NAMAL INCOME FUND

Interim Report

For the six months ended 30th September 2019

National Asset Management Limited 07, Glen Aber Place, Colombo 3.

Phone: 0112445911 Fax: 0112445903 Email: info@namal.lk

Table of Contents

Report of the Investment Manager 1

Statement of Comprehensive Income 2

Statement of Financial Position 3

Statement of Movement in Unit Holders Fund 4

Notes To the Acccounts 5 - 6

Corporate Information 7

NAMAL INCOME FUNDInterim Report 2019

NAMAL INCOME FUND INTERIM REPORT

1HFY20

Dear Investor,

We take pleasure in presenting the interim report of the NAMAL Income Fund

(NIF) for the six months ended 30th September 2019.

Performance review

The NIF generated an annualized return of 4.33% for the six month period under

review. Interest income for the period under review decreased to LKR 1.27Mn

from LKR. 3.78Mn previously. Net operating profit for the period decreased to LKR

0.73Mn from LKR 2.84Mn over the corresponding period in 2018. There was no

dividend distributed to unit holders over the period.

Market Review

The benchmark 12 month Treasury Yields declined during 1H FY19 and stood at

8.41%. The decrease was led by CBSL reducing Standing Lending Facility Rate to

8.00% during the period under review. Private credit growth showed a downward

trend during the period mainly due to slowdown in lending by financial

institutions.

The Sri Lankan economy reported a GDP growth of 2.6% for 1H CY19. Growth was

mainly led by the strong performance of the agricultural sector which grew by

3.2% YoY. Industries sector saw a modest growth of 2.3% while the services sector

grew by 2.8%. Within the industries sector, the construction subsector recorded

a healthy growth rate of 4.7%. Within the services sector, telecommunications, IT

and financial services all saw significant growth for the period under review

(10.9%, 11.9% and 8.8% respectively). On the external sector, as of August 2019,

the trade deficit declined by 36.5% YoY and stood at USD 540 Mn. Significant

growth in textile and garments exports as well as reduction in personal vehicle

imports helped to narrow the trade deficit. Tourism earnings declined by 28.3%

to USD 270 Mn, while worker remittances declined by 3% to USD 518 Mn. The

overall BoP position to August 2019 posted a surplus of USD 1,451 Mn. (Source:

Department of Census and Statistics, CBSL and External Sector Performance

August 2019)

Portfolio composition

NIF can invest in corporate debt (rated BBB- or higher) up to a maximum of 80%

of assets, Bank deposits are limited to a maximum of 50% of assets.

As at 30 September 2019, the Fund had a 50.59% allocation to debentures and

49.41% allocation to cash and cash equivalents.

Sincerely,

The Fund Management Team

21st November 2019

Performance Comparison

6M* (%)

12M (%)

24M (%)

36M (%)

NIF 4.33 5.13 6.53 7.93

Asset Allocation

Treasury Bill rates

6.00%

8.00%

10.00%

12.00%

3 Months 6 Months 12 Months

10.00%

11.00%

12.00%

13.00%

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

2 year 3 year 10 year

Source: Central Bank of Sri Lankla

*Six months ending 30th September 2019*Annualized Returns

Cash and Cash

Equivalents (Net of

Payables), 49.41%

Debentures, 50.59%

1

STATEMENT OF COMPREHENSIVE INCOME

For the six month period ended 30 th September 2019 2018Notes Rs. Rs.

INVESTMENT INCOMEInterest income 9.1 1,272,787 3,785,434 Unrealised gains on financial assets held at fair value through profit or loss 6.2 357,656 30,746 Total investment income 1,630,443 3,816,180

EXPENSESManagement and Registrar fees (130,263) (314,000) Trustee and Custodian fees (219,099) (275,863) Audit fee and expenses (278,316) (288,713) Other expenses (276,150) (94,912) Total operating expenses (903,827) (973,488)

Net operating profit 726,615 2,842,692

FINANCE COSTInterest expense - -

PROFIT AFTER DEDUCTIONS AND BEFORE TAX 726,615 2,842,692

Income tax expense - -

PROFIT AFTER DISTRIBUTIONS AND TAX 726,615 2,842,692

INCREASE IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 726,615 2,842,692

Interim Report 2019NAMAL INCOME FUND

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Statement of Movements in Unitholder's Fund

For the six month period ended 30 th September2019 2018Rs. Rs.

