Table of Contents
- Investment Goal
- Form N-2
- Form N-2/A
- Form 486BPOS
- Form POS 8C
- Prospectus
- Summary Prospectus
- Statement Of Additional Information
- Annual Report
- Semiannual Report
Investment Goal
- To provide investors with as high a level of current income as is consistent with the preservation of shareholders’ capital and liquidity. The Fund also tries to maintain a stable $1.00 share price.
- Tax-exempt
- Maintain stable $1.00 share price
- Yield
Investment Strategy
- The Fund invests at least 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash. For purposes of this policy, “Government securities” means any securities issued or guaranteed as to principal or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing. Government securities include those issued by government agencies or instrumentalities, such as the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Federal Home Loan Banks and Federal Farm Credit Banks, whose securities are neither issued nor guaranteed by the U.S. Government. The Fund intends to be a “Government money market fund,” as such term is defined in or interpreted under Rule 2a-7 under the Investment Company Act of 1940 (1940 Act). Shareholders will be given at least 60 days’ advance notice of any change to the 99.5% policy.
- The Fund uses the amortized cost method of valuation to seek to maintain a stable $1.00 share price and does not currently intend to impose liquidity fees on Fund redemptions. Please note, however, that the board of trustees reserves the ability to subject the Fund to a liquidity fee in the future, after providing prior notice to shareholders.
Use of Proceeds
- The net proceeds of the continuous offering of shares will be invested in accordance with the Fund’s investment objective and policies (as stated below) and are expected to be invested within seven days of receipt. The Fund is not required to raise a minimum amount of proceeds from this offering. There can be no assurance that the Fund will be able to sell all the shares it is offering. If the Fund sells only a portion of the shares it is offering, the Fund may be unable to achieve its investment objective.
Taxes
- The Fund's distributions are generally taxable to you as ordinary income. It is not anticipated that the Fund will be available to tax-deferred investors.
Share Classes
| USDX |
| Form |
N-2 |
| Public |
Public |
| Type of stock |
Preferred |
| Offering Price |
1 |
| wUSDX |
| Form |
486BPOS |
| Public |
Private |
| Type of stock |
Common |
| Offering Price |
100 |
The Fund
- XFT U.S. Treasury Fund (the “Fund”) is a continuously offered, diversified, closed-end management investment company that operates as an interval fund. As an interval fund, the Fund will offer to make repurchases of its outstanding shares at net asset value (“NAV”) on a monthly basis such that the aggregate percentage of common shares subject to repurchase in any three-month period will not exceed 25% of the Fund’s outstanding common shares, unless such offer is suspended or postponed in accordance with regulatory requirements. See “Monthly Repurchases of Shares.”
Distributions
- The Fund intends to distribute most or all of its net earnings and realized gains, if any, in the form of dividends from net investment income (“dividends”) and distributions of net realized capital gains (“capital gain distributions” and, together with dividends, “Distributions” and each, a “Distribution”). The Fund intends to accrue dividends daily and distribute them to shareholders of record quarterly. Capital gain distributions, if any, usually will be declared and paid annually in December. The Fund does not have a fixed distribution rate nor does it guarantee that it will pay any distributions in any particular period. Unless a shareholder elects otherwise, their distributions will be reinvested in additional USDX under the Fund’s distribution reinvestment plan. Shareholders who elect not to participate in the Fund’s distribution reinvestment plan will receive all distributions in cash paid to the shareholder of record (or, if the shares are held in a nominee name, then to such nominee). See “Distribution Policy” and “Distribution Reinvestment Policy.”
Distribution Policy
- The Fund’s distribution policy is to make quarterly distributions to shareholders. If, for any distribution, investment company taxable income (which term includes net short-term capital gain), if any, and net tax-exempt income, if any, is less than the amount of the distribution, then assets of the Fund will be sold and the difference will generally be a tax-free return of capital distributed from the Fund’s assets. The Fund’s final distribution for each calendar year will include any remaining investment company taxable income and net tax-exempt income undistributed during the year, as well as all net capital gain realized during the year. If the total distributions made in any calendar year exceed investment company taxable income, net tax-exempt income and net capital gain, such excess distributed amount would be treated as ordinary dividend income to the extent of the Fund’s current and accumulated earnings and profits. Distributions in excess of the earnings and profits would first be a tax-free return of capital to the extent of the adjusted tax basis in the shares. After such adjusted tax basis is reduced to zero, the distribution would constitute capital gain (assuming the shares are held as capital assets).
- This distribution policy may, under certain circumstances, have certain adverse consequences to the Fund and its shareholders because it may result in a return of capital resulting in less of a shareholder’s assets being invested in the Fund which, over time, would increase the Fund’s expense ratio and reduce shareholder returns. The distribution policy also may cause the Fund to sell a security at a time it would not otherwise do so in order to manage the distribution of income and gain. The initial distribution will be declared on a date determined by the Board. Given the Fund’s investment strategy, it is unlikely that the Fund will need to pay any distribution as a return of capital.
- Under the terms of a dividend reinvestment plan adopted by the Fund, all dividends declared on shares will be automatically reinvested in additional shares of the Fund. Shareholders automatically participate in the dividend reinvestment plan unless and until they make an election to withdraw from the plan. See “Distribution Reinvestment Policy.”
- The dividend distribution described above may result in the payment of approximately the same amount or percentage to the Fund’s shareholders each period. The dividend distribution that the Fund pays to shareholders may vary as portfolio and market conditions change, and will depend on a number of factors. There can be no assurance that a change in market conditions or other factors will not result in a change in the dividend distribution or that any dividends received will be sustainable in the future.
- As required under Section 19 of the 1940 Act, each distribution payment made to a shareholder will be accompanied by a written statement which discloses the source or sources of each distribution. The IRS requires you to report these amounts, excluding returns of capital, on your income tax return for the year declared. The Fund will provide disclosures, with each distribution, that estimate the percentages of the current and year-to-date distributions that represent (1) net investment income, (2) capital gains and (3) return of capital. At the end of the year, the Fund may be required under applicable law to re-characterize distributions made previously during that year among (1) ordinary income, (2) capital gains and (3) return of capital for tax purposes. An additional distribution may be made in December, and other additional distributions may be made with respect to a particular fiscal year in order to comply with applicable law. Shareholders should read any written disclosure provided pursuant to Section 19(a) and Rule 19a-1 carefully and should not assume that the source of any distribution from the Fund is net profit.
- The Board reserves the right to change the quarterly distribution policy from time to time.
Risk Controls
- CEFs themselves are diversified professionally managed pools of assets
- CEFA seeks to have no more than 50% one week’s trading volume for a CEF to reduce the impact our trading has on the market price of a CEF
- The fixed capital structure of a CEF takes away redemption risk which can apply to both ETFs and OEFs
- We can enter stop or trailing stop orders to create a floor for a CEF’s exposure as well as GTC Limit Orders
- The involvement of activist investors helps avoid large pervasive discounts for most CEFs
- A CEF purchased at a discount is a great way to gain more exposure per dollar invested; giving the ability for portfolio leverage without the interest cost of leverage
- We rarely have more than 8% portfolio exposure to any one fund or 15% allocated to any one sub-sector except for sector-based models
- CEFA reviews firm positions on a regular ongoing basis