https://www.sec.gov/Archives/edgar/data/1444822/000119312517110128/d350531d497.htm
497 1 d350531d497.htm AQR FUNDS PROSPECTUS SUPPLEMENT
AQR FUNDS
Supplement dated April 4, 2017 (“Supplement”)
to the Class I Shares and Class N Shares Prospectus dated May 1, 2016, as amended (“Prospectus”), of the AQR Diversified Arbitrage Fund, AQR Long-Short Equity Fund, AQR Equity Market Neutral Fund, AQR Multi-Strategy Alternative Fund, AQR Style Premia Alternative Fund and AQR Style Premia Alternative LV Fund (the “Funds”)
This Supplement updates certain information contained in the Prospectus. Please review this important information carefully. You may obtain copies of the Funds’ Prospectus and Statement of Additional Information free of charge, upon request, by calling (866) 290-2688, or by writing to AQR Funds, P.O. Box 2248, Denver, CO 80201-2248.
Effective at the close of business on June 30, 2017, the AQR Long-Short Equity Fund and AQR Equity Market Neutral Fund will be closed to new investors, subject to certain exceptions as set out below under the heading “Closed Fund Policies.”
Additionally, effective April 5, 2017, the section entitled “Closed Fund Policies” beginning on page 165 of the Prospectus is hereby deleted and replaced in its entirety with the following:
Closed Fund Policies
Effective at the close of business of the below dates (each, a “Closing Date”), the following Funds (each, as of its Closing Date, a “Closed Fund”) were or will be closed to new investors, subject to certain exceptions.
Closed Fund Closing Date
AQR Diversified Arbitrage Fund June 29, 2012
AQR Multi-Strategy Alternative Fund September 30, 2013
AQR Style Premia Alternative Fund March 31, 2016
AQR Style Premia Alternative LV Fund March 31, 2016
AQR Long-Short Equity Fund June 30, 2017
AQR Equity Market Neutral Fund June 30, 2017
Existing shareholders of a Closed Fund as of the applicable Closing Date are permitted to make additional investments in that Closed Fund and reinvest dividends and capital gains after the Closing Date in any account that held shares of the Closed Fund as of the Closing Date.
Notwithstanding the closing of a Closed Fund, you may open a new account in the Closed Fund (including through an exchange from another series of the Trust (each, a “Series”)) and thereafter reinvest dividends and capital gains in the Closed Fund if you meet the Closed Fund’s eligibility requirements and are:
● A current shareholder of the applicable Closed Fund as of the Closing Date—either (a) in your own name or jointly with another or as trustee for another, or (b) as beneficial owner of shares held in another name—opening a (i) new individual account or IRA account in your own name, (ii) trust account, (iii) joint account with another party or (iv) account on behalf of an immediate family member;
1
● A qualified defined contribution retirement plan that offers the applicable Closed Fund as an investment option of the plan (or another plan sponsored by the same employer), as of the Closing Date purchasing shares on behalf of new and existing participants;
● A financial advisor, wrap-fee program or model portfolio who as of the Closing Date has included the applicable Closed Fund as part of a discretionary fee-based program or model portfolio purchasing shares on behalf of a new or existing client;
● An investor opening a new account at a financial institution and/or financial intermediary firm or a client of an investment consultant that (i) has clients currently invested in the applicable Closed Fund or clients for whom the Adviser provides advisory services implementing a similar principal investment strategy and (ii) the new account to be opened has been pre-approved by the Adviser to purchase shares of the applicable Closed Fund. Investors should contact the firm through which they invest to determine whether new accounts are permitted;
● Clients of a financial institution, financial intermediary or consultant that submitted a letter of intent to invest in the Closed Fund that was accepted by the Adviser on or prior to the Closing Date;
● A shareholder of a Fund (including a Closed Fund) or another account or fund managed by the Adviser transferring, either by exchange or redemption and subsequent purchase, into a Closed Fund with a similar principal investment strategy where the Adviser concludes, in its judgment, that the transfer will not adversely affect the applicable Closed Fund;
● A participant in a tax-exempt retirement plan of the Adviser and its affiliates and rollover accounts from those plans, as well as employees of the Adviser and its affiliates, trustees and officers of the Trust and members of their immediate families; or
● A current shareholder of the AQR Diversified Arbitrage Fund transferring, either by exchange or redemption and subsequent purchase, into AQR Multi-Strategy Alternative Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect AQR Multi-Strategy Alternative Fund.
● A current shareholder of the AQR Long-Short Equity Fund transferring, either by exchange or redemption and subsequent purchase, into the AQR Equity Market Neutral Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect the AQR Equity Market Neutral Fund.
● A current shareholder of the AQR Equity Market Neutral Fund transferring, either by exchange or redemption and subsequent purchase, into the AQR Long-Short Equity Fund where the Adviser concludes, in its judgment, that the transfer will not adversely affect the AQR Long-Short Equity Fund.
The ability to permit, limit or decline investments in accordance with the eligibility requirements set out above relating to accounts held by financial institutions and/or financial intermediaries may vary depending upon systems capabilities, applicable contractual and legal restrictions and cooperation of those institutions and/or intermediaries.
Investors may be required to demonstrate eligibility to purchase shares of a Closed Fund before an investment is accepted.
Each Closed Fund reserves the right to (i) allow investments in Closed Funds that do not fit within the eligibility requirements above pursuant to guidelines approved by the Funds’ Board of Trustees, (ii) reject any investment, including those pursuant to eligibility requirements detailed above, and (iii) close and re-open the Closed Fund to new or existing shareholders at any time.
PLEASE RETAIN THIS SUPPLEMENT FOR YOUR FUTURE REFERENCE...
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@hawkmountain
I've exhausted my linkages, to the best of my knowledge, as of today. :)
Here is an interesting notation from Fidelity, from the below linked article:
"If your child is not filing a tax form that covers his or her earned income, consider maintaining a written log of their earnings in case the IRS asks questions."
https://www.fidelity.com/learning-center/personal-finance/retirement/turbocharge-childs-retirement
One may presume if the IRS starts auditing minor Roth IRA applications, which have been opened with fully righteous considerations; many other events to the negative side have already taken place.
Regards,
Catch

