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Merrill Lynch Investment Managers Completes Successful Closed-End Fund Offering
INNOVATIVE STRUCTURE OFFERS INVESTORS ENHANCED INCOME IN A "MUDDLE-THROUGH" MARKET ENVIRONMENT
PLAINSBORO, New Jersey, May 16, 2005 — Merrill Lynch Investment Managers (MLIM) announced today that the initial public offering of common shares of Enhanced Equity Yield Fund, Inc. (NYSE: EEF) raised gross proceeds of approximately $425 million, assuming full exercise of the underwriters’ overallotment option, which may not occur.
Enhanced Equity Yield Fund, which commenced trading on the NYSE on May 3, is designed to provide investors with current income and gains, with a secondary objective of capital appreciation. The fund will invest primarily in a diversified portfolio of dividend-paying common stocks, as well as write call options on equity indexes in an effort to produce gains from options premiums. In addition, the fund will offer to repurchase between 5% and 25% of its outstanding shares on an annual basis, helping to mitigate discounts in the secondary market by allowing shareholders to sell back their shares to the fund at net asset value.
“Given overall expectations for modest stock market returns in the near term, equity investors are looking to enhance the yield in their portfolios,” said Frank Porcelli, chief operating officer for MLIM in the Americas.
“By using an active covered call options strategy combined with a diversified portfolio of dividend-paying stocks — a portfolio management strategy traditionally available only to institutional investors — Enhanced Equity Yield Fund aims to provide an enhanced return over time with a moderate level of volatility,” added Brian Fullerton, chief investment officer for MLIM in the Americas.
In addition to providing attractive quarterly income and capital appreciation potential, the fund is designed to provide the opportunity for tax advantaged qualified income. A certain portion of the fund’s income from options transactions may be treated as long-term capital gains. This income coupled with qualified dividend income can provide investors with a portion of income at a tax advantaged rate.
The Fund is managed by MLIM’s quantitative investment team led by portfolio manager Vincent Costa, who has over 18 years of investment experience in index funds, enhanced index funds and hedge funds. The team, including portfolio managers Jonathan Clark and Debra Jelilian, is known for its institutional capabilities and currently manages more than $53 billion for institutional clients in equity index and enhanced equity index products.
Currently, MLIM offers 44 closed-end funds that trade on the NYSE, representing approximately $23.4 billion in assets.
Merrill Lynch (NYSE: MER) is one of the world’s leading financial management and advisory companies with offices in 36 countries and total client assets of approximately $1.6 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions, and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world’s largest managers of financial assets. Firmwide, assets under management total $479 billion. For more information on Merrill Lynch, please visit www.ml.com.
The price of shares of the Fund traded on the New York Stock Exchange will fluctuate with market conditions and may be worth more or less than their original offering price. Shares of closed-end funds often trade at a discount to their net asset value, but may also trade at a premium.
Contact Media Relations:
Megan Frank 212.449.7284
megan_frank@ml.com
