NATIONAL INVESTMENT TRUST LIMITED (NIT)

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
Aug 11 - 17, 2008

National Investment (Unit) Trust is Pakistan's largest and oldest Mutual Fund, having approximately 52,000 unit holders on its account. NIT's distribution network comprises of 19 NIT branches, various Authorized bank branches all over Pakistan and Arab Emirates Investment Bank (AEIB) in Dubai. The Management Company of the Trust has been classified as a Non-Banking Finance Company (NBFC) under the NBFC Rules, 2003 and has obtained the requisite license from the Securities and Exchange Commission of Pakistan (SECP) to undertake Asset Management Services. Pakistan Credit Rating Agency Limited (PACRA) has assigned "5-star" rating (normal) based on the performance during FY07 and "5-star" long term rating based on the performance during FY05 to FY07 which signifies superior performance. In addition, JCR-VIS has assigned "MFR 5-star" rating to National Investment (Unit) Trust which shows very good performance.

FINANCIAL HIGHLIGHTS

INDICATORS

NINE MONTHS FY 2008(RS. MILLION)

NINE MONTHS FY 2007 (RS. MILLION)

Net income

3,371

4,570

Capital gain

607

2,674

Dividend income

2,965

2,412

Unit holders fund

104,939

78,248

NAV( Rs. Per unit

63.59

49.38

Earning per unit(Rs)

2.04

3.88

Sales of units

13,682

4,473

Source: NIT Nine Months Report 2008

The Stock Market stabilized and gradually gained momentum to deliver a good performance in the later part of first quarter and gained further momentum in the second and third quarters reaching an all time high of 15,274.53 on March 2008. Sectors such as Oil & Marketing Companies, Cement and Fertilizer witnessed significant growth during the period. The Fund once again outperformed the KSE-100 by 3.37% where its Net Asset Value appreciated by 13.19% against 9.82% increase in KSE-100 Index during the nine months ended on March 31, 2008. The high value of the units attracted redemptions to the tune of Rs.15, 857 million, which were met to the utmost satisfaction of the unit holders. In the month of December 2007, a historic move was made where redemptions worth Rs.4, 803 million being 10% of unit holdings of LOC holders under Letter of Comfort (LOC) issued by Government of Pakistan out of the LOC holders' fund were facilitated without compromising the interest of general unit holders. Sale of units aggregated Rs.17, 067 million (incl. CIPs) during the period which is historically the highest in the first nine months of a year. The net income of the Fund (excluding unrealized gains) during the nine months ended 31 March 2008 stood at Rs.3, 371 million which translates into earnings per unit of Rs. 2.04. Net income of Rs.4, 570 million earned by the fund during the corresponding period last year included capital gain of Rs.2, 265 million earned from the block sale of NIT's holdings and Rs.152 million earned from capital gain realized through right sizing exercise.

CURRENT POSITION OF NIT

National Investment Trust (NIT) has declared the highest ever dividend of Rs 6.50 per unit for its unit holders for the year ended on June 30, 2008.

The fiscal year particularly the last quarter has observed a great volatility mainly due to apprehensions about budget; tight monetary measures, and political situation in the country. Despite these volatilities and huge decline in stock index, NIT remained adhered to its policy of not selling in the falling market. NIT always works on delivery based purchases and this policy has always yielded good results for the Trust. Net income earned by the trust amounted to 4.013 bn included realized capital gains of Rs 929 m in fiscal year 2008 as against income of Rs 19.812 bn in fiscal year 2007 included a capital gains of Rs 15.655 bn payment of record dividend Rs 6.50 per unit which involved a huge total payout of Rs 10.490 bn among its unit holders as against the distribution of Rs 10.034 bn to unit holders during 2006. However, due to the unclear situation in the stock market earning per share has declined to 2.51% during the last fiscal year 2008. The difference between earning and divided is being filled through the NIT resaves and no borrowing has been acquired from the other resources. During the last fiscal year 2008 a decline of 10.8% was witnessed in KSE-l00 index, however NIT has out performed the benchmark of KSE-100 Index by a good margin of 4.4%. Net Asset Value of NIT unit declined by 6.4% to 52.58 on June 30, 2008 from Rs 56.18 as on June 30, 2007, NIT Funds has registered a growth of 9% in dividend income which increased to Rs 3.344 bn during the year ended on June, 30 2008 from Rs 3.082 bn in the previous year. NIT units has presented an impressive increase of 47.6% to Rs 21.748 bn the year ended on June 30, 2008 as against the sale of NIT units worth Rs 14.736 bn in fiscal year 2007, while during the year redemption worth Rs 23,022 m were lodged, which were met to the entire satisfaction of the unit holders.

FUTURE OUTLOOK

NIT makes saving and investing simple, accessible, and affordable. By investing in NIT, investor can get professional management of funds, diversification, liquidity, low cost, convenience and tax advantage. NIT is very appropriate to investors who wish to diversify and have a long-term Investment horizon. NIT enables the common man to participate in the industrial growth of the country by becoming a part of company by opening, an account, with a minimum investment of only Rs.5, 000 or more at anytime. Investors who invest with a long term holding period stands a very good chance to make capital gain on their investment in addition to the regular annual income.

However, today rising inflation, higher interest rates, rising input costs and difficult international macro economic outlook are difficult issues for this elected government. The Stock Market has also gone down to less than 10, 000 which is extremely concerning for investors. So, NIT despite having a strong position in the market might suffer a loss along with other rival companies due to current political and economic crisis.