A PROJECT REPORT ON ANALYSIS OF EQUITY LINKED SAVING SCHEMES IN UTI MUTUAL FUND AND THEIR RELATIVE BENEFITS OVER

OTHER TAX SAVINGS SCHEMES This project report is prepared as a partial fulfillment of the PGDM Program {2010-12} At

UTI MUTUAL FUND {Bhubaneswar} PREPARED BY Mr.Ashis Rahul Regd.no.-BIM0410BM025 Batch-2010-12 Under guidance of Prof. Siddharth S. Kanungo Bharatiya Vidya Bhavan {Internal guide} Mr.Ujjwal Chakraborty Manager {UTI mutual fund} {External guide}

Bhavans centre for communication and management Kharvel Nagar, Unit III B.B.S.R.-751001

DECLARATION I hereby declare that this project report Analysis of equity linked saving scheme in UTI Mutual Fund and its relative benefit over tax saving scheme submitted in the partial fulfillment of summer internship trainee of PGDM Programmed of Bharatiya vidya bhavan {BCCM} B.B.S.R. Is based on secondary data found by me in various sources like books, website, magazines & collected by me under guidance of Prof. Siddharth S. Kanungo.

CERTIFICATE BY GUIDE

This is to certify that the report entitled: Analysis of Equity Linked Saving scheme in UTI Mutual Fund and its relative benefit over other tax saving scheme submitted by Mr.Ashis Rahul (Regdno.BIM0510BM0254) BHARATIYA VIDYA BHAVAN, B.B.S.R. Kendra, Orissa towards partial requirement for the award of the degree of post Graduate Diploma in Management (PGDM) bonafide record of the work carried out by him under my supervision and guidance. Name: Prof. Siddharth S. Kanungo Place: B.B.S.R Date:

CERTIFICATE OF APPROVAL This is certify that the Report entitled: Analysis of Equity linked Saving Scheme in UTI MutualFund and its relative benefit over the other tax saving scheme In UTI MUTUAL FUND LIMITED,B.B.S.R. Submitted by Mr.Ashis Rahul (BIM0510BM025) BHARATIYA VIDYA BHAVAN,Bhubaneswar kendra, Orissa towards partial fullfilment of the requirement for the award of the degree of the Post Graduate Diploma in Management(PGDM) is a bonafide record of the work carried out by him under my supervision and guidance

vice Principal

Director (Academics)

Certificate from the Organization

This is to certify that the report entitled:

Analysis of Equity linked saving Schemes in UTI Mutual Fund and its relative b benefit over other tax saving schemes IN UTI MUTUAL FUND LIMITED, BHUBANESWAR

Submitted by Mr. Ashis Rahul (Regn No. BIM0510BM025), Bharatiya Vidya Bhavan, Bhubaneswar Kendra, Orissa towards partial fulfillment of the requirements for the award of the degree of Post Graduate Diploma in Management (PGDM) is a bona fide record of the work carried out by her under the guidance of Mr. UJJWAL CHAKRABORTY Bhubaneswar. Marketing MANAGER, UTI MUTUAL FUND LIMITED,

Name: Mr. UJJWAL CHAKRABORTY Designation: Marketing MANAGER Place: Bhubaneswar Date:

ACKNOWLEDGEMENT

I would like to convey my heartiest gratitude to several people, for their support and guidance, which helped me to complete this project. I wish to acknowledge my thankfulness to Mr.SIDDHARTH.S.KANUNGO (internal guide) for his valuable suggestion and support in my completion of my project. It is with deep sense I express my sincere thanks to Mr.UJJWAL CHAKRABORTY, Manager, UTI Mutual Fund, Bhubaneswar (external guide) for providing me an excellent guidance supervision and encouraged me for the present study which was undertaken and completed under Mr.UJJWAL CHAKRABORTY (External guide). He was very much sympathetic, accommodating and constructive nature remined me a constant source of inspiration for me throughout the duration of this summer project. At last I am very much thankful to all the personnel in UTI mutual fund for their utmost co-operation and timely help extended by them for completion of this project.

Thank you!

Ashis Rahul

EXECUTIVE SUMMARY The sip project was designed to know the function and features of Uti Mutual Fund and to analyze the risk and reward associated with mutual fund investment. Few equity linked saving scheme have been chosen to analyze the feature performance and benefit associated with the funds and the ingredients of the funds ,its exposure in different asset such as equity debt and money market instrument have been analyzed. The ELSS fund have been reviewed by its return via-a-via benchmark over last 1,3,5 year period .the aim the study also includes to judge the benefit of the scheme from the return and tax advantage perspective. It has been found that schemes like ulip, rbp are balanced fund bearing les risk and generating comparatively better return than the comparable instrument. ETSP, an equity scheme has been performing very well over a longer horizon. The relative advantage of the ELSS scheme have also been discussed and analyzed.

CONTENTS 1.INTRODUCTION 2. CORPORATE PROFILE MUTUAL FUND AND ITS DESCRIPTION MUTUAL FUND ADVANTAGE AND DISADVANTAGE TYPE OF UTI MUTUAL FUND RESEARCH METHODOLOGY UTI EQUITY TAX SAVING PLAN UTI-RETIREMENT BENEFIT PENSION FUND & ITS ANALYSIS UTI-UNIT LINKED PLAN & ITS ANALYSIS CONCLUSION BIBILOGRAPHY

INTRODUCTION ELSS-Equity linked saving scheme - Equity linked saving schemes are a kind of mutual funds like diversified equity funds with Tax benefits. It is just like other tax saving instruments like National Savings Certificate and Public Provident Fund. Main advantage with ELSS is lock-in period is only 3 years while for NSC it is 6 years and for PPF it is 15 years. At the same time risk factor is high in ELSS. UTI MUTUAL FUND- mutual fund is a common pool of money into which investors places their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is joint of mutual;the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund. A mutual fund uses the money collected from investors buy those assets which are specifically permitted by its stated investment objective. Thus, an equity fund would buy mainly equity assets-ordinary shares, preference shares, warrants etc. A bond fund would mainly buy debt instrument such as debentures, bonds or govt securities. It is these assets which are owned by investors in the same proportion as their contribution bears to the total contributions of all investors put together. Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI Asset Management company ltd, who has been appointed by the UTI Trustee Pvt.Ltd co.for managing the scheme of UTI Mutual Fund and the scheme transferred/migrated from Unit Trust of India. The UTI Asset Management Company provides professionally managed back office support for all business service of UTI Mutual Fund in accordance with the provision of the investment management agreement, the Trust Deed, the SEBI (Mutual Fund) Regulation and the objectives of the schemes. State of the art systems and communication are in place to ensure a seamless flow across the various activities undertaken by UTIMF. UTI have well qualified management team, who has been highly empowered to manage funds with greater efficiency and accountability in the sole of interest of unit holders. The fund managers are also ably supported with a strong in-house securities research department. The ensure better management of funds, a risk management department is also in operation.UTIMF has consistently reset and upgraded transparency standards. All the

branches, UFCs and registers offices are connected on a robust IT network to ensure cost effective quick and efficient service.

OBJECTIVES TO KNOW ABOUT ALL THE SCHEME OF UTI MUTUAL FUND AND ITS ADVANTAGES. TO KNOW THE PERFORMANCE OF ELSS FUND IN THE MARKET IN COMPARISION OF BSE-100&BSE-30 BENCHMARK. TO KNOW THE ADVANTAGES OF MUTUAL FUND FOR DIFFERENT AGES OF PEOPLE. TO KNOW THE DETAILES OF MUTUAL FUND INDUSTRY AS A WHOLE. TO KNOW THE ESSENCE OF ELSE PRODUCTS IN WEALTH CREATION.

