A mutual fund is a fund operated by an investment company that invests in one or more categories of assets, including stocks, bonds and money market instruments. All shareholders share in the gains and losses generated by the fund on an equal basis, proportional to the amount initially invested. Investors can redeem mutual fund shares on demand at net asset value.
Mutual funds offer investors diversification and professional money management.
A management fee is charged for these services, and there are other fees, such as 12b-1 fees. Funds with a sales charge sold through brokers are called load funds and those sold to investors directly by the fund companies are called no-load funds. Copyright 1997-2000 City Securities Corporation. All rights reserved.