BACKGROUND OF UTI

UTI MISSION STATEMENT

To meet investors diverse income and liquidity needs by creation of appropriate Schemes; to act as his one-window investment institution; to offer best possible returns on his investment, and render him prompt and efficient service, beyond normal customer expectations. To keep the common man into sharper focus; to encoura e savin habits amon them; to brin and investment

to the common man the prosperity of the

capital market at minimum risk, throu h the habit of investin in !nits. To pursue excellence in performance in all areas relatin to sale of !nits

investment of funds and service to investors; to havin abidin concern and utmost care for the savin of investors. To develop in each and every

member of !T" the hi hest de ree of self-esteem and pride that we are fortunate to be in this "nstitution to offer our best services to investors.#

INTRODUCTION
!T" was set up under the !T" $ct, %&'(. "t commenced its operations from its )uly %&'*. "t was created to spread investment consciousness to mobili+e the savin s of the ,ublic, particularly small investors includin those in the rural sector, and to invest these savin s in shares and securities and other financial instruments harnessin household savin s for industrial development of the country and to provide fair returns to the investors. !T" has corporate sector. rown into "ndia#s lar est institutional investor in the

ORGANIZATION STRUCTURE
$s a pure Trust without a capital -ownership capital., !T" represents a unique or ani+ational innovation. !nder the provisions of the first !T" Scheme -!nit Scheme %&'*. which was outlined in the $ct itself, certain institutions were required to contribute to the Scheme#s initial capital, which is redeemable at the discretion of the Trust at such values as may be decided by the /overnment of "ndia. $ccordin ly, initial capital of 0s. 1 2rore for !S #'* Scheme was contributed by the 03" -later on transferred to "43"., 5"2 S3" and "ts subsidiaries and other Scheduled 3anks includin few forei n 3anks. !nder the $ct the initial capital contributors to the !S #'* Scheme had been provided representation on the 3oard of the Trustees of !T". 2hairman of the 3oard is appointed by /overnment of "ndia. 6ominations to the 3oard are made by 03" -% Trustee., "43" -* Trustees., 5"2 -% Trustee. and S3" -% Trustee.. 7ther contributin institutions elect 8 Trustees. 9xecutive Trustee is appointed by "43". 3oard of Trustees does not include any employee. Thus, the 3oard consists

mainly of representative :nominees of the investors to the initial unit capital of the *1#'* scheme. Since !T" does not have any share capital it operates on the principle of ;no profit no loss< as all income and ains net of all costs and development char es ultimately o back to the initial capital contributors and unit -

holders of respective schemes. $t present *1#'* scheme has 0s. 88=== crore capital while its initial capital was 0s. 1 crore.

GROWTH DURING 1964-1980

"n %&'*-'1, !T" mobili+ed 0s. %& crore under !S#'* Scheme. The Trust introduced 0einvestment ,lan under !S#'* in %&''-'> -$utomatic reinvestment of dividends to !S #'* unit-holders and in %&>%, !nit 5inked "nsurance ,lan -!5",. which provided not only rowth in the value of

investment for the contractual period of %= years -%1-year option was introduced later. but also insurance benefit. 3y )une %&?=, with * offices !T" had been operatin ' different Schemes and ,lans with an outstandin !nit 2apital of 0s. (&% crores -%= lakh unit-holdin accounts. and invisible funds of 0s. *'> crore. 4ividend rate under !S#'* increased from '.%@ in %&'*-'1 to %=@ in %&>&-?= -from >@ to ?.1@ under !5",.. 3y )uly %, %&?= the sales and repurchases price f units under !S#'* Scheme had increased to 0s. %(.8= and 0s. %%.=1 respectively.

GROWTH DURING 1980-90

4urin the ei hties, !T" had introduced more than 8= new open-end and closed-end schemes. These include !nit Scheme for 2haritable and 0eli ious Trusts and 0e istered societies %&?% -open A end., 2apital /ains !nit Scheme %&?( -open-end., 2hildren# /ift /rowth Bund %&?'

-7pen-end., ,arents /irt /rowth Bund %&?> -open-end., "ncome !nit Scheme %&?8 -closed end., %* Conthly "ncome !nit Schemes -from %&?(., the first Cutual Bund type !nit Scheme popularly known as Caster share -%&?'. as also 8 7ffshore Bunds -"ndia Bund !nit Scheme %&?' and "ndia /rowth Bund %&??.. 3y )une %&&=, the outstandin !nit 2apital increased to 0s. %(,(&8 crores -'1 lakh unit-holdin accounts under (= Schemes., while the investible funds rose to 0s. %>,'1% crores. !S #'* alone accounted for unit capital of 0s. >=81 crores and investible funds of 0s. %=,(1* crores. The sales and repurchase prices of units under !S#'* had risen to 0s. %(.>1 and 0s. %(.== respectively. The rate of dividend under !S#'* rose to %?@ in %&?&-&=.

