The Morgan units closed Wednesday at Rs 8.40 on the National Stock Exchange while the closing price was Rs 8.30 on the Bombay Stock Exchange. The counter clocked a volume of 3.41 lakh units and 48,700 units, respectively. ``We look forward to a good relationship with our investors,'' said Vinod Sethi, portfolio manager, MSGF, while putting to rest speculations of the fund going open-ended. ``There is no such plan,'' he said. Sethi added that MSGF was the AMC's principal focus. ``We do not plan to launch anynew products for the time being.''

Analysts termed the payout as a confidence building measure by the mutual fund. ``Although the realised gain (75 paise) is paltry for original investors, nonetheless, investors will have something to cheer about,'' said an analyst. The yield will be fantastic for those investors who had bought MSGF units last year when the price plummeted below Rs 4.

The declaration of dividend was preceded by intense speculation at the Morgan counter when close to 73 lakh units were traded on the Bombay Stock Exchange on May 31. The counter also witnessed a number of negotiated deals in the last fortnight. ``Speculators had been targeting the counter after the management said it was planning to reward its unitholders,'' said a BSE broker.

With the net asset value (NAV) consistently staying above par for six months and tax breaks for mutual funds, MSGF made a perfect case for declaration of dividend. The price of units moved up by 31.5 per cent from Rs 6.65 on May 26 to touch a high ofRs 8.75 on June 7. On the current BSE price of Rs 8.30, the yield works out to 9.03 per cent (for 2-3 months' period). The units trade at a 37.5 per cent discount to the NAV of Rs 13.28.

``With a healthy NAV, the market was expecting a higher dividend payout, especially since it comes after a wait of five years. The low payout may turn out to be a dampener and the market price could drop,'' said a market source. Given that the market price of MSGF has traditionally been depressed, the dividend adjusted price is unlikely to bounce back to give speculators an exit option with a decent yield.

However, for original investors, buying at current levels or with any drop in price will help enhance the yield on investments. The market is also pinning hopes on future payouts from the fund since the current dividend is interim in nature.

According to the AMC, the regulatory requirements like record date and book closure will take 2-3 months. Based on the current unit capital of Rs 759.42 crore, MSGF will see adividend payout of Rs 57 crore. Besides, the AMC will have to pay a dividend tax of 11 per cent, which will also be factored into the NAV.

For the year ended March 31, 1999, the fund, for the first time, made profits to the tune of Rs 127.23 crore on sale of investments. The previous year's loss was Rs 123.65 crore. Since launch, MSGF has been in an eye of storm for its poor performance with the NAV dipping way below par. The fund has aggressively restructured its portfolio and brought down the holdings from more than 250 to around 90 stocks. As a result, the NAV rose by 47 per cent in last fiscal.