A SUMMER TRAINING REPORT ON

PERFORMANCE APPRAISAL OF AXIS MUTUAL FUND

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF BACHELOR OF BUSINESS ADMINISTRATION (BBA), GURU JAMBHESHWAR UNIVERSITY, HISAR

TRAINING SUPERVISOR MR. NEEL GAUDA MANAGER

SUBMITTED BY ANKIT MANGLA ENROLLMENT NO. 05511242010

SESSION 2005-2008

GURU JAMBHESHWAR UNIVERSITY

HISAR
ACKNOWLEDGEMENT
The present work is an effort to throw some light on PERFORMANCE APPRAISAL OF AXIS MUTUAL FUND. The work would not have been possible to come to the present shape without the able guidance, supervision and help to me by number of people.

With deep sense of gratitude I acknowledged the encouragement and guidance received by my organizational guide Mr. Neel Gauda AXIS. I convey my heartfelt affection to all those people who helped and supported me during the course, for completion of my Research Report. and other staff members of

ANKIT MANGLA

EXECUTIVE SUMMARY

The AXIS Mutual funds seek to earn extraordinary return from their investments. For this, generally they employ innovative methods of fund management and at the same time they try to keep their strategies a closely guarded secret. In India, an additional point to keep in mind is the limited number of AXIS Mutual funds in operation of AXIS Mutual funds in operation. The research methodology for the present study has been adopted to reflect these realties and help reach the logical conclusion in an objective and scientific manner. The important component of research methodology such as formulation of hypothesis, method of data collection, tools for processing of the data and reporting format of the study, are enumerated as follows: The present study has been undertaken with the following objectives:To analysis the conceptual issues pertaining to AXIS Mutual funds with their implications for a developing country like India, to examine the theoretical framework of axis mutual fund in india to provide clues for growth strategies of axis mutual industry in india, to study the role of axis mutual in the economic development of the country, so as to bring out the biases and inadequacy of the government policy related to the mutual funds in the country, to study the legal and regulatory frame work of axis mutual fund in India, to study the working of axis mutual fund industry in india in terms of its practices, procedures and constraints within which, it has been operating.

TABLE OF CONTENTS
DESCRIPTION PAGE NO.

CHAPTER -1

INTRODUCTION TO MUTUAL FUNDS IN INDIA

1-10

CHAPTER-2

RESEARCH METHODOLOGY Objective of study Research design Limitation

11 12 13 13-14 15 15 16-19 19-22 22-25

CHAPTER-3 INTRODUCTION TO AXIS MUTUAL FUNDS Historical background of Axis mutual funds Features of Axis mutual funds Current status Working Axis mutual funds

Legal and Regulatory Framework of Axis Mutual Funds 25-37 Schemes SWOT Analysis 38-41 42-43

CHAPTER -4 CHAPTER- 5 CHAPTER- 6 CHAPTER -7 CHAPTER- 8

DATA ANALYSIS CONCLUSIONS SUGGESTIONS ANNEXURES BIBLIOGRAPHY

44-68 69-74 75-78 79-82 83-88

INTRODUCTION TO MUTUAL FUNDS IN INDIA

Concept of Mutual Funds
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

Mutual Funds Industry in India

The mutual fund industry in India started in 1963 with the formation of

Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases First Phase 1964-87

An Act of Parliament established Unit Trust of India (AXIS) on 1963.

It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978

AXIS was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by AXIS was Unit Scheme 1964. At the end of 1988 AXIS had Rs.6, 700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds) 1987

marked the entry of non- AXIS, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first nonAXIS Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.

Third Phase 1993-2003 (Entry of Private Sector Funds) with the

entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except AXIS were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase since February 2003 In February 2003, following the

repeal of the Unit Trust of India Act 1963 AXIS was bifurcated into two

separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.

The second is the AXIS Mutual Fund Ltd, sponsored by SBI, PNB,

BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile AXIS which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a AXIS Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

The graph indicates the growth of assets over the years. GROWTH IN ASSETS UNDER MANAGEMENT

Erstwhile AXIS was bifurcated into AXIS Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards.

Mutual Fund Companies in India The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existance of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund. The succeeding decade showed a new horizon in indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existance with re-registering all mutual funds except UTI. The regulations were further given a revised shape in 1996. Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector players penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India ABN AMRO ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Funds Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian. HDFC Mutual Fund HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993. Sahara Mutual Fund

10

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund (TMF) Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

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UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds. Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have

12

Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investments management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organisations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focussing on a long-term capital appreciation. Escorts Mutual Fund Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited. Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai. Benchmark Mutual Fund

13

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance

14

Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

RESEARCH METHODOLOGY
The AXIS Mutual funds seek to earn extraordinary return from their investments. For this, generally they employ innovative methods of fund management and at the same time they try to keep their strategies a closely guarded secret. In India, an additional point to keep in mind is the limited number of AXIS Mutual funds in operation of AXIS Mutual funds in operation. The research methodology for the present study has been adopted to reflect these realties and help reach the logical conclusion in an objective and scientific manner. The important component of research methodology such as formulation of hypothesis, method of data collection, tools for processing of the data and reporting format of the study, are enumerated as follows:

Importance of the Study

The concept of AXIS Mutual was introduced in India with the objective of commercialization of the indigenously developed technologies. It is an important objective in itself and there is nothing wrong to pursue it vigorously. In the developed countries particularly in the U.S.A., there has been a close linkage between AXIS Mutual financing and commercial exploitation of new invariably high technology related industries. The origin of the concept of AXIS Mutual has been associated with the funding of untried technology in the USDA in 1940's by American Research & Development Corporation. (ARDC) the first formal AXIS Mutual fund in the world. With the success of ARDC experiment the concept of AXIS Mutual gained popularity first in the U.S.A. and then gradually across the developed world. The point missed in

15

this connection is that the evolution of the AXIS Mutual market has been country specific to repeat the differences in conditions prevailing in different countries. The rules announced by SEBI in 1996 to regulate the AXIS Mutual funds in India have relaxed the eligibility criteria for investment by AXIS Mutual funds. and the condition of financing for untried technology by AXIS Mutual funds has been done away with. still in mindset in concerned quarters remain bounded to the same old concept. The relevant issues to explore in this context are what modifications are required in the policy regime? And what are the other factors holding the progress of the industry? The answer to these questions requires a through analysis of the role the AXIS Mutual can play in an economy like India and specific issues related to the venture fund in India, there in lies the importance of the study.

OBJECTIVES of Study
The present study has been undertaken with the following objectives:to analysis the conceptual issues pertaining to AXIS Mutual funds with their implications for a developing country like India. to examine the theoretical framework of AXIS Mutual fund in India to provide clues for growth strategies of AXIS Mutual industry in India. to study the role of AXIS Mutual in the economic development of the country, so as to bring out the biases and inadequacy of the government policy related to the Mutual funds in the country. to study the legal and regulatory frame work of AXIS Mutual fund in India; to study the working of AXIS Mutual fund industry in India in terms of its practices, procedures and constraints within which, it has been operating;

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Scope of the Study

AXIS Mutual fund is related to such divers topic as corporate finance, leverage buyouts, merchant banking financing of start-ups, small business management, entrepreneurship development, business incubators, technology transfers, and economic development. The present study is confined to a specific aspect of AXIS Mutual. Appraisal of working of AXIS Mutual in developing country like India for proper perspective; the scope of the study has been widened to include the practices and experiences of the developed and some developing countries. The AXIS Mutual is relatively small and emerging activity. The number of players in the industry is limited. It also indicates that geographical coverage is at all India bases as AXIS Mutual funds are spread in different parts of the country. As far as the time period covered under the study is concerned, all possible efforts are made to find out data from different authentic sources. 2.4 Data Collection The present study contemplated an exploratory research. Secondary data has been used which is collected through venture activity reports, journals, magazines, newspapers reports prepared by research scholars, universities and internet.

RESEARCH DESIGN Analysis of Data

Analysis of data has been done with help of various statistical tools. There are percents simple average and time series analysis: Trend fitting by least square method: Y = a + bx have been used to study the pattern of venture fund investment over years.

Limitations of the Study

As far as limitation is concerned present research work has been completed in the face of following major constraints. The data used in my research study is secondary data.

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Latest data and information about AXIS Mutual is very less. The data is available till the year 2003 in most of the cases. Limited analytical techniques have been used due to the nature of data available on the subject.

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COMPANY PROFILE

AXIS MUTUAL FUND: CONCEPTUAL FRAMEWORK

The concept of AXIS mutual fund need to be understood in proper

perspective in order to analyses its working with specific reference to India. With this objective, the present chapter is an attempt to define the AXIS mutual fund within Indian context. The chapter is divided in to five sections. Section 1: presents historical background of AXIS mutual fund in India. Section 2: explains the definition of AXIS mutual fund along with the salient features of mutual fund, section 3: explains the current launches of AXIS mutual fund, Section 4:explains the working and USP of AXIS mutual fund, Section 5: explain the different forms of AXIS mutual fund, section 6: explains the comparison between AXIS mutual fund and conventional sources of finance.

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AXIS MUTUAL FUND AND ITS FEATURES

Risk Factor Mutual Funds and securities investments are subject to market risks and there can be no assurance or guarantee that the Schemes objectives will be achieved. As with any investment in securities, the Net Asset Value of Units issued under the Schemes may go up or down depending on the various factors and forces affecting the capital market. Past performance of the Sponsors/ AMC/ Mutual Fund/ Schemes and its affiliates do not indicate the future performance of the Schemes of the Mutual Fund. The Sponsors are not responsible or liable for any loss or shortfall resulting from the operations of the Schemes beyond their contribution of Rs.10, 000/- each made by them towards setting of the Mutual Fund The Names of the Schemes do not in any manner indicate either the quality of the Schemes or their future prospects and returns. Investors in the Schemes are not being offered any guarantee / assured returns. Please read the Offer Documents carefully before investing.

Statutory Details In terms of The Unit Trust of India (Transfer of Undertaking and Repeal) Act 2002 (Act), the assets and liabilities of the erstwhile Unit Trust of India have been bifurcated into two parts the specified undertaking and the specified company. The Administrator of the Specified Undertaking of The Unit Trust of India comprises of US 64 and the assured return schemes (most of which have since been converted into tax free bonds, the present investment is guaranteed by the Govt. of India).

The Specified Company has been set up as a mutual fund viz. AXIS MF, comprising of all net asset value based schemes. AXIS MF has been structured in accordance with SEBI (Mutual Funds) Regulations, 1996 The mutual fund 5

was registered with SEBI on January 14, 2003 under Registration Code MF/048/03/01.

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DISCLAIMER

Each of AXIS Mutual Fund schemes are offered only through the Offer Document or the key information memorandum available with respect to each fund, prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations 1996, as amended till date

The Scheme Offer Document contains information necessary for an investor to make informed investment decision in any of the Scheme of AXIS Mutual Fund. Please read the Offer Document carefully in its entirety prior to making an investment decision and retain the Offer Document for future reference

Features

Diversification: Mutual Funds invest their corpus in diversified portfolios, which reduces the risk contained in the investment. This also means that you can invest a small sum of Rs.5000/- and still be a part of a portfolio where the market value of single scrip might be much more than the total investment.

