annual report - CSE

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2012/2013ANNUAL REPORT

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Contents

About NAMAL

Chairman's Review

Board of Directors

Management Team

NAMAL Funds

Investment Manager’s Report

NAMAL Acuity Value Fund

Unit Information

Corporate Information

48

24

17

13

10

06

03

01

50

ANNUAL REPORT 2012 / 2013

1

About

2

About NAMAL

National Asset Management Limited (NAMAL) is the pioneer Unit Trust management company in Sri Lanka established in 1991. With 21

years of experience and a successful track record of investing in equity and �xed income markets, NAMAL launched the �rst Unit Trust to

be licensed in Sri Lanka (National Equity Fund) and the �rst listed Unit Trust (NAMAL Acuity Value Fund). We operate eight Unit Trusts and

o�er private portfolio management services as well. A subsidiary of Union Bank of Colombo PLC, our shareholders include DFCC

Bank and Ennid Capital (Pvt) Limited. We have a highly experienced and professional management team with widespread

experience in domestic and international capital markets.

Our Investment Philosophy

“Value Investing” is an in-grained investment philosophy at NAMAL. It is a rigorous and disciplined investment management process

involving Fundamental Research and Valuations, Asset Allocation, Portfolio Implementation, Monitoring and Reallocation Strategies. The

core investment team is guided by the Investment Committee which includes eminent independent investment professionals.

Our Unit Trusts

Unit Trusts enable individual investors to bene�t from professional fund management, investment performance, portfolio diversi�cation,

additional investment alternatives and risk management for a low minimum investment. In addition, investors have the ability to redeem

their investments on a daily basis in the event of an emergency. Investing in Unit Trusts allows you to plan and invest for your future

�nancial wealth, signi�cant life milestones and your prosperous retirement while enjoying peace of mind.

All NAMAL Unit Trusts are licensed and regulated by the Securities and Exchange Commission of Sri Lanka.


3

Chairman’s Review


4

Dear Investors,

It is my pleasure to send this report and accounts of the Funds to the investors for the year ended 31st March 2013. During the year,

NAMAL funds delivered strong fund performance, incremental growth and earnings growth across all categories compared to the

previous year.

Our �agship equity funds, National Equity Fund (NEF) and NAMAL Growth Fund (NGF) outperformed market indices and benchmark

competition for the 12 months ended 31 December 2012. The NEF launched in 1991, outperformed the CSE All Share Price Index (ASPI)

by 7.23% while NGF outperformed the ASPI by 5.43%. The NEF and NGF were the best performing funds in the Balanced and Growth

segments. The Fixed Income Funds continued to deliver attractive post tax returns to our investors.

Despite these attractive returns, we are fully cognisant of the current weak global economic conditions and volatility in the global markets.

As value investors we attempt to price macro–economic risks into individual investments. We remain fully aware of the importance of

making the right investment choices and committed to delivering long term capital appreciation and income to our investors by adopting

conservative, fundamental based investment management.

Chairman’s Review

5

I wish to take this opportunity to thank our sta�, Securities and Exchange Commission, the Trustees and our market counterparties for their

contribution. Most importantly I wish to extend my sincere appreciation to our loyal investors, many of whom have remained with NAMAL

since inception, for the trust they have placed in us. I am con�dent NAMAL will repay your trust by continuing to deliver excellent

performance in the future.

Alexis Lovell, MBEChairman


6

Board of Directors

7

Board of Directors

Anil AmarasuriyaAjith Wijeyesekera – Deputy Chairman

Ms Khoo Siew Bee

Alexis Lovell – Chairman

Not in picture: Jitendrakumar Warnakulasuriya Tyrone De Silva

Nihal Fonseka Avancka Herat


8

Alexis Lovell, MBE - Chairman

Mr. Lovell is the Chairman of Union Bank of Colombo PLC. He counts over thirty years of experience in Finance and Investment Banking. Mr. Lovell is a Chartered Management Accountant, UK and holds a post graduate degree in Business Administration. He was awarded the MBE (Most Distinguished Order of the British Empire) by Her Majesty the Queen of England for services to Investment Banking.

Ajith Wijeyesekera - Deputy Chairman

Mr. Wijeyesekera is a renowned entrepreneur/ business leader with over 30 years experience in business management. An eminent personality in the Sri Lankan apparel industry, he is the Founder Chairman/Managing Director of Union Apparels (Pvt) Limited, a well established manufacturer of garments for export markets, consisting of �ve manufacturing units with a turnover of Rs. 4 billion and a workforce of over 3500.

He is also the Founder Chairman/Managing Director of Union Resorts, the owning company of The Blue Water, Wadduwa, a luxury �ve star resort hotel, NorthStar Holdings an investment company, Union Industrial Washing (Pvt) Limited and the elite fashion store, Dilly's Fashions (Pvt) Ltd.

Anil Amarasuriya

Mr. Amarasuriya is the Director / Chief Executive O�cer of Union Bank of Colombo PLC (UBC). A veteran banker and former Managing Director / Chief Executive O�cer of Sampath Bank. His association with UBC dates back to 2003 when he spearheadedits restructure, when Sampath Bank and a group of investors infused capital to the Bank. He has been instrumental in the Bank's business re-engineering process through a new strategic direction to reposition UBC as the preferred Bank for the SME and RetailBanking Sectors.

He is a Fellow of the Institute of Chartered Accountants, Sri Lanka and the Chartered Institute of Management Accountants, UK and an Honorary Fellow of the Institute of Bankers, Sri Lanka. He was a member of the Sri Lanka Accounting and Auditing Standards Monitoring Board. He is currently the vice chairman of the Sri Lanka Bank's Association and a Director of Financial Ombudsman Guarantee Ltd. Mr. Amarasuriya was also a former Chairman of the Sri Lanka Banks' Association and Financial Ombudsman Sri Lanka Guarantee Limited. He also served as a Director of Sampath Surakum Ltd, SC Securities Ltd, Sampath Trade Services (HK) Ltd and Lanka Bangla Finance Ltd.

Jit Warnakulasuriya

Mr. Warnakulasuriya is the Chairman of Just in Time Group and counts many years experience in management and over 25 years experience in the �eld of IT. Mr. Warnakulasuriya is a Fellow member of the Institute of Certi�ed Professional Managers, Chartered Institute of Marketing.

Pro�les of the Board of Directors


9

Ms Khoo Siew Bee

Ms. Siew Bee has extensive experience in all aspects of corporate �nance work in Asia, the US and Europe. Her previous positions include Director & Country Manager of Schroders Taiwan, Director of Schroders Hong Kong, Director of Schroders Singapore and Mergers & Acquisitions Director (Asia Paci�c) of Monsanto Singapore Pte. Ltd. Ms. Siew Bee is a Director of BP De Silva Holdings Pte Ltd., and a number of its subsidiary and associate companies.

Nihal Fonseka

Appointed to the Board of DFCC Bank as an Ex O�cio Director and Chief Executive O�cer in January 2000, Mr Fonseka is a career Banker.

