HIGHLAND FLOATING RATE FUND
Supplement dated March 2, 2011

To Class A, B and C Shares Prospectus and Class Z Share Prospectus,
each dated October 31, 2010

Management—Portfolio Managers

The section “Management—Portfolio Managers” on page 27 of the Class A, B and C Shares Prospectus and page 23 of the Class Z Shares Prospectus is amended and restated as follows:

     Portfolio Manager

     The Fund’s portfolio is managed by Greg Stuecheli. Mr. Stuecheli has managed the portfolio since December 2008. The SAI provides additional information about the portfolio manager’s compensation, other accounts managed by the portfolio manager and the portfolio manager’s ownership of securities issued by the Fund.

     Greg Stuecheli. Mr. Stuecheli is a Partner and Senior Portfolio Manager of Retail Products at Highland. Previously, Mr. Stuecheli was a Portfolio Manager covering distressed and special situation credit and equity investments. In addition, Mr. Stuecheli currently serves on the board of directors of CCS Medical Holdings, Inc. and LLV Holdco, LLC (as Chairman). He is a former board member of Safety-Kleen Holdco, Inc. Prior to joining Highland in June 2002, Mr. Stuecheli served as an analyst for Gryphon Management Partners, LP from 2000 to 2002. His primary responsibilities included researching long and short investment ideas. In 1999 he was a Summer Associate at Hicks, Muse, Tate & Furst. From 1995 to 1998, Mr. Stuecheli worked as a chemical engineer at Jacobs Engineering Group and Cytec Industries. He received an MBA from Southern Methodist University and a BS in Chemical Engineering from Rensselaer Polytechnic Institute. He has earned the right to use the Chartered Financial Analyst designation.

INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE PROSPECTUS
FOR FUTURE REFERENCE

HIGHLAND FLOATING RATE FUND
Supplement dated March 2, 2011

To Class A, Class B, Class C and Class Z Shares Statement of Additional Information,
dated October 31, 2010

Information Regarding Portfolio Managers

The first paragraph and tables in the section “Information Regarding Portfolio Managers” on page 18 of the Statement of Additional Information are amended and restated as follows:

     The Fund’s portfolio manager is Greg Stuecheli. The following table provides information about the funds and accounts, other than the Fund, for which the Fund’s portfolio manager is primarily responsible for the day-to-day portfolio management. This information is provided as of June 30, 2010.

     Greg Stuecheli

							Total Assets
					Total Number of		Managed with
					Accounts Managed		Performance-
	Total Number of		Total Assets		with Performance-		Based Advisory
Type of Accounts	Managed Accounts		Managed (millions)		Based Advisory Fee		Fee (millions)
Registered Investment Companies:		4	$	1,363		1	$	19
Other Pooled Investment Vehicles:		0	$	0		0	$	0
Other Accounts:		0	$	0		0	$	0

     Ownership of Securities

The paragraph and table in the section “Information Regarding Portfolio Managers—Ownership of Securities” on page 19 of the Statement of Additional Information are amended and restated as follows:

     The following table sets forth the dollar range of equity securities of the Fund beneficially owned by the portfolio manager. This information is provided as of June 30, 2010.

	Dollar Range of Equity Securities
Name of Portfolio Manager	Beneficially Owned by Portfolio Manager
Greg Stuecheli	$	10,001—$50,000

INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE STATEMENT OF ADDITIONAL
INFORMATION FOR FUTURE REFERENCE