REVIEW OF LITREATURE
(Stock is available at alternative valuation at present investors with five year time horizon can expert alternative return from investor in ELSS)
Manju Nair mutual fund product Based Share khan Manager Mumbai

3.From articles published in the economic times by Sanjay Sanghvi (CPF). ELSS best investment option over 3-5 years. Nobody loves to pay taxes, unfortunately there is no way you can avoid it once you cross a certain income level , you have few way to save taxes that explain people obsession with the overcrowded section 80c of the income tax act. It covers scores of avenues employers provident fund, tax saving scheme from mutual fund. Among these tax saving scheme for mutual fund (also known as equity linked savings or ELSSs) Even before the beginning of the financial year, my customers have been calling up to say that dont want to renew their systematic investment plans [SIPs] in ELSSs this year, says a financial advisor here. The stock market has given huge negative return in the last year and equity scheme including tax saving once were down 35-50% people dont have stomach to lose capital in the current environment be it even for a short period ,he adds. Mutual fund line up (ELSS) plans for tax saving days financial chronicle (mydigital.fc.com) Mehul shah. Mutual fund house are making a beeline to launch new equity-linked saving scheme (ELSS), as the deadline to submit actual investment proof for saving purpose is coming closer for most salaried professional. As per section 80c of the income tax act and individual can avail exemption of up to 1, 00,000 by investing in as ELSS. This tax saving instrument has a mandatory three year locked in period. Market expert says it is good time to invest in ELSS for tax-saving purpose. However they advise investor to opt for existing ELSS with a proven track record rather than subscribing for a new one. After the stock market crash in 2008, many investors are however skeptical about ELSS as an investment option out of the existing 30 open-ended ELSS only six have delivered positive return on a compounded annual basis in the past three year up to December. However expert says that the sensex levels justify investment in ELSS, which invests in equities. Published in money out looking .com by Narendra Nathan. Mutual fund line up (ELSS) plans for tax saving days Investments should never be made under duress; they should be the outcome of either discipline or opportunity with saving tax the prime motive behind such investment performance often tends to get the short straw in this investment equation. If you are going to

follow this last minute approach. You might end up passing up a great return cum tax saving opportunity going in the equity market today. Published in insurance review by Amit Kumar Why equity linked saving scheme (ELSS) the best tax saver!! It generally happens that people think about investment just one or two months before the new financial year as they are only concerned about saving tax and not about their investment. Generally people think that investments will give them good return irrespective of the time of investment but the fact is that investing without considering the market condition the market and the other economic situation the possibility of making loss is very high. Hence the amount you have saved by not payment tax might go in vain because of some bad investment. Since ELSS invests primarily in the equity markets, timing is very important for any investors. At a time when equity markets are down, exposure can be made to these schemes to lower youre holding cost. Thus, an investor can put his money in these schemes even at the beginning of the financial year if, in his opinion, the equity market at the beginning of the financial year if,in his opinion ,the equity markets at that moment present a good investment opportunity. ELSS offer tax rebate under section 80c for an investment upto maximum Rs.1,00,000. These scheme usually invest at least 80 percent of their corpus in equities and have a three-year locked in period. Following are the major benefits of ELSS. 1. Main advantage of ELSS is its short lock in period, in ANCSC it is 6 years and in PPF it is 15 years. 2. Since it is an equity linked scheme earning potential is very high. 3. Investor can opt for dividend option and get some gains during the lock-in period also. 4. Investors can opt for systematic investment plan (SIP). Disadvantages of ELSS 1. Risk factor is high compared to NSCand PPF. 2. No assured return. 3. Premature withdrawal is not allowed. 4. Return will change according to stock market volatility. Why should one invest in ELSS? Lock-in for three years helps in staying invested over a long period. Investment in equity over a long-term delivers better return. Tax saving and higher return. Through SIPs, one can invest small amount of Rs. 500 in ELSS every month.

RESEARCH METHODOLOGY Formulating object for the project. Identifying and defining problems and opportunities. Primary data are collected by taking a sample of 20 investors of mutual fund.

 Collection of secondary data from books, magazines, websites etc. Analysis of those secondary data. Evaluating the end interpreting the result. Putting results in the form of charts and in calculation modes. Analysis of those charts.

CORPORATE PROFILE Unit Trust Of India (UTI),was set up as a statutory corporation under Unit Trust of India act,1963,started functioning with effect from 1st july,1964. Every year, millions of investors entrust their savings in schemes of UTI. This faith and confidence of investors stem from UTIs commitment of offering safety, liquidity and reasonable returns to investors which has been reflected consistently in its past track record .UTI has carved out a special position for itself in mutual fund industry and in the Indian Capital Market. UTI AMC is a registered portfolio manager under the SEBI (portfolio managers) Regulations, 1993 on 3rd February 2004, for undertaking portfolio management service and also acts as the manager and marketer to offshore funds through its 100% subsidiary, UTI International Limited, registered in Guernsey, channel island. UTI Asset Management Company presently manages a corpus of over Rs. 67,189 cores as on march 2011. UTI Mutual Fund has track record of managing a variety of scheme catering to the needs of every class of citizenry. It has nationwide network consisting of 123 UTI Financial centers (UFCs) and UTI International Offices in London, Dubai and Bahrain. With a view to reach to common investors at district level, 1 satellite office has been opened in select towns and districts. OBJECTIVES UTI has been established with a view to encourage saving and investment and participation in the income, profits and gains accruing to the corporation from the accusation, holding management and disposal of securities. The three main objectives of UTI are: Enabling common investors to participate in the prosperity of capital market through portfolio management aimed at reasonable return, liquidity and safety. Contributing to Indias industrial development by channelizing household savings into corporate investment and Facilitating orderly development of the capital market. TRANSFORMATION UTIs first scheme UNIT SCHEME 1964 commenced its operation on 1st July 1964. In 1971 UTI came up with its new scheme UNIT LINKED INSURANCE PLAN. In 1986 came master share the mutual fund scheme in India. During the 90s UTI

launched many scheme like MIS, GUIS, GMISETC etc., which gives an assured rate return. During late 90s UTIs asset under management to Rs.70, 000 crs. In 2003 the structure of UTI has a change. UTI has divided into independent entities named as SUUTI and UTI Mutual Fund. Four major financial institutions, State Bank of India, Bank Of Baroda, Life Insurance Corporation of India and Punjab National Bank joined as sponsors of UTI mutual fund. THE MISSION OF UTI MUTUAL FUND The most trusted brand, admired by all stake holders. The largest most efficient money manager with global presence. The most preferred employer. The best in class customer service provider. The most innovative and best wealth creator MUTUAL FUND

A mutual fund is a common pool of money into which investors places their contribution that is to be invested in accordance with a stated objective. The ownership of the fund is thus joint of mutual; the fund belongs to all investors. A single investors ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund. A mutual fund uses the money collected from investors to buy those assets which are specifically permitted by its stated investment objective. Thus, an equity fund would buy mainly equity assets ordinary shares, preference share, warrants etc. A bond fund would mainly buy debt instruments such as debentures, bonds or government securities. It is these assets which are owned by the investors in the same proportion as their contribution bears to the total contribution of all investors put together.

Advantages & Disadvantages ADVANTAGES OF MUTUAL FUND: If mutual fund are emerging as the favorite investment vehicle, it is because of the many advantages they have over other forms and avenues of investing, particularly for the investor who has limited resources available in terms of capital and ability to carry out detailed research and market monitoring. Portfolio diversification: Mutual funds normally invest in a well diversified portfolio or securities. Each investors in a fund is a part owner of all of the funds assets. This enables him to hold a diversified investment portfolio even with a small amount of investment, which would otherwise require big capital. Professional management: even if an investor has a big amount of capital available to him, he benefits from the professional management skills brought in by the fund in the management of the investors portfolio. The investment management skills ,along with the needed research into available investment options, ensure a much better return than what an investor can manage on his own.

Reduction /diversification of risk: An investor in a mutual fund acquires a diversified portfolio, no matter how small his investment. Diversification reduces the risk of loss, as compared to investing directly in one or two shares or debentures or other instruments. When an investor invests directly, all the risk of potential loss his own. Reduction of transaction cost: what is true of risk is also true of transaction cost. A direct investors bears all the cost of investing such as brokerage or custody of securities. When going through a fund, he has the benefit of economies of scale. Liquidity: often, investors hold shares or bonds they cannot directly, easily and quickly sell. Investment in a mutual fund, on the other hand, is more liquid. An investor can liquidate the investment, by selling the units to the fund if open end, or selling them in the market if closed end. Convenience and flexibility: Mutual Fund Management companies offer many investors service that a direct market investors cannot get. Investors can easily transfer their holdings from one scheme to the other; get updated market information, and so on. DISADVANTAGES OF INVESTING THROUGH MUTUAL FUND While the benefits of investing through mutual funds far outweigh the disadvantages, an investors and his advisory will do well to be aware of a few shortcoming of using the mutual fund as investment vehicle. No control over costs: an investor in a mutual fund has any control over the overall cost of investing. He pays investment management fees as long as the remains with the fund. Fees are usually payable as a percentage of the value of his investment, whether the fund, value is rising or declining. A mutual fund investors also pays fund distribution costs, which he would not incur in direct investing. No tailor-made portfolios: Investors who invest in their own portfolios of their shares, bonds and other securities. Investing through fund means he delegates this decision to the fund managers. The very high net worth individuals or large corporate investors may find this to be a constraint in achieving their objective. A investor can choose from different investment plans and construct a portfolio of his choice. Managing portfolio of funds: Availability of a large number of funds can actually mean too much choice for the investors. He may again need advice on how to select a fund to achieve his objectives, quite similar to the situation when he has to select individual shares or bonds to invest in. TYPES OF FUNDS

There are many types of mutual funds available to the investors. However, these different types of fund can be grouped into certain classification for better understanding. From the investors perspective, we would follow three basic classifications. Firstly, funds are usually classified in terms of their constitutions as closed-end or open-end. The distinction depends upon whether they give the investors to option the redeem and buy units at any time from the fund itself (open-end) or whether the investors have to await a given maturity before they can redeem their units to the fund (close-end).

