CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

TABLE OF CONTENT

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EXECUTIVE SUMMARY 2. INTRODUCTION TO BANKING INDUSTRIES 3. HISTORY OF STATE BANK OF INDIA 4. SBI LIFE INSURANCE 5. INTRODUCTION TO MUTUAL FUND 6. ANALYSIS AND FINDINGS 7. FINDINGS 8. SUGGESTIONS 9. CONCLUSION 10. REFERENCES 11. ANNEXURE

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

EXECUTIVE SUMMARY
TITLE OF THE STUDY

OVER ALL STUDY OF SBI LIFE INSURANCE AND CUSTOMER AWARNESS LEVEL ABOUT SBI MUTUAL FUND IN BELGAUM CITY

INTRODUCTION SUMMARY OF THE COMPANY

State Bank of India
INCLUDEPICTURE "http://upload.wikimedia.org/wikipedia/en/thumb/c/cc/SBI-logo.svg/50px-

SBI-logo.svg.png" \* MERGEFORMATINET

Type
Founded Headquarters Key people

Public (BSE, NSE: SBI) & (LSE: SBID) Calcutta, 1806 (as Bank of Calcutta)
Corporate Center, Madame Cama Road, Mumbai 400 021 India Chairman OM PRAKASH BHATT

Industry

Banking Insurance Capital Markets and allied industries

Loans, Credit Cards, Savings, Investment vehicles, SBI Life (Insurance) etc.
38382.42 cror (2006 ,March )

Products Revenue Website

www.statebankofindia.com

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Topic of the study: Over all study of sbi life insurance and customer awareness about sbi mutual fund in Belgaum city This project was conducted so as to understand the concept of Mutual Funds and its usage as an investment avenue. The study also aims to find out the awareness of mutual funds and its preference over other investments. The project was undertaken at state bank of India Belgaum The objectives of the study include: To over all study about SBI life insurance and mutual fund To find out market potential for mutual funds. To find out the factors, which influence to investing in mutual funds. To find out attributes investors look for while buying mutual funds. My fieldwork involved visiting the people who have invested in mutual funds and who have not purchased mutual funds and also chartered accountants to know whether they have invested in mutual funds or not and also the reasons for their investment / non-investment. Research Methodology: For collecting data, I used Questionnaire and interaction with people. The primary data was collected through interaction with the people I visited, and secondary data was collected from books, magazines, websites etc.. Sample Frame: People who have invested in mutual funds and who have not invested in Mutual funds. Sample size : 100 respondents Sample Unit : 1. Bank Employees 2. Udyambag entrepreneurs 3. Government employees 4. Stock Dealers in Belgaum city 5. Businessmen. Sampling Method : Simple random sampling technique.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Simple random sampling means every element is selected independently of every other element and the sample is drawn by a random procedure from a sampling frame. Tools used for the study: Graphical Representation SPSS Software Other related statistical technique like factor analysis etc The difficulty faced during the fieldwork was not getting the appointments of the respondents since they were very busy and some were non-cooperative. Moreover, time limitation was there. The data analysis is done by using coding sheet, SPSS software, statistical techniques etc.

INTRODUCTION TO BANKING INDUSTRIES State Bank of India:

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND (SBI)) is the largest bank in India. If one measures by the number of branch offices and employees, SBI is the largest bank in the world. Established in 1806 as bank of Bengal, it is the oldest commercial bank in the Indian Subcontinent. SBI provides various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. The government nationalized the bank in 1955, with the Reserve bank of India taking a 60% ownership stake. In recent years the bank has focused on two priorities, 1), reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defect to the private sector, and 2), computerizing its operations. State Bank of India (SBI) is India's largest commercial bank. SBI has a vast domestic network of over 9000 branches (approximately 14% of all bank branches) and commands one-fifth of deposits and loans of all scheduled commercial banks in India. The State Bank Group includes a network of eight banking subsidiaries and several nonbanking subsidiaries offering merchant banking services, fund management, factoring services, primary dealership in government secure credit cards and insurance. THE EIGHT BANKING SUBSIDIARIES ARE: 1 -State Bank of Bikaner and Jaipur (SBBJ) 2 -State Bank of Hyderabad (SBH) 3 -State Bank of India (SBI) 4 -State Bank of Indore (SBIR) 5 -State Bank of Mysore (SBM) 6 -State Bank of Patiala (SBP) 7 -State Bank of Saurashtra (SBS) 8 -State Bank of Travancore (SBT)

HISTORY OF STATE BANK OF INDIA

EVOLUTION OF SBI

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND The origin of SBI goes back to the first decade of the nineteenth century with the establishment of the bank of Calcutta in Calcutta on 2 June 1806. Three year later the bank received its charter and was redesigned as the bank of Bengal (2 January 1809). A unique institution, it was the first joint stock bank of British India sponsored by the government of Bengal. The bank of Bombay (15th April 1840) and the bank of madras (I July 1843) followed by bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the imperial bank of India on 27 January 1921. Primarily Anglo-Indian creation, the three presidency banks came into existence either as a result of the compulsion of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize Indias economy. Their evolution was, however Shaped by ideas culled from similar developments in Europe and England and was influenced by changes occurring in the structure of both the local trading environment and those in the relation of the Indian economy to the economy of Europe and the global economy frame works Establishments The establishment of bank of Bengal marked the advent of limited liability, joint stock banking in India, so was the associated in banking viz the decision to allow the bank of Bengal to issue notes, which would be accepted goes the payments of public revenues within a restricted geographical area, this right of note issue was very valuable not only for the bank of Bengal but also its two siblings, he banks of Bombay and madras, it meant an accretion to the capital of the bank, a capital on which the proprietors did not have to pay any interest . The concept of deposit banking was also an innovation because the practice of accepting money for safe keeping (in some cases even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India, but for long time. And especially up to the time. Each charter provided for a share capital. Four fifth of which were privately subscribed and the rest owned by the provincial govt the member of the broad director, which managed the affair each bank, were mostly BABASAB PATIL Page 6

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND proprietary directors representing the large European managing agency house of India. The rest were government nominees, invariably civil servant, one of whom was elected as the president of the board. INCLUDEPICTURE "http://upload.wikimedia.org/wikipedia/en/8/84/Bank_of_Bengal.jpg" \*

