HIGHLAND GLOBAL ALLOCATION FUND

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N-CSR 1 d878645dncsr.htm HIGHLAND GLOBAL ALLOCATION FUND HIGHLAND GLOBAL ALLOCATION FUND

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-23369

HIGHLAND GLOBAL ALLOCATION FUND

(Exact name of registrant as specified in charter)

300 Crescent Court

Suite 700

Dallas, Texas 75201

(Address of principal executive offices)(Zip code)

NexPoint Asset Management, L.P.

300 Crescent Court

Suite 700

Dallas, Texas 75201

(Name and Address of Agent for Service)

Registrant’s telephone number, including area code: (877) 665-1287

Date of fiscal year end: September 30

Date of reporting period: September 30, 2024

Item 1.

Reports to Stockholders.

A copy of the Annual Report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”), is attached herewith.

LOGO

SEPTEMBER 30, 2024 ANNUAL REPORT

Highland Global Allocation Fund

HIGHLAND GLOBAL ALLOCATION FUND

TABLE OF CONTENTS


Portfolio Manager Commentary			1
Fund Profile			3
Financial Statements			4
Investment Portfolio			5
Statement of Assets and Liabilities			9
Statement of Operations			10
Statements of Changes in Net Assets			11
Statement of Cash Flows			12
Financial Highlights			13
Notes to Financial Statements			14
Report of Independent Registered Public Accounting Firm			34
Additional Information			35
Tax Information			36
Disclosure of Fund Expenses			37
Approval of Investment Advisory Agreement			38
Trustees and Officers			45
Important Information About This Report			49

Economic and market conditions change frequently.

There is no assurance that the trends described in this report will continue or commence.

We recognize and respect your privacy expectations, whether you are a visitor to our web site, a potential shareholder, a current shareholder or even a former shareholder.

Collection of Information. We may collect nonpublic personal information about you from the following sources:

•

Account applications and other forms, which may include your name, address and social security number, written and electronic correspondence and telephone contacts;

•

Web site information, including any information captured through the use of “cookies”; and

•

Account history, including information about the transactions and balances in your accounts with us or our affiliates.

Disclosure of Information. We may share the information we collect with our affiliates. We may also disclose this information as otherwise permitted by law. We do not sell your personal information to third parties for their independent use.

Confidentiality and Security of Information. We restrict access to nonpublic personal information about you to our employees and agents who need to know such information to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information, although you should be aware that data protection cannot be guaranteed.

A prospectus must precede or accompany this report. Please read the prospectus carefully before you invest.


Portfolio Manager Commentary (unaudited)

September 30, 2024		Highland Global Allocation Fund

Performance Overview

For the twelve months ended September 30, 2024 (the “Period”), the Highland Global Allocation Fund (the “Fund”) experienced a total market price return of +11.77% and a total NAV return of +12.90%. The Fund’s benchmark, the FTSE All World Index returned +32.24%.

Manager Discussion

During the Period, the Fund’s principal investment themes encompassed real estate, telecommunications, and energy sectors, with utilities and energy emerging as significant contributors to overall performance. Conversely, private real estate investments and short positions in single-name equities were notable detractors.

MidWave Wireless, the Fund’s largest holding, slightly detracted from performance during the Period. As a privately held nationwide licensee of wireless spectrum, MidWave Wireless manages assets integral to daily communication for most individuals. Spectrum refers to the radio frequencies that underpin all wireless communications, regulated by the Federal Communications Commission (FCC), which administers spectrum allocation for non-federal uses primarily through competitive auctions. Access to spectrum can also be facilitated via the secondary market, enabling licensees like MidWave Wireless to transfer, sell, or lease spectrum rights, in whole or in part.

The valuation of MidWave Wireless is anchored in two primary spectrum assets: (i) a 1.7 GHz band license covering 11 of the top 30 U.S. markets and approximately 19% of the national population; and (ii) a flexible-use license for 8 MHz in the 1.4 GHz band, which spans the entire country and currently supports wireless medical telemetry services. The recent designation of flexible use for the 1.4 GHz band, effective August 29, 2023, potentially positions MidWave to leverage its spectrum for a broader array of services and emerging technologies.

The Fund continues to hold a strategic allocation to energy Master Limited Partnerships (MLPs), which contributed positively to performance this year. MLPs, as indicated by the Alerian MLP Index (AMZ), delivered a robust return of +21.11%, while the Alerian Midstream Energy Index (AMNA), representing a broader midstream energy sector including C-Corps, outperformed with a return of +35.47%. We maintain an optimistic long-term outlook for midstream energy investments.

ANNUAL REPORT | 1


Portfolio Manager Commentary (unaudited) (concluded)

September 30, 2024		Highland Global Allocation Fund

LOGO


	AVERAGE ANNUAL TOTAL RETURNS

	1 Year	5 Year	10 Year	Since Inception

Highland Global Allocation Fund	12.90%	6.49%	3.48%	5.65%

FTSE All World Index	32.15%	12.68%	9.92%	7.68%

Returns shown in the chart and table do not reflect taxes that a shareholder would pay on Fund distributions or on the sale of the Fund shares. Performance results reflect the contractual waivers and/or reimbursements of fund expenses by the Advisor. Absent this limitation, performance results would have been lower. The Expense Cap expired on January 31, 2019.

Effective on February 13, 2019, the Highland Global Allocation Fund converted from an open-end fund to a closed-end fund, and began trading on the NYSE under the symbol HGLB on February 19, 2019. The performance data presented above reflects that of Class Z shares of the Fund when it was an open-end fund, HCOYX. Month-end returns since March 2019 reflect market prices. The closed-end Fund pursues the same investment objective and strategy as it did before its conversion.

The performance data quoted here represents past performance and is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance data current to the most recent month-end, please visit our website at www.nexpointassetmgmt.com.

Stock prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. The Fund invests in growth stocks that may be more volatile because they are more sensitive to market conditions. The Fund invests in mid-cap companies which may entail greater risks and less liquidity due to narrower product lines and more limited resources than larger companies. The Fund may invest in foreign securities which may cause more volatility and less liquidity due to currency changes, political instability and accounting differences. The Fund’s investments in derivatives may involve more volatility and less liquidity because of the risk that an investment may not correlate to the performance of the underlying securities.

Mutual fund investing involves risk including the possible loss of principal.

ANNUAL REPORT | 2


Fund Profile (unaudited)

		Highland Global Allocation Fund

Objective

Highland Global Allocation Fund seeks to provide long-term growth of capital and future income (future income means the ability to pay dividends in the future.)

Net Assets as of September 30, 2024

$267.0 million

Portfolio Data as of September 30, 2024

The information below provides a snapshot of Highland Global Allocation Fund at the end of the reporting period. Highland Global Allocation Fund is actively managed and the composition of its portfolio will change over time. Current and future holdings are subject to risk.


Security Classifications as of 09/30/2024⁽¹⁾	%

U.S. Equity	46.8
U.S. Senior Loans	13.7
Non-U.S. Equity	11.7
U.S. Master Limited Partnerships	8.8
U.S. LLC Interest	8.5
U.S. Registered Investment Companies	7.6
Non-U.S. Sovereign Bonds	5.0
U.S. Preferred Stock	3.8
Non-U.S. Registered Investment Company	1.2
Other (each less than 1.0%)	(2.5	)
Other Investments and Assets & Liabilities	(4.6	)

Top 10 Holdings as of 9/30/2024⁽²⁾	%

MidWave Wireless, Inc. (fka Terrestar Corp.) (U.S. Equity)	20.0
MidWave Wireless, Inc. (fka Terrestar Corp.) Term Loan A, 1st Lien 12.00%, 2/27/2028 (U.S. Senior Loans)	9.5
Energy Transfer L.P. (U.S. Master Limited Partnerships)	6.8
NexPoint Event Driven Fund, Class Z (U.S. Registered Investment Companies)	6.3
NexPoint Real Estate Finance, Inc., REIT (U.S. Equity)	5.3
GAF REIT (U.S. Equity)	5.0
Argentine Republic Government International Bond 3.50%, 7/9/2041 (Non-U.S. Sovereign Bonds)	5.0
Whitestone, REIT, Class B (U.S. Equity)	4.4
GAF REIT Sub III, LLC (U.S. LLC Interest)	4.1
Targa Resources (Non-U.S. Equity)	3.6

⁽¹⁾	Security classifications are calculated as a percentage of total net assets and net of long and short positions.

