ACKNOWLEDGEMENT

I take this opportunity to express the feeling of gratitude towards Pune University for keeping Industrial Training as a part of PGDM Course.It is an occasion of great pleasure and a matter of deep felt personal satisfaction to present this complied statement of the Industrial Training undergone at a Company of great esteemed ICICI PRUDENTIAL LIFE INSURANCE CO.OPERATIVE LTD.

I also forward my special gratitude to our director sir DR. V. S. MANGNALE and faculty member MS. RASHMY MORAY for guiding me in training programmer. The valuable suggestion of our faculty member during the course of my project and giving me inspiration to achieve my goal. The shape that project has been taken is due to our faculty member’s help, judicious guideline and encouragement.

A deep sense of gratitude to Mr. Rajesh Kumar who gives me guidance related to Portfolio Management and Portfolio Management Services. He guided me in many difficulties related to my project. I am grateful to Mr. Pravin Tivari & Mr. Champak Bhatt who allow me to take summer training.

I express gratitude to all the staff of ICICI Prudential Life Insurance Co. Ltd. who give me guidance related to their specialize department in which they are doing their work & give knowledge what the work they do & how it is done.I take this opportunity to appreciate all those who directly or indirectly were instrumental in the completion of my project work.

And three most precious part of our life, our parents who have showered their love and support which can be never repaid in any form but can be commemorated without them this achievement could not have been achieved.

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INTRODUCTION

Investing in securities such as shares, debentures, and bonds is profitable as well as exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific knowledge as well artistic skill. In such investments both rationale and emotional responses are involved. Investing in financial securities is now considered to be one of the best avenues for investing one savings while it is acknowledged to be one of the best avenues for investing one saving while it is acknowledged to be one of the most risky avenues of investment. It is rare to find investors investing their entire savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called portfolio”. Creation of a portfolio helps to reduce risk, without sacrificing returns. Portfolio management deals with the analysis of individual securities as well as with the theory and practice of optimally combining securities into portfolios. An investor who understands the fundamental principles and analytical aspects of portfolio management has a better chance of success.An investor considering investment in securities is faced with the problem of choosing from among a large number of securities and how to allocate his funds over this group of securities. Again he is faced with problem of deciding which securities to hold and how much to invest in each. The risk and return characteristics of portfolios. The investor tries to choose the optimal portfolio taking into consideration the risk return characteristics of all possible portfolios. As the risk return characteristics of individual securities as well as portfolios also change. This calls for periodic review and revision of investment portfolios of investors. An investor invests his funds in a portfolio expecting to get good returns consistent with the risk that he has to bear. The return realized from the portfolio has to be measured and the performance of the portfolio has to be evaluated.It is evident that rational investment activity involves creation of an investment portfolio. Portfolio management comprises all the processes involved in the creation and maintenance of an investment portfolio. It deals specifically with the security analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio evaluation. Portfolio management makes use of analytical techniques of analysis and conceptual theories regarding rational allocation of funds. Portfolio management is a complex process which tries to make investment activity more rewarding and less risky.

EVOLUTION OF PORTFOLIO MANAGEMENT

Portfolio management is essentially a systematic method of maintaining one‘s investment efficiently. Many factors have contributed to the existence and development of the concept. In the early years of the century analyst used financial statements to find the value of the securities. The first to be analyzed using this was Railroad Securities of the USA. A booklet entitled ―The Anatomy of the Railroad‖ was published by Thomas F. Woodlock in 1900. As the time progressed this method became very important in the

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investment field, although most of the writers adopted different ways to publish there data. They generally advocated the use of different ratios for this purpose. John Moody in his book ―The Art of Wall Street Investing‖ strongly supported the use of financial ratios to know the worth of the investment. The proposed type of analysis later on became the ―common-size‖ analysis.The other major method adopted was the study of stock price movement with the help of price charts. This method later on was known as Technical Analysis. It evolved during 1900-1902 when Charles H. Dow, the founder of the Dow Jones and Co. presented his view in the series of editorials in the Wall Street Journal in USA. The advocates of technical analysis believed that stock prices movement is ordered and systematic and the definite pattern could be identified. There investment strategy was build around the identification of the trend and pattern in the stock price movement.

ROLE OF PORTFOLIO MANAGEMENT

There was a time when portfolio management was an exotic term. A practice which is beyond the reach of the small investor, but the time has changed now. Portfolio management is now a common term and is widely practiced in INDIA. The theories and concepts relating to portfolio management now find their way in the front pages of the financial newspapers and magazines.In early 90‘s India embarked on a program of economic liberalization and globalization, with high participation of private players. This reform process has made the Indian industry efficient, with rapid computerization, increased market transparency, better infrastructure and customer services, closer integration and higher volume. The markets are dominated by large institutional investors with their diversified portfolios. A large number of mutual funds have come up in the market since 1987. With this development investment in securities has gained considerable momentum Along with the spread of the securities investment way among Indian investors have changed due to the development of the quantitative techniques. Professional portfolio management, backed by research is now being adopted by mutual funds, investment consultants, individual investors and big brokers. The Securities Exchange Board of India (SEBI) is a regulatory body in INDIA. It ensures that the stock market is free from fraud, and of course the main objective is to ensure that the investor‘s money is safe.Portfolio not only now include domestic securities but foreign too. Investment is no longer a simple process. It requires a scientific knowledge, a systematic approach and also professional expertise. Portfolio management is the only way through which an investor can get good returns, while minimizing risk at the same time. So portfolio management objectives can be stated as: -1. Risk Minimization.2. Safeguarding Capital.3. Capital Appreciation.4. Choosing Optimal Mix of Securities.5. Keeping Track on Performance.

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OBJECTIVES OF STUDY:

1. To identify and analyze risk, portfolio and return.2. To study ICICI Prudential Portfolio and risk regarding selection of assets.3. To undertake the company analysis of the sample units of selected industries.4. To evaluate the performance of securities of selected firms through different

performance evaluation techniques.5. To understand, analyze and select a best portfolio.

NEED FOR STUDY:

ICICI Prudential Life Insurance has a number of funds for investors to invest. The ICICI Maximize is such a fund that offers the investors maximum returns with minimum risk. But the company wants to know the risk and return of the investors by analyzing the portfolio. Hence the study is taken.

LITERATURE REVIEW

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Why people invest?

Investors do invest in different instrument to simplify their lifestyle and to make certain goals in future life. Most investors invest for the long term to fulfill the inflation and for the capital appreciation. By and large the investors have typical requirement to fill, and those are:-Capital preservation: - The chance of losing some capital has been a primary need. This is perhaps the strongest need among investors in India, who have suffered regularly due to failures of the financial system.Wealth generation: - This is largely a factor of investment performance, including both short-term performance of an investment and long-term performance of a portfolio. Wealth accumulation is the ultimate measure of the success of an investment decision. Life Cover:- Many investors look for investments that offer good return with adequate life cover to manage the situations in case of any eventualities. Recent days investors do invest in the endowment policies and ULIPs.Tax savings: - Legitimate reduction in the amount of tax payable is an important part of the Indian psyche. Every rupee saved in taxes goes towards wealth accumulation.Income: This refers to money distributed at intervals by an investment, which are usually used by the investor for meeting regular expenses. Mostly daily traders invest for income.Future Uncertainty: - No one has seen the future so every person personally save money for any contingencies. People invest in short term for this. There must be an easy cash withdraw for the contingencies.Ease of withdrawal: - This refers to the ability to invest long term but withdraw funds when desired. This is strongly linked to a sense of ownership. It is normally triggered by a need to spend capital, change investments or cater to changes in other needs.Beat inflation: - inflation is a major player in the economy. It reduced the valuation of rupee. Investors do in vest to maintain the buying capacity of them.Retirement planning: - most of the service person do invest to get return after the vesting period, for that the investment such a manner that the returns comes at the time of retirement.

Investment Planning

Investors need to identify the financial goals throughout life or for the next 10 to 15 years depending upon the time horizon selected by the investor, and prioritizing them. Investment Planning is important because it helps in deriving the maximum benefit from the investments.Success as an investor depends upon his investment in right instrument in right time and for the right period. This, in turn, depends on the requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and level of return.

