48490352-project-report-on-mutual-funds (1)

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A

PROJECT STUDY REPORT

ON

TRAINING UNDERTAKEN

AT

UTI MUTUAL FUNDS

TITLED

ANALYSIS OF MUTUAL FUNDS IN INDIA

SUBMITTED IN PARTIAL FULFILLMENT

FOR TH E AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

2009-2011

SUBMITTED BY:- SUBMITTED TO:MONIKA SHARMA MISS MEGHA ARYAM.B.A PART-II LECTURER

SIDDHI VINAYAK COLLEGE OF SCIENCE & HR. EDUCATION


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PREFACE

Someone has greatly said that practical knowledge is far better than classroom teaching.

During this project I fully realized this and come to know about the present real world of

MUTUAL FUND INDUSTRY. I am pleased to know about various activities in the real world of

Mutual funds industry.

The Subject of my study is ANALYSIS OF MUTUAL FUND INDUSTRY IN INDIA. I have done

this mainly by collecting data through secondary sources.

The report contains first of all brief introduction about UTI MUTUAL MUTUAL FUND and then

an analysis of MUTUAL FUND INDUSTRY IN INDIA.

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ACKNOWLEDGEMENT

I take the privilege of conveying my heartiest gratitude to all those, who directly or indirectly

enable me to complete my Project.

I express my immense sense of gratitude to Mr. Vivek Sharma (Channel Relationship

Manager PSU Banks, UTI MF Delhi) and Miss Megha Arya (Lecturer at S.V.C of Science

and higher education and My Guide ) for their encouraging guidance, keen interest and

valuable advice in the critical evaluation of my Project. I am also thankful to them for providing

me with the overall systematic approach and encouraging inspiration to overcome problems

and complete such a stupendous work.

I am also obliged to all the other staff members for their kind co-operation.

Monika Sharma

MBA III sem

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TABLE OF CONTENTS

TITLE Page

No.

CERTIFICATE i

PREFACE ii

ACKNOWLEDGEMENT iii

EXECUTIVE SUMMARY ivCONTENTS

1. INTRODUCTION TO THE INDUSTRY 7

2. INTRODUCTION TO THE ORGANISATION 50

3. RESEARCH METHODOLOGY

3.1 TITLE OF THE STUDY3.2 DURATION OF THE PROJECT

3.3 OBJECTIVE OF STUDY

3.4 TYPES OF RESEARCH

3.5 SAMPLE SIZE AND METHOD

0F SELECTING SAMPLE

3.6 SCOPE OF STUDY

3.7 LIMITATIONS OF STUDY

86

4. FACTS AND FINDINGS 90

5. SWOT 99

6. CONCLUSION 102

7. RECOMMENDATIONS AND SUGGESTIONS 1054


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8. BIBLIOGRAPHY 108

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Executive Summary

Mutual funds are financial intermediaries, which collect the savings of investorsand invest them in a large and well-diversified portfolio of securities such as

money market instruments, corporate and government bonds and equity shares

of joint stock companies. MFs can survive and thrive only if they can live up to

the hopes and trusts of their individual members. This project deals with the

structure of the Indian MF industry and its constituents. It also classifies the

Mutual fund schemes and describes the major players in the industry, with

specific reference to Unit Trust of India (UTI)

This research is exploratory in nature. I collected data from various secondary

sources. The choice of sample scheme was guided by the fact that a reasonable

amount of information was available and representing true picture of Indian

mutual fund industry.

In India, the trend is that investors invest when there is a boom in the stockmarket and withdraw their holdings in times of slump. This is absolutely contrary

to how the system works abroad as their investments take place in the slump

period when greater units can be purchased with same amount of money.

Withdrawals are correspondingly done in boom times as maximum return is

achieved. This is the right strategy and Mutual Fund companies are trying to

create this awareness among consumers.

.

In the end it is concluded and recommended that there is a need for Better

marketing to increase awareness level, focus on building a relationship of trust

and commitment with the investors, provide better rate of returns.

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Chapter 1INTRODUCTION

TO

THE INDUSTRY

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OVERVIEW OF INDIAN MUTUAL FUND INDUSTRY

A Mutual Fund is a trust that collects the savings of a number of investors who

share a common financial goal and pools it together to create a larger resource

of money. The money thus collected is invested by the fund manager in different

types of securities depending upon the objective of the scheme. These could

range from shares to debentures to money market instruments. The securities

could be further subdivided into technology securities, pharmaceutical securities,FMCG securities etc. The income earned through these investments and the

capital appreciation realized by the scheme are shared by its unit holders

proportionately i.e. on the basis of the number of units owned by them (pro rata).

Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed portfolio

at a relatively low cost . Anybody with any surplus money that can be invested,

even as little as a few thousand rupees can invest in Mutual Funds. Each Mutual

Fund scheme has a defined investment objective and strategy. The team

undertakes this in the most professional manner.

Markets for equity shares, debentures, bonds and other fixed income

instruments; real estate, derivatives and other assets have reached their maturity

and are driven by latest up-to-date information. A mutual fund is thus the ideal

investment vehicle for todays complex and modern financial scenario.

Price changes in these assets are driven by global events occurring every day,

in-fact every minute in faraway places. It will be very difficult, in-fact next to

impossible for an ordinary individual to have the knowledge, skills, inclination and

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time to keep track of events, understand their implications and act speedily. An

individual also finds it difficult to keep track of ownership of his assets,

investments, brokerage dues and bank transactions etc. A mutual fund is theanswer to all these situations. It appoints professionally qualified and

experienced staff that manages each of these functions on a full time basis. The

costs of hiring these professionals per investor are very low, as the pool of

money invested is large. In effect, the mutual fund vehicle exploits economies of

scale in all three areas - research, investments and transaction processing.

While the concept of individuals coming together to invest money collectively is

not new, the mutual fund in its present form is a 20 th century phenomenon. In

fact, mutual funds gained popularity only after the Second World War. Globally,

there are thousands of firms offering tens of thousands of mutual funds with

different investment objectives. Today, mutual funds collectively manage almost

as much as or more money as compared to banks

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1.1.1 INDUSTRY PROFILE

Mutual Fund industry today, with about 34 players and more than five hundred

schemes, is one of the most preferred investment avenues in India.

However, with a plethora of schemes to choose from, the retail investor

faces problems in selecting funds. Factors such as investment strategy

and management style are qualitative, but the funds record is an

important indicator too. Though past performance alone cannot be

indicative of future performance, it is, frankly, the only quantitative way to

judge how good a fund is at present. Therefore, there is a need to

correctly assess the past performance of different mutual funds.

Worldwide, good mutual fund companies over are known by their AMCs

and this fame is directly linked to their superior stock selection skills. For mutual

funds to grow, AMCs must be held accountable for their selection of stocks. In

other words, there must be some performance indicator that will reveal thequality of stock selection of various AMCs.

One industry that has undergone the most dramatic transformation in the post-

liberalization era of the nineties is the financial services industry and in particular,

the mutual funds industry. There has been a paradigm change in the quality and

quantity of product and service offerings.

UTI remained the monopoly player in the mutual fund sector until 1987, when

public sector banks and insurance companies were permitted to enter the fray.

Finally, in 1993, the Securities and Exchange Board of India (SEBI) came up

with comprehensive mutual regulations, that permitted the private sector to start

with mutual funds operations. These were later replaced by the SEBI Mutual

Fund Regulations, 1996.

