Clough Global Equity Fund Section 19(a) Notice
- None.
- None.
The distribution notice from Clough Global Equity Fund indicates a total distribution sourced entirely from return of capital or other capital sources, rather than from net investment income or realized capital gains. This is significant because it suggests that the Fund's distributions are not being covered by its income or capital gains, which could be a red flag for investors seeking sustainable dividend income. A 100% return of capital implies that the Fund is paying out more than it earned or realized in gains, which may not be sustainable in the long term.
Furthermore, the Fund's annualized distribution rate as a percentage of NAV is 10.01%, which is substantially high and could be attractive to income-seeking investors. However, the high distribution rate in conjunction with a return of capital raises questions about the Fund's ability to maintain such distributions without eroding the principal value of investors' shares. The cumulative total return on NAV of 15.50% is robust, but the average annual total return on NAV over a five-year period is just 1.47%, indicating potential volatility or periods of underperformance.
From a tax perspective, the classification of the distribution is critical. The Fund's notice clarifies that the distributions are estimates and not for tax reporting purposes. The actual amounts and sources for tax purposes will be determined at the end of the fiscal year. If a significant portion of the distribution is indeed a return of capital, this has different tax implications compared to ordinary income or capital gains distributions. A return of capital reduces the cost basis of the investment and is not taxed until the investment is sold or the cost basis is fully recovered. Investors should consult with tax professionals to understand the implications for their individual tax situations.
Investors should interpret the Fund's distribution information with caution. While the NAV performance shows a positive trend, the reliance on return of capital for distributions may not be indicative of strong investment performance. Shareholders need to consider their investment objectives and whether they are seeking current income or long-term capital appreciation. The difference between NAV and market price should also be considered, as it reflects the realizable value of the investment and the potential for price volatility based on market supply and demand dynamics. Investors should be aware that the market price can diverge significantly from the NAV, which can impact the actual returns realized upon selling shares.
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / February 29, 2024 / On February 29, 2024, the Clough Global Equity Fund (NYSE American:GLQ) (the "Fund"), a closed-end fund, paid a monthly distribution on its common stock of
The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted thereunder. The Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from: | ||||||||
| Per Share ($) | % | |||||||
Net Investment Income | 0.00000 | 0.00 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.06030 | 100.00 | % | |||||
Total (per common share) | 0.06030 | 100.00 | % | |||||
Fiscal Year-to-Date Cumulative Distributions from: | ||||||||
| Per Share ($) | ($) | |||||||
Net Investment Income | 0.00378 | 1.57 | % | |||||
Net Realized Short-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Net Realized Long-Term Capital Gain | 0.00000 | 0.00 | % | |||||
Return of Capital or other Capital Source | 0.23662 | 98.43 | % | |||||
Total (per common share) | 0.24040 | 100.00 | % | |||||
The amounts and sources of distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. The Fund estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with ‘yield' or ‘income.'
Presented below are return figures, based on the change in the Fund's Net Asset Value per share ("NAV"), compared to the annualized distribution rate for this current distribution as a percentage of the NAV on the last business day of the month prior to distribution record date.
Fund Performance & Distribution Information
Fiscal Year to Date (11/01/2023 through 1/31/2024) | ||||
Annualized Distribution Rate as a Percentage of NAV^ | 10.01 | % | ||
Cumulative Distribution Rate on NAV^+ | 3.33 | % | ||
Cumulative Total Return on NAV* | 15.50 | % | ||
Average Annual Total Return on NAV for the 5 Year Period Ending 1/31/2024** | 1.47 | % | ||
Past performance is not indicative of future results.
^ Based on the Fund's NAV as of January 31, 2024.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through
February 29, 2024.
*Cumulative fiscal year-to-date return is based on the change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, for the period November 1, 2023 through January 31, 2024.
**The 5 year average annual total return is based on change in NAV including distributions paid and assuming reinvestment of these distributions and that all rights in the Fund's rights offering were exercised, as of the last business day of the month prior to the month of the current distribution record date.
While the NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's investment in the Fund. The value of a shareholder's investment in the Fund is determined by the Fund's market price, which is based on the supply and demand for the Fund's shares in the open market.
Shareholders should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's Managed Distribution Plan.
Furthermore, the Board of Trustees reviews the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor the Fund's distribution level, taking into consideration the Fund's net asset value and the financial market environment. The Fund's distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
Contact Info:
Website: https://www.cloughcefs.com/
Email: cloughclientinquiries@paralel.com
SOURCE: Clough Global Equity Fund | GLQ
View the original press release on accesswire.com
FAQ
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