https://www.sec.gov/Archives/edgar/data/1396092/000120928617000225/e2088.htm
497 1 e2088.htm
B. Riley Diversified Equity Fund (the “Fund”)
(Investor Class Shares – BRDRX)
(Institutional Class Shares – BRDZX)
(Class A Shares – BRDAX)
8730 Stony Point Parkway, Suite 205
Richmond, Virginia 23235
Supplement dated April 4, 2017
To the Fund’s Prospectus dated May 1, 2016
(as supplemented from time to time)
* * * * * * * *
Elimination of Investment Minimums for the Fund
Effective immediately, all references to investment minimums and minimum subsequent investments in the Fund are hereby removed. B. Riley Asset Management, a division of B. Riley Capital Management, LLC, the investment adviser to the Fund, determined to no longer require investment minimums or minimum subsequent investments for the Fund.
Previously, the minimum initial purchase or exchange into the Fund was $5,000 for Investor Class Shares, $10,000 for Institutional Class Shares, and $3,000 for Class A Shares. Subsequent investment amounts were previously $2,500, $2,500 and $100, respectively, for Investor Class Shares, Institutional Class Shares, and Class A Shares.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

In its ads, is Schwab effectively selling away from SWPPX and SWTSX? Why offer them if Schwab 1000 SNXFX offers "decades of advantages"? Is Schwab doing its investors a disservice? (Well, we know they're not fiduciaries.)
It's all marketing. Vanguard does the same thing. A decade ago, when Vanguard's large cap stock index was new, I suggested to my mother that she take advantage of Vanguard's (then) free financial plan review. The CFP suggested a respectable mix of Vanguard index funds - no surprise there.
But I questioned one selection - Vanguard 500 over their Large Cap Stock fund. Vanguard had made a big deal out of how it worked with MSCI to design indexes for making tracking funds more efficient. For example, adding buffer zones to reduce turnover. If you believed Vanguard (and I do believe they do a lot of work on how to best manage index funds), then this should have been the better fund, and the one to recommend. (In reality, you need a microscope to see the performance differences, and which one does better depends upon the time period selected.)
But everyone knows the S&P 500. So Vanguard 500 was recommended based on brand recognition (sellability), not on it being the best Vanguard had to offer. I'm sure Schwab has made a calculation based on how much it gets for one fund vs. another, how much it has to pay S&P for licensing fees, how much better or worse one fund will sell than another, and tilted its advertising accordingly.
BTW, if there's anything out there on how Schwab manages its index funds as contrasted with Vanguard, MSCI, Fidelity, etc., I'm interested. (For example, how much portfolio lending is done, what percentage of that income goes back into the fund, timing flexibility on trades with index reconstitutions, etc.) I haven't seen anything from Schwab, but then again, I haven't really gone looking for Schwab's methodology.
I suspect this is a bigger factor than which index Schwab is tracking ineach of its large cap blend index funds. Which brings us full circle to the title of this thread.

Dan Wiener sent out a sharp email this morning to his subscribers. It's well-written, focused and does a nice job of reminding folks how to bring a critical eye to investment ads.
Here's an excerpt of Dan's missive:
"Over this morning’s third cup of coffee I turned my Wall Street Journal to a full-page ad from Charles Schwab & Co. that caught my eye. Citing “Decades of advantages” the advert compares the Schwab 1000 Index to the S&P 500 Index and, not surprisingly, declares the Schwab index a winner.
… let’s compare the Schwab 1000 Index Fund against another, oh, 600+-stock portfolio like, oh, Vanguard’s LargeCap Stock Index. The fund is relatively new, with only a 13-year history but over that period its 5-year and 10-year returns outpace the Schwab fund by anywhere from 12 basis points to 28 basis points, per annum. Not bad.
More importantly, if you believe Charles Schwab’s ad, more stocks means better diversification and better performance. So, how about comparing the Schwab index and fund … with Vanguard’s even broader Total Stock Market Index?
You know where this is headed. For all Schwab’s bluster, their fund can’t compete. Pick your Vanguard share class, Total Stock Market Index outperforms. Sometimes by as little as 22 basis points per annum, and sometimes by as much as 57 basis points depending on the share class and the time frame."