Research: These mutual funds perform an extensive research of the company before making an investment decision giving you the benefit of expert advice.

Liquidity: These funds are extremely liquid, some of them even have features like across-the-counter redemption. This feature is especially useful at times when the market is rising or falling.

Professionally managed: professionals who have the required expertise in buying and selling stocks manage these funds. As a result they make better decisions on entering and exiting a particular stock, which is very crucial for the overall performance of a portfolio. Moreover, mutual fund investment also rids the investor of maintaining records, eliminates hassles with the broker for payment, delivery and other arduous back office tasks. 6

Savings on transaction costs: As purchases and sales are done in bigger quantities, the funds also get the advantages of lesser brokerage and other reduced transaction costs.

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Tax Advantages: In India these funds become even more attractive because of the tax advantages, like indexation benefits , long term capital gains tax , tax free dividends and much more.

Special features of AXIS mutual funds

AXIS meet needs: AXIS believes that every one has specific needs and priorities. Your needs could vary from buying a house, getting your daughter married to providing for your childs education. You might even want to travel the world. All your needs are very important for us. AXIS can help to fulfill your needs to reality by helping you select schemes, which would be consonance with your needs.

AXIS work towards building an Investment Culture: It would AXIS constant endeavor to inculcate saving and organized investing habits in you. it will help you plan your investments and build a healthy mutual fund portfolio, which would be an optimal solution for your needs. Cultivating an investment culture will not only help you but also your family.

AXIS will keep you updated: a newsletter, which will keep you, informed of the latest happenings in the stock markets, economy and important events, apart from giving you the NAV and other relevant information about your schemes will be sent you every month. Latest NAV of the schemes can also be found out from our various branches.

AXIS can be your One Stop Financial Solution: Apart from subscribing to Mutual fund schemes through us, you can also take advantage of our banking Services and a whole range of financial products. Like - ATM card, credit card, personal loan products, depository services, loan against units/shares etc. and see your financial needs satisfied under one roof.

With AXIS Bank- Mutual Fund services, you can consult with your own Investment Advisor and invest in a Mutual Fund Scheme that is right for you.

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A great opportunity, to get organized and make your investment more in line with your real needs.

Risk Factors: All the investments in the securities market are subject to market risks and the NAV of schemes/plans may go up or down depending upon the factors and forces affecting securities market. Past performance is not necessarily indicative of the future.

Salient Features of the AXIS

The scheme is open to resident individuals, institutions as well as to NRIs and FIIs. Sale of units under each fund will be at face value during the initial offer period. On re-opening of the scheme, Sale of units will be at 102% of NAV. Repurchase will be at NAV.

The primary objective of the scheme is capital appreciation. However the scheme may also distribute income to the unit holders. Unit holders will have an option to reinvest income distribution, if any, at ex-dividend NAV. The benchmark of AXIS-Large Cap Fund is BSE Sensex, AXIS-Mid Cap Fund is CNX Midcap 200 Index, AXIS-Basic Industries Fund is BSE 100 Index, AXIS- Auto Sector Fund is BSE Sensex, AXIS Banking Sector Fund is BSE BANKEX and AXIS- PSU Fund is BSE PSU Index. Automatic Trigger Option and Switchover facility from one fund to another are available.

CURRENT STATUS AND INITIATIVES OF AXIS MUTUAL FUND

i)

AXIS Mutual to launch dividend yield fund. AXIS Mutual Fund may be sold to one of its four stakeholders by the end of FY 06. SBI, LIC, Punjab National Bank and Bank of Baroda hold 25 per cent each in the fund house.

ii)

The would-be owner will buy out the other three stakeholders. The sale will complete the process of restructuring that was initiated by the Government a couple of years ago.

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iii)

AXIS Mutual plans to launch AXIS Dividend Yield Fund. This fund will invest in stocks that offer a high dividend yield. The initial offer period is between April 11 and May 3.

iv)

The fund is available for sale and purchase on an ongoing basis from June 1. It would invest in about 70 stocks; 65-100 per cent of the assets will be invested in high dividend yield stocks and 35 per cent in stocks with potential for capital appreciation.

v)

The minimum investment amount is Rs 5,000. The fund offers growth, dividend and dividend reinvestment options.

vi)

Tata Mutual has declared a dividend of 15 per cent for Tata Pure Equity Fund with April 27 as the record date; a dividend of 10 per cent has been declared for Tata Equity Opportunities Fund.

The record date is May 11.

Principal PNB Mutual has announced that there will be no entry or exit load on transactions in its existing as well as to-be-launched funds made by `fund of funds' managed by it or other asset management companies.

Birla Mutual plans to launch Birla GenNext Fund, which will capitalise on opportunities driven by consumptions trends of young citizens with high disposable incomes.

Sectors such as hotels, travel and tourism, retail, financial services and consumer durables will be the focus. The fund will be benchmarked to the Nifty. The fund house has filed the offer document with SEBI for approval.

DSP Merrill Lynch plans to launch a fund that will invest in mid-cap stocks. The fund has filed the offer document with the Securities and Exchange Board of India. The minimum investment amount is Rs 5,000. The fund offers growth and dividend options.

AXIS MUTUAL FUND (ranks 47th in The Economic Times Fifth Brand Equity Survey of India's Top 50 Service Brands 2005)

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(India Business Insight Via Thomson Dialog NewsEdge)AXIS Mutual Fund ranks 47th in The Economic Times Fifth Brand Equity Survey of India's Top 50 Service Brands 2005. AC Nielson ORG-MARG conducted the survey through interviews with 7,480 people (1,870 chief wage earners, 1,870 housewives and 3,740 young adults) in 12 cities in India.

The survey was restricted to Sec A, B and C respondents (with monthly household incomes ranging from below Rs2, 500 to over Rs15, 000 a month).

A total of 196 consumer brands and 79 service brands were short-listed for evaluation. Respondents were asked to evaluate brands on the parameters of relatedness, perceived popularity, quality connotation, and distinctiveness/uniqueness, value for money and repurchase intent.

Also, wherever possible, quantitative means were also used to strengthen the listing criteria.

AXIS Mutual Fund expands product suite, launches AXIS-Thematic Fund

AXIS Mutual Fund today announces the launch of AXIS-Thematic Fund with effect from 9th March 2004. The initial offer period is from 9th March 2004 to 25th March 2004. The scheme will re-open for sales and repurchase not later than 30 days from the closure of the initial offer.

At any given point of time, there are certain sectors in the economy that perform better than others. An early identification of these sectors for investments will reap rewards for the investors. To capitalize on diverse investment opportunities across various sectors, AXIS Mutual Fund is launching AXIS-Thematic Fund as an open-end growth oriented equity scheme. The scheme will comprise of six funds, each concentrating on a distinct theme AXIS - Large Cap Fund, AXIS - Mid Cap Fund, AXIS-Basic Industries Fund, AXIS-Auto Sector Fund, AXIS-Banking Sector Fund and AXIS-PSU Fund. The investment focus of each of the six funds is as follows:

AXIS -Large Cap Fund: The portfolio of the fund will consist of the universe of top 50 companies in terms of market capitalization.

AXIS -Mid Cap Fund: This fund will invest primarily in mid cap stocks. 25

AXIS- Basic Industries Fund: The portfolio of this fund will consist predominantly of companies engaged in the sectors like Metals, Building Material, Oil & Gas, Power, Chemicals, Engineering etc. The fund will invest in stocks of the companies, which form the part of Basic Industries.

AXIS- Auto Sector Fund: The fund will invest in the stocks of companies engaged in the automobile and auto ancillary industry.

AXIS -Banking Sector Fund: The fund will invest in the stocks of the companies / institutions engaged in the banking and financial services activities.

AXIS PSU Fund: The fund will invest in the stocks of companies where the State / Central Government of India owns the majority of the holding or management control is vested with State/Central Government of India.

AXIS Master Value Fund declares second consecutive tax-free (Jan 13, 2005) AXIS Mutual Fund declares second consecutive dividend of 100% (Rs 10.00 per unit on face value of Rs.10/-) under AXIS-Master Value Fund (AXISValue Fund).

The record date for the dividend is February 7, 2005. The dividend is tax-free for the investors, so the post-tax return for the investors works out to be much higher. Investors who will join the scheme on or before February 7, 2005 will also be eligible for the dividend.

The NAV of the scheme as on January 12, 2005 was Rs.27.82 (Post dividend distribution, NAV will fall to the extent of the pay out).

WORKING OF AXIS MUTUAL FUND

In a sell decision, for instance, the procedure was this: whatever each scheme needed to sell got listed - the names of the company, the number of scrips and the price range. All this got captured on paper, and this paper moved right up to the level of the chairman. Depending upon who in the chain was present or absent in his chair at that point of time, it took anything between 30 minutes to an hour. And then, after

26

approval, it would travel all the way down. Sale orders would get sent to the dealing room, after which the dealing room would contact the broker for placing the deals on that day. So, typically, for an hour-and-a-half, AXIS was not present in the market. What this meant was that if there was any leak in the entire information process, people could take positions in the market, with the clear knowledge that AXIS was going to do something. If someone knew that AXIS was going to sell a significant quantity of share X that day, which would have an obvious negative impact on the price, he could exit before AXIS sold.

It has changed this by using technology and delegating. One way of doing that was to ensure that different individuals were given the responsibility for managing different schemes. So each individual fund manager knew what his investment objectives were; two, he knew the prices of his investments; three, he knew the liquidity of the scheme; four, he knew whether or not any corporate action was going to be taken - was there going to be a declaration of the dividend - did he have to raise more funds, were there likely to be any redemption pressure due to any circumstances associated with a particular scheme as opposed to fund house. All of that knowledge necessarily resided at the fund management level. Now, where knowledge resides, we ensure that responsibility and empowerment resides there as well. Otherwise there was a disconnect between where scheme-specific knowledge was and where responsibility and empowerment resided. That had to be bridged. We put aside was this business of paper approval. If I have a fund manager of a particular scheme, and he wants to buy or sell, unless it was a very large buy or sell order, he can take the decision himself. And the minute he puts those orders on his screen, it would reflect on the screen of the dealing room. So there is no information leak of what AXIS is going to buy or sell. We are the first fund house I say this with legitimate pride to completely integrate all the various components of the activity, with regard to putting the transactions from the fund manager, middle office, back office, dealing room all connected.

