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Not to deviate too far from the original post, but the SilverDatsun handle struck me as most people don't remember Datsuns.
I was wondering if you still own or owned a Datsun.
I have my father's Datsun 1977 280Z 5-speed in the garage. Just took it out today to warm it up. I asked him when I was younger could I take it for a drive...he said "no!" Never realized I would be driving it after his passing. I get a lot of thumbs up or honking horns when I am out on the road.
I voted for the proposals as it would lower the costs. Couldn't see what the downside would be to their proposals. I am sure there is a contingency plan if the proposals do not pass.
I voted against because after two phone calls involving consulting supervisors nobody representing M&P could tell me what I would actually be voting for. I could not bring myself to vote for something that people who worked for M&P did not understand. Or worse: that they were deliberately keeping obscure.
Re Datsun, there was a joke in the early 1970s about how Datsun got its name. The Japanese manufacturer hired a German advertising agency to create a name for their new line of automobiles. The ad man asked when the car maker need the new name. "Tomorrow" was the reply. Tomorrow?!! Dat Soon???!!!!
@Old_Joe: any more down market days, and many of the previously staid will get goofy. The new Nissan Z, in yellow no less, has a spot on the cover of Consumers Reports.
fyi, general state of US play as of some years ago (from an expert who has repaired to Europe), so perhaps things have changed, but I thought it a good summary:
The entire thing can be explained in a few words:
- In US mutual funds, the trust is the umbrella structure and the individual funds it holds are (singularly and collectively) a series. It's done this way for organizational efficiency. There's nothing inherently negative about it from a shareholder perspective.
- There are two areas where it is SOP for funds to set broader "official" limits than they generally intend to rely on, and then to back off those by setting internal limits that are more restrictive. Those two areas are fees and investment limits. This allows them to periodically adjust fees and investment limits without the bother and expense of a proxy vote. This is how it is possible for the "official" limits to be broadened while the effective (internal) limits remain unchanged. Because of this, in many cases the limits in the prospectus can be quite misleading. A fund may say it invests at least 2/3 of assets in security type X, but if you look at its history you might see that in practice it rarely invests less than 93% in security type X. Portfolio managers want to have as much flexibility as they can in case they need it, but they generally don't expect to -- and don't want to -- use it.
Thus: - Corporations as well as trusts may be used as "umbrella structures": - Funds are investment companies so they must have a company structure, usually a corporation or trust, even if the structure is not for the purpose of providing an "umbrella"
Holding multiple funds (series) in a single trust or corporation is usually on balance advantageous, but there are some small negatives (cross fund liability exposure and administrative overload) as well:
Series funds are subject to the theoretical risks of being liable for the debts of other funds. [See Section III(B)(3)(b-d) in cited source, below.] There is little or no other advantage to offering a family of funds with a separate legal entity for each fund. Multiple legal entities inevitably require duplication and expense resulting from separate governing boards, periodic reports, and other regulatory filings. However, maintaining too many series in the same entity can cause administrative difficulties in handling board meetings and preparing and filing shareholder reports and registration statements, which are usually on the same schedule for all series. Thus, many fund sponsors with a large number of funds use several series companies, each containing several series, and often having different fiscal year-ends.
Mairs & Power Growth Fund Mairs & Power Balanced Fund Mairs & Power Small Cap Fund (together, the “Funds”)
April 8, 2022
Supplement to the Summary Prospectuses, Prospectus, and Statement of Additional Information each dated April 30, 2021, as previously supplemented
As previously communicated, a special meeting of shareholders of the Funds was held on March 30, 2022. At the special meeting, shareholders of each of the Funds approved a proposal to reorganize each Fund into a corresponding newly created series of Trust for Professional Managers (together, the “Acquiring Funds”), which are designed to be substantially similar from an investment perspective to the current Funds. Mairs & Power, Inc. will serve as the investment adviser to the Acquiring Funds. The reorganization is intended to qualify as a tax-free transaction for federal income purposes.
