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John Hancock Hedged Equity & Income Fund Announces Investment Policy Changes, Amendment To Managed Distribution Plan And Declaration Of Increased Quarterly Distribution

Stocks in this article: HEQ MFC

BOSTON, Sept. 30, 2013 /PRNewswire/ -- John Hancock Hedged Equity & Income Fund (NYSE: HEQ) (the "Fund"), a John Hancock Closed-End Fund, announced today that the Board of Trustees approved certain changes to the Fund's investment policies and, in conjunction with these investment policy changes, approved a change to the Fund's benchmark.

The Board of Trustees also voted to amend the Fund's current managed distribution plan (the "Plan"), increasing the quarterly distribution amount from $0.323 to $0.376 per share, a 16% increase over the Fund's most recently announced distribution.  The new distribution rate is effective with the December 31, 2013 distribution.

Investment Policy Changes and New Benchmark

The Board of Trustees has approved the following investment policy changes, which are expected to be implemented over the next 60 days:

  • Removal of 30% restriction on the investment in securities of foreign issuers and foreign currency securities.  The Fund will have no restriction on investing in foreign issuers or foreign currency securities.
  • Change the Fund's benchmark from the Russell 3000 Index to the MSCI ACWI Index to align the Fund's benchmark with the increased flexibility to invest in foreign securities.
  • Employ a "beta hedge" strategy that consists of selling equity index futures to provide potential downside protection in the event of market decline. The "beta hedge" strategy will replace the use of a put option spread.
  • Reduce the utilization of call writing strategy.  The Fund will typically limit notional exposure of the index call options to a range between 0% and 50% of the value of the Fund's portfolio securities. Previously, the Fund's use of index call options typically ranged from 40% to 60% of the value of the portfolio, with the ability to write up to 100% of the value of the portfolio.

The modifications to the investment policy and strategy of the Fund are designed to seek to increase the overall income generating capabilities of the portfolio while continuing to maintain its equity focus and downside protection capabilities.

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