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1.1.2 HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust

of India, at the initiative of the Government of India and Reserve Bank . The

history of mutual funds in India can be broadly divided into four distinct phases

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.

It was set up by the Reserve Bank of India and functioned under theRegulatory and administrative control of the Reserve Bank of India.

In 1978 UTI was de-linked from the RBI and the Industrial Development

Bank of India (IDBI) took over the regulatory and administrative control in

place of RBI.

The first scheme launched by UTI was Unit Scheme 1964 . At the end of

1988 UTI had Rs.6, 700 crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by

public sector banks and Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC).

SBI Mutual Fund was the first non- UTI Mutual Fund established in June

1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank

Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India(Jun 90), Bank of Baroda Mutual Fund (Oct 92).

LIC established its mutual fund in June 1989 while GIC had set up its

mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under

management of Rs.47, 004 crores.

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

With the entry of private sector funds in 1993, a new era started in the

Indian mutual fund industry, giving the Indian investors a wider choice of

fund families.

1993 was the year in which the first Mutual Fund Regulations came into

being, under which all mutual funds, except UTI were to be registered and

governed.

The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was

the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The

industry now functions under the SEBI (Mutual Fund) Regulations 1996.

As at the end of January 2003, there were 33 mutual funds with total

assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44, 541

crores of assets under management was way ahead of other mutual

funds.

Fourth Phase since February 2003

In Feb 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities.

One is the Specified Undertaking of the Unit Trust of India with assets

under management of Rs.29, 835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and

certain other schemes. The Specified Undertaking of Unit Trust of India,

functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual

Fund Regulations.

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The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB

and LIC. It is registered with SEBI and functions under the Mutual Fund

Regulations. With the bifurcation of the erstwhile UTI which had in March2000 more than Rs.76,000 crores of assets under management and with

the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund

Regulations

With recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation

and growth.

.

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ASSETS UNDER MANAGEMENT (AUM) have grown as follows:

TABLE 1.1.2

AS ON 31st MARCH AUM (Rs. Crores)

1965 24.671970 88.301975 169.951980 455.30

1985 2,209.611990 19,130.921995 72,967.171996 74,315.311997 70,197.411998 58,918.221999 70,623.502000 103,452.982001 90,587.002002 100,594.00

2003 79,464.002004 139616.002005 149554.002007 326388.002008 505152.002009 417300.00

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Fig. 1.1.2

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1.2 Different types of Mutual Fund Schemes

Fig. 1.2

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Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-endedscheme depending on its maturity period.

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and

repurchase on a continuous basis. These schemes do not have a fixed maturity

period. Investors can conveniently buy and sell units at Net Asset Value (NAV)

related prices which are declared on a daily basis. The key feature of open-endschemes is liquidity.

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years.

The fund is open for subscription only during a specified period at the time of

launch of the scheme. Investors can invest in the scheme at the time of the initial

public issue and thereafter they can buy or sell the units of the scheme on thestock exchanges where the units are listed. In order to provide an exit route to

the investors, some close-ended funds give an option of selling back the units to

the mutual fund through periodic repurchase at NAV related prices. SEBI

Regulations stipulate that at least one of the two exit routes is provided to the

investor i.e. either repurchase facility or through listing on stock exchanges.

These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or

balanced scheme considering its investment objective. Such schemes may be

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open-ended or close-ended schemes as described earlier. Such schemes may

be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to

long- term. Such schemes normally invest a major part of their corpus in equities.

Such funds have comparatively high risks. These schemes provide different

options to the investors like dividend option, Capital appreciation, etc. and the

investors may choose an option depending on their preferences. The investors

must indicate the option in the application form. The mutual funds also allow theinvestors to change the options at a later date. Growth schemes are good for

investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors.

Such schemes generally invest in fixed income securities such as bonds,corporate debentures, Government securities and money market instruments.

Such funds are less risky compared to equity schemes. These funds are not

affected because of fluctuations in equity markets. However, opportunities of

capital appreciation are also limited in such funds. The NAVs of such funds are

affected because of change in interest rates in the country. If the interest rates

fall, NAVs of such funds are likely to increase in the short run and vice versa.

However, long term investors may not bother about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such

schemes invest both in equities and fixed income securities in the proportion

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indicated in their offer documents. These are appropriate for investors looking for

moderate growth. They generally invest 40-60% in equity and debt instruments.

These funds are also affected because of fluctuations in share prices in the stockmarkets. However, NAVs of such funds are likely to be less volatile compared to

pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity,

preservation of capital and moderate income. These schemes invest exclusivelyin safer short-term instruments such as treasury bills, certificates of deposit,

commercial paper and inter-bank call money, government securities, etc.

Returns on these schemes fluctuate much less compared to other funds. These

funds are appropriate for corporate and individual investors as a means to park

their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities

have no default risk. NAVs of these schemes also fluctuate due to change in

interest rates and other economic factors as is the case with income or debt

oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE

Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the

securities in the same weightage comprising of an index. NAVs of such schemes

would rise or fall in accordance with the rise or fall in the index, though not

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exactly by the same percentage due to some factors known as "tracking error" in

technical terms. Necessary disclosures in this regard are made in the offer

document of the mutual fund scheme.There are also exchange traded index funds launched by the mutual funds which

are traded on the stock exchanges.

Sector specific funds

These are the funds/schemes which invest in the securities of only those sectors

or industries as specified in the offer documents. e.g. Infrastructure,

Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum

stocks, etc. The returns in these funds are dependent on the performance of the

respective sectors/industries. While these funds may give higher returns, they

are more risky compared to diversified funds. Investors need to keep a watch on

the performance of those sectors/industries and must exit at an appropriate time.

They may also seek advice of an expert.

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the

Income Tax Act, 1961 as the Government offers tax incentives for investment in

specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension

schemes launched by the mutual funds also offer tax benefits. ULIP schemes

also offer tax benefits. These schemes are growth oriented and invest pre-

dominantly in equities. Their growth opportunities and risks associated are like

any equity-oriented schemes.

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1.3 MARKET TRENDS

Alone UTI with just one scheme in 1964 now competes with as many as

400 odd products and 34 players in the market. In spite of the stiff

competition and losing market share, UTI still remains a formidable force to

reckon with.

Last six years have been the most turbulent as well as exiting ones for the

industry. New players have come in, while others have decided to close shop

by either selling off or merging with others. Product innovation is now

pass with the game shifting to performance delivery in fund

management as well as service . Those directly associated with the fund

management industry like distributors, registrars and transfer agents, and

even the regulators have become more mature and responsible.

The industry is also having a profound impact on financial markets. While

UTI has always been a dominant player on the bourses as well as the debt

markets, the new generations of private funds which have gained substantial

mass are now seen flexing their muscles. Fund managers, by their selection

criteria for stocks have forced corporate governance on the industry. By

rewarding honest and transparent management with higher valuations, asystem of risk-reward has been created where the corporate sector is more

transparent then before.

Funds have shifted their focus to the recession free sectors like

pharmaceuticals, FMCG and technology sector. Funds performances are

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improving. Funds collection, which averaged at less than Rs100bn per

annum over five-year period spanning 1993-98 doubled to Rs210bn in 1998-

99. In the current year mobilization till now have exceeded Rs300bn. Totalcollection for the current financial year ending March 2000 is expected to

reach Rs450bn.