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Investment Planning also helps to decide upon the right investment strategy. Besides individual requirement, investment strategy would also depend upon age, personal circumstances and risk appetite. Investment Planning also helps in striking a balance between risk and returns. By prudent planning, it is possible to arrive at an optimal mix of risk and returns, which suits particular needs and requirements.Investment means putting the ideal money to work to earn more money. Done wisely, it can help you meet financial goals. Investing even a small amount can produce considerable rewards over the long-term, especially if you do it regularly. But one needs to decide about how much he / she wants to invest and where. Options before investmentInvestors choose wisely before investing which solely depends on the present market conditions, future prospect of the instrument, the return offered by the company and the season to invest in that particular instrument. For example, a good investment for a long-term life insurance plan may not be a good investment for higher education expenses. In most cases, the right investment is a balance of three things: Liquidity, Risk tolerance and Return.Liquidity – How easily an investment can be converted to cash, since part of invested money must be available to cover financial emergencies.

Risk tolerance - The biggest risk is the risk of losing the money that has been invested, but the main thing is to how much investor can cover up and sustain with that. Another equally important risk is that investments may not provide enough growth or income to offset the impact of inflation, which could lead to a gradual increase in the cost of living. There are additional risks as well (like decline in economic growth). But the biggest risk of all is not investing at all.

Return - Investments are made for the purpose of generating returns. Safe investments often promise a specific, though limited return. Those that involve more risk offer the opportunity to make - or lose - a lot of money. STEPS INVOLVED IN INVESTMENT PLANNING

Investment is not only prediction it has its own reasons behind every up and down in the market. So it is has its own theory to move in particular directions. To get in to the market investors must go through the following process.Analysis and profiling of the instrument: - The first step is performing a Need Analysis check. The requirements and expectations of the investor should be met by the instrument. During the profiling investor should consider their age, their profession, the number of dependents, and their income. By doing this check, the risk profile of the investor should be designed.Evaluating the alternatives - The next step would be revaluating the needs. Other investment instruments and options should be analyzed. The risk-return profile of investment products is evaluated in this step. Every investment product varies according

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to its return potential and riskiness. Investment products giving a high rate of return are generally risky and volatile. The products giving a lower rate of return usually are less risky.

Analyse the Profile: - The next step would be analyze the risk-return profile of the investor on to the investment portfolio. The investment instruments are matched with the risk-return profile of the investor. All the investment alternatives that offer expected rate of return are evaluate for consideration.Preparing an Optimum Portfolio- Then according to the risk appetite and return pattern an optimum portfolio is designed for the investor. The basket of investment instrument selected in the previous step are given due weightage and appropriate amount of money is invested in each of the investment avenue so as to get maximum return with minimum possible risk.Consistent Monitoring - Finally a continuous watch on the portfolio is extremely important. Fundamental analysis of the investment products done in the previous stages would only help in selecting the right product but the right time of entry or exit from a particular stream is evaluated by doing a technical analysis. For this professional portfolio management is a must.

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Analysis and profiling of the instrument

Evaluating the alternatives

Analyze the Profile

Preparing an Optimum Portfolio

Consistent Monitoring

Investment Planning

Various Investment OptionsSavings form an important part of the economy of any nation. With the saving invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenue to the investors. Though certainly not the best or deepest of markets in the World, it has reasonable options for an ordinary man to invest his savings. There are basically two kinds of Investments, One that gives returns at fixed rate and other where the rate of return is depending upon the certain factors of the economy. 1. Fixed Return Options

Post office monthly income schemePublic provident fundBank fixed depositsGovernment securities or giltsRBI taxable bondsInsuranceCompany fixed depositsInfrastructure bonds

2. Variable Return Options Mutual Funds Share and Stock market -1. Primary invested in equity (IPO) 2. Secondary market investment in equity 3. Derivative, Futures and Options Gold Real estate Foreign exchange assets

3. Ulip Linked Insurance Plan- ULIP capital secure fund. ULIP balanced fund. ULIP growth fund ULIP equity fund Pension capital secure fund Pension balanced fund Pension growth fund

Fixed Return OptionsUnder fixed return investments, investor will get fixed return on their investments. The rate of return is pre decided at the time of investment. Rate of return can be calculated on per annum basis or at completion of particular time period.

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Post Office Monthly Income Scheme:In this scheme an investment can be made by individuals in single or joint names maximum of Rs. 6 lakhs (Rs.3 lakhs per person) with an interest of 8%p.a. in a monthly income scheme. This will give you Rs. 4000/- per month if you invested the maximum amount. In addition, this investment will fetch your taxable bonus of 10% on the deposit maturity (i.e. after 6 years)

Other Post Office Scheme Kisan Vikas Patra:Money can be doubled in 8 years and 7 months. There is no upper limit on the amount that you invest. There are no tax benefits for the investments made under this scheme. The rate of interest works out to a compounded annual return of about 8.4%. There are no tax deductions at source and banks loans are available against Kisan Vikas Patra. Interest is paid at maturity and cannot be claimed prior to maturity.

Senior Citizen Savings Scheme (2004):As per the 2004-2005 budgets, the Government has announced a new Senior Citizen Savings Scheme. It has been launched only through designated Post Offices from the 2nd August, 2004. it for the individuals who have attained the age of 60 years or above on the date of opening of an account or who have attained the age of 55 years or more but less than 60years, and who have retired under Voluntary Retirement scheme or a Special Voluntary Retirement scheme on the date of opening of an account. The main feature of the scheme is that is carries an interest of 9% p.a. (taxable) on the deposits. Deposits can be a minimum of Rs. 1000 and maximum of Rs. 15lakhs, to be held for a period of 5 years and extendable for further 3 years. It can also be prematurely withdrawn after one year with some deductions. Interest qualifies for deduction u/s 80. Public Provident Fund:The rate of public provident fund is 8.5% p.a. currently. This is basically a long term investment opportunities (maturity 15 year) as the entire amount that is accumulated in this account can be withdrawn entirely only after 15years. Partial withdrawal is allowed only after 5 years. Interest is exempt from income tax and contributions are eligible for tax deductions.

Bank Fixed Deposits:Bank fixed deposits yield will vary from bank to bank but they are more or less streamlined. The yields are currently in the region of 5.5% to 6.5% per annum for deposits ranging from 30 days to five years. The entire schedule banks are covered by DICGC (Deposit Insurance and Credit Guarantee Corporation)Which means that up to 1 lakh deposited in a bank per person is absolutely safe and insured even if the bank collapse.

Government Security or Gilts:

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Government security and gilts are totally secure. Government bonds are issued by the government of India periodically. These are now available in the secondary market through satellite dealers and banks. They are known to yield 5% to 6% per annum. Interest exceeding Rs. 2500 is liable for TDS at10.455%.

RBI Taxable BondThese are 8% saving bonds which are taxable. The maturity is after 6 years and there is no upper limit to investment is these bonds. The interest accrued on these bonds is taxable under the Income Tax Act,1961

Mutual fund in India

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 internet 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 holding funds increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.

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

Advantages of Mutual Funds:

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Professional Management - The primary advantage of funds (at least theoretically) is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments.

Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money.Disadvantages of Mutual Funds:

• Professional Management - Did you notice how we qualified the advantage of professional management with the word "theoretically"? Many investors debate whether or not the so-called professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. We'll talk about this in detail in a later section.

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

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

It's important to understand that each mutual fund has different risks and rewards. In general, the higher the potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk - it's never possible to diversify away all risk. This is a fact for all investments. Each fund has a predetermined investment objective that tailors the fund's assets, regions of investments and investment strategies. At the fundamental level, there are three varieties of mutual funds: 1) Equity funds (stocks)2) Fixed income funds (bonds)3) Money market funds.

All mutual funds are variations of these three asset classes. For example, while equity funds that invest in fast-growing companies are known as growth funds, equity funds that invest only in companies of the same sector or region are known as specialty funds.

Let's go over the many different flavors of funds. We'll start with the safest and then work through to the more risky.

Money Market Funds:The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to park your money. You won't get great returns, but you won't have to worry about losing your principal. A typical return is twice the amount you would earn in a regular checking/savings account and a little less than the average certificate of deposit (CD).

Bond/Income Funds:Income funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk. Because there are many different types of bonds, bond funds can vary dramatically depending on where they invest. For example, a fund specializing in high-yield junk bonds is much more risky

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than a fund that invests in government securities. Furthermore, nearly all bond funds are subject to interest rate risk, which means that if rates go up the value of the fund goes down.

Balanced Funds:The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted to a specified maximum or minimum for each asset class.

A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class. The portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle.

Equity Funds:Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income. There are, however, many different types of equity funds because there are many different types of equities. A great way to understand the universe of equity funds is to use a style box, an example of which is below.