Another change it might seem very small is that the office timings have been changed. So the fund manager and the research people came in about an hour and 15

27

minutes before the markets open. All the research inputs that the fund managers need are available well before the markets opens. Before the markets open, our fund managers have already decided what the buy and sell orders for that day are, at what prices they want to buy and sell, and how much they want to buy and sell. And we have enabled that these orders will be transmitted to the dealing room the minute the market opens so that far from missing out the early opportunities in the market, AXIS is there in the markets when they open, in a completely transparent manner. Quite simply, we would have got less money then. In fact, the impact cost would have been so high for us then that the government would have had to pay a huge price. Looking at the unimaginable size we had with us, if we, like any other mutual fund, were to sell off everything, close shop and go home, we would have had to liquidate our entire US-64 portfolio. Our NAV would have fallen and the price that the government had promised to support would have just gone on expanding. That is why we gave the investor an option to subscribe to our bonds, and get returns better than anything in the market with 100 per cent safety guaranteed by the government. That gives us enough time to decide how much we want to sell it and when, in the market. So the problem of AXIS overhang, which the market was speculating about, was gone. But one of the reasons why the market was depressed was the one-day-AXIS-is-going-tocome-out-and-sell syndrome. So the minute we were to able to say that that one day was not going to be May 31 or shortly before that, we got a much larger time frame and brought to the markets just what we need to bring and no more. One main negative impact on the market went out. Today thats no longer such an issue. We bought ourselves five years of time to liquidate the portfolio. We believed, contrary to what most pundits believed, that the markets would definitely rise within the next five years. In fact, it came pretty quickly, within a year. So this time we have not been making the same mistakes, of holding on to the portfolio like in the past.. That is how we repaid all of those debts.

All those who have their funds performing right on the top are funds on whose reputation the fund house is dependent. But in the way the funds are administered, there is a bigger price paid by somebody at the bottom, in order to keep the top ones at the top. There is a kind of what do I call it? Cross-subsidization in terms of fees.

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If you look at, say liquid funds, between the first funds and say the 10th or 12th fund, there is a very small difference. That difference is explained in the manner in which the entry and exit load is maintained. So you load on everything else to some other fund. Anyone doesnt mind some funds coming in the third or fourth quartile so long as you have some funds coming at the top. We dont do that. Occasionally they have come on the top. Theres been a huge portfolio churn, not just buying and selling, but reduction in the kind of portfolios it have had. Massive provisioning, which has today brought us to a zero net NPA position. All of that, in the process of a transformation, will impact performance. Today AXIS have addressed all those issues; going forward everyone have to see how AXIS perform.

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REGULATIONS
Features: Unique Features of AXIS their Impact on its Functioning

[Extract from the Report of "Corporate Positioning" Committee] In the initial stages, AXIS had been performing a hybrid role of both a financial institution and a mutual fund. However, over the last few years, its role as a financial institution has significantly diminished and it has positioned itself purely as the largest mutual fund in the country. There is also a significant trend emerging which suggests that financial institutions will gradually wither away or merge into universal banks. In this scenario, commercial banks and mutual funds will emerge as the primary institutions for the mobilisation of household savings. This reinforces the need for AXIS to evolve as a pure mutual fund. At the same time, consideration has to be given to the fact that AXIS has promoted and holds controlling interest in a number of institutions outside the pure mutual fund industry. As noted earlier, AXIS management structure is at variance with the structure prescribed for mutual funds under SEBI regulations. These regulations provide for four separate entities, namely a Sponsor, an Independent Trustee, an Asset Management Company and the Fund. It is necessary that AXIS as the largest player in the Mutual Fund industry should, as recommended by the Vaghul Committee, lend itself to SEBI regulatory jurisdication and conform to the form of structure prescribed in SEBI regulations. As stated earlier, out of 73 domestic schemes, 67 schemes have already been brought under SEBI regulations and apart from US-64 and SUS-99, the remaining schemes have finally suspended sales and/or are nearing termination. It only remains for the structure of AXIS also to be made SEBI compliant. While the present structure of AXIS provides for separate Asset Management Committees for US-64, equity schemes and for income/debt schemes, the degree of control exercised and direction imparted by these Committees appears to be restricted and inadequate. The key mandate of the Committees is to review performance of unit schemes of AXIS and provide guidance. The Committees discharge this role of independent review of scheme performance through the mechanism of periodic meetings. Given the limitation of a "review committee" format, the Committees have not found it possible to resolve "embedded" problems stemming from "historical"

30

decisions. The Committees, therefore, cannot replace Asset Management Companies. There is therefore need for an independent Trustee and an independent AMC, as provided under SEBI regulations with wider powers of control and direction. AXIS has no identified Sponsor but the institutions, which contributed to the initial capital of Rs.5 crores and, crores in 1999, may be considered as Sponsoring Institutions. SEBI regulations impose certain responsibilities and obligations on sponsors and it would be difficult to discharge these responsibilities and obligations when there are a large number of sponsors. It is therefore necessary that the Sponsor should be a separate company. It is suggested that this company can be formed with the initial shareholders being the Sponsoring Institutions who will convert the whole or part of their present holdings in the initial capital of Rs.5 crores and the additional contribAXISon of Rs.445.50 crores made in June 1999 into the capital of the Sponsoring Company. This conversion can be made at the NAV of the units when US-64 becomes NAV based. It is desirable that no single member of the Sponsoring Institutions ultimately holds more than 25% of the ultimate capital of the Sponsoring Company, particularly since many of them already own or have participation in AMCs managing other mutual funds. With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

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The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows: This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBI guidelines in the mutual fund industry. Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awarness programme for investors in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

The sponsorers of Association of Mutual Funds in India Bank Sponsored

SBI Fund Management Ltd. BOB Asset Management Co. Ltd. Canra bank Investment Management Services Ltd. AXIS Asset Management Company Pvt. Ltd.

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Institutions GIC Asset Management Co. Ltd. Jeevan Bima Sahayog Asset Management Co. Ltd. Private Sector Indian:BenchMark Asset Management Co. Pvt. Ltd. Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. Escorts Asset Management Ltd. JM Financial Mutual Fund Kotak Mahindra Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Co. Pvt. Ltd Sundaram Asset Management Company Ltd. Tata Asset Management Private Ltd. Predominantly India Joint Ventures:Birla Sun Life Asset Management Co. Ltd. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd. Predominantly Foreign Joint Ventures:ABN AMRO Asset Management (I) Ltd. Alliance Capital Asset Management (India) Pvt. Ltd. Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt. Ltd. Principal Asset Management Co. Pvt. Ltd. Prudential ICICI Asset Management Co. Ltd. 33

Standard Chartered Asset Mgmt Co. Pvt. Ltd AXIS Mutual Fund ties up with Dena Bank for distributing its MF schemes AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-up for distribution of AXIS MF schemes. Under the agreement, Dena Bank will offer the entire bouquet of AXIS MF's schemes across the bank's selected branches September 12, 2005: AXIS Mutual Fund (AXIS MF) and Dena Bank today announced a strategic tie-up for distribution of AXIS MF schemes. Under the agreement, Dena Bank will offer the entire bouquet of AXIS MF's schemes across the bank's selected branches. Presently AXIS MF (with assets under management of over Rs.25000 crore) reaches out to its investors through its wide distribution network comprising 65 Financial Centers (UFCs), 271 Chief Representative offices, 58 Chief Agents, over 19000 AMFI certified Financial Advisors and through tie-ups with several Banks and Department of Post. With today's tie-up, AXIS MF is further enhancing its distribution capabilities. AXIS MF will now also be offering its schemes initially through 80 branches of Dena Bank including 41 Finmart branches across India . Announcing the AXIS MF's tie-up with Dena Bank, Dr R H Patil , Chairman, AXIS AMC said, "This initiative reflects AXIS MF's strategy to rapidly expand in the retail market and value-add its access network to complement the Mutual Fund's growth strategy in the Indian mutual fund sector. With this tie-up millions of customers of Dena Bank will get an opportunity to invest in various schemes of AXIS MF closer to their doorstep at the branches where they do their banking transactions." "Dena Bank has got a dominant presence in Gujarat and Maharashtra which happen to be important retail markets for AXIS MF." he added On the occasion, Shri M V Nair , Chairman and Managing Director, Dena Bank said, The signing of our Agreement today is a very happy occasion for both Dena Bank and AXIS Mutual Fund. It is a significant milestone for the Bank and it is the first tie up the Bank has made to offer various Mutual Fund products to its customers. The Bank will endeavour to cross sell its products also with this tie up. Shri M V Nair said, "In a rapidly changing scenario, the lender - borrower relationship which Banks traditionally had with customers is giving way to a different 34

kind of business relationship and the Banks are now offering a variety of financial services to the customers to meet their changing aspirations. The tie up between Dena Bank and AXIS MF is a step towards converting the bank branch into a financial supermarket which caters to all the financial needs of the customer by providing banking, insurance, as well as investment services at one stop." "There is immense potential for marketing of mutual funds and the tie up would help to tap this potential. Today's agreement brings together two strong and vibrant brands in a strategic alliance, which will combine the strengths of both organizations for mutual benefit. We are looking at the tie up as an opportunity to bring more customers into our fold and to expand our horizons." he added.

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PROVISIONS
AXIS Mutual Fund, a professionally managed mutual fund continued to be the largest mutual fund in the country. AXIS MF has a full-fledged in-house research department including dedicated debt research and macro economic research cell, which facilitate the asset management functions. Your directors are pleased to report that the Assets under management of AXIS Mutual Fund was at Rs.20,657 crore as at March 31, 2005. AXIS Mutual Fund is the largest mutual fund of the country having 66 offices. It manages 52 schemes as on date. AXIS Mutual Fund widened its product range by launching AXIS Dividend Yield Fund. AXIS Master Index Fund and AXIS S&P CNX Nifty Index Fund were the lowest cost funds in the industry. AXIS SUNDER is the largest exchange traded fund in the industry. Further, during the year the AXIS Mutual Fund merged the following schemes: five schemes viz AXIS-PEF Unit Scheme, AXIS- Unit Scheme 1992, AXIS Master Equity Plan 1998, AXIS Master Equity Plan 1999 and AXIS Grandmaster Unit Scheme were merged with a new scheme namely AXIS Opportunities Fund. AXIS Grihalakshmi Unit Plan was merged with AXIS Mahila Unit Scheme AXIS Growing Corpus Growing Income Plan was merged with AXIS Unit Scheme 95

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Acquisition of the schemes of IL&FS Mutual Fund: AXIS Asset Management Company Pvt. Ltd. has acquired the schemes of IL&FS Mutual which now forms part of AXIS Mutual Fund with effect from July 5, 2004. During the period, AXIS Mutual Fund has declared 103 dividends under 32 schemes apart from daily and weekly dividends declared under AXIS-Liquid Plan, AXIS Money Market Fund and AXIS Floating Rate Fund Short Term Plan. AXIS- Master Value Fund, AXIS-Growth and Value Fund, AXIS MNC Fund and AXIS - Masterplus paid a total dividend of 100%, 50%, 30% and 30% respectively. While according to the Standard disclosure, the Mutual Funds past performance is not guaranteed to be sustained in future, it has been a good year for the AXIS Mutual Fund.*

Awards:
Your Directors are pleased to inform that during the period under review, the schemes of AXIS Mutual Fund won the following awards/rankings: Awaaz Consumer Award 2005: AXIS Mutual Fund won the award in the Mutual Fund category as the Most preferred Mutual Fund based on the National consumer preference survey conducted by AC Neilson-ORG Marg on behalf of TV Channel CNBC Awaaz.