The closing of the reorganization will take place in late April 2022. Shareholders of the Funds will become shareholders of the corresponding Acquiring Funds, receiving shares of the corresponding Acquiring Funds equal in value to the shares of the Funds held immediately prior to the reorganization. Following the closing of the reorganization, shareholders of the Funds will receive a Prospectus for their respective Acquiring Fund, which provides information about these changes along with other information regarding the Acquiring Funds.
Thank you for your investment. If you have any questions, please call the Funds toll-free at 800-304-7404.
A common way to change the legal structure of a company (including an investment company, i.e. mutual fund), is to create a shell company with the desired structure, and then do an M&A. The old company is "moved" into the new structure, and existing shareholders get shares of the "new" company.
The shareholders approved this move and it will be executed later this month.
Nothing sinister here. You'll find a slew of pages describing procedures for converting California corps into Delaware corps. One of the common techniques is to merge the Calif. corp. into a new (shell) Delaware corp. Restructuring mutual funds is conceptually similar.
But it will all be substantially the same outfit, same goals and directions? From the proxy:
The proposed reorganization of the Target [old] Funds will not result in a change in the current investment adviser, Mairs & Power, Inc., to the Target Funds, or any change to the Target Funds’ investment objectives, strategies or investment policies. ... the expenses of the Reorganization were not expected to result in an increase in each Target Fund’s total annual fund operating expense ratio
It will not, however, be the same outfit. The board of directors will be different.
Same investment adviser (Mairs & Power, Inc.), no "change to the ... investment objectives, strategies, or investment policies". What more are you looking for? To compare the prospectus of the current funds and of the new funds?
Current Principal Investment Strategies of M&P Growth Fund:
The Fund invests primarily in U.S. common stocks. In selecting securities for the Fund, the Fund’s investment adviser, Mairs & Power, Inc. (the Adviser), gives preference to companies that exhibit the potential for above-average growth and durable competitive advantages at reasonable valuations. In the Adviser’s experience, these securities typically have strong returns on invested capital. The Adviser follows a multi-cap approach and the Fund invests in stocks of small-cap, mid-cap and large-cap companies. The Adviser focuses generally on companies located in Minnesota and other states in the Upper Midwest region of the U.S. (which the Adviser considers to be the states of Illinois, Iowa, Minnesota, North Dakota, South Dakota and Wisconsin).
New Principal Investment Strategies of M&P Growth Fund: [Why bother? It is the same, verbatim.]
P.S. The independent registered public accounting firm is changing, from Earnst & Young LLP headquartered in Minneapolis to Cohen & Kahn, Ltd based in Milwaukee. Legal counsel is changing as well, from Godfrey & Kahn, S.C. in Milwaukee to Vedder Prince P.C. in Chicago.
So we can already see how changing the board will affect things. We can likely expect the annual statements to have a different format. Maybe even a different color
No change in fund administrator, transfer agent, or accountant. US Bankcorp Fund Services (based in Milwaukee) provides these services to both the current funds and the new ones.
Comments
This is the best thread hijack that I've seen around here in quite a while!
I was wondering if you still own or owned a Datsun.
I have my father's Datsun 1977 280Z 5-speed in the garage. Just took it out today to warm it up. I asked him when I was younger could I take it for a drive...he said "no!" Never realized I would be driving it after his passing. I get a lot of thumbs up or honking horns when I am out on the road.
I voted for the proposals as it would lower the costs. Couldn't see what the downside would be to their proposals. I am sure there is a contingency plan if the proposals do not pass.
Re Datsun, there was a joke in the early 1970s about how Datsun got its name. The Japanese manufacturer hired a German advertising agency to create a name for their new line of automobiles. The ad man asked when the car maker need the new name. "Tomorrow" was the reply.
Tomorrow?!! Dat Soon???!!!!
1984 (US) name change to Nissan
The entire thing can be explained in a few words:
- In US mutual funds, the trust is the umbrella structure and the individual funds it holds are (singularly and collectively) a series. It's done this way for organizational efficiency. There's nothing inherently negative about it from a shareholder perspective.