The idea is to classify funds based on both the size of the companies invested in and the investment style of the manager. The term value refers to a style of investing that looks for high quality companies that are out of favor with the market. These companies are characterized by low P/E and price-to-book ratios and high dividend yields. The opposite of value is growth, which refers to companies that have had (and are expected to continue to have) strong growth in earnings, sales and cash flow. A compromise between value and growth is blend, which simply refers to companies that are neither value nor growth stocks and are classified as being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in strong financial shape but have recently seen their share prices fall would be placed in the

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upper left quadrant of the style box (large and value). The opposite of this would be a fund that invests in startup technology companies with excellent growth prospects. Such a mutual fund would reside in the bottom right quadrant (small and growth).

Index Funds:The last but certainly not the least important are index funds. This type of mutual fund replicates the performance of a broad market index such as the S&P 500 or Dow Jones Industrial Average (DJIA). An investor in an index fund figures that most managers can't beat the market. An index fund merely replicates the market return and benefits investors in the form of low fees.

Costs are the biggest problem with mutual funds. These costs eat into your return, and they are the main reason why the majority of funds end up with sub-par performance.

What's even more disturbing is the way the fund industry hides costs through a layer of financial complexity and jargon. Some critics of the industry say that mutual fund companies get away with the fees they charge only because the average investor does not understand what he/she is paying for.

Fees can be broken down into two categories - 1. On-going yearly fees to keep you invested in the fund.2. Transaction fees paid when you buy or sell shares in a fund (loads).

• Front-end loads - These are the most simple type of load: you pay the fee when you purchase the fund. If you invest Rs.1,000 in a mutual fund with a 5% front-end load, Rs.50 will pay for the sales charge, and Rs. 950 will be invested in the fund.

• Back-end loads (also known as deferred sales charges) - These are a bit more complicated. In such a fund you pay the back-end load if you sell a fund within a certain time frame. A typical example is a 6% back-end load that decreases to 0% in the seventh year. The load is 6% if you sell in the first year, 5% in the second year, etc. If you don't sell the mutual fund until the seventh year, you don't have to pay the back-end load at all.

A no-load fund sells its shares without a commission or sales charge. Some in the mutual fund industry will tell you that the load is the fee that pays for the service of a broker choosing the correct fund for you. According to this argument, your returns will be higher because the professional advice put you into a better fund. There is little to no evidence that shows a correlation between load funds and superior performance. In fact, when you take the fees into account, the average load fund performs worse than a no-load fund.

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In the Indian economy Mutual funds have grown faster than any other investment instrument. The table show net capitalization in Mutual fund sector during 2002 to 2007.

Year UTI Bank-sponsored mutual funds

FI-sponsored mutual funds

Private sector mutual funds

Total

2004-05 -9434.1 1033.4 861.5 12122.2 4583.02005-06 1049.9 4526.2 786.8 41509.8 47872.72006-07 -2467.2 706.5 -3383.5 7933.1 2788.92007-08 3423.8 5364.9 2111.9 41581 52481.62008-09 7326.1 3032.0 4226.1 76687 91271.2

NET RESOURCES MOBILISED BY MUTUAL FUNDS 2004 to 2009

FEW TERMS IN MUTUAL FUNDS NAV: -Mutual’s price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share rupee amount of the fund is derived by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.

In terms of corporate valuations, the value of assets less liabilities equals net asset value (NAV), or "book value".In the context of mutual funds, NAV per share is computed once a day based on the closing market prices of the securities in the fund's portfolio. All mutual fund’s buy ansell orders are processed at the NAV of the trade date.  However, investors must wait until the following day to get the trade price.Mutual funds pay out virtually all of their income and capital gains. As a result, changes in NAV are not the best gauge of mutual fund performance, which is best measured by annual total return.

Because ETFs and closed-end funds trade like stocks, their shares trade at market value, which can be a dollar value above (trading at a premium) or below (trading at a discount) NAV.

SALE PRICE: - When an investor wants to disinvest from the investment he/she sell the unit(s) of the stock of the shares of mutual fund. The sell results the loss or gain of the capital. The tax law provides special rules for determining how much gain or loss you have, and in what categories, when you sell mutual fund shares. Tax is one of the main concerns during the sell. The tax gain or loss from mutual fund sales is calculated by comparing your tax basis in the shares sold to the sales proceeds net of any transaction costs. In general, the tax-planning objective is to maximize the basis in the shares being sold to minimize the gain, or maximize the loss.The Tax Code allows four methods:

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(Total asset value –liabilities) /no. of units= Net asset value

1. First-in, first-out (FIFO) method.2. Specific identification (specific ID) method.3. Single-category or "regular" average basis method. 4. Double-category average basis method.

FIFO MethodThis method assumes that shares you sell come out of the earliest-acquired blocks you own. In a rising market, FIFO tends to generate the biggest tax bill, because the oldest, cheapest shares are considered sold first. However, FIFO also increases the odds that your gains will be long term and therefore qualify for the 20% maximum rate.FIFO is the "default" method. In other words, you must use FIFO to calculate mutual fund gains and losses,Specific ID MethodUnder this method, one specifies exactly which block (or blocks) of mutual fund shares you intend to sell, so you can minimize gains or maximize losses by selling your highest-cost shares first.Selling the most expensive shares could mean his/her gains will be short term and therefore taxed at regular income tax rate rather than the long-term capital gains rate of 15%. However, if you are selling losers, it's generally better to sell short-term shares. Your short-term losses will then offset short-term gains that would otherwise be taxed at your income tax rate.

Single-Category Average Basis MethodThis method is available when one leaves his/her mutual fund shares on deposit in an account with an agent or custodian, but not when he/she actually has possession of share certificates. Each time investor makes a sale, he simply figures his average presale basis for shares of that fund. For holding period purposes, investor is considered to sell the oldest shares first.Double-Category Average Basis MethodHere you separate shares into two pools — one consisting of all long-term shares (held over 12 months), and the other consisting of all short-term shares. Then each time you sell, you calculate the average per-share basis for each pool. You can then sell strictly out of one pool or the other, or mix and match as you see fit. The advantage is you have more flexibility to control the basis of the shares being sold and whether the resulting gains will be taxed at 15% or your regular rate.Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

TYPES OF MUTUAL FUND SCHEMES

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By Structure Open - Ended SchemesClose - Ended SchemesInterval SchemesBy Investment Objective Growth SchemesIncome SchemesBalanced SchemesMoney Market SchemesOther Schemes Tax Saving SchemesSpecial Schemes Index SchemesSector Specific Schemes

Fig: changes in the Mutual fund industry in India till 2006

ULIP AND ENDOWMENT PLANSEndowment plans are life insurance plans, which not only cover the individual’s life in case of eventuality but also offer a maturity benefit at the end of the term.

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In the event of the individual’s demise, his/her nominees receive the sum assured with accumulated profits/bonus on investments (till the time of his demise). In case the individual survives the tenure, he/she receives the sum assured and accumulated profits/bonus.

ULIPs attempts to fulfill investment needs of an investor with protection/ insurance needs of an insurance seeker. ULIPs work on the premise that there is a class of investors who regularly invest their savings in products like fixed deposits, bonds, debt funds, diversified equity funds and stocks. There is another class of individuals who take insurance to provide for their family in case of an eventuality. So typically both these categories of individuals have a portfolio of investment as well as life insurance.ULIP as a product combines both these products (investment and life insurance) into single product. This saves the investor/insurance seeker the hassles of managing and tracking a portfolio of product.Taking into account the changing socio-economic demographics, rate of GDP growth, changing consumer behavior and occurrences of natural calamities at regular intervals, the Indian life insurance market is expected to reach the value of around Rs 1683 Billion in the year 2009. The market is expected to grow at a CAGR of more than 200% YOY from the year 2006.

ULIP - KEY FEATURES (IN GENERAL):

1. Premiums paid can be single, regular or variable. The payment period too can be regular or variable. The risk cover can be increased or decreased. 2. As in all insurance policies, the risk charge (mortality rate) varies with age. 3. The maturity benefit is not typically a fixed amount and the maturity period can be advanced or extended. 4. Investments can be made in gilt funds, balanced funds, money market funds, growth funds or bonds. 5. The policyholder can switch between schemes, for instance, balanced to debt or gilt to equity, etc. 6. The maturity benefit is the net asset value of the units. 7. The costs in ULIP are higher because there is a life insurance component in it as well, in addition to the investment component. 8. Insurance companies have the discretion to decide on their investment portfolios. 9. They are simple, clear, and easy to understand. 10. Being transparent the policyholder gets the entire episode on the performance of his fund. 11. Lead to an efficient utilization of capital. 12. ULIP products are exempted from tax and they provide life insurance. 13. Provides capital appreciation. 14. Investor gets an option to choose among debt, balanced and equity funds.

