11, Scindia House, Connaught Circus, New Delhi – 110 001.

Website : www.escortsmutual.com         E-mail : help@escortsmutual.com

Dear Unit holder(s),

The Directors of Escorts Investment Trust Ltd. have pleasure in presenting the Thirteenth Annual Report and audited financial statement of the schemes of Escorts Mutual Fund for the period from April 1, 2009 to March 31, 2010.

Escorts Mutual Fund is one of the earliest private sector entrants to the Indian Mutual Fund Industry. The Mutual Fund has made impressive gains by constantly increasing its retail client base over the years. It remains committed for providing professional financial solution for investors across all profiles, having carved a niche for handsomely rewarding the investors for their participation in Escorts Mutual Fund Schemes.

As on March,31, 2010 the average asset under Management (AUM) was Rs. 2003 mn as against Rs. 1812 mn on March,31, 2009. The fund house is presently managing 13 funds/schemes and has 28 Branches across the country.

Equity Market Review and Outlook

Post economic and financial market turmoil of previous year the financial year 2009-10 began on a difficult note with various economic indicators across the globe not looking very encouraging. However, with spate of coordinated recovery measures across the major world economies, initial signs of recovery were seen in global markets. In tandem, the Indian Stock market buoyed by stable election mandate revived too with  BSE Sensex closing at 17528, up by 8,435 points (+93%), and Nifty closing at 5,249, up by 2,228 points (+74%) at  the end of financial year 2009-10.

Stable election results and strong government at centre had built huge expectation from the government for definite measures for revival of sentiments and to ward off impact of global meltdown. This lead to demand revival in high beta stocks like Realty, Banking, Capital Goods that remained the Q1,Q2 market leaders in terms of overall returns on investments. During the 3^rd and 4^th quarter consumer durable, auto lead the pack ably supported by IT, Health Care.

The net FII inflow for the year was $23.3 bn, the insurance companies remained the top domestic buyer in the market. Domestic Mutual Funds remained net sellers to the tune of $2 bn.

Lead by government initiative on excise cut PAT of companies increased by 18% for the 1^st three quarters of FY 2009-10. Lower commodities prices, cost rationalization, RBI soft stance on interest rates and stable exchange rates played very important role for such excellent results.

The resilience of Indian Economy during the global crisis and the GDP projections have lead the market to factor in growth expectation leading to higher current price earning multiples as to historical long term average of 18 times. Much will depend on global cues and what economic indicators emanating from US, EU and China suggests during the current financial year.

Debt Market Review and Outlook

The global economy continues to recover amidst ongoing policy support and improving financial market conditions. It continues to face several challenges such as high levels of unemployment, close to 10% in the US, and inflation. Core measures of inflation in Emerging Markets Economies especially in Asia, have also been rising. Amongst Emerging Markets Economies, China continues to grow at rapid pace, led mainly by domestic demand. This has prompted central banks in some Emerging Markets Economies to begin phasing out their accommodative monetary policies in order to protect from downside risk to growth. However, the developments on the inflation front are worrisome. Globally headline inflation rate rose between November 2009 and January 2010, softened in February 2010 on account of moderation of food, metal and crude prices and again rose marginally in some major economies in March 2010. The headline inflation, a measure by WPI, accelerated from 0.5 per cent in September 2009 to 9.89% in March 2010, exceeding the RBI’s baseline projection of 8.5% for March 2010. In order to anchor inflation and inflationary expectation RBI may increase Repo rate, Reverse Repo rate and Cash reserve ratio.

During the FY0910, 10-yr GOI benchmark bond yield have shown the range of 6.85%-7.85%. The overnight call money rate, which generally hovered above the repo rate, has softened considerably to 0.50% in the beginning of financial year 2009-10 and 3.00% - 4.00% level seen towards at the end of financial year 2009-10. Other money market rates such as discount rate of CDs, CPs and CBLO rate softened in tandem with the overnight call money rate.

