Small Cap Equity Fund

JAMES DONDERO, CFA
Co-Founder, President
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JAMES DONDERO
Co-Founder, President

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 Life’s 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 American Banknote Corporation, Cornerstone Healthcare Group and Metro-Goldwyn-Mayer.

MICHAEL GREGORY
Managing Director

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MICHAEL GREGORY
Managing Director

Mr. Gregory is CIO and Global Head of Highland Alternative Investors at Highland Capital Management in addition to Managing Director and Head of Healthcare Credit and Healthcare Long/Short Equity investment strategies. In 2006, he founded Cummings Bay Healthcare Fund, a healthcare hedge fund that is currently in the seventh year of operations and became an affiliate of Highland in 2010. Mr. Gregory also worked as a Partner at Sands Point Capital Management LLC, managing a dedicated healthcare equity hedge fund. He holds an MBA from the Yale School of Management, having completed a highly specialized joint program in healthcare within the Yale Schools of Medicine, Management and Public Policy. He holds a BS in Economics from the University of Pennsylvania, Wharton School of Business. He is a Fellow of the Royal Society of Medicine, lecturer at Yale University, and frequent guest on CNBC, Fox Business and Morningstar. He has been profiled in Barron’s, cited by the WSJ as a “Category King” in Healthcare and named by Institutional Investor as “Best Up and Comer” in 2011.

Fund Overview

Investment Objective

The Small Cap Equity Fund seeks to maximize long term capital appreciation through investments in stocks of smaller companies.

Access to Institutionally Managed Small Cap Equity
  •  Disciplined process that integrates proprietary earnings based metrics with intensive bottom-up fundamental stock research. Proprietary screenings have an emphasis on consistency and improving company fundamentals incorporating liquidity criteria, market-cap, earnings growth, free cash flow growth generation, balance sheet strength, and reinvestment of capital.
  • Identify high-quality, attractively priced companies that generate free cash flow and consistently grow earnings
  • Focus on management’s ability to implement its growth strategies, assess sustainability and quality of earnings growth
Fund NAV (As of Feb 23, 2017)
SYMBOLNAV
HSZAX (Class A)$14.70
HSZCX (Class C)$10.67
HSZYX (Class Y)$15.98
Fund AUM (As of Feb 23, 2017)
AUM
Total Net Assets$57.82 M
VIEW FULL PERFORMANCE
Class AClass CClass Y
SymbolHSZAXHSZCXHSZYX
Inception09/30/9809/30/9909/30/98
Gross Expense Ratio1.67%2.42%1.42%
Net Expense Ratio11.21%1.96%0.96%

Historical Returns & NAV

As of 02/23/2017Class AClass CClass Y
Net Asset Value (NAV)$14.70$10.67$15.98
Daily NAV Change ($)$-0.04$-0.03$-0.04
Daily NAV Change (%)-0.27%-0.28%-0.25%
As of 01/31/2017 MonthlyQuarterlyClass AClass A (w/sales charge)Class CClass Y
Year To Date2.98%-2.94%2.90%2.94%
One Year47.70%39.16%46.60%48.16%
Three Year10.06%7.91%9.27%10.34%
Five Year13.01%11.68%12.18%13.29%
Since Inception10.25%9.90%8.78%10.53%



View all Literature & Forms

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 investor’s shares when redeemed may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted.

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.

1. The Advisor has contractually agreed to limit the total annual operating expenses of the Fund to 0.95% of average daily net assets of the Fund. The expense cap will continue through at least January 31, 2017.

*The maximum sales charge for Class A shares is 5.75%.

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: State Street Bank and Trust Company

Highland Funds’ mutual funds are distributed by Highland Capital Funds Distributor