The Rise and Fall of US-64 Case

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Excerpts

US-64 was a phenomenal success in the first three decades of its existence. During the period 1965-1995, the number of units held by the investors grew from 1.87 lakh units in 1965 to 15,277 million units in 1995 (See Exhibit II). Corporate investors and various trusts invested substantial amounts of money into the scheme...

On September 30, 1998, a shocked investing public came to know that the reserves of US-64 had turned negative by Rs 1098 crore. The pressure for redemption from investors increased sharply...

On 28th February 2001, UTI managed funds amounting to Rs.64,250 crore or more than 13% of the market capitalization of the Bombay Stock Exchange. It was around this time that some serious bungling seemed to have taken place. UTI accumulated substantial holdings in what came to be known as the K-10 scrips...

On February 1, 2004, at the National Centre for Performing Arts at Nariman Point, Mumbai, almost 1,100 people came to celebrate the first anniversary party of UTI Mutual Fund, which had been born when UTI was bifurcated into two parts, UTI-I and UTI Mutual Fund. UTI-I, as a special unit with all the guaranteed return schemes, had an outstanding corpus of Rs 19,200 crore and 18 schemes...

Exhibit I: Contributors to the Initial Capital of US-64
Exhibit II: Five Yearly Compounded Average Growth Rates of Units
Exhibit III: Comparison of NAV-based Unit Prices with Special Sale Prices
Exhibit IV: Composition of Investments of US-64 (June 87-June2000)
Exhibit V: Dividend Rates 1964-65 to 2001-02
Exhibit VI: Distribution of Income of US-64 (Rs.Crore)
Exhibit VII: UTI's Holding in the K10 Scripts
Exhibit VIII: Repurchase Price of US-64

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