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ALL OF THE ABOVE CONSTITUENTS ARE EXPLAINED AS FOLLWS:

1. 1. FUND SPONSOR

A sponsor is any person who, acting alone or in combination with another body

corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a

company. In accordance with SEBI Regulations, the sponsor forms a trust and

appoints a Board of Trustees, and also generally appoints an AMC as fund

manager. In addition, the sponsor also appoints a custodian to hold the fund

assets. The sponsor must contribute at least 40% of the net worth of the AMC and

possess a sound financial track record over five years prior to registration.

1. TRUSTEES

The MF or trust can either be managed by the Board of Trustees, which is a body

of individuals, or by a Trust Company, which is a corporate body. Most of the funds

in India are managed by Board of Trustees. The trustees being the primary;

guardians of the unit holders funds and assets, a trustee has to be a person of high

repute and integrity. The trustees, however, do not directly manage the portfolio

securities. The portfolio is managed by the AMC as per the defined objectives,

accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

1. 3. ASSET MANAGEMENT COMPANY (AMC)

The AMC, which is appointed by the sponsor or the trustee s and approved by

SEBI, acts like the investment manager of the trust. The AMC functions under the

supervision of its own Board of Directors, and also under the direction of the

trustees and SEBI. AMC, in the name of the trust, floats and manages the diffe rent

investment schemes as per the SEBI Regulations and as per the Investment

Management Agreement signed with the Trustees.1. 4. OTHERS

Apart from these, the MF has some other fund constituents, such as custodians

and depositories, banks, transfer agents and distributors. The custodian is

appointed for safe keeping of securities and participating in the clearing system

through approved depository. The bankers handle the financial dealings of the

fund. Transfer agents a responsible for issue and redemption of units of MF. AMCs

appoint distributors of brokers who sell units on behalf of the Fund, and also serve

as investment advisers. Besides brokers, independent individuals are also

appointed as agents for the purpose of selling fund schemes to investors. The

regulations require arms length relationship between the fund sponsors, trustees,custodians and AMC.

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MUTUAL FUND CLASSIFICATION

1) OPEN ENDED AND CLOSE ENDED FUNDS

a) OPEN ENDED FUNDS

In an open ended fund, investors can buy and sell units of the fund, at NAV

related prices, at any time, directly from the fund.

Open ended scheme are offered for sale at a pre- specified price, say Rs. 10, in

the initial offer period. After a pre -specified period say 30 days, the fund is

declared open for further sales and repurchases

Investors receive account statements of their holdings,

The number of outstanding units goes up and down

The unit capital is not fixed but variable.

b) CLOSE ENDED FUNDS

A closed -end fund is open for sale to investors for a specified period, after

which further sales are closed.

Any further transactions happen in the secondary market (stock exchange)

where closed-end funds are listed.

The price at which the units are sold or redeemed depends on the market prices,

which are fundamentally linked to the NAV.

The number of units of closed ended funds remains unchanged.

The unit capital is fixed because of one time sale.