The package only offers to give back a part of an investor's money and that too at depleted value. All US-64 investors who came into the fund in recent years, believing the ad slogan "HUA KAAMYAAB" are out of pocket now. For instance, an investor who bought US-64 units in May 2001, has lost 26 per cent in a matter of just over two months.
The package is a cleverly structured deal. It guarantees return for an investor's first 3000 units. For the rest, it doesn't even state how the money will be managed, nor does it articulate the objective, its direction, what should an investor expect now, what will be the asset allocation and its equity and debt strategy, the strategy to manage redemption. An investor seeks answer to these basic questions, to evaluate suitability of any investment, and more so from US-64 which is hitting headlines every day. The deal looks more like another quick solution. Interestingly, UTI states that it will not allow dilution of NAV for the remaining investors, but doesn't say how?
1. You can sell only 3000 units back to UTI at Rs 10 per unit in August '2000.
2. Price will be revised every month and will go up by 10 paisa every month till May 2003, barring the month of June 2002. Hence, the repurchase price will be Rs. 11 in July 2002 and Rs. 12 in May 2003.
3. Dealing in the fund (sale and redemption) will commence from January 2002 based on NAV based prices. For your first 3000 units the price applicable will be Rs. 10.50 in January 2001 or NAV whichever is higher. For the remaining holdings, NAV based price will be applicable. And it could be any amount.
4. From January 2002, there will be two class of investors of Unit Scheme '64. Old investors, who still own their first 3000 units and another class, old investors with over 3000 unit and all new investors in the fund from January 2002 (if someone still buys US-64).
For your holdings of over 3000 units, you don't have much of a choice but to wait till January 2002, for the discovery of the NAV. For your first 3000 units, it makes sense to stay put in the fund for sometime, as your downside is protected with assured repurchase price. But don't sleep. Just check for the NAV in January. And check again for some dividend in June 2002. If you get some, then it will possibly be the right occasion to exit the fund in July 2001 at Rs 11, even if its NAV is lower.