an introduction to mutual funds

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Chapter: 1Mutual FundsandHistory


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Mutual Funds

A mutual fund is a managed group of owned securities of several corporations.

These corporations receive dividends on the shares that they hold and realize

capital gains or losses on their securities traded. Investors purchase shares in

themutual fund as if it was an individual security. After paying operating costs, the

earnings (dividends, capital gains or loses) of the mutual fund are distributed to the

investors, in proportion to the amount of money invested. Investors hope that a loss

on one holding will be made up by a gain on another. Heeding the adage "Don't put

all your eggs in one basket" the holders of mutual fund shares are able collectively

to gain the advantage by diversifying their investments, which might be beyond

their financial means individually.

A mutual fund may be either an open-end or a closed-end fund. An open-endmutual fund does not have a set number of shares; it may be considered as a fluid

capital stock. The number of shares changes as investors buys or sell their shares.

Investors are able to buy and sell their shares of the company at any time for a

market price. However the open-end market price is influenced greatly by the fund

managers. On the other hand, closed-end mutual fund has a fixed number of shares

and the value of the shares fluctuates with the market. But with close-end funds,

the fund manager has less influence because the price of the underlining owned

securities has greater influence.

Over the past decade, American investors increasingly have turned to mutual funds

to save for retirement and other financial goals. Mutual funds can offer the

advantages of diversification and professional management. But, as with other

investment choices, investing in mutual funds involves risk. And fees and taxes

will diminish a fund's returns.
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HistoryThe modern mutual fund was first introduced in Belgium in 1822. This form of

investment soon spread to Great Britain and France. Mutual funds became popular

in the United States in the 1920s and continue to be popular since the 1930s,especially open-end mutual funds. Mutual funds experienced a period of

tremendous growth after World War II, especially in the 1980s and 1990s.

Mutual funds started to get popular in the 1980s - 90s when investors saw theirreturns skyrocket from these investment vehicles. The idea of pooling assetstogether for investment purposes, and generating return from these pool ofinvestments has been around since the 19th century. Some possible origins ofmutual funds are:

Launch of closed-end investment firms by King William I in 1822 inHolland

Creation of an Investment Trust by Adriaan van Ketwich in 1774. His fundwas known as "Eendragt Maakt Magt" which means "Unity CreatesStrength." Van Ketwich believed that by pooling investments together andminimizing risk, more of the poor and middle class investors will beencouraged to also invest.

Mutual funds or investment trusts were created in 1849 in Scotland and inScotland in the 1880s.

The first closed-end mutual fund was created in USA by Boston PersonalProperty Trust in 1893.

The first modern mutual fund known as the Alexander Fund was created inthe state of Pennsylvania in 1907.

Mutual Funds has evolved over the years and it is sure to appear assomething very interesting for all the investors of the world. In presentworld, mutual funds have become a main form of investment because of itsdiversified and liquid features. Not only in the developed world, but in thedeveloping countries also different types of mutual funds are gaining

popularity very fast in a tremendous way. But, there was a time when theconcept of Mutual Funds were not present in the economy.

There is an ambiguity about the fact that when and where the Mutual Fund Concept was introduced for the first time. According to some historians, themutual funds were first introduced in Netherlands in 1822. But according to
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some other belief, the idea of Mutual Fund first came from a DutchMerchant ling back in 1774. In 1822, that idea was further developed. In1822, the concept of Investment Diversification was properly incorporatedin the mutual funds. In fact, the Investment Diversification is the mainattraction of mutual funds as the small investors are also able to allocatetheir little Funds in a diversified way to lower Risks.

After 1822 in Netherlands, the Mutual Funds Concept came in Switzerlandin 1849 and thereafter in Scotland in the 1880s. After being popular in GreatBritain and France, Mutual fund concept traveled to U.S.A in the 1890s. In1920s and 1930s, the Mutual Fund popularity reached a new high. Therewas record investment done in mutual funds. But, before 1920s,the mutualfunds were not like the modern day mutual funds.

The modern day mutual funds came into existence in 1924, in Boston.Massachusetts Investors Trust introduced the Modern Mutual Funds and thefunds were available from 1928. At present this Massachusetts InvestorsTrust is known as MFS Investment Management Company. After theglorious year of 1928, Mutual fund ideas expanded to different levels anddifferent regulations came for well functioning of the funds.

Still today, the funds are evolving and improving in order to offer peoplemuch wider choices and better advantages for fulfillment of their variousinvestment needs and financial objectives.


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Chapter: 2How Mutual Fundworks


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How it works

A mutual fund pools money from hundreds and thousands of investors to

construct a portfolio of stocks, bonds, real estate, or other securities, according to

the kind of investments the mutual fund trades. Investors purchase shares in the

mutual fund as if it was an individual security. Fund managers hired by the mutual

fund company are paid to invest the money that the investors have placed in the

fund. Heeding the adage "Don't put all your eggs in one basket" the holders

ofmutual fund shares are able to gain the advantage of diversification which might

be beyond their financial means individually.

Every mutual fund has a goal - either growing its assets (capital gains) and/orgenerating income (dividends) for its investors. Distributions in the form of capitalgains (short-term and long-term) and dividends may be passed on (paid) toshareholders as income or reinvested to purchase more shares. For tax purposes,keep track of your distributions and cost basis of purchased/reinvested shares.

Like any business, mutual funds have risks and costs associated with returns. As ashareholder, the risks of a fund and the expenses associated with fund's operationdirectly impact your return.
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Its working


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Prospects of mutual funds

The prospectus is a legal document that includes information about the mutualfund. In this document you will find information about the terms of the offer, the

issuer, and its objectives. In the aftermath of the 1929 stock market crash thefederal government in the Securities Act of 1933 required security companies to

publish a prospectus. At first glance a prospectus may seem overwhelming. Theinformation in the prospectus is usually lengthy, packed with tables and graphs,and written in technical and legal language. This document is provided to help youmake an informed investment decision before you invest in a mutual fund.

To gain the essential information you need, pay close attention the following keysections:

Investment Objective

A short statement of the fund's investment objectives. Some funds intend toachieve short-term growth while others might focus on long-term stability.

Investment Strategy

Exactly how the fund plans to accomplish the objectives. This section describes thetypes of assets that the fund purchases.

Fees and Expenses

Although mutual funds aim to make money for their investors, their ultimate goal,just like any other business, is to make money for themselves. In order to do so,funds charge their shareholders a variety of fees and expenses, all of which must bedocumented in the prospectus. A table at the front of every prospectus contains a

breakdown of the different fees and expenses, along with a hypothetical projectionof how the fees would impact a $10,000 investment over a 10-year period. Thisenables you to compare fees and expenses across mutual fund

Account Information

This section contains very basic information about how to buy and sell shares andother account-related information. In addition to telling you how to get your moneyinto the fund, the prospectus will also tell you how to take it out of the fund. The

prospectus will inform you which redemption methods are available to you.
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Risks

The level of risk that the fund takes and the risks that are associated with thespecific investments made by the fund are one of the most important sections in the

prospectus.

Performance

Information about the fund's performance over the last 10 years is included.Investors should be aware that past performance is not necessarily an indicator offuture results. As important is how well the fund has traditionally performedcompared to an index, such as the S&P 500. A fund's performance is also related tothe fund's volatility, dividend payments, and turnover.

