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A Project Report On
A STUDY ON THE PERFORMANCE AND INVESTORS OPINION ABOUT SBI MUTUAL FUND, BHILAI

Submitted to the S.R.M. SCHOOL OF MANAGEMENT In partial fulfilment of the requirements in the award of the Degree of Master of Business Administration By SONIA JACOB Reg. No: 3511210455 Under the Guidance of Mr. AP.Karthik Kumaran Asst. PROFESSOR SRM SCHOOL OF MANAGEMENT

DEPARTMENT OF MANAGEMENT STUDIES, SRM UNIVERSITY

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KATTANKULATHUR CAMPUS TAMILNADU 603 203


DEPARTMENT OF MANAGEMENT STUDIES SRM UNIVERSITY KATTANKULATHUR CAMPUS CERTIFICATE This is to certify that the project report entitled A STUDY ON THE PERFORMANCE AND INVESTORS OPINION ABOUT SBI MUTUAL FUND, BHILAI Submitted by Sonia Jacob (Reg. No: 3511210455) in partial fulfilment for the final project in awards of Master of Business Administration of SRM UniversityKattankulathur, is a bonafide research work carried out under my supervision and guidance and no part of this project has been submitted for any other degree / diploma. The assistance and help received during the course of the investigation has been fully acknowledged.

Counter Signed Dr. (Mrs). Jayshree Suresh Dean, SRM University.

Counter Signed Mr. AP. Karthik Kumaran Asst. Professor & Project Guide, SRM University.

Submitted to the Department of Management Studies, SRM UNIVERSITY (Kattankulathur Campus) for the examination held on __________________.

Internal Examiner

External Examiner

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DECLARATION

I Sonia Jacob, Reg. No: 3511210455, hereby declare that the project report titled A STUDY ON THE PERFORMANCE AND INVESTORS OPINION ABOUT SBI MUTUAL FUND, BHILAI under the supervision and the guidance of Mr. AP. Karthik Kumaran, Professor, Department of Management Studies, SRM UNIVERSITY (Kattankulathur Campus- Chennai), is the result of the original work done by me and to the best of my knowledge, a similar work has not been submitted earlier to any University or any other Institution. Place: Date: Sonia Jacob

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ACKNOWLEDGEMENT
A journey is easier when we travel together. Interdependence is certainly more important than independence. It will always be my pleasures to thank those who have helped me in making this project a lifetime experience.

I would like to express my heartiest gratitude to SBI MUTUAL FUND (BHILAI), for giving me an opportunity to work with its CHATTISGARH HEADQUATER OF SBI MUTAUL FUND, our Institute and important persons associated with this project as without their guidance and support I would have never ever have got a chance to have real life experience of working with a mutual fund firm of such a great reputation and learn practically about working and service provided to customer by mutual fund firm,

I would also like to extend my gratitude to Mr.Anshum Nandecha for giving me an opportunity to join them to know and learn about the distribution channel and operation in SBI MUTUAL FUND.

It is my privilege to thank Mr.Tapas Banerjee (Customer Service Officer) & Mr.Sumit Tamarkar (Marketing Associate) and Mrs. Renuka Rathore (Branch Head) whose guidance has made me learns and understands the finer and complicated aspects of mutual fund. The help and guidance which he has extended to me has made me feel as being an integral part of the organization.

My heartiest gratitude extends to my faculty Prof. AP.Karthik Kumaran, (Professor of SRM UNIVERSITY CHENNAI) who have helped me in every aspect of my work.

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Finally, I thank all those who directly and indirectly contributed to this project.

31st JULY 2013 SRM UNIVERSITY

Sonia Jacob

Index
Sr.no

Particulars Chapter 1

Pg no

1.1. 1.2.

Introduction Industry profile CONCEPT OF MUTUAL FUNDS

2 4

1.2.1 Working of Mutual Funds 1.2.2 Role Of SEBI and AMFI 1.2.3 Common Terms Used 1.2.4 History Of Mutual Funds 1.2.5 Types Of Mutual Funds 1.2.6 Pros and cons of Investing in Mutual Funds

4 7 7 9 11 16 18 28 31

1.3. 1.4 1.6

Organisation Profile Review Of Literature Objective of the study

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1.7 1.8 1.9 1.10

Limitation Significance Methodology Method of analysis

31 32 32 34

Chapter 2 2.1 Integrated perspective of all functional areas in Mutual Funds Chapter 3 3.1 Analysis Of Data Chapter 4 4.1 4.2 Findings Suggestions Chapter 5 5.1 5.2 5.3 Summary Bibliography Appendix 70 70 71 67 67 41 36

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ABSTRACT
A STUDY ON THE PERFORMANCE AND INVESTORS OPINION ABOUT SBI MUTUAL FUND, BHILAI
The purpose of the project is to analyze, whether Mutual Fund could be a better investment option. This would enable the SBI Mutual Fund in understanding the potential of Mutual Fund as an investment option, from the perception of the investor. This study would also help in future preferences of the investor with their factors that they look at in an investment. 200 Respondents from Bhilai are taken as a sample through Convenience sampling method.

After the study, based on the data collected, it has been analyzed and better suggestion and conclusion are given to conclude the project study. A pilot study of 25 samples has been collected to identify the effectiveness of the questionnaire. The statistical tools which are used for the findings are percentage method, Chi-square test and weighted average method. The primary sources of data are collected from a structured questionnaire circulated among the various sectors of individuals. The data obtained give rise to following findings. 80% of the respondents treat Mutual Fund as an investment option. 33% of investor's objective in Mutual Fund is for the benefit of their children, 26% for the purpose of tax benefits, and 12% for the purpose of creation

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of the assets. The willingness to take up Mutual Fund as an investment option is independent of the occupation of the respondent. 31 % of the investors feels that investment is for children's benefit and return, 37% of investor would like to save in Mutual Fund, 28% would like to save Insurance and deposit bend, 24% in post office saving, .05% in and share markets. The investors would like to invest their money where they would get more security than liquidity. With respect to the above findings some suggestion are provided to SBI Mutual Fund which if followed, would help them generate efficient business strategy and understand the perception of their customers.

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CHAPTER 1

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1.1 INTRODUCTION Mutual Funds over the years have gained immensely in their popularity. However, with the introduction of innovative products, the world of mutual funds now-a-days has a lot to offer to its investors. With the introduction of diverse options, investors needs to choose a mutual fund that meets his risk acceptance and his risk capacity levels and has similar investment objectives as the investor. With the plethora of schemes available in the Indian markets, an investors needs to evaluate and consider various factors before making an investment decision. Hence an investor must infer the fact sheets of the various schemes to assess the portfolio management style of the fund manager. Mutual funds provide : 1. Professional Management 2. Diversification 3. Convenient Administration 4. Return potential 5. Low cost 6. Liquidity 7. Transparency 8. Flexibility 9. Choice of schemes 10. Well regulated 11. Tax benefits

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Mutual funds provide risk diversification: diversification of a portfolio is amongst the primary tenets of portfolio structuring, and a necessary one to reduce the level of risk assumed by the portfolio holder. Mutual funds represent one such option. So it is always safe for investor to invest their hard earned money in those schemes which have invested in stock of divers sectors with potential to earn higher returns. So this project is carried to understand the science of portfolio management that mutual fund apply to trade off with risk and maximize return. It becomes very difficult for investor to make decision as where to invest his hard earned money and in which stream of investment will reap optimal appreciation of money invested for the period. By analyzing the fact sheets of the Asset Management Company we can auspicate the best fund scheme to invest. There are many research institutes, which provide updated information of all the schemes that are available and the trend in the Mutual Fund industry.

