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Highland Global Allocation Fund Declares Monthly Distributions

On January 2, 2025, the Highland Global Allocation Fund (NYSE: HGLB) made a significant announcement regarding its distribution strategy for the upcoming months. The Fund will issue a monthly distribution of $0.088 per share for January, February, and March 2025. This announcement follows the Fund's implementation of a level distribution policy that is designed to provide stable income to its shareholders while aligning the distribution rate with the performance of its net asset value (NAV).

Background of the Distribution Policy

The Board of Trustees approved the level distribution policy back in March 2019. This policy enables the Fund to pay monthly distributions at a consistent rate, although this rate is subject to annual recalibration based on the average NAV over the last five trading days of the preceding year. For the first quarter of 2025, the distribution has been set at an annualized rate of 8.5% of the average NAV.

Distribution Schedule

The specific dates for the upcoming distributions are as follows:

• - January Distribution: Ex-Date and Record Date on January 24, 2025, with the Payable Date set for January 31, 2025.
• - February Distribution: Ex-Date and Record Date on February 21, 2025, followed by the Payable Date on February 28, 2025.
• - March Distribution: Ex-Date and Record Date on March 24, 2025, with payments being made on March 31, 2025.

This structured approach to distributions aligns well with the Fund's objective of maintaining stability and predictability in earnings, especially for investors dependent on regular income.

Investment Insight and Considerations

It’s crucial for shareholders to understand that the Fund's success in following this distribution policy is contingent on a number of factors, including fluctuations in the financial markets, prevailing interest rates, and the overall performance of equity and fixed-income markets. As these conditions evolve, it may impact the Fund’s capacity to make distributions consistently according to the outlined policy.

Moreover, shareholders have the flexibility to choose how they wish to receive these distributions. They can opt for reinvestment into additional shares through the Fund's Dividend Reinvestment Plan or take the option of cash payments. Those preferring cash must formally disengage from the reinvestment plan by coordinating with their broker or financial advisor.

It’s also important to acknowledge that while the Fund aims to distribute a consistent monthly amount, there may be instances where it could pay out less than the entire net investment income in certain periods. In such cases, it may compensate by distributing accumulated income from other periods to achieve the targeted amount. Therefore, the dividends funds receive could vary from the net income earned during any given period.

Additionally, any distributions that encompass a return of capital will reduce the Fund's overall assets, potentially leading to an increase in the expense ratio. Shareholders should not solely gauge the Fund’s investment prowess through these distribution figures, as they may not wholly reflect the Fund's underlying performance.

Conclusion

The Highland Global Allocation Fund's recent declaration provides a clear insight into its distribution strategy aimed at delivering steady income to shareholders. Moving forward, it’s vital for investors to stay informed regarding the potential fluctuations in distribution rates, as well as their options for receiving payments. For those considering investing in the Fund, understanding the associated risks and the implications of the level distribution policy is essential. Investors are encouraged to review the Fund’s prospectus thoroughly to make well-informed decisions regarding their investments.