The idea behind a mutual fund is simple: Many people pool their money in a
fund, which invests in various securities. Each investor shares
proportionately in the fund's investment returns -- the income (dividends
or interest) paid on the securities and any capital gains or losses caused
by sales of securities the fund holds.
Every mutual fund has a manager, also called an investment adviser, who
directs the fund's investments according to the fund's objective, such as
long-term growth, high current income, or stability of principal. Depending
on its objective, a fund may invest in stocks, bonds, cash investments, or
a combination of these financial assets.
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