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Destra Multi-Alternative Fund (NYSE: DMA)

Sub-Advised by Validus Growth Investors, LLC

Market Price Distribution Rate

8.74%

as of 5/19/22

Premium/(Discount)

(29.95%)

as of 5/19/22

Market Price

$8.14

as of 5/19/22

Net Asset Value

$11.62

As of 5/19/22

The Destra Multi-Alternative Fund (the “Fund”) is an exchange-listed closed-end fund featuring a monthly distribution. The Fund seeks to achieve long-term performance non-correlated to the broad stock and bond markets. It invests primarily in alternative strategies and asset classes including real estate, direct private equity, alternative credit, commodities and hedge strategies.

The Fund gives investors access to institutional alternative strategies that may provide more opportunity for total return from different sources than traditional investments, without the high minimum investments or lock ups that such strategies often require.

The Fund aims to maximize risk-adjusted returns and therefore does not try to directly compete with stocks or bonds. Instead, it consists of investments with historically low correlations to these traditional asset classes, seeking to lower overall volatility and add value to an investor’s existing investment portfolio across a variety of market cycles.

Alternative investments typically have a different return profile and different risks than traditional investments. There is no guarantee that the Fund will achieve its objectives, generate profits, or avoid losses.

The Alternative Closed-End Fund

The Fund seeks returns from capital appreciation and income with an emphasis on income generation. The closed-end fund structure allows the Fund to invest a substantial amount of its capital in institutional-quality, longer-horizon individual investments and strategies. Some of these strategies and assets may be less liquid, providing an opportunity to capture illiquidity premiums embedded in these instruments as they mature, for the benefit of the Fund’s shareholders.

As with most alternative investment strategies, a major objective of the Fund is to reduce volatility relative to traditional asset classes. This combination of alternative sources of return and risk and a goal of low correlation to traditional stocks and bonds may make the Fund a core alternative solution or component of a well-diversified portfolio.

Potential Benefits

 

Investment Strategy

Allocating to Alternatives

The Fund may invest across multiple alternative categories and strategies, including:

Institutional Endowment Approach Executed Within an Easy-to-Access Fund

The Destra Multi-Alternative Fund invests following a time-tested strategy used by many endowments and foundations. This process, sometimes called the “Endowment Model,” exploits the opportunities of long time horizons that endowments, foundations and closed-end funds can pursue because of their unique structures. This changes the nature of investments that may be considered, and the ability to commit capital to certain assets and strategies through a full investment cycle.

Income Focused. Growth Potential. Low Correlations.

There is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses.

Unique Total Return Model

  • Broadens CEF Exposure – Traditional CEFs have a heavy emphasis on income generation exclusively
  • DMA actively pursues non-correlated sources of income and NAV growth across a range of opportunity sets

Performance

Average Annual Total Returns as of 4/30/22

Market Price NAV
3 Month 0.23%1.21%
1 Year - - 2.00%
3 Year - -0.71%
5 Year - -0.16%
Since Commencement of Operations* - -3.27%

*The Fund’s Since Inception return is based on the Fund’s class A Share inception date on 3/16/2012. The class A Share returns net of A share expenses were used from 3/16/2012 inception until the class I share inception date on 7/2/2014. From 7/2/2014, the class I share returns net of I share expenses were used thereafter until the Fund listing date and conversion into common listed share class on 1/13/2022. No synthetic expenses have been retroactively applied to the combined historical performance

Returns are shown net of advisory fees paid by the Fund and net of the Fund’s operating fees and expenses. Investors who purchase shares of the Fund through an investment adviser or other financial professional may pay a separate fee to that service provider.

Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. The NAV total return takes into account the Fund’s total annual expenses and does not reflect transaction charges. If transaction charges were reflected, NAV total return would be reduced. All distributions are assumed to be reinvested either in accordance with the dividend reinvestment plan (DRIP) for market price returns or NAV for NAV returns. Until the DRIP price is available from the Plan Agent, the market price returns reflect the reinvestment at the closing market price on the last business day of the month. Once the DRIP is available around mid-month, the market price returns are updated to reflect reinvestment at the DRIP price.

