TABLE OF CONTENTS Serial No. 1.

2.

Contents Certificate Acknowledgement Company Profile Vision Incorporation of company Corporate structure Capital structure Strategy Corporate governance Board of directors

Page No.

3.

4. 5.

Objective of the study Introduction to the study a. Investor and Investment b. Mutual funds c. Insurance

6.

Literature Review

7.

Research Methodology a. Sampling & Sample Design

b. Analytical Tools c. Data Collection d. Limitations of the study

8. 9. 10. 11. 12.

Result & Discussions/Findings Recommendation Executive summary Bibliography Annexure

Acknowledgement

Preservation, inspiration and motivation have always played a key role in the success of any venture. In the present world of cutthroat competition project is likely a bridge between theoretical and practical working, willingly I have prepared this particular project. First of all, I would like to thank the supreme power, the almighty God who is obviously the one who has always directed me to work on the right path of my life. With this grace this project could become a reality. I feel highly delighted with the way my dissertation report on topic Investment Pattern of Investors in Mutual Funds & Life Insurance has been completed. Any accomplishment requires the efforts of many people and this work is not different. Firstly, I would like to extend my sincere thanks to RELIGARE SECURITIES for co-operation and providing me good environment to work on. Finally, I would like to thanks all the branch employees, respondents and other people whom directly or indirectly help me completing the project. (P.SANTOSH KUMAR)

COMPANY PROFILE

RELIGARE SECURITIES LTD Religare Enterprises Limited (REL) is a global financial services group with a presence across Asia, Africa, Middle East, Europe and the Americas. In India, RELs largest market, the group offers a wide array of products and services ranging from insurance, asset management, broking and lending solutions to investment banking and wealth management. The group has also pioneered the concept of investments in alternative asset classes such as arts and films. With 10,000 plus employees across multiple geographies, REL serves over a million clients, including corporates and institutions, high net worth families and individuals, and retail investors. REL is part of a family of companies that fall under the broader Religare brand, which includes other global businesses such as diagnostics, aviation and travel, wellness retail, and IT products and solutions. Vision & Mission Vision - To build Religare as a globally trusted brand in the financial services domain. Mission - Providing complete financial care driven by the core values of diligence and transparency. Brand Essence - Core brand essence is Diligence and Religare is driven by ethical and dynamic processes for wealth creation.

Religare Enterprises Limited Religare Securities Limited

Religare Finvest Limited

Equity Broking Online Investment Portal Portfolio Management Services Depository Services

Lending and Distribution business

Religare Insurance Broking Limited

Life Insurance General Insurance Reinsurance

Religare Commodities Limited

Commodity Broking

Religare Arts Initiative Limited

Religare Realty Limited In house Real Estate Management Company

Business of Art Gallery launched - arts-i

Religare Venture Capital Limited Religare Capital Markets Limited

Corporate Broking Institutional Broking Derivatives Sales Corporate Finance

Private Equity and Investment Manager

Religare Asset Management*

OUR BRAND IDENTITY Name Religare is a Latin word that translates as 'to Bind Together'. This name has been chosen to reflect the integrated nature of the financial services the company offers. Symbol The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000 three-leaf clovers found. For us, each leaf of the clover has a special meaning. It is a symbol of Hope. Trust. Care. Good Fortune. For the world, it is the symbol of Religare. The first leaf of the clover represents Hope. The aspirations to succeed. The dream of becoming. Of new possibilities. It is the beginning of every step and the foundation on which a person reaches for the stars. The second leaf of the clover represents Trust. The ability to place ones own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all, not in the binding, but in the bond that is built. The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative

moments of success. Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision. Accent usage The diacritical tilde mark (~) over the letter A in the Religare typeface indicates a palatal emphasis sound of the letter A. PRODUCTS & SERVICES OF Religare SECURITIES LTD Equity: Race- Pro, you can place online trades for virtually any stock listed on NSE & BSE. Race-pro offers plenty of powerful ways to place stock orders ... along with the trading tools and services that help you move quickly and conveniently. Ways to trade stock Delivery based Trading: Place delivery based orders for all stocks listed on NSE & BSE Intra-day Trading: Execute Margin Orders up to 3 to 4 times your available funds. The same is available for select group of stocks listed on NSE & BSE. BTST: customers should sell shares before they receive the same in their Demat account. They can avail of this facility 1st and 2nd day after the buy order Derivative With a Derivative-approved Use trade account, you can pursue a wide range of Futures & Options trading strategies with speed and ease. The company delivers the support, information and Mutual.Fund structure date.