GROWTH DURING 1990-94

The nineties continued to witness hi h rates of rowth in !nit#s operations. 7utstandin !nit 2apital increased from 0s. %(,(&8 crore in )uly %&&= to 0s. %',*=& crores in )uly %&&% and further to an estimated 0s. (&,(=( crores by )une %&&*. 4urin the same period outstandin unit-holdin

accounts increased from '1 lakhs to %=( lakhs and further to ('* lakhs. "ndividual investor came into sharper focus durin this period. "nvestible

funds increased from 0s. %>,'1% crore to 0s. 8%,(>' crores and crossed 0s. 1%,>=& crores. The number of !T" branch offices increased from 8= in )uly %&&= to ** in )une %&&*. 4urin )uly %&&=-)une %&&*, !T" has

introduced (1 Schemes of different variety. These include %= Conthly "ncome Schemes : ,lans, * 4eferred "ncome !nit Schemes : ,lans, %8 9quity 7riented Cutual Bund type closed-end Schemes -like !/S-8=== and !/S-1=== exclusively for !S '* unit-holders, Caster ain, Casterplus, !S#'8 Caster rowth and /randmaster. as also * 9quity Schemes: ,lans -under overnment#s 9quity 5inked Savin s Schemes..

!T" also introduced a number of special Schemes to cater to special societal : sectoral needs -Senior 2iti+ens# !nit ,lan, 0aDlakshmi !T" Scheme, 2hildren#s# 2olle e and 2areer Bund and 3hopal /as Eictim Conthly "ncome ,lan.. $t present, !T" mana es 1* Schemes. 9ven after a preferential offer at a 81@ price discount to existin !S '* unit-holders in )uly %&&8, the dividend under !S#'* was raised from 81@ to 8'@ in %&&8-&(. The )uly sales and repurchase prices of !S#'* in %&&( were 0s. %'.== and 0s. %1.== respectively. "n )uly %&&( holders were !S #'* unit-

iven 8F1 0i hts offer at a 8=@ price discount. The

,referential and 0i hts offers brou ht in substantial rise in effective yield to !S#'* unit-holders. $lso, durin last * years period, all fixed income ivin hi her capital

Schemes have out performed their promises by

appreciation on maturity or bonus dividend. 3esides, all the equity funds of !T" have out-performed market indices. Castershare, the first mutual fund type scheme of !T" has provided compound rate of return *?@ per year for the last > G years of its operation. To the investin public !T" has emer ed as a financial institution for safety, liquidity and competitive returns. Since !T" does not char e any mana ement fee, enDoys considerable economies of scale and has very low non-performin or bad-debt portfolio, it has the lowest intermediation cost -less than %@ of net asset value.. 7peratin on the principle of ;no profit no loss<, !T" has been able to provide relatively handsome returns to unit-holders.

HIGHLIGHTS OF 1995-96
The hi hli hts of the year#s performance were F Cobili+ation of 0s. ?.88> -0s. ',(>( face value. crore from %=1 lakh fresh unitholdin accounts under ei ht new schemes -all closed-end.

and fifteen existin open-end schemes. Ceetin rep--- and redemption of units of the value of 0s. %%.1> -0s. >,'*( face value. crore Bresh investment in fresh primary corporate debt and equity issues amountin to 0s. 8,&&* crore under all schemes. 4ividend of 8=@ and a first ever bonus of %F%= under !S-'*. 4ividend rates !nder !5", -%'.1@., 20TS -%?@. and /2/" -%(@. maintained at the previous year#s level. 4ividend under 2/S-&( and !S-&1 increased to %(@ and %(.1@ respectively. 4ividend under Castershare -%'@. maintained on the enlar ed capital -due to %F1 bonus issue in the previous year.. 3etween )uly %, %&&1 and )une (=, %&&' while the 3S9 6ational "ndex and 3S9 Sensex appreciated by %8.>@ and %1.%@ respectively, 6$Es of !T"#s equity A oriented schemes recorded an appreciation of '.*@ to 81.?@. 2ontinued low ross operatin cost rate of =.>&@ of total investible

funds and reduction of cost per account soHbranch offices, and 8= new franchise offices. 7pened two new branch offices, and 8= new franchise offices.

UTI : GROWTH IN PERSPECTI E

(Rs. in cores)

!"#$

S#%"& ' ( ) " $ #% % S * + " , " &

O'-&-#(). ( / ' ( .* # 0 .#%

O'& # ( ) . ( / ' ( .+ 1 % ) . ( / # * * 1 ' ( & 2. ( %# 3 + & 4 %.(8 %.(1 %.>= 8.%& 8.'& (.(1 (.?* *.(1 1.=? 1.&> '.=% '.(> '.?% >.>= &.=* &.?' %=.*> %8.8( %(.'' %*.&8 %>.=% 8=.(? 8&.>& (?.1' *?.1? '1.%8

I(5"&-.6%" F ' ( ) &

R"&"$5"& 7 P $ 1 5. &. 1 (

C$1&& I ( * 1 , "

C$1&& E 8 0 " ( ) .' $ "

I(*1," D .& -$ .6 -' -. 1 (

%&'*-'1 %&'1-'' %&''-'> %&'>-'? %&'?-'& %&'&->= %&>=->% %&>%->8 %&8->( %&>(->* %&>*->1 %&>1->' %&>'->> %&>>->? %&>?->& %&>&-?= %&?=-?% %&?%-?8 %&?8-?( %&?(-?* %&?*-?1 %&?1-?' %&?'-?> %&?>-?? %&??-?& %&?&-&=