MERGEFORMATINET Offices of the Bank of Bengal PROFILE Spreading its arms around the world, the SBIs International Banking Group delivers the full range of cross-border finance solutions through its four wings the Domestic division, the Foreign Offices division, the Foreign Department and the International Services division. The Domestic wing provides services like merchant banking, shipping finance and project export finance. The Foreign Offices wing offers the entire range of international trade and industrial finance products, while the Kolkatta-based Foreign Department undertakes treasury and currency operations. The International Services division renders specialized services like correspondent banking, global link services and country and bank risk exposure monitoring. Being Indias largest and most trusted commercial bank, the SBI offers you a network of relationships unmatched in strength and span by any other Indian financial entity.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND The bank has a network of 66 offices/branches in 29 countries spanning all time zones. The SBIs international presence is supplemented by a group of Overseas and NRI branches in India and correspondent links with over 522 leading banks of the world. SBIs offshore joint ventures and subsidiaries enhance its global stature. The bank has carved a niche for itself in Euroland with branches strategically located in Paris, Frankfurt and Antwerp. Indian banks and corporates are able to avail single-window Euro services from SBI Frankfurt. These strengths are reinforced by a dedicated and highly skilled team of professionals deployed by the bank in each specific segment. Mission Statement: To retain the bank position as the premier Indian Financial Service Group, with world class standard and significant Global Business committed to excellence in customer, shareholder and employee satisfaction to play a leading role in the expanding and diversifying financial service sector, while continuing emphasis on its development banking role Vision statement: Premier Indian Financial Service Group with Global Perspective, world-class Standard of efficiency and professionalism and core institutional values. Retain its position in the country as a pioneer in development banking Maximize shareholders values through high sustained earning per share An institution with a culture of mutual care and commitment, a satisfying and exciting work environment and continue learning opportunities. Core values of the bank: Excellence in customer service Profit orientation Belonging and commitment to the bank Fairness in all dealing and relations BABASAB PATIL Page 8

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Risk taking and innovation Team playing Learning and renewal Integrity Transference and discipline in policies and system Objectives of SBI Improvement in profitable through better management of asset portfolio increased employee productivity, enhanced support to countrys foreign trade as well as substantial improvement in the system particularly in the area of training mechanization, customer service, and internal house keeping etc. Comfortable capital position SBI is adequately capitalized with a tier I capital adequacy ratio of 8.04% and a large capital base of Rs 240.72 billion as at March 31, 2005. The bank has considerably improved its net worth coverage for net NPAs to 4.4 times as at March 31, 2005 due to lower slippages reflecting an improving asset quality, witnessed across the entire banking sector. The capitalization levels of SBI are adequate to address the asset side risks and support the business growth in the medium term. Management strategies In retail finance, the bank has leveraged its corporate relationships, pursued business growth selectively, and has not competed based on interest rate. The bank has taken initiatives like on-line tax returns filing and faster transfer of funds to protect its dominant position in the government business. The bank also has a clear technology strategy that will enable it to compete with the new generation private sector banks in customer service and operational efficiency.

Asset quality to remain at average levels The bank continues to have a high level of gross NPAs at 5.95% of gross advances as at March 31, 2005, compared with 4.9% for all scheduled commercial banks (SCBs) taken BABASAB PATIL Page 9

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND together. The bank is facing challenges to improve the quality of assets originated, as can be seen in the consistently higher levels of slippages (additions to NPAs) at 2.71% in 200405. Business description SBI along with its associate banks offer a wide range of banking products and services across its different client markets. The bank has entered the market of term lending to corporate and infrastructure financing, traditionally the domain of the financial institutions. It has increased its thrust in retail assets in the last two years, and has built a strong market position in housing loans. SBI, through its non-banking subsidiaries, offers a host of financial services, viz., merchant banking, fund management, factoring, primary dealership, broking, investment banking and credit cards. SBI has commenced its life insurance business by setting up a subsidiary, SBI Life Insurance Company Limited, which is a joint venture with Cardiff S.A., one of the largest insurance companies in France. SBI currently holds 74% equity in the joint venture. Industry prospects : To leverage benefits such as access to low cost resources and the facility to provide a larger gamut of services, a number of finance companies such as Kotak Mahindra Finance Limited and HDFC Limited have promoted banks. Simultaneously, yet another emerging trend is that of foreign banks promoting NBFCs to benefit from regulatory flexibility available to such entities in areas like absence of statutory liquidity ratio and cash reserve ratio requirements, priority sector requirements, and corporate exposure limits.

SBI LIFE INSURANCE:

Our Mission:
"To emerge as the leading company offering a comprehensive range of life insurance and pension products at competitive prices, ensuring high standards of customer

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND satisfaction and world class operating efficiency, and become a model life insurance company in India in the post liberalization period".

Our Values:

Trustworthiness Ambition Innovation Dynamism Excellence SBI Life Insurance is a joint venture between the State bank of India and Cardif SA

of France. SBI Life Insurance is registered with an authorized capital of Rs 1000 crore and a paid up capital of Rs 500 crores. SBI owns 74% of the total capital and Cardif the remaining 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across the country, arguably the largest in the world. Cardif is a wholly owned subsidiary of BNP Paribas, which is the Euro Zones leading Bank. BNP Paribas is one of the oldest foreign banks with a presence in India dating back to 1860. Cardif is ranked 2nd worldwide in creditors insurance offering protection to over 35 million policyholders and net income in excess of Euro 1 billion. Cardif has also been a pioneer in the art of selling insurance products through commercial banks in France and in 35 more countries. SBI Life Insurances mission is to emerge as the leading company offering a comprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. SBI Life has a unique multi-distribution model encompassing Bancassurance, Agency and Group Corporate. SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBIs access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion.Agency Channel, comprising of the most

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND productive force of more than 25,000 Insurance Advisors, offers door to door insurance solutions to customers.