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.

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1.2 INDUSTRY PROFILE


CONCEPT OF MUTUAL FUNDS 1.2.0 Working of Mutual Funds:
The following figure explains the working of Mutual funds

Figure 1: Working of Mutual Funds

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The important terms of the figure are explained as follows: Fund Sponsor: A sponsor is any person who, acting alone or in combination with another body corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a company. In accordance with SEBI Regulations, the sponsor forms a trust and appoints a Board of Trustees, and also generally appoints an AMC as fund manager. In addition, the sponsor also appoints a custodian to hold the fund assets. The sponsor must contribute at least 40% of the net worth of the AMC and possess a sound financial track record over five years prior to registration. Trustees: The MF or trust can either be managed by the Board of Trustees, which is a body of individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are managed by Board of Trustees. The trustee being the primary guardian of the unit holders funds and assets has to be a person of high repute and integrity. The trustees, however, do not directly manage the portfolio securities. The portfolio is managed by the AMC as per the defined objectives, accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

Asset Management Company (AMC): The AMC, which is appointed by the sponsor or the trustees and approved by SEBI, acts like the investment manager of the trust. The AMC functions under the supervision of its own Board of Directors, and also under the direction of the trustees and SEBI. AMC, in the name of the trust, floats and manages the different investment schemes as per the SEBI Regulations and as per the Investment Management Agreement signed with the Trustees. Others: Apart from these, the MF has some other fund constituents, such as custodians and depositories, banks, transfer agents and distributors. The custodian is appointed for safe keeping of securities and participating in the clearing system through approved depository. The bankers handle the financial dealings of the fund. Transfer agents are responsible for issue and redemption of units of MF.

Risk Return Matrix:

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The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vice versa if he pertains to lower risk instruments, which would be satisfied by lower returns. For example, if an investor opts for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases. Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesnt mean mutual fund investments are risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns.

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1.2.2 Role of SEBI and AMFI:


To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. Mutual Funds either promoted by public or by private sector entities including those promoted by foreign entities are governed by these Regulations. SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody. According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be independent. The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual funds function within the strict regulatory framework. Its objective is to increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse areas such as valuation, disclosure, transparency etc.

1.2.3 Common Terms Used


Net Asset Value (NAV): Net Asset Value is the market value of the assets of the scheme minus its liabilities. Per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. Sale Price: Is the price you pay when you invest in a scheme. It may include a sales load.

Repurchase Price: Is the price at which units under open-ended schemes are repurchased by the Mutual Fund. Such prices are NAV related. Redemption Price: Is the price at which close-ended schemes redeem their units on maturity. Such prices are NAV related.

Sales Load: Is a charge collected by a scheme when it sells the units, also called Front-end load. Schemes that do not charge a load are called No Load schemes. Repurchase or Back-end Load: Is a charge collected by a scheme when it buys back the units from the unit holders.

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Diversification: Diversification is nothing but spreading out your money across available or different types of investments. By choosing to diversify respective investment holdings reduces risk tremendously up to certain extent. SIP: Is a plan where investors make regular, equal payments into a mutual fund. By using a systematic investment plan (SIP), investors are benefitting from the long-term advantages of d cost averaging and the convenience of saving regularly without taking any actions except the initial setup of the SIP. Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is calculated using regression analysis, and indicates the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. Expense Ratio: A measure of what it costs an investment company to operate a mutual fund. It is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors. The largest component of operating expenses is the fee paid to a fund's investment manager/advisor. Other costs include recordkeeping, custodial services, taxes, legal expenses, and accounting and auditing fees.

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Sharpe Ratio: A ratio to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed. R-Squared: A statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. R-squared values range from 0 to 100. An R-squared of 100 means that all movements of a security are completely explained by movements in the index. A high R-squared (between 85 and 100) indicates the fund's performance patterns have been in line with the index. A fund with a low R-squared (70 or less) doesn't act much like the index.

1.2.4 History of Mutual Funds


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 of India. The history of mutual funds in India can be broadly divided into four distinct phases.

First Phase 1964-87


Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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 UTI 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 UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

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


1987 marked the entry of non- UTI, 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 non- UTI Mutual Fund established in June 1987 followed by Canbank 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). At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.

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 UTI 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 UTI 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 UTI Mutual Fund, 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 UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI 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.

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1.2.5 Types of Mutual Funds Schemes in India Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. Thus mutual funds have a variety of flavors. There are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds in categories, mentioned below.

1.2.5.1 Overview of existing schemes in mutual fund category: By Structure


Open - Ended Schemes: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Close - Ended Schemes: These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchanges could vary from the net asset value (NAV) of the scheme on account of demand and supply situation, expectations of unit holder and other market factors. Alternatively some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV; however one cannot buy units and can only sell units during the liquidity window. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.

1.2.5.2 Overview of existing schemes in mutual fund category: By Nature


Equity fund: These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary different for different schemes and the fund managers outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows: Diversified Equity Funds

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Mid-Cap Funds Sector Specific Funds Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the riskreturn matrix. Debt funds: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly


known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

Income Funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities.

MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes.

Short Term Plans (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures.

Liquid Funds: Also known as Money Market Schemes, These funds provides
easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.

Balanced funds: These are a mix of both equity and debt funds. They invest in
both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns.

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Further the mutual funds can be broadly classified on the basis of investment parameter viz, by investment objective and types of returns. Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly.

1.2.5.3 Overview of existing schemes in mutual fund category: By Investment Objective Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation. Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.

Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50). Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Other schemes: Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate. Index Schemes: Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weightage. And hence, the returns from such schemes would be more or less equivalent to those of the Index.

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Sector Specific Schemes: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.

Types of returns There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution. If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

Risk Low
MMMF Gilt Funds

Debt Funds
Balanced Funds Index Funds Diversified Equity Funds Sector Funds High return potential

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Figure : Risk Return of Different Funds

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1.2.6 Pros & cons of investing in mutual funds


For investments in mutual fund, one must keep in mind about the Pros and cons of investments in mutual fund.

Pros of Investing in Mutual Funds


1. Professional Management - The basic advantage of funds is that, they are professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments. 2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors. 4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

Cons of Investing in Mutual Funds:


1. Professional Management- Some funds dont perform in the market, as their management is not dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or not the so-called professionals are any better than the investor himself, for picking up stocks. 2. Costs The biggest source of AMC income is generally from the entry & exit load which they charge from an investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.

