A SUMMER TRAINING PROJECT On COMPARATIVE ANALYSIS BETWEEN ULIPS AND MUTUAL FUNDS WITH SPECIAL REFRENCE TO ULIPs OF ICICI

PRUDENTIAL

SUBMITTED TO Kurukshetra University, Kurukshetra in the Partial Fulfillment for the Degree of Master in Business Administration (SESSION 2007-09)- MBA-3rd SEMESTER

Under Supervision Of: Ms Ranjeet Kaur

Submitted By: Devender S/o Sh. Ramesh chand Univ.regi.no: 04-MY-523

Faculty (M.B.A.) T.I.M.T.(Yamunanagar)

Univ.roll no. Institute roll no; 1212/07

Tilak Raj Chadha Institute of Management and Technology (TIMT) (Affiliated to Kurukshetra University, Kurukshetra & Approved by AICTE) M.L.N.College Educational Complex, Yamuna Nagar-135001 (Haryana Ph. 01732-220103, 234110. Fax: +91 -1732- 220103. E-mail: info@timt.ac.in , Web Site: www.timt.ac.in

PREFACE

It is evident that work experience is an indispensable part of every professional course. In the same manner practical training in any organization is must for each and every individual who is undergoing management course. Without the practical exposure one cannot consider himself of herself as a qualified capable manager. During the training period the student learns through his own experience the real situations of the corporate world and to put his theoretical knowledge into practice. This experience is very valuable for the students and plays a leading & important role in his career.

Hence to fulfill this requirement, I have completed my eight weeks training in ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED. This report is an account of work done by me during my training period in ICICI PRUDENTIAL LIFE INSURANCE COMPANY. My work was mainly related to understanding the various aspects of recruitment of advisors and doing analysis of ulips and mutual funds in the context of current trends

. The report is spilt in several sections which concerns various tasks that formed the parts of my training. Each section describes in detail the work done towards its successful completion.

ACKNOWLEDGEMENT

It is almost inevitable to incur indebtedness to all those who generously helped by sharing their invaluable time and rich experience with me, without which this project would have never been accomplished. Firstly, I am highly obliged to thank Dr. Vikas Daryal (Director of TIMT) to provide the opportunity to do my summer internship in ICICI prudential company. It also gives me immense pleasure in expressing my sincere and humble gratitude towards Ms. Deepika kohli (HOD, MBA) & Ms Ranjit Kaur (faulty, MBA) for his valuable guidance, keen interest, constructive criticism and constant support and inspiration up to the final shaping of this manuscript. .

I deeply convey my sincere thanks to Mr Manoj Sharma (Unit Manager) ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED (Ambala city), for granting me this opportunity to get training in this esteemed organization. He has been benevolent enough to lend me help and spare his valuable time throughout the training period.He has been immensely contributive with his ideas, constructive criticism and motivation which were the guiding line during the entire tenure of work.

I also deeply acknowledge the staff members of ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED who have been a great helping hand throughout the period

DECLARATION

I hereby declare that I have completed my research report on Study of COMPARITIVE ANALYSIS BETWEEN ULIPS AND MUTUAL FUNDS WITH SPECIAL REFERENCE TO ULIPS OF ICICI PRUDENTIAL. This is my original Research Report and not submitted for any other diploma or degree course.

Signature

DEVENDER

CONTENTS Introduction Profile of the study Company profile Unit Linked Insurance Plan (Ulips) Mutual fund Comparison between Ulips & Mutual fund Justification of Study Objectives of study Literature Review Research Methodology and Analytical Tools Sampling &Sampling Design

Data Collection Analytical Tools Statistical Tools Limitations of Study Results & Findings Recommendations Policy Implications Bibliography Annexure

EXECUTIVE SUMMARY

The Indian Insurance Industry is broadly segmented into public and private insurance companies. Before year 2000, only public sector insurance companies were allowed to do business in India. But after year 2000, insurance sector was thrown open for private insurance companies as well. At present there are around 16 private life insurance companies and around 9 private nonlife insurance companies doing business in India. ICICI Prudential Life Insurance co. ltd is the #1 private life insurers in the world. ULIPs are life insurance plans whose returns are linked to the stock markets. ULIP returns fluctuate with the up and down in the stock market. Mutual Fund are collective investment vehicles that pool resources of various investors and invests these resources in a diversified portfolio comprising of stocks, bonds or money market instruments. Although both these products are somewhat different in their

working but more or less the fund pooled in both of them are invested similarly. With the advent of Unit Linked Insurance Plans, the life insurance products have changed from being only a life cover product to an investment vehicle with built-in features of life insurance and tax benefits. Indian market offers a huge scope for ULIPs as a product since even today its largely under insured and with general income level on a rise every one is looking for investment avenues. However awareness regarding this instrument is really poor and hence efforts need to be made to bring it to the forefront. Traditional avenues like LIC policies and FDs still form the favored destination for investments. This report is prepared with an aim to provide the development of present Indian Insurance Industry. This report also provides a comparative analysis of mutual funds and unit linked insurance plans Based on this report, the prospecting insurance customers would get help in choosing the right investment products for themselves.

INTRODUCTION TO THE PROJECT

As we know now a days there are so many investment options available in the market. But instead of so many options our goal is to decide the one that will maximise our investment and give us the decent returns As we decide the goals the biggest question is where to invest because there are so many plans are available in the market. Now a days ULIPS AND MUTAUL FUND are playing a vital role . These both options are more over similar to each other excepting some differences. My aim to conduct this study was to get more informed about both these investment options and on the basis of the differences between these two, to decide which is better. Ulips which provide insurance plus investment on the other hand MUTUAL FUND provides only investment these two products are best but most of the people are difficult to understand which one is suiting them. To solve this problem project COMPARITIVE STUDY BETWEEN ULIPS AND MUTUAL FUND was conducted. Before study the comparison firstly understand the concept of ULIPS AND MUTUAL FUND then go for comparison. ULIPS and MUTUAL FUND are the two good investment options that offer specific products tailor-made for different life stages. It thus ensures that the benefits offered to

the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met.

COMPANY PROFILE ICICI Prudential life Insurance Company Limited was incorporated on July 20, 2000. The authorized capital of the company is Rs.2300 Million and the paid up capital is Rs. 1500 Million. The Company is a joint venture of ICICI (74%) and prudential plc UK (26%). The Company was granted Certificate of Registration for carrying out Life Insurance business, by the Insurance Regulatory and Development Authority on November 24, 2000. It commenced commercial operations on December 19, 2000, becoming one of the first few private sector players to enter the liberalized arena. The Company is now operational in Mumbai, New Delhi, Pune, Chennai, Kolkata, Bangalore, Chandigarh, Ahmedabad, Hyderabad, Lucknow, Nasik, Jaipur, Cochin, Meerut, Mangalore and Ludhiana. Till March 31,2002 the Company has issued 100,000 polices translating into a Premium Income of around Rs. 1,200 Million and a sum assured of over Rs.15,000 Million. The Company recognizes that the driving force for gaining sustainable competitive advantage in this business is superior customer experience and investment behind the brand. The Company aims to achieve this by striving to provide world class service levels through constant innovation in products, distribution channels and technology based. BOARD OF DIRECTORS The ICICI Prudential Life Insurance Company Limited Board comprises reputed people from the finance industry both from India and abroad MR. K.V. KAMATH, CHAIRMAN MR. BARRY STOWE MRS. KALPANA MORPARIA MRS. CHANDA KOCHHAR MR. HT PHONG MR. M.P. MODI MR. R NARAYANAN

MR. KEKI DADISETH MS. SHIKHA SHARMA, MANAGING DIRECTOR MR. N. S. KANNAN, EXECUTIVE DIRECTOR MR. BHARGAV DASGUPTA, EXECUTIVE DIRECTOR MANAGEMENT TEAM The ICICI Prudential Life Insurance Company Limited Management team comprises reputed people from the finance industry both from India and abroad. MS. SHIKHA SHARMA, MANAGING DIRECTOR & CEO MR. N. S. KANNAN, EXECUTIVE DIRECTOR MR. BHARGAV DASGUPTA, EXECUTIVE DIRECTOR MS. ANITA PAI, EVP CUSTOMER SERVICE & TECHNOLOGY MR. AZIM MITHANI, CHIEF ACTUARY MR. PUNEET NANDA, CHIEF INVESTMENTS OFFICER COMPANY VISION:To make ICICI Prudential the dominant Life and Pensions player built on trust by worldclass people and service. This is what company hopes to achieve: Understanding the needs of customers and offering them superior products and service Leveraging technology to service customers quickly, efficiently and conveniently.

Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to Companys policyholders Providing an enabling environment to foster growth and learning for Companies employees And above all, building transparency in all Companys dealings.

The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describes what the company stands for, the qualities of people and the way they work.

Company Values 1. 2. 3. 4. 5. Integrity Walk the talk: live the values Stand up honestly and fearlessly for what I truly care about Costumer First Own the customer: deliver the promise. Listen actively, stretch continually to add values to customer and channel partners. Boundary Less Never say its my job go beyond the call of duty Experiment- believe anything is possible Ownership Own mistake. Learn from failure. Confront hard facts, pursue goals relentlessly Passion Winning instinct-transmit boundless energy and enthusiasm to drive results. Demonstrate speed for competitive advantages. PROMOTERS OF THE COMPANY ICICI Prudential life insurance has mainly two sponsor. These are

1. ICICI BANK

2. PRUDENTIAL PLC

Prudential plc logo

ICICI BANK ICICI BANK Ltd was established in 1955 by the World Bank, the Government of India and the Indian Industry, to promote industrial development of India by providing project corporate finance to Indian industry. ICICI Bank is Indias second-largest bank with total assets of about Rs.112, 024 crore and a network of about 950 branches and offices and about 1900 ATMs. It offers a wide range of banking products and financial services to corporate and retail customers

through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Banks equity shares are listed in India on stock exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.ICICI has now developed a whole range of activities to become a Universal Bank. Some of ICICI's spectrum of activities includes: Commercial Banking: ICICI Bank, India's first internet bank.