Management

The names the managers and some additional information about their experienceand qualifications is reported. It can be helpful to know whether or not they havemanaged other funds in the past and their success or failure in order to get a senseof their past strategies and results.

Statement of Additional Information

Mutual funds split their prospectuses into two parts -- the "prospectus" (describedabove) and the Statement of Additional Information (SAI). In 1983, the Securitiesand Exchange Commission required mutual funds to supply much more detailedinformation about the fund. These are included in the SAI. For legal purposes it isassumed that you have read it. If you don't receive the SAI with the prospectus,you should request one. It provides great detail about the fund's board of directors,any limitations on the fund's investments, and the fees and expenses that arementioned in the prospectu

Features

Micro SIP/Chota SIP

Invest as low as Rs 100/- in Mutual Fund Companies

Top Mutual Fund Companies offer its investors an option to invest extremely small

amounts such as Rs 100/-, Rs 500/-, Rs 1000/- each month depending on

individuals capacity into many of its mutual fund schemes.


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Flexibility of Dates

Ease of investing on convenient dates

Investor can invest in top Mutual Fund Scheme on their choice of dates. Many

large Mutual Fund companies offer multiple dates for investing into its topperforming mutual fund schemes. E.g Few dates would be 1st, 5th, 10th, 15th, 25th

of each month. This makes regular investments on salary dates possible.

Timely Payments through ECS

Hassle free, Regular Payments to allow you to concentrate on other important

things in life

Investors in Mutual Funds need not worry about making timely payments each

month through opting for ECS Payment Method. This ensures regular, hassle free,timely and correct monthly payments

Investing Through POA (Power of Attorney)

Investing without physical presence

Investments in Mutual Funds can be done through Assignment of a Power of

Attorney for effective financial planning. Army Personnel, Officers posted on-dutyat far off places, owners/directors of limited companies, Non-Resident Indians,

Resident Indian posted onsite/outside India can invest through the convenience of

POA.

Top-up Facility for Mutual Funds

Happy with your fund performance, increase your payment amount

Apart from regular payments investors can also invest via top-up facility. The

amount of SIP can be increased at fixed intervals. The Top-up amount has to be in

multiples of Rs 500/- depending upon fund. The frequency is fixed at Yearly and

Half-Yearly Basis.


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Direct Credit of Dividend Payments

No need to rush to bank to deposit the Dividend Cheque

Asset Management Companies offer direct credit of dividend payment proceeds to

investors bank accounts in order to ensure faster processing and timely credits ofdividend amount.

Direct Credit of Redemption Payments

Get back your money quicker when you sell mutual fund units

When a mutual fund is sold the money is directly credited to investors bank

account to facilitate quick withdrawal of funds.

Trigger/SWP/AEP PlansCan fund book my profits for me?Sure

In case price of investment goes up, investors can set automatic triggers to sell or

transfer the portion of the increased value. This is to ensure that the profits are

booked from increased valuation on their Mutual Fund Investment. E.g Trigger can

be set to Sell/Transfer if the NAV appreciates by 12%, 20%, 50% and 100%.

Register Multiple Bank Accounts

Can I have more than one registered bank account linked to my Fund Folio?Yes,you can.

As a Mutual Fund investor you can register upto 5 different bank accounts in your

folio. So in case if you have to close or transfer any one of the accounts the other

can be utilised.


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Chapter: 3Risks


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Risks in mutual funds

The most important relationship to understand is the risk-return trade-off. Higherthe risk greater the returns/loss and lower the risk lesser the returns/loss.Hence it is upto you, the investor to decide how much risk you are willing to take.In order to do this you must first be aware of the different types of risks involvedwith your investment decision.

Market Risk: Sometimes prices and yields of all securities rise and fall. Broadoutside influences affecting the market in general lead to this. This is true, may it

be big corporations or smaller mid-sized companies. This is known as MarketRisk. A Systematic Investment Plan (SIP) that works on the concept of Rupee

Cost Averaging (RCA) might help mitigate this risk.

Credit Risk: The debt servicing ability (may it be interest payments or repaymentof principal) of a company through its cashflows determines the Credit Risk faced

by you. This credit risk is measured by independent rating agencies like CRISILwho rate companies and their paper. A AAA rating is considered the safest

whereas a D rating is considered poor credit quality. A well-diversified portfoliomight help mitigate this risk.

Inflation Risk: Things you hear people talk about:"Rs. 100 today is worth more than Rs. 100 tomorrow.""Remember the time when a bus ride costed 50 paise?""Mehangai Ka Jamana Hai."The root cause, Inflation. Inflation is the loss of purchasing power over time. A lotof times people make conservative investment decisions to protect their capital butend up with a sum of money that can buy less than what the principal could at thetime of the investment.


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Interest Rate Risk: In a free market economy interest rates are difficult if notimpossible to predict. Changes in interest rates affect the prices of bonds as well asequities. If interest rates rise the prices of bonds fall and vice versa. Equity might

be negatively affected as well in a rising interest rate environment. A well-diversified portfolio might help mitigate this risk.

Political/Government Policy Risk: Changes in government policy and politicaldecision can change the investment environment. They can create a favorableenvironment for investment or vice versa.

Liquidity Risk: Liquidity risk arises when it becomes difficult to sell the securitiesthat one has purchased. Liquidity Risk can be partly mitigated by diversification,staggering of maturities as well as internal risk controls that lean towards purchase

of liquid securities.

Prepayment Risk: the chance that a bond will be paid off early. For example, if

interest rates fall, a bond issuer may decide to pay off (or "retire") its debt and

issue new bonds that pay a lower rate. When this happens, the fund may not be

able to reinvest the proceeds in an investment with as high a return or yield.


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Chapter: 4

Types of Mutual funds


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Types of mutual funds

Most funds have a particular strategy they focus on when investing. For instance,some invest only in Blue Chip companies that are more established and are

relatively low risk. On the other hand, some focus on high-risk start up companiesthat have the potential for double and triple digit growth. Finding a mutualfund that fits your investment criteria and style is important.

Types of mutual funds are:

Value stocks:

Value mutual funds aim to hold stocks that are selling at a discount to intrinsic

valuethese funds can be actively or passively managed and often hold dividend-paying stocks.Stocks from firms with relative low Price to Earning (P/E) Ratio,usually pay good dividends. The investor is looking for income rather than capitalgains.

Growth stock:

Just the thought of what mutual funds to invest in is enough to give anyone aheadache. With so many investment choices available choosing the best mutualfunds is difficult at best. If you dont know all you should about each investment

then you probably depend on reading articles and newspapers. If you have noidea of where to invest your money youre best is to put it intogrowth stockmutual funds. Mutual funds are a great choice if youre a beginner investor,however you need to decide whether you need a short term or long terminvestment and what risk level you are willing to take on in exchange for a higherreturn. Stocks from firms with higher low Price to Earning (P/E) Ratio, usually

pay small dividends. The investor is looking for capital gains rather than income.Based on company size, large, mid, and small capStocks from firms with variousasset levels such as over $2 Billion for large; in between $2 and $1 Billion for midand below $1 Billion for small.
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Income stock:

The investor is looking for income which usually come from dividends or interest.These stocks are from firms which pay relative high dividends. This fund mayinclude bonds which pay high dividends. This fund is much like the value stockfund, but accepts a little more risk and is not limited to stocks. Many investors likethese companies because of the dependable income, and are not too concerned withthe fluctuation of the stock's price.A mutual fund that is classified as an IncomeFund or a Growth and Income Fund, will usually also invest heavily in bonds, notonly dividend paying stocks.