Fund Basics

Ticker DMA
NAV Ticker XDMAX
CUSIP 250 65A 502
Fund Inception Date 3/16/2012
NYSE Listing Date 1/13/2022

1 The closing price at which the Fund’s shares were traded on the exchange.

2 Per-share dollar value of the Fund, calculated by dividing the total value of all the securities in its portfolio, plus any other assets and less liabilities, by the number of Fund shares outstanding.

Portfolio Characteristics

as of 4/30/22

Market Price1 $8.34
NAV2 $11.72
Premium/(Discount) (28.84%)
Average 30-Day Volume 10,713
Net Assets $105M
Leverage Outstanding $15M
Total Leverage Ratio 14.28%
Manager Destra Capital Advisors LLC
Sub-Advisor Validus Growth Investors, LLC

Asset Allocation

as of 4/30/22

Alternative Sector Breakdown

as of 4/30/22

Top 10 Holdings (% of total assets)

as of 4/30/22

Clarion Lion Industrial Trust12.58%
Canyon CLO Fund II7.88%
Ready Capital Corp6.90%
Treehouse REIT, Inc.6.11%
Preservation REIT 16.00%
Newlake Capital Partners4.95%
Aventine Property Group3.93%
GoSite, Inc.3.84%
Owl Rock Capital Corp3.83%
Healthcare Trust, Inc.3.76%

Holdings are subject to change without notice. There is no assurance that the investment process will lead to successful investing.

All compositions are subject to daily changes with market actions.

Literature & Communications

Distributions

Declaration Date Ex-Distribution Date Record Date Payable Date Total Distribution
5/10/2022 5/19/2022 5/20/2022 5/31/2022 $0.0593
4/8/2022 4/18/2022 4/19/2022 4/29/2022 $0.0599
3/11/2022 3/18/2022 3/21/2022 3/31/2022 $0.0593
2/8/2022 2/17/2022 2/18/2022 2/28/2022 $0.0597
1/14/2022 1/24/2022 1/25/2022 2/3/2022 $0.0604

See the Funds Section 19a-1 letters, if any, located on the Fund's website under the "Section 19(a)" section for estimates of distribution sources other than income.

The dividend history represents dividends that were paid by the Fund and is not a guarantee of the Fund's future dividend-paying ability.

Pursuant to the DRP, unless the registered owner of the Fund’s Common Shares elects otherwise by contacting AST, all dividends declared on the Common Shares will be automatically reinvested in additional Common Shares by AST. Common Shareholders who elect not to participate in the DRP will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record. After the Common Shares are listed on the NYSE, whenever the Fund declares a dividend payable in cash on such Common Shares, non-participants in the DRP will receive cash and participants in the DRP will receive the equivalent in additional Common Shares. The shares will be acquired by AST for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized shares from the Fund or (ii) by purchasing outstanding shares on the open market on the NYSE or elsewhere. If, on the payment date for any dividend, the closing market price plus estimated brokerage commissions per share is equal to or greater than the NAV per share, AST will invest the dividend amount in newly issued shares. The number of newly issued shares to be credited to each participant’s account will be determined by dividing the dollar amount of the dividend by the Fund’s NAV per share on the payment date. If, on the payment date for any dividend, the NAV per share is greater than the closing market value plus estimated brokerage commissions (i.e., the Fund’s shares are trading at a discount), AST will invest the dividend amount in shares acquired in open-market purchases.

In the event of a market discount on the payment date for any dividend, AST will have until the last business day before the next date on which the Common Shares trade on an “ex-dividend” basis or 30 days after the payment date for such dividend, whichever is sooner, to invest the dividend amount in shares acquired in open-market purchases. It is contemplated that the Fund will pay monthly income dividends. If, before AST has completed its open-market purchases, the market price per share exceeds the NAV per share, the average per share purchase price paid by AST may exceed the NAV of the shares, resulting in the acquisition of fewer shares than if the dividend had been paid in newly issued shares on the dividend payment date. Because of the foregoing difficulty with respect to open-market purchases, the DRP provides that if AST is unable to invest the full dividend amount in open-market purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, AST may cease making open-market purchases and may invest the uninvested portion of the dividend amount in newly issued shares at the NAV per share at the close of business on the last purchase date. All correspondence or questions concerning the Plan should be directed to the Plan Administrator at American Stock Transfer & Trust Company, LLC - Plan Administration Department, P.O. Box 922 Wall Street Station, New York NY 10269-0560.