Funds can also grouped in terms of whether they collect from investors any charges at the time of entry or exit or both, thus reducing the ingestible amount or the redemption proceeds. Funds that make charges are classified as load funds, and funds that do not make any of the charges are termed as no load funds. Funds can be classified as being tax-exempted or non-tax exempted, depending on whether they invest in securities that give tax exempt returns or not. Currently in India, this classification may be somewhat less important, given the tax exemption given to investors receiving any dividends from all mutual funds. Under each board classification, we may then distinguish between several types of funds on the basis of the nature of their portfolios, meaning whether they invest in equities or fixed income securities or some combination of both. Every type of fund has a unique risk profile that is determined by its portfolio, for which reason funds are often separated into more or less risk bearing. We first look at the fund classifications and then understand the various types of funds under them. MUTUAL FUND CLASSIFICATION OPEN-END VS. CLOSED-END FUNDS. An open-end fund is one that has units available for sale and repurchase at all times. An investor can buy or redeem units from the fund itself at a price based on the net asset value (NAV) per unit NAV per unit is obtained by dividing the amount of the market value of the funds assets (plus accrued income minus the funds liabilities) by the number of units outstanding. The fund size and its total investment amount go up if more new subscriptions come in from new investors than redemptions by existing investors; the fund shrinks when redemptions of units exceed fresh subscriptions. An open-end fund is not obliged to keep selling/issuing new units at all times, and many successful funds stop issuing further subscriptions from new investors after they reach a certain size and think they cannot manage larger fund without adversely affecting profitability. Unlike an open-end fund, the unit capital of a closed-end fund is fixed, as it makes a onetime sale of a fixed number of units. Later on, unlike open-end funds, closed-end funds do not allow investors to buy or redeem units directly from the funds. However, to provide the much needed liquidity to investors many close-end funds get themselves listed on a stock exchange(s). . Thus offering another avenue for liquidity to closed-end fund investors. In this case, the mutual fund actually reduces the number of units outstanding with investors. LOAD AND NO-LOAD FUNDS Marketing of a new mutual fund scheme involves initial expenses. These expenses may be recovered from the investors in different ways at different times. Three usual ways in which a funds sales expenses may be recovered from the investors are:

1. 2. 3.

At the time of investors entry into the fund/Scheme, by deducting a specific amount By charging the fund/scheme with a fixed amount each year, during the stated number At the time of the investors exit from the fund/scheme, by deducting a specified

from his initial contribution, or of years, or amount from the redemption proceeds payable to the investor. These charges made by the fund managers to the investors to cover distribution / sales / marketing expenses are often called loads. The load charges to the investor at the time of his entry into a scheme is called a front-end or entry load. This is the first case above. The load that the investor pays at the time of his exit is called a back-end or exit load. This is the third case above. Some funds may also charge different amount of loads to the investors, depending upon how many years the investor has stayed with the fund; the longer the investor stays with the fund, less the amount of exit load he is charged. This is called contingent deferred sales charge. In India, SEBI has defined a load as the onetime fee payable by the investor to allow the fund to meet initial issue expenses including brokers / agents / distributors commissions, advertising and marketing expenses. SEBI definition of a load fund would include all funds that charge a front-end load, which is in line with the internationally used definition. However, SEBI would consider a fund to be a no-load fund, if an AMC absorbs these initial marketing expenses and does not charge the fund-a situation that is somewhat special to India and not widely prevalent elsewhere. Internationally, a fund, even when it does not make a front-end load, would still be considered a load fund, if it charges an exit load or a deferred sales load. SEBI regulation allow AMCs to recover loads from the investors for the purpose of paying for the initial issue expenses, subject however to a limit on the maximum amount that can be charged by the AMC. This limit currently stands at 6% meaning that initial issue expenses, should not exceed 6% of the initial corpus mobilized during the initial offer period. Similarly, SEBI has also imposed a limit on the maximum recurring expenses including investment management and advisory fees that can be charged to a scheme. The limits have been related to the level of the weekly net assets. Thus, the AMC can charge scheme 2.50% of the average net assets of the scheme as recurring expenses, if the net assets do not exceed Rs.100 cores, 2.25% on the next 300 cores, 2.0% on the next 300 cores and 1.75% over Rs.700 cores. In case the scheme intends to invest in bonds, the maximum percentage limits are less by 0.25%. Further, if the AMC had absorbed the initial issue expenses, it can charge an additional 1% of net assets as investment fees. . TAX-EXEMPT VS. NON-TAX-EXEMPT FUNDS

when a fund invests in tax-exempt securities, it is called tax exempt fund. In the U.S.A., For example, municipal bonds pay interest that is tax free, while interest on corporate and other bonds is taxable. In India, after the 1999 Union Government Budget, all of the investor. However, funds other than equity funds have to pay a distribution tax, before distributing income to investors. In other words, equity mutual fund schemes are taxexempt investment avenues, while other funds are taxable for distributable income. While Indian mutual funds currently offer tax free income, any capital gains arising out of sale of funds currently offer tax free income, any capital gains arising out of sale of fund units are taxable. All the tax considerations are important in the decision on where to invest as the tax exemptions or concessions alter the returns obtained from the taxability perspective has great significance for investors. MUTUAL FUND TYPES: All mutual funds would be either closed-end or open-end, and either load or no-load. These classifications are general. For example all open-end funds operate the same way; or in case of a load fund a deduction is made from investors subscription or redemption and only the net amount used to determine his number of shares purchased or sold. A. Board Fund Types by Nature of Investments Mutual funds may invest in equities, bonds or other fixed income securities, or short term money market securities. So we have Equity, bond and money market funds. All of them invest in physical assets. For example, we have gold or other precious metal funds, or Real estate funds B. Board Fund Types by Investment objective Investors and hence the mutual funds pursue different objectives while investing. Thus, Growth fund invests from medium to long term capital appreciation. Income funds invest to generate regular income, and less for capital appreciation. Value funds invest in equities that are considered undervalued today, those value will be unlocked in the future. C. Board Found Types by Risk Profile The nature of funds portfolio and its investment objective imply different levels of risk undertaken. Funds are therefore often grouped in order of risk. Thus Equity funds have a greater risk of capital loss than a Debt fund that seeks to protect the capital while looking for income. Money market funds are exposed to less risk than even the Bond funds, since they invest in short term fixed income securities, as compared to longer term portfolios of bond funds. Fund managers often try to alter the risk profile of funds by suitably changing the investment objective. For example, a fund house may structure an Equity income fund investing in shares that do not

fluctuate much in value and offer steady dividends-say Power sector companies, or a Real estate income fund that invests only the in income producing assets. Balanced funds seek to produce a lower risk portfolio by mixing equity investments with debt investments. Investors and their advisors need to understand both the investment objective and risk of the different types of funds. .

MONEY MARKET FUNDS Often considered to be at the lowest rung in the order of the risk level, money market funds invest in securities of a short term nature, which generally means securities of less than one year maturity. The typical, short term, interest bearing instruments these funds invest in include Treasury bills issued by govt. Certificate of deposit issued by banks and commercial paper issued by companies. In India Money Market Mutual Funds also invest in the interbank call money market. UTI variant in this category UTI Money Market Mutual Fund. GILT FUNDS Gilts are government securities with medium to long term maturities, typically of over one year (under one year instruments being money market securities). In India, we have now see the emergence of Government securities or Gilt Funds that mature in less than one year). Since the issuer is the Government/s of India/states, these funds have little risk of default and hence offer better protection of principal. However, investors have to recognize the potential in the market price of debt securities quoted on the stock exchanges (just like the equities). Debt securities prices fall when interest rate level increase and vice versa. UTI G-Sec Investment Plan and UTI Gilt Advantage Funds are available in UTIs bouquet of schemes. These funds are generally invested in long term Government Securities having weighted average maturity of over 20 years. Besides these, the Short Term variant of G-Sec funds is available it UTI MF which is known as UTI GSec Short Term Fund which is invested in short term Government Securities having weighted average maturity of 2 years. DEBT FUNDS OR INCOME FUNDS Next in order of the risk level we have the general category debt funds. Debt funds invest in debt instruments issued not only by governments but also by private companies, banks and financial institutions and other entities such as infrastructure companies / utilities. By investing in debt, this funds target low risk and stable income for the investor as their key objectives. However as compared to the money market funds, they do have a higher price

