Closed End Funds are a much less common form of investment company. A 'closed-end fund,' legally known as a 'closed-end company,' is one of three basic types of investment companies, with the two other types of investment companies being mutual funds and Unit Investments Trusts (UITs). Some of the particular characteristics of closed-end funds are: Closed-end funds generally do not continuously offer their shares for sale. Rather, they sell a fixed number of shares at one time (in the initial public offering), after which the shares typically trade on a secondary market, such as the New York Stock Exchange or the Nasdaq Stock Market. The price of closed-end fund shares that trade on a secondary market after their initial public offering is determined by the market and may be greater or less than the shares net asset value (NAV). (NAV is the total value of the portfolio divided by the number of outstanding shares.) Closed-end fund shares generally are not redeemable. That is, a closed-end fund is not required to buy its shares back from investors upon request. Some closed-end funds, commonly referred to as interval funds, offer to repurchase their shares at specified intervals. The investment portfolios of closed-end funds generally are managed by separate entities known as "investment advisers" that are registered with the SEC. Closed-end funds also are permitted to invest in a greater amount of "illiquid" securities than mutual funds. (An "illiquid" security generally is considered to be a security that can't be sold within seven days at the approximate price used by the fund in determining NAV.) Because of this feature, funds that seek to invest in markets where the securities tend to be more illiquid are typically organized as closed-end funds. Closed-end funds come in many varieties. They can have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses. Keep in mind that just because a fund had excellent performance last year does not necessarily mean that it will duplicate that performance. For example, market conditions can change and this year's winning fund could be next year's loser. To understand the factors you should consider before investing in a mutual fund, read Mutual Fund Investing: Look at More Than a Mutual Fund's Past Performance. In addition, you should carefully read all of a funds available information, including its prospectus and most recent shareholder report before purchasing mutual fund shares. Closed-end funds are subject to SEC registration and regulation, and are subject to numerous requirements imposed for the protection of investors. Closed-end funds are regulated primarily under the Investment Company Act of 1940 and the rules adopted under that Act. Closed-end funds are also subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. You can find the definition of "closed-end company" in Section 5 of the Investment Company Act. Much of the above information is courtesy of the SEC.