Help! What does this mean?

[Andrew Jackson]

I was filling out the application form for the Permanent Portfolio mutual fund and came across this:

7. Election Yes or No (check one)

In the event that assets are distributed to me (us) in and in-kind redemption of shares in the Permanent Portfolio, I (we) hereby instruct the Fund to deliver the assets to a qualified broker or dealer and to have them promptly sold by the broker or dealer, provided that the selling costs shall not exceed 2% of the proceeds of the sale. Instruct the broker or dealer to remit the net proceeds to me (us) immediately upon completion of the sale

What the heck is an election? And the word broker and 2% scare me.

[kork13]

I'm not fluent in legalese, but that section sounds more like something regarding either (A) automatic re-investment of dividends; or (B) trades within the overall mutual fund, not an individual's holdings. I'm leaning more toward the latter.

Mutual fund managers regularly make buys/sales of the actual holdings (the individual stocks) of a mutual fund. This might be in order to realize a net gain for the fund, to prevent further losses, to realign the fund's positions, and so on. I think what your quote is referencing are those sales, which occur normally in the day-to-day management of the mutual fund.

However, that's just my deciphering, FWIW. If nothing else, you can (should) always call the brokerage company and ask for an explanation of what it means. They're the best ones to ask for clarification.

[jIM_Ohio]

I was filling out the application form for the Permanent Portfolio mutual fund and came across this:



What the heck is an election? And the word broker and 2% scare me.

I own this fund
I asked the same question after investing in it

I am told all mutual funds have that disclaimer
basically says if mutual fund holds $2 billion in assets and you own $2 million of that (1%) it may be tough for fund manager to sell $2 M overnight if you redeem your shares, so the fund manager may give you shares of stock or gold bullion instead so the fund does not incur trading costs on the $2 M sale if you choose to liquidate all your shares at once.

[Andrew Jackson]

I own this fund
I asked the same question after investing in it

I am told all mutual funds have that disclaimer
basically says if mutual fund holds $2 billion in assets and you own $2 million of that (1%) it may be tough for fund manager to sell $2 M overnight if you redeem your shares, so the fund manager may give you shares of stock or gold bullion instead so the fund does not incur trading costs on the $2 M sale if you choose to liquidate all your shares at once.

Thanks Jim.

Wish they would just explain it like that in the application. And I wish I owned 1% of a $2 billion dollar fund.