US-64 offered a cleverly structured limited repurchase of 3000 units per unit holder at Rs. 10 per unit. This translates into hefty losses for all investors who poured money into the fund in past few years. To stem exodus, the fund has also extended the carrot guaranteed return by assuring steadily rising repurchase price by 10 paisa every month.
UTI announced a limited repurchase of 3000 units per unit holder of US-64 units at Rs. 10, which will be revised 10 paisa every month till May 2003.
The repurchase price of Rs.10 per unit is the lowest ever since July 1968, and translates into massive capital loss to almost every investor who invested in the fund over the past few years. For investor who invested in US-64 as recently as May '2001 @ Rs. 14.55, this means 25% capital erosion in just over 1-month. The sale price of US-64 was the highest at Rs. 19.35 in May 1995.
All unit-holders holding units as on June 30, 2001 can offer for repurchase upto 3000 units per unitholder at any time during the period from August 1, 2001 to May 31, 2003. The Repurchase price will be Rs 10 for the month of August 2001, which will rise 10 paisa every month, except in June 2002 and June 2003. With steady rise the repurchase price will be Rs 12 in May 2003. The minimum repurchase price will be on the above line or the NAV, whichever is higher.
US-64 will fully reopen for fresh sales and repurchases at NAV based prices with effect from 1st January 2002. Thereafter, for 3000 units per unitholder covered under measures in paragraph 1 above, the repurchase price would be the higher of the applicable repurchase price under paragraph 1 above or the then prevailing NAV based repurchase price. These 3000 units per unitholder will also be entitled to dividend, as may be declared.
UTI also stated that any deficit on account of repurchase and the prevailing NAV will be funded to prevent any NAV dilution. The fund also claims to have arranged adequate liquidity to honour redemption request without large-scale sale of its investments in the market. The Government of India has agreed to stand fully behind UTI to support implementation of the above scheme for small investors.