UTI MF Investment Process (Domestic Equity Portfolio)

UTI MF Investment Process (Domestic Equity Portfolio) MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

Presentation Flow Investment Philosophy Team Structure Investment Process Equity Portfolio Portfolio Construction 2 2

Investment Philosophy Wealth Creation Alpha- Generation Style Discipline Long Term Orientation Companies that can self sustain their growth and have the ability to invest at high rates of return or Companies that experience an improving trajectory bought at attractive valuations Alpha-not just from buying the right stocks but also from not buying the wrong stock The essence of asset management, is to stay true to the mandate through the different moods and seasons of the market. It also enables differentiation between portfolio strategies. Clear articulation of investment beliefs and a well defined investment process are key to sustaining Alpha generation over long periods. 3 3

About Our Investment Management Team Swati Kulkarni, CFA FM Domestic Equity Total Work Exp: 34 Years With UTI AMC: 26 Years Lalit Nambiar, CFA FM Domestic Equity Total Work Exp: 24 Years With UTI AMC: 11 Years Ajay Tyagi, CFA FM Domestic Equity & Offshore Funds Total Work Exp: 18 Years With UTI AMC: 18 Years Vetri Subramaniam Head Equity & Fund Manager Total Work Exp: 26 Years UTI AMC: 1. 5 Years V Srivatsa FM Domestic Equity & Offshore Funds Total Work Exp: 18 Years With UTI AMC: 16 Years Sanjay Dongre FM Domestic Equity Total Work Exp: 24 Years With UTI AMC: 24 Years Kaushik Basu FM Domestic Equity Total Work Exp: 34 Years With UTI AMC: 34 Years Rajeev Kumar Gupta FM Domestic Equity Total Work Exp: 36 Years With UTI AMC: 29 Years Sachin Trivedi, CFA FM Domestic Equity & Head of Research Total Work Exp: 17 Years With UTI AMC: 17 Years Tracks Auto, Logistics Amit Premchandani, CFA FM Domestic Equity & Sr. Analyst Total Work Exp: 13 Years With UTI AMC: 9 Years Tracks Banks, NBFCs, Cement Kamal Gada, CFA FM Overseas Investments & Research Analyst Total Work Exp: 13 Years With UTI AMC: 10 Years Tracks Energy, Fertilizer, Media, Chemicals, Infra construction Parag Chavan, CFA Research Analyst Total Work Exp: 8 Years With UTI AMC: 6 Years Tracks Metals & Mining, Utilities, Building Materials, Sugar, Healthcare, Hotels Sharwan Goyal, CFA FM Domestic Equity & Portfolio Analyst Total Work Exp: 12 Years With UTI AMC: 12 Years Preethi R S Research Analyst Total Work Exp: 6 Years With UTI AMC: 6 Years Tracks Auto Ancillaries, Insurance, HFC & NBFCs Vishal Chopda, CFA FM Domestic Equity & Research Analyst Total Work Exp: 11 Years With UTI AMC: 8 Years Tracks FMCG, QSR, Retail, Consumer Durable, Telecom Deepesh Agarwal Research Analyst Total Work Exp: 6 Years With UTI AMC: Less than a year Tracks Capital Goods, Textiles 4

Investment Universe & Portfolio Construction INVESTMENT PROCESS LED BY CONVICTION & STYLE CONSISTENCY INVESTMENT UNIVERSE 340 COMPANIES SCREENING THE UNIVERSE UTI PROCESS PORTFOLIO CONSTUCTION INVESTMENT UNIVERSE About 340 companies, spanning large, mid & small market capitalisation Coverage vs Major Indices 97% 99% 88% 97% 83% 95% 74% 78% 91% 60% S&P BSE 100 S&P BSE 200 Nifty LargeMicap 250 Nifty Midcap 150 Nifty 500 % of Cos. Covered % of Market Cap Covered Large Cap Mid Cap Small Cap 135 Market Cap. Rs in bn SCREENING THE UNIVERSE UTI PROCESS Objective Factors Operating Cash Flow Return on Capital/Equity Subjective Factors Management Competence Growth Prospects PORTFOLIO CONSTRUCTION Coverage based on Market cap 109 This is a comprehensive and ongoing feature of Investment process. Based on the Fund Mandate & Internal Prudential investment norms Considerations for Valuations, Sector Weights Market Cap bias & Active Share 97 4,503 No of Cos. Covered 17,520 101,621 5 Data as on September 30, 2018

