What is the Unit Scheme - 1964?

Attractive tax free saving at this price

Under the US 64 Scheme one unit with the face value of Rs.10 is available for sale at a price of Rs. 14.20 (Jan2001). If you have some money to spare, you could buy units and get attractive dividends at the end of the financial year i.e., June 2001. All dividends are tax – free.

What is the Unit Scheme – 1964?

It is the mother of all mutual fund schemes. Launched in 1964, it has a unit capital of Rs.13, 857 crores invested by over 2 crore unit holders all over the world. The scheme is an open ended scheme as both individuals and institutions can invest in the units. The objective of the scheme is to provide a regular income to the investors once in a year.

The US-64 is a balanced scheme i.e., it invests its funds in both equities as well as debt securities. The income in the form of dividend is generally distributed during the month of July every year. During July, UTI offers the sale of units at a price, which is the lowest in the whole year. After that UTI progressively increases the sale price of each unit. As UTI declares dividends, investors who invest at any time of the year (but before the book closure) are entitled to dividends in July. (Dividend is declared on each unit that you buy.)

Should you need your money for any emergency, UTI offers to repurchase the units. Sale and repurchase prices of units are announced every month by UTI through advertisements in many newspapers. The current repurchase price (the price that UTI buys your units for) of each unit is Rs.14.00. These rates are applicable till the end of November 2000.

The scheme provides for nomination facility and hence you can nominate anyone to receive the money. Investors can purchase units in the electronic form with NSDL. This makes it a convenient way of holding securities instead of locking up the certificates in a cupboard.

What makes this scheme attractive?

The track record of the UTI in paying dividend on this scheme for all these years has been very good. In the last 4 years the dividends have been as follows: in 1996-97 - 20.00 %, in 1997- 98 - 20.00 %, in 1998-99 - 13.50 % and in 1999 – 2000 – 13.75%.

The dividends that the investor receives enjoy benefits under Section 10 (33) of Income Tax Act, 1961 which means that the income received is totally tax-free.

How to apply?

Units can be bought from any agent of UTI, Brokers or directly through UTI. Sale is open to: Resident individual investors including minors, Trusts, Societies, Corporate Bodies, HUFs, Banks, Companies and also to non-resident investors including individuals, minors, HUFs, Companies and Overseas Corporate Bodies (OCBs) with repatriation/non-repatriation benefits. Minimum investment is Rs.2000/- without any maximum limit.

Now, if you are still not convinced about this savings scheme, you could blow up your money on that attractive suit you have been eyeing everyday! The choice is yours!