Material Facts You Should Know
HMS Capital Management, LLC (the adviser) was not in existence prior to April 2009. HMS Capital Management, LLC is registered as an investment adviser under the United States Investment Advisers Act of 1940, as amended, with Securities and Exchange Commission. Registration does not imply directly or otherwise that the Securities and Exchange Commission recommends or approves the advisor. Nothing contained herein constitutes legal, tax, or other advice. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. These opinions may not fit to your financial status, risk and return preferences.
All index performance returns are believed to be correct and are provided for informational purposes only. The performance of the Indices is shown with all dividends reinvested in the index and does not reflect any reduction in performance for the effects of transaction costs or management fees. Performance information quoted above represents past performance and does not guarantee future results.
Performance for the portfolio is reported net of fees. The expense ratio is 1.0%. Performance information quoted above represents past performance and does not guarantee future results. The investment return and principal value of an investment in the investment strategy will fluctuate so that an investor’s market value, when sold, may be worth more or less than their original cost. Current performance may be higher or lower than the performance information quoted above. The Indices used for comparative purposes are included only as an indication of the general state of the markets in which HMS Capital Management, LLC invests. Indices are a broad based measurement of changes in stock market conditions based on the average performance of widely diversified group of companies. The above referenced portfolios, however, hold considerably fewer than 400-500 different securities. The Index is for comparative purposes only; it is not meant to be indicative of the investment strategy’s performance, asset composition, or volatility. Given the wide scope of the securities held by the indices, they should be inherently less volatile. Our results may differ markedly from those of the indices in either up or down market trends. The performance of the indices are shown with all dividends reinvested in the index and does not reflect any reduction in performance for the effects of transaction costs, taxes or management fees.
Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness. While HMS believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and HMS’s view as of the time of these statements. All information, views, opinions and estimates are subject to change or correction without notice. Investment recommendations may change and readers are urged to check with their investment advisors before making any investment decisions. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. HMS’s investment process does not ensure a profit or protect against loss. Actual results, performance or events may differ materially from those expressed or implied in such statements.
Expected return estimates are merely estimates and do not represent an implied return on the portfolio nor a guarantee of returns. Expected return estimates are calculated using historical returns for various asset classes and future performance of these asset classes may differ significantly from past performance. Expected returns may not be realized due to a variety of factors, including changes in economic growth, corporate profitability, geopolitical conditions, and inflation.
Risks Associated with Investing
General Risks. All investments are subject to inherent risks. Accordingly, you may lose money. When you sell your investments, they may be worth less than what you paid for them because the value of the investments will fluctuate reflecting day-to-day changes in market conditions, interest rates and numerous other factors.
Market Risk. The stock and bond markets can trade in random or cyclical price patterns, and prices can fall over sustained periods of time. The value of the investments will fluctuate as the stock or bond markets fluctuate and could decline over short- or long term periods.
Foreign Securities Risk. The portfolio may invest in foreign securities, and, from time to time, a significant percentage of your assets may be composed of foreign investments. Such investments involve greater risk in comparison to domestic investments for the following reasons: foreign companies may not be subject to the same degree of regulation as U.S. companies, and there may be less publicly available information about foreign issuers than U.S. companies; foreign companies may not be subject to uniform accounting, auditing and financial reporting standards; dividends and interest on foreign securities may be subject to foreign withholding taxes, and such taxes may reduce the net return to investors; and foreign securities are often denominated in a currency other than the U.S. dollar. With investment in any foreign security there is possibility of expropriation, confiscation, taxation, currency blockage, or political or social instability, any of which could negatively affect the investment.
Currency Risk. Foreign securities are subject to currency risk because fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the security.
Interest Rate Risk. The portfolio’s investments are subject to interest rate risk, which is the risk that the value of a security will decline because of a change in general interest rates. Investments subject to interest rate risk will usually decrease in value when interest rates rise and rise in value when interest rates decline. Also, fixed-income securities with long maturities typically experience a more pronounced change in value when interest rates change.
Credit Risk. The portfolio’s investments are subject to credit risk. An issuer’s credit quality depends on its ability to pay interest on and repay its debt and other obligations. Defaulted securities or those expected to default are subject to additional risks in that the securities may become subject to a plan or reorganization that can diminish or eliminate their value. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for the security.
Small- to Medium-Capitalization Risk. The portfolio has the ability to invest in securities of companies with small to medium market capitalizations. Such companies may be engaged in business within a narrow geographic region, be less well known to the investment community and have more volatile share prices. Also, companies with smaller market capitalizations often lack management depth, have narrower market penetrations, less diverse product lines and fewer resources than larger companies. Moreover, the securities of such companies often have less market liquidity and as a result, their stock prices often react more strongly to changes in the marketplace.
High Yield Security Risk. Investments in fixed-income securities that are rated below investment grade by one or more NRSROs (“high yield securities”) may be subject to greater risk of loss of principal and interest than investments in higher-rated fixed-income securities. High yield securities are also generally considered to be subject to greater market risk than higher-rated securities. The capacity of issuers of high yield securities to pay interest and repay principal is more likely to weaken than is that of issuers of higher-rated securities in times of deteriorating economic conditions or rising interest rates. In addition, high yield securities may be more susceptible to real or perceived adverse economic conditions than higher-rated securities. The market for high yield securities may be less liquid than the market for higher-rated securities. This can adversely affect the portfolio’s ability to buy or sell optimal quantities of high yield securities at desired prices.