Screening the Universe Factors Why it matters? Operating Cash Flow - Profits are an opinion, cash is a fact - Profits in financial statements could be distorted by accrual, amortization and non cash items and It does not account for changes in inventory, debtors and creditors. - In the absence of operating cash flow a company needs to continuously borrow money or dilute equity to fund its operations Return on Capital/ Equity - If a company cannot earn returns in excess of its cost of capital it destroys value - A company with healthy capital return ratios creates value by investing its profits in its business and that creates the magic of compounding 6

Are these factors Persistent? Analysis It is much easier to analyze the past and present than predict the future Return Expectation We invest based on analysis of historical data but returns depend on what happens in the future Persistency Our emphasis on these two factors operating cash and return on Capital/ Equity is underlined by the high degree of persistency exhibited by these factors 7

Methodology Persistency analysis Companies are divided into Cash Flow Tiers (C): 3 Tiers based on the number of years in which they have generated positive operating cash flows in the previous 5 years (for manufacturing cos) RoCE/ implied ROE Tiers (R): 3 Tiers based on the previous 5 year average return on capital (for manufacturing cos) & consistency in implied ROE (RoA X Leverage) for Financials over 5 years Sectors C1 C2 C3 All companies (excluding Financials) Positive OCF RoCE In all previous 5 years in 3 or 4 of the previous 5 years In 2 or less of the previous 5 years R1 R2 R3 >18% (5 year average) >10% - 18% (5 year average) <10% (5 year average) R1 R2 R3 Period of Analysis 22 years (FY 1997 to 2018) Universe of companies analyzed - 1280 companies (includes MF industry holdings, S&P BSE 500 Index companies since 2002) Banks & HFCs ROA>0.8 & Leverage <18x In all previous 5 years in 3 or 4 of the previous 5 years In 2 or less of the previous 5 years OCF Operating cash flow RoCE Pre tax RoCE NBFCs ROA>2 & Leverage <8x In all previous 5 years in 3 or 4 of the previous 5 years In 2 or less of the previous 5 years (EBIT/Avg capital employed) 8 RoA Return on Asset, RoE Return on Equity, OCF Operating Cash Flow, RoCE Return on Capital Employed, EBIT Earnings before Interest and Taxes. Data as of 31 st March, 2018

Persistency Analysis Probability of companies migrating across the buckets FY 2008-13 Change in Bucket FY 2013-18 (Next 5 Years) Probability C1 REMAINING IN C1 85% C1 DETERIORATING TO C3 2% C3 IMPROVING TO C1 18% R1 REMAINING IN R1 61% R1 DETERIORATING TO R3 13% R3 IMPROVING TO R1 10% 9

Persistency Analysis Probability of companies migrating across the buckets FY 1998-03 Change in Bucket FY 2003-08 (Next 5 Years) Probability C1 REMAINING IN C1 73% C1 DETERIORATING TO C3 5% C3 IMPROVING TO C1 15% R1 REMAINING IN R1 68% R1 DETERIORATING TO R3 8% R3 IMPROVING TO R1 29% 10

Persistency Analysis over 5 year buckets How likely is it that the performance in the preceding 5 years will persist in the next 5 years? Operating Cash Flow (OCF) based performance % of Cos Trend of 5 Years Persistency Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 From To Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 C1 C1 79 73 73 70 70 73 73 72 72 73 78 81 85 C1 C2 21 25 23 25 26 25 24 24 24 23 19 15 12 C1 C3 1 2 5 6 5 2 3 4 4 3 3 4 2 C2 C1 61 53 43 41 44 38 37 42 44 43 45 48 53 C2 C2 35 36 42 39 35 40 42 39 40 38 39 41 39 C2 C3 4 12 15 21 21 23 21 19 17 19 17 11 8 C3 C1 16 20 15 11 13 9 4 12 15 15 14 15 18 C3 C2 62 50 48 46 40 40 46 47 40 44 41 43 45 C3 C3 22 30 37 42 47 51 50 41 45 41 45 42 37 The probability of a C1 company remaining C1 at the end of the next 5 years is quite high The probability of a C1 company moving down to C3 or a C3 company moving up to C1 is quite low. 11