Hi, guys.
I think the asset allocation question is interesting. Once, a long, long time ago, I concluded that the only fund a long-term investor needed was a U.S. microcap value fund; highest possible returns, volatility be danged. (Remember Fremont US Microcap FUSMX, a favorite?)
I'm not 100% sure of that anymore. Over the past decade (at least through late last year), bonds has outperformed stocks. Over the 40 years period from 1969-2009, bonds outperformed. From the period from inception of the benchmark to the last presidential election (1994-2016), EM bonds had pretty much matched the S&P 500 and utterly buried EM stocks. You might say, "that's unfair, you've picked periods where the stock market has three of its worst crises in a century and two 'lost decades.' The bond market meanwhile had a 35 year bull market."
Mostly, I'd nod. On the other hand, you also had a period of the most amazing drivers of economic growth we've ever seen, from the rise of the internet and mass computerization to the fall of trade barriers and financial deregulation worldwide.
So, how much confidence do you have in describing the state of the markets in 2050?
I'm clueless and might well be ... ummm, "watching from the sidelines" by then.
So if I had to make a suggestion, it would be "spread your bets, stay agile, keep your costs down."
---
In that way, BBALX is rather more aggressive than most. That is, they've structured-in exposure (for example, to natural resources and emerging markets) that others might dodge. It dropped 30% in '09. Is that bad? Mostly if you think of it as designed to be "conservative" rather than "risk-conscious." Fidelity Global Balanced and Vanguard STAR, for example, both dropped noticeably more. The global balanced funds from PIMCO, T. Rowe Price (RPGAX) and Templeton weren't around, so we can't use them as benchmarks.
Do I love BBALX? Nope. I respect it as a well-designed tool. it's cheap, disciplined and less subject to manager risk than a purely active fund. Is it the right tool for your project? Don't know. But I have faith that you'll figure it out.
For what that's worth,
David

FYI: At $500 million in box office revenue and counting, we sure love Disney’s new movie “Beauty and the Beast.” With more than 1 billion sold, we sure love Apple’s iPhone. The same goes for Netflix, Chevy pickups, wide-screen televisions and grocery store aisles stocked high with fresh fruit and vegetables.
But for some reason, we hate the one entity that brought all these things within reach of most Americans: Wall Street.
Regards,
Ted
http://www.latimes.com/opinion/op-ed/la-oe-cohan-wall-street-regulations-20170402-story.html

FYI: T. Rowe Price Group (TROW) announced on Monday that retail investors and registered investment advisors or IRA's can buy transaction-fee free investor class shares for its mutual funds through Charles Schwab's (SCHW) mutual fund platform effective April 3.
Regards,
Ted
http://www.barrons.com/articles/t-rowe-price-free-to-be-transaction-fee-free-1491243858

I bought BPTRX for my daughter years ago as I liked his other funds ( way before the asset bloat there) and thought she had a 50 + year horizon. The crazy leverage he uses helped drive the fund to one of my best investments but I wouldn't recommend it for anyone who needs the money before sometime in the 2040s.
As an added benefit, Ron Baron has an annual meeting with a suprize entertainer that some years caught her attention when the stock performance did not. (Paul McCarthy one year) a nice bennie although who knows what that cost us shareholders?
Now we should lighten up but who wants to pay capital gains?
Couple of thoughts
1) Not a big an issue now but back then (1990s) hard to find decent funds that would take small amounts of money
2) given the vagaries of managers and performance would pick a fund with something resembling a team approach in a big company so you dont get stuck with an under preforming fund with a a large capital gain years hence.
But realistically best to use SPY or VTI

@David --
Thanks for your great work as always.
Still not quite getting the love for BBALX, relative to the client base and culture at Northern Trust. Yes, the fund is outperforming its benchmark, but also has a downside capture ratio of 102%, with an upside of 100%. I would think a conservative, wealth-preservation fund would have US/DS ratios of something like 90/80, etc.

