NAMAL HIGH YIELD 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 5-7

Corporate Information 8

Interim Report 2019NAMAL HIGH YIELD FUND

NAMAL HIGH YIELD FUND INTERIM REPORT

1HFY20

Dear Investor,

We take pleasure in presenting the interim report of the NAMAL High

Yield Fund (NHYF) for the six months ended 30th September 2019.

Performance review

The NHYF generated an annualised return of 13.11% for the period

under review and 13.07% for the past 12 months. Interest income was

LKR 182.63Mn and the fund recorded net operating profit of LKR

172.47Mn for the six months under review.

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

The Portfolio is constructed to maximize returns by investing in high

yielding corporate debt. As at 30th September 2019, 56.3% of net

assets were invested in Commercial Papers, 37.7% in Fixed deposits

with the remainder in money market accounts

Sincerely,

The Fund Management Team

21st November 2019

Performance Comparison

6M* (%)

12M (%)

24M (%)

NHYF 13.11 13.07 11.65

Asset Allocation

Treasury Bill rates

6.00%

8.00%

10.00%

12.00%

3 Months 6 Months 12 Months

*Six months ending 30th September 2019*Annualized Return

Source: Central Bank of Sri Lanka

Commercial Papers

56%

Fixed Deposits

38%

Cash and Cash Equivalents (Net of Payables)

6%

1

STATEMENT OF COMPREHENSIVE INCOMEFor the 06 month period ended 30th September

2019 2018Note Rs Rs

INVESTMENT INCOMEInterest income 9. 182,633,679 64,612,417 Total Investment Income 182,633,679 64,612,417

EXPENSESManagement fees (7,145,389) (3,030,456) Trustee and custodian fees (2,554,233) (1,162,974) Audit fees (132,803) (189,925) Professional charges (274,500) (64,553) Bank Charges (52,429) (42,815)

Total operating expenses (10,159,355) (4,490,723)

NET OPERATING PROFIT/(LOSS) 172,474,325 60,121,694

PROFIT AFTER DEDUCTIONS AND BEFORE TAX 172,474,325 60,121,694

PROFIT AFTER TAX FOR THE PERIOD 172,474,325 60,121,694

INCREASE IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 172,474,325 60,121,694

NAMAL HIGH YIELD FUNDInterim Report 2019

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STATEMENT OF CHANGES IN UNIT HOLDERS' FUNDSFor the 06 month period ended 30th September

2019 2018Rs Rs

2,559,671,877 1,302,491,199

172,474,325 60,121,694

7,726,197,741 3,453,342,087

(7,649,602,486) (3,373,448,878)

UNIT HOLDERS' FUNDS AT THE BEGINNING OF THE

PERIOD Increase in net assets attributable to unit holders

Creation of Units During the period

Redemption of Units During the period

UNIT HOLDERS' FUNDS AT THE END OF THE PERIOD 2,808,741,456 1,442,506,102.09

NAMAL HIGH YIELD FUND

Interim Report 2019

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

1 All figures are provisional and 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.

2019 20185 Net Asset value of a Unit as at September 30 (Rs.) 21.91 19.37

No of Units as at 30th September 127,963,635.20 74,049,816.40

NAMAL HIGH YIELD FUNDInterim Report 2019

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NOTES TO THE FINANCIAL STATEMENTSFor the 06 month period ended 30th September 6. FINANCIAL ASSETS - DEBT INSTRUMENTS AT AMORTISED COST 2019 2018

Rs Rs

6.1 Investment in Commercial PapersDunamis Capital PLC 193,995,435 147,017,587 Lanka Orix Leasing Company PLC 396,551,221 208,042,565 First Capital Holdings PLC 257,218,621 199,787,402 Softlogic Holdings PLC 461,075,076 134,941,281 Hayleys PLC 185,629,986 - Janashakthi PLC 82,530,445 -

1,577,000,783 689,788,835

6.2 Investment in Fixed DepositsSiyapatha Finance PLC 236,264,893 225,706,382 Merchant Bank of SriLanka 355,995,592 166,290,190 Commercial Leasing and Finance PLC 238,498,395 144,355,941 Vallibel Finance PLC - 99,048,790 LOLC Finance PLC 56,580,476 - LB Finance PLC 168,606,322 60,642,117

1,055,945,678 696,043,420

2,632,946,460 1,385,832,256

NAMAL HIGH YIELD FUNDInterim Report 2019

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

7. OTHER RECEIVABLES 2019 2018Rs Rs

Unit Creation Receivable 78,000 275,500 Fixed Deposit Capital and Interest Receivable - 22,214,017 Placement fee Receivable 4,166,171 -

4,244,171 22,489,517

8. ACCRUED EXPENSES 2019 2018Rs Rs

Fund management fees payable 1,140,157 614,314 Trustee fee and Custodian fee payable 408,172 230,384 Audit fee payable 133,230 132,803 Redemption payable 213,777 250,412,911 Other payable 153,810 200 Consultancy Fees payable 302,908 -

2,352,053 251,390,613

9. INTEREST INCOME06 month period

ended06 month period

ended30.09.2019 30.09.2018

Rs RsInterest on

Money Market Savings deposit 2,320,455 1,867,421 Commercial papers 110,480,318 20,173,779 Savings deposits 230,216 2,302,615 Fixed deposits 65,960,243 40,268,601 FD Placement Fee 3,642,446 -

182,633,679 64,612,417

10.

2019Rs.

Net Asset Value as per Financial Statements 2,808,741,456 Income Tax Receivable (5,081,418)

Published Net Asset Value 2,803,660,038

Number of units outstanding 127,963,635

Published Net Asset Value per Unit 21.91

NAMAL HIGH YIELD FUNDInterim Report 2019

RECONCILIATION BETWEEN THE NET ASSET VALUE AS PER FINANCIAL STATEMENTS AND THE PUBLISHED NET ASSET VALUE

7

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 & Notaries Public216, De Saram PlaceColombo 10

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

National Asset Management LimitedBoard of Directors (30th September 2019) Mr. Alexis Lovell Chairman

Mr. Indrajit Wickramasinghe DirectorMr. Tyronne de Silva DirectorMr. Malinda Samaratunga DirectorMr. Wijenanada Dambawinne DirectorMr. Suren Madhanayake DirectorMs. Khoo Siew Bee DirectorMr.Kapila Nanayakkara DirectorMr.Rusiru Abeyasinghe Director

Interim Report 2019NAMAL HIGH YIELD FUND

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