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ULIPs vs. Mutual Funds

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case with mutual funds, investors in ULIPs is allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis.Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few.Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house.ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity.

  ULIPs Mutual Funds

Investment amounts

Determined by the investor and can be modified as well

Minimum investment amounts are determined by the fund house

Expenses

No upper limits, expenses determined by the insurance company

Upper limits for expenses chargeable to investors have been set by the regulator

Portfolio disclosure Not mandatory* Quarterly disclosures are mandatory Modifying asset al location

Generally permitted for fee or at a nominal cost

Entry/exit loads have to be borne by h the investor

Tax benefits

Section 80C benefits are available on all ULIP Investments

S Section 80C benefits are available only on investments in tax-saving funds

Indian Stock Market overview

The Bombay Stock Exchange (BSE) and the National stock Exchange India Ltd. (NSE) are the two primary exchanges in India. In addition, there are 22 regional stock exchanges. However, the BSE and NSE have established themselves as the two leading exchanges and account for about 80% of equity volume traded in India. The average daily turnover

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NSE has around 1500 shares listed with a total market capitalization of around Rs. 9,21,500 crore. The BSE has over 6000 stocks listed and has a market capitalization of around Rs. 9,68,000 crore.Most key stocks are traded on both the exchanges and hence the investor could buy them on either exchange. Both exchanges have a different settlement cycle, which allows investors to sift their positions on the bourses. The primary index of BSE is BSE Sensex comprising of 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks. The BSE Sensex is the older and more widely followed index. Both these indices are calculated on the basis of market capitalization and contain the heavily traded shares from key sectors. Both exchanges have switched over from the open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE online trading) and NEAT (National Exchange Automated Trading) system. It facilitates more efficient processing, automatic order matching, faster execution of trades and transparency.The scripts traded on the BSE have been classified into ‘A’,’B1’,’B2’,’C’, ‘F’,’Z’ groups. The ‘A’ group shares represent those, which are in the carry forward system (Badla).The ‘F’ group represents the debt market (fixed income securities) segment.The ’Z’ groups scripts are the blacklisted companies.The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups and rights renunciations.

Term deposits A deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a fifteen days to a few years. When a term deposit is purchased, the lender (the customer) understands that the money can only be withdrawn after the term has ended or by giving a predetermined number of days notice.Term deposits are an extremely safe investment and are therefore very appealing to conservative, low-risk investors. By having the money tied up investors will generally get a higher rate with a term deposit compared with a demand deposit.

Investor some time pledge these term deposits to take house loan, personal load, education load, etc. these works as the security deposits or asset of the debtor.Here is a list of Term deposit rates of different Banks I have studied:-

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Tenure ICICI HDFC ABN-Amro

15 days - 59 days 5.25% 4% 5.50% 4%-5.5% 4%60 days – 89 days 5.75% 4% 5.50% 5.50% 5.50%90 days – 360 days 6.25% 6.25% 6.75% 6%-8% 8.50%361 days 8.50% 6.25% 8% 6% 8.50%362 days< 1year 6.25% 6.25% 6.75% 6% 8.50%1 year < 2years 6.50% 8% 8% 6%-8% 9.25%2 years - 4 years 6.75% 8% 8.25% 6.75% 9.25%

Standard Chartered

Kotak Mahindra

Bonds in India.

A bond is just an organization's IOU; i.e., a promise to repay a sum of money at a certain interest rate and over a certain period of time. In other words, a bond is a debt instrument. Other common terms for these debt instruments are notes and debentures. Most bonds pay a fixed rate of interest for a fixed period of time. Why do organizations issue bonds?A company needs funds to expand into new market, while Government needs money for everything from infrastructure to social programs. Whatever the need, a large sum of money will be needed to get the job done.

One way is to arrange for banks or others to lend the money. But a generally less expensive way is to issue (sell) bonds. The organization will agree to pay some interest rate on the bonds and further agree to redeem the bonds (i.e., buy them back) at some time in the future (the redemption date).

The price of a bond is a function of prevailing interest rates. As rates go up, the price of the bond goes down, because that particular bond becomes less attractive (i.e., pays less interest) when compared to current offerings. As rates go down, the price of the bond goes up, because that particular bond becomes more attractive (i.e., pays more interest) when compared to current offerings.A bearer bond is a bond with no owner information upon it; presumably the bearer is the owner. Bearer bonds included coupons which were used by the bondholder to receive the interest due on the bond.Another type of bond is a convertible bond. This security can be converted into shares of the company that issues the bond if the bondholder chooses. Of course, the conversion price is usually chosen so as to make the conversion interesting only if the stock has a pretty good rise.

Different types of bonds

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In general there are few types of bonds available in the market to buy, like;Government bonds - these bonds are issued by the government to raise money from the public.Bonds - Debt securities maturing in more than ten years.Marketable securities which are from the Indian government– collectively known as Treasuries and are as Treasury bonds, Treasury notes and Treasury bills.Municipal Bonds - Municipal bonds, known as “munis”, are the next progression in term of risk. The major advantage in munis is that the returns are free from State/central tax. Local government some time makes their debt non-taxable for residents, thus making some municipal bonds completely tax free. Because of the tax-savings yield in munis is lower than the taxable bonds.Corporate bonds - A company can issue bonds just as it can issue stock. Generally, a short term corporate bond is less than five years; intermediate is five to twelve years, and long term is over 12 years. Zero coupon Bonds - This is a type of bond that make no coupon payments but instead is issued at a considerable discount to par value. For example, let us say, a zero coupon bond with a Rs. 1,000 par value and 10 years to maturity is trading at Rs. 600; then investor would be paying Rs.600 today that will worth Rs. 1,000 after 10 years.

PORTFOLIO MANAGEMENT

Portfolio management is a term that has been used in the financial investment community for many years. It has recently come into vogue within the project management community and for one very good reason: Organizations commit huge amounts of resources to new projects and they need to know if their investments are paying off.

A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices.

In finance, a portfolio is a collection of investments held by an institution or a private individual. In building up an investment portfolio a financial institution will typically conduct its own investment analysis, whilst a private individual may make use of the services of a financial advisor or a financial institution, which offers portfolio management services. Holding a portfolio is part of an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants, gold certificates, real estate, futures contracts, production facilities, or any other item that is expected to retain its value.

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TYPES OF PORTFOLIO

i) Aggressive Portfolio:

This portfolio is aimed at investors who are looking for higher returns. The portfolio is constructed with a value-orientation and with adequate diversification, but which will at times take on certain aggressive positions. Depending on the market conditions these could include a greater exposure to high beta / mid-cap / illiquid stocks, an exposure in momentum stocks etc.  ii) Dividend Yield Portfolio:

This portfolio endeavors to generate superior risk-adjusted returns through a combination of dividend income and capital appreciation. This portfolio may be considered appropriate for investors with a relatively low risk appetite, who wish to earn potentially higher returns offered through the equity markets. It is also suitable for investors looking for tax-efficient investment options that offer the scope for high-returns. Investments are proposed to be made primarily in stocks that offer an attractive dividend yield. Portfolio Manager seeks to pay particular attention to the dividend track record, sustainability of free cash flows / dividends, industry prospects, management quality, business fundamentals etc., with an attempt to include only high-quality companies in the portfolio.

iii) Deep Value Portfolio:

The objective of the portfolio is to generate returns over the long term, by investing in a diversified portfolio of undervalued stocks. Various parameters may be used to judge the degree of under valuation of the stocks including, but not limited to, price/earnings (p/e), price/book (p/book), dividend yield (DY), price/cash flow, replacement cost, valuations relative to history/sector/markets, etc. Due attention will be paid to qualitative parameters such as management quality, industry prospects, liquidity etc.  iv) Focused Portfolio:

The Focused Portfolio endeavors to generate capital appreciation by taking concentrated positions in stocks and sectors. Greater concentration of the portfolio will increase both the risks and potential returns from the portfolio. The Focused Portfolio is not limited by any particular theme /

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sector / market capitalization and has the flexibility to choose between stocks across themes / sectors / investment styles. v) Preservation of Investment Amount (Asset Shield):

