Final Project - Jaspreet

Study of SIP by business class and salaried class
STUDY OF SYSTEMATIC INVESTMENT PLAN BY

BUSINESS CLASS AND SALARIED CLASS
In partial fulfillment for the award of the degree of

Masters of Business Administration,
Punjab Technical University, Jalandhar
(2008-10)
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DECLARATION
This is to state that the Project titled “ STUDY OF SYSTEMATIC INVESTMENT

PLAN BY BUSINESS CLASS AND SALARIED CLASS’’ is based on the original
work carried out by me and is being submitted towards partial fulfillment of the
requirement for the MBA program of the Punjab Technical University, Jalandhar. This
has not been submitted for the award of any other degree or diploma.
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ACKNOWLEDGEMENT
I take this opportunity to express my deep sense of gratitude to all those who have
contributed significantly by sharing their knowledge and experience in the completion of
this project work.
I am greatly obliged to, for providing me with the right kind of opportunity and facilities
to complete this venture.
I am thankful to my faculty guide under whose able guidance this project work was
carried out. I thank her for her continuous support and mentoring during the tenure of the
project.
Finally, I would also like to thank all my dear friends for their cooperation, advice and
encouragement during the long and arduous task of carrying out the project and preparing
this project.
DATE
PLACE
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EXECUTIVE SUMMARY
The mutual fund industry is lot like the film star of the financial business. Though it is
perhaps the smallest segment of the industry it is also the most glamorous. In that it is a
young industry where there are changes in the rules of the game everyday and there are
constant shifts and upheavals.
The mutual fund is structured around a fairly simple concept, the mitigation of rest
through the spreading of investment across multiple entities, which is achieved by the
pooling of a number of small investments into a large bucket. Yet it has been the subject
of most elaborate and prolonged regulatory effort in the history of the country.
This project is about the study of systematic investment plan (SIP) by business class and
salaried class. The objective of the study is found out the awareness of people towards the
investment options and which class preferred the SIP and the reasons behind their choice
towards the different options. In the end some suggestions have been included to increase
the demand of mutual funds and to remove the present problems facing by the mutual
fund industry.
For the collection of primary data a structured questionnaire was prepared as per research
objectives. Various statistical tools like Mean, Z-test and chi- square test of proportion
have been applied to test the various hypothesis set before conducting the study.
Management books and web sites have been used as the source of secondary data.
Questionnaires were filled by both the business class and salaried class residing in
Chandigarh and near by Chandigarh. It took me around two months to complete my
project starting from identifying the project and till the stage of analyzing the data and
preparing the project report.
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TABLE OF CONTENTS
SERIAL No. CONTENTS PAGE

No.
1. ACKNOWLEDGEMENT 3
2. EXECUTIVE SUMMARY 4
3. COMPANY PROFILE 6 - 15
4. INTRODUCTION TO THE PROJECT 16 - 43
5. LITERATURE REVIEW 44 - 46
6. RESEARCH METHODOLOGY 47 - 52
7. ANALYSIS AND INTERPRETATION 53 - 89
8. FINDINGS OF THE STUDY 90
9. RECOMMENDATIONS 91
10. LIMITATIONS OF THE STUDY 92
11. CONCLUSION 93
12. REFERENCES 94
13. ANNEXURE 95 - 100
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COMPANY
PROFILE
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INTRODUCTION OF MAHINDRA FINANCE
The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India.
Mahindra & Mahindra is the only Indian company among the top three tractor
manufacturers in the world. Mahindra's Farm Equipment Sector has recently won the
Japan Quality Medal, the only tractor company worldwide to be bestowed this honour. It
also holds the distinction of being the only tractor company worldwide to win the Deming
Prize. Mahindra is the market leader in multi-utility vehicles in India. It made a milestone
entry into the passenger car segment with Logan.
With over 62 years of manufacturing experience, the Mahindra Group has built a strong
base in technology, engineering, marketing and distribution which are key to its evolution
as a customer-centric organization. The Group employs over 50,000 people and has
several state-of-the-art facilities in India and overseas.
M&M has entered into partnerships with international companies like Renault SA,
France, and International Truck and Engine Corporation, USA. Forbes has ranked the
Mahindra Group in its Top 200 list of the World's Most Reputable Companies and in the
Top 10 list of Most Reputable Indian companies. Mahindra has recently been honoured
with the Bombay Chamber Good Corporate Citizen Award for 2006-07.
M&M are one of India’s leading non-banking finance companies focused on the rural and
semi-urban sectors providing finance for Utility Vehicles (UVs), tractors and cars.They
are a subsidiary of Mahindra & Mahindra Limited, a leading tractor and UV manufacturer
with over 60 years’ experience in the Indian market.
The Group has a leading presence in key sectors of the Indian economy, including the
financial services, trade and logistics, automotive components, information technology,
infrastructure development and After-Market. In financial sector the goal of Mahindra
Finance is to be the preferred provider of retail financing services in the rural and semi-
urban areas of India, while their strategy is to provide a range of financial products and
services to our customers through our nationwide distribution network. They seek to
position their selves between the organized banking sector and local money lenders,
offering our customers competitive, flexible and speedy lending services.
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Mahindra Finance principally finance UVs used both for commercial and personal
purposes, tractors and cars. While they predominantly finance M&M UVs and tractors,
HISTORY OF MAHINDRA GROUP
Few groups can identify as closely with India's destiny and industrial progress as the
Mahindra Group. In fact, Mahindra is like a microcosm of India. Both were born around
the same time, had the same aspirations and both experienced the inevitable troughs and
crests in the journey towards their goals. And both continue to march on the path to
progress and global recognition.
The birth of Mahindra & Mahindra began when K.C. Mahindra visited the United States
of America as Chairman of the India Supply Mission. He met Barney Roos, inventor of
the rugged 'general purpose vehicle' or Jeep and had a flash of inspiration: wouldn't a
vehicle that had proved its invincibility on the battlefields of World War II be ideal for
India's rugged terrain and its kutcha rural roads.
Mahindra Finance were incorporated on January 1, 1991 as Maxi Motors Financial
Services Limited and received certificate of commencement of business on February 19,
1991 . The name was changed to Mahindra & Mahindra Financial Services Limited on
November 3, 1992 . Mahindra Finance are registered with the RBI as an NBFC with
effect from September 4, 1998 under Section 45IA of the Reserve Bank of India Act
1934.
Key events in business history
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1993
Commenced financing of M&M UVs
1995
Opened first branch outside Mumbai, at Jaipur
1996
Commenced financing M&M dealers for purchase of tractors
1998
Launched pilot project for retail tractor financing
1999
Commenced tractor retail financing in rural and semi-urban areas
2001
Total Assets crossed Rs. 10 billion
2002
Commenced financing of non-M&M vehicles
Received Tier II debt from International Finance Corporation
Made first securitisation transaction of Rs. 434.8 million
2004
Received a long-term credit rating of AA+/Stable
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Opened a branch in Port Blair
Listing of non convertible debentures on BSE on the wholesale debt market

segment
Securitisation of tractor assets of Rs. 256.6 million
2005
Tied up with HPCL
Made MIBL our wholly owned subsidiary
2006
Issued IPO
Tied up with Maruti
Launched marketing campaign
Reached a new benchmark with 400 branches
LOGO OF MAHINDRA FINANCE
VISION
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Their vision is to be the leading Rural Finance Company and continue to retain the
leadership position for Mahindra Products.
MISSION
 Mahindra Finance will be recognised as the premier provider of financial services

on the basis of their contribution to sale of Mahindra range of vehicles, tractors,
services and help M&M protect its sale through availability of finance.
 Mahindra Finance will specialise in financing products based on applications and

build on the competence developed in its focus area. It will target all segments of
vehicle financing and deploy the skills acquired through an in-depth understanding
of the chosen product market.
 It will provide products and services tailored to the needs of M&M, our most
favoured customer, and always meet their needs. In case of demand-supply
mismatch of funds, we will do everything to find a solution.
 Mahindra Finance will help M&M develop better products by providing first-hand
information received from the target market.
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STRENGTHS
The following are the key strengths of the Mahindra finance:

 In-depth knowledge of the rural and semi-urban market
 relationship with Mahindra & Mahindra
 branch network
 association with dealers
 client base
 loan approval and administration procedures
 ability to borrow at competitive rates
 Experienced Board and executive management team
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THE BOARD OF DIRECTORS OF MAHINDRA FINANCE
The Board of Directors of the Company has, as its members, eminent persons from
Industry, Finance, Investment and other branches of business, who bring diverse
experience and expertise to the Board.
The Company's current Board of Directors is as follows:
NAME DESIGNATION
Mr. Keshub Mahindra Chairman
Mr. Anand G. Mahindra Vice Chairman and Managing Director
Deepak Shantilal Parekh Director
Nadir Burjorji Godrej Director
M. M. Murugappan Director
Bharat Narotam Doshi Executive Director & Group Chief

