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Submitted in partial fulfillment of the requirement of the degree course of Master Of commerce (2010-2012) affiliated to Guru Nanak Dev University Amritsar .




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A project report is never the sole product of the person whose name appears on the cover. There are always some people who guidance proves to be an immense help in giving its final shape so, it become my first duty to express my gratitude towards all of them.

I am thankful to MR.MANMOHAN SANDHU (Assistant Vice President) in UTI MUTUAL FUND . He guided me at every step to make my project a real masterpiece. gratitude to my respected faculty guide Mrs .without their continuous help the project would not have been materialised in the present form. Their valuable suggestions helped me at every step. My heartfelt

I am also grateful to our institute L.K.C. Jalandhar for providing me a platform and opportunity to do work in the field of management.

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Practical training constitutes an integral part of the management studies. Training gives opportunities to the students to expose themselves to the industrial environment, which is quite different from the classroom teaching.

One can not rely merely upon theoretical knowledge. It has to be coupled with practical for it to be fruitful. Classroom lecture make the fundamentals concept of management clear but not their application in actual practice. Positive and corrective results of classroom learning need realities of practical situation. The training also enables the management students to themselves see the working condition under which they have to work in future. It thus enables the students to undergo those experiences, which will help them later when they join the organisation. It is in this sense that practical training in the company has a significant role to play in the subject of management for developing managerial and administrative skills in the future managers and to enhance their analytical skills. I received my training in SOOD ASSOCIATES{Tax consultants}. It was my fortune to get training in a very healthy atmosphere. I learnt a lot of new things which I could never been learnt from theory classes.

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This is to certify that Ramandeep singh, a student of M.COM, has undertaken the project STUDY ON MUTUAL FUND AND ITS COMPARISON WITH OTHER INVESTMENT OPTIONS for partial fulfillment of the degree course of MASTER OF commerce. This project has not been submitted earlier for reward of any degree/diploma of any institution/university .

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Executive Summary

Page No.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Introduction of Mutual Fund


Company Profile Literature Review Objective of study Research Methodology Various Schemes offered By UTI Comparison of Mutual Fund With Other Investment Options Comparison of UTI mutual fund with Reliance mutual fund Findings Conclusion Suggestions Bibliography

20-25 26-27 28-29 30-31 32-47 48-54


57-58 59-60 61-62 63-64

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BOARD OF DIRECTORS Mr. Prithvi Haldea Mr. Pradeep Gupta Mr. Anita Ramchandran Mr. Sachit Jain Shri P.R. Khanna

TRUSTEE Shri Janki Ballabh Dr. P.G. Apte Shri S.P. Oswal Shri S. Ravi Mr. Deepak Vaidya

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Meaning of Mutual Fund

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. Mutual funds really captured the public's attention in the 1980s and '90s when mutual fund investment hit record highs and investors saw incredible returns. However, the idea of pooling assets for investment purposes has been around for a long time. Here we look at the evolution of this investment vehicle, from its beginnings in the Netherlands in the eighteenth century to its present status as a growing, international industry with fund holdings accounting for trillions of dollars in the United States alone. Savings has become an integral part of life today. It not anymore advantageous of having your money locked up in a fixed deposit for years, which is not going to fetch an average individual of not more than 6% annually. The percentages offered for a fixed deposit is also declining as years pass by, and this is not doing the investor any good.

Concept of Mutual Fund

y y y Many investors invest with common financial objective pool their money. Investors, on a proportionate basis, get mutual fund unit for the sum contributed to the pool. The money collected from investors is invested in shares, debentures & other securities by fund managers.

Calculation of NAV
Net Asset Value = Market value of investments+ Current asset & other assets + Accrued income Current liabilities Accrued expenses

NAV= Market Value of Assets Liabilities

Units Outstanding

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A mutual fund is set up in the form of a trust, which has Sponsor, Trustees, Asset

Management Company (AMC) and Custodian.

SPONSOR - The trust is established by a sponsor or more than one sponsor who is like promoter of
a company.

TRUSTEES - The trustees of the mutual fund hold its property for the benefit of the unit holders.
The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.


- Asset Management Company (AMC) approved by SEBI manages the funds by making

investments in various types of securities. A highly regulated organization that pools money from many people into a portfolio structured to achieve certain objectives. Hence it is termed as an Asset Management Company. Typically an AMC manages several funds - open-end /closed-end across several categories - growth, income, balanced. Every mutual fund has an AMC associated with it.

CUSTODIAN - The custodian, an independent organization, has the physical possession of all
securities purchased by the mutual fund, and undertakes responsibility for its handling and safekeeping. For instance, the Stock Holding Corporation of India Ltd (SCHIL) is the custodian for most fund houses in the country.

BASIC TERMS USED IN MUTUAL FUND 1. NAV: The performance of a particular scheme of a mutual fund is denoted by Net Asset Value
(NAV). Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly depending on the type of scheme.

2. LOAD: It is a charge collected by a mutual fund when it sells units. It can be either front-end load
(i.e., the charge is collected when an investor buys the units) or back-end load (i.e., the charge collected when the investor sells back the units). Some schemes do not charge any load and are called No Load Schemes.

3. PORTFOLIO: A portfolio comprises of investments in a variety of securities and asset classes.

This diversification reduces the overall risk. The portfolio risk depends on the nature of each investment in the portfolio and the overall impact (favourable or unfavourable) of the various risk factors on each security. A mutual fund scheme states the kind of portfolio it seeks to construct as well as the risks involved under each asset class.

4. CUSTODIAN: The custodian, an independent organisation, has the physical possession of all
securities purchased by the mutual fund, and undertakes responsibility for its handling and safekeeping. For instance, the Stock Holding Corporation of India Ltd (SCHIL) is the custodian for most fund houses in the country.

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5. REGISTRAR: A Registrar holds and maintains the details of the transactions carried out by
each Unit holder in a Mutual Fund scheme. He is appointed by the AMC to serve the Unit holder for the purchases, sales or switching of Units that he may carry out. The dividend distributions, recording of nominations or transfers are some other services rendered by the Registrar. He may also have Investor Service Centres in various cities, where an investor can get over-the-counter service.