He is a Member of the National Payments Council and the Financial System Stability Consultative Committee of the Central Bank of Sri Lanka. He is the President of the National Advisory Council of the Chartered Institute for Securities & Investment, UK. Mr Fonseka is the immediate past Chairman of the Colombo Stock Exchange (2006-11) and the Association of Development Financing Institutions in Asia and the Paci�c (ADFIAP) (2010-12). He was a member of the Presidential Commission on Taxation (2009). In the past he has also served as a member of the Strategic Enterprise Management Agency (SEMA), the Post Tsunami Presidential Task Force for Rebuilding the Nation (TAFREN) and the Ministerial Task Force on Small and Medium Enterprises.

He is a graduate of the University of Ceylon, Colombo and is a Fellow of the Institute of Financial Studies (Chartered Institute of Bankers), UK.

Tyrone De Silva

Mr. De Silva is a Senior Vice President and Head of the Corporate Banking and Investment Banking Departments at DFCC Bank. He joined the Bank in 1989 and has been involved throughout in the Bank's Corporate Finance and Capital Markets business.

He serves as a member of Bank's Credit, Investment and Asset Liability Committees and as nominee Director on the Boards of some of the Bank's other subsidiary and associate companies.

Mr. De Silva holds a Master's Degree in Business Administration from the University of Warwick, UK. He is also a Graduate Member of the Institute of Mechanical Engineers, UK.

Avancka Herat

Mr. Herat is the Executive Director of NAMAL. (Please refer management team pro�le.)


10

Management Team

11

Avancka Herat, Executive Director/Chief Investment O�cer

Mr. Herat has over 15 years in experience in the �nancial services sector in the areas of investments banking, investment management and corporate �nance. He has extensive regional experience having worked for investments banks and MNC’s including Jardine Fleming, JP Morgan and Caltex. He has worked in Singapore, Hong Kong and Thailand specializing in key sectors such as Petroleum, Telecoms, Power and Energy, Cement, MNC’s and Small Caps. Prior to joining NAMAL, Mr. Herat was the Chief Investment O�cer/Director of Aegis Fund Management (Pvt) Ltd, managing the funds of DCSL Group, including Sri Lanka Insurance Corporation Ltd.

Mr. Herat holds a BSc (Hon) Degree in Business Management from University of Swansea, Wales and MSc in Business Finance from University of London, Uxbridge.

Charana Jayasuriya, Head – Sales & Structuring

Mr. Jayasuriya has more than ten years experience in the capital markets of Sri Lanka and United Kingdom in asset management, investment banking and �nancial regulation. Prior to joining NAMAL, Mr. Jayasuriya was Fund Manager for Aegis Fund Management (Pvt) Ltd managing the funds of DCSL Group, including Sri Lanka Insurance Corporation Ltd specialising in �xed income and foreign currency.

Mr. Jayasuriya holds a LLB (Hons) Law and LLM in Banking & Finance Law from University College, University of London.

Tharaka Mudalige, Senior Sales Manager – Retail Sales

Mr. Mudalige has 6 years experience in Life Insurance and General Insurance specialising in Bancassurance. Prior to joining NAMAL, Mr. Mudalige was the Manager Sales of Bancassurance - for AVIVA NDB Insurance PLC.

Dinesh Fernando, Fund Manager

Mr. Fernando has 20 years experience in the �nancial services sector in the areas of equity research, investment banking and portfolio management. He has worked for HSBC, KPMG, DFCC Bank, NDB Investment Bank and First Guardian Equities in Sri Lanka and overseas. Prior to joining NAMAL he was with Standard Chartered Bank.

Mr. Fernando is a CFA Charterholder and a member of the Association of Chartered Certi�ed Accountants (UK) and Chartered Institute of Management Accountants (UK).

Pro�les of the Management Team


12

Mrs Pushpika Jeevaratne, Head of Compliance

Mrs. Jeevaratne has over 6 years experience in the �nancial services sector including investment banking. She has worked for Vanik and DP Capital Management prior to joining NAMAL.

Mrs. Jeevaratne holds a BSc. (Eng) from University of Moratuwa and is a member of the Chartered Institute of Management Accountants (UK)

Ms Menaka Fernando, Finance Manager

Ms. Fernando has more than six years experience in Accounting, Auditing and Advisory Services at Kreston MNS & Co.

Ms. Fernando is a member of the Institute of Chartered Accountants of Sri Lanka and the Association of Accounting Technicians of Sri Lanka.

Ms Hemanthi Bulathwatte, Registrar

Ms Bulathwatte is an Attorney-at-law and currently reading for a BSc in Business Administration at the University of Sri Jayewardenepura. She is a registered Company Secretary with the Registrar of Companies in Sri Lanka. She counts over six years experience in the �elds of company secretarial and litigation.


13

Funds

14

NAMAL Funds

Name of Fund National Equity Fund

Fund Type

Objective

Invest In

Time Frame ofInvestment

Risk-Return

Dividends

MinimumInvestment

Front-End Fee

Management Fee

Exit Fee

Registrar Fee

Trustee Fee

Advantages

NAMAL IPO FundNAMAL Growth Fund

Growth

Capital Growth

Medium to Long Term

No Set Pattern

2.50%

1.25% (Additional 1.5% ifNet Return exceeds 15% p.ain a Quarter)

No

No

0.20%

*Invest in Professionally Selected IPO Securities

*Daily Liquidity

Rs. 10,000

High to ModerateRisk / Return

Listed Equity & Fixed IncomeSecurities

Rs.1,000

Balanced

Income and Long Term Growth

Listed Equity & FixedIncome Securities

Medium to Long Term

High to ModerateRisk / Return

Annual

5.00%

1.50%

No

0.25%

0.20%

*Provides current income and long term capital growth

*Flexibility to invest upto 80% in the stock market

*Minimum investment is low

Rs.5,000

5.00%

1.50%

No

0.25%

0.25%

*Invest in high quality handpicked stocks

*Flexibility to invest upto 90% in the stock market

*Ability to participate in a diversi�ed portfolio of listed shares

Growth

Long Term Capital Growth

Listed Equity

Medium to Long Term

High Risk - High Return

No Set Pattern


15

Name of Fund NAMAL Income Fund

Fund Type

Objective

Invest In

Time Frame ofInvestment

Risk-Return

Dividends

MinimumInvestment

Front-End Fee

Management Fee

Exit Fee

Registrar Fee

Trustee Fee

Advantages

NAMALHigh Yield Fund

NAMALMoney Market Fund

Rs.10,000

Income

Income

Fixed IncomeSecurities

Medium to Long Term

Medium to Long Term

Semi Annual

No

1.25%

1.00%(If withdrawn prior to 1 year)