%&.%* 8.%1 &.8* %1.(* %>.%' 88.?( %?.== %1.%% 8(.%> (=.'* %>.8* 8?.&> (*.1& >(.8> %=%.1( 1>.?1 18.%= %1>.(> %''.&= ((=.%' >1'.%& ?&%.>1 %8'%.=' 8=1&.*8 (?11.=% 11?(.1&

%?.>( %&.?= 8>.=1 *%.%' 1'.'1 >>.*1 &8.8( %=*.>1 %8*.&1 %1%.&8 %*?.?% %''.?= %&(.(* 81(.(& (*>.*> (&=.?& *81.(1 111.*' >='.&% %=8%.(( %>1>.(= 81?'.(& (>8'.%% 1**&.1? ?&=1.%% %((&%.>(

8*.'> 81.&* ((.?' *?.>= '1.*= ??.(= %=1.%* %%&.8' %*%.&' %>8.=& %'&.&1 %>'.'' 8='.?* 8>&.&% (&(.>= *11.(= 1%(.&> '>&.8* ?>=.8* %8'%.(( 88=&.'% (8%?.(* *1'(.'? '>(?.?% %%?(*.'1 %>'1=.&8

=.=> =.%% =.88 =.(? =.1& %.=( %.>> 8.*( (.%> *.81 (.1& (.&& *.1* ?.*? 8'.=& (>.?? 18.=( >'.%* &?.8= %1=.*' 8&&.?> **1.=? 1'>.%? &*=.>8 90:5;10 (%11.%&

%.1( %.?( 8.18 (.'> *.?( '.(& ?.*% &.'? %%.?= %*.1( %(.=1 %'.=8 8=.(* 8'.*& (&.=* *>.11 '=.%8 >?.1= %=%.'& %*8.'* 81>.=1 (?&.&> 18*.1? ?*=.&= %'?>.=8 8%*8.?*

=.8( =.88 =.(% =.1% =.1? =.'> =.?= =.?% =.&& %.(( %.?8 %.>> %.?& 8.18 8.'1 8.** (.=( 8.%* 1.=1 '.'% %%.>> %1.(& 88.8% *%.(' '*.=( &?.8'

%.8& %.'= 8.=? (.=( *.8= 1.>? >.'* ?.&8 %=.&% %(.%& %8.>? %*.=% %>.88 88.?% (%.=1 (?.>* *>.&? 1&.(* ?'.** %8'.8& 8%*.&8 (%'.>& *8>.?' '?.'? %8*'.*' %?&1.%1

%&&=-&% %&&%-&8 %&&8-&( %&&(-&*

*118.&1 %8%?8.(1 '*&8.== %=>%8.==

%'*=&.(( 8*?%1.*% (='*&.*' ((&(=(.==

%=8.>( 8(1.>( (=%.=> (>?.%1

8%(>'.*? (%=1.'& (?&>'.?% 1%>=?.?1

('&1.8? 1%((.8& >>=?.8* &?>*.%1

8?8%.1& 1=(1.&1 11(8.>' >=&?.&>

%%&.(1 8?&1.'* 8'1.&' (%?.?(

8(1*.&? (=%%.&& (*&%.'* 1%>&.*>

* High sales was due to the encouraging response to equity oriented schmes which mobilise about Rs. 7000 crore.

FUND DEPLO!MENT PATTERN

7ver the years, the fund development pattern has considerably chan ed. "n the initial years, equity share s accounted for about *=@ and preference share ?@, the rest bein in /overnment securities bonds of public

corporations and money market instruments. 3y early ei hties, the share of equities declined to about 81@ preference shares to about (@ and debentures to 8'@. 3ut share of deposits with corporates and other loans increased to 81@ and that of money market instruments to 8%@. 3y the end of ?=s, the percenta e of preference equities had become

insi nificant. Share equity declined to 8%@ and debentures to 8*@. The shares of loans and deposits were %'@, money market instruments 8=@ and /overnment securities %?@. $t present, the broad distribution of investible funds isF 9quities *&.&1@, 4ebentures 8*.'(@, 5oans and 4eposits ?>@, /overnment securities %%@ and Coney Carket "nstruments '@. The trend is towards equity in line with amon st investors. The chan e in the pattern of deployment has been consequence of the chan in composition of the different types of Schemes mana ed by !T". The introduction of mutual fund type schemes led to an increase in the share of equities. Bast rowth of !S#'* required correspondin rowth in rowin interest in equity

liquidity to meet repurchase and dividend payment needs. 6eed for liquid fund increased also because of the increased number of maturin fixed A income schemes. $ ain, introduction of lar e number of fixed income Schemes demanded rowin amount of investment in loans and corporate deposits as well as privately placed debentures. The increased volatility of demand supply and interest rates in various financial markets, warranted more flexible fund deployment pattern. $s a result of rapid rowth in

investible financial sector, !T" has become a maDor player in the stock overnment securities, corporate credit and money markets.

