The profit distribution of closed-end funds can only be carried out in the form of cash dividends, but not in the form of dividend reinvestment. At the same time, according to the Measures for the Operation and Management of Public Offering of Securities Investment Funds, the annual income distribution ratio of closed-end funds shall not be less than 90% of the annual distributable profits of the funds; The income distribution of closed-end funds shall not be less than once a year; After the distribution of fund income, the net value of fund shares shall not be lower than the face value.

It should be noted that fund dividends must meet the following conditions:

1. The fund can only be distributed after the current year's income makes up for the previous year's losses.

2. After the distribution of fund income, the unit net value cannot be lower than the face value.

3. If the fund investment has a net loss in the current period, it cannot be distributed.

The so-called cash dividend means that the fund distributes the income to investors in cash. Although the cash dividend seems to have gained real benefits, in fact, after the cash dividend, the actual assets of investors have not changed more than before because the net value of the fund will also decline.

For example, before a fund pays dividends, the net value of each fund is 1.2 yuan. If you plan to pay dividends to each fund holder in 0.2 yuan's cash, the net value of the fund after dividends will become 1 yuan. At this time, the total assets of investors are still 1.2 yuan, but this 0.2 yuan has changed from fund share to cash.

Cash dividend is actually equivalent to redeeming a part of the fund and cashing out a part of the fund investment income, and redeeming the fund can also cash out the income. The only difference is that the cash dividend of the fund does not require any fees, and the redemption of the fund may require a certain handling fee.

Second, look at dividend reinvestment. Dividend reinvestment refers to the cash dividends distributed by the fund to investors for purchasing the fund. After dividends, the number of investors' fund shares will increase. However, because the net value of each fund will decrease, the total value of funds held before dividends has not changed.

The reinvestment of fund dividends is actually equivalent to giving some fund shares to investors. There is no handling fee for dividend reinvestment, so the value of the fund held will not increase or decrease compared with that before dividend, but the number of fund shares will increase.

The above two kinds of funds pay dividends, one is to get a certain cash flow, and the other is to get a certain fund share. There is no absolute difference between good and bad according to individual needs.

Cash dividends are suitable for investors who need to withdraw income from the fund regularly. For example, they may need to spend some money from the fund income every year. At this time, it is obviously better to choose cash dividends. You don't have to redeem the fund yourself, and you can save some handling fees.