Equity Schemes
AXIS Dynamic Equity Fund was ranked MFR1 by ICRA for the best performance in one year ended on 31st March 2005 and 31st December , 2004. AXIS India Advantage Equity Fund was ranked MFR2 by ICRA for the best performance in one year ended on 31st March 2005 . AXIS Nifty Index Fund won a Gold award at ICRA Online MF Awards 2005, indicating the best performance in the category of Open Ended Index SchemesNifty for one year period ending Dec 31,2004 .

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AXIS Growth and Value has won CNBC TV 18 Mutual Fund of the Year Award. It has been ranked among the 3 Best Performers in the category of Open Ended Diversified Equity Funds amongst 34 schemes for the year 2004 AXIS Dynamic Equity Fund has won the silver award for the year ended 2004. It has been adjudged ICRA - MFR1, indicating performance under the top 10% in the category of Open ended Diversified Equity Schemes Aggressive for one year period ending December 31st 2004.

Debt Schemes
AXIS Bond Fund was ranked CRISIL CPR1 and CPR2 for its performance in one year ended on 30th June 2005 and 31st March, 2005 respectively. The scheme was ranked RRR1 by CRISIL and ranked 1st among 24 schemes for the best performance in one year ended on 30th June 2005. AXIS Gilt Advantage Fund was ranked CPR1 by CRISIL for best performance for two years ended 31st December, 2004 and CPR2 on 31st March, 2005 and 30th June, 2005. AXIS Bond Advantage Fund was ranked CPR2 by CRISIL for best performance for one year ended on 31st March, 2005. AXIS Liquid Fund (Short Term Plan) was ranked CPR2 by CRISIL for best performance for one year ended on 30th June, 2005, and 31st March, 2005. AXIS Liquid Fund (Cash Plan) was ranked CPR1 by CRISIL for best performance for two years ended on 30th June, 2005, and 31st March, 2005.

Market Overview for Equity:

Post General Elections, the SENSEX crashed of May 17th 2004 to a low of 4227. However, the subsequent rally was breathtaking and sensex reached the level of over 8000 points. The main reasons for the spectacular rise in the market were (i) market friendly measures introduced in the Interim Union Budget of July 2004 and the Union Budget of 2005, (ii) inflows of over Rs 55,000 crore from foreign institutional investors (FIIs) during the period. Further the retail participation in equity market continues to remain low and the ownership of equity as proportion of financial savings is still below 2%. Government played a dominant role in the issue of new

38

paper with public issues from NTPC, PNB, and OBC raising the funds from the markets. Tata Consultancy Services (TCS) and Jet Airways also raised funds through public issues. These public issues and the rally in the markets has resulted in increase in the total market capitalization to over 22,00,000 crores. India is now the fifth largest market globally and the third largest among the emerging markets in terms of market capitalization.

Outlook For Equity Market:

GDP growth rate of 6.5 to 7% supported to a large extent by a vibrant revival in the industrial sector will act as a support to an equally active equity markets. The relative advantage of Indian economy over many of its Asian peers lies in the fact that the growth of the economy is being driven by a strong domestic demand. Exports account for about 10 to 12% of the GDP in India vis a vis almost 40% for many of the other emerging nations. Any slowdown in the global economy will have a cascading effect on these countries. The era of high commodity prices have made most markets flush with funds to invest. There is also a perceptible shift of capital from the western hemisphere comprising of USA and European Union to the eastern hemisphere comprising of rapidly growing nations like India and China. Two themes will dominate the markets namely (i) infrastructure boom and

consumption led domestic demand theme which translates into a robust performance of the basic industries and (ii) export and the outsourcing potential of the Indian corporate sector in both the production of goods and the delivery of offshore services. These opportunities will be captured by sectors such as information technology, textiles, auto ancillaries and pharmaceuticals.

Market Overview For Debt:

The debt markets has witnessed declining returns as yields rose substantially in fiscal year 2004-05. The markets recovered in the last quarter of FY 2004-05 as the liquidity situation eased and sentiments improved. The 10-year Gsec benchmark yields rose sharply by over 200 basis points to a high of 7.32% in the year. The factors

39

contributing to the rise in debt market yields were rising world interest rates, high domestic inflation and low levels of domestic liquidity. The domestic WPI inflation rose to a high of 8% but softened later due to decline in commodity prices. RBI hiked the repo-rate by 25bps to 4.75% and CRR by 50bps to 5.00% in October, 2004 to counter inflationary pressures.

Outlook For Debt Market:

The debt market is expected to stabilize in year 2005-06 after the significant volatility witnessed in the previous year. The market has experienced comfortable liquidity conditions during the first quarter of 2005-06, coupled with declining inflation on account of the base effect of previous year. The impact of high fuel prices on inflation worldwide is the key risk to the containment of inflation and domestic fiscal deficit targets. The global interest rate scenario after the series of rate hikes is expected to have a moderate impact on domestic interest rates. The RBI's monetary policy for 2005-06 continues to be guided by the objective of appropriate liquidity to meet credit growth and support investment and export demand and equal emphasis on price stability.

Investment objectives and policies:

The investment objective, basis and policies of investment underlying the schemes of AXIS Mutual Fund are enclosed as Annexure A.

Performance of the schemes:

The Performance of the schemes of AXIS Mutual Fund for the year ended March 31, 2005, is enclosed as Annexure B. A list of the schemes in which dividend was declared during year ended March 31, 2005, is enclosed as Annexure C. *It is underlined that past performance may or may not be sustained in the future.

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Statutory Details: AXIS Mutual Fund is managed in accordance with the applicable Rules, Regulations prescribed by the regulators and good business practice. In view of the fact that the amounts collected under various schemes are deployed in securities market, the price and redemption value of the units, and income from them, can go up as well as down with the fluctuations in the market value of its underlying investments. Liability and Responsibility of Trustees and settlor The AXIS Mutual Fund was constituted as a Trust, by settlors viz. State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank on 9th December, 2002 in accordance with the provisions of Indian Trusts Act, 1882 and the Mutual Fund is duly registered under the Indian Registration Act, 1908. The liabilities and responsibilities of the Trustees are as contained in the Trust deed dated 9th December 2002 and Regulation 18 of SEBI (MF) Regulations, 1996. During the year under consideration, a vacancy arose in the position of the CEO in the AXISAMC Pvt. Ltd. on the relinquishment of the post of the CMD by Shri M Damodaran. In the absence of a successor getting posted, the Trustees addressed the AMC Board to ensure appropriate control and delegation of functions in the interest of the investors. The functions of the CEO are presently carried out by a Committee of Executive Directors (COED) empowered by the AMC Board. The Trustees have also established a system of Compliance check and internal audit at regular intervals through M/s Chokshi & Chokshi, external auditors, who provide their reports directly to the Trustees, with copies to the AMC. Based on the observations in the Report, the Trustees convey their recommendations to the COED for action and whenever necessary, in the interest of investors, to the AMC Board, SEBI and the Sponsors/ Government of India.

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SCHEMES OF AXIS MUTUAL FUND

Scheme Performance as on January 31, 2006 AXIS Equity Tax Savings Plan declares tax-free dividend 60% AXIS Equity Tax Savings Plan (AXIS-ETSP) declares tax-free dividend @60% (Rs.6.00 per unit on face value of Rs.10/-). The record date for the dividend is February 23, 2006.

All unit holders registered under the dividend option of AXIS Equity Tax Savings Plan as on February 23, 2006 will be eligible for this dividend. Also investors who join the dividend option of the scheme on or before the record date will be eligible for the dividend.

During the current fiscal year 2005-06, the scheme has declared dividend totaling to 100% (Rs.10.00 per unit on face value of Rs.10). Earlier in September 2005 the scheme had declared a dividend of 40% (Rs.4.00 per unit on face value of Rs.10).

The NAV per unit as on February 2, 2006 was Rs.27.33 under the growth option and Rs.22.73 under the dividend option (Post dividend distribution, NAV will fall to the extent of the pay out).

The scheme has consistently outperformed the benchmark BSE Sensex as per table below:

AXIS-ETSP was launched in November 1999 as an open-ended equity oriented tax savings scheme. The investment objective of the scheme is to invest in equities, fully connvertible debentures/bonds and warrants of companies.

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Contribution made by individuals under AXIS-Equity Tax Savings Plan will qualify for deduction of the whole amount paid subject to a maximum of Rs.1, 00,000/- under Section 80C of Income Tax Act, 1961 as provided therein.

COMPARISION

BETWEEN

AXIS

MUTUAL

FUND

AND

CONVENTIONAL SOURCES OF FINANCE

Following the takeover of AXIS Securities, Securities Trading Corporation of India (STCI) has charted out a few more acquisition plans. Shedding its NBFC image, STCI plans to acquire a bank in the future. Further, it also plans to acquire the SCAXIS, a primary dealer, jointly managed by Standard Chartered bank and AXIS Securities and get it merged with its own PD arm after hiving off the same from its core business model.

Non-Banking Financial Institutions

A fairly well developed network of non-banking financial institutions. Fund based Institutions. All India financial institutions :IDBI, ICICI, IFCI, IIBI Investment Institutions: AXIS, LIC, GIC and subsidiaries Small Scale Financing - Small Industries Development Bank Of India Export Import Financing - EXIM Bank Of India State Level State Finance Corporations (SFCs): e.g. KSFC, MSFC and GSFC State Industrial Development & Investment Corporations (SIDCs): E.g., KSIDC, SIICOM, and GIICOther non-banking institutions Leasing and Hire Purchase Companies Investment Companies AXIS Mutual Funds

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Non fund based financial intermediaries Merchant (Investment) bankers provide advice on making and share debenture issues & advise on strategic corporate financial initiatives Brokers: Help in trading in shares, debentures and other securities Portfolio Managers and Advisers: Provide investment advice

Two Views of the Financial Markets 1. Capital Market: Securities of one year maturity Banks, Financial Institutions, Mutual Funds, Stock Exchanges, Other private investors such as AXIS Mutual funds

2. Money Markets: Deals with instruments of less than one years maturity. i) ii) iii) Call Money Market - Overnight funds Commercial Paper Market - 3 to 12 month maturity typically Govt. Securities Markets

3. Primary Market: Deals with new or first time issue of securities 4. Secondary: Subsequent purchase and sale of securities.

MARKET PLAYERS 1) Stock Exchanges i) Of which national ii) With debt segment iii) With derivatives 2) Listed Securities 3) Brokers 4) Of which corporate 5) Sub brokers 44 23 4 1 2 9413 9443 3835 13291

6) Merchant Bankers 7) Underwriters 8) AXIS Mutual Funds 9) Share Transfer Agents 10) Depositories 11) Mutual Funds 12) Regulator 13) Appellate Tribunal

124 43 43 143 2 38 1 1

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SWOT ANALYSIS
Strength
Good for new investor as the fund has to be managed by specialized fund manager. Only product which invests in money market, debt market and equity market at same time. Investment needed is comparatively less than other investments. During the stack market boom periods all mutual funds have performed fairly well thereby increasing investors expectations.