fluctuation risk, since they invest in longer term securities. Similarly, as compared to gilt funds, general debt funds do have a higher risk of default by their borrowers. Debt funds are largely considered as income funds as they do not target capital appreciation, look for high current income, and therefore distribute a substantial part of their surplus to investors. Income funds that target returns substantially above market levels can face more risk. While we have a earlier described the equity income funds, the income funds fall largely in the category of debt funds as they invest primarily in fixed income generating debt instruments. Again, different investment objectives set by the fund managers would result in different risk profiles. We have UTI Bond Fund as a reference under this category. a) Diversified debt funds- A debt fund that invests in all available types of debt securities, issued by entities across all industries and sector is a properly diversified debt fund. While debt funds offer high income and less risk than equity funds, investors need to recognize that debt securities are subject to risk of default by the issuer on payment of interest or principals. A diversified debt fund has the benefit of risk reduction through diversification and sharing of any default related losses by a large number of investors. Hence a diversified debt fund is less risky than a narrow focus fund that invests in debt securities of a particular sector or industry. b) Focused Debt Funds - Some debt funds have a narrow focus, with less diversification in its investments. Example includes sector, specialized and offshore debt funds. The debt funds have a substantial part of their portfolio invested in debt instruments and are therefore income oriented and inherently less risky than equity funds. However the Indian financial markets have demonstrated that debt funds should not be automatically considered to be less risky than equity funds, as there have been relatively large defaults by issuer of debt and many funds have non-performing assets in their debt portfolios. It should also be recognized that the market values of debt securities will also fluctuate more as Indian debt markets witnessed more trading and interest rate volatility in the future. The central point to note is that all these narrow focused funds have greater risk than diversified debt funds. c) High yield debt funds - Usually, debt funds control the borrower default risk by investing in securities issued by borrowers who are rated by credit rating agencies and are considered to be off investment grade. There are, whoever, high yield debt funds that seek to obtain higher interest returns by investing in debt instruments that are considered

below investment grade. Clearly these funds are exposed to higher risk, funds that invest in debt instruments that are not backed by tangible assets d) Assured return funds an Indian Variant. - Fundamentally, mutual funds hold assets in trust for investors. All returns are for account of the investor. The roll of the fund manager is to provide the professional management service and to ensure the highest possible return consistent with the investment objective of the fund. The fund manager or the trustees or the sponsors do not give any guarantee on the minimum return to the investors. Whenever, in India, historically, UTI and other funds have offered assured return schemes to investors. The most popular variant of such scheme is the Monthly Income Plans of UTI. Returns are indicated in advance for all of the future years of these closed-end schemes. e) Fixed Term Plan Series another Indian Variant- A mutual fund scheme would normally be either open-end or closed-end. However, in India mutual funds have involved on innovative middle option between the two, in response to the investor needs. If a scheme is open-end, the fund issues new units and redeems them at any time. The fund does not have a stated maturity or fixed term of investment as such. Fixed term plan series offers a combination of both these features to investors, as a series of plans are offered and units are issued at a frequent interval for short plan duration. EQUITY FUND As investors move from debt fund category to equity funds, they face increased risk levels. However, there is a large variety of equity funds and all of them are not equally risk prone. Investors and their advisor need to short out and select the right equity fund that suits their risk appetite. In the following section, we have presented the equity fund types, going from the highest risk level to the lowest level within this category. The issuers of equity shares offer no guaranteed repayment as in case of debt instruments. Hence, equity funds are generally considered at the higher end of the risk spectrum among all funds available in the market. On the other hand, on like debt instruments are that offer fixed amounts of repayment; equity can appreciate in value in line with the issuers earnings potential, and so offer the greatest potential for growth in capital. Equity funds adopt different investment strategies resulting in different levels of risk. Hence, they are generally separated in to different types in terms of their investment style. A) Aggressive Growth Funds - There are many types of stocks / shares available in the market; blue chips that are recognized market leaders, less researched stocks that are considered to have future growth potential, and even some speculative stocks that are considered to have future growth potential, and even some speculative stocks of somewhat

unknown or unproven issuers. Fund managers seek out and investment in different types of stocks in line with their own perception of potential returns and appetite for risk. Growth funds - Growth funds invest in companies whose earnings are expected to rise at an above average rate. These companies may be operating in sectors like technology considered to have a growth potential, but not entirely unproven and speculative. The primary objective of growth funds is capital appreciation over a three to five year span. Growth funds are therefore less volatile than funds that target aggressive growth. UTI Master share 86, UTI equity fund, UTI Index Select Fund and UTI Master plus are few funds under UTI basket fall under this category. B) Specialty Funds- These funds have a narrow portfolio orientation and invest in only companies that meet pre-defined criteria. For example, some funds may build portfolios that will exclude Tobacco companies. Funds that invest in particular regions such as the Middle East or the ASEAN countries are also an example of specialty funds. Within the specialty fund category. Some funds may be broad based in terms of the types of investments in the portfolio. However, most specialty funds tend to be concentrated funds, since diversification is limited to one type of investment. Clearly concentrate specialty funds tend to be more volatile than diversified funds. UTI Leadership Equity fund as an example having invested 65% in leaders of a sector. C.i. Sector funds. Sector funds portfolios consist of investment in only one industry or sector of the market such as information technology, pharmaceuticals or fast moving consumer goods that have recently been launched in India. Since sector funds do not diversified into multiple sectors, they carry a higher level of sector and company specific risk than diversified equity funds. ITI Pharma & Healthcare Fund, UTI banking Sector Fund are few examples of the sector fund. C.ii.Thematic Funds These funds asset-allocation and investment-universe are structured on a theme. Not as restrictive as sector funds, the theme could run well across sectors, such UTI Infrastructure Fund and UTI Services Fund. C.iii. Offshore funds These funds invest in equity in one or foreign countries there by achieving diversification across the countrys borders. However they also have additional risks-such as foreign exchange, rate risk-and their performance depends on the economic conditions of the countries they invest in offshore equity funds may invest in a single country (hence riskier) or many countries (hence more diversified). India

Fund, India Growth Fund, Columbus India Fund are varieties of Offshore Funds UTI MF launched in different times. C.iv. Small-Cap equity funds These funds invest in shares of companies with relatively lower market capitalization than that of big, blue chip companies. They may thus be more volatile than other funds, as smaller companies shares are not very liquid in the markets. We can think of these funds as a segment of specialty funds. In terms of risk characteristics, small company funds may be aggressive growth or just growth type. In terms of investment style, some of these funds may also be value investors. C.V. Option income Funds These funds do not yet exit in India, but option income funds write options on a significant part of their portfolio. While options are viewed as risky instruments, they may actually help to control volatility, if properly used. Conservative option funds invest in large, dividend paying companies. And then sell options against their stock positions. This ensures a stable income stream in the form of premium income through selling options and dividend. Now that options on individual shares have becomes available in India, such funds may be introduced. D. Diversified Equity Funds. - A fund that seeks to invest only on equities, except for a very small portion in liquid money market securities, but is not focused on any one or few sectors or shares, may be termed a diversified equity fund. While exposed to all equity price risk diversified equity fund seek to reduce the sector or stock specific risk through diversification. They have mainly market risk expose. Such general proposal but UTI diversified funds are clearly at the lower risk level than the growth funds. Funds are the diversified equity funds. D.i. Equity Linked Saving Schemes: an Indian variant In India, the investors have been given tax concessions to encourage them to invest in equity markets through these special schemes. Investment in these schemes entitles the investor to claim an income tax rebate, but usually has a lock-in period before the end of which funds cannot be withdrawn. These funds are subject to the general SEBI investment guidelines for any equity funds, and would be in the diversified equity fund category. However, as there are no specific restrictions on which sectors these funds ought to invest in, investors should clearly look for where the fund management company proposes to invest and accordingly judge the level of risk involved. UTI is having UTI Equity Tax savings Plan in this category. This scheme provides tax benefit under sec 80 of Income Tax Act 1961. The investments are locked for three years. Generally

