Updated again:
https://www.sec.gov/Archives/edgar/data/1486174/000143510919000308/chou_497e.htm
497 1 chou_497e.htm
CHOU AMERICA MUTUAL FUNDS
Chou Opportunity Fund (CHOEX)
Chou Income Fund (CHOIX)
Supplement dated July 1, 2019 to the Prospectus dated May 1, 2019
Background: Fund Liquidation, Rescission of In-Kind Redemption to Affiliate, and Continued Ability of Shareholders to Redeem Prior to the Liquidation Date for Cash
On June 5, 2019, the Board of Trustees (“Board”) of Chou America Mutual Funds (the “Trust”) approved a Plan of Liquidation and Dissolution (the “Plan”) pursuant to which the assets of the Chou Opportunity Fund and the Chou Income Fund (the “Funds”) will be liquidated and the proceeds remaining after payment of or provision for liabilities and obligations of the Funds will be distributed to shareholders.
Each Fund will seek to complete the liquidation on or around the close of business on July 31, 2019 (the “Liquidation Date”). Shareholders will be permitted to redeem from the Funds prior to the Liquidation Date, according to the ordinary procedures for redemptions from the Funds described in this Prospectus. Francis Chou, the Portfolio Manager to the Funds and chief executive officer of the Adviser, owns and controls a company that owns shares of each Fund (the “Chou Affiliated Shareholder”). Mr. Chou intends for the Chou Affiliated Shareholder to retain its shares in each Fund until the liquidation is completed, so each Fund expects to have sufficient cash to pay any redemptions by the other shareholders.
In anticipation of their liquidation, the Funds stopped accepting purchases on June 5, 2019. The Funds are in the process of winding up and are no longer pursuing their respective investment objectives and strategies. Reinvestment of dividends on existing shares in accounts which have selected that option will continue until the liquidation.
On June 28, 2019, the Board of the Trust rescinded the proposed redemption-in-kind of the 1.75 Term Lien Loans (the “Exco Loans”) of Exco Resources, Inc. (“Exco”) by the Chou Affiliated Shareholder.
The Exco Reorganization and Risks to Shareholders
As previously disclosed, Exco is involved in an insolvency proceeding in the United States Bankruptcy Court for the Southern District of Texas United States (the “Bankruptcy Court”) and each Fund has determined that the Exco Loans constitute illiquid investments. On June 18, 2019, the Bankruptcy Court approved a Plan of Reorganization of Exco that, when implemented, will result in cancellation of the Exco Loans in return for newly-issued common stock of Exco (the “New Exco Shares,” and together with the Loans, the “Exco Investments”). Shareholders can find more information regarding Exco and its plan of reorganization at the following website:
https://dm.epiq11.com/case/EXCO/info
According to the Disclosure Statement for the Plan of Reorganization, New Exco Shares will not be listed on or traded on any nationally recognized market or exchange and there can be no assurance that an active trading market for the New Exco Shares will develop. In the absence of a trading market for the New Exco Shares, the Funds’ expect that they will need to continue to calculate their net asset value per share (“NAV”) based on each Fund’s Board’s good faith determination of the fair value of the New Exco Shares.
As of June 28, 2019, the Exco Loans represented approximately 23.85% of the net assets of CHOEX with the remaining portfolio assets represented by cash. As such, any changes in the NAV of CHOEX will derive almost entirely from changes in the value of the Exco Investments.
As of June 28, 2019, the Exco Loans represented approximately 11.57% of the net assets of CHOIX. CHOIX expects to complete the liquidation of its other portfolio holdings shortly, after which time any changes in its NAV will derive almost entirely from changes in the value of the Exco Investments.
The Funds anticipate that they may not be able to reduce their holdings of the Exco Investments prior to the Liquidation Date due to (a) the absence of a market for the Exco Investments and (b) the rescission of the redemption in kind by the Chou Affiliated Shareholder.
As redemptions from the Funds continue to occur prior to the Liquidation Date, the Exco Investments will represent an increasing proportion of the Funds’ net assets. Consequently, if redemptions continue, any changes in the value of the Exco Investments will have an increasing effect on the Funds’ respective NAVs and total performance.
If you own Fund shares in a tax deferred account, such as an individual retirement account, 401(k) or 403(b) account, you should consult your tax adviser to discuss the Fund’s liquidation and determine its tax consequences.
* * * *
For more information, please contact a Fund customer service representative toll free at
(877) 682-6352.
PLEASE RETAIN FOR FUTURE REFERENCE.

