The
Directors of UTI Trustee Company have
pleasure in presenting the first Annual Report and audited financial statement
of the schemes of UTI Mutual Fund for the period from February 1, 2003 to March
31,2004.
UTI
Mutual Fund was carved out of Unit Trust of India (UTI) as a SEBI registered
mutual fund from February 1, 2003. Hence, February 1, 2003 gained significance
in the annals of Indian Capital Market as the day on which UTI Mutual Fund came
into existence. UTI MF, a professionally managed mutual fund has a full-fledged
in-house research department including dedicated debt research and macro
economic research cell, which facilitate the asset management functions.
UTI
Mutual Fund is the largest mutual fund of the country having 55 offices in
India and 12
offices
in overseascountries. It manages 49 schemes as of 31/03/2004. During
the period under review, UTI Mutual Fund widened its product range by launching
5 open-ended schemes/plans viz. UTI Liquid Fund – Short Term Plan (Regular),
UTI Liquid Fund – Cash Plan (Regular), SUNDER, UTI G-Sec Short Term Plan, UTI
Liquid Cash Plan (Institutional), UTI Liquid Short Term Plan (Institutional),
UTI Children’s Career Bond Plan. Keeping in mind the investment requirement of
its investors, UTI MF also launched six thematic funds – UTI Banking Sector
Fund, UTI Auto Sector Fund, UTI Basic Industries Fund, UTI PSU Fund, UTI Mid
Cap Fund and UTI Large Cap Fund.
The Asset under Management amounted to Rs.20, 602
crore as at March 31, 2004 as compared to Rs.13,774 crore as at January 31
2003.
UTI MF has plans to launch products in overseas
market, therefore it has tied-up with State Street Global Advisors (SSgA), the
largest institutional asset management outfit in the world having Assets under
Management of over US $1.3 trillion, to widen its product basket and encompass
international market.
·
CNBC-TV18-BNP Paribas Mutual Fund Award: UTI G-Sec Fund (Growth) won
the award for the year 2004. The fund has also been ranked by Moody’s Investors
Services as the best performing Fund in Open-ended Gilt Fund (One Year).
·
ICRA online Mutual Fund Award: UTI NIFTY INDEX FUND won award for the year 2004:
The scheme has been ranked MFR1 for the best performance in the category
Open-ended Index Schemes (Nifty) for a one-year period ended 31st
December 2003.
·
CNBC India Mutual Fund of the Year Award: US 95 won the award for the
year 2003. Moody’s Investors Services have ranked the fund as the best
performing Fund in Open-ended Balanced Fund (Three Year).
The fiscal year 2003-04 witnessed a sharp rise in
the equity market up to January 2004, following which the market was choppy and
range bound for the remaining part of the year. The debt market rose
substantially upto October 2003 and thereafter the market turned volatile with
a downward bias. Indian equities benefited from both domestic and global
factors. Easy liquidity conditions worldwide, low interest rates and the
lowering of emerging markets risk premiums saw very strong portfolio flows into
India. Indian companies were registering robust performances and improving
efficiencies for the past three years – a fact that was ignored by the markets
for a long time but was rewarded handsomely last year. The debt markets, after
recording three successive years of double-digit returns, surrendered a part of
those gains in the last few months of the last fiscal. The debt markets
corrected sharply after April 2004, largely due to the sustained rise in
wholesale prices. The Indian economy performed admirably across sectors in
2003-04, which acted as an overall boost to equity sentiments. Crude prices
have remained high throughout the last six months largely due to strong global
demand and non-availability of spare capacities to meet any feared terrorist
attack that could potentially disrupt supplies.
During the current fiscal year, markets reacted with
the results of the parliamentary elections. However, the official
pronouncements, the budget statement, abolition of long term capital gains tax
and the modifications to the turnover tax proposals have imparted a degree of
confidence in the market participants.
Industrial growth during the current fiscal year has
been strong with the capital goods sector performing notably well. Although
monsoon fears have receded, high crude oil prices having a negative spill-over
effect on inflation, both directly as well as through linkages via commodity
prices are a cause for worry. Agricultural performance in 2004-05 will depend
on the spread and consistency of monsoons. The other sectors are expected to
continue their robust performances. The investment cycle has shown signs of
heightened activity, and if it catches further momentum, will drive economic
growth going ahead. Although market sentiment has swung from extreme pessimism
to cautious optimism in the past few months, corporate numbers have continued
to remain consistently strong and fundamental factors benefiting Indian
equities are intact.
The debt market is expected to stabilize after the current spate of volatility. While the evolving macroeconomic conditions will continue to determine short term movements, the markets have experienced comfortable liquidity conditions during the first quarter of 2004-05, notwithstanding signs of a slow down in external inflows and significant credit offtake. The high commodity prices, especially fuel prices, impacting inflation worldwide are expected to moderate. This coupled with the policy initiatives of the Central Bank and the Government are likely to ease domestic inflation levels. The global interest rate scenario after the initial reversal and rate hikes is also likely to see a more measured pace of changes. This will continue to affect cross border money flows and the domestic markets.
The stance of
RBI's monetary policy for 2004-05 continues to be guided by the objectives of
provision of adequate liquidity for meeting credit growth and to support
investment and export demand while keeping a very close watch on the movements
in the price level.
