Follow your money from application to portfolio to redemption.
A mutual fund is a structure that allows investors to participate in a professionally managed portfolio. The scheme issues units, maintains a portfolio according to its mandate and calculates NAV under applicable rules.
The investor's return can come from changes in the value of the portfolio and, where applicable, distributions. When you redeem, the value received depends on the applicable NAV, exit load if any, taxes and transaction rules.
Do not confuse a mutual fund with a fixed-return deposit. Market-linked schemes can rise and fall and can lose money.