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# Aberdeen Australia Equity Fund, Inc. (NYSE AMEX: IAF)
  (EDT)
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Closed-End Overview

Understanding the Basics of Closed-End Funds

Investors sometimes confuse mutual funds -- also known as “open-end” funds -- with “closed-end” funds. Like traditional mutual funds, closed-end funds are professionally managed investment companies that offer individual investors a variety of benefits. While there are a number of similarities between these two types of investment companies, there are also quite a few important differences. The below table provides a side-by-side comparison to help investors better understand the basic differences.

In addition to offering investors opportunities to generate return through portfolio performance, dividends and distributions, closed-end funds also enable investors to potentially buy and sell shares in the market at beneficial prices.

Click on any of the key features below to access additional details that make closed-end funds important investment options.

Key Feature Closed-End Funds Open-End Mutual Funds
Professional Management Yes Yes
Diversification Yes Yes
Pursuit of Investment Objective Yes Yes
Follows Defined Investment Strategy Yes Yes
Economies of Scale Yes Yes
Relatively Low Management Fees Yes Yes
Liquidity Yes Yes
Pass Through Taxation Yes Yes
Distributions Yes Yes
Highly Regulated Yes Yes
Fund Companies Continuously Offer to Sell and Redeem Shares No Yes
Share Price is Based only on Net Asset Value (NAV) No Yes
Shares are Traded on Public Exchange Yes No
Shares are Priced Throughout the Day Yes No
Shares May Trade at Premium or Discount Yes No
Initial Public Offerings and Subsequent Rights Offerings of Fund Shares Yes No
Stable Asset Base Yes No
Minimum Investment Required No Yes
Use of Leverage Yes Limited
Investment in Illiquid Securities Yes Limited
 
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Investors should consider a fund’s investment objectives, risks, charges and expenses carefully before investing. A copy of the prospectus for Aberdeen Australia Equity Fund, Inc. that contains this and other information about the fund may be obtained by calling 866-839-5205. Please read the prospectus carefully before investing. Investing in funds involves risk, including possible loss of principal.

Closed-end funds have a one-time initial public offering and then are subsequently traded on the secondary market through one of the stock exchanges. The 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 a fund will achieve its investment objective. Past performance does not guarantee future results.

There can be no assurance that the Board will maintain the Fund's distribution rate at a particular level, or that the Board will continue a managed distribution policy. Additionally, distributions may include return of capital as well as net investment income and capital gains. If the Fund's investments do not generate sufficient income, the Fund may be required to liquidate a portion of its portfolio to fund these distributions. If the Fund's distributions consist of a large amount of return of capital, it may result in a deterioration of the Fund's assets.

The information on this website is for U.S. investors. Nothing on this website should be considered a solicitation or offering for sale of any investment product or service to any person in any jurisdiction where such solicitation or offer would be unlawful.

NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

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