⁽²⁾	Top 10 holdings are calculated as a percentage of total net assets.

ANNUAL REPORT | 3


Financial Statements (unaudited)

September 30, 2024		Highland Global Allocation Fund

A GUIDE TO UNDERSTANDING THE FUND’S FINANCIAL STATEMENTS


Investment Portfolio		The Investment Portfolio details the Fund’s holdings and its market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset and industry to demonstrate areas of concentration and diversification.
Statement of Assets and Liabilities		This statement details the Fund’s assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all of the Fund’s liabilities (including any unpaid expenses) from the total of the Fund’s investment and non-investment assets. The net asset value per share for each class is calculated by dividing net assets allocated to that share class by the number of shares outstanding in that class as of the last day of the reporting period.
Statement of Operation		This statement reports income earned by the Fund and the expenses incurred by each Fund during the reporting period. The Statement of Operations also shows any net gain or loss the Fund realized on the sales of its holdings during the period as well as any unrealized gains or losses recognized over the period. The total of these results represents the Fund’s net increase or decrease in net assets from operations.
Statements of Changes in Net Assets		This statement details how the Fund’s net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and distribution reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding.
Statement of Cash Flows		This statement reports net cash and foreign currency provided or used by operating, investing and financing activities and the net effect of those flows on cash and foreign currency during the period.
Financial Highlights		The Financial Highlights demonstrate how the Fund’s net asset value per share was affected by the Fund’s operating results. The Financial Highlights also disclose the classes’ performance and certain key ratios (e.g., net expenses and net investment income as a percentage of average net assets).
Notes to Financial Statements		These notes disclose the organizational background of the Fund, certain of their significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies.

ANNUAL REPORT | 4


Investment Portfolio

As of September 30, 2024		Highland Global Allocation Fund



Shares		Value ($)
U.S. Equity – 46.8%
COMMUNICATION SERVICES – 20.9%
169,531	MidWave Wireless, Inc. (fka Terrestar Corp.) (a)(b)(c)(d)(e)		53,336,148
189,945	Telesat (e)(f)		2,501,576

			55,837,724

ENERGY – 1.4%
357,484	Talos Energy, Inc. (e)(f)		3,699,959

			3,699,959

FINANCIALS – 0.4%
100,000	TXSE Group, Inc. (a)(b)(e)		1,000,000

			1,000,000

HEALTHCARE – 0.3%
232,800	Heron Therapeutics, Inc. (e)(f)		463,272
17,200	Patterson (f)		375,648

			838,920

MATERIALS – 1.4%
730,484	MPM Holdings, Inc. (d)(e)		3,652,420

			3,652,420

Real Estate – 22.4%
56,000	Alexandria Real Estate Equities, REIT (f)		6,650,000
8,055	City Office, REIT (f)		47,041
1,147,062	GAF REIT (a)(b)(c)(e)		13,297,267
596,890	NexPoint Diversified Real Estate Trust, REIT (c)(f)		3,730,563
901,385	NexPoint Real Estate Finance, Inc., REIT (c)(f)		14,088,653
184,813	NexPoint Residential Trust, Inc., REIT (c)(f)		8,133,620
417,500	Seritage Growth Properties (e)(f)		1,941,375
280,000	United Development Funding IV, REIT, REIT (a)(b)		137,830
875,255	Whitestone, REIT, Class B (f)		11,842,200

			59,868,549

	Total U.S. Equity (Cost $128,199,412)		124,897,572

Principal Amount ($)
U.S. Senior Loans (g) – 13.7%
COMMUNICATION SERVICES – 9.5%
25,288,552	MidWave Wireless, Inc. (fka Terrestar Corp.) Term Loan A, 1st Lien, cash/0% PIK 02/27/28 (a)(b)(c)		25,255,677

REAL ESTATE – 4.2%
5,000,000	NexPoint SFR Operating Partnership L.P., 05/24/27 (a)(c)		4,907,500
8,500,000	NHT Operating Partnership LLC Convertible Promissory Note, 02/22/27 (a)(b)(c)		6,438,750

			11,346,250

	Total U.S. Senior Loans (Cost $38,781,124)		36,601,927



Shares		Value ($)
Non-U.S. Equity – 11.7%
COMMUNICATION SERVICES – 0.0%
77,866	Grupo Clarin, Class B (e)(h)		144,996
1,109	iHeartMedia, Inc. (e)(h)		2,052

			147,048

CONSUMER DISCRETIONARY – 2.3%
3,000	MercadoLibre, Inc. (e)(f)(h)		6,155,880

ENERGY – 3.6%
65,800	Targa Resources (f)(h)		9,739,058
121	Transocean (e)(f)(h)		514

			9,739,572

FINANCIALS – 0.1%
24,300	Grupo Supervielle ADR (f)(h)		172,773
3,995	StoneCo, Class A (e)(f)(h)		44,984

			217,757

HEALTHCARE – 0.0%
10,445	HLS Therapeutics, Inc. (e)(h)		28,828

INDUSTRIALS – 0.5%
60,593	GL Events (h)		1,297,040

UTILITIES – 5.2%
202,250	Central Puerto ADR (f)(h)		1,915,307
67,700	Pampa Energia ADR (e)(f)(h)		4,064,708
66,500	Vistra Corp. (f)(h)		7,882,910

			13,862,925

	Total Non-U.S. Equity (Cost $13,881,490)		31,449,050

U.S. Master Limited Partnerships – 8.8%
ENERGY – 8.8%
1,127,440	Energy Transfer L.P. (f)		18,095,412
139,050	Western Midstream Partners L.P. (f)		5,320,053

	Total U.S. Master Limited Partnerships (Cost $21,741,958)		23,415,465

U.S. LLC Interest – 8.5%
REAL ESTATE – 8.5%
349	GAF REIT Sub II, LLC (a)(b)(c)(e)		8,449,409
156,528	GAF REIT Sub III, LLC (a)(b)(c)(e)		11,055,472
3,789,008	SFR WLIF III, LLC (a)(b)(c)		3,337,359

	Total U.S. LLC Interest (Cost $24,175,570)		22,842,240

U.S. Registered Investment Companies – 7.6%
334,005	Highland Opportunities and Income Fund (c)(f)		2,047,450
1,032,870	NexPoint Event Driven Fund, Class Z (c)		16,908,086
60,871	NexPoint Merger Arbitrage Fund, Class Z (c)		1,206,457

	Total U.S. Registered Investment Companies (Cost $20,721,668)		20,161,993

SEE GLOSSARY ON PAGE 8 FOR ABBREVIATIONS ALONG WITH ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 5


Investment Portfolio (continued)

As of September 30, 2024		Highland Global Allocation Fund



Principal Amount ($)		Value ($)
Non-U.S. Sovereign Bonds – 5.0%
90,699	Argentine Republic Government International Bond 1.00%, (05/15/2024) (h)		59,499
29,000,000	3.50%, 0, 0, (05/15/2024)(h)(i)		13,273,593

	Total Non-U.S. Sovereign Bonds (Cost $17,040,893)		13,333,092

Shares
U.S. Preferred Stock – 3.8%
FINANCIALS – 0.9%
25,000	First Horizon (f)		638,750
89,000	Western Alliance Bancorp (f)		1,796,020

			2,434,770

HEALTHCARE – 1.5%
202,684	Apnimed, Series C-1 (a)(e)(j)		2,519,362
108,098	Apnimed, Series C-2 (a)(e)(j)		1,432,299

			3,951,661

REAL ESTATE – 1.4%
239,774	Braemar Hotels & Resorts, Inc. (e)(j)		3,474,325
13,831	NexPoint Diversified Real Estate Trust, REIT (c)(f)		213,891

			3,688,216

	Total U.S. Preferred Stock (Cost $7,972,655)		10,074,647

Non-U.S. Registered Investment Company – 1.2%
10,000	BB Votorantim Highland Infrastructure, LLC (a)(b)(c)		3,271,300