Financial Officer (Group CFO)
Arun Kumar Nanda Executive Director & Secretary
Narayanan Vaghul Director
Dr. Ashok Sekhar Ganguly Director
R. K. Kulkarni Director
Anupam Pradip Puri Director
Thomas Mathew T. Nominee of LIC
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PRODUCT PORTFOLIO OF MAHINDRA FINANCE
Car loans
Personal Two-wheeler
loans loans
Utility
Services vehicle loans
Investment PRODUCT
advisory PORTFOLIO
Tractor loans
(mutual
funds)
Loans Refinance
Commercial Buy used

vehicle vehicles
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FUTURE PLANS OF MAHINDRA FINANCE
 The financing arm of the $4.5 billion Mahindra Group, Mahindra and Mahindra
Financial Services Limited, is now looking to tap overseas markets with possible
ventures in the US and South Africa.
 The company is planning to make entries into all the countries where the promoter
company Mahindra and Mahindra (M&M holds almost 70 per cent in the
company) has introduced its vehicles.
 M&M is already present in the US in the tractor segment and also in South Africa
through vehicles like Scorpio and other pick-up vehicles.
 With gross revenues of over Rs 840 crore (Rs 8.4 billion) logged in the last
financial year as compared with Rs 596 crore (Rs 5.96 billion) recorded in the
previous year, MMFSL is aiming to grow more robustly in the current fiscal too.
 Ramesh Iyer, managing director, MMFSL, said, "We are aiming to keep up our
current CAGR of 35 per cent per annum for this fiscal. The company is planning
for launch in key markets like the US and South Africa and also where M&M will
have presence in future".
 The company in India finances tractors, cars, utility vehicles, two wheelers, light
commercial vehicles, construction equipments and used cars through more 425
branches across the country.
 The company even has plans to finance heavy commercial vehicles in future.
 MMFSL, has come out with the third quarter results. The company reported net
profit of Rs 25.6 crore (Rs 256 million) versus Rs 30.3 crore (Rs 303 million) in
the previous quarter.
 Managing Director of the company, Ramesh Iyer, says that both, their auto
business as well as their tractor business grew 35-40%.
 He says that cost of funds has moved up, which has impacted margins. Iyer added
that the firm plans to add 15-20 new branches in the next three months.
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INTRODUCTION
TO THE PROJECT
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Mutual Fund Industry
The mutual fund industry is India started in 1963 with the formation of Unit Trust of
India, at the initiative of the government of India and Reserve Bank of the 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.
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). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.
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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 Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile 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,
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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. Erstwhile UTI was bifurcated into UTI
Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from
February 2003. The Assets under management of the Specified Undertaking of the
Unit Trust of India has therefore been excluded from the total assets of the industry as
a whole from February 2003 onwards.
GROWTH IN ASSETS UNDER MANAGEMENT OF

MUTUAL FUND INDUSTRY
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MUTUAL FUNDS OPERATION FLOW CHART
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realised are shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest
in a diversified, professionally managed basket of securities at a relatively low cost.
The flow chart below describes broadly the working of a mutual fund:
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ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the organisational set
up of a mutual fund:
SEBI
The regulation of mutual funds operating in India falls under the purview of the authority
of the Securities and Exchange Board of India (SEBI). Any person proposing to set
up a mutual fund in India is required, under the Securities and Exchange Board of
India (Mutual Funds) Regulations, 1996 (“Mutual Fund Regulations”),to be
registered with the SEBI.
SPONSOR
The sponsor should contribute at least 40% to the net worth of the AMC. However, if any
person holds 40% or more of the net worth of an AMC shall be deemed to be a
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sponsor and will be required to fulfill the eligibility criteria specified in the Mutual
Fund Regulations.
TRUSTEES
The mutual fund is required to have an independent Board of Trustees, i.e. two thirds of
the trustees should be independent persons who are not associated with the sponsors
in any manner whatsoever. An AMC or any of its officers or employees are not
eligible to act as a trustee of any mutual fund.
ASSET MANAGEMENT COMPANY
The sponsor or the trustee are required to appoint an AMC to manage the assets of the
mutual fund. Under the Mutual Fund Regulations, the applicant must satisfy certain
eligibility criteria in order to quality to register with SEBI as an AMC.
MUTUAL FUND
Every mutual fund must be registered with SEBI and must be constituted in the form of a
trust in accordance with the provisions of the Indian Trust Act, 1882.
THE TRANSFER AGENTS
The role of a transfer agent is to collect data from distributors relating to daily purchases
and redemption of units.
CUSTODIAN
Only institutions with substantial organizational strength, service capability in terms of

computerization and other infrastructure facilities are approved to act as custodians.
The custodian must be totally delinked from the AMC and must be registered with
SEBI.
UNIT HOLDERS
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They are the parties to whom the mutual fund is sold. They are ultimate beneficiary of the
income earned by the mutual funds.
THEORETICAL FRAMEWORK OF THE STUDY
There are various investment options but before going into detail one must clear about the
difference between saving and investment.
SAVING AND INVESTMENT
Many of us use the words “saving” and “investing interchangeably, but they are quite
different. Saving is storing money safely---such as in a bank or money market account---
we save for short-term needs such as upcoming expenses or emergencies. Typically, with
this kind of “saving”, we earn a low, fixed rate of return and we can withdraw or have
accesss to our money, easily. Investing is taking a risk with a portion of our savings. we
can buy stocks and bonds or mutual funds with the hope of realizing higher long-term
returns. Unlike bank savings, stocks and bonds have historically returned enough to
outpace inflation, but they can also decline in value from time to time.
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How Saving and Investing Differ
Saving Investing
Objective Short term needs Long-Term needs
Vehicles Used Bank or money market Stocks, bonds and
Accounts, certificates mutual funds
Of deposit (CD)
Risk None on balances (generally Varies, depending on
Up to $100,000 per depositor) on securities owned
In federally insured bank
accounts and CDs
Source of Interest paid on money Interest and capital gains
Return deposited (or losses), depending on
Securities owned
Key Benefit Money is safe and Returns have outpaced
Accessible inflation over the long term
Key Drawback Returns historically You could lose money if
Have not outpaced Securities decline in
Inflation over time value
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Most medium- and long-term goals require more than saving, they require investing. Our
culture has become used to borrowing to reach goals, but if we borrow for everything we
can't afford, we will be using future income to repay loans and credit card debt. we can't
borrow for everything. we will still need a substantial down payment to purchase a home
or buy a car. And borrowing for some things, like retirement, doesn't make sense. In
broad sense Saving and investing both have a place in our future happiness. Investing has
a big advantage because we can choose ways that allow our money to compound over
time. How does our money compound? It depends on our investments, how much we
earn, how often compounding is calculated, and how long compounding has been
working for us.
Saving and investing allow us to make our hard-earned money work for us. Interest,
dividends, and capital gains build wealth over time. For example, $1000 invested in the
stock market at an average rate of 10.4 percent (Ibbotson Associates) will grow to:
• $2,690 in 10 years
• $4,411 in 15 years
• $7.234 in 20 years
• $19,457 in 30 years
DIFFERENT INVESTMENT SCHEMES
• Stock Market
• Commodity
• Real Estate
• Insurance
• Government Securities
• Mutual Funds
• Post Office Deposits
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• Arts and Antiques

• Money Market Securities
STOCK MARKET
A stock market, or (equity market), is a private or public market for the trading of
company stock and derivatives of company stock at an agreed price; these are securities
listed on a stock exchange as well as those only traded privately.
COMMODITY MARKET
Commodity markets are markets where raw or primary products are exchanged. These
raw commodities are traded on regulated commodities exchanges, in which they are
bought and sold in standardized contracts.
INSURANCE
Insurance is defined as the equitable transfer of the risk of a loss, from one entity to
another, in exchange for a premium. An insurer is a company selling the insurance.
GOVERNMENT SECURITIES
Government securities(G-secs) are sovereign securities which are issued by the Reserve
Bank of India on behalf of Government of India,in lieu of the Central Government's
market borrowing programme.
POST OFFICE DEPOSITS

A Post-Office Recurring Deposit Account (RDA) is a banking service offered by
Department of post, Government of India at all post office counters in the country. The
scheme is meant for investors who want to deposit a fixed amount every month, in order
to get a lump sum after five years. The scheme, a systematic way for long term savings, is
one of the best investment options for the low income groups.
MONEY MARKET SECURITIES
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Money Market securities are some of the safest and most liquid of all investments
available. Risk-averse investors that have a quick need for cash often find money market
securities a good investment choice. The money market itself operates through dealers,
Money Center Banks, and the Open Market Trading Desk at the New York Federal
Reserve Bank. The basic money market securities are:
Treasury bills Certificates of deposits
Money market funds Commercial papers
MUTUAL FUNDS
A mutual fund is a company that pools money from many investors and invests the money
in stocks, bonds, short-term money-market instruments, or other securities or assets, or
some combination of these investments. The combined holdings the mutual fund owns are
known as its portfolio. Each share represents an investor's proportionate ownership of the
fund's holdings and the income those holdings generate. Legally known as an "open-end
company," a mutual fund is one of three basic types of Investment Company. The two
other basic types are closed-end funds and Unit Investment Trusts (UITs).
OTHER TYPES OF INVESTMENT SCHEMES
The two other basic types of investment companies are:
Closed-end funds — which, unlike mutual funds, sell a fixed number of shares at one
time (in an initial public offering) that later trade on a secondary market; and
Unit Investment Trusts (UITs) — which make a one-time public offering of only a
specific, fixed number of redeemable securities called "units" and which will terminate
and dissolve on a date specified at the creation of the UIT. "Exchange-traded funds"
(ETFs) are a type of investment company that aims to achieve the same return as a
particular market index. They can be either open-end companies or UITs. But ETFs are
not considered to be, and are not permitted to call themselves, mutual funds.
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DISTINGUISHING CHARACTERISTICS OF MUTUAL FUNDS:
• Investors purchase mutual fund shares from the fund itself (or through a broker for
the fund), but are not able to purchase the shares from other investors on a
secondary market, such as the New York Stock Exchange or Nasdaq Stock
Market.
• The price investors pay for mutual fund shares is the fund’s approximate per share
net asset value (NAV) plus any shareholder fees that the fund imposes at purchase
(such as sales loads).
• Mutual fund shares are "redeemable." This means that when mutual fund investors
want to sell their fund shares, they sell them back to the fund (or to a broker acting
for the fund) at their approximate per share NAV, minus any fees the fund
imposes at that time (such as deferred sales loads or redemption fees).
• Mutual funds generally sell their shares on a continuous basis, although some
funds will stop selling when, for example, they become too large.
• The investment portfolios of mutual funds typically are managed by separate
entities known as "investment advisers" that are registered with the SEC.
KEY POINTS
• Mutual funds are not guaranteed or insured by the FDIC or any other
government agency — even if buying is done through a bank and the fund
carries the bank's name. Money can be loosening by investing in mutual funds.
• Past performance is not a reliable indicator of future performance. So don't be
dazzled by last year's high returns. But past performance can help only to
assess a funds volatility over time.
• All mutual funds have costs that lower the investment returns.
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ADVANTAGES OF MUTUAL FUNDS
Every investment has advantages and disadvantages. But it's important to remember that
features that matter to one investor may not be important to us. Whether any particular
feature is an advantage for us will depend on our unique circumstances. For some
investors, mutual funds provide an attractive investment choice because they generally
offer the following features:
• Professional Management — Professional money managers research, select, and