Hi, guys.
We posted last night but I didn't send out the notice until this morning; I still am uncomfortable bothering folks late on a weekend evening with "business."
Stuff that's there:

• my note on basketball and milestones, including ours and the markets
  
• Ed's reflections on how the recent news from BlackRock, Morningstar, Templeton and elsewhere might foreshadow the industry's future
  
• Bob C's discussion of how to think about creating a suitable income stream in retirement
  the story on Morningstar's new mutual fund series, including what (little) we know, what we don't and what we might speculate about
  
• my profile of Northern Global Tactical Asset Allocation, which Morningstar finally got into the right peer group
  
• Charles' profile of Litman Gregory Masters Alternative Strategies, which flows from his recent meetings with those folks in San Francisco
  
• the first installment of Sam's profile of the Grandeur Peaks Global Stalwarts funds, where he shared the first 50% of the profile yesterday and aims to share the rest today
  
• a Launch Alert for 361 US Small Cap Equity, a rare small cap that's driven by behavioral finance principles and that has a pretty solid record as a series of private accounts
  
• coverage of a pretty stunning array of structural changes, including the marginalization of Mark Mobius, manager dismissals at BlackRock, the sale of one fund family and a host of rebrandings.

Hope you find some worthwhile nuggets there.
David

If Shadow had posted this article, I would have believed him :-D
However, I have to say this was much better than predictable "Trump resigns the Presidency" idea so many had yesterday. I actually sent out an email to my friends to tell them if they didn't stop I will never talk to them again. Then they thought *that* was an April Fool's joke.
Speaking of retirement, the two people who I think should have retired several years back are Denzel Washington and Nicholas Cage. It is so painful to watch them,
Aso.

Sometimes, investing is much like the weather. At times the sun can be out with a nice blue sky along with the temperature in the mid 80's and calm winds ... and, here comes a solar votrex that disrupts communications, travel and other things.
With this, now in retirement I run an all weather conserative asset allocation in my portfolio along with a rebalance plan that adjust my equity allocation based upon certain stock market conditions plus I also harvest some capital gains in the rebalance process thus keeping them from becoming vaporized in major stock market declines.
With this, when the day gets spoiled by a solar vortex (so-to-speak) and the bear comes growling I am already ahead of most; and, it is a big reason I keep an ample cash on hand so that I can become a buyer of stocks in major stock market pullbacks and corrections.
With my portfolio management tools and rebalance processes as the markets recover I continue to sell down equities through a systematic process. Really nothing complex about this just a disciplined and systematic approach that keys off of stock market pullbacks and their recovery where I harvest some capital gains along the way.
Folks ... thus far, this process has worked well form me and my family through the years. It has worked thus far for me, my father, his father and so on and so forth. It's really quite simple ... Make harvest of the crops whether they are capital gains in the markets or crops in the soil.