In addition to the above portfolios, the Portfolio Manager also offers products to meet specific objectives such as products endeavoring to preserve Investment Amount. Portfolio Manager would endeavour preservation of a certain percentage of the Investment Amount by investing in a mix of fixed income and equity derivatives (these could include both call and put options on indices or individual stocks) in such a manner so that the same endeavors to preserve the stated percentage of the Investment Amount while attempting to enhance returns by the use of equity derivatives. The options component could also be invested in foreign securities with respect to Resident Individuals under enabling provisions of the RBI circular dated February 4, 2004 viz. RBI USD 25,000 route, which will be subject to modification as permitted by RBI from time to time. Arbitrage opportunities between the cash and futures market may also be undertaken (more specifically described in the section below) as part of the fixed income component. Herein the portfolio is invested in a mix of fixed income mutual funds / securities and equity derivatives in such a manner so that the same endeavors to preserve the stated percentage of the Investment Amount while at the same time an attempt would be made to enhance returns by the use of equity derivatives.

vi) Cash future arbitrage:

The cash futures arbitrage strategy can be employed when the price of the futures exceeds the price of the underlying stock. Two simultaneous transactions are undertaken: (a) Selling the futures (b) Buying the underlying stock. The sale of the futures would require a payment of an initial margin (of which 50% can be paid in the form of securities i.e. the stock purchased) to the exchange and also mark to market margins which are a function of market movements. The position may be held till expiry of the futures contracts. By definition, the price of the futures will equal the closing price of the stock. Thus, the price differential between the futures and the stock is realized. However, the position could even be closed earlier in case the price differential is realized before expiry or better opportunities are available in other stocks. The strategy is attractive if this price differential (post all costs) is higher than the investor's cost-of-capital.  vii) Only Options Portfolio:

The objective of the portfolio is to earn capital appreciation on the client’s capital, by investing in a mix of stock options and index options. The investment in options could include pure long positions in call and put options as well as spreads where the total liability is limited to the premium paid. The total capital to be invested will be staggered over the investment tenure, so as to spread the exposure to the option

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premiums through the investment tenure (i.e. only a proportion of the total clients capital will be invested in stock option premium in any month). In no month will an amount greater than the client’s initial capital be invested in options. Returns on the portfolio will be generated through capital appreciation on the options investments. For the purchase of options, while the upside is unlimited, losses are limited to the premium paid. Thus under all possible circumstances, the losses on the portfolio will be limited to the clients initial capital.

viii) Non-Discretionary Portfolio:

In the case of non-discretionary portfolios, the investment objectives and the securities to be invested would be entirely decided by the Portfolio Manager based on the Agreement executed with the Client. The same could vary widely between clients to client. ix) Alpha Portfolio: The Alpha Portfolio seeks to capture Alpha - which is out performance to index in the client’s portfolio. The entire portfolio will be hedged against overall market movements by using Nifty futures. The portfolio would remain fully hed ged at all times. The hedged portfolio would reduce market risk (beta) by insulating the portfolio against market movements.

x) Infrastructure Portfolio: The infrastructure portfolio will invest in companies that are directly or indirectly linked to the infrastructure theme. This could include sectors such as construction, capital goods, power, cement, metals, banking, and logistics and other related sectors/sub-sectors

PORTFOLIO MANAGEMENT SERVICEPortfolio management is about strengths, weaknesses, opportunities and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing. Active management involves a single manager, co-managers, or a team of managers who attempt to beat the market return by actively managing a fund's portfolio through investment decisions based on research and decisions on individual holdings. Closed-end funds are generally actively managed group of experts design and manage your equity portfolio suiting risk-return· Appetite· Benefit of Diversification and an element of customization· No Settlement hassles· Separately held securities

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· Greater Flexibility· Efficient switch between cash and equity positions· Portfolio designing is done as per market conditions and market considerations· Customized Performance Reporting· 100% Transparency, managed under SEBI license and regulations· Competitive Fee StructureSo investments under portfolio management are risk diversified and research oriented.

Discretionary Portfolio ManagementThe Portfolio Manager undertakes the entire management of portfolio. Starting from buying and selling of securities to reshuffling and safe custody is undertaken. Investor’s involvement will be minimum. Thereby allowing investor the flexibility to attend to their personal matters, while the Portfolio Manager takes care of investor’s investments and keeps it posted on a regular basis

PORTFOLIO MANAGEMENT PROCESS

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RESEARCH METHODOLOGY

The scope of the project is related to security form of investment particularly in shares and setting a portfolio by using various risky shares. The selected of units is made from specified category shares listed in ICICI Prudential. To achieve the objectives of the present study the data has been collected from the following sources.

RESEARCH OBJECTIVESEvery research study has its own specific research objective. Without objective no one is doing any work. To do anything there is a purpose behind it.

“The word objective means purpose behind doing anything.”

Here in ICICI Prudential my research objectives are as follows:1 .To know the Investment Pattern of ICICI Prudential Life Insurance company.2. To know the Investor’s approach towards the return provided by the ICICI Prudential Life Insurance.3. To know the Satisfaction of the investors towards the return offered by the ICICI Prudential Life Insurance.

SOURCES OF DATA:

As there are mainly two methods:

(a) Primary data

(b) Secondary data

Primary data:

There are different methods of data collection such as observation, questionnaire etc.

Data collection through questionnaire is to be used in case of very large population is

exist. And it is very difficult to get the required data in specified and accurate format.

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Methodology refers to the way by which the information is collected. There are

various methods to collect the information from the company. This research data had

collected the information through

Personal investigation

All the methods here have their own Pros & Cons. Different researcher are used

varied methods. This research had undergone to the studies in ICICI Prudential Life

Limited. And this research data have collected all information by personal inquiry

along with questionnaire.

SECONDARY DATA:Data collected from various books and websites.Data provided by ICICI Prudential as part of the classes undertaken.Data collected from newspapers and Internet.Date collected from Stock Exchanges.(BSE/NSE)

COMPANY PROFILE

ABOUT THE ORGANISATION

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ICICI GROUP PROFILE

The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated in 1955, at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited. ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI also among the first Indian companies to raise funds from International markets.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion (US$ 79 billion) at 31 March, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable bank in India in terms of market capitalization and is ranked third amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization*. The Bank has a network of about 950 branches and 3,300 ATMs in India and presence in 17 countries. ICICI Bank 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 and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established a branch in Belgium. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)

MANAGEMENT

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K. V. Kamath Managing Director and Chief Executive Officer

Board Committees

Audit Committee Board Governance & Remuneration Committee

Mr. Sridar IyengarMr. Narendra Murkumbi

Mr. M. K. Sharma

Mr. N. Vaghul Mr. Anupam Puri

Mr. M. K. Sharma Mr. P. M. Sinha

Prof. Marti G. Subrahmanyam

Customer Service Committee Credit Committee

N. VaghulNarendra Murkumbi

M.K. Sharma

Mr. N. VaghulMr. Narendra Murkumbi

Mr. M .K. Sharma

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Lalita Gupte Joint Managing Director

Kalpana MorpariaJoint Managing Director

Chanda KochharDeputy Managing Director

Nachiket Mor Deputy Managing Director

P.M. SinhaK. V. Kamath

Mr. P. M. SinhaMr. K. V. Kamath

Fraud Monitoring Committee Risk Committee

Mr. M. K. SharmaMr. Narendra Murkumbi

Mr. K. V. Kamath Ms. Kalpana Morparia

Ms. Chanda D. Kochhar

Mr. N. VaghulMr. Sridar Iyengar

Prof. Marti G. SubrahmanyamMr. V. Prem Watsa Mr. K. V. Kamath

Share Transfer & Shareholders'/ Investors' Grievance Committee

Asset-Liability Management Committee

Mr. M. K. SharmaMr. Narendra MurkumbiMs. Kalpana Morparia

Ms. Chanda D. Kochhar

Ms. Lalita D. GupteMs. Kalpana Morparia

Ms. Chanda D. KochharDr. Nachiket Mor

Committee of Directors

Mr. K. V. KamathMs. Lalita D. Gupte

Ms. Kalpana Morparia Ms. Chanda D. Kochhar

Dr. Nachiket Mor

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank and Prudential plc. It was one of the first players to commence operations when the insurance industry was opened to the private sector in year 2000. Since inception the company has written over 3.75 million policies. The company has a network of over 4, 00,000 advisors & 22 bank assurance partners. It is also the only life insurer in India to get IFS AAA (ind) rating, by Fitch Ratings. For the past six years, ICICI Prudential has retained its position as No.1 private life insurer in the country with a wide range of flexible products that meet the needs of the Indian customer at every step in life. ICICI Prudential Life Insurance Company has mopped up a premium income of Rs 348 core for the year ended march 31, 2010, reflecting a 200 percent growth over the

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corresponding period last year. It has sold 2, 46,827 policies during the year, against three-lakh policies sold in fiscal 2009.Total sum assured increase more than six fold to Rs. 6,005 crore .ICICI Prudential has corned about 40 per cent of the private sector insurance market, which today accounts for 10 per cent of incremental sales of the entire industry.ICICI Prudential chief marketing officer Saugato Gupta attributed the growth in performance to its distribution ramp-up the ICICI brand, its customer-centric focus and its product portfolio. ‘People believe in the ICICI brand and with our distribution happening correspondingly, it had helped increase sales, ‘said Gupta.The private insurer doubled its reach to 25 towns from 12 cities last year. The company’s strategy to push need-based selling ands tackle the concept of under-insurance in the country further helped it push up the average tickle size with the average sum assured crossing Rs 2 lakh.