0.25%

Rs.200,000 per annum

Lower level of riskthan Equity Funds

Invest in high qualityincome producinginstruments

Receive regulardividend income

Rs.1,000,000

Money Market

Cash Management

Fixed Income Securitiesof less than 12 months

Short Term

Low Risk / Return

Quarterly

No

0.25%

No

0.05%

0.15%

Provides currentincome at minimum risk

Dividends paidquarterly

Rs. 10,000

Fixed Income

Income

Short Term Commercial Papers,Trust Certi�cates & Corporate Debt

Short Term

Moderate toLow Risk - Returns

Regular

No

0.50%

No

No

0.15%

Obtains Signi�cantly HigherYields than Treasury Bills &Fixed Deposits

Daily Liquidity


16

Highlights of NAMAL Funds


National Equity Fund NAMAL Growth Fund NAMAL Acuity Value Fund NAMAL IPO Fund

Fund Performance YoYGrowth / (decline) 11.93% 11.46% 10.20% 7.02%

Fund Size Rs. 1.66 Bn 250.0 Mn 961.3 Mn 17.4 Mn

Dividend (Rs. Per share) 1.00No dividend paid in line

with fund objectives 1.00 -

Return per unit holder(since inception)

14.62%* Rs. 100,000 invested at

inception is worthRs. 1.8 Mn today

16.65%*Rs. 100,000 invested at

inception is worthRs. 1.1 Mn today

21.05%** (returns areannualized since 2009)

4.16%** (Since inception in2011)

* assuming re-investment of dividends since 1991 and returns are annualized** assuming re-investment of dividends since 1997 and returns are annualized

NAMAL Income Fund NAMAL High Yield FundNAMAL Money Market Fund

Fund Performance YoYGrowth / (decline) 9.67% 9.59%

Fund Size Rs. 360.6 Mn 450.1 Mn

Dividend (Rs. Per share) 0.75 0.88

Tax Equivalent Yield 13.43%* 13.32%*

14.45%

1.01 Bn

-

20.07%*

* for institutional investors who pay 28% corporate tax

17

Invesment Manager’sReport

18

Economic Growth Moderates

Sri Lanka’s GDP growth moderated to 6.4% in 2012, from above 8% in the preceding two years (Fig 1). The sluggish performance of the Services sector (constituting 58.5% of GDP) which saw growth of 4.6% in 2012 compared to 8.6% in 2011 was the main contributor to moderating GDP. The Services sector was severely impacted by sharply slower growth in the wholesale and retail trade (23.0% of GDP) of 3.7% in 2012 compared to 10.3% in 2011 (Fig 2).

The Industrial sector maintained an unchanged growth rate of 10.3% assisted by a boom in the Construction sub-sector, which grew by 21.6% in 2012. Unfortunately, growth in the key manufacturing sub-sector slowed to 5.2% from 7.9%.

The Agriculture sector was a�ected by drought followed by heavy monsoonal rains and �oods. Notwithstanding the setbacks, the growth rate increased to 5.8% in 2012 compared to 1.4% in 2011.

The moderate GDP growth level is commendable, given the weak global economic environment and the structural problems a�ecting the domestic economy at the end of 2011 including higher interest rate environment, consumer price in�ation and currency depreciation. Despite these challenges, per capita GDP increased to US$ 2,923 from US$ 2,836 in 2011.

Investment Manager’s Report

Economic outlook

-8

-6

-4

-2

0

2

4

6

8

10

12

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

%

Agriculture Industry Services

Fig 02: GDP Growth By Sector

Source: CBSL

-2

0

2

4

6

8

10

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

%

Fig 01: GDP Growth Moderates

Source: CBSL


19

The expanding trade de�cit, of US$ 9.7 billion in 2011, and consequently large Current Account de�cit was the largest structural problem confronting the economy at the start of 2012. Policy makers took aggressive measures, including depreciation of the currency, tighter monetary policing including 18% credit ceiling for banks and higher customs duties on selected imports to combat the trade de�cit. These measures contributed to the trade de�cit contracting to US$ 9.4 billion in 2012 (Fig 3) , accounting for 15.8% of GDP (16.4% in 2011). This improvement together with a signi�cant increase in inward remittances and higher earnings from tourism helped the Current Account de�cit to improve to 6.6% of GDP in 2012, compared to 7.8% of GDP in 2011).

Sri Lanka still faces some signi�cant external sector challenges due to the weakness of its two primary export markets, United States and European Union, which account for 61% of exports. This was underlined by the 7.4% decline in exports despite the signi�cant currency depreciation.

Trade Account Stabilizes in 2012

The Central Bank of Sri Lanka (CBSL) took a hawkish stand with its monetary policy in the �rst half of the year by increasing policy rates (Fig 4) and imposed a credit ceiling on banks to slowdown domestic consumption. Banking sector credit growth slowed to 20.8% in 2012 compared to 31.7% in 2011 (Fig5). Following the easing of external sector pressure, CBSL adopted a more accommodative stance by reducing policy rates in December 2012. The credit ceiling was withdrawn in 2013 and provided excess liquidity in the banking system.

Treasury Bill yields which increased during the tightening cycle in 2012 have declined in 2013 with monetary easing.

The Colombo Consumer Price Index (CCPI), particularly point to point continued to edge up during the course of the year which had a signi�cant impact on real interest rates (Fig 6). The increase in fuel and electricity prices in 2013 will have an impact on core in�ation, which will limit the ability for further policy easing in 2H of FY2013.

Tighter Monetary Policy Implemented

-1,100

-600

-100

400

900

1,400

1,900

2007 2008 2009 2010 2011 2012 2013

USD m

Exports Imports Trade Deficit

Fig 03: Trade De�cit Improves

Source: CBSL

Source: CBSL Annual Report & Website

7

8

9

10

11

12

13

1/1/2003 1/1/2005 1/1/2007 1/1/2009 1/1/2011 1/1/2013

Repurchase rate (%) Reverse Repurchase (%)

Fig 04: Policy Rates Raised

Source: CBSL


20

The Sri Lanka Rupee depreciated by over 20% to a low of Rs. 133 against US$ by June 2012 before recovering to Rs. 127 by the year end with the reduction in Trade and Current Account de�cits (Fig 7). The Rupee was helped to stabilise by the continuing �ow of FII investments into Treasury Bonds and Bills which accounted for approximately 45.6% of the gross o�cial reserves of US$ 6.9Bn as of end of FY12 (Fig8)

Rupee Depreciation

-10%

-5%

0%

5%

10%

15%

20%

0

20

40

60

80

100

120

140

160

1-Ja

n-07

1-M

ay-0

7

1-Se

p-07

1-Ja

n-08

1-M

ay-0

8

1-Se

p-08

1-Ja

n-09

1-M

ay-0

9

1-Se

p-09

1-Ja

n-10

1-M

ay-1

0

1-Se

p-10

1-Ja

n-11

1-M

ay-1

1

1-Se

p-11

1-Ja

n-12

1-M

ay-1

2

1-Se

p-12

1-Ja

n-13

LKR / USD Depreciation (YTD)

Fig 07: Rupee Depreciation

Source: CBSL

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

-600

-500

-400

-300

-200

-100

0

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012Rs. bn

Loan-deposit gap Loan/deposits ratio

Fig 05: Banking Sector Credit Growth Slows

Source: CBSL

Fig 06: Real Rates Declined

Source: CBSL

0%2%4%6%8%

10%12%14%

Jan

Mar

May Ju

l

Sep

Nov Ja

n

Mar

May Ju

l

Sep

Nov Ja

n

Mar

May Ju

l

Sep

Nov Ja

n

Mar

2010 2011 2012 2013

1 year T bill rate Inflation Real rate


21

The Budget de�cit was contained to 6.4% of GDP in 2012 despite the constrained revenues resulting from the slowing economy (Fig 9). During the last three years stronger nominal GDP growth has resulted in the budget de�cit declining as a percentage of GDP. It is critical for long term economic growth prospects that the budget de�cit is reduced, the impact of the European sovereign debt crisis was most acute in countries with high debt to GDP ratios. Government debt increased to 79.1% of GDP in 2012 (78.5% in 2011).

