Direct-marketed funds are sold through the mail, by telephone, or at office locations. They typically offer their shares to the public with a low sales charge or none at all . The third important distribution channel involves employer-sponsored retirement plans. Under these plans, both employees and employers make contributions to individual accounts for employees. Typically, employees make their own investment decisions by choosing from a menu of investment options offered by their employer.
Mutual funds are ideal products for defined contribution plans.
The variety of funds offered by an individual mutual fund firm provides employees a choice of investments with wide-ranging risk and return characteristics. Mutual funds offer daily pricing, and exchange features whereby investors can move investments from one fund to another. Mutual funds are mandated to provide disclosure documents such as prospectuses and annual reports not typically available with respect to many other investment options. Major daily newspapers publish fund prices daily, enabling employees to track their retirement investments easily. Finally, fund companies have developed extensive educational materials to assist employees in their investment decision-making.