Under the monthly income option, UTI has broken the coupon into six months each. For the first six months (September 1999 to March 2000), UTI will pay a coupon of 10.75 per cent while returns will be 10.5 per cent for the next six months (April 2000 to August 2000). UTI will pay a coupon of 11.3 per cent under the annual option.

"Sebi had asked us not to assure returns for the entire tenure of MIP after MIP '99. Hence, we have decided to assure returns on an year-to-year basis," said a UTI official. The scheme also offers a cumulative option. The fund will close for subscription in the first week of August.

"You will definitely not see a mobilisation of Rs 2,700 crore again but UTI should manage to garnercollections between Rs 800 crore to Rs 1,000 crore. However, you may see a subdued response from retail investors," said an analyst. The first MIP for the current calendar was a huge success with the tax-free status of MIP drawing large sums of institutional money, besides its regular share of retail moolah. "The market also probably knew that MIP '99 was the last one with assured returns for five years which further gave an impetus to collections," said an industry observer.

However, UTI has not done away with its policy to repurchase units after three years. In MIP '99 (II), units will be repurchased at net asset value (NAV)-linked price after three years. Investors may not find this very comforting since they will have bear a two-pronged risk: one, the coupon which will be revised every year and two, the NAV. ``Earlier, you were sure of the coupon while NAV was the only risk. While coupon will now be revised every year, if the NAV is below par, you cannot even exit the fund if you are not satisfied withthe return,'' said an analyst. ``Ideally, the Trust should offer repurchase facility after every year at par value or NAV, if it is above par value,'' the analyst added.

UTI has again fixed an upper limit of Rs 1,000 crore for collections and has reserved the right to suspend sales if mobilisation crosses Rs 1,000 crore. Firm allotment will be given to applications of up to Rs 50,000 while allotment for applications above Rs 50,000 will be on a pro-rata basis.