Highland Opportunities and Income Fund
Item G.1.a.i. - Legal Proceedings

Two affiliated funds, including the Highland Opportunities
and Income Fund (f/k/a Highland Income  Fund), are the
beneficiaries of an  approximately   $122 million judgment
against Credit  Suisse related  to a syndicated real  estate
transaction fraudulently underwritten by the Swiss  bank.  The
judgment  was appealed up to the Dallas Court of Appeals, then
the Texas Supreme Court, remanded to the trial court, and went
back to the Dallas Court of Appeals.  The Dallas Court of Appeals
issued a ruling reducing the judgment to an amount  that, including
offsets for prior settlement proceeds received by the funds, may
result in the two funds recovering zero net dollars on the
outstandingjudgment. The Texas Supreme Court is considering
certiorari to hear the case again. The case will now move back
to the trial court. Depending on how the trial court applies the
court of appeals decision it may result in the Fund's recovering
zero net dollars.