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performance and achieved new heights by creating many new records. KSE-100 index crossed the barrier of 12000 marks for the first time in the history of capital market. KSE-100 index made further inroad and reached 12274 points on April 17, 2006. Similarly total market capitalization also increased to Rs.3419.4 billion on April 2006 from Rs.2013.2 billion showing a growth of 70% over June 2005. The improved performance of stock market can mainly be attributed to consistent and transparent economic policies resulting in strong economic growth, a successful privatization processes attracting foreign investors in prestigious organization like PTCL and National Refinery, sound monetary policy of State Bank, maintenance of fiscal discipline and capital market reforms including development measures introduced by stock exchanges with full support of Securities and Exchange omission of Pakistan. The privatization of government units through bourses helped to broad base the equity ownership to a significant level. During July-March 2005-06 the listed capital on Karachi Stock Exchange increased from Rs.438.49 billion reflecting an increase of around 11 percent. Market capitalization increased from Rs.2071.18 billion to Rs.3257.06 billion reflecting an increase of over 57 percent in value of shares. MUTUAL FUNDSMutual Fund is an institution established for investing a pool of funds in various type of securities/shares for the benefit of investors. A small investor is unable to diversify his portfolio of funds simply because of high investment required for diversification. Mutual funds provide a means of diversification of investment by small investors. Initially mutual fund collects funds from small investors and when sufficient funds are gathered, and then they are invested into securities of different types, thus diversifying the portfolio. A management company manages a mutual fund. A Portfolio Manager, whose responsibility is to satisfies the desire of the investors, manages the portfolio of mutual fund. The fund manager invests money on behalf of the investors. The fund manager is paid a management fee. If there is a profit or gain on investments, it belongs to the investors. In case there is a loss, it is also borne by the investors. TYPES OF MUTUAL FUNDS(1) OPEN-END MUTUAL FUNDSAn open-end fund does not have a fixed pool of money. In it subscription and redemption of shares are allowed on a continuous basis. The price at which the shares of open-end funds offered for subscription and redemption is determined
91 by net asset value after adjusting for any sales load or redemption fee. In Pakistan there exists 13 open-end mutual funds listed at Karachi Stock Exchange. (2) CLOSE- END MUTUAL FUNDSA closed-end fund has a fixed pool of money, which is collected when the fund is set up. In it shares are initially offered to public and then traded in secondary market. The trading usually occurs at a slight discount to the net asset value. Now mutual fund managers have developed a variety of investment products to cater for the requirement of investors having different needs.