Hi Davidmoran! Thanks for your comments. I think employee designation comes into play. The 12 yo mowed lawns, and its seems according to H&R Block that a 'household employee' under 18 who mows lawns, babysits, delivers newspapers is a special case and as such is exempt from fed tax and self employment tax.

The key here appears to be employee. If the 12 yo entered into an employment relationship (e.g. where the neighbors controlled the hours of mowing), then the work isn't contract work. So there's no SE tax and no 1040 until the income exceeds $6300 (Pub 929). That would be true regardless of age. What is special here in dealing with a child is that the employer (the neighbor) doesn't have to pay FICA or unemployment taxes for the child (as an employee).
If the work is being done as contract work (see IRS Tax Topic 762), then the $400 threshold for SE tax still seems to apply.
There's a similar exception for child newspaper deliverers (again, if they're employees). See this IRS FAQ: My son is a newspaper carrier.
You find these in Circular E (Pub 15). See the Special Rules Table here. It lists exceptions for family employees (under 18 and under 21), household employees (under 18), and newspaper carriers (under 18).
Tax Topic 756 also addresses household employees.
The difference between employee and contractor is discussed in Tax Topic 762.
Note also that while a child can earn income (in the IRS sense) for chores performed for the neighbors, it appears money received for the same chores performed for the parent may not be considered earned income. Rather, the chores are treated as part of "parental training and discipline."

Lincoln Financial/Insurance just about bought the farm along with its policyholders during the market melt. I recall that the Newton Savings and Loan that was purchased allowed this company to apply for TARP money 1 or 2 days before that window closed. The Delaware sale was part of a "pay the government monies back" program.
Hoping the economy doesn't travel any of the paths again. Lots of folks I know we very much concerned about a sinking financial ship of state.
https://www.google.com/#q=lincoln+financial+bailout&*
http://www.badfaithinsurance.org/reference/General/0715a.htm

FYI: Delaware Investments, a fund firm with headquarters in
Philadelphia, has rebranded its name to Macquarie
Investment Management on April 3, 2017.
Regards,
Ted
http://www.mfwire.com/common/artprint2007.asp?storyID=56032&wireid=2
M* Delaware Family of Funds:
http://quicktake.morningstar.com/fundfamily/delaware-investments/0C00001YXQ/fund-list.aspx

FYI: Jeremy Grantham, co-founder of Boston investment firm GMO, doesn’t expect valuations to drop back to normal levels for two decades. But he is keeping cash on hand to take advantage of any dip, which he says would need to be 15-20% to act.
Regards,
Ted
http://ritholtz.com/2017/04/grantham-time-decently-different/

FYI: Tesla (TSLA) is trading up 4%+ today on the back of strong delivery numbers, leaving the stock at a new all-time high. Below is a chart of Tesla (TSLA) since its IPO back in 2010. While it may seem like the stock has been going up forever recently, it has actually been trading in a range between $140 and $280 over the last two and a half years. Is today’s breakout to new highs the start of another big leg higher?
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/tesla-tsla-overtakes-ford-f-in-market-cap/

@Ben WP - Numerous attaboy's to you. I highly applaud your efforts. I also am in full agreement that handing them the tool without owners instructions could prove fruitless.
I started my grandson with a stake in OAKBX the day he was born roughly 6 years ago. I add to it on his birthday, at Christmas and whenever I jus think about it. At that time I tried explaining to his parents why, why that fund, etc., etc., and basically got the deer in the headlights look. It wasn't that they weren't grateful I don't think, it was probably more along the lines of them being overwhelmed by being new parents and all. I'll have another go at it soon.
They also have a relative on the other side who works for and is pushing all manner of PrimeAmerica stuff at them. They get guilted and consoled in all manner of financial matters that they don't understand and feel pressured to help the uncle out because he's MIL's brother. You know how that goes. Thankfully they've managed to glean a few things from my mumblings and haven't gone too deep with this guy.
But back to your situation. It sounds like your kids might be on top of this financial stuff since they have investments of their own. Why not just have the discussion with them with respect toward what you would like to do and see where it goes. I know I make it all sound so easy but maybe you all can agree on a plan and investment choices. Don't make it complicated, the simpler the better. Heck, even Mr. Buffett says 90% SPY + 10% bond fund and go about your life.
On the other hand they might have way too many other things that weigh on their minds on a daily basis and you might get the same reaction as I did. In that case put your hands to pencil and paper, write down your plan including why you're doing what you're doing and just get started. There will come opportunities in the future to add to your writings and hopefully they'll begin to show an interest.
Good luck.

