First-Time Conversion Of A Mutual Fund To A Closed-End Fund

In an industry first, a mutual fund converted to a closed-end fund with the same investment objective and strategy. As described below, the conversion was approved by the fund's board of trustees ("Board") and by a majority of shareholders in unusual circumstances to protect the interests of the fund's long-term shareholders. Shares of the fund now trade on the New York Stock Exchange (the "NYSE").

Background. Since 2011, the Highland Floating Rate Opportunities Fund (the "Fund") and its predecessor fund operated as a mutual fund, with an investment objective of providing a high level of current income, consistent with preservation of capital, by investing directly (and, indirectly, through derivatives) in floating rate loans.