Information Technology: ICICI InfoTech, transaction processing, software development

Investment Banking: ICICI Securities, one of the key players in the Indian Capital Markets

Mutual Fund: Prudential ICICI AMC, leading private sector mutual fund player

Venture Capital: ICICI Venture, leading private equity investor on IT and HealthCare

Retail Services: ICICI PFS, Marketing and Distribution of Retail Asset Products Distribution: ICICI Capital, Distribution and Servicing of Retail liability product PRUDENTIAL PLC

Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the US and Asia, provides retail financial services products and services to more than 20million customers, policyholder and unit holders worldwide. As of 31 December 2006, the company had over $251 billion in funds under management. Prudential has

brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, banking, investment management and general insurance.

In Asia, Prudential is the leading European life insurance company with a vast network of 24 life and mutual fund operations in twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

Prudential plc is an international retail financial services group that aims to help people secure and enhance their own and their dependants financial well-being by providing savings, protection and other products and services suited to their needs.It have strong franchises in three of the largest and most attractive markets in the world, where rising wealth and changing demographics are fuelling demand for life insurance and other longterm savings and protection products.

Structure of the Sales Function

ICICI Prudentials sales function is divided into two functional structures within the organization. These two Structures are:

* Bancassurance & Alliances * Tied Agency

Bancassurance & Alliances: Bancassurance or Banca: - ICICI Prudential was a pioneer in offering life insurance solutions through banks and alliances. Within a short span of two years, and with nearly a large number of partners, B & A has emerged as a vital component of the companys sales and distribution strategy, contributing to approximately one third of companys total business. The business philosophy at B&A is to leverage distribution synergies with there partners and add value to its customers as well as the partners. Flexibility, adaptation and experimenting with new ideas are the hallmarks of this channel. The business philosophy at B&A is to leverage distribution synergies with its partners and add value to the business of both. Bancassurance Team includes. Banks ICICI Bank Federal Bank South Indian Bank Bank of India Lord Krishna Bank Some co-operative banks Corporate Agents Bajaj Capital India Infoline Way 2 Wealth Advanced Financial Services (Karvy) Blue Chip AHS

APS Strategic Marketing Pvt. Ltd. S M Insurance Investment Managers Emgee Muthoot

Structure of sales function of ICICI PRU

Tied Agency: - Tied Agency is the largest distribution channel of ICICI Prudential, comprising a large advisor force that targets various customer segments. The strength of tied agency lies in an aggressive strategy of expanding and procuring quality business. With focus on sales & people development, tied agency has emerged as a robust, predictable and sustainable business model. Generally this advisors works under the leadership of unit manager, who motivate them in every step by providing training and guidance to them, usually each unit manager have 20 to 30 advisors under them. Advisors are the people who are not the employee of the ICICI prudential, but works as commission agents. PRODUCTS

UNIT LINKED INSURANCE PLAN (ULIP) It is a scheme promoted by Unit trust of India. Unit Linked Insurance Plan is commonly known as ULIP. Your investment in the said plan is apportioned into insurance premium and investment. In other words it is a combination of Insurance and mutual fund. It is a two in one scheme. As the name suggest unit linked insurance plans are the insurance plans that are linked with units. Here the word unit means per unit value of investment in diversified securities. Unit linked life insurance plan provides you the opportunity to participate in market linked returns while enjoying the valuable benefits of life insurance...

This plan enables you to protect your loved ones, while making your money grow faster. Your premiums are invested in units of the investment fund (equity, debt, money market, security bonds etc.) of your choice, based on the prevailing unit price. On maturity you receive the value of your units. On death you receive the greater of .the value of your units or the sum assured while purchasing the policy. It is an policy, which provides for life insurance, where the policy value varies according to the value of the underlying assets at the time which is affected by market situation. Many investors today are trying to invest as individuals. I see and read about thousands of people who are doing online day trading. This is a perfect example of an individual trying to trade against wellorganized teams. That is why so few of them succeed as well as why many lose their money. I was taught that when it comes to investing, you should invest as a member of a team. If a person wants to become sophisticated investor and more than that, then they must invest as a team.

Excerpts from Guide to Investing by Robert T. Kiyosaki Unit Linked Insurance Plans (ULIP), A policy, which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).ULIP came into play in the 1960s and became very popular in Western Europe and Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also successfully mapped along with life insurance need to retirement planning. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens future and retirement planning. A feature of ULIP distinguishes itself through the multiple benefits that it provides to the consumer. A policy, which provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). ULIP came into play in the 1960s and became very popular in Western Europe and Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also successfully mapped along with life insurance need to retirement planning. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens future and retirement planning.

Features of ULIP: ULIP distinguishes itself through the multiple benefits that it provides to the consumer. The plan is a one-stop solution providing: * Life Protection: Ulips are insurance plans hence these provide insurance cover to the investor. * Investment and savings:

Ulips also provide an investment opportunity as amount paid as premium is being invested in marketable securities. Flexibility:

These plans are flexible enough as different modes of payment of premium are available, which includes monthly payment to quarterly as well as yearly. * Adjustable Life cover: The life cover means sum assured for policy, it is also very flexible and can be changed according to the requirements. * Investment options: It provides the different investment options as we can invest our premium in to different marketable securities such as equity related as well as in debt and government securities. * Transparency: All the transactions done here are kept transparent. It includes from charges deduction and actual amount invested in market to returns that has risen from amount invested. * Options to take additional cover against death due to accident: There are different other options that are available in it are RIDERS. By adopting these riders, in case of death of the insured person by an accident would give the nominee double the sum assured. Disability:

Another RIDER that is available in it is in case of disability of the insured person the company will give him double the sum assured. Critical Illness:

It also covers the 9 critical diseases in case of insured person. * Surgeries: In case of any person has shown the symptoms of any disease and it requires any kind of surgery, in that case the insurance company will pay the amount equals to sum assured. Liquidity:

This scheme also provides high liquidity as after three years you can sell this plans/investment at the prevailing market price. * Tax Planning: The ulip plans are comes with tax rebate hence in case to avoid the tax a person can invest his/her money in to these plans & can claim for tax rebate.

FUNDS OF ULIP: The ulips provides kinds of investment options or in other words in ulips our money is invested in three kinds of securities these are

* Equity based funds: In equity based funds your money is invested in projects of different companies in terms of equity participation. The shares of those companies are purchased. In this kind of investment the risk is high but the returns are also very high as compare to other funds. * Debt Funds: In it your money is invested in debt funds here it is necessary to explain the term debt funds, debt funds are those securities in which money is invested in securities which having the constant & stable returns. Usually by debt funds we mean debentures etc of a company. In these kind of securities the risk is moderate so as the returns. * Government securities: As the name suggest in it your money is invested in government backed securities. The chances of loosing our investment are almost nil as these securities are backed by the government. But the returns in these securities are also very less. * Money market fund In this money is invested in treasury bills, certificate of deposits etc.

* Balanced fund In this the money is invested into debt & equity both . there is fixed interest and return on equity according to market condition.

Unit-linked insurance plan The honey and the sting

THE equity market, when it is all abuzz, has the magical quality of morphing into a honeycomb. Investors swarm it, lured by the prospect of high returns. It is no different now. Investors those that deployed funds directly or through the mutual funds route have had a rich harvest of honey. Another class of investors that has reason to smile is the one that invested in equity-oriented schemes of unit-linked insurance plans. These plans enable investors track the performance of their net asset values everyday. With companies having unit-linked products wasting no time to broadcast accomplishments, the advertising business is also abuzz. While mentions in business dailies are par for the course, it is not uncommon to see hoardings announcing the spectacular returns that such plans have delivered. The temptation to get carried away by the hype can be irresistible, but now is the time to exercise some discretion. A Look at how suitable the unit-linked plans are from an insurance perspective, and what factors investors need to consider.