The note at the bottom of the article says he's included the times the S&P 5c has dropped 19% -- slightly extending the usual definition of -20%. (It didn't seem quite as bearish at the time, compared to the ~ 50% losses in the previous two.)

Hi Davidmoran! Thanks for your comments. I think employee designation comes into play. The 12 yo mowed lawns, and its seems according to H&R Block that a 'household employee' under 18 who mows lawns, babysits, delivers newspapers is a special case and as such is exempt from fed tax and self employment tax.

I would compare BBALX with MALOX, RPGAX, and TIBIX. They are all a bit different. RPGAX has the shortest history. The others have a 10-year record. If I were considering BBALX, I would want to see what management experience each of the current team has in a real bear market. How they did is not as important as what they learned and how they would respond to a similar time period.

@AndyJ: golub1 makes the correction BBALX in the second paragraph of his post.
Regards,
Ted

? Boilerplate meant also such as from the great Fairmark.
I know something (a little anyway) about compliance, doing this sort of copy / paste editing and original writing / rewriting of prospectus text for freelance work, irregularly. It is not easy dealing with that kind of lawyering. I agree that it gets worse by the year. Sometimes anyway. Some years it gets better.
I do not get your last Q. I opened Roths for my two kids the year they were legit. 15-20y ago. I never have dreamed of filing, and did not file, a tax return for them. Fret 'rules' aside, no one cares, no one tracks. I would do the same now.

The situation is real; our first grandchild was born a couple of months ago. The parents are both successful federal employees and do already invest, from the sounds of what I hear they have FANG or similar stocks. I am tempted to offer a modest amount so that the parents might start a fund for our grand daughter, in hopes that we or they could add periodically. The question is how to do it right.
My parents gave us lump sums for a couple of our kids, but seemed to forget the last two. No advice, no strings, no great interest. Parents-in-law gave share certificates directly to my wife on no schedule. Sears, Kodak, Pinnacle West, and the Hancock regional bank fund. No advice, no rationale, no pointers on dividend reinvestment at a time in my life when I knew squat about money. Both sets of parents had money, but did no better talking about it than they did with sex ed. Glad we sold the first two when we did, but if someone had told me that selling electricity to the Four Corners area was a sure thing, and to reinvest the dividends, we'd probably be sitting on a college fund for at least one kid. Same for the MF; it was a great idea, but if you don't tell the donee how to benefit from it, it's kind of useless. Fortunately, the past is the past.
David's and Charles' write ups of BBASX and MASNX, and the mention twice that these could serve as core funds for young people set me to thinking. Should I donate a position in a fund and tell my kids why I chose it and why I think it should be held and how to make it grow and the whole 50-minute lecture on buy-and-hold, including how to avoid all the screw- ups I made on my investing journey? Conversely, should I count on my over-achieving kids to pick the right investment for their daughter and skip the lecture on risk management?. (Actually, I'm not qualified to deliver that, but it sounded good.) With respect to the two funds above, I'd be reluctant to pick such funds because I don't really understand how the managers make money. I can read the beautifully written and cogently reasoned descriptions by our colleagues, but I myself could not take my son-in- law aside and explain in my own words why Ella would be in great shape 18 years from now. On the other hand, I could suggest a conservative allocation fund which is on my high conviction list, namely BRUFX. I could do ok explaining that one and have no qualms about buying it for the child. For comparison's sake, I manage a UGTM fund for my 18-year old. It's composed of positions in VIG, AKREX, DSENX, and HIMVX. 50% of all money this daughter earns is direct deposited into it.
All suggestions are welcome. I don't want to be a control freak, but I sure don't want to give a tool without a user's manual.