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Mutual Funds - Redeeming Your Shares
 Mutual
funds offer complete liquidity so that when you need to redeem your shares, the
proceeds are immediately available to you by a variety of convenient methods. On
any day the fund is open you can arrange to sell your shares and the fund will
buy them back from you at the current net asset value.
Most
money market mutual funds (and some other fixed-income funds) offer check
writing privileges. The fund provides you with checks that you may draw against
the value of the shares in your account. You may write a check payable to
yourself and deposit or cash it at your bank, or you can use it to pay your
monthly mortgage and other bills and continue to earn dividends on your funds
until the check clears the mutual fund. Most funds impose a minimum check
amount, and some limit the number of checks that can be drawn within a certain
time period.
Most fund
families offer telephone exchange privileges among funds in the same family.
This enables you to telephone the fund and ask that a certain dollar amount of
shares be redeemed from your stock fund. The fund has seven days to transfer it
into your money market fund. (The transaction normally takes three or four
days.) You may then write a check against the money market fund, in effect
gaining immediate access to the money in the stock fund.
Many
funds offer wire redemption, which enables you to have the proceeds of shares
you sell deposited directly into your checking account through the bank
wire-transfer system. Some mutual funds require redemption requests to be in
writing, accompanied by a signature guarantee. This policy is designed to
protect consumers by preventing unauthorized or fraudulent transactions. A
signature guarantee can be obtained from any commercial bank. If your savings
bank cannot provide a signature guarantee, ask it to recommend a corresponding
commercial bank.
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