High returns and sustainability

The high-decibel advertising campaigns may lead investors to believe that the returns generated over the past few months are sustainable. Nothing could be farther from the truth. To draw a parallel, similar advertisements were put out by mutual funds during the heady days of the market in the mid-1990s. For instance, campaigns with such punchlines as "100 per cent return in 10 months" were common. Investors who entered such funds were left high and dry when the market tanked. Suitability of options

Unit-linked insurance plans usually offer three schemes: One oriented towards debt and money-market instruments, another with a tilt towards equities, and a third that seeks to achieve a mix of investing in both equities and debt. If one opts for the plan that invests primarily in equity, the buzzing market could lead to windfall returns. However, should the buzz die down, investors could be left . Fund management style

Considering that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock

market. Even if one views insurance as a long-term commitment, investments based on performance over such a short time span may not be appropriate. What has happened over the past few months is that such plans have participated in the broad-based rally in the market to deliver high returns. However, these returns are certainly not an index of what investors can expect in the future. For instance, mutual funds posted spectacular returns in the mid-1990s and their net asset values (NAVs) zoomed. When the buzz died down, the erosion in value was equally swift. Quite a few funds have managed to recover from their battered NAV levels. Blue chip and Prima, now from the Franklin Templeton stable and then part of Kothari Pioneer, have recovered considerably to post annual returns of 25 per cent and 20 per cent respectively over a 10-year period. And this has been achieved on an asset base that has swelled considerably, especially over the past couple of years. This ability to handle business downturns, maintain performance on an increasing asset base, and emerge unscathed is a reflection of the quality of fund management. And the same yardstick should be applied to evaluate insurance companies as well. Current evidence is inadequate to pass judgment on how they will stack up when the going gets tough. Till such time they prove that they can deliver the goods under tough market conditions, investors will be better off opting for plans that invest primarily in debt, which have lower downside risk. Market timing

To maximise returns even during such bullish phases, it is imperative that investors time their entry and exit from the markets. As far as stocks go, returns tend to be compressed over a short timeframe. (To illustrate, the Sensex has put on 60 per cent in a span of six months this year.) Staying put too long in a unit-linked insurance plan that focuses on equity may deplete returns if market mood turns negative. This implies that investors should deftly switch between schemes within a plan to get the biggest bang for their buck. For instance, investors who want to lock in to the gains on the equity portfolio can switch whole or part of their exposure to the debt-oriented plan. Charges aplenty

Various charges are levied on such plans. They either lead to a deduction from the investment amount that is brought in or are adjusted by liquidation of units. In both cases, returns are affected. Typically, charges are high in the initial two years before they taper off and stabilize for the rest of the plan's term. This would mean that the effective amount available in the first two years would be 80 per cent of what has been invested. Thereafter the investible surplus is higher. In the current Bull Run, the high returns mask the charges levied. But if returns drop to singledigit levels, investors will feel the pinch.

One also needs to consider the deduction that will be made if one opts for life cover. If it happens to be on a one-year renewal basis, a higher amount will be deducted as mortality charges. This is in contrast to what one pays in a pure term plan under which premiums are fixed on the basis of the mortality risk at the time of purchasing the plan. Course of action

PROVIDING life cover is the most important function of insurance; providing returns is just an added advantage of such plans, which gets magnified, given the tax rebates. Investors can consider the following options: *Steer clear of opting for life cover under the unit-linked plans; settle for a pure term plan instead, which will offer you a high amount of cover for a relatively lower premium outgo. *Investors can look at the debt-based plans as the tax breaks could magnify returns. *Over the long-term they could offer superior returns compared to debt funds offered by mutual fund houses, assuming that the tax breaks are in place. *For those who seek a partial exposure to equity in their portfolio, a combination of a pure term policy and an investment in mutual fund schemes, such as Prima, Blue chip, HDFC Equity, HDFC Tax Saver, and Templeton India Growth Fund, is a superior option to the unit-linked plans with an equity tilt. *Investors with surpluses and looking at tax-break-oriented investments can consider the equity option in unit-linked plans, despite the risk of a short track record. *Balanced funds as a class have not performed well in the Indian context, with only two schemes (HDFC Prudence and US-95) having a good long-term track record. *In this backdrop, the balanced fund option need not be considered. Employing conservative investment strategies in a buzzing market may appear boring. However, when the markets start tanking, such strategies ensure that you are not taken to the cleaners. MUTUAL FUND

As you probably know, mutual funds have become extremely popular over the last 20 years. What was once just another obscure financial instrument is now a part of our daily lives. More than 80 million people, or one half of the households in America, invest in mutual funds. That means that, in the United States alone, trillions of dollars are invested in mutual funds.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital 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. History of mutual funds: When three Boston securities executives pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become. The idea of pooling money together for investing purposes started in Europe in the mid1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts Investors Trust. Meaning of Mutual Funds: A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). A mutual fund is a pool of money from several shareholders and is managed by an investment professional. The investment professional invests insecurities complying with the stated objective of the fund (i.e. growth, value, income, etc.).

Definitions: 1. A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated

objective of the scheme. For example, an equity fund would invest in equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc.

2. A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The fund's Net Asset Value (NAV) is determined each day.

3. Mutual Funds are financial intermediaries. They are companies set up to receive your money, and then having received it, make investments with the money Via an AMC i.e. asset management company.

The beauty of mutual funds is that anyone with a few hundred rupees can invest and reap returns as high as those provided by the equity markets or have a steady and comparatively secure investment as offered by debt instruments.

4. A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways: 1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution. 2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. 3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for profit.

Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

The flow chart below describes broadly the working of mutual funds:

Organization of mutual funds There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: In this diagram the organization of mutual funds consists of: Sponsor: Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations 1996. The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. Trustee:

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders to ensure that the AMC functions in the interest of Investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.

Asset Management Company (AMC):

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crores at all times.

Registrar and Transfer Agent:

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The registrar and transfer agent also handles communications with investors and updates investor records.

By Structure: By structure mutual funds are of following types

Open-ended Funds An Open-ended Fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. Close-ended Fund A Close-ended Fund has a stipulated maturity period, which generally ranges from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the Stock Exchanges, if they are listed. The market price at the stock exchange could vary from the scheme's NAV on account of demand and supply situation, unit holders' expectations and other market factors. By Investment Objective:

Growth Fund The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. Growth schemes are ideal for investors who have a long-term outlook and are seeking growth over a period of time. Income Fund The aim of Income Funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities.Income Funds are ideal for capital stability and regular income. Capital appreciation in such funds may be limited, though risks are typically lower than that in a growth fund. Balanced Funds The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents.

This proportion affects the risks and the returns associated with the balanced fund - in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market.Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a c ombination of income and moderate growth. Money Market Funds The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for corporate and individual investors as a means to park their surplus funds for short periods. Other Equity Related Schemes:

Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws, as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction under Section 88 of the Indian Income Tax Act, 1961. Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE S&P CNX 50. Sectoral Schemes Sectoral Funds are those which invest exclusively in specified sector(s) such as FMCG, Information Technology, Pharmaceuticals, etc. These schemes carry higher risk as compared to general equity schemes as the portfolio is less diversified, i.e. restricted to specific sector(s) / industry (ies).

ADVANTAGES OF MUTUAL FUND DIVERSIFICATION:

The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in

value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value. PROFESSIONAL MANAGEMENT:

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

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

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

You can usually buy mutual fund shares by mail, phone, or over the Internet. LOW COST: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index

Some other features are: TRANSPARENCY FLEXIBILITY CHOICE OF SCHEMES TAX BENEFITS WELL REGULATED

DRAWBACKS OF MUTUAL FUNDS * NO GUARANTEES: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. * FEES AND COMMISSIONS: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. * TAXES: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. * MANAGEMENT RISK: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers. Mutual Fund Industry Diagramshowingdiff erent phases of growth of mutual funds in India: RISKS IN MUTUAL FUNDS: Risk is an inherent aspect of every form of investment. For mutual fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the scheme's investments may be affected by factors affecting capital markets such as price and volume volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other developments. Market Risk:

At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences, When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to "market risk". Inflation Risk: Sometimes it referred as "loss of purchasing power." Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not more. Credit Risk: In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures? Interest Rate Risk: Changing interest rates affect both equities and bonds in many ways. Bond prices are influenced by movements in the interest rates in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase. Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV. Investment Risks: In the sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities. Liquidity Risk: Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian fixed income market. Changes in the Government Policy: Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund

Justification Of Study

Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. as we decide the goals the biggest question is where to invest because there are so many plans are available in the market. But now a days ULIPS AND MUTAUL FUND are playing a vital role, ULIPs which provide insurance plus savings on the other hand MUTUAL FUND provides only savings these two products are best but most of the people are difficult to understand which one is suit them. To solve this problem project COMPARISON BETWEEN ULIPS AND MUTUAL FUND are prepared. Before study the comparison firstly understand the concept of ULIPS AND MUTUAL FUND then go for comparison. ULIPS and MUTUAL FUND are the two good investment option that offers specific products tailor-made for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage. Investment point of view ULIP AND MUTUAL FUND are good due to wider meaning difficult to understand. Most of the people living in town and small cities dont know the exact difference between two products ULIP AND MUTUAL FUND today play vital role in the market.

Tax point of view these products are good but there is some to understand that difference. ULIP AND MUTUAL FUND are give good return but to clear the which one is better.

Objective of Study

To draw a comparative analysis of ulips and mutual funds and to explore various popular investment avenues for the investors has been the prime objective of this study.

To Test the awareness level in the market for Unit Linked Insurance Plans (ULIPs) and Mutual Fund.

To find the most popular investment avenues among sample of investors.

To find the importance of various investments based parameters among sample of investors.

To identify the potential customers across locations, age-groups, profession.

To get an idea of customer expectations in terms of rate of return.

To find the comparison between ulip & mutual fund

To know about customer preferences in invetment

Literature review Kothari C.R., Research Methodology Methods and Techniques (Second Edition) New Age International Publishers, Ansari Road, Daryaganj, New Delhi-110002. Chapter 4, Page 55-58. Chapter 6, Page 95,100,111.( Methods of data collection, collection of data through Questionnaire, collection of secondary data are referred before the data collection.)2

Research methodology

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. It Includes* Meaning of research * Problem of research * Research design * Sample design * Data collection method * Data analysis & Interpretation

Meaning of Research

Research is defined asionat a scientific & systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research is a systemized effort to gain new knowledge. It is a careful inquiry especially through search for new facts in any branch of knowledge. The search for knowledge through objective and systematic method of finding solution to a problem is a research. Problem statement

The research problem is that there are many option are in the market to invest. But now a days ULIPS AND MUTAUL FUND are playing a vital role. These two products are best

but most of the people are difficult to understand which one is suit them. So research problem is to make comparison between them and analysis the best one on the basis of the investors response.

