Strategic Global Income Fund, Inc. (the “Fund”) (NYSE:SGL) is a
non-diversified, closed-end management investment company seeking a high
level of current income as a primary objective and capital appreciation
as a secondary objective through investments in US and foreign debt
securities. The Fund today announced a revision to the amount of the
Fund’s monthly distribution paid pursuant to its managed distribution
policy (the “Policy”).
The Board of Directors of the Fund adopted the Policy in May 1998.
Pursuant to the Policy as in effect since its last revision in May 2011,
the Fund made regular monthly distributions at an annualized rate equal
to 6% of the Fund’s net asset value, as determined as of the last day on
which the New York Stock Exchange was open for trading during the first
week of that month.
The Board has approved a reduction in the annualized rate for
distributions pursuant to the Policy from 6% to 5% effective beginning
with June’s monthly distribution. (The amount of the May distribution,
previously announced in a press release issued on May 12, 2014, remains
unchanged.) Pursuant to the Policy with respect to distributions paid
from June 2005 through July 2009, the annualized rate had been 8%; from
August 2009 through May 2011, the annualized rate had been 7%. The Board
believes that this revised rate is appropriate based upon the
recommendation of UBS Global Asset Management (Americas) Inc. (“UBS
Global AM”), the Fund’s investment adviser, in light of the Fund’s
investment opportunities in the current market environment. Notably,
global bond yields remain at historically low levels. Furthermore,
spreads on many credit sectors — such as corporate or securitized debt
obligations — have continued to contract, which presents the Fund with
more limited opportunities to generate significant future capital gains.
(“Spreads” refers to the differences between the yields paid on US
Treasury bonds and other types of debt, such as emerging market bonds.)
UBS Global AM believes that the new distribution rate is more
appropriate and in line with the Fund’s ongoing earnings potential.
To the extent that the Fund’s taxable income in any fiscal year exceeds
the aggregate amount distributed based on a fixed percentage of its net
asset value, the Fund would make an additional distribution in the
amount of that excess near the end of the fiscal year. To the extent
that the aggregate amount distributed by the Fund (based on a fixed
percentage of its net asset value) exceeds its current and accumulated
earnings and profits, the amount of that excess would constitute a
return of capital or net realized capital gains for tax purposes. A
return of capital may occur, for example, when some or all of the money
that shareholders invested in the Fund is deemed to be paid back to
shareholders. A return of capital distribution does not necessarily
reflect the Fund’s investment performance and should not be confused
with “yield” or “income.”
The Fund estimates the source characteristics of its monthly
distributions. The amounts and sources reported are only estimates and
are not being provided for tax reporting purposes. The actual amounts
and sources of the amounts for accounting and tax reporting purposes
will depend upon the Fund’s investment experience during the remainder
of its fiscal year and may be subject to retroactive changes based on
tax regulations. The actual sources of the Fund’s regular monthly
distributions may be net investment income, net realized capital gains,
return of capital or a combination of the foregoing. The Fund sends
shareholders a Form 1099-DIV (or a financial intermediary should provide
an investor with similar information) for the calendar year that will
tell shareholders how to report these distributions for federal income
tax purposes.
Monthly distributions based on a fixed percentage of the Fund’s net
asset value may require the Fund to make multiple distributions of
long-term capital gains during a single fiscal year. The Fund has
received exemptive relief from the Securities and Exchange Commission
that enables it to do so. The Fund’s Board receives recommendations from
UBS Global AM periodically and no less frequently than annually will
reassess the annualized percentage of net assets at which the Fund’s
monthly distributions will be made. The Fund’s Board may change or
terminate the managed distribution policy at any time without prior
notice to Fund shareholders; any such change or termination may have an
adverse effect on the market price for the Fund’s shares.
Investors should not draw any conclusions about the Fund’s investment
performance from the amount of the monthly distribution or from the
terms of the Fund’s managed distribution policy.
Investing in the Fund entails specific risks, such as interest rate,
credit and the risks associated with investing in the securities of
non-US issuers, including those located in emerging market
countries. The value of the Fund's investments in foreign securities may
fall due to adverse political, social and economic developments
abroad and due to decreases in foreign currency values relative to the
US dollar. Further detailed information regarding the Fund, including a
discussion of principal objectives, principal investment strategies and
principal risks, may be found in the fund overview located at http://www.ubs.com/closedendfundsinfo.
You may also request copies of the fund overview by calling the
Closed-End Funds Desk at 888-793 8637.
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