monitor the performance of the securities the fund purchases.
• Diversification — Diversification is an investing strategy that can be neatly

summed up as "Don't put all your eggs in one basket." Spreading the investments
across a wide range of companies and industry sectors can help lower the risk if a
company or sector fails. Some investors find it easier to achieve diversification
through ownership of mutual funds rather than through ownership of individual
stocks or bonds.
• Affordability — Some mutual funds accommodate investors who don't have a lot
of money to invest by setting relatively low dollar amounts for initial purchases,
subsequent monthly purchases, or both.
• Liquidity — Mutual fund investors can readily redeem their shares at the current
NAV — plus any fees and charges assessed on redemption — at any time.
DISADVANTAGES OF MUTUAL FUNDS
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• Costs despite Negative Returns — Investors must pay sales charges, annual fees,
and other expenses (which we'll discuss below) 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 fund
went on to perform poorly after they bought shares.
• Lack of Control — Investors typically cannot ascertain the exact make-up of a

fund's portfolio at any given time, nor can they directly influence which securities
the fund manager buys and sells or the timing of those trades.
• Price Uncertainty — With an individual stock, investors can obtain real-time (or
close to real-time) pricing information with relative ease by checking financial
websites or by calling your broker. You can also monitor how a stock's price
changes from hour to hour — or even second to second. By contrast, with a
mutual fund, the price at which you purchase or redeem shares will typically
depend on the fund's NAV, which the fund might not calculate until many hours
after you've placed your order. In general, mutual funds must calculate their NAV
at least once every business day, typically after the major U.S. exchanges close.
DIFFERENT TYPES OF FUNDS
When it comes to investing in mutual funds, investors have literally thousands of choices.
Before invest in any given fund, investors should decide whether the investment strategy
and risks of the fund are a good fit for them or not.. The first step to successful investing
is figuring out our financial goals and risk tolerance — either on our own or with the help
of a financial professional. Once we know what we're saving for, when we'll need the
money, and how much risk we can tolerate, we can more easily narrow our choices.
Most mutual funds fall into one of three main categories — money market funds, bond
funds (also called "fixed income" funds), and stock funds (also called "equity" funds).
Each type has different features and different risks and rewards. Generally, the higher the
potential return, the higher the risk of loss.
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Money Market Funds
Money market funds have relatively low risks, compared to other mutual funds (and
most other investments). By law, they can invest in only certain high-quality, short-term
investments issued by the U.S. government, U.S. corporations, and state and local
governments. Money market funds try to keep their net asset value (NAV) — which
represents the value of one share in a fund — at a stable $1.00 per share. But the NAV
may fall below $1.00 if the fund's investments perform poorly. Investor losses have
been rare, but they are possible.
Money market funds pay dividends that generally reflect short-term interest rates, and
historically the returns for money market funds have been lower than for either bond or
stock funds. That's why "inflation risk" — the risk that inflation will outpace and erode
investment returns over time — can be a potential concern for investors in money
market funds.
Bond Funds
Bond funds generally have higher risks than money market funds, largely because they
typically pursue strategies aimed at producing higher yields. Unlike money market
funds, the SEC's rules do not restrict bond funds to high-quality or short-term
investments. Because there are many different types of bonds, bond funds can vary
dramatically in their risks and rewards. Some of the risks associated with bond funds
include:
Credit Risk — the possibility that companies or other issuers whose bonds are owned by
the fund may fail to pay their debts (including the debt owed to holders of their bonds).
Credit risk is less of a factor for bond funds that invest in insured bonds or U.S. Treasury
bonds. By contrast, those that invest in the bonds of companies with poor credit ratings
generally will be subject to higher risk.
Interest Rate Risk — the risk that the market value of the bonds will go down when
interest rates go up. Because of this, we can lose money in any bond fund, including those
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that invest only in insured bonds or Treasury bonds. Funds that invest in longer-term
bonds tend to have higher interest rate risk.
Prepayment Risk — the chance that a bond will be paid off early. For example, if
interest rates fall, a bond issuer may decide to pay off (or "retire") its debt and issue new
bonds that pay a lower rate. When this happens, the fund may not be able to reinvest the
proceeds in an investment with as high a return or yield.
Stock Funds
Although a stock fund's value can rise and fall quickly (and dramatically) over the short
term, historically stocks have performed better over the long term than other types of
investments — including corporate bonds, government bonds, and treasury securities.
Overall "market risk" poses the greatest potential danger for investors in stocks funds.
Stock prices can fluctuate for a broad range of reasons — such as the overall strength of
the economy or demand for particular products or services.
Not all stock funds are the same. For example:
• Growth funds focus on stocks that may not pay a regular dividend but have the
potential for large capital gains.
• Income funds invest in stocks that pay regular dividends.
• Index funds aim to achieve the same return as a particular market index, such
as the S&P 500 Composite Stock Price Index, by investing in all — or perhaps
a representative sample — of the companies included in an index.
• Sector funds may specialize in a particular industry segment, such as
technology or consumer products stocks.
HOW FUNDS CAN EARN MONEY
32
Investors can earn money from their investment in three ways:
1. Dividend Payments — A fund may earn income in the form of dividends and
interest on the securities in its portfolio. The fund then pays its shareholders nearly
all of the income (minus disclosed expenses) it has earned in the form of
dividends.
2. Capital Gains Distributions — The price of the securities a fund owns may
increase. When a fund sells a security that has increased in price, the fund has a
capital gain. At the end of the year, most funds distribute these capital gains
(minus any capital losses) to investors.
3. Increased NAV — If the market value of a fund's portfolio increases after

deduction of expenses and liabilities, then the value (NAV) of the fund and its
shares increases. The higher NAV reflects the higher value of your investment.
With respect to dividend payments and capital gains distributions, funds usually will give
a choice: the fund can send a check or other form of payment, or investors can have their
dividends or distributions reinvested in the fund to buy more shares (often without paying
an additional sales load).
FACTORS TO CONSIDER BEFORE INVESTING IN MUTUAL FUNDS
33
Thinking about long-term investment strategies and tolerance for risk can help the
investors to decide what type of fund is best suited for them. But they should also
consider the effect that fees and taxes will have on their returns over time.
1. Degrees of Risk
All funds carry some level of risk. investors may lose some or all of the money they
invest — their principal — because the securities held by a fund go up and down in value.
Dividend or interest payments may also fluctuate as market conditions change. Mutual
funds offer a variety of schemes ranging from relatively safe debt funds like Magnum
Income Fund and gilt funds like Magnum Guilt Fund to very risky sectoral funds like
Magnum Sector Funds Umbrella. Investors can choose schemes best suited to their risk
appetite. Debt funds and gilt funds, which invest only in fixed-income instruments, are
relatively safe and offer returns equivalent to returns on pure Debt instruments, when held
for atleast a year. Sectoral funds, such as IT Funds, Pharma Funds, etc can offer very high
returns when the stock markets are bullish, but these are high risk products and can also
result in a loss on capital when the markets are bearish.
34
Sectoral funds
R
E
T Equity funds
U
R
N Index funds
S
Balanced funds
Debt funds
Liquid funds
RISK
2. Mutual Fund Fees and Expenses
As with any business, running a mutual fund involves costs. For example, there are costs
incurred in connection with particular investor transactions, such as investor purchases,
exchanges, and redemptions. There are also regular fund operating costs that are not
necessarily associated with any particular investor transaction, such as investment
advisory fees, marketing and distribution expenses, brokerage fees, and custodial, transfer
agency, legal, and accountant’s fees. Some funds cover the costs associated with an
individual investor’s transactions and account by imposing fees and charges directly on
the investor at the time of the transactions (or periodically with respect to account fees).
These fees and charges are identified in a fee table, under the heading "Shareholder Fees."
Funds typically pay their regular and recurring, fund-wide operating expenses out of fund
assets, rather than by imposing separate fees and charges on investors. (however, that
because these expenses are paid out of fund assets, investors are paying them indirectly.)
Although the SEC limits redemption fees to 2% in most situations but the Financial
Industry Regulatory Authority (FINRA), however, does impose limits on some fees.
35
Shareholder Fees
• Sales Charge (Load) on Purchases — the amount investors pay when they buy
shares in a mutual fund. Also known as a "front-end load," this fee typically goes
to the brokers that sell the fund's shares. Front-end loads reduce the amount of
their investment. For example, let's say a person have $1,000 and want to invest it
in a mutual fund with a 5% front-end load. The $50 sales load he must pay comes
off the top, and the remaining $950 will be invested in the fund. According to
NASD rules, a front-end load cannot be higher than 8.5% of his investment.
• Purchase Fee — another type of fee that some funds charge their shareholders
when they buy shares. Unlike a front-end sales load, a purchase fee is paid to the
fund (not to a broker) and is typically imposed to defray some of the fund's costs
associated with the purchase.
• Deferred Sales Charge (Load) — a fee investors pay when they sell their shares.
Also known as a "back-end load," this fee typically goes to the brokers that sell
the fund's shares. The most common type of back-end sales load is the "contingent
deferred sales load" (also known as a "CDSC" or "CDSL"). The amount of this
type of load will depend on how long the investor holds his or her shares and
typically decreases to zero if the investor holds his or her shares long enough.
• Redemption Fee — another type of fee that some funds charge their shareholders
when they sell or redeem shares. Unlike a deferred sales load, a redemption fee is
paid to the fund (not to a broker) and is typically used to defray fund costs
associated with a shareholder's redemption.
• Exchange Fee — a fee that some funds impose on shareholders if they exchange
(transfer) to another fund within the same fund group or "family of funds."
• Account fee — a fee that some funds separately impose on investors in

connection with the maintenance of their accounts. For example, some funds
36
impose an account maintenance fee on accounts whose value is less than a certain
dollar amount.
Annual Fund Operating Expenses
• Management Fees — fees that are paid out of fund assets to the fund's investment
adviser for investment portfolio management, any other management fees payable
to the fund's investment adviser or its affiliates, and administrative fees payable to
the investment adviser that are not included in the "Other Expenses" category
(discussed below).
• Distribution [and/or Service] Fees ("12b-1" Fees) — fees paid by the fund out
of fund assets to cover the costs of marketing and selling fund shares and
sometimes to cover the costs of providing shareholder services. "Distribution fees"
include fees to compensate brokers and others who sell fund shares and to pay for
advertising, the printing and mailing of prospectuses to new investors, and the
printing and mailing of sales literature. "Shareholder Service Fees" are fees paid to
persons to respond to investor inquiries and provide investors with information
about their investments.
• Other Expenses — expenses not included under "Management Fees" or