Research Design

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 the design includes an outline of what the researcher will do from writing the hypothesis and its operational implication to the final analysis of data. Research design can be of types: Exploratory Research Design Descriptive Research Design Experimental Research Design Diagnostic Research Design

The present study is Descriptive Research in nature.

SAMPLING

Sampling may be defined as the selection of some parts of an agreement or totality for the purpose of study. All the items in any field of inquiry constitute a universe or population, a complete enumeration of all the items in the population is known as Census inquiry. But when the field of inquiry is large this method becomes difficult to adopt because of the limited no. of resources involved in the case sample survey method is chosen under which units are selected in such a way that they represent the entire universe.

SAMPLING DESIGN

Steps In Sampling Design: - While developing a research design following items are taken into consideration:-

I.Type of universe: - First and the foremost step is to clearly define the universe to be studied. As I have taken the area of Ambala City (Haryana), so for me here the universe is Ambala area. No doubt it is a finite universe but the area is very big and cant be covered easily due to shortage of time.

II.Sampling unit: - A decision has to be taken concerning a sampling unit before selecting sample. Here my sample unit includes investors & customers of life insurance companies.

III.Size of sample: - This refers to the number of items to be selected from the universe to constitute a sample. Here I have taken the sample of 80 .

IV.Sampling procedure: - Finally the technique of selecting the sample is to be dealt with. That means through which method the sample has been collected. There are various types of selecting the sample. This includes probability sampling, random sampling, stratified sampling, cluster sampling, convenience sampling. Here I have used the convenience sampling method for data collection, as Ambala area is very big ..

DATA COLLECTION

There are two types of data these are:

PRIMARY DATA: - The primary data are those, which are collected afresh and for the first time. And thus happened to be original in character. Sources of primary data are: Questionnaire Personal interview

SECONDERY DATA:-

The secondary data on the other hand, are those, which have already been collected by Someone else and which have already been passed through the statistical processes. When the researcher utilizes secondary data then he has to look into various sources from where he can obtain them. From e.g. Books, magazine, newspaper, Internet, publications and reports.

DATA ANALYSIS Q1 your annual income is

INCOME Below 1 lakh 1-2 lakh 2-3lakh 3-4 lakh More than 4 lakh RESPONDENT 19 21 32 19

INTERRPRETATION Thus according to above graph 32% respondents have income of 2-3 lakh , 21% respondents have annual income of 1-2 lakh, 19% have below 1 lakh , 19% have below 1 lakh , 9% have annual income of more than 4 lakh.

Q2 How much do you invest in a year ? Investment In Rs Nil Below 10000 10000-50000 50000-100000 More than 100000 Respondent 22 18 26

22 12

INTERRPRETATION According to above graph 26 % respondents invest 10000-50000 Rs, 22% respondents invest between 50000-1000000, 18% below 10000 Rs , 22% does not invest , 12% invest more than 1 lakh.

Q 3 Do you about ULIPs ?

Response Yes

No Respondent 46 54

Q4 If yes, how you know about ulips ? Media Company Advisor Newspaper Internet Relatives & friends others No. of respondent

21 11 8 10 6

STATISTICAL TOOLS

INTERRPRETATION According to above graph 21 respondents know about ulip through company advisor, 11 respondents through newspaper, 8 through internet , 10 through relatives & friend, 6 know through other media.

Q 5 Are you satisfied by return of ulips ? satisfaction level

Highly satisfied Satisfied Neutral Less dissatisfied Highly dissatisfied

No. of respondent 23 28 25 14 10

INTERRPRETATION According to above graph 23% respondents are highly satisfied by return of ulip, 28%respondents are less satisfied through , 25% have neutral response , 14% are dissatisfied, 10% are highly dissatisfied from the return of ulip.

Q.6 In which insurance company you would like to invest ? company ICICI Pru. LIC BAJAJ ALLIANZ MAX NEW YORK OTHERS No. of respondents 28 38

11 12 11

INTERRPRETATION According to above graph 28% respondents would like to invest in ICICI Pru., 38% in LIC, 11% in BAJAJ ALLIANZ , 12% IN max new york , 11% would like to invest in other company.

Q-7Do you know about mutual fund ? Yes No 62

38

Q 8 Are you satisfied by the return in mutual fund ? Satisfaction Level Highly sat. Less satisfied Neutral Dissatisfied Highly dissat. No. of respondent 20 25

28 20 14

INTERRPRETATION According to above graph 20% respondents are highly satisfied by return of mutual fund, 25%respondents are less satisfied through , 28% have neutral response , 20% are dissatisfied, 14% are highly dissatisfied from the return of mutual fund.

Q 8 YOUR RATING TO ULIPs? RESPONSES

VERY GOOD GOOD AVERAGE POOR VERY POOR NO. OF RESPONDENT 33 24 28 9 6

INTERRPRETATION According to above graph 33% respondents are rating very good to ulip, 24% respondents are rating good , 28% have neutral response , 9% are rating it poor, 6% are rating it as very poor .

Q 9Your Rating To Mutual Fund? RESPONSES VERY GOOD GOOD AVERAGE POOR VERY POOR NO. OF RESPONDENT 28

26 30 10 6

INTERRPRETATION According to above graph 28% respondents are rating very good to mutual fund, 26% respondents are rating good , 30% have neutral response , 10% are rating it poor, 6% are rating it as very poor mutual fund FINDINGS & RESULTS

* Awareness among people about Ulip is less.

* Awareness of Mutual fund is very good.

* But instead of less awareness people are investing in Ulip because of many advantages over mutual fund.

* Return are good in ulips as compare to mutual fund.

* Respondent rate ulip good as compared to mutual fund.

STATISTICAL TOOLS

* MULTI DIMENSIONAL SCALING:

Multidimensional scaling (MDS) is a method for analyzing a (similarity or dissimilarity) proximity matrix based on a set of observations. The purpose of MDS is to model the proximity of observations in order to represent them as accurately as possible in a limited number of dimensions (usually 2). There are different MDS algorithms: XLSTAT uses the SMACOF (Scaling by MAjorizing a COnvex Function) algorithm that minimizes the "normalized stress" function. Furthermore, there are several MDS models (or representation functions), i.e. several ways to transform the dissimilarities into disparities. The disparities are the distances that describe the optimal representation for the observations. The difference between the disparities and the distances measured on the representation resulting from the MDS is called the stress: the lower the stress, the better the representation of the observations.

When the representation function simply respects the relative order of the observations, one speaks about ordinal MDS or nonmetric MDS.When the dissimilarities are transformed into disparities using a specific parametric function ,one speaks about metric MDS.The following models are available in the current version of XLSTAT.

Mds 1 Q1. How you rank the ulip on the basis of following factors from 1-5 scale?

High Return Insurance Cover Tax Benefit Less Charges Risk Factor Rank 1 35 32 15 7 5 Rank 2

28 28 12 16 16 Rank 3 12 18 23 28 19 Rank 4 13 12 24 22

24 Rank 5 12 10 26 27 36

INTERPRETATION

Stress is 0.063 which is quite low

The red points mark the accurate points in the data where as the white points mark those points which presents the actual data

Its clearly visible that the skewness present in the diagram is somewhat low that means the points are very close to the purely accurate data

MCA 1 Multiple correspondence analysis is used to study our data as table of observation described by several categorical variables. This method is well suited to analyzing survey for which the array rows are usually the observations and columns are category of categorical variables, usually categories of answer to question. Here I used this tool on the previous data.

Q2 How you rank the ulip on the basis of following factors from 1-5 scale?

High Return Insurance Cover Tax Benefit Less Charges Risk Factor

Rank 1 35 32 15 7 5 Rank 2 28 28 12 16 16 Rank 3 12 18 23

28 19 Rank 4 13 12 24 22 24 Rank 5 12 10 26 27 36

INTERPRETATION o Here we take active observation, which is shown by blue dots.

Here the eignvalue of four factors is between 0 to 1.

It gives four factors which are high return, insurance, tax benefits, less charges.

Principal component analysis(PCA) Principal component analysis (PCA) expresses a set of variables as a set of linear combinations of factors that are not correlated between them; these factors represent an increasingly small fraction of the variability of the data. This method allows you to represent the original data (observations and variables) with fewer dimensions than the original, while keeping data loss to a minimum. Representing the data in a limited number of dimensions (2 dimensions in this case) greatly facilitates analysis. PCA differs from factor analysis in that it creates a set of factors that have no correlation to one another; this corresponds to the special case where all communalities are equal to 1 (null specific variance).Here we are using PCA on ten factors and It will reduce these into four or five one Pca 1 Q3 How you rank the ulip on the basis of following factors from 1-5 scale?

High Return Insurance Cover Tax Benefit Less Charges Rank 1 35

32 15 7 Rank 2 28 28 12 16 Rank 3 12 18 23 28 Rank 4 13 12

24 22 Rank 5 12 10 26 27

INTERPRETATION PCA reduce four factor into two factor It gives high return and insurance as two correlated factors

Multiple Regression Multiple Regression is used to model complex phenomena which cannot be handled by the linear model. XLSTAT provides pre-programmed functions from which the user may be able to select the model which describes the phenomenon to be modelled. When the model required is not available, the user can define a new model and add it to their personal library. To improve the speed and reliability of the calculations, it is recommended to add derivatives of the function for each of the parameters of the model. When this is possible (pre-programmed functions or user defined functions where the first derivatives have been entered by the user) the Levenberg-Marquardt algorithm is

used. When the derivatives are not available, a more complex and slower but efficient algorithm is used. This algorithm does not, however, enable the standard deviations of the parameter estimators to be obtained.

Here I am using the multiple multiple regression analysis on one dependent variable (growth) and two independent variables (high return ,insurance cover). Regression 1 Q4 how you rank ULIP on the following factors?