Weakness
Customers do not prefer it because of risk attached to it that is market risk. Fund manager if makes a wrong prediction then customer will bear the brunt therefore it depends on funds managers analysis. Sometimes the age factor affects the investment preference of the investors. People are afraid of investing in the equity market.

Opportunities
Creating positive image about the fund and changing the nature of the market itself.

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 Market of mutual fund is expanding as many foreign companies are coming in this. Great scope of new investment due to the budget announcement this year. The objective of investing in mutual fund is Tax-saving apart form returns third main objective is growth.

Threats
Now there are many other investment instruments which are more lucrative than mutual fund. (real estate , gold) Unawareness among investors regarding mutual funds. Also in India most of the people lack of awareness about mutual fund. They dont know anything about what is mutual fund, how it works. How fund managers invest peoples money in different portfolios and provide the better returns to the customers Lack of promotions, advertising by mutual fund industry

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DATA ANALYSIS AND INTERPRETATION

Q: AGE OF THE RESPONDANDS
Less than 20 yrs 20yrs-30yrs 30yrs-40yrs 40yrs& above
20 15 35 30

Age group of people investing in m utual funds Less than 20 yrs 20yrs-30yrs 30yrs-40yrs 40yrs& above

INTERPRETATION: from a sample size of hundred 20% of the respondands who invest in UTI mutual fund where below age of 20 years. 15% of the respondands who invest in UTI mutual fund where between the age of 20 year to 30year. 35% of the respondands who invest in UTI mutual fund where between age of 30 to 40. 30% of the respondands who invest in UTI mutual fund where between age of 40 and above.

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Q: PROFESSION OF RESPONDANDS AN UTI M.F

Professional Business Retired Housewife service Student
45 35 13 2 4 1

Category of individuals investing in Axis mutual fund

50 40 30 20 10 0 1 professional business retired Housewife service Student

INTERPRETATION: 45% of the respondands who invest in UTI mutual funds they are professional. 35% of the respondands who invest in UTI mutual funds they are business. 13% of the respondands who invest in UTI mutual funds they are retired. 2% of the respondands who invest in UTI mutual funds they are house wife. 4% of the respondands who invest in UTI mutual funds they are services. 1% of the respondands who invest in UTI mutual funds they are students.

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Q: GROSS MONTHLY INCOME OF RESPONDANDS

professional business retired Housewife service Student
45 35 13 2 4 1

GROSS MONTHLY INCOME

50 40 30 20 10 0 ) Rs.30000& above Rs5000Rs10000 Rs.20000Rs.30000 Less than Rs.5000 Rs10000Rs.20000

INTERPRETATION: 45% of the respondands who invest in UTI mutual funds they are professional. 35% of the respondands who invest in UTI mutual funds they are business. 13% of the respondands who invest in UTI mutual funds they are retired. 2% of the respondands who invest in UTI mutual funds they are house wife. 4% of the respondands who invest in UTI mutual funds they are services. 1% of the respondands who invest in UTI mutual funds they are students.

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Q: IN WHICH OF THE FOLLOWING INSTRUMENT DO YOU INVEST?

bank deposits mutual fund P.O deposits shares dont invest
50 15 5 25 5

INSTRUMENT DO U INVEST

bank deposits mutual fund P.O deposits shares dont invest

INTERPRETATION: 50% of the respondands who invest in bank deposit. 15% of the respondands who invest in mutual funds. 5% of the respondands who invest in P.O deposit. 25% of the respondands who invest in share deposit. 5% of the respondands who dont invest.

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Q: WHAT TYPE OF MUTUAL FUND DO YOU INVEST?

open end fund closed end fund dont know
60 30 10

TYPE OF MUTUAL FUND DO U INVEST

80 60 40 20 0 open end fund closed end fund dont know

INTERPRETATION: 60% who invest in open end fund. 30% who invest in close end fund. 10% who dont know.

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Q: WHICH SEGMENT OF MUTUAL FUND DO YOU INVEST? balance fund debt fund equity fund
30 10 60

SEGMENT OF MUTUAL FUND DO YOU INVEST

balance fund debt fund equity fund

INTERPRETATION: 30 % who invest in balance fund 10% who invest in debt fund. 60% who invest in equity fund

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Q: IN WHICH OF THE MUTUAL FUND COMPANIES YOU HAVE INVESTED?

AXIS-MF SBI -MF HDFC-MF PRU-ICICI MF TEMPLETON-MF JM-MF BIRLA-SUNLIFE -MF
9 35 20 15 7 7 7

MUTUAL FUNDS COMPANIES YOU HAVE INVESTED

40 35 30 25 20 15 10 5 0 1 PRU-ICICI MF TEMPLETON-MF JM-MF BIRLA-SUNLIFE MF AXIS-MF SBI -MF HDFC-MF

INTERPRETATION: 9% who invest in AXIS M. F. 35% who invest in SBI M.F. 20% who invest in HDFC M.F. 15% who invest in PRU-ICICI M.F. 7% who invest in Templeton M.F. 7% who invest in J.M, M.F. 7% who invest in Birla-Sun Life-M.F.

54

Q: HOW MUCH DO YOU INVEST ON MONTHLY BASIS?

less than 1000 Rs. 1000-5000 Rs. 5000-10000 Above 10000

50 30 25 10

DO U INVEST ON MONTHLY BASIS

60 50 40 30 20 10 0 1 2 3 4 5

INTERPRETATION: 50% respondands who invest in UTI M.F where below the income of less than 1000. 30% respondands who invest in UTI M.F where below the income of Rs. 1000-5000. 25% respondands who invest in UTI M.F where below the income of 5000-10000. 10% respondands who invest in UTI M.F where below the income of above 10000.

55

Q: HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF LIQUIDITY?

Shares PO savings Gold Mutual Fund Bonds/debentures Bank FD
40 5 10 25 10 10

INSTRUMENT ON THE PARAMETER OF LIQUIDITY

45 40 35 30 25 20 15 10 5 0 1 2

Series1 Series2 Series3 Series4 Series5 Series6 Series7

INTERPRETATION: 40% who invest in shares.5% who invest in P.O Saving. 10% who invest in Gold. 25% who invest in mutual funds. 10% who invest in bonds and debentures. 10% who invest in bank F.D.

56

Q: HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF RETURN?

Shares PO savings Property Gold Mutual Fund Bonds/debentures Bank FD

40 5 5 30 5 5 10

INSTRUMENT ON THE PARAMETER OF RETURN Shares

PO savings Property Gold Mutual Fund Bonds/debentures Bank FD

INTERPRETATION: 40% who invest in shares.5% who invest in P.O Saving.5% who invest in property. 30% who invest in Gold. 5% who invest in mutual funds. 5% who invest in bonds and debentures. 10% who invest in bank F.D.

57

Q: HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF SAFETY?

Shares PO savings Property Gold Mutual Fund Bonds/debentures Bank FD

30 10 20 5 15 5 15

INSTRUMENT ON THE PARAMETER Bank FD OF SAFETY

Bonds/debenture s Mutual Fund 1 Gold Property 0 20 40 PO savings Shares

INTERPRETATION: 30% who invest in shares. 10% who invest in P.O Saving.20% who invest in property. 5% who invest in Gold. 15% who invest in mutual funds. 5% who invest in bonds and debentures. 15% who invest in bank F.D.

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Q: RANK YOUR PREFERENCE ON THE SCALE OF 1 TO 5 FOR THE FOLLOWING MUTUAL FUNDS?

AXIS-MF PRU-ICICI-MF HDFC-MF TEMPLETON-MF

50 5 5 40

PREFERENCE MUTUAL FUNDS

60 40 20 0 1 2 3 4 5

INTERPRETATION: 15% who preferred to invest in Axis M.F. 5% who preferred to invest in Pru-ICICI M.F. 5% who preferred to invest in HDFC M.F. 40% who preferred to invest in Tempton M.F.

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Performance evaluation of AXIS Mutual Fund

AXIS Master Value Fund declares second consecutive tax-free (Jan 13, 2005) AXIS Mutual Fund declares second consecutive dividend of 100% (Rs 10.00 per unit on face value of Rs.10/-) under AXIS-Master Value Fund (AXISValue Fund).

The record date for the dividend is February 7, 2005. The dividend is tax-free for the investors, so the post-tax return for the investors works out to be much higher. Investors who will join the scheme on or before February 7, 2005 will also be eligible for the dividend.

The NAV of the scheme as on January 12, 2005 was Rs.27.82 (Post dividend distribution, NAV will fall to the extent of the pay out).

During the calendar year 2003, AXIS Master Value Fund had declared a total dividend of 140% (Rs 14.00 per unit on face value of Rs.10/-).

The

performance

of

the

scheme

is

given

in

the

table

below:

Scheme Performance as on December 31, 2004 (NAV- Rs.29.59) Performance Comparison with benchmark index

Compounded Annualised Return Over last one year Over last three years Over last five years Since Inception

NAV(net asset value) CNX Mid Cap 200 25.38% 60.72% 17.82% 28.52% 44.61% 61.14% 17.96% 28.92%

Assuming that all pay outs during the period have been reinvested in the units of the scheme at the immediate ex-dividend NAV Past Performance may nor may not be sustained in the future

AXIS Master Value Fund is an open-ended equity oriented value fund, which was launched in June 1998 as the close-ended fund and made open-ended from 17th

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February 2003. The investment objective of the scheme is to provide investors the benefits of capital appreciation and income distribution through investment in stocks that are relatively undervalued to their expected long-term earnings growth. The scheme will invest upto 80% of the net assets in the scrips having anyone or more of the following characteristics at the time of acquisition: a) Low P/E ratio (PE ratio lower than the market PE or the sector PE) OR b) Attractive dividend yield OR c) Low price to book value ratio OR d) Companies with positive Economic Value Added (EVA)

Up to 20% of net assets is invested in equity / equity related instruments issued by blue chip companies with a potential for consistent growth and with management of high quality and track record.

Shri Vinay Kulkarni, the Fund Manager of the scheme said AXIS-Master Value Fund is positioned as a pure value scheme with clearly defined investment criteria for investing in value stocks. The scheme invests in stocks that are relatively undervalued to their intrinsic value and which will create wealth for the various stakeholders in the medium to long term.

Going forward also the scheme will attempt to identify value stocks across the sectors, which are best placed to report strong earning momentum and are available at attractive valuation. he added

About AXIS MF AXIS Mutual Fund was carved out of Unit Trust of India as a SEBI registered mutual fund by repealing the Unit Trust of India Act (1963) on 1st February 2003. AXIS Mutual Fund (AXIS MF) manages the pure Mutual Fund schemes, which are fully SEBI compliant and in line with the best global practices, while, Specified Undertaking of the Unit Trust of India (SUAXIS) manages schemes which involve the commitment of the Government of India 61

Let us start the discussion of the performance of mutual funds in India from the day the concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in AXIS Mutual funds.

For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but AXIS remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders was accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of AXIS became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization. The Assets under Management of AXIS was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There was rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the where about rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net asset value.

