PHILADELPHIA, May 7, 2020 /PRNewswire/ -- Aberdeen
Australia Equity Fund, Inc. (NYSE American:
IAF) (the "Fund"), a closed-end fund, today announced that
its Board of Directors has determined in order to provide the
portfolio managers with additional flexibility to meet the Fund's
investment objectives, the Fund will begin to use leverage as
permitted under the Fund's investment restrictions and
organizational documents. The Fund is permitted to borrow for
investment purposes as may be permitted by the Investment Company
Act of 1940, or any rule, order or interpretation thereunder. This
allows the Fund to borrow for investment purposes in the amount up
to 33⅓% of the Fund's total assets. At the present time, the Fund
intends to limit the use of leverage to approximately 10-15% of its
total assets. No material changes in the Fund's portfolio
composition or investment approach are expected as a result of the
Fund's use of leverage. To the extent the Fund utilizes leverage,
it will be exposed to additional risks, including the risk that the
costs of leverage could exceed the income earned by the Fund on the
proceeds of such leverage. The use of leverage will increase the
volatility of changes in the Fund's net asset value, market price
and distributions. Additionally, in the event of a general
market decline in the value of the Fund's assets, the effect of
that decline will be magnified in the Fund because of the
additional assets purchased with the proceeds of the leverage.
In addition, the Fund announces today that it has amended
the calculation of the distribution rate under its Managed
Distribution Policy ("MDP"). Beginning with the distribution
payable on June 30, 2020, the
quarterly MDP payment will be calculated as a percentage of the
rolling average of the Fund's net asset values over the preceding
three month period ending on the last day of the month immediately
preceding the distribution's declaration date. Previously, the
quarterly MDP payment was calculated as a percentage of the rolling
average of the Fund's prior four quarter-end net asset values. The
rolling distribution rate of 10%, which was approved in
March 2020 for the 12-month period
commencing with the distribution payable in June 2020 will remain unchanged. The Fund's
distribution policy (the "Distribution Policy") is to provide
investors with a stable quarterly distribution out of current
income, supplemented by realized capital gains and, to the extent
necessary, paid-in capital. The Distribution Policy will be subject
to regular review by the Board.
The Fund estimates that it has distributed more than its income
and capital gains; therefore, a portion of your distribution may be
a return of capital. A return of capital may occur for example,
when some or all of the money that you invested in the Fund is paid
back to you. A return of capital distribution does not necessarily
reflect the Fund's investment performance and should not be
confused with "yield" or "income."
Shareholders should not draw any conclusions about the Fund's
investment performance from the amount of the Fund's current
distributions or from the terms of the Distribution Policy.
Information reported about the amounts and sources of
distributions are only estimates and are not being provided for tax
reporting purposes. The final determination of the source of all
distributions in 2020 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 remainder
of 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 these distributions
for federal income tax purposes.
In the United States, Aberdeen Standard Investments is the
marketing name for the following affiliated, registered investment
advisers: Aberdeen Standard Investments Inc., Aberdeen Asset
Managers Ltd., Aberdeen Standard Investments Australia Ltd.,
Aberdeen Standard Investments (Asia) Ltd., Aberdeen Capital Management, LLC,
Aberdeen Standard Investments ETFs Advisors LLC and Standard Life
Investments (Corporate Funds) Ltd.
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. Past performance does not
guarantee future results.
If you wish to receive this information
electronically, please contact
Investor.Relations@aberdeenstandard.com
aberdeeniaf.com
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SOURCE Aberdeen Australia Equity Fund, Inc.