India’s GDP growth rate is likely to be around 8% for FY 2010-11. The fiscal and monetary support measures taken in 2008-09 and 2009-10 are being gradually withdrawn. It is expected that RBI will gradually move to neutral monetary stance on the backdrop of strong domestic growth and higher inflationary pressure. It is likely that going forwards the monetary policy will centre around liquidity, bank rate and inflation.

For the year ended 31^st March, 2010 Escorts Mutual Fund had thirteen SEBI registered schemes. These schemes are under the category of Debt, Equity and Hybrid Funds. The fund is committed to provide stable return to its investors in medium to long term that is consistent with scheme objectives and meet investor’s expectations.

A brief note on various schemes/plans and their performance is as under:

Escorts Growth Plan, an open-ended growth scheme, has the investment objective to generate capital appreciation by investing predominantly in a well-diversified portfolio of Equity Shares with growth potential. The scheme has provided a good return of 101.42% during the year as against the 73.76% of benchmark index.

Escorts Tax Plan, an open-ended Equity Linked Savings Scheme, has the investment objective to generate capital appreciation by investing predominantly in a well-diversified portfolio of Equity Shares with growth potential. The scheme has provided a return of 74.57% during the year as against the 73.76% of benchmark index.

Escorts Income Plan, an open ended scheme, has the investment objective to generate current income by investing predominantly in a well-diversified portfolio of Fixed Income securities with moderate risk levels. It provided a good return of 7.61% during the year as against the 5.41% of benchmark index. Further, it declared an uninterrupted and regular monthly Dividend aggregating to Rs. 0.78 per unit for the financial year.

Escorts Balanced Fund, an open-ended scheme, has the investment objective to generate long term capital appreciation and current income from a portfolio of equity & fixed-income securities. The scheme has provided a good return of 58.78% during the year as against the 47.31% of benchmark index.

Escorts Liquid Plan, an open ended liquid scheme has the investment objective to provide income and liquidity consistent with the prudent risk from a portfolio comprising of money market and debt instruments. This income may be complemented by possible capital appreciation. The aim is to optimise returns while providing liquidity. The scheme provided a good return of 6.29% during the year as against the 3.69% of benchmark index. Further, it declared dividend aggregating to Rs. 0.2940 per unit under Daily Dividend Option and Rs. 0.3684 per unit under Weekly Dividend Option for the financial year.

Escorts Floating Rate Fund, an open ended income scheme has the investment objective to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitised debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed Rate Debt Securities (including fixed rate securitised debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns). The scheme provided a good return of 5.14% during the year as against the 3.69% of benchmark index.

Escorts Income Bond, an open ended income scheme has the investment objective to generate current income by investing predominantly in a well - diversified portfolio of Fixed Income securities with moderate risk levels. The scheme performance during the year was moderate with a return of 3.41% as against the 5.41% of benchmark index.

Escorts Opportunities Fund, an open ended Scheme has the investment objective to generate long term capital appreciation by predominantly moving investments in a portfolio of equity and equity related securities amongst different sectors, present or future, expected to show high earnings such as Technology Sector, Media Sector, Entertainment Sector, Communications Sector, FMCG Sector, Pharmaceuticals Sector, Cyclical Sector, Real Estate Sector, Space Sector, Cybercity Sector etc. It declared a dividend aggregating to Rs. 0.9442 per unit for the financial year.  

Escorts Gilt Plan, an open-ended income scheme, has the investment objective of generation of income and capital appreciation through investments in government securities market. The aim is to generate returns commensurate with minimal credit risk by investing in securities created and issued by the Central Government and / or a State Government and / or repos / reverse repos in such government securities as may be permitted by RBI. The scheme performance during the year was moderate with a return of 3.29% as against the 5.41% of benchmark index.

Escorts High Yield Equity Plan, an open ended growth scheme has the investment objective to generate income by investing predominantly in well diversified portfolio of equity stocks providing high dividend yield but at the same time capture long term capital appreciation as and when the opportunity arises. This long term style of investment tries to locate, in a disciplined manner, shares, which for a variety of reasons are selling at prices which are substantially lower than the company’s actual business value or future earnings potential, and are also yielding a higher than normal dividend yield. The scheme has provided a moderate return of 64.53% during the year as against the 83.09% of benchmark index.

