Uti Retains Mip-95 Assets

Unit Trust of India (UTI) has retained the assets of Monthly Income Plan 95 (MIP-95), which matured on June 30, for two years. The move, according to UTI, is to ensure that the recoveries out of these assets can be distributed proportionately to all unitholders.

The trust has also announced that the terminal value as on June 30, 2002 is Rs 6.46 a unit under the monthly income option and Rs 15.77 a unit under cumulative option. The scheme was launched in April 1995 for 7 years, effective from 1 July 1995 to 30 June 2002.

In a press release, UTI said one of the prime reasons for reduction in the rate of distribution over the period and depreciation in the value of units was the non-realisation of relatively high proportion of debt investments.

Moreover, these investments were in various companies and non-realisation was particularly owing to persistent recessionary conditions prevailing in the industry and delay in implementation of some projects by them.

The other reasons adversely affecting the performance of the scheme was a drastic decline in interest rates (particularly since 1998), a steep fall in equities in the last one year and income distribution tax since 1 June 1999.

As a result, debt assets worth Rs 184 crore (as of 31 May 2002) are held up. The scheme was also deprived of income thereon to the extent of Rs 58 crore, up to 31 May 2002. The impact of these assets on the scheme, having a capital base of around Rs 460 crore, is quite evident.

UTI has said that considering the redemption value at Rs 6.46 a unit for the monthly option and Rs 15.77 a unit for cumulative option, UTI has worked out the annualised returns to the investor at 7.30 per cent a year for the former and 6.72 per cent a year for the latter. This is for the entire tenure of the scheme. With the impact of income distribution tax, the annualised returns under monthly option would have been 8.07 per cent a year.

For the cumulative option unitholders, no income distribution tax was applicable and, hence, does not impact returns.