Glossary

48 terms. Each links to the article that covers it in depth.

A B C D E F I L M N P R S T U V

Asset coverage: A 1940 Act test for leveraged funds: total assets divided by senior securities. Debt needs at least 300% coverage, preferred shares 200%. Funds report it per $1,000 of senior securities. Read more →
At-the-market (ATM) offering: A programme that lets a fund sell new common shares into the market at prevailing prices, usually only when the fund trades at a premium so existing holders are not diluted below NAV. Read more →
Auction-rate preferred (ARPS): Preferred shares once used by CEFs for leverage, with dividends reset at periodic auctions; most were replaced after the 2008 auction failures.
Bid–ask spread: The gap between the best buying and selling prices on the exchange. Wide spreads are common in thinly traded CEFs and are a real cost of trading. Read more →
Closed-end fund (CEF): A registered investment company that raises a fixed pool of capital in an IPO and lists its shares on an exchange; it does not continuously issue or redeem shares. Read more →
Common net assets: The value of the portfolio after all liabilities, including borrowings and preferred shares, attributable to common shareholders. The basis for NAV per share.
Coverage (NII coverage): Net investment income divided by distributions to common shareholders over the same period. Meaningful for income strategies only. Read more →
Discount: A market price below NAV. Expressed as a negative premium/discount percentage: (price ÷ NAV − 1) × 100. Read more →
Distribution: A cash payment to shareholders. It may combine net investment income, realised capital gains and return of capital; the mix is reported separately. Read more →
Distribution rate: The annualised regular distribution divided by market price (or NAV). It is not an income yield and not a return. Read more →
DRIP (dividend reinvestment plan): A plan run by the fund's transfer agent that reinvests distributions in shares — often newly issued at NAV or a discount to price when the fund trades at a premium, or bought in the market when it trades at a discount. Read more →
Effective leverage: Total leverage including economic exposure from derivatives and structured instruments, not only balance-sheet borrowings. Read more →
Ex-distribution date: The first trading day on which a buyer of the shares is not entitled to the declared distribution.
Expense ratio: Annual fund expenses as a percentage of net assets attributable to common shares. Check whether interest on leverage is included and which denominator is used. Read more →
Fair-value level (1/2/3): Accounting classification of how a holding was valued: Level 1 quoted prices, Level 2 observable inputs, Level 3 unobservable inputs (typically private or illiquid assets).
Form N-2: A closed-end fund's registration statement and prospectus: investment policies, fee table, leverage terms, offering details.
Form N-CSR / N-CSRS: The annual and semi-annual shareholder reports filed with the SEC: financial highlights, statements, notes on leverage and fees. Read more →
Form N-PORT: Monthly portfolio holdings filed with the SEC each quarter, public roughly 60 days after quarter end. The source of the holdings on this site.
Interval fund: A fund that offers to repurchase a set percentage of shares at NAV at fixed intervals; most are unlisted, some are exchange-listed. Legal structure and listing status are recorded separately here.
Leverage: Borrowing or preferred-share issuance used to hold more assets than shareholders' capital alone would allow. Amplifies gains and losses. Always check the denominator of a leverage percentage. Read more →
Managed assets: Common net assets plus leverage (borrowings and preferred shares). Management fees are often charged on this larger base. Read more →
Managed distribution policy: A policy to pay a set amount per share or a set percentage of NAV regardless of what the portfolio earned in the period. Read more →
Market price return: The change in the exchange price of the shares, excluding distributions. Read more →
Market price total return: Price change plus distributions reinvested at the market price on the ex-date. Read more →
Maximum drawdown: The largest peak-to-trough decline of a total-return series over the period.
NAV (net asset value): Assets minus liabilities per common share, calculated after each trading day for most listed CEFs. Read more →
NAV return / NAV total return: Change in NAV, without and with distributions reinvested at NAV — the closest measure of the manager's result. Read more →
Net investment income (NII): Interest and dividends earned by the portfolio minus expenses, before realised or unrealised gains. Read more →
Premium: A market price above NAV; a positive premium/discount percentage. Read more →
Premium/discount Z-score: (Current premium/discount − window average) ÷ window standard deviation. Compares today's discount with the fund's own history; not a valuation verdict. Read more →
ReinvestCapture™ rate: Regular distribution rate on price × (NAV ÷ price): the asset value a year of reinvested distributions buys, as a percentage of the share price paid. At a 20% discount each reinvested dollar buys $1.25 of assets, so the rate runs above the payout rate; at a premium it runs below. It says nothing about whether the distribution is earned. Read more →
Return of capital (ROC): The portion of a distribution not covered by net investment income or realised gains in the period. Not automatically destructive; judge it against NAV over time. Read more →
Reverse split: Consolidation of shares (e.g. 1-for-3) that raises NAV and price per share without changing the fund's value; historical per-share series must be adjusted for it.
Rights offering: An offer to existing shareholders to buy new shares in proportion to their holding, usually below market price or NAV; dilutive to non-participants when priced below NAV. Read more →
Section 19(a) notice: A notice accompanying a distribution that estimates its sources (income, gains, return of capital). Preliminary; superseded by the year-end tax characterisation. Read more →
Senior securities: Debt and preferred shares issued by a fund; they rank ahead of common shares. The 1940 Act limits them through asset-coverage tests. Read more →
Sharpe ratio: Annualised excess return over the risk-free rate divided by annualised volatility, on the total-return series.
Sortino ratio: Like the Sharpe ratio but using downside deviation, penalising only negative returns.
Special distribution: A one-off payment, often at year-end, outside the regular schedule. Never annualised on this site. Read more →
Sponsor: The organisation that created the fund and provides or arranges its investment adviser. Adviser, sub-adviser and portfolio manager are distinct roles.
Tender offer: An offer by the fund to repurchase a percentage of its shares at or near NAV; oversubscribed tenders are prorated. Read more →
Tender-offer fund: An unlisted fund that provides liquidity through periodic tender offers at the board's discretion.
Tender-option bond (TOB): A financing structure used by municipal CEFs to create leverage by depositing bonds in a trust that issues floating-rate and inverse-floating certificates.
Term fund / target-term fund: A fund with a stated date to liquidate and return NAV; a target-term fund also aims for a specific payout, without guarantee. Read more →
Total managed assets: See managed assets. Read more →
Trailing 12-month (TTM) yield: Actual distributions with ex-dates in the past year divided by the current price; shown with and without special distributions. Read more →
UNII (undistributed net investment income): The balance of net investment income earned but not yet paid out, on the fund's accounting basis; negative when past distributions exceeded income. Read more →
Volatility: Annualised standard deviation of daily total returns; market-price and NAV volatility are different quantities.