What is particularly noteworthy is that bulk of the mobilization has been by

the private sector mutual funds rather than public sector mutual funds. Indeed

private MFs saw a net inflow of Rs. 7819.34 crore during the first nine months

of the year as against a net inflow of Rs.604.40 crore in the case of public

sector funds.

Mutual funds are now also competing with commercial banks in the race

for retail investors savings and corporate float money. The power shift

towards mutual funds has become obvious. The coming few years will show

that the traditional saving avenues are losing out in the current scenario.

Many investors are realizing that investments in savings accounts are as

good as locking up their deposits in a closet. The fund mobilization trend bymutual funds in the current year indicates that money is going to mutual funds

in a big way. The collection in the first half of the financial year 1999-2000

matches the whole of 1998-99.

India is at the first stage of a revolution that has already peaked in the

U.S. The U.S. boasts of an Asset base that is much higher than its bank

deposits. In India, mutual fund assets are not even 10% of the bankdeposits, but this trend is beginning to change. Recent figures indicate

that in the first quarter of the current fiscal year mutual fund assets went

up by 115% whereas bank deposits rose by only 17%. (Source: Think

tank, The Financial Express September 99) This is forcing a large number

of banks to adopt the concept of narrow banking wherein the deposits are

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kept in Gilts and some other assets, which improves liquidity and reduces

risk. The basic fact lies that banks cannot be ignored and they will not

close down completely. Their role as intermediaries cannot be ignored.

Banks v/s Mutual Funds

CHARACTERISTICS BANKS MUTUAL FUNDSReturns

LowBetter

Administrative exp. High LowRisk Low ModerateInvestment options Less MoreNetwork High penetration Low but improvingLiquidity At a cost Better Quality of assets Not transparent TransparentInterest calculation Minimum balance between 10th. &

30th. Of every month

Everyday

Guarantee Maximum Rs.1 Lac on deposits None

Table 1.3

1.4 REGULATORY ASPECTS

Schemes of a Mutual Fund:

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The asset management company shall launch no scheme unless the

trustees approve such scheme and a copy of the offer document has

been filed with the Board.Every mutual fund shall along with the offer document of each scheme

pay filing fees.

The offer document shall contain disclosures which are adequate in order

to enable the investors to make informed investment decision including

the disclosure on maximum investments proposed to be made by the

scheme in the listed securities of the group companies of the sponsor

The mutual fund and asset Management Company shall be liable to

refund the application money to the applicants

If the mutual fund fails to receive the minimum subscription amount

referred to in clause (a) of sub-regulation (1)

If the moneys received from the applicants for units are in excess of

subscription as referred to in clause (b) of sub-regulation (1).

The asset management company shall issue to the applicant whose

application has been accepted, unit certificates or a statement of accounts

specifying the number of units allotted to the applicant as soon as

possible but not later than six weeks from the date of closure of the initial

subscription list and or from the date of receipt of the request from the unit

holders in any open ended scheme.

Rules Regarding Advertisement:

The offer document and advertisement materials shall not be misleading

or contain any statement or opinion, which are incorrect or false.

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Investment Objectives and Valuation Policies:

The price at which the units may be subscribed or sold and the price at

which such units may at any time be repurchased by the mutual fund shallbe made available to the investors.

General Obligations:

Every asset management company for each scheme shall keep and

maintain proper books of accounts, records and documents, for each

scheme so as to explain its transactions and to disclose at any point of

time the financial position of each scheme and in particular give a true and

fair view of the state of affairs of the fund and intimate to the Board the

place where such books of accounts, records and documents are

maintained.

The financial year for all the schemes shall end as of March 31 of each

year.

Every mutual fund shall have the annual statement of accounts audited by

an auditor who is not in any way associated with the auditor of the asset

management company.

Procedure for Action In Case Of Default:

On and from the date of the suspension of the certificate or the approval,

as the case may be, the mutual fund, trustees or asset management

company, shall cease to carry on any activity as a mutual fund, trustee or asset management company, during the period of suspension, and shall

be subject to the directions of the Board with regard to any records,

documents, or securities that may be in its custody or control, relating to

its activities as mutual fund, trustees or asset management company.

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Restrictions on Investments:

A mutual fund scheme shall not invest more than 15% of its NAV in debtinstruments issued by a single issuer, which are rated not below

investment grade by a credit rating agency authorized to carry out such

activity under the Act. Such investment limit may be extended to 20% of

the NAV of the scheme with the prior approval of the Board of Trustees

and the Board of asset Management Company.

A mutual fund scheme shall not invest more than 10% of its NAV in un

rated debt instruments issued by a single issuer and the total investment

in such instruments shall not exceed 25% of the NAV of the scheme. All

such investments shall be made with the prior approval of the Board of

Trustees and the Board of asset Management Company.

No mutual fund under all its schemes should own more than ten per cent

of any company's paid up capital carrying voting rights.

Such transfers are done at the prevailing market price for quoted

instruments on spot basis.

The securities so transferred shall be in conformity with the investment

objective of the scheme to which such transfer has been made.

A scheme may invest in another scheme under the same asset

management company or any other mutual fund without charging any

fees, provided that aggregate inter scheme investment made by all

schemes under the same management or in schemes under the

management of any other asset management company shall not exceed

5% of the net asset value of the mutual fund.The initial issue expenses in respect of any scheme may not exceed six

per cent of the funds raised under that scheme.

Every mutual fund shall buy and sell securities on the basis of deliveries

and shall in all cases of purchases, take delivery of relative securities and

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in all cases of sale, deliver the securities and shall in no case put itself in a

position whereby

it has to make short sale or carry forward transaction or engage in badlafinance.

Every mutual fund shall, get the securities purchased or transferred in the

name of the mutual fund on account of the concerned scheme, wherever

investments are intended to be of long-term nature.

Pending deployment of funds of a scheme in securities in terms of

investment objectives of the scheme a mutual fund can invest the funds of

the scheme in short term deposits of scheduled commercial banks.

No mutual fund scheme shall make any investment in;

Any unlisted security of an associate or group company of the sponsor; or

Any security issued by way of private placement by an associate or group

company of the sponsor; or

The listed securities of group companies of the sponsor which is in excess

of 30% of the net assets [of all the schemes of a mutual fund]

No mutual fund scheme shall invest more than 10 per cent of its NAV in

the equity shares or equity related instruments of any company. Provided

that, the limit of 10 per cent shall not be applicable for investments in

index fund or sector or industry specific scheme.

A mutual fund scheme shall not invest more than 5% of its NAV in the

equity shares or equity related investments in case of open-ended

scheme and 10% of its NAV in case of close-ended scheme.

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1.5 How Mutual Fund Industry Works

The working of Mutual Funds can be briefly stated in the form of the points

below: -

A draft offer document is prepared at the time of launching the

fund. Typically, it pre specifies the investment objectives of the fund, the

risk associated, the costs involved in the process and the broad rules for

entry into and exit from the fund and other areas of operation. In India, as

in most countries, these sponsors need approval from a regulator, SEBI

(Securities exchange Board of India) in our case. SEBI looks at track

records of the sponsor and its financial strength in granting approval to the

fund for commencing operations.

A sponsor then hires an asset management company to invest the

funds according to the investment objective.

