When most people think about investing, they first turn to the stocks, bonds and mutual funds that provide the capital for America’s publicly owned businesses. But these public companies—roughly 15,000 in number1—represent only a fraction the nation’s six million or so businesses, many of which are highly successful and growing private enterprises. These businesses must obtain the capital they need through direct investments and loans instead of the public markets. That’s why Congress created business development companies, or BDCs, in 1980: to make it easier for privately owned U.S. companies to get the capital they need.
One form of BDC is the public, non-traded BDC. These particular BDCs pool funds from individuals, which are then used to make loans, equity investments, or both, primarily in privately owned U.S. companies with annual revenues greater than $10 million. Income from the interest payments on loans, dividends and appreciation on equity is returned to investors in the form of distributions during the life cycle of the fund and through proceeds when assets are sold.2
If you’re like many investors today, you’re searching for an investment that provides the potential for steady income in the form of distributions and long-term appreciation. HMS Income Fund, a public, non-traded BDC, offers you these opportunities and a chance to invest in some of the most exciting and vibrant companies in the U.S.3
1Approximate number of publicly traded companies based on the approximate number of companies listed on the NYSE and NASDAQ as of December 2015.
2There is no public market for shares of a non-traded BDC and non-traded BDCs are not obligated to effectuate a liquidity event by a specified date. It may be difficult for investors to sell their shares.
3There is no assurance that the Fund will pay distributions. The amount and timing of distributions are not guaranteed. Investment income has been insufficient to fund distributions due to the incentive fee on income, which the Adviser and Sub-Adviser have agreed to waive. For the nine months ended September 30, 2016, 70% of distributions were paid from net realized income from operations (before the waiver of the incentive fee on income), 1% came from the waiver of the incentive fee on income, and 29% came from distributions in excess of net investment income, which represents adjustments made to GAAP basis net investment income to arrive at taxable income available for distributions. 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.
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.
You should be aware that the Fund, the Advisers, the Dealer Manager, Main Street and Hines and their respective officers, directors, employees and affiliates do not undertake to provide impartial investment advice or to give advice in a fiduciary capacity in connection with the Fund’s public offering of, or the purchase of, the Shares. In addition, as described elsewhere in this prospectus, each of the Advisers and the Dealer Manager has a financial interest associated with this offering of the Shares, including prospective fees, expense reimbursements and other payments they anticipate receiving from the Fund in connection purchases of the Shares. This prospectus is not intended as a recommendation to make an investment in the Shares, and investors should consult their financial advisors before making an investment decision.