Mutual Funds

mutual fund: 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.

Mutual Funds

A mutual fund is simply an investment that allows people with similar financial goals to pool their resources with thousands of other investors. Professional money managers invest that money in dozens of securities that meet the objectives of the fund. Mutual funds offer many distinct advantages, including:

Professional management

Managing investments requires a commitment of time, resources and expertise that most individuals don’t have. When you invest in a mutual fund, you are hiring full-time professional managers to buy, sell and monitor your investments.

Diversification

In a mutual fund, your money is invested in dozens or even hundreds of securities covering different industries that meet the fund’s objective. Owning a diverse mix of securities doesn’t eliminate risk but can reduce it, as the ups and downs of individual securities often offset each other.

Mutual funds generally fall into four categories: stocks, bonds, money market instruments or those that invest in combinations of these three categories.

Some funds can invest all over the world or in certain parts of the world, and some funds concentrate their holdings in specific industries or sectors of the economy. There are funds that invest only in large companies and others that invest only in small companies.

• There are risks associated with investing, including the possible loss   of principal. The value and return of mutual funds will fluctuate so   that when redeemed, an investor's shares may be worth more or less   that the original value. It is important to remember that past   performance does not indicate future results and there are no   guarantees that prior markets will be duplicated.

• For more complete information, including charges and expenses,   please obtain a prospectus from your financial adviser. Please read   the prospectus carefully before you invest or send money.