BUSINESS DI ERSIFICATION
!nder the $ct, !T" has been provided with wide scope of business. 3esides sellin securities, and purchasin units, !T" is authori+ed to invest in

rant loans an advance, accept : discount bills of exchan es

and other mercantile instruments, purchase : sale : issue of loan participation certificates, special deposits with companies acquire

immovable property, provide leasin and hire purchase, merchant bankin and investment advisory services, buy : sell and deal in forei n exchan e and doin any other kind of business connected with mobili+ation of

savin s or investments which 2entral /overnment may decide. 6ot only has !T" increased its lendin operations and started providin underwritin and other advisory services in the course of the last ten years, it has also taken up an active developmental role by promotin institutions like Stock Ioldin : co-promotin new and

2orporation of "ndia, 2redit 0atin

"nformation and Services "ndia 5td, "nvestment 0atin

"nformation and 2redit

$ ency of "ndia 5td., 4iscount and Binance Iouse of "ndia 5td.,

7ver-The-2ounter 9xchan e of "ndia 5td. 0isk 2apital and technolo y finance corporation, Technolo y 4evelopment and "nformation 2ompany 5td. 9arlier, in %&??, !T" had set up !T" "nvestors $dvisory Services -re istered with the Securities 9xchan e 2ommission of !S$. as also the !T" "nstitute of capital market -en a ed in trainin constancy and

research.. The pro ressive liberali+ation of the "ndian economy has thrown open new opportunities for financial services businesses in "ndia. These

has had an impact on !T"#s obDectives of encoura in investments. The service needs of rowin

savin s and

investors of !T" demanded

both up radation of technolo y of !T"#s operations and syner ical interlinkin keepin of various financial service businesses. "n this context, and in with the Cission is to provide ;sin le window< service to savers

and investors, !T" has already initiated a technolo y up radation proDect which involve on-line computeri+ation of operations inter-linked across offices throu h telecommunications. $lso, !T" has promoted !T" 3ank 5td. $ll these are expected to help remove bottlenecks-internal and external, to improve services to the contribute to healthy rowth of capital market.

UTI ASSOCIATES
UTI S"*'$.-< E8*+#(/" L.,.-") 2UTI-SEL4 reported an excellent year of operation. !T"-S95#s clients include lar e domestic institutions, Cutual Bunds, B""s and fairly a lar e number of retail clients. "n its seekin business it achieved an impressive turnover of 0s. %8'' crore on the capital market se ment and 0s. %*?( crore in the debt se ment. Bor the first full year of operation in %&&1-&', it reported a net profit of 0s. %.1 crore. The company proposes to be a 4epository ,articipation with the 6ational Securities 4eposition 5imited and throu h the ES$T network across in the country desires to provide value added brokin services to the clients. "n its second year of operation, UTI B#(3 experienced all-round rowth, with the year-end deposits reachin 0s. &8' crore and the advances 0s. 11> crore. "t reported a profit of 0s. %%.8% crore -0s. 8.( crore in %&&*-&1.. The 3ank is a member of SJ"BT !ser /roup in "ndia and has ot

permission from the 47T to set up its own leased line called !T"-3ank 6et for voice. 4ata and fax transmission. $s a cate ory 0e ister and Transfer -0KT. $ ency, UTI I(5"&-1$ S"$5.*"& L.,.-") -!T"-"S5. handles nine !T" schemes, coverin a unit holders base of %%.1 lakh accounts throu h its four offices on the metropolitan cities. "t plans to open fifteen smaller branches over the next one year to provide focused service to investment. 4urin the year, !T"-"S5 earned ross

income of 0s. 8.%? crore and made net profit of 0s. (.( lakhs. 4urin %&&1-&', UTI I(&-.-'-" 1= C#0.-#% M#$3"- conducted various

courses in the areas of "nvestment Cana ement, Cerchant 3ankin , 2orporate Binance K Treasury Cana ement and few client need based trainin for clients like 3ank 6ational of ,aris, 3usiness Standard, "ndian 0evenue Service, !T"-S95, etc. UTI I(5"&-,"(- A)5.&1$< S"$5.*"& . $n !S Securities 9xchan e 2ommission re istered company providin investment services support to !T"#s "ndia /rowth Bund, made a net profit of 0s. >=.>= lakhs in %&&1-&', as compared with a net profit of 0s. %%1.%> lakhs in the previous year.

UTI : GO T; ORGANISATION OR TRUST

The Trust operates as an autonomous body, it is not subDect to /overnment intervention. "n the last (= years, !T" had, only 1 2hairman all appointed by the /overnment. Thou h !T" is not a public sector undertakin -and not covered by the definition of ;State< under $rticle %8 of the 2onstitution.. !T", as a matter of societal convention, has been followin certain policies relatin to salaries and wa es, reservation in

employment, use of Iindi and internal vi ilance procedure which are broadly in line with policies of public sector units.

