Small-Cap Equity Fund

Investment Objective

• Invests primarily in small-cap companies with above-average growth histories and/or growth potential
• Rigorous fundamental research and bottom-up stock selection
• Portfolio comprised of management’s top small-cap investment ideas
• Alpha generation comes from management’s tactical, nimble portfolio management style
• Significant capacity runway- allows management to execute on its investment objectives

Investment returns and principal value will fluctuate so that an investor’s shares when redeemed may be worth more or less than their original cost. 

Please consider the investment objectives, risks, charges and expenses of Highland Funds carefully before investing. A prospectus with this and other information about Highland’s mutual funds can be found on the Literature tab above. You may also obtain a prospectus for our mutual funds by calling 877-665-1287. Please read the prospectus carefully before investing.

Securities Market Risk. The value of the securities may go up or down, sometimes rapidly or unpredictably, due to factors affecting particular companies or the securities market generally. A general downturn in the securities market may cause multiple asset classes to decline in value simultaneously, although equity securities generally have greater price volatility than fixed income securities.

Small-Cap Company Risk. The risk that investing in the securities of small-cap companies may pose a greater market and liquidity risks than larger, more established companies, because of limited product lines and/or operating history, limited financial resources, limited trading markets, and the potential lack of management depth. In addition, the securities of such companies are typically more volatile than securities of larger capitalization companies.

Allocation Risk. The risk that Highland may not allocate assets of the Fund among investment management styles in an optimal manner, if among other reasons, it does not correctly assess the attractiveness of an investment style.

Foreign Investment Risk. The risk that investing in foreign (non-U.S.) securities may result in the Fund experiencing more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies, due to smaller markets, differing reporting, accounting and auditing standards, nationalization, expropriation or confiscatory taxation, currency blockages and political changes of diplomatic developments. The cost of investing in many foreign markets are higher than the U.S. and investments may be less liquid.

Currency Risk. The risk that the values of foreign investments may be affected by changes in the currency rates or exchange control regulations. If a foreign currency weakens against the U.S. dollar, the value of a foreign investment denominated in that currency would also decline in dollar terms.

Credit Risk. The risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty of a derivatives contract or repurchase agreement, is unable or unwilling (or is perceived to be unable or unwilling) to make a timely payment of principal and/or interest, or to otherwise honor its obligations.

Interest Rate Risk. The risk that fixed income securities will decline in value because of changes in interest rates. A fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration.

Derivatives Risk. The risk that an investment in derivatives may not correlate completely to the performance of underlying securities and may be volatile, and may result in a loss greater than the principal amount invested. Equity derivatives may also be subject to liquidity risk as well as the risk the derivative may be different than what would be produced through the use of another methodology or if it had been priced using market quotations.

Glossary: Click for important terms and definitions

Source: SEI Investments Global Funds Services

Highland Funds’ mutual funds are distributed by NexPoint Securities, Inc., Member FINRA/SIPC