mutual fund

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mutual fund,

in finance, investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value (i.e., the price of a share equals total assets minus liabilities divided by the total number of shares). A mutual fund, also called an open-end investment company, owns the securities of several corporations and receives dividends on the shares that it holds. A closed-end investment company differs from an open-end company in that the number of shares is limited and the price of the shares may fluctuate above and below the net asset value. The earnings of a mutual fund are distributed to the holders of its shares. It is hoped that a loss on one holding will be made up by a gain on another. The holders of mutual-fund shares thus gain the advantage of diversification, which might ordinarily be beyond their means. Common mutual funds, which often provide skilled management for security holdings, include stock, bond, balanced, index, and money-market fundsmoney-market fund,
type of mutual fund that invests in high-yielding, short-term money-market instruments, such as U.S. government securities, commercial paper, and certificates of deposit. Returns of money-market funds usually parallel the movement of short-term interest rates.
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. Stock funds mainly invest in common shares, and bond funds in bonds; such funds may specialize in a particular category of stocks or bonds (such as Internet stocks or municipal bonds). A balanced fund might invest in preferred stocks and bonds in addition to common stocks. Index funds invest in a portfolio that mimics a given index, such as the stocks that make up the S&P 500. The forerunner of the modern mutual fund was established in Belgium in 1822, and the use of these closed-end investment companies soon spread to Great Britain and France. They became popular in the United States in the 1920s, but from the 1930s the open-end mutual fund became more popular. Mutual funds experienced a period of tremendous growth after World War II, especially in the 1980s and 90s.


See M. Useem, Investor Capitalism: How Money Managers Are Changing the Face of Corporate America (1996).

References in periodicals archive ?
Investors can use the Fifo and specific identification methods for sales of stock as well as mutual fund shares under regulations section 1.
We believe that many customers of PrimeVest and other broker-dealers were overcharged in the same way as our clients, when they made multiple purchases of mutual fund shares, and did not get the benefit of the breakpoint discount," said Peter A.
For information about the differences in mutual fund share classes, see the NASD Investor Alerts Understanding Mutual Fund Classes and Class B Mutual Fund Shares: Do They Make the Grade?
The supervisory problems here led not only to the sales of inappropriate mutual fund share classes, but to the failure to identify special sales charge waiver programs on mutual fund purchases.
The firms have agreed to a remediation plan that will give affected customers the opportunity to convert their holdings to a more financially advantageous mutual fund share class.
We support strict compliance with and vigorous enforcement of all laws and policies regarding the purchase, sale and valuation of mutual fund shares.
Another such class action was commenced in Wisconsin state court on behalf of all purchasers, redeemers and holders of mutual fund shares of Strong Growth Fund , Strong Large-Cap Growth Fund , Strong Growth 20 Fund , Strong Advisor Mid-Cap Growth , and Strong American Dividend Income Fund .
7 /PRNewswire/ -- NASD has proposed for comment a rule that would expand the disclosure of two types of compensation paid for the sale of mutual fund shares.
The notes are collateralized by HMFFT 2003-2's participation rights to receive certain asset based sales charges (ABSC or 12b-1 fees), contingent deferred sales charges (CDSC), and shareholder servicing fees (SSF) for the distribution and servicing of class B mutual fund shares sold to investors.
Today's action is part of a larger, ongoing focus of NASD on the sale of Class B mutual fund shares.
Ira provides day-to-day guidance to financial service industry clients handling a variety of projects, such as the design of products targeted to pension funds and IRAs, and the review of fee arrangements connected to the sale of mutual fund shares and insurance products.

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