Why SBI life:

Customer Satisfaction - many of our customers who have bought an insurance policy with us have bought a second one Financially sound with over a 100 years of Banking experience, when you trusted us with your money, why would you trust somebody else with your protection needs. Individual product: Unit Linked Plans: It may be difficult to understand all your needs but as your preferred life insurance company, SBI Life definitely understands all your financial & insurance needs. Unit linked Plans are an attempt to meet all your financial & insurance needs through a single non participating product. Whats more you get market linked returns which in the long term has always proved to give better returns than traditional savings products. We offer the following plans under this category. Horizon II Unit Plus II Unit Plus Child Plan Unit Plus Elite Plan Pension Plans: Life expectancy is improving rapidly. People live longer. You cannot work throughout your life. You will have to retire from work. In the post retirement period you have lot of time for yourself. You would like to do things you have not done while you were working. You need to have a comprehensive plan to meet our post retirement financial needs ensuring complete peace of mind. Horizon II Pension Unit Plus II Pension Life Long Pension

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

Pure Protection Plans: There are times when everything seems to be perfect, but who can predict future and there is always a place to make this world a better place for our loved ones. To ensure that these uncertainties do not shatter the dreams you have for your family, SBI life offers you. Shield Swadhan Keyman Protection cum Savings (Endowment) Plans: SBI Life offers a variety of plans that gives you the benefit of protection and the opportunity to save for various events like purchase of new house, wedding, car etc. we assist your savings. Sudarshan Scholar II Setubandhan Money Back Plans: As an individual your life is fueled by dreams. You experience different special moments in life like wedding, birth of a child, childs education or purchasing a new home. You have to be financially prepared for these special moments. What you need is easy liquidity at regular intervals with life insurance protection take Care of these special moments. Money Back Sanjeevan Supreme

HORIZON II Introduction: SBI Lifes HORIZON II is a unique, non participating Unit Linked Insurance Plan in Indian Insurance Industry, where you need not to be a financial market expert. This plan offers the flexibility of Unit Linked Plan along with Automatic Asset Allocation which BABASAB PATIL Page 13

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

provides relatively higher returns on your money where as increasing death benefits provides higher security to your family. Key features: Twin benefit of insurance cover and market linked returns Hassle-free investment management of funds from inception to maturity Automatic Asset Allocation of funds Automatic rebalancing of funds at yearly intervals, free of cost Higher protection, to meet your family financial needs. Automatic cover continuance. Liquidity option after 3 years Facility to top up your investment kitty. Tax benefit as per section 80C and 10(10D) of income tax act. 15 days free look period from the date on which you receive the policy document. No. of Units Fund(x) = Net Investment in Fund(x) NAV of Fund(x)

Benefits: Hassle Free Investment Management: You simply invest we will manage it for you. Maturity Benefits: At the end of the term you will get the fund value. Increasing Death Benefit: For all in forced policies , In case of death after

completion of age 7.

UNIT PLUS CHILD PLAN Introduction: Life begins afresh when you become a parent and when the child takes that first step towards you, the moment is filled with cheer, enthusiasm never felt before. This moment BABASAB PATIL Page 14

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND marks a new beginning in the childs life and theres no looking back after that. The child keeps growing and so are his dreams, aspirations which always aim to reach horizon and you want your child achieve his/her dreams. But at the same time as a proud parent you also want to secure their future against rising cost of education and other necessities. We at SBI LIFE understand you better and hence have developed UNIT PLUS CHILD PLAN to suit you and your needs best. This Plan is meant for parents in the age group of 18-57 having a child between the age group of 0-15 years. Key features: Market related returns to match increasing cost of education Peace of Mind by giving you triple benefits. Loyalty units to celebrate your child reaching 18 years. New Investment Fund (Equity Optimiser Fund) in addition to existing funds. Pay Premium for a limited period and reap benefits over a long time. Flexible plan which adapts to your changing needs as and when you want.

UNIT PLUS ELITE:

Introduction You set the ball rolling and have been the catalyst for transformation of the society and your decisions have generated maximum benefits both at personal as well as society level. Young generation aspires to be you and they get inspiration to emulate you to achieve success. Your leadership does not settle with the normal, it deserves privileged facilities. A plan which provides Value for Your money Our Preferred Customer.

PENSION PRODUCT HORIZON II PENSION

Horizon II Pension is the most simple unit linked pension plan; all you need to do is: Choose your retirement date, the plan option and the regular premium amount. Based on the plan option and the term opted, SBI Life will invest your money in three different funds viz., Equity Pension Fund, Bond Pension Fund and Money BABASAB PATIL Page 15

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Market Pension Fund. The funds are invested keeping in mind the term opted for and your money is invested in safer funds as your policy approaches maturity.

UNIT PLUS II PENSION

Pure Pension Pension cum Life Cover IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

Introduction: We at SBI Life understand the basic needs for pension plan and give you financial strength to maintain your life style even after the retirement. Unit Plus II Pension plan makes sure that you have regular income after you retire and also helps you to maintain your standard of living. This is a unit linked pension plan wherein the policyholder chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years. You can choose to pay either single premium or pay regular premium for the entire policy term. Your contributions are invested into 4 fund options as per your choice. Key Features: Choice to invest & control four different funds as per your risk appetite. Flexibility to choose between two options Pure Pension Pension cum Life Cover No medical required for Pure Pension, automatic acceptance facility. BABASAB PATIL Page 16

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Flexibility to increase regular contribution. Top up payments: any amount, anytime. Customize your plan by adding riders. 15 days free look period.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND LIFE LONG PENSION: Introduction: Life expectancy is improving rapidly. People live longer. You cannot work throughout your life. You will have to retire from work. In the post retirement period you have lot of time for yourself. You would like to do things you have not done while you were working You need to have a comprehensive plan to meet your post retirement financial needs ensuring complete peace of mind. Key features: A maximum of Rs. 1,00,000 p.a. paid as a contribution on a pension plan is fully deductible from the taxable income (within the max. ceiling Rs. 1 lakh ) Minimum Guaranteed returns of 4% p.a. (compounded annually) on your Personal Pension Account (till 31st March 2010) + Vested bonus. It helps you to accumulate enough savings to meet the old age needs and look for a reliable and enduring pension payment. It is an extremely flexible plan. Benefits: Tax benefit Maturity benefit Death benefit

Pure Protection Products:

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

Swadhan Introduction
Happiness and security for your family is what you want. However life has its uncertainties and risks. All that youre interested in is how best to afford a secure future for your loved one. Have you ever wished for a low premium insurance policy that not only provides security to your loved ones but also returns back the premium paid. Protection at affordable premium e cover comes to you at no cost Tax benefit u/s 80 c and (10 D) of it act 5% rebate for female lives Guaranteed return of basic premium paid on survival at the end of the term, depending

Shield: Introduction
Your family is of utmost importance to you. You want your family to have all the good things in life and you would do everything you could to fulfill them. Life is full of uncertainties and risk. To ensure that these uncertainties do not the shatter the dreams you have for your family. Key features: It offers you life insurance cover at the lowest cost for a selected term. It is available in 3 options to suit your requirement. Level Premium throughout the chosen term with increasing Sum Assured, depending on the option chosen. Tax benefit u/s 80 C and 10 (10 D) of IT Act Attractive rebate for Female lives.