UNIT HOLDERS' FUNDS AT THE BEGINNING OF THE YEAR 50,569,689 91,891,069

Increase in net assets attributable to unit holders 726,615 2,842,692

Received on unit creations 3,916 32,315

Payments on unit redemptions (15,001,004) (10,051,854)

UNIT HOLDERS' FUNDS AT THE END OF THE YEAR 36,299,216 84,714,222

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NOTES TO THE FINANCIAL STATEMENTSFor the 06 month period ended 30th September

1 All figures are unaudited. Where necessary comparative figures have been adjusted to confirm with the changes in presentation in the current period.

2 Income is recognised on an accrual basis.

3 There are no material Contingent Liabilities or contingent Assets which require disclosure in the financial statements.

4 No circumstances have arisen since the Balance Sheet date, which would require adjustments or disclosure in the Financial Statements.

20185 Net Asset Value per unit as at September 30th (Rs) 15.24 14.48

No of Units as at 30th september 1,996,498 5,433,109

6 Financial assets - fair value through profit or loss2018

Rs. Rs.

Debt securities - Quoted debentures 15,387,600 39,930,411 15,387,600 39,930,411

6.1 Quoted debentures2018

Rs. Rs.

National Development Bank PLC - 6,062,855 Nations Trust Bank PLC - 15,492,816 Hemas Holdings PLC - 2,892,332 DFCC Bank PLC 15,387,600 15,015,477 MTD Walkers PLC - 466,932

15,387,600 39,930,411

6.2 Unrealised gains on financial assets held at fair value through profit or loss2018

Rs. Rs.

Debt securities - Quoted debentures 357,656 30,746 357,656 30,746

2019

2019

2019

2019

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NOTES TO THE FINANCIAL STATEMENTSFor the 06 month period ended 30th September 2019 2018

7 FINANCIAL ASSETS - DEBT INSTRUMENTS AT AMORTISED COST Rs. Rs.7.1 Repurchase agreements

First capital Treasuries PLC - 27,150,395 - 27,150,395

8 ACCRUED EXPENSES 2019 2018Rs. Rs.

Fund manager and Registrar fee payable 19,127 49,381 Trustee and Custodian fee payable 35,918 35,918 Audit fee payable 285,882 242,505 Other payable 48,061 48,111 consultancy fees payable 299,961 -

688,950 375,915

9 INVESTMENT INCOME 2019 2018Rs. Rs.

9.1 Interest Income on,Interest on Treasury bill repurchase agreements - 998,158 Interest on debentures 693,629 2,724,330 Interest on saving accounts 47,868 62,946 Interest on MM Savings 531,289 -

1,272,787 3,785,434

10 RECONCILIATION BETWEEN THE NET ASSET VALUE AS PER FINANCIAL STATEMENT AND THE PUBLISHED NET ASSET VALUE

2019Rs.

Net Asset Value as per Financial Statement 36,299,216.07 Income Tax receivable (5,881,439.31) Published Net Asset Value 30,417,776.76

No of Units Outsanding 1,996,498.20

Published net asset value per unit 15.24

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CORPORATE INFORMATION

Trustee & Custodian Deutsche Bank AG86 ,Galle RoadColombo 03

Auditors Ernst & YoungChartered Accountants201, De Saram PlaceColombo 10

Bankers Deutsche Bank AG86, Galle RoadColombo 03

Lawyers F J & G De SaramAttorneys-at-Law & Notries Public216, De Saram PlaceColombo 10

Managers & Registrars National Asset Management Limited (NAMAL)No.07Glen Aber PlaceColombo 03

National Asset Management LimitedBoard of Directors (30th September 2019)

Mr. Alexis Lovell ChairmanMr.Indrajit Wickramasinghe DirectorMr. Tyrone de Silva DirectorMr.Malinda Samaratunga DirectorMr.Wijenanda Dambawinne DirectorMr.Suren Madhanayake DirectorMs. Khoo Siew Bee DirectorMr. Kapila Nanayakkara DirectorMr.Rusiru Abeyasinghe Director

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