The repurchase of the units has played a significant role in the appreciation of the net-asset value (NAV) from Rs 8.07 to Rs 9.15 (Rs 1.08 or 13.38 per cent) during the period. During the year, the net surplus generated by the growth fund is Rs 79.98 crore, of which Rs 17.17 crore (21.46 per cent) has come from a discount on repurchase of units. This implies that 21.46 per cent or 22 paise of the gain in NAV (Rs 1.08) has come from repurchase of the units. The other part of 0.86 paise has come from appreciation in price of the underlying equity holdings in the portfolio.

The buyback means an addition to the unit-premium reserve. Since the asset-management company (AMC) has bought back 5.3 crore units (priced at Rs 10) at a discount, it has resulted in an inflow of Rs 17.17 crore to thereserve. This implies an average repurchase price of Rs 6.79 or at a discount of Rs 3.21 to the issue price of Rs 10 per unit.

Morgan Stanley Mutual Fund had received permission from the Securities and Exchange board of India (Sebi) in 1994 to repurchase units from the market on prevailing prices. The discount/premium is credited/debited to the reserve.

The fund repurchased units for the first time during 1995-96. In 1996-97, there was no repurchase from the secondary market. The highest and lowest buyback prices for the previous fiscal (1997-98) were Rs 7.90 and Rs 5.85 respectively. Despite the high quantum of repurchase, the market price of units has failed to provide an exit option since the unit price could not breach the par value - the highest price for the year was Rs 9.50. Although the NAV as at May 22, 1998 is Rs 10.25, units on BSE are trading at a hefty discount of around 40 per cent to the NAV.

As per the holdings on March 31, 1998, the growth fund has a maximum exposure to the electricaland electronics sector, which accounts for 17.26 per cent of the portfolio. A close second is the information-technology (IT) sector with a share of 15.58 per cent. The financial sector, which has a large slice of 11.23 per cent, consists of only the Housing & Development Finance Corporation (HDFC). The fund holds more than 2.5 lakh shares of the financial institution. Another significant holding is that of the Container Corporation, where the growth fund holds close to 18.5 lakh shares. This translates into a holding of 11.49 per cent under the transportation category.

According to a Morgan Stanley spokesperson, restructuring of the fund would now concentrate on removing marginal/small holdings. ``By and large, we have stabilised our number of holdings,'' he said. He ruled out any new launches from the AMC. ``Our aim right now is to generate decent returns for our unitholders,'' he added.