Excerpted from Bogle on Mutual Funds by John C. Bogle, pages vii
The fourth basic principle, that mutual fund ownership provides simplicity and convenience, begins the moment you first purchase a fund's shares. Your purchase may take place through a one-step process handled by a representative of a stock brokerage firm (broker distribution). Or you may select a multistep process in which no broker is involved (direct distribution). In this case, you call a fund sponsor toll-free, a prospectus and application are sent to you, your application and check are returned to the sponsor, and you then receive a confirmation statement showing the amount of your investment, the number of shares you purchased, and the purchase price.
The convenience of mutual fund ownership continues following the initial purchase, with such features as automatic reinvestment of dividends and capital gains distributions, tax reporting, programs for regular additional investments and for systematic withdrawals, checkwriting on money market funds, and even telephone exchanges among different funds within the same family. Finally, if you want to redeem your shares and withdraw from the fund, you can usually do so at a moment's notice with a simple phone call.
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