https://www.sec.gov/Archives/edgar/data/830779/000119312518332066/d655023d497.htm497 1 d655023d497.htm COMSTOCK FUNDS, INC.
Filed Pursuant to Rule 497(e)
Registration No. 033-40771
COMSTOCK FUNDS, INC.
COMSTOCK
CAPITAL VALUE FUND (the “Fund”)
Supplement dated November 21, 2018, to the Fund’s Summary Prospectus, Prospectus and
Statement of Additional Information for Class AAA Shares, Class A Shares, Class C
Shares, and Class I Shares, dated August 28, 2018
After careful consideration, the Board of Directors (the “Board”) of the Fund approved calling a special meeting of shareholders, to be held as soon as possible, to consider a proposal to change the nature of the Fund’s business from a mutual fund registered under the Investment Company Act of 1940, as amended (the “1940 Act”) to an operating company, and to de-register the Fund as a registered investment company with the Securities and Exchange Commission (the “Proposal”).
This conclusion was based in substantial part on the Board’s belief that the appropriate business strategy to be pursued by the Fund would be becoming an operating company that owns interest in one or more operating businesses and/or to acquire assets other than securities, and try to maximize the utilization of the Fund’s accumulated
capital loss carryforwards. If shareholders of the Fund approve the Proposal, the conversion to an operating company is expected to take effect in the second quarter of 2019.
Shareholders of the Fund will receive a combined proxy statement with additional information about the shareholder meeting and the Proposal. Shareholders should read the proxy materials carefully, as they will contain a more detailed description of the Proposal.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
Vanguard change coming Do the number of shares remain the same? That depends on the price of the investor shares and the admiral shares. There's some well defined dollar value of your fund holding (number of shares x investor share price). You're going to end up with the same value after conversion. Obviously if the admiral share price is higher you can't get as many shares as you had before, else you'd be making a profit on the conversion.
You only get the same number of shares if the prices of the two share classes are the same. I've done a few conversions; only once have I lucked out like that.
For example, VBMFX and VBLTX are trading at the same price. So you'd have the same number of shares after conversion.
But VTSMX is trading at $60.96 while VTSAX is trading at $60.99. If you had 100 shares of VTSMX (worth $6,096), don't expect to get upgraded to 100.000 shares of VTSAX (worth $6,099). Expect to get about 0.049 shares less (that makes up the $3 difference). At least if I've kept track of my decimal places correctly.
It's not a big deal. If you paid $5,000 for the investor shares, then the total cost of your admiral shares after conversion is still $5,000. If you sell all your shares, you declare your cost basis as $5,000 regardless of how many admiral shares that is.
In the end, regardless of what Vanguard or any other financial institution reports to the IRS, it's your responsibility, not theirs, to get the numbers right. If you think Vanguard has erred, the IRS has a box where you can say so and put down your figure.
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You're suggesting two completely different buy/sell sequences:
1) Buy admiral shares (doubling your exposure), wait one month (presumably to avoid wash sale rule), and then sell investor shares
2) Sell investor shares before distribution (bringing your exposure to zero), wait until ex-div date, and then buy admiral shares
If you have gains, then #2 might make some sense. Though you're be recognizing all the gain. In contrast, if you do a direct conversion, you'll have the divs to deal with (they're usually qualified), but that should be relatively small compared to the cap gains you'd be deferring by doing the conversion.
Still, if you're adamant on keeping your records simplified, it has some merit. (You'd only be deferring taxes on the cap gains by doing the conversion, not eliminating them permanently.)
Jonathan Clements: Simple Isn’t Easy: Alan Roth "Roth notes, fee-only advisors are also conflicted. If they’re charging, say, 1% of a client’s portfolio, they may ...advocate complicated strategies simply to justify their own fee."
Does he have evidence that this is happening to a significant degree? What is happening to a large enough extent that it has raised concern at the SEC, is reverse churn, essentially the opposite of what Roth is describing.
https://www.stratifi.com/blog/reverse-churning/"Less than 100% of a realized
capital gain will be taxed, because you’ll have some sort of cost basis on the shares."
No, assuming a cap gain is recognized, 100% of that gain is taxed. The reason why less than 100% of the proceeds from a security sale is not taxed is that some of those proceeds represent cost. But 100% of the part that is gain is taxed.
Right idea, but horribly expressed.
An example of where a cap gain is realized but not recognized is in the sale of a primary residence. The first $250K of gain by an individual is realized but not recognized for tax purposes.
2018 Mutual Funds preliminary capital gain distribution estimates
Money In Donor-Advised Funds Can Make Impact Before Distribution FYI: Charitable investors who set up donor-advised funds to ultimately give the proceeds to specific issues, like gender-based causes or environmental protection, may be surprised to find their money sitting in the fund actually works against their values.
According to a new study from Cornerstone Capital Group, a growing number of people want to invest the money in their DAFs for impact. However, only a small portion of the more than $23 billion contributed to donor-advised funds in 2016 was used for such purpose, according to the National Philanthropic Trust.
Regards,
Ted
PG&E bond Above mentioned PG&E bond already dropped YTM to 6.1% after announcement that California regulators do not expect company's bankruptcy. Stock jumped up 30%. Now PG&E bonds are trading in the same range as GE Capital bonds.