oi ---
https://www.nytimes.com/2019/07/01/business/rolling-stones-social-security-retirement.html

That excerpt from the report seems to be diametrically opposed to the way "gambling" was used in the MW story. The former is talking about some investors' perceptions, while the latter was talking more about "reality" (my word).
Here's the same excerpt including preceding and following sentences:

The American Council of Life Insurance found that some participants equated lifetime annuity payments with gambling on their lives, meaning they perceive annuities as increasing risk rather than decreasing it. The individual sees the annuity as a bet, and if they receive the full cost of the annuity payouts before they die, the annuity was a worthwhile investment, but if they die beforehand, it was a bad investment. Less consideration is given to the utility of peace of mind, or the benefits of mortality pooling. This suggests that many participants hold deep beliefs and convictions regarding the loss of principle [sic], control of retirement balance, and a desire to maintain an ability to draw on accumulated savings, which potentially stops participants from making beneficial long-term decisions.

The MW article says that in the real world ("Without more and better ... choices") retirees are gambling. So here, gambling is not about annuities, which do exist, but rather the lack of education ("information") and the lack of alternatives.
Here's how I look at gambling with respect to retirement (not really much different from hank's view):
I use a traditional pension (defined benefit plan) that is just large enough to fully fund a person's retirement as the baseline for a "safe" retirement. An objective equivalent would be a lump sum payment that is converted into the same income stream as that pension. Another objective equivalent would be a defined contribution plan, which is also just a pile of cash, likewise converted into the same income stream as that pension.
One stream is called a "pension", the others, an "annuity'. Strip away the emotion, the deep beliefs, the convictions, and they're the same thing.
Now, nearly all retirees would not take that income stream (unless you called it a pension). Rather, they would take the money and invest it. They would put that safe retirement at risk for the chance to wind up with more. Perhaps more to enjoy during retirement, perhaps more to leave as a legacy. It doesn't matter. The point is that they are putting something at risk (a safe retirement) for the possibility of "winning" something.
That's gambling. No value judgment. They may feel, for example, that it is more important to leave a legacy than to have the certainty that they won't wind up destitute.
It is more likely that they don't have enough to start with, so the safe baseline alternative doesn't exist. In that case, no matter what they do, it's is a gamble. Of necessity.

We are holding off drawing SS as long as possible. My wife started at full retirement age (66), and I’m considering waiting until 70. For us, SS functions as a sort of longevity insurance. Plus, my wife has many close relatives who lived into their 90s and later.

“Without more and better lifetime income choices, retirees are essentially gambling with their retirement savings. Too few have the tools and information needed to manage their nest eggs to last throughout their golden years.”
I’m not up to speed on all this. Glanced at the MW story only. But what in heck do they consider “gambling”? Since there’s a significant body of opinion in the investment community and here on the board that one should actually “ramp up” their equity exposure as they progress during retirement, this reference to “gambling” strikes me as vague at best and misdirected at worst.
I don’t subscribe to the school that recommends increasing equity exposure during the retirement years. But the bigger “gamble” in the early years of retirement seems to me to be in locking-in a low growth potential, be it by going heavily into cash / bonds or putting all your eggs into an annuity (less ”growthy” than maintaining a well diversified portfolio with as much exposure to equities as you can tolerate).

The cited paper discusses how various different decumulation strategies could work: SPIA, laddered bonds, systematic [periodic withdrawal] spending, target date fund + QLAC, managed payout fund, and annuity with GMWB rider.
The paper is focused on defined contribution plans (401(k), 403(b), etc.), not IRAs. Nevertheless, the same sort of approaches could be applied to IRAs.
Judging from the reader comments on the MarketWatch site, people seem to view investing during one's decumulation period is no different from investing in one's accumulation period, except perhaps that one focuses a bit more on income-generating securities.
But as the paper states: By recognizing the clear difference between accumulation and decumulation risks, it is easy to understand why income solutions can vary so greatly in terms of composition and the risks they seek to address.
The paper, though it does some simulations, strikes me as largely an overview (albeit a very clear one) of the considerations people have in retirement and how the different approaches address or fail to address them. It's a nice writeup (skip the MarketWatch piece). The three page exec summary in turn makes for a good, somewhat quick read.
http://cri.georgetown.edu/wp-content/uploads/2019/06/policy-report-19-02.pdf

@Gary - that's not what Lewis wrote. Go back and read it again. Lewis said ".... and this constant assumption that Americans are stupid and don’t know how to maximize their retirement." See that part about "this constant assumption."

