1 CEFs, unlike mutual funds, are not continuously offered. There is an initial public offering (IPO) and once issued, shares of CEFs trade on a stock exchange. Shares of CEFs frequently trade at prices lower (but sometimes higher) than the net asset value (NAV) of the CEF’s shares, which means that the market price of a CEF’s shares may be lower than the value of the securities and assets that the shares represent. This creates a risk of loss for investors when selling shares purchased in an IPO. The risk of loss due to this discount may be greater for investors expecting to sell shares in a relatively short period after completion of an IPO. Please consider whether to purchase shares of CEFs in an IPO or after the CEF begins trading on a stock exchange. Each method will generally involve different costs and affect how your Financial Advisor/Private Wealth Advisor is compensated. You should discuss this with your Financial Advisor/Private Wealth Advisor.
The risk that a CEF may trade at prices lower than the NAV of the CEF’s shares is separate and distinct from the risk that a CEF’s NAV can decrease as a result of investment activities. There is no assurance that a CEF will achieve its investment objective(s). A CEF’s common share price will fluctuate and, at the time of sale, may be above or below NAV and may be worth more or less than the original investment. Investors should only consider purchasing shares as a portion of a diversified portfolio. A CEF’s NAV will be reduced immediately following an offering by any applicable sales load and offering expenses paid by a CEF.
2 Leverage is a speculative technique and there are special risks and costs associated with leveraging, including (i) the likelihood of greater volatility of NAV, market price and dividend rate than a comparable CEF without leverage; (ii) the risk that fluctuations in the interest or dividend rates that leveraged CEFs must pay on any leverage will reduce the return for a leveraged CEF; (iii) the effect of leverage in a declining market, which is likely to cause a greater decline in the NAV of the CEF than if the CEF were not leveraged, which can, in turn, result in a greater decline in the market price of the CEF; and (iv) leverage generally increases operating costs, which reduce total return. There is no assurance that a leveraging strategy will be successful.
3 Source: As per data sourced from Dealogic.
Please consider the investment objectives, risks, charges and expenses of a CEF carefully before investing. The prospectus contains this and other information about a CEF. To obtain a prospectus, investors should contact a financial advisor or visit the CEF’s website. Please read the prospectus carefully before investing.
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