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3. Dilution - Because funds have small holdings across different companies, high returns from
a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider your
personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

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1.3 ORGANIZATION PROFILE

SBI MUTUAL FUNDS

With 25 years of rich experience in fund management, The SBI Funds Management Pvt. Ltd. bring forward their expertise by consistently delivering value to their investors. They have a strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest bank. They are a Joint Venture with the SBI and AMUNDI (France), one of the world's leading fund management companies. With their network of over 222 points of acceptance across India, They deliver value and nurture the trust of their vast and varied family of investors. Excellence has no substitute. And to ensure excellence right from the first stage of product development to the post-investment stage, They are ably guided by their philosophy of growth through innovation and their stable investment policies. This dedication is what helps their customers achieve their financial objectives. Their Vision To be the most preferred and the largest fund house for all asset classes, with a consistent track record of excellent returns and best standards in customer service, product innovation, technology and HR practices.

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Their Services Mutual Funds Investors are their priority. Their mission has been to establish Mutual Funds as a viable investment option to the masses in the country. Working towards it, They developed innovative, need-specific products and educated the investors about the added benefits of investing in capital markets via Mutual Funds. Today, They have been actively managing their investor's assets not only through their investment expertise in domestic mutual funds, but also offshore funds and portfolio management advisory services for institutional investors. This makes us one of the largest investment management firms in India, managing investment mandates of over 5.4 million investors. Portfolio Management and Advisory Services SBI Funds Management has emerged as one of the largest player in India advising various financial institutions, pension funds, and local and international asset management companies. They have excelled by understanding their investor's requirements and terms of risk / return expectations, based on which They suggest customized asset portfolio recommendations. They also provide an integrated end-to-end customized asset management solution for institutions in terms of advisory service, discretionary and non-discretionary portfolio management services. Offshore Funds SBI Funds Management has been successfully managing and advising India's dedicated offshore funds since 1988. SBI Funds Management was the 1st bank sponsored asset management company fund to launch an offshore fund called 'SBI Resurgent India Opportunities Fund' with an objective to provide their investors with opportunities for long-term growth in capital, through Theyll-researched investments in a diversified basket of stocks of Indian Companies.

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PRODUCT PROFILE : SBI MUTUAL FUND SCHEMES AT A GLANCE

Scheme Name

Highlights

Investment Objective

Min Investm Additional Exit Load ent Investment amount Rs. 25000 Rs.1000 For exit within 7 business days from the date of allotme nt0.25%, For exit after 7 business days from the date of allotme nt Nil Nil

SBI ARBITRAGE OPPORTUNI TIES FUND (An open ended equity scheme)

The fund adopts a market neutral trading strategy. Arbitrage opportunities arise due to market inefficiencies. Fund seeks to exploit such inefficiencies that will manifest as mispricing in cash (stock) and derivative markets. Fund Manager will lock into such arbitrage opportunities seeking to generate tax efficient risk free returns.

To provide capital appreciation and regular income for unit holders by identifying profitable arbitrage opportunities between the spot and derivative market segments as also through investment of surplus cash in debt and money market instruments.

SBI BLUE CHIP FUND (An Openended Growth Scheme)

SBI Bluechip Fund invests in stocks of Blue chip companies i.e. in stocks of companies with market capitalization equal or more than the least market capitalized stock of BSE 100 Index. These companies have a large business presence, good reputation and are possibly market leaders in their industries. Scheme Highlights The Magnum COMMA Fund seeks to generate opportunities for growth along with

To provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of equity stocks of companies whose market capitalization is atleast equal to or more than the least market capitalized stock of BSE 100 Index. To generate opportunities for growth along with possibility of consistent returns by

Rs.50 00

Rs.1000

SBI MAGNUM COMMA FUND (An Open-

Rs.50 00

Rs.1000

For exit within 1 year from the date of

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ended Growth Scheme)

possibility of consistent returns by investing in a portfolio of stocks of companies engaged in the commodity business within the following sectors: Oil & Gas Metals Materials Agriculture The companies included in respective spaces include Petrochemicals, Power and Gas etc. under Oil and Gas sector ; Zinc, Copper, Aluminum, Bullion, and Silver etc. under Metals Sector; Paper, jute, cement etc. under Materials sector and Sugar, Edible Oil, Soya, Tea and Tobacco etc. under Agriculture sector. The scheme could also invest in companies providing inputs to commodity manufacturing companies. The scheme seeks capital appreciation through investment in diversified portfolio of equities of high growth companies, along with liquidity of an open ended scheme through investments primarily in equities.

investing predominantly in a portfolio of stocks of companies engaged in the commodity business within the following sectors - Oil & Gas, Metals, Materials & Agriculture and in debt & money market instruments.

allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI MAGNUM EQUITY FUND (An Openended Equity Scheme)

The objective of the scheme is to provide the investor Long term capital ppreciation by investing in high growth companies along with the liquidity of an open-ended scheme through investments primarily in equities and the balance in debt and

Rs.10 00

Rs.500

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme

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money instruments. SBI MAGNUM GLOBAL FUND (An Openended Equity Scheme) Magnum Global Fund is an open-ended equity scheme which makes well researched investments in stocks and securities of companies from selected industries with high growth potential.

market

nt - Nil.

To provide investors maximum growth opportunity through well researched investments in Indian equities, PCDs and FCDs from selected industries with high growth potential and in Bonds.

Rs. 2000

Rs. 500

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil. Exit Load 1.00% for exit within 7 business days from the date of investm ent.

SBI NIFTY INDEX FUND (An Openended Passively Managed Growth Scheme)

It is an open-ended passively managed index fund, investing in all the stocks comprising the CNX Nifty in the same proportion as their weight age in the index. Magnum index fund endeavors to replicate CNX Nifty index.

The scheme will adopt a passive investment approach. The scheme will invest in stocks comprising the CNX Nifty index in the same proportion as their weightage in the index with the objective of achieving returns equivalent to the Total Returns Index of CNX Nifty index by minimizing the performance difference between the benchmark index and the scheme To provide investors with opportunities for long-term growth in capital alongwith the liquidity of an openended scheme by investing predominantly in a well diversified basket

Rs.50 00

Rs.1000

SBI MAGNUM MIDCAP FUND (An Openended Growth Scheme)

The fund invests in a basket of equity stocks of midcap companies. Midcap companies are those companies whose market capitalization at the time of investment is lower than the last stock in the S&P CNX

Rs.50 00

Rs.1000

For exit within 1 year from the date of allotme nt - 1%; For exit after 1

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Nifty Index less 20% (upper range) and above Rs. 200 crores.

of equity stocks of Midcap companies. Midcap companies are those companies whose market capitalization at the time of investment is lower than the last stock in the S&P CNX Nifty Index less 20% (upper range) and above Rs. 200 crores. To provide investors with opportunities for long-term growth in capital along with the liquidity of an openended scheme through an active management of investments in a diversified basket of equity stocks spanning the entire market capitalization spectrum and in debt and money market instruments. The objective of the scheme is to provide the investor with long term capital appreciation/ dividends along with the liquidity of an open-ended scheme. The scheme will invest in a diversified portfolio of equities of high growth companies. Rs. 5000 Rs.1000

year from the date of allotme nt - Nil.