Escorts Infrastructure Fund, close ended equity scheme with an automatic conversion into an open ended scheme on expiry of 5 years from the date of allotment. The investment objective of the Scheme is to provide income distribution and / or medium to long term capital gains by investing predominantly in equity/equity related instrument of the companies in the infrastructure sector. The scheme has provided a moderate return of 67.15% during the year as against the 73.76% of benchmark index.

Return<1 Yr is absolute

Escorts Leading Sectors Fund, an open-ended growth scheme, has the investment objective to provide capital appreciation or income distribution by investing in companies from Leading Sectors, depending upon their growth prospects and sustainability of future earnings growth. The scheme has provided a moderate return of 63.45% during the year as against the 73.76% of benchmark index.

Return<1 Yr is absolute

Escorts Power & Energy Fund, an open-ended growth scheme, has the investment objective to provide income distribution and / or medium to long-term capital gains by investing predominantly in equity/equity related instruments of the companies in the Power/ Energy Sector and /or Debt/Money Market Instruments. The scheme has provided a return of 63.45% during the year as against the 67.06% of benchmark index. It declared a dividend aggregating to Rs. 3.00 per unit for the financial year. 

Return<1 Yr is absolute

Board of Directors

The following are the directors of Escorts Investment Trust Ltd. :

Mr. Rajan Nanda, Chairman and Managing Director, Escorts Limited

Dr. Rakesh Khurana, Chairman & Managing Director, Knowledge Network India Pvt. Ltd.

Mr. Deba Prasad Roy, Financial Consultant

Mr. Ashok Kumar Bhargava, Consultant

Risk Factor

Mutual Funds, like securities investments, are subject to market and other risks and there can be no guarantee against loss resulting from investment in the schemes nor can there be assurance that the scheme’s objectives will be achieved. As with any investment in securities, the NAV of the units issued under the schemes can go up or down depending on various factors and forces affecting securities markets.

Statutory Details

Escorts Mutual Fund was registered with the Securities and Exchange Board of India ('SEBI') on 3^rd July, 1996 vide registration no. MF/028/96/4.

The enclosed audited accounts of the Mutual Fund Schemes provide, in our view, an adequate disclosure of its affairs during the period under review. In addition, we state that:

·         The liabilities and responsibilities of the Trustee (Escorts Investment Trust Ltd.) are in accordance with SEBI (Mutual Funds) Regulations, 1996, Trust Deed and the offer documents of the schemes. The liability of the Sponsor / Settlor is limited to the initial contribution of Rs. 1,00,000/- towards the setting up of Escorts Mutual Fund.

·         Since the schemes permit investments, partly or wholly in shares, bonds, debentures and other scrips or securities whose values can fluctuate, the price and redemption value of the units, and income from them, can go up as well as down with the fluctuations in the markets value of its underlying investments.

·         On a written request, present and prospective unitholders / investors can obtain a copy of the trust deed, the annual report of the schemes, the annual report of the asset management company (Escorts Asset Management Limited) and the text of the relevant schemes.

Acknowledgement

The Trustees wish to place on record their grateful thanks to the Unitholders for their continued support and to the Securities and Exchange Board of India, the Bankers, Custodians and Unitholders of Escorts Mutual Fund for the support provided during the year.

Yours sincerely,

for Escorts Investment Trust Limited

(Trustee of Escorts Mutual Fund)

(Rajan Nanda)                                                                                   Place : New Delhi

Chairman                                                                                           Date : 27.07.2010
 

Disclosure pursuant to SEBI Circular No. MFD/CIR/9/120/2000, dated 24-11-2000 regarding details of unclaimed redemption and dividend and number of such investors for each scheme is as follows :

# including against its authorized persons / distributors/ employees etc.

* Non actionable mean the complaints that are incomplete