It also hires another entity to be the custodian of the assets of the

fund and perhaps a third one to handle registry work for the unit holders

(subscribers) of the fund.

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In the Indian context, the sponsors promote the Asset Management Company

also, in which it holds a majority stake. In many cases a sponsor can hold a

100% stake in the Asset Management Company (AMC).

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1.6 Financial Aspects of Mutual Fund

Net Asset Value:

Before venturing into the market related functional aspects of Mutual funds, it is

important to understand the evaluation criteria of these funds. Just as a business

is evaluated by the level of its profits, a mutual fund is assessed on the basis of

its net asset value, as explained below.

The net asset value of the fund is the cumulative market value of the assets fund

net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling

off all the assets in the fund, this is the amount that the shareholders would

collectively own. This gives rise to the concept of net asset value per unit, which

is the value, represented by the ownership of one unit in the fund. It is calculated

simply by dividing the net asset value of the fund by the number of units.

However, most people refer loosely to the NAV per unit as NAV, ignoring the

"per unit". We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by

the fund. Once it is calculated, the NAV is simply the net value of assets divided

by the number of units outstanding. The detailed methodology for the calculation

of the asset value is given below.

Asset value is equal to

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Sum of market value of shares/debentures

+ Liquid assets/cash held, if any

+ Dividends/interest accrued

Amount due on unpaid assets

Expenses accrued but not paid

Asset Management Company (AMC):

An Asset Management Company or AMC is the investment manager of the

respective trust, which is entitled to invest in different securities on behalf of unit

holders, in line with the objectives of respective schemes.Load:

The charge collected by a Mutual Fund from an investor for selling the units or

investing in it.

Entry load:

When a charge is collected at the time of entering into the scheme it is called an

Entry load or Front-end load or Sales load. The entry load percentage is added

to the NAV at the time of allotment. .

Exit load:

An Exit load or Back-end load or Repurchase load is a charge that is collected at

the time of redeeming or for transfer between schemes (switch). The exit load

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percentage is deducted from the NAV at the time of redemption or transfer

between schemes.

Systematic Investment Plan:

Systematic Investment Plan is normally offered by many open-ended mutual

funds in order to encourage regular investments. This plan allows an investor to

purchase additional units of the Scheme by investing fixed amount of rupees

every month/quarter. The beauty of the plan is that as the market falls the

number of units purchased by the investor increases as the purchases are linked

to the NAV. This concept is called Rupee Cost Averaging. Rupee CostAveraging does not guarantee a profit or protect against a loss. Rupee Cost

Averaging can smooth out the market's ups and downs and reduce the risk of

investing in volatile markets.

Systematic Withdrawal Plan:

The unit holder may set up a Systematic Withdrawal Plan on a monthly, quarterly

or semi-annual or annual basis to redeem a fixed number of units

Price/Earnings Ratio:

Abbreviated as P/E Ratio or P/E. Sometimes referred to as the "multiple."

Calculated by dividing the stock's

current price by the company's current annual earnings per share, usually from

the last four quarters (known as the Trailing P/E Ratio), but sometimes from the

estimates of the earnings expected in the next four quarters (the Projected P/E

ratio), or from the sum of the last two actual quarters and the estimates of thenext two quarters. In and of itself, the P/E Ratio tells very little, but can be

usefully compared to the P/E Ratios of other companies in the same industry, or

to the market in general, or to the company's own historical P/E Ratios, in order

to determine how much the market is currently willing to pay for a share of the

company's earnings .

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BY MARKET CAPITALISATION

Market capitalization: Stock Funds are often grouped by the size of the

companies they invest in big, small or tiny. By size we mean a company's value

on the stock market: the number of shares it has outstanding multiplied by the

share price. This is known as market capitalization.

Big companies tend to be less risky than small companies. But smaller

companies can often offer more growth potential. The best idea is

probably to have a mix of funds that gives an exposure to large-cap,

midsize and small companies.

A fund's market capitalization will indicate whether the fund emphasizes

the stocks of blue-chip companies with large market capitalizations,

emerging companies with small capitalizations, or something in between.

a) Large Cap Funds: Large cap funds invest their assets primarily in companies, which have a sizable

market capitalization. Different fund houses define `Sizable' differently. This is

usually mentioned in the fact sheets for the investor's benefit. For instance, in its

IPO (Franklin Flexi Cap), Templeton defined large caps as companies with a

market capitalization in excess of Rs 15 bn (Rs 1,500 crores). Companies below

this threshold were categorized as mid/small caps.

Investing in large caps is a lower risk-lower return proposition (vis--vismid cap stocks), because such companies are usually widely

researched and information is widely available.

Large-cap funds are less volatile than funds that invest in smaller

companies. Usually, that means we can expect smaller returns but

stable returns.

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E.g.: Kotak 30, HDFC Top 200 Fund, Franklin India Bluechip Fund, HSBC Equity

Fund for instance, invest predominantly in large caps.

b) Mid Cap Funds:

These funds invest in companies that have a lower market capitalization than the

large caps. For instance, Sundaram Mutual Fund defines mid caps as stocks

with a market capitalization of less than Rs 18 bn. However, this level varies from

fund house to fund house. As with large caps, BSE (BSE Mid Cap 200) and S&P

CNX (S&P CNX Mid Cap 200) have designed their own indices for mid cap

stocks.

Investments in mid caps are a riskier proposition as compared to

investments in large cap funds. In fact, a mid cap stock could well

graduate to a large cap over the years giving the investor a significant

return on his investment.

E.g.: Franklin India Prima Fund, Kotak Mid-Cap, Magnum Global Fund,

Sundaram Select Mid Cap fund are some examples of mid cap funds .

c) Small Cap Funds:

Small cap funds invest in companies with a smaller market capitalization.

(Sundaram SMILE) - Sundaram Mutual Fund defined small caps as stocks with a

market capitalization of less than Rs 2 bn. investing in small cap funds is fraught

with considerable risk.

Small cap companies in most cases are just evolving. Again, as

with mid caps, information on small caps is not easily available so

these companies are under-researched or maybe not researched

at all. So we are contending with a relatively unknown entity here.

However, the risk-return trade-off is much higher vis--vis large

caps and mid caps.

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The volatility of the fund often depends on the aggressiveness of

the manager. Aggressive small-cap managers will buy hot growth

and technology companies, taking high risks in hopes of highrewards. More conservative "value" managers will look for

companies that have been beaten down temporarily by the stock

market.

Currently this is a niche segment as there is no fund investing purely in small cap

stocks. Sundaram SMILE is probably the first small cap fund of its kind.

d) Multi/Flexi-Cap Funds:Just about every second mutual fund IPO these days is a multi/flexi cap fund.

The fund manager has the mandate to shift across market

capitalizations depending on the growth opportunity.

This is generally dictated by the market happenings i.e. which sector is

driving growth at a given time or which market segment (market

capitalization) is witnessing the latest rally.

But generally, there's a ceiling on how far the fund manager can go in

a particular market segment or sector. This helps in keeping the

portfolio relatively diversified and mitigate risks. In terms of risk-return

trade-off, these funds are positioned between large caps and mid

caps.

Some multi cap funds include - DSP ML Opportunities, Tata Equity Opportunities

and Principal Resurgent India Fund.

