DALLAS – March 07, 2019 – Highland Global Allocation Fund (NYSE: HGLB) (“the “Fund”) today announced that its Board of Trustees (the “Board”) has approved an 8.5% level distribution policy and a change in distribution frequency from quarterly to monthly. The Fund is therefore declaring distributions of $0.106 per month for March through December 2019.
In addition to the distribution policy, the Fund announced plans for its share repurchasing program, which provides a structure for the Fund and its adviser, Highland Capital Management Fund Advisors, L.P. (the “Adviser” or together with its affiliates “Highland”) to purchase shares in the secondary market.
“We appreciate the shareholder support throughout the conversion process and the opportunity to manage the portfolio under a closed-end structure,” said Highland Capital Management co-founder and president James Dondero, who serves as the Fund’s portfolio manager. “The portfolio represents the best investment ideas from across our platform. As such, we view the Fund’s current trading values as an attractive buying opportunity.”
Details of the open-market purchases and the level distribution policy are included below.
The following dates apply to the distributions declared:
|March 21, 2019||March 22, 2019||March 29, 2019|
|April 22, 2019||April 23, 2019||April 30, 2019|
|May 22, 2019||May 23, 2019||May 31, 2019|
|June 20, 2019||June 21, 2019||June 28, 2019|
|July 23, 2019||July 24, 2019||July 31, 2019|
|August 22, 2019||August 23, 2019||August 30, 2019|
|September 20, 2019||September 23, 2019||September 30, 2019|
|October 23, 2019||October 24, 2019||October 31, 2019|
|November 20, 2019||November 21, 2019||November 29, 2019|
|December 20, 2019||December 23, 2019||December 31, 2019|
As previously disclosed, if shares of the Fund trade at a discount of more than 3% to net asset value (“NAV”) post-conversion, the Adviser and its affiliates will purchase up to the lesser of $20 million or 5% of the Fund’s shares in open-market transactions over a two-year period after conversion.
In addition, if shares trade at a discount of more than 3% to NAV post-conversion, the Fund will separately repurchase the lesser of up to $20 million or 5% of the Fund’s shares over a six-month period.
The amount and timing of the purchases will be at the discretion of the Adviser, subject to market conditions and investment considerations. There is no assurance that the Fund will purchase shares at any particular discount levels or in any particular amounts. Any repurchases made by the Fund would be made on a national securities exchange at the prevailing market price, subject to exchange requirements regarding volume, timing and other limitations under federal securities laws
The Adviser will direct repurchases subject to the Fund’s available cash, after consideration of reserves necessary for anticipated fund expenses and contingencies, and the Fund may sell portfolio securities in order to generate cash for repurchases. The repurchases and open-market purchases will be made pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Both purchases made by the Adviser and its affiliates and Fund repurchases will only be made to the extent the Adviser, in its sole discretion, deems such repurchases consistent with applicable law.
Shares of closed-end investment companies often trade at a discount to their NAVs. The Fund’s common shares may trade at a discount to NAV, although it is possible that they trade at a premium above NAV. The market price of the Fund’s common shares will be determined by such factors as relative demand for and supply of such common shares in the market, the Fund’s net asset value, general market and economic conditions and other factors beyond the control of the Fund.
Level Distribution Policy
The Board has approved a level distribution policy (the “Level Distribution Policy”) for the Fund, under which the Fund intends to make monthly distributions to stockholders at a constant and fixed (but not guaranteed) rate that will reset annually to a rate equal to 8.5% of the average of the Fund’s NAV per share (the “Distribution Amount”), as reported for the final five trading days of the month preceding the announcement of distributions. The Distribution Amount applicable to the following calendar year will be reset based upon the new results of the distribution rate calculation.
However, there can be no guarantee that the Level Distribution Policy will be successful in its goals. The Fund’s ability to maintain a stable level of distributions to shareholders will depend on a number of factors, including changes in the financial market, market interest rates, and performance of overall equity and fixed income markets. As portfolio and market conditions change, the ability of the Fund to continue to make distributions in accordance with the Level Distribution Policy may be affected.
The Board expects that any declaration of distributions to shareholders, including final amounts and dates applicable to each, will be made and announced annually. Shareholders will have the option of reinvesting these distributions in additional common shares through the Fund’s Dividend Reinvestment Plan, or electing to receive cash by contacting AST, their financial adviser or their brokerage firm. Shareholders who wish to receive their distribution in cash must opt out of the Fund’s Dividend Reinvestment Plan. For further information, shareholders should carefully read the description of the Dividend Reinvestment Plan in the prospectus.
The Board may amend the Level Distribution Policy, the Distribution Amount or distribution intervals, or the Fund may cease distributions entirely, at any time, without prior notice to shareholders. The announcement of, amendment to, or later termination of this Level Distribution Policy may have an adverse effect on the market price of the Fund’s shares of common stock.
The Fund may at times, in its discretion, pay out less than the entire amount of net investment income earned in any particular period and may at times pay out such accumulated undistributed income in addition to net investment income earned in other periods in order to permit the Fund to maintain a stable level of distributions. As a result, the dividend paid by the Fund to shareholders for any particular period may be more or less than the amount of net investment income earned by the Fund during such period. The Fund intends to distribute all realized net long-term capital gains, if any, no more than once every twelve months.
To the extent that sufficient investment income is not available on a monthly basis, the Fund’s distributions may consist of return of capital in order to maintain the distribution amount. A return of capital occurs when some or all of the money that shareholders invested in the Fund is paid back to them. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income.’ Any such returns of capital will decrease the Fund’s total assets and, therefore, could have the effect of increasing the Fund’s expense ratio. In addition, the Level Distribution Policy may require the Fund to sell its portfolio securities at a less than opportune time to meet the distribution amount.
Shareholders should not make any conclusions about the Fund’s investment performance from the amount of the Fund’s distributions or the Fund’s Level Distribution Policy. With each distribution that does not consist solely of net investment income, the Fund will issue a notice to shareholders that will provide detailed information regarding the amount and composition of the distribution and other related information. The amounts and sources of distributions reported in the notice to shareholders are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions for tax reporting purposes will depend upon the Fund’s investment experience during its full fiscal year and may be subject to changes based on tax regulations. The Fund will send individual shareholders a Form 1099-DIV for each calendar year that will tell them how to report these distributions for federal income tax purposes. Please consult your tax advisor about any tax implications applicable to you in light of your particular circumstances.
About Highland Global Allocation Fund
Highland Global Allocation Fund is a closed-end fund managed by Highland Capital Management Fund Advisors, L.P., an affiliated adviser of Highland Capital Management, L.P. The Fund invests primarily in U.S. and foreign equity and debt securities that the portfolio manager considers to be undervalued by the market but have solid growth prospects. Undervalued securities are those securities that are undervalued relative to the market, their peers, their historical valuation or their growth rate. No assurance can be given that the Fund will achieve its investment objectives.
Shares of closed-end investment companies frequently trade at a discount to net asset value. The price of the Fund’s shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above net asset value. Past performance does not guarantee future results.
Investors should consider the investment objectives, risks, charges and expenses of the Highland Global Allocation Fund carefully before investing. This and other information can be found in the Fund’s prospectus, which may be obtained by calling 1-866-351-4440 or visiting www.highlandfunds.com. Please read the prospectus carefully before you invest.
Effective shortly after close of business on February 13, 2019, Highland Global Allocation Fund converted from an open-end fund to a closed-end fund, and began trading on the NYSE under the symbol HGLB on February 19, 2019. The closed-end Fund pursues the same investment objective and strategy as it did before its conversion.