Mastershare, UTI Masterplus, UTI Wealth Builder, UTI Master Growth, UTI Contra

these schemes are highly diversified equity funds invested across the sectors of the economy. E. Equity Index Fund - An Index fund tracks the performance of a specific stock market index. The objective is to match the performance of the stock market by tracking and index that represents the overall market. The fund invests in shares that constitute the index and in the same proportion as the index. Since they generally invest in a diversified market index portfolio, these funds stake only the overall market risk. While reducing the sector and stock specific risks through diversification. In India the index funds generally track NIFTY and BSE Sensex. UTI Master Index Fund is a variety of equity Index Fund which tracks BSE Sensex. UTI Nifty Index Fund is a variant of such fund tracks NIFTY. These two funds are best of the Index funds in the Indian Mutual Industry. F. Value funds - The growth funds too reviewed above hold shares of companies with good or improving profit prospects, and aim primarily at capital appreciation. They concentrate on the future growth prospects, may be willing to pay high price/earnings multiples for companies considered to have good potential. In contrast to the growth investing, other fund follow value investing approach. Value funds try to seek out fundamentally sound companies whose shares are currently under priced in the market. Value funds will add only those shares to their portfolios that are selling at low price earnings ratios, low market to book value ratios are undervalued by other yardsticks. G) Equity Income funds - Usually income funds are in the debt funds category as they target fixed income investment. However, there are equity funds that can be designed to give the investor a high level of current income along with some steady capital appreciation, investing mainly in shares of companies with high dividend yield. As an example an equity income fund would invest largely in power/utility companies shares of established companies that pay higher dividends and whose prices do not fluctuate as much as other shares. These equity funds should therefore be less volatile and less risky than nearly all other equity funds. HYBRID FUNDS-QUASI EQUITY/AUASI DEBT We have seen that in terms of the nature of financial securities held, there are 3 major mutual fund types: money market, debt and equity. Many mutual funds mix these different types of securities in their portfolios. Thus, most funds, equity and debt, always have some money market securities in their portfolios as these securities offer the much needed liquidity. However, money market holdings with constitute a lower proportion in the overall portfolios of debt or equity funds. There are funds that, however, seek to hold a relatively balanced a holding of debt and equity securities in their portfolios. Such funds

are termed hybrid funds as they have a dual equity / bond focus. Some of the funds in this category are described below. a) Balanced Funds - A balanced fund is one that has portfolio comparing debt instruments, convertible securities, and preference and equity shares. Their assets are generally held in more or less equal proportion between debt/money market securities and equities. By investing in mix of this nature, balanced funds seek to attain the objectives of income moderate capital appreciation on preservation of capital, and are ideal for investors with a conservative and long term orientation. UTI Children Career Plan, UTI Retirement Benefit Plan, UTI Mahila Unit Scheme, UTI ULIP Insurance Plan are examples of debt oriented balanced funds. UTI Balanced fund is a equity oriented balanced Fund. b) Growth and income funds. - Unlike income focused or growth focused funds, these funds seek to strike a balanced between capital appreciation and income for the investors. Their portfolios are a mix between companies with good dividend paying record as and those with potential for capital appreciation. These funds would be less risky than pure growth funds, though more risky than income funds. UTI Dividend Yield Fund is designed 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. c) Asset allocation funds- Normally, an equity fund would have its primary portfolio in equities most of the time. Similarly, a debt fund would not have measure equity holdings. In other words their asset allocation is predetermined within certain parameters. However, there do exist funds that follow variable asset allocation policies and move in and out of an asset class (equity, debt, money market, or even non financial asset) depending upon their outlook for specific markets. In many ways these funds have objective similar to balanced funds and may seek to diversified into foreign equities, gold and real estate backed securities in addition to debt instruments, convertible securities preference and equity shares. Asset allocation funds that follow more stable allocation policies (which hold relatively fixed proportion of specific categories) are more like balanced funds. One the other hand, funds that follow more flexible allocation policies (which vary their waiting depending upon the fund mangers outlook) are more akin to aggressive growth or speculative funds. The former are for investors who refer low risk and stable return. The later carry higher risk and potential for higher return because of the flexibility enjoyed by the fund managers. COMMODITY FUNDS While all of the debt/equity /money market funds invest in financial assets, the mutual fund vehicle in suited for investment in any other-for example-physical asset. Commodity

funds specialize in investing in different commodities directly or through shares or commodity companies or through commodity futures contracts. Specialized funds may invest in a single commodity or a commodity group such as edible oils or grains, while diversified commodities funds will spread their assets over many commodities. A most common example of commodity funds is the so-called precious metal funds. Gold funds invest in gold, gold futures or shares of gold mines. Other precious metals funds such as platinum or silver are also available in other countries. They may take expose to more than one metal to get some benefit of diversification. In India a gold fund may hold potential, given a large public holdings and interest in gold. However, commodity funds have not yet developed.

REAL ESTATE FUNDS Specialized real estate funds would invest in real estate directly, or may fund real estate developers, or lend to them, or buy shares of housing finance companies or may even buy their securities assets. The funds may have a growth orientation or seek to give investors regular income. There has recently been an initiative to offer such an income fund by the HDFC.

RESEARCH METHODOLOGY

Research always starts with a question or a problem. Its purpose is to question through the application of the scientific method. It is a systematic and intensive study directed towards a more complete knowledge of the subject studied.

RESEARCH METHODOLOGY - I have done my sip in finance development where they have assigned me to evaluate the performance of 3 main fund which are known as Unit linked insurance plan (ULIP), Retirement benefit pension fund (RBP), Equity tax saving plan (ETSP). So my main task hear to find out what are the performance of three fund and what type of performance it has been provided since it early phase. SAMPLING METHOD:Introduction:- So to know the performance of three fund I need to collect the data the data for four cogitative year regarding these three fund on different dimension like NAV, BSE, PORTFOLIO SIP RETURN, LOAD STRUCTURE and it help me to conclude about their performance. Secondary data:- Secondary data consist of information that already exist somewhere, having been collected for another purpose. I have gathered secondary data from website of different operators, different magazines, newspapers and libraries. Primary data:- I have taken great care while collecting primary data to answer that it is relevant, accurate, current and unbiased. I have visited them personally to get data.

UTI Equity Tax Saving Plan (UTI ETSP) (An open ended equity oriented tax saving scheme)

INVESTMENT OBJECTIVE The scheme aims at providing members benefits of investment in equities and at the same time avail of concession available under section 80C of the Income Tax Act, 1961. ASSET ALLOCATION PATTERN OF THE SCHEME:

Type of instruments Equity and equity linked Instrument Debt securities Money market instruments

Normal Allocation Maximum 100%, Minimum 80% Nil The scheme may hold upto 20% of its assets in money market and other liquid instruments to fund the redemptions.

ELIGIBLE INVESTORS: An application for issue of units may be made by any resident or non-resident Indian as well as non-individuals as indicated bellow. : Following categories of investors are qualified for tax benefit under Section 80C of Income tax Act, 1961: A resident adult individual either single or with another individual on joint/either or survivor basis.

 A parent, step-parent or other lawful guardian on behalf of a resident minor. An application cannot be made by adult and minor jointly. A Hindu undivided family (HUF). An application on behalf of a HUF shall be made only by the Karta either singly or jointly with another adult male member. Where there is no major male member, an application by a female member, as manager will be accepted provided a declaration to that effect is attached to the application. An Association of persons (AOP) or a Body of individual (BOI) consisting, in either case, only husband and wife governed by the system of community of property in force in the state of Goa and Union Territories of Dader and Nagar Haveli and Daman and Diu. Following additional categories of investors are allowed to invest in the scheme, but these investors will not qualify for tax benefit under Section 80C of Income Tax Act, 1961. Such investment will also be subject to lock-in-period of three years from the date of acceptance. A NRI or person of Indian origin residing abroad either single or jointly with another or upto two other individuals on joint/anyone or survivor basis. A parent, step-parent or other lawful guardian on behalf of a NRI minor. A non resident Hindu undivided family. A body corporate including a company formed the companies Act, 1956 or established under State or Central law for the time being in force. A bank including a scheduled bank, a regional rural bank, a co-operative bank etc,. An eligible trust including private Trust being irrevocable thust and created by an instrument in writing. A society. A Financial Institution. An Army/Navy/Air Force/Paramilitary Fund. A Partnership firm. A Fill registered with SEBI. A Mutual Fund. UTI Equity Tax Savings Plan declares tax-free dividend of 10% UTI Equity Tax Savings Plan (UTI-ETSP) declares tax-free dividend of 10% (Rs.1.00 per unit On a face value of Rs.10/-). Pursuant to the payment of dividend, the NAV of the dividend Option of the scheme would fall to the extent of payout and statutory levy if any. The record date for the dividend is February 21, 2011. MINIMUM APPLICATION AMOUNT:

Minimum investment Rs. 500/- and in multiples of Rs. 500/- thereafter. No maximum limit. BENCHMARK INDEX: BSE 100 DIVIDEND POLICY: Subject to availability of distributable surplus, the scheme may make the dividend distribution at such intervals as may be decided by Trustee from time to time. Expenses of the scheme

Load structure- Entry Load: 2.25% for < Rs.2 crores;

Nil for >= Rs.2 crores. Exit load- nil
Latest NAV
Scheme Name NAV (Net Repurchase Asset Value) Price Sale Price Date

