Nearly a decade ago, Kit Blue wanted to help her grandchildren save for college, so she went hunting for a mutual fund that would teach...

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Nearly a decade ago, Kit Blue wanted to help her grandchildren save for college, so she went hunting for a mutual fund that would teach the kids a lesson about the power of investing.

Instead, the fund taught her and thousands of people like her a costly lesson.

Now, for the first time, she has a chance to get out of this difficult classroom to go searching for something better.

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Blue, of Metairie, La., was like many fund investors in the early 1990s, wowed by the performance of American Century Giftrust.

Giftrust was — and remains — something of an oddity among mutual funds. Built to be given as a gift, the fund accepted money only as a present for someone else, and that money had to remain in place for at least a decade.

The idea was to force investors to be patient so that the fund’s aggressive-growth strategy could kick in and pay off over time. Investors couldn’t bail out during a bad stretch, which theoretically gave management the opportunity to take chances and aim high.

The fund opened in 1983, essentially as a way for company founder James Stowers to give gifts to friends and relations. By the time the first investors could remove money, in the early 1990s, there was little doubt in the public’s mind that the concept had proved itself. The fund was up an average of roughly 20 percent a year over its first decade.

Investors saw those numbers and ignored the fact that this was an aggressive, bumpy ride without a parachute.

According to Morningstar, an industry-research firm, the fund has gained just less than 3 percent a year over the past decade, lagging the Standard & Poor’s 500 index by about 8.5 percentage points.

The past five years have been particularly horrific, with the fund averaging an annual loss of more than 13.7 percent.

Investors tired of paying American Century’s fees for such wretched results wanted to bail out, but there was no rip cord.

Giftrust is not so much a mutual fund as it is a trust; each account represents an individual irrevocable trust.

Investors who wanted to fight to break these trusts — established in American Century’s home state of Missouri — were, in many cases, looking at having legal fees wipe out their Giftrust money to gain their freedom.

“By the time I realized the problems with the fund, I was stuck with it,” Blue said. “My children kid me about how bad an investment it has been and how I have no choice but to stick with it. It’s embarrassing.”

For Blue and others like her, however, there is finally some relief, thanks to the new Missouri Uniform Trust Code, which came into law Jan. 1. Under the new law, if the grantor and all beneficiaries agree, the trust can be terminated prematurely.

To its credit, American Century is notifying shareholders by mail and has made the necessary forms readily available on its Web site (www.americancentury.com). The fund was not the focus of the law but an offshoot of changes being made; American Century was not involved in the legislative process.

“I wouldn’t say we are pleased, but we recognize that the inflexibility of this product has made people unhappy, and that certainly was never the intention of anyone at American Century,” company spokesman Chris Doyle said.

Chuck Jaffe is senior columnist at CBS Marketwatch. He can be reached at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.