Budget De�cit Declines

ASPI Recovers in 2H of FY12The ASPI declined by 7.1% YoY during the FY2012 impacted by the tightening policy cycle bottoming out at 4,738 in June 2012 before rallying 19% to 5,643 by end 2012 and continuing the upward momentum into 2013.

The ASPI is 244% higher than in 31 March 2009 and as a result Colombo Stock Exchange has outperformed regional indices in the past two years and remains one of the best performing markets with growth of 374% since 1st January 2005. The performance of key regional markets India (Sensex, up 290%), Singapore (Straits Times, up 153%), and Hong Kong (Hang Seng, up 159%) have been weaker (Fig 10). Average daily volumes of ASPI stood at Rs. 433Mn per day in CY2012 compared to Rs. 417Mn per day in CY2011.

Foreign Funds (FIIs) were large net buyers in 2012 after being net sellers in 2010 and 2011. This can be attributed to the attractive valuations in US$ terms. The market cap of ASPI which stood at US$ 19.5 Bn at end 2011 had declined by 13% to US$ 17.0 Bn by end of 2012. The net purchases by FIIs for CY 2012 stood at Rs. 38.7 Bn, the highest net in�ow in one calendar year during the last 20 years (Fig 11). Yield Ratio has improved with the correction in ASPI (Fig12) while the market PER levels have fallen to historically attractive levels (Fig 13).

Market Review

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Fig 09: Budget De�cit

Source: CBSL

0%

10%

20%

30%

40%

50%

60%

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

31-Ja

n-10

28-F

eb-1

031

-Mar

-10

30-A

pr-1

031

-May

-10

30-Ju

n-10

31-Ju

l-10

31-A

ug-1

030

-Sep

-10

31-O

ct-1

030

-Nov

-10

31-D

ec-1

031

-Jan-

1128

-Feb

-11

31-M

ar-1

130

-Apr

-11

31-M

ay-1

130

-Jun-

1131

-Jul-1

131

-Aug

-11

30-S

ep-1

131

-Oct

-11

30-N

ov-1

131

-Dec

-11

31-Ja

n-12

29-F

eb-1

231

-Mar

-12

30-A

pr-1

231

-May

-12

30-Ju

n-12

31-Ju

l-12

31-A

ug-1

230

-Sep

-12

31-O

ct-1

230

-Nov

-12

31-D

ec-1

231

-Jan-

1328

Feb

201

3

Foreign investments in treasury bills and bonds (USD Mn) Gross official reserve (USD m) FI as a % of gross official reserve

Fig 08: FII Investments in Treasury Bonds and Bills

Source: CBSL


22

-

100

200

300

400

500

600Ja

n-05

Jun-

05

Nov

-05

Apr-

06

Sep-

06

Feb-

07

Jul-0

7

Dec-

07

May

-08

Oct

-08

Mar

-09

Aug-

09

Jan-

10

Jun-

10

Nov

-10

Apr-

11

Sep-

11

Feb-

12

Jul-1

2

Dec-

12

Index

Hang Seng Sensex S & P 500 Straits Times ASPI

Fig10: ASPI Outperforms Regional Indices

Source : Bloomberg

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

%

Post Tax TB Yield

Post Tax Dividend Yield

Fig 12: Yield Ratio Improves

Source: CSE & NAMAL


(15,000.00)

(10,000.00)

(5,000.00)

-

5,000.00

10,000.00

15,000.00

20,000.00

Jan-

03

Jun-

03

Nov

-03

Apr-

04

Sep-

04

Feb-

05

Jul-0

5

Dec-

05

May

-06

Oct

-06

Mar

-07

Aug-

07

Jan-

08

Jun-

08

Nov

-08

Apr-

09

Sep-

09

Feb-

10

Jul-1

0

Dec-

10

May

-11

Oct

-11

Mar

-12

Aug-

12

Jan-

13

LKR m

Net foreign Purchases/(Sales)

Fig 11: Foreign Funds (FIIs) Large Net Buyers

Source : CSE

23

Despite slower growth in 2012 Sri Lanka remained a bright spot in the global economic landscape. Sri Lanka does not have the excessive debt levels constraining some European countries and the �nancial sector remains fundamentally stable. The country is rebuilding following the end of its ethnic con�ict which will lead to higher growth rates than comparative benchmarks. The biggest medium term risk is in the external account, which is vulnerable to external trade and capital �ows.

As value investors we attempt to price macro–economic risks into individual investments. We continue to focus on identifying investments that are attractively valued which could outperform market returns in the long run. We look at opportunities to exit from counters that we consider expensive relative to their underlying value. We continue to be bullish on Retail, Health Care, Food and Beverage, Banking, Oil & Gas, and Infrastructure services.

Market Outlook

1.4

1.7

2.0

2.3

2.6

2.9

3.2

3.5

3.8

4.1

4.4

Jan-8

5Jan

-86

Jan-8

7Jan

-88

Jan-8

9Jan

-90

Jan-9

1Jan

-92

Jan-9

3Jan

-94

Jan-9

5Jan

-96

Jan-9

7Jan

-98

Jan-9

9Jan

-00

Jan-0

1Jan

-02

Jan-0

3Jan

-04

Jan-0

5Jan

-06

Jan-0

7Jan

-08

Jan-0

9Jan

-10

Jan-1

1Jan

-12

Jan-1

3

Log scale

25x

10x

5x

2x

Fig 13: Market PER Multiples Down on Forward Earnings

Source: CSE & NAMAL


Acuity Value Fund

24

25

Fund Performance Review

Investment Strategy

NAMAL Acuity Value Fund (NAVF) is a growth fund listed on Colombo Stock Exchange which aims to provide long term capital appreciation by investing in equity. The Fund can allocate a maximum of 100% to equity.

The investment strategy is market neutral and based on fundamental research to identify stocks trading below intrinsic value. The Fund has invested in fundamentally strong companies that are exposed to the key sectors of the economy. These investments will enable the Fund to perform strongly notwithstanding any short-term market volatility.

The Fund aims to deliver consistent capital appreciation to investors whilst ensuring preservation of capital.

