James Dondero is Co-founder and President of Highland Capital Management, LP (an alternative asset manager specializing in high-yield fixed income investments). Jim has over 30 years of experience in the credit markets. Prior to founding Highland in 1993, Jim served as Chief Investment Officer of Protective Lifes GIC subsidiary and helped grow the business from concept to over $2 billion between 1989 and 1993. His portfolio management experience includes mortgage-backed securities, investment grade corporates, leveraged bank loans, high-yield bonds, emerging market debt, derivatives, preferred stocks and common stocks. From 1985 to 1989, he managed approximately $1 billion in fixed income funds for American Express. Prior to American Express, he completed the financial training program at JP Morgan. Jim received a BS in Commerce (Accounting and Finance) from the University of Virginia. Jim is a Certified Public Accountant, a Certified Managerial Accountant, and a Chartered Financial Analyst. He currently serves as Chairman for CCS Medical and NexBank and serves on the Board of Directors of Cornerstone Healthcare Group and Metro-Goldwyn-Mayer.

Mr. Heiss is a Managing Director at Highland Capital Management Fund Advisors and a Co-Portfolio Manager for the Highland Long/Short Equity and Highland Merger Arbitrage Funds. Prior to joining Highland in July 2013, Mr. Heiss spent three years as a Senior Analyst and Partner at Varna Capital where he was a Generalist covering multiple sectors for the long/short equity hedge fund. Prior to Varna, Mr. Heiss spent three years as an Analyst at Maverick Capital where he covered the U.S. Financial Services sector for the $10 billion long/short equity hedge fund. Mr. Heiss began his career at Goldman Sachs in New York, first as a Senior Analyst in the Finance Division and later as an Investment Banking Analyst in the Financial Institutions Group. Mr. Heiss holds a BBA in Finance from the University of Miami and is a holder of the right to use the Chartered Financial Analyst designation.

Mr. Fritz is a Director at Highland Capital Management Fund Advisors and a Co-Portfolio Manager for the Highland Merger Arbitrage Fund. Prior to joining Highland in July 2013, Mr. Fritz worked as an investment banking analyst for Citigroup Global Markets Inc. While at Citi, Mr. Fritz advised on and executed capital markets and M&A transactions in the metals & mining, heavy equipment and diversified industrials sectors. Mr. Fritz received a BBA in Finance and Mathematics from the University of Notre Dame.

Seek to achieve positive absolute returns with reduced correlation to equity and fixed income markets.

Invest in publicly announced mergers to capture the spread between the current price of the target company and the announced offer price for that company.

Alternative investment that seeks to reduce overall portfolio volatility and correlation.

The performance data quoted here represents past performance and is no guarantee of future results. Investment returns and principal value will fluctuate so that an investors shares when redeemed may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted.

On May 12, 2016, the Predecessor Fund transferred its assets to the Fund in exchange for the Funds Class Z shares. The investment policies, objectives, guidelines and restrictions of the Fund are in all material respects equivalent to those of the Predecessor Fund. In addition, the Predecessor Funds portfolio manager is the current portfolio manager of the Fund. As a mutual fund registered under the 1940 Act, the Fund is subject to certain restrictions under the 1940 Act and the Internal Revenue Code of 1986, as amended (the Code) to which the Predecessor Fund was not subject. Had the Predecessor Fund been registered under the 1940 Act and been subject to the provisions of the 1940 Act and the Code, its investment performance could have been adversely affected, but these restrictions are not expected to have a material effect on the Funds investment program.

The Predecessor Fund did not have distribution policies. The Predecessor Fund was an unregistered Delaware limited partnership and did not qualify as a regulated investment company for federal income tax purposes.

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

Performance results reflect the contractual waivers and/or reimbursements of fund expenses by the Advisor. Absent this limitation, performance results would have been lower. The Advisor has contractually agreed to limit the total annual operating expenses of the Fund to 1.50% of average daily net assets of the Fund. The Expense Cap will continue through at least October 31, 2018. Total net operating expenses including the expense cap and excluding dividends on short sales and interest and dividend expense on securities sold short are Class A 1.86%, Class C 2.48%, and Class Z 1.53%.

*The maximum sales charge for Class A shares is 5.50%

Equity Securities Risk.Equity securities, such as common stocks, are subject to market, economic and business risks that may cause their prices to fluctuate.

Short Sales Risk.Short sales that are not made against-the-box (as defined under Description of Principal Investments) theoretically involve unlimited loss potential since the market price of securities sold short may continuously increase.

Hedging Risk.Although intended to limit or reduce investment risk, hedging strategies may also limit or reduce the potential for profit. There is no assurance that hedging strategies will be successful.

Market Risk.The Funds share price will fluctuate with changes in the market value of its portfolio securities. Many factors can affect this value and you may lose money by investing in the Fund.

Portfolio Turnover Risk.High portfolio turnover will increase the Funds transaction costs and may result in increased realization of net short-term capital gains.

Derivatives Risk.Derivatives are subject to the risk that changes in the value of a derivative may not correlate perfectly with the underlying asset, rate or index. Derivatives also expose the Fund to the credit risk of the derivative counterparty.

Leverage Risk.Leverage may increase the risk of loss, cause fluctuations in the market value of the Funds portfolio to have disproportionately large effects or cause the net asset value (NAV) of the Fund generally to decline faster than it would otherwise.

Non-U.S. Securities Risk.Investments in securities of non-U.S. issuers, particularly securities of emerging market issuers, involve certain risks not involved in domestic investments (for example, expropriation or political or economic instability).

Micro, Small and Mid-Cap Securities Risk.Investments in securities of companies with micro, small or medium capitalizations involve certain risks that may differ from, or be greater than, those for larger companies, such as higher volatility, lower trading volume, fewer business lines and lack of public information.

Non-Diversification Risk.As a non-diversified fund, the Fund may invest a larger portion of its assets in the securities of one or a few issuers than a diversified fund. A non-diversified funds investment in fewer issuers may result in the funds shares being more sensitive to the economic results of those issuers. An investment in the Fund could fluctuate in value more than an investment in a diversified fund.

Management Risk.The Fund relies on Highlands ability to achieve its investment objective. Highland may be incorrect in its assessment of the intrinsic value of companies whose securities the Fund holds, which may result in a decline in the value of Fund shares.

Glossary:Click for important terms and definitions

Highland Funds mutual funds are distributed by Highland Capital Funds Distributor