Should this valve be installed on the supply or return chilled water line to the (FCU) fan coil unit. Should it be three way mixing or diverting valve.Please describe how it works once installed in the chilled water circuit, preferably with sketch if possible.Thanks

3-way valve is installed in the return. The mixing type is usually used with 2 inlets and one outlet.

Operation as follow; as the space become more satisfied, the bypass part of the 3-way valve will open more so less water will go through the coil and be bypasses back to the return.