Highland Credit Strategies Fund (the “Trust”) (NYSE: HCF) today announced that its Board of Trustees (the “Board”) has declared a regulardistribution on its common stock, for the month of June 2009, of $0.0600 per share, payable on June 30, 2009 to holders of record at the close of business on June 11, 2009.
There has been a continued decrease in the income earned by the Trust, and thus a decrease in the amount of investment income available for distribution to shareholders. This decrease is, in part, a result of the following factors. First, the Trust continues to decrease the amount of leverage utilized, and thus the Trust’s total assets and in turn the amount of income earned on its investments has decreased. Borrowings outstanding decreased from $77 million as of April 30, 2009, to $64 million as of May 31, 2009. Second, 3-Month LIBOR has decreased approximately 35%, from 1.02% of April 30, 2009, to 0.66% as May 31, 2009, which has decreased the amount of income earned on its floating rate investments. Third, it is anticipated that defaults are likely to increase in the portfolio in the near term, thus lowering the amount of income available for distribution to shareholders.
As of May 31, 2009, the Trust had estimated undistributed net investment income of approximately $1.8 million (unaudited).
The following are annualized historical distribution rate calculations based on the total declared distribution for the month, the Trust’s net asset value (“NAV”) at month-end and the Trust’s month-end closing price (“Market Price”).
Amount | ||||||||||||||||||
Annualized Month-End Distribution Rates | Ordinary | ST Cap Gain | LT Cap Gain | Total | NAV | Market | ||||||||||||
May 29, 2009 | $ | 0.0650 | $ | — | $ | — | $ | 0.0650 | 12.70 | % | 15.35 | % | ||||||
April 30, 2009 | $ | 0.0650 | $ | — | $ | — | $ | 0.0650 | 13.02 | % | 15.85 | % | ||||||
March 31, 2009 | $ | 0.0800 | $ | — | $ | — | $ | 0.0800 | 15.93 | % | 20.69 | % | ||||||
February 27, 2009 | $ | 0.1000 | $ | — | $ | — | $ | 0.1000 | 18.97 | % | 23.76 | % | ||||||
January 30, 2009 | $ | 0.1000 | $ | — | $ | — | $ | 0.1000 | 18.30 | % | 20.55 | % | ||||||
December 31, 2008 | $ | 0.0740 | $ | 0.0080 | $ | 0.0180 | $ | 0.1000 | 17.80 | % | 21.05 | % | ||||||
November 28, 2008 | $ | 0.1200 | $ | — | $ | — | $ | 0.1200 | 19.38 | % | 22.68 | % | ||||||
October 31, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 18.67 | % | 19.87 | % | ||||||
September 30, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 14.48 | % | 18.83 | % | ||||||
August 29, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 13.15 | % | 14.90 | % | ||||||
July 31, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 12.94 | % | 15.15 | % | ||||||
June 30, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 12.47 | % | 13.45 | % | ||||||
May 30, 2008 | $ | 0.1500 | $ | — | $ | — | $ | 0.1500 | 11.92 | % | 12.67 | % |
Distribution rates are calculated by annualizing the distribution declared during the period and then dividing the resulting annualized distribution by the month-end NAV (in the case of NAV) or the month-end closing price (in the case of Market Price). The distribution rate is based on an estimation of investment income and may or may not include a return of capital. The distribution rate is based solely on actual distributions, which are made at the discretion of the Board.
This press release is not for tax reporting purposes but is being provided to announce the amount of the Trust’s distributions that have been declared by the Board. In early 2010, after definitive information is available, the Trust will send shareholders a Form 1099-DIV specifying how the distributions paid by the Trust during the calendar year should be characterized for purposes of reporting the distributions on a shareholder’s tax return (e.g., ordinary income, short-term capital gain, long-term capital gain or return of capital).
About Highland Credit Strategies Fund
The Trust is a non-diversified, closed-end management investment company. The Trust’s investment objectives are to provide both current income and capital appreciation. The Trust seeks to primarily invest in secured and unsecured floating and fixed rate loans, bonds and other debt obligations, debt obligations of stressed, distressed and bankrupt issuers, structured products and equities. Highland Capital Management, L.P. (“Highland”) has served as the Trust’s investment adviser since the Trust’s inception in 2006. The Trust’s shares are listed on the NYSE under the symbol “HCF”. An investment in the Trust is not appropriate for all investors. No assurance can be given that the Trust will achieve its investment objectives.
Shares of closed-end investment companies frequently trade at a discount to net asset value. The price of the Trust’s shares is determined by a number of factors, several of which are beyond the control of the Trust. Therefore, the Trust cannot predict whether its shares will trade at, below or above net asset value.
Highland, the Trust’s investment adviser, is a leading alternative investment management firm specializing in credit and structured products. Headquartered in Dallas, Texas, Highland manages assets on behalf of investors around the world with offices in New York, Singapore, and London.
Past performance does not guarantee future results.
Contacts:
Highland Credit Strategies Fund
Shareholder Services, 877-665-1287
hfinfo@hcmlp.com