	Total Non-U.S. Registered Investment Company (Cost $4,574,500)		3,271,300

Non-U.S. Master Limited Partnership – 0.8%
ENERGY – 0.8%
78,631	Enterprise Products Partners L.P. (f)(h)		2,288,948

	Total Non-U.S. Master Limited Partnership (Cost $2,151,846)		2,288,948

U.S. Corporate Bonds & Notes – 0.2%
COMMUNICATION SERVICES – 0.2%
320,615	iHeartCommunications, Inc. 6.38%, 05/01/26 (f)		280,736
584,493	8.38%, 05/01/27 (f)		314,818

	Total U.S. Corporate Bonds & Notes (Cost $1,269,175)		595,554

U.S. Asset-Backed Security – 0.1%
250,000	CFCRE Commercial Mortgage Trust, Series 2017-C8, Class D 3.00%, (05/15/2024)		200,427

	Total U.S. Asset-Backed Security (Cost $225,827)		200,427

Units
U.S. Rights – 0.1%
HEALTHCARE – 0.1%
2,156,000	Paratek Pharmaceuticals (a)(b)(e)(f)		172,480

	Total U.S. Rights (Cost $–)		172,480



Principal Amount ($)		Value ($)
U.S. Repurchase Agreement – 0.0%
12	RBC Dominion Securities 4.860%, dated 09/30/2024 to be repurchased on 10/01/2024, repurchase price $12 (collateralized by U.S. Government obligations, ranging in par value $0-$4, 0.000%-6.500%, 10/31/2024-09/20/2054; with total market value $12)(k)(l)		12

	Total U.S. Repurchase Agreement (Cost $12)		12

Shares
U.S. CASH EQUIVALENT – 0.1%
MONEY MARKET FUND (m) – 0.1%
233,534	Dreyfus Treasury Obligations Cash Management, Institutional Class 4.810%		233,534

	Total U.S. Cash Equivalent (Cost $233,534)		233,534

Total Investments – 108.4%			289,538,241

(Cost $280,969,664)
SECURITIES SOLD SHORT – (3.8)%
U.S. EXCHANGE-TRADED FUND – (0.8)%
(9,610)	iShares Russell 2000 ETF		(2,122,753	)

	Total U.S. Exchange-Traded Fund (Proceeds $2,000,747)		(2,122,753	)

U.S. EQUITY – (3.0)%
COMMUNICATION SERVICES – (2.6)%
(9,952)	Netflix, Inc. (n)		(7,058,655	)

CONSUMER STAPLES – (0.4)%
(4,000)	WD-40 Co.		(1,031,520	)

	Total U.S. Equity (Proceeds $1,665,944)		(8,090,175	)

	Total Securities Sold Short - (3.8)% (Proceeds $3,666,691)		(10,212,928	)

Other Assets & Liabilities, Net – (4.6)% (o)			(12,349,772	)

Net Assets – 100.0%			266,975,541

(a)

Securities with a total aggregate value of $134,610,853, or 50.4% of net assets, were classified as Level 3 within the three-tier fair value hierarchy. Please see Notes to Financial Statements for an explanation of this hierarchy, as well as a list of unobservable inputs used in the valuation of these instruments.

(b)

Represents fair value as determined by the Investment Adviser pursuant to the policies and procedures approved by the Board of Trustees (the “Board”). The Board has designated the Investment Adviser as “valuation designee” for the Fund pursuant to Rule 2a-5 of the Investment Company Act of 1940, as amended. The Investment Adviser considers fair valued securities to be securities for which market quotations are not readily available and these securities may be valued using a combination of observable and unobservable inputs. Securities with a total aggregate value of $134,610,853, or 50.4% of net assets, were fair valued under the Fund’s valuation procedures as of September 30, 2024. Please see Notes to Financial Statements.

SEE GLOSSARY ON PAGE 8 FOR ABBREVIATIONS ALONG WITH ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 6


Investment Portfolio (concluded)

As of September 30, 2024		Highland Global Allocation Fund

(c)	Affiliated issuer. Assets with a total aggregate fair value of $175,677,602, or 65.8% of net assets, were affiliated with the Fund as of September 30, 2024.

(d)

Restricted Securities. These securities are not registered and may not be sold to the public. There are legal and/or contractual restrictions on resale. The Fund does not have the right to demand that such securities be registered. The values of these securities are determined by valuations provided by pricing services, brokers, dealers, market makers, or in good faith under the policies and procedures established by the Board. Additional Information regarding such securities follows:


Restricted Security	Security Type		Acquisition Date		Cost of Security		Fair Value at Period End		Percent of Net Assets
MidWave Wireless, Inc. (fka Terrestar Corp.)		Common Stock		11/14/2014	$	48,015,561	$	53,336,148		20.0%
MPM Holdings, Inc.		Common Stock		5/15/2019	$	—	$	3,652,420		1.4%

(e)	Non-income producing security.

(f)	All or part of this security is pledged as collateral for short sales. The fair value of the securities pledged as collateral was $100,061,965.

(g)

Senior loans (also called bank loans, leveraged loans, or floating rate loans) in which the Fund invests generally pay interest at rates which are periodically determined by reference to a base lending rate plus a spread (unless otherwise identified, all senior loans carry a variable rate of interest). These base lending rates are generally (i) the Prime Rate offered by one or more major United States banks, (ii) the

lending rate offered by one or more European banks such as the Secured Overnight Financing Rate (“SOFR”) or (iii) the Certificate of Deposit rate. As of September 30, 2024, the SOFR 1 Month and SOFR 3 Month rates were 5.16% and 5.31%, respectively. Senior loans, while exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”), contain certain restrictions on resale and cannot be sold publicly. Senior secured floating rate loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity maybe substantially less than the stated maturity shown.

(h)

As described in the Fund’s prospectus, a company is considered to be a non-U.S. issuer if the company’s securities principally trade on a market outside of the United States, the company derives a majority of its revenues or profits outside of the United States, the company is not organized in the United States, or the company is significantly exposed to the economic fortunes and risks of regions outside the United States.

(i)	Step Coupon Security. Coupon rate will either increase (step- up bond) or decrease (step-down bond) at regular intervals until maturity. Interest rate shown reflects the rate currently in effect.

(j)	Perpetual security with no stated maturity date.

(k)	Tri-Party Repurchase Agreement.

(l)	This security was purchased with cash collateral held from securities on loan. The total value of such securities as of September 30, 2024 was $12.

(m)	Rate reported is 7 day effective yield.

(n)	No dividend payable on security sold short.

(o)	As of September 30, 2024, $10,198,998 in cash was segregated or on deposit with the brokers to cover investments sold short and is included in “Other Assets & Liabilities, Net”.

SEE GLOSSARY ON PAGE 8 FOR ABBREVIATIONS ALONG WITH ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 7


Glossary: (abbreviations that may be used in the preceding statements)

Other Abbreviations:

ADR	American Depositary Receipt

CFCRE

Center for Commercial Real Estate

ETF	Exchange Traded Fund

LLC	Limited Liability Company

L.P.	Limited Partnership

PIK	Payment-in-Kind

REIT	Real Estate Investment Trust

ANNUAL REPORT | 8


Statement of Assets and Liabilities

As of September 30, 2024		Highland Global Allocation Fund


	($	)
Assets
Investments, at value	113,627,093
Affiliated investments, at value (Note 9)	175,677,602

Total Investments, at value	289,304,695
Cash equivalent (Note 2)	233,534
Repurchase agreements, at value	12
Cash	26,282
Restricted Cash — Securities Sold Short (Note 2)	10,198,998
Foreign currency, at value (Note 2)	4,478
Foreign tax reclaim receivable	28,809
Receivable for:
Dividends and interest	2,814,090
Reinvested distributions	220,858
Prepaid expenses and other assets	29,515

Total assets	302,861,271


Liabilities:
Securities sold short, at value (Proceeds from securities sold short $3,666,691 (Notes 2 and 7))	10,212,928
Due to broker	25,351,663
Payable for:
Investments purchased	84,559
Collateral from securities loaned (Note 4)	12
Investment advisory and administration fees (Note 6)	58,219
Accounting services fees	26,715
Transfer agent fees	27,467
Reports to shareholders	15,614
Legal fees	82,043
Accrued expenses and other liabilities	26,510