Portfolio Managers

Validus Growth Investors, LLC

Validus is a research-focused, fundamentally-driven manager of direct equity, alternative, and asset allocation strategies. As part of its proprietary research methods, Validus implements systematic scoring regimes to identify specific investment opportunities which are combined with active risk-mitigation techniques to construct portfolios. Validus currently has over $215 million in assets under management and administration.

Investment Team

Mark Scalzo
Portfolio Manager

Zach Leeds
Assistant Portfolio Manager

Glossary

Gross Expense Ratio: Expense ratio is a measure of what it costs to operate an investment, expressed here as a percentage of its assets. These are costs the investor pays through a reduction in the investment’s rate of return. The gross expense ratio is the total annual fund or class operating expenses directly paid by the fund from the fund’s most recent prospectus (before waivers or reimbursements). This ratio also includes Acquired Fund Fees & Expenses, which are expenses indirectly incurred by a fund through its ownership of shares in other investment companies. Net Expense Ratio: Expense ratio is a measure of what it costs to operate an investment, expressed here as a percentage of its assets. These are costs the investor pays through a reduction in the investment’s rate of return. The net expense ratio is the total annual fund or class operating expenses directly paid by the fund from the fund’s most recent prospectus, after any fee waiver &/or expense reimbursements that will reduce any fund operating expenses. This ratio also includes Acquired Fund Fees & Expenses, which are expenses indirectly incurred by a fund through its ownership of shares in other investment companies. This number does not include any fee waiver arrangement or expense reimbursement that may be terminated without agreement of the fund’s board of trustees during the one-year period.

Risks

Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. Please see below risk for underlying holdings of the Fund. The Fund’s distribution rate amounts were calculated based on the ordinary income received from the underlying investments net of Fund expenses. Net capital gains realized from the disposition of Fund investments, if any, will be paid out annually. The distribution rate does not reflect other non-income items and has not been adjusted for tax reporting purposes. Distribution amount is not indicative of Fund performance. Current distributions and monthly target yields are not guaranteed and may not be met in the future. Shareholders receiving periodic payments from the Fund may be under the impression that they are receiving net profits. However, all or a portion of a distribution may consist of a return of capital. A portion of the Fund’s distributions consisting of a return of capital are often based on the character of the distributions received from the underlying holdings, primarily real estate investment trusts. Investing involves risk including the possible loss of principal. Alternative investment funds, ETFs, mutual funds, and closed-end funds are subject to management and other expenses, which will be indirectly paid by the Fund. Issuers of debt securities may not make scheduled interest and principal payments, resulting in losses to the Fund. Typically, a rise in interest rates causes a decline in the value of fixed-income securities. Lower-quality debt securities, known as “high-yield” or “junk” bonds, present greater risk than bonds of higher quality, including increased default risk and non-diversification risk as the funds are more vulnerable to events affecting a single issuer. The use of leverage, such as borrowing money to purchase securities, will cause the Fund to incur additional expenses and will magnify the Fund’s gains or losses. Investments in lesser-known, small- and medium-capitalization companies may be more vulnerable than those in larger, more established organizations. The Fund will not invest in real estate directly, but, because the Fund will concentrate its investments in securities of REITs, its portfolio will be significantly impacted by the performance of the real estate market. The value of a structured note will be influenced by time to maturity; type of note; market volatility; changes in the issuer’s credit quality rating; and economic, legal, political, or geographic events that affect the reference index.

Validus Growth Investors is the Fund’s sub-advisor. Destra Capital Advisors LLC, a registered investment advisor, is the Fund’s investment manager and is providing secondary market servicing for the Fund.