PHILADELPHIA, Nov. 12, 2014 /PRNewswire/ -- Aberdeen Chile Fund, Inc. (NYSE MKT: CH) (the "Fund"), a closed-end management investment company, announced today that it has determined to reduce the quarterly distribution payable under the Fund's managed distribution policy ("Distribution Policy"), effective with the distribution to be declared in December 2014. The Board of Directors (the "Board") has determined that the Fund will continue to pay quarterly distributions at an annual rate that is a percentage of the average of the Fund's prior four calendar quarter-end net asset values. The Board has determined that the annual percentage rate for the Fund's Distribution Policy will be reduced from 10% to 8%. The decision to reduce the percentage rate was based predominately on the current level of net unrealized gains (estimated at $27.8 million or $2.96 per share at June 30, 2014), the portion of recent distributions characterized as return of capital and the historical longer term total return of the Fund. The Distribution Policy will remain subject to regular review by the Board.
The Board remains committed to the Distribution Policy. The Board continues to consider that making periodic distributions could increase liquidity for common shareholders and may assist in narrowing the discount to net asset value at which common shares have at times traded. Of course, there can be no guarantee that these benefits will occur.
Pursuant to an exemptive order granted by the Securities and Exchange Commission on March 30, 2010, the Fund may distribute any long-term capital gains more frequently than the limits provided in Section 19(b) under the 1940 Act and Rule 19b-1 thereunder. Therefore, distributions paid by the Fund during the year may include net income, short-term capital gains, long-term capital gains and/or a return of capital. Net income dividends and short-term capital gain dividends, while generally taxable at ordinary income rates, may be eligible, to the extent of qualified dividend income earned by the Fund, to be taxed at a lower rate not to exceed the maximum rate applicable to your long-term capital gains. Distributions made in any calendar year in excess of investment company taxable income and net capital gain are treated as taxable ordinary dividends to the extent of undistributed earnings and profits, and then as a return of capital that reduces the adjusted basis in the shares held. To the extent return of capital distributions exceed the adjusted basis in the shares held, capital gain is recognized with a holding period based on the period the shares have been held at the date such amount is received. Shareholders should not draw any conclusions about the Fund's investment performance from the terms of the distribution policy. The final determination of the source of all distributions will be made after year-end. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the fiscal year and may be subject to change based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report distributions for federal income tax purposes.
The payment of distributions in accordance with the Distribution Policy may result in a decrease in the Fund's net assets. A decrease in the Fund's net assets may cause an increase in the Fund's annual operating expense ratio and a decrease in the Fund's market price per share to the extent the market price correlates closely to the Fund's net asset value per share. The Distribution Policy may also negatively affect the Fund's investment activities to the extent that the Fund is required to hold larger cash positions than it typically would hold or to the extent that the Fund must liquidate securities that it would not have sold, for the purpose of paying the distribution. The Fund's Board of Directors has the right to amend, suspend or terminate the Distribution Policy at any time. The amendment, suspension or termination of the Distribution Policy may affect the Fund's market price per share. Investors should consult their tax advisor regarding federal, state and local tax considerations that may be applicable in their particular circumstances.
Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund's investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund's portfolio. There is no assurance that the Fund will achieve its investment objective.
If you wish to receive this information electronically, please contact [email protected]
SOURCE Aberdeen Chile Fund, Inc.