DEF: Highland Opportunities and Income Fund Seeks Shareholder Approval for Trustee Elections at Upcoming Annual Meeting

Highland Opportunities and Income Fund is soliciting proxies for its 2025 Annual Meeting of Shareholders to elect two Class I Trustees.

Summary

• Highland Opportunities and Income Fund (HFRO) is holding its Annual Meeting of Shareholders on June 16, 2025, in Dallas, Texas.
• The primary purpose of the meeting is to elect Ethan Powell and Bryan A. Ward as Class I Trustees, each for a three-year term expiring at the 2028 Annual Meeting.
• Shareholders of record as of April 30, 2025, are entitled to vote.
• The Board of Trustees recommends a vote FOR the election of both nominees.
• The proxy statement provides details on how to vote in advance via internet, phone, or mail.
• The Fund has engaged Sodali Fund Solutions to assist with proxy solicitation at an approximate cost of $24,800.
• As of the record date, there were 55,326,802 common shares, 5,800,000 Series A Preferred Shares, and 4,000,000 Series B Preferred Shares outstanding.
• Holders of Preferred Shares vote separately to elect Ethan Powell, while holders of both Common and Preferred Shares vote together to elect Bryan A. Ward.
• A quorum of 33 1/3% of the aggregate Common Shares and Preferred Shares is required for the meeting.
• The Board is composed of five Trustees, four of whom are independent.
• The Fund's investment adviser and administrator is NexPoint Asset Management, L.P.

Sentiment

Score: 7

Explanation: The document is a standard proxy statement, which is generally neutral in tone. The Board recommends voting for the proposals, indicating a positive outlook from management's perspective. However, there are also disclosures of potential conflicts of interest and limitations on risk management, which temper the overall sentiment.

Positives

• The Board of Trustees is actively engaged in overseeing the management and operations of the Fund.
• The Board has a strong committee structure, including an Audit Committee and a Governance and Compliance Committee, each chaired by an Independent Trustee.
• The Fund provides multiple avenues for shareholders to vote, including internet, phone, and mail.
• The Fund is providing clear and accessible information to shareholders regarding the Annual Meeting and the matters to be voted upon.
• The Fund has a process for shareholders to communicate with Trustees.

Negatives

• Mr. John Honis is treated as an Interested Trustee due to relationships with historically affiliated entities of the Adviser.
• The Fund's officers and employees of the Adviser may solicit proxies by internet or by telephone, which may introduce potential biases.
• The Fund may not be given the opportunity to participate in certain investments made by investment funds, accounts or other investment vehicles managed by the Adviser or its affiliates.

Risks

• If a Quorum is not present at the Annual Meeting, the meeting may be adjourned or postponed.
• The Board recognizes that not all risks that may affect the Fund can be identified, and that risk management oversight by the Board and by the Committees is subject to substantial limitations.
• The Fund may face conflicts of interest due to the Adviser managing other investment vehicles with similar objectives.
• The Fund's reliance on service providers for day-to-day management and operation introduces operational risks.
• The Fund's executive officers and trustees and the partners of the Adviser serve or may serve as officers, directors or principals of entities that operate in the same, or related, lines of business as the Fund does or of investment funds, accounts or other investment vehicles managed by the Funds affiliates.

Future Outlook

The Trustees do not intend to present any other business at the Annual Meeting nor are they aware that any shareholder intends to do so. If, however, any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy will vote thereon in accordance with their judgment.

Management Comments

• Frank Waterhouse, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Treasurer, encourages shareholders to vote their shares.
• The Board of Trustees recommends a vote FOR the Proposal.

Industry Context

This proxy statement is a standard document for registered investment companies, ensuring compliance with SEC regulations and providing shareholders with necessary information to make informed voting decisions. The election of trustees is a routine but important governance matter for closed-end funds like HFRO.

Comparison to Industry Standards

• The structure of the Board, with a majority of independent trustees, aligns with industry best practices for registered investment companies.
• The advisory and administration fee structure is typical for closed-end funds, although the specific percentages may vary based on the fund's size and investment strategy.
• The engagement of a proxy solicitation firm like Sodali Fund Solutions is common practice to ensure sufficient shareholder participation in the voting process.
• The disclosure of beneficial ownership by major shareholders is a standard requirement under Section 13(d) of the 1934 Act.

Related Party Transactions

• The Fund has entered into an investment advisory agreement with NexPoint Asset Management, L.P., where the Adviser provides investment advisory services to the Fund.
• The Fund has entered into an administration agreement with the Adviser.
• The Adviser has entered into a Services Agreement with Skyview Group (Skyview), pursuant to which the Adviser will receive administrative and operational support services to enable it to provide the required advisory services to the Fund.

Stakeholder Impact

• Shareholders have the opportunity to vote on the election of Trustees, influencing the governance and oversight of the Fund.
• The election of qualified Trustees is intended to benefit shareholders by ensuring effective management and oversight of the Fund's operations.
• The disclosure of related party transactions provides transparency to shareholders regarding potential conflicts of interest.

Next Steps

• Shareholders are urged to vote on the proposal to elect the Class I Trustees.
• The Annual Meeting will be held on June 16, 2025, to conduct the election and address other business matters.

Key Dates

Keywords

Trustees, Annual Meeting, Proxy Statement, Shareholders, Highland Opportunities and Income Fund, HFRO, NexPoint, Investment Company