6. ASSET MANAGEMENT COMPANY (AMC): A highly regulated organisation that

pools money from many people into a portfolio structured to achieve certain objectives. Hence it is termed as an Asset Management Company. Typically an AMC manages several funds - open-end /closed-end across several categories - growth, income, balanced. Every mutual fund has an AMC associated with it.


mutual fund to investors for the first time.

The sale of a company's shares or a fund house s

8. STOCKS: Stocks represent ownership or equity in a company.

This asset class has historically outperformed all other asset classes over the long-term but tends to be more volatile in the short-term.

9. DEBT INSTRUMENTS: This represents debt papers of corporate and government agencies.
They provide income in the form of interest payments and principal if held till maturity. There can be price volatility due to interest rate movements as well as economic and political instability.

10. MONEY MARKET INSTRUMENTS: These are inter-bank Call Money, Commercial
Paper, Treasury Bills, Certificates of Deposit (CDs), Bill Rediscounting and short-term bonds. They pay interest and are the least volatile of all the asset classes.


The price or NAV a unit holder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable. Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unit holders. It may include exit load, if applicable.

12. SWITCHING FACILITY: Switching facility provides investors with an option to transfer
the funds amongst different types of schemes or plans. Investors can opt to switch units between Dividend Plan and Growth Plan at NAV based prices. Switching is also allowed into/from other select open-ended schemes currently within the Fund family or schemes that may be launched in the future at NAV based prices.

13. Expense ratio:

The expense ratio for a fund is the annual expenses of a fund (at the end of the financial year), including the management fee, administrative costs, divided by the number of units on that day.

14. Statement of account:

It is the statement showing the complete portfolio of an investor regarding investment in the mutual fund scheme. It also shows its current worth of holdings.

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15. Sales Price:

The price or NAV a Unit holder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.

16. Repurchase/Redemption Price:

Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the Unit holder. It may include exit load, if applicable.


An additional expense which does not pass through the statement of operations and cannot be controlled by the investor is brokerage commissions. Brokerage commissions are incorporated into the price of the fund and are reported usually 3 months after the fund's annual report in the statement of additional information. Brokerage commissions are directly related to portfolio turnover (portfolio turnover refers to the number of times the fund's assets are bought and sold over the course of a year). Usually the higher the rate of the portfolio turnover, the higher the brokerage commissions. The advisors of mutual fund companies are required to achieve "best execution" through brokerage arrangements so that the commissions charged to the fund will not be excessive.


Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

y 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-end schemes 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 the stock 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 open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

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y 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 the investors 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.

y 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.

y 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 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 stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

y 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 exclusively in 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.

y 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.

y 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 weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not 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.

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y 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.

y 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 scheme.



Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value. Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell. Regulatory oversight: Mutual funds are subject to many government regulations that protect
investors from fraud.




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

5. 6.

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


Transparency: Funds provide investors with updated information pertaining to the market

and the schemes. All material facts are disclosed to investors as required by the regulator.
8. Flexibility: Investors also benefit from the convenience and flexibility offered by Mutual Fund. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic investment and withdrawal is also offered to the investors in most open-ended schemes. 9. Choice of schemes: Mutual fund provides investors with various schemes with different objectives. Investors have the option of investing in scheme having a correlation between its investment objectives and their own financial goals. 10. Tax benefits: There are some schemes which provide tax benefits to the customers.

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1. No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

2. Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. 3. Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. 4. Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

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STEPS TO INVEST IN MUTUAL FUND:Step one - Identify your investment needs.

Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. Begin by asking yourself these questions: 1. What are my investment objectives and needs? Probable Answers: I need regular income or need to buy a home or finance a wedding or educate my children or a combination of all these needs. 2. How much risk am I willing to take? Probable Answers: I can only take a minimum amount of risk or I am willing to accept the fact that my investment value may fluctuate or that there may be a short-term loss in order to achieve a long-term potential gain. 3. What are my cash flow requirements? Probable Answers: I need a regular cash flow or I need a lump sum amount to meet a specific need after a certain period or I don't require a current cash flow but I want to build my assets for the future. By going through such an exercise, you will know what you want out of your investment and can set the foundation for a sound Mutual Fund investment strategy.

Step two - Choose the right Mutual Fund.

Once you have a clear strategy in mind, you now have to choose which Mutual Fund and scheme you want to invest in. The offer document of the scheme tells you 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 performance over the last few years in relation to the appropriate yardstick and similar funds in the same category.  How well the Mutual Fund is organised to provide efficient, prompt and personalised service.  Degree of transparency as reflected in frequency and quality of their communications.

Step three - Select the ideal mix of Schemes.

Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. The following charts could prove useful in selecting a combination of schemes that satisfy your needs.

Step four - Invest regularly

For most of us, the approach that works best is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. With many open-ended schemes offering systematic investment plans, this regular investing habit is made easy for you.

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Step five - Keep your taxes in mind

If you are in a high tax bracket and have utilised fully the exemptions under Section 80L of the Income Tax Act, investing in growth funds that do not pay dividends might be more tax efficient and improve your post-tax return. If you are in a low tax bracket and have not utilised fully the exemption available under Section 80L, selecting funds paying regular income could be more tax efficient. Further, there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws. You may therefore consult your tax advisor or Chartered Accountant for specific advice.

Step six - Start early

It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return.

