Investors choose to pay dividends in cash, and the dividends will be transferred from the fund custody account to the bank deposit account designated by the investors on the implementation date. Dividend reinvestment is provided by the fund management company to investors, and the dividends obtained are directly reinvested in the services of the fund, which is equivalent to the distribution of income by listed companies in the form of stock dividends. If investors do not need cash for the time being and want to reinvest directly, they can choose the dividend reinvestment method. In this case, the dividend funds will be converted into corresponding fund shares and credited to your account, and the reinvestment fee is generally free.
In fact, the actual income of these two dividend methods is exactly the same. This part of the income is originally a part of the net value of the fund unit. Therefore, investors actually get the assets on the books, which is also the reason why the net value of fund shares fell on the dividend day (ex-dividend day).
Because closed-end funds generally do not issue new fund shares during their existence, the income distribution of closed-end funds can only be in the form of cash dividends.