FYI: The California State Teachers' Retirement System (CalSTRS) announced on Thursday that its funding level had dropped and its unfunded liability had increased, following a drop in the fund's expected investment returns.
The public pension plan voted in February to lower its annual expected return rate from 7.5 percent to 7 percent by 2018. As a result, CalSTRS unfunded liability grew to $97 billion from $76 billion, and its funding level dropped from 68 percent to nearly 64 percent.
Regards,
Ted
http://www.reuters.com/article/california-pensions-calstrs-idUSL2N1H71DC

I tend to agree with Ted on this. Three or four fixed-income funds should be plenty, unless your account is all bonds. In my own retirement account, I own three bond funds: OSTIX, FFRHX, and THIIX. They are each very straight forward, very low volatility and low downside capture. Given higher interest rate environment, this makes sense to me. I also like LASYX, TGBAX, LLDYX, and PONDX. But the three I own now work for me. I don't have to constantly watch them. Great management, simple to understand, and decent interest income. I prefer to keep bonds pretty simple.

I think emerging markets up like 25 - 30% in last 6 months. Whatever rudimentary understanding I have, unless $USD breaks down meaningfully I don't see any point in overweighting emerging markets. I have some positions which I'm looking to reposition into others and possibly add. Hopefully I'll have opportunity to sell and then buy at lower prices.
I think in a "diversified" portfolio, if we think 30% allocation should be international, then 20% of that perhaps should be emerging markets. So as an example, out of a $100,000 portfolio, $6,000 should be in emerging markets.
Do any of us have more in emerging markets, now or at any other point? I have some money in MALOX and PASDX in my retirement accounts that's meaningful. I own some GPROX and PLMDX also. My meaningful positions are MACSX and MAPIX. I don't think I'm even 3% in emerging markets. Need to check.

All good ideas, Ted. The one about legal documents, however, is especially good. I cannot tell you how many people think if they have a will, they are all set. THEY ARE NOT! Yes, a will is important. But perhaps even more so are Powers of Attorney that designate who will act on your behalf for healthcare and financial decisions. These are critical, especially for single people, since spouses typically serve as POA for each other. And folks should make sure the financial POA includes language the specifically includes "all retirement accounts". Most custodians like Fidelity and Schwab will not honor financial POAs that do not have this language. The other important legal item is to be sure your beneficiary designations are current. Many times we find folks who have remarried with life insurance and/or financial account beneficiaries still naming their ex-spouse, or young people just married with their parents still named as beneficiaries.
People, please take time to get these two items done, and be sure they reflect how you wish your assets to be handled in the event of your incapacity or death. This really is important.

Hmmm...actually I have no index funds in my taxable accounts. I have index funds in my retirement accounts. I consider distributions as income and/or taking money of the table.

FYI: Wall Street continues a doomed fight for brokers’ right to give bad advice to retirement savers, all in the hopes of propping up earnings. After three stinging courtroom defeats, the industry procured a presidential memorandum directing the Labor Department to review its ban on giving disloyal advice to investors.
Regards,
Ted
https://www.bloomberg.com/view/articles/2017-03-28/investors-pay-if-wall-street-wins-a-fiduciary-rule-delay

FYI: A mutual fund exists for virtually any and all your investment needs in your retirement or other accounts. The challenge is in choosing the right one for your portfolio from the more than 8,000 mutual funds available.
The second annual IBD Best Mutual Fund Awards makes the task a lot easier. Every one of them has beaten its benchmark for the past one, three, five and 10 years — a feat that fewer than 4% of U.S. diversified stock and U.S. bond funds can claim.
Look at the list and see if you already own any of these top performers. If you don't, compare them to the ones you do own and see if they might make a better fit in your portfolio. If you're looking for a fund to start or add to your portfolio, this best-of-the best list is a great place to start.
Regards,
Ted
http://www.investors.com/best-mutual-fund-awards/ibd-best-mutual-fund-awards-growth-value-large-cap-small-cap-muni-bond/

DSEEX is the institutional share class, which you can get for $5,000 only in retirement accounts. But you could also buy DBLFX, which has a 0.48% expense ratio, put 10% to 20% of what would have been your DSEEX allocation in that bond fund, then put the remaining 80% to 90% in four stock ETFs like XLK, which has a 0.14% expense ratio, and bring your average expense ratio down to about 0.20%. Since many of those ETFs trade transaction free at brokers, there'd be no cost there and you could also harvest losses on individual ETFs for tax purposes if need be instead of having them all lumped together in one fund. Periodically you could review what DSEEX is buying and try to get the ETFs it owns at a lower share price. I just don't see the great advantage of paying active management fees for a formula.
By contrast, I do see an advantage to paying active management fees for SFGIX, an active manager with a long successful track record at another fund shop--Matthews--and now his own shop. The manager of that fund doesn't follow a formula but does intensive fundamental research of the securities he owns, and has the results to prove it. Now you could call that just luck--a classic active versus passive debate--but at the very least you know Andrew Foster is definitely active. You're not paying for a formula. The only really active side in DSEEX is on the bond side, which is not the primary driver of its returns.

