UTI OFFERS INSTANT SERVICE
TO INVESTORS
By A Correspondent

Overall Performance
Total annual domestic and offshore sales of Unit Trust of India (UTI) for the year 1999-2000 aggregated at Rs. 16445 crore showing achievement of 96% of the target of Rs. 17200 crore. Domestic sales of units under different schemes exceeded the target by 1.3%. As compared to aggregate sales of last year (excluding SUS-99) sales registered an increase of 6% during the year. Repurchases and redemptions at Rs. 12179 crore registered a decrease of 25% over the previous year’s total repurchases and redemptions of Rs. 16202 crore. UTI’s net sales increased by 54% to Rs. 4266 Crore in 1999-2000 from Rs. 2776 Crore in the previous year.

• US 64 mobilisation compared to previous years was higher in the second half of the year garnering 60 % of the total years sales of Rs. 4668 crore.
• UTI Bond Fund continued to be popular with investors with sales crossing the Rs. 1000 crore mark to touch Rs. 1391 crore.
• The five growth sector funds provided the desired impetus to equity scheme sales by garnering Rs. 2050 crore during 1999-2000, which was 81.6% of the total sales under domestic equity schemes.
• Children segment schemes turned a new leaf by showing a jump of 67% in sales compared to previous years.
• Six new schemes, UTI G Sec Fund, UTI Equity Tax Savings Plan, Nifty Index Fund and 3 MIPs launched during the year collected Rs. 4763 Crore.

Corporate Governance
In accordance with the discipline of corporate governance, the frequency and quality of discloures to investors was increased and their content improved. Data on UTI subsidiaries and their role in UTI operations is also being disclosed in the Offer Documents of the UTI schemes. The Board of Trustees and various committees met more frequently during the year than in the previous year.

Regulatory Framework
All UTI schemes are formulated in adherence to UTI Act and all the schemes launched after July’1994 are subject to full compliance to SEBI regulations. The pre-1994 schemes adhere to the requirements of SEBI MF Regulations in respect of marketing, advertising, investor servicing and investment management. Of the seven domestic schemes to be brought under SEBI purview, draft documents in respect of three have been submitted to SEBI. US 64 will fully meet SEBI’s regulatory requirements by july 2002.

Implementation of the High Level Expert Committee Recommendation
Of the 19 recommendations of the High Level Committee, 10 have already been implemented and six are under implementation. Among the remaining three, the recommendation to make US 64 NAV driven within the stipulated time-frame, the recommendation for setting up an Asset Management Company for US 64 and increasing the number of trustees by 5 will require amendment to the UTI Act; these issues are being addressed separately.

Communication
UTI’s website, unittrustofindia.com has enlarged its content and made more investor friendly. It is used as an effective tool for communication and dissemination of information. All pages have been revamped for better readability/navigability leading to lesser upload times. For the convenience of the investors, all after-sales service forms are now available for download on the website. All this has increased the number of users of the Internet site and the numbers are increasing by the day. Moreover, to enable UTI Offices to offer instant service to investors, an Internet facility has been established.

Technology Focus and Investor Servicing
UTI has successfully rolled over all its systems without any disruption. The shared VSAT network being used by the Trust has been functioning normally after the roll over. The Registrar and Transfer Agents engaged by the Trust for investor services have also migrated without encountering any problems.

Information technology has been effectively and efficiently utilised to offer better service to the investors like daily NAV based sale and repurchase prices of UTI Bond Fund and UTI G Sec, facility to switch between equity schemes of the Trust, despatch of certificates, statement of accounts, income distribution instruments, repurchase proceeds, redemption proceeds, etc. completed well within the time schedules specified by SEBI and statement of account now being issued in lieu of certificates for fresh sales for most schemes to make it cost efficient and to simplify procedure for issue of duplicate in case of loss of original.

During 1999-2000, SAP R/3, an internationally reputed Enterprise Resource Planning (ERP) software was customised and installed at all Branch Offices for accounting. The system has also enhanced the speed of accounting transactions and the quality of MIS.

