You make money on mutual funds if you buy your units at one price and sell them later at a higher price. Of course, you lose money if you sell your units for less than you paid for them. You may also make money from distributions paid by mutual funds. Mutual funds invest in many of the same things as individual investors - everything from treasury bills to shares on foreign stock markets. There are funds that specialize in buying shares in a specific sector, such as financial services companies, and funds that invest in a specific geographic region, such as Japan.
Mutual funds buy many types of investments.
The issuer is typically a company or a government. The bank uses your money for a set length of time and in return, agrees to pay back the original money with interest. Debt securities are also an important way for companies and governments to raise money. They frequently sell debt securities called bonds and use the cash for major projects, or just to meet their daily expenses. The government or company usually agrees to pay back the amount of the debt security within a set amount of time.