1. INTRODUCTION1.

1 Mutual Fund Mutual fund is a mechanism for pooling the investment, made by the investors, instock market, securities, shares and debentures as disclosed in offer document and issuingunits to the investors. Units are issued to the investors in accordance with quantum of money invested by them. Investors of Mutual funds are known as Unit Holders.As investments are spread across a wide cross-section of industriesand sectors, the risk are reduced. Diversification reduces the risk because all stocks maynot move in the same direction in the same proportion at the same time. The profits or losses are shared by investors in proportion to their investments. The Mutual funds normally come out with a number of schemes with differ e n t investment objectives which are launched from time to time. A mutual fund is required tob e r e g i s t e r e d w i t h S e c u r i t i e s a n d E x c h a n g e s B o a r d o f I n d i a ( S E B I ) w h i c h r e g u l a t e s securities markets before it can collect funds from the public ONECANMAKEMONEYFROMMUTUALFUNDINTHREEWAYS:Income is earned from dividends and interest on bonds. A fund pays out nearly allincome it receives over the year to fund owners in the form of a distribution. If the fund sell securities that have increased in price, the fund have a capital gainmost fund also pass on this gain to investor in a distribution. If fund holding increases in price but are not sold by the fund manager, the fundshares increase in price. One can sell then this mutual fund shares the profit. Classification of Mutual Fund Open Ended Funds: These funds have units available for sale and repurchase atall time. An investor can buy or redeem the units at price based on NAV per Unit. Close Ended Funds: T h e s e f u n d s d o n t h a v e u n i t s a v a i l a b l e f o r s a l e a n d repurchase at all time. It allows onl y one-time sale of a fixed number of units.However, to provide liquidity to investors many close-ended funds get listed on aStock Exchange(s). Load Funds : Fund Manager made charges to the investors to cover d i s t r i b u t i o n / s a l e s / m a r k e t i n g expenses. These charges are called Loads. If load amount is charged over a period of time, it is called a DeferredLoad. Some funds charge different amount of load to the investors dependingon number of years the investors have stayed with funds. Such charges are calledContingent Deferred Sale Charge. No-Load Funds : Funds which make no charges or load for sales expenses arecalled as No Load Funds.