Us-64 To Skip Dividend

The Unit Trust of India (UTI) has decided to skip dividends for its flagship Unit Scheme-64 (US-64) this year. The mutual fund has also decided to change its financial year from the current July-June to April-March from April 2004.

The decisions were taken at the UTI board meeting here today. The other important decisions include making US-64 Sebi-compliant and setting up an internal asset reconstruction fund.

This is the first instance of US-64 skipping dividend. UTI had declared a dividend of 10 per cent in June 2001, 13.75 per cent in June 2000 and 13.50 per cent in June 1999. In June 1998, it had declared a dividend of 20 per cent.

Since any dividend would have to come from the sale of assets and not from disposable profits, such a payout would affect the net asset value (NAV) of the scheme, UTI officials reasoned.

Hence, the decision is to give investors higher returns through growth and consolidation in the NAV rather than through a cash payout.

The plan is to set up a Rs 20 crore asset reconstruction fund. The money is being transferred from the development reserve fund to create the asset reconstruction fund, which will buy out UTI