JOHN HANCOCK HEDGED EQUITY & INCOME FUND REQUIRED NOTICE TO SHAREHOLDERS - SOURCES OF DISTRIBUTION UNDER SECTION 19(a)

Rhea-AI Summary

John Hancock Hedged Equity & Income Fund (HEQ) announced sources of its quarterly distribution of $0.2500 per share. The distribution includes net investment income, short-term, and long-term capital gains. The fund's average annual total return for the past 5 years was 4.88%, with an annualized current distribution rate of 8.53% of NAV. The cumulative total return for the fiscal year through February 29, 2024, was 0.95%.

Insights

Financial Analyst

The recent announcement by John Hancock Hedged Equity & Income Fund regarding its quarterly distribution breakdown offers a snapshot into the fund's current income-generating capabilities. With approximately 49% of the distribution sourced from net investment income, the fund demonstrates a capacity to pay out earnings derived from its investment holdings, which could be indicative of a stable or robust portfolio performance. The significant portion, 44%, coming from net realized short-term capital gains, suggests active trading strategies or the realization of gains from investments held for less than a year.

It is noteworthy that the annualized current distribution rate of 8.53% relative to the Net Asset Value (NAV) as of the end of February stands out when compared to the average annual total return of 4.88% over the past five years. This discrepancy could potentially signal a higher payout ratio that might not be sustainable in the long run without capital appreciation or additional income sources. Investors would benefit from monitoring subsequent distributions to assess the consistency of these payouts and the fund's underlying performance.

Tax Advisor

From a taxation perspective, the composition of the fund's distribution is important information for shareholders. The distinction between net investment income and realized capital gains has different tax implications. The latter, split into short-term and long-term categories, could influence an investor's tax liability depending on their individual tax bracket and the holding period of the fund's securities. No part of the distribution is classified as a return of capital, which can be beneficial as it typically reduces an investor's cost basis and defers tax liability until the sale of the fund shares.

However, the high percentage of the distribution coming from short-term capital gains, taxed at ordinary income rates, could lead to a higher tax bill for investors in the current year. It's important for shareholders to consult with tax professionals to understand the impact of these distributions on their personal tax situation and to plan accordingly for any potential tax liabilities that may arise from holding this investment.

Market Research Analyst

Examining the fund's distribution components in relation to industry benchmarks provides valuable context. The fund's distribution rate is quite high when compared to the average yield of other closed-end funds, which could make it attractive to income-focused investors. However, the sustainability of such distributions is a key factor to consider. The fund's reliance on short-term capital gains could be reflective of a more aggressive or opportunistic investment approach, which may carry higher risk and volatility.

Furthermore, the fund's performance relative to its NAV is an essential metric for investors to consider. While the cumulative total return for the fiscal year is modest at 0.95%, the distribution rate is over twice the total return for the same period. This could suggest that the fund is distributing more than what it earns, a practice that, if continued, could potentially erode the fund's NAV over time. Investors should keep an eye on the fund's investment strategy and market conditions, as these will influence future distributions and the overall health of the fund.

BOSTON, March 28, 2024 /PRNewswire/ - John Hancock Hedged Equity & Income Fund (NYSE: HEQ) (the "Fund"), a closed-end fund managed by John Hancock Investment Management LLC (the "Adviser") and subadvised by Wellington Management Company LLP (the "Subadviser"), announced today sources of its quarterly distribution of $0.2500 per share paid to all shareholders of record as of March 11, 2024, pursuant to the Fund's managed distribution plan.  This press release is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission.  

John Hancock Hedged Equity & Income Fund

Notification of Sources of Distribution

This notice provides shareholders of the John Hancock Hedged Equity & Income Fund (NYSE: HEQ) 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: $0.2500

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				For the fiscal year-to-date period 01/1/2024-03/31/20241
Source		Current Distribution ($)		% Breakdown of the Current Distribution		Total Cumulative Distributions ($)		% Breakdown of the Total Cumulative Distributions
Net Investment Income		0.1237		49 %		0.1237		49 %
Net Realized Short- Term Capital Gains		0.1092		44 %		0.1092		44 %
Net Realized Long- Term Capital Gains		0.0171		7 %		0.0171		7 %
Return of Capital or Other Capital Source		0.0000		0 %		0.0000		0 %
Total per common share		0.2500		100 %		0.2500		100 %
Average annual total return (in relation to NAV) for the 5 years ended on February 29, 2024								4.88 %
Annualized current distribution rate expressed as a percentage of NAV as of February 29, 2024								8.53 %
Cumulative total return (in relation to NAV) for the fiscal year through February 29, 2024								0.95 %
Cumulative fiscal year-to-date distribution rate expressed as a percentage of NAV as of February 29, 2024								2.13 %

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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 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 $0.2500 per share, which will continue to be paid quarterly until further notice.

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 the United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors which are, in some cases, beyond the Fund's control and could cause actual results to differ materially from those set forth in the forward-looking statements.

An investor should consider a Fund's investment objectives, risks, charges and expenses carefully before investing.

Wellington Management Company LLP is an independent and unaffiliated investment subadviser to John Hancock Hedged Equity & Income Fund.

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 Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 18 geographies. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We're committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement. Not all offerings are available in all jurisdictions. For additional information, please visit manulife.com.

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SOURCE John Hancock Investment Management

FAQ

What is the quarterly distribution per share announced by John Hancock Hedged Equity & Income Fund (HEQ)?

The quarterly distribution per share announced by John Hancock Hedged Equity & Income Fund (HEQ) is $0.2500.

What are the sources of the distribution declared by John Hancock Hedged Equity & Income Fund (HEQ)?

The sources of the distribution declared by John Hancock Hedged Equity & Income Fund (HEQ) include net investment income, net realized short-term capital gains, and net realized long-term capital gains.

What was the average annual total return for John Hancock Hedged Equity & Income Fund (HEQ) for the 5 years ended on February 29, 2024?

The average annual total return for John Hancock Hedged Equity & Income Fund (HEQ) for the 5 years ended on February 29, 2024, was 4.88%.

What was the cumulative total return for the fiscal year through February 29, 2024, for John Hancock Hedged Equity & Income Fund (HEQ)?

The cumulative total return for the fiscal year through February 29, 2024, for John Hancock Hedged Equity & Income Fund (HEQ) was 0.95%.