UTI SCHEMES
1; US-64 2FOR INDI IDUAL RESIDENT>MINOR>MH>HUF AND NON-INDI IDUAL4
!S-'* is the mother launched by !T" in %&'*. Today, in its (1 th year, this continues to be !T"#s most popular Scheme. The Scheme offers perfect blend of various benefits such as attractive income, capital appreciation, ready liquidity to ether with additional benefits by way of special offers, as also tax benefits. $ll these benefits makes !S-'* a /774 3!L for all cate ory of investors throu hout the year. WHO CAN IN EST "nvestment can be made by any adult individual 0esident sin ly or alon with one more adult on Doint or either or survivor basis, parent:step parent:court uardian on behalf of 0esident minor, I!B, Trusts, Societies, 3odies 2orporate, 2ompanies and 3anks as also for the benefit of Centally Iandicapped $dult. HOW MUCH CAN ONE IN EST The face value of each unit under the Scheme is 0s. %=:-. $pplication can be made for a minimum of 0s. 8,===:-. There is no maximum limit.

AT WHAT PRICE UNITS ARE SOLD OR REPURCHASED Thou h the face value of unit is 0s. %=:- per unit, actual sale and repurchase will be effected at the sale and repurchase prices fixed by the Trust every month. TRACK RECORD OF INCOME AND BENEFITS !S-'* has been a packa e of Cultiple 3enefits. The Scheme has a history of payin consistently attractive income as is evident from the followin chat. !"#$ %&&=-&% %&&%-&8 %&&8-&( %&&(-&* %&&*-&1 %&&1-&' %&&'-&> I(*1," 2?4 %&.1= 81.== 8'.== 8'.== 8'.== 8=.== 8=.== ,lus %F%= 3onus %F%= 3onus

7ver and above the income, !S '* holders have also been offered additional benefits likeF "n the year %&&= "n the year %&&% "n the year %&&8 "n the year %&&( $ hi h rowth scheme !/S 8=== $ hi h rowth Scheme !/S 8=== ,referential offer of additional units M 0s. %%.8= 8F1 0i hts offer M 0s. %8.?= at a discount of 8=@ on

)uly &( sales price "n the year %&&* %F1 0i hts offer M 0s. %*.?= at a 8=@ discount on Sept. &* sale price !/S 8=== 3onus $nd 0i hts !/S 1=== 3onus $nd ri hts "n the year %&&' "n the year %&&> !/S 8=== 0i hts "f ains of all these exclusive offers are taken into account, the return to the !S-'* holders works out much more than the income yield. Iowever, we may mention that there is no future. LISTING !nits under the Scheme are listed on 7T29", 4S9 and wholesale debt se ment of 6S9. TA@ GUIDE F1$ .().5.)'#%& Taxation of income and capital appreciation under the Schemes will be subDect to prevalent tax laws. "ncome from units under all Schemes of the Trusts includin ;!S-'*< will enDoy deduction from income upto an overall limit of 0s. %1,===:- under Section 375 of "ncome Tax $ct, %&'%. uarantee of past ains bein repeated in %F* 3onus on )uly, #&* 7:S !nits %F%F 0i hts units on the enlar ed capital M 0s. %1:%F1 3onus on *th 7ct, #&1 7:S !nits %F% 0i hts units on the enlar ed capital issued at par %F%= 3onus %F% 0i hts at par in $pril %&&>

$ny lon term capital ains arisin out of the investment in Scheme will be subDect to treatment indicated under Sections *? and %%8 of the "ncome Tax $ct, %&'%. Ealue of investment in units under the Scheme is fully exempted from wealth tax. CAPITAL GAINS TA@ E@EMPTION UNDER SECTION 54 EA "nvestment of entire or part of net consideration arisin out of transfer of lon term capital assets in !S#'* will be eli ible for capital ains tax

exemption under Section 1*9$ of "ncome Tax $ct %&'% subDect to availability of repurchase:transfer:pled e only after three years from the date of acceptance. CAPITAL GAINS TA@ E@EMPTION UNDER SECTION 54EB "nvestment of entire or part of capital ains arisin out of transfer of lon term capital assets in !S#'* will be eli ible for capital ains tax exemption under Section 1*93 of "ncome Tax $ct %&'% subDect to availability of repurchase:transfer:pled e only after seven years from the date of acceptance. FOR ELIGIBLE TRUSTS !nits are approved securities under Section %%-8.-b. of the "ncome Tax $ct, %&'%. 9li ible Trusts investin in units will, therefore, quality for

necessary tax exemption in respect of income and corpus under Sections %% and %( of "ncome Tax $ct %&'%. DEDUCATION OF TA@ AT SOURCE !nder Section %&*N of the "ncome Tax $ct %&'%, !T" will be required to deduct income tax at source M %1@ from the income payable to individual,

I!B and other unitholder not bein companies under the Scheme, if such income exceeds 0s. %=,===:- durin the financial year. 6o dedication of tax will be made for 9li ible "nstitutions which are covered under Section %% or %8 or %=-88. of %=-88$. or %=-8(. or %=-8($$. or %= -8(2. of the "ncome Tax $ct, %&'% on the basis of a declaration in the formal provided in application form.

