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OPEN ENDED FUNDS

Mutual funds can be open-ended or closed-ended. But many people consider all mutual funds to be open-ended, while putting closed-ended mutual funds in another category.
"Open-ended" mutual funds means that shares are issued in the fund (or sold back to the fund) whenever anyone wants them. With closed-ended mutual funds, only a certain number of shares can be issued for a particular mutual fund, and they can only be sold back to the fund when the fund itself terminates. (But you can still sell closed-ended mutual funds to other investors on the secondary market.)
Most mutual funds are classed as open-end mutual funds, meaning that the fund will redeem outstanding shares immediately upon request. Thus, the number of shares of a given mutual fund is not fixed, but fluctuates as new shares are sold to investors and outstanding shares are redeemed. The offering price and redemption price of an open-end mutual fund are based on the market value of the securities in its portfolio. In addition, varying charges, called loads, may be applied. The offering price may include a front-end load, generally to cover the commission to the broker or other sales representative. A back-end load may be subtracted from the redemption price, often at a rate that progressively decreases the longer the shares are held.

Open-end mutual funds may be sold by securities dealers and brokers, by financial planners, by a sales staff employed by the mutual fund management, or directly by the fund to the investor. The last-named process carries no sales charge, or a low one, and such funds are called no-load or low-load. All mutual funds have management fees regardless of distribution methods.