Schlor II
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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Introduction As a caring parent you would always want your child to get the very best. Is there a way to protect your children against lifes risks? Is there a way to make tomorrow safe for them? Therefore this is the time when careful financial planning can help you fulfill the aspirations that you have for your childrens. We at SBI Life can help you ensure that your childrens future is secure and prosperous. Schlor II is designed to protect your childs future educational needs. Key features We at SBI Life can help you ensure that your childrens future is secure and prosperous. The uncertainties if life. We at SBI Life can help you ensure that your childrens future is secure and prosperous. Installments. Attractive rider option 15 days free lock period

Money back:
Introduction As an individual your life is fueled by dreams. You experience different special moments in life like wedding, birth of a child, childs education or purchasing a new home. You have to be financially prepared for these special moments. What you need is easy liquidity at regular intervals with life insurance protection to take care of these special moments. Key features The plan has a number of money back options specially suited to your needs The cover is available at competitive premium rates. The cover is available at competitive premium rates. In addition to normal death cover, the plan also provides you 4 additional covers. Attractive rider options. Convenient premium payment options: Single and Multiple BABASAB PATIL Page 20

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND premium payment. 15 days free lock period from the date on which you receive the policy documents

Protection cum Savings Products: Introduction

Sudarshan is an Endowment Policy designed to provide savings and protection to you and your family. You can save regularly for the future. Thus at the end of the plan, you will receive a substantial amount of savings along with the accumulated bonuses declared. At the same time, your family will be protected for death risk for the full sum assured. Key features: It offers you the option of tailoring your policy according to your requirement and needs, by opting for various extra covers (Riders) that are offered. This is a unique product that offers you an innovative cover (plan B) which helps you to protect your savings against 'the financial consequences of inflation' with constant premium for the entire duration of the plan. It gives you protection against unfortunate terminal or dreaded illness even your own retirement - in a most flexible manner.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

What is a Mutual Fund? A vehicle for investing in stocks and bonds A mutual fund is not an alternative investment option to stocks and bonds, rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the funds gains, losses, income and expenses. Each mutual fund has a specific stated objective The funds objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, its officers and its performance. Popular objectives of a Mutual Fund: Fund objective Equity (Growth) Debt (Income) Money market (including Gilt) What the fund will invest in Only in stock. Only in fixed income securities. In short-term money market instruments (including government securities)

Balanced

Partly in stocks and partly in fixed income securities, in order to maintain a balance in returns and risk.

Managed by an Asset Management Company (AMC) The company that puts together a mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or varied investment objectives.The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective.

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All AMCs Regulated by SEBI, Funds governed by Board of Directors The Securities and Exchange Board of India (SEBI) mutual fund regulations require that the funds objectives are clearly spelt out in the prospectus.In addition, every mutual fund has a board of directors that is supposed to represent the shareholders' interests, rather than the AMCs.

Range of Services Investment banking

Mutual Funds Brokerage and distribution of equities Dematerialization services Trading in commodities Life Insurance Features and Options Wealth management Corporate advisory

INTRODUCTION TO MUTUAL FUND

MEANING A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. BABASAB PATIL Page 23

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification. One can make money from a mutual fund in three ways: A) Income is earned from dividends declared by mutual fund schemes from time to time. B) If the fund sells securities that have increased in price, the fund has a capital gain. This is reflected in the price of each unit. When investors sell these units at prices higher than their purchase price, they stand to make a gain. C) If fund holdings increase in price but are not sold by the fund manager, the fund's unit price increases. You can then sell your mutual fund units for a profit. This is tantamount to a valuation gain.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND HISTORY The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under: 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.

Second Phase - 1987-1993 (Entry of Public Sector Funds) BABASAB PATIL Page 25

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management. 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 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). 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 Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the BABASAB PATIL Page 26

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM 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. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

THE MUTUAL FUND STRUCTURE

SEBI TRUSTEE SPONSOR

OPERATIONS

AMC

FUND MANGER

MKT/SALES
MUTUAL FUND

MKT/ SALES

SCHEMES The structure consists of

DISTRIBUTOR

INVESTOR Sponsor - Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. Trust - The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Trustee - Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner. Asset Management Company (AMC) - The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crore at all times. Registrar and Transfer Agent - The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

Role of Mutual funds in Financial Market

Indian financial institution have played a dominant role in asset formation and intermediation and contributed substantially in macroeconomic development. In this process of development Indian Mutual Funds have emerged as a strong financial intermediaries and are playing a very important role in bringing stability to the financial system and efficiency to resource allocation. Mutual Fund plays a crucial role in an economy by mobilizing savings and investing them in the capital market, thus establishing a link between savings and the capital market. The activities of mutual fund have both short and long term impact on the savings and capital market, and the national economy. Mutual fund, thus, assist the process financial intermediation. They mobilize funds in the saving market and act as complimentary to banking, at the same time they also compete with banks and other financial institutions. In the process stock market activities are also significant influenced by mutual funds. There is thus hardly any segment of the financial market, which is not influenced by the existence and operations of mutual funds. However, the scope and efficiency of mutual funds are influenced by overall economic fundamentals: the inter-relation between the financial and real sector, the nature of development of the savings and capital markets, market structure, institutional arrangements and overall policy regime.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS

A. Professional Management - The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the BABASAB PATIL Page 29

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. B. Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds, the risk is spread out. 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. In other words, the more stocks and bonds you own, the less any one of them can hurt you. Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money. C. Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay. D. Liquidity - Open-ended mutual funds are priced daily and are always willing to buy back units from investors. This means that investors can sell their holdings in mutual fund investments anytime without worrying about finding a buyer at the right price. In the case of other investment avenues such as stocks and bonds, buyers are not necessarily available and therefore these investment avenues are less liquid compared to open-ended schemes of mutual funds. E. Regulations - All Mutual Funds are registered with SEBI and they function under strict guidelines designed to protect the interests of the Investor. F. Tax benefits Equity Funds: Currently, dividends are tax-free in the hands of the investor. There is no distribution tax payable by the Mutual Fund on dividends distributed. There is no tax deduction at source on dividends as well. Investments for over 12 months qualify for long term capital gains. Moreover for resident investors there is no TDS on redemption of the units. The recently introduced Securities Transaction Tax is applicable to equity fund investments. Debt Funds:

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Currently, dividends are tax-free in the hands of the investor. However, there is distribution tax together with surcharge and education cess, as may be applicable, payable by the Mutual Fund on dividends distributed. There is no tax deduction at source on dividends as well. Investments for over 12 months qualify for long term capital gains. For resident investors there is no TDS on redemption of the units. LIMITATIONS OF MUTUAL FUNDS As Mutual Fund provides numerous advantages for investment it has also few limitations that are listed below: A) Costs Despite Negative Returns- Investors must pay sales charges, annual fees, and other expenses regardless of how the fund performs. And, depending on the timing of their investment, investors may also have to pay taxes on any capital gains distribution they receive even if the funds went on to perform poorly after they bought shares. B) Lack of Control- Investors typically cant ascertain the exact make up of a funds portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. C) Price Uncertainty- With an individual stock, you can obtain real time pricing information with relative ease by checking financial websites or by calling your broker. You can also monitor how a stocks price changes from hour to hour or even seconds to seconds. By contrast, with a Mutual Fund, the price at which you purchase or redeem shares will typically depend on the funds NAV. In general; Mutual Funds must calculate their NAV at least once every business day, typically after the major U.S. exchange close. GLOBAL SCENARIO Some basic facts-

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND The money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S. against a corpus of $ 100 million in India. Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and Capital are non-bank mutual funds in this group. In the U.S. the total number of schemes is higher than that of the listed companies while in India we have just 277 schemes Internationally, mutual funds are allowed to go short. In India fund managers do not have such leeway. On- line trading is a great idea to reduce management expenses from the current 2 % of total assets to about 0.75 % of the total assets. Changes Taken Place Lower Costs: As per SEBI regulations, bond funds can charge a maximum of 2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the administrative costs are low, the benefits are passed down and hence Mutual Funds are able to attract mire investors and increase their asset base. Better Advice: Mutual funds could provide better advice to their investors through the Net rather than through the traditional investment routes. Direct dealing with the fund could help the investor with their financial planning. New investors would prefer online: Mutual funds can target investors who are young individuals and who are Net savvy, since servicing them would be easier on the Net.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older public and private sector players will either close shop or be taken over. Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in Derivatives.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

TYPES OF SCHEMES

A. Investment Objective: Schemes can be classified by way of their stated investment objective such as Growth Fund, Balanced Fund, and Income Fund etc. 1. Equity Oriented Schemes The investments of these schemes will predominantly be in the stock markets and endeavor will be to provide investors the opportunity to benefit from the higher returns which stock markets can provide. However they are also exposed to the volatility and attendant risks of stock markets and hence should be chosen only by such investors who have high risk taking capacities and are willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds. Diversified Equity Funds invest in various stocks across different sectors while sectoral funds which are specialized Equity Funds restrict their investments only to shares of a particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest passively only in the stocks of a particular index and the performance of such funds move with the movements of the index.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

Magnum COMMA Fund Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum MidCap Fund Magnum Multicap Fund Magnum Multiplier Plus 1993 Magnum Sector Funds Umbrella o MSFU - FMCG Fund o MSFU - Emerging Businesses Fund o MSFU - IT Fund o MSFU - Pharma Fund o MSFU - Contra Fund SBI Arbitrage Opportunities Fund SBI Blue chip Fund SBI Infrastructure Fund - Series I SBI Magnum Taxgain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUND - SERIES I BABASAB PATIL Page 35

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND 2. Debt Based Schemes Debt Funds invest only in debt instruments such as Corporate Bonds, Government Securities and Money Market instruments either completely avoiding any investments in the stock markets as in Income funds or gilt Funds or having a small exposure to equities as in Monthly Income Plans or Children's Plan. Hence they are safer than equity funds. At the same time the expected returns from debt funds would be lower. Such investments are advisable for the risk. Magnum Children`s Benefit Plan Magnum Gilt Fund o Magnum Gilt Fund (Long Term) o Magnum Gilt Fund (Short Term) Magnum Income Fund Magnum Income Plus Fund o Magnum Income Plus Fund (Saving Plan) o Magnum Income Plus Fund (Investment Plan) Magnum Insta Cash Fund Magnum InstaCash Fund -Liquid Floater Plan Magnum Institutional Income Fund Magnum Monthly Income Plan Magnum Monthly Income Plan Floater Magnum NRI Investment Fund BABASAB PATIL Page 36

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND SBI Capital Protection Oriented Fund - Series I SBI Debt Fund Series o SDFS 15 Months Fund o SDFS 90 Days Fund o SDFS 13 Months Fund o SDFS 18 Months Fund o SDFS 24 Months Fund o SDFS 60 Days Fund o SDFS 180 Days Fund SBI Premier Liquid Fund SBI Short Horizon Fund o SBI Short Horizon Fund - Liquid Plus Fund o SBI Short Horizon Fund - Short Term Fund 3. Hybrid Schemes (Balanced scheme) Magnum Balanced Fund invest in a mix of equity and debt investments. Hence they are less risky than equity funds, but at the same time provide commensurately lower returns. They provide a good investment opportunity to investors who do not wish to be completely exposed to equity markets, but is looking for higher returns than those provided by debt funds. Magnum Balanced Fund Magnum NRI Investment Fund - FlexiAsset Pl BABASAB PATIL Page 37

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND B. STRUCTURE Schemes can be classified as Closed-ended or Open-ended depending upon whether they give the investor the option to redeem at any time (open-ended) or whether the investor has to wait till maturity of the scheme. 1. Open ended Schemes - The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to new investors. On the other hand, an openended fund rarely denies to its investor the facility to redeem existing units. 2. Closed ended Schemes - The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closedended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme. 3. Interval Schemes - These schemes combine the features of open-ended and closedended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices.