At Use trade, we offer access to more than 1000 mutual fund schemes from leading fund families. These funds provide broad diversification and cover a range of investment objectives, philosophies, asset classes and risk exposures. Trades may be placed via the Internet, Interactive Voice Response (IVR) phone system or with a broker. IPO IPO or Initial Public Offer presents excellent opportunities for gaining high returns on your investments in a relatively short period of time. We have made investing in IPOs hassle free. All that is required is Buying POWER and rest is at the click of a button. No paperwork no queues. Get information on IPO news, Forthcoming IPOs Usectrade.com Commodities Metals, energies, grains and livestock whatever you wish to trade, you'll find it on our commodity trading system. Plus, you'll get a comprehensive suite of educational, analytical, and execution tools that makes trading commodities Insurance Use trade in association with Birla Sun life brings you a secure insurance option without the hassles and worries of a conservative insurance plan. With least paperwork, you get the dual benefit of a risk cover and savings. What's more, we shall send you regular reminders about your premium payments due. Bonds Fixed income securities can help reduce your risk within an investment portfolio while providing a steady stream of income over time. Currently you can choose to invest online in GOI Bonds. If you are looking to
8

and a

lot more on

easy.

diversify your portfolio, possibly improve your tax efficiency and/or reducing your risk exposure, you may want to consider making fixed income securities part of your personal investment strateg ORGANIZATIONAL STRUCTURE OF ON-LINE SHARE TRADING,

(Vice President) Head E-broking

National Sales

Operations Head

Service Head

Site development

Commissions and salaries

R.M.C

S.M

EXECUTIVES

Competitors KOTAK SECURITIES ANGEL BROKING INDIABULLS KARVY INDIAINFOLINE ICICI BROKERAGE MOTILAL OSWAL HDFC SHARE KHAN IDBI PAISA BUILDER ANAGRAM ANAND RATHI CUSTOMERS
An Individual Person

Partnership Firms

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Proprietorship Firms Companies Public limited companies Analysis of the Company

Strengths: Company has a brand image in the market Providing better services to the customers. Charges offered by the company are less compared to other stock broking firms. Team of talented and committed professionals available to improve companys performance.

Weakness: Competition from cheap imports. Not available for rural area customers.

Opportunities: Securities will provide tremendous scope for diversification and growth. Opportunity to support securities operations by supplying products from India. By proving better services helps to acquire new more number of customers. Threats:

11

 Constant pressure to be cost competitive to meet customer expectations. Relentless pressure to maintain profitability due to rising input/raw material prices. Heavy competition from other stock broking companies.
OBJECTIVE OF THE STUDY

The main objective of the study is to find out the investment pattern of the investors in Mutual fund and Life insurance. To determine what factors influence them while they choose a particular investment ,a particular company and in which particular scheme they prefer to invest and to find out whether they are satisfied with their investment decision or not

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13

INTRODUCTION TO THE STUDY Investor An investor is any party that makes an Investment. However, the term has taken on a specific meaning in finance to describe the particular types of people and companies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company. Less frequently the term is applied to parties who purchase real estate, currency, commodity derivatives, personal property, or other assets. The term implies that a party purchases and holds assets in hopes of achieving capital gain, not as a profession or for short-term income. Types of investors

Individual investors (including trusts on behalf of individuals, and umbrella companies formed for two or more to pool investment funds)

Collectors of art, antiques, and other things of value Angel investors, either individually or in groups Venture capital funds, which serve as investment collectives on behalf of individuals, companies, pension plans, insurance reserves, or other funds.

Investment banks. Businesses that make investments, either directly or via a captive fund Investment trusts, including real estate investment trusts

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Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded

Investment Investment or investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it. Types of investment The term "investment" is used differently in economics and in finance. Economists refer to a real investment (such as a machine or a house), while financial economists refer to a financial asset, such as money that is put into a bank or the market, which may then be used to buy a real asset. Business Management The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: managers determine the assets that the business enterprise obtains. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial (see below). The manager must assess whether the net present value of the investment to the enterprise is positive; the net present value is calculated using the enterprise's marginal cost of capital.

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Economics In economics, investment is the production per unit time of goods, which are not consumed but are to be used for future production. Examples include tangibles (such as building a railroad or factory) and intangibles (such as a year of schooling or on-the-job training). In measures of national income and output, gross investment I is also a component of Gross domestic product (GDP), given in the formula GDP = C + I + G + NX. I is divided into non-residential investment (such as factories) and residential investment (new houses). "Net" investment deducts depreciation from gross investment. It is the value of the net increase in the capital stock per year. Finance In finance, investment is buying securities or other monetary or paper (financial) assets in the money markets or capital markets, or in fairly liquid real assets, such as gold, real estate, or collectibles. Valuation is the method for assessing whether a potential investment is worth its price. Personal Finance Within personal finance, money used to purchase shares, put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. Saving within personal finance refers to money put aside, normally on a regular basis. This distinction is important, as investment risk can cause a capital loss when an investment is realized; unlike saving(s) where the more limited risk is cash devaluing due to inflation.

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In many instances the terms saving and investment are used interchangeably, which confuses this distinction. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings, if its value can fluctuate then it is investment. RealEestate In real estate, investment is money used to purchase property for the sole purpose of holding or leasing for income and where there is an element of capital risk. Unlike other economic or financial investment, real estate is purchased. Broad of speaking, a person can make use of his income in three alto natives. They are saving, investment and expenditure. If he saves more then he will have to reduce on his expenses and vice versa. To meet the current and future financial requirement of the person, a right combination of these is essential. These few lines explain the importance of a right combination of the three activities. This is what we mean by investor investment pattern & thus comes the need of awareness initiatives for this concept. An Investor has many objects for doing the investment some are doing investment for security purpose some are doing for high return purpose and some for tax benefits. Same income and age group people follow different pattern of investment and to understand this pattern is very complex. Researchers try to find out the investment pattern of Investors in Mutual Fund & Life Insurance.