Social Security benefits are guaranteed to keep up with inflation and last for life. That’s important when half of all 65-year-old American women can expect to live past age 86, according to Social Security estimates. The average life expectancy for U.S. men who are currently 65 is age 84.

What about the half of women who don’t live that long? The most important number no one can know for sure is his/her life expectancy. If you are not physically healthy and/or longevity doesn’t run in your family taking Social Security early makes sense. Also many people don’t have the retirement savings to time their taking of the benefit perfectly like this story suggests, yet they may still be sick of working and not want to work till age 70 before retiring. In other words, the answer to when to take the benefit is complex and this constant assumption that Americans are stupid and don’t know how to maximize their retirement by the financial services sector is getting pretty old.

FYI: The world of retirement savings recently reached a significant milestone that has important implications for workers and retirees: For the first time, assets in defined-contribution savings plans represent more than 50% of all retirement plan assets globally, according to Willis Towers Watson.
While some defined-benefit pension plans still exist, many more workers today have to rely on defined-contribution plans (think: 401(k) and IRA accounts) to fund their retirements. With today’s defined-contribution plans, workers have to assume the responsibility for making all the complex savings and investment decisions that will significantly affect the amount of money they will have available once they stop working and retire.
While recent innovations in defined-contribution retirement plans, such as the use of auto-enrollment, are making it easier to save, the focus now must shift toward a more-comprehensive approach to help individuals make those savings last.
Increasingly, workers expect their retirement plans to not only help them save, but also help them to generate and manage income through retirement. A recent report by the Georgetown University Center for Retirement Initiatives, “Generating and Protecting Retirement Income in Defined Contribution Plans”, looks at how different approaches can meet individual goals for doing just that.
Regards,
Ted
https://www.marketwatch.com/story/the-retirement-plan-of-the-future-turning-that-pot-of-money-into-monthly-income-2019-06-28/print

https://www.sec.gov/Archives/edgar/data/3521/000119312519186064/d749776d497.htm
497 1 d749776d497.htm TAF ALGER SMALL CAP FOCUS FUND
THE ALGER FUNDS
Alger Small Cap Focus Fund
July 1, 2019 Supplement to the Statutory and Summary
Prospectuses dated March 1, 2019, as supplemented to date
The Board of Trustees of The Alger Funds has authorized a partial closing of Alger Small Cap Focus Fund (the “Fund”), effective July 31, 2019.
The Fund’s Class A and C Shares will be available for purchase by existing shareholders of the Fund who maintain open accounts.
The Fund’s Class I and Z Shares will be available for purchase by existing shareholders of the Fund who maintain open accounts and investors who transact with certain broker-dealers identified by Fred Alger & Company, Incorporated, the Fund’s distributor. Please check with your financial advisor regarding the availability of Class I and Z shares of the Fund for purchase at their firm.
In addition, the Funds Class A, C, I and Z shares will be available to new investors that utilize certain retirement record keeping platforms identified by the Fund’s distributor.
The Fund’s Class Y Shares will remain open to all qualifying investors.
The Fund may resume sales to all investors (or further suspend sales) at some future date if the Board of Trustees determines that doing so would be in the best interest of shareholders.

