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Mutual fund is essentially is a Trust. Mutual Fund is a link between the capital market and the Investors. Mutual Fund plays a vital role in the Indian stock market. Most of the people in India think that investing in Mutual Fund means investments in equity markets. If we look at the wider spectrum in the mutual fund industry we will realize that investment in Debt fund is more than 85 %. Mutual Fund investment is an instrument where people pool in money mutually. Like minded investors come together for achieving their financial objectives in life, it is vehicle of collective saving, every investor has his own share in proportion to his investment, there is an expert called fund manager who takes the decision in the investment professionally, Mutual Fund constitutes a trust and issues units.

A mutual fund is nothing more than a collection of stocks and/or bonds. You can make money from a mutual fund in three ways:

• Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.


• If the fund sells securities that have increased in price, the fund has a capital Gain. Most funds also pass on these gains to investors in a distribution.


• If fund holdings increase in price but are not sold by the fund manager, the fund’s shares increase in price. You can then sell your mutual fund shares for a profit.