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The supervisory authority adopted a set of measures to create a transparent and competitive environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. The measure was taken to make mutual funds the key instrument for long-term saving. The more the variety offered, the quantitative will be investors. At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and donts of mutual funds.

63

SCOPE OF THE STUDY

AXIS Crisis & After How the Crisis Originated

What was the Crisis that Overtook AXIS during 1999 to 2002 1) Mr.Yogi Aggarwal, columnist of "india-syndicate.com/" further points out in his illuminating articles published online2) "The figure of Rs 5.81 for the net asset value (NAV) of Unit-64 marked a nadir for AXIS and revealed to a shocked public just how deep the rot had set in the government run financial sector. 3) "The facts as revealed by the government appointed Tarapore Committee and the other committees which preceded it show a trail of bungling, structural flaws and AXIS officials using public money in an "imprudent" manner to help various controversial and powerful companies in stock exchange dealings that cost the AXIS several thousands of crores and severely eroded investor wealth. What they reveal is not just incompetence but a flouting of all prudential norms to favour certain individuals and companies. 4) "While the Tarapore Committee saw no reason to believe in any "breach of confidentiality" leading to the large scale redemptions in Unit-64 during April and May 2001 when around Rs 5,000 crore was taken out by big corporates and banks from Unit-64, it severely criticized the way the scheme worked. A fundamental flaw was that Unit-64 lived beyond its means, rewarding unit holders with dividends beyond its capabilities and propping up the price of Units well beyond their real worth. 5) "AXIS could keep going because new people were always willing to put their money in Unit-64, thus paying for the dividends and helping hide the real state of affairs. The classic case which comes to mind is that of the Ponzi scam in the west in the early part of the last century, in which investors were promised and paid huge returns by the simple expedient of having new investors come in so that the kitty was always full. so long as the inflow from fresh investors was large enough to pay for the hefty returns promised.

64

6) "The Tarapore Committee commented, "The pricing mechanism was clearly faulty and had all the ingredients of a ponzi scheme under which new entrants and those continuing in the scheme had to bear the burden of redemption at relatively high prices." The government run financial sector had clearly failed in its responsibilities by trying to meet up to unrealistic expectations which it had created in the middle class constituency. 7) "At the same time the government's constant instructions to the AXIS to prop up or help this or that business house led to bad investment decisions to the detriment of unit holders. It is noteworthy that matters seem to have worsened from mid1998 onwards, when the present government took office and when P S Subramanayam was appointed chairman. Inter scheme transfers between different AXIS funds were one reason for the drain on Unit-64s resources. These jumped ten times from around Rs 1,000 to Rs 2,000 crore per year in the period preceding to Rs 10,000 to Rs 20,000 crore a year thereafter. 8) "These transfers were used to prop up other AXIS schemes at the cost of the Unit64. To illustrate consider the following: In December 2000 Unit-64 got Rs 3,333 crore from other AXIS schemes for 230 sale transfers. These were reversed the next month but for this the Unit-64 had to shell out Rs 3,447 crore. This paper exercise meant a loss of Rs 116 crore for Unit-64 which went to boost the revenues of other AXIS schemes. 9) "The AXIS decision to offer unit holders of upto 5,000 units the option of reselling their unit back to AXIS at a price of Rs 10 in January 2002 rising by 10 paise each month till May 2003 only involves a postponement of a difficult choice. Unless the sensex rises to an unrealistic level of around 7,000 (from the present of approximately 3,400) the NAV of Unit 64 cannot be above Rs 10. Since the government is committed to buying back all units at Rs 10 in May 2003 there would be sharp redemptions at that time. Depending on how the stock market behaves estimates of the government's liability to bail out AXIS at that time range from Rs 6,000 crore to Rs 8,000 crore. 10) "What is perhaps most scandalous is the manner in which AXIS was used to prop up share prices of certain companies in a dubious manner. The top management consistently ignored the advice of its equity research cell. The Tarapore 65

Committee found that in all 19 cases it picked for examination there were signs of "imprudence". These companies included such as Himachal Futuristic, DSQ Software, Pentamedia Graphics, Ispat Industries, Jindal Vijayanagar, Essar Oil and Essar Steel, and Reliance and Reliance Petro. 11) "A majority of these deals were through private placement and off-market deals making them less transparent and the value of these deals in the three years to June 2001 was around Rs 18,000 crore. The committee noted, "there are a number of cases where the chairman's powers have been exceeded," and "investments have been made in one company of a group while there was default in another company of the group." 12) "Further, the AXIS invested around Rs 2,500 in the equity of thinly traded or unlisted companies from which it will be very difficult for the AXIS to exit. Many of these investments (it's perhaps more accurate to call them "gifts") were made at the behest of the political masters though the Committee does not go into this. In one famous case AXIS was used to bail out brokers involved inthe Calcutta Stock Exchange crisis of March 2001 by purchasing 1.3 million shares of DSQ Software for Rs 25.1crore. 13) In the next article we give the recommendations as made by the Deepak Parekh Committee.

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STRENGTH AND WEAKNESS OF AXIS MUTUAL FUND

AXIS is a statutory corporation established under the Unit Trust of India, Act 1963 with a view to encouraging saving and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities. The Act came into force on 1st February 1964. The initial capital of AXIS was Rs.5 crores which has been contributed as under: a. Reserve Bank of India (RBI) Rs.2.50 crores b. Life Insurance Corporation of India (LIC) Rs.0.75 crores c. State Bank of India (SBI) and its subsidiary banks Rs.0.75 crores d. Scheduled banks (other than SBI and its subsidiary banks) and notified financial institutions Rs.1.00 crore The initial capital forms part of US-64 and the subscribers hold units in that Scheme. In 1975, the AXIS Act was amended and by virtue of the amendment, the Industrial Development Bank of India (IDBI) took over the rights and responsibilities of RBI under the Act and the share of the initial capital held by RBI was transferred to and vested in IDBI. he general superintendence, direction and management of the affairs and business of AXIS rests in a Board of Trustees which exercises all powers and does all acts and things which may be exercised or done by AXIS. The composition of the Board of Trustees is as under : a. The Chairman to be appointed by the Central Government in consultation with IDBI. b. One trustee to be nominated by RBI. c. Four trustees to be nominated by IDBI of whom not less than three shall be persons having special knowledge of, or experience in commerce, industry, banking, finance or investment. d. One trustee to be nominated by LIC. e. One trustee to be nominated by SBI.

67

f. Two trustees to be elected by other contributing institutions viz scheduled banks (other than SBI and its subsidiary banks) and notified financial institutions. g. An executive trustee to be appointed by IDBI, provided that such an appointment may not be necessary if the Chairman is whole-time. The Board meets not less than six times a year and atleast once in two months. The Act provides that where the whole of the initial capital has been refunded to the contributory institutions, the Central Government may, after consultation with IDBI, by order, provide for reconstitution of the Board. The Act also provides that regulations made by the Board have to be with the prior approval of IDBI. There is an Executive Committee which, subject to such general or special directions as the Board may, from time to time, give, has the power to deal with any matter within the competence of AXIS. The Executive Committee consists of :a. The Chairman of the Board. b. The Executive Trustee where such trustee has been appointed and c. Two other trustees nominated in this behalf by IDBI. The Executive Committee usually meets once in a month. The day-to-day business operations of AXIS are looked after by a full time Chairman. A team of Executive Directors and Chief General Managers assists him. Presently the Board has created posts of eight Executive Directors and twelve Chief General Managers though all posts have not been filled. The post of Executive Trustee has remained vacant from 1st January 2000.

AXIS has a three-tier organisational set up with a Corporate Office, four zonal offices and fifty four branch offices. It has about 4.1 crores unit holding accounts (with more than one account held by a single person) under 73 domestic schemes having investible funds at market value as on 30th June 2001 of Rs.56,057 crores. In addition, it has six off shore funds and four venture capital funds. Its management expenses amount to about 1% of the investible funds.

68

The Board has powers to constitute such other committees whether consisting wholly of trustees or wholly of other persons or partly of trustees and partly of other persons as it thinks fit and for such purpose as it may decide. In May 1997, at the instance of SEBI, the Board constituted three Asset Management Committees for AXIS domestic schemes, one each for a. US-64 b. equity schemes and c. Income/debt schemes. Each Asset Management Committee consists of seven members of whom not less than five are independent outside experts. No person is a member of more than one committee. The Committees' scope of activity includes:a. Overseeing and ensuring that each scheme addresses to/complies with the stated objectives of the scheme, AXIS General Regulations, SEBI (Mutual Fund) Guidelines and the prudential investment norms laid down by the Board of Trustees from time to time; b. Reviewing scheme performance regularly and guiding fund managers on the future course of action to be adopted; c. Considering other key issues such as product designing, marketing, investor servicing, compliance, taxation and accounting policy.

There is also an Audit Committee consisting of five trustees which reviews the systems and controls and interacts with the internal and external auditors. In addition to Board Committees, there are a number of Committees constituted of the Executives of which the most important are :a. A First-Tier Audit Committee which reviews the reports of all

sections/departments of AXIS and initiates necessary corrective action. b. An Investment Valuation Committee which reviews the system and practice of valuation of securities. c. A Primary Market Investment Committee for considering primary market proposals.

69

d. A Property Management Committee to appraise proposals approved by the Building Committee. e. An Internal Committee for settlement of dues. While the power to take decisions related to investment of the funds has been delegated by the Board of Trustees to the Executive Committee and to a lesser extent to the Chairman, exposure limits have been laid down in AXIS General Regulations, 1964 and further restrictive limits have been specified by the Board. The broad investment policy of each scheme is laid down under the provisions of each scheme approved by the Board of Trustees or the Executive Committee. The Board reviews the delegation of powers from time to time. For investments in the primary market, there is a Primary Market Investment Committee consisting of 4 Senior Executives which vets all proposals and submits the same to the Chairman with their recommendations. The secondary market transactions in equity as well as debt are decentralised to individual fund managers who decide on buy and sell strategy after consultation with research analysts. All stock market transactions are reported to the Executive Committee which gives overall direction in respect of secondary market transactions. Report of secondary market transactions is also placed before the Board.

AXIS has promoted a number of associated companies and institutions. The details of its investment in those companies/institutions are as under :-

Book Value of Company/InstitAXISon Investment as at 30/6/2001 (Rs. lakhs) AXIS Bank Ltd 8,912 61 100 % Holding

AXIS Securities Exchange Ltd. 3,174

70

AXIS Investor Services Ltd AXIS Investment Advisory

1000 247 146

100 78 100

Services Ltd. AXIS International Ltd.

In addition, it has participated with other institutions in promoting a number of capital market intermediaries like The Stock Holding Corporation of India Ltd., Infrastructure Leasing and Financial Services Co. Ltd., National Securities Depository Ltd. etc. The investments in associated companies and institutions have been financed out of the Development Reserve Fund. As on June 30, 2001, the Fund amounted to Rs.1,535 crores. The Act provides that in the discharge of its functions under the Act, AXIS shall be guided by such directions in matters of policy involving public interest as IDBI may give to it in writing and if any question arises whether the direction relates to a matter of policy involving public interest, IDBI's decision is final.