Step seven - The final step

All you need to do now is to get in touch with a Mutual Fund or your agent/broker and start investing. 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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Mutual funds have been a significant source of investment in both government and corporate securities. It has been for decades the monopoly of the state with UTI being the key player, with invested funds exceeding Rs.300 bn. (US$ 10 bn.). The state-owned insurance companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including private and foreign companies. Banks--- mainly state-owned too have established Mutual Funds (MFs). Foreign participation in mutual funds and asset management companies is permitted on a case by case basis. UTI, the largest mutual fund in the country was set up by the government in 1964, to encourage small investors in the equity market. UTI has an extensive marketing network of over 35, 000 agents spread over the country. The UTI scrips have performed relatively well in the market, as compared to the Sensex trend. However, the same cannot be said of all mutual funds. All MFs are allowed to apply for firm allotment in public issues. SEBI regulates the functioning of mutual funds, and it requires that all MFs should be established as trusts under the Indian Trusts Act. The actual fund management activity shall be conducted from a separate asset management company (AMC). The minimum net worth of an AMC or its affiliate must be Rs. 50 million to act as a manager in any other fund. MFs can be penalized for defaults including non-registration and failure to observe rules set by their AMCs. MFs dealing exclusively with money market instruments have to be registered with RBI. All other schemes floated by MFs are required to be registered with SEBI. In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/coaccepted by banks, certificates of deposit and dated government securities having unexpired maturity upto one year.

UTI HAS MONOPOLY SINCE 1963- 1987 HISTORY 1.1963-1987:The Unit Trust of India was the sole player today single largest in the industry. Created by an act of Parliament in 1963, UTI launched its first product, the unit scheme 1964, which is even today single largest mutual fund scheme. UTI created a number of products such as monthly income plans, children plans, equity oriented schemes and offshore funds during this period. UTI managed assets of Rs.6700 at the end of this phase.

2.1987-1993:In 1987 public sector banks and financial institutions entered the mutual fund industry. SBI mutual fund was the first non-UTI fund to be set up in 1987. Significant shift of investors from deposits to mutual fund industry happened during this period. Most funds were growth-oriented closed-ended funds. By the end of this period, assets under UTI s management grew to Rs. 38247 crores and public sector funds managed Rs.8750 crores.

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In 1993, the mutual fund industry was open to private sector players, both Indian and foreign. SEBI s first set of regulations for the industry were formulated in 1993, and substantially revised in 1996. Significant innovations in servicing, product design and information disclosure happened in this phase, mostly initiated by private sector players.

4.1996-1999:The implementation of the new SEBI regulations and the restructuring of the mutual fund industry led to rapid asset growth. Bank mutual funds were re-cast according to the SEBI recommended structure, and UTI came under voluntary SEBI supervision.

5.1999-2003:This phase was marked by very rapid growth in the industry, and significant increase in market shares of private sector players. Assets crossed Rs. 1, 00,000 crores. The tax break offered to mutual funds in 1999 created arbitrage opportunities for a number of institutional players. Bond funds and the liquid funds registered the highest growth in this period, accounting for nearly 60% of the assets. UTI s share of the industry dropped below 50%.


30th Apr' 2008 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 97 UTI Financial Centers (UFCs) 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 well-qualified, professional fund management teams, who have 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.

To be the most Preferred Mutual Fund.

The most trusted brand, admired by all 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 organization known for best corporate governance.

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UTI SPONSERS y 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 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 drawn substantially 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.

y Life Insurance Corporation of India

Life Insurance Corporation of India (LIC) is amongst the largest insurance companies world, with 2048 branches and having a Fund size of Rs. 463147.62 crore. in the

y 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 incidental therein. As on 31.03.2006 Punjab National Bank has 4065 branches, 2 subsidiaries and a deposit size of Rs.1, 19,684.92 crores.

State Bank of India

The State Bank of India is the largest public sector bank in India with 9177 branches in India and 70 offices in 30 countries worldwide. In addition to this, SBI also has 21 subsidiaries. The sponsors are neither responsible nor liable for any loss resulting from the operation of the scheme beyond the contribution of an amount of Rs.10, 000 /-

Karvy Computer share Private Limited is a joint venture between Computer share, Australia
and Karvy Consultants Limited, India in the registry management services industry. Computer share, Australia is the world s largest and only global share registry providing financial market services and technology to the global securities industry. Karvy Corporate and Mutual Fund Share Registry and Investor Services business, India's No. 1 Registrar and Transfer Agent and rated as India's "Most Admired Registrar" for its overall excellence in volume management, quality processes and technology driven servicesmade by them towards setting up of the Mutual Fund.

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y y y y y y y y 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


y y y y y y y y y HDFC Bank ICICI Bank Axis Bank Kotak Bank Standard Charted Bank Citi Bank HSBC HDFC Securities Kotak Securities

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y y y y y y y y y y y y y y y y y y y y Andhra Bank United Bank of India Bank of Baroda Dena Bank Punjab & Sind Bank Indian Overseas Bank REPCO Bank The Jammu & Kashmir Bank Ltd. IndusInd Bank Limited The Bank of Rajasthan Limited ING Vysya Bank Ltd. Catholic Syrian Bank Tamil ad Mercantile Bank Ltd. The Federal Bank Ltd. The South Indian Bank Ltd. Ahmadabad Mercantile Co op Bank Janata Sahakari Bank Ltd. The Cosmos Co-op. Bank Ltd. New India Co-op. Bank Ltd. Punjab & Maharashtra Co-op. Bank Ltd.

The Sara swats Co-op. Bank Ltd.


INDEPENDENT FINANCIAL ADVISORS RETAIL CHANNEL y y Direct Sales through UFC (UTI Financial Centre) 90 UFCs all over the country and counting.


y y y JM Morgan Stanley Retails Services Ltd Birla Sun Life Distribution Co. Ltd. Cholamandalam Distribution Services

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Literature review
Investment in mutual funds
Most research on mutual funds has employed two explanatory variables, namely, risk and return. This approach implicitly places no value on other potentially important attributes Of the mutual fund investment decision. In keeping with this strictly economic frame, Several scholars have investigated whether or not mutual funds outperform the market. Much early research (e.g., Sharpe, 1966; Jensen, 1968) showed that, on a risk-adjusted Basis, mutual funds underperform the market. More recent studies, for example Ippolito (1989) and Grinblatt and Titman (1989, 1992), find some evidence of superior Mutual Fund returns. However, in a recent article. Brown, Goetzmann, Ibbotson, and Ross (1992, p. 553) conclude that "there is still no strong evidence that manager performance over and above market indices can justify the fees managers charge and the commission costs they incur." A second line of enquiry that also considers only return and risk is whether or not historic mutual fund performance predicts future performance. Several authors have Concluded that past risk-adjusted mutual fund performance helps predict future risk adjusted performance (Elton and Gruber, 1989; Goetzmann and Ibbotson, 1991; Grinblatt and Titman, 1989, 1992; Hendricks, Patel, and Zeckhauser, 1993; Ippolito, 1989; Lehmann and Modest, 1987). Some evidence is fairly weak; other evidence is stronger.