Rules prescribed to govern Mutual Funds:

1. All Mutual Funds expect the statutory ones, will have to seek the approval of the SEBI and the scheme floated by them shall have to be registered with the SEBI.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND 2. Mutual Funds shall be established in the form of trust under Indian Trust Act to be operated by separate asset management companies (AMCs) will be authorized by SEBI and should have minimum net worth of 5 crores. 3. SEBI will have the power to withdraw authorization to any AMC if it finds the interest of investors, Mutual Funds or the capital market are not been served. 4. The AMC and the Trustee of a Mutual Fund should be two separate legal entities and an AMC or its affiliate cannot act as a manager or any other fund. 5. No person should be director of more than one AMC, nor hold the position of the trustee of director in trust company of funds operated by the same AMC. 6. Mutual Funds must distribute 90% of their profits in any given year. 7. No Mutual Funds under all its schemes shall hold more than 10% of its fund in the shares or debentures or other instruments of a single company. 8. No Mutual Funds under all its schemes take together shall invest more than 10% of its fund in the shares or debentures or other instruments of a single company. 9. No Mutual Funds under all its schemes taken together shall invest more than 15% of its fund in the shares and debentures of any specific industry, expecting those schemes which have been floated specifically for investment in one or more specified industries and a declaration has been made in the offer letter. 10. No individual scheme of Mutual Funds shall invest more than 5% of its corpus in any one companys share. 11. Mutual Funds can invest only in transferable securities either in the money market or in the capital market. 12. Privately placed debentures, securities debt and other unquoted debt instrument holding shall not exceed 10% in case of growth fund and 40% in case of income funds. 13. Mutual Funds will be required to take delivery of scrip purchase and give delivery in case of income funds. 14. Mutual Funds shall be authorized for business by SEBI and registered companies with sound track records and good reputation could sponsor this. 15. The entire subscription shall have to be refunded to the investor if (a) The minimum amount of Rs.20 Crores or 60% of the targeted amount which ever is higher is not BABASAB PATIL Page 39

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND raised for closed-end scheme or (b) The minimum amount of Rs.50 Crores or 60% of the targeted amount, whichever is higher is not raised for an open-ended scheme. 16. Mutual Funds shall provide continuous liquidity and closed-end scheme shall be listed on exchange. For open ended schemes, Mutual Funds shall sell or purchase units at predetermined price based on net asset value, which shall be published at least ones a week .

NAV OF A MUTUAL FUND

Track your investments: One easy way to keep track of your fund is to keep track of the intelligent investor rankings of mutual funds, which are complied on a quarterly basis. These rankings allow you to take note of your funds performance and risk profile and compare it across various time periods as well as across its peer set, Net Asset Value (NAV) The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. Calculation of NAV The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below: Asset value is equal to: Sum of market value of shares/debentures Liquid assets/cash held, if any Dividends/interest accrued Amount due on unpaid assets BABASAB PATIL Page 40

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Expenses accrued but not paid Details on the above items For liquid shares/debentures, valuation is done on the basis of the last or closing market price on the principal exchange where the security is traded For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be estimated. For shares, this could be the book value per share or an estimated market price if suitable benchmarks are available. For debentures and bonds, value is estimated on the basis of yields of comparable liquid securities after adjusting for illiquidity. The value of fixed interest bearing securities moves in a direction opposite to interest rate changes Valuation of debentures and bonds is a big problem since most of them are unlisted and thinly traded. This gives considerable leeway to the AMCs on valuation and some of the AMCs are believed to take advantage of this and adopt flexible valuation policies depending on the situation. Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with every passing day, interest is said to be accrued, at the daily interest rate, which is calculated by dividing the periodic interest payment with the number of days in each period. Thus, accrued interest on a particular day is equal to the daily interest rate multiplied by the number of days since the last interest payment date. Usually, dividends are proposed at the time of the Annual General meeting and become due on the record date. How is the percentage change in NAV calculated? Percentage change in NAV is an absolute measure of return, which finds the NAV appreciation between two points, as a percentage. For example, if the NAV of the fund is Rs.23.45 at the beginning of a year, and Rs. 27.65 at the end of the year, then the percentage change in NAV is = ( 27.65-23.45 ) / 23.45*100 = 17.91% The general formula is (Absolute change in NAV / NAV at the beginning)* 100

What is the rate of return to an investor in mutual funds?

An investor in mutual fund earns returns from 2 sources: BABASAB PATIL Page 41

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Income from Dividend paid by the mutual fund. Capital gains arising out of selling the units at a price higher than the acquisition price. What is Growth Option? Investors who do not require periodic income distributions can choose the growth option, where incomes earned are retained in the investment portfolio, and allowed to grow, rather than being distributed to the investors.

What is Dividend Option? Investors, who choose a dividend option on their investment, will receive dividends from the mutual fund, as and when such dividends are declared. Dividend are paid in the form of warrants, or directly credited to the investor bank accounts. There are further choices in the distribution of dividends, in the normal dividend plan, periodicity of dividend is left to Fund Manager, who may pay annually or an interim dividend. There are other choices where in the investor can choose their dividend payout frequencies that can monthly, weekly, daily.

What is re-investment option? Mutual Funds also provide another option to investors in the form of re-investment. Investors reinvest the dividends that are declared by the mutual fund, back into the fund itself, at NAV that is prevalent at the time of re-investment. In this option, the number of units held by the investor will change with every re-investment. The value of the units will be similar to that under the dividend option.

What are 1) Equity funds 2) Debt funds 3) Sector funds? Equity Funds: These are those that invest pre-dominantly in equity shares of the companies. BABASAB PATIL Page 42

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND Debt Funds: These are those that pre-dominantly invest in debt securities such as bonds, commercial papers, certificates of deposits and treasury bills. Sector Funds: Sector funds choose to invest in one or more chosen sectors of the equity markets. These sectors could vary depending on the investors preference than the return risk attributes of the sector.