Pension products today accounts for 25 per cent of its total sales, giving ICICI Prudential an overall industry share of 23-25 per cent.

Salient Features of Prudential

Prudential was founded in 1848 and from since it remained a pioneer insurance service provider.

Presence in UK and throughout Asia. One of the largest Insurance Company in the UK. Investor deposit base in U.K. alone exceeds Rs 53200 crores Has over US $270 billion under management. 4th largest life insurance company in terms of revenues in the world. Already established as one of the biggest mutual fund companies in India

(Prudential ICICI AMC). Solid reputation builds over 150 years. Over 75 years of experience in Asia. Operating in 11 countries in South East Asia. A truly global brand. “One-stop shop for all financial requirements of an investor.”

VISION

To make ICICI Prudential the dominant Life and Pension player built on trust by world-class people and service.This we hope to achieve by:-

Understanding the need of customers and offering them superior products and service.

Leveraging technology to service customers quickly, efficiently and conveniently.

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Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders.

Providing an enabling environment to foster growth and learning for our employees.

And above all, building transparency in all our dealing.

The success of the company will be founded in its unflinching commitment to 5 core value—Integrity, Customer First, boundary less, Ownership and Passion. Each of the values describes what the company stands for, the qualities of our people and the way we work. We do believe that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector.Given the quality of our parentage and the commitment of our team, there are no limits to our growth.

DATA ANALYSIS

GRAPHICAL PRESENTATION

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Fig: Distribution of age groups in the sample

Explanation :-The above pie chart shows that the sample of 153 is predominantly consists of respondents of the age groups of 18-30 years and 31-40 years. This reveals that most of the investors are them who are started their carrer recently or working for 10-15 years. This also shows that the age group of greater than 50 years are very less interested in invetment.

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Fig : Distribution of occupation through out the sample

Explanation :-This graph shows that the respondents are mostly from the service class (61%) and business person consists of only 37% of respondents.Self employed are very less in numbers.Form the Standard Chartered point of view it is quite useful as the service people are regular investors. Where as the business class invest large amount in a single time.

Fig : Distribution of sample annual income wise

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Explanation :-In the sample the income group of 2,50,000 to 5,00,000 Rs is dominating. It reveals that this income group were the major respondent in the survey. The second major income group is the 7,50,000 to 10,00,000.Most investors are from the income group of 2,50,000 tp 5,00,000 Rsand 7,50,000 to 10,00,000 which is enthusiastic for the companies as the potential customers are from the medium investor and the bid investors. Combining the two income group company can have a mixed bag of good investor in the near future.

Fig : Distribution of disposible income

Explanation :-Disposible income is the strong piller of investment, more the disposible income for the investors more they invest in the investment instrument. The pie shows that the major repondents have a dispposible income of 5,000 to 10,000 Rs per month which is good enough money for an investor who is investing regularly for the longer term. It also depicts that investors who has a disposible income of more then 20,000 Rs is 1/5th of the sample. This reveals company got a fair enough data base of high amount investors.

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Fig : First priority of investment in the sample

Explanation :-Tax saving is the major concern now in india. The above pie alsoshow that 40% of people want to invest for the taxsavings, but that is for only 1.5 lakh. It is expeacted that before the investment investors focus would be the main criteria where he wants to invest in. depending up on the reponse I have found out that 18% people invest to secure for Future Uncertainties and 19% fight against inflation and do invest for only Capital Preservation.Only 9% people focus on their retirement time and invest for vesting period.

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Fig : Withdraw from investmentExplantion :-It shows that how investors want to stay remain invested in.42% of investors want to stay in the market for the 3-5 years, it has been said that 3 years is a market cycle so, investor usually want stay in for the two cycle. This is the very normal period for remain invested due to primary BULL and BEAR turn period go through 5-6 years.23% investors are the short term investor as they want to get out of market with in 3 years. But it is healthy for the investment market thst 18% investors want to stay invested for 6-9 years and 17% more than 10 years. These long term investors are keeping the market more stable than the short term investors.

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Fig : Risk tolerence abilityExplanation :-The research showed that the most investors are risk averse and goo for the moderate risk. 42% investors are in this category. This is good news for the market that only 22% of insvestors are with low risk apetite. The low risk apetite investor mostly invested in the fixed return instruments.7% investors have very high and 29% investors have high risk profile, they useally invest in the stocks and mutual fund, where the ris is high and the returns are also high in proportion.

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Fig :Risk bear acceptabliltyExplanation :- Investor’s negative return acceptablity shows how he/she can aceept the market up-downs positively. If they really take it to the account then the can sustain in the market for the longer time.In the above pie chart ‘Never accept return’ shows the group with low risk appetite where as ‘once in 3 years’ & ‘once in 5 years’ represents the group with moderate risk appetite. ‘once in 7 years’ & ‘can fluctuate in long run’ represents the group with high or very high risk appetite. Though this is not applied to all, as risk assumption is different for every other person.Here, 36% investors need always positive returns or assured return, where as 30% of investors can have a moderate risk bearing appetite. And rest 34% investors can bear the high risk.

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Fig : Disposible income according to age groupsExplanation :-It clearly shows that the age group of 18-30 years has the most disposible income per month because most of them are single. More the age grows the disposible income reduced may be because the family expance and the living expance increased. So from the company’s point of view 18-30 years age group is the most potential investors and usually this age group is investing for more profit.It has to make a point that investors with 5,000 to 10,000 Rs per month are most in the 18-30 years age group.

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Fig : Investment instrument used by age groupsExplanation :-Most of the investors are invested in the insurance sector. The age group of 18-30 years are highly invested in the mutual funds and share market. This group also invested equally in the FDs and RBI bonds. The 31-40 years age group is also invested in all the instrument but they are quite heavily invested in the real estate sectors. But the number of respondent in this group is less than the 18-30 years sge group.The more than 50 years age group are most invested in the FD & RBI bonds. They are less invested in the shares and the mutual funds.

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Fig : Risk tolerence according to Age

Explanation :-Risk tolerence is the major concern in the investment market. If the risk is high then return expected is high for the investors. Age is also considered for the risk tolerence. It is expected that the lower the age group risk tolerence is high.In the above bar graph it is clear that 18-30 years age group have more risk taking ability than the other age groups, number of respondent in very high, high are most in this age group. The reason behind this is that this age group wants to earn more and they are only in the beginning of their carrer.The next group which is next this is the 31-40 age group in which most are family person and for that reason the are with mostly moderate risk profile.

Fig : Age wise time Horizon

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Explanation:- Time Horizon is very much important for an investor because it determines the time

period the investor need to invest and the market conditions during that time. More the time horizon the risk diluted more.Those who invest for very few years (<3 years) the are the short term investors and the risk takers. They usually invest for the high gain in short term. The above bar graph shows that age group 18-30 years dominating in this sector.Most of the respondents are in the 3-5 years group. They remain invested for the a full cycle of bear turn and bull turn.The age group of 31-40 years are likely to remain invested in 6-9 years because if they could invest in the beginning of the bull turn then they can make highest profit after 3 market cycle.Only the Real Estate investors wants to invested more than 10 years.

Fig : Age wise negative return acceptability.

Expalnation :-Negative return acceptability shows the risk tolerence, as shown before risk tolerence

is more in 18-30 years age group, this graph also shows that least risk tolerence group is 31-40 years age group.

The age group of >50 years are also risk averse they can not tolerate any fluctuuation in return part in longer time but they can tolerate minute losses in 7 and 3 years return.18-30 year age group response are evenly distributed in all ranges of negative return acceptibility.