Index funds:

An index fund orindex tracker is acollective investment scheme that aims to

replicate the movements of anindexof a specific financial market, or a set of rulesof ownership that are held constant, regardless of market conditions The securitiesin this fund are the same as in an Index fund such as the Dow Jones Average orStandard and Poor's. The number and ratios or securities are maintained by thefund manager to mimic the Index fund it is following.

Enhanced index:

This is an index fund which has been modified by either adding value orreducing volatility through selective stock-picking.Stock market sectorThesecurities in this fund are chosen from a particular marked sector such asAerospace, retail, utilities, etc.

A mutual fund that tracks a stock market index, but with certain modifications inplace to allow for more equivalent position sizes, the exclusion of certainsecurities, or the use of leverage, all with the goal of beating the return of thetracking index. These types of funds are actively managed, and will often usethe S&P 500 Index as the tracking index

Defensive stock:

Another group of stocks are called Defensive and are mostly part of the consumernon-cyclical group. These are companies that make things that are immune to theups and downs of the economy, such as tobacco, soap, drugs, diapers, food and

beverages.The securities in this fund are chosen from a stock which usually is not impacted

by economic down turns.
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International:

Stocks from international firms. One of the easiest ways to get started in

international investing is through mutual funds. But which one? International funds

are now available in dozens of flavors. Some focus on a single country or

geographic region, while others invest all over the world. You'll learn how how to

analyze a foreign stock fund and find out which fund companies offer the best-

performing international funds

Real estate:

Stocks from firms involved in real estate such as builder, supplier, architects and

engineers, financial lenders, etc. One of the ways the average investor can getstarted in the real estate market is through real estate mutual funds. Many ofthese specialized mutual funds allow investors to gain entry into this market withas little as $1,000. Real estate funds also offer the investor the advantages of amutual fund. This includes a portfolio with lower overall risk, as well as

professional management of the fund.

Socially responsible:

This fund would invests according to non-economic guidelines. Funds may makeinvestments based on such issues as environmental responsibility, human rights, orreligious views. For example, socially responsible funds may take a proactivestance by selectively investing in environmentally-friendly companies or firmswith good employee relations. Therefore the fund would avoid securities fromfirms who profit from alcohol, tobacco, gambling, pornography etc.

Balanced funds:

The investor may wish to balance his risk between various sectors such as asset

size, income or growth. Therefore the fund is a balance between various attributesdesired.


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Tax efficient:

Aims to minimize tax bills, such as keeping turnover levels low or shying awayfrom companies that provide dividends, which are regular payouts in cash or stockthat, are taxable in the year that they are received. These funds still shoot for solidreturns; they just want less of them showing up on the tax returns.

Convertible:

Bonds or Preferred stock which may be converted into common stock. Convertiblebond portfolios are designed to offer some of the capital-appreciation potential ofstock portfolios while also supplying some of the safety and yield of bond

portfolios. To do so, they focus on convertible bonds and convertible preferredstocks. Convertible bonds allow investors to convert the bonds into shares of stock,usually at a preset price. These securities thus act a bit like stocks and a bit like

bonds.

Junk bond:

Bonds which pay higher that market interest but carry higher risk for failure andare rated below AAA. You can look all you want for a mutual fund with junk

bond in the funds name, but you wont find it. That term is a nickname for bondsissued by companies with poor credit ratings. The bonds pay, or at least promise topay, high interest to get investors to buy them.

Mutual funds of mutual funds:

This funds that specializes in buying shares in other mutual funds rather thanindividual securities.


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Closed end:

This fund has a fixed number of shares. The value of the shares fluctuates with

the market, but fund manager has less influence because the price of the

underlining owned securities has greater influence. Typically an investor can

acquire shares in a closed-end fund by buying shares on asecondary marketfrom

abroker,market maker, or other investor as opposed to anopen-end fundwhere all

transactions eventually involve the fund company creating new shares on the fly

The price of a share in a closed-end fund is determined partially by the value of

the investments in the fund, and partially by the premium (or discount) placed on it

by the market. The total value of all the securities in the fund divided by the

number of shares in the fund is called thenet asset value(NAV) per share. The

market price of a fund share is often higher or lower than the per share NAV: when

the fund's share price is higher than per share NAV it is said to be selling at apremium; when it is lower, at a discount to the per share NAV

Exchange traded funds (ETFs) :

Baskets of securities (stocks or bonds) that track highly recognized indexes.Similar to mutual funds, except that they trade the same way that a stock trades, ona stock exchange. A security that tracks an index, a commodity or a basket ofassets like an index fund, but trades like a stock on an exchange. ETFs experience

price changes throughout the day as they are bought and sold.
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Not all stock funds are the same. For example:

Growth funds focus on stocks that may not pay a regular dividend but have the

potential for large capital gains.

Income funds invest in stocks that pay regular dividends.

Index funds aim to achieve the same return as a particular market index, such as

the S&P 500 Composite Stock Price Index, by investing in allor perhaps a

representative sampleof the companies included in an index.

Sector funds may specialize in a particular industry segment.


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Other Types of Investment Companies

Legally known as an "open-end company," a mutual fund is one of three basic

types of investment companies. While this brochure discusses only mutual funds,you should be aware that other pooled investment vehicles exist and may offer

features that you desire. The two other basic types of investment companies are:

Closed-end funds: which, unlike mutual funds, sell a fixed number of shares at

one time (in an initial public offering) that later trade on a secondary market; and

Unit Investment Trusts (UITs): which make a one-time public offering of only a

specific, fixed number of redeemable securities called "units" and which will

terminate and dissolve on a date specified at the creation of the UIT.


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Some of the traditional, distinguishing characteristics of mutual

funds include the following:

Investors purchase mutual fund shares from the fund itself (or through a broker

for the fund) instead of from other investors on a secondary market, such as the

New York Stock Exchange or Nasdaq Stock Market.

The price that investors pay for mutual fund shares is the fund's per share net

asset value (NAV) plus any shareholder fees that the fund imposes at the time of

purchase (such as sales loads).

Mutual fund shares are "redeemable," meaning investors can sell their shares

back to the fund (or to a broker acting for the fund).

Mutual funds generally create and sell new shares to accommodate new

investors. In other words, they sell their shares on a continuous basis, although

some funds stop selling when, for example, they become too large.

The investment portfolios of mutual funds typically are managed by separate

entities known as "investment advisers" that are registered with the SEC.


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Chapter: 5

Advantages and Disadvantages


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Advantages and DisadvantagesEvery investment has advantages and disadvantages. But it's important to

remember that features that matter to one investor may not be important to you.

Whether any particular feature is an advantage for you will depend on your unique

circumstances. For some investors, mutual funds provide an attractive investment

choice because they generally offer the following features:

Advantages:

What are the key advantages of mutual fund investing?