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Investment objective The options for investing our savings are continually increasing, yet every single investment vehicle can be easily categorized according to three fundamental characteristics - safety, income and growth - which also correspond to types of investor objectives. While it is possible for an investor to have more than one of these objectives, the success of one must come at the expense of others. Here we examine these three types of objectives, the investments that are used to achieve them and the ways in which investors can incorporate them in devising a strategy.

Safety Perhaps there is truth to the axiom that there is no such thing as a completely safe and secure investment. Yet we can get close to ultimate safety for our investment funds through the purchase of government-issued securities in stable economic systems, or through the purchase of the highest quality corporate bonds issued by the economy's top companies. Such securities are arguably the best means of preserving principal while receiving a specified

rate of return. The safest investments are usually found in the money market and include such securities as Treasury bills (T-bills), certificates of deposit, commercial paper or bankers' acceptance slips; or in the fixed income (bond) market in the form of municipal and other government bonds, and in corporate bonds. The securities listed above are ordered according to the typical spectrum of increasing risk and, in turn, increasing potential yield. To compensate for

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their higher risk, corporate bonds return a greater yield than T-bills.

Income
However, the safest investments are also the ones that are likely to have the lowest rate of income return, or yield. Investors must inevitably sacrifice a degree of safety if they want to increase their yields. This is the inverse relationship between safety and yield: as yield increases, safety generally goes down, and vice versa. Most investors, even the most conservative-minded ones, want some level of income generation in their portfolios, even if it's just to keep up with the economy's rate of inflation. But maximizing income return can be an overarching principle for a portfolio, especially for individuals who require a fixed sum from their portfolio every month. A retired person who requires a certain amount of money every month is well served by holding reasonably safe assets that provide funds over and above other income-generating assets, such as pension plans.

Growth Of Capital
This discussion has thus far been concerned only with safety and yield as investing objectives, and has not considered the potential of other assets to provide a rate of return from an increase in value, often referred to as a capital gain. Capital gains are entirely different from yield in that they are only realized when the security is sold for a price that is higher than the price at which it was originally purchased. (Selling at a lower price is referred to as a capital loss.) Therefore, investors seeking capital gains are likely not those who need a fixed, ongoing source of investment returns from their

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portfolio, but rather those who seek the possibility of longer-term growth. Growth of capital is most closely associated with the purchase of common stock, particularly growth securities, which offer low yields but considerable opportunity for increase in value. For this reason, common stock generally ranks among the most speculative of investments as their return depends on what will happen in an unpredictable future. Blue-chip stocks, by contrast, can potentially offer the best of all worlds by possessing reasonable safety, modest income and potential for growth in capital generated by long-term increases in corporate revenues and earnings as the company matures. Yet rarely is any common stock able to provide the near-absolute safety and Income-generation of government bonds.

Secondary Objectives Tax Minimization An investor may pursue certain investments in order to adopt tax minimization as part of his or her investment strategy. A highly paid executive, for example, may want to seek investments with favorable tax treatment in order to lessen his or her overall income tax burden. Making contributions to an IRA or other tax-sheltered retirement plan, such as a 401k, can be an effective tax minimization strategy.

Marketability Liquidity Many of the investments we have discussed are reasonably illiquid, which means they cannot be immediately sold and easily converted into cash.

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Achieving a degree of liquidity, however, requires the sacrifice of a certain level of income or potential for capital gains. Common stock is often considered the most liquid of investments, since it can usually be sold within a day or two of the decision to sell. Bonds can also be fairly marketable, but some bonds are highly illiquid, or non-tradable, possessing a fixed term. Similarly, money market instruments may only be redeemable at the precise date at which the fixed term ends. If an investor seeks liquidity, money market assets and non-tradable bonds aren't likely to be held in his or her portfolio. In brief, choosing a single strategic objective and assigning weightings to all other possible objectives is a process that depends on such factors as the investor's temperament, his or her stage of life, marital status, family situation, and so forth. Out of the multitude of possibilities out there, each investor is sure to find an appropriate mix of investment opportunities. You need only be concerned with spending the appropriate amount of time and effort in finding, studying and deciding on the opportunities that match your objectives.

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WHAT IS A MUTUAL FUND? 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 appreciations realized 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.

TYPES OF MUTUAL FUNDS BY STRUCTURE Open-Ended Schemes Close-Ended Schemes

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 Interval Schemes BY INVESTMENT OBJECTIVE Growth Schemes Income Schemes Balanced Schemes Money Market Schemes OTHER SCHEMES Tax Saving Schemes Special Schemes Index Schemes Sector Specific Schemes

