ISLAMABAD, Jan 1: The National Investment Trust (NIT) increased total return on its units to 38pc inclusive of 13pc dividends yields during July-December 2002, thus outperforming the benchmark KSE-100 by a healthy margin of 10.5pc.

The KSE-100 index meanwhile has risen by 51.5pc during the same period, to 2701.41 points on December 31, 2002 from 1783.17 points on July 11, 2002.

According to various details, released by the NIT here on Wednesday, with an increase of 62pc, NIT’s Net Asset Value (NAV) has risen to Rs17.85 as on December 31, 2002 from Rs10.99 on July 11, 2002 (the first day after book closure).

The total return on NIT units for FY2002 was 38pc, inclusive of a dividend yield of 13pc. This performance not only exceeds the 36pc return of the benchmark KSE-100 share index, but is also the best performance amongst all Open-ended Mutual Funds in the country. Indeed, only the 9th ICP Mutual Fund, with a massive dividend payout in FY2002, has yielded a higher return in the entire Mutual Fund sector, including all open-ended and close- ended mutual funds.

A well-publicised portfolio re-structuring exercise, which commenced in October 2001, has yielded benefits, which was evident form the improved financial performance of the Fund in FY2002. Despite large redemptions during the earlier part of last year (net redemptions of almost Rs1.6 billion), the fund not only maintained its liquidity, but also managed to maintain the dividend payout at the previous year’s level.

The major components of the revitalized focus at NIT, in addition to the on-going portfolio restructuring exercise, also comprises improvement in liquid resources, roll over and settlement of long-term borrowing, marketing for enhanced sale of units and revamping of the Fund which would help realise the medium and long term objectives of the Funds. The core objective of the portfolio restructuring exercise has been to realign the portfolio focus towards the three requirements of (in order of priority): 1)

Income Generation, 2) Capital Preservation and 3) Growth keeping these objectives in mind, the level of market activity was substantially increased in the previous year with a view to capitalising on attractive valued available in the market in the post-September 11 market slump. The resultant broad-based buying, provided an excellent opportunity to the common investors to benefit form taking positions in the scrips generally known as ‘side items’. This broad-basing of the trading activity was well received by the market and was instrumental in increasing the number of trading scrips from a narrow band of 50 scrips to 150 scrips.

With the reduction in the discount rates, the yields on all instruments have also gone down. In this era of declining returns, NIT has strived to maintain its dividend yield by focusing on income generation through a combination of portfolio re-structuring, increased dividend and capital gains for distribution to the unit holders. NIT is well positioned to maintain its focus on income by maintaining a healthy payout.

The Funds under management have increased form Rs17.4 billion at the end of FY2001 to Rs20.I billion as on June 30, 2002. As of December 31, 2002 these were Rs27.9 billion depicting a consistent growth.

NIT’s commitment towards enhancement of unit holder value will be further enhanced by the adoption of International Accounting Standard (IAS) 39 in the last year. The adjustments, emanating as a consequence of the change in accounting framework, would give more flexibility for the market operations, which would be beneficial for the profitable operations of the Funds.