UTI - ETSP-Growth Option UTI - ETSP-Income Option

39.38 15.72

39.38 15.72

39.38 15.72

29-Jun-2011 29-Jun-2011

Tax Treatment For UTI ETSP

UTI Mutual Fund, UTI Equity Tax Savings Plan, dividend UTI Mutual Fund today declared tax-free dividend of 10 per cent for its scheme--UTI Equity Tax Savings Plan (UTI-ETSP). The record date for the dividend is February 21, the company said in a statement. All unit holders registered under the dividend options of both the schemes as on February 21 would be eligible for dividends. As on February 15, the NAV per unit of UTI Equity Tax was Rs 16.35 under the dividend options. Launched in November 1999, UTI-ETSP is an open-ended equity oriented tax savings scheme. The corpus of the fund is invested in equities, fully convertible debentures/bonds and warrants of companies. Investment in this scheme would qualify for deduction, subject to a maximum of Rs 1, 00,000 under Section 80C of Income Tax Act. 1. Tax Issues concerning mutual fund: UTI Mutual fund is a mutual fund registered with SEBI and as such as eligible for benefits under section 10 (23D) of the income Tax act, 1961 (hereinafter referred to as the Act to have its entire income exempt income from income tax. The funds collected under the scheme shall be invested in equities, fully convertible debentures/ bonds and warrants of companies. Investment may also be made in issues of partly convertible debentures/bonds including those issued on rights basis subject to the condition that, as far as possible, the non-convertible portion of the debentures/bonds so acquired or subscribed shall be disinvested within a period of twelve months from their acquisition. The Quarterly Average Fund Size of the Scheme amounted to Rs. 488.45 crore as on 31st March 2011. As at March 31,2011, the scheme had 92.32% of its net assets invested in equities and 7.68% in money market instruments. In view of the uncertain market condition, the fund has maintained higher proportion in money market instruments on short term defensive consideration. Tax on capital gains : Long term capital Gains.

As per section 10 (38) of the Act, any income arising from the transfer of a long term capital asset being a unit of an Equity Oriented Fund chargeable to securities transaction tax shall not form part of total income therefore, exempt from income Tax. With effect from June 01, 2006 equity oriented fund means a fund where the investible funds are invested funds are invested by way of equity share in domestic companies to the extent of more then sixty percent of the total proceeding of such fund : and

which has been set up under a scheme of a mutual fund specified under section 10 (23D) of the income Tax Act, 1961 : Short term capital gains. Units held for not more than twelve months preceding the transfer are short term capital assets. Capital gains arising from the transfer of short term capital asset being unit of an equity oriented fund which is chargeable to STT shall be liable to income tax @ 10% under section 111 A of the Act. The said tax rate would be increased by applicable surcharge i.e. 10% for Individual, HUF, AOP, BOI, having total income above Rs. 10 Lakhs, 10% for firm and domestic company, @2.5% for non-domestic company and Nil for co-operative society of local authority. The tax and surcharge will be increase by education cess @ 2%. Securities Transaction As per chapter VII of Finance (No.-2) Act, 2004 relating to securities Transaction Tax (STT) the STT shall be payable by the seller at rate of 0.20% (0.25% w.e.f. June1, 2006) on the sale of a unit of an equity oriented fund to the UTI mutual. The STT shall be collected by the Mutual Fund at source. As per section 80E of the income tax act, 1961 where the total income of an assesses in a previous year includes any income, chargeable under the head profits and gains of profession, arising from taxable securities transaction, the assessee, shall be entitled to a deduction, from the amount of income tax on such income arising from such transaction, computed in the manner as specified under section 88E, of an amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into the course of business during that previous year. o o TDS on capital gains: - For Non resident investors. : Long Term capital gains No tax would be deducted from the proceeding payable to non resident

investors from long term capital gains arising out of redemption of units of equity oriented funds. o Short term capital gains As per part II of the First Schedule to the Finance Act, 2006 (Clause 1 (b) (i) (C) ), the Mutual fund is liable to deduct tax @10% on short term capital gains. The TDS will have to be increased by applicable surcharge and an education cess @ 2 percent would be charged on amount of tax and surcharge. Long term capital gains

 No tax would be deducted from the proceed payable to non resident investors from long term capital gains arising out of redemption of units of an equity oriented fund. Short term capital gains. As per part II of the first schedule to the Finance Act, 2006 (Clause 2 (b) (vii), the mutual fund is liable to deduct tax @ 10% on short term capital gains. The TDS will to be increased by applicable surcharge. Further an education cess @ 2 percent would be charged on amount of tax and surcharge.

UTI-ETSP PORTFOLIO AS ON 31ST MAY 2011

EQUITY
Infosys Technologies Ltd. Reliance Industries Ltd.
ITC Ltd. State Bank Of India Sun Pharmaceuticals Industries Ltd. HDFC Ltd. Tata Consultancy Services Ltd. Coromandel International Ltd. Tata Motors Ltd - Dvr Shares Ultra Tech Cement Ltd.

% OF NAV 7.32 6.33 5.17 3.93 3.71 3.65 3.16 3.07 2.95 2.88

Larsen & Toubro Ltd. Oil & Natural Gas Corporation Ltd. Bharat Heavy Electricals Ltd. Axis Bank Ltd. Tata Power Company Ltd. Gujarat State Petronet Ltd. Asian Paints Ltd. ICICI Bank Ltd Bharat Electronics Ltd. Oriental Bank Of Commerce Dena Bank GAIL (India) Ltd Sterlite Industries (India) Ltd. Akzo Nobel India Ltd. Grasim Industries Ltd. Indian Oil Corporation Ltd Cadila Healthcare Ltd. Century Textiles & Industries Ltd. Bharat Petroleum Corporation Ltd. Hero Honda Motors Ltd.

2.64 2.62 2.56 2.49 2.35 2.34 2.24 2.20 2.20 2.07 1.85 1.83 1.64 1.60 1.52 1.38 1.25 1.24 1.21 1.13

Others Net Current Assets

Total

11.79 7.68 100.00

Industries exposure (% to NAV)

FUND ANALYSIS: 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. This is a highly diversified equity fund providing stability to the funds as it is over weight on large cap stocks. The little mix of mid cap stocks gives the boost in the NAV of the scheme over a longer period. As the scheme provides tax benefits under sec 80 (c) of the Income Tax Act 1961 the investment is locked for three years. The fund has taken exposure in Energy, Consumer goods, and Industrial Manufacturing which is expected to do well in future. These sectors have the capacity to outperform others. In this fund exit load is nil. If the investment is less than 2 crores the entry load is 2.25%. In the comparison between the funds performance and the benchmark set by CRISIL we can see that in the recession time the fund is well managed. This is an equity oriented scheme to be advised to those classes of investors who generally seek to reap the benefit of equity investment over relatively a longer period.

UTI Retirement benefit Pension UTI RBP (An open and notified pension fund)INVESTMENT OBJECTIVE: 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 upto the extent of repurchase value of their holding through a systematic withdrawal plan. ASSET ALLOCATION PATTERN OF THE SCHEME: Type of instruments Equity and equity linked Instrument Debt securities Money market instruments Normal Allocation (0% of net Asset) Maximum : Nil, Maximum : 40% Minimum : 60%, Maximum : 100% No fixed allocation will normally be made for money market instruments. The same will be kept to the minimum generally to meet the liquidity needs of the scheme.

Plans: Systematic withdrawal plan (SWP) available. Payment under SWP are made after 58 year / 5 year from the date of investment, whichever is later, at monthly, quarterly, half-yearly or yearly intervals. Minimum amount of redemption is Rs. 1000/- and in multiples of Rs. 100 thereafter. ELIGIBLE INVESTORS: UTI Retirement Benefit Pension Fund is open to resident Indian individuals in the age group 18 to 60 years either singly of joint with another individual on joint / anyone or survivor basis. A Body Corporate or an eligible trust or a society can also invest in the scheme for the benefit of individuals. However, member will be granted in the name of such beneficiary individuals and not in the name of body corporate or eligible trust. MINIMUM APPLICATION AMOUNT: The minimum amount of each investment that can be made in the scheme is Rs. 500/subject to not being more than 12 times in any fiscal year. A member of the scheme has

to ensure that he invests in the scheme an aggregate sum of at least Rs. 100,000/- before he completes 52 year of age. The minimum for those joining the scheme after 52 years of age of Rs. 10,000/- (sale value). Members with an existing folio under the scheme and having an investment of Rs. 10,000/- or more under a folio, can continue invest a minimum of Rs. 10,000/- every time. BENCHMARK INDEX: CRISIL MIP Blended Index DIVIDEND POLICY: Subject to available of distributable surplus, the scheme may make the dividend distribution at such intervals as may be decided by Trustee from time to time. Generally, for unit holder below the age of 58 year, dividend distribution, if any will automatically get reinvested in the scheme.