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Main objectives of study

y To study various schemes of mutual fund in UTI. y To know that how mutual fund is better option of investment than other options like bank deposits, public provident fund, employee provident fund, life insurance policy, debenture, Equity instruments, company fixed deposit, National saving certificates, real asset. y To compare UTI mutual fund with Reliance mutual fund.

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Research is the systematic design, collection, analysis and reporting of data and finding relevant solution to a specific situation or problem. Research is thus an original contribution to the existing stock of knowledge making for its advancement. The purpose of research is to discover answers to the questions through the application of scientific procedures.

Secondary data has been used for the purpose of data collection. Secondary data has been collected by using secondary sources of information like Company Broucher, Journals, Magazines and Websites. Descriptive research methodology has been adopted for the project.

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UTI SCHEMES (as on May 2011):

1. Equity Funds Category 2. Index Funds Category 3. Balanced Funds Category 4. Income Funds Category 5. Liquid Funds Category

1. Equity Funds Category

y Diversified Funds

 UTI Master share Fund Investment Objective

An equity fund aiming to provide benefit of capital appreciation investing in equity. and income distribution through

y y y

Features Open Ended Scheme Fund Size Rs. 2503.46 Crs. NAV Rs. 55.07 (Growth) Fund Positioning:

Rs. 29.60 (Income)

UTI Master Share 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 to pursue the policy of distributing dividend on an annual basis.

 UTI Master Plus Fund Investment Objective

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.

y y y Fund Size Rs. 898.85 Crores Open ended scheme NAV - Rs. 85.24 (Growth) Rs. 61.44(Income)

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Fund Positioning
It 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.

y y y Fund Size Rs. 2006.93 Crores Open ended Equity Fund NAV - Rs. 55.65 (Growth) Rs. 49.17 (Income)

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

 UTICONTRA FUND Investment Objective

The fund aims to provide capital appreciation/dividend distribution through investments in listed equities and equity-related instruments. The Fund's investment policies are based on insights from behavioral finance. The fund offers an opportunity to benefit from the impact of non-rational investors' behavior by focusing on stocks that are currently undervalued because of emotional and behavioral patterns present in the stock market.

y y y Fund Size Rs. 192.71 Crores Open End Equity Oriented NAV Rs. 13.64 ( Growth) Rs. 12.59 (Income)

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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.

 UTIWEALTH BUILDER Investment Objective

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 Fund Size Rs. 846.40 Crores Closed ended fund NAV Rs. 16.56 (Growth) Rs. 14.43(Income) 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 utilize derivatives to hedge the portfolio.


The investment objective of the scheme is to provide long term capital appreciation and / or income distribution from a diversified portfolio of equity and equity related instruments of companies that are expected to benefit from changing Indian demographics, Indian Lifestyles and rising consumption pattern. However, there can be no assurance that the investment objective of the scheme will be achieved.

y y y Fund Size Rs. 523.73 Crores Close Ended Scheme NAV Rs. 11.89 ( Growth) Rs. 11.89 (Income) Theme/Speciality Based Funds


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. The fund will invest in the stocks of the companies which form part of Basic Infrastructure Industries.

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y y y Fund Size Rs. 2646.05 Crores Open ended scheme NAV - Rs. 32.69 (Growth) Rs. 18.59 (Income)

Fund Positioning
UTI Basic Industries Fund is positioned to follow a top down approach keeping in mind the economic scenario. The fund s endeavour is to pick sectors, which are expected to perform better and select Fundamentally strong companies in those sectors. The scheme s 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 Investment Objective 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. Features
y y y Fund Size Rs. 2998.42 Crores Open Ended NAV Rs. 33.16 (Growth) Rs. 15.21(Income)

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 well suited 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.

 UTIServices Industries Fund Investment Objective

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.

Fund Size Rs. 282.89 Crores Open end Equity Fund NAV - Rs. 60.00 (Growth) Rs. 25.79 (Income)

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Fund Positioning
It is positioned as a unique fund available in the Indian Mutual Fund Industry whose objective is to capitalise on the growing service sector pie in India s 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.


Investment objective of the scheme is capital appreciation through investment in stock that are relatively undervalued to their expected long term earning growth.

y y y Fund Size Rs. 680.64 Cr Open ended NAV - Rs. 54.39 (Growth) Rs. 23.86 (Income)

Fund Positioning
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 Investment Objective

An open ended equity fund with the objective to provide Capital appreciation by investing primarily in mid caps stocks.

y y y Fund Size Rs. 315.58 Crores Open ended NAV- Rs. 31.87 (Growth) Rs. 21.73 (Income)

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 Investment Objective

To achieve long-term capital appreciation and / or dividend distribution by investing in stocks that is "Leaders" in their respective industries/sectors/sub sectors.

y y y Fund Size Rs. 742.00 Crores Open End NAV - Rs. 15.54 (Growth) Rs. 14.41 (Income)

 UTIMASTER GROWTH Investment Objective

An open ended equity fund for investment in equity shares, convertible debentures and other capital and money market instruments with a provision to invest upto 50% of its corpus in PSU's equities and equity related products. The fund aims to provide unit holders capital appreciation & income distribution.

y y y Fund Size Rs. 356.74 Crores Open ended NAV - Rs. 50.62 (Growth) Rs. 43.79 (Income)

Fund Positioning
UTI Master Growth is positioned to invest around 50% of its corpus in PSUs. The remaining 50% will be invested in leading companies across sectors with an objective to provide superior risk adjusted return i.e. Return with less volatility. The Fund will invest with a long term perspective in the companies which have good potential for growth.

