Summer Training Report

on

“Analysis of sales plan of UTI mutual fund”

Submitted in Partial Fulfillment for the Award of the Diploma of

Post Graduate Diploma in Management

(Session 2009-11)

Submitted to:Balraj Sir Submitted By: Shafiq Ahmad

Internal Guide Roll No :-9025
PGDM – 2nd yr

DEPARTMENT OF MANAGEMENT

INSTITUTE OF MANAGEMENT STUDIES, NOIDA

A UGC Recognized Institute
A-8B, Plot –C, Sector-62, Noida

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 ACKNOWLEDGEMENT

“Knowledge is an experience gained in life, it is the choicest possession, which should

not be shelved but should be happily shared with others”
The successful completion of any task would be incomplete without
thanking the people who made it possible. With all my submissiveness, I thank Almighty
for his constant presence throughout my work. I take pleasure in expressing a few words
of gratitude and respect to all those who helped me in completing my work.
If words are considered to be signs of gratitude then let these words convey the very
same. My sincere gratitude to Mr. Sunil Rawat, (Sales Manager,UTI) Allahabad for
giving necessary directions on doing this project to the best of my abilities. I am highly
indebted to Mr. K. G. Singh (Branch Manager) who provided me with the necessary
information and also for the support extended out to me in the completion of this report
and his valuable suggestion and comments on bringing out this report in the best way
possible.
I am grateful to all faculty members of institute of management study, especially
Balraj sir, (Training Coordinator). Who did a great job as guider and my friends who
have helped me in the successful completion of this project.

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 STUDENT UNDERTAKING

This is to certify that this project “Analysis sales plan of UTI mutual fund
performance in India” is original work done for the partial fulfillment for the award of
Post graduate diploma in mgt. I am grateful to Mr. Balraj, faculty of PGDM and training
coordinator of Institute of Management Studies.

Student

SHAFIQ AHMAD

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 EXECUTIVE SUMMARY

The Indian mutual fund industry in recent years has exponential

growth and yet it is still at a very growing stage. We believe that the
mutual fund industry has grown in terms of size or choices available,
but is a long distance from being regarded as a mature one.
UTI mutual fund ,on which our project is based, came into existence on
1st February 2003. Bank of Baroda (BOB), Punjab National Bank (PNB)
and State Bank of India (SBI) and Life Insurance Corporation of India
(LIC) are the sponsors of the UTI mutual fund. UTI mutual fund is
managed by UTI Asset Management Company Private Limited (AMC).
UTI mutual fund has a nationwide network consisting 70 UTI Financial
Centers (UFCs) and UTI International offices in London, Dubai and
Bahrain. The fund has a track record of managing a variety of schemes
catering to the needs of every class of citizenry.

In this project we are concern about UTI mutual fund`s schemes, type
of customer, investment objectives, investment asset of people, their
return expectations, technological role, and various recommendation
like more advertisement ,building more trust among non investors,
proving their schemes as more high returning ,less riskier, for
improving the numbers if investors of UTI mutual funds.Focus must be
given on converting all age ,income group, objectives of other
investors for grabbing more customers for making UTI mutual fund
more sagacious.

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 OBJECTIVE

This study is conducted in order to find out ….

• Current trends of Mutual fund in the Indian market

• Different schemes of UTI mutual

• Investor’s perception towards UTI Mutual fund investment option.

• Different views of professional advisors.

• Technological role in UTI mutual fund Industry.

• People awareness regarding UTI mutual fund Plans.

• Finding various expectation of investor with investing firms.

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 INDEX

Executive summary 4

Objective 5

CHAPTER – 1
1.1 Introduction to Mutual funds 8
1.2 Meaning 9
1.3 Concept 9
1.4 Choosing the right investment 10
1.5 Different investment options 11

CHAPTER -2
2.1 Company profile 17
2.2 History 18
2.3 Type of UTI`s fund 20
2.4 Structure of UTI mf 21
2.5 history of UTI 22
2.6 Major in mutual fund industry in India 24

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CHAPTER – 3

3.1 Factors affecting UTI MFs 27

3.2 Advantages of investment in UTI 30
3.3 Disadvantages in UTI mutual fund 33
3.4 Classification of MFs 34
3.6 UTI mutual fund Facilities 37
3.7 Risk involved in UTI mutual fund 38

CHAPTER -4

4.1Performance evolution 39
4.2 survey methology 40
4.3 Limitation of the study 41
4.4 Findings 42
4.5 Conclusion & recommendations 58
4.6 How to choose a UTI mutual fund 65
4.7Questionaire 59
4.8 Bibliography 62

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 CHAPTER –1

Mutual fund

INTRODUCTION

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. Though certainly not the best or deepest of markets in the world, it has
reasonable options for an ordinary man to invest his savings.

