Adams Closed-End Funds

Helping Investors Reach Long-Term Investment Goals

Adams Funds is composed of two closed-end funds: Adams Diversified Equity Fund and Adams Natural Resources Fund. Closed-end funds (CEFs) are professionally-managed investment companies and are ideally suited to helping investors achieve long-term investment goals.

Understanding Closed-End Funds

While often compared to traditional open-end “mutual” funds, closed-end funds have unique characteristics. A CEF raises capital primarily through an initial public offering (IPO). CEF shares and the proceeds are invested according to the fund's investment objectives. A CEF’s assets are the portfolio of stocks and other securities that it owns and manages. "Closed" refers to the fact that, once the capital is raised, there are typically no more shares available from the fund sponsor.

After the IPO, every closed-end fund is listed on a national exchange, such as the New York Stock Exchange (NYSE), where its shares are purchased and sold in transactions with other investors, not with the sponsor company itself. Since a CEF shares are listed on a securities exchange and bought and sold in the open market, they typically trade in relation to, but independent of, their underlying net asset values (NAVs). Intra-day trading allows investors to purchase and sell shares of closed-end funds just like the shares of other publicly-traded securities. In addition, when shares of closed-end funds trade at prices below their underlying NAVs (at a discount), investors have the opportunity to enhance the return on their investment by making bargain purchases.

Although the outstanding shares of a closed-end fund remain relatively constant, additional shares can be created through secondary offerings, rights offerings or the issuance of shares for dividend reinvestment.

By contrast, open-end “mutual” funds continuously offer their shares to investors and prospective investors and stand ready to redeem their shares at all times. Transactions in shares of mutual funds are based on their net asset value (NAV), determined at the close of each business day. Sometimes the transaction price includes an adjustment for a sales, redemption or other charge.

For more information about the advantages of investing in closed-end funds, please contact us, or visit The Closed-End Fund Association’s website: www.cefa.com.