Features that investors like in Mutual Fund If mutual funds are emerging as the favorite investment vehicle, it is because of the many advantages they have over other forms and avenues of investing, particularly for the investor who has limited resources available in terms of capital and ability to carry out detailed research and market monitoring. The following are the major advantages offered by mutual funds to all investors. Portfolio diversification: Mutual Funds normally invest in a well-diversified portfolio or securities. Each investor in a fund is a part owner of all of the funds assets. This enables him to hold a diversified investment portfolio even with a small amount of investment that would otherwise require big capital.
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 Professional management; Even if an investor has a big amount of capital available to him, he lacks the professional attitude that is generally present in the experienced fund manager who, ensures a much better return than what an investor can manage on his own. Few investors have the skills and resources of their own to succeed in todays fast moving, global and sophisticated markets. Reduction/ diversification of risk: An investor in a mutual fund acquires a diversified portfolio, no matter how small his investment. Diversification reduces the risk of loss, as compared to investing directly in one or two shares or debentures or other instruments. When an investor invests directly, all the risk of potential loss is his own. A fund investor also reduces his risk in another way. While investing in the pool of funds with other investors any loss on one or two securities is also shared with other investors. This risk reduction is one of the most important benefits of a collective investment vehicle like the mutual fund. Reduction of transaction costs: What is true of risk is also true of the transaction costs. A direct investor bears all the costs of investing such as brokerage or custody of securities. When going through a fund, he has the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a benefit passed on to its investors.

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Liquidity: Often, investors hold shares or bonds they cannot directly, easily and quickly sell. Investment in a mutual fund, on the other hand, is more liquid. An investor can liquidate the investment by selling the units to the fund if open-end, or selling them in the market if the fund is closed-end, and collect funds at the end of a period specified by the mutual fund or the stock market.

Convenience and flexibility: Mutual fund management companies offer many investor services that a direct market investor cannot get. Investors can easily transfer their holdings from one scheme to the other, get updated market information But roses have thorns as well While the benefits of investing through mutual funds far outweigh the disadvantages, an investor and his advisor will do well to be aware of a few shortcomings of using the mutual funds as investment vehicles. No Control over Costs: an investor in a mutual fund has any control over the overall cost of investing. He pays investment management fees as long as he remains with the fund, albeit in return for the professional management and research. Fees are usually payable as a percentage of the value of his investments. Whether the fund value is rising or declining. A mutual fund investor also pays fund distribution costs, which he would not incur in direct investing. However, this shortcoming only means that there
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is a cost to obtain the benefits of mutual fund services. However, this cost is often less than the cost of direct investing by the investors.

No Tailor-made Portfolios: Investors who invest on their own can build their own portfolios of shares, bonds and other securities. Investing through funds means he delegates this decision to the fund managers. The very high-net-worth individuals or large corporate investors may find this to be a constraint in achieving their objectives. However. Most mutual funds help investors overcome this constraint by offering families of schemes-a large number of different schemes within the same fund. An investor can choose from different investment plans and construct a portfolio of his choice.

Poor Reach: Lack of deeper distribution networks and channels is hurting the growth of the industry. This is an area of concern for the MF industry, which has not been able to penetrate deeper into the country and has been limited to few metros.

Banks still dominate: The biggest hindrance to the growth of the mutual fund industry lies in its inability to attract the savings of the public, which constitutes the major source of

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investment in the other developed countries. A large pool of money in the savings in India is still with the state run and private banks. The structure and organization of Mutual Funds as per SEBI guidelines is as follows:

(a)

Sponsor Sponsor is the company which sets up the Mutual Fund e.g. Kothari Pioneer Mutual Fund have sponsor Pioneer Investment Management, Inc., USA and the Investment Trust Of India Ltd. (ITI). The Investment Trust Of India (Pvt.) Ltd. was established in 1946 and is one of the India well known Financial Services Companies. To promote the Mutual Fund, the sponsor has to meet the criteria laid down by SEBI. The criteria broadly deal with

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sufficient experience, net worth, and past record in terms of fair dealing & integrity. Those who qualify these criteria are permitted by SEBI to setup Mutual Funds. (b) Asset Management Company (AMC) AMC manages the funds of various Schemes: AMC employs a large number of professional for investment and research. It plays a key role in the running of a Mutual Fund and it operates under the supervision and guidance of the trustee. For example, Kothari Pioneer AMC Ltd. has been appointed as the investment manages Kothari Pioneer Mutual Fund and operates its various schemes under the provisions of the investment Management Agreement entered into with Kothari Pioneer Mutual Fund on July 29,1993. The AMC can be a private or public limited company either listed or not. The AMC may be a new or existing, should have a minimum 40 percent stake paid up in the paid-up equity of the AMC to be set up the sponsor. The minimum net worth of the AMC is stipulated at Rs. 5 crore. The Memorandum and Articles Of Association of the AMC Company should have the approval of SEBI. AMC is authorized to do business, if the following condition of SEBI are fulfilled. (1) (2) AMC, which are already existing, should have a sound track record, general reputation and fairness in all other business transactions. The directors of AMC should be persons of high repute and standing having at least 10 years of professional experience in the relevant fields such as portfolio management, investment analysis, and in financial administrator. (3) At least 50 percent of the Board of AMC should be independent director not connected with sponsoring organization.
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(4)

The AMC should at all times have a minimum net worth of Rs. 5 crore.

