A mutual fund is an investment method where the fund agency puts togethera lumpsum of money from many investors and then invests in various forms of securities like shares, bonds, or debt securities. An investor in a mutual fund is called as a unit-holder. Each unit-holder is allotted units (a pro-rata share of the portfolio) depending on the amount of their investment. The profit or loss is then distributed among unit-holders depending on the amount of units held by each one. There are many types of Mutual Funds so it is a good idea to consult a financial advisor about your unique situation before investing in one.