Mastershare 1986, the oldest close-ended equity scheme from UTI has declared an annual dividend of 10 per cent. The dividend will be tax-free in the hands of investors. The record date for the same is October 19, 2001. The current payout is sharply down from the previous annual payout of 16 per cent in May 2000. Launched in October 1986, the scheme is due for redemption in 2003 and has returned an annualised 17.72 per cent since its launch.
A frequently traded mutual fund, Mastershare units are listed on the Bombay Stock Exchange and were last traded at Rs 7.25 on September 26, 2001. Thus, the dividend yield works out to 13.79 per cent at the current market price. Based on the latest net asset value of Rs 10.53, the units are trading on the BSE at a hefty discount of 31.14 per cent. While the dividend is tax-free for investors, it will attract a dividend tax of 11 per cent at UTI's end since Mastershare is a closed-end fund. Thus, apart from the dividend income of Rs 91.27 crore, Mastershare will have to entail an additional outflow of Rs 10.03 crore on account of dividend tax.