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US-64 declares 13.75% dividend

Aabhas Pandya

Unit Trust of India's flagship, Unit Scheme 1964 (US-64) has announced a dividend payout of 13.75 per cent for 1999-2000. The dividend, which translates into an income of Rs 1.375 per unit, has come as a disappointment for a large number of investors. Despite a bullish equity market for a large part of the year, the payout has gone up by only 25 basis points or Re 0.025!

The reserves of US-64 now stand at a healthy Rs 53 billion. The sale and repurchase price for July have been kept the same as last year at Rs 13.50 and Rs 13.20, respectively.

For an investor who entered the fund in July last year at Rs 13.50, the dividend yield turns out to be an unimpressive 10.18 per cent. The investor would have been better off by investing in any of the medium-term debt funds. The repurchase price for July has been fixed at Rs 13.20. If an investor were to exit the fund in July, the return is a paltry 7.96 per cent. Clearly, US-64 is fast losing its charm.

US-64 had slashed the dividend payout last year to 13.5 per cent against 20 per cent in 1998 after its reserves turned negative to the tune of Rs 10.98 billion on June 30, 1998.

While the dividend was made tax-free in the hands of investors in 1999, it was no compensation for a large part of the investor section, whose dividend income came within the ambit of the overall tax exemption on income from investments.

Source: Value Research

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