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Fig : Disposible income-wise Risk tolerenceExplanation:-Disposible income gives the power of investment to the investor. But the risk tolerence is the mind set of individual investors. I have tried to corelate these two.This graph shows that different disposible income group has different risk tolerence. The < 5,000 Rs income group is with moderate risk takers.The disposible income group of 5,000-10,000 Rs are more risk takers than the previous one. Though the response of this group is more concern about the moderate risk.The next group 10,000-15,000 Rs has diversified their risk, this group tend to invest in diversified intrument where risk is diluted due to diversity of risk profile.The 15,000-20,000 Rs disposible income group is the most risk takers in all the groups.

Relation Between Disposible income & Time Horizon

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Fig:Disposible income wise time horizonExplanation:-Time horizon decides the tenure the investor remain invested in the market. This depics the investment potential along with risk tolerence.The above graph shows that the Disposible income group of > 20,000 Rs are intended to quick return,so they intended to invest for below 3 years. 36% of respondent from more than 20,000 Rs group.The disposible income group of 5,000-10,000 Rs.is tend to invest for 3-5 years and > 10 years span.Where as 10,000-15,000 Rs disposible income group is predominently invested in the 6-9 years span.

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Fig: Occupation wise InvestmentExplanation:-This graph will show how investors of different category tend to invest.

Here in this bar graph service category are like to invest in the Fixed Deposits (23%) and Mutual Funds (24%). Fixed deposits gives a fiex return where as in mutual funds the risk is diversified.Business class is more attracted towards the Shares (18%) and real estate (17%) because they have the lum sum amount to invest in the single time. More over they also invest in the mutual funds where high risk may be taken for the higher return.For the Self employed category, they are mostly invested in the Fixed Deposits (37%) and Insurance sector(36%).

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Fig: Occupation wise Time Horizon

Explanation:-The above graph shows that in all the occupation nearly 22% -25% investors are want

to quit before 3 years. This may be because of the short term investment.The noticeable thing is that in service category 40% and in Business category 48% investors are tend to remain invested for 3-5 years. This is very good indicstion for the investment institution.In the service category 21% invetors are want to stay invested for more than 10 years this is because the are invested in the real estate and long term invesment instrument like bonds.

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TAX CALCULATION & PORT FOLIO MANAGEMENTTAX CALCULATIONIn the port folio management I have learned how to calculate the Income tax of service person and businessmen. According to the indian Income tax acts Income tax is defined as below:An income tax is a tax levied on the financial income of persons, corporations, or other legal entities.Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. Individual income taxes often tax the total income of the individual (with some deductions permitted). The government of India imposes a Progressive Income Tax on taxable income of individuals, Hindu Undivided Families (HUFs), companies (firms), co-operative societies and trusts.Income from SalaryAll income received as a salary is taxed under this head. Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax deductions and net paid income. In addition, the Form 16 will contain any other deductions provided from salary such as: 1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills. (Company pays Fringe Benefit Tax on this amount) 2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if provided as conveyance allowance. No bills are required for this amount. 3. Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based on gross income. Such taxes paid are deductible from income tax.

Income from Business or ProfessionThe income referred to in section 28, i.e., the incomes chargeable as "Income from Business or Profession" shall be computed in accordance with the provisions contained in sections 30 to 43D. However, there are few more sections under this Chapter, viz., Sections 44 to 44DA (except sections 44AA, 44AB & 44C), which contain the computation completely within itself. Section 44C is a disallowance provision in the case non-residents. Section 44AA deals with maintenance of books and section 44AB deals with audit of accounts.

Section 80C DeductionsSection 80C of the Income Tax Act [1] allows certain investments and expenditure to be tax-exempt. The total limit under this section is Rs. 150,000 (Rupees One lakh fifty thousand) which can be any combination of the below: * Contribution to Provident Fund or Public Provident Fund * Payment of life insurance premium * Investment in pension Plans

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* Investment in Equity Linked Savings schemes (ELSS) of mutual funds * Investment in specified government infrastructure bonds * Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit) * Payments towards principal repayment of housing loans. Also any registration fee or stamp duty paid.

* Payments towards tuition fees for children to any school or college or university or similar institution. (Only for 2 children)

PERSONAL TAX RATES

For individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI): For the Assessment Year 2008-09

Taxable income slab (Rs.) Rate (%)

Up to 1,50,000 Up to 1,80,000 (for women) Up to 2,25,000 (for resident individual of 65 years or above)

NIL

1,50,001 – 3,00,000 1 0

3,00,001 – 5,00,000 2 0

5,000,001 upwards 3 0*

*A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs 1,000,000.

Tax calculation:-For MenIllustration: let a person with yearly income of 6,00,000 Rs. The tax he will paid will be as given below.For first 1,50,000 Rs tax NilFor next 1,00,000 Rs.of investment tax NilNow tax for 2,50,001-3,00,000 @ 10% 5,000 RsFor 3,00,001-5,00,000 Rs. @ 20% 40,000 Rs.For 5,00,001-6,00,000 Rs. @ 30% 30,000 Rs.Total tax paid 75,000 Rs.

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EXPECTED RETURNPortfolio Expected ReturnThe expected rate of return is the weighted average of the expected rates of return on assets comprising the portfolio. The weights, which add up to 1, reflect the fraction of total portfolio invested in each asset. Thus, there are two determinants of portfolio returns:Expected rate of return on each assets andRelative share of each asset in the portfolio:Symbolically:

E (rp) =∑w E (ri)Where, E (rp) =expected return from the portfolio.

w = proportion invested in the portfolio.E (ri) =expected return from the assets i.

Portfolio RiskTotal risk is measured in terms of variance or standard deviation of return. Unlike portfolio expected return, portfolio variance is not the weighted average of variance of returns on individual assets in the portfolio.Symbolically:σ²p= (w1)²(σ1)²+ (w2)²(σ2)²+2(w1) (w2) (σ12)

Where,σ²= Variance of returns of the portfolio(w1)= Fraction of the portfolio invested in asset 1(w2)= Fraction of the portfolio invested in asset 2(σ²1)= Variance of asset 1(σ²2)= Variance of asset 2(σ12)= Covariance between returns of two assets.

Return is not fixed for any investment instrument it depends upon the market liquidity, interest rate, and some other economic situation of that country. For the calculation of the risk & return I have chosen the historic data.I have also showed the risk profile which have been ranging from Low to very high. List of return expected on the basis of Historical data Types of investments Historical returns Risk profile Company Bonds 6%-8% Medium-high Bond Mutual Funds 8%-10% Medium Equity Mutual Funds 15%-20% High Equities 15%-20% Very high Fixed Deposits 7%-8% Low PPF 8% Low Post Office 8% Low Government Securities 5%-6% Low

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ELSS 15%-20% Medium-high

Note: higher returns for lower risk (because of Govt. guarantees there) that PPF and similar A/c appear to have, is misleading. These do not have much liquidity, and since that is an important measure of risk.

CREATING PORTFOLIO

Making a portfolio is depends on the risk measurement of the investment and the time horizon he/she prefer to invest. But from the point of view of the portfolio manager, choosing a investment intrument or a fund is more difficult than to measure the risk tolerence and time horizon.For the portfolio managers calculating the risk and return is the main area where they focused. As an investors before investing alwways watch for the risk and return for his/her investment. So before creating the portfolio, risk and return calculation is manditory.To understand the risk of a specified fund, there are some statistical instruments that helps to measure the volatality in respect to the market, industry, and peers. Measuring volatility and risk depics the fluctuation of return investors receive.For this creation of portfolio I have choose Mutual Funds as investment instrument because, it has a diversified investment options from equity market, money market, to debt instrument. To diversified investment investor can investment as he/she wanted to. Any one can invest in mutual funds as variation in investment instrument is greater than any other investment instrument.

METHODOLOGY USED

Investing in mutual funds involving an active role of a fund manager is set to be one of the safest investment avenues as regards the high risk/return equity investment. Being assumed safe and the responsibility entrusted to fund managers, it is perceived that investors give a cursory glance at the performance sheet of the fund, gain some money, and carry on with their investments with the fund.However, though they make money from the fund, a detailed examination of the fund's performance in relation to other risk-free investment avenues and the Benchmark index gives telling insights into the fund's performance. A comparison with risk-free investments like government securities, treasury bills, and also the Benchmark index would determine how safer and more profitable your fund is.Here is an analysis of the ratios that can help investors gauge the performance of your fund as regards investing in less riskier investment avenues.

