A mutual fund is operated by an investment company which raises money from shareholders and invests in a group of assets (usually stocks or bonds, following a stated set of objectives. Mutual funds sell shares of the fund to investors, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money from investors and use it to purchase stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund.

Hope this helps:)