Investing

Where should I purchase a mutual fund?

Directly from the fund company.
The least expensive way to invest in a mutual fund is through the fund company itself. Companies that sell shares directly to the public without sales brokers or sales commissions are typically called direct-marketed funds or no-load funds. While most are sold without any sales charges, some charge a low initial fee, usually 3.5% or less and are called low-load funds.  Contact the fund company directly to request information and a prospectus for the fund(s) you are interested in and to learn how to make an investment in the fund.

Through no-transaction fee programs.
You can purchase fund shares through a special service that offers the funds of many different fund companies. Often called "fund supermarkets," (the best-known are Schwab's OneSource and Fidelity's No Transaction Fee Program) these companies sell shares directly to you without a sales charge or transaction fee, making it possible for you to buy funds from many different companies, without sales charges, with the added convenience of consolidating your fund holdings and record keeping.

Through "wrap programs" or financial advisors.
Special programs are available that allow you to purchase mutual funds with the added benefit of receiving investment advice. You can expect to pay a fee for the service, which is generally based on a percentage of assets, rather than a sales commission on each purchase. Financial advisors who provide investment advice can also provide mutual funds. Advisors may charge a fee based on percentage of assets or a flat hourly fee. "Fee only" planners are often recommended.

Through your retirement plan where you work.
You may already be invested in mutual funds if you participate in a 401(k) or company-sponsored retirement plan where you work. This may be the first place you learned about mutual funds--or maybe these are the only funds you are invested in. Shares in the plan are purchased for you according to the rules of the plan and many restrictions on investment and redemptions apply. While you cannot purchase funds from the plan for other purposes, you should become educated about the funds in your plan and their relationship to your financial goals and other mutual fund investments that you hold. See Investing for Retirement at this site for more information.

How To Take The First Steps

Once you've identified your goals and the types of funds available to help you reach them, it's time to identify specific funds that might be suitable for you and learn more about them before you make your investment.

• Visit the Fund Selector to review funds by investment category and compare their objectives, performance, and expenses. Also review the fund's minimum investment requirement to determine if you can meet the initial requirement needed to open an account.
• Next, contact the fund company directly by visiting its website or by calling their shareholder services phone number to request a prospectus and information kit for the fund or funds you are interested in. You'll receive an application form with complete instructions on how to invest and redeem shares, as well as how to use other services offered by the fund company.
• Read the prospectus carefully before you invest. It's important that you understand how the fund operates and how its policies, fees or philosophies might affect your investment over time.

Making Investments
You can invest in a mutual fund by mail by completing an application and returning it along with a check for your investment. Some fund companies allow you to complete the application online and then mail in your check separately. You can also establish automatic monthly investments, or indicate other services  you are interested in, such as the ability to invest over the telephone, bank wire, or online.

Once you make an investment, you are a shareholder in the fund and you'll receive a confirmation of each investment or redemption you make, along with periodic reports and statements. The fund will also report dividend payments or capital gains distributions and provide the tax status of your earnings.

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