 UTIMNC FUND Investment Objective

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.

y y y Fund Size Rs. 175.88 Crores Equity Diversified NAV - Rs. 60.77 (Growth) Rs. 39.24 (Income)

Fund Positioning
The Fund is positioned as equity oriented Fund offering a niche investment opportunity 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%.

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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.

y y y Fund Size Rs. 1517.26 Crores Open ended NAV - Rs. 22.71(Growth) Rs. 14.80 (Income)

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.

y Sector Funds
 UTI BANKING SECTOR FUND Investment Objective
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.

y y y Open ended Equity based fund Fund Size Rs. 305.31 Crores NAV Rs. 44.30 (Growth) Rs. 23.03 (Income)

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. Weight age in the above sub-segments will vary from time to time depending on the valuations and the expected growth potential. As the benchmark index is skewed in favour of few stocks, the fund could have substantial deviations from the respective weight age in the benchmark index so as to achieve diversification within the sector.

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Investment Objective
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.

y y y Fund Size Rs. 87.93 Crores Open ended NAV - Rs. 21.62 (Growth) Rs. 18.2 (Income)

Fund Positioning
It is positioned as a fund capitalising on opportunities emerging in IT sector. As the benchmark index is skewed in favour of few Stocks, the fund could have substantial deviations from the respective weight ages in the benchmark index so as to achieve diversification within the sector.

 UTIENERGY FUND Investment Objective

Investment will be made in stocks of those companies engaged in the following areas:(a) Petrol sector covering industries such as oil and gas drilling and exploration, refining of crude oil, distribution of gas, petrol 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 laying them.

y y y Fund Size Rs. 471.63 Crores Open ended NAV - Rs. 10.81 (Growth) Rs. 12.25 (Income)

Fund Positioning
UTI Energy Fund is now positioned as a Thematic Fund focussing on India s 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 equity investor 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.

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An open-ended fund which exclusively invests in the equities of the Pharma & Healthcare sector companies. This fund is one of the growth sector funds aiming to invest in companies engaged in business of manufacturing and marketing of bulk drug, formulations and healthcare products and services

y y y Fund Size Rs. 88.99 Crores Open ended NAV - Rs. 40.64 (Growth) Rs. 31.41 (Income) Tax Planning Funds


An open ended equity fund investing a minimum of 80% in equity and equity related instruments. It aims at enabling members to avail tax rebate under section 80C of the IT act and provide them with the benefits of growth.

y y y Fund Size Rs. 488.45 Crores Open ended Equity fund NAV - Rs. 40.20 (Growth) Rs. 16.05 (Income)

Fund Positioning
UTI ETSP is positioned to invest in leading companies across sectors, with an aim 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.


The investment objective of the scheme is to provide medium to long term capital appreciation along with income tax benefit.

y y y Fund Size Rs. 308.99 Crores Close Ended NAV - Rs. 12.73 (Growth) Rs. 12.73 (Income)

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Fund Positioning
Fund is a close ended equity linking savings scheme which aims to provide medium 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.

2. Index Funds Category  UTIMASTER INDEX FUND Investment Objective

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 weight age as these companies have in BSE sensex. The fund strives to minimise performance difference with the sensex by keeping the tracking error to the minimum.

y y y Fund Size Rs. 68.91 Crores Open ended Index Fund NAV - Rs. 59.20 (Growth) Rs. 59.20 (Income)

Fund Positioning
UTI MIF is positioned as a low cost pure index Fund to track the BSE Sensex passively. The Fund endeavours to achieve return equivalent to BSE Sensex while minimising the tracking error.

 UTINIFTY INDEX FUND Investment Objective

UTI NIF is an open ended passive fund with the objective to invest in securities of companies comprising of the S&P CNX Nifty in the same weight age as they have in S&P CNX Nifty. The fund strives to minimise performance difference with S&P CNX Nifty by keeping the tracking error to the minimum.

y y y Fund Size Rs. 204.18 Crores Open ended Index fund NAV - Rs. 35.68 (Growth) Rs. 18.16 (Income)

Fund Positioning
UTI NIF is positioned as s low cost pure index Fund to track S&P CNX NIFTY passively. The Fund endeavours to achieve return equivalent to S&P CNX NIFTY while minimising tracking error.

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 UTIINDEX SELECT FUND Investment Objective

An Open ended equity fund with the objective to invest in select stocks of the BSE Sensex and the S & P CNX Nifty. The fund does not replicate any of the indices but aims to attain performance better than the performance of the indices.

y y y Fund Size Rs. 282.05 Crores Open ended NAV - Rs. 39.63 (Growth) Rs. 17.4 (Income)

Fund Positioning
It is positioned as an Enhanced Index Fund providing a mix of passive and active fund Management. While the universe of the stocks is restricted, the fund may have substantial deviating from the respective weight age in the Nifty and BSE Sensex, and also may completely avoid a few stocks within the universe so as to outperform the underlying benchmark indices.

 UTISUNDER Investment Objective

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.

y y y Fund Size Rs. 0.70 Crores Exchange traded fund NAV Rs. 629.83 (growth) Rs. 611.26(income)

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.