Standard Deviation

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Standard deviation throws light on a fund's volatility in terms of rise and fall in its returns. Maximum volatility in a security is the riskiest, considering the unevenness it brings about in its performance. Standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return. That is the average return of a fund over a period of time.A fund that has a consistent four-year return of 3%, for example, would have a mean or average of 3%. The standard deviation for this fund would then be zero because the fund's return in any given year does not differ from its four-year mean of 3%. On the other hand, a fund that in each of the last four years returned -5%, 17%, 2% and 30% will have a mean return of 11%. The fund will also exhibit a high standard deviation because each year the return of the fund differs from the mean return. This fund is therefore riskier because it fluctuates widely between negative and positive returns within a short period.To determine how well a fund is maximising its returns received for its volatility, a comparison can be done for similar investment and similar risky mutual funds. The fund with the lower standard deviation would be more optimal because it is maximising the return received for the amount of risk acquired.AlphaAlpha determines the sensitivity of the stock with the portfolio. Basically it helps to estimate the profitability of the portfolio.BetaBeta determines the sensitivity, or risk, of a fund in comparison to that of its index or benchmark. A fund with a beta very close to 1 means the fund's performance closely matches the index or benchmark. A beta greater than 1 indicates greater volatility than the overall market, and a beta less than 1 indicates less volatility than the benchmark.If, for example, a fund has a beta of 1.05 in relation to the Sensex, the fund has been moving 5% more than the index. Therefore, if the Sensex has increased 15%, the fund would be expected to increase 15.75%.On the other hand, a fund with a beta of 2.4 would be expected to move 2.4 times more than its corresponding index. So if the Sensex moved 10%, the fund would be expected to rise 24%, and, if the Sensex declined 10%, the fund would be expected to lose 24%.Investors can choose funds exhibiting high betas, which increase chances of beating the market. Also if the market is bearish the funds that have betas less than 1 are a good choice because they would be expected to decline less in value than the index. For example, if a fund had a beta of 0.5 and the Sensex declined 6%, the fund would be expected to decline only 3%. However, you must note that beta by itself is limited and there may be factors other than the market risk affecting your fund's volatility.

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SWOT ANALYSISStrengths

ICICI Prudential is the 1st life insurance company to introduce UNIT LINKED, PENSION PRODUCTS AND LIFE TIME it can get the pioneer advantage.

Prudential is the 156 year old company founded in 1848 so it has full fledge experience in this industries.

ICICI enjoys a rating with the Moody’s which is higher than the severing rating. Large distribution channel with 30 branches and more than 30,000 financial

advisors. Partners having experience in different markets of the world. Synergy with existing operations Expertise in the field of insurance Professional management Good Customer service Create a brand name Flexible Products

Weakness

Low capital base Yet to build strong distribution network Cannot tap rural market It has to do operation within the boundary of IRDA.

Opportunities

Today ICICI Prudential covers 40% Market so yet there is a great potentiality to increase market share.

Insurance plan like pension plan, child plan and investment plan of ICICI Prudential go good response from the market. So in future company can take benefit for it.

The brand name that creates ICICI Prudential and awareness level of it is comparatively quite higher than competition. So it will be helpful in future while lunching new innovation products.

Banks ready to tie up for as a readymade distribution network for a small fee. Untapped Market.

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Threats

Large distribution network of LIC Decades of experience and brand name of LIC 5% service tax on investments. It is private company so there is a doubt about solvency and liquidity among the

general people. Change in the environmental factors many affects the company. The government policies and the annual budget may the insurance market. Large distribution network of LIC and trust of people in LIC.

CONCLUSIONThe over all project is depending up on the findings that has been explained previously. All my survey findings are corelated and being explain in the above graphs.After completing the survey and watching the analysis I come to this conclusiion that the before investment investors do have focus on Tax savings, Income, Capiatal preservation etc. They also have a predetermination of the time period of investment. According to my view the age group of 18-30 can be a great potential investors for the company as the has high risk profile, more disposible income, and the time horizon is perfect 3-5 years.

LIMITATIONS OF THE STUDY

The major limitations of the project are:1. Detailed study of the topic was not possible due to limited time of the project.2. Direct contact with the companies is not made.3. Confidential information is not shared due to business secrecy and the lack of trust.4. They are not at all ready to give any financial information to the trainees for their

study of project.5. Due to time constraints the executives of the company are not able to allot time to

the trainees.6. Fluctuations in the market performance of the companies were a big constraint of

the study.

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RECOMMENDATION

Recommendation for this category is company must follow up these high potential customers, they can be offered ULIPs as there is blocking period of 5 years in NEW SECURE FIRST plan. This ULIP has a 20%-22% return which good enough for investment. The main focus should be to reach to the customer, these customers are aware of ULIPs and aware of other product. Company should try to reach them and tap the investor.Mutual Funds can also be offered as they have high risk profile. Company should take initiative to get demat account of these customers.

The age group of 31-40 years, investors are with ‘Moderate’ risk profile, most of the investors are from the 10,000-15,000 Rs per month disposible income. Company will get a good investor with diluted risk profile. Company can offer them ULIPs,and Fixed Deposits as investment instrument. Mutual funds can be an option but that must be a debt fund to invest.

The age group of 41-50 years, investors are from the 15,000-20,000 Rs disposible income group. Investor in this group are invested in Insurance sector, the primary focus of these investors are retirement and time horizon is likely to be 6-9 years. This is also good potential group for the retirement plan in ULIPs. Mutual funds can be a good option for them.

For the age group of above 50 years, the rish profile would be low moderate,as the term is not more than 3 years. Investors have invested in insurance sector but in this age insurance would not be a good option for investor. Company should try to minimise the risk tolerence by offering Fixed deposits.

OcccupationIf we see the survey data it will seen that respondents are majorly Service peopole and Business Class. Depending upon the data I conclude that the srevice class has a time horizon of 3-5 years and risk tolerence ‘Low- Moderate’. They invested in FDs, Mutual Fund and ULIPs.

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Recommendation company shoul tap these class by innovative marketing strategies as they already invested, and offer FDs, ULIPs. Mutual fund can be a lucrative offer if the Fund is any moderate fund or debt fund.For the business class, the risk profile is high-very high. Most investor are with negative return acceptability and time horizon is < 3 years. Company should offer Mutual funds with risk profile High to very high thus investor can get a high return. Apart from this company should offer to open demat account with them.

Disposible IncomeThe disposible income bracket less than Rs.5000 per month are basically safe investors and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of these products should be such that people are attracted towards this scheme. Emphasis on marketing of the products should be given.Respondents under disposible income bracket Rs.5,000-Rs.10,000 have mainly invested in insurance and real estate. But when survey was done and their preferences was asked these respondents strongly preferred investing in these strategies.Disposible Income Bracket of Rs.15,000-Rs.20,000 are the strong contenders for investing their money and these people have invested in real estate, insurance and fixed deposits. Moreover there is mixed preferences for their investments thus proper segmentation of the sample should be done accordingly marketing strategies should be adopted.Though there is a small percentage of respondents in disposible income bracket above Rs.20,000 who least prefer investing in mutual fund. But this is the segment which can be well targeted and their portfolio should be such that gives them more returns. The case of ULIP is different as people strongly prefer investing in this investment strategy. Thus emphasis for selling ULIP in this income bracket.

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BIBLIOGRAPHY

Siteswww.google.comwww.investopedia.comwww.standardchartered.inwww.iciciprulife.comwww.nseindia.comwww.ampi.comwww.finance.indiamart.comwww.business.india.comwww.valueresearch.comwww.myiris.com

Books

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Financial management (Ninth edition) by I M Pandey.Security analysis and Portfolio management by Ritu Ahuja.Security analysis and Portfolio management by S. Kevin

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QUESTIONNAIRE FOR INVESTMENT STRATEGIES

Name Age: 18-30 31-40 41-50 >50 Occupation: Service Business Self Employed Other Contact no.

Q 1.What is your annual income (approx)?< 2,50,000 2,50,000-5,00,000 5,00,000-7,50,000 7,50,000-10,00,000 > 10,00,000

Q 2. What is your monthly disposible income?< 5,000 5,000-10,000 10,000-15,000 15,000-20,000 > 20,000

Q 3. What is your primary investment focus (please give ranking 1-5, where 1- best)Tax Savings Future Uncertainity Income Retirement Capital Preservation

Q 4. When You want to withdraw money from youe investment?Less than 3 years 3-5 years

6-9 years >10 years

Q 5. Where you have invested from the followings?(you can tick more than one)Share Mutual Funds FD/RBI bonds Real Estate Insurance

Q 6. What is applicable to you?Never Accept Negative return Can accept negative return once in 3 years Can accept negative return once in 5 years Can accept negative return once in 7 years Returns can fluctuate in longer term.

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