Total liabilities	35,885,730

Net Assets	266,975,541


Net Assets Consist of:
Paid-in capital	688,843,000
Total accumulated loss	(421,867,459	)

Net Assets	266,975,541

Investments, at cost	104,149,477
Affiliated investments, at cost (Note 9)	176,586,641
Cash equivalent, at cost (Note 2)	233,534
Repurchase agreements, at cost	12
Foreign currency, at cost (Note 2)	91,794

Common Shares
Shares outstanding ($0.001 par value; unlimited shares authorized)	23,000,199
Net asset value, offering and redemption price per share	11.61

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 9


Statement of Operations

For the year ended September 30, 2024		Highland Global Allocation Fund


	($	)
Investment Income:
Income:
Dividends from unaffiliated issuers	3,617,513
Dividends from affiliated issuers (Note 9)	1,640,361
Less: Foreign taxes withheld	(16,537	)
Securities lending income (Note 4)	467
Interest from unaffiliated issuers	2,193,312
Interest from affiliated issuers (Note 9)	5,259,452

Total income	12,694,568


Expenses:
Investment advisory (Note 6)	1,038,715
Accounting services fees	175,417
Transfer agent fees	80,717
Legal fees	181,237
Registration fees	60,852
Audit and tax compliance fees	189,711
Interest expense and commitment fees	2,068,044
Insurance	58,030
Trustees fees (Note 6)	102,680
Reports to shareholders	85,000
Custodian/wire agent fees	17,102
Dividends and fees on securities sold short (Note 2)	26,511
Other	132,537

Total expenses before waiver and reimbursement	4,216,553

Less: Expenses waived or borne by the adviser and administrator	(290,699	)

Net expenses	3,925,854

Net investment income	8,768,714


Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Investments from unaffiliated issuers	(3,571,378	)
Investments from affiliated issuers (Note 9)	463,060
Foreign currency related transactions (Note 2)	(5,238	)

Net realized loss	(3,113,556	)


Net change in unrealized appreciation (depreciation) on:
Investments in unaffiliated issuers	37,319,474
Investments in affiliated issuers (Note 9)	(6,624,307	)
Securities sold short (Note 2)	(3,641,346	)
Foreign currency related translations (Note 2)	(1,818	)

Net change in unrealized appreciation (depreciation)	27,052,003

Net realized and unrealized gain (loss)	23,938,447

Total increase in net assets resulting from operations	32,707,161

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 10


Statements of Changes in Net Assets

		Highland Global Allocation Fund



	Year Ended September 30, 2024 ($)			Year Ended September 30, 2023 ($)
Increase (Decrease) in Net Assets Resulting from Operations:
Net investment income		8,768,714			9,750,765
Net realized loss		(3,113,556	)		(5,165,747	)
Net change in unrealized appreciation (depreciation)		27,052,003			12,345,834

Net increase in net assets resulting from operations		32,707,161			16,930,852

Distributions		(8,550,227	)		(10,001,548	)
Return of capital		(13,836,577	)		(12,474,020	)

Decrease resulting from distributions		(22,386,804	)		(22,475,568	)

Increase (decrease) in net assets from operations and distributions		10,320,357			(5,544,716	)


Share transactions:
Value of distributions reinvested
Shares of closed-end fund		2,700,077			2,752,205

Net increase from shares transactions		2,700,077			2,752,205

Total increase (decrease) in net assets		13,020,434			(2,792,511	)


Net Assets
Beginning of year		253,955,107			256,747,618

End of year		266,975,541			253,955,107

Capital Stock Activity - Shares
Shares of closed-end fund:
Issued for distribution reinvested		351,358			305,555

Net increase in fund shares		351,358			305,555

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 11


Statement of Cash Flows

For the year ended September 30, 2024		Highland Global Allocation Fund


	($	)
Cash Flows (Used In)/Provided By Operating Activities:
Net increase in net assets resulting from operations	32,707,161

Adjustments to Reconcile Net Increase in Net Assets to Net Cash (Used In)/Provided By Operating Activities:
Purchases of investment securities from unaffiliated issuers	(30,165,698	)
Purchases of investment securities from affiliated issuers	(8,827,916	)
Proceeds from disposition of investment securities from unaffiliated issuers	77,092,969
Proceeds from disposition of investment securities from affiliated issuers	463,060
Proceeds from return of capital of investment securities from unaffiliated issuers	421,405
Proceeds from return of capital of investment securities from affiliated issuers	1,589,266
Proceeds of securities sold short	2,000,747
Amortization of premiums from unaffiliated issuers	1,646
Amortization of premiums from affiliated issuers	(1,646	)
Net realized (gain) loss on investments from unaffiliated issuers	3,571,378
Net realized (gain) loss on investments from affiliated issuers	(463,060	)
Net realized (gain) loss on securities sold short, and foreign currency related transactions	5,238
Net change in unrealized (appreciation)/depreciation on investments, affiliated investments, securities sold short, and translation on assets and liabilities denominated in foreign currency	(27,052,003	)
(Increase) Decrease in receivable for dividends and interest	(205,126	)
(Increase) Decrease in foreign tax reclaims receivable	(13,195	)
(Increase) Decrease in prepaid expenses and other assets	(15,670	)
Increase (Decrease) in payable for investments purchased	(2,631	)
Increase (Decrease) in payable for investment advisory and administration fees	(6,609	)
Increase (Decrease) in due to broker	(28,997,780	)
Increase (Decrease) in payable for trustees fees	(520	)
Increase (Decrease) in payable for reports to shareholders	15,614
Increase (Decrease) in payable for transfer agent fees	(35,678	)
Increase (Decrease) in payable for legal fees	(113,214	)
Increase (Decrease) in payable for interest expense and commitment fees	(9,207	)
Increase (Decrease) in accrued expenses and other liabilities	(16,045	)

Net cash flow provided by operating activities	21,942,486


Cash Flows (Used In)/Provided BY Financing Activities:
Reverse repurchase agreement	(3,581,000	)
Distributions paid in cash	(19,686,727	)
Increase (Decrease) in receivable for reinvested distributions	8,814

Net cash flow used in financing activities	(23,258,913	)

Effect of exchange rate changes on cash	(7,056	)

Net decrease in cash	(1,323,483	)


Cash, Cash Equivalent, Restricted Cash, and Foreign Currency:
Beginning of year	11,786,775

End of year	10,463,292


End of Year Cash Balances:
Cash equivalent	233,534
Cash	26,282
Restricted Cash	10,198,998
Foreign currency	4,478

End of year	10,463,292


Supplemental disclosure of cash flow information:
Reinvestment of distributions	2,700,077

Paid in-kind interest income	4,418,251

Cash paid during the year for interest expense and commitment fees	2,077,251

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 12


Financial Highlights

		Highland Global Allocation Fund

Selected data for a share outstanding throughout each year is as follows:



	For the Years Ended September 30,
	2024			2023			2022			2021			2020

Net Asset Value, Beginning of Year		$11.21			$11.49			$11.76			$9.45			$13.09

Income from Investment Operations:

Net investment income^(a)		0.38			0.43			0.29			0.38			0.43

Net realized and unrealized gain (loss)		1.00			0.29			0.38			2.82			(3.00	)

Total from Investment Operations		1.38			0.72			0.67			3.20			(2.57	)

Less Distributions Declared to shareholders:

From net investment income		(0.37	)		(0.44	)		(0.33	)		(0.28	)		(0.61	)

From return of capital		(0.61	)		(0.56	)		(0.61	)		(0.61	)		(0.46	)

Total distributions declared to shareholders		(0.98	)		(1.00	)		(0.94	)		(0.89	)		(1.07	)

Net Asset Value, End of Year^(b)	$	11.61		$	11.21		$	11.49		$	11.76		$	9.45

Total Return^(b)		12.90	%		6.30	%		5.31	%		35.13	%		(19.92	)%

Ratios to Average Net Assets:^(c)

Net Assets, End of Year (000’s)	$	266,976		$	253,955		$	256,748		$	259,472		$	205,462

Gross expenses^(d)(e)		1.62	%		2.07	%		1.16	%		1.01	%		1.92	%

Net investment income		3.38	%		3.71	%		2.34	%		3.48	%		4.06	%

Portfolio turnover rate		13	%		10	%		31	%		17	%		18	%

(a)	Per share data was calculated using average shares outstanding during the period.