SBI MAGNUM MULTICAP FUND (An Openended Growth Scheme)

Magnum Multi-cap Fund, an equity diversified fund which invests in equity stocks covering the entire market capitalization spectrum (large, mid and small cap). It also has the mandate to invest in bonds and money market instruments.

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI MAGNUM MULTIPLIER PLUS SCHME (An Openended Equity Scheme)

MMPS is a diversified equity fund which invests across market capitalization ie. in large, mid and small cap stocks, with an endeavour to generate long term capital appreciation through investment in equities of high growth companies.

Rs. 1000

Rs.500

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil. For exit within 1

SBI CONTRA FUND

A contrarian approach in investing is putting

To provide the investors maximum

Rs. 2000

Rs.500

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(An Openended Equity Scheme)

money in companies which are fundamentally good but whose share prices are not reflecting the true potential.

growth opportunity through equity investments in stocks of growth oriented sectors. There are four sub-funds dedicated to specific sectors viz. Information Technology, Pharmaceuticals, FMCG, Contrarian (investment in stocks currently out of favour) and Emerging Businesses. The investment objective of the Emerging Business Fund would be to participate in the growth potential presented by various companies that are considered emergent and have export orientation/ outsourcing opportunities or are globally competitive. The fund may also evaluate emerging business with growth potential and domestic focus. Rs. 2000 Rs.500

year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI EMERGING BUSINESS FUND (An Openended Equity Scheme)

This scheme focuses on the theme of emerging businesses. So they invest in companies showing promise based on the growth potential arising out of export/outsourcing opportunities and/or global competitiveness. It also focuses on emerging domestic themes. Investment in equities would be well diversified across various emerging sectors with exposure to a particular business restricted to 25% of the total investment portfolio under normal market conditions.

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI FMCG FUND (An Openended Equity Scheme)

The economic growth in India is bringing lifestyle changes to common Indian life. Therefore the demand

To provide the investors maximum growth opportunity through equity investments in stocks

Rs. 2000

Rs.500

For exit within 1 year from the date of

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for basic consumables like tooth power or tooth paste, food material, washing soap or washing power, bathing soap etc are rising. These products are manufactured by FMCG (fast moving consumer goods companies). The scheme seeks maximum growth opportunities by investing in these FMCG companies. SBI IT FUND (An Openended Equity Scheme) IT (Information Technology) has given significant boost to Indian economy. This scheme seeks to provide maximum growth opportunities through investments in IT stocks.

of growth oriented sectors. There are four sub-funds dedicated to specific sectors viz. Information Technology, Pharmaceuticals, FMCG, Contrarian (investment in stocks currently out of favour) and Emerging Businesses.

allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

To provide the investors maximum growth opportunity through equity investments in stocks of growth oriented sectors. There are four sub-funds dedicated to specific sectors viz. Information Technology, Pharmaceuticals, FMCG, Contrarian (investment in stocks currently out of favour) and Emerging Businesses. To provide the investors maximum growth opportunity through equity investments in stocks of growth oriented sectors. There are four sub-funds dedicated to specific sectors viz. IT, Pharmaceuticals, FMCG, Contra sub

Rs. 2000

Rs.500

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI PHARMA FUND (An Openended Equity Scheem)

The large population in India is pushing up the demand for medicine. The Indian pharmaceutical companies are benefiting from this rising demand. Also there is a demand for Indian medicines outside the country.

Rs. 2000

Rs.500

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the

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The scheme seeks maximum growth opportunities by investing in Pharma companies.

fund for investment in stocks currently out of favour and Emerging Business Fund (EBF) to participate in the growth potential presented by various companies that are considered emergent and have export orientation/outsourcing opportunities or are globally competitive by investing in the stocks representing such companies. The fund may also evaluate emerging businesses with growth potential and domestic Focus. The prime objective of scheme is to deliver the benefit of investment in a portfolio of equity shares, while offering deduction under section 80C of the Income-tax Act, 1961. It also seeks to distribute income periodically depending on distributable surplus. Investments in this scheme would be subject to a statutory lock-in of 3 years from the date of investment to avail Section 80C benefits. Rs. 500 Rs.500

date of allotme nt - Nil.

SBI MAGNUM TAXGAIN SCHEME (An Openended Equity Linked Savings Scheme)

An open-ended ELSS (equity linked saving scheme) wherein investment up to Rs. 1,00,000 are eligible for deduction from the gross total income u/s 80C of Income Tax Act.

NIL

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SBI PSU FUND (An Openended Growth Scheme)

This scheme invests in stocks of Public Sector Enterprises (PSE). As the reform process progresses over the next few years, PSUs stocks are likely to emerge as more robust and vibrant players across various sectors.

The objective of the scheme would be to provide investors with opportunities for longterm growth in capital along with the liquidity of an open-ended scheme through an active management of investments in a diversified basket of equity stocks of domestic Public Sector Undertakings and in debt and money market instruments issued by PSUs and others. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit.

Rs.50 00 & in multi ple of Rs. 1/

Rs.1000 & in multiple of Rs. 1/

For exit within 1 year from the date of allotme nt - 1%; For exit after 1 year from the date of allotme nt - Nil.

SBI TAX ADVANTAGE FUND SERIES I (A 10 Year Close Ended ELSS)

The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equities of companies across large, mid and small market capitalization, along with income tax benefit.

Rs.50 0/-

Rs.500/-

NIL

SBI TAX ADVANTAGE FUND SERIES II (A 10 Year Close Ended ELSS)

Rs.50 0/-

Rs.500/-

NIL

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1.4 REVIEW OF LITERATURE

Sapar & Narayan(2003) examines the performance of Indian mutual funds in a bear market
through relative performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's measure with a sample of 269 open ended schemes (out of total schemes of 433). The results of performance measures suggest that most of the mutual fund schemes in the sample of 58 were able to satisfy investor's expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk.

Rao D. N (2006) studied the financial performance of select open-ended equity mutual fund
schemes for the period 1st April 2005 - 31st March 2006 pertaining to the two dominant investment styles and tested the hypothesis whether the differences in performance are statistically significant. The analysis indicated that growth plans have generated higher returns than that of dividend plans but at a higher risk studied classified the 419 open-ended equity mutual fund schemes into six distinct investment styles.

Agrawal Deepak & Patidar Deepak (2009) studied the empirically testing on the basis
of fund manager performance and analyzing data at the fund-manager and fund-investor levels. The study revealed that the performance is affected by the saving and investment habits of the people and at the second side the confidence and loyalty of the fund Manager and rewardsaffects the performance of the MF industry in India.

Mehta Sushilkumar (2010) analyzes the performance of mutual fund schemes of SBI and
UTI and found out that SBI schemes have performed better then the UTI in the year 2007-2008.

Selvam et.al (2011) studied the risk and return relationship of Indian mutual fund schemes.
The study found out that out of thirty five sample schemes, eleven showed significant tvalues and all other twenty four sample schemes did not prove significant relationship between the risk and return. According to t-alpha values, majority (thirty two) of the sample schemes' returns were not significantly different from their market returns and very few number of sample schemes' returns were significantly different from their market returns during the study period.