High Return Insurance Cover Growth Rank 1 35 32 37 Rank 2 28 28 21

Rank 3 12 18 13 Rank 4 13 12 17 Rank 5 12 10 12

INTERPRETATION Observation 4 is the best one in which the people said that the High return & insurance Lead to the growth of the organization

Mds 2

Q1 HOW YOU RANK MUTUAL FUND ON THE BASIS OF FOLLOWINGS FACTORS FROM 1-5 SCALE?

High Return Tax Benefit Liquidity Less Charges Risk Cover Rank 1 33 13 18 17 24 Rank 2 21 19

27 20 16 Rank 3 17 17 15 21 29 Rank 4 13 23 23 31 12 Rank 5

16 28 17 11 19

INTERPRETATION Stress is 0.143 which is quite low

The red points mark the accurate points in the data where as the white points mark those points which presents the actual data Its clearly visible that the skewness present in the diagram is somewhat low that means the points are very close to the purely accurate data

MCA2 Q2 HOW YOU RANK MUTUAL FUND ON THE BASIS OF FOLLOWINGS FACTORS FROM 1-5 SCALE

High Return Tax Benefit Liquidity Less Charges Risk Cover Rank 1 33 13 18 17 24 Rank 2 21 19 27

20 16 Rank 3 17 17 15 21 29 Rank 4 13 23 23 31 12 Rank 5 16 28

17 11 19

INTERPRETATION o o Here we take active observation, which is shown by blue dots. Here the eignvalue of four factors is between 0 to 1.

It gives four factors which are high return, insurance, tax benefits, less charges.

PCA2 Q3 HOW YOU RANK MUTUAL FUND ON THE BASIS OF FOLLOWINGS FACTORS FROM 1-5 SCALE

High Return

Tax Benefit Liquidity Less Charges Rank 1 33 13 18 17 Rank 2 21 19 27 20 Rank 3 17 17

15 21 Rank 4 13 23 23 31 Rank 5 16 28 17 11

INTERPRETATION

PCA reduce four factor into two factor It gives high return and Liquidity as two correlated factors

REGRESSION 2 Q3 HOW YOU RANK MUTUAL FUND ON THE BASIS OF FOLLOWINGS FACTORS FROM 1-5 SCALE

High Return Liquidity Capital Formation Rank 1 33

18 17 Rank 2 21 27 29 Rank 3 17 15 23 Rank 4 13 23 19 Rank 5 16 17

12

INTERPRETATION Observation 2 is the best one in which the people said that the High return & insurance Lead to the capital formation of the organization

RECOMMENDATIONS

The major obstacle that was faced during the project was public unawareness regarding ULIPS. So first and foremost its important to undertake steps to create an awareness for the same. To this end, following steps can be initiated:

Advertisement Campaigns- aggressive marketing strategies should be adopted with a special focus on educating the Indian masses about the benefits of ULIPs both TV as well as radio can be made use of for the same.

Road Shows this can be another means of reaching target market effectively as pockets or areas could be identified where demand and market for ULIP would be increase for instance in urban areas, people may be more willing and open to this new concept than the rural areas.

Hoardings and bill boards this forms a very effective means of mass communications. Attractive and informative bill boards can be designed and located at strategic locations at strategic locations like markets, highways and other busy roads.

Train bank staff: educate and train the bank staff who actually have an interface with the customers about all the aspects of the ULIPs and equip then with solutions to all the FAQs. They should be instructed to pitch for the product to every prospective customer by providing financial motivation to them as well. Various in house competitions could be organized as a means of stimulating enthusiasm among the employs.

Financial incentives- in order to motivate the bank employees, financial incentives could also be provided with higher rewards for ULIPs in comparison to FDs and general insurance policies. Non financial incentives like certificates and other forms of recognition can also be provided to the Study.

POLICY IMPLICATIONS

Some suggestions that I have given to the company and following are the result of those suggestions are as follows;

* Company has been thinking for the advertisement and promotional activities

* Regarding the product ,company said it is not easy to change the accessabilty rapidly of ulip plans it requiries lot of time because it is a long process.

* Company also give the prefrence to the rural people as the advisors In rural area.

* The company is giving more emphasis on the selling activites so I suggest them to give equal importance on the urban & rural area and they will thinking about giving some xtra schemes for the rural area in ther next budget.

LIMITATIONS OF STUDY

How so ever impeccable a thing may see to be there always dwell some possibilities of failure and incompleteness. The result of this work also subject to some of limitations are as follows :v Due to shortage of time the studies conducted on very small scale i.e. based upon material and information provided by the company.

I have faced a lot of problem in collecting the information about the company

v Some of the officers were too busy to give a sincere response to investigation and hence their response may not relate to real picture. v The findings of the research are limited to a particular area & can not be applied to all places.

v As the human behavior is not constant so the results collected through questionnaire may or may not apply to future period of time.

v Lack of experience: I was new on the topic which was assigned to me. So lack of experience in getting information from respondents came in to the way of collecting the relevant data.

v Small sample size: As sample size taken by me for purpose of survey was 80 Respondents. So the result may have some deviations from the facts because of small sample size

SWOT Analysis v STRENGTH:-

Brand Name of ICICI:-The name of the ICICI is known in all over the country as number one bank in the private sector and this is the name which people have trusted for many years, which is mainly due to the ICICI Bank. So ICICI Prudential, do not have the crises of the brand name STRONG FINANCIAL BACKING: - the ICICI prudential had a strong financial backing from their promoter, (ICICI BANK and Prudential), which help the company to build trust on the mind of the people. STRONG SALES FORCE: - The Company has a very strong force of good marketing brain, which gives an edge over the other competitor especially nationalized insurance company like LIC. And secondly it has a very good distribution channel which helps the company to get more clients from these reliable sources. These channel include Allied Banks like ICICI Bank Federal Bank South Indian Bank Bank of India Lord Krishna Bank Some co-operative banks

Corporate Agents Bajaj Capita India Infoline Way 2 Wealth Advanced Financial Services (Karvy) Blue Chip AHS APS Strategic Marketing Pvt. Ltd. S M Insurance Investment Managers

Allied Corporate Agencies Strong Marketing and Sales Promotion team

ULIPs: Almost 90% of the total business of ICICI Pru is the business with the sale of ULIPs and only 10% of the products are the traditional insurance policies. So this is the strength which ICICI Pru can work upon more to get the maximum positive results. v WEAKNESS:Lack of Information about the product:-Most of the product of the ICICI Prudential are known by the people, this is because of lack of information about the product and bad marketing strategies by the company mainly in small cities Focusing mainly on urban sector:-ICICI prudential mainly focus on the urban sector of the country, where the competition is very tuft and are not concentrating on the other sector of the country mainly in the rural sector where there.

Most of the Plans are too complicated:-ICICI Prudential insurance plan are too complex to understand for a layout person, and this makes most of the people to avoid this plan because they feel difficulties to understand. The same is in the case of Mutual Funds.

OPPORTUNITIES:-

A large Part of cities are uncovered: - A large part of the cities are uncovered by ICICI Prudential life insurance where they do not have any branches. Some Top Nationalized banks should be made Allies: - There are large parts of the cities were Nationalized banks have large number of clients in compare to private banks, this is mainly because they are operating for such a long time and there is a good opportunities to converted those customer into ICICI prudential customer, By making them allies. There is a good opportunities to increase the Advisors base: - when we compare the ratio of Advisors with LIC, then we will find that there is a large gap between them, so there is an opportunities to increase the advisor base by breaking the agents of LIC. v Threats:-

LIC: - LIC is the greatest threat to ICICI prudential in the area of insurance sector, because it is one of the oldest insurance company in the country, and have a large size of the customer abase. Threat with some private banks: - there are some banks which are providing these services to their customer. And slowly taking away a good market share.

CONCLUSION

To conclude I can say that both these investment options (ulips and mutual funds) are very good and those people who are willing to invest can term these options as better one when compared with others. But as ulips are less popular there is a need to educate the people about them. In the end as my project topic was specific to comparative analysis of ulips and mutual funds I can say that between ulips and mutual funds ulips are better investment option as ulips gives more benefits to investors than those which are offered by mutual funds.

Further more to specify the Above study shows that ULIPS are better for long term because every person who invest money wants good return and ULIPS give good return in long term as comparison to short term on the other hand MUTUAL FUND are better for short period because the return are good in short period as comparative to long term, no doubt long term also provide good return due to fixed charges in long run and the return known as capital gain and these returns are taxable in some plans thats why mutual funds are only better for short period .Hence in the end the ulips can be considered as a better investment.

Bibliography 1. Beri G.C., Marketing Research 3rd edition, Publishing House,Pg. 30- 40, 72-87 This book helped in understanding the different research designs and analytical tools used here 2. Kothari C.R. Research Methodology Methods and Techniques, 2 nd Edition, Wishwa prakashan, New Delhi Pg 45- 49, 301-306, 236-243 revealed 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

3. Jain T.R ., Statistics for MBA, Latest edition 2005-06 V.K.(India) Enterprises ,Ambala city,pg, 108- 125,134 -150 revealed information regarding the statistical tools and their limitations in different fields the research is given in this section..