(b)

The Net Asset Value per share and total return have been calculated based on net assets which include adjustments made in accordance with U.S. Generally Accepted Accounting Principles required at period end for financial reporting purposes. These figures do not necessarily reflect the Net Asset Value per share or total return experienced by the shareholder at period end.

(c)	All ratios for the period have been annualized, unless otherwise indicated.

(d)	Supplemental expense ratios are shown below:

(e)	Includes dividends and fees on securities sold short.

Supplemental Expense Ratios:



	For the Years Ended September 30,
	2024			2023			2022			2021			2020

Net expenses (net of waiver/reimbursement, if applicable, but gross of all other expenses)^(f)		1.51	%		1.95	%		1.01	%		0.88	%		1.81	%

Interest expense and commitment fees		0.80	%		1.19	%		0.28	%		0.15	%		0.82	%

Dividends and fees on securities sold short		0.01	%		—	%^(g)		0.01	%		0.01	%		0.07	%

(f)	This includes the voluntary elected waiver by the Investment Adviser during the period, which resulted in a 0.11% impact to the net expenses ratio.

(g)	Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. | 13


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

Note 1. Organization

Highland Global Allocation Fund (the “Fund”) is organized as an unincorporated business trust under the laws of The Commonwealth of Massachusetts. The Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, closed-end management investment company. This report covers information for the year ended September 30, 2024.

On November 8, 2018, shareholders of the Fund approved a proposal authorizing the Board of Trustees (the “Board”) of the Fund to convert the Fund from an open-end fund to a closed-end fund at a special meeting of shareholders. The Board took action to convert the Fund to a closed-end fund effective shortly after 4:00 p.m. Eastern Time on February 14, 2019 (the “Conversion Date”). The Fund also effected an approximately 1-for-1.4217 reverse stock split of the Fund’s issued and outstanding shares on February 14, 2019, thereby reducing the number of shares outstanding. Shareholders were paid cash for any fractional shares resulting from the reverse stock split. The Fund began listing its shares for trading on the New York Stock Exchange (the “NYSE”) on February 19, 2019 under the ticker symbol “HGLB”. The Fund may issue an unlimited number of common shares, par value $0.001 per share (“Common Shares”). Prior to the Conversion Date, the Fund issued Class A, Class C, and Class Y shares.

Note 2. Significant Accounting Policies

The following summarizes the significant accounting policies consistently followed by the Fund in the preparation of its financial statements.

Use of Estimates

The Fund is an investment company that follows the investment company accounting and reporting guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services — Investment Companies applicable to investment companies. The Fund’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require NexPoint Asset Management, L.P. (formerly Highland Capital Management Fund Advisors, L.P.) (“NexPoint” or the “Investment Adviser”) to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the

date of the financial statements and the reported amounts of increases or decreases in net assets from operations during the reporting period. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially.

Valuation of Investments

Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated NexPoint as the Fund’s valuation designee to perform the fair valuation determination for securities and other assets held by the Fund. NexPoint acting through its “Valuation Committee”, is responsible for determining the fair value of investments for which market quotations are not readily available. The Valuation Committee is comprised of officers of NexPoint and certain of NexPoint’s affiliated companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is subject to Board oversight and certain reporting and other requirements intended to provide the Board the information it needs to oversee NexPoint’s fair value determinations.

The Fund’s investments are recorded at fair value. In computing the Fund’s net assets attributable to shares, securities with readily available market quotations on the NYSE, National Association of Securities Dealers Automated Quotation (“NASDAQ”) or other nationally recognized exchange, use the closing quotations on the respective exchange for valuation of those securities. Securities for which there are no readily available market quotations will be valued pursuant to policies and procedures adopted by NexPoint and approved by the Board. Typically, such securities will be valued at the mean between the most recently quoted bid and ask prices provided by the principal market makers. If there is more than one such principal market maker, the value shall be the average of such means. Securities without a sale price or quotations from principal market makers on the valuation day may be priced by an independent pricing service. Generally, the Fund’s loan and bond positions are not traded on exchanges and consequently are valued based on a mean of the bid and ask price from the third-party pricing services or broker-dealer sources that the Investment Adviser has determined to have the capability to provide appropriate pricing services.

Securities for which market quotations are not readily available, or for which the Fund has determined that the

ANNUAL REPORT | 14


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

price received from a pricing service or broker-dealer is “stale” or otherwise does not represent fair value (such as when events materially affecting the value of securities occur between the time when market price is determined and calculation of the Fund’s net asset value (“NAV”), will be valued by the Fund at fair value, as determined by the Valuation Committee in good faith in accordance with policies and procedures established by NexPoint and approved by the Board, taking into account factors reasonably determined to be relevant, including, but not limited to: (i) the fundamental analytical data relating to the investment; (ii) the nature and duration of restrictions on disposition of the securities; and (iii) an evaluation of the forces that influence the market in which these securities are purchased and sold. In these cases, the Fund’s NAV will reflect the affected portfolio securities’ fair value as determined in the judgment of the Valuation Committee instead of being determined by the market. Using a fair value pricing methodology to value securities may result in a value that is different from a security’s most recent sale price and from the prices used by other investment companies to calculate their NAVs. Determination of fair value is uncertain because it involves subjective judgments and estimates.

There can be no assurance that the Fund’s valuation of a security will not differ from the amount that it realizes upon the sale of such security. Those differences could have a material impact to the Fund. The NAV shown in the Fund’s financial statements may vary from the NAV published by the Fund as of its period end because portfolio securities transactions are accounted for on the trade date (rather than the day following the trade date) for financial statement purposes.

Fair Value Measurements

The Fund has performed an analysis of all existing investments and derivative instruments to determine the significance and character of inputs to their fair value determination. The levels of fair value inputs used to measure the Fund’s investments are characterized into a fair value hierarchy. Where inputs for an asset or liability fall into more than one level in the fair value hierarchy, the investment is classified in its entirety based on the lowest level input that is significant to that investment’s valuation. The three levels of the fair value hierarchy are described below:

Level 1 —

Quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement;

Level 2 —

Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active, but are valued based on executed trades; broker quotations that constitute an executable price; and alternative pricing sources supported by observable inputs are classified within Level 2. Level 2 inputs are either directly or indirectly observable for the asset in connection with market data at the measurement date; and

Level 3 —

Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. In certain cases, investments classified within Level 3 may include securities for which the Fund has obtained indicative quotes from broker-dealers that do not necessarily represent prices the broker may be willing to trade on, as such quotes can be subject to material management judgment. Unobservable inputs are those inputs that reflect the Fund’s own assumptions that market participants would use to price the asset or liability based on the best available information.

The Investment Adviser has established policies and procedures, as described above and approved by the Board, to ensure that valuation methodologies for investments and financial instruments that are categorized within all levels of the fair value hierarchy are fair and consistent. A Pricing Committee has been established to provide oversight of the valuation policies, processes and procedures, and is comprised of personnel from the Investment Adviser and its affiliates. The Pricing Committee meets monthly to review the proposed valuations for investments and financial instruments and is responsible for evaluating the overall fairness and consistent application of established policies.

As of September 30, 2024, the Fund’s investments consisted of senior loans, asset-backed securities, bonds and notes, common stocks, preferred stocks, LLC interests, master limited partnerships, registered investment companies, cash equivalents, repurchase agreements, exchange-traded funds, rights, warrants, reverse repurchase agreements, and securities sold short. The fair value of the Fund’s loans, bonds and asset-backed securities are generally based on quotes

ANNUAL REPORT | 15


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

received from brokers or independent pricing services. Loans, bonds and asset-backed securities with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets. Senior loans, bonds and asset-backed securities that are priced using quotes derived from implied values, indicative bids, or a limited number of actual trades are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable.

