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FMI International Fund to close to new investors

edited March 2017 in Fund Discussions
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.

Comments

  • edited March 2017
    Nice! I own it in my taxable account. I own OAKIX in my IRA. FMIJX has demonstrated itself to be a superior fund especially from a risk perspective. OAKIX does better in good markets. At this point in time, thinking I should at least get a $100 foothold in my IRA as I contemplate switching out of OAKIX and into FMIJX.
  • edited March 2017
    VF...I agree with you in regards to the FMI fund, but that raises a question for me. If I own FMIJX in an IRA (which I do), once it closes to new investors would I be prohibited from buying in a taxable account under the same brokerage umbrella?
  • @PRESSmUP. I really wouldn't advise you do that.

    Say you owned it in taxable account @ one brokerage, and it closed, and you couldn't buy it in another taxable account @ another brokerage. THEN you could considering doing 1 share transfer and you'll be set. I think you will agree this seems reasonable.

    Now then if you had shares in taxable, and if you are eligible to invest in IRA, and fund closed, I think you could still transfer 1 share to IRA, and you again be okay.

    However, if you have shares in IRA, and if you try to transfer 1 share into taxable, you are running afoul of the rules. I guess if you don't mind paying penalty for what will effectively be a withdrawal you might be okay. However, think about it now. Why you want to go through the hassle? If you have Schwab or Scottrade, just purchase $100 worth since that's the minimum.

    I just put in order for $100 in my IRA.
  • Not quite sure I follow, but I did understand the last part....just buy $100 worth.

    I have quite a few funds in both taxable and IRA, but with only 1 fund in both...RPMGX, in my mind the best fund I've ever owned. Looking for more, simply for consolidation purposes, and the FMI fund is under consideration.
  • In taxable account , would doing an exchange be a taxable event ?
    Derf
  • edited March 2017
    @Derf. That's what I was trying to explain. I don't think you can transfer from IRA in kind. If the fund company permits it will need to go as two transactions - a sell followed by a buy. Sell means you have to pay tax penalty and then buy fewer shares in taxable. Seems pointless to me when you can buy right now for $100.

    1 taxabe to another taxable - not sure why you would want to do - that i think should be fine. But AGAIN, $100 minimum why, Why, WHY?
  • @VF Exchange one fund for another in same fund family.
    Yes your right I could pay in cash, but,thought I'd use some of the profit in fund (ADE) to buy fund BGE with out taxable event. All to take place in taxable account.
  • @Derf. Just pretend you did it:-) First just buy $100 worth. Then take your profit anytime you want.
  • OAKIX recently re-opened to new investors while FMIJX is about to close. Both describe themselves as value funds. One seems to be finding values while the other can't and has accumulated a large cash stake. Go figure.
  • sfnative said:

    OAKIX recently re-opened to new investors while FMIJX is about to close. Both describe themselves as value funds. One seems to be finding values while the other can't and has accumulated a large cash stake. Go figure.

    FMIJX is a concentrated fund, that's the diff.
  • briboe69 said:

    sfnative said:

    OAKIX recently re-opened to new investors while FMIJX is about to close. Both describe themselves as value funds. One seems to be finding values while the other can't and has accumulated a large cash stake. Go figure.

    FMIJX is a concentrated fund, that's the diff.
    FMIJX hedges its currency. I do not believe OAKIX does.
  • Mona said:


    FMIJX hedges its currency. I do not believe OAKIX does.

    So help me understand. If interest rates go up, which means dollar should go down, which means everything else remaining the same, OAKIX should do better since foreign currencies would appreciate against the dollar and it is not hedged.

    That was way too much analysis for me. Someone, have mercy!
  • edited March 2017
    briboe69 said:


    FMIJX is a concentrated fund, that's the diff.

    First, I don't think FMIJX is that concentrated. Second top 5 holdings of both funds have 18-19%. I seriously don't think this should be used as a decision point on which fund to chose. JMHO.

    Count the total number of holdings FMIJX = 35+18+11 vs OAKIX = 59+11. What is interesting is that 11 holdings for FMIJX are "Short". I'm guessing these are the holdings for hedging currency.

    Anyways, I'm going to watch for divergence as indicator to switch.
  • Several differences between OAKIX and FMIJX.

    1. OAKIX has suffered outflows and may have reopened in order not to sell stocks to cover.

    2. FMI management seems to close funds much sooner that Oakmark. FMI large cap closed years ago with only a few billion. They've since reopened but they appear to close down funds with a lot less AUM.

    Just my opinion
  • beebee
    edited March 2017
    @VintageFreak said,
    If interest rates go up, which means dollar should go down
    I believe the US dollar strengthens as rates rise.