Unique Strength & Weakness of AXIS AXIS is the largest player in the mutual fund industry with total investible funds of domestic schemes (at Market Value) as at 30th June, 2001 of Rs.56,057 crores constituting about 57% of the total investible funds of the industry. US 64 with a total unit capital as at 30th June 2001 of Rs.12,786 crores had a substantial share of these investible funds. It has certain unique strengths notable amongst them being :a. Its large size with consequential economies of scale; b. Its nation-wide well entrenched distribution network and consequently its wide reach and capacity to mobilise large resources; c. Its brand image arising out of a public perception that the safety of funds is assured by its pseudo Government character, which may not be entirely unjustified. d. The fact that it does not have an AMC to whom management fees would have to be paid which results in higher returns available to unit holders. 71

It also has certain pronounced weaknesses: a. Being the largest player in the mutual fund industry, it also has large investments in individual companies. Its ability to turnaround its portfolio quickly is therefore somewhat limited. b. The fact that it combines within itself the roles of an AMC and the Trustee results in the absence of a degree of accountability which an AMC normally owes to the Trustee and the control which the latter enforces upon the former. c. There is a lack of transparency, particularly with regard to US-64 where the sale and repurchase price are not linked to the NAV and the NAV is not disclosed to the unit holder. The fact that AXIS is perceived as having a pseudo Government character is as much its weakness as it is its strength, particularly in respect of US-64. While it enhances its ability to sell the units, it also gives a false sense of comfort which may not be true or even desirable. Moreover, in a highly competitive market, public perception of AXIS as a pseudo - Government institution may affect its ability to attract and retain the best professional talent or to adequately motivate it.

CONCLUSIONS
The advantages of investing in a Mutual Fund are:

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Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell.

Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud.

Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call, and you've got the cash.

Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet.

Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index

Transparency Flexibility Choice of schemes Tax benefits Well regulated

REGULATION: GETTING BETTER

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i)

Through trial and error, Sebi has steadily improved its regulation of the mutual fund industry. Corporate governance is better than before, but the last mile has still to be negotiated before investor confidence can be taken for granted

ii)

How well is the Indian mutual funds industry regulated? If you were to look at media headlines over the last couple of years, the regulators report card might well have carried this comment: Needs improvement.

iii)

Till recently, the industry played host to several questionable practices late trading (where big corporate investors got to invest at favourable prices of the previous day), scheme switching (shifting investments between schemes within the same fund) and excessive incentivisation for selling mutual fund schemes, among others.

iv)

Add the peccadilloes of Alliance Mutual Funds star CIO Samir Arora, which got Sebi quite worked up, and the picture doesnt look too good.

v)

But if you were to ask Sebi chairman G.N.Bajpai, he is certain that things are not as bad as the media paints them. Whenever instances of malpractice have come to our notice, we take action, he says.

vi)

And to be fair to the regulator, the mutual fund business has not seen any major upheaval of the kind where investors have actually ended up losing money. The only case which came close to this is that of the Unit Trust of India (AXIS), but the fact is that the government stepped in to prevent investors from losing too much.

vii)

A majority of private sector mutual funds have managed to outperform their benchmarks, drawing little ire from investors. Some of them do, in fact, charge fairly high fees, but good market performance has made the case for lower fees not as compelling as in America.

viii)

Even in the case of late trading which has been more or less the norm in an industry where big corporates and distributors negotiate terms with mutual funds on a regular basis malpractices have not been as rampant as in America.

ix)

The conclusion: While the mutual fund industry, thanks to its relatively small size till recently, has a bias towards large corporate investors, governance standards

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overall have improved, aided undoubtedly by significant regulatory changes over the last few years. x) The only thing to complain about is that Sebi plugged the holes in the system by following a trial-and-error approach, and not necessarily proactively. The regulatory regime was tightened bit by bit, aided by Sebis experiences and market forces. The pace of regulation has actually accelerated in the last few years. xi) During 2002-03, for example, the regulator put out detailed guidelines on corporate governance practices for asset management companies (AMCs). One of these was the introduction of compulsory benchmarking of a funds performance against any chosen index. xii) Further, the trustees of funds were also entrusted with the responsibility of reviewing the performance of various schemes against the benchmark index. xiii) Besides, everyone, including the trustees, have been brought under the insider trading regulations. Trustees now have to hold meetings at least once in two months as against four times a year previously. xiv) This year, Sebi has also made it mandatory for the board of trustees to have twothirds of its strength as independent directors that is, those who are not associates of the sponsors. Consultants have also been brought under this definition. xv) At the operational level, AMCs have been asked to put in place risk management systems for fund management, operations, and so on with detailed guidelines being issued. xvi) Most importantly, Sebi has issued clear-cut guidelines for valuing bond instruments traditionally a grey area non-performing assets, and illiquid and unlisted securities. The Association of Mutual Funds of India (AMFI) has also helped in making product comparisons easy for investors by mandating funds to follow uniform sector classifications, as established by AMFI. Disclosure standards have also been improved substantially though by no means perfect. xvii) There will always be loopholes in any system and it will be difficult for any regulator to plug all the holes, admits Bajpai. Just as a chain is only as good as its

75

weakest link, a system is only as good as the quality of people who man it. The weak links, close observers of the industry say, may be more outside the immediate control of AMCs in the largely unsupervised distribution chain. Sebi has, of course, prescribed a code of conduct for mutual fund distributors. xviii) All of them have to be registered with the Association of Mutual Funds of India. Distributors also have to mandatorily pass a certification exam before they are allowed to sell any mutual fund products. But then, the onus is on the fund managements to ensure that their agents and distributors do indeed follow the practices laid down in the code of conduct. xix) Another issue that Sebi and the industry association have dealt with some amount of success is the practice of rebating commissions back to investors. To hardsell a fund scheme, distributors often share a part of their distribution commission with brokers and retail investors as an incentive. xx) This amounts to promoting/selling schemes for the wrong reasons and may end up misleading the investor. Sebi has put the onus on the fund houses to monitor their distributors and stop incentivising investors. Despite all the laws that are on paper, given the extended area of operations of distributors, Sebis writ may not run beyond a point. xxi) The only way the issue can really be tackled is to give professional intermediaries larger space in investment decisions. xxii) Says Ranjit Mudholkar of the Association of Financial Planners: Financial planners can make a significant difference to the entire value chain. First, they would have a fiduciary responsibility towards their clients and would service them accordingly. Secondly, investing in the right product would be part of the financial planning process rather than the result of mere pushing by the broker. xxiii) But, quite clearly, there is a case for Sebi to take a second look at the role of the distribution segment. In the absence of financial planners investors are still to use them in sufficient numbers distributors are vital intermediaries between AMCs and investors. xxiv) In some other areas, Sebi could have done better, faster. Take late trading. Under this practice, mutual funds oblige their big investors by allowing them to purchase

76

units at the previous days NAV, enabling them to take advantage of any appreciation in market prices since then. xxv) While late trading has been rampant for several years now, Sebi took corrective action only a few months ago by introducing uniform cut-off timings for equity and debt funds. xxvi) It also asked AMCs to set up time-stamping machines that would keep track of the date and time when applications and cheques were received to curb late trading. Better late than never. xxvii) Sebi could also have taken a closer look at the actual operations of funds. While there have presumably been no flagrant violations of rules, some funds have been exploiting loopholes. Fixed maturity plans are a case in point. Investments under such schemes are usually made in the debt instruments of banks and corporates. xxviii) Fund houses have taken the easy way out and are investing a large portion of the funds mobilised through such schemes in bank fixed deposits. When asked about this practice, one Sebi director wondered what was wrong with investing in bank deposits. While there is nothing in the mutual fund regulations to prohibit investments in bank instruments, the moot point is whether the fund is doing investors any great service. xxix) When investors entrust their money to experts and apparently knowledgeable fund managers, you would expect them to do more than just rush to the nearest bank counter to make a deposit. Bajpai, however, agrees that there should be some limit on how much money can be parked in bank fixed deposits. xxx) Another area of long-term concern is share switching. Sebi has not, so far, found a foolproof way to prevent mutual funds from switching securities between schemes. xxxi) Prudential-ICICI Mutual Fund made switching famous, but few people probably know that switching securities between schemes without their investors knowing it is more widespread than one is led to believe. xxxii) Since funds declare their scheme-wise assets only at the end of the month, there is a lot of scope for switching around investments from one scheme to another depending on which scheme the fund wants to show a higher NAV.

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xxxiii)

According to industry circles, such movements need not always leave an audit trail. Bajpai says that all decisions pertaining to the industry are taken in consultation with the participants.

xxxiv)

We regularly hold talks with AMFI and, in addition to that, we have a mutual fund advisory committee consisting of people who are not drawn from the mutual fund sector, he says.

xxxv)

With barely two per cent of household savings going into mutual funds, the segment has a lot of catching up to do. With post-office administered schemes and bank deposits offering competition, more investors can be enticed to the mutual fund industry only if it is steadily seen as very investor-friendly. Sebis initiatives have set the industry in the right direction, but the final destination is still some distance away.

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SUGGESTIONS
AXIS Crisis - Recommendations 1. Initial contributors to AXIS should infuse permanent funds of atleast Rs.500 crores. 2. The PSU portfolio should be transferred at book value to a Special Unit Scheme (SUS 99) to be subscribed for by GOI by the issue of dated GOI securities. 3. US-64 should make a strategic sale of its significant equity holdings by negotiation to the highest bidder to ensure fetching the best value for the unit holder. 4. The investment sub-limit of Rs.10,000 for tax benefit on Equity Linked Savings Schemes should be removed and benefit should be extended to US-64 and all schemes investing more than 50% in equity. 5. Income distributed by US-64 and schemes investing more than 50% in equity should be exempt from tax. 6. New schemes for investing in growth stocks in IT, Pharma and FMCG sectors should be launched, to be subscribed for by banks. 7. The size of the AXIS Board should be increased to 15, with additional five members being co-opted by the Board. 8. Trustees should assume higher degree of responsibility and exercise greater authority. 9. The remuneration of Trustees should be increased and their attendance record be published in the Annual Report. There should be a separate Asset Management Company for US-64 with an independent Board of Directors.

a. Chinese walls should be created by appointing separate and independent fund managers for each scheme.

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b. Inter-scheme transfers must be based on independent decisions and requirements of concerned fund managers and at market determined prices. c. There should be an independent fund manager for US-64 with full responsibility and accountability. d. The fund manager should be helped by a strong research team and the research capability should be strengthened. e. Investment/dis-investment decisions should be based on research analysts' recommendations who should have the authority and responsibility of making the recommendations. f. The fund manager should have the final authority and responsibility in decision making based on his perception of the market and research inputs 10. The focus on small investors should be strengthened and the lilt towards corporate investors reduced. a. US-64 should be NAV driven within three years. b. If at the end of the three year period, the re-purchase price and the NAV are not in line, the Trust will be left with no alternative but to seek GOI support once again the provide the difference between the NAV and the repurchase price. Only a clear commitment from the GOI to stand by US-64 till it finally assumes the character of a NAV driven scheme will instill the required confidence in the US-64 investors. c. The spread between sale and repurchase prices should be gradually increased to deter short term investors. d. The dividend distribution policy needs to follow a more conservative approach to build up sufficient reserves during periods of good performances. e. As a rule, dividends need to be curtailed when there is inadequate income.