Diversification:

Using mutual funds can help an investor diversify their portfolio with a minimuminvestment. When investing in a single fund, an investor is actually investing innumerous securities. Spreading your investment across a range of securities can helpto reduce risk. A stock mutual fund, for example, invests in many stocks - hundreds oreven thousands. This minimizes the risk attributed to a concentrated position. If afew securities in the mutual fund lose value or become worthless, the loss maybeoffset by other securities that appreciate in value. Further diversification can beachieved by investing in multiple funds which invest in different sectors orcategories. This helps to reduce the risk associated with a specific industry orcategory. Diversification may help to reduce risk but will never completely eliminateit. It is possible to lose all or part of your investment.

Professional Management:

Mutual funds are managed and supervised by investment professionals. As per thestated objectives set forth in the prospectus, along with prevailing market conditionsand other factors, the mutual fund manager will decide when to buy or sell securities.This eliminates the investor of the difficult task of trying to time the market.Furthermore, mutual funds can eliminate the cost an investor would incur whenproper due diligence is given to researching securities. This cost of managingnumerous securities is dispersed among all the investors according to the amount ofshares they own with a fraction of each dollar invested used to cover the expenses ofthe fund. What does this mean? Fund managers have more money to research moresecurities more in depth than the average investor.


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Convenience:

With most mutual funds, buying and selling shares, changing distribution options, andobtaining information can be accomplished conveniently by telephone, by mail, oronline.

Although a fund's shareholder is relieved of the day-to-day tasks involved inresearching, buying, and selling securities, an investor will still need to evaluate amutual fund based on investment goals and risk tolerance before making a purchasedecision. Investors should always read the prospectus carefully before investing inany mutual fund.

Liquidity:

Mutual fund shares are liquid and orders to buy or sell are placed during market

hours. However, orders are not executed until the close of business whenthe NAV (Net Average Value) of the fund can be determined. Fees or commissionsmay or may not be applicable. Fees and commissions are determined by the specificfund and the institution that executes the order.

Minimum Initial Investment:

Most funds have a minimum initial purchase of $2,500 but some are as low as$1,000. If you purchase a mutual fund in an IRA, the minimum initial purchaserequirement tends to be lower. You can buy some funds for as little as $50 per month

if you agree to dollar-cost average, or invest a certain dollar amount each month orquarter.


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Disadvantages

Risks and Costs:

Changing market conditions can create fluctuations in the value of a mutual fund

investment.There are fees and expenses associated with investing in mutual funds that do notusually occur when purchasing individual securities directly.

As with any type of investment, there are drawbacks associated with mutual funds.No Guarantees. The value of your mutual fund investment, unlike a bank

deposit, could fall and be worth less than the principle initially invested. And,while a money market fund seeks a stable share price, its yield fluctuates, unlike acertificate of deposit. In addition, mutual funds are not insured or guaranteed by anagency of the U.S. government. Bond funds, unlike purchasing a bond directly,will not re-pay the principle at a set point in time.

The Diversification "Penalty." Diversification can help to reduce your risk ofloss from holding a single security, but it limits your potential for a "home run" if asingle security increases dramatically in value. Remember, too, that diversificationdoes not protect you from an overall decline in the market.

Costs. In some cases, the efficiencies of fund ownership are offset by acombination of sales commissions, 12b-1 fees, redemption fees, and operatingexpenses. If the fund is purchased in a taxable account, taxes may have to be paidon capital gains. Keep track of the cost basis of your initial purchase and new

shares that are acquired by reinvesting distributions. It's important to compare thecosts of funds you are considering. Always look at "net" returns when comparingfund performances. Net return is the bottom line; an investment's true returns afterall costs are deducted.Prospectuses will not contain all the costs that affect the net return on yourinvestment. This is why it is important to compare net returns whether or not thefund in a no-load or load fund.


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Expenses

Because mutual funds are professionally managed investments, there are managementfees and operating expenses associated with investing in a fund. These fees andexpenses charged by the fund are passed onto shareholders and deducted from the

fund's return.

These expenses are typically expressed as the expense ratio - the percent of fundassets spent (annually) on day-to-day operations. Expense ratios can vary widelyamong funds. Expense ratios for mutual funds commonly range from 0.2% to 2.0%,depending on the fund. Consult the fund's prospectus to determine the expense ratiofor a specific fund.

Make yourself aware of all fees and expenses that impact the fund's return byreducing gains and increasing losses.

Fees Not Found in the Prospectus

One ongoing expense that is not included in the expense ratio is brokerage costsincurred by a fund as it buys and sells securities. These costs are listed separatelyin a fund's annual report, sometimes as a percentage and sometimes as a dollaramount. Some trading costs, however, are not included in this figure. The spread

between the bid and ask prices of over-the-counter stocks, for example, can be

thought of as a trading expense, but such costs are not reported by fundcompanies. The annual report also includes any interest costs, which a fund willincur if it borrows money to buy securities.""All of the expenses that we have mentioned so for can be thought of as comingout of the portfolio's raw return, skimmed off the top, so to speak...""...In addition, because mutual funds buy and sell securities, they incur brokeragecosts. Because these costs vary and are difficult to predict, they are not included inthe fee table in the front of the prospectus. However, they are included in anycomputations of a fund's performance that appears in advertising."Again, when comparing fund returns, always look at the "net" return. This is the

bottom line.


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Chapter: 6

Costs


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ExpensesFees and Expenses

As with any business, running a mutual fund involves costsincludingshareholder transaction costs, investment advisory fees, and marketing and

distribution expenses. Funds pass along these costs to investors by imposing fees

and expenses. It is important that you understand these charges because they lower

your returns.

Some funds impose "shareholder fees" directly on investors whenever they buy or

sell shares. In addition, every fund has regular, recurring, fund-wide "operating

expenses." Funds typically pay their operating expenses out of fund assets

which means that investors indirectly pay these costs.


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SEC rules require funds to disclose both shareholder fees and operating expenses

in a "fee table" near the front of a fund's prospectus. The lists below will help you

decode the fee table and understand the various fees a fund may impose:

Shareholder Fees

Sales Charge (Load) on Purchasesthe amount you pay when you buy shares

in a mutual fund. Also known as a "front-end load," this fee typically goes to the

brokers that sell the fund's shares. Front-end loads reduce the amount of your

investment. For example, let's say you have $1,000 and want to invest it in a

mutual fund with a 5% front-end load. The $50 sales load you must pay comes off

the top, and the remaining $950 will be invested in the fund. According to NASD

rules, a front-end load cannot be higher than 8.5% of your investment.

Purchase Feeanother type of fee that some funds charge their shareholders

when they buy shares. Unlike a front-end sales load, a purchase fee is paid to the

fund (not to a broker) and is typically imposed to defray some of the fund's costsassociated with the purchase.

Deferred Sales Charge (Load)a fee you pay when you sell your shares. Also

known as a "back-end load," this fee typically goes to the brokers that sell the

fund's shares. The most common type of back-end sales load is the "contingent

deferred sales load" (also known as a "CDSC" or "CDSL"). The amount of this

type of load will depend on how long the investor holds his or her shares and

typically decreases to zero if the investor holds his or her shares long enough.


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Redemption Feeanother type of fee that some funds charge their shareholders

when they sell or redeem shares. Unlike a deferred sales load, a redemption fee is

paid to the fund (not to a broker) and is typically used to defray fund costs

associated with a shareholder's redemption.