"Distribution or Service (12b-1) Fees," such as any shareholder service expenses
that are not already included in the 12b-1 fees, custodial expenses, legal and
accounting expenses, transfer agent expenses, and other administrative expenses.
• Total Annual Fund Operating Expenses ("Expense Ratio") — the line of the
fee table that represents the total of a fund’s entire annual fund operating
expenses, expressed as a percentage of the fund's average net assets.
Even small differences in fees can translate into large differences in returns over time.
For example, if a investor invested $10,000 in a fund that produced a 10% annual
return before expenses and had annual operating expenses of 1.5%, then after 20 years
37
he would have roughly $49,725. But if the fund had expenses of only 0.5%, then he
would end up with $60,858 — an 18% difference.
Net Asset Value
"Net asset value," or "NAV," of an investment company is the company’s total assets
minus its total liabilities. For example, if an investment company has securities and other
assets worth $100 million and has liabilities of $10 million, the investment company’s
NAV will be $90 million. Because an investment company’s assets and liabilities change
daily, NAV will also change daily. NAV might be $90 million one day, $100 million the
next, and $80 million the day after.
An investment company calculates the NAV of a single share (or the "per share NAV")
by dividing its NAV by the number of shares that are outstanding. For example, if a
mutual fund has an NAV of $100 million, and investors own 10,000,000 of the fund’s
shares, the fund’s per share NAV will be $10. Because per share NAV is based on NAV,
which changes daily, and on the number of shares held by investors, which also changes
daily, per share NAV also will change daily. Most mutual funds publish their per share
NAVs in the daily newspapers.
DIFFERENT INVESTMENT OPTIONS IN MUTUAL FUNDS
There are many investment options in mutual funds. These are:
• SIP (Systematic Investment Plan)

• Lump sum
38
• ZIP (Zoom Investment Plan)

• STP (Systematic Transfer Plan)
Systematic Investment Plans
SIP is a method of investing a fixed /regular sum every month or every quarter. The
investment can be in the scheme of anyone’s choice as most mutual funds give this
facility for their schemes. In other words, instead of investing lump sum in one scheme
investor invest a smaller fixed amount every month or every quarter. His account gets
credited with proportionate units every month and he receives up-dated statements
reflecting his transactions.
For example: If your scheme of choice is, say, HDFC Top 200 or DSPML TIGER and
you want to invest Rs 1,00,000 in it. Instead of issuing a cheque of Rs100,000 at one go,
invest Rs 5000 every month for 20 months. This is systematic investment planning.
The biggest plus which SIP provides you with is regular disciplined savings.
For as little as Rs. 250* each month for 12 months or Rs. 500 every month for 6 months,
investor can purchase mutual fund units and avoid larger minimum investment amounts
of over Rs. 1,000. Fixed amounts can be invested in Mutual Funds each month using
funds drawn automatically from their savings account regularly.
How to invest in SIPs?
 The SIP option is available with all types of funds like equity, income or gilt.
 An investor can avail the SIP option by giving post-dated cheques of Rs 500 or Rs
1,000 according to the funds’ policy.
39
 If an investor wants to put more than Rs 500 or Rs 1,000 in any given month he
will have to fill in a new a form for SIP intimating the fund that he is changing his
SIP structure. Also he will be allowed to change the SIP structure only in the
multiples of the SIP amount.
 If an investor is investing in two different schemes of the same fund he can fill in a
common SIP form for all the schemes. However if the first holders in those
schemes are different than they will have to fill different SIP forms, as the first
holder has to sign on the form.
 The investor can get out of the fund i.e. redeem his units any time irrespective of
whether he has completed his minimum investment in that scheme. In such a case
his post-dated cheques will be returned back to him.
BENEFITS OF SYSTEMATIC INVESTMENT PLAN
Over the last 12 months investors in equity markets have seen it all. From all time highs
of round 21,000 levels to dismal lows of round 13,000. A lot of investors who entered at
21,000 expecting the market to go even higher are very upset. Most investors cannot
really stomach the kind of volatility that is inherent in equity markets. At the end of the
day, investors who can take some risk are actually shunning equities only because they
entered equity markets at the ‘wrong time’. Systematic investment plans (SIPs) take care
of this problem. But market timing is not the only reason for you to plump for SIPs, there
are other advantages.
1. Light on the wallet

Given that average per capital income of an Indian is approximately only Rs 25,000 (i.e.
monthly income of Rs 2,083), a Rs 5,000 one-time entry in a mutual fund is still asking
for a lot (2.4 times the monthly income!). And mutual funds were never meant to be
elitist; far from it, the retail investor is as much a part of the mutual fund target audience
as the next high net worth investor (HNI). So if one cannot shell out Rs 5,000, that’s not a
40
huge stumbling block, SIP route trigger the mutual fund investment with as low as Rs 500
(in most cases).
2. Makes market timing irrelevant

If market lows give investor the jitters and make him wish him had never invested in
equity markets, then SIPs can help him blunt that depression. Most retail investors are not
experts on stocks and are even more out-of-sorts with stock market oscillations. But that
does not necessarily make stocks a loss-making investment proposition. Studies have
repeatedly highlighted the ability of stocks to outperform other asset classes (debt, gold,
property) over the long-term (at least 5 years) as also to effectively counter inflation. So if
stocks are such a great thing, why are so many investors complaining? Its because they
either got the stock wrong or the timing wrong. Both these problems can be solved
through an SIP in a mutual fund.
3. Helps to build for the future

Most of us have needs that involve significant amounts of money, like child’s education,
daughter’s marriage, buying a house or a car. If we had to save for these milestones
overnight or even a couple of years in advance, we are unlikely to meet our objective
(wedding, education, house, etc). But if we start saving a small amount every
month/quarter through SIPs that is treated as sacred and that is set aside for some purpose,
we have a far better chance of making that down payment on our house or getting our
daughter married without drawing on our PF (provident fund).
4. Compounds return
The early bird gets the worm is not just a part of the jungle folklore. Even the ‘early’
investor gets a lion’s share of the investment booty vis-à-vis the investor who comes in
later. This is mainly due to a thumb rule of finance called ‘compounding’. According to a
study by Principal Mutual Fund if Investor Early and Investor Late begin investing Rs
1,000 monthly in a balanced fund (50:50 – equity:debt) at 25 years and 30 years of age
respectively, Investor Early will build a corpus of Rs 8 m (Rs 80 lakhs) at 60 years, which
is twice the corpus of Rs 4 m that Investor Late will accumulate. A gap of 5 only years
results in a doubling of the investment corpus! That is why SIPs should become an
41
investment habit. SIPs run over a period of time (decided by you) and help you avail of
compounding.
5. Lowers the average cost

SIPs work better as opposed to one-time investing. This is because of rupee-cost
averaging. Under rupee-cost averaging an investor typically buys more of a mutual fund
unit when prices are low. On the other hand, investor will buy fewer mutual fund units
when prices are high. This is a good discipline since it forces the investor to commit cash
at market lows, when other investors around him are wary and exiting the market.
Investors may even be pleased when prices fall because the fixed rupee investment would
now fetch more units.
BENEFIT OF SIP OVER LUMP SUM
There are many investors who like to park their money as a lump sum into an asset class
and forget about it. They don't want to worry about what's happening to it on a daily basis
as long as the investment earns them some returns in the long haul. That's not a bad idea
at all and the safer the instrument, the lesser are your worries about returns. But there is
another way this lumpsum can be used -- by investing a fixed sum at regular intervals.
This method eliminates the need to time the market (making an entry or an exit) -- an area
where most investors are prone to go wrong. This method is commonly known as the
rupee cost averaging. Under this system, one need not worry about when and how much
to invest. A fixed sum of money can be invested regularly and over time it averages out
the costs.
For instance, if one were to buy units of a mutual fund -- by following rupee cost
averaging, the fixed amount of money will fetch more units when the net asset value of
the units are down, and vice versa. What one must remember here is that what price you
pay for a single unit does not matter but the average price at the end of purchase is what
holds and the returns are based on this average cost. This automatically falls in line with
42
the age-old principle of buy low and sell high. Rupee cost averaging, of course, does not
inculcate the selling aspect. It only helps one average the cost of an asset purchase.
How it plans out

