UTI chairman P S Subramanyam said US-64 had generated an income of over Rs 2,179 crore, sufficient to declare a dividend of 16.5 per cent. ``The board of trustees declared a dividend of 13.5 per cent by adhering to prudential norms,'' Subramanyam said.

The UTI chairman said the negative reserve balance of Rs 1098 crore as on June 30, 1998 has been wiped out and has turned positive by a few crores. It may be recalled that the UTI had dipped into its reserves to pay 20 per cent dividend last year. The Deepak Parekh Committee, set up last year to restructure the UTI operations, had recommended that the trust should declare the dividend only per the income generated.

The UTI also slashed thesale price of US-64 to Rs 13.50 and repurchase price to Rs 13.20 as per the recommendations of the Deepak Parekh Committee report. The UTI also witnessed an outflow of funds under the US-64 scheme. Total sales under US-64 were Rs 4,596 crore while repurchases were of the order of Rs 7,513 crore.

On the other hand, sales and redemptions by the UTI almost matched While total sales were Rs 15,505 crore, redemptions also amounted to Rs 14,930 crore. The total investible funds under the UTI as on June 30, 1999 stood at Rs 61,000 crore. Seven new schemes launched during the year collected Rs 6,939 crore.

Subramanyam refused to give the exact net asset value of the US-64 scheme. ``The Parekh Committee report had given the UTI a three year time frame and we will go by it,'' he said. However, no fresh term loans were being sanctioned under the US-64 while the real estate investments were being revalued. Real estate investments would be put under the US-64 for the time being and then transferred to the developmentreserve fund (DRF) as per the Parekh Committee report. ``No fresh term loans were being sanctioned under US-64,'' he said.

UTI executive trustee PJ Nayak said last year two-third of income had come from booking of profit on sale of investments while the rest was from interest and dividend. ``Two-third of the investment portfolio was in equities and the remaining in debt instruments,'' he added.

The UTI chief four new funds are to be launched this year - one of which would be dedicated gilt fund targeted at provident, pension and gratuity funds. ``Other funds are venture capital fund, an infrastructure fund and mergers, acquisitions and restructuring funds,'' he said. It also plans to introduce a ``systematic withdrawal plan'' under UTI Bond Fund to tap the non-tax paying investors under the Monthly Income Plan.

Unit Linked Insurance Plan (ULIP) earned an income of 17.48 per cent on its capital and the trust has decided not to declare a dividend. Half-yearly income distribution of eight per cent wasdeclared under the scheme for charitable and religious trusts resulting in a total distribution of 14 per cent.

Last year, US-64 saw outflows in excess of Rs 7,500 crore, against inflows of just Rs 4,596 crore. Most of those outflows last year were the result of corporates panicking at the prospect of UTI not being able to maintain its repurchase prices in the wake of the deficit in its reserves. This year, thanks to the lowering of dividend, the trend could well be different. Although the cut in dividend has reopened fears of some redemption pressure, UTI officials point out that it was the best return they could give in the current circumstances. ``The 13.5 per cent dividend is the best we could do. There may be some redemption pressure but the absence of any competitive investment avenues is likely to prevent investors from exiting the fund,'' said a UTI official.