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1.6.2 HOW TO INVEST IN MUTUAL FUNDS

Step One - Identify the Investment needs: Our financial goals will vary, based

on the age, lifestyle, financial independence, family commitments, and level of

income and expenses among many other factors. Therefore, the first step is to

assess the needs. We can begin by defining the investment objectives and

needs, which could be regular income, buying a home or finance a wedding or

educate children etc.Step Two - Choose the right Mutual Fund : The important thing is to choose

the right mutual fund scheme, which suits our requirements. The offer document

of the scheme tells us its objectives and provides supplementary details like the

track record of other schemes managed by the same Fund Manager. Some

factors to evaluate before choosing a particular Mutual Fund are the track record

of the performance of the fund over the last few years. Other factors could be the

portfolio allocation, the dividend yield and the degree of transparency etc .

Step Three - Select the ideal mix of Schemes : Investing in just one Mutual

Fund scheme may not meet all the investment needs. We may consider

investing in a combination of schemes to achieve our specific goals.

Step Four - Invest regularly: The best approach is to invest a fixed amount at

specific intervals, say every month. By investing a fixed sum each month, we

buy fewer units when the price is higher and more units when the price is low,

thus bringing down the average cost per unit. This is called rupee cost averaging

and is a disciplined investment strategy followed by investors all over the world.We can also avail the systematic investment plan facility offered by many open-

end funds.

Step Five- Start early: It is desirable to start investing early and stick to a

regular investment plan. If we start now, we will make more than if we wait and

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invest later. The power of compounding lets us earn income on income and our

money multiplies at a compounded rate of return.

Step Six - The final step: Finally we need to fill in the application forms of various mutual fund schemes and start investing. We may reap the rewards in

the years to come. Mutual Funds are suitable for every kind of investor - whether

starting a career or retiring, conservative or risk taking, growth oriented or

income seeking.

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1.6.3 Risks exposed to while investing in Mutual Funds

Market risk - If the overall stock or bond markets fall on account of macro

economic factors, the value of stock or bond holdings in the fund's

portfolio can drop thereby impacting the NAV.

Non-market risk - Bad news about an individual company can pull down

its stock price, which can affect, negatively, funds holding a large quantity

of that stock. This risk can be reduced by having a diversified portfolio that

consists of a wide variety of stocks drawn from different industries.

Interest rate risk - Bond prices and interest rates move in opposite

directions. When interest rates rise, bond prices fall and this decline in

underlying securities affects the NAV negatively. The extent of the

negative impact is dependant on factors such as maturity profile, liquidity

etc.

Credit risk - Bonds are debt obligations. So when the funds invest in

corporate bonds, they run the risk of the corporates defaulting on their

interest payment and the principal payment obligations and when that risk

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crystallises it leads to a fall in the value of the bond causing the NAV of

the fund to take a beating.

1.6.4 Tax Implications in Mutual Funds

TaxationEquity

Funds

Liquid funds/Money

Market Funds

Debt fund/liquid

plus FundsShort Term

Capital Gain

Tax

*15.45%As per Income Tax

SlabAs per Income Tax

Slab

Long Term

Capital Gain

Tax

Nil

Less of 10% without

indexation or 20% with

indexation

Less of 10% without

indexation or 20%

with indexationDividend

Distribution

Tax

Nil **28.325% **14.163%

TABLE 1.6.4

80C benefits through ELSS: Under the current tax laws, you can get an

annual income tax benefit of up to Rs. 1Lakh if you invest in Equity Linked

Savings Schemes, ELSS. However, the minimum term for these schemes

is 3 years and you cannot withdraw your money before that time

*The education cess of 3% shall be levied on all investors.

*Short Term Capital Gain Tax indicated above is inclusive of education cess

**Dividend Distribution Taxes indicated above are inclusive of additional

surcharge and cess.

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1.7 MAJOR PLAYERS IN THE INDIAN MF INDUSTRY

ABNAMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO

Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO

Asset Management (India) Ltd. was incorporated on November 4, 2003.

Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun

Life Financial. Sun Life Financial is a golbal organisation evolved in 1871 and

is being represented in Canada, the US, the Philippines, Japan, Indonesia andBermuda apart from India. Birla Sun Life Mutual Fund follows a conservative

long-term approach to investment. Recently it crossed AUM of Rs. 10,000

crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund )

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,

1992 under the sponsorship of Bank of Baroda. BOB Asset Management

Company Limited is the AMC of BOB Mutual Fund and was incorporated on

November 5, 1992. Deutsche Bank AG is the custodian.

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Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial

Corporation Ltd. as the sponsor. Sahara Asset Management Company Private

Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual

Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to

launch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr.

approximately. Today it is the largest Bank sponsored Mutual Fund in India.

They have already launched 35 Schemes out of which 15 have already yielded

handsome returns to investors. State Bank of India Mutual Fund has more than

Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread

over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The

sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment

Corporation Ltd. The investment manager is Tata Asset Management Limited

and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's

is one of the fastest in the country with more than Rs. 7,703 crores (as on April

30, 2005) of AUM.

Kotak Mahindra Mutual Fund

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Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by

Standard Chartered Bank. The Trustee is Standard Chartered Trustee

Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd.

is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of

the largest financial services groups in the world. Investors can buy or sell the

Mutual Fund through their financial advisor or through mail or through their

website. They have Open end Diversified Equity schemes, Open end Sector

Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes,Open end Income and Liquid schemes, Closed end Income schemes and

Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in

the market in securities, investmenty management and credit services. Morgan

Stanley Investment Management (MISM) was established in the year 1975. It

provides customized asset management services and products to

governments, corporations, pension funds and non-profit organisations. Its

services are also extended to high net worth individuals and retail investors. In

India it is known as Morgan Stanley Investment Management Private Limited

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(MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the

first close end diversified equity scheme serving the needs of Indian retail

investors focussing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited

as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its

AMC was incorporated on December 1, 1995 with the name Escorts Asset

Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance

Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is

ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset

Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial

Services Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd.

as the Trustee Company. Incorporated on October 16, 2000 and

headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd.

is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank

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acting as the sponsor. Canbank Investment Management Services Ltd.

incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is

in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment &

Finance Company Ltd. was setup on January 3, 1997. Cholamandalam

Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC

Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989.

It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fundwas constituted as a Trust in accordance with the provisions of the Indian Trust

Act, 1882. . The Company started its business on 29th April 1994. The

Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset

Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC),

a Government of India undertaking and the four Public Sector General

Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India

Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United

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India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with

the provisions of the Indian Trusts Act, 1882.

Chapter 2

INTRODUCTIONTO THE

COMPANY

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accounts are segregated and there is no conflict of interest between the various

activities undertaken by UTI AMC.

UTI International Ltd. (Guernsey based) a 100% subsidiary of UTI AssetManagement Company Ltd. (UTI AMC) of India and Shinsei Bank Limited

(Shinsei Bank) of Japan have signed a joint venture agreement to set up UTI

International (Singapore) Pte Limited (The Company).

UTI International is set up with the vision to engage in Investment Management

and Distribution of financial products in the South East Asian region. Besides

structuring investment products for customers in the region, the Company will

also manage funds investing in other jurisdictions. The company will also launch

and manage structured investment products to cater to the Japan South-East

Asia corridor.

Assets under Management

UTI Asset Management Company presently manages a corpus of over Rs.

78,617 Crores as on 30th May' 2010 . UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every class of citizenry.