Persistency Analysis over 5 year buckets How likely is it that the performance in the preceding 5 years will persist in the next 5 years? RoCE/ROE based performance % of Cos Trend of 5 Years Persistency From Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 From To Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 R1 R1 72 65 68 66 66 67 63 54 55 53 50 52 61 R1 R2 18 26 24 27 26 25 23 28 25 26 25 28 25 R1 R3 10 10 8 7 8 9 14 18 20 20 25 20 13 R2 R1 38 38 40 34 37 31 25 20 21 17 18 20 23 R2 R2 43 40 41 42 45 45 46 42 42 39 37 32 42 R2 R3 19 22 20 24 19 23 29 39 37 45 46 48 35 R3 R1 18 25 29 29 25 20 16 13 14 13 12 10 10 R3 R2 32 30 28 23 25 22 23 20 21 16 17 17 21 R3 R3 50 45 43 48 51 58 61 67 65 71 71 73 69 The bar in terms of RoCE/ ROE is more stringent than cash flow. But this metric has cyclical movements R1 companies have a tendency to remain R1 and R3 companies display a high probability of remaining R3 Movement down, from R1 to R3 or up, from R3 to R1 has lower probability, but identification of such migration can either prevent value destruction or create value respectively 12 RoA Return on Asset, RoE Return on Equity

Movement/distribution of companies among tiers Movement/distribution of companies within CFO tiers CFO Tiers period ending FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY18 C1 49% 47% 49% 52% 52% 52% 51% 49% 48% 49% 48% 48% 49% 50% 52% 55% 58% 65% C2 37% 40% 39% 36% 36% 36% 35% 34% 33% 32% 33% 34% 33% 33% 31% 30% 29% 26% C3 14% 13% 13% 12% 12% 12% 14% 18% 18% 19% 18% 18% 18% 17% 17% 16% 13% 9% Movement/distribution of companies within ROCE tiers ROCE Tiers period ending FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY18 R1 32% 32% 30% 31% 34% 38% 42% 47% 45% 44% 43% 40% 34% 34% 32% 31% 31% 34% R2 41% 39% 38% 35% 32% 31% 30% 29% 29% 30% 29% 29% 30% 29% 27% 26% 26% 29% R3 26% 28% 32% 34% 33% 31% 28% 24% 26% 26% 28% 31% 36% 37% 41% 43% 44% 37% 13

How is Wealth created? STRATEGIES PROCESS TEAM GROWTH Companies that can self sustain their growth and have the ability to invest at high rates of return VALUE Companies that experience an improving trajectory bought at attractive valuations Our process design enables us to distinguish between companies. Our wide range of strategies and diverse Fund Managers can use these inputs in the manner appropriate to the fund mandate. 14

Portfolio Construction Fund Mandate: The fund mandate will dictate the overall portfolio strategy and the endeavor would be to adhere to the mandate across economic scenarios & market moods Impact of the screening mechanism: Preference for companies in C1, C2 and R1, R2 Investment strategies may invest in C3 and R3 companies, but risk management would be key (probability v/s return) Valuations Sector weights Market capitalization bias Active share 15

Portfolio Characteristics- OCF & Return ratio Tiers Scheme Fund Manager AUM (Rs. In Crs) Wtd. Avg. Mcap CFO ROCE C1 C2 C3 R1 R2 R3 UTI Equity Fund Ajay Tyagi 8,129 1,35,682 96 4 0 96 4 4 UTI MNC Fund Swati Kulkarni 2,016 77,156 96 4 0 76 17 17 UTI Mastershare Unit Scheme Swati Kulkarni 5,486 2,35,123 86 8 6 69 24 24 UTI Dividend Yield Fund Swati Kulkarni 2,571 1,60,318 98 1 1 65 24 24 UTI Value Opportunities Fund UTI Long Term Equity Fund (Tax Saving) Vetri Subramaniam & Amit Premchandani Vetri Subramaniam & Lalit Nambiar 4,410 1,85,319 91 8 1 59 29 29 1,015 1,39,263 89 11 0 51 35 35 UTI Core Equity Fund V Srivatsa 883 1,0,6784 79 11 10 46 38 38 UTI Hybrid Equity Fund V Srivatsa 6,421 1,33,165 79 12 9 45 38 38 UTI Mid Cap Fund Lalit Nambiar 3,537 16,177 78 19 3 33 45 45 16 Portfolio as of September 30, 2018. Wtd. Avg. Mcap Weighted Average Market Capitalization (Rs. In Crores)

