Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
First, let us understand, what is Ownership?
Ownership simply means that a person who receives shares in a company, owns part of the company and becomes a partner in its financial future. He also owns part of the profits.
A share of a company can return money in two ways:
A mutual fund is an investment company - a company that makes investments on behalf of individuals and institutions who share common financial goals. In todays complex financial marketplace, mutual funds offer investors a simpler, more convenient, and less time-consuming method of investing in a portfolio of securities (like stocks & bonds) then trading them individually. Through mutual funds, investors can delegate investment decisions to the funds' professional money managers - decisions such as which securities to hold, when to buy, and when to sell. Also, investors in mutual funds can access a broader diversity of securities then they could invest on their own, thereby reducing their risk. (Not having all your eggs in one basket idea)
Mutual fund investors select a fund with an investment objective that most closely matches their own. For example, they may want to maximize their current income, maximize the long-term growth of their capital, or they want some combination of growth and income.
The fund pools the money with other investors who have similar objectives. Professional money managers then use the pool to buy a wide range of stocks, bonds, or money market investments that, in the manager's judgment, will help the investors achieve their objectives. Together, these securities form the underlying portfolio of the fund. The fund earns money on those securities and distributes the earnings to the investors as dividends or, if the securities are sold for a profit, as a capital gain. Alternatively, investors may elect to have their dividends and capital gains automatically reinvested in the purchase of additional fund shares.
An investor in mutual funds is buying units of the fund. Each unit represents ownership in all the fund's underlying securities. Dividends and capital gains produced by these securities are paid out in proportion to the number of fund shares owned. Thus, shareholders who invest a few hundred dollars get the same investment return as those who invest hundreds of thousands.
It is important that an investor proposing to borrow for the purchase of securities be aware that a purchase with borrowed monies involves greater risk than a purchase using cash resources only. To what extent a purchase using borrowed monies involves undue risk is a determination to be made by each purchaser and will vary depending on the circumstances of the purchaser and the securities purchased.
Fund-Related Internet Sites