Asset Allocation

The Fund invested 88.6% in Equities, 4.6% in Repos, 2.4% in Commercial Paper, 2.1% in Fixed Deposits with the balance invested in debentures as at 31 March 2013. The main sector allocations in equity are Banks, Finance & Insurance (27%), Beverage, Food & Tobacco (23.8%) and Healthcare (21.1%).

Performance Review

The All Share Price Index increased by 5.82% for the year ending 31st March 2013. The Fund outperformed the ASPI by 4.38% with the Fund’s NAV increasing by 9% during the period under review.

The Fund value was Rs. 961 million as at 31 March 2013. Net assets attributable to unit holders increased by Rs. 81.6 million during the year, vs. a decrease of Rs. 256.2 million the prior year.

Return to Investors

The Fund has provided an annualized return of 21.05% to investors since inception in 2009.

The Fund paid a dividend of Rs. 1.00 per unit for FY2013, bringing the cumulative dividends paid to Rs. 8.50 per unit since inception in 2009.

Investment Management Team, National Asset Management Ltd


26

Fund Performance and Market Returns as at 31st March 2013

Fig 1: Fund Performance

12 months 24 months 36 months10.20%5.82%

-12.21%-20.60%

55.09%54.00%

10.3% -15.4% 53.8%

NAMAL Acuity Value FundASPIS & P SL20

*Note

1) Performance up to 31st March 2013 as published by the Unit Trust Association of Sri Lanka2) All returns are adjusted for dividends3) Returns are not annualized4) Past performance should not be taken as a guide to future performance

Fig 2: Top Five Equity Holdings

26.95%

23.77%

21.11%

11.17%

5.89%

2.90%

2.57%

2.09%

1.41%

1.30%

0.84%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Banks, Finance and Insurance

Beverage, Food and Tobacco

Healthcare

Diversified Holdings

Manufacturing

Investment Trust

Hotels and Travels

Telecommunication

Construction and Engineering

Plantations

Chemicals and Pharmaceuticals

SECT

OR

Fig 3: Sector Allocation

The Company No of Shares Value (RS.) % of NAV Asiri Hospitals 10,665,149 121,582,699 13% Distilleries 626,400 104,295,600 11% Commercial Bank 675,000 76,275,000 8% Lion Brewery 200,000 66,600,000 7% CT Holdings 482,000 60,828,400 6%


27

ADBT/CPEG/JJ

INDEPENDENT AUDITORS’ REPORTTO THE UNIT HOLDERS OF NAMAL ACUITY VALUE FUND

Report on the Financial Statements

We have audited the accompanying �nancial statements of NAMAL Acuity Value Fund (the “Fund”) which comprise the statement of �nancial position as at 31 March 2013 and statement of comprehensive income, statement of changes in unitholder’s funds, statement of cash �ows, for the year then ended and a summary of signi�cant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

National Asset Management Limited, the Managers of the Unit Trust are responsible for the preparation and fair presentation of these �nancial statements in accordance with Sri Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of �nancial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on these �nancial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the �nancial statements are free from material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the �nancial statements. An audit also includes assessing the accounting policies used and signi�cant estimates made by management, as well as evaluating the overall �nancial statement presentation.

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. We therefore believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, so far as appears from our examination, the Fund maintained proper accounting records for the year ended 31 March 2013 and the �nancial statements give a true and fair view of the Fund’s �nancial position as at 31 March 2013 and its �nancial performance and cash �ows for the year then ended in accordance with Sri Lanka Accounting Standards.

Report on Other Legal and Regulatory Requirements

These �nancial statements also comply with the requirements of Section 151(2) of the Companies Act No. 07 of 2007 as required by Section 17 of the Unit Trust Deed between National Asset Management Limited and Deutsche Bank AG dated 3 September 2009.

28 May 2013Colombo


28

NAMAL Acuity Value FundSTATEMENT OF FINANCIAL POSITIONAs at 31 March 2013

As at 1 April Notes 2013 2012 2011

ASSETS Rs. Rs. Rs.

Cash and cash equivalents 657,111 115,887 365,831 Financial assets - Held for trading 5 880,172,656 683,998,277 1,046,788,040 Financial assets - Loans and receivables 6 92,245,890 192,844,881 61,482,928 Accrued income and other receivables 8 6,932,575 750,000 26,950,096 Income tax recoverable 4,944,161 3,092,442 1,579,639 Total Assets 984,952,393 880,801,487 1,137,166,534

UNIT HOLDERS' FUNDS & LIABILITIES

LIABILITIESCDS payable 22,569,691 - - Accrued expenses 9 1,123,955 1,122,857 1,268,103

Total Liabilities (Excluding net assets attributable to Unit Holders) 23,693,646 1,122,857 1,268,103

UNIT HOLDERS' FUNDSNet assets attributable to Unit Holders 961,258,747 879,678,630 1,135,898,431

984,952,393 880,801,487 1,137,166,534

- These Financial Statements were approved by the Management Company, and adopted by the Trustees. -

28 May 2013Colombo

……………………………..……………………………..

DirectorManagement Company


*The Accounting Policies and Notes on pages 32 to 47 form an integral part of these Financial Statements.


29

NAMAL Acuity Value FundSTATEMENT OF COMPREHENSIVE INCOMEYear ended 31 March 2013

2013 2012Notes Rs. Rs.

INVESTMENT INCOMEDividend income 10.1 25,669,988 16,076,610 Interest income 10.2 34,021,483 15,626,442Net realised gains on �nancial assets held for trading 5.3 52,141,890 200,015,383Net change in unrealised losses on �nancial assets held for trading 5.4 (4,938,685) (447,294,322)Total investment income 106,894,676 (215,575,887)

EXPENSESManagement fees (9,835,724) (10,402,715) Trustee fees (2,024,123) (2,223,532) Custodian fees (268,800) (264,723) Audit fee and expenses (149,050) (136,831) Professional charges (6,160) - Other expenses (740,875) (608,579) Total operating expenses (13,024,732) (13,636,380)

Net operating pro�t/(loss) 93,869,944 (229,212,267)

FINANCE COSTInterest expense (62,826) - Distribution to Unit Holders 12 (10,751,200) (26,878,000)

PROFIT/ (LOSS) AFTER DEDUCTIONS AND BEFORE TAX 83,055,918 (256,090,267)

Income tax expense 11 (1,475,801) (129,534)

PROFIT/(LOSS) AFTER DISTRIBUTIONS AND TAX 81,580,117 (256,219,801)

INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 81,580,117 (256,219,801)



30

NAMAL Acuity Value FundSTATEMENT OF CHANGES IN UNITHOLDERS' FUNDSYear ended 31 March 2013


2013 2012Rs. Rs.

UNIT HOLDERS' FUNDS AT THE BEGINNING OF THE YEAR 879,678,630 1,135,898,431

Increase/ (decrease) in net assets attributable to Unit Holders 81,580,117 (256,219,801)

Received on unit creations - -

Payments on unit redemptions - -

UNIT HOLDERS' FUNDS AT THE END OF THE YEAR 961,258,747 879,678,630


31

NAMAL Acuity Value FundSTATEMENT OF CASH FLOWS Year ended 31 March 2013


2013 2012Rs. Rs.