EXPENSES OF THE SCHEME Load Structure : Entry Load: Nil Exit Load: <1 Yr - 5% >=1 Yr & <2 Yrs - 4% >=2 Yrs & <3 Yrs -

3%. >3 Yrs & <4 Yrs - 2% >=4 Yrs & <5 Yrs - 1% >=5 Years NIL. Redeem within and upto 1 year the date of investment. Redeem made after one year of investment and upto 3 years from the date of investment. Redemption made after 3 years from the date of investment. Redemption at maturity i.e. 58 years from the date of investment whichever is later Not exceeding 5% of the NAV Not exceeding 3% of the NAV

Not exceeding 1% of the NAV Nil

Tax-Treatment For UTI RBP 1. Tax issues concerning mutual fund: UTI Mutual fund is a mutual fund registered with SEBI and as such as eligible for benefits under section 10 (23D) of the income Tax act, 1961 (hereinafter referred to as the Act to have its entire income exempt income from income tax. The mutual fund will received income without any deduction of tax at source under the provision of section 196 (iv) of the Act. Tax Issue concerning unit Holders. Tax on income in respect of units. As per the section 10 (35) of the Act, income received by investors under the scheme of UTI MF is exempt from income tax in the hands of the recipients unit holders. As per section 115R of the Act, income distribution tax shall be levied at 12.5% plus surcharge for distribution made to individuals or individuals or Hindu Undivided Families and for any other person at 20% plus surcharge w.e.f. 9th July 2004. Further education cess @ 2% would be charged on amount of tax plus surcharge. o Tax on capital Gains. Long term capital Gains. Resident unit holder Any long term capital gain arising on redemption of units by resident is subject to treatment indicated under Section 48 and 112 of the Income Tax Act, 1961. Long term capital gains in respect of units held for more than 12 months is chargeable to tax @ 205 after factoring the benefit of cost inflation index or tax at the rate of 10% without indexation, whichever is lower. The said tax rate would be increase by applicable surcharge i.e. @ 10% for individuals having total income above Rs. 10 Lakhs. The tax and surcharge will be increased by education cess @2%.

Non Resident unit holders. Under section 115E of the Income Tax Act, 1961, in case of income of non resident Indian by way of long term capital gains, in respect of units is chargeable at the rate of 20% plus surcharge and education cess. Under section 115 D of Income Tax Act, a non-resident Indian cannot avail by education cess @ 2%. In the alternative the capital gains tax may be computed by the non resident under section 112, if it is more beneficial to them. Under section 112 of Income Tax Act, 1961 long term capital gains are taxed @ 20% plus surcharge and education cess. The benefit of indexation is also available to other residents under section 48 of the Income Tax Act, 1961. Gains on short term capital asset are taxed as taxed as regular income. Short Term Capital Gains. Unit held for not more then twelve months preceding the date of their transfer are short term capital assets. Capital gains arising from the transfer of short term capital assets to tax at the normal rates of tax applicable to such assessee. TDS on capital gains. Residents Investors As per central Board of Direct Taxes (CBDT) circular No. 715 dated 8th August 1995, in case of resident unit holder no. tax is required to be deducted from capital gains arising at the time of redemption of the units. o Non Resident Investors. Long term capital gains: As per part II of the First Schedule to the Finance Act 2006 (Clause 1 (b) (i) (D)), the Mutual Fund is liable to deduction tax @ 20% on long term capital gains. Short term capital Gains: As per Part II of the First schedule to the Finance Act 2006 (Clause 1 (b) (i) (K), the Mutual Fund is liable to deduction tax @30% on short term capital gains. The TDDS will have to be increased by applicable surcharge. Further an education cess @ 2 percent would be charged on amount of tax and surcharge.

UTI-RBP PORTFOLIO AS ON FEB 28TH 2011

DEBT
Govt Securities

% Of NAV

RATING

11.03% GOI 18/07/2012 GS-8.33%07/06/2036 Long Term Debt Shriram Transport Finance Co.Ltd. . Mahindra & Mahindra Fin.Ser.Ltd Emaar Mgf Land Ltd. Reliance Utilities & Power Pvt Ltd. HDFC Ltd. AAIDBI Bank Ltd. ICICI Bank Ltd Cholamandalam Investment & Finance Company Ltd NABARD Tata Steel Ltd. Others Sub Total Securitised Debt Standard Bank CP / CDs IDBI Bank Ltd. Sub Total Equity Infosys Ltd Tata Technologies Consultancy Chartered Mat-

1.45 0.68

SOV SOV

12.09

AA AA+ BBB+ AAA AAA AA+ AAA AAAAA AA

5.49 2.84 2.77 2.75 2.72 2.15 1.84 1.39 1.05 3.07 38.16 0.49

AAA(SO)

16.15 16.15 1.38 1.34 1.32 1.18 1.04 1.04

Services Ltd State Bank Of India ICICI Bank Ltd Oil & Natural Gas Corporation Ltd. Reliance Industries Ltd

Sterlite

Industries

1.03 0.96 0.95 0.93 0.93 0.91 0.91 0.90 0.87 21.00 36.69 6.38 100.00

(India) Ltd. Bharti Airtel Ltd. Mahindra Ltd. Polaris & Mahindra Lab

Software

Limited Larsen & Toubro Ltd. Zensar Ltd. Bharat Electricals Ltd. Axis Bank Ltd. HDFC Ltd. Others Sub Total Net Current Assets Total Technologies Heavy

Fund Performance as on February 28, 2011

PERIOD

NAV GROWTH OPTION 4.73 6.41 8.07 11.41

CRICIL HYBRID

DEBT

1 YEAR 3 YEAR 5 YEAR Since inception

6.64 5.62 N.A N.A

Industrywise Exposure (% to NAV)

CREDIT PROFILE OF DEBT

ASSET ALLOCATION

Fund Analysis :UTI Retirement Benefit Plan was launched to provide a parallel pension scheme to the people working in sectors like Pvt. Sectors, Unorganized Sectors. This is a first fund in its kind. It is a conservatively managed balance fund which aims to create wealth at the hands of the investors over a longer period. As the investors are investing for their retirement planning, it is managed with a minimum risk having maximum 40% exposure in equities. It provides Systematic Withdrawal Plan from the investors from the age of 58 in form of pension. The scheme provides the Tax Benefit under sec 80 of the Income Tax Act 1961. One can avail the benefit maximum Rs. 100000/-. The return it has generated over a longer period is much competitive and in line with /better than the provident fund / PPF returns. The investors who seek conservative investment avenue with added benefit of tax rebate and retirement planning may find this plan suitable and one of the best to invest.

UTI Unit linked

Insurance Plan UTI ULIP (An open-end insurance and tax saving cum investment plan) INVESTMENT OBJECTIVE: To provide return through growth in the NAV or through dividend distribution and reinvestment thereof. ASSET ALLOCATION PATTERN OF THE SCHEME: Type of Instruments Equity and equity lined Instruments Debt securities Money market instruments Normal Allocation Minimum 0%, Minimum 40% Minimum 60%, Maximum 100% No fixed allocation will normally be made for money market instrument.

PLANS: 10 year plan or 15 years Plan. TARGET AMOUNT The minimum and maximum Target amount of investment under the scheme is Rs. 15000/- and Rs. 1500000/- respectively. ELIGIBLE INVESTORS Investment is open to the following categories of investors (both resident as well as NRIs) between the age of 12 year 55 years in the 10 year plan and between the age of 12 years and 55 years for the 15 years plan, at the time of Joining the plan on each occasion. : An adult male person.

An adult female person having regular and independent source of income. However adult female persons having no regular income of their own are allowed to participate in the scheme subject to the life insurance cover being restrict to Rs. 150000/ever if the target amount chosen by them is above Rs. 150000/ A minor above 12 years of age through his parent. However, such having no regular and independent source of income will not be eligible will not be eligible for the life insurance cover. Investment can also be made in the name of the spouse / children above the age of 12 years. The age of the applicant at entry to the one, this is as on the date on which UTI AMC accepts his application.

 A physically handicapped person can also join the scheme subject to lapse of 5 years from the date of event causing physical handicap and his holding gainful employment at the time of application and subject to such conditions as may be prescribed. BENCHMARK INDICES: CRISIL MIP Blended Index and CRISIL Balance Fund Index. DIVIDEND POLICY: Generally the income earned by or accrued to the scheme will be ploughed back in the scheme and therefore the scheme may not make any dividend distribution. However, in appropriate circumstances, dividend may be distribution. Dividend distribution, if any, will automatically get reinvested in the scheme. EXPENSES OF THE SCHEME Entry load: Nil Exit load: 2% for premature withdrawal Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value) 17.0293 17.0293 Date

UTI - Unit Linked Insurance Plan TERMINATION OF MEMBERSHIP:

17.0293 01-Jul-2011

Any unit holder whose RC remains unpaid even after the expire of the period specified under payment of contribution above, shall cease to participate in the scheme forthwith unless otherwise decided by the UTI AMC. Insurance cover on the life of such a unit holder will also stand to terminate simultaneously. A unit holder, whose participation in the scheme stands terminated in terms of subclause (a) above, may approach the UTI AMC not later one year from the first day of the month of the earliest contribution in default, to revive his participation. This request will be considered subject to such term and conditions as may be prescribed by the UTI AMC in consultation with the LIC any insurance company as the case may be.