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How to invest in SBI Mutual Funds


Step 1. Identify your investment needs. Investor financial goals will vary,based on his age, lifestyle, financial independence family commitments, level of income and expenses among many other factors. Therefore, the first step is to assess his needs. He should begin by asking himself these questions: a. What are his investment objectives and needs? He needs regular income or he needs to buy a home or finance a weeding or educate his children or a combination of all these needs. b. How much risk is he willing to take? He can only take a minimum amount of risk or he is willing to accept the fact that his investment vale may fluctuate or that there may be a short-term loss in order to achieve a long-term potential gain. c. What are his cash flow requirements? He needs a regular cash flow or he needs a lump sum amount to meet a specific need after a certain period or he doesn't require a current cash flow but he wants to build assets for the future.

Step 2. Choose the right Mutual Fund.

Once an investor has a clear strategy in mind, he now has to choose which mutual fund and scheme he wants to invest in, the offer document of the scheme tells him its objectives and provides supplementary details like the track record of other schemes managed by the same fund manager.' Some factors to evaluate before choosing a particular mutual fund are: a) The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category. b) How well the mutual fund is organized to provide efficient, prompt and personalized service.

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Step 3. Select the ideal mix of Schemes. Investing in just one mutual fund scheme may not meet all his investment needs.He may to consider investing in a combination of schemes to achieve your specific goals. Step 4. Invest regularly For most of us, the approach that works best is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, he buys fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit, this is called rupee cost averaging. With many open-ended schemes offering systematic investment plans, this regular investing habit is made easy. Step 5. Keep your taxes in mind. a. If the investor is in a high tax bracket and have utilized fully the exemptions under section 80L of the income tax, investing in growth funds that do not pay dividends might be more tax efficient and improve his post tax return. b. If he is in a low tax bracket and have not utilized fully the exemption available under section 80L selecting funds paying regular income could be more tax efficient. Further, there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws. Step 6. Start early. It is desirable to start investing early and stick to a regular investment plans. The power of compounding makes the investor to earn income on income and his money multiplies at a compounded rate of return Step 7. The Final Step. He should get in touch with a mutual fund or his agent/broker and start investing.

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1.6 OBJECTIVES OF THE STUDY


To study about the mutual funds industry. To study the approach of investors towards mutual funds.

To study the behavior of the investors for preferring mutual funds. To help an investor to make right choice of investment, while considering the inherent risk factors.

To understand risk and return of the various schemes. To understand the resent trends in the MF world.

1.7 LIMITATIONS:
Risk Factors: Mutual Funds and Securities Investments are subject to market risks and there is no assurance or guarantee that the objective of schemes will be achieved. As with any other investment in securities, the NAV of the Units issued under the schemes can go up or down depending on the factors and forces affecting the securities market. Past performance of the Sponsor/AMC/Mutual Fund/Schemes and their affiliates do not indicate the future performance of the schemes of the Mutual Fund. Investment Statutory Details: SBI Mutual Fund has been set up as a Trust under The Indian Trusts Act, 1882. State Bank of India (SBI), the sponsor is not responsible or liable for any loss resulting from the operation of the schemes beyond the initial contribution made by it of an amount of Rs. 5 lakhs towards setting up of the Mutual Fund. It should not be construed as investment advice to any party. All opinions and estimates included here constitute our view as of this date and are subject to change without notice. Neither SBI Funds Management Private Limited, nor any person connected with it, accepts any liability arising from the use of this information. Sample size taken is small and may not be sufficient to predict the results with 100% accuracy.

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The result is based on primary and secondary data that has its own limitations. The study only covers the area of Chhattisgarh that may not be applicable to other areas.

1.8 SIGNIFICANCE
The company wants to know the perception of investors, who perceive Mutual Fund as an investment option. The company would like to create the awareness of SBI Mutual Fund. This study would assist. In the form of an infrastructure. for the forthcoming branches in developing their services towards the Investors.

1.9METHODOLOGY
SOURCES OF DATA

Primary data
Descriptive research design is been used for the study. Primary data is collected from consumer. Personal interview method was used to collect data from consumers.

Secondary data
The secondary data is collected from the various published book, journal, magazine, newspaper, past records RESEARCH DESIGN A research design is the specification of methods and procedures for acquiring the needed data to solve the problem.

TYPES OF RESEARCH DESIGN


The arrangement of conditions suitable for collection and analysis of data varies depending upon the type of research study. 1. Exploratory research design. 2. Descriptive research design. 3. Conclusive research design.

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DESCRIPTIVE RESEARCH DESIGN


Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists at present. In social science and business research, we quite often use the term expost facto research for descriptive research studies. The main characteristics of this method are that the researcher has no control over the variable; he can only report what happened or what is happening. Here the study is conducted for fact finding on preference of respondent interest towards, Mutual Fund as an investment option.

CONCLUSIVE RESEARCH
After the study, based on the data collection. It has been analyzed and the better conclusion and suggestion are given to conclude the project study.

INFORMATION REQUIRED FOR THE STUDY


Demographic data. Ranking of attributes Source influenced for taking Mutual Fund. Awareness of Mutual Fund as an investment. Satisfaction level. Preference of the Mutual Fund company. Awareness of the Mutual Fund companies and the source of awareness.

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1.10 METHOD OF ANALYSIS INSTRUMENTAL DESIGN


Direct and structured questioners are designed through which data is collected.

SAMPLING POPULATION
The first step in the sampling process is the definition of the population, which can be defined in terms elements. Sampling units extent & time. For the present study taken the population was the resident of Bhilaii city.

SAMPLING UNIT
In the study the sampling unit chosen is any resident of Madurai city.

SAMPLE SIZE
The total sample size according to the formula is 200.

SAMPLING TECHNIQUES
Convenience sampling method has been adopted for the study. When population elements are selected for inclusion in the sample based on the ease of the researcher can be called as Convenience sampling.

STATISTICAL TOOLS: Percentage Method:


Percentage method is used in making comparison between two (or) more series of data this method is used to describe relationship. No of respondents % of respondent = ------------------------------ * 100 Total respondent

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Chi-Square test:
It is statistical measure with the help of which it is possible to access the significance between the observed frequencies and the expected frequencies obtained from some hypothetical universe. Chi-Square tests enable us to test whether more than two population proportion can be considered equal. The formula for computing Chi-square is E (Oij-Eij) /\2 X /\2 = ---------------Eij Where Oij = Observed frequency of the cell in the row and the column Eij = Expected frequency of the cell in the row and the column The calculated value of X/\2 is compared with the table value of X/\2 for the given degree of freedom at a specific level of significance If calculated value<table value hypothesis is accepted and If calculated value>table value hypothesis is rejected.

