HMS Income Fund

HMS Income Fund: Created With You and
American Businesses in Mind


HMS Income Fund is a public, non-traded business development company (BDC) that focuses on income and capital appreciation. The company’s strategy is to make debt investments in syndicated middle-market companies as well as self-originated debt and equity investments in lower middle-market companies.

HMS Income Fund taps the experience and resources of Main Street Capital Corporation (“Main Street”), a publicly-traded BDC (NYSE: MAIN), through MSC Adviser I, LLC, a wholly-owned subsidiary that is the sub-adviser to the fund. The sub-adviser recommends and monitors all of HMS Income Fund’s investments, targeting investment opportunities that arise from ownership transitions, strategic acquisitions, business expansions and other growth initiatives, primarily for later stage businesses. Since its inception, Main Street has specialized in providing long-term loans and equity capital to middle-market and lower middle-market U.S. companies.


Please note: Investors are not acquiring an interest in Main Street.

1There is no guarantee that the Fund will pay distributions. The amount and timing of distributions are not guaranteed. Investment income has been insufficient to fund distributions. As of December 31, 2104, 77% of distributions were paid from net realized income from operations (net of waiver of base management and incentive fees and expense support); 20% came from the waiver of the base management and incentive fees; 3% from expense support from the Adviser and 0% from other sources. If the advisors had not agreed to waive their fees, these distributions would have come from investors’ paid in capital. Paying distributions from sources other than net realized income lowers an investor’s overall return. There is currently no agreement in place for the Adviser to provide Expense Support to the Company after December 31, 2014.

2Current per-share offering price is $9.75 at maximum sales load; periodic valuations will cause offering price to fluctuate. Then-current offering price minus the sales load for dividend reinvestment plan ("DRP") shares. On January 9, 2015, HMS Income Fund, Inc. (the “Company”) decreased its public offering price from $10.00 per share to $9.75 per share. The decline in the net asset value was primarily driven by the recent impact of broad price declines in the high yield bond and leveraged loan markets, and the effect of declining oil prices on our investments in companies in the oil and gas sector.

Distribution Rate1


Current Per-Share Offering Price2


HMS Income Fund Fast Facts

  • Price per share
  • Sales charges, fees and expenses
  • Exit strategy
  • Alignment of interests
  • Quarterly repurchases
  • Tax reporting
  • Minimum investment
  • Investor suitability

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For more information, read the prospectus for HMS Income Fund. Copies of the prospectus may be obtained from Hines Securities, Inc., 2800 Post Oak Blvd., Suite 4700, Houston, Texas 77056 or by calling 888.446.3773. You should read the prospectus carefully in order to fully understand the objectives, risks, sales charges, fees and expenses of HMS Income Fund before investing or sending money.

HMS Income Fund Risk Factors

An investment in shares of our common stock may be considered speculative and involves a high degree of risk, including the risk of a substantial loss of investment. You should carefully consider the information found in “Risk Factors” before deciding to invest in shares of our common stock. The following are some of the risks you will take in investing in our shares:

  • We are a relatively new company and have a limited operating history and are subject to the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objectives.
  • Economic activity in the United States was impacted by the global financial crisis of 2008 and has yet to fully recover.
  • The amount of our distributions to our stockholders is uncertain. Portions of the distributions that we pay may represent a return of capital to you for U.S. federal income tax purposes which will lower your tax basis in your shares and reduce the amount of funds we have for investment in targeted assets. A return of capital is a return of your investment rather than earnings or gains derived from our investment activities. We may not be able to pay you distributions, and our distributions may not grow over time.
  • A significant portion of our investment portfolio is and will continue to be recorded at fair value as determined in good faith by our board of directors and, as a result, there is and will be uncertainty as to the ultimate market value of our portfolio investments.
  • Our board of directors may change our operating policies and investment strategies without prior notice or stockholder approval, the effects of which may be adverse.
  • Our Advisers and their respective affiliates, including our officers and certain of our directors, may have conflicts of interest as a result of compensation arrangements, time constraints and competition for investments, which they will attempt to resolve in a fair and equitable manner, but which may result in actions that are not in your best interests.
  • The potential for our Advisers to earn incentive fees may create an incentive for the Advisers to invest our funds in securities that are riskier or more speculative than would otherwise be the case, and our Advisers may have an incentive to increase portfolio leverage in order to earn higher management fees.
  • We have borrowed funds to make investments. As a result, we are exposed to the risks of borrowing, also known as leverage, which may be considered a speculative investment technique. Leverage magnifies the potential for gain or loss on amounts invested in us and may increase the risk of investing in us.
  • Our investments in prospective portfolio companies, which tend to be senior secured term loans, second lien loans, mezzanine debt and selected equity investments, may be risky, and we could lose all or part of our investment. 
  • In the event that our Adviser collects a fee on an investment that provides for PIK interest and such investment fails, our Adviser would not be required to repay the fee that it received with respect to that investment.
  • Most loans in which we invest will not be rated by a rating agency or, if they were rated, would be rated below investment grade. Such below investment grade debt securities are commonly known as "junk" bonds and are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.
  • We will be subject to financial market risks, including changes in interest rates, which may have a substantial negative impact on our investments.
  • Investors will not know the purchase price per share at the time they submit their subscription agreements and could receive fewer shares of common stock than anticipated if our Pricing Committee of the board of directors determines to increase the offering price to comply with the requirement that we are prohibited from selling shares below our net asset value. 
  • If we are unable to raise substantial funds in our ongoing, continuous “best efforts offering,” we will be limited in the number and type of investments we may make, and the value of your investment in us may be reduced in the event our assets underperform. 
  • Our shares of common stock are not listed on an exchange or quoted through a quotation system and will not be listed for the foreseeable future, if ever. Therefore, you will have limited liquidity and may not receive a full return of your invested capital if you sell your shares of common stock.

For more information, please read the prospectus, which you can download here or obtain by calling your financial advisor. You should read the prospectus carefully in order to fully understand the objectives, risks, sales charges, fees and expenses of HMS Income Fund before investing or sending money.