Except in the case of Bank sponsored AMC where the Prior concurrence of RBI is required. SEBI may withdraw the authorization granted to any AMC, if it is not serving in the interest of investors. The board of trustees, of a Mutual Fund, will appoint another AMC or liquidate the Mutual Fund as may be necessary with in there months of withdrawal. (c) Trustee The trustees are an important link in the working of a Mutual Fund. Trustees are people with long experience and who have earned a name for themselves for integrity and excellence in their fields. It is the responsibility of the trustees to see that AMC always act in the best interest in the investors. Thus they carry the crucial responsibility of safe guarding the interest of the investors. They do this by constant monitoring of the operations of the scheme. AMC supplies all information demanded by trustees on a regular basis i.e. quarterly. Establishing a separate trust company should carry out trusteeship functions. At least 50 percent of the Board of Trustee shall be independent and should not have any affiliation with the sponsoring institution or any of its subsidiaries. The trustees have to submit a six monthly report to the SEBI and an annual report to the investors in the fund. (d) Custodian

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The SEBI while granting the authorization for setting up of a Mutual Fund, would also approve the custodian as part of the package. The custodian should be different from the AMC. The sponsor and trustee companies cannot act as custodian. If the sponsor has a custodian division, it can act for other Mutual Fund not set up by the sponsor. The approval of any agency as custodian would depend upon its track record, experience, and qualify of service, computerization and other infrastructure facilities. The approval of Mutual Fund involves the approval of sponsor, AMC, trustee and custodian all together, who are responsible for the management of fund. Each scheme floated by Mutual Fund should have prior registration with SEBI. The AMC should prepare a proportion/letter of offer for each to decide the proposal within 30 days of its receipt, filing within SEBI before inviting public. SEBI has to decide the proposal within 30 days of its receipt, failing which SEBI clearance is presumed. Mutual Funds are allowed to start and operate both open-ended and close-ended schemes. History of the Indian Mutual Fund Industry The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases First Phase 1964-87 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

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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 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.

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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, 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.

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The graph shows the growth of assets under management over the years

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What is Insurance? Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. Principles of insurance Commercially insurable risks typically share seven common characteristics.
1. A large number of homogeneous exposure units. The vast majority

of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called law of large numbers, which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyds of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial
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property policies may insure exceptional properties for which there are no homogeneous exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
2. Definite Loss. The event that gives rise to the loss that is subject to

insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
3. Accidental Loss. The event that constitutes the trigger of a claim

should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
4. Large Loss. The size of the loss must be meaningful from the

perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small

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losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high,

or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards (See FAS 113 for example), the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance.
6. Calculable Loss. There are two elements that must be at least

estimate able, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
7. Limited risk of catastrophically large losses. The essential risk is

often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors

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surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5%. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coastlines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsures can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurers capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market. Why Life Insurance? You think twice before taking the plunge into buying insurance. Is buying insurance a necessity now? Spending an 'extra' amount as premium at regular intervals where you do not see immediate benefits does not seem a necessity at the moment. Well you could be wrong. Buying Insurance cannot be compared with any other form of investment. Insurance gives you a life long benefit and the

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returns will definitely come but only when you need it the most i.e. at the right time. Besides buying insurance early in life is one of the wise decisions you could take. Because the premium you would be paying would be comparatively lower. Insurance is not about how much more it can offer you when the stock market is at its peak. It may not be an attractive investment option. But weigh the pros and cons and consider how much more it offers at a small price. Most important of all it provides you with that unique sense of security that no other form of investment provides. It gives you a sense of financial support especially during that time of crisis irrespective of the fluctuations in the stock market. Insurance provides for your career goals right from your childhood years. If the earning member of the family is no more your child's educational needs will not suffer. In fact his higher education too will be provided for. You need not spend sleepless nights thinking about how to save for your child's marriage. Life Insurance will take care of that typical once-in-a-life-time spending on marriages. An accident or a disability may be devastating but an insurance policy can be of utmost support for the family during such times too. Besides it provides for additional benefits such as bonuses. You need not worry about your retirement years. The rising prices, taxes, and your lifestyle will be taken care of easily. And you can relax and spend your old age in comfort and peace.

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Life insurance today plays a major role in ones life at various stages. Considering the benefits it offers one cannot but give a thought to buying an insurance policy at the earliest.

