A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual funds, also referred to as investment companies, offer an alternative investment choice for individuals with a long-term horizon. The way they operate is that individual investor money are pooled and invested in many different companies. Assets are professionally managed to meet various investment objectives. They issue and sell shares to shareholders and also redeem them (buy them back) upon request. Prices of shares are set daily at the close of business, based on the value of all investments in the mutual fund’s portfolio. Their major advantages are diversification and professional management, which are not readily available to small investors outside the mutual fund arena.