    Article on the topic:
    https://forbes.com/sites/moneybuilder/2011/12/01/what-determines-the-strength-of-a-currency/#72d4bae816c6
  • Just bought $100 worth in my Schwab solo 401K. Thanks for the heads up, @TheShadow and the tip @VintageFreak
  • briboe69 said:


    FMIJX is a concentrated fund, that's the diff.

    First, I don't think FMIJX is that concentrated. Second top 5 holdings of both funds have 18-19%. I seriously don't think this should be used as a decision point on which fund to chose. JMHO.
    Don't take my word for it, take it directly from FMIJX's summary prospectus:
    "As a non-diversified fund, the FMI International Fund tends to concentrate its investment on fewer companies than a diversified mutual fund. The Fund holds approximately 25-40 stocks, with most major industry groups represented."

    Never said it was good or bad, my point was concentrated funds tend to closer sooner to preserve flexibility. Personally, I like them and own a few of them.


  • FWIW saying I like the 'concentrated' nature of the fund and in particular this one. It's been on my watchlist for ages as part of my foreign stock exposure, and I just opened a 1/3-sized starter position the other day to get in before it closes ... planning to average into any major drops if/when/as they occur to get up to my target position size.
  • Zoneblitz said:

    Several differences between OAKIX and FMIJX.

    1. OAKIX has suffered outflows and may have reopened in order not to sell stocks to cover.

    2. FMI management seems to close funds much sooner that Oakmark. FMI large cap closed years ago with only a few billion. They've since reopened but they appear to close down funds with a lot less AUM.

    Just my opinion

    You are of course correct. But that's difference between the fund management and stewardship and not the portfolio:-)
  • edited March 2017
    briboe69 said:


    Never said it was good or bad, my point was concentrated funds tend to closer sooner to preserve flexibility. Personally, I like them and own a few of them.

    Sure. 35 stock IMO is not that concentrated. There are studies that show beyond 20 holdings it matters less. However, let's not get into statistical mumbo jumbo. It matters more if there is MUCH concentration in top 5-10 holdings. FAIRX as example.

    I doubt you will ever see wild swings in FMIJX, and that's not just because managers are more competent or they invest in "value" stocks. Their top holding could be carved in half and it would go down 2%. Par for the course. And FMIJX is more diversified across sectors which is the real diversification we seek. We all know too well how diversified Large Cap Growth was (NOT!) in the early 2000s.

    My point was - and I quoted some numbers already - FMIJX has more than 35 "holdings". Can't simply go by number of disclosed holdings to determine concentration.

    As an aside, I didn't know Mutual Funds are not required to divulge ALL their holdings. Recently reading annual report for FPIVX, I read "the fund does not disclose all its holdings". So I went checking. I wouldn't be surprised if the 18 (other) and 11 (short) holdings of FMIJX are undisclosed. Need to go do some digging. Right now I'm trusting M* (what have I done!)

    PS - Your logic on owning concentrated funds, i.e. best ideas I like. I own a few myself, but not what you might like:-)
    COBYX, FAIRX, APPLX, PROVX, CGMFX, FVALX, INTLX,...not sure I got all of them.
  • VF, I'm curious what you still see in APPLX.
  • AndyJ said:

    VF, I'm curious what you still see in APPLX.

    Not sure I understand your question entirely - what do you still see...? My decisions to own funds are not always performance based. If so, I would have sold it. I'm curious why you asked me about APPLX and not (say) FAIRX or CGMFX. I am open to hearing your opinion on any of the funds I mentioned above as to why I should sell. Pretty much all of them have stunk from a relative performance perspective.

    Getting back to APPLX gold bets have it underperforming till a couple of years back, but it seems to have come around. I can buy gold or I can buy funds who use gold as a hedge - HSTRX, FEVAX, APPLX.
  • edited March 2017
    To explain, I owned APPLX for a year or two in its early days when it was mainly an all-cap U.S. value fund, liked it a lot, and thought it might be a keeper then (thus the "still" in the earlier post), but imho, it really fell apart when they added Au as a permanent fixture and went international, which looked to me at the time to be beyond their sphere of competence. Hadn't checked it for a while, but now I see it's returned less than 1% annual for 3y, and the port looks pretty similar to what it was when the performance tanked a few years ago, so looks to me they haven't done much right lately, either.

    So, I'm just not seeing much there to bank on going forward, but wondered if you might have some insight that's different from the view from this house.
  • edited March 2017
    @AndyJ, we hijacked thread. So starting new one. Look for APPLX in title.
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