LETTER AGREEMENT

October 31, 2014

LETTER AGREEMENT

Highland Funds I (the “Trust”)

000 Xxxxxxxx Xxxxx, Xxxxx 000

Xxxxxx, Xxxxx 00000

Re: Management Fee Waiver Agreement

Ladies and Gentlemen:

This Letter Agreement documents an undertaking by Highland Capital Management Fund Advisors, L.P. (the “Adviser”) to waive the management fees of Highland Long/Short Equity Fund (the “Fund”), a series of the Trust. This Letter Agreement shall terminate (i) in the event the Investment Advisory Agreement between the Trust and the Adviser terminates with respect to the Fund, (ii) at the sole discretion of the Fund’s Board of Trustees on 30 days’ prior written notice to the Adviser or (iii) upon mutual agreement between the Adviser and the Fund’s Board of Trustees.

Effective as of the date first written above and until at least October 31, 2015, the Adviser hereby undertakes to waive 1.25% of the Fund’s management fees for each class of the Fund.

This Letter Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act of 1940, as amended, and the Investment Advisers Act of 1940, as amended, and any rules and regulations promulgated thereunder.

Sincerely,

Highland Capital Management Fund Advisors, L.P.

By:		/s/ Xxxxx Xxxxxx
		Name: Xxxxx Xxxxxx
		Title: Secretary

ACKNOWLEDGED AND ACCEPTED

Highland Funds I
By:		/s/ Xxxxxx Xxxxxx
		Name: Xxxxxx Xxxxxx
		Title: Asst. Treasurer