Efficient service at the lowest cost was achieved with the in-house income distribution Processing in 50 branches. This has not only improved delivery time of income distribution instruments but has also reduced the incidence of complaints with better management and maintenance of data. The other branches will be taking up in-house printing in the near future.

Electronic Clearing Service (ECS) facility is used for all payments like income distribution under US 64 and repurchase / maturity payments under various schemes. Almost all branches across the country, wherever RBI offers these facilities are covered. The number of unit holders benefiting from this facility is increasing as more and more investors realise the convenience and safety value. Opting for ECS facility helps prevent fraudulent encashment of UTI cheques by unscrupulous persons and postal transmission losses.

With more investors opting for the safer Demat mode, UTI schemes offering this facility are US-64, Mastershare, Mastergain 92, Mastershare Plus, Master growth and Grandmaster. So far about 130766 unitholders have opted for dematerialisation for an aggregate amount of Rs. 891 Crore.

Network Expansion
UTI has already networked all the branch offices of the Trust and Registrars. Any-branch service is now available for US 64 unitholders that will be extended to all unitholders within the next two years. All the branch offices of the Trust are now in a position to provide information with regard to unitholders’ investments in 53 out of 80 schemes, using customised Browser Based Query System (BBQS). Extension of the facility to the remaining schemes is planned for the next year. New section on ‘Your query/suggestions’ on UTI’s Website, unittrustoflndia.com will help in faster grievance redressal directly by the branch/zonal office concerned.

Coming closer to the investors, UTI opened a branch at Raipur and franchise offices at Bhuj in Gujarat, Hissar in Haryana, Kota in Rajasthan, Birbhum and Malda in West Bengal. The number of franchise offices rose to 54. In addition, CR Collection centres have been reviewed and rationalised to 190 for offering quality service to the investors spread across the length and breadth of the country. Performance evaluation and re-orientation of the agency force led to weeding out of 9495 agents while 4397 new agents were appointed during the year to bring units to the doorsteps of the multitude of investors. In line with its goal of going rural and for deeper penetration of the potential taluk/tehsil places, 14 Chief agents were appointed during the year. With a view to facilitate rural investors in making investments in UTI schemes, acceptance of cash applications through a non-operative account was introduced at more than 50 collection centres. UTI will be increasing presence in the prosperous rural areas. NRIs and OCBs residing in the Gulf region are serviced by UTI’s Representative Office in Dubai.

Efforts have been made to seek more innovative channels such as institutional agents and private sector banks. An arrangement has been made with UTI Bank to market UTI schemes. An exclusive training programme on marketing UTI schemes was conducted for UTI Bank Staff. Prominent institutions and SHCIL have been engaged for marketing/promoting UTI schemes.

Synergies with the UTI associates
UTI is effectively utilising UTI Bank’s Cash Management Services (CMS) at all branches for efficient funds management through speedier realisation of funds collected from investors across the country. The Trust also plans to extend CMS facility in association with UTI Bank to NRIs who can make payments through outstation cheques. UTI Investor Services Limited provides R&T services in respect of 34 schemes of UTI while UTI Securities Exchange Ltd. provides quality broking services. UTI investment Advisory Services provides investor advisory services to UTI’s India Growth fund as also extends fund accounting/compliance services in respect of offshore funds as well as research support. UTI Institute of Capital Market’s services are utilised for training of UTI employees and agents, investor education as well as research support.

Unit Scheme 64
US-64 mobilised Rs. 4668 Crore, 28% of the total sales for the year. Repurchases during the year aggregated Rs.2281 crore as against Rs.7770 crore in the previous year. Positive net sales of Rs.2387 crore as against negative net sales of Rs.3131 crore in the previous year is the hallmark of this year’s achievement. Servicing under US 64, flagship scheme of the Trust has been automated and unitholders are serviced from any branch irrespective of the units purchased from any location. This online system takes care of around 40% of the total investor base of UTI.

