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FAQs on US-64 liquidity package

The Unit Trust of India, following the announcement of a package creating liquidity option for small investors of US-64, has received many queries seeking clarifications on the package.

In a media release on Thursday, the Trust has sought to address most of these queries:

When can I repurchase my holdings up to 3,000 units at a predetermined price?

Anytime from August 1, 2001 to May 31, 2003, except during the book closure period in June 2002.

How many units can I repurchase?

Up to 3,000 units per investor, provided these units were held in one's name as on June 30, 2001.

What happens to my holding above 3,000 units?

The Trust will repurchase this holding at NAV-based price w.e.f. January 1, 2002.

However, unit-holders who do not offer for repurchase their unit holding up to December 31, 2001, will get the repurchase price which would be the higher than the applicable repurchase price listed in the table below or the then prevailing NAV-based repurchase price.

At what price can I repurchase my units?

From August 1, 2001 to December 31, 2001, you can repurchase units at the price given in the table below. Thereafter, at the repurchase price mentioned below or the NAV-based price to be declared from time to time, whichever is higher.

Period 2001-2002	Repurchase price (Rs)
August 2001	10.00
September 2001	10.10
October 2001	10.20
November 2001	10.30
December 2001	10.40
January 2002	10.50
February 2002	10.60
March 2002	10.70
April 2002	10.80
May 2002	10.90
June 2002	Book Closure
July 2002	11.00
August 2002	11.10
September 2002	11.20
October 2002	11.30
November 2002	11.40
December 2002	11.50
January 2003	11.60
February 2003	11.70
March 2003	11.80
April 2003	11.90
May 2003	12.00
June 2003	Book Closure

Can you give some illustration to show how much I can repurchase?

If I have 3,010 units

• You can repurchase up to 3,000 units and for the balance 10 units a fresh membership advice will be issued to you if you tender your holding up to December 31, 2001. You can repurchase the balance 10 units at the NAV-based price on or after January 1, 2002.
• Alternatively, if you tender all your 3,010 units on or after January 1, 2002, your first 3,000 units will be repurchased at the price offered in the month of submission as shown in the preceding table or NAV-based price, whichever is higher. The balance 10 units will be repurchased at the NAV-based repurchase price prevailing during that month.

If I have 10 certificates of 1,050 units each:

You can repurchase 3 certificates totaling 3,000 units and can get a fresh M/A for the balance 150 units.

If I have 3 certificates of 500 units and 3 certificates of 700 each:

You can repurchase 3 certificates totaling 2,100 units. Against 2 certificates of 500 units each you can repurchase 900 units and you will get a M/A for balance 100 units.

If I have an ADU of 3,300.452 units:

You can repurchase up to 3,000 units and for balance 300.452 ADUs you will be issued a new M/A which can also be repurchased any time from January 1, 2002.

If I acquired up to 3,000 units as a transferee in or before May '01:

You can repurchase up to 3,000 units under the package.

If I had given for split or subdivision of a certificate or had consolidated in or before May '01:

You can repurchase up to 3000 units as described above.

If I have given my transfer case for 3,000 units in the month of July 2001:

If you have tendered for transfer in your name (i.e. as transferee) in the month of July 2001, you will not be eligible for repurchase under the package. You can, however, repurchase these units at the NAV-based price from January 2002.

Can holdings up to 3,000 units be repurchased in tranches?

Yes, within the overall limit, one can repurchase up to 3,000 units in one or more tranches.

What happens to change in name, status and address done after June 30, 2001?

Such changes do not take away unit-holder's entitlement under the package.

Is this package available to any particular type of investor category?

No. This package, up to 3,000 units only, is available to all types of investors holding units as on June 30, 2001.

If I am a non-individual unit-holder with cases similar to the above?

You can repurchase up to 3,000 units as detailed above, as the package is available to both individual and non-individual unit-holders within the overall limit.

Give illustrations about the circumstances under which I cannot make use of the liquidity option created for small investors?

• If you have given your transfer case for acquiring units in the month of July 2001 or thereafter;
• If you buy units in the secondary market anytime from July 2001;
• If you buy from a friend and send your case for transfer in July '01 and thereafter;
• If any of your request was sent back to you under objection for any reason and is resolved by you at a date later than May 31, 01.

What happens if I buy units from the secondary market today?

If you buy units from the secondary market, you cannot use this package of repurchase, as it is only for those unit-holders who were on US-64's books as on June 30, 2001. You can repurchase the holding acquired through market operations after January 1, 2002 at the NAV-based price.

Will I get any dividend for 2001-02 and 2002-03?

The dividend, if any, for 2001-02 will be paid to only those unit-holders whose name is registered in US-64's books as on June 30, 2002 or any other record date for the year 2001-02 and June 30, 2003 or any other record date for the year 2002-03.

In other words, if you do not repurchase your holding under the package or otherwise, earlier than the record date/s for dividend, you will be entitled to dividend for that year.

If I repurchase 3,000 units in July 2002, do I get dividend, if any, for 2001-02, over and above the July 2002 price of Rs 11/- per unit?

Yes.

Does UTI have sufficient liquidity to meet redemptions?

Yes, adequate liquidity arrangements have been made to ensure that any funds needed for redemption will be available to UTI without it having to resort to large-scale sale of its investments in the market.

Who will fund the deficit, if any, between NAV and the offered repurchase price?

The deficit, if any, between the offered repurchase price (as given in the table above) and the NAV will be met and funded from sources external to the scheme.

Whether the difference, if any, between NAV and offered repurchase price cause an erosion in the NAV for the remaining unit-holders?

No, because of the external funding of the deficit, if any.

The repurchase price results in a capital loss for those who had purchased units during the last few years?

The liquidity option has been created basically for small investors of US-64, who may be in urgent need of funds.

I have units in dematerialised form and want to repurchase the same.

For repurchasing demat units you may contact your depository participant with the repurchase form. Your DP will verify your holdings and signature and certify the same on the repurchase request form.

This request form could be sent either directly to our Bombay Main Branch or to the nearest branch office of the UTI (which in turn will forward the same to Bombay Main Branch).

The main branch will process the request within the framework of the package and will pay the proceeds to you.

The overall ceiling of 3,000 units will be in force in such cases also.

When is the first NAV likely to be declared?

On or before January 1, 2002.

Whether the NAV will be declared on daily, weekly or monthly basis?

The periodicity or frequency of the NAV will be announced before January 2002.

The liquidity option has been created basically for the small investors of US-64, who may be in urgent need of funds.

The UTI goes on to mention in the media release that while the unit-holders get the opportunity to create liquidity by repurchasing their holding up to 3,000 units, it would be worthwhile to recognize the benefit of the assured repurchase price offered under the package, which will increase from month to month.

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