I have made a major overhaul. I no longer need/want to take *any* risk. But before I go the CD laddering and money market route thought I would try something first. I hold 8 bond funds the most funds I have ever held. Sort of a fund of funds approach. Based on performance hope to winnow that down to three or four funds. PONDX is my largest holding because of its persistency of trend. Another holding is IOFIX. Don't believe it has ever been mentioned but a real persistent trender. If I can beat a CD and money market return will just stick with this in retirement. I believe the normalizing of rates by the Fed could be a boon for retirees. 3% or more in money market rates down the road? Sign me up!
Edit: I should add I am really stymied by Scottrade's limited offerings and/or advisor only funds and will be glad when their merger is complete with TD Ameritrade.

I still can't shake the feeling that until the IRA contributions can be made in sums equal to that of 401/403/457s ($18K vs $5500 per year) they may well be a joke down the road and/or don't allow people to save away enough for retirement. Yes, I contribute to mine each year, but if you CAN contribute more - up to a certain limit - why shouldn't we, especially if you're in a job that LETS you be a responsible saver and tuck away more while you can? Heck, if you suddenly are able to contribute $18K to an IRA while you're in a good-paying job, that can put you ahead of things if for some reason you lose that job and/or are later unable to contribute much to your retirement future. In this case, it's like you're being penalised for trying to be a responsible person and thinking proactively about your future needs.
Long story short every now and then I just think the whole IRA/Roth IRA thing is a nice thought but may not be very helpful -- or more trouble than they're worth. Ridiculous contribution limit aside, the various loopholes / hoops you have to jump through with retirement accounts, conversions, limits on contributions, required withdrawls, etc .... it's crazy.

I think I see where people are getting confused with 401(k)s. VF gave too much info.
Wife made non-deductible contribution to "piddly IRA". That's the current state of affairs, it doesn't matter how she got there.
The back story (which is irrelevant) is that wife decided in the past to make the non-deductible contribution because there's a rule saying you can't deduct a contribution to a traditional IRA if:
(a) you are participating in a plan at work such as a 401(k), and
(b) your income exceeds $119k in 2017.
https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work

I think you mean non-deductible contributions. In Roth IRA leagalize, "qualified" generally refers to "distributions" (withdrawals). Distributions are said to be qualified if they meet the five year rules and you're over 59.5 or meet some exception.
https://www.irs.gov/publications/p590b/ch02.html#en_US_2016_publink1000231061
"Qualified" is also used to describe employer plans that satisfy section 401(a) of the tax code (e.g. 401(k) plans). A completely different subject.
http://www.360financialliteracy.org/Topics/Retirement-Planning/Retirement-Planning-Basics/What-does-the-term-qualified-plan-mean

The link is a nice try, but is talking about something different - money in employer-sponsored plans (e.g. 401(k)s). With all due respect to LLJB, I think you might be advised to ignore it, at least for now. Especially given your question asking to clarify whether 401(k) assets count in this IRA question.
Short answer - they don't; that's why I'm suggesting you pay no attention to 401(k) rules for now.
The only way your wife's 401(k) plan could mess with the IRA Roth conversion is if your wife rolled over the 401(k) money into an IRA (the existing one or a new one) before doing the conversion. Don't do that, and you're fine.
Dolphin's got it exactly right.
==========
Other details include:
- Since this is wife's first Roth IRA, she'll have to wait five years to get post-conversion earnings out without taxes
- If converted money is withdrawn in less than five years and wife is under 59.5 at the time, then there's an extra penalty. (The reason is that this is viewed as a backdoor for getting money out of the original IRA before age 59.5, which would have that penalty.)
Here's a description of the general 5 year rule for all Roths (explaining the first item above):
http://fairmark.com/retirement/roth-accounts/roth-distributions/tax-free-distributions-from-roth-iras/
Here's a description of the Roth conversion/early withdrawal penalty issue (second item):
http://fairmark.com/retirement/roth-accounts/roth-distributions/distributions-after-a-roth-ira-conversion/

