Closed-end funds issue preferred series of shares to investors that act as a short term loans. These shares pay dividends based on a fixed or variable rate in the form of distributions to the share holder at periodic intervals. Preferred series owners are entitled to payment on their investment in advance of common shareholders. Closed-end funds generate or create a distribution to investors in the closed-end fund. The system uses preferred shares distributions when you process preferred shares for closed-end funds.
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