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CONTRA CONCEPT
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CONTRA AS A CONCEPT

• Invests in stocks / sectors that are currently
  OUT of FAVOUR
• But
• Fundamentally strong
• With strong transparent managements
• Having significant / sustainable competitive
  advantages
• Having good long term earnings potential, and
• Improving operating parameters

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HOW CONTRARIANS FUNCTION

• Take advantages of prolonged under-valuation /
  out-of-favour stocks.
• Book profits in over-valued / over-owned stocks.
• Move away from the herd and wait to be followed
  if the stocks are fundamentally strong surely
  there will be followers.

Continuous Efforts to Identify Investment Avenues
By Thinking Acting Differently
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VALIDATING CONTRA AS A CONCEPT
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VALIDATION OF THE CONCEPT

• Concept validated for BSE 100 companies
• Tracked the Avg. Annual Returns of the worst
  performing 12 stocks of a particular year over
  next 2/3 years for EACH of last 12 years.
• Example
• Under-performers of CY 1992 monitored over CY
  1993-94 ( 2 year returns) CY 1993-95 (3 year
  returns).

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CONTRA OUT-PERFORMS IN 2 YEARS
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SUMMARISING AVERAGE ANNUAL RETURNS FOR TWO YEARS
Minimum TWO Year View Is Critical to Benefit
Suitably.
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GETS EVEN BETTER IN 3 YEARS
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SUMMARISING FOR THREE YEAR FORWARD RETURNS
Works Year after Year
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HISTORY SAYS CONTRA PAYS

• In All Scenarios
• Across time - frames.
• Across economic conditions.
• Across market phases
• Across sectors.
• Longer investment horizon fetches better returns

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UTI CONTRA FUND- A NEW FUND OFFER FROMUTI MF
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UTI CONTRA FUND

• Diversified Equity Fund.
• Active Management Style.
• Invests in Out of Favour, fundamentally strong
  stocks.
• Take advantage of behavioral and emotional
  patterns present in the equity markets

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UTI CONTRA FUND FOCUSSED APPROACH

• Three-Pronged Investment Strategy.
• Segments Based Strategy
• Companies Based Strategy.
• Cyclical-Sector Based Strategy.

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UTI CONTRA FUND SEGMENT BASED STRATEGY

• Invest in Fundamentally strong Segments with
• Strong viable business models.
• Currently neglected.
• Critical to economic growth.

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UTI CONTRA FUND SEGMENT BASED STRATEGY

• A CASE STUDY
• Capital Goods and Auto (Period 1996-2005)
• Neglected during 1996-2001
• Strong Long Term Potential
• Low levels of Automobile penetration
• Large potential for infrastructure development
• Indian Pharmaceuticals
• Favoured sector of the late 90s

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UTI CONTRA FUND SEGMENT BASED STRATEGY
Underperformance of Capital Goods Auto - 4
Wheelers Over 1995 to 2001.
CONTRA CALL Switch from Pharma to Auto Capital
Goods
Featured Companies Capital Goods LT, BHEL,
Siemens Auto Tata, A.Leyland, MM
Pharma Ranbaxy, Dr.Reddy, Cipla
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UTI CONTRA FUND SEGMENT BASED STRATEGY
Capital Goods Auto - 4 Wheelers leaves Pharma
far behind over 2001-2005.
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UTI CONTRA FUND STOCK BASED STRATEGY

• Invest in fundamentally strong Companies
• Currently out of favor due to short term reasons.
  
• Have the potential to bounce back.
• Strong management.

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UTI CONTRA FUND STOCK BASED STRATEGY
A CASE STUDY
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Downturn in Commercial Vehicle business
concerns regarding foray into Car business led
to Company X UNDERPERFORMANCE for 5 Years A
great OPPORTUNITY for a Contrarion !!
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140
120
100
80
60
40
20
0
Jul-96
Oct-96
Apr-97
Jul-97
Oct-97
Apr-98
Jul-98
Oct-98
Apr-99
Jul-99
Oct-99
Jan-97
Jan-98
Jan-99
Jan-00
Co. X
Sensex
600
A Great Payoff Company X has been one of the
biggest OUTPERFORMER in the next 5 Years.
500
400
300
200
100
0
Mar-00
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Co. X
Sensex
A Leading 4 Wheeler Company
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UTI CONTRA FUND STOCK BASED STRATEGY
A CASE STUDY
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200
Company Y, in spite of being a great 2 Wheeler
company bore the brunt in 98-99 presenting a
fabulous Contra - Entry.
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120
80
40
0
Oct-98
Feb-99
Jun-99
Oct-99
Aug-98
Dec-98
Apr-99
Aug-99
Dec-99
Company Y
Sensex
800
700
Since then Company Y continues to dazzle
600
500
400
300
200
100
0
Mar-00
Sep-00
Mar-01
Sep-01
Mar-02
Sep-02
Mar-03
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Company Y
Sensex
A Leading 2 Wheeler Company
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UTI CONTRA FUND CYCLICAL-SECTOR BASED STRATEGY