Domestic Equity Schemes
Among domestic equity schemes, 13 open-ended schemes and one interval fund open for sale collected Rs.2527 crore, registering a rise of 672% over the previous year. The UTI Growth Sectors Fund (UTI-GSF), comprising five sectoral funds i.e. Brand Value Fund, Pharma and Healthcare Fund, Software Fund, Petro Fund and Services Sector Fund with total sales of Rs.2050 crore, accounted for 81% of the total sales under equity schemes. This is in line with the marked shift in investor preference for sector funds witnessed during the year. Repurchases under equity schemes aggregated Rs.4773 crore.

Sectoral Funds
As regards sectoral funds GSF-Software and GSF-Services have done exceedingly well: 3 funds have outperformed their respective sectoral indices (GSF Brand, Petro and UGS 10000) in the last year and since inception. In the tax planning segment, the recently launched Equity Tax Saving Plan has been outperforming the BSE Sensex since inception. The performance of Masterplus was affected on account of heavy repurchase which constrained reshuffling of the portfolios in favour of upcoming growth stocks/sectors: however this scheme has a large exposure to FMCG and Pharma which did not perform well during the year but are expected to do well in the future.

Equity Schemes - Income Distribution
During the year, the Trust had rewarded unitholders of equity schemes. In all 10 equity schemes declared income distribution: Grandmaster (10%), Mastergrowth (15%), UGS 10000 (20% - maiden), UTI GSF - Software (20% - maiden), UTI GSF - Service (20% - maiden), Mastergain (15%), Masterplus (12%) and UTI GSF - Brand Value (10% - maiden), Mastershare (16%) and MEP ’99 (15%). These income distributions are tax free in t he hands of the investors. Bonus of 2:5 was also distributed in MEP 93.

Scheme Innovation
Some of the innovative features added to the schemes are highlighted below :

• Open-ending of Mastergrowth 93 with effect from December 01, 1999.
• Common/composite application forms for 8 equity schemes (Masterplus 91, Mastergain 92, Mastergrowth 93, Grandmaster 93, PEF Unit scheme, UGS 10000, UTI Master Index Fund, UTI Nifty Index Fund).
• Composite services form for repurchase of units.
• Reduction in discount to NAV in respect of repurchase of units from 5% to 3%.
• Introduction of Folio concept in Master Index Fund and reduction of discount to NAV from 2% to 1% on repurchase made within 6 months and nil on repurchases thereafter.

Debt-Oriented Schemes
Total sales under debt-oriented schemes aggregated to Rs.9012 crore and repurchases/redemptions to Rs. 4773 crore. Three Monthly Income Plans (MIPs) collected Rs. 3093 Crore. UTI G-sec Fund, open-end gilt fund launched during the year, mobilised Rs. 822 crore. UTI-Money Market Fund collected Rs.1165 crore and UTI Bond Fund Rs.1391 crore. Fresh Sales under Unit Linked Insurance Plan were Rs. 105 crore, which is the highest ever. Together with renewal contribution, sales under ULIP amounted to Rs.678 crore.

Among the non-assured schemes, the UTI Bond Fund has given an anualised return of 12.6%, since inception. The current size of the fund is Rs.504 crore.

The UTI Money Market Fund has given a 1 year and 3 year return of 10.12% and 10.31% respectively. The fund has given annualised returns varying between 9.15% and 10.38% over a moving 90-day period. The current size of the fund is Rs.214 crore.

US-95 has given a return of 66.98% during the year. The 5-year and 3-year annualised returns are 15.03% and 19.5% respectively. The current size of the fund is Rs. 161 crore.

Seniors Citizens Unit Scheme is designed to provide medical security system to protect individuals against hospitalisation expenses especially after superannuation.

Grihalakhsmi Unit Scheme 94 has an objective of providing regular income for women.

Retirement Benefit Unit Plan is a life-cycle product targeted towards the superannuating needs of individuals.

