Closed-end funds

Closed-end funds are exactly the same as open-end funds, only completely different.
Let's look at the similarities:

• both are portfolios managed by an investment adviser
• investment objectives are often similar
• both are investment companies
• both are "management companies" as opposed to UITs and face-amount certificates

Now let's look at the differences:

• open-end funds are redeemed for the NAV (net asset value)
• closed-end funds are traded, independent of their NAV
• sales charges and 12b-1 fees are charged to open-end fund investors
• investors pay commissions to buy and sell closed-end funds
• closed-end funds use more leverage offering auction-rate preferred shares to investors
• open-end funds may continuously offer new shares
• closed-end funds have a fixed number of shares