The word originates in the Latin "vestis", meaning garment, and refers to the act of
putting things (money or other claims to resources) into others' pockets. The basic
meaning of the term being an asset held to have some recurring or capital gains. It is an
asset that is expected to give returns without any work on the asset.

There are a lot of investment avenues available today in the financial market for an
investor with an investable surplus. He can invest in Bank Deposits, Corporate
Debentures, and Bonds where there is low risk but low return. He may invest in Stock of
companies where the risk is high and the returns are also proportionately high. The recent
trends in the Stock Market have shown that an average retail investor always lost with
periodic bearish tends.Thus we had wealth management services provided by many
institutions. However they proved too costly for a small investor.

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 MEANING

A mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money collected & 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 income earned through these
investments and its unit holders in proportion to the number of units owned by them (pro
rata) share the capital appreciation realized by the scheme. .

CONCEPT

THE SECURITY AND EXCHANGE BOARD OF INDIA REGULATIONS,1996

defines a mutual fund as a " a fund establishment in the form of a trust to raise money
through the sale of units to the public or a section of the public under one or more
schemes for investing in securities, including money market instruments."

A mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized is shared by its unit holders in
proportion to the number of units owned by them. Thus, a mutual fund is the most
suitable investment for the common person as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:

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CHOOSING THE RIGHT INVESTMENT OPTIONS

The choice of the best investment options will depend on personal circumstances as well
as general market conditions. For example, a good investment for a long-term retirement
plan may not be a good investment for higher education expenses. In most cases, the right
investment is a balance of three things: Liquidity, Safety and Return.

Liquidity- how accessible money is? How easily an investment can be converted to cash,
since part of invested money must be available to cover financial mergencies.
Safety- what is the risk involved? The biggest risk is the risk of losing the money that has
been invested. Another equally important risk is that investments may not provide
enough growth or income to offset the impact of inflation, which could lead to a gradual
increase in the cost of living. There are additional risks as well (like decline in economic
growth). But the biggest risk of all is not investing at all.
Return - what can you expect to get back on your investment?
Investments are made for the purpose of generating returns. Safe investments often
promise a specific, though limited return. Those that involve more risk offer the
opportunity to make - or lose - a lot of money.

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DIFFERENT INVESTMENTS OPTIONS

FIXED DEPOSITS

A fixed deposit is meant for those investors who want to deposit a lump sum of money
for a fixed period; say for a minimum period of 15 days to five years and above, thereby
earning a higher rate of interest in return. Investor gets a lump sum (principal + interest)
at the maturity of the deposit.

Returns

Duration Interest Rate (%) per annum

15-30 days 4 -5 %
30-45 days 4.25-5 %
46-90 days 4.75--5.5 %
91-180 days 5.5-6.5 %
181-365 days 5.75-6.5 %
1-2 years 6-8 %
2-3 years 6.25-8 %
3-4 years 6.75-8%

ULIP (Unit Linked Insurance Plan)

A ULIP, as the name suggests, is a market-linked insurance plan. The main difference
between a ULIP and other insurance plans is the way in which the premium money is
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invested. Premium from, say, an endowment plan, is invested primarily in risk-free
instruments like government securities and AAA rated corporate paper, while ULIP
premiums can be invested in stock markets in addition to corporate bonds and
government securities.

EQUITY INVESTMENT

An equity investment is where we loan our money to someone else for a share of the
profits they receive from the way they use the money.The broad categories of equity
investments include mainly:

• Stock, and
• Option

STOCKS

Stocks are essentially a share of ownership you receive in a corporation in return for
letting them use your money. The stock will have a value in the open market should you
decide to sell it and in some cases it will pay dividends as well. Most people buy stocks
in the hopes that they purchase it at a low price and are then able to sell it at a high price.
This happens because the corporation has performed well and increased its value during
the time period between the purchase and the sale of the stock. The reverse can also
happen. We may buy the stock at a high price and then subsequently sell it at a lower
price for a net loss. This is the risk associated with stocks.

CHARACTERISTICS OF STOCKS

• Good potential for growth in the long-term.

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 • Riskier investment compared to other types of investments.
• Returns are not guaranteed.

STOCK CLASSIFICATIONS

Large Cap – These stocks are usually some of the larger, well-known companies, which
you have probably heard of, and typically they have a capitalization of $5 Billion dollars
or more. Keep in mind this can vary and some investment houses or brokers might use a
higher limit to define a large cap stock.

Mid Cap – A middle capitalization stock is usually a company that has been established
for a decent amount of time and as such it will be known by a fair number of people. The
capitalization for a mid cap will fall between $1 Billion - $5 Billion dollars in most cases,
but again this can vary depending on the company or the broker.