Need for Life Insurance The need for life insurance comes from the need to safeguard our family. If you care for your familys needs you will definitely consider insurance. Today insurance has become even more important due to the disintegration of the prevalent joint family system, a system in which a number of generations co-existed in harmony, a system in which a sense of financial security was always there as there were more earning members. Times have changed and the nuclear family has emerged. Apart from other pitfalls of a nuclear family, a high sense of insecurity is observed in it today besides, the family has shrunk. Needs are increasing with time and fulfillment of these needs is a big question mark. Insurance provides a sense of security to the income earner as also to the family. Buying insurance frees the individual from unnecessary financial burden that can otherwise make him spend sleepless nights. The individual has a sense of consolation that he has something to fall back on. From the very beginning of your life, to your retirement age insurance can take care of all your needs. Your child needs good education to mould him into a good citizen. After his schooling he needs to go for higher studies, to gain a professional edge over the others - a necessity in this age where cutthroat competition is the rule. His career needs have to be fulfilled.
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Six tips for investing in life insurance 1. Understand Why You Need It: - While most people may need life insurance at some point in their life, don't buy a policy just because you heard it was a good idea. Life insurance is designed to provide families with financial security in the event of the death of a spouse or parent. Life insurance protection can help pay for mortgages, a college education, help to fund retirement, provide charitable bequests and of course is a key element in estate planning. In short, if others depend on your income for support, you should strongly consider life insurance. Even if you don't have any of these needs immediately, you still may want to consider purchasing a small "starter" policy, if you anticipate you will have them in the future. The reason: the younger you are, the less expensive life insurance will be. 2. Determine the Amount of Coverage You Need: - The amount of money your family or heirs will receive after your death is called a death benefit. To determine the proper amount of life insurance an online calculator, like the one available at this site, can be helpful. You can also get a ballpark figure using any number of formulas. The easiest way is to simply take your annual salary and multiply by 8. A more detailed method is to add up the monthly expense your family will incur after your death. Remember to include the one-time expenses at death and the ongoing expenses such as a mortgage or school bills. Take the ongoing expenses and divide by .07.That indicates you'll want a lump sum of money earning approximately 7% each year to pay those ongoing expenses. Add to that amount any money you'll need to cover one-time expenses and you'll have a rough estimate of the amount of life insurance you need. As useful as calculators and rough estimates are, there are some things they don't do.
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They cannot provide you with any final answers. Calculators only allow you to perform "hypothetically," recalculating and generating new results as you make and input new assumptions. Using these tools and educating yourself on the workings of life insurance and other financial products, however, can help you feel more comfortable when discussing your needs with such professionals as a New York Life agent. 3. Find the Right Type of Policy:-Once you've got an estimate of how much insurance you'll need, it's time to think about the type of policy that best fits your needs. Today life insurance comes in many varieties, but there are four basic types term, whole life, universal life, and variable life. As a first-time buyer, one will more than likely fit your needs. .4. Look at the Quality of the Company: - An insurance policy is only as good as the company that backs it. You want to know for certain that the company that issues your policy will be around to service it and eventually pay the death claim. To help you discern the strongest companies, there are several ratings agencies that rate insurance companies on the quality of their fiscal fitness, quality of investments, and overall financial soundness. A credit rating represents an independent assessment of the insurer's ability to pay its claims on time and meet all its other financial obligations, the bottom line for any life insurance company. 5. Consult an Agent: - Agents provide an invaluable service. First, an agent can help you factor in the other "human' elements into your insurance equations to help you determine the right amount of insurance. The relationship you develop with an agent can last a lifetime. Second, an agent can help you update your coverage as your needs change. They can help you

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guide you through a lifetime of financial decisions, giving you one less thing to worry about. 6. Increase Your Vocabulary: - Any discussion of insurance will probably include words such as cash value, premium, dividends, death benefit and more. To discuss life insurance knowledgeably, it will help to understand the terms. Below is a brief summary of some common terms. This site offers a complete glossary of insurance terms.

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Literature Review. The literature review includes the academic books, journals, internet access, magazines etc. Business Statistics by S.P Gupta &M.P. Gupta- The information regarding the statistical tools and their limitations in different fields the research is given in this section. This section explains why to use correlation and what are the situations in which correlation can be used, and what does correlation means.

Research Methodology by C.R. Kothari The information regarding the basics of research and research methodology , what are the different types of research designs, what is problem statement, what are the sources of data collection and what are the methods of data collection is given in this section Financial Management by I.M. Pandey- The information regarding nature of financial management, portfolio management, risk-return relationship,options,derivatives and valuation of shares have been understood from this book. WORK BOOK by Association Of Mutual Funda In India-The information about the basic knowledge and working of mutual funds in India is taken from this book.

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RESEARCH METHODOLOGY Research is a systematic and continues method of defining a problem, collecting the facts and analyzing them, reaching conclusion forming generalizations. Research methodology is a way to systematically solve the problem. It may be understood has a science of studying how research is done scientifically. In it we study the various steps that all generally adopted by a researcher in studying his research problem along with the logic behind them. The scope of research methodology is wider than that of research method. Thus when we talk of research methodology we not only talk of research methods but also consider the logic behind the method we use in the context of our research study and explain why we are using a particular method. So we should consider the following steps in research methodology: Problem statement Objective of study Research design Data collection Sample design Statistical tool Limitation of study

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PROBLEM STATEMENT The research problems, in general refers to sum difficulty with a researcher experience in the contest of either a particular a theoretical situation and want to obtain a salutation for same, there are so many investment options available for the investors, how they invest or choose a particular investment option and what factor they consider more for investing or choosing a particular investment option and also to find out are they satisfied with their investment decision. RESEARCH OBJECTIVE To understand the investor pattern of investment To find out the difficulties of investors while investing. To find out that which is more popular among investor between Life Insurance & Mutual Fund. To find out that are investor satisfied with their investment decision or not.

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RESEARCH DESIGN A research design is the arrangement of the conditions for the collections and analysis of the data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted; it constitutes the blue print of the collection, measurement and analysis of the data. As search design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data. I used descriptive research design in this project. The research design focus on the following . o What is the study about? o Why is the study being made? o Where will the study be carried out? o What type of data is required? o Where can be required data be found? o What period of time will the study include? o What will be sample design? o What techniques of data collection will be used? o How will the data be analyzed? o In what style will the report be prepared?

