UTI
Mutual Fund has announced the consolidation / merger being made to
S&P CNX Nifty UTI Notional Depository Receipt (SUNDER) and
UTI-Master Index Fund.
SUNDER is an open ended, exchange listed, Index linked scheme based
on S&P CNX Nifty Index. The fund has been tracking the underlying
S&P CNX Nifty Index. However, the small size of this fund has
increased the risk of higher tracking error. UTI Nifty Index Fund too
has a mandate to replicate the S&P CNX Nifty Index and minimise the
performance differences between the scheme and benchmark subject to
market liquidity, costs of trading, management expenses and other
factors which may cause tracking error. Therefore, it is proposed to
merge the fund with UTI Nifty Index Fund.
UTI-Master Index Fund is an open ended
passive index fund like UTI-Nifty Index Fund. UTI-Master Index Fund
representing BSE Sensex does not reflect a broader universe as compared
to Nifty and hence the acceptance in the market is on a lower side. This
is apparent from the perspective of fund size and number of investors
the fund currently has. Since, both BSE Sensex and S&P CNX Nifty
have their constituents as large cap companies and BSE Sensex
constituents have a weight-age of 84% in S&P Nifty. Hence, it is
proposed to merge UTI-Master Index Fund with UTI-Nifty Index Fund.
Kindly note the following in case of the Merger:
1. The option chosen by you (Growth or Dividend) will remain same in the merged scheme i.e., UTI-Nifty Index Fund.
2. The merger of SUNDER and UTI-Master Index Fund into the UTI-Nifty
Index Fund would result in no change to your wealth as an investor on
the date of the merger. The SUNDER and UTI-Master Index Fund investors
will be allotted units of UTI-Nifty Index Fund as per the applicable
NAV. As a result, UTI-Nifty Index Fund would have an increased investor
base and corpus to the extent of switchover from SUNDER and UTI-Master
Index Fund.
Option to existing unit holders of SUNDER, UTI-Master Index Fund and UTI-Nifty Index Fund:
• Kindly note that if you desire to continue in the merged scheme, no
action needs to be taken by you in this regard. You will automatically
become a Unitholder in UTI-Nifty Index Fund.
• If you do not wish to continue, you will be given an option to
redeem your existing units at prevailing NAV without any load from 13
February 2012 to 14 March 2012 (both days inclusive), for a period of 31
days. Unitholder of SUNDER who wishes to exit can submit redemption
request with his / her DP during exit option period or AMC can accept
redemption only in creation unit size (i.e. 10,000 units plus in
multiples of 1 unit in case of Authorised Participants as well as other
investors). Unit holders of UTI-Master Index Fund who wish to exit can
inform us in writing with your bank account particulars and submit the
statement of account on any day during the exit option period. As per
the SEBI Circular Cir/IMD/DF/15/2010 dated 22 October 2010, if there is
no change in the fundamental attribute of the surviving scheme on merger
(i.e. UTI-Nifty Index Fund), no exit option need to be provided under
the said scheme. As the fundamental attribute of UTI-Nifty Index Fund is
not being changed no exit option is given to the unitholders of
UTI-Nifty Index Fund.
• At the end of the option period, all unit holders who have not
redeemed their existing units in SUNDER and UTI-Master Index Fund will
be allotted units of UTI-Nifty Index Fund. This conversion will be in a
ratio, which will ensure that the investor’s wealth is intact as on the
date of merger as shown in the illustration. The conversion will be done
at the NAV computed for SUNDER, UTI-Master Index Fund and UTI-Nifty
Index Fund on 14 March 2012.
• Such unit holders of SUNDER and UTI-Master Index Fund who have not
redeemed their existing units will receive a Statement of Account for
their holdings in UTI-Nifty Index Fund post merger.
• If you do not exercise your exit option, you have deemed to have consented to the aforesaid proposal.
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