About Howard Capital Management, Inc. (HCM)
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Dividend Income Balanced (Holdings: Equity and Multi-Income) 65/35 but may vary at manager’s discretion. The Dividend Income Balanced strategy typically seeks to participate in all markets and sectors by investing the portfolio in sectors which HCM’s Proactive Section Rotation (PSR) methodology indicates to have the potential to meet performance objectives. PSR is a tactical asset allocation methodology, which attempts to identify the best performing sectors at a given point in time. The Dividend Income Balanced strategy utilizes the HCM-BuyLine® proprietary indicator to monitor market conditions and assist in determining whether or not assets should be invested in equity products or moved to cash, cash equivalents, or bond funds. Multiple indicators are monitored in an effort to identify such trends in the equity markets. The strategy is rebalanced periodically, and it is possible for the allocation to be adjusted, including when the HCM-BuyLine® indicates a strengthening or weakening of the equity markets. Because this Howard Capital Management, Inc. (HCM) strategy is actively managed, it may experience above-average turnover, which could have a negative impact on account performance. To discourage short-term investing and excessive trading, funds, including those utilized in the Dividend Income Balanced, may impose short-term redemption fees that range from 0.50% to 2.00%. HCM seeks to avoid these fees, but they may occasionally be incurred.
Performance Results. Returns reflect the aggregate of FOLIOfn client accounts using the DIVIDEND INCOME BALANCED strategy. Returns 1) are calculated monthly, 2) are net of fees (Advisory 2.20%, Custodian 0.25%), deducted quarterly in advance, 3) reflect the reinvestment of all income, and 4) are calculated and reported in U.S. dollars. All performance results are audited and have been independently verified.
Mutual Fund Advisory Services. We provide investment advisory services to the HCM Tactical Aggressive Fund, HCM Dividend Sector Plus Fund, and the HCM Income Plus Fund (“the Funds”), mutual funds registered under the Investment Company Act of 1940. The HCM Tactical Aggressive Fund seeks long-term capital appreciation through investments in (i) domestic equity securities of any market capitalization, (ii) investment companies (including mutual funds that use leverage), closed-end funds and exchange traded funds (“ETFs”), (including ETFs that use leverage), and (iii) cash and cash equivalents. The HCM Dividend Sector Plus Fund seeks to achieve its investment objective through investment in (i) dividend paying equity securities of companies included in the S&P 500 and (ii) cash and cash equivalents. The HCM Income Plus Fund seeks income and capital appreciation through investments in ETFs including but not limited to utilities, convertible bonds, real estate, fixed income of any maturity, duration, and credit quality including “junk bonds.” We will be entitled to an annual advisory fee equal to 1.25% of each of the Fund’s average daily net assets paid on a monthly basis. We may recommend investments in the Funds for other advisory client accounts, including accounts for owners, officers, and investment adviser representatives associated with our firm. If you have engaged us for discretionary management services, we may invest a percentage of your assets in the Funds without further approval from you. Because we receive compensation from the Funds, we have a financial incentive to invest client assets in the Funds or to recommend that clients invest in the Funds. However, we will only make such investments and/or recommendations where we believe it is consistent with our fiduciary duty and your investment objectives. We will earn fees from the Funds and fees from you for investments made in the Funds. For ERISA assets invested in the Funds, the advisory fee on such assets will be offset by the amount of the management fee paid to us by the Funds. At our discretion, we may offset a portion of your advisory fee against the fees and expenses you may otherwise pay to the Funds. You should refer to the prospectus for a complete description of the fees, investment objectives, risks and other relevant information associated with investing in the Funds. Refer to the Investment Discretion section below for additional disclosures on our discretionary authority to manage your investment account. Securities held in separate accounts, including accounts for owners, officers, and other individuals associated with our firm, may also be the same securities as those purchased by the Funds.
HCM-BuyLine®. The HCM-BuyLine® is a strategic proprietary indicator used to assist in determining when and how much to invest in equities, including the potential for the equity portion of an HCM strategy to become fully invested in cash, cash equivalents, or bond funds. When the HCM-BuyLine® indicates a bull market, HCM then identifies the particular mutual funds, ETFs or individual stocks that we believe have the best return potentials in the current market from the universe of assets available in each given program and invests in them. When the HCM-BuyLine® indicates a bear market, HCM moves clients’ investments to less risky alternatives. Not every HCM-BuyLine® buy and sell will result in a profitable trade. There will be times when following the indicator results in a loss. However, there have been situations in the past in which HCM reduced clients’ exposure to equities during market downturns by following an HCM-BuyLine® signal, thereby preserving capital. An important goal of the HCM-BuyLine® is to outperform the market on a long-term basis. The reason is the mathematics of gains and losses. A portfolio which suffers a 30% loss takes a 43% gain to return to the previous portfolio value. The HCM-BuyLine® is a reactive indicator, not a proactive one. It will not catch the first 5–10% of a bull or bear market. Ideally, it will avoid most of the downtrends and catch the bulk of the uptrends. There may be times when the use of the indicator will result in a loss when we re-enter the market. Other times there may be a modest positive impact. When severe downtrends occur, however, such as in 2000-2002 and 2007-2008, it has the potential to make a significant difference in portfolio performance. Naturally, there can be no guarantee that the HCM-BuyLine® indicator will perform as anticipated. The HCM-BuyLine® is not a stoploss order that automatically sells securities in the portfolio at a certain price. As a result, it will not necessarily limit your losses to the desired amounts due to the limitations of the HCM-BuyLine®, market conditions, and delays in executing orders.
Comparative Benchmark. S&P 500 Monthly Reinvested Index (20%), HFRX Equity Hedge Index (45%), Barclays Capital US Aggregate Bond TR Index 35%).
Historical performance results for investment indices and/or categories have been provided for general comparison purposes only. Indices are unmanaged investment measures and are not available for investment purposes. The returns of the strategy in certain years may be higher than the returns of its comparative benchmark index as a result of certain market factors and events that may not be replicated in the future. In addition, the strategy’s holdings may differ significantly from the securities that comprise the benchmark. No current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the advisor), will be profitable or equal to past performance levels. The actual performance of an individual client’s portfolio may be lower or higher than the performance of the HCM portfolio strategy due to differences in timing of contributions and withdrawals, account start date, actual fees paid, and other factors. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark for measuring the performance of a portfolio. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. The ability of the program to position assets in cash and/or bond funds results in its returns exhibiting a considerable variation from, and lower volatility than, its benchmark returns during periods when the HCM BuyLine® indicates higher risk for equities. During other periods, the program’s returns may exhibit higher volatility than those of the benchmark. All investment strategies have the potential for profit or loss. There can be no assurances that any investment or strategy will match or outperform any particular benchmark. Past performance is not a guarantee of future investment success.
Dividend Income Balanced data in this report has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Howard Capital Management, Inc. Howard Capital Management, Inc. is registered as an investment adviser with the SEC and only transacts business where it is properly registered or is otherwise exempt from registration. SEC registration does not constitute an endorsement of the firm by the Commission, nor does it indicate that the adviser has attained a particular level of skill or ability. LASS.DIB.1021
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