4.Gupta S.P. Statistical Methods Sultan Chand & Sons Educational Publishers, New Delhi Pg.67-77, 379-390, 589-606, 954-958, revealed information regarding the statistical tools and their limitations in different fields the research is given in this section. 5 Micheal D.S. Mutual Fund rules, published by Tata mcgraw Hill, pp 24,27-31,33-39

6 Bhole L.M. Management of Financial Institutions pp 12.12-12.36.

7 Myhhal Management of Financial Regulation and Operation 4th edition pp 15-40.

8 Fabozzi . J FrankFoundation Of Financial Market and Institute 3rd edition pp 123125. 9 Balachanderan S. IC 33 life Insurance 1st edition pp 188-196

10 Pandey I.M.-Financial Management by Vikas Publishing House the concept of mutual funds & various schemes have been studied from this book. 11 Srivastva s.: Management of Indian Financial Institutions-Himalaya Publishing House 6th edition. Introduction of mutual funds, their advantages, disadvantages and various types have been taken from it

Journals and Magazines

10 ICFAI Reader April 2008 , Mutual Fund Distribution

11 Economic and Political weekly, April 2006, Trends in Mutual Fund.

12 Indian Journal of finance Vol-2, September 2008 pp 26-34. Growth of mutrual fund 13 Busse A. Jeffery Journal of Finance, Mutual Fund persistence, pp 21-24. s 14 Ranganathan. Kavita Focus , International Journal of Management Digest, April 2006, pp 17-23.

15 Facts For U, February 2008 and may 2007.

16 http;// www.sify.com/finance/fullstory.php?id=14731474&cid=14229712 - 31k intro to ulip 17 blog.moneyraam.com/2008/01/ulip-vs-mutual-fund.html ulip vs mutual fund

18http;// www.policydeal.in/category/ulip

ANNEXURE Questionnaire Name_________________ Phone no______________

Address_______________

Occupation____________

Age_____________________

Q1. Your annual income?

Below 1 lakh 1 -2 lakh

2 - 3 lakh 3-4 lakh

More than 4 lakh

Q2.Do you invest?

Yes

No

Q3.How much amount do you invest in a year?

Nil

below 10000

10000-50000

50000-100000

above100000

Q4.Do you know about ulips (unit linked insurance plans)?

Yes

No

Q5.If yes, how do you know about ULIPs ?

Company advisor

newspaper

Internet

relatives & friends

Others

Q6 You like to invest in?

Gold

Fixed deposits

Insurance(ulips)

mutual fund Others

Q7.

In ulip how you rank the following factors on 1-5 scale?

High return Insurance cover Tax benefits Less Charges

Risk factor Rank 1

Rank 2

Rank 3

Rank 4

Rank 5

Q8. your satisfaction regarding returns in ulips?

a) Highly Satisfied

b) satisfied

c) neutral e) highly Dissatisfied

d) dissatisfied

Q9 In which company you would like to invest ? a) c) e) ICICI Pru Bajaj Allianz Any Other b) LIC d)Max New York life

Q10 Are you satisfied with the services provided by company?

a) Highly Satisfied c)Neutral e) highly Dissatisfied

b)

Satisfied

d) dissatisfied

Q11. How do you rank below insurance companies from 1-5 scale ?

ICICI Pru LIC Bajaj allianz Max new york life Others Easy Access

Risk Coverage

Customer Satisfaction

High Rate Return

Brand Name

Q12.Do you know about mutual funds?

Yes

No

Q14.Have you ever invested in mutual funds?

Yes

No

Q15

In mutual fund how you rank the following factors on 1-5 scale?

High return

liquidity Tax benefits Less Charges Risk factor Rank 1

Rank 2

Rank 3

Rank 4

Rank 5

Q17. In which company you prefer to invest in mutual fund ?

Reliance mutual fund

Prudential ICICI

CAN mutual fund

TATA mutual fund

SBI mutual fund

Q18 Your satisfaction regarding return in mutual fund?

a) highly Satisfied

b)

Satisfied

c) neutral

d) dissatisfied

e) highly Dissatisfied

Q19.Do you know the difference between the ulips and mutual funds?

Yes

No

Q20. Out of ulips and mutual funds which you considered is more risky

investment?

Ulips

mutual funds

Q22.If you have to invest money in near future, out of both these(ulips and mutual funds) you would like to invest in ?

Mutual funds

Ulips

Tick the reasons for your answer

High Returns

Insurance cover

less risk

Tax rebate

Less charges

Freedom to exit others (please specify)________

Q23. Your rating to Mutual Funds

Poor

Below average

Average

Good

Very good

Q24 Your rating to ulips Poor Below average Average Good

Very good

MDS 1

XLSTAT 7.1 - Multidimensional Scaling (MDS) - 9/27/2008 at 10:38:49 PM High Return Insurance Cover Tax Benefit Less Charges Risk Factor

Similarity matrix (converted to a dissimilarity matrix): workbook = Book1 / sheet = Sheet1 / range = $E$11:$I$15 / 5 rows and 5 columns 35 32 15 7

Uniform weighting (default) 28 28 12 16 16

No missing values 12 18 23 28 19

Metric Multidimensional Scaling

13 12 24 22 24

Multidimensional Scaling model: absolute 12 10 26 27 36

Stress used for the results: Kruskal's stress-1

Dimension of the representation space: 2

Repetitions: 10

Seed of the pseudo-random numbers generator: 4145765104

Iterations: 50

Convergence: 0.0001

Space with 2 Dimensions:

Model: Dij= Pij

Observation coordinates:

Observation Dim1 Dim2

High Return -9.686 10.530

Insurance Cover -13.136 2.958

Tax Benefit 1.804 -8.711

Less Charges 10.609 1.415

Risk Factor 10.408 -6.192

Distances measured in the representation space:

High Return Insurance Cover Tax Benefit Less Charges Risk Factor

High Return 0

8.321 22.411 22.248 26.141

Insurance Cover 8.321 0 18.957 23.795 25.259

Tax Benefit 22.411 18.957 0

13.418 8.965

Less Charges 22.248 23.795 13.418 0 7.609

Risk Factor 26.141 25.259 8.965 7.609 0

Ideal distances calculated using the model (disparities):

High Return Insurance Cover Tax Benefit Less Charges

Risk Factor

High Return 0 8.000 24.000 23.000 24.000

Insurance Cover 8.000 0 18.000 24.000 26.000

Tax Benefit 24.000 18.000 0 12.000 10.000

Less Charges 23.000 24.000 12.000 0 9.000

Risk Factor 24.000

26.000 10.000 9.000 0

In the case of the absolute model, the disparities are equal than the dissimilarities

Residual distances:

High Return Insurance Cover Tax Benefit Less Charges Risk Factor

High Return 0 0.321 -1.589 -0.752 2.141

Insurance Cover 0.321 0 0.957 -0.205 -0.741

Tax Benefit -1.589 0.957 0 1.418 -1.035

Less Charges

-0.752 -0.205 1.418 0 -1.391

Risk Factor 2.141 -0.741 -1.035 -1.391 0

Comparative table:

Pair Dissimilarity Disparity Distance Dissimilarity rank

Disparity rank

High Return - Insurance Cover 8.000 8.000 8.321 1 1

Less Charges - Risk Factor 9.000 9.000 7.609 2 2

Tax Benefit - Risk Factor 10.000 10.000 8.965 3 3

Tax Benefit - Less Charges 12.000 12.000 13.418 4 4

Insurance Cover - Tax Benefit 18.000

18.000 18.957 5 5

High Return - Less Charges 23.000 23.000 22.248 6 6

High Return - Tax Benefit 24.000 24.000 22.411

7 7

High Return - Risk Factor 24.000 24.000 26.141 7 7

Insurance Cover - Less Charges 24.000 24.000 23.795 7 7

Insurance Cover - Risk Factor 26.000 26.000 25.259 8 8

In the case of the absolute model, the disparities are equal than the dissimilarities

Summary of repetitions:

Repetition Iterations Initial stress Fin. stress

1 46 1.387 0.110

2 20 0.567 0.144

3 50 0.569 0.111

4 17 0.507 0.063

5 22 0.640 0.063

6 11

0.404 0.144

7 50 0.587 0.110

8 31 0.927 0.106

9 50 0.564 0.110

10 28 0.494 0.063

In bold, repetition corresponding to the best solution that XLSTAT found

MCA 1

XLSTAT 7.1 - Multiple Correspondence Analysis (MCA) - 9/27/2008 at 10:42:18 PM High Return Insurance Cover Tax Benefit Less Charges Risk Factor

Table: workbook = Book1 / sheet = Sheet2 / range = $D$10:$I$14 / 5 rows and 6 columns 35

32 15 7 5

No missing values 28 28 12

16 16

Uniform weighting (default) 12 18 23 28

19

Number of factors associated with non trivial eigenvalues: 4 13 12 24 22 24

Rank 5 12 10 26 27 36

Burt table:

Var1 - Rank 1 Var1 - Rank 2 Var1 - Rank 3 Var1 - Rank 4 Var1 - Rank 5 High Return - 12 High Return - 13 High Return - 28 High Return - 35 Insurance Cover - 10 Insurance Cover - 12 Insurance Cover - 18 Insurance Cover - 28 Var1 - Rank 1 1 0