9; UNIT LINKED INSURACNE PLAN 19:1 2ULIP 4

!5", is a unique ,lan offerin an unmatched packa e of benefits. %. Tax rebate on every contribution. 8. 5ife insurance cover. (. $ccident cover upto 0s. (=,===:- irrespective of the si+e of your investment. *. $ttractive returns 1. Caturity bonus. !nder this ,lan a person have a choice of either a %= year ,lan or a %1 year ,lan have to be particulared an a re ate amount called Tar et

$mount by investin uniform annual or semi-annual installments over the period of the ,lan. The minimum tar et amount of investment is 0s. ',===:and maximum 0s. >1,===:-. The lar est amount can be in multiples of 0s. %,===:-, %,1==:- for the %=:%1 years period respectively. 9very year one have to will contribute a fixed sum of money durin the

period of the ,lan. This amount in turn is used to pay a small premium to the 5ife "nsurance 2orporation and the rest is invested in !nits which earns

an income which is also reinvested every year. $t the end of the ,lan period one will be paid the cash equivalent of the !nits standin to your credit and maturity bonus. Bor a %= year ,lan you have to be above %8 years of a e and below 11 years and ' months. "f you want to Doin the %1 year ,lan the upper a e limit is 1= years and ' months. 9ven if the person is physically handicapped the can Doin the plan subDect to a lapse of 1 years from the date of event and holdin employment at the time of application. "f somethin happens to the person unfortunately, before completion of the ,lan period then his le al heirs or the second person will be entitled to receive the followin . %. The cash equivalent of !nits in your credit. 8. The amount of life insurance cover. (. The amount of accident insurance cover -if death occurs due to accident. TA@ BENEFITS !nder Section ?? of the ".T. $ct %&'%, a tax rebated of 8=@ of the amount you contribute to !5", subDect to maximum contribution of 0s. '=,===:- and a tax rebate of 0s. %8,===:- p.a. "f one withdraws from the ,lan without contributin for minimum period of 1 years, the tax rebate allowed under this Section will be withdrawn. The tax rebate for contribution is available to the person as well as for the membership of his spouse and:or children. ainful

$lso under Section ?=5 of the ".T. $ct %&'%, for income from !5",, enDoy a deduction from income upto a limit of 0s. %1,===:-.O $ny lon - term capital ains arisin out of the Scheme will be subDect to treatment indicted under sections *? and %%8 of ".T. $ct %&'%. The value of investments in !nits under this plan is fully exempted from wealth Tax. The personal accident insurance cover is in addition to the life insurance cover. "t is up to the maximum of 0s. (=,=== irrespective of the number of membership or tar et amount. The amount of personal accident insurance cover will be as followsF E5"(-& %. 8. (. 4eath due to accident Total permanent disablement A,1'(- 1= A**.)"(- I(&'$#(*" 2R&;4 (=,=== (=,===

5oss of both eyes or both hands or both feet or (=,=== one hand and one foot, or one eye and one hand or one foot due to accident.

*.

5oss of one eye or one hand or one foot due to %1,=== accident

RETURNS E@PECTED The plan has declared an income of %'.1@ for last 1 years i.e. from %&&( to %&&>. Bor the year %&&>-&? the income declared is %'.1@. The income so declared will be reinvested in further units after deduction of tax, if any.

MATURIT! BOUNS 7n completion of the full plan period, you will receive a maturity bonus. Bor a %= year plan you will et a maturity bonus of 1@ on the lar est amount and for a %1 year ,lan it is >.1@ . "f a member has paid all the contributions under the ,lan and dies in the last year before completin %= years or %1 years period, the maturity bonus will still be payable. APPRO@IMATE GROWTH OF IN ESTMENT UNDER ULP M#-'$.-< P$1*"")& A/" #- "(-$< %8-8= years 81 years (= years (1 years *= years *1 years 1= years 11 years 10 !"#$ P%#( 2R&4 %,1',8*1.'& %,1',%?8.?? %,11,?'?.>1 %,11,%>>.'1 %,1(,>&1.*& %,1%,8%&.'( %,*>,%(1.&* %,*=,>8>.'> 15 !"#$ P%#( 2R&;4 8,8&,'(>.?8 8,8&,(1%.'' 8,8?,8=(.=1 8,8',%&(.%( 8,88,=8&.1( 8,%*,?1%.=% 8,=(,>&'.%8 -

P on a Tar et $mount 0s. >1,===:-.

A; CHILDRENBS GIFT GORWTH FUND 2CGGF-19864

The children#s /ift /rowth Bund is a ift that keeps rowin with the years. Jhen the child becomes an adult, the ift matures. So the child ets the money when the needs it most to pay for hi her education, to help set up a business or practice or to help set up a home. The ift can be iven by any adult i.e. parent, relative, friend, a uardian appointed by 2ourt of 2ompany, 3ody 2orporates, 0e istered Society,

9li ible Trust to any child under %1 years of a e. The money you ift under this Scheme is converted into units. The face value of each of these !nits is 0s. %=:- and the ift can be iven in multiples to %== !nits. !nits are sold at par at 0s. %=:- throu hout the year except when the books are closed durin the month of )une. The

minimum number of !nits you can ift is 8==. There is no maximum limit. "t is advisable to name an alternate child so as to void le al procedures in the unfortunate event of the death of the first named child. INCOME DISTRIBUTION There is an assured incomeM %8@ p.a. money becomes, more than %=.?= times of the ori inal investment in 8% years. The ift matures when the child reaches the a e of 8% years. Till then, Dust nobody- not even parents can touch the ift or accumulation, which

ensures undisturbed rowth of the ift till the child attains adulthood and is in a position to handle it.. $t maturity the child can deal with the units independently. CONTRIBUTION TO DE ELOPMENT RESER E FUND =.81@ of the fresh sales mobilised under the scheme every year shall be set aside as contribution to 40B of the trust, additionally =.=11 of the 6$E at the be innin of the year shall be contributed every year.