It has a nationwide network consisting 144 UTI Financial Centres (UFCs),340

Chief representative offices,109 Chief agents and UTI International offices in

London, Dubai and Bahrain. With a view to reach to common investors at district

level, 3 satellite offices have also been opened in select towns and districts.

We have a well-qualified, professional fund management team, who has been

highly empowered to manage funds with greater efficiency and accountability in

the sole interest of unit holders. The fund managers are also ably supported with

a strong in-house securities research department. To ensure better management

of funds, a risk management department is also in operation.

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Reliability

UTIMF has consistently reset and upgraded transparency standards. All the

branches, UFCs and registrar offices are connected on a robust IT network to

ensure cost-effective quick and efficient service. All these have evolved UTI

transparent SEBI compliant entity.

2.2 Board of Directors

Chairman & Managing Director Shri U.K Sinha(Chairman)

Managing Director, National Stock

Exchange Limited

Shri Ravi Narain(Director)

Chief Executive Officer and wholetime

director

Shri Balram P. Bhagat

Director Invest India EconomicFoundation

Shri Gautam bharadwaj(Director)

Managing Director Retired IAAS Shri A. Krishna Rao(Director)Chartered Accountant Shri S. Venkat Raman(Director)

2.3 Vision

To be the most Preferred Mutual Fund

2.4 Mission - To make UTI Mutual Fund:

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The most trusted brand , admired by the stakeholders

The largest and most efficient money manager with global presence The best in class customer service provider

The most preferred employer

The most innovative and best wealth creator

A socially responsible organisation known for best corporate governance

2.5 Investment Philosophy

UTI Mutual Funds investment philosophy is to deliver consistent and stable

returns in the medium to long term with a fairly lower volatility of fund returns

compared to the broad market. It believes in having a balanced and well-

diversified portfolio for all the funds and a rigorous in-house research based

approach to all its investments. It is committed to adopt and maintain good fund

management practices and a process based investment management.

UTI Mutual Fund follows an investment approach of giving as equal an

importance to asset allocation and sectoral allocation, as is given to security

selection while managing any fund. It combines top-down and bottom-up

approaches to enable the portfolios/funds to adapt to different market conditions

so as to prevent missing an investment opportunity.

In terms of its funds performance, UTI Mutual Fund aims to consistently remain

in the top quartile vis--vis the funds in the peer group.

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2.6 Company Information

2.6.1 UTI Trustee

UTI Trustee Co. (P) Ltd

Directors

Shri Janki Ballabh Chairman

Prof. P.G. Apte

Shri S.P. Oswal

Shri Babasaheb N Kalyani

Shri Ashok K Kini

Shri S Ravi

Prof. P.V. Ramana

Shri Deepak Vaidya

1.6.2 UTI Sponsors

Bank of Baroda:-

Bank of Baroda is a commercial bank performing activities in terms of

Banking Companies (Acquisition and Transfer of Undertakings Act 1970)

under which the Undertaking of the Bank was taken over by the Central

Government. During the period since inception, it has always maintained its

practice of sound value based banking to emerge as one of the premier

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public sector Banks of the country today. It has a track record of

uninterrupted profits since inception in 1908. The financial strength of the

Bank and its long tradition of efficient customer service are drawnsubstantially from the extensive reach of its 2704 strong branch network (as

of 31.03.2006) covering almost every State and Union Territory in the

Country. The Bank is also one of the few Indian Banks with a formidable

presence overseas with 39 branches. Thus, the total branch network is 2,743

as at 31.03.2006.

Life Insurance Corporation of India

Life Insurance Corporation of India (LIC) is amongst the largest insurance

companies in the world, with 2048 branches and having a Fund size of Rs.

463147.62 crore.

Punjab National Bank

Punjab National Bank is a commercial bank performing activities in terms of

Banking Companies (Acquisition and Transfer of Undertakings Act 1970)

under which the Undertaking of the Bank was taken over by the Central

Government. The main object of the bank under the said Act is as below:- An

act to provide for the acquisition and transfer of the undertaking of certain

banking companies, having regard to their size, resources coverage and

organization, in order to further to control the heights of the economy, to meet

progressively and serve better, the needs of the development of the economy

and to promote the welfare of the people, in conformity with the policy of the

State towards securing the principles laid down in clause (b) and (c) of Article

39 of the Constitution of India and for matter connected therewith or

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2.7 Distribution Channels

2.7.1 PSU Banks

Punjab National bank

Central Bank of India

State Bank of India

Indian Bank

Bank of India

Union bank of India

Corporation Bank State Bank of Patiala

Allahabad Bank

2.7.2 Private and foreign Banks

HDFC Bank

ICICI Bank

Axis Bank Kotak Bank Standard Charted Bank

Citi Bank

HSBC

HDFC Securities Kotak Securities

2.7.3 Non Named Banks

Andhra Bank United Bank of India

Bank of Baroda

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2.7.8 Distribution Houses Channel

JM Morgan Stanley Retails Services Ltd

Birla Sun Life Distribution Co. Ltd.

Cholamandalam Distribution Services Ltd

SBI CAP Securities Limited Tata Td Waterhouse Securities Pvt. Ltd

Mata Securities India Pvt. Ltd.

2.8 UTI Funds (as on May 30, 2010)

2.8.1 Equity Funds Category

UTI Master share Fund

Investment Objective

An equity fund aiming to provide benefit of capital appreciation and income

distribution through investing in equity.

Features

Open Ended Scheme

Fund Size Rs. 2308.91 Crs.

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NAV Rs. 48.20 (Growth) Rs. 28.46 (Income) (as on May 30, 2010 )

Fund Positioning

UTI Mastershare is positioned as a highly diversified equity fund aiming to

provide a relatively stable and sustainable performance. The fund portfolio will

always stick to its theme of discipline, diligence and dividend. This

fund intends to maintain a conservative portfolio, with a disciplined investment

strategy of investing only in fundamentally strong companies. The fund seeks topursue the policy of distributing dividend on an annual basis.

UTI Master Plus Fund


An open-ended equity fund with an objective of long-term capital appreciation

through investments in Equities and Equity related instruments, convertible

debentures, derivatives in India and also in overseas markets.

Features

Fund Size Rs. 844.77 Crores

Open ended scheme

NAV - Rs. 73.88 (Growth)

Rs. 53.26(Income) (as on May 30, 2010 )

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Fund PositioningIt is positioned as a fund, which primarily invests in stocks comprising of BSE

100 Index. It aims to focus on high growth stocks of BSE 100 index, which has

the potential to emerge as industry leaders in medium term. Hence portfolio of

the fund will present a good blend of industry leaders and emerging industry

leaders.

UTI EQUITY FUND

Investment Objective UTI Equity Fund (formerly known as Master gain 92) is

open-ended equity Scheme with an objective of investing at least 80% of its

funds in equity and equity related instrument with medium to high risk profile and

upto 20% in debt and money market instruments with low to medium risk profile.

Features


Open ended Equity Fund


Rs. 42.33 (Income) (as on May 30, 2010 )

Fund Positioning

UTI Equity Fund is positioned as a relatively aggressively managed, diversified

equity fund. The Fund portfolio will primarily comprise of leading stocks in the

respective sectors. The fund will focus on generating returns by actively booking

profits and shifting assets between high growth stocks so as to reflect changing

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business realities. In this process, the fund is likely to have relatively high

portfolio turnover.