Small Cap – The small cap stocks are for the most part companies most are unfamiliar
with and they are usually not followed to a great extend by analysts or individual
investors. Small Caps typically have a capitalization of less than $1 Billion dollars.

OPTION

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An option is a contract that gives its owner the right, but not the obligation to conduct a
transaction involving an underlying asset at a predetermined future date and at a
predetermined price (exercise or strike price).

There are two types of options:

CALL OPTION

• In call option the buyer has the right to buy the underlying assets at strike price.
While the seller has the obligation to sell the underlying assets at the strike price.

PUT OPTION

• In put option the buyer has the right to sell the underlying assets at the strike
price, whereas the seller has an obligation to buy the underlying assets at the
strike price.

DEBT INVESTMENT

A debt investment is where we loan our money to someone else for an amount called
interest. A debt investment is unique in that the borrower is obligated to the debtor to pay
the money back.

BONDS

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A bond is a debt security, by which we lend money to a government, municipality,
corporation, federal agency or other entity known as the issuer.
In return for the loan, the issuer promises to pay a specified rate of interest during the life
of the bond and to repay the face value of the bond (the principal) when it becomes due.

U.S. Treasury Securities

U.S. Treasury securities—such as bills, notes and bonds—are debt obligations of the U.S.
government. When you buy a Treasury security, you are lending money to the federal
government for a specified period of time. They are considered to be the safest of all
investments as interest and repayment of the principal amount is guaranteed by the
federal government. Because of this unique degree of safety, interest rates are generally
lower than for other widely traded debt, such as corporate bonds.
CORPORATE BONDS
These are issued by private and public corporations. They are typically issued in
multiples of $1,000 and/or $5,000. Interest is usually paid semiannually. Unlike stocks,
bonds do not give you an ownership interest in the issuing corporation.

Corporate bonds provide the more conservative investor a worthwhile compromise

between the higher risk equity securities and the various conservative government
debentures.

CDs (Certificates of Deposit)

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A CD is a special type of deposit account that typically offers a higher rate of interest
than a regular savings account. Just like savings accounts, CDs are also insured up to
$100,000. When you purchase a CD, you invest a fixed sum of money for fixed period

INSURANCE

There are many types of insurance of course. In which the life insurance is the most
common alternative investment vehicle. We say alternative, only to distinguish the fact
that money invested within insurance has rules and stipulations applied to it unique to
that product.

ANNUITIES

Annuities are contracts sold by an insurance company designed to provide payments to

the holder at specified intervals, usually after retirement. Earnings cannot be withdrawn
without penalty until a specified age and are taxed only at the time of withdrawal.
Annuities are relatively safe, low- yielding investments. An annuity has a death benefit
equivalent to the higher of the current value of the annuity or the amount the buyer has
paid into it

DERIVATIVES

A derivative is a contract between two parties on an underlying asset and involves

exchange of a set of cash flows. A contract or security that derives its value from that
of an underlying asset (as another security) or from the value of a rate (as of interest
or currency exchange) or index of asset value (as a stock index)

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 Chapter -2
COMPANY PROFILE

UTI mutual fund came into existence on 1st February 2003. Bank of Baroda (BOB),
Punjab National Bank (PNB) and State Bank of India (SBI) and Life Insurance
Corporation of India (LIC) are the sponsors of the UTI mutual fund. UTI mutual fund is
managed by UTI Asset Management Company Private Limited (AMC). UTI AMC is a
registered portfolio manager under the SEBI (Portfolio Managers) Regulations, 1993 for
undertaking portfolio management services and also acts as the manager and marketer to
offshore UTI mutual fund.

UTI mutual fund has a nationwide network consisting 70 UTI Financial Centers (UFCs)
and UTI International offices in London, Dubai and Bahrain. The fund has a track record
of managing a variety of schemes catering to the needs of every class of citizenry

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HISTORY OF UTI MUTUAL FUND INDUSTRY

The UTI 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 the Reserve Bank. The history of
UTI Mutual fund in India can be broadly divided into four distinct phases

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the
RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of 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 UTI mutual fund)

1987 marked the entry of non- UTI, public sector UTI Mutual fundset up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI UTI mutual fund was the first non- UTI mutual fund
established in June 1987 followed by Canbank UTI mutual fund (Dec 87), Punjab
National Bank UTI mutual fund (Aug 89), Indian Bank UTI mutual fund (Nov 89), Bank
of India (Jun 90), Bank of Baroda UTI mutual fund (Oct 92). LIC established its UTI
mutual fund in June 1989 while GIC had set up its UTI mutual fund in December 1990.
At the end of 1993, the UTI mutual fund industry had assets under management of
Rs.47,004 crores.

