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State Funds Enhanced Ultra Short Duration Mutual Fund (STATX) to liquidate

TheShadowTheShadow
in Fund Discussions
https://www.sec.gov/Archives/edgar/data/1679960/000116204419000108/state497201902.htm

497 1 state497201902.htm
SUPPLEMENT DATED FEBRUARY 27, 2019 TO THE

ENHANCED ULTRA SHORT DURATION MUTUAL FUND PROSPECTUS

DATED MARCH 29, 2018, AS SUPPLEMENTED

On February 20, 2019, the Board of Trustees of State Funds (the “Trust”), upon the recommendation of New York Alaska ETF Management LLC, the investment adviser for the series of the Trust, approved a plan to liquidate and terminate (the “Liquidation”) the Enhanced Ultra Short Duration Mutual Fund (the “Fund”), a series of the Trust. It is anticipated that the Liquidation will be completed on or about March 6, 2019 (the “Liquidation Date”). A shareholder vote is not required to approve the Liquidation.

Any shares of the Fund outstanding on the Liquidation Date will be automatically redeemed on that date. Effective as of the regularly scheduled close of regular trading on the New York Stock Exchange on February 27, 2019, the Fund will no longer accept investments from new shareholders. Redemption orders received in proper form as described in the Fund’s prospectus after the close of regular trading on the New York Stock Exchange on February 27, 2019 will not be subject to any contingent deferred sales charges or other sales charges imposed by the Fund, except that shares held through a broker-dealer or other financial intermediary, such as omnibus accounts, may be subject to sales charges in accordance with the protocols of the financial intermediary.

At any time prior to the Liquidation Date, shareholders may redeem their shares of the Fund pursuant to the procedures set forth in the prospectus under “How to Redeem Shares.” A letter will be sent to shareholders who hold shares directly with the Fund with respect to the Liquidation and the distribution of their redemption proceeds. Shareholders who hold their shares in the Fund through a financial intermediary should contact their financial representative to discuss their options with respect to the Liquidation and the distribution of such shareholders’ redemption proceeds.

It is expected that as soon as practicable following the Liquidation, the cash proceeds of the Liquidation will be distributed to shareholders of the Fund in complete redemption of their shares, after all charges, taxes, expenses and liabilities of the Fund have been paid or accounted for. For federal income tax purposes, the automatic redemption on the Liquidation Date will generally be considered a taxable event like any other redemption of shares. Shareholders should consult with their tax advisors for more information about the tax consequences of the Liquidation to them, including any federal, state, local, foreign or other tax consequences.

In order to provide for an orderly liquidation and satisfy redemptions in anticipation of the Liquidation, the Fund will no longer pursue its investment objectives and strategies between now and the Liquidation Date.

For assistance or more information, shareholders can contact their registered representative or contact the Fund by calling toll free 1-800-523-8382.

* * * * *

Please retain this Supplement for future reference...

Comments

  • msf
    No explanation. Was it something we said?
    https://mutualfundobserver.com/discuss/discussion/47020/statx-what-am-i-missing/

    Shadow - I hope you have no problem cashing out.
  • TheShadowTheShadow
    @msf,

    I had a toe hold in the fund. I am somewhat disappointed in this news though.
  • TheShadowTheShadow
    This is a peculiar explanation:

    "Based on the recommendation of the adviser and given the Fund’s anticipated future expense, the Board has determined that liquidating the Fund would be in the best interests of the Fund and its shareholders."
  • JoeD
    edited February 2019
    This is as murky as the mutual fund world gets. Something seems amiss.

    I never did place my 10% investment in this fund due to complications over at Vanguard. I'd be ticked off if they closed right after I had moved $$ in there.

    Per msf's comment....maybe it WAS something we said?

    Perhaps David Snowball called them for an interview and the jig was up?
  • David_Snowball
    No one wanted to talk. Hmmm...
  • Mona
    I sold my large position last week. Vanguard had to contact them one or two times because they did not report back.
  • TheShadowTheShadow
    Put in a sell order this morning. Had to tell the transfer agent CSR that the fund was being liquidated.
  • Old_JoeOld_Joe
    You two are probably lucky (thanks to MFO & your own attention on this) to get out whole. I have a bad feeling that there will be some who won't.
  • TedTed
    @ MFO Members: Based on State Farm's decisions in 2017, I wouldn't be surprised they will soon exit the mutual fund business.

    If you have any investments with State Farm, you should probably move them. As of April 2017 their 12,000 agents stopped offering funds and other retirement investment products to their customers.

    M* State Farm Family Of Funds:
    http://quicktake.morningstar.com/fundfamily/state-farm/0C00001YTU/fund-list.aspx
  • Mona
    edited March 2019
    Old_Joe said:

    You two are probably lucky (thanks to MFO & your own attention on this) to get out whole. I have a bad feeling that there will be some who won't.

    Certainly not my attention, other than to MFO! A few folks in particular and they know who they are. Thanks you!


  • brucea
    There was a unusual statement in a previous SAI that the fund manager was allowed to buy a good number of shares at $10. The NAV is pretty steady at 100.
  • msf
    Nice catch. It's not unusual to see VCs get shares of a private company at a discount, but I've never seen something like that done with seed money for a mutual fund. (That's not to say it's not done, but it's not something I've run across.)

    I notice in the same SAI (dated March 29, 2018, supplemented Sept 21, 2018) that it has two controlling (> 25% share) owners: Interactive Brokers (56.92%) and Institutional Secured Credit LLC (29.66%).

    Not unusual for brokerages to have a sizeable stake (though rarely this large) in a fund. But that's because they have legal title ("street name") to the shares that their customers own. In this case, Interactive Brokers doesn't sell STATX, so what's it doing owning over half the fund?

    That 29.66% is (through a series of companies) completely owned by "Mr. Abarbanel who is the CEO of the fund and owns 100% of the Advisor." (This includes the 10,000 shares purchased at $10/share.)

    In a little touch of irony, Institutional Secured Credit is located on Painted Mirage Road, at the same address as the fund and the fund advisor.
  • msf
    Mona said:

    I sold my large position last week. Vanguard had to contact them one or two times because they did not report back.

    My apologies for forgetting that you too had invested in the fund. Glad to hear you've managed to escape intact.
  • syzygy
    @TheShadow - You are on the ball!
    I sold $25k of STATX on Thursday, 2/28/2019, and the funds are in my Vanguard settlement account today. It looks to be an orderly closing so far ...
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