Question

how mutual fund works

Answer 1

Some mutual funds focus on a single asset class, such as stocks or bonds, while other invest in a variety. Unlike the stock market, in which investors purchase shares from one another, mutual fundsshares are purchased directly from the fund (or a broker that purchases them directly from the fund).
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Answer 2

The fund sponsor raises money from the investing public, who become fund shareholders. It then invests the proceeds in securities (stocks, bonds and money market instruments) related to the fund's investment objective. ... Mutual fund shares are bought and sold on the basis of a fund's net asset value (NAV).