Exchange Feea fee that some funds impose on shareholders if they exchange

(transfer) to another fund within the same fund group or "family of funds."

Account feea fee that some funds separately impose on investors in connection

with the maintenance of their accounts. For example, some funds impose an

account maintenance fee on accounts whose value is less than a certain dollar

amount.

Annual Fund Operating Expenses

Management Feesfees that are paid out of fund assets to the fund's investment

adviser for investment portfolio management, any other management fees payable

to the fund's investment adviser or its affiliates, and administrative fees payable tothe investment adviser that are not included in the "Other Expenses" category

(discussed below).

Distribution [and/or Service] Fees ("12b-1" Fees)fees paid by the fund out

of fund assets to cover the costs of marketing and selling fund shares and

sometimes to cover the costs of providing shareholder services. "Distribution fees"include fees to compensate brokers and others who sell fund shares and to pay for

advertising, the printing and mailing of prospectuses to new investors, and the

printing and mailing of sales literature. "Shareholder Service Fees" are fees paid to

persons to respond to investor inquiries and provide investors with information.


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Other Expensesexpenses not included under "Management Fees" or

"Distribution or Service (12b-1) Fees," such as any shareholder service expenses

that are not already included in the 12b-1 fees, custodial expenses, legal and

accounting expenses, transfer agent expenses, and other administrative expenses.

Total Annual Fund Operating Expenses ("Expense Ratio")the line of the

fee table that represents the total of all of a fund's annual fund operating expenses,

expressed as a percentage of the fund's average net assets. Looking at the expense

ratio can help you make comparisons among funds.

A Word About "No-Load" Funds

Some funds call themselves "no-load." As the name implies, this means that the

fund does not charge any type of sales load. But, as discussed above, not every

type of shareholder fee is a "sales load." A no-load fund may charge fees that are

not sales loads, such as purchase fees, redemption fees, exchange fees, and account

fees. No-load funds will also have operating expenses.

Be sure to review carefully the fee tables of any funds you're considering,

including no-load funds. Even small differences in fees can translate into large

differences in returns over time. For example, if you invested $10,000 in a fund

that produced a 10% annual return before expenses and had annual operating

expenses of 1.5%, then after 20 years you would have roughly $49,725. But if thefund had expenses of only 0.5%, then you would end up with $60,858an 18%

difference.


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A Word About Breakpoints

Some mutual funds that charge front-end sales loads will charge lower sales loads

for larger investments. The investment levels required to obtain a reduced salesload are commonly referred to as "breakpoints."

The SEC does not require a fund to offer breakpoints in the fund's sales load. But,

if breakpoints exist, the fund must disclose them. In addition, a NASD member

brokerage firm should not sell you shares of a fund in an amount that is "just

below" the fund's sales load breakpoint simply to earn a higher commission.

Each fund company establishes its own formula for how they will calculate

whether an investor is entitled to receive a breakpoint. For that reason, it is

important to seek out breakpoint information from your financial advisor or the

fund itself. You'll need to ask how a particular fund establishes eligibility for

breakpoint discounts, as well as what the fund's breakpoint amounts are. NASD's

Mutual Fund Breakpoint Search Tool can help you determine whether you're

entitled to breakpoint discounts.


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Chapter: 7

Buying and selling


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Exchanging Shares

A "family of funds" is a group of mutual funds that share administrative and

distribution systems. Each fund in a family may have different investmentobjectives and follow different strategies.

Some funds offer exchange privileges within a family of funds, allowing

shareholders to transfer their holdings from one fund to another as their investment

goals or tolerance for risk change. While some funds impose fees for exchanges,

most funds typically do not. To learn more about a fund's exchange policies, call

the fund's toll-free number, visit its website, or read the "shareholder information"

section of the prospectus.

Bear in mind that exchanges have tax consequences. Even if the fund doesn't

charge you for the transfer, you'll be liable for any capital gain on the sale of your

old sharesor, depending on the circumstances, eligible to take a capital loss.

We'll discuss taxes in further detail below.


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How Funds Can Earn Money for You

You can earn money from your investment in three ways:

Dividend PaymentsA fund may earn income in the form of dividends and

interest on the securities in its portfolio. The fund then pays its shareholders nearly

all of the income (minus disclosed expenses) it has earned in the form of

dividends.

Capital Gains DistributionsThe price of the securities a fund owns may

increase. When a fund sells a security that has increased in price, the fund has a

capital gain. At the end of the year, most funds distribute these capital gains (minus

any capital losses) to investors.

Increased NAVIf the market value of a fund's portfolio increases after

deduction of expenses and liabilities, then the value (NAV) of the fund and its

shares increases. The higher NAV reflects the higher value of your investment.

With respect to dividend payments and capital gains distributions, funds usuallywill give you a choice: the fund can send you a check or other form of payment, or

you can have your dividends or distributions reinvested in the fund to buy more

shares (often without paying an additional sales load).


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Factors to ConsiderThinking about your long-term investment strategies and tolerance for risk can

help you decide what type of fund is best suited for you. But you should also

consider the effect that fees and taxes will have on your returns over time.

Degrees of Risk

All funds carry some level of risk. You may lose some or all of the money you

investyour principalbecause the securities held by a fund go up and down in

value. Dividend or interest payments may also fluctuate as market conditions

change.

Before you invest, be sure to read a fund's prospectus and shareholder reports to

learn about its investment strategy and the potential risks. Funds with higher rates

of return may take risks that are beyond your comfort level and are inconsistent

with your financial goals.

Key Points to RememberMutual funds are not guaranteed or insured by the FDIC or any other government

agencyeven if you buy through a bank and the fund carries the bank's name.

You can lose money investing in mutual funds.

Past performance is not a reliable indicator of future performance. So don't be

dazzled by last year's high returns. But past performance can help you assess a

fund's volatility over time.

All mutual funds have costs that lower your investment returns. Shop around, and

use a mutual fund cost calculator at www.sec.gov/investor/tools.shtml to compare

many of the costs of owning different funds before you buy.


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Chapter: 8

Classes


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Classes of FundsMany mutual funds offer more than one class of shares. For example, you may

have seen a fund that offers "Class A" and "Class B" shares. Each class will invest

in the same "pool" (or investment portfolio) of securities and will have the same

investment objectives and policies. But each class will have different shareholder

services and/or distribution arrangements with different fees and expenses. As a

result, each class will likely have different performance results.

A multi-class structure offers investors the ability to select a fee and expense

structure that is most appropriate for their investment goals (including the time thatthey expect to remain invested in the fund). Here are some key characteristics of

the most common mutual fund share classes offered toindividual investors:

Class A SharesClass A shares typically impose a front-end sales load. They

also tend to have a lower 12b-1 fee and lower annual expenses than other mutual

fund share classes. Be aware that some mutual funds reduce the front-end load as

the size of your investment increases. If you're considering Class A shares, be sure

to inquire about breakpoints.

Class B SharesClass B shares typically do not have a front-end sales load.

Instead, they may impose a contingent deferred sales load and a 12b-1 fee (along

with other annual expenses). Class B shares also might convert automatically to a

class with a lower 12b-1 fee if the investor holds the shares long enough.