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11.

The rate of return offered to investors needs to be reviewed on a periodic basis. The yield offered on US-64 is excessively high as compared to other comparable instruments.

12.

The composition of the portfolio needs to be changed to provide for more weightage to debt consistent with the objectives of the Scheme.

13.

The operations of US-64 should be brought under SEBI purview at the earliest.

14.

An independent professional firm should be commissioned for a detailed review of asset management processes including back office, inter scheme transfer and investor servicing.

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the

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manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers

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ANNEXURES
QUESTIONNAIRE FOR THE INVESTOR
1. NAME: ____________________________________

2.

AGE:

LESS THAN 20 YRS 30yrs-40yrs

20YRS-30YRS 40yrs& above Female

3. SEX:

Male

4. CITY: _________________________________________ 5. PROFESSION : a) professional c) retired e) service g) Others(specify) _____________ 6 GROSS MONTHLY INCOME: a) Less than Rs.5000 c) Rs10000-Rs.20000 e) Rs.30000& above 7. IN WHICH OF THE FOLLOWING INSTRUMENT DO YOU b) Rs5000-Rs10000 d) Rs.20000-Rs.30000 b) business d) Housewife f) Student

INVEST ? a) bank deposits b) mutual fund

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c) P.O deposits e) dont invest IF OPTION IS 7(B), THEN

d) shares f) other(specify) _______

8. WHAT TYPE OF MUTUAL FUND DO YOU INVEST? a) open end fund b) closed end fund c) dont know 9. WHICH SEGMENT OF MUTUAL FUND DO YOU INVEST? a) balance fund b) debt fund c) equity fund 10. IN WHICH OF THE MUTUAL FUND COMPANIES YOU HAVE INVESTED? a) AXIS-MF c) HDFC-MF e) TEMPLETON-MF g) BIRLA-SUNLIFE -MF 11. HOW MUCH DO YOU INVEST ON MONTHLY BASIS? a) Less then Rs.1000 b) Rs.1000-Rs.5000 b) SBI -MF d) PRU-ICICI-MF f) JM-MF

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c) Rs.5000-RS.10000

d) Rs.10000& above

12. HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF LIQUIDITY ( 5 FOR THE MOST LIQUID & 1 FOR THE LEAST LIQUID) a) Shares c) Gold e) Bonds/debentures b) PO savings d) Mutual Fund f) Bank FD

13. HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF RETURN ( RATE FROM 1 TO 5 ) a) Shares c) Property e) Mutual Fund g) Bank FD 14. HOW DO YOU RATE THE FOLLOWING INSTRUMENT ON THE PARAMETER OF SAFETY ( 5 FOR THE MOST SAFE & 1 FOR THE LEAST SAFE) a) Shares c) Property e) Mutual Fund g) Bank FD b) PO savings d) Gold f) Bonds/debentures b) PO savings d) Gold f) Bonds/debentures

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15. RANK YOUR PREFERENCE ON THE SCALE OF 1 TO 5 FOR THE FOLLOWING MUTUAL FUNDS? a) AXIS-MF c) HDFC-MF e) ANY OTHER-----b) PRU-ICICI-MF d)TEMPLETON-MF

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BIBLIOGRAPHY
BOOKS
1. Ghodke, Manju. Accessing Capital Markets by Urban Local Bodies in India: An Assessment of Muncipal Bonds. In: India Infrastructure Report 2004. Mumbai: Oxford, 2004 2. Sethu, G and Baid, Rachana Marketing of Mutual Funds. In: 'SIBM, Essays in Management, Volume 1, Pune, Symbiosis Institute of Business Management, 2003 3. Chakrabarty, Chiragra. 'Estimation of Treasury Bill Pricing: A model to forecast auction cut-off yield', published as Apart of a edited book "Indian Capital Market: An Empirical study, published by University of Delhi, 2003 4. Sethu, G and Baid, Rachana, 'Fund management Industry - Determinants of Networth for Asset Management Companies in Indian Capital Market: An Empirical Study', Ed. Rathore, Shirin et al.,Anmol Publications, New Delhi, 2003 5. Comodity Options: A Case Study for India. In "Forward Market Comission - 50 Years". Forward Market Commision, Mumbai 2003 6. Hiremath C V and Karisiddappa C R: Marketing of Library and Information Services and Products: Some thoughts on designing and development of economic models. In Electronic Libraries.Edited by S S Sirurmath, B D Kumbar, and MM Koganuramath. Mumbai: Allied Publishers, 2002

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7. Hiremath C V and Karisiddappa C R: Marketing of Library and Information Services: Issues Concepts,and Strategies, In "Library public relations: Challenges of the new millenium" edited by Konnur P V, Panaji: GOLA, 2000 8. Shashikant, Uma, 'Indian debt Markets: Are we focusing on valuation and risk Management?' In India's Financial Markets and Institutions edited by L. C. Gupta, Society for Capital Markets Research and Development, Delhi, January 1999 9. Panchali, Jinesh N., "Issues in Marketing of Funds" In "Mutual Funds in India: challenges, Opportunities and Strategic Perspectives, edited by Uma Shashikant, AXISICM, 1996 10. Sethu G. and Brahmaiah B., 'Mergers and Acquisitions' (A chapter in Financial Management by I. M. Pandey), Vikas Publishers, Delhi, 1993

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ARTICLES/MAGAZINES
1. Verma, B. P. 'Economic Value Addition by Indian Banks: A Study', presented in the Capital 2. Markets Conference, December 2002 3. Panchali, Jinesh N., Corporate Governance: Indian Experiences, Workshop on Corporate 4. Excellence through Corporate Governance organised by ICSI, Centre for Corporate Research and Training, 2001 5. Koganurmath M M and Hiremath C V: Knowledge management: Generation to specialisation 6. of social science information databases. Presented in International conference on Asia-pacific and the global order, October 2-4, 2000 7. Panchali, Jinesh N. 'Institutional Investors' Activism and Corporate Governance' presented at 4th Capital Markets Conference, December 2000 8. Sethu, G. 'Issues in Valuation', at Conference on Corporate Sector Research 2000, ICSI Centre for Corporate Research & Training May 2000 9. Sethu, G. 'Mutual Fund Puzzle', Third Capital Market Conference 1998. AXIS-ICM, Navi Mumbai,December 23-24, 1999 10. Hiremath C. V. and Karisiddappa C. R., 'Information infrastructure for Indian capital markets. In: Information Management in the context of fast emerging information society: Papers of XXII 11. All India conference of IASLIC, 1999 12. Sethu, G. and Gururajan, Raj. 'Electronic Fund Transfer: A Discussion', 8th World Congress on Total Quality, Mumbai, Feb-1998 13. Sethu, G. 'Understanding the Role, Processes, and Mechanisms of Regulation in the the 14. Evolution and Functioning of the Market', Presented at the seminar on Financial Sector:

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15. Preconditions for Marketisation, Indian Merchants' Chamber and Times Guaranty, Mumbai,

February 3, 1998
16. Thiripalraju, M, Madhusoodanan T. P and Mishra, Gouri Shankar 'Commodity Futures Prices in India: Evidence on Forecast Power, Price Formation and Inter-Market Feedback', Accepted for Tenth PACAP/FMA Finance Conference, Kuala Lumpur, Malaysia, October 26-28, 1998 17. Sethu G and Panchali, Jinesh N. 'A Decision Support System for M& A Negotiation', Second Capital Market Conference 1998. AXIS-ICM, Navi Mumbai, December 23-24, 1998 18. Thiripalraju, M, Madhusoodanan T. P, Krishna Murali And Naveen, P. 'Selection of an Index 19. For Stock Index Futures: The Indian Case', Pacap Finance Conference, Shanghai, China, 20. August,25- 28, 1997 21. Thiripalraju, M. 'Derivatives (Futures and Options)', International Tax and Finance Group (ITF) 22. Conference, Aug-1997 23. Shashikant, Uma and Ramesh, B. 'Intertemporal Stability of Emerging Market Correlations', 24. 10th Australian Finance and Banking Conference, Sydney, Dec-1997 25. Hiremath, C. V, Koganurmath M. M and Kumbar, T. S. 'Marketing Strategies for Library and 26. Information Services', XLIII All India Library Conference, Chandigarh, November 5 - 8, 1997 27. Hiremath, C. V and Karisiddappa, C. R. Information Superhighway and Capital Markets: An

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28. Indian Scenario', XXI IASLIC All India Seminar at Coimbatore, December 26 - 29, 1997 29. Madhusoodanan, T. P. 'Time Diversification: The Indian Evidence', Accepted for the Sixth 30. Conference on the Theories and Practice of Securities and Financial Markets, Taipei, Taiwan, 31. December 13-14, 1997 32. Shashikant, Uma. 'Interemporal Stability of Emerging Market Correlations', Presented at the 33. 10th Australian Finance and Banking Conference, Sydney, December, 1997 34. Arumugam, S. 'Trading Day of the Week and Weekend Effects: Further Evidence on 35. Anomalies in Stock Returns in India', Presented at the Capital Market Conference 1997, 36. AXIS-ICM, Navi Mumbai, December 26-27, 1997 37. Sethu, G. 'Investor Relations and Services', Third Annual Seminar on Mutual Fund Industry, 38. January 20 - 21, 1997 39. 25. Sethu, G, Shashikant, Uma and Gururajan, Raj. 'Quality Challenges in a Dynamic Context: 40. Experiences from the Indian Financial Services Industry', 7th World Quality Congress, 41. Feb-1997 42. Thiripalraju, M and Madhusoodanan, T. P. 'Underpricing in Initial Public Offerings: The Indian 43. Evidence', 1996 APFA/PACAP Finance Conference, Taipei, Taiwan, July 8 10, 1996 44. Shashikant, Uma, 'Attracting Foreign Capital: Emerging Global Markets', New Opportunities in

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45. Investment Funds in India, Sept. 2, 1996 46. Shashikant, Uma, 'Diversification Benefits from Investments in Emerging Markets: Theories 47. And Evidence', 9th Australian Finance and Banking Conference, University of New South 48. Wales, Sydney, December, 1996 49. Thiripalraju, M. 'Recent Institutional Developments and Structural Changes in the Indian 50. Capital Market', Pacific Basin Finance Conference, Hongkong, July 6 - 8, 1992 51. Ravishankar, D. 'Indian Stock market Mechanism Badla Rates and its Implications', Pacific 52. Basin Finance Conference, Hongkong, July 6 - 8, 1992

INTERNET
1. www.indiainfoline.com 2. www.sebi.com 3. www.financemedia.com 4. www.AXIS.com

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