Time Fixed amount Price per Shares
(mths) invested (Rs) share (Rs) purchased
1 1000 20 50
2 1000 21 48
3 1000 24 42
4 1000 19 53
5 1000 16 63
6 1000 17 59
7 1000 16 63
8 1000 23 43
9 1000 18 56
10 1000 22 45
Total 10,000 19.6 520
This helps in doing away with the volatility in the market since it smoothens out ups and
downs. A look at the table shows how investing regularly can fetch us more shares of a
stock through rupee cost averaging. In the above example, when investing in lump sum,
the share price was Rs 20 -- meaning, we end up buying 500 shares. Instead, if one were
to invest Rs 1,000 every month for 10 months, the total number of shares purchased adds
up to 520, since these were bought at different price levels and the average cost of each
share comes down to Rs 19.6. And 520 shares would definitely fetch a higher return than
500 at the end of ten months.
43
LITERATURE
REVIEW
 Laurent Barras et al, has developed a simple technique that controls for
“false discoveries,” or mutual funds that exhibit significant alphas by luck alone.
Our approach precisely separates funds into (1) unskilled, (2) zero-alpha, and (3)
skilled funds, even with dependencies in cross-fund estimated alphas. We find
44
that 75% of funds exhibit a zero alpha (net of expenses), consistent with the Berk
and Green (2004) equilibrium. Further, we find a significant proportion of skilled
(positive alpha) funds prior to 1996, but almost none by 2006. We also show that
controlling for false discoveries substantially improves the ability to find funds
with persistent performance
 Olivier Scaillet et al, has develops a simple technique that properly

controls for “false discoveries,” or mutual funds that exhibit significant alphas by
luck alone, to evaluate the performance of actively managed U.S. domestic-equity
mutual funds during the 1975 to 2006 period. Our approach precisely separates
mutual funds into those having (1) unskilled, (2) zeroalpha, and (3) skilled fund
managers, net of expenses, even with cross-fund dependencies in estimated
alphas. This separation into skill groups allows several new insights. First, we
find that the majority of funds (75.4%) pick stocks well enough to cover their
trading costs and other expenses, producing a zero alpha, consistent with the
equilibrium model of Berk and Green (2004). Further, we find a significant
proportion of skilled (positive alpha) funds prior to 1996, but almost none by
2006, accompanied by a large increase in unskilled (negative alpha) fund
managers—due both to a large reduction in the proportion of fund managers with
stockpicking skills and to a persistent level of expenses that exceed the value
generated by these managers. Finally, we show that controlling for false
discoveries substantially improves the ability to find funds with persistent
performance.
 Kent Daniel et al, In managing mutual funds, stock selection appears to be

the main source of fees. The question then is whether the stock selection is good
enough to generate performance that compensates for those fees. This question
45
has previously been considered by different authors and tests have been carried
out using various models. Most studies have concluded that mutual funds do not
have significant stock-picking ability. Although several studies have found
evidence of persistence in mutual fund performance, this persistence has been
attributed to either survival bias or benchmark errors. This article presents a
methodology for analysing fund performance using benchmarks that are based on
portfolio characteristics. This study is in the line with that of Grinblatt and
Titman (1989, 1993). The method developed by Grinblatt and Titman is quite
different from those employed in other studies. Instead of considering the actual
returns realised by funds, they study the performance of individual stocks held by
funds. This allows them to derive benchmarks that suit the investment styles of
the funds better. Moreover, it enables fund returns to be obtained without
deducting fees and transaction costs. The comparison with the benchmark is
therefore fairer, as benchmarks do not take these expenses into account. It is then
possible to see whether fund managers have any stock selection or timing
abilities.
46
RESEARCH
METHODOLOGY
RESEARCH METHODOLOGY
47
The study is based on survey and fact finding enquiries with the business class and
salaried class people. The research is planned on such way as to give a clear picture of
respondent’s preference towards systematic investment plan in mutual funds.
The research is done so as to verify knowledge and to get the latest information which
cannot be got anywhere else.
OBJECTIVE OF THE STUDY
• To study the preference of the customers among various investment options.

• To study the awareness of Mutual funds among people in Chandigarh.
• To study the most preferred options (Lump sum or SIP) in Mutual funds among
different classes (business class and salaried class).
• To study the factors affecting the purchasing of Mutual funds.
• To study the volatility of market on the future of Mutual fund industry.
RESEARCH PROBLEM
The analysis and observation of systematic investment plan by business class and salaried
class.
RESEARCH DESIGN
Research design is both qualitative as well as quantitative.
48
Qualitative Research
Qualitative research is used for investigating the reasons for human behavior. Under
qualitative research there is Attitude or Opinion research. This research is designed to
find out respondents preference towards different investment options.
The various factors which is analyzed through this research is :
• What factors motivate people to invest in mutual funds?
• Effect of market volatility on customer’s investment decision.
Quantitative Research
In quantitative research all the data are expressed in tabulated form and statistical tool are
applied.
SCOPE OF THE STUDY
The scope of the study is to know the perception of the consumers about different
investment options and the factors affecting their investment decisions. The study has its
practicability for Asset Management Companies to understand what kind of features
customers want in their fund schemes. The study will help in for creating an
understanding whether the business class is more interested in Systematic Investment Plan
or the salaried class and why?
DATA COLLECTION
49
Primary data is a fresh data and the researcher as per its need collects it. Here in this
study, primary data is collected through
Questionnaire method
This was pretested before finally being used for the study. The questionnaire is framed
with closed ended, dichotomous, multiple choice, the Likert – scale type and open ended
questions. Basically the questions were framed with the motive of extracting information
from the respondents to know their preference towards Lump sum or SIP.
Secondary data is pre collected data and is used for the research as per the needs in my
research the secondary data used is company profile and introduction of mutual fund
industry, data from websites and magazines.
SAMPLING TECHNIQUE
Sampling procedure
Random sample method : Data is collected by random sample method also known as
chance sampling or probability sampling. In this sampling each and every person in the
population has an equal chance of inclusion in the sample.
SAMPLE SIZE
Sample size of the research is 150 i.e. 150 respondents was contacted for the relevant
information and data’s required.
AREA OF SURVEY
The area of survey for the study is of Chandigarh and Kurali, Kharar (Mohali). The basis
of selection is based on different classification such as occupation, age, income etc.
DATA USAGE
50
For the analysis and interpretation only primary data is used. However for the conclusion
and recommendations both primary and secondary data along with verbal knowledge and
information obtained from respondents is used. The data collected from respondents is
analyzed with the simple observations and with the statistical tools like:
Mean value
Pie diagrams
Bar charts
Likert scale &
Hypothesis testing.(χ2, Z-test)
SUMMARY OF THE RESEARCH METHODOLOGY
51
RESEARCH DESIGN QUALITATIVE RESEARCH

QUANTITATIVE RESEARCH
PRIMARY SOURCE
Website
Magazines
DATA COLLECTION SECONDARY SOURCE

Questionnaire
SAMPLING TECHNIQUE PROBABILITY SAMPLING
SAMPLE SIZE 150
AREA OF SURVEY CHANDIGARH & MOHALI
MEAN VALUE
PIE GRAPHS
STATISTICAL TOOLS BAR CHARTS
LIKERT SCALE
HYPOTHESIS TESTING
52
DATA ANALYSIS
&
INTERPRETATION
DATA ANALYSIS AND INTERPRETATION
53
INCOME WISE SEGMENTATION OF THE SAMPLE
ANNUAL INCOME COUNT IN PERCENTAGE
BUSINESS CLASS SALARIED CLASS

1-1.5 LAKH 28% 30%
1.5-2.5 LAKH 40% 27%
2.5-3.5 LAKH 20% 40%
3.5-4.5 LAKH 12% 3%
40 40 40
35
30
30 28 27
C 25
O 20 20 business class
U
15 salaried class
N 12
T 10
5 3
0
1.5 2.5 3.5 more than 4.5
ANNUAL INCOME IN LAKHS

INTERPRETATION
In this study large number of the salaried class (40%) comes in the income group of 2.5
lakh whereas 40% business class (40%) comes in the income group of 3.5 lakh.
Least no. of salaried class respondents come in the income group of 4.5 lakh.
And the income of the people largely affects their investment decisions.
1. What is your occupation?
OCCUPATION VALID FREQUENCY VALID

PERCENTAGE
54
BUSINESS CLASS 70 47%
SALARIED CLASS 72 48%
RETIRED 5 3%
HOUSE WIVES 3 2%
GRAPHICAL PRESENTATION
3% 2%
BUSINESS CLASS
47% SALARIED CLASS
RETIRED
48%
HOUSE WIVES
INTERPRETATION
This study consists of 47% business class and 48% salaried class and the rest 3% retired
and 2% housewives.
The occupation of a person also affects their investment decisions.
2. How much people invest money?
55
VALUE TABLE VALID VALID

FREQUENCY PERCENTAGE
BUSINESS CLASS 49 44%
SALARIED 66 56%
CLASS
0%
44%
business
class
salaried class
56%
INTERPRETATION
As compared to business class, most of the salaried class invests money in various
investment options. According to the survey, 56% salaried class and 44% business class
invests money. And rests of them are still planning to invest.
3. What kind of investor you are?
56
INVESTOR BUSINESS CLASS SALARIED CLASS
RISK LOVER 40% 38%
RISK NEUTRAL 47% 40%
RISK AVERTER 13% 22%
50 47
40 40 38 40
PERCENTAGE
VALUE IN
30
22
20 business class
13 salaried class
10
0
risk lover risk neutral risk averter
INVESTORS
INTERPRETATION
In this study it has been found that most of the business class is risk lovers whereas most
of the salaried class is risk averters; because high risk means high returns and
businessman usually wants more returns in short period of time whereas salaried class
wants their money to be safe.
4. In which options of investment you invest the money?
57
a. FOR BUSINESS CLASS:
INVESMENT OPTIONS RESPONDENTS PERCENTAGE