Tax-Treatment For UTI ULIP Tax issues concerning mutual fund: UTI Mutual fund is a mutual fund registered with SEBI and as such as eligible for benefits under section 10 (23D) of the income Tax act, 1961 (hereinafter referred to as The Act to have its entire income exempt income from income tax. The Mutual fund will receive income without any deduction of tax at source under the provision of section 196(iv) of the Act. Tax issue concerning unit Holders Tax on income in respect of units. As per the section 10 (35) of the Act, Income receive by investors under the scheme of UTI MF is exempt from income tax in the hands of the recipient unit holders. As per section 115R of the Act, income distribution tax shall be levied at 12.5% plus surcharge for distribution made to individuals or individuals or Hindu Undivided Families and for any other person at 20% plus surcharge w.e.f 9 th July 2004. Further education cess @ 2% would be charged on amount of tax plus charge. Tax on Capital Gains o Long Term capital Gains Resident unit holder Any long term capital gain arising on redemption of units by resident is subject to treatment indicated under Section 48 and 112 of the Income Tax Act, 1961. Long term capital gains in respect of units held for more than 12 months is chargeable to tax @ 205 after factoring the benefit of cost inflation index or tax at the rate of 10% without indexation, whichever is lower. The said tax rate would be increased by applicable surcharge i.e. @10% for individual having total income above Rs. 10 lakhs. The tax and surcharge will be increased by education cess @ 2%. o Non Resident Unit holders

Under section 115E of the Income Tax Act, 1961, in case of income of non resident Indian by way of long term capital gains, in respect of units is chargeable at the rate of 20% plus surcharge and education cess. Under section 115D of Income Tax Act, a non-resident Indian cannot avail by education cess @ 2%. In the alternative the capital gains tax may be computed by the non resident under section 112, if it is more beneficial to them. Under section 112 of Income Tax Act, 1961 long term capital gains are taxed @ 20% plus surcharge and education cess. The benefit of indexation is also available to the residents under section 48 of the Income Tax Act, 1961. Gains on short term capital asset are taxed as taxed as regular income. Short Term Capital Gains Unit held for non more then twelve months preceding the date of their transfer are short term capital assets. Capital gains arising from the transfer of short term capital assets to tax at the normal rates of tax applicable to such assessee. TDS on Capital gains. Residents InvestorsAs per Central Board of Direct Taxes (CBDT) circular No. 715 dated 8th August 1995, in case of resident unit holder no tax is required to be deducted from capital gains arising at the time of redemption of the units. o Non Resident Investors o o o o Long term capital gains: As per part II of the First Schedule to the Finance Act 2006 (Clause 1 (b) i) Short term capital Gains: As per Part II of the First schedule to the Finance Act 2006 (Clause 1 (b) (i)

(D)), the mutual Fund is liable to deduction tax @ 20% on long term capital gains.

(K), the Mutual Fund is liable to deduction tax @ 30% on short term capital gains. The TDS will have to be increased be applicable surcharge. Further an education cess @ 2 percent would be charged on amount of tax and surcharge. PORTFOLIO AS ON MAY 31ST ,2011 UTI-ULIP

EQUITY Tata consultancy Bosch ltd Nestle India ltd Crisil ltd

% OF NAV 1.91 1.68 1.66 1.50

RATING

Reliance industry ltd Infosys tech Mahindra & Mahindra ltd HDFC ltd Axis bank ltd Larsen & turbo ltd Pfizer ltd PNB Tata global beverages ltd Union bank of india Pipavav shipyard ltd Grasim industry ltd Others Subtotal DEBT GOVT SEC 7.80% GSEC 11.04.2021 06.13 GOI 04/06/2028 7.49%GOI 16/4/2017 05.69% GSEC 25/9/2018 10.25% GOI 30/05/2021 OTHERS LONG TERM DEBT SHRIRAM TRANSPORT EMAAR MGF LAND LTD AXIS BANK LTD Indian oil corporation LIChousing finance

1.47 1.41 1.40 1.35 1.27 1.26 1.26 1.21 1.06 1.05 1.01 1.01 16.55 38.06

2.11 1.19 0.84 0.75 0.24 0.19 6.44 4.67 3.04 2.99 2.20

SOV SOV SOV SOV SOV

AA BBB+ AA+ AAA AAA

ltd NABARD KOTAK MAHINDRA BANK LTD IDBI BANK LTD ICICI BANK LTD HERO INVESTMENT PVT LTD OTHERS SUB TOTAL Securitised debt Standard chatard bank CP/CDS Bajaj finance ltd ICICI bank ltd Axis bank ltd Oriental bank of commerce Andhra bank Oters Sub total Net current assets Total

2.19 2.19

AAA AA+

2.09 1.67 1.10

AA+ AAA P1+

13.54 42.12 0.95 3.28 3.12 2.73 1.02 0.42 0.33 10.90 2.65 100 AAA(SO) P1+ PR1+ P1+ P1+ PR1+

FUND PERFORMANCE AS ON MAY 31ST ,2011

Period

NAV

growth

CRISIL hybrid (60:40)% 7.09 7.08

debt

option % 1 years 3 years 5.98 11.10

5 years Since inception

11.14 10.98

10.35 N.A.

Industry wise exposure (% to NAV) equity portion

Credit profile of debt

Asset Allocation

Fund Analysis:

UTI ULIP was launched in the year 1971. This an unique funds in its kind. UTI ULIP is positioned as a debt oriented balanced fund with a long term investment horizon and aims to deliver capital appreciation. Owing to its long term nature, emphasis given on adjusting the asset allocation and the mix within the asset class depending on the prevailing market conditions. The fund is ideally suited for investors looking for stable growth with a horizon of 10-15 years with added benefits of life insurance and accident covered. Tax benefits can also be used if applicable. The entry load in ULIP is nil and in case of premature withdrawal exit load is 2%. For maturity payment no exit load is charged. In this scheme bonus have been declared for 7 times, which shows that the fund is performing well. Total number of dividend paid in this scheme is 3 Maximum part of the fund has been invested in long term debt to reduce the risk in the fund.

FINDING AND INTERPRETATION : i) It has been derived that UTI mutual fund is having all kinds of Schemes for Wealth Creation. ii) It has been analyzed and found that UTI MF has no of efficient schemes for Tax Savings. iii) These are schemes are more efficient in generating returns than the traditional Tax Savings scheme. iv) Plan. UTI RBP is an alternative plan to those who are not covered under any Pension

v) UTI ULIP is a multi benefit Plan which provides Life Insurance as well as Tax Benefit under Sec 80 of the Income Tax Act 1961. vi) UTI Equity Tax Savings Plan is a plan with high growth potentials. vii) My study reveals that these plans are very effective and efficient options for investment as well as Tax Savings.

Suggestions : i) These plans are very popular to the investors. UTI should be very careful and vigilant to manage these funds efficiently as the investors have much faith and confidence with these schemes. ii) From the performance point of view it has been suggested that in ETSP the short term returns are average in comparison to its benchmark. UTI should be careful to the fact. iii) These plans should be popularized through micro level marketing to attract the people engaged in service sector. iv) RBP may be focused to the unorganized / private sector where the employees have no pension / retirement benefit.

CONCLUSION The purpose of the project was to analyze the utility pf ITO-ELSS product and its edge over other competitive products like NSE, P.P.F. & L.I.C. It has been found that ELSS product beer the market risk where as product like NSE, P.P.F. providing 80C benefits are guaranteed by the central government. Though the mutual fund ELSS product bear the market risk the capacity of generating return over the longer period is much higher than those product. On the other hand NSE, P.P.F generates a return at the range of 8 to 8.5% annual our study schemes that ULIP, RBP, and ETSP have generated a return of respectively over five year. Beside the tax benefit the product like ULIP extends the benefit of insurance coverage, accidental insurance coverage, maturity bonus. The product live RBP product provides retirement security. The products ULIP charge a very nominal load to the investors whereas the same the same kind of product under insurance scheme charge a very high load. The return from insurance product is ranging between 5 to 6.5% where UTI-ULIP has given an annualized compounded return of for last 5 years. From the above analyses it is advisable to the investors. Who can take some risk for generating higher return may take exposure to UTI-ULIP, UTI-RBP & UTI-ETSP. These schemes will be actually beneficial to them in generating higher returns in addition to availing tax benefit.

BIBLOGRAPHY

Website

www.utimutualfund.com www.moneycontrol.com www.wilkipedia.com www.google.com www.statebankofindia.com www.iciciprudencial.com www.citibank.com Magazine and newspaper

4Ps magazine The times of India The Economic times.