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Third Phase – 1993-2003 (Entry of Private Sector UTI mutual fund)
With the entry of private sector UTI mutual fund in 1993, a new era started in the
Indian UTI mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first UTI mutual fund Regulations came
into being, under which all UTI Mutual fund mutual fund, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector UTI mutual fund registered in July 1993.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes.

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 UTI MUTUAL FUND

A UTI mutual fund is a pool of money, collected from investors, and is invested
according to certain investment objectives. A UTI mutual fund uses the money collected
from the investors to buy those assets which are specifically permitted by its stated
investment objective. The fund’s assets are owned by the investors in the same proportion
as their contribution bears to the total contributions of all investors put together

TYPES OF UTI `s FUND

• By Structure
o Open - Ended Schemes
o Close - Ended Schemes
o Interval Schemes

• By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Debt Schemes
o Money Market Schemes
o Special scheme

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STRUCTURE OF UTI MUTUAL FUND

This can be studied with a help of following diagram-

Sponsor

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 Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the
Investment Managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India Regulations, 1996.

Trust

The mutual fund is constituted as a trust in accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals).

The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter
alias ensure that the AMC functions in the interest of investors and in accordance with the
Securities and Exchange Board of India (mutual fund) Regulations, 1996. At least 2/3rd
directors of the Trustee are independent directors who are not associated with the Sponsor in
any manner.

Asset Management Company (AMC)

Trustee as the Investment Manager of the mutual fund appoints the AMC. The AMC is
required to be approved by the Securities and Exchange Board of India (SEBI) to act as
an asset management company of the UTI mutual fund. Atlas 50% of the directors of the
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AMC is an independent director who is not associated with the Sponsor in any manner.
The AMC must have a net worth of at least 10 crore at all time

Custodian

A custodian’s role is safe keeping of physical securities and also keeping a tabon the
corporate actions like rights, bonus and dividends declared by the companies in which the
fund has invested. The Custodian is appointed by the Board of Trustees. The custodian
also participates in a clearing and settlement system through approved depository
companies on behalf of UTI Mutual fund , in case of dematerialized securities. In India
today, securities (and units of mutual fund) are no longer held in physical form but
mostly in dematerialized form with the Depositories.

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MAJOR MUTUAL FUND COMPANIES IN INDIA

ABN AMRO 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 global organization evolved in 1871 and is being
represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda 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.

HDFC mutual fund

HDFC mutual fund was setup on June 30, 2000 with two sponsors namely Housing
Development Finance Corporation Limited and Standard Life Investments Limited.
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ICICI Prudential mutual fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the
largest life insurance companies in the US of A. Prudential ICICI mutual fund was
setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The
Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential
ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

State Bank of India mutual fund

State Bank of India mutual fund is the first Bank sponsored mutual fund to launch
offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately.
Today it is the largest Bank sponsoredmutual 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 sponsors 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
25
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.

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 fund was
constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. .

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 India Insurance Co. Ltd. (UII)
and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act,
1882.

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 CHAPTER NO 3
FACTORS AFFECTING UTI MUTUAL FUND ….:
The various factors responsible for UTI mutual fund industry in India are as follow:
Population

India's population is young, with 54% under the age of 25 and 80% under 45 and the
percentage of working population is rising rapidly.

A younger and working age population means –

* Income levels to rise
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* Higher savings and consequent flows into equity markets
* Increased household consumption
* Significant increase of labor supply
* Large population and favorable demographics

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 Movement in Global Markets

If we see the position of BSE Sensex as compared to other major indexes in the world then we find that BSE has been
the best performer.

This is the major factor which has contributed to UTI mutual fund emerging as a great investment vehicle for every
category of investors and made UTI mutual fund one of the most preferable way to generate return. UTI mutual fund
invest in equity of various companies for long time and long investment in equities can help investors in generating
good returns If we look the graph then we can say that equities have the potential to deliver good return if we invest
for long term.

India – Potential 'Services Capital' of the World

With services becoming increasingly tradable, India is well placed in terms of costs and skill sets and over the past 13
years. From 1991-2005, India's services sector growth has averaged 7.6% year compared with 5.7% for
manufacturing. Figure-3 shows the composition of GDP from which it is clear that composition of service and
industry sector has increased in GDP over the years
Inflation affects the Return

Inflation has always been one of the most important macroeconomic factor affection the country. It represents the
general price level of the country Inflation has always lowered
29 the actual return from bank savings except the year
2002
* Returns on safe fixed income options such as bank deposits have been moderating.
* Assured' return products are being phased out.
* Inflation and taxes are impacting returns