UTI UNION TRUST OF INDIA

YEAR OF ESTABLISHMENT: ABOUT

1964

Unit Trust of India [UTI] is a financial organization in India, which was created by the UTI Act passed by the Parliament in 1964. For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. Its establishment has been a landmark in the history of investment trusts in India. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. Fearing a run on the institution and possible impact on the whole market Government came out with a rescue package and change of management in 2001. Subsequently, the UTI Act was repealed and the institution was bifurcated into two parts. UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank. In order to distance Government from running a mutual fund the ownership was transferred to four institutions; namely SBI, LIC, BOB and PNB, each owning 25%. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level. UTI was re-organised into two parts: 1. The UTI Mutual Fund [UTIMF] 2. The Specified Undertaking [SUUTI] Presently, UTI operates under the name of UTI Mutual Fund. UTIMF is still the largest player in the industry.

SUBSIDIARIES OF UTI 1. The UTI Bank Ltd. 2. UTI Investor Services Ltd. 3. UTI Investment Advisory Services 4. UTI Securities Exchange Ltd. 5. UTI Institute of Capital Markets

ROLE OF UTI IN INDUSTRIAL FINANCE 1. Assistance to Corporate Sector 2. Form of Assistance 3. Purpose-wise Assistance 4. Industry-wise Assistance 5. Sectoral Distribution of Assistance 6. State-wise Distribution of Assistance

OBJECTIVES Basic objective: offer small and large investors the means of acquiring shares in the widening prosperity resulting from the steady, industrial growth of the country. Primary Objectives: 1. To promote and pool the small savings from the lower and middle income people who cannot have direct access to the stock exchange, 2. To give an opportunity to share the benefits and fruits of prosperity resulting from rapid industrialisation in India.

FUNCTIONS The main functions of UTI are as follows: 1. To encourage savings of lower and middle-class people. 2. To sell units to investors in different parts of the country. 3. To convert the small savings into industrial finance. 4. To give them an opportunity to share the benfits and fruits of industrialisation in the country. 5. To provide liquidity to units.

ADVANTAGES OF UTI 1. Good opportunity for small investors: Many investors cannot directly invest in financial instruments because minimum required investment in them is quite high. UTI is the best choice for them. 2. Cost of investment is low: This is low is UTI in comparison to direct investment because of many cost involved in it like brokerage cost, purchase cost, etc. 3. Wide choice of schemes: UTI provides investors a wide choice of schemes and they can invest according to their choice and capacity 4. Safe investments: UTI invests its funds in wide range of securities. Any risk in one security is offset by good return in other 5. Steady incomes: The unit holders are ensured of regular return on their investment as UTI distributes nine-tenth of its income in unit holders 6. Expert handlings: UTI has the advantage of having expert advice while making investment in the security of various companies. The expert can

analyse the financial strength of invest.

the company where UTI is going to

7. Tax concession: The investment in UTI carries some tax concessions. There is a wealth tax concession if the amount is invested in units. 8. Liquidity UTI announces repurchase price of units under various schemes. The investor needing his money back can sell the units to the trust and get the money back.

TYPES OF SCHEMES A. Based on maturity period 1. Open-Ended Schemes 2. Closed-Ended Schemes 3. Fund of Funds 4. Exchanged Traded Funds

B. Based on Investment Objective 1. Growth / Equity Oriented Schemes 2. Income / Debt Oriented Schemes 3. Balanced Fund 4. Liquid Fund 5. Gilt Fund 6. Index Fund

STATISTICS AND ACHIEVEMENTS It has over 70 schemes in domestic MF space and has the largest investor base of over 9 million in the whole industry. It is present in over 450 districts of the country and has 100 branches called UTI Financial Centres

or UFCs. About 50% of the total IFAs in the industry work for UTI in distributing its products. India Posts, PSU Banks and all the large Private and Foreign Banks have started distributing UTI products. The total average Assets Under Management (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes AUM put together it ranked FIRST in the industry. This measure indicates its revenue- earning capacity and its financial strength.