MUTUAL FUNDS 56 80%
NSC 24 35%
FD 21 30%
POST OFFICE SAVINGS 28 40%
IPO 31 45%
DIRECT STOCK 35 50%
EXCHANGE
OTHERS 16 25%
80 80
70
PERCENTAGE
60
VALUE IN
50 50
45
40 40
35
30 30
20 business class
20
10
0
MF NSC FD POS IPO DSE others
INVESTORS
Analysis :
58
O E O-E (O-E) 2 (O-E) 2

/E
56 32.5 23.5 552.25 16.992

24 32.5 -8.5 72.25 2.223
21 32.5 -11.5 132.25 4.069
28 32.5 -4.5 20.25 0.623
31 32.5 -1.5 2.25 0.069
35 32.5 2.5 6.25 0.192
χ2 = 24.168
Applying χ2 test, for degree of freedom (v) =6-1=5, χ2 0.005 = 11.1
Here χ2 = 24.168
H0: Let us make the hypothesis that there is no significant difference between ‘O’ and
‘E’.
H1: There is a significant difference between ‘O’ and ‘E’.
Hence calculated value χ2c > χ2t ; 24.168>11.1
H0 is rejected and H1 is accepted
There is significance between our observed and expected frequency. So the hypothesis
holds bad.
b. FOR SALARIED CLASS:
59

MUTUAL FUNDS 54 75%
NSC 26 36%
FD 34 48%
POST OFFICE SAVINGS 27 38%
IPO 37 51%
DIRECT STOCK 29 40%
EXCHANGE
OTHERS 14 20%
80 75
70
PERCENTAGE
60
VALUE IN
50 48 51
40 38 40
36
30 salaried class
20 20
10
0
MF FD IPO others
INVESTORS
Analysis:
O E O-E (O-E) 2 (O-E) 2

/E
60
54 34.5 19.5 380.25 11.0210

26 34.5 -8.5 72.25 2.0940
34 34.5 -0.5 0.25 0.0072
27 34.5 -7.5 56.25 1.6304
37 34.5 2.5 15.25 0.0289
29 34.5 -5.5 30.25 0.8768
χ2 = 15.6619
Applying χ2 test, for degree of freedom (v) =6-1=5, χ2 0.005 = 11.1
Here χ2 = 15.6619
H0: Let us make the hypothesis that there is no significant difference between ‘O’ and
‘E’.
H1: There is a significant difference between ‘O’ and ‘E’.
Hence calculated value χ2c > χ2t ; 15.6619 >11.1
H0 is rejected and H1 is accepted
There is significance between our observed and expected frequency. So the hypothesis
holds bad.
INTERPRETATION
Mutual funds are the most preferred investment options in business class and
salaried class but as compared to salaried class (75%) business class (80%) invest in
big quantities in mutual funds. After mutual funds business class invests in direct
stock exchange in big quantities whereas salaried class invests in initial public
offers in big quantities.
5. What is the motive of investment?
61
BUSINESS CLASS SALARIED CLASS
SHORT TERM GAINS 63% 29%
LONG TERM GAINS 37% 71%
FOR BUSINESS CLASS
0%
0%
37%
SHORT TERM GAINS

LONG TERM GAINS
63%
FOR SALARIED CLASS
62
0%
0%
29%
S HO RT T ERM G AINS
L O NG T ERM G AINS
71%
INTERPRETATION
The study shows that business class and salaried class invests in the SIP for different
motives. The business class invests for speculative gains and salaried class invests in SIP
for the long term gains.
6. Why do you invest in mutual funds?
63
FACTORS BUSINESS CLASS SALARIED CLASS
EXPERT 85% 33%

MANAGEMENT
TRANSPARENCY 38% 28%
LIQUIDITY 45% 30%
TAX BENEFITS 55% 85%
CONVENIENCE 30% 27%
HIGH RETURNS 70% 50%
90% 85% 85%

80%
70% 70%
60% 55%
50% 50%
45%
40% 38% BUSINESS CLASS
33% SALARIED CLASS
30% 28% 30% 30%
27%
20%
10%
0%
EXPERT TAX BENEFITS
MANAGEMENT
INTERPRETATION
The study shows that most of the salaried class people (85%) invest in mutual funds
because of tax benefits. So taxes saving funds are more popular in salaried class.Whereas
most of the business class (85%) people invest in mutual funds because of expert
management and high returns. So business class people mostly invest in equity funds for
high returns.
7. In which investment scheme you invest?
64
A. FOR BUSINESS CLASS:

DEBT 31 45%
EQUITY 48 69%
BALANCED 39 56%
TAX SAVINGS 28 40%
70 69
60 56
PERCENTAGE
50
VALUE IN
45
40 40
30
20
10
0
debt balanced
INVEStMENT SCHEMES business class
B. FOR SALARIED CLASS:
65
DEBT 34 47%
EQUITY 31 43%
BALANCED 42 58%
TAX SAVING 52 71%
GRAPHICAL PRESENTATATION
80
70 71
PERCENTAGE
60 58
VALUE IN
50 47 43
40
30
20
10
0
DEBT BALANCED
INVESTMENT SCHEMES salaried class
INTERPRETATION
The study shows that most of the business class (69%) invests in equity schemes because
they want high returns and they are risk lover. Whereas most of the salaried class (71%)
invests in tax saving schemes because they are risk averter.
Some investors are still waiting for the market stability for further investment.
8. In which option you prefer investing?
INVESTMENT BUSINESS CLASS SALARIED CLASS

OPTIONS
66
LUMP SUM 75% 40%
SIP 69% 91%
ZIP 3% 2%
STP 15% 25%
100%
91%
90%
80% 75%
69%
70%
60%
50% BUSINESS CLASS
40%
40% SALARIED CLASS
30% 25%
20% 15%
10% 3% 2%
0%
LUMP SIP ZIP STP
SUM
INTERPRETATION
The study shows that 90% salaried class invests in SIP (systematic investment plan)
because They find it risk free option of investment.
And most of the business class (71%) invests in lump sum because of the
convenient way of the investment.
People are not much aware about the STP and ZIP.
Thus SIP is a major investment option in mutual funds.
9. Rank in the scale of 1-3 factors that influence you to go for SIP (1- most preferred,
2- preferred, 3- somewhat preferred)
67
a) FOR BUSINESS CLASS:
MOST PREFERRED SOMEWHAT

PREFERRED PREFERRED
LOW RISK 34 24 12
ANNUITY 18 28 24
PAYMENT
CONVENIENCE 12 23 35
Low risk
X f fx d fd fd2
1 34 34 -1 -34 34
2 24 48 0 0 0
3 12 36 1 36 36
Mean
118/70 = Σfx/Σf
= 1.685 Standard
1.000 deviation
Annuity payments
X f fx d fd fd2
1 18 18 -1 -18 18
2 28 56 0 0 0
3 24 72 1 72 72
Mean
146/70 ==2.086
Σfx/Σf Standard
1.1339 deviation
XConveniencf fx d fd fd2
1 12 12 -1 -12 12
2 23 46 0 0 0
3 35 105 1 105 105
Mean = Σfx/Σf Standard deviation
68
163/70 = 2.32 8 1.2928
INTERPRETATION
Among three factors, which has maximum mean, but in order to ascertain whether mean
difference between various factors is significant or not Z-Test has been prepared.
H0 – Difference between maximum two mean insignificant.
H1 – Difference between maximum two mean is significant.
Z-Test applied
Z-Test is applied to ascertain whether the mean difference between ANNUITY

PAYMENT and CONVENIECE is insignificant or not.
Mean of CONVENIENCE is maximum=2.328 and standard deviation=1.2928
Mean of ANNUITY PAYMENT is after that i.e. 2.086 and standard deviation=1.1339
1) Level of significance is 5% and level of confidence is 95%.
2) Hypothesis testing.
69
Null hypothesis Alternative hypothesis

H0: X1=X2 H0: X1≥X2
H0: X1≠X2 H0: X1≤X2
3) ZC=Σ X1-X2 /S.E. = 1.1796
4) ZC<ZT i.e. 1.1796<1.645
5) H0 is accepted.
6) Difference is insignificant between the mean of CONVENIENCE and ANNUITY
PAYMENT. Difference is due to sampling.
LOW RISK
preference level of low risk
12 most
preferred
34
preferred
24 somewhat
preferred
ANNUITY PAYMENT
70
preference level of annuity payments
18 most preferred
24
preferred
somewhat
28 preferred
CONVENIENCE
preference level of convenience
12 most preferred
preferred
35
23 somewhat
preferred
ANALYSIS: The above analysis shows that low risk is the most important factor among
business class while investing in SIP. Because in the volatilize market, SIP is the one of
the investment plan which covers the risk and gives better returns.
b) FOR SALARIED CLASS
71
MOST PREFERRED SOMEWHAT

PREFERRED PREFERRED
LOW RISK 20 29 23
ANNUITY 39 15 18
PAYMENT
CONVENIENCE 34 19 19
Low risk
X f fx d fd fd2
1 20 20 -1 -20 20
2 29 58 0 0 0
3 23 69 1 69 69
Mean
147/72 ==2.76
Σfx/Σf Standard
1.111 deviation
Annuity payments
X f fx d fd fd2
1 39 39 -1 -39 39
2 15 30 0 0 0
3 18 54 1 54 54
Mean
123/72 ==1.7083
Σfx/Σf Standard
1.1365 deviation
XConveniencef fx d fd fd2
1 34 34 -1 -34 34
2 19 38 0 0 0
3 19 57 1 57 57
129/72==Σfx/Σf
Mean 1.7917 1.1242 deviation
Standard
72
INTERPRETATION
Among three factors, which has maximum mean, but in order to ascertain whether mean
difference between various factors is significant or not Z-Test has been prepared.
H0 – Difference between maximum two mean insignificant.
H1 – Difference between maximum two mean is significant.
Z-Test applied
Z-Test is applied to ascertain whether the mean difference between LOW RISK and
CONVENIECE is insignificant or not.
Mean of LOW RISK is maximum=2.0417 and standard deviation=1.111
Mean of CONVENIENCE is after that i.e. 1.7917 and standard deviation=1.1242
7) Level of significance is 5% and level of confidence is 95%.
8) Hypothesis testing.
Null hypothesis Alternative hypothesis
73
H0: X1=X2 H0: X1≥X2

H0: X1≠X2 H0: X1≤X2
9) ZC=Σ X1-X2 /S.E. = 1.347
10) ZC<ZT i.e. 1.347<1.645
11) H0 is accepted.
12) Difference is insignificant between the mean of LOW RISK and
CONVENIENCE. Difference is due to sampling.
LOW RISK
preference level of low risk
most preferred
23 20
preferred
somewhat
29 preferred
ANNUITY PAYMENT
74
preference level of annuity payments
18 most preferred
preferred
39
15 somewhat
preferred
CONVENIENCE
preference level of convenience
19 most preferred
34
preferred
somewhat
19 preferred
ANALYSIS: The above analysis shows that annuity payment is the most important
factor among salaried class while investing in SIP. Because of the ECS system, people
find it the most convenient way of investment.
As compared to business class, salaried class people mostly preferred the SIP due to
convenience by the annuity payments whereas the business class preferred SIP due to
the low risk.
10. What is the medium of investment?