DATA COLLECTION The task of data collection is begins after a research problem has been defined and research designed/ plan chalked out. Data collection is to gather the data from the population. The data can be collected of two types:
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 Primary data Secondary data Primary data The Primary data are those, which are collected afresh and for the first time, and thus happened to be original in character.

Methods of collection of Primary data are as follows: o Interview o Questionnaire Secondary data The Secondary data are those which have already been collected by some one else and which have already been passed through the statistical tool. Methods of collection of Secondary data are Journals, Websites and books. SAMPLE DESIGN A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure and the researcher would adopt in selecting items of sample. Sample design may as well lay down the number of items to be included in the sample i.e. the size of the sample. Sample design is determined before data are collected. Sapling area Sample Size Sampling Technique Hyderabad 100 - Non-Probability

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STATISTICAL TOOL Introduction In our day-to-day life, we find many examples when a mutual relationship exists between two variables i.e. with fall or rise in the value of one variable, the fall or rise ay take place in the value of other variable. For example, price of a commodity rises as the demand for the commodity goes up. Upto a certain time-period, weight of a person increases with the increase in the age. Similarly, the temperature rises with the rise in the sunlight. These facts indicate that three is certainly some mutual relationship that exists between the demand for a commodity and its price, the age of a person and his weight, and the sunlight and temperature. The correlation refers to the statistical technique used in measuring the closeness of the relationship between the variables. Definition of Correlation Some important definitions of correlation are given below: Correlation analysis deals with the association between two or ore variables. Simpson and Kafka If two or ore quantities vary in sympathy, so that movement in one tend to be accompanied by corresponding movements in the other, then they are said to be correlated. Conner Correlation analysis attempts to determine the degree of relationship between variables. Ya-Lun-Chou

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Spearmans Rank Correlation Method This method of determining correlation was propounded by Prof. Spearman in 1984. By this method correlation between qualitative data namely beauty, honesty, intelligence etc, can be computed. Such types of variables can be assigned ranks but their quantitative measurement is not possible. Thus, rank correlation method is used in such cases. The following is the formula for the computation of rank correlation coefficient: R = 1 - 6D2 or 2 N (N -1) 1- 6D2 (N3-N)

Where R = Rank coefficient of correlation, D= Difference between two ranks (R1-R2) N= Number of pair of observation. The value of rank correlation always lies between 1 and +1. This method can be studied in the following three different situations: 1. When ranks are given 2. When ranks are not given. 3. When equal or tied ranks.

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What are the reasons for choosing a particular company for investing in life insurance and mutual funds?

Agent Brand name Track record

Life Insurance 7 37 19

Rank R1 3 1 2

Mutual Fund 12 33 30

Rank R2 3 1 2

(D=R1-R2) 2 0 0 0 D2=0

R = 1 - 6D2 or 2 N (N -1) 1- 6.0 =1 (33-3)

1- 6D2 (N3-N)

Hence there is a complete agreement in the order of ranks and the ranks are in same direction.

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LIMITATIONS In every research there are chances of errors and constraints. I have found following limitations in my study. Sample size, which I have taken, is very small, on the basis of which efficient decision cant be taken.

Respondents were biased in their responses because they were more in favor of the brand they were using.

Co-operation from respondents, this was the major problem. Most of the people were at their work. So they did not have enough time to give all replies. The population surveyed was not open to questions related to their personal income i.e. either they fell hesitant in disclosing the facts about their incomes or they were simply not interested.

The respondents were not in the favor to disclose their address and contact number because they believed that they would be contacted through telemarketing.

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Results and Discussions/Findings Q:Do you invest?

100 90 80 No. of responses 70 60 50 40 30 20 10 0 Yes Response No

Q: If not, what is the reason for that?

8 7 No. of responses 6 5 4 3 2 1 0 Lack of knowledge Lack of interest Inadequate funds Reasons

Q:What do you perceive first while investing?

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45 40 No. of responses 35 30 25 20 15 10 5 0 1 Perception Security High returns&Tax benefits Sav ing&Tax benefits Sav ing High returns Tax benefits

Q: Do you invest in LIFE INSURANCE or MUTUAL FUNDS?

50 45 40 No of responses 35 30 25 20 15 10 5 0 Life Insurance Mutual Funds Both

Q: What are the reasons for investing in LIFE INSURANCE?

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30 Security No. of responses 25 20 15 10 5 0 1 Reasons Saving Tax benefits Security&Tax benefits Saving&Tax benefits

Q:Give the name of company you prefer for investing in LIFE INSURANCE?
35 30 25 20 15 10 5 0 1 Company No.of responses

ICICI Prudential LIC Birla Sunlife Religare Insurance Others

Q:What are the reasons for choosing a particular company for life insurance?

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40 35 No.of responses 30 25 20 15 10 5 0 Agent Brand name Reason Track record

Q:In which plan do you invest your money in LI?

35 30 No. of responses 25 20 15 10 5 0 Money back Endowment plan Scheme ULIPS

Q:Are you satisfied with your decision of investing in LI?

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60 50 No. of responses 40 30 20 10 0 Highly satisfied Satisfied Moderate

Q:What are the reasons for investment in Mutual Fund?