0 0 0 0 0 0 1 0 0 0 0 Var1 - Rank 2 0 1 0

0 0 0 0 1 0 0 0 0 1 Var1 - Rank 3 0 0 1 0 0

1 0 0 0 0 0 1 0 Var1 - Rank 4 0 0 0 1 0 0 1

0 0 0 1 0 0 Var1 - Rank 5 0 0 0 0 1 1 0 0

0 1 0 0 0 High Return - 12 0 0 1 0 1 2 0 0 0 1

0 1 0 High Return - 13 0 0 0 1 0 0 1 0 0 0 1 0

0 High Return - 28 0 1 0 0 0 0 0 1 0 0 0 0 1 High Return - 35

1 0 0 0 0 0 0 0 1 0 0 0 0 Insurance Cover - 10 0

0 0 0 1 1 0 0 0 1 0 0 0 Insurance Cover - 12 0 0 0

1 0 0 1 0 0 0 1 0 0 Insurance Cover - 18 0 0 1 0 0

1 0 0 0 0 0 1 0 Insurance Cover - 28 0 1 0 0 0 0

0 1 0 0 0 0 1 Insurance Cover - 32 1 0 0 0 0 0 0 0

1 0 0 0 0 Tax Benefit - 12 0 1 0 0 0 0 0 1 0 0

0 0 1 Tax Benefit - 15 1 0 0 0 0 0 0 0 1 0 0

0 0 Tax Benefit - 23 0 0 1 0 0 1 0 0 0 0 0 1 0

Tax Benefit - 24 0 0 0 1 0 0 1 0 0 0 1 0 0 Tax Benefit - 26 0

0 0 0 1 1 0 0 0 1 0 0 0 Less Charges - 16 0 1 0

0 0 0 0 1 0 0 0 0 1 Less Charges - 22 0 0 0 1

0 0 1 0 0 0 1 0 0 Less Charges - 27 0 0 0 0 1 1

0 0 0 1 0 0 0 Less Charges - 28 0 0 1 0 0 1 0 0

0 0 0 1 0 Less Charges - 7 1 0 0 0 0 0 0 0 1

0 0 0 0 Risk Factor - 16 0 1 0 0 0 0 0 1 0 0 0

0 1 Risk Factor - 19 0 0 1 0 0 1 0 0 0 0 0 1 0

Risk Factor - 24 0 0 0 1 0 0 1 0 0 0 1 0 0 Risk Factor - 36 0

0 0 0 1 1 0 0 0 1 0 0 0 Risk Factor - 5 1 0

0 0 0 0 0 0 1 0 0 0 0

Eigenvalues and variance percentages:

F1 F2 F3 F4

Eigenvalue

1.000 1.000 1.000 0.833

% variance 26.087 26.087

26.087 21.739

Cumulative % 26.087 52.174 78.261

100.000

Number of removed trivial eigenvalues: 24

Note: Within the framework of Multiple Correspondence Analysis, the total variance has no statistical interpretation

In bold, significant values at the level alpha=0.050 (two-tailed test)

Factor scores:

F1

F2 F3 F4 Obs1 0.000 2.236 0.000 0.000 Obs2 2.128 0.000 -0.274 0.000 Obs3 0.202 0.000

1.568 -1.443 Obs4 0.624 0.000 -0.080 0.000 Obs5 0.202 0.000 1.568 1.443

PCA 1

XLSTAT 7.1 - Principal Component Analysis (PCA) - 9/27/2008 at 10:43:48 PM

High Return Insurance Cover Tax Benefit Less Charges Table: workbook = Book1 / sheet = Sheet3 / range = $F$10:$I$14 / 5 rows and 4 columns 35 32 15 7 Uniform weighting (default) 28 28 12 16 No missing values 12

18 23 28 Pearson correlation coefficient (normed PCA, variances with 1/n) 13 12 24 22 Without axes rotation 12 10 26 27 Number of factors associated with non trivial eigenvalues: 4

Bartlett's sphericity test:

Chi-square (observed value) 13.723

Chi-square (critical value) 12.592

DF 6

One-tailed p-value 0.033

Alpha 0.05

Decision:

At the level of significance Alpha=0.050 the decision is to reject the null hypothesis of absence of significant correlation between variables. In other words, the correlation between variables is significant. Mean and standard deviation of the columns:

Mean Standard deviation

High Return 20.000 9.654

Insurance Cover 20.000 8.672

Tax Benefit 20.000 5.477

Less Charges 20.000 7.772

Correlation matrix:

High Return Insurance Cover Tax Benefit Less Charges

High Return 1 0.946 -0.904 -0.962

Insurance Cover 0.946 1 -0.935 -0.861

Tax Benefit

-0.904 -0.935 1 0.803

Less Charges -0.962 -0.861 0.803 1

In bold, significant values (except diagonal) at the level of significance alpha=0.050 (two-tailed test)

Eigenvalues:

F1 F2 F3 F4

Eigenvalue 3.707 0.224 0.057 0.012

% variance 92.678 5.594 1.432 0.295

Cumulative %

92.678 98.272 99.705 100.000

Factor loadings:

F1 F2 F3 F4 High Return 0.990 -0.106 0.006 0.090 Insurance Cover 0.972 0.144 0.184 -0.028 Tax Benefit -0.946

-0.290 0.145 0.013 Less Charges -0.942 0.328 0.050 0.053

REGRASSION 1

XLSTAT 7.1 - Linear Regression - 9/27/2008 at 10:48:36 PM High Return Insurance Cover Growth

Dependent variable(s) workbook = Book1 / sheet = Sheet7 / range = $I$11:$I$15 / 5 rows and 1 column 35 32 37

Uniform weighting (default) 28 28 21

Quantitative variables: workbook = Book1 / sheet = Sheet7 / range = $G$11:$H$15 / 5 rows and 2 columns 12 18 13

No missing values 13 12 17

Confidence interval (%): 95.00 12 10 12

Modeling variable Growth:

Summary for the dependent variable:

Variable Total no. of values No. of values used No. of values ignored Sum of weights Mean Standard deviation

Growth 5

5 0 5 20.000 10.149

Summary for the quantitative variables:

Variable Mean Standard deviation

High Return 20.000 10.794

Insurance Cover 20.000 9.695

Goodness of fit coefficients:

R (coefficient of correlation) 0.928

R (coefficient of determination) 0.861

Radj. (adjusted coefficient of determination) 0.722

SSR 57.262

Evaluating the information brought by the variables (H0 = Y=Moy(Y)):

Source DF Sum of squares Mean square Fisher's F Pr > F

Model 2 354.738

177.369 6.195 0.139

Residuals 2 57.262 28.631

Total 4 412.000

Model parameters:

Parameter Value Standard deviation Student's t Pr > t Lower bound 95 % Upper bound 95 %

Intercept 3.674 6.070 0.605

0.607 -22.444 29.792

High Return 1.153 0.765 1.508 0.271 -2.138 4.445

Insurance Cover -0.337 0.852 -0.396

0.730 -4.001 3.327

The equation of the model writes: Growth = 3.67391304347823 + 1.15347826086956*High Return -0.337173913043475*Insurance Cover

Predictions, residuals, and confidence intervals:

Observations Weights Growth Growth (Model) Residuals Standardized residuals Lower Conf. Mean Upper Conf. Mean Obs1 1 37.000 33.256 3.744 0.700

14.036 52.476 Obs2 1 21.000 26.530 -5.530 -1.034 12.452 40.608 Obs3 1 13.000 11.447 1.553 0.290

-10.641 33.534 Obs4 1 17.000 14.623 2.377 0.444 -0.150 29.396 Obs5 1 12.000 14.144 -2.144 -0.401

-3.644 31.932

MDS 2

XLSTAT 7.1 - Multidimensional Scaling (MDS) - 9/27/2008 at 10:58:02 PM High Return Tax Benefit Liquidity Less Charges Risk Cover Similarity matrix (converted to a dissimilarity matrix): workbook = Book1 / sheet = Sheet14 / range = $F$9:$J$13 / 5 rows and 5 columns 33 13 18 17

24

Uniform weighting (default) 21 19 27 20 16

No missing values 17 17 15 21 29

Metric Multidimensional Scaling

13 23 23 31 12

Multidimensional Scaling model: absolute 16 28 17 11 19

Stress used for the results: Kruskal's stress-1

Dimension of the representation space: 2

Repetitions: 10

Seed of the pseudo-random numbers generator: 766854828

Iterations: 50

Convergence: 0.0001

Space with 2 Dimensions:

Model: Dij= Pij

Observation coordinates:

Observation Dim1 Dim2

High Return -2.601 -10.766

Tax Benefit -4.175 2.843

Liquidity 8.848 -1.814

Less Charges

7.968 7.233

Risk Cover -10.041 2.503

Distances measured in the representation space:

High Return Tax Benefit Liquidity Less Charges Risk Cover

High Return 0 13.700 14.534 20.873 15.213

Tax Benefit

13.700 0 13.831 12.912 5.876

Liquidity 14.534 13.831 0 9.090 19.376

Less Charges

20.873 12.912 9.090 0 18.620

Risk Cover 15.213 5.876 19.376 18.620 0

Ideal distances calculated using the model (disparities):

High Return Tax Benefit Liquidity Less Charges

Risk Cover

High Return 0 12.000 16.000 20.000 17.000

Tax Benefit 12.000 0 16.000 10.000

5.000

Liquidity 16.000 16.000 0 10.000 16.000

Less Charges 20.000 10.000 10.000 0

22.000

Risk Cover 17.000 5.000 16.000 22.000 0

In the case of the absolute model, the disparities are equal than the dissimilarities

Residual distances:

High Return Tax Benefit Liquidity

Less Charges Risk Cover

High Return 0 1.700 -1.466 0.873 -1.787

Tax Benefit 1.700 0 -2.169

2.912 0.876

Liquidity -1.466 -2.169 0 -0.910 3.376

Less Charges 0.873 2.912 -0.910

0 -3.380

Risk Cover -1.787 0.876 3.376 -3.380 0

Comparative table:

