First Trust Mortgage Income Fund (the "Fund") (NYSE: FMY) has decreased the Fund’s regularly scheduled monthly common share distribution to $0.10 per share from $0.14 per share. The distribution will be payable on February 15, 2013 to shareholders of record as of February 5, 2013. The ex-dividend date is expected to be February 1, 2013. The monthly distribution information for the Fund appears below.
First Trust Mortgage Income Fund (FMY):
|Distribution per share:||$0.10|
|Distribution Rate based on the January 18, 2013 NAV of $17.92:||6.70%|
|Distribution Rate based on the January 18, 2013 closing market price of $18.51:||6.48%|
|Decrease from previous distribution of $0.14:||-28.57%|
The majority, and possibly all, of this distribution will be paid out of net investment income earned by the Fund. A portion of this distribution may come from net short-term realized capital gains or return of capital. The final determination of the source and tax status of all distributions paid in 2013 will be made after the end of 2013.
The Fund is decreasing its distribution to bring it in line with its current earnings level. Historically, certain of the Fund’s mortgage investments have experienced lower than expected defaults and for securities purchased at a discount, generated higher than expected prepayments, reducing initially anticipated losses on those investments and resulting in higher than anticipated net income to the Fund. As a result, the Fund built a cushion of undistributed net investment income (“UNII”) on both a Generally Accepted Accounting Principles (“GAAP”) basis, as well as on a tax basis as illustrated in the table below.