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CHAPTER 2 INTEGRATED PERSPECTIVE OF ALL FUNCTIONAL AREAS IN ORGANIZATION

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HUMAN RESOURCES DEPARTMENT:


Man power planning is based on the square foot area, HR department also take care of training and development needs, employee welfare and motivation. CORE ACTIVITIES OF HR: i. Personal file maintenance ii. Leave cards and comp of slips iii. Employee issue handling iv. Conflict management (If there is any conflict between the team members or employees, the HR department handle the situation) v. Counseling

CUSTOMER SERVICE DEPARTMENT


Customer Service department is responsible for entire customer satisfaction and solving customer problems and customer retention and customer engagement activities to create excitement for customer during shopping period.

MARKETING DEPARTMENT:
Marketing is the process of planning and executing the conception, pricing , promotion and distribution of ideas, goods & services to create exchange that satisfy individual and organization objectives. Marketing department is responsible for promoting the product and the store. It looks after the promotion and offers. Marketing can also be done by hoardings and banners in the entire locality to create awareness of the customer and it also done by talking with media people and giving pamphlets and advertisement to the newspaper.

KEY EXECUTIVES

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Current Board of Directors As on 14 January 2013, there are fifteen members in the SBI board of directors:

Pratip Chaudhuri Hemant G. Contractor Arundhati Bhattacharya A. Krishna Kumar S. Visvanathan S. Venkatachalam D. Sundaram * Thomas Mathew S.K. Mukherjee Rajiv Kumar Jyoti Bhushan Mohapatra Deepak Amin Harichandra Bahadur Singh

(Chairman) (Managing Director) (Managing Director & Chief Financial Officer) (Managing Director) (Managing Director) (Director) (Director) (Director) (Officer Employee Director) (Director) (Workmen Employee Director) (Director) (Director)

The financial market provides different investment options to the perspective investors. These include low risk and low return products like the Fixed Deposits, corporate debentures and bonds as well as high risk and high return options like stock market. But most of investors in India are not able to trust the stock market given its fluctuating nature. The recent financial crisis and stock market crash has added to that development. Mutual Funds provide a mid-way for getting returns better than FDs with more security than the stock market. There are a large number of schemes for investors to choose from based upon their investment requirements. The market regulator has also taken a number of steps to increase the transparency of the mutual fund operations. As the Indian Economy grows, there has been an increase in the personal financial assets and a rise in foreign participation. With these changes, the mutual fund industry is also witnessing a rapid growth. There are more investors with a growing risk appetite, rising income, increasing awareness and all see mutual funds as the most preferred investment option. The months of April and May of the year 2010 were characterised by a flurry of NFOs launched by AMCs. The funds launched included SBI PSU Fund, Canara Robeco Indigo Fund, Birla Sun Life India Reforms Fund, DSP Blackrock Focus 25 Fund, IDFC Nifty Index Fund etc. Previously, some fund houses came up with New fund Offers (NFO) to increase their assets under management (AMC), but the banning of entry load by the Securities and Exchange board of India has forced AMCs to identify and launch only those funds which have a good chance of

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performing well over the medium to long term because if the investors dont find the objective and theme of the fund captivating then might not be able to raise the minimum amount required to be collected to cover the expenses of a NFO. The banning of entry load has also resulted in dwindling distributor interest towards the sale of mutual funds and they prefer selling other financial products which give them a higher commission. With money flowing into mutual funds in a trickle, fund houses are focusing on other businesses like offshore advisory business and Portfolio Management Services to cover losses.

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Sl No. 1 2 3 4 5 6 7 8 9 10

Asset Management Company Reliance Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund LIC Mutual Fund SBI Mutual Fund Franklin Templeton Mutual Fund Kotak Mahindra Mutual Fund IDFC Mutual Fund

Corpus (Amount in Cr) 1,11,819.33 94,702.79 83,035.31 79,456.70 69508.69 40507.21 39,826.35 34,107.00 33,743.49 25,177.28

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CHAPTER 3 DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS & INTERPRETATION TABLE 1 AGE GROUP AGE 0-18 YRS 19-25 YRS 26-35 YRS 36-45 YRS 46-55 YRS 55 YRS AND ABOVE

RESPONDENTS

62

48

50

35

06

PERCENTAGE

31%

24%

25%

17%

3%

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RESPONDENTS
70

60

50

40

30

20

10

0 RESPONDENTS

0-18 YRS 0

19-25 YRS 62

26-35 YRS 48

36-45 YRS 50

46-55 YRS 35

55 YRS AND ABOVE 6

INFERENCE: From the study conducted, it was found that, the maximum number of respondents fall under the age group of 16yrs-25yrs and 26yrs-35 yrs. The study clearly says that, About 31 % fall under the age. group 16yrs-25yrs , 25% comes under 36yrs-45yrs, 24% fall under 26yrs-35-yrs,17% in 46yrs-55yrs and 3% in 55yrs & above it was found that nil percentage of respondents falls under 0yrs15yrs .

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TABLE 2 OCCUPATION
OCCUPATION SERVICE PROFESSION BUSINESS TOTAL

NO. OF RESPONDENTS

138

39

23

200

PERCENTAGE

69%

19%

12%

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OCCUPATION WISE

12%

19%

SERVICE PROFESSION BUSINESS

69%

INFERENCE: From the study conducted, it was found that, more than half of the respondents come under the service class. Nearly 69% of the respondents are from service class, 19% of the respondents are from the profession class and only 12% of the respondents are from the Business class.

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TABLE 3 INCOME LEVEL

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INCOME LEVEL WISE


80 70 60 50 Axis Title 40 30 20 10 0 PERCENTAGE RESPONDENTS

Below 1L 29% 58

1L 2L 37% 76

2L 3L 25% 50

3L 4L 6% 11

4L & ABOVE 3% 5

INFERENCE:
From the study conducted, it was found that, majority of the respondents comes under the Salary class of 1Iak-2Iak. About 37% comes under. 1Iak-2Iak, 29%of them comes under Below 11ak , nearly 25% of them comes under 2lak3lak , 6% of them comes under 3lak-4lak and only 3% comes under 41ak & above.

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TABLE 4 INVESTOR LIKE TO SAVE IN

TYPE OF INVESTMENT Mutual Fund Share Market Deposits / Bonds Insurance Post office Savings Others TOTAL

RESPONDENTS 147 18 100 81 50 6 402

PERCENTAGE 36.56% 4.47% 24.87% 20.14% 12.43% 1.49%

RESPONDENTS
Mutual Fund Share Market Deposits / Bonds 2% 12% Insurance Post office Savings Others

37% 20%

4% 25%

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INFERENCE:
From the study conducted, it is found that, majority of the respondents prefer Mutual Fund rather than other types of investment. 36.56% of the respondents prefer Mutual Fund to save their money. 24.87% of them believe in Deposits/bond as the investment option. 20.14% of them believe in Insurance. 12.43% of them believe in Post Office. 4.47% of them believe in Share market. 1.49% of them believe other.

TABLE 5 OBJECTIVES OF INVESTMENT


OBJECTIVES OF INVESTMENT Children Benefit Tax Benefit Returns Others Total NUMBER OF RESPONDENTS 95 100 95 14 314 PERCENTAGE 31% 33% 31% 5%

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OBJECTIVE OF INVESTMENT
120

100

80

60

40

20

0 PERCENTAGE NUMBER OF RESPONDENTS

Children Benefit 31% 95

Tax Benefit 33% 100

Returns 31% 95

Others 5% 14

INFERENCE:
From the study conducted, in asking the respondents objectives towards investment, it was found that nearly 33% of the investor aim in Tax benefit while taking decision in saving money. The next is nearly 31% of the respondents like to invest for their Children's Benefit and Returns, only 5% go for the others.