FOR BUSINESS CLASS
75
VALID FREQUENCY VALID PERCENTAGE
SELF TRADING 16 23%
BROKERS 49 70%
OTHERS 5 7%
7% 0%
23%
SELF TRADING
BROKERS
OTHERS
70%
FOR SALARIED CLASS
76
VALID FREQUENCY VALID PERCENTAGE
SELF TRADING 17 24%
BROKERS 53 74%
OTHERS 2 2%
2%0%
24%
SELF TRADING
BROKERS
OTHERS
74%
INTERPRETATION
The above tables show that on an average the people invest in mutual funds through the
brokers like Mahindra Finance and they find it easy and burden free investment.
11. What is the amount you usually invest in mutual funds?

a. FOR BUSINESS CLASS:
77
INVESTMENT OPTIONS VALID FREQUENCY VALID PERCENTAGE
LESS THAN 5,000 2 3%
5,000 – 20,000 13 19%
20,000 – 50,000 22 31%
MORE THAN 50,000 33 47%
3%
19%
less than 5,000
47%
5,000-20,000
20,000-50,000
more than
50,000
31%
Analysis:
78
x f m fm
0 - 5 thousand 2 2.5 5
5 – 20 thousand 13 12.5 162.5
20 – 50 thousand 22 35 770
50 – 1 lakh 33 75 2475
Total 70 3412.5
Mean 48.75
INTERPRETATION
The above table shows that the average investment has been done by business class in
mutual funds is48.75 thousand.
b. FOR SALARIED CLASS:
79
INVESTMENT OPTIONS VALID FREQUENCY VALID PERCENTAGE
LESS THAN 5,000 7 10%
5,000 – 20,000 14 19%
20,000 – 50,000 29 40%
MORE THAN 50,000 22 31%
10%
31%
19% less than 5,000
5,000-20,000
20,000-50,000
more than
50,000
40%
Analysis:
80
x f m fm
0 - 5 thousand 7 2.5 17.5

5 – 20 thousand 14 12.5 17.5
20 – 50 thousand 29 35 101.5
50 – 1 lakh 22 75 1650.0
Total 72 1944
Mean 27
INTERPRETATION
The above table shows that the average investment has been done by salaried class in
mutual funds are 27 thousand. Thus the study shows that on an average the investments
done by business class in mutual funds are more than salaried class.
12. Are returns on Mutual Fund investment guaranteed?
81
YES NO
BUSINESS CLASS 59% 41%
SALARIED CLASS 67% 23%
70 67
60 59
PERCENTAGE
50
VALUE IN
40 41
30 BUSINESS CLASS
23
20 SALARIED CLASS
10
0
YES NO
GUARANTEED INVESTMENT
INTERPRETATION
The above analysis shows that on an average most of the people are agreed that the
returns on the mutual funds are guaranteed because of the diversification and so they
invest in mutual funds.
13. PERCEPTION TOWARD MUTUAL FUNDS BY INVESTORS
82
To record the perception of respondents towards Mutual funds and their investment Likert
Scale has been used. Weighted average method has been used to evaluate the recorded
perception. Weight age has been assigned on the basis of following criteria.
Strongly Agree (5)
Agree (4)
Can’t Say (3)
Disagree (2)
Strongly disagree (1)
Statement and weighted average has been calculated as per the information collected
during the survey.
For business class
83
SA A CS D SD T.W. W.A.
I regularly receive 12 38 6 10 4 254 3.628

updated details regarding
my investment.
I receive reasonable 1030 35 12 5 8 211 3.0142

returns on the money
invested in mutual funds.
SIP is the best investment 30 24 6 8 2 282 4.028

option in the present
scenario.
I have full faith in the 15 32 12 7 4 257 3.671

company in which I have
invested the money.
I feel that my money is 10 25 11 17 7 224 3.200

safe in mutual funds.
I would like to invest 5 21 16 21 7 206 2.943

more money in mutual
funds.
I want to shift my money 4 11 7 35 13 168 2.400

from mutual funds to
other saving schemes.
For salaried class
84
SA A CS D SD T.W. W.A.
I regularly receive updated 22 30 12 5 3 279 3.875

details regarding my
investment.
I receive reasonable 8 40 4 10 10 242 3.361

returns on the money
invested in mutual funds.
SIP is the best investment 23 29 9 6 5 275 3.819

option in the present
scenario.
I have full faith in the 5 40 2 13 12 229 3.180

company in which I have
invested the money.
I feel that my money is 24 11 23 9 5 256 3.555

safe in mutual funds.
I would like to invest 9 11 27 12 13 203 2.819

more money in mutual
funds.
I want to shift my money 6 10 14 31 11 185 2.569

from mutual funds to
other saving schemes.
STATEMENT I: The result on the Likert scale revealed on the average is 3.628 is for
business class and 3.875 for salaried class. This implies that all the respondents whether
85
the business class or salaried class is agree with this statement that they regularly receive
the updated details of their investment.
STATEMENT II: The result has been found that on the average 3.0142 for the business
class and 3.361 for salaried class. This implies that the respondents are agreeing that they
receive reasonable returns on the money invested in mutual funds.
STATEMENT III: The result has been found that on the average 4.028 for business class
which implies that business class is strongly agreed that the SIP is a better investment
option in the present volatile market conditions for better returns. The result on the
average for salaried class is 3.819.it shows that the salaried class is also agreed with the
statement that the SIP is a better option of investment in mutual funds.
STATEMENT IV: The result on Likert scale revealed that on the average 3.671 is for
business class and 3.180 for the salaried class. This implies that on average respondents
agree with the statement that they have full faith in the company in which they have
invested the money and they further want to invest more money in the same company.
STATEMENT V: The results give by the Likert scale is 3.200 for business class and
3.555 for salaried class which implies that on an average both the business class and
salaried class agree that their money is safe in mutual funds.
STATEMENT VI: Result on Likert scale revealed that on the average 2.943 for business
class and 2.819 for salaried class. This implies that the people whether the business class
or salaried class doesn’t want to invest more money in the mutual funds because the
volatility of the present market.
STATEMENT VII: The result on Likert scale reveals that on the average 2.400 for the
business class and 2.569 for the salaried class. This implies that the respondents are
86
disagreeing with the statement that they want to shift their money in other investment
options.
INTERPRETATION
The above statements tell that the whether the business class or salaried class, all is
conscious about their investment. They regularly receive the updates of the money; they
have invested in mutual funds. They have full trust on the companies in which they
have invested the money and don’t want to shift their money in other investment
options. Now the market is very volatile, all the respondents think that the SIP is a
better option of investment in the present condition.
Answers Of Some Open Ended Questions
87
14. Does volatility of market affects your investment decision?

Results: Mostly respondents are on this view that Yes it affects, because our market gets
affected by international practices, government scenario and companies future policy
which volatiles the market.
Some respondents don’t want to invest in the volatile market because they are risk
averters and are still waiting for the stability of the market for the further investment.
As compared to business class, salaried class people are more get affected by the
volatility of the market because salaried class people are mostly risk averters.
15. State your view point in favor and against investing in SIP in mutual funds.
Favor
According to most of the respondents they invest in the SIP because of the following
reasons according to the preference
Annuity payments
Liquidity of money
Guaranteed returns
Low risk
Against
People are against the SIP because
Inconvenience
Comparatively low returns
Both salaried class and business class are in favor of the SIP but as compared to
business class, salaried class is more in favor of the systematic investment plan.
Study of the systematic investment plan by business class and salaried class in
summarized form
88
S. QUESTIONS BUSINESS SALARIED

NO. CLASS CLASS
1. Number of respondents 47% 48%
2. Respondents invest their money 70% 90%
3. Kind of investors Mostly risk neutral Mostly risk neutral

(47%) (40%)
4. Respondents invest in mutual funds 80% 75%
5. Motive of investment short term gains Long term gains