What is the maximum load the fund can charge? A mutual fund is required to dispatch to the unitholders the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unitholder. In case of failures to dispatch the redemption/repurchase proceeds within the stipulated time period, Asset management Company is liable to pay interest as specified from time to time 915% at present).

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ANALYSIS AND FINDINGS Analysis of Questionnaire

RESPONDENTS AGE

age Frequency 18-30 32 30-40 26 40-50 21 50&above 21 Total 100 Percent 32.0 26.0 21.0 21.0 100.0 Valid Percent 32.0 26.0 21.0 21.0 100.0 Cumulative Percent 32.0 58.0 79.0 100.0

Valid

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age
50&above 21.0% 18-30 32.0%

40-50 21.0%

30-40 26.0%

Interpretation:
Out of 100 respondents 32% are 18 to 30 age, 26% are 30 to 40, 21% are 40 to 50 and remaining 21% are of above 50. So Mutual funds should more concentrate on young generation because they have less risk on family and they will investment more because of career development and retirement benefits.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND OCCUPATION OF THE RESPONDENTS

what is your occupation Frequency 19 39 19 23 100 Percent 19.0 39.0 19.0 23.0 100.0 Valid Percent 19.0 39.0 19.0 23.0 100.0 Cumulative Percent 19.0 58.0 77.0 100.0

Valid

serviceman businessman professional other Total

what is your occupation

serviceman 19.0%

other 23.0%

professional 19.0% businessman 39.0%

Interpretation: The responses which I had got 19% were serviceman, 39% were businessman, 19% were professional and the remaining 23% were other people.

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MONTHLY INCOME:
what is your monthly income in rupess Frequency 8 18 17 27 15 15 100 Percent 8.0 18.0 17.0 27.0 15.0 15.0 100.0 Valid Percent 8.0 18.0 17.0 27.0 15.0 15.0 100.0 Cumulative Percent 8.0 26.0 43.0 70.0 85.0 100.0

Valid

below 5000 5000-10000 10000-15000 15000-20000 20000-25000 above 25000 Total

what is your monthly income in rupess

above 25000 15.0% below 5000 8.0% 5000-10000 18.0% 20000-25000 15.0%

10000-15000 17.0% 15000-20000 27.0%

Interpretation: Out of 100 samples 8% are of below Rs.5,000, 18% are of above 5,000 and below Rs.10,000, 17% are of above Rs.10,000 and below Rs.15,000,27% are of above 15,000 and below Rs 20,000, 15% are of above 20,000 and below 25,000 the remaining 15% are of above Rs.25,000 monthly income.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND AWARENESS

are you aware about of sbi mutual fund Frequency 66 34 100 Percent 66.0 34.0 100.0 Valid Percent 66.0 34.0 100.0 Cumulative Percent 66.0 100.0

Valid

yes no Total

are you aware about of sbi mutual fund

no 34.0%

yes 66.0%

Interpretation: Out of 100 samples 66% are aware of SBI mutual funds i.e. 66 surveyed people know about SBI mutual funds and 34% are unaware of the SBI mutual funds. As there is a lack of awareness in this semi urban city Belgaum, the attempts should be made to create the general awareness through popular modes of communication that would reach the potential customers, like Local T.V Channels, Local Newspapers, Theatres, Hoardings and Banners in the public crowded areas.

MUTUAL FUND:

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do you want to invest your money in the following mutual fund Frequency debt fund 35 equity fund 40 no 25 Total 100 Percent 35.0 40.0 25.0 100.0 Valid Percent 35.0 40.0 25.0 100.0 Cumulative Percent 35.0 75.0 100.0

Valid

do you want to invest your money in the following mutual fund

no 25.0% debt fund 35.0%

equity fund 40.0%

Interpretation: Out of 100 samples 40% respondents have invested their money in equity mutual funds and the remaining 35%have invested in debt mutual funds and remaining 25% respondents are not interested. INVESTED IN MUTUAL FUND:

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have you invested money in mutual fund Frequency 65 35 100 Percent 65.0 35.0 100.0 Valid Percent 65.0 35.0 100.0 Cumulative Percent 65.0 100.0

Valid

yes no Total

have you invested money in mutual fund

no 35.0%

yes 65.0%

Interpretation: Out of 100 samples 65% respondents have invested their money in mutual funds and the remaining 35% have not invested in mutual funds. So that the potential market available for targeting is around 35%.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND INVESTMENT COMPANIES:

in which company you have invested your money Frequency uti 36 sbi 33 reliance money 20 others 11 Total 100 Percent 36.0 33.0 20.0 11.0 100.0 Valid Percent 36.0 33.0 20.0 11.0 100.0 Cumulative Percent 36.0 69.0 89.0 100.0

Valid

in which company you have invested your money

others 11.0% uti reliance money 20.0% 36.0%

sbi 33.0%

Interpretation: Out of 100 samples 36% respondents have invested their money in UTI mutual funds, 33% respondents have invested their money in SBI mutual fund, 20% respondents have invested their money in reliance money and the remaining 11% respondents have invested their money in other mutual fund.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND PLANS:

which plan you have taken Frequency debt fund 35 equity fund 40 if any other specify others 25 Total 100 Percent 35.0 40.0 25.0 100.0 Valid Percent 35.0 40.0 25.0 100.0 Cumulative Percent 35.0 75.0 100.0

Valid

which plan you have taken

if any other specify 25.0% debt fund 35.0%

equity fund 40.0%

Interpretation: Out of 100 samples 40% respondents have invested their money in equity scheme mutual funds, 35% respondents have invested their money in debt scheme mutual fund and the remaining 25% respondents have invested their money in other scheme

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND INVESTED IN MUTUAL FUND:

which amount you are contributing to a mutual fund Frequency 31 41 22 6 100 Percent 31.0 41.0 22.0 6.0 100.0 Valid Percent 31.0 41.0 22.0 6.0 100.0 Cumulative Percent 31.0 72.0 94.0 100.0

