PITTSBURGH, Feb. 14, 2014 /PRNewswire/ -- Federated Enhanced Treasury Income Fund (FTT) today announced that its Board of Trustees approved a reduced advisory fee, a new managed distribution plan (MDP) and the extension of the share repurchase program. The actions are the latest in a series taken to seek to enhance long-term shareholder value.
The fund's advisory fee will decrease from 85 basis points to 60 basis points effective March 1, 2014. As announced last month, Dix Hills Partners, LLC will no longer provide services as sub-adviser to the fund effective March 1, 2014. Federated Investment Management Company, the fund's investment adviser, will make duration-management calls for the fund. The duration calls will be based on recommendations provided by Federated's duration committee, which recommends duration targets for nearly all of its fixed-income products. In addition, as reported on Jan. 14, 2014, J. Andrew Kirschler has assumed portfolio management responsibilities for the fund. Kirschler has 18 years of investment experience and he previously served as a senior bond trader, where he specialized in trading Treasuries.
Under the new MDP, which will replace the existing MDP on March 1, 2014, the fund will make monthly cash distributions per share approximating 3.5% of the fund's net asset value (NAV) on an annualized basis. The fund may make distributions in excess of those required under the plan in order to meet its obligations under the Internal Revenue Code. The distribution will be based on the NAV of the fund on the last business day of the previous month.
The fund's distributions under the MDP may include net investment income, net realized long-term capital gains, net realized short-term capital gains and return of capital. If a distribution does not consist solely of net investment income, a notice with the estimated components of the distribution will be provided to shareholders at the time of payment and posted to the fund's website at FederatedInvestors.com. Investors should use the Form 1099-DIV sent after calendar year end, and not the notice, to prepare tax returns. Investors should not draw any conclusions about the fund's past or future investment performance from the amount of this distribution or from the terms of the fund's MDP.
The fund's share repurchase program has been extended beginning on March 1, 2014 and will run for one year. The program will allow the fund to buy back up to 5 percent of its outstanding common shares as of Dec. 31, 2013, or 433,975 shares, in the open market. The amount and timing of share purchases will be subject to market conditions and investment considerations. The fund repurchased 410,957 of the 459,352 shares that were authorized to be repurchased under the share repurchase program that began on March 1, 2013.
There is no assurance that the fund will purchase shares at any specific discount levels or in any specific amounts. The fund's repurchase activity will be disclosed in its shareholder report for the relevant fiscal period. There is no assurance that the market price of the fund's shares, either absolutely or relative to its NAV, will increase as a result of any share repurchases or that the share repurchase program will enhance value over the long-term.
The fund's Board of Trustees and investment adviser continue to analyze options to enhance shareholder value and potentially reduce the trading discount between the market price of the fund's common shares and their NAV. The investment adviser believes the extension of the share repurchase program will continue to allow the fund to purchase its shares at a discount to NAV, which has the potential to increase the NAV and thereby benefit shareholders remaining in the fund, and may enhance liquidity of the shares in the open market. The Board of Trustees will monitor the impact of the fee reduction, MDP and share repurchase program and continue to consider strategic options to enhance shareholder value over the long-term.
Federated Investors, Inc. (FII) is one of the largest investment managers in the United States, managing $376.1 billion in assets as of Dec 31, 2013. With 135 funds, as well as a variety of separately managed account options, Federated provides comprehensive investment management worldwide to approximately 6,000 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. For more information, visit FederatedInvestors.com.
Certain statements made in this press release are forward-looking statements. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements due to numerous factors. These include, but are not limited to: market developments; legal and regulatory developments; and other additional risks and uncertainties. As a result, neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.
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