Cash �ows from operating activitiesDividend received 19,487,413 17,276,706 Interest received 34,186,810 12,631,012 Proceeds from sale of investments 1,654,976,741 529,206,631 Payments on purchase of investments (1,681,440,976) (517,926,910) Taxation paid (2,831,104) (777,756) Operating expenses paid (13,023,634) (13,781,627) Net cash generated from operating activities 11,355,250 26,628,056

Cash �ows from �nancing activitiesIncome distribution (10,751,200) (26,878,000) Interest paid on borrowings (62,826) - Proceeds from borrowings 212,363,759 - Repayment of borrowings (212,363,759) - Net cash used in �nancing activities (10,814,026) (26,878,000)

Net increase/(decrease) in cash and cash equivalents 541,224 (249,944) Cash and cash equivalents at the beginning of the year 115,887 365,831 Cash and cash equivalents at the end of the year 657,111 115,887


32

1. GENERAL INFORMATION

NAMAL Acuity Value Fund is a closed ended unit trust fund approved by the Securities and Exchange Commission of Sri Lanka. The fund was launched on 07 September 2009.

The fund is managed by National Asset Management Limited, which is incorporated and domiciled in Sri Lanka. The registered o�ce of the management company is located at 7th Floor, Union Bank Head O�ce, No. 64, Galle Road, Colombo 03. The Trustee of the fund is Deutsche Bank AG having its place of business at No. 86, Galle Road, Colombo 03.

The investment objective of the fund is to achieve long term capital appreciation for the Unit Holders by adopting a dynamic asset allocation strategy for investments in listed and unlisted �xed income securities.

2. ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION

The �nancial statements are prepared in accordance with and comply with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and adopted as directed by the Securities and Exchange Commission of Sri Lanka.

The �nancial statements have been prepared on the historical cost basis except for the �nancial assets at fair value through pro�t or loss. The �nancial statements are presented in Sri Lankan rupees. The statement of �nancial position is presented broadly in order of a liquidity basis.

2.1.1 Statement of compliance

These �nancial statements have been prepared in accordance with Sri Lanka Accounting Standards comprising SLFRSs and LKASs (hereafter "SLFRS") which are e�ective from 01 January 2012.

2.1.2 Comparative information

This is funds’ �rst �nancial statements prepared in accordance with (SLFRSs/LKASs) and SLFRS 1 – First time Adoption of Sri Lanka Financial Reporting Standards has been applied. Please refer Note 4 to the �nancial statements.

2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.2.1 Financial instruments – initial recognition and subsequent measurements

2.2.1.1 Date of recognition

All �nancial assets are initially recognized on the trade date, i.e the date that the fund becomes a party to the contractual provisions of the instrument. This includes purchases of �nancial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place.

2.2.1.2 Initial measurement of �nancial instruments

The classi�cation of �nancial instruments at initial recognition depends on their purpose and characteristics and the management intention in acquiring them. All �nancial assets are measured initially at the fair value plus transaction costs, except in the cases of �nancial assets recorded at fair value through pro�t or loss.

NAMAL Acuity Value FundNOTES TO THE FINANCIAL STATEMENTSYear ended 31 March 2013


33

2.2.1.3 Financial assets - Loans and receivables

Loans and receivables are non derivative �nancial assets with �xed or determinable payments that are not quoted on an active market. Loans and receivables in the statement of �nancial position comprise of repurchase agreements, commercial papers and placements with other banks.

After initial measurement, loans and receivables are subsequently measured at amortised cost using the e�ective interest rate, less allowance for impairment. The amortization is included in the “interest income” in the statement of comprehensive income. The losses arising from impairment is recognised in the statement of comprehensive income in “credit loss expense”.

Interest income is recognized by applying the e�ective interest rate, except for short term receivables when the recognition of interest would be immaterial.

2.2.1.4 Financial assets at fair value through pro�t or loss

Financial assets are classi�ed as fair value through pro�t or loss (FVTPL) if they are held for trading or are designated at fair value though pro�t or loss. Financial assets are classi�ed as held-for-trading if they are acquired for the purpose of selling or repurchasing in the near term. Up on the initial recognition, transaction cost are directly attributable to the acquisition are recognized in pro�t or loss as incurred.

• Financial assets held for trading

Financial assets, held for trading are recorded in the statement of �nancial position at fair value. Changes in fair value are recognised in the ‘net change in �nancial assets held for trading’ in the statement of comprehensive income. Interest income or expense and dividend income are recorded in “investment income’ according to the terms of the contract. Included in this classi�cation are quoted equity securities and quoted debentures.

2.2.1.5 Determination of fair value

The fair value for �nancial instruments traded in active markets at the reporting date is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For all other �nancial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include the discounted cash �ow method, comparison with similar instruments for which market observable prices exist, options pricing models, credit models and other relevant valuation models.

An analysis of fair values of �nancial instruments and further details as to how they are measured are provided in Note 7.

2.2.1.6 Derecognition of �nancial assets

A �nancial asset is derecognised when,

1) The rights to receive cash �ows from the asset have expired.2) The fund has transferred its rights to receive cash �ows from the asset or has assumed an obligation to pay the received cash �ows in full without material delay to a third party under a ‘pass–through’ arrangement; and either,• The fund has transferred substantially all the risks and rewards of the asset or• The fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.



34

2.2.2 Recognition of income

Revenue is recognised to the extent that it is probable that the economic bene�ts will �ow to the fund and the revenue can be reliably measured.

Interest income

For all �nancial instruments measured at amortised cost, interest income is recorded using the e�ective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the �nancial instrument or a shorter period, where appropriate, to the net carrying amount of the �nancial asset.

Interest income from repurchase agreements and government treasury bills are recognised at gross of notional tax credit or withholding tax.

Dividend income

Income is recognised when the right to receive the dividend is established, normally being the ex-dividend date. Dividend income is recognized net of withholding tax, if any.

2.2.3 Cash and cash equivalents

Cash and cash equivalents in the statement of �nancial position comprise cash at bank.

For the purpose of the statement of cash �ows, cash and cash equivalents consist of cash and cash equivalents as de�ned above.

2.2.4 Income tax

Current tax assets and liabilities for the current and prior year are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. The fund is liable to pay income tax at the rate 10% in accordance with the Inland Revenue Act No. 10 of 2006.

2.2.5 Expenses

The management participation fees of the fund is as follows:

Management Fee - 1.0% of Net Asset Value of the Fund

Trustee Fee - 0.2% of Net Asset Value of the Fund Custody Fee - Flat Fee of Rs. 20,000 per month

2.2.6 Accrued expenses

Payables are initially recognised at fair value, which is the fair value of the consideration to be paid in the future for service received, whether or not billed to the fund, and subsequently at amortised cost.