3. Balanced Funds Category

 UTI-BALANCED FUND Investment Objective
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.

y y y Fund Size Rs. 979.50 Crs. Open Ended Balanced Fund -NAV - Rs. 1000 (Growth) Rs. 5000 (Income)

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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.

y y y Fund Size Rs. 2817.06 Crs. Open Ended Balanced Fund NAV Rs. 15.73(growth) 14.21(income)

 UTI-MAHILA UNIT SCHEME Investment Objective

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%

y y y Fund Size Rs. 261.99 Crs. Open Ended Balanced Fund NAV Rs. 20.84


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.

y y y Fund Size Rs. 406.21 Crs. Open-Ended Balance Fund NAV Rs. 175.51

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To provide return through growth in the NAV or through dividend distribution and reinvestment thereof

y y y Fund Size Rs. 2367.38 Crs. Open-Ended Balance Fund NAV Rs. 17.06


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.

y y y Fund Size Rs. 733.25 Crs. NAV Rs. 17.98 Open Ended Balanced fund

4. Income Funds Category

 UTI SHORT TERM INCOME FUND Investment Objective
The scheme seeks to generate steady & reasonable income with low & high level of liquidity from a portfolio of money market securities & high quality debt.

y y y Fund Size Rs 626.78 Crores Open ended Short Term Bond NAV - Rs. 16.88 (Growth) Rs. 16.64 (Income)

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 diversification. The fund intends to maintain the average maturity of the portfolio upto 4 years.

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 UTI G-SEC FUND Investment Objective

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 securities the need for maximisation of the returns and meeting of the liquidity requirements of the scheme is kept in view.

y y y Fund Size Rs. 262.47 Crores Open end Gilt Fund NAV - Rs. 22.26 (Growth) Rs. 10.91 (Income)

Fund Positioning
The UTI G-Sec Fund endeavours to offer stable and regular returns along with a decent capital appreciation over a period of time for those investors who invest with a long-term horizon. The fund does not invest in state government securities and generally has a low portfolio churn.


To generate credit risk-free return through investments in sovereign securities issued by the Central and / or a State Government

y y y Fund Size Rs. 140.50 Crores Gilt Medium & Long Term NAV - Rs.20.31 (Growth) Rs. 12.60 (Income)

Fund Positioning
The UTI Gilt Advantage Fund endeavours to offer stable and regular returns along with a decent capital appreciation over a period of time for those investors with a long term horizon. The fund can also invest instate government securities. The Fund retains a higher degree of flexibility in altering its duration even for short-term market movements.

 UTI BOND FUND Investment Objective

Open -ended 100% pure debt fund, which invests in rated corporate debt papers and government securities with relatively low risk and easy liquidity.

y y y y Fund Size Rs. 382.79 Crores Debt : Medium Term NAV Rs. 28.51 (Growth) Rs. 11.55 (Income)

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Fund Positioning
UTI Bond Fund is an income scheme with low volatility in returns. This is due to a conservative positioning of the scheme with lower average maturity of its portfolio, a higher weight age of corporate bonds and a portfolio of G-Secs, which are of medium term duration. The scheme with its stable returns and low volatility is suitable for all categories of investors with a medium term horizon.

5. Liquid Funds Category

 UTIMONEY MARKET FUND Investment Objective
An open-ended pure debt liquid plan, seeking to provide highest possible current income, by investing in a diversified portfolio of short-term money market securities.

y y y Fund Size Rs. 2087.82 Crore Open Ended Liquid Fund NAV - Rs. 2743.54 (Growth) Rs. 1895.46 (Income)

Fund Positioning
The UTI Money Market Fund is positioned as a low-risk, low-volatility fund which aims at offering reasonable return to investors looking to park short-term surpluses. The fund attaches importance to low credit risk, portfolio diversification and stability of returns. The fund may invest in marked-to-market securities; however the total exposure to such securities will be restricted to 5% of the Fund. Currently the fund has no marked-to market component and retains a high level of liquidity in the portfolio.

 UTI LIQUID FUNDCASH PLAN Investment Objective

The scheme seeks to generate steady & reasonable income with low risk & high level of liquidity from a portfolio of money market securities & high quality debt.

y y y Fund Size Rs. 12086.79 Crore Open Ended Liquid Fund NAV - Rs. 1589.04 (Growth) Rs. 1075.55 (Income)

Fund Positioning
The UTI Liquid Fund is positioned as a low-risk, low-volatility fund which aims at offering reasonable returns to investors looking to park short-term surpluses. The fund attaches importance to low credit risk, portfolio diversification and stability of returns. The fund may invest in marked-to-market securities, however the total exposure to such securities will be restricted to 5% of the Fund.

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INVESTMENT OPTIONS AVAILABLE WITH AN INVESTOR:Savings form an important part of the economy of any nation. With the savings 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 avenues 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. Let us examine several of them:

1. BANKS:Considered as the safest of all options, banks have been the roots of the financial systems in India. Promoted as the means to social development, banks in India have indeed played an important role in the rural upliftment. For an ordinary person though, they have acted as the safest investment avenue wherein a person deposits money and earns interest on it. The two main modes of investment in banks, savings accounts and fixed deposits have been effectively used by one and all.

2. POST OFFICE SCHEMES:Just like banks, post offices in India have a wide network. Spread across the nation, they offer financial assistance as well as serving the basic requirements of communication. Among all saving options, Post office schemes have been offering the highest rates. Added to it is the fact that the investments are safe with the department being a Government of India entity. So the two basic and most sought for features, those of return safety and quantum of returns were being handsomely taken care of.

3. COMPANY FIXED DEPOSITS:Another oft-used route to invest has been the fixed deposit schemes floated by companies. Companies have used fixed deposit schemes as a means of mobilizing funds for their operations and have paid interest on them. The safer a company is rated, the lesser the return offered has been the thumb rule. However, there are several potential roadblocks in these. First of all, the danger of financial position of the company not being understood by the investor lurks. The investors rely on intermediaries who more often than not, don t reveal the entire truth. Secondly, liquidity is a major problem with the amount being received months after the due dates. Premature redemption is generally not entertained without cuts in the returns offered and though they present a reasonable option to counter interest rate risk (especially when the economy is headed for a low interest regime), the safety of principal amount has been found lacking. Many cases like the Kuber Group and DCM Group fiascoes have resulted in low confidence in this option.

