When a Mutual Fund declares a 50% dividend, what does that mean?

How is a MF dividend determined?

MF unit has face value of Rs 10
50% div means Rs5 div ( 50% of face value)
so drop of 5 in NAV
15-5, 25-5,150-5, 500-5 etc

50%?!?!! The only time I have ever seen a stock or mutal fund declare a 50% dividend if when it was goign out of business. Are you sure the dividend was 50%?

that means the price of the mutual fund will drop 50% and they will pay you with that money. Basically they just sold half your mutual fund and gave you the money but you still have exactly the same number of shares @ 50% of their value

50 percent doesn't sound right. If it is a .50 dividend then the price(nav -net asset value) of the mutual fund will decline by .50 and the payout to the shareholder would be .50 x shares owned. If the dividends are reinvested then the amount would purchase shares at the new price (old nav before dividend payout minus .50). Either way, if the mutual fund is not an IRA account, you would have to pay taxes on the dividends.

It may mean that the fund can't find enough stocks that meet their criteria, so they are distributing the excess funds to their shareholders. I have actually never seen that happen before, but it is certainly possible.

MF dividends are based on their investment gains. The mutual fund does not have to pay taxes if they distribute their gains as taxable income to their shareholders. Some mutual funds have large unrealized capital gains that will eventually be distributed.