PricewaterhouseCoopers LLP
Suite 1800
2001 Ross Ave.
Dallas TX 75201-2997
Telephone (214) 999 1400







Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders
of Highland Floating Rate Fund:


In planning and performing our audit of the financial statements
of Highland Floating Rate Fund ("the
Company") as of and for the period ended June 30, 2010,
in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
we considered the Company's 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-SAR, but not
for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over
financial reporting.  Accordingly, we do not
express an opinion on the effectiveness of the Company's
internal control over financial reporting.

The management of the Company 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 company's
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 company's 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 trustees of
the company; and (3)  provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of a
company's 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 Company's annual or interim financial
statements will not be prevented or detected on a timely basis.

Our consideration of the Company's 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 Public
Company Accounting Oversight Board (United States).  However,
we noted no deficiencies in the
Company's internal control over financial reporting and
its operation, including controls over
safeguarding securities, that we consider to be material
weaknesses as defined above as of June 30, 2010.

This report is intended solely for the information and
use of management and the Board of Directors of
Highland Floating Rate 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.

/s/PricewaterhouseCoopers LLP

August 24, 2010