Valid

up to 10000 10000-25000 25000-50000 50000-100000 Total

which amount you are contributing to a mutual fund

50000-100000 6.0% 25000-50000 22.0% up to 10000 31.0%

10000-25000 41.0%

Interpretation: Out of 100 respondents 31% of them have invested up to Rs.10,000, 41% of them have invested above Rs 10,000 and below Rs 25,000, 22% of them have invested above Rs 25,000 and below Rs 50,000, and remaining 6% of them have invested above Rs.50,000 and below Rs 1,00,000. Mutual fund companies should give advertisement on T.V and other local medium to attract the customers.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND INFLUENCED TO BUY MUTUAL FUND:
what influenced your financial planning Frequency Valid discussion with family member stock holder/agent website Total 21 45 34 100 Percent 21.0 45.0 34.0 100.0 Valid Percent 21.0 45.0 34.0 100.0 Cumulative Percent 21.0 66.0 100.0

what influenced your financial planning

w ebsite 34.0%

discussion w ith fami 21.0%

stock holder/agent 45.0%

Interpretation: According to respondents the influencing factor to buy mutual funds was 21% of them were influenced by Family member,45% were influenced by stock holder/agent,34% of them influenced by website. People who have invested in mutual funds they have influenced from family member, stock holder/agent, website.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND INFLUENCED TO WHILE TAKING DECISION TO INVEST IN MUTUAL FUND:

which factor you considered while taking decision to invest in mutual fund Frequency returns 36 saving 20 liquidity 16 if any other specify 28 Total 100 Percent 36.0 20.0 16.0 28.0 100.0 Valid Percent 36.0 20.0 16.0 28.0 100.0 Cumulative Percent 36.0 56.0 72.0 100.0

Valid

which factor you considered while taking decision to invest in mutual fu

if any other specify 28.0% returns 36.0%

liquidity 16.0% saving 20.0%

Interpretation: The various attributes the investors look for while buying the mutual funds are 36% of them gives preference of Rate of Return, 20% of them gives preference of saving, 16% of them gives preference of liquidity, 28% of them gives preference of other (tax benefit) People will consider rate of return as a very high attribute while investing in mutual funds compared to other attributes like saving, liquidity, and other.

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CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND FUTURE INVESTED IN SBI MUTUAL FUND:
in future are you interested investing money in SBI mutual fund Frequency 64 36 100 Percent 64.0 36.0 100.0 Valid Percent 64.0 36.0 100.0 Cumulative Percent 64.0 100.0

Valid

yes no Total

in future are you interested investing money in SBI mutual fund

no 36.0%

yes 64.0%

Interpretation: Out of 100 samples 64% respondents will invested their money in SBI mutual fund, and remaining 36% respondents will not invested their money in SBI mutual fund.

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if no why Frequency 28 18 10 23 21 100 Percent 28.0 18.0 10.0 23.0 21.0 100.0 Valid Percent 28.0 18.0 10.0 23.0 21.0 100.0 Cumulative Percent 28.0 46.0 56.0 79.0 100.0

Valid

risk not much knowledge about the mutual fund bad experience returns is not fixed all of the above Total

if no why
all of the above 21.0% risk 28.0%

returns is not fixed 23.0% not much know ledge a 18.0% bad experience 10.0%

Interpretation: The reason for not opting for mutual funds for those 28% respondents they feel mutual fund involves high risk, 18% respondents not much knowledge about mutual fund, 10% respondents had bad experience with mutual funds because they have lost their money in past, 23% respondents they feel mutual fund return is not fixed, 21% respondents all of the above reason.

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FINDINGS
Thus on the basis of the study conducted we can see that Mutual Fund is one of the best options for investment as it has many advantages of diversification, professional management, economies of scale, liquidity etc. From the survey conducted it was found that Mutual fund should mainly concentrate on young generation. Around 66% aware about SBI mutual fund. Investors invest in Mutual Funds as a high return and (saving) security in their old age or as retirement security. While others invest to gain access to stock market through professional management and for higher education. Around 30% of the investors know about the tax benefits of investing in Mutual Funds.

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SUGGESTIONS

Awareness of mutual funds:

Investors are not very much aware of the investment opportunities, therefore they have to be educated about this form of investment. In order to educate the Government as well as the Non-government employees, seminars and workshops could be conducted in these organizations and try to clear their doubts and misconceptions about Mutual funds. funds. Mutual fund is a classical example of unsought goods. The nature of that the consumer does not know about or does not normally think of buying. The attempts should be made to create awareness through popular modes of communication that would reach the potential customers, like Local T.V Channels, Local Newspapers, Theatres, Hoardings and Banners in the public crowded areas etc. Proper benchmark is required to measure the performance of the mutual

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CONCLUSION
From the above study it is seen that there is an attractive market for mutual funds in Belgaum provided awareness should be created of the different schemes and people should be educated with all the information of mutual funds.

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References

Company website Magazines www.moneycontrol.com www.mutualfundsindia.com www.amfi.com

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Annexure
QUESTIONARRIE

1. Age a] 18-30 d] 50 & above 2. What is your occupation? Serviceman Professional 3. What is your monthly income in Rupess? Below 5,000 10,000-15,000 20,000-25,000 4. Are you aware about SBI Mutual fund? Yes No 5. Do you want to invest your money in the following Mutual fund? Debt fund Equity fund No 6. Have you invested money in Mutual fund? Yes No th (If no go to 12 question) 7. In which company have you have invested your money? UTI SBI Reliance money Other 8. Which plan you have taken? Debt fund Equity fund If any other specify other Businessman Other 5,000-10,000 15,000-20,000 above 25,000 ` b] 30-40 c] 40-50

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9. Which amount you are contributing to a Mutual fund? Up to 10,000 25,000-50,000 10,000-25,000 50,000-1, 00,000

10. What influenced your financial Planning? Discussion with family Member Stock holder/ Agent Web site 11. Which factor you considered while taking decision to invest Mutual Fund? Returns Saving Liquidity If any other specify. 12In futures are you invested money in SBI Mutual fund? Yes No 13. If no why? 1. Risk 2. Not much knowledge about the Mutual fund 3. Bad experience 4. Returns is not fixed 5. All of the above

Signature of the person

Thank You for Your Kind Cooperation

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