• Invest before cycle upturns
• Indian Market has adequate exposure to Cyclical
  sectors.
• Invest during cycle downturns.
• Significant outperformance during Trend
  Reversals.
• Exposures to select companies which are strong
  enough to withstand Cyclical pressures.

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UTI CONTRA FUND CYCLICAL-SECTOR BASED STRATEGY
A CASE STUDY STEEL SECTOR
Long Period of Underperformance during Global
Metal Downturn
Back with a bang with the hint of the Cycle
Upturn.
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UTI CONTRA FUND CYCLICAL-SECTOR BASED STRATEGY
A CASE STUDY SUGAR SECTOR
Completely Out of Favor for 2 years...
Sweet-heart of the day.
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UTI CONTRA FUND MINIMISING RISK WITHOUT
COMPROMISING RETURNS
As UTI CONTRA FUND invests in already beaten down
stocks, downside is minimised.
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HOW UTI CONTRA FUND HAS LOWER DOWNSIDE RISK

• Undervaluation / Under-ownership implies
• Worst of fears already factored in
• Relative insulation to negative market triggers
• Ensures
• Relative downside protection
• Multiplier effect of positive newsflows
• However
• Returns may take a little longer time to unfold

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CONTRA INVESTMENT THEME NOT A DO-IT-YOURSELF
KIT

• Sole Underperformance is not an exhaustive
  criteria.
• Thorough screening of Management Quality
  Business Model a must to stay away from Junk
  Companies.
• One has to be definitive regarding the Discovery
  Triggers of the Contra opportunities.
• UTI MF placed well with a strong in-house
  research and risk team.

Professional Fund Management Expertise Is
Required Extensively.
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WHY DUE-DILIGENCE IS IN-DISPENSABLE EXAMPLE
Actual Graph of Two Flashy Stocks Which Never
Bounced Back. TWO of MANY !!!
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UTI CONTRA FUND SUMMARISING

• UTI CONTRA FUND
• Will think act differently
• By investing in Out of Favour stocks.
• But will NOT ignore the fundamentals
• Will have lower downside risk

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UTI MUTUAL FUND LEADING ALL THE WAY

• Largest MF in the Country with AUM of About Rs.
  25,416 crores (as on Jan 31, 2006)
• Equity AUM of approx. Rs 12,721 crores
• Fresh Collection of Rs 2080 cr in the UTI
  Leadership Fund
• From more than 3.5 lakh applications
• 56 Domestic Funds, 5 Offshore Funds
• 30 Equity, 24 Debt and 2 Balanced Domestic Funds
• Systematic Disciplined approach to investing
• Dedicated Equity Research Cell to assist Fund
  Managers
• Comprehensive risk management practices

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UTI CONTRA FUND FEATURES NFO DETAILS
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UTI CONTRA FUND SCHEME FEATURES

• Type of Scheme
• An Open Ended Equity Oriented Scheme
• Investment Objective
• To provide long-term capital appreciation by
  investing in Equity Markets
• To adopt a Contrarian Approach
• Look for Out of Favour Stocks
• Look for Under-Valued Stocks because of Emotional
  Behavioural patterns in the Stock Market
• Options Available
• Growth Option
• Dividend Option (with Payout / Reinvestment
  facilities)

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UTI CONTRA FUND SCHEME FEATURES

• Portfolio of the fund would be focussed
• Maximum Number of stocks 50
• Minimum 80 of Equity exposure
• Benchmark S P CNX Nifty.
• Asset Allocation

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UTI CONTRA FUND SCHEME DETAILS

