• All securities must be valued in a fair and equitable manner
• Securities traded on an exchange will generally be valued at the last reported sale price
• Loans are generally valued using independent market quotations
• Assets for which quotations are not available or unreliable are generally fair valued
– Fair values should take into account all material event and developments
• Third-party service providers, including custodians and administrators
• Written pricing policies and procedures
• Reconciliations and cash management controls
• Electronic records retention
• Firm Wide Restricted List
• Highland determines:
– The research or brokerage product or service constitutes an eligible brokerage or research service;
– The product or service provides lawful and appropriate assistance in the performance of Highland’s investment decision making responsibilities; and
– In good faith the amount of client commissions paid is reasonable in light of the value of the products or services provided.
• The brokerage or research is “provided by” a broker-dealer who participates in effecting the trade that generates the commission. Highland may not incur a direct obligation for research with a third party vendor and then arrange to have a broker-dealer pay for that research in exchange for brokerage commissions.
• Highland may only generate soft dollars with commissions in agency transactions. Highland may not use dealer markups in principal transactions to generate soft dollars. In addition, a trade for a fixed income security or over-the-counter (“OTC”) security may be done on an agency basis only if the trader determines that it would not result in a broker-dealer unnecessarily being inserted between Highland and the market for that security.
• No soft dollars are generated on accounts for which:
– Investment discretion resides with the client (i.e. non-discretionary accounts);
– Client mandates restrict or prohibit the generation of soft dollar commissions;
– The client has a directed brokerage arrangement.
• The brokerage trade placed is for “securities” transactions (and not, for example, futures transactions).
It is Highland’s policy to allocate investment opportunities fairly and equitably over time. All investments are consistent with the client’s stated investment objectives and disclosures. Investment managers must obtain the best execution under the circumstances and execute securities transactions for clients in such a manner that the client’s total cost or proceeds in each transaction is the most favorable under the circumstances. The following should be considered in making an allocation determination:
• Whether the risk-return profile of the proposed investment is consistent with the account’s objectives and program;
• The potential for the proposed investment to create an imbalance in the account’s portfolio liquidity requirements of the account;
• Tax consequences;
• Regulatory and other restrictions; and
• Any need to re-size risk.
Employee Trading Policy
To mitigate any conflicts of interest in employee trading, all employees are subject to a personal trading policy. Subject to limited exceptions with the Chief Compliance Officer’s approval, employees may not trade in securities of an issuer in which any portfolio or fund managed by the Firm has an interest in any part of the capital structure. Employee brokerage accounts are monitored electronically and employees make quarterly attestations as to trades executed and positions held. Employees must pre-clear all transactions in reportable securities.
Employees are prohibited from trading while in possession of material, non-public information.