Pair Dissimilarity Disparity Distance Dissimilarity rank

Disparity rank Distance rank

Tax Benefit - Risk Cover 5.000 5.000 5.876 1 1 1

Tax Benefit - Less Charges 10.000 10.000 12.912 2

2 3

Liquidity - Less Charges 10.000 10.000 9.090 2 2 2

High Return - Tax Benefit 12.000 12.000 13.700 3

3 4

Liquidity - Risk Cover 16.000 16.000 19.376 4 4 9

High Return - Liquidity 16.000 16.000 14.534 4

4 6

Tax Benefit - Liquidity 16.000 16.000 13.831 4 4 5

High Return - Risk Cover 17.000 17.000 15.213 5

5 7

High Return - Less Charges 20.000 20.000 20.873 6 6 10

Less Charges - Risk Cover 22.000 22.000 18.620 7

7 8

In the case of the absolute model, the disparities are equal than the dissimilarities

Summary of repetitions:

Repetition Iterations Initial stress Fin. stress

1 16 0.840 0.143

2 11

1.173 0.305

3 27 0.474 0.143

4 31 0.629 0.143

5 19 0.569 0.143

6 12 0.425 0.143

7 16 0.701 0.143

8 19 0.550 0.174

16 0.371 0.143

10 20 0.496 0.174

In bold, repetition corresponding to the best solution that XLSTAT found

MCA 2

XLSTAT 7.1 - Multiple Correspondence Analysis (MCA) - 9/27/2008 at 11:00:10 PM High Return Tax Benefit Liquidity Less Charges Risk Cover

Table: workbook = Book1 / sheet = Sheet13 / range = $E$12:$J$16 / 5 rows and 6 columns 33 13 18 17 24

No missing values 21 19 27

20 16

Uniform weighting (default) 17 17 15 21 29

Number of factors associated with non trivial eigenvalues: 4 13 23 23 31 12

Rank 5 16

28 17 11 19

Burt table:

Var1 - Rank 1 Var1 - Rank 2 Var1 - Rank 3 Var1 - Rank 4 Var1 - Rank 5 High Return - 13

High Return - 16 High Return - 17 High Return - 21 High Return - 33 Var1 - Rank 1 1 0 0 0 0 0 0 0 0 1 Var1 - Rank 2

0 1 0 0 0 0 0 0 1 0 Var1 - Rank 3 0 0 1 0

0 0 0 1 0 0 Var1 - Rank 4 0 0 0 1 0 1 0 0 0

0 Var1 - Rank 5 0 0 0 0 1 0 1 0 0 0 High Return - 13 0 0 0

1 0 1 0 0 0 0 High Return - 16 0 0 0 0 1 0 1 0

0 0 High Return - 17 0 0 1 0 0 0 0 1 0 0 High Return - 21 0 1

0 0 0 0 0 0 1 0 High Return - 33 1 0 0 0 0 0

0 0 0 1 Tax Benefit - 13 1 0 0 0 0 0 0 0 0 1 Tax Benefit - 17

0 0 1 0 0 0 0 1 0 0 Tax Benefit - 19 0 1 0 0 0

0 0 0 1 0 Tax Benefit - 23 0 0 0 1 0 1 0 0 0 0

Tax Benefit - 28 0 0 0 0 1 0 1 0 0 0 Liquidity 15 0 0 1 0

0 0 0 1 0 0 Liquidity 17 0 0 0 0 1 0 1 0

0 0 Liquidity 18 1 0 0 0 0 0 0 0 0 1 Liquidity 23 0 0

0 1 0 1 0 0 0 0 Liquidity 27 0 1 0 0 0 0 0

0 1 0 Less Charges - 11 0 0 0 0 1 0 1 0 0 0 Less Charges - 17 1

0 0 0 0 0 0 0 0 1 Less Charges - 20 0 1 0 0 0 0

0 0 1 0 Less Charges - 21 0 0 1 0 0 0 0 1 0 0 Less Charges - 31

0 0 0 1 0 1 0 0 0 0 Risk Cover - 12 0 0 0 1

0 1 0 0 0 0 Risk Cover - 16 0 1 0 0 0 0 0 0 1

0 Risk Cover - 19 0 0 0 0 1 0 1 0 0 0 Risk Cover - 24 1 0 0

0 0 0 0 0 0 1 Risk Cover - 29 0 0 1 0 0 0 0 1

0 0

F1 F2 F3 F4 Eigenvalue 1.000 1.000

1.000 1.000 % variance 25.000 25.000 25.000 25.000 Cumulative % 25.000 50.000 75.000 100.000 Number of removed trivial eigenvalues: 25

Note: Within the framework of Multiple Correspondence Analysis, the total variance has no statistical interpretation

Standardized coordinates of the observations:

F1 F2 F3 F4

Obs1

2.236 0.000 0.000 0.000

Obs2 0.000 -0.544 0.000 1.870

Obs3 0.000 0.000 2.236 0.000

Obs4 0.000 0.036 0.000 1.141

Obs5 0.000 2.169 0.000 0.450

Contributions of the observations (%):

Rel. weight F1 F2 F3 F4 Obs1 20.000 100.000 0.000 0.000 0.000 Obs2 20.000 0.000

5.913 0.000 69.920 Obs3 20.000 0.000 0.000 100.000 0.000 Obs4 20.000 0.000 0.027 0.000 26.037 Obs5

20.000 0.000 94.061 0.000 4.043

Squared cosines of the observations:

F1 F2 F3 F4

Obs1

1.000 0.000 0.000 0.000

Obs2 0.000 0.078 0.000 0.922

Obs3 0.000 0.000 1.000 0.000

Obs4 0.000 0.001 0.000 0.999

Obs5 0.000 0.959 0.000 0.041

PCA 2

XLSTAT 7.1 - Principal Component Analysis (PCA) - 9/27/2008 at 11:02:10 PM High Return Tax Benefit Liquidity Less Charges Table: workbook = Book1 / sheet = Sheet12 / range = $G$14:$J$18 / 5 rows and 4 columns 33 13 18 17 Uniform weighting (default) 21 19 27 20 No missing values

17 17 15 21 Pearson correlation coefficient (normed PCA, variances with 1/n) 13 23 23 31 Without axes rotation 16 28 17 11 Number of factors associated with non trivial eigenvalues: 4

Bartlett's sphericity test:

Chi-square (observed value) 3.610

Chi-square (critical value) 12.592

DF 6

One-tailed p-value

0.729

Alpha 0.05

Decision:

At the level of significance Alpha=0.050 the decision is to not reject the null hypothesis of absence of significant correlation between variables. In other words, the correlation between variables is not significant.

Mean and standard deviation of the columns:

Mean Standard deviation

High Return 20.000 6.986

Tax Benefit 20.000

5.138

Liquidity 20.000 4.382

Less Charges 20.000 6.512

Correlation matrix:

High Return Tax Benefit Liquidity Less Charges High Return 1 -0.758 -0.085 -0.365 Tax Benefit -0.758 1 0.062 -0.126 Liquidity -0.085

0.062 1 0.428 Less Charges -0.365 -0.126 0.428 1 In bold, significant values (except diagonal) at the level of significance alpha=0.050 (two-tailed test)

Eigenvalues:

F1 F2 F3 F4

Eigenvalue 1.857 1.386 0.677 0.080 % variance 46.430 34.645 16.921 2.003 Cumulative % 46.430 81.076 97.997 100.000

REGRESSION2

XLSTAT 7.1 - Linear Regression - 9/27/2008 at 11:14:07 PM High Return Liquidity Capital Formation

Dependent variable(s) workbook = Book1 / sheet = Sheet11 / range = $H$15:$H$19 / 5 rows and 1 column 33 18 17

Uniform weighting (default) 21 27 29

Quantitative variables: workbook = Book1 / sheet = Sheet11 / range = $F$15:$G$19 / 5 rows and 2 columns 17 15 23

No missing values 13 23 19

Confidence interval (%): 95.00 16 17 12

Modeling variable Capital Formation:

Summary for the dependent variable:

Variable Total no. of values No. of values used

No. of values ignored Sum of weights Mean Standard deviation

Capital Formation 5 5 0 5 20.000 6.403

Summary for the quantitative variables:

Variable Mean Standard deviation

High Return 20.000 7.810

Liquidity 20.000 4.899

Goodness of fit coefficients:

R (coefficient of correlation) 0.600

R (coefficient of determination) 0.360

Radj. (adjusted coefficient of determination)

-0.280

SSR 104.980

Evaluating the information brought by the variables (H0 = Y=Moy(Y)):

Source DF Sum of squares Mean square Fisher's F Pr > F

Model 2 59.020 29.510 0.562 0.640

Residuals 2 104.980 52.490

Total 4 164.000

Model parameters:

Parameter Value Standard deviation Student's t Pr > t Lower bound 95 % Upper bound 95 %

Intercept 3.423 18.465 0.185 0.870 -76.024 82.870

High Return 0.042 0.465 0.090 0.936 -1.961

2.045

Liquidity 0.787 0.742 1.060 0.400 -2.406 3.980

The equation of the model writes: Capital Formation = 3.42291980219307 + 4.19264674263599E-02*High Return + 0.786927542463986*Liquidity

Predictions, residuals, and confidence intervals:

Observations Weights Capital Formation Capital Formation (Model) Residuals Standardized residuals Lower Conf. Mean Upper Conf. Mean Lower Conf. Indiv. Upper Conf. Indiv. Obs1 1

17.000 18.971 -1.971 -0.272 -10.775 48.717 -24.117 62.059 Obs2 1 29.000 25.550 3.450 0.476 -1.012

52.113 -15.404 66.505 Obs3 1 23.000 15.940 7.060 0.975 -6.458 38.337 -22.445 54.324 Obs4 1 19.000

22.067 -3.067 -0.423 0.623 43.512 -15.769 59.904 Obs5 1 12.000 17.472 -5.472 -0.755 -1.590 36.533 -19.067

54.010