Dear Mr. Berko:

My market experiences in the past five years have been terrible. Between 2000 (when I first got in the market) and today, I have lost $161,000 of my initial $520,000 investment. I’m 54 and need to be careful and conservative with the money I have left. So last year I got a new broker who specializes in closed-end funds (my goal is growth and income), investing $20,000 in seven funds; every one of them is lower today than when I bought it at the new issue price.

My broker is really hot on a new closed-end fund called ING Global Equity Dividend Fund with Option Overlay Strategy, which is going public at $20, and he insists that I must buy it at the $20 initial public offering because it will “come out of the gate leading the pack.” What can you tell me about this new fund?

P.E., Spring Grove, Ill.

Dear P.E.:

This reply is too late to help in this case but read on, because my answer should be 100 percent helpful to you in the future.

I believe that ING Global Equity Dividend Fund with Option Overlay Strategy could be a swell fund, even though it takes 29 seconds to pronounce the name; and I’d own it in a Sioux City second. In fact, I do. But I almost never purchase a closed-end fund at its initial public offering price. This closed-end fund (IGD-$20.02) went public on March 28 and thousands of brokers like yours peddled these shares to clients at $20, which included an underwriting discount (commission) of 90 cents a share.

However, in most instances, one has to be dumber than a bowling shoe to purchase a closed-end fund at its IPO price. Experience is proof — in the overwhelming majority of instances — that the market price of a closed-end fund often falls between 5 percent and 10 percent from the IPO price within 40 to 60 days of trading.

My definition of stupidity is doing the same thing over and over again and expecting different results. Apparently many investors are super-stupid, because they continue to purchase closed-end funds at the IPO price, and within a month the stock price is always lower, not higher.

I suspect there will be many excellent closed-end funds coming to the market with an IPO this year. Wait 40 to 60 days after the IPO to purchase one of those newly minted closed-end funds. If you use a discount broker, your commission costs can be less than a dime a share.

There are a gaggle of good closed-end funds trading on the Big Board, the Curb and the OTC market. ING Global Equity Dividend Fund with Option Overlay Strategy is one among them. Even though you may have paid a few hundred dollars more than necessary for IGD, I believe that this fund will do well for you. In fact, I feel good enough about IGD that we have recently purchased this issue for many of our managed accounts.

The underwriters (UBS and Wachovia Corp.) raised $2 billion, and this cash cache (less about $90 million in commission and fees) will be managed by Leonard Stehouwer and Jorik van den Bos, two savvy gents for whom I have enormous respect. Leo and Jo will invest this money in a portfolio of global issues with a history of dividend yields between 2 percent and 5 percent.

These fellows believe they can unearth many European and other foreign dividend-paying stocks that are undervalued and have (at the very least) modest appreciation potential. They reckon that the use of various option techniques will allow them to effectively increase IGD’s income flow to shareholders. These managers intend to generate option premiums (7 percent to 8 percent) by selling covered call options on a large portion of the issues in the IGD portfolio. And they intend to balance the fund’s objectives with the strategic use of put options on various stock indexes. Jo and Leo believe they will distribute $1.85 of income per share this year, which is a more than 9.2 percent current return. However, we both know this dividend is not etched in steel.

I’m glad you bought this issue, and there will be others similar to IGD with a little different wrinkle, a new angle, another strategy, etc. that you may also wish to own. And you should. But in the future wait a month or so as the price descends from the IPO level closer to the issue’s net asset value.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.