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TABLE 6 PERCENTAGE OF SAVING FROM INCOME


PERCENTAGE OF SAVING 0% - 10% 10% - 20% 20% - 30% 30% - 40% Above 40% Total NO. OF RESPONDENTS 47 86 41 18 8 200 PERCENTAGE 24% 43% 20% 9% 4%

PERCENTAGE OF SAVING FROM INCOME


9% 4% 23%

0% - 10% 10% - 20%

21% 20% - 30% 30% - 40% Above 40% 43%

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INFERENCE:
From the study conducted, it was found that, nearly 43% of the respondents invest only 10%-20% from their income and they believe it is the safest, the next 24% invest 0%-10% of their income, 20% prefer to invest 20%30% from their income, 9% prefer to save nearly 30%-40% and only 4% like to invest above 40% from their income.

TABLE 7 MUTUAL FUND AS AN INVESTMENT OPTION


WILLINGNESS TO TAKE UP MUTUAL FUND AS AN INVESTMENT OPTION NUMBER OF RESPONDENTS PERCENTAGE

YES NO TOTAL

161 39 200

80% 20%

PERCENTAGE OF WILLINGNESS
20%

YES NO 80%

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INFERENCE:
From the study conducted, it was found that, nearly more than half of the respondents are willing to take Mutual Fund as investment. About 80% of the respondents prefer to take Mutual Fund as an investment and only 20% of the respondents says that they don't prefer to take so.

TABLE 8 FACTORS THAT RESPONDENTS IS MOTIVATED IN TAKING INVESTMENT DECISION


MOTIVATING FACTOR Friends Family Advertisement Auditors Articles Others Total NO. OF RESPONDENTS 82 107 21 6 8 10 234 PERCENTAGE 35% 46% 9% 3% 3% 4%

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MOTIVATING FACTOR
3% 4% 35% Friends Family Advertisement Auditors 46% Articles Others

3% 9%

INFERENCE:
From the study conducted, it was found that, the maximum numbers of the respondents are influenced by the Family in taking investment decision. About 46% of the respondents are influenced by their Family members, 35% of them are influenced by their Friends, nearly 9% of the respondents are influenced by advertisements, 4%. are influenced by others and only 3% of the investor are influenced by Articles and Auditors

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TABLE-9 PERIOD OF INVESTMENT/MODE OF INVESTMENT

PERIOD Annually Half Yearly Quarterly Monthly Total

NO. OF RESPONDENTS 110 20 39 31 200

PERCENTAGE 54% 20% 10% 16%

PERIOD OF INVESTMENT
16%

10%

Annually Half Yearly 54% Quarterly Monthly

20%

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INFERENCE:
From the study conducted, it was found that, nearly more than half of the investor prefers to invest annually. About 54% of the investor prefer annual investment, 20% of the investor believe in Half-yearly investment, 16% prefer to invest Monthly and only 10% prefer to invest Quarterly.

TABLE 10 Objectives in Mutual Fund in the perception of the investors.

OBJECTIVES

NO. OF RESPONDENTS

PERCENTAGE

Tax Benefits

95

26%

Risk Cover

106

29%

Creation of Asset

44

12%

Childrens Benefits

121

33%

Total

366

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OBJECTIVES IN MUTUL FUND IN THE PERCEPTION OF THE INVESTORS

33%

26% Tax Benefits Risk Cover Creation of Asset Childrens Benefits

12%

29%

INFERENCE:
From the study conducted it J was found that, nearly 33% of the respondents invest in the Mutual Fund for Children's benefits, 29% goes for risk cover, 26% of the respondents prefer mutual Fund for tax benefit, and only 12% believe that they could create an asset for them.

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TABLE 11 AWARENESS OF SBI MUTUAL FUND


AWARENESS Yes No TotaL NO. OF RESPONDENTS 118 82 200 PERCENTAGE 59% 41%

PERCENTAGE

60% 50% 40% PERCENTAGE 30% 20% 10% 0% Yes No

INFERENCE:
From the study conducted on awareness of the SBI Mutual Fund found that, more than half of the respondents are aware of SBI Mutual Fund. About 59% of the respondents say that they are aware of the SBI Mutual Fund and 41 % of the respondents are not aware of the consultant.

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TABLE 12 RESPONDENTS CATEGORY IN INVESTMENT


GENDER NO. OF RESPONDENTS PERCENTAGE

MALE

135

67%

FEMALE

65

33%

TOTAL

200

INFERENCE:
From the study conducted using the questionnaire it was found that 67% of the respondents are male and 33% of the respondents are female.

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PERCENTAGE

MALE FEMALE

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TABLE 13 CHI-SQUARE OCCUPATION Vs MUTUAL FUND AS AN INVESTMENT


OCCUPATION YES NO TOTAL

SERVICE

114

24

138

PROFESSION

31

39

BUSINESS

16

23

TOTAL

16

23

NULL HYPOTHESIS : Willingness to take up Mutual Fund as an investment


option is independent of the occupation of the respondent.

ALTERNATIVE HYPOTHESIS : Willingness to take up Mutual Fund as an


investment option is dependent of the occupation of the respondent

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Observed Frequency (Oi) 114 24 31 8 16 7 Total

Expected Frequency (Ei) 111.09 26.91 31.395 7.605 18.515 4.485

(Oi-Ei) 2.91 -2.91 -0.395 0.395 -2.515 2.515

(Oi-Ei)^2 8.4681 8.4681 0.156 0.156 6.325 6.325

(Oi-Ei)^2/Ei 0.076 0.315 0.005 0.021 0.342 1.41 2.169

CALCULATION: E1=161*138/200 = 111.09 E2=039*138/200 = 26.91 E3=161*039/200 = 31.395 E4=039*039/200 = 7.605 E5=161*023/200 = 18.515 E6=039*023/200 = 4.485 CALCULATED VALUE X^2 = 2.167 TABLE VALUE X^2 = 5.991 DEGREE OF FREEDOM = (r-1)(c-1) = (3-1)(2-1) = 2*1 =2 DEGREE OF FREEDOM = 2 (@ 5% Significant level)

INFERENCE:
Since table value is greater than the calculated value Null Hypothesis of accepted. Therefore Willingness to take up Mutual Fund as an investment option is independent of the occupation of the respondent.

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TABLE 14 CHI-SQUARE RESPONDENT CATEGORY Vs OBJECT IS MUTUAL FUND


Categories Male Female Total

Tax benefit

59

36

95

Rissk Factors

65

41

106

Creation of Assets

26

18

44

Children's Benefit

86

35

121

Total

236

130

366

NULL HYPOTHESIS : Insurance objectives and respondent categories are


independent.

ALTERNATIVE HYPOTHESIS : Insurance objectives and respondent categories


are dependent.