(63%) (71%)
6. Most favorable reason for investing in Expert management Tax benefits
mutual funds (85%) (85%)
7. Most favorable investment scheme Equity Tax saving
(69%) (71%)
8. Most preferred investment option Lump sum SIP
(75%) (91%)
9. Most preferred factor influence to Low risk Annuity payments
invest in SIP (48%) (54%)
10. Medium of investment Brokers Brokers
(70%) (74%)
11. Amount of investment More than 50,000 20,000-50,000
(47%) (40%)
12. Respondents in favor of guaranteed 59% 67%
returns
FINDINGS OF THE STUDY
89
• According to the survey, 90% salaried class and 70% business class invests
money. And rests of them are still planning to invest.
• According to the survey, People invest in various investment options. From the
most common investment options mutual funds are the most preferred one among
business class and salaried class. But business class (80%) invests more in mutual
funds than salaried class (75%).
• In this study it has been found that most of the business class (40%) is risk lovers
whereas most of the salaried class (38%) is risk averters; because high risk means
high returns and businessman usually wants more returns in short period of time
whereas salaried class wants their money to be safe.
• The motive of investment is different for both the business class and salaried class.
Business class invests for short term or speculative gains whereas salaried class
invests for the long term gains.
• In this study it has been found that SIP is preferred by both the classes. But 91%
salaried class invests in SIP whereas only 67% business class invests in SIP.
Salaried class invests in SIP because of the convenience mode of investment due
to annuity payments whereas business class invests because of risk diversification.
• According to the survey it has been found that on an average the amount invested
by the business class (more than 50,000) is more than the salaried class (around
25,000).
• The volatility of the market effects the investment decision of the investors. As
compared to business class, salaried class people are more get affected by the
volatility of the market because salaried class people are mostly risk averters.
RECOMMENDATIONS
90
• The people are not much aware about the mutual funds so there should be
adequate efforts to advertise the mutual fund schemes by proper media, so that
more and more people are made aware of mutual fund providing companies and
their schemes.
• The financial institutions such as Mahindra finance should provide the adequate
training to their agents and others promoting the mutual funds so that the
customers should be given the schemes according to their interests.
• All kinds of expenses incurred to encourage sales, such as commuting expenses,
telephone expenses, stationary, transportation expenses etc. should be provided for
by the companies well in time to the agents who promote the mutual funds.
• People should also be made aware about the functions of the intermediaries
(Mahindra finance) like what kinds of facilities they provide to their customers so
that the customers can consider this a convenience way of investment rather than
direct investment.
LIMITATIONS OF THE STUDY
91
• Due to time constraints only the customers of limited geographical area i.e. in and
around Chandigarh were surveyed. So the results may not be representative of the
entire national market.
• Some of the respondents were found to be reluctant while providing the
information. So the element of prejudice cannot be overruled.
• Some of the respondents were not interested in providing the information due
some fear in their mind about their business.
• As the project study was based on a simple survey and not census study so some
of the sampling errors, which are presumed to occur in a sample survey, may be
there.
CONCLUSION
92
There are various investment schemes available in the financial market. But people invest
in different schemes according to their requirements and interests. Mutual funds are the
one of the best investment scheme and emerging sector in present scenario, because
mutual fund companies invests in different sectors so that risk can be diversified and
people can get the better returns.
Mutual fund companies like Reliance, HDFC, ICICI, PNB, Franklin etc. provide the
various schemes and various investment options according to the customers needs.
Systematic investment plan is one of the investment option provided by the mutual fund
companies for the easy and convenient mode of investment to their customers.
In this study it has been founded that as compared to the business class, mostly salaried
class invests in SIP. But the amount of investment is usually higher by the business class
as compared to salaried class. This is because the business class are risk lovers and
usually wants the higher returns in a short period of time whereas salaried class are risk
averters and wants risk free investment. Otherwise both business class and salaried class
are conscious about their investment and regularly receive updated details about their
investment and usually get the good returns from their investment in the mutual funds.
According to the survey it has also been founded that the volatility of the market also
effects the investment decisions of the investors. Some investors are still waiting for the
stability of the Market for the further investment.
During the survey it has been founded that the most of the people in rural areas are not
much aware about the mutual funds. So the intermediaries (like Mahindra finance) are
doing an effort to train their agents so that they can tell the people about the mutual funds
and their benefits so that this sector can be grow further.
BIBLIOGRAPHY
Websites
93
http://www.iciciprulife.com/public/Fund-Performance/Rupee_Cost_Averaging.htm
http://www.rediff.com/money/2005/feb/22perfin4.htm
http://www.sec.gov/answers/mffees.htm#salesload
http://militaryfinance.umuc.edu/investing/index.html
http://www.moneycontrol.com/mccode/news/searchresult.php?search_str=Systematic
%20Investment
http://www.amfiindia.com
References
1. Mc.Donald,Objectives and Performance of Mutual Funds,1991-Pg33-35.
2. R.A.Reddy,Mutual Fund Industry,2002,pg220-226
3. K.Ashwathtappa-Mutual funds growth and development,2006,3rd edition pg 12-19.
4. Journal of Financial and Quantitative Analysis,311-333.
5. “Portfolio Performance”-The ICFAI Journal,2002.
6. Portfolio Organiser-Growth in demand of Mutual Funds,2007.
94
ANNEXURE
QUESTIONNAIRE
95
I am Management student of Rayat - Bahra Institute of Management , Sahauran

conducting a market research as a part of our academics on Mutual Fund. Kindly fill in
or circle your response would be held in strict confidence.
1. What is your occupation?
a. Business b) Service d) Any other
2. Do you invest money?
a. Yes b) No
3. What kind of investor you are?
a. Risk lover
b. Risk neutral
c. Risk averter
4. In which options of investment you invest the money?
o Mutual funds ----------------

o NSC ----------------
o FD ----------------
o Post office savings ----------------
o IPO ----------------
o Direct stock trading ----------------
o Others ----------------
5. What is the motive of your investment?
96
o Short term gains/ speculative gains

o Long term
6. Why do you invest in Mutual Funds?( You can tick more than one option )
1. Liquidity
2. Transparency
3. Tax benefits
4. Convenience
5. Expert management of funds
6. Security of money
7. High returns
7. In which scheme you invest?
8. Equity
9. Debt
10. Balanced
11. Tax saving
8. Broadly in which option you prefer investing?
1. Lump sum
2. SIP (systematic investment plan)
3. ZIP (zoom investment plan)
4. STP (systematic transfer plan)
9. Rank in the scale of 1-3 factors that influence you to go for SIP (1- most
preferred, 2- Preferred, 3- somewhat preferred)
97
12. Low risk -------------------

13. Annuity payment -------------------
14. Convenience -------------------
10. What is the medium of investment?
1. Self trading
2. Brokers
3. Others
11. What is the amount you usually invest in Mutual Funds?
1. Less than 5,000 -------------------

2. 5,000 - 20,000 -------------------
3. 20,000 – 50,000 -------------------
4. More than 50,000 -------------------
12. Are returns on Mutual Fund investment guaranteed?
a) Yes b) No
13. Read the following statements and tick the option you find appropriate.
SD- strongly disagree D- disagree CS- can’t say
A- Agree SA- strongly agree
98
SA A CS D SD
A I regularly receive updated details

regarding my investment.
B I receive reasonable returns on the

money invested in mutual funds.
C SIP is the best investment

option in present scenario.
D I have full faith in the company in

which I have invested my money.
E I feel that my money is safe in

mutual funds.
F I would like to invest more money

in mutual funds.
G I want to shift my money from

Mutual funds to other saving
Schemes.
14. Does volatility of market affects your investment decision?
--------------------------------------------------------------------------------
99
15. State your view point in favor and against investing in SIP in mutual funds.
Favor
I.
II.
III.
Against
I.
II.
III.
Personal Details
Name & designation _________________________
Age _________________________
Annual Income _________________________
THANK YOU
100
101

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Study of SIP by business class and salaried class

STUDY OF SYSTEMATIC INVESTMENT PLAN BY

In partial fulfillment for the award of the degree of

This is to state that the Project titled “ STUDY OF SYSTEMATIC INVESTMENT

SERIAL No. CONTENTS PAGE

4. INTRODUCTION TO THE PROJECT 16 - 43

7. ANALYSIS AND INTERPRETATION 53 - 89

8. FINDINGS OF THE STUDY 90

10. LIMITATIONS OF THE STUDY 92

13. ANNEXURE 95 - 100

INTRODUCTION OF MAHINDRA FINANCE

HISTORY OF MAHINDRA GROUP

Key events in business history

Commenced financing of M&M UVs

Opened first branch outside Mumbai, at Jaipur

Commenced financing M&M dealers for purchase of tractors

Launched pilot project for retail tractor financing

Commenced tractor retail financing in rural and semi-urban areas

Total Assets crossed Rs. 10 billion

Commenced financing of non-M&M vehicles

Received Tier II debt from International Finance Corporation

Made first securitisation transaction of Rs. 434.8 million

Received a long-term credit rating of AA+/Stable

Opened a branch in Port Blair

Listing of non convertible debentures on BSE on the wholesale debt market

Securitisation of tractor assets of Rs. 256.6 million

Tied up with HPCL

Made MIBL our wholly owned subsidiary

Tied up with Maruti

Launched marketing campaign

Reached a new benchmark with 400 branches

LOGO OF MAHINDRA FINANCE

 Mahindra Finance will be recognised as the premier provider of financial services

 Mahindra Finance will specialise in financing products based on applications and

The following are the key strengths of the Mahindra finance:

THE BOARD OF DIRECTORS OF MAHINDRA FINANCE

Mr. Keshub Mahindra Chairman

Mr. Anand G. Mahindra Vice Chairman and Managing Director

Deepak Shantilal Parekh Director

Nadir Burjorji Godrej Director

Bharat Narotam Doshi Executive Director & Group Chief

Arun Kumar Nanda Executive Director & Secretary

Narayanan Vaghul Director

Dr. Ashok Sekhar Ganguly Director

Anupam Pradip Puri Director

Thomas Mathew T. Nominee of LIC

PRODUCT PORTFOLIO OF MAHINDRA FINANCE

Commercial Buy used

FUTURE PLANS OF MAHINDRA FINANCE

Mutual Fund Industry

First Phase – 1964-87

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

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

Fourth Phase – since February 2003

GROWTH IN ASSETS UNDER MANAGEMENT OF

MUTUAL FUNDS OPERATION FLOW CHART

ORGANISATION OF A MUTUAL FUND

ASSET MANAGEMENT COMPANY

THE TRANSFER AGENTS

Only institutions with substantial organizational strength, service capability in terms of

THEORETICAL FRAMEWORK OF THE STUDY

SAVING AND INVESTMENT