UTICONTRA FUND


The fund aims to provide capital appreciation/dividend distribution throughinvestments in listed equities and equity-related instruments. The Fund's

investment policies are based on insights from behavioural finance. The fund

offers an opportunity to benefit from the impact of non-rational investors'

behaviour by focussing on stocks that are currently undervalued because of

emotional and behavioural patterns present in the stock market.

Features


Open End Equity Oriented

NAV Rs. 13.19 ( Growth)

Rs. 12.18 ( Income) (as on May 30, 2010 )

Fund Positioning

The fund works with an approach to benefit from non rational behaviour of

investor/equity markets and focus on out of favour stocks. The portfolio would be

a diversified portfolio of out of favour stocks which have strong fundamentals.

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UTIWEALTH BUILDER FUND


The objective of the scheme is to achieve long term capital appreciation by

investing predominantly in a diversified portfolio of equity and equity related

instruments.

Features


CLOSE ENDEDNAV Rs. 15.10 (Growth)

Rs. 14.15( Income) (as on May 30, 2010 )

Fund Positioning

The broad investment strategy of the fund would be to invest in equity and equity

related securities. The scheme aims to build an maintain a diversified portfolio of

equity stocks that have the potential to appreciate in the long term. The fund will

also utilise derivatives to hedge the portfolio.

Theme/Speciality Based Funds(as on May 30,2010)

UTIINFRASTRUCTURE FUND


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An open ended equity fund with the objective to provide Capital appreciation

through investing in the stocks of the companies engaged in the sectors like

Metals, Building materials, oil and gas, power, chemicals, engineering etc. Thefund will invest in the stocks of the companies which form part of Basic

Infrastructure Industries.

Features


Open ended scheme

NAV Rs 33.84 (Growth)


Fund Positioning

UTI Basic Industries Fund is positioned to follow a top down approach keeping in

mind the economic scenario. The funds endeavour is to pick sectors, which are

expected to perform better and select fundamentally strong companies in those

sectors. The schemes performance is highly linked with the overall economic

growth of the country as the sectors in which the scheme invests are directly

linked to the GDP growth of India.

UTIDIVIDEND YIELD FUND


An Open ended equity scheme. It aims to provide medium to long term capital

gains and/or dividend distribution by investing predominantly in equity and equity

related instruments which offer high dividend yield.

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Features


Open Ended NAV Rs. 28.61 (Growth)

Rs. 14.18(Income) (as on May 30, 2010 )

Fund Positioning

UTI Dividend Yield Fund is positioned as a conservatively managed equity fund.

The fund portfolio will primarily comprise of stocks which are high dividend

yielding (on historical basis) or potential high dividend yielding stocks. The fund

will have a good mix of companies across various sectors. The Fund is wellsuited for investors with medium to low risk profile and with a long term

investment horizon. The fund aims to distribute regular dividends to its investors.

UTISERVICE INDUSTRIES FUND


An open-ended fund which invests in the equities of the Services Sector

companies of the country. One of the growth sector funds aiming to provide

growth of capital over a period of time as well as to make income distribution by

investing the funds in stocks of companies engaged in service sector such as

banking, finance, insurance, education, training, telecom, travel, entertainment,

hotels, etc.

FeaturesFund Size Rs. 327.69 Crores

Open end Equity Fund



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Fund Positioning

It is positioned as a unique fund available in the Indian Mutual Fund Industrywhose objective is to capitalise on the growing service sector pie in Indias GDP.

Its exposure is diversified amongst various industries in the services sector. The

fund primarily invests in companies which provide services or produce products

wherein, the value addition come more from human resources, than from capital

or machines. As the benchmark index is skewed in favor of few stocks, the fund

could have substantial deviations from the respective weightage in the

benchmark index so as to achieve diversification within the sector.

UTIMASTER VALUE UNIT PLAN


An open-ended equity fund investing in stocks which are currently under valuedto their future earning potential and carry medium risk profile to provide 'Capital

Appreciation'

Features

Fund Size Rs. 478.15 Cr

Open ended

NAV - Rs. 46.52 (Growth)Rs. 23.56 (Income) (as on May 30, 2010 )

Fund Positioning

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Master Value Fund is positioned as a pure value fund with clearly defined

investment criteria for investing in value stocks. The Fund invests in stocks that

are relatively undervalued to their intrinsic value and which will create wealth for the various stakeholders in the medium to long term. Investment tools like low

P/E, Low P/Book value and positive EVA (Economic Value Added) will be used

to identify the stocks. The Fund is committed to booking profits periodically in

order to retain the value orientation of the portfolio.

UTIMID CAP FUND


An open ended equity fund with the objective to provide Capital appreciation by

investing primarily in mid caps stocks.

Features

Fund Size Rs. 338.31 Crores Open ended

NAV- Rs. 29.33 (Growth)


Fund Positioning

The Mid cap fund is positioned as a pure mid cap fund with the entire portfolio to

be invested in dynamic and well managed, medium sized enterprises with higher

growth potential vis--vis their well established counterparts. The fund will invest

in stocks, which constitute the CNX Midcap 200 and S&P CNX 500 index only.The fund shall not invest in the top 50 stocks by market capitalisation. The fund

is aptly positioned for individuals/ institution willing to take higher risk for better

returns.

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UTILEADERSHIP FUND


To achieve long-term capital appreciation and / or dividend distribution by

investing in stocks that is "Leaders" in their respective

industries/sectors/subsectors.

Features

Fund Size Rs. 833.11 Crores Open End



UTIMNC FUND


An open-ended equity fund with the objective to invest predominantly in the

equity shares of multinational companies in diverse sectors such as FMCG,

Pharmaceutical, Engineering etc.

Features


Equity Diversified NAV - Rs. 50.60 (Growth)


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Fund Positioning

The Fund is positioned as equity oriented Fund offering a niche investmentopportunity of growth through investment predominantly in stocks of Multinational

Corporations and other liquid stocks. The fund will predominantly invest only in

companies which are forming part of CNX MNC index and / or where more than

25% of the holding is by the MNC parent and / or where FII / FDI and MNC

parent combined holding is more than 50%.

UTIOPPORTUNITIES FUND


The scheme seeks to generate capital appreciation and / or income distribution

by investing in the funds of the scheme in equity shares and equity related

instruments. The focus f the scheme is to capitalise on opportunities arising in

the market by responding to the dynamically changing Indian economy by

moving its investments amongst different sectors as prevailing trends change

Features Fund Size Rs. 1420.80 Crores Open ended



Fund Positioning

The fund is positioned as a dynamic sector allocation fund. The fund will, at any

given point in time, invest in only select sectors and will dynamically change the

allocation from one sector to another depending on the potential risk reward. On

a risk return profile the fund is positioned between a diversified equity fund and

sector fund.

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Sector Funds

UTI BANKING SECTOR FUND


An open-ended fund which exclusively invests in the equities of the banking and

financial services activities companies. This fund is one of the thematic funds.

The Investment objective is "capital appreciation" through investments in the

stocks of the companies/ institutions engaged in the banking and financial

services activities.