The fair value of the Fund’s common stocks, registered investment companies, rights and warrants that are not actively traded on national exchanges, are generally priced using quotes derived from implied values, indicative bids, or a limited amount of actual trades and are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable. Exchange-traded options are valued based on the last trade price on the primary exchange on which they trade. If an option does not trade, the mid-price, which is the mean of the bid and ask price, is utilized to value the option. At the end of each calendar quarter, the Investment Adviser evaluates the Level 2 and 3 assets and liabilities for changes in liquidity, including but not limited to: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from third party services, and the existence of contemporaneous, observable trades in the market.

Additionally, the Investment Adviser evaluates the Level 1 and 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Fund’s investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise be less liquid than publicly traded securities.

ANNUAL REPORT | 16


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. A summary of the inputs used to value the Fund’s assets and liabilities as of September 30, 2024, is as follows:



	Total value at September 30, 2024		Level 1 Quoted Price		Level 2 Significant Observable Inputs		Level 3 Significant Unobservable Inputs

Highland Global Allocation Fund

Assets

U.S. Equity

Communication Services	$	55,837,724	$	2,501,576	$	—	$	53,336,148

Energy		3,699,959		3,699,959		—		—

Financials		1,000,000		—		—		1,000,000

Healthcare		838,920		838,920		—		—

Materials		3,652,420		—		3,652,420		—

Real Estate		59,868,549		46,433,452		—		13,435,097

U.S. Senior Loans

Communication Services		25,255,677		—		—		25,255,677

Real Estate		11,346,250		—		—		11,346,250

Non-U.S. Equity

Communication Services		147,048		147,048		—		—

Consumer Discretionary		6,155,880		6,155,880		—		—

Energy		9,739,572		9,739,572		—		—

Financials		217,757		217,757		—		—

Healthcare		28,828		28,828		—		—

Industrials		1,297,040		1,297,040		—		—

Utilities		13,862,925		13,862,925		—		—

U.S. Master Limited Partnerships

Energy		23,415,465		23,415,465		—		—

U.S. LLC Interest		22,842,240		—		—		22,842,240

U.S. Registered Investment Companies		20,161,993		20,161,993		—		—

Non-U.S. Sovereign Bonds		13,333,092		—		13,333,092		—

U.S. Preferred Stock

Financials		2,434,770		2,434,770		—		—

Healthcare		3,951,661		—		—		3,951,661

Real Estate		3,688,216		3,688,216		—		—

Non-U.S. Registered Investment Companies		3,271,300		—		—		3,271,300

Non-U.S. Master Limited Partnerships

Energy		2,288,948		2,288,948		—		—

U.S. Corporate Bonds & Notes

Communication Services		595,554		—		595,554		—

U.S. Asset-Backed Security		200,427		—		200,427		—

U.S. Rights

Healthcare		172,480		—		—		172,480

U.S. Repurchase Agreement		12		—		12		—

U.S. Cash Equivalent		233,534		233,534		—		—


Total Assets		289,538,241		137,145,883		17,781,505		134,610,853

ANNUAL REPORT | 17


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund



	Total value at September 30, 2024			Level 1 Quoted Price			Level 2 Significant Observable Inputs		Level 3 Significant Unobservable Inputs

Highland Global Allocation Fund

Liabilities

Securities Sold Short

U.S. Exchange Traded Fund	$	(2,122,753	)	$	(2,122,753	)	$	—	$	—

U.S. Equity

Communication Services		(7,058,655	)		(7,058,655	)		—		—

Consumer Staples		(1,031,520	)		(1,031,520	)		—		—


Total Liabilities		(10,212,928	)		(10,212,928	)		—		—


Total	$	279,325,313		$	126,932,955		$	17,781,505	$	134,610,853

The table below sets forth a summary of changes in the Fund’s assets measured at fair value using significant unobservable inputs (Level 3) for the year ended September 30, 2024.



	Balance as of September 30, 2023 $		Transfers Into Level 3 $		Transfers Out of Level 3 $			Accrued Discounts (Premiums) $		Distribution to Return Capital $			Realized Gain (Loss) $			Net Change in Unrealized Appreciation (Depreciation) $			Purchases $		Sales $			Balance as of September 30, 2024 $		Change in Unrealized Appreciation (Depreciation) from Investments held at September 30, 2024 $

U.S. Equity

Communication Services		59,727,467		—		—			—		—			—			(6,391,319	)		—		—			53,336,148		(6,391,319	)

Financials		—		—		—			—		—			—			—			1,000,000		—			1,000,000		—

Materials		3,652,420		—		(3,652,420	)		—		—			—			—			—		—			—		—

Real Estate		12,983,680		—		—			—		(127,400	)		—			578,817			—		—			13,435,097		578,817

U.S. Senior Loans

Communication Services		22,289,158		—		—			1,646		—			—			59,488			2,905,385		—			25,255,677		59,488

Real Estate		13,126,000		—		—			—		—			—			(1,779,750	)		—		—			11,346,250		(1,779,750	)

Non-U.S. Equity

Consumer Discretionary		7,113		—		—			—		—			(1,100,958	)		1,120,992			—		(27,147	)		—		—

U.S. LLC Interest

Real Estate		23,126,103		—		—			—		—			—			(283,863	)		—		—			22,842,240		(283,863	)

U.S. Preferred Stock

Healthcare		3,446,437		—		—			—		—			—			505,224			—		—			3,951,661		505,224

Non-U.S. Registered Investment Company		3,607,189		—		—			—		(2,717	)		—			(333,172	)		—		—			3,271,300		(333,172	)

Non-U.S. Asset-Backed Security		10		—		—			—		—			—			—			—		(10	)		—		—

U.S. Rights

Healthcare		—		172,480		—			—		—			—			—			—		—			172,480		—

U.S. Warrants

Industrials		—		—		—			—		—			71,252			—			—		(71,252	)		—		—


Total		141,965,577		172,480		(3,652,420	)		1,646		(130,117	)		(1,029,706	)		(6,523,583	)		3,905,385		(98,409	)		134,610,853		(7,644,575	)

ANNUAL REPORT | 18


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

Investments designated as Level 3 may include assets valued using quotes or indications furnished by brokers which are based on models or estimates without observable inputs and may not be executable prices. In light of the developing market conditions, the Investment Adviser continues to search for observable data points and evaluate broker quotes and indications received for portfolio investments.

For the year ended September 30, 2024, there was one U.S. equity materials position that was transferred out of Level 3 due to an updated indication of value.

For the year ended September 30, 2024, there was one U.S. right healthcare position that transferred into Level 3.

The following is a summary of significant unobservable inputs used in the fair valuations of assets and liabilities categorized within Level 3 of the fair value hierarchy:



Category	Fair Value at 9/30/2024 $		Valuation Technique	Unobservable Inputs	Input Value(s) (Arithmetic Mean)

U.S. Equity		67,771,245	Multiples Analysis	Unadjusted Price/ MHz-PoP	$0.10 - $0.90 ($0.48)

			Discounted Cash Flow	Discount Rate	13% - 15% (14.0%)

			Net Asset Value	N/A	N/A

			Direct Capitalization Method	Capitalization Rates	4.75% - 5.25% (5.00%)

			Transaction Indication of Value	Enterprise Value ($mm)	$841

				Offer Price per Share	$1.10

				Merger Consideration	$5.00

				Cost ($mm)	$1.00

U.S. Senior Loans		36,601,927	Discounted Cash Flow	Discount Rate	5.83% - 16.50% (11.50%)

U.S. LLC Interest		22,842,240	Discounted Cash Flow	Discount Rate	5.73% - 13.00% (8.92%)

			Direct Capitalization Method	Capitalization Rates	4.75% - 5.50% (5.15%)

U.S. Preferred Stock		3,951,661	Transaction Indication of Value	Enterprise Value ($mm)	$281.4 - $366.1 ($323.8)

			Option Pricing Model	Volatilty	70% - 90% (80%)

Non-U.S. Registered Investment Company		3,271,300	Net Asset Value	N/A	N/A

U.S. Rights		172,480	Transaction Indication of Value	Merger Consideration	0.08


		134,610,853

The significant unobservable input used in the fair value measurement of the Fund’s senior loans is: discount rate. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Fund’s LLC interests are: discount rate and capitalization rate. A significant increase (decrease) in any of those inputs in isolation could result in a significantly higher (lower) fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Fund’s common equity securities are: unadjusted price/MHz-PoP multiple, discount rate, capitalization rate, enterprise value, tender offer per share, and merger consideration. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Fund’s preferred equity securities are: enterprise value and volatility. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

The significant unobservable input used in the fair value measurement of the Fund’s rights is: merger consideration. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

In addition to the unobservable inputs utilized for various valuation methodologies, the Investment Adviser frequently uses a combination of two or more valuation methodologies to determine fair value for a single holding. In such instances, the Investment Adviser assesses the methodologies and ascribes weightings to each methodology. The weightings ascribed to any individual methodology ranged from as low as 25% to as high as 100% as of September 30, 2024. The selection of weightings is an inherently subjective process, dependent on professional judgement. These selections may have a material impact to the concluded fair value for such holdings.

