ALL ABOUT MUTUAL FUNDS 1

MUTUAL FUND MONEY COLLECTED FROM VARIOUS INVESTORS, POOLED TO BUY SHARES FOR LONG TERM AND SHARE TRANSACTIONS IN THE SHORT TERM. The profit is shared as Dividends. Growth schems do not distribute dividends and they accumulate. Initially to enter a Mutual Fund, you have to invest min. Rs.5000 or you can start investing Rs.1000/- for a minimum of five months When a new scheme, plan is launched it is called NPO. Normally the face value (cost per unit/share) is Rs.10/- You invest Rs.10000/- in NPO. You are allotted 1000 units with a facevalue of Rs.10/- That plan makes a profit of 10 % in one month. Then the value goes up by Rs.1000 and now stands at Rs.11000/-. Then the value (Net Asset\ Value) is increased by 10 %. That means your plan NAV becomes now Rs.11/-. You can enter the existing scheme, plan. But you have to buy at the NAV prices, not at Rs.10 or face value.