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Observed Frequency (Oi) 59 36 65 41 26 18 86 35 Total

Expected Frequency (Ei) 61.26 33.74 68.35 37.65 28.37 15.63 78.02 42.98

(Oi-Ei) -2.26 3.36 -3.35 3.35 -3.35 3.35 7.98 -7.98

(Oi-Ei)^2 5.11 5.11 11.22 11.22 5.62 5.62 63.68 63.68

(Oi-Ei)^2/Ei 0.083 0.151 0.164 0.298 0.198 0.36 0.816 1.481 3.551

CALCULATIONS: E1 =236*95/366 E2= 130*95/366 E3=236*106/366 E4=130*106/366 E5=236*44/366 E6=130*44/366 E7=236*121/366 E8= 130* 121/366 CALCULATED VALUE X^2 = 3.551 TABLE VALUE X^2 = 7.815 DEGREE OF FREEDOM = (r-1)(c-1) = (4-1)(2-1) = 3*1 =3 DEGREE OF FREEDOM = 3 (@ 5% Significant level)

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INFERENCE:
Since table value is greater than the calculated value Null Hypothesis of accepted. Therefore Mutual Fund objectives and respondent categories are independent.

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CHAPTER 4 FINDINGS

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4.1 FINDINGS
80% of the respondents treat Mutual Fund as an investment option

While dealing with the investor, it is found that service people are more Interest in Mutual Fund. Business sector feels that Mutual Fund is an important criterion in their field of work. 33% of investor's objective in Mutual Fund is for the benefit of their children, 26% for the purpose of tax benefits, and 12% for the purpose of creation of the assets. 36.56% investors feel that investment is for children benefit & return in Mutual Funds., 20.14% Investors would like to save in insurance, 24.8% Investors would like to save in deposit / bond, 12.43% Investors would like to save in Post office, 4.47% Investors would like to save in share market, 1.44% Investors prefers others. Income group which opts for insurance as an investment option is between 1Iakhs-2Iakhs. The investors would like to invest their money where they would get more Security The willingness to take up Mutual Fund as an investment option is independent of the occupation of the respondents. Mutual Fund objectives and respondents categories are found to be independent.

4.2 RECOMMENDATIONS
The performance of the mutual fund depends on the previous years Net Asset Value of the fund. All schemes are doing well. But the future is uncertain. So, the AMC (Asset under Management Companies) should take the following steps: The people do not want to take risk. The AMC should launch more diversified funds so that the risk becomes minimum. This will lure more and more people to invest in mutual funds.

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The expectation of the people from the mutual funds is high. So, the portfolio of the fund should be prepared taking into consideration the expectations of the people.

Try top reduce fund charges, administration charges and other charges which helps to invest more funds in the security market and earn good returns. Different campaigns should be launched to educate people regarding mutual funds.

Companies should give regular dividends as it depicts profitability. Mutual funds should concentrate on differentiating the portfolio of their MF than their competitors MF. Companies should give handsome brokerage to brokers so that they get attracted towards distribution of the funds. As majority of the respondents are in service, this is the core market area to be concentrated on. Income group which opts for investment in Mutual Fund sector is below 2Lakhs. It is suggested that while marketing, this segment to be considered with great concern . From the findings, it is found that, the security is the main criteria for the investors. It is suggested that this aspect would be reinforced while accessing the investor. It is found that period of investment of the investor is more only during the year ending. It would be easy to tap the investor, .if the promoter concentrates during this period. While dealing with the prospective investors business people could be attracted with more schemes which focus on their increasing return. Tax benefits occurring out of investing from insurance must be highlighted in the service sector. Professionals are not benefited with pension, since most of them are in private sector. So the one, who promotes the product in this sector should tap the schemes which would benefit to their family and their children. As 80%of the respondents think Mutual Fund as an investment, the company can bring more Mutual Fund products to suit needs of the investor.

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CHAPTER 5 SUMMARY

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5.1SUMMARY
Study undertaken for SBI Mutual Fund has been successful in studying the perception of investors on the potential of Mutual Fund as an investment option.

It is encouraging and positive to know that Mutual Fund was much sought after avenues for investment it as been found that the service sectors are more interested in having Mutual Fund as an avenue of investment.

Based on the findings of the study a few suggestions have been given, which if considered would give strength to the marketing strategy of SBI Mutual Fund.

5.2 BIBLIOGRAPHY
Websites:
www.sbimf.com. www.theeconomictimes.com www.mutualfundsindia.com www.valueresearchonline.com www.amfiindia.com www.livemint.com BOOKS 1.S.P.Gupta, Statistical Methods, Sultan Chand & Sons Vol 1 pp.E-3.1, (E-4.1 E-4.15), E-13.5. 2. S.P. Gupta, Statistical Methods, Sultan Chand & Sons Vol 2 pp.A-4.1. 3. Beri G.C., Marketing Research. New Delhi, Tata Mc Graw Hill Pub, Edition II, pp.245-260. 4. Donald S.Tull, Marketing Research Measurements and Methods, Tata Mc Graw Hill, pp.310-312.

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APPENDICES APPENDIX 1
QUESTIONNAIRE FOR ANALYZING MUTUAL FUNDS AS INVESTMENT OPTION 1. NAME : 2. DATE OF BIRTH : 3. SEX : 4. ADDRESS : PHONE NO : EMAIL- ID : 5. OCCUPATION Service Business Others 6. NAME OF THE COMPANY: DESIGNATION : 7. ANNUAL INCOME Below Rs 1,00,000 Rs. 1,00,000 2,00,000 Rs 2,00,000 - 3,00,000 Rs. 3,00,000 4,00,000 Rs 4, 00,000 & Above 8. NO. OF DEPENDENT 2 3 4 Above 4 9. RATE THE FACTOR THAT YOU LOOK AT IN AN INVESTMENT Rate of return Liquidity Tax benefit Security

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10. YOU LIKE TO SAVE IN Mutual Fund Share Market Deposit/Bonds Insurance Post Office Savings Others (please specify) 11. WHO INFLUENCE YOU IN YOUR INVESTMENT DECISION Family Friends Advertisements Articles Auditors Others 12. MODE OF INVESTMENT (OR) PERIOD OF INVESTMENT Monthly Quarterly Half-yearly Annually 13. OBJECTIVES OF INVESTMENT Children's Education/marriage Tax Benefits Returns Others 14. PERCENTAGE OF SAVING FROM INCOME 0-10% 10%-20% 20%-30% 30%-40% Above 40% 15. DO YOU THINK MUTUAL FUN IS AN OPTION OF INVESTMENT Yes No 16. RATE YOUR INVESTMENT OBJECTIVES IN MUTUAL FUND Tax Benefit Risk Cover Creation of an asset Children's Benefits 17. ARE YOU AWARE OF SBI MUTUAL FUND Yes No 18. DO YOU REQUIRE A PERSONAL SALES EXECUTIVE OF SBI MUTUAL FUND MEET YOU TO SUGGEST THE BEST SCHEME THAT SUITE YOU FROM SBI MUTUAL FUND.

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Yes No 19. IF YES, Meet Call Mail