35

2.2.7 Unit Holders’ funds and net assets attributable to Unit Holders

Unit Holders’ funds has been calculated as the di�erence between the carrying amounts of the assets and the carrying amounts of the liabilities, other than those due to Unit Holders as at the reporting date.

Units can be issued and redeemed based on the fund’s net asset value per unit, calculated by dividing the net assets of the fund calculated in accordance with the valuation guidelines issued by the Unit Trust Association of Sri Lanka and approved by the Securities and Exchange Commission of Sri Lanka, by the number of units in issue. Income not distributed is included in net assets attributable to Unit Holders.

2. 3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

2.3.1 Fair value of �nancial instruments

Management considers credit, liquidity and market risk and assesses the impact on valuation of investments when determining the fair value. Following are the key sources of estimation uncertainty at the statement of reporting date that have signi�cant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next �nancial year.

a) Fair value of securities not quoted in an active market and over the-counter derivative instrumentsManagement uses its judgment in determining the appropriate valuation technique for �nancial instruments that are not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. Other �nancial instruments are valued using a discounted cash �ow analysis based on the assumptions supported, where possible, by observable market prices or rates.

2.3.2 Impairment losses on �nancial assets – Loans and receivables

The fund reviews its �nancial investments classi�ed as loans and receivables at each reporting date to assess whether they are impaired. In particular management judgment is required in the estimation of the amount and timing of future cash �ows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may di�er, resulting future changes to the allowance.

2.4 STANDARDS ISSUED BUT NOT YET EFFECTIVE Standards issued but not yet e�ective up to the date of issuance of the fund’s �nancial statements are set out below. The fund will adopt these standards when they become e�ective. Pending a detailed review the �nancial impact is not reasonably estimable as at the date of publication of these �nancial statements.

(i) SLFRS 9 -Financial Instruments: Classi�cation and MeasurementSLFRS 9, as issued re�ects the �rst phase of work on replacement of LKAS 39 and applies to classi�cation and measurement of �nancial assets and liabilities. This standard will be e�ective for the �nancial periods beginning on or after 01 January 2015.

(ii) SLFRS 13 -Fair Value MeasurementSLFRS 13 establishes a single source of guidance under SLFRS for all fair value measurements. SLFRS 13 provides guidance on all fair value measurements under SLFRS.

This standard was originally e�ective for the �nancial period beginning on or after 01 January 2013 an early application was allowed. However e�ective date has been deferred subsequently.



36

3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(a) Financial instruments

The fund’s principal �nancial assets comprise investments in trading securities, repurchase agreements, commercial papers, �xed deposits and cash at bank. The main purpose of these �nancial instruments is to generate a return on the investment made by Unit Holders. The fund’s principal �nancial liabilities comprise amounts attributable to Unit Holders, which are the amounts owed to Unit Holders of the fund. The fund also has other �nancial instruments such as receivables and payables which arise directly from its operations.

In accordance with LKAS 39 Financial Instruments: Recognition and Measurement, the fund’s bank balance, repurchase agreements, �xed deposits and commercial papers are classi�ed as ‘loans and receivables’ and valued at amortised cost. Trading securities are classi�ed as ‘held for trading’, meaning they are valued at fair value through pro�t or loss. Amounts attributable to Unit Holders are classi�ed as ‘other �nancial liabilities’ and are carried at the redemption amount being net asset value. Payables are designated as ‘other �nancial liabilities’ at amortised cost.

(b) Financial risk management objectives, policies and processes

Risks arising from holding �nancial instruments are inherent in the fund’s activities, and are managed through a process of ongoing identi�cation, measurement and monitoring. The fund is exposed to credit risk, market risk, and liquidity risk.

Financial instruments of the fund comprise investments in trading securities for the purpose of generating a return on the investment made by Unit Holders, in addition to cash at bank, and other �nancial instruments such as receivables and payables, which arise directly from its operations.

The manager is responsible for identifying and controlling the risk that arise from these �nancial instruments. The manager agrees policies for managing each of the risks identi�ed below.

The risks are measured using a method that re�ects the expected impact on the statement of comprehensive income and statement of �nancial position of the fund from reasonably possible changes in the relevant risk variables. Information about these risk exposures at the reporting date, measured on this basis, is disclosed below.

The manager also monitors information about the total fair value of �nancial instruments exposed to risk, as well as compliance with established investment mandate limits. These mandate limits re�ect the investment strategy and market environment of the fund, as well as the level of risk that the fund is willing to accept, with additional emphasis on selected industries. This information is prepared and reported to relevant parties within the manager on a regular basis as deemed appropriate, including the Fund manager, other key management, Group’s integrated risk management committee of the manager and ultimately the Trustees of the fund.

Concentration of risk arises when a number of �nancial instruments or contracts are entered in to with the same counterparty, or where a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly a�ected by changes in economics, political or other conditions.



37

(c) Credit risk

Credit risk is the risk that the counterparty to the �nancial instrument will fail to discharge an obligation and cause the fund to incur a �nancial loss.

The fund’s exposure to credit risk from its �nancial assets arises from default of the counterparty, with the current exposure equal to the fair value of these instruments as detailed below. It is the fund’s policy to enter into �nancial instruments with reputable counterparties. The details are as follows:

Counter Party Credit Rating Rating AgencyMercantile Investments and Finance PLC BBB+ Ram RatingPeople’s Leasing and Finance PLC AA- Fitch RatingSoftlogic Holdings PLC A- Fitch RatingSoftlogic Finance PLC BBB- Ram RatingAsia Capital PLC* Unrated -*As per SEC Directive investments in companies that do not have a rating is limited to a maximum 10% of NAV

Risk concentration of credit risk exposure:

Concentration of credit risk is managed by counterparty and by market sector. The fund is also subject to credit risk on its bank balance and receivables. The credit risk exposure on these instruments is not deemed to be signi�cant.

The fund’s maximum exposure to credit risk can be analysed as follows:

2013 2012 Rs.000 Rs. 000NAMAL Acuity Value Fund - Investments Conservative 44,261 154Balanced 47,984 192,691Growth 880,173 683,998

(d) Market risk

Market risk represents the risk that the value of the fund’s investments portfolios will �uctuate as a result of changes in market prices.

This risk is managed by ensuring that all investment activities are undertaken in accordance with established mandate limits and investments strategies. As such, Unit Holders can manage this risk through their choices of which investment portfolios to participate in.

The fund uses a range of di�erent fund managers for investment assets. Where a Unit Holder is invested in more than one investment portfolio, this reduces the impact of a particular manager underperforming. Within the underlying investment portfolio, diversi�cation is achieved at a number of levels. The diversi�ed portfolios are invested across a range of investment sectors. Within each sector of the diversi�ed portfolios, the fund managers invest in a variety of securities.



38

Price risk

Price risk is the risk that the fair value of the fund’s investment in trading securities will �uctuate as a result of changes in the price of the fund’s investments in trading securities. Price risk exposure arises from the fund’s investment portfolios.

