UTI had expected a massive redemption in the scheme soon after going open-ended. UTI had even liquidated 25-30 per cent of Masterplus '91 corpus to meet redemptions which roughly works out to Rs 500 crore, which was being held in short-term securities.

Masterplus has a corpus of Rs 1755 crore. ``In fact, the amount being held in short-term can also be diverted for some bottom-fishing in the equity markets for short-term gains in Masterplus,'' said an analyst.

While the news of US-64 reserves turning negative and the subsequent drama that unfolded grabbed all the attention, it also led to a steep fall in the indices, including the 225-point drop in a single day on October 5.

Between September 28 (when thenews on US '64 reserves turning negative broke) and October 20, the Sensex lost 441 points to 2764. As a result, the net asset value of Masterplus dropped from a high of Rs 19.59 on September 28 to Rs 17.83 on October 15. This means a fall of 9 per cent.

In fact, the the NAV slumped between September 28 and October 6 from Rs 19.59 to Rs 18.08.

According to sources in UTI, the fund had liquidated holdings worth Rs 500 crore, going by the past experience in Grandmaster and Mastergain '92. In the case of Mastergain, close to 25 per cent of the Rs 2300-crore fund was redeemed in one month when it went open-end in 1997.

``Since US-64 was the focus of attention, a number of investors were more worried about their holdings in the UTI's flagship rather than Masterplus. It could be that a majority of unitholders in Masterplus also hold investments in US-64,'' says a fund analyst.

On the other hand, for speculators who had accumulated Masterplus units from the bourses with an average price of Rs 16-16.5, itwould have meant little economic sense to redeem their units at an NAV of around Rs 18. An exit load of 3 per cent further pulls down the returns.

On an NAV of Rs 18, an investor would have got back Rs 17.46, a return of Rs 1.46 or 9 per cent if he bought units from the market at an average price of Rs 16 in little over 2 months. The Masterplus counter had witnessed intense activity once the news of the fund being made open-end was known with the volumes soaring.

``Masterplus portfolio is promising since the NAV had touched Rs 20 in the brief market rally that took the Sensex from a level of 2862 to 3135 in mid-September. Hence, any short-term rally is likely to bring much higher returns to investors,'' said a fund manager.