Unit Linked Insurance Plan (ULIP) has earned an estimated net income of Rs.523 crore on its capital.

The scheme for Charitable and Religious Trusts and Registered Societies (CRTS) gives a total income distribution of 12.75% during the year.

The Trust met its commitment under all assured return schemes including MIP 94(III), which matured during the year.

A number of investor friendly features have been introduced in the debt schemes. UTI Bond Fund introduced the facility of monthly withdrawal plan and roll over. Money Market Mutual Fund has been made available from more branches of UTI bank. A single form for Bond Fund, G-sec Fund and US 95 was also introduced.

In ULIP, minimum amount of the target is being revised upward from Rs.6000 to Rs.15000. There will, however, be no change in the maximum amount of the target of Rs. 75000 for the time being. Sale and repurchase prices of ULIP units will be based on NAV to be announced on weekly basis as against the existing practice of announcing prices worked out administratively every month. The spread between the sale and repurchase prices shall not exceed 7% . ULIP offers three exit options after maturity : continue in the plan fully or partially till the time investor desires to remain invested and participate in further growth without requiring to pay any annual/half yearly instalments under that particular target plan or switch-over to other scheme of UTI which may be announced by UTI from time to time or receive full or part of the maturity proceeds on the date of the maturity. Additional maturity bonus will continue to accrue to the investors at 0.5% of the target amount for each subsequent completed year after maturity. Accident insurance cover under ULIP is being increased from Rs.30000 to Rs.50000.

Retirement Benefit Plan increased the permissible frequency of investments from 4 to 12 in a year for all categories of investors and introduced a Salary Savings Plan with lower minimum investment of Rs.500 (a minimum amount of Rs.5000 per month for institutional investors) has been introduced.

Offshore Equity Funds
During the year, UTI raised Rs. 238 crore under off-shore funds. UTI launched 2 new offshore funds India Media Internet Communications Fund and India Infrastructure Fund. The current size of UTI’s off-shore fund is Rs. 2,811 crore.

The oldest of UTI’s off-shore funds, India Fund has outperformed the BSE Sensex and S&P CNX Nifty during the year. The current fund size is Rs.248 crore. The Rupee NAV of close-end India Growth Fund outperformed the benchmark BSE Sensex. The Fund size was Rs. 826 crore. During the year, the India IT Fund has received inflows of $ 45 million and outflows of $ 35 million. The current fund size is 1576 crore. The Rupee NAV of the Fund appreciated by 195.65%. India Access Fund successfully tracked the S&P CNX Nifty Index.

Looking Ahead
UTI’s Human Resource Development is now focussed on enabling UTI employees to meet the challenges of Business Process Re-engineering and software implementation projects. A BPR implementation Department has been set up to enable UTI to shift all Business Processes and Processing and Servicing Software to the new integrated investor-centric on-line system by the first quarter of 2001. The crucial building block of the strategy is a Central Data Base and Central Processing Centre to process all sales, repurchase and after-sales service transactions for UTI’s customers across the country. The new software platform will have interfaces with workflow and imaging solutions, to ensure tight control on process productivity and a paperless processing environment. The New system will help standardise service levels, and reduce complexity of access for investors.

Another key component of UTI’s client operations strategy is to build approximately 100 lean UTI Financial Centres (UFCs) which will provide online service to all customers, support agents in executing marketing strategies and extend financial planning capability to UTI’s high net-worth customers. UTI will launch three pilot UFCs in Mumbai, Delhi and Calcutta.

The third component of the strategy is to build remote, technology-based sales and service channels. UTI is building a call centre to provide toll free telephone-based sales and service. The call centre will initially provide product-related information. Going forward, it will provide customer account information, query and complaint handling, and customer transaction capability. In the final phase, UTI will also use the call centre for outbound sales and marketing campaigns. Finally, UTI is also building a content and functionality-rich internet-based channel. The internet channel, in the first phase, will provide enhanced investment information, and going forward will also provide customer-centric information, advice and transaction capability.