No need to wade through all 25 pages of the offering document for Bruce Berkowitz's Fairholme fund, a member of the Kiplinger 25. We tell you what's most important.
OBJECTIVE
"Long-term growth of capital." Translation: We want your investment to appreciate over time.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
STRATEGY
Normally holds "a focused portfolio consisting primarily of equity securities." Translation: We generally hold a small number of stocks.
Manager looks for companies with "stress-tested owner/managers; sensible capital-allocation policies; strong competitive positions ... potential for long-term growth; low market prices in relation to tangible asset values ... and relatively high free cash flow yields." Translation: We look for growing companies run by experienced managers who do a good job of spending the company's capital, and we buy the stocks when they are undervalued.
Also invests in "special situations," such as "liquidations, reorganizations, recapitalizations, mergers ..." Translation: We invest in companies undergoing major changes.
"The Fund ... may maintain a significant portion of its total assets in cash." Translation: We may not be fully invested in stocks all the time.
INVESTMENT RISKS
"Market risk." Translation: The stock or bond markets could go down.
"Non-diversification risk." Translation: Owning relatively few securities is riskier than owning a lot of securities.
"Special situation risk." Translation: Those mergers, liquidations and reorganizations may not work out as we hope; they may even fail.
"Credit risk." Translation: Companies whose bonds we own could default.
MANAGEMENT TEAM
"The Fund is managed by a portfolio team whose lead member, Bruce R. Berkowitz, is the Managing Member of the Manager ... Mr. Berkowitz has been Managing Member and Chief Investment Officer of the Manager since the Manager's inception in 1997." Translation: A team headed by Berkowitz runs the fund. He's been in charge of the management firm since 1997.
FEES
Shareholder fees (paid directly from your investment)
Maximum sales charge (load) on purchases: None
Maximum deferred sales charge (load): None
Maximum sales charge (load) imposed on reinvested dividends and other distributions: None
Redemption fee (as a percentage of amount redeemed): 2%
Translation: You won't pay anything to buy shares or reinvest dividends, but you will pay a 2% fee on any shares redeemed within 60 days of the date of purchase (that 60-day trigger is in the footnotes).
Fund operating expenses (deducted from fund assets)
Management fees: 1%
Distribution (12b-1) fees: None
Other expenses: 0%
Acquired fund fees and expenses: 0.01%
Total annual fund operating expense: 1.01%
Translation: You pay 1% of assets per year for management of the fund and other costs of running it, including legal, accounting and printing costs. The 0.01% charge is the fund's share of the expenses of other funds it invests in, such as money-market funds.
An example of expenses over time
1 year: $103
3 years: $322
5 years: $558
10 years: $1,236
Translation: This is what you'll pay in fees if you invest $10,000, the fund returns 5% each year, and expenses remain constant.
-
Do You Really Need That Wine Cellar?Home Features Wine cellars are a popular feature in high-end houses. Will installing one in your home increase its value, or would you be better off with a cheaper solution?
-
Think a Repeal of the Estate Tax Wouldn't Affect You? WrongThe wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
Best Banks for High-Net-Worth Clientswealth management These banks welcome customers who keep high balances in deposit and investment accounts, showering them with fee breaks and access to financial-planning services.
-
Stock Market Holidays in 2025: NYSE, NASDAQ and Wall Street HolidaysMarkets When are the stock market holidays? Here, we look at which days the NYSE, Nasdaq and bond markets are off in 2025.
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?Markets When does the market open? While the stock market does have regular hours, trading doesn't necessarily stop when the major exchanges close.
-
Bogleheads Stay the CourseBears and market volatility don’t scare these die-hard Vanguard investors.
-
The Current I-Bond Rate Until May Is Mildly Attractive. Here's Why.Investing for Income The current I-bond rate is active until November 2024 and presents an attractive value, if not as attractive as in the recent past.
-
What Are I-Bonds? Inflation Made Them Popular. What Now?savings bonds Inflation has made Series I savings bonds, known as I-bonds, enormously popular with risk-averse investors. So how do they work?
-
This New Sustainable ETF’s Pitch? Give Back Profits.investing Newday’s ETF partners with UNICEF and other groups.
-
As the Market Falls, New Retirees Need a Planretirement If you’re in the early stages of your retirement, you’re likely in a rough spot watching your portfolio shrink. We have some strategies to make the best of things.
