dual-purpose fund

Definition

A closed-end fund which distinguishes between common shareholders and preferred shareholders for distribution purposes. Common shareholders receive all distributions from capital gains, while preferred shareholders receive all distributions from dividend and interest income. The class of shares sold to common shareholders is called capital shares, and this group of shareholders generally has a less stable payment stream. The class of shares sold to preferred shareholders is called income shares, and their income stream is relatively more stable.
When a dual-purpose fund is set up, a liquidation date is specified. On the liquidation date, preferred shareholders have the first right to payouts from the fund, but they can only be paid up to the par value of their shares. Common shareholders have rights to all the remaining capital from the fund.

Use dual-purpose fund in a sentence

If you want to have more freedom with your money you should try and open up a good dual-purpose fund.

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You may want to try and open a dual-purpose fund that will allow you greater flexibility with your money in the future.

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The dual-purpose fund nature of the security meant that it depended on the investors relationships to the company to determine the payout.

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dually employed with kids (DEWKS) dual-status taxpayer