Investment objectives and
policies:
The
investment objective, basis and policies of investment underlying the schemes
of UTI Mutual Fund are enclosed as Annexure A.
The Performance of the schemes of UTI Mutual Fund
for the period from February 1, 2003 to
March 31, 2004, is enclosed as Annexure B.
A list of the schemes in which dividend
was declared during the period from February 1, 2003 to March 31, 2004, is enclosed as Annexure C.
*Past performance may or may not be sustained in the
future.
Unclaimed Redemptions and
Dividends:
As
on March 31, 2004, the schemes of UTI Mutual Fund had Unclaimed Dividends and
the details of the same are enclosed as Annexure D. The schemes are open-ended schemes except a few close-ended
schemes which are open for repurchase. Redemption payable represents the amount
payable against Redemption requests received at the end of the year.
Statutory Details:
The Unit Trust of India Act, 1963 has been repealed by The Government of India through “The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002”. In exercise of the powers conferred under the Repeal Act, the Central Government vide its notification dated 15th January 2003 had notified 1st February 2003 as the “Appointed Day” for the purpose of inter-alia transfer and vesting of NAV based schemes as listed in Schedule II of the Repeal Act to a specified company. For such transfer, UTI Mutual Fund (a Mutual Fund, registered with SEBI as per SEBI (Mutual Fund) Regulations, 1996) has been set up as a Trust under Indian Trust Act, 1882. UTI Mutual Fund (UTI MF) is sponsored by State Bank of India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank (Sponsors). UTI Trustee Company (P) Ltd (UTI Trustee Company), a company incorporated under the Companies Act, 1956, is the trustee to UTI MF in terms of the Trust Deed made between Sponsors and UTI Trustee Company. UTI AMC (P) Ltd (UTI AMC), a company incorporated under the Companies Act, 1956, has been appointed as the asset management company for UTI MF.
UTI
Mutual Fund is managed in accordance with the applicable Rules, Regulations
prescribed by the regulators and good business practice. The Fund and the Asset
Management Company have maintained high standards in their reporting and
compliance.
UTI
Trustee Company discharges its obligations as Trustees to the Mutual Fund in
terms of SEBI (MF) Regulations, 1996 (Regulations) and the Trust deed,
including their respective amendments. The Trustees have entered into an
Investment Management Agreement dated 9th December, 2002, with UTI
Asset Management Company Pvt. Ltd. to
function as Investment Manager for all the schemes of the UTI Mutual Fund and
to manage the affairs of the Fund and operate its schemes.
UTIAMC
is accountable to the extent as specified in the Regulations and the Investment
Management Agreement executed with the Trustees.
In
view of the fact that the amounts collected under various schemes are deployed
in securities market, the price and redemption value of the units, and income
from them, can go up as well as down with the fluctuations in the market value
of its underlying investments.
The
UTI Mutual Fund was constituted as a Trust, by settlors viz. State Bank of
India, Life Insurance Corporation of India, Bank of Baroda and Punjab National Bank
on 9th December, 2002 in accordance with the provisions of Indian
Trusts Act, 1882 and the Mutual Fund is duly registered under the Indian
Registration Act, 1908. The liabilities and responsibilities of the Trustees
are as contained in the Trust deed dated 9th December 2002 and
Regulation 18 of SEBI (MF) Regulations, 1996.
The
liability of the settlors viz. State Bank of India, Life Insurance Corporation
of India, Punjab National Bank and Bank of Baroda, is restricted to an amount
of Rupees Ten Thousand, being the initial contribution.
Acquisition of the schemes
of IL&FS Mutual Fund:
An
agreement was signed on 29th April, 2004 between (UTI Trustee
Company Pvt. Ltd., UTI Asset Management Company Pvt. Ltd.) and (Infrastructure
Leasing & Financial Services Ltd. - the Sponsor, IL&FS Trustee Company
Ltd., IL&FS Asset Management Company Ltd.) for acquisition of the schemes
of IL&FS Mutual by UTI Mutual Fund, subject to the necessary regulatory
approvals and after completion of formalities including giving the investors of
IL&FS Mutual Fund an option to exit without load. Accordingly the schemes
of IL&FS Mutual Fund have been transferred to UTI Mutual Fund and now form
part of UTI Mutual Fund with effect from July 5, 2004.
Acknowledgements:
UTI Mutual Fund would like to thank the Government
of India, the Securities and Exchange Board of India, the Reserve Bank of
India, the Sponsors, the Board of UTI Asset Management Company Pvt. Ltd. and
the Association of Mutual Funds in India for their immense support,
co-operation and guidance during the period under review. We are also thankful
to our Auditors, Custodian, Registrar and Transfer Agents, Banks, Distributors
and all other service providers for their valued support. UTI MF would also
like to thank the unitholders, the employees and Board of Directors of UTI
Asset Management Company Pvt. Ltd. for their cordial support.
We
look forward to your continued support and assure you of our commitment to
quality products and services from UTI Mutual Fund.
Place: New Delhi UTI TRUSTEE COMPANY
PRIVATE LIMITED
(C RAMACHANDRAN)
CHAIRMAN