4. NATIONAL SAVING CERTIFICATES (NSCs):This is also a very safe investment avenue. The certificate has a maturity period of 6 years. The current interest rate is 8.16% per annum. The interest rate is fixed in a sense that subsequent changes to the interest rates do not affect you. That is, any increase/decrease in interest rates will not have any impact on your investment or interest earned. If you invest Rs 100 in NSC, you will receive Rs 160 after 6 years assuming an interest rate of 8.16% per annum. One major drawback of NSC is that interest is taxable. If you are in the highest tax bracket then the posttax return for you can be as less as 5.44% per annum instead of 8.16%.

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5. PUBLIC PROVIDENT FUND (PPF):PPF is considered yet another safe investment avenue. The current interest rate on PPF is 8% per annum. Again like EPF the rate of interest is not fixed. The government modifies the same from time to time. The best part of PPF is that the interest thereon is exempt from tax under section 10(11) of the Income Tax Act. Tax deduction can be claimed on contribution made by an individual into his own PPF account or into the PPF account of his spouse or children. PPF account can be opened in a nationalised bank or a post office. It is a 15-year account. The entire amount including accumulated interest can be withdrawn after 15 years. Partial withdrawals (which are also tax free) are allowed from the 7th year. The minimum investment amount is Rs 500 per financial year and the maximum is Rs 70,000 per financial year. The amount of investment one can make may vary every year giving you a lot of flexibility in planning your investments.

6. Employees Provident Fund:This is one of the very safe investment avenues. The current interest rate of EPF is 8.5% per annum. However, this rate is not fixed and the government can modify the same from time to time. The best part of EPF is that the interest earned is exempt from tax under section 10 (12) of the Income Tax Act. That is the entire interest income earned by you goes into your pocket. The taxman gets nothing. Investment in EPF can be made by way of a monthly contribution from your salary. The amount contributed is 12% of the total of your basic salary and dearness allowance. Over and above this 12%, some companies allow their employees, with certain ceilings (a certain amount above which money can't be invested), to contribute an additional amount towards EPF. This is called voluntary provident fund (VPF). VPF is also eligible for tax deduction under section 80C. You will be exempt from tax if withdrawals are done after a continuous contribution for 5 years or more, through one or more employers. However if you withdraw money before five years the entire interest portion and the employer's contribution are taxable in the year of withdrawal. Portion of withdrawal which pertains to employee's own contribution is not taxable. One of problems with EPF investment is that you cannot make lump sum investment into the same. The other problem is that at the time of withdrawal it often takes more than a few months to receive the money from the PF trust.

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7. EQUITIES:Various studies have shown that over longer time frames (more than 10 years), equities are equipped to outperform other asset classes like gold, fixed income instruments and property among others. However over shorter time frames, equities can prove to be the riskiest asset class. Investing in equities would imply buying shares/stock of a listed company. This in turn would involve understanding the future business prospects of the company, being aware of the various economic, legal and political factors that can have an impact on the company's business prospects. Also studying factors like interest rates and competition (domestic and overseas) would be vital. To most, that would seem like a full time job. And it is! That's a job best left to experts like money managers and research analysts. Hence, retail investors on their part would be better off utilizing the mutual funds route for investing in equities.

8. INSURANCE:There are a variety of insurance products available. The traditional plans such as money back, cash back, endowment, whole life, children plans are considered relatively safe. However, the returns thereon vary between 4% per annum to 6% per annum. For most of these plans premium has to be paid monthly, quarterly, semi-annually or annually during the term of the policy. The risk categorisation of ULIPs depends on the type of fund you opt for. The fund that invests its corpus mainly in equity (stocks) is considered riskier while the one investing chiefly in bonds/debentures (government debt akin to banks' fixed deposits) is considered relatively safer. The riskier funds offer potential for high returns while safe funds offer moderate returns. Tax deduction can be claimed on the premium paid in respect of life insurance policy of self, spouse or children. If the annual life insurance premium were more than 20% of the sum assured then the deduction would be restricted to 20% of the sum assured. For example, if the sum assured is Rs 1, 00,000 then only Rs 20,000 will be available for tax deduction. The death benefits of the life insurance policy are exempt from tax. If the annual insurance premium does not exceed 20% of the sum assured, the survival benefits are also exempt from tax under section 10(10D) of the Income Tax Act.

9. REAL ASSETS:Real assets are physical investments, which would include real estate, gold & silver, precious stones, rare coins & stamps and art objects.

10. MUTUAL FUNDS:The options discussed above are essentially for the risk-averse, people who think of safety and then quantum of return, in that order. For the brave, it is dabbling in the stock market. Stock markets provide an option to invest in a high risk, high return game. While the potential return is much more than 10-11 percent any of the options discussed above can generally generate, the risk is undoubtedly of the highest order. Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly.

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Characteristics of mutual funds are: a) Diversification:

Investments are spread across a wide cross-section of industries and sectors and so the risk is reduced. Diversification reduces the risk because all stocks don t move in the same direction at the same time. One can achieve this diversification through a Mutual Fund with far less money than one can on his own.

b) Professional Management:
Mutual Funds employ the services of skilled professionals who have years of experience to back them up. They use intensive research techniques to analyze each investment option for the potential of returns along with their risk levels to come up with the figures for performance that determine the suitability of any potential investment.

c) Potential of Returns:
Returns in the mutual funds are generally better than any other option in any other avenue over a reasonable period of time. People can pick their investment horizon and stay put in the chosen fund for the duration. Equity funds can outperform most other investments over long periods by placing longterm calls on fundamentally good stocks. The debt funds too will outperform other options such as banks. Though they are affected by the interest rate risk in general, the returns generated are more as they pick securities with different duration that have different yields and so are able to increase the overall returns from the portfolio.

d) Liquidity:
Fixed deposits with companies or in banks are usually not withdrawn premature because there is a penal clause attached to it. The investors can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units can be transacted at the prevailing market price on a stock exchange. Mutual funds also provide the facility of direct repurchase at NAV related prices. The market prices of these schemes are dependent on the NAVs of funds and may trade at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the expected future trend of NAV which in turn is linked to general market conditions. Bullish market may result in schemes trading at Premium while in bearish markets the funds usually trade at Discount. This means that the money can be withdrawn anytime, without much reduction in yield. Some mutual funds however, charge exit loads for withdrawal. Besides these important features, mutual funds also offer several other key traits. Important among them are:

e) Well Regulated:
Unlike the company fixed deposits, where there is little control with the investment being considered as unsecured debt from the legal point of view, the Mutual Fund industry is very well regulated. All investments.

f) Transparency:
Being under a regulatory framework, mutual funds have to disclose their holdings, investment pattern and all the information that can be considered as material, before all investors. This means that the investment strategy, outlooks of the market and scheme related details are disclosed with reasonable frequency to ensure that transparency exists in the system. This is unlike any other investment option in India where the investor knows nothing as nothing is disclosed.

