0001752724-20-070734.txt : 20200415
0001752724-20-070734.hdr.sgml : 20200415
20200415133142
ACCESSION NUMBER: 0001752724-20-070734
CONFORMED SUBMISSION TYPE: NT N-CEN
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20191231
FILED AS OF DATE: 20200415
DATE AS OF CHANGE: 20200415
EFFECTIVENESS DATE: 20200415
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: HIGHLAND INCOME FUND\MA
CENTRAL INDEX KEY: 0001710680
IRS NUMBER: 456245636
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: NT N-CEN
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-23268
FILM NUMBER: 20793231
BUSINESS ADDRESS:
STREET 1: 300 CRESCENT COURT
STREET 2: SUITE 700
CITY: DALLAS
STATE: TX
ZIP: 75201
BUSINESS PHONE: 972-628-4100
MAIL ADDRESS:
STREET 1: 300 CRESCENT COURT
STREET 2: SUITE 700
CITY: DALLAS
STATE: TX
ZIP: 75201
FORMER COMPANY:
FORMER CONFORMED NAME: HIGHLAND FLOATING RATE OPPORTUNITIES FUND
DATE OF NAME CHANGE: 20170925
FORMER COMPANY:
FORMER CONFORMED NAME: HIGHLAND FLOATING RATE OPPORTUNITIES FUND II
DATE OF NAME CHANGE: 20170628
N-CEN
1
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200 CRESCENT COURT SUITE 700
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DALLAS
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US-TX
US
1-877- 665-1287
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn
11219
1-800-937-5449
Records As Transfer Agent For Trust
SEI Investments Global Funds Services
1 Freedom Valley Drive
Oaks
19456
1-610-676-1000
Records as Administrator for Trust
NexPoint Securities, Inc.
300 Crescent Court
Suite 700
Dallas
75201
1-972-628-4100
Records as Distributor for Trust
Highland Capital Management Fund Advisors, L.P.
300 Crescent Court
Suite 700
Dallas
75201
1-877-665-1287
Records as Advisor and Administrator for Trust
The Bank of New York Mellon
240 Greenwich Street
New York
10286
1-212-495-1784
Records as Custodian for Trust
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Dr. Bob Froehlich
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Dustin Norris
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Ethan Powell
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Bryan A. Ward
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John Honis
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Jason Post
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200 Crescent Court, Suite 700
Dallas
75201
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NexPoint Securities, Inc.
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S&P
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Thomson Reuters Corporation
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NEWEDGE USA, LLC
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DEUTSCHE BANK SECURITIES, INC.
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MORGAN STANLEY & CO, INC
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BAIRD, ROBERT W., & CO., INCORPORATED
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BARCLAYS CAPITAL INC.
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INTERNAL CONTROL RPT
2
HIF_ICL.txt
INTERNAL CONTROL LETTER
Report of Independent Registered Public Accounting
Firm
To the Board of Trustees and Shareholders of
Highland Income Fund
In planning and performing our audit of the
financial statements of Highland Income Fund (the
Fund) as of and for the year ended December 31,
2019, in accordance with the standards of the Public
Company Accounting Oversight Board (United States)
(PCAOB), we considered the Funds internal control
over financial reporting, including controls over
safeguarding securities, as a basis for designing
our auditing procedures for the purpose of
expressing our opinion on the financial statements
and to comply with the requirements of Form N-CEN,
but not for the purpose of expressing an opinion on
the effectiveness of the Funds internal control over
financial reporting. Accordingly, we do not express
an opinion on the effectiveness of the Funds
internal control over financial reporting.
The management of the Fund is responsible for
establishing and maintaining effective internal
control over financial reporting. In fulfilling this
responsibility, estimates and judgments by
management are required to assess the expected
benefits and related costs of controls. A companys
internal control over financial reporting is a
process designed to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles. A companys internal control
over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable
assurance that transactions are recorded as
necessary to permit preparation of financial
statements in accordance with generally accepted
accounting principles, and that receipts and
expenditures of the company are being made only in
accordance with authorizations of management and
directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of a
companys assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal
control over financial reporting may not prevent or
detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are
subject to the risk that controls may become
inadequate because of changes in conditions, or that
the degree of compliance with the policies or
procedures may deteriorate.
A deficiency in internal control over financial
reporting exists when the design or operation of a
control does not allow management or employees, in
the normal course of performing their assigned
functions, to prevent or detect misstatements on a
timely basis. A material weakness is a deficiency,
or a combination of deficiencies, in internal
control over financial reporting, such that there is
a reasonable possibility that a material
misstatement of the companys annual or interim
financial statements will not be prevented or
detected on a timely basis.
Our consideration of the Funds internal control over
financial reporting was for the limited purpose
described in the first paragraph and would not
necessarily disclose all deficiencies in internal
control over financial reporting that might be
material weaknesses under standards established by
the PCAOB. However, we noted the following
deficiency in the Funds internal control over
financial reporting and its operation, including
controls over safeguarding securities, that we
consider to be a material weakness as defined above
as of December 31, 2019.
Controls over the application of fair value
accounting with respect to the validation of fair
value methodologies were not sufficiently designed
to ensure the appropriateness of the fair value
determinations reached for Level 3 real estate-
related holdings.
This report is intended solely for the information
and use of the Board of Trustees of Highland Income
Fund and the Securities and Exchange Commission and
is not intended to be and should not be used by
anyone other than these specified parties.
PricewaterhouseCoopers LLP
Dallas, Texas
April 10, 2020
LEGAL PROCEEDINGS
3
HFRO_-_G.1.a.txt
LEGAL PROCEEDINGS
Highland Income Fund
Item G.1.a.i. - Legal Proceedings
Case or Docket Number: 05-15-01463-CV
Full Names of Principal Parties: Claymore Holdings,
LLC v. Credit Suisse AG, Cayman Islands Branch and
Credit Suisse Securities (USA) LLC
Brief Description: Two Highland-managed funds, the
NexPoint Strategic Opportunities Fund and the
Highland Income Fund, are the beneficiaries of a
+$400 million judgment (including accrued interest)
against Credit Suisse related to a syndicated real
estate transaction fraudulently underwritten by the
Swiss bank. Credit Suisse is appealing the judgment
against it. The two funds also are participants in
a similar action against Credit Suisse related to
five additional real estate deals in which the funds
allege Credit Suisse committed fraud in relation to
the underwriting.