Class C SharesClass C shares might have a 12b-1 fee, other annual expenses,and either a front- or back-end sales load. But the front- or back-end load for Class

C shares tends to be lower than for Class A or Class B shares, respectively. Unlike

Class B shares, Class C shares generally do not convert to another class. Class C

shares tend to have higher annual expenses than either Class A or Class B shares.


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Chapter: 9

Other aspects


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Tax ConsequencesWhen you buy and hold an individual stock or bond, you must pay income tax

each year on the dividends or interest you receive. But you won't have to pay any

capital gains tax until you actually sell and unless you make a profit.

Mutual funds are different. When you buy and hold mutual fund shares, you will

owe income tax on any ordinary dividends in the year you receive or reinvest them.

And, in addition to owing taxes on any personal capital gains when you sell your

shares, you may also have to pay taxes each year on the fund's capital gains. That's

because the law requires mutual funds to distribute capital gains to shareholders ifthey sell securities for a profit that can't be offset by a loss.

Tax Exempt Funds: If you invest in a tax-exempt fundsuch as a municipal bond

fundsome or all of your dividends will be exempt from federal (and sometimes

state and local) income tax. You will, however, owe taxes on any capital gains.

Bear in mind that if you receive a capital gains distribution, you will likely owe

taxeseven if the fund has had a negative return from the point during the year

when you purchased your shares. For this reason, you should call the fund to find

out when it makes distributions so you won't pay more than your fair share of

taxes. Some funds post that information on their websites.

SEC rules require mutual funds to disclose in their prospectuses after-tax returns.

In calculating after-tax returns, mutual funds must use standardized formulas

similar to the ones used to calculate before-tax average annual total returns. You'll

find a fund's after-tax returns in the "Risk/Return Summary" section of the

prospectus. When comparing funds, be sure to take taxes into account.


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Avoiding Common Pitfalls

If you decide to invest in mutual funds, be sure to obtain as much information

about the fund before you invest. And don't make assumptions about the soundness

of the fund based solely on its past performance or its name.


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Sources of InformationProspectus

When you purchase shares of a mutual fund, the fund must provide you with a

prospectus. But you canand shouldrequest and read a fund's prospectus

before you invest. The prospectus is the fund's selling document and contains

valuable information, such as the fund's investment objectives or goals, principal

strategies for achieving those goals, principal risks of investing in the fund, fees

and expenses, and past performance. The prospectus also identifies the fund's

managers and advisers and describes how to purchase and redeem fund shares.

While they may seem daunting at first, mutual fund prospectuses contain a treasure

trove of valuable information. The SEC requires funds to include specific

categories of information in their prospectuses and to present key data (such as fees

and past performance) in a standard format so that investors can more easily

compare different funds.

Here's some of what you'll find in mutual fund prospectuses:

Date of IssueThe date of the prospectus should appear on the front cover.

Mutual funds must update their prospectuses at least once a year, so always check

to make sure you're looking at the most recent version.

Risk/Return Bar Chart and TableNear the front of the prospectus, right after the

fund's narrative description of its investment objectives or goals, strategies, and

risks, you'll find a bar chart showing the fund's annual total returns for each of the

last 10 years (or for the life of the fund if it is less than 10 years old). All funds that

have had annual returns for at least one calendar year must include this chart.

Fee TableFollowing the performance bar chart and annual returns table, you'll


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find a table that describes the fund's fees and expenses. These include the

shareholder fees and annual fund operating expenses described in greater detail

above. The fee table includes an example that will help you compare costs among

different funds by showing you the costs associated with investing a hypothetical

$10,000 over a 1-, 3-, 5-, and 10-year period.

Financial HighlightsThis section, which generally appears towards the back of

the prospectus, contains audited data concerning the fund's financial performance

for each of the past 5 years. Here you'll find net asset values (for both the

beginning and end of each period), total returns, and various ratios, including the

ratio of expenses to average net assets, the ratio of net income to average net

assets, and the portfolio turnover rate.

Profile

Some mutual funds also furnish investors with a "profile," which summarizes key

information contained in the fund's prospectus, such as the fund's investment

objectives, principal investment strategies, principal risks, performance, fees and

expenses, after-tax returns, identity of the fund's investment adviser, investment

requirements, and other information.


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Statement of Additional Information ("SAI")Also known as "Part B" of the registration statement, the SAI explains a fund's

operations in greater detail than the prospectusincluding the fund's financial

statements and details about the history of the fund, fund policies on borrowing

and concentration, the identity of officers, directors, and persons who control the

fund, investment advisory and other services, brokerage commissions, tax matters,

and performance such as yield and average annual total return information. If you

ask, the fund must send you an SAI. The back cover of the fund's prospectus

should contain information on how to obtain the SAI.

Shareholder ReportsA mutual fund also must provide shareholders with annual and semi-annual reports

within 60 days after the end of the fund's fiscal year and 60 days after the fund's

fiscal mid-year. These reports contain a variety of updated financial information, a

list of the fund's portfolio securities, and other information. The information in the

shareholder reports will be current as of the date of the particular report (that is, the

last day of the fund's fiscal year for the annual report, and the last day of the fund's

fiscal mid-year for the semi-annual report).


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Past PerformanceA fund's past performance is not as important as you might think. Advertisements,

rankings, and ratings often emphasize how well a fund has performed in the past.

But studies show that the future is often different. This year's "number one" fund

can easily become next year's below average fund.

Be sure to find out how long the fund has been in existence. Newly created or

small funds sometimes have excellent short-term performance records. Because

these funds may invest in only a small number of stocks, a few successful stocks

can have a large impact on their performance. But as these funds grow larger andincrease the number of stocks they own, each stock has less impact on

performance. This may make it more difficult to sustain initial results.

While past performance does not necessarily predict future returns, it can tell you

how volatile (or stable) a fund has been over a period of time. Generally, the more

volatile a fund, the higher the investment risk. If you'll need your money to meet a

financial goal in the near-term, you probably can't afford the risk of investing in a

fund with a volatile history because you will not have enough time to ride out any

declines in the stock market.


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Looking Beyond a Fund's Name

Don't assume that a fund called the "XYZ Stock Fund" invests only in stocks or

that the "Martian High-Yield Fund" invests only in the securities of companies

headquartered on the planet Mars. The SEC requires that any mutual fund with a

name suggesting that it focuses on a particular type of investment must invest at

least 80% of its assets in the type of investment suggested by its name. But funds

can still invest up to one-fifth of their holdings in other types of securities

including securities that you might consider too risky or perhaps not aggressive

enough.


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Bank Products versus Mutual FundsMany banks now sell mutual funds, some of which carry the bank's name. But

mutual funds sold in banks, including money market funds, are not bank deposits.

As a result, they are not federally insured by the Federal Deposit Insurance

Corporation (FDIC).

Money Market Matters

Don't confuse a "money market fund" with a "money market deposit account." The

names are similar, but they are completely different:

A money market fund is a type of mutual fund. It is not guaranteed or FDIC

insured. When you buy shares in a money market fund, you should receive a

prospectus.

A money market deposit account is a bank deposit. It is guaranteed and FDIC

insured. When you deposit money in a money market deposit account, you should

receive a Truth in Savings form.


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Chapter: 10

Glossary

Glossary of Key Mutual Fund Terms12b-1 Feesfees paid by the fund out of fund assets to cover the costs of


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marketing and selling fund shares and sometimes to cover the costs of providing

shareholder services. "Distribution fees" include fees to compensate brokers and

others who sell fund shares and to pay for advertising, the printing and mailing of

prospectuses to new investors, and the printing and mailing of sales literature.