ANNUAL REPORT | 19


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

Certain Illiquid Positions Classified as Level 3

As of September 30, 2024, the Fund held an investment in the common shares of MidWave, Inc. Wireless (“MidWave”) valued at $53,336,148, or 20.0% of net assets, and U.S. Senior Loans valued at $25,255,677 or 9.5% of net assets. MidWave does not currently generate revenue and primarily derives its value from holding licenses of two wireless spectrum assets. The license with respect to one such spectrum asset was previously terminated by the FCC and subsequently restored on April 30, 2020 on a limited conditional basis. The restoration of such license, in current form, requires MidWave to meet certain deployment milestones for wireless medical telemetry service (“WMTS”) during a 39-month period. Upon satisfaction of the deployment milestones, MidWave, as it stands today, will be able use such spectrum for other services besides WMTS as long as those services do not interfere with WMTS and MidWave continues to provide WMTS.

As of now, if MidWave is unsuccessful in satisfying such deployment milestones, or if other services cannot be implemented in a manner that does not interfere with WMTS, the value of the MidWave equity would likely be materially negatively impacted. In determining the fair value of MidWave, the Investment Adviser has assigned a high probability of success on both conditions based on consultation with the company and its consultants.

The Fund may hold other illiquid positions that are classified as Level 3 that are not described here. Please see Note 7 for additional disclosure of risks from investments in illiquid securities.

Security Transactions

Security transactions are accounted for on the trade date. Realized gains (losses) on investments sold are recorded on the basis of the specific identification method for both financial statement and U.S. federal income tax purposes taking into account any foreign taxes withheld.

Income Recognition

Corporate actions (including cash dividends) are recorded on the ex-dividend date, net of applicable withholding taxes, except for certain foreign corporate actions, which are recorded as soon after ex-dividend date as such information becomes available and is verified. Interest income is recorded on the accrual basis.

Accretion of discount on taxable bonds and loans is computed to the maturity date, while amortization of premium on taxable bonds and loans is computed to the earliest call date, both using the effective yield method. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable country’s tax rules and rates.

Return of Capital Reclassification

Adjustment to income is associated with return of capital from income received in prior period. Information related to these adjustments was not received until after the finalization of the prior period financial statements.

U.S. Federal Income Tax Status

The Fund is treated as a separate taxpayer for U.S. federal income tax purposes. The Fund intends to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended, and will distribute substantially all of their taxable income and gains, if any, for the tax year, and as such will not be subject to U.S. federal income taxes. In addition, the Fund intends to distribute, in each calendar year, all of their net investment income, capital gains and certain other amounts, if any, such that the Fund should not be subject to U.S. federal excise tax. Therefore, no U.S. federal income or excise tax provisions are recorded. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations.

The Investment Adviser has analyzed the Fund’s tax positions taken on U.S. federal income tax returns for all open tax years (current and prior three tax years), and has concluded that no provision for U.S. federal income tax is required in the Fund’s financial statements. The Fund’s U.S. federal and state income and U.S. federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue. Furthermore, the Investment Adviser of the Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months.

ANNUAL REPORT | 20


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

Distributions to Shareholders

The Fund declares and pays investment income distributions quarterly. The Fund typically declares and pays distributions from net realized capital gains in excess of capital loss carryforwards annually.

Statement of Cash Flows

Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included within the Fund’s Statement of Assets and Liabilities and includes cash on hand at its custodian bank and/or sub-custodian bank(s), cash equivalents, foreign currency and restricted cash held at broker(s).

Cash & Cash Equivalents

The Fund considers liquid assets deposited with a bank and certain short-term debt instruments of sufficient credit quality with original maturities of three months or less to be cash equivalents. The Fund also considers money market instruments that invest in cash equivalents to be cash equivalents. These investments represent amounts held with financial institutions that are readily accessible to pay Fund expenses or purchase investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates fair value. The value of cash equivalents denominated in foreign currencies is determined by converting to U.S. dollars on the date of this financial report. These balances may exceed the federally insured limits under the Federal Deposit Insurance Corporation (“FDIC”).

Foreign Currency

Accounting records of the Fund are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates using the current 4:00 PM London Time Spot Rate. Fluctuations in the value of the foreign currencies and other assets and liabilities resulting from changes in exchange rates, between trade and settlement dates on securities transactions and between the accrual and payment dates on dividends, interest income and foreign withholding taxes, are recorded as unrealized foreign currency gains (losses). Realized gains (losses) and unrealized appreciation (depreciation) on investment securities and income and expenses are translated on the respective dates of such transactions.

The effects of changes in foreign currency exchange rates on investments in securities are not segregated in the Statement of Operations from the effects of changes in market prices of those securities, but are included with the net realized and unrealized gain or loss on investment securities.

Securities Sold Short

The Fund may sell securities short. A security sold short is a transaction in which the Fund sells a security it does not own in anticipation that the market price of that security will decline. When the Fund sells a security short, it must borrow the security sold short from a broker-dealer and deliver it to the buyer upon conclusion of the transaction. A Fund may have to pay a fee to borrow particular securities and is often obligated to pay over any dividends or other payments received on such borrowed securities. In some circumstances, a Fund may be allowed by its prime broker to utilize proceeds from securities sold short to purchase additional investments, resulting in leverage. Securities and cash held as collateral for securities sold short are shown on the Investment Portfolio. Cash held as collateral for securities sold short is classified as restricted cash on the Statement of Assets and Liabilities, as applicable. Restricted cash in the amount of $10,198,998 was held with the broker for the Fund. Additionally, securities valued at $100,061,965 were posted in the Fund’s segregated account for collateral for short sales. The Fund’s loss on a short sale could be unlimited in cases where the Fund is unable, for whatever reason, to close out its short position.

Other Fee Income

Fee income may consist of origination/closing fees, amendment fees, administrative agent fees, transaction break-up fees and other miscellaneous fees. Origination fees, amendment fees, and other similar fees are nonrecurring fee sources. Such fees are received on a transaction by transaction basis and do not constitute a regular stream of income and are recognized when incurred.

Note 3. Derivative Transactions

The Fund is subject to equity securities risk, interest rate risk and currency risk in the normal course of pursuing its investment objective. The Fund enters into derivative transactions for the purpose of hedging against the effects of changes in the value of portfolio securities due to anticipated changes in market conditions, to gain

ANNUAL REPORT | 21


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

market exposure for residual and accumulating cash positions and for managing the duration of fixed income investments.

Options

The Fund may utilize options on securities or indices to varying degrees as part of its principal investment strategy. An option on a security is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the security underlying the option at a specified exercise or “strike” price. The writer of an option on a security has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price or to pay the exercise price upon delivery of the underlying security. The Fund may hold options, write option contracts, or both.

If an option written by a Fund expires unexercised, a Fund realizes on the expiration date a capital gain equal to the premium received by a Fund at the time the option was written. If an option purchased by a Fund expires unexercised, a Fund realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an exchange-traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, underlying security, exercise price and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when a Fund desires. A Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if the cost of the closing option is more than the premium received from writing the option, a capital loss. A Fund will realize a capital gain from a closing sale transaction if the premium received from the sale is more than the original premium paid when the option position was opened, or a capital loss, if the premium received from a sale is less than the original premium paid.

During the year ended September 30, 2024, the Fund did not enter into options transactions. The Fund may invest in written options to provide leveraged short exposure, and purchased options to provide leveraged long exposure, to the underlying equity, which is consistent with the investment strategies of the Fund.

