Prism Shareholder Letter – December 2021
Dear Shareholders,
The Yieldstreet Prism Fund was launched to provide a solution to investors who were seeking to generate current income outside of the public bond market. The Fund, which primarily invests in private market debt opportunities, has been successful in achieving this goal and has distributed an annualized ~8%1 in 2021, meeting its target objective.
The Fund was initially set up to have a terminal or end date in March 2024, when it was expected to wind down and repay investors outstanding capital. Effective today, the Fund’s Board of Directors has approved a change to remove the Fund’s terminal date and make the Fund a perpetual fund, like the vast majority of ’40 Act funds offered today.
Relative to the Fund’s investment mandate, this change will enable the Fund to invest in a wider range of potential investments, rather than being limited only to investments with terms that would mature prior to the original terminal date, which we believe will benefit shareholders.
As a reminder, the Prism Fund was launched during the pandemic and the investment team has been purposefully selective in deploying capital given the continued market uncertainty. In addition, the investment team believes opportunities with shorter maturities are generally less attractive on a relative value basis than longer maturity opportunities. As such, the team has invested more in public market securities (or more liquid investments) as a way to keep the Fund invested while the team stays selective. These public market investments have resulted in an increase in the volatility of the Fund’s NAV, consistent with what we’re seeing in the broader market.
Today’s change will enable the team to deploy capital into areas of the market they believe offer the most attractive opportunities, which is expected to reduce the amount of public market securities owned by the Fund over time.
Despite the change, we intend to continue to offer investors the opportunity to liquidate at least a portion of their shares via the Fund’s quarterly tender offers. To help accommodate investors, the Fund expects to increase the amount of available shares to be tendered in one or more future tender offers from the previously offered 5%2, supporting more liquidity for investors. By announcing this change today, we believe that we will be able to offer every investor to date the opportunity to liquidate their entire current portfolio by March 2024 in accordance with our initial mission.
Sincerely,
Yieldstreet
Investors should carefully consider the investment objectives, risks, charges and expenses of the YieldStreet Prism Fund before investing. The prospectus for the YieldStreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund.
Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.
The securities described in the prospectus are not offered for sale in the states of Nebraska or North Dakota or to persons resident or located in such states. No subscription for the sale of Fund shares will be accepted from any person resident or located in Nebraska or North Dakota.
1. Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund’s Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.
2. The Fund intends to offer to repurchase shares from investors at the discretion of the Fund’s Board of Directors and depending upon the performance of the Fund under its Share Repurchase Program. The Fund will limit the number of shares to be repurchased under the Share Repurchase Program in any calendar year to no more than 20% of shares outstanding in the prior calendar year, or no more than 5% in each quarter. If the number of shares submitted for repurchase under the Share Repurchase Program by investors exceeds the number of shares the Fund seeks to repurchase, the Fund will repurchase shares from investors on a pro-rata basis, and not on a first-come, first-served basis. The Fund may also, if the Board of Directors so approves, undertake one or more tender offers outside of our Share Repurchase Program prior to March 9, 2024, which was previously our termination date. The timing and terms and conditions of any such tender offers will be determined by the Board of Directors.
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2 Represents an net annualized return, using an internal rate of return (IRR) methodology, with respect to the matured investments shown in your Portfolio experience, utilizing the effective dates and amounts of subscriptions and distributions to and from the investments, net of management fees and all other expenses charged to the investments.[read more]