Most mutual funds are liquid, meaning they are easily turned into cash. Remember, though, that the value of the shares you sell generally will not be determined until after the close of the business day you sell them. This is known as forward pricing, and all redeemable mutual funds are required to handle redemptions by this rule. Withdrawal charges may apply to redemptions of certain mutual funds shares. It is possible that you could lose money.
Distributions are taxable.
Fees and expenses are involved. Check with your fund company to find out what kinds of fees might affect your investment. If you sell your shares for a price higher than you paid for them, your shares have appreciated in value. Dividends are a payout of a portion of a company's earnings to a stockholder. As a stockholder, a mutual fund receives these dividends and passes them on to you.