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g) Flexible, Affordable and a Low Cost affair:

Mutual Funds offer a relatively less expensive way to invest when compared to other avenues such as capital market operations. The fee in terms of brokerages, custodial fees and other management fees are substantially lower than other options and are directly linked to the performance of the scheme. Investment in mutual funds also offers a lot of flexibility with features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans enabling systematic investment or withdrawal of funds. Even the investors, who could otherwise not enter stock markets with low investible funds, can benefit from a portfolio comprising of high-priced stocks because they are purchased from pooled funds.

Difference between mutual fund and other investment options can be analyzed through the following table.

Product Bank Deposits Equity instruments Debentures Company fixed deposit Bonds PPF NSC Real assets Employee provident fund Life Insurance

Return Low High Moderate Moderate Moderate Moderate Moderate High High

Safety High Low Moderate Low Moderate High High Low High

Liquidity High High or Low Low Low Moderate Low Low Low Low

Tax Benefit Convenience No No No No Yes Yes Yes Yes Yes High Moderate Low Moderate Moderate Moderate Moderate Moderate Moderate


High Moderate

Low High

Yes Yes

Moderate High

Mutual Fund Moderate

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The above table shows that an investment option that ideally ranks high on return, high liquidity, and low risk doesn t exist. Consider ppf which features good return and low risk but it is low on liquidity. Bank deposit features high liquidity and low risk, but return can also be low. Mutual funds are investment vehicles structured to be better than direct investments. Mutual funds offer a better alternative for the following reasons:

1. Mutual fund carries liquidity risk, as all stocks may not be liquid. Mutual funds are liquid and offer redemption facility on every business day. 2. Mutual funds offer the ability to switch between products and options for growth and re-investment of income. Direct investment doesn t have these flexibilities. 3. Transaction costs in direct investing are higher. Mutual funds save on costs due to their scale of operations. 4. Mutual funds have the quality of diversification also.

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Reliance mutual fund was established as a trust under Indian Trust Act 1882. It was registered on June 30, 1995 as Reliance capital mutual fund which was changed on March 11, 2004. It is one of India s leading mutual fund, with AUM of Rs. 88,388 cr. RMF provides investors a well-rounded portfolio of products to meet varying investor s requirements and has presence in 118 cities across the country.

Comparison between Reliance mutual fund and UTI mutual fund

Basis of comparison Establishment How they came into business Invetment

Reliance Established on 1995 Registered under SEBI as trust under Indian Trust Act, 1882 Invests in 12-20 sectors which includes; auto, auto ancillaries, telecom services, power, construction, hotels, retailing, media & entertainment etc. Reliance diversified funds, Reliance equity opportunity fund, Reliance regular saving fund Equity fund, debt fund, sector specific fund and gold exchange trade funds 106 schemes Online and internet based , reliance outlets and branches

UTI Established on 1964 By UTI act passed under parliament in 1963 Invests in 7-15 sectors which includes; IT, telecom, automobiles, cement products, textile, metal etc.

Main funds

UTI dividend yield fund, UTI opportunity fund

Types of funds offered

Equity fund, debt fund, asset fund, balanced fund, index fund 107 schemes Online and internet based, tie up with post office branches, UTI outlets

Number of schemes offered Distributions

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The whole analysis about mutual fund concludes the following points. 1. Mutual fund is most suitable investment option as it offers an opportunity to invest in a diversified, professionally managed portfolio at relatively low cost. 2. It is fit for middle class investors because one can start investing from Rs. 500 only. 3. As compared to other investment options mutual fund provides good return, high liquidity, safety, tax benefits and convenient way of investment. 4. There is no age limit for investment in mutual fund. 5. It is best option of long term investment. 6. The comparison between reliance and UTI mutual fund shows the tough competition among each other. Both companies provide same type of funds and same number of schemes. But UTI mutual fund offers less sectors of investment than reliance. 7. UTI is well established and is an old trusted company. There is full transparency and regulation under SEBI in mutual fund. One can take legal action against any type of misleading

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The above study about mutual fund has concluded that mutual fund represents the most appropriate investment options for investors because mutual fund is one option where investor uses portfolios for its investment and has many schemes as option. It is an easy and flexible way of investment. With the help of professionals, investors invest their money in safe zones. On the other hand comparison of UTI mutual fund with Reliance mutual funds, we concluded that in UTI there are less sectors of investment than reliance. Its competitors in the market are increasing so it should raise its investment areas and should provide more facilities to investors.

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The following type of suggestions, I would like to suggest to the investors. 1. Mutual fund is best option of investment as it provides diversification and tax benefits. 2. To get good return long term investment should be selected because of market fluctuations. 3. Investment should start as early as possible because the power of compounding lets you earn income on income. 4. Before investment set your financial goal that how much you can invest and what are the expected returns. 5. Decide your risk tolerance power. 6. Dont invest in a single scheme. Choose multiple options, so that market fluctuations dont affect your whole investment. Consult with a specialist who has the full knowledge about mutual funds and market situations.
For company I would like to suggest that it should open new investment areas to face the competition. Easy and quick accessing information tools should be used to investors.

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