"Shareholder Service Fees" are fees paid to persons to respond to investor inquiries

and provide investors with information about their investments.

Account Feea fee that some funds separately impose on investors for the

maintenance of their accounts. For example, accounts below a specified dollar

amount may have to pay an account fee.

Back-end Loada sales charge (also known as a "deferred sales charge")

investors pay when they redeem (or sell) mutual fund shares, generally used by the

fund to compensate brokers.

Classesdifferent types of shares issued by a single fund, often referred to as

Class A shares, Class B shares, and so on. Each class invests in the same "pool" (or

investment portfolio) of securities and has the same investment objectives and

policies. But each class has different shareholder services and/or distribution

arrangements with different fees and expenses and therefore different performance

results.

Closed-End Funda type of investment company that does not continuously

offer its shares for sale but instead sells a fixed number of shares at one time (in the

initial public offering) which then typically trade on a secondary market, such as


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market index. ETFs differ from traditional open-end companies and UITs, because,

pursuant to SEC exemptive orders, shares issued by ETFs trade on a secondary

market and are only redeemable from the fund itself in very large blocks (blocks of

50,000 shares for example).

Expense Ratiothe fund's total annual operating expenses (including

management fees, distribution (12b-1) fees, and other expenses) expressed as a

percentage of average net assets.

Front-end Loadan upfront sales charge investors pay when they purchase fund

shares, generally used by the fund to compensate brokers. A front-end load reduces

the amount available to purchase fund shares.

Index Funddescribes a type of mutual fund or Unit Investment Trust (UIT)

whose investment objective typically is to achieve the same return as a particular

market index, such as the S&P 500 Composite Stock Price Index, the Russell 2000

Index, or the Wilshire 5000 Total Market Index.

Investment Advisergenerally, a person or entity who receives compensation

for giving individually tailored advice to a specific person on investing in stocks,

bonds, or mutual funds. Some investment advisers also manage portfolios of

securities, including mutual funds.

Investment Companya company (corporation, business trust, partnership, or

limited liability company) that issues securities and is primarily engaged in the


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business of investing in securities. The three basic types of investment companies

are mutual funds, closed-end funds, and unit investment trusts.

Management Feefee paid out of fund assets to the fund's investment adviser or

its affiliates for managing the fund's portfolio, any other management fee payable

to the fund's investment adviser or its affiliates, and any administrative fee payable

to the investment adviser that are not included in the "Other Expenses" category. A

fund's management fee appears as a category under "Annual Fund Operating

Expenses" in the Fee Table.

Market Indexa measurement of the performance of a specific "basket" of

stocks considered to represent a particular market or sector of the U.S. stock

market or the economy. For example, the Dow Jones Industrial Average (DJIA) is

an index of 30 "blue chip" U.S. stocks of industrial companies (excluding

transportation and utility companies).

Mutual Fundthe common name for an open-end investment company. Like

other types of investment companies, mutual funds pool money from many

investors and invest the money in stocks, bonds, short-term money-market

instruments, or other securities. Mutual funds issue redeemable shares that

investors purchase directly from the fund (or through a broker for the fund) instead

of purchasing from investors on a secondary market.

NAV (Net Asset Value)the value of the fund's assets minus its liabilities. SEC

rules require funds to calculate the NAV at least once daily. To calculate the NAV

per share, simply subtract the fund's liabilities from its assets and then divide the


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result by the number of shares outstanding.

No-load Funda fund that does not charge any type of sales load. But not every

type of shareholder fee is a "sales load," and a no-load fund may charge fees that

are not sales loads. No-load funds also charge operating expenses.

Open-End Companythe legal name for a mutual fund. An open-end company

is a type of investment company

Operating Expensesthe costs a fund incurs in connection with running the

fund, including management fees, distribution (12b-1) fees, and other expenses.

Portfolioan individual's or entity's combined holdings of stocks, bonds, or

other securities and assets.

Profilesummarizes key information about a mutual fund's costs, investment

objectives, risks, and performance. Although every mutual fund has a prospectus,

not every mutual fund has a profile.

Prospectusdescribes the mutual fund to prospective investors. Every mutual

fund has a prospectus. The prospectus contains information about the mutual fund's

costs, investment objectives, risks, and performance. You can get a prospectus

from the mutual fund company (through its website or by phone or mail). Your

financial professional or broker can also provide you with a copy.

Purchase Feea shareholder fee that some funds charge when investors

purchase mutual fund shares. Not the same as (and may be in addition to) a front-


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end load.

Redemption Feea shareholder fee that some funds charge when investors

redeem (or sell) mutual fund shares. Redemption fees (which must be paid to the

fund) are not the same as (and may be in addition to) a back-end load (which is

typically paid to a broker). The SEC generally limits redemption fees to 2%.

Sales Charge (or "Load")the amount that investors pay when they purchase

(front-end load) or redeem (back-end load) shares in a mutual fund, similar to a

commission. The SEC's rules do not limit the size of sales load a fund may charge,

but NASD rules state that mutual fund sales loads cannot exceed 8.5% and must be

even lower depending on other fees and charges assessed.

Shareholder Service Feesfees paid to persons to respond to investor inquiries

and provide investors with information about their investments. See also "12b-1

fees."

Statement of Additional Information (SAI)conveys information about an

open- or closed-end fund that is not necessarily needed by investors to make an

informed investment decision, but that some investors find useful. Although funds

are not required to provide investors with the SAI, they must give investors the

SAI upon request and without charge. Also known as "Part B" of the fund's

registration statement.

Total Annual Fund Operating Expensethe total of a fund's annual fund

operating expenses, expressed as a percentage of the fund's average net assets.

You'll find the total in the fund's fee table in the prospectus.


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Unit Investment Trust (UIT)a type of investment company that typically

makes a one-time "public offering" of only a specific, fixed number of units. A

UIT will terminate and dissolve on a date established when the UIT is created

(although some may terminate more than fifty years after they are created). UITs

do not actively trade their investment portfolios.


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Chapter: 11

Company Overview

AXIS BANK


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Type: - private

Industry: - Financial Services

Founded: - 1993

Headquarters: - Mumbai, India

Key people: - Shri K. N. Prithviraj

Products: - Accounts

Deposits

Loans

Cards

Forex

Mutual funds

Investments

Website: - www.axisbank.com

AXIS BANK


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Company Background

Axis Bank Ltd was incorporated in the year 1993 as UTI Bank Ltdwhich provided corporate and retail banking products and was the first private

banks to have begun operations in 1994, after the Government of India allowednew private banks to re established. The Bank was promoted jointly by theAdministrator of the specified undertaking of the Unit Trust of India (UTI - I), LifeInsurance Corporation of India(LIC) and General Insurance Corporation of India(GIC) and other four PSU insurance companies, i.e. National Insurance CompanyLtd., The New India Assurance CompanyLtd., The Oriental Insurance CompanyLtd. and United India Insurance Company Ltd.

