The dividend, which works out to 75 paise per unit, requires prior approval of the Board of Trustees and completion of certain procedural/regulatory requirements, which the firm expects to do within the next 2-3 months. However, investors are generally amused by the sudden dividend declaration by Morgan Stanley. ``The fund seems to be planning to launch a new scheme. Morgan Stanley has not floated any scheme after its scheme in 1994. Now others are coming in droves and mopping up funds,'' said an investor.

It may be recalled that Morgan Stanley's first scheme created an euphoria in 1994. While investors were attracted by the pre-launch claims of Morgan Stanley, the scheme's NAV remained much below the face value of Rs 10 forquite a long time. ``MSDW Investment Management has always been keen to reward the fund's 1.2 million unitholders. The fund's net asset value (NAV) crossed its par value Rs 10 in January this year and with the NAV remaining consistently above Rs 10 for the past five months, it is now proposing a 7.5 per cent dividend,'' it said in a statement.

A sizeable degree of out-performace vis-a-vis the market benchmarks helped MSDW bring the fund's NAV into positive territory which resulted in profitable positions for the fund and facilitated the dividend pay-out. ``Otherwise, the broad indices of the market continue to trade at levels well below those that prevailed at the time of the launch of the fund. In fact, the fund has consistently outperformed the widely used benchmarks since inception,'' it said in a statement.

The Morgan Stanley Growth Fund is India's largest, private sector equity mutual fund with 1.2 million unit holders and net assets of Rs 1008 crore. The fund was launched in January 1994 and sincethen has consistently out-performed the widely used benchmarks. While the NAV has risen by 32.8 per cent since inception to June 4, 1999, the BSE 200 has dropped by 13.8 per cent and the S&P CNX 500 has dropped by 21.9 per cent during the same period. Otherwise, the broad indices of the market continue to trade at levels well below the levels that prevailed at the time of the launch of the fund.