- There are two areas where it is SOP for funds to set broader "official" limits than they generally intend to rely on, and then to back off those by setting internal limits that are more restrictive. Those two areas are fees and investment limits. This allows them to periodically adjust fees and investment limits without the bother and expense of a proxy vote. This is how it is possible for the "official" limits to be broadened while the effective (internal) limits remain unchanged. Because of this, in many cases the limits in the prospectus can be quite misleading. A fund may say it invests at least 2/3 of assets in security type X, but if you look at its history you might see that in practice it rarely invests less than 93% in security type X. Portfolio managers want to have as much flexibility as they can in case they need it, but they generally don't expect to -- and don't want to -- use it.
That's brilliantly concise and informative. Thank you for that.
This editorial colleague does plain language financial work for a living
https://www.sec.gov/investment/fast-answers/divisionsinvestmentinvcoreg121504htm.html
Thus:
- Corporations as well as trusts may be used as "umbrella structures":
- Funds are investment companies so they must have a company structure, usually a corporation or trust, even if the structure is not for the purpose of providing an "umbrella"
Holding multiple funds (series) in a single trust or corporation is usually on balance advantageous, but there are some small negatives (cross fund liability exposure and administrative overload) as well: https://files.klgates.com/files/upload/dc_im_03-organizing_mutual_fund.pdf
https://www.sec.gov/Archives/edgar/data/1521353/000089418922002552/mpft_497e.htm
497 1 mpft_497e.htm SUPPLEMENTARY MATERIALS
Filed pursuant to Rule 497(e)
Registration Nos. 333-174574; 811-22563
MAIRS & POWER FUNDS TRUST
Mairs & Power Growth Fund
Mairs & Power Balanced Fund
Mairs & Power Small Cap Fund
(together, the “Funds”)
April 8, 2022
Supplement to the Summary Prospectuses, Prospectus, and Statement of Additional Information
each dated April 30, 2021, as previously supplemented
As previously communicated, a special meeting of shareholders of the Funds was held on March 30, 2022. At the special meeting, shareholders of each of the Funds approved a proposal to reorganize each Fund into a corresponding newly created series of Trust for Professional Managers (together, the “Acquiring Funds”), which are designed to be substantially similar from an investment perspective to the current Funds. Mairs & Power, Inc. will serve as the investment adviser to the Acquiring Funds. The reorganization is intended to qualify as a tax-free transaction for federal income purposes.
The closing of the reorganization will take place in late April 2022. Shareholders of the Funds will become shareholders of the corresponding Acquiring Funds, receiving shares of the corresponding Acquiring Funds equal in value to the shares of the Funds held immediately prior to the reorganization. Following the closing of the reorganization, shareholders of the Funds will receive a Prospectus for their respective Acquiring Fund, which provides information about these changes along with other information regarding the Acquiring Funds.
Thank you for your investment. If you have any questions, please call the Funds toll-free at 800-304-7404.
* * * * *
Please retain this supplement for your reference.
The shareholders approved this move and it will be executed later this month.
See, e.g.
https://www.dlapiperaccelerate.com/knowledge/2019/reincorporating-a-california-corporation-to-a-delaware-corporation.html
But it will all be substantially the same outfit, same goals and directions?
From the proxy: It will not, however, be the same outfit. The board of directors will be different.
Current: https://www.mairsandpower.com/images/reports/prospectuses/Mairs__Power_Prospectus.pdf
New: https://www.sec.gov/Archives/edgar/data/1141819/000089418922001017/mairspowercombined485a.htm
Current Principal Investment Strategies of M&P Growth Fund: New Principal Investment Strategies of M&P Growth Fund: [Why bother? It is the same, verbatim.]
P.S. The independent registered public accounting firm is changing, from Earnst & Young LLP headquartered in Minneapolis to Cohen & Kahn, Ltd based in Milwaukee. Legal counsel is changing as well, from Godfrey & Kahn, S.C. in Milwaukee to Vedder Prince P.C. in Chicago.
So we can already see how changing the board will affect things. We can likely expect the annual statements to have a different format. Maybe even a different color
No change in fund administrator, transfer agent, or accountant. US Bankcorp Fund Services (based in Milwaukee) provides these services to both the current funds and the new ones.