1. What is a fund? As an investment tool, securities investment funds pool the funds of many investors, are hosted by fund custodians (such as banks), and are managed and used by professional fund management companies. They invest in stocks and bonds, etc.

Securities, to achieve the purpose of income.

For individual investors, if you have 10,000 yuan to invest, but the amount is not enough to buy a series of different types of stocks and bonds, or you simply do not have the time and energy to select stocks and bonds, buying a fund is the best option.

Not a bad choice.

For example, if you subscribe for an open-end fund, you will become the holder of the fund. The above 10,000 yuan will be converted into a certain share of fund units after deducting the subscription fee.

The investments of all holders together constitute the assets of the fund. The professional team of the fund management company uses the fund assets to purchase stocks and bonds to form the fund's investment portfolio.

The fund shares you hold are the epitome of the above investment portfolio.

Expert financial management is an important feature of fund investment.

The investment experts equipped by fund management companies generally have profound theoretical foundations in investment analysis and rich practical experience. They use scientific methods to study financial products such as stocks and bonds, combine investments, and avoid risks.

Accordingly, every year the fund management company will withdraw management fees from the fund assets to pay for the company's operating costs.

On the other hand, the fund custodian will also draw custody fees from the fund assets.

In addition, open-end fund holders need to pay directly subscription fees, redemption fees and conversion fees.

Closed-end fund holders pay transaction commissions when they buy or sell units.

There are several types of funds: ◇According to the organizational form, there are two types of corporate funds and contract funds. At present, domestic funds are all contract types.

◇According to whether the fund size is fixed, it can be divided into closed-end funds and open-end funds.

As of mid-September 2003, there were 86 domestic securities investment funds, with a total scale of 161.6 billion fund units, including 54 closed-end funds and 32 open-end funds.

The U.S. mutual fund industry has developed rapidly since the 1970s.

As of July 2003, there were approximately 8,300 mutual funds (open-end funds) in the United States, with a net asset value of US$687 billion, of which more than 70% were held by individual investors.

Investments by U.S. households in mutual funds have grown steadily since 1990.

According to statistics from the Investment Company Association in May 2002, 54.2 million households (a total of 94.9 million individual investors) hold mutual funds, accounting for approximately half of the households in the United States.

In 1990, 23.4 million households participated in fund investment, accounting for 25%.

◇According to different investment objects, it can be divided into stock funds, bond funds, hybrid funds, money market funds, futures funds, option funds, etc.

◇According to the characteristics of investment operations, funds can be divided into growth, income and balanced funds.

When Morningstar launched its fund star rating system in 1985, it divided funds in the U.S. market into four categories based on asset distribution: U.S. stock funds, international stock funds, taxable bond funds and municipal bond funds.

In 2002, based on the above classification, Morningstar further subdivided fund types into 50 types according to investment style, investment industry, region, etc.

To clarify some misunderstandings: ◇Funds are not stocks. Some investors confuse funds and stocks, but they are not.

On the one hand, investors who purchase funds only entrust fund management companies to invest in stocks, bonds, etc., and when they purchase stocks, they become shareholders of listed companies.

On the other hand, funds investing in many stocks can effectively diversify risks and have relatively stable returns; while single stock investments often cannot fully diversify risks, so returns fluctuate greatly and risks are greater.

◇Funds are different from savings. Since open-end funds are sold through banks, many investors think that funds are not much different from bank deposits.

In fact, there is an essential difference between the two: savings deposits represent the credit of commercial banks, with guaranteed principal, fixed interest rates, and basically no risk; while funds invest in the securities market and have to bear investment risks.

Savings deposits receive fixed interest income, while investment funds have the opportunity to share in the gains brought by the rise in the underlying stock and bond markets.

◇Funds are different from bonds. Bonds are certificates of creditor-debt relationships that agree to repay principal and interest on schedule.

Domestic bond types include treasury bonds, corporate bonds and financial bonds. Individual investors cannot purchase financial bonds.

Treasury bonds have no credit risk, and interest is tax-free; corporate bonds have higher interest rates, but are subject to a 20% interest tax and have certain credit risks.

In contrast, funds that mainly invest in stocks have less fixed returns and higher risks; while bond funds that only invest in bonds can use portfolio investments to improve the stability of returns and diversify risks.

◇Funds are risky. Investing in funds is risky.

In other words, the 10,000 yuan you initially used to purchase the fund may result in losses.