TA@ BENEFITS I(*1," T#8 E8",0-.1( "ncome from units under all schemes of the trust includin 2//B# will

enDoy deduction from income within an overall limit of 0s. %1,===:- under Section ?= 5 of "ncome Tax $ct, %&'%. Tax liability on income from units, durin the minority of the 2hild, will be on either of the parents whose

income is reater. $s the 2hild attains the maDority, the tax liability will be on the 2hild. !nder section %&*N of "ncome Tax $ct, %&'% !T" will be required to deduct income tax at source M %1@ from the income payable under the Scheme to the donee child., if such income exceeds 0s. %=,===:durin the financial year. The /ift Tax $ct, %&1? has abolished the levy of ift tax in respect of ifts made on or after %st 7ctober %&&?. Thus, fifth of units of !T" are fully exempt from levy of /"BT Tax without any upper limit /eneral. *. UTI BOND FUND 2UBF4 !T" 3764 B!64 -!3B. is an open ended pure debt scheme. The

obDective of the Scheme is to provide attractive return to the investors throu h capital rowth so as to achieve utmost tax efficiency and hi h

liquidity. The entire investment of the Bund will be in debt and money market instruments. The income and rowth will be plou hed back and reflected in 6et $sset Ealue. !T" 3ond Bund was initially offered for sale from * th Cay, %&&? to %>th )une, %&&?. The Scheme has now been made open ended from %? th )uly, %&&?. The sale of units under the Scheme will be kept open throu hout the year except durin the book closure not exceedin *1 days in a year.

The face value of a unit under the Scheme is 0s. %=:- Sale price will be the applicable 6$E on daily basis without any sales load. $pplications should be for a minimum of 0s. %=,===:-. There is no maximum limit. SALE AND REPURCHASE PRICE Sale:0epurchase at 6$E all the year round. Bor repurchase before one year a 4eferred sales char e upto %.1@ will be levied. 6$E of the fund will be declared daily and will be available on the next day. Bolio $ccount maintained to facilitate Systematic "nvestment ,lan. IN ESTMENT OBCECTI E $mount mobili+ed shall be invested in debt instruments and money market instruments. E@PENSES Total annual recurrin expense char ed to the Scheme excludin initial

issue expenses and redemption expenses but includin expenses, contribution shall be subDect to the followin limits. -i. -ii. -iii. -iv.

administrative

7n the first 0s. %== crores of avera e daily net assets A 8.81@ 7n the next 0s. (== crores of the avera e daily net assets A 8.==@ 7n the next 0s. (== cores of the avera e daily assets A %.>1@ 7n the balance of the assets A %.1=@.

PERIOD OF HOLDING AND DATE OF TERMINATION "t is an 7pen end Scheme and hence there is no date of termination. Iowever, !T" may wind up the Scheme under the followin circumstances. -i. Iappenin of any event which in the opinion of !T" requires the

Scheme to be wound up. -ii. >1@ of the members pass a resolution that the Scheme be wound up of -iii. "f S93" so directs in the interest of the members

Such windin , if so, shall be with due notice to S93" and in newspapers as per Scheme provisions TA@ CONCESSIONS 6o deduction of Tax at source Tax benefit !:Ss. *? K %%8 of "ncome Tax $ct, %&'% on capital ains from capital appreciations. 2apital /ains Tax exemption under Sections 1* 9$::1* 93 of "ncome Tax $ct, %&'% subDect to the provisions of lock in Aperiod under the said sections. 5; UTI MEP 1999 The next to the series of 95SS schemes from !T" is now open. !T" has consistently come out with such tax savin schemes for the last few years and has been the lar est accumulator of funds in the cate ory too. "n accordance with the uidelines the fund aims at rowth by investin over

?= per cent of the funds collected in equity and related instruments. The scheme has also made a provision for investment in derivatives, and in forei n markets. This will of cou?rse be dependent on permission to do so, and as and when it is permitted in "ndia. Since the scheme is under a lock in period for three years liquidity will be available to the investor only when repurchases commence under the scheme in the year 8==8. "nitial expenses upto a maximum of ' per cent will be char ed to the scheme. 7f the 95SS schemes launched in the last few years C9, &1 has delivered an annuali+ed return of a ne ative 1 per cent, C9, &' has returned =.> per cent, and C9, &> has returned a ne ative ? per cent annuali+ed. !T" is also offerin compensation for early investment in the scheme. Bor those who invested in the scheme in )anuary the fund is offered an incentive of (.1 per cent. This has now oes down to 8.1 per cent of the month of Bebruary, and will o down further to %.1 per cent for entire Carch. THE PLANNING SCHEMES Scheme 7pen 6ature 2loses C9, %&&* % )an %&&& 2lose ended equity-linked scheme (%st Carch &&. overnment