• Purchase and Redemption Price
• During the NFO, the units of the fund will be
  sold at Rs. 10 plus Load applicable.
• Continuous purchase and redemption of units at
  NAV based prices on an ongoing basis from 20th
  April 2006.
• Investment Amount
• Minimum initial investment is Rs. 5000/-.
• Additional investments in multiples of Rs. 1
• Facilities Available
• Systematic Investment Plan (SIP) and
• Automatic Trigger facilities ( after scheme
  re-opens for continuous purchase redemption)

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UTI CONTRA FUND SCHEME DETAILS
Load Structure during NFO
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UTI CONTRA FUND
New Fund Offer Opens on 22nd February 2006
New Fund Offer Closes on 22nd March 2006
Scheme Re-opens for continuous purchase
redemption on 20th April 2006
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RISK FACTORS

• All investments in Mutual Funds and securities
  are subject to market risk and the NAV of the
  Funds may go up or down depending on the factors
  forces affecting the securities market. Past
  performance of the Sponsor/Mutual Fund/
  Scheme(s)/AMC is not necessarily indicative of
  the future results. UTI Contra Fund is just the
  name of the scheme and does not in any manner
  indicate the quality of the scheme, its future
  prospects or returns. The scheme is subjected to
  the risks relating to interest rate, liquidity,
  securities lending, investment in overseas
  market, trading in equity and debt derivatives.
  There may be instances where no income
  distribution could be made. Please read the Offer
  Document carefully and do consult your financial
  advisor before investing.

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INVEST IN UTI CONTRA FUND
NFO CLOSES 22 MARCH, 2006
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INDIAN EQUITY MARKETS
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WHAT MAKES INDIAN EQUITY MARKETS ATTRACTIVE

• Fast sustainable economic growth driven by
• Demographic changes and Income growth
• Unfolding potential for Consumption
• Focus on Infrastructure spending
• Health of Corporate India getting better
• Valuations are not expensive by historic
  standards
• Previous peaks at much higher market P/Es

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INDIA GETTING YOUNGER AND RICHER

• Explosive effect of rising Per capita Income
  Currently at USD 750
• Historically, at 1 growth, PCI doubled in a life
  time
• At current 4 growth, PCI will reach USD 1000 in
  8 years
• PCI of top 20 of population (gt200mn people) is
  growing at 9 - doubling in 8 years

Increasing consuming group
Source planning commission of India
Young and richer India has huge implication in
terms of multiplier effect on consumption and
economic growth
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ECONOMIC GROWTH LED BY CONSUMPTION
Consumer loans/ GDP
Mortgages/ GDP
Credit cards/ GDP
Other retail loans/ GDP
Source RBI, Var brokerage house
Indian economy is domestically driven economy
(85 from dom. Mkt.) unlike emerging markets
which are linked to export growth
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INFRASTRUCTURE SPENDING ON ANVIL
Infrastructure investments the key driver to
feed the imminent capex boom and drive industrial
growth to double digit
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CORPORATE INDIA GETTING HEALTHIER
Growing Profitability
Peak Rate of Custom Duty Operating in a
Competitive environment
Efficiently managed Working Capital/ Sales
Healthy balance sheets
Source CMIE
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LIQUIDITY FLOWS TO EQUITIES

• Why FII interest is sustainable
• Highest global economic growth rates
• Domestically driven economy provides a hedge
• Own economies at saturation point in economic
  cycle
• Why domestic money flow to equities
• Low returns of alternative investments
• Tax issues
• Low historic exposure to equities

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INDIA AMONGST THE FASTEST GROWING ECONOMIES
Growth has been accelerating in each
decade Industry services (78 of GDP) growing _at_
8 Impact of agriculture on overall growth is
steadily reducing Per capita income has grown by
7 CAGR over the past decade and is projected to
cross 1,000 by the end of the decade
Source Var Brokerge housess
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LOW EQUITY EXPOSURE IN DOMESTIC SAVINGS
Low level of Local Investment
Source Var Brokerage Houses
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EQUITY MARKETS IN PHASES OF SUSTAINABLE GROWTH
RATES

• During periods of strong economic growth, equity
  markets perform strongly
• Two prominent cases
• Domestic investment led growth in the US A
  (1948-1964)
• Export led growth in Japan (1970-1985)

ECONOMIC GROWTH LIQUIDITY FLOWS EXPECTED TO
SUSTAIN INDIAN EQUITY MARKET OUTPERFORMANCE
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Dow Jones performance
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Nikkei performance