30 No. of responses 25 20 15 10 Saving 5 0 1 Reasons High returns&Diversified portfolio Tax benefits&Saving Diversified portfolio Tax benefits

High returns

Q:Which company do you prefer for investing in MF ?

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40 35 30 25 20 Religareutual

No. of responses

UTI MF Birla Sunlife MF Prudential ICICI Others

Fund unds

15 10 5 0 1 Name of company

Q: What are the reasons for choosing a particular company?

35 30 No. of responses 25 20 15 10 5 0 Agent Brand name Reasons Track record

Q: In which scheme do you invest?

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45 40 No. of responses 35 30 25 20 15 10 5 0 1 Scheme Equity Balanced Income Sector specific Tax saving

Q:Are you satisfied with your decision of investing in MF?

60 50 No. of responses 40 30 20 10 0 Highly satisfied Satisfied Satisfaction level Moderate

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RECOMMENDATIONS

Investors should make the investment with proper planning keeping in mind their investment objectives. Investors should read the offer document carefully before investing in any scheme of the mutual funds and life insurance. Investors should also consults the brokers or agents to seek information and advice but their decision should not merely be based on agents advice rather the decision should be based on their careful investigation. The investors should select a particular investment option on basis of their need and risk tolerance. The investors should diversify their investment portfolio in order to reduce the risk. The investors should continuously monitor their investments.

The companies should provide all relevant information to the investors.

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EXECUTIVE SUMMARY

Management ideas without any action based on them mean nothing. That is why practical experience is vital for any management studies. Theoretical studies in the class room are not sufficient to understand the functioning climate and the real problems coming in the way of management. So, practical exposures are indispensable to such courses. Thus, practical experience acts as a supplement to the classroom studies. This report deals with Investment Pattern of Investors in Mutual Fund & Life Insurance has been completed. I have learnt a lot of new things which could never been learnt from theory classes. Main objectives of this project is to find out the investment pattern of investors in Mutual Fund & Life Insurance, to find out what factors influence them more to choose a particular investment option, particular company & to find out whether they are satisfied with their investment decision or not. In this study I used non-probability sampling technique and collected data from primary and secondary source. In this study descriptive research design is used. Area of study is Hyderabad. It is find out that out of 100 people 89 invest their money while 11 do not invest at all because of

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inadequate funds, lack of interest and lack of knowledge. Majority of people invest their money in both Mutual Funds & Life insurance .Majority of people take the investment decision on the basis of brand name and track record and are satisfied from their decision.

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BIBLIOGRAPHY Books:Financial Management 9th edition by I.M. Pandey. Vicas publication house pvt ltd. Research Methodology 2nd edition by C.R. Kothari .New age international publication, Business Statistics 14th edition by S.P. Gupta &M.P.Gupta.Sultan Chand & Sons publication.

Workbook 3rd edition May 2006 by Association of Mutual Funds in India.

Websites:http://www.insurance.com/LifeArticles.aspx http://www.amfiindia.com http://www.investopedia.com/articles/basics/04/032604.asp http://finance.indiamart.com/taxation/income_tax/tax_planning.ht ml

www.religaresecurities.com

ANNEXURE
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Investment Pattern of Investors in Mutual Fund & Life Insurance Name of Investor:Yrs.). Place:Occupation:Annual Income (in Rs.) Service.. Business Others.. Investment Details: Q:- Do you invest? Yes Q:- If not, why? What is the Lack of Knowledge Full of Risks Q:- What do you perceive first while investing? Saving Tax Benefits Others Q:-Arrange the following investment option in descending order according to your preferences while making an investment? Life Insurance Mutual Fund
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Sex:- Male/Female

Age(In

Service/Business/Other

No reason for that? Lack of Interest Inadequate Funds

High Returns Security

Bank Deposits Equity

Govt. Bonds

Q:-Do, You invest in Life Insurance or in Mutual funds? LI MF Both

Q: What are the reasons for investment in Life Insurance? Security Tax benefits Others Q:- Give the name of the company you prefer for investing in life insurance? ICICI Prudential Religare Insurance Others Q:- What are the reasons for choosing a particular company for life insurance? Broker/Agent Track Record Others Q: In which plan do you invest your money? Money back ULIPS
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Savings High Return

Life Insurance Birla Sun Life

Brand Name

Endowment plan

Q;- Are you satisfied with the overall decision of our investment in life insurance? Highly Satisfied Moderate Highly Unsatisfied Satisfied Unsatisfied No Reply

Q:- What are the reasons for investment in Mutual Fund? Tax Benefits Diversified Portfolio High Return Saving

Q:-Which company do you prefer for investing in Mutual Fund? UTI Mutual Fund Fund Prudential ICICI Religare Mutual Funds Others Birla Sun Life Mutual

Q:- What are the reasons for investing/ choosing a particular company for investing in Mutual Fund? Broker/Agent Track Record Q: In which scheme do you invest? Equity specific scheme Balanced scheme
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Brand Name

Income scheme Sector specific scheme

Index scheme Tax saving scheme

Q: - Are you satisfied with your decision of investing in Mutual Fund? Highly Satisfied Moderate Highly Unsatisfied Satisfied Unsatisfied

Place: Date: Respondent Signature

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