Active Management Scheme Fund Manager AUM (Rs. In Crs) Benchmark Active Share (%) UTI Mid Cap Fund Lalit Nambiar 3,537 Nifty Midcap 150 73.52 UTI Core Equity Fund V Srivatsa 883 Nifty LargeMidcap 250 70.12 UTI Equity Fund Ajay Tyagi 8,129 S&P BSE 200 65.90 UTI Hybrid Equity Fund V Srivatsa 6,421 S&P BSE 200 61.40 UTI Long Term Equity Fund (Tax Saving) UTI Value Opportunities Fund Vetri Subramaniam & Lalit Nambiar Vetri Subramaniam & Amit Premchandani 1,015 S&P BSE 200 60.71 4,410 S&P BSE 200 55.07 UTI Dividend Yield Fund Swati Kulkarni 2,571 Nifty Dividend Opp. 50 47.40 UTI Mastershare Unit Scheme Swati Kulkarni 5,486 S&P BSE 100 41.72 UTI MNC Fund Swati Kulkarni 2,016 Nifty MNC 34.99 17 Data as on September 30, 2018

Diverse Strategies Style Discipline UTI Mastershare Unit Scheme UTI Equity Fund UTI Value Opportunities Fund Price to Book Price to Earnings Return on Equity Market Capitalisation (` In Crores) 5.39 6.29 25.96 19.33 17.93 275,845 235,123 28.57 135,682 6.41 8.92 26.89 38.73 19.04 22.11 248,382 4.60 15.81 6.41 26.89 26.09 19.04 248,382 185,319 UTI Core Equity Fund UTI LTEF (Tax Saving) UTI Hybrid Equity Fund Price to Book Price to Earnings Return on Equity Market Capitalisation (` In Crores) 3.64 22.98 15.54 106,784 6.75 29.55 18.42 154,167 139,263 4.80 15.19 6.41 26.89 28.29 19.04 248,382 3.50 22.22 14.49 133,165 6.41 26.89 19.04 248,382 18 PE and PB is based on Trailing (TTM), Data as on September 30, 2018 Fund Benchmark

Diverse Strategies Style Discipline UTI Mid Cap Fund UTI Dividend Yield Fund UTI MNC Fund Price to Book Price to Earnings Return on Equity Market Capitalisation (` In Crores) 5.38 29.45 13.01 7.31 33.10 17.63 17,972 16,177 160,318 6.03 22.45 8.96 22.11 22.21 27.91 242,176 26.82 77,156 14.92 15.36 41.86 46.59 28.29 89,608 Fund Benchmark 19 PE and PB is based on Trailing (TTM), Data as on September 30, 2018

UTI Holdings, UTI Universe and S&P BSE 500 Index Positioning CFO UTI Holdings Rs bn UTI Holdings UTI Universe S&P BSE 500 Index No. of Cos % of AUM % of Cos Market cap Rs bn No. of Cos % of Mcap % of Cos Market cap Rs bn No. of Cos % of Mcap C1 285 199 85% 80% 85,071 221 89% 80% 90,127 314 88% 76% C2 30 29 9% 12% 5,221 34 5% 12% 7,641 65 7% 16% C3 11 9 3% 4% 3,088 10 3% 4% 3,597 22 3% 5% IPOs/NA 9 12 3% 4% 1,932 12 2% 4% 2,017 14 2% 3% % of Cos Total 336 249 100% 100% 95,311 277 100% 100% 1,03,381 415 100% 100% ROCE UTI Holdings Rs bn UTI Holdings UTI Universe S&P BSE 500 Index No. of Cos % of AUM % of Cos Market cap Rs bn No. of Cos % of Mcap % of Cos Market cap Rs bn No. of Cos % of Mcap % of Cos R1 281 137 63% 45% 72,962 155 58% 46% 76,718 220 58% 44% R2 115 96 26% 32% 33,307 105 27% 31% 35,200 135 26% 27% R3 42 53 9% 17% 13,288 61 11% 18% 16,783 123 12% 25% IPOs/NA 11 17 2% 6% 5,417 19 4% 6% 5,872 22 4% 4% Total 449 303 100% 100% 1,24,974 340 100% 100% 1,34,572 500 100% 100% Companies which have been not part of BSE500 Index since 2003 are excluded, Aggregated based on Equity and Hybrid Funds, Cash flow analysis is excluding Financial Services sector 20 Data as on September 30, 2018

UTI Aggregate vs MF Industry CFO ROCE C1 C2 C3 IPOs/NA R1 R2 R3 IPOs/NA UTI MF 85% 9% 3% 3% 63% 26% 9% 2% MF Industry 84% 8% 5% 2% 56% 26% 15% 3% S&P BSE 500 Index 88% 7% 3% 2% 58% 26% 12% 4% Aggregated based on Equity and Hybrid Funds 21 Data as on September 30, 2018

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