Swap Contracts

The Fund may use swaps as part of its investment strategy or to manage their exposure to interest, commodity, and currency rates as well as adverse movements in the debt and equity markets. Swap agreements are privately negotiated in the over-the-counter (“OTC”) market or may be executed in a multilateral or other trade facility platform, such as a registered exchange (“centrally cleared swaps”). For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received in the Statements of Assets and Liabilities, respectively, and amortized over the life of the swap. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Premiums paid or received are recognized as realized gain or loss in the Statement of Operations. Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument; for example, the agreement to pay interest in exchange for a market or commodity-linked return based on a notional amount. To the extent the total return of the market or commodity-linked index exceeds the offsetting interest obligation, the Fund will receive a payment from the counterparty. To the extent it is less, the Fund will make a payment to the counterparty. Periodic payments received or made by the Fund are recorded in “Net realized gain (loss) on swap contracts” on the accompanying Statements of Operations and Changes in Net Assets as realized gains or losses, respectively. As of September 30, 2024, the Fund held no open swap contracts.

Reverse Repurchase Agreements

The Fund may engage in reverse repurchase agreement transactions with respect to instruments that are consistent with the Fund’s investment objective or policies. This creates leverage for the Fund because the cash received can be used to purchase other securities.

A reverse repurchase transaction is a repurchase transaction in which the Fund is the seller of securities or other assets and agrees to repurchase them at a date certain or on demand. Pursuant to the Repurchase Agreement, the Fund may agree to sell securities or other assets to Mizuho Securities for an agreed upon price (the “Purchase Price”), with a simultaneous agreement to repurchase such securities or other assets from Mizuho Securities for the Purchase Price plus a

ANNUAL REPORT | 22


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

price differential that is economically similar to interest. The price differential is negotiated for each transaction. This creates leverage for the Fund because the cash received can be used to purchase other securities.

The Fund had investments in reverse repurchase agreements during the period, but did not have any outstanding as of September 30, 2024. The collateral pledged for the reverse repurchase agreements includes Agency Collateralized Mortgage Obligations and cash. The Fund’s average daily balance was $3,732,619 at a weighted average interest rate of 7.59% for the days outstanding.

Additional Derivative Information

The Fund is required to disclose; a) how and why an entity uses derivative instruments; b) how derivative instruments and related hedged items are accounted for; c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows; and d) how the netting of derivatives subject to master netting arrangements (if applicable) affects the net exposure of the Fund related to the derivatives.

To reduce counterparty credit risk with respect to OTC transactions, the Fund has entered into master netting arrangements, established within the Fund’s International Swap and Derivatives Association, Inc. (“ISDA”) master agreements, which allows the Fund to make (or to have an entitlement to receive) a single net payment in the event of default (close-out netting) for outstanding payables and receivables with respect to certain OTC derivative positions in forward currency exchange contracts for each individual counterparty. In addition, the Fund may require that certain counterparties post cash and/or securities in collateral accounts to cover its net payment obligations for those derivative contracts subject to ISDA master agreements. If the counterparty fails to perform under these contracts and agreements, the cash and/or securities will be made available to the Fund.

Certain ISDA master agreements include credit related contingent features which allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.

Collateral terms are contract specific for OTC derivatives. For derivatives traded under an ISDA master agreement, the collateral requirements are typically calculated by netting the mark to market amount for each transaction under such agreement and comparing that to the value of any collateral currently pledged by the Fund or the counterparty.

For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Fund, if any, is reported in restricted cash on the Statement of Assets and Liabilities. Generally, the amount of collateral due from or to a party must exceed a minimum transfer amount threshold before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance.

There were no derivative instruments held as of September 30, 2024.

Note 4. Securities Lending

The Fund has a securities lending agreement with The Bank of New York Mellon (“BNY” or the “Lending Agent”).

Securities lending transactions are entered into by the Fund under the Securities Lending Agreement, (“SLA”) which permits the Fund, under certain circumstances such as an event of default, to offset amounts payable by the Fund to the same counterparty against amounts receivable from the counterparty to create a net payment due to or from the Fund.

ANNUAL REPORT | 23


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

The following is a summary of securities lending agreements held by the Fund, with cash collateral of overnight maturities and non-cash collateral which would be subject to offset as of September 30, 2024:



Gross Amount of Recognized Assets (Value of Securities on Loan)		Value of Cash Collateral Received⁽¹⁾		Value of Non-Cash Collateral Received⁽¹⁾		Net Amount

$	—	$	12	$	—	$	12

(1)	Collateral received in excess of fair value of securities on loan is not presented in this table. The total cash collateral received by the Fund is disclosed in the Statement of Assets and Liabilities.

The value of loaned securities and related collateral outstanding at September 30, 2024 are shown in the Investment Portfolio. The value of the collateral held may be temporarily less than that required under the lending contract. As of September 30, 2024, the cash collateral was invested in repurchase agreements consisted of U.S. Treasury Bills, Notes, Bonds and U.S. Treasury Inflation Indexed Bonds with the following maturities:

Remaining Contractual Maturity of the Underlying Collateral, as of September 30, 2024



	Overnight and Continuous		<30 Days		Between 30 & 90 Days		>90 Days		Total

Repurchase Agreement	$	12	$	—	$	—	$	—	$	12

U.S. Government Securities		—	$	—	$	—	$	—	$	—


Total	$	12	$	—	$	—	$	—	$	12

The Fund could seek additional income by making secured loans of its portfolio securities through its custodian. Such loans would be in an amount not greater than one-third of the value of the Fund’s total assets. BNY would charge a fund fees based on a percentage of the securities lending income.

The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral is returned by the Fund, on the next business day.

The Fund would receive collateral consisting of cash (U.S. and foreign currency), securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, sovereign debt, convertible bonds, irrevocable bank letters of credit or such other collateral as may be agreed on by the parties to a securities lending arrangement, initially with a value of 102% or 105% of the market value of the loaned securities and thereafter maintained at a value of 100% of the market value of the loaned securities. If the collateral consists of non-cash collateral, the borrower would pay the Fund a loan premium fee. If the collateral consists of cash, BNY would reinvest the cash. Although voting rights, or rights to consent, with respect to the

loaned securities pass to the borrower, the Fund would recall the loaned securities upon reasonable notice in order that the securities could be voted by the Fund if the holders of such securities are asked to vote upon or consent to matters materially affecting the investment. The Fund also could call such loans in order to sell the securities involved.

Securities lending transactions were entered into pursuant to SLAs, which would provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaulted, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an SLA counterparty’s bankruptcy or insolvency. Under the SLA, the Fund can reinvest cash collateral, or, upon an event of default, resell or repledge the collateral, and the

ANNUAL REPORT | 24


Notes to Financial Statements

September 30, 2024		Highland Global Allocation Fund

borrower can resell or repledge the loaned securities. The risks of securities lending also include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate this risk, each Fund benefits from a borrower default indemnity provided by BNY. BNY’s indemnity generally provides for replacement of securities lent or the approximate value thereof.

Note 5. U.S. Federal Income Tax Information

The character of income and gains to be distributed is determined in accordance with income tax regulations which may differ from GAAP. These differences include (but are not limited to) investments organized as partnerships for tax purposes, losses deferred due to wash sale transactions, tax treatment of net investment loss and distributions in excess of net investment income. Reclassifications are made to the Fund’s capital

accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. These reclassifications have no impact on net investment income, realized gains or losses, or NAV of the Fund. The calculation of net investment income per share in the Financial Highlights table excludes these adjustments.

As of September 30, 2024, the most recent tax year-end, permanent differences chiefly resulting from income and non-deductible expenses from partnerships and return of capital were identified and reclassified among the components of the Fund’s net assets as follows:

At September 30, 2024, the most recent tax year-end, components of distributable earnings on a tax basis is as follows:

Undistributed

Income

Undistributed

Long-Term Capital

Gains

Other Temporary

Differences

Accumulated

Distributable

Earnings

(Accumulated

Losses)

Paid-in-

Capital

(2,149,059

SEC Form N-CSR filed by Highland Global Allocation Fund