A Successful makeover as AXIS BANK

In 2007 the bank decided to have an identity of its own distinct from its parentUTI-I. Thus was born a brand Axis - a word which connotes solidity and gives afeel of transcending geographical boundaries. The Bank successfully rebrandeditself as Axis Bank in July 07 which has helped it in shedding the faint perceptionof being a Government owned entity. This brand makeover was very wellexecuted, thus ensuring No slippages in the banks growth trajectory which wasevident from the 67% growth units customer accounts to 9.9 mn during FY08 asagainst 5.93 million during FY07.The Bank today is capitalized to the extent of Rs.403.63 crores with the public holding (other than promoters and GDRs)at 53.72%.The Bank's Registered Office is at Ahmadabad and its Central Office is

located at Mumbai. The Bank has a very wide network of more than 896 branchesand Extension Counters (as on 31st December 2009). The Bank has a network ofover 4055 ATMs (as on 31st December 2009) providing 24 hrs a day bankingconvenience to its customers. This is one of the largest ATM networks in thecountry. The Bank has strengths in both retail and corporate banking and iscommitted to adopting the best industry practices internationally in order toachieve excellence. Axis Bank currently has global footprints in four countries byway of 3 branches in Singapore, Hong Kong, Dubai and 2 representative offices inShanghai and Dubai.

Promoters


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Axis Bank Ltd. has been promoted by the largest and the best Financial Institutionof the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with UTIcontributing Rs. 100 crore, LIC - Rs. 7.5 crore and GIC and its four subsidiariescontributing Rs. 1.5 crore each.

SUUTI - Shareholding 24.09%

Erstwhile Unit Trust of India was set up as a body corporate under the UTIAct,1963, with a view to encourage savings and investment. In December 2002,the UTI Act,1963 was repealed with the passage of Unit Trust of India (Transfer ofUndertaking and Repeal) Act, 2002 by the Parliament, paving the way for the

bifurcation of UTI into 2entities, UTI-I and UTI-II with effect from 1st February2003. In accordance with the Act, the Undertaking specified as UTI I has beentransferred and vested in the Administrator of the Specified Undertaking of the

Unit Trust of India (SUUTI), who manages assured return schemes along with6.75% US-64 Bonds, 6.60% ARS Bonds with a Unit Capital of over Rs. 14167.59crores.The Government of India has currently appointed Shri K. N. Prithviraj as

the Administrator of the Specified undertaking of UTI.


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Chapter: 12

VISION and MISSION

VISION, MISSION ANDVALUES


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Vision

To be the preferred brand for total financial banking sol AXIS ones for bothcorporate and individuals

Mission

Customer Service and Product Innovation tuned to diverse needs of individual andcorporate clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

Values

Customer Satisfaction through

Providing quality service effectively and efficiently

Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Maximization of Stakeholder value

Success through Teamwork, Integrity and People

Vision 2015 and Core Values


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VISION 2015:

To be the preferred financial solutions provider excelling in customer deliverythrough insight, empowered employees and smart use of technology

CORE VALUES

Customer Centricity

Ethics

Transparency

Teamwork

Ownership

ORGANISATION STRUCTURE


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Chapter: 13

Suggestions and Conclusion

Suggestions


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You don't need to have an account with an MF house. In fact that has no advantage

or disadvantage. All you need is a bank account with a direct debit/ECS facility.

After enrolling in the MF, your bank account will be linked to the MF. SIPs

amounts will be directly debited from bank account and sale proceeds will be

credited to the same account automatically.

With an SIP, 6 months to 1 year is very short period. You may not make more than

15% in this period and that too if the bourses are rising continuously. You could

even make a loss.

SEBI has directed all MFs to stop entry and exit load. But till it is completely

implemented, entry load is deducted at the time of entry itself. Typical entry load is

2.5% and it is deducted immediately. The rest is used to purchase units.

As I said before, ECS mandate can be made with the bank. You can ask the MF to

present a debit note to the bank on specific day of the month. It will be done

automatically and you do not have to do any paperwork/manual work.

If you can, increase the SIP limit to Rs. 5000 and invest Rs. 1000 in five funds

instead of a single fund.

Use websites such as MoneyControl.com, PersonalFn.com, rediff.com to analyze

the best MFs. Do not look at current returns alone - rather look for performance for

the past three years.

STAY AWAY from new fund offers (NFOs). Also avoid thematic funds like "xxx

Infrastructure Fund", "yyy Power and Utilities Fund", "zzz IT/Pharma fund",

etc. Invest in diversified fund.

Conclusion


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A mutual fund brings together a group of people and invests their money in stocks,bonds, and other securities.

The advantages of mutuals are professional

management,diversification,economies of scale, simplicity and liquidity.

The disadvantages of mutual are high costs, over-diversification, possible taxconsequences, and the inability of management to guarantee a superior return.

There are many, many types of mutual funds. You can classify funds based onasset class, investing strategy, region, etc.

Mutual funds have lots of costs.

Costs can be broken down into ongoing fees (represented by the expense ratio) andtransaction fees (loads).

The biggest problems with mutual funds are their costs and fees.

Mutual funds are easy to buy and sell. You can either buy them directly from thefund company or through a third party.

Mutual fund ads can be very deceiving.
http://www.investopedia.com/terms/d/diversification.asphttp://www.investopedia.com/terms/d/diversification.asphttp://www.investopedia.com/terms/d/diversification.asphttp://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/e/expenseratio.asphttp://www.investopedia.com/terms/e/expenseratio.asphttp://www.investopedia.com/terms/e/expenseratio.asphttp://www.investopedia.com/terms/l/loadfund.asphttp://www.investopedia.com/terms/l/loadfund.asphttp://www.investopedia.com/terms/l/loadfund.asphttp://www.investopedia.com/terms/l/loadfund.asphttp://www.investopedia.com/terms/e/expenseratio.asphttp://www.investopedia.com/terms/e/economiesofscale.asphttp://www.investopedia.com/terms/d/diversification.asp


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Chapter: 14

Bibliography


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Bibliography

Banks brochure and booklet

Website

www.google.com

www.axisbank.com
http://www.google.com/http://www.axisbank.com/http://www.axisbank.com/http://www.axisbank.com/http://www.axisbank.com/http://www.axisbank.com/http://www.google.com/


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Chapter: 15

Annexure


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Questionnaire on Mutual Funds

[Please tick which ever applicable and give reasons where ever possible]

1. Name : ______________________________________2. Address :_____________________________________3. Age :______yrs.4. Gender : [ ] male , [ ] female.

5.

Occupation : [ ] service [ ] business [ ] retired [ ]VRS.

6. Total Annual Income :a. [ ] 060,000b. [ ] 60,0001,00,000c. [ ] 1,00,0002,00,000d. [ ] 2,00,000 and above

7. Have you ever invested your money in mutual fund?a. [ ] yesb. [ ] no


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If yes,

a)Where do you find yourself as a mutual fund investor?

Totally ignorant [ ]

Partial knowledge of mutual funds [ ]

Aware only of any specific scheme in which you invested [ ]

Fully aware [ ]

b) In which kind of mutual you would like to invest?

Public [ ]

Private [ ]

C) How do you come to know about Mutual Fund?

Advertisement [ ]

Peer Group [ ]

Banks [ ]

Financial Advisors [ ]


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8. Where from you purchase mutual funds?

Directly from the AMCs [ ]

Brokers only [ ]

Date _________

Place _________ Signature.

an introduction to mutual funds

Documents