6; THE SCHEME FOR 10 MILLENIUMS

!/S %====, the rowth internal fund from the unit trust of "ndia has posted a ood performance so far. The fund launched in Cay &? has appreciated by %?.( per cent while the sensex has in the same period declined by %1.'( per cent. The fund has over 1=@ exposure in Bast Covin 2onsumer

/oods and close to 88@ in ,harmaceuticals. Coreover, it has close to 1@

exposure in en ineerin

companies, 1@ in computer software, (.?@ in

consumer products, (.1@ in lubricants, 8.?@ in chemicals and plastics. The scheme mana ed a subscription of close to 0s. >= crore in its initial offer period.

CRISIS OF US 64
The !S A '* scheme with a corpus of 0s. 88=== crores and 8* million unit holders, accounts for a third of !T"#s operations. The total corpus of the other CBs taken to ether is less than one A fourth of the !T"#s. Bormed by an act of the ,arliament in %&'(, !T" launched the !S A '* in %&'*. "t was the first scheme in "ndia to channel public savin s into nondeposit instruments like equity and corporate debt at a time when capital markets were too underdeveloped in this country to undertaken this task. Two years after it started of, the fund started facin its first crisis. Jhat happens when you buy a !S A'* unit at 0s. %* =. The face value of 0s. %= oes into the 2apt. $ccount and the rest 0s. * oes into the share premium reserve. So the !S A '* mana ers now have 0s. %* in investible fund and they buy shows and debentures for the entire

amount. $fter a year the value of the shares fall to 0s. %8 . The fall in market value, 0s. 8, is debited from the reserves to provide for the loss that is incurred. 7n the )une (=th, !S A '* reserves turned ne ative A i.e. the scheme#s investments fell so low as to entirely wipe out the reserves. $t that sta e, the reserves stood at minus 0s. %=&= crores. Subramanyam#s claims

-a. Bund had hidden reserves because was very hi h -b. 3ecause !T" held lar e blocs of shares, they could be sold to takeover tycoons or to the companies themselves at very hi h prices. A0-+ C'("D 1994: Quoted invested -share and debentures. 6amed at 7utstandin capital 0eserves and ,rovisions 9stimated 6$E - 0s. ?, 81* crore. - %?,&?( crore - 0s. %8,=%& crore - 0s. ',(%8 crore - 0s. 8*.%?

3etween (= )une &* and (= )une #&? 6$E of !S A '* fell from 8*.%> to &.*1, a fall of '=.&@. $nyone who keeps money in !T" today in bettin not on the ability of !T" to make ood the losses, but on the willin ness of the overnment to uarantee that units will be bou ht back at the current repurchase price. 3ut if that trust is to be sustained the overnment must come out with more concrete, le al assurance and a clearer rescue plan than what it has so far. So if the overnment is serious about savin !S- '*, it must state that this is the kind of money it is willin to put up if used be. $ccordin to Subramanyam, between (= )une and (= September &? , after the market revived, !S '*#s fund mana ers mana ed to reduce the hole with reserves from A 0s. %=&= crore to A 0s. %1= crore.

!S- '* owns equity in %*== firms and since only $ roup stocks and a few 3 roup stocks are of any interest to the market now, the rest are

probably worth only a fraction of their quoted value. PROBLEMS WITH UTI 0e arded as an outpost of finance ministry. Jhenever the market has fallow, !T" has been asked to prompted it up at shareholder#s expense -like a B".. "n the current crisis, !T" stepped into hu e purchase to share it up. 0etail investors we now withdrawin money because they doubt !S A '* will be able to continue repurchases at the brave price it is now offerin . * years a o, a controversy erupted when !T" bou ht a hu e block of shares at a price exceedin 0s. *==. COMPANIES FALL INTO TWO CATEGORIES -i. -ii. 3eholder to !T" and mi ht hesitate to sell !S A '*. 3ou ht !S A '* because they bou ht it a ood place to park their funds. STEPS S"(&.6%" 10-.1(: !T" is to tell !S A '* holders that the 6$E is 0s. & , and cut the repurchase price to that level overni ht. A&&"- ,#(#/","(- *1,0#(< 2AMC4 : the company can be capitali+ed with 0s. 8=== crore and the real estate held by !S- '* can be valued and transferred to the area.

GOING DOWN SECRETAL! !T" and S93" were statutory bodies. !S A '* continued to be unre ulated and its net asset value -6E$., alone amon all mutual fund schemes,

continued to be undisclosed. So investors went on investin in it believin it was all income scheme with little when it was in fact heavily invested in equity.

RECOMMENDATIONS OF DEPAK PAREKH COMMITTEE

0ecommendation for tax exemption on income from investments in the scheme. Cakin !S A '* a overnment A uaranteed savin s instrument. 9xtendin stand by facility from the overnment for need- based

liquidity support to the scheme. $nd the creation of an S,E to transfer all non-performin investments to another entity.