Here's some info from the IRS that doesn't specifically answer the question but would be interesting if you wanted to get all the after-tax contributions out of the IRA and into a Roth while moving whatever gains are there into another pre-tax plan.
https://irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans
I didn't follow any of the other links on the page but my guess is that you might find specific answers about the tax implications and/or penalties in one of those links.
The tax returns and Form 8606, which is used to report after-tax contributions to the IRS is all you need to prove your basis. I believe, but I'm guessing a little, that brokers or trustees have to report the value of retirement plans to the IRS annually or at least when there's a distribution so the IRS can calculate what portion of the distribution you should be paying tax on.

https://www.sec.gov/Archives/edgar/data/1023391/000089706917000173/cg891.htm
497 1 cg891.htm
Filed pursuant to Rule 497(k)
Filed pursuant to Rule 497(e)
1933 Act File No. 333-12745
1940 Act File No. 811-07831
FMI Funds, Inc.
FMI International Fund
Investor Class FMIJX / Institutional Class FMIYX
March 17, 2017
Supplement to the Prospectus and Summary Prospectus
dated January 31, 2017
FMI International Fund (the “Fund”) to be Closed to New Investors
Effective April 30, 2017, the Fund will be closed to new investors. Except as indicated below, after April 30, 2017, only investors of the Fund on April 30, 2017, whether owning shares of record or through a processing intermediary, are eligible to purchase shares of the Fund. Exceptions include:
§ Participants in an employee retirement plan for which the Fund is an eligible investment alternative and whose records are maintained by a processing intermediary having an agreement with the Fund in effect on April 30, 2017.
§ Clients of a financial adviser or planner who had client assets invested in the Fund on April 30, 2017.
§ Employees, officers and directors of the Fund or Fiduciary Management, Inc., the investment adviser to the Fund (referred to as the “Adviser”), and members of their immediate families (namely, spouses, siblings, parents, children and grandchildren).
§ Firms having an existing business relationship with the Adviser, whose investment the officers of the Fund determine, in their sole discretion, would not adversely affect the Adviser’s ability to manage the Fund effectively.
§ An investment in the Fund that officers of the Fund determine, in their sole discretion, would not adversely affect the Adviser’s ability to manage the Fund effectively.
The Fund reserves the right, at any time, to re-open or modify the extent to which the future sales of shares are limited.
In connection with the closing of the Fund, the discussion on “Exchanging Shares” on page 33 of the Prospectus is deleted and replaced in its entirety with the following:
EXCHANGING SHARES
Shares of a Fund may be exchanged for shares of any other Fund or for the First American Retail Prime Obligations Fund, subject to minimum purchase requirements:
·FMI Large Cap Fund
·FMI Common Stock Fund
·FMI International Fund (must be an existing shareholder of the FMI International Fund, as the Fund is closed to new investors)
·First American Retail Prime Obligations Fund
at the relative net asset values. An affiliate of USBFS advises the First American Retail Prime Obligations Fund. This is a money market mutual fund offered to respond to changes in your goals or market conditions. Neither USBFS nor First American Retail Prime Obligations Fund is affiliated with the Funds nor the Adviser. You may have a taxable gain or loss as a result of an exchange because the Internal Revenue Code treats an exchange as a sale of shares. The registration of both the account from which the exchange is being made and the account to which the exchange is being made must be identical. Exchanges may be authorized by telephone unless the option was declined on the account application.
How to Exchange Shares
1.Read this Prospectus (and the current prospectus for the fund for which shares are to be exchanged) carefully. (Please note that the FMI International Fund is currently closed to new investors, subject to certain limited exceptions as set forth above.)
2. Determine the number of shares you want to exchange keeping in mind that exchanges to open a new account are subject to a $1,000 minimum ($2,500 with regard to the FMI International Fund and the First American Retail Prime Obligations Fund) for Investor Class shares and a $100,000 minimum for Institutional Class shares.
3.Write to FMI Funds, Inc., c/o U.S. Bancorp Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
Once a telephone transaction has been placed, it cannot be canceled or modified.
Call the transfer agent at 1-800-811-5311 to obtain the necessary exchange authorization forms and the First American Retail Prime Obligations Fund Prospectus. This exchange privilege does not constitute an offering or recommendation on the part of the FMI Funds or the Adviser of an investment in any of the foregoing mutual funds.
********
The date of this Supplement is March 17, 2017.
Please retain this Supplement for future reference.