Michael <g...@v...net> writes:

> I'm afraid I don't completely
> understand NAVs and don't know if they were purchased at a premium

NAV means "Net Asset Value".

Caution - what follows may be way more detail than you
were looking for regarding NAVs and closed-end funds,
in particular regarding discounts/premiums and leverage:

The Fund has a portfolio. Suppose you have Fund XYZ and
the fund portfolio contains 10 million dollars worth of
various stocks. And suppose that there are 1 million
shares of the fund outstanding. Each share of the fund
represents ownership of $10 worth of assets. That's the NAV.

Now here's the thing: Closed end funds issue a fixed
number of shares. Say, in the example above, that 1 million
shares. Once they've been issues, people no longer buy
and sell those shares from or to the fund itself. Instead,
those shares now trade on the exchanges like any other
stock, and subject to supply and demand. So even though
each share may represent ownership of $10 worth of a
portfolio, when you buy or sell that share to someone
else, he may not want to offer you $10 for it. Suppose
he only offers you $9.50 for it. That's called a "discount".
And when you look up that fund in the stock listings
or in the newspaper or whatever, you'll see a share
price of $9.50, even though you know that theoretically
it's worth more than that. These discounts (and sometimes
premiums - sometimes folks pay *more* than a share is
theoretically worth!) sometimes magnify the price movements
of one's investment.

The other thing about closed end funds which is more
common than for open-ended funds or indices - is that
closed-end funds often employ leverage - they borrow
money and use that borrowed money to magnify the move
in value of the underlying portfolio! Again, to the
example above, there may be $10 million worth of
portfolio and 1 million shares outstanding, but it's
possible that that $10 million portfolio consists of,
say, $12 million worth of stock and $2 million worth
of borrowing. If the $12 million worth of stock goes
up by 10%, the value of the overall portfolio goes
up by more. If the $12 million worth of stock goes
down by 10%, the loss is also magnified (ie. the
portfolio goes to $10.8 million of stock minus the
existing $2 million loans leaving $8.8 million in
the portfolio - a loss of 12%, rather than 10%,
even though the *stocks* only went down by 10%).

The above is all general, by the way. Specific
funds may invest in more particular things - the
ones you have apparently own real estate, for
example, and one of them had lots of stock in the
financial sector, rather than more evenly representing
the market as a whole. Both of those will have taken
very hard hits.

I'm a little concerned that someone has put an investor
who doesn't know what a NAV is into closed end funds.
Whoever sold these things to you failed to educate you
adequately or to make sure you understood what you owned.
There may be little you can do about the past, but I'd
strongly suggest looking for someone who can better
serve you by either helping more to educate you or by
keeping you in simpler investments which you understand
better. I hope these funds only represent a small portion
of a larger and better diversified portfolio!




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