FYI: One of the signature achievements of the post-millennial capital markets is the driving down of investor costs to near zero, via Reg NMS which did away with the fraction spreads market makers once enjoyed and converted stock exchanges to a decimalized system.
While there have been winners and losers as a result of this and other improvements, no one would argue that the individual investor hasn’t become better off – more access, lower costs, increased liquidity. The concurrent shrinking of the average internal expense ratio at mutual funds and ETFs has been undeniably positive for the end investor trying to save for college, retirement, etc.
Democratic presidential candidate Bernie Sanders is now calling for a transactions tax on investors and traders that would represent a big step backwards for market participants, with the altruistic goal of wiping out the $1.6 trillion in student debt that many believe is holding back the economic potential of millions of young Americans.
Regards,
Ted

InvestmentNews Article:
https://www.investmentnews.com/article/20190624/FREE/190629961/wall-street-lashes-out-at-bernie-sanders-plan-to-pay-off-student

FYI: Dear retail investors holding lame 0.75% bank certificates of deposits and U.S. Treasury bonds yielding a tad over 2% for 10 years. If you want your money to yield something outside of the stock market, then it’s time to leave the United States.
Not pack-your-bags, sell-your-home leave the United States. But time to diversify out of U.S. bonds and CDs and put that retirement money somewhere far, far away.
It can’t go to Germany. That’s a negative yield debt. It can’t go to Japan. That’s money under the mattress. So it has to go to the emerging markets. Like China. Yes, China.
Regards,
Ted
https://www.forbes.com/sites/kenrapoza/2019/06/21/for-fixed-income-investors-time-to-leave-america/#290485bc51f6
M* Snapshot GARBX:
https://www.morningstar.com/funds/xnas/garbx/quote.html

An immediate annuity can have a place in your retirement portfolio, particularly if you feel you need to have at least one stream of income you can count on. But because interest rates are so low, you should wait until rates rise again before purchasing an annuity.

FYI: The California Public Employees’ Retirement System was one of the first public-pension systems to tie its investments to social activism. Now it is having second thoughts.
Regards,
Ted
https://www.wsj.com/articles/calpers-dilemma-save-the-world-or-make-money-11560684601

Hi @msf
We've been down this discussion road before; but I would still opt for Fidelity's annuity offering.
With the offerings available, one should not have a problem with beating inflation; and with fairly low risk, IMHO.
Even with a somewhat aggressive investment choice of Fidelity's VIP Balanced fund, one has very low costs: .57% expense ratio (same as retail offering) and .25% of account balance for the fee. And no surrender charges found in more common annuity types, usually after the first 7 years of the contract; and the normal spousal/non-spousal beneficiary choices.
For those not familiar with this product, check the link and read through everything....investment choices, etc.
Fidelity's Personal Retirement Annuity
Have a good remainder,
Catch

FYI: Recent articles in Advisor Perspectives by David Blanchett and by Zvi Bodie and Dirk Cotton have dealt with single-premium immediate annuities (SPIAs) used to generate lifetime income in retirement. The focus of those articles was the pricing and the risks of going without inflation protection. In addition to SPIAs, insurers also offer variable annuities (VAs) and fixed-indexed annuities (FIAs) with optional riders known as guaranteed lifetime withdrawal benefits (GLWBs). I’ll expand on the recent articles by comparing the income-generating properties of SPIAs versus VAs and FIAs, and place particular emphasis on how inflation risk impacts inflation-adjusted income.
Regards,
Ted
https://www.advisorperspectives.com/articles/2019/06/17/which-annuities-offer-the-best-inflation-protection

Please, for those who know more than I do: why is this NEW fund advertised as an "income" fund? Is that not the raison d'etre of bond funds generally?

There are income funds and there are total return funds. From one of many articles about Bill Gross' retirement:

“His real claim to fame was pioneering total return investing in fixed income,” said Miriam Sjoblom, director of fixed-income ratings at Morningstar. “That means you are not just concerned with collecting income. You are concerned with price appreciation and avoiding losses.
“The fact that he was able to popularize a style of investing that didn’t focus on yield changed the industry,” Sjoblom said.

https://www.seattletimes.com/business/pimco-founder-bill-gross-the-bond-king-calls-it-quits/
DoubleLine confuses matters by calling its fund an income fund while stating that its objective "is to maximize total return". Compare that with, say, DODIX, which says that it "seeks a high and stable rate of current income, consistent with long-term preservation of capital. A secondary objective is to take advantage of opportunities to realize capital appreciation." (Quotes from funds' respective prospectuses.)
Maybe just a matter of degree these days, with everything giving a nod to appreciation.

