Your initial investment in the Mutual Fund will not be taxed because that was your money to begin with that you already paid tax on, but the earnings will be taxed. If it has been less than twelve months it will be taxed at your regular income tax rate, but if the fund is over twelve months old it will be taxed at a lower capitol gains rate.

Then depending on the fund that you purchased, there may even be an early withdrawal penalty.

So check the rules of your mutual fund, and check with someone that can help you wade through the tax issues that are pertinent to your specific situation.

Cheers,