Features

Open ended Equity based fund Fund Size Rs. 160.29 Crores NAV Rs. 36.20 (Growth)


Fund Positioning

It is positioned as a fund capitalising on opportunities emerging in banking

sector. Within the banking sector, the fund could have companies/institutions,

are private or public, and, Indian or foreign owned. Weightage in the above sub-

segments will vary from time to time depending on the valuations and the

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expected growth potential. As the benchmark index is skewed in favour of few

stocks, the fund could have substantial deviations from the respective weightage

in the benchmark index so as to achieve diversification within the sector.

UTISOFTWARE FUND


An open-ended fund which invests exclusively in the equities of the Software

Sector companies. One of the growth sectors funds aiming to invest in equity

shares of companies belonging to information technology sector to provide

returns to investors through capital growth as well as through regular income

distribution.

Features




Fund Positioning

It is positioned as a fund capitalising on opportunities emerging in IT sector. Asthe benchmark index is skewed in favour of few Stocks, the fund could have

substantial deviations from the respective weightages in the benchmark index so

as to achieve diversification within the sector.

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UTIENERGY FUND

Investment ObjectiveInvestment will be made in stocks of those companies engaged in the following

areas:(a) Petro sector covering industries such as oil and gas drilling and

exploration, refining of crude oil, distribution of gas, petro products, pipelines and

manufacturing of downstream oil products. (b) All types of Power generation

companies. Companies which are into production of ethanol.(c) Business related

to storage of Energy and companies involved in business of delivering Energy in

different forms. (d) Industrial manufacturing companies which are into

manufacturing of equipment related to energy development (like Petro and

Power) and related areas, pipes/cables and lying them.

Features




Fund Positioning

UTI Energy Fund is now positioned as a Thematic Fund focussing on Indias

high growth energy sector. The investment universe comprises sectors / sub

sectors including Power Generation & Distribution, Oil Downstream & Upstream,

Capital Equipment Manufacturing, Pipe Manufacturing, Gas Distribution etc. As

is the case with Thematic Funds, such a fund is suitable for a regular equityinvestor who has a higher risk appetite. Such a fund can be used to complement

their core portfolio holdings. Suggested investment horizon is 2-3 years.

UTIPHARMA & HEALTHCARE FUND

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Fund Positioning

UTI ETSP is positioned to invest in leading companies across sectors, with anaim to provide superior risk adjusted return i.e return with relatively lesser

volatility. The Fund would invest with a long term perspective, in companies that

are believed to have growth potential.

UTILONG TERM ADVANTAGE FUND


The investment objective of the scheme is to provide medium to long term capital

appreciation along with income tax benefit.

Features


Close Ended



Fund Positioning

Fund is a close ended equity linking savings scheme which aims to providemedium to long term capital appreciation along with income tax benefit under

section 80C. Scheme will invest in those companies that are believed to have

potential to offer appreciation potential greater than the growth in the relevant

stock market indices in the long term.

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2. 8.2 Index Funds Category

UTIMASTER INDEX FUND


UTI MIF is an open ended passive fund with the primary investment objective to

invest in securities of companies comprising the BSE sensex in the same

weightage as these companies have in BSE sensex. The fund strives to

minimise performance difference with the sensex by keeping the tracking error tothe minimum.

Features Fund Size Rs. 64.52 Crores Open ended Index Fund NAV - Rs. 52.20 (Growth)


Fund Positioning

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UTISUNDER


To provide investment returns that, before expenses, closely correspond to the

performance and yield of the basket of securities underlying the S&P CNX Nifty

index.

Features Fund Size Rs. 0.63 Crores Exchange traded fund

NAV Rs. 536.06 (No Class Option) (as on May 30, 2010 )

Fund Positioning

UTI SUNDER is an exchange Traded Fund which replicates the S&P CNX Nifty.

IT is positioned as a low cost fund with a listing on a stock exchange (National

Stock Exchange), to provide an opportunity for the investor to enter or exit on the

basis of the intra-day movements in the underlying index, rather than at the end

of the day closing prices as in case of a traditional index fund.

2.8.3. Balanced Funds Category

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UTI-BALANCED FUND


An open-ended balanced fund investing between 40% to 75% in equity /equity

related securities and the balance in debt (fixed income securities) with a view to

generate regular income together with capital appreciation.

Features Fund Size Rs. 1061.03 Crs. Open Ended Balanced Fund NAV - Rs. 74 (Growth)


UTI-CHILDREN CAREER BOND PLAN (BALANCED)


An open ended debt oriented fund with investment in Debt/G-Sec of minimum

60% and a maximum of 40% in Equity. Investment can be made in the name of

the children upto the age of 15 years so as to provide them, after they attain the

age of 18 years ,a means to receive scholarship to meet the scholarship to meet

the cost of higher education and /or to help them in setting up a profession

,practice or business or enabling them to set up a home or finance the cost of

other social obligation.

Features

Fund Size Rs. 2556.35 Crs.

Open Ended Balanced Fund

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NAV Rs. 14.76 (as on May 30, 2010 )

UTI-MAHILA UNIT SCHEME


To invest in a portfolio of equity/equity related securities and debt and money

market instruments with a view to generate reasonable income with moderate

capital appreciation. The asset allocation will be Debt : Minimum 70%, Maximum

100% Equity : Minimum 0%, Maximum 30%

Features Fund Size Rs.194.79 Crs. Open Ended Balanced Fund

NAV Rs. 19.57 (as on May 30, 2010 )

UTI-CHARITABLE, RELIGIOUS TRUST AND REGISTERED SOCIETY


Open-ended debt oriented Income scheme with an objective of investing not

more than 30% of the funds in equity related instruments and the balance in debt

and money market instruments with low to medium risk profile. The scheme is

catering to the Investment needs of Charitable, Religious and Educational Trusts

as well as Registered societies with the goal of providing regular income.

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Features

Fund Size Rs. 408.09 Crs. Open-Ended Balance Fund

NAV Rs. 165.58 (as on May 30, 2010 )

UTI-UNIT LINK INSURANCE PLAN

Investment ObjectiveTo provide return through growth in the NAV or through dividend distribution and

reinvestment thereof

Features Fund Size Rs. 2673.30 Crs. Open-Ended Balance Fund

NAV Rs. 17.48 (as on May 30, 2010 )

UTI-RETIREMENT BENEFIT PENSION FUND


The objective of the scheme is to provide pension to investors particularly self-

employed persons after they attain the age of 58 years, in the form of periodical

cash flow upto the extent of repurchase value of their holding through a

systematic withdrawal plan.

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Features Fund Size Rs. 647.27 Crs.

NAV Rs. 18.64 (as on May 30, 2010 ) Open Ended Balanced Fund

2.8.4. Income Funds Category

UTI SHORT TERM INCOME FUND


The scheme seeks to generate steady & reasonable income with low & high

level of liquidity from a portfolio of money market securities & high quality debt.

Features Fund Size Rs 386.85 Crore Open ended Short Term Bond NAV - Rs. 15.88 (Growth)


Fund Positioning

The Short-Term Income Fund aims at to generate reasonable returns with low

risk and high liquidity from a portfolio of Money Market securities and high quality

of debt. The Fund attach importance to low credit risk and portfolio

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diversification. The fund intends to maintain the average maturity of the portfolio

upto 4 years.

UTI G-SEC FUND


An open-end Gilt-Fund with the objective to invest only in Central Government

securities including call money, treasury bills and repos of varying maturities with

a view to generate credit risk free return. While selecting the maturity profile of

the investment in government securi

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