Thanks @msf for your (typically) well reasoned and precisely detailed analysis. I’d preface my comments by saying things always look rosier late in a decade-long bull market cycle in equities. I’m confident that if this bull lasts another 3 or 4 years the than prevailing “expert” advice will be to pile 100% into aggressive equity funds because fixed income is tantamount to rubbish.
- Easy to overlook is investor risk tolerance. No matter what one’s rationale may be for “loading up” on equities, there’s nothing like a 40-50% drubbing over a couple miserable years to bring us to our knees and shock us back to our Puritan sensibilities. In too many cases those equities piled into during sunnier days get unloaded by investors at discounted prices late in the bear cycle.
- Also overlooked by the article’s underlying assumption is that although investors might well possess a pension, SS, or annuity assets that would allow some level of subsistence, their portfolio of equities, bonds, etc. is not without some immediate purpose. In many cases (speaking from personal experience) those assets are withdrawn regularly for major expenses like travel, new vehicles and upgrades / maintenance on their principal dwelling. It’s also an emergency fund for unexpected medical costs and provides needed “insurance” against having the carpet pulled out from underneath by a reduction in SS or pension benefits (though the assumption is these benefits will remain intact).
- Further, the invested portfolio provides needed growth to compensate for inflation - arguably better than those (somewhat fixed) pension, annuity, SS benefits can. Point being: Treat those invested assets with the same care & due diligence you would if you had none of those added “insurance” products.
The article seems related to an argument advanced by John Bogle around 2013 when he said investors should treat SS as a “bond” in their allocation decisions. It was part of a wider ranging interview, so I’m posting only one commentary from a secondary source. (But the actual full interview is linked within the commentary). I’m also posting a lengthy mfo discussion from around the same time in which a number of members from various tiers shared their (somewhat divergent) thoughts on the question.
Bogle’s position: https://www.businessinsider.com/how-to-save-for-retirement-vanguard-john-bogle-2017-1
MFO discussion (September 2013) : https://mutualfundobserver.com/discuss/discussion/7814/count-social-security-as-part-of-portfolio

I generally agree with this article (about counting annuities as part of the "safe" portion of your portfolio allocation). It does gloss over a couple of points that merit further thought.
One is how to reduce to present value, i.e. how does one calculate the present value of an income stream in order to know how much one has in "safe" investments? It suggests using the commercial rate for an immediate annuity today that would be comparable to one's pension (if one is lucky enough to have one).
This approach could also be applied to an annuity that one annuitied some time in the past. One might have paid $100K for an immediate annuity in 2014, while that same annuity might cost only $70K today. In part because one has fewer years of life left, but also in part because interest rates have risen slightly. In that sense, an income stream is very much like a bond portfolio - its day to day mark to market value fluctuates.
Notice also that the value of social security isn't discounted to present value. That's because it is inflation adjusted. The value of $20K/year in 2020 is the same as the value of $20K/year in 2030. No need to discount. In the article, it appears that the writer assumed a 22 year life expectancy; $20K x 22 years = $440K shown for Client B.
The other point to think about is why own bonds at all, if your guaranteed income stream (pension, annuities) is large enough to cover essential expenses. The article suggests that the reason is to let people sleep at night ("risk tolerance").
This consideration is real but emotional (since by hypothesis the risk is minimal). If people have trouble addressing this, they will also likely continue ignoring the present value of their income stream for asset allocation. Because all one sees on one's monthly brokerage statements are the assets in the portfolio.
Of course any form of insurance (social security, pensions, annuities) has a cost (overhead). This cost can be reclaimed via the flexibility to be more aggressive with the rest of one's portfolio. Similarly, keeping a cash reserve (see thread on how much cash to keep in retirement) allows one to be more aggressive with the remaining assets.

https://www.cnbc.com/2019/06/12/heres-why-advisors-may-urge-retirees-to-load-up-on-equities.html
Here’s why advisors may urge retirees to load up on equities
Key Points
With guaranteed income — pension, Social Security or income annuities — your client might have enough safety to step up his stock allocation in retirement, said Michael Finke, professor of wealth management at The American College.
Consider guaranteed income sources as being similar as bonds, Finke said. That means you can increase your stock allocation elsewhere.