I am looking at investing in a mutual fund and reading over the Fund Summary Prospectus.
There is a paragraph that says
The Fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in more taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the previous expense examples, reduce the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 3% of the average value of its portfolio.
The part that bothers me is that it
may indicate higher transaction costs and may result in more taxes. How do I know if it WILL have higher fees and what are those fees?
Seems like this is a very nice place to hide whatever fees they want. Above this section in the prospectus, there are details about the Annual Fund Operating Expenses and detailed examples. Then they throw this section in and make it seem like
By the way, we might charge you more than the annual fund operating expenses, but we won't tell you how much. Pretty confused by this.
Is there any way to know how much Portfolio Turnover will cost me in addition to the Annual Fund Operating Expenses?