JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND NOTICE TO SHAREHOLDERS - SOURCES OF DISTRIBUTION UNDER SECTION 19(a)
- None.
- The cumulative total return for the fiscal year through February 29, 2024, was -6.41%, indicating a negative performance for shareholders.
Insights
The recent announcement by John Hancock Financial Opportunities Fund regarding its quarterly distribution reveals a significant portion of the payout is classified as a return of capital or other capital source, accounting for 69% of the total distribution. This is an area of interest for investors as it indicates the fund's income and capital gains are not sufficient to cover the distribution, potentially eroding the capital base over time.
While a return of capital can boost a shareholder's immediate cash flow, it does not represent income generated from the fund's investments. This could suggest that the fund's underlying assets are not yielding returns at a rate that aligns with the distribution policy. The long-term sustainability of such distributions could be questioned if the trend continues, potentially affecting the fund's net asset value (NAV) and, by extension, its share price.
From a tax perspective, the composition of the distribution is relevant for shareholders. The fact that the distribution includes a return of capital means that part of the payment received is not subject to immediate taxation. Instead, it reduces the cost basis of the investment, which could result in higher capital gains taxes when shares are eventually sold.
Investors should consider their individual tax situations and the implications of these distributions on their long-term tax liabilities. The absence of net realized short-term capital gains in the distribution also plays a role in the tax characterization, as short-term gains are typically taxed at higher rates than long-term gains or qualified dividends.
When assessing the fund's performance, the average annual total return of 3.91% over the past five years juxtaposed with the annualized current distribution rate of 9.09% presents a discrepancy that investors should evaluate. The current distribution rate substantially exceeds the average return, which could be a red flag regarding the fund's ability to maintain its distribution levels without depleting capital.
Furthermore, the negative cumulative total return of -6.41% for the fiscal year to date suggests that the fund's market performance has been underwhelming. Investors should be cautious of the potential for a reduction in future distributions or a decline in NAV if the fund's market performance does not improve. Additionally, the high distribution rate relative to NAV may be attractive to income-focused investors, but it's important to assess the sustainability of such payouts.
Notification of Sources of Distribution
This notice provides shareholders of the John Hancock Financial Opportunities Fund (NYSE: BTO) with important information concerning the distribution declared on March 1, 2024, and payable on March 28, 2024. No action is required on your part.
Distribution Period: March 2024
Distribution Amount Per Common Share:
The following table sets forth the estimated sources of the current distribution, payable March 28, 2024, and the cumulative distributions paid this fiscal year to date from the following sources: net investment income; net realized short term capital gains; net realized long term capital gains; and return of capital or other capital source. All amounts are expressed on a per common share basis and as a percentage of the distribution amount.
For the period 01/1/2024-03/31/2024
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For the fiscal year-to-date period
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Source | Current | % Breakdown | Total Cumulative | % Breakdown | ||||
Net Investment Income | 0.1085 | 17 % | 0.1085 | 17 % | ||||
Net Realized Short- Term Capital Gains | 0.0000 | 0 % | 0.0000 | 0 % | ||||
Net Realized Long- Term Capital Gains | 0.0940 | 14 % | 0.0940 | 14 % | ||||
Return of Capital or Other Capital Source | 0.4475 | 69 % | 0.4475 |
69 % | ||||
Total per common share | 0.6500 | 100 % | 0.6500 | 100 % | ||||
Average annual total return (in relation to NAV) for the 5 years ended on February 29, 2024 | 3.91 % | |||||||
Annualized current distribution rate expressed as a percentage of NAV as of February 29, 2024 | 9.09 % | |||||||
Cumulative total return (in relation to NAV) for the fiscal year through February 29, 2024 | -6.41 % | |||||||
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of February 29, 2024 | 2.27 % | |||||||
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1 The Fund's current fiscal year began on January 1, 2024 and will end on December 31, 2024. |
You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's managed distribution plan.
The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with "yield" or "income."
The amounts and sources of distributions reported in this Notice are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
The Fund has declared the March 2024 distribution pursuant to the Fund's managed distribution plan (the "Plan"). Under the Plan, the Fund makes fixed quarterly distributions in the amount of
If you have questions or need additional information, please contact your financial professional or call the John Hancock Investment Management Closed-End Fund Information Line at 1-800-843-0090, Monday through Friday between 8:00 a.m. and 7:00 p.m., Eastern Time.
Statements in this press release that are not historical facts are forward-looking statements as defined by
An investor should consider a Fund's investment objectives, risks, charges and expenses carefully before investing.
About John Hancock Investment Management
A company of Manulife Investment Management, we serve investors through a unique multimanager approach, complementing our extensive in-house capabilities with an unrivaled network of specialized asset managers, backed by some of the most rigorous investment oversight in the industry. The result is a diverse lineup of time-tested investments from a premier asset manager with a heritage of financial stewardship.
About Manulife Investment Management
Manulife Investment Management is the global brand for the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in
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SOURCE John Hancock Investment Management
FAQ
What is the quarterly distribution per share announced by John Hancock Financial Opportunities Fund (BTO)?
What are the sources of the distribution declared by John Hancock Financial Opportunities Fund (BTO)?
What was the average annual total return for the 5 years ended on February 29, 2024, for John Hancock Financial Opportunities Fund (BTO)?
What was the cumulative total return for the fiscal year through February 29, 2024, for John Hancock Financial Opportunities Fund (BTO)?