The table below shows the impact on the statement of comprehensive income and statement of �nancial position due to a reasonably possible change in the price of the fund’s investment in trading securities in note 5, with all other variables held constant:

The above �gures are calculated across the entire investment portfolio on an annual basis. There is a corresponding change to the fair value of trading securities within the statement of �nancial position.

Interest rate risk

Interest rate risk is the risk that the value of a �nancial instrument will �uctuate as a result of changes in market interest rates.

The fund’s exposure to interest rate risk primarily arises from changes in interest rates applicable to the balance held at the bank and the listed debentures.

Foreign exchange risk

Foreign exchange risk is the risk that value of a �nancial instrument will �uctuate as a result of changes in foreign exchange rates.

The fund is not exposed to foreign exchange risk since the �nancial instruments of the fund denominated in Sri Lankan Rupees.

(e) Liquidity risk

Liquidity risk is the risk that the fund will encounter di�culty in raising funds to meet its obligation to pay Unit Holders.

Due to the nature of a unit trust, it is unlikely that a signi�cant number of Unit Holders would exit at the same time. However, to control liquidity risk, the Fund investments in �nancial instruments, which under normal market conditions are readily convertible to cash. In addition, the fund invests within established limits to ensure there is no concentration of risk.

Payables have no contractual maturities but are typically settled within �ve market days. Receivables outstanding at balance date are due to be settled within seven market days of balance date. Due to the short term nature of these �nancial instruments, carrying value approximates fair value. The e�ect of discounting is not signi�cant as there is little di�erence between undiscounted and discounted cash �ows.


31 March 2013

Increase/ (decrease)in pro�t before taxRs. 000

Increase/ (decrease)in net assetsattributable toUnit HoldersRs. 000

31 March 2012

Increase/ (decrease)in pro�t before taxRs. 000

Increase/ (decrease)in net assetsattributable toUnit HoldersRs. 000Change in price

of the fund’sinvestment intrading securities:

+10%-10%

86,060 86,060 65,522 65,522(86,060) (86,060) (65,522) (65,522)


39


4.1 Reconciliation of equity as at 01 April 2011 (date of transition to SLFRS's)

Notes SLAS Reclassi�cation Remeasurements SLFRSRs. Rs. Rs. Rs.

ASSETS

Equity investments 1,046,788,040 (1,046,788,040) - - Financial assets - Held for trading A - 1,046,788,040 - 1,046,788,040

Treasury bill repurchase agreements 61,471,307 11,621 - 61,482,928 Financial assets - Loans and receivables A 61,471,307 11,621 - 1,108,270,968

CURRENT ASSETSAccrued income and other receivables A 26,961,717 (11,621) - 26,950,096 Income tax recoverable 1,579,639 - - 1,579,639 Cash and cash equivalents 365,831 - - 365,831

28,907,187 (11,621) - 28,895,566

1,137,166,534 - - 1,137,166,534

UNIT HOLDERS' FUNDS AND LIABILITIESLiabilitiesAccrued expenses 1,268,103 - - 1,268,103

1,268,103 - - 1,268,103 Unit Holders' Funds BUnit capital 524,121,000 611,777,431 - 1,135,898,431 Net realised gains 160,231,861 (160,231,861) - - Net unrealised appreciation 443,519,621 (443,519,621) - - Income account 8,025,949 (8,025,949) - -

1,135,898,431 - - 1,135,898,431

1,137,166,534 - - 1,137,166,534

4. FIRST-TIME ADOPTION OF SLFRS's These �nancial statements, for the year ended 31st March 2013, are the �rst �nancial statements the fund has prepared in accordance with SLFRS. For periods up to and including the year ended 31 March 2012, the fund prepared its �nancial statements in accordance with Sri Lanka Accounting Standards (SLAS).

Accordingly, the fund has prepared �nancial statements which comply with SLFRS applicable for periods ending on or after 31 March 2013, together with the comparative period data as at and for the year ended 31 March 2012, as described in the accounting policies. In prepar-ing these �nancial statements, the fund’s opening statement of �nancial position was prepared as at 1 April 2011, the fund's date of transition to SLFRS. This note explains the principal adjustments made by the fund in restating its SLASs statement of �nancial position as at 1 April 2011 and its previously published SLASs �nancial statements as at and for the year ended 31 March 2012.


40


4. FIRST-TIME ADOPTION OF SLFRS's (contd..)

4.2 Reconciliation of equity as at 31 March 2012 Notes SLAS Reclassi�cation Remeasurements SLFRSRs. Rs. Rs. Rs.

ASSETS

Equity investments 665,224,000 (665,224,000) - - Fixed income Investments 18,190,880 (18,190,880) - - Financial assets - Held for trading A - 683,998,277 - 683,998,277

Fixed income investments 115,931,728 937,591 - 116,869,319 Placements with other banks 75,200,000 621,410 75,821,410 Treasury bill repurchase agreements 154,080 72 - 154,152 Financial assets - Loans and receivables A 191,285,808 1,559,073 - 192,844,881

CURRENT ASSETSAccrued income and other receivables A 2,892,470 (2,142,470) - 750,000 Income tax recoverable 3,092,442 - - 3,092,442 Cash and cash equivalents 115,887 - 115,887

6,100,799 (2,142,470) - 3,958,329

880,801,487 - - 880,801,487

UNIT HOLDERS' FUNDS AND LIABILITIESLiabilitiesAccrued expenses 1,122,857 - - 1,122,857

1,122,857 - - 1,122,857 Unit Holders' Funds BUnit capital 524,121,000 355,557,630 - 879,678,630 Net realised gains 345,669,173 (345,669,173) - Net unrealised appreciation/(depreciation) (3,774,701) 3,774,701 - Income account 13,663,158 (13,663,158) - -

879,678,630 - - 879,678,630 880,801,487 - - 880,801,487

4.3 Reconciliation of total comprehensive income for the year ended 31 March 2012

Notes SLAS Reclassi�cation Remeasurements SLFRSRs. Rs. Rs. Rs.

Gross income 31,703,052 - - 31,703,052 Net realised gains on �nancial assets held for trading C - 200,015,383 - 200,015,383Net change in unrealised losses on �nancial assets held for trading C - (447,294,322) - (447,294,322)Total investment income 31,703,052 (247,278,939) (215,575,887)

Expenses (13,636,380) - - (13,636,380)

Distribution to Unit Holders (26,878,000) - - (26,878,000)

Pro�t after deductions before tax (8,811,328) (247,278,939) - (256,090,267)

Taxation (129,534) - - (129,534) Pro�t after tax (8,940,862) (247,278,939) - (256,219,801)

Net realised gains C 200,015,383 (200,015,383) - - Net unrealised depreciation in valuation of investments at market value C (447,294,322) 447,294,322 - -

Decrease in net assets attributable to Unit Holders (256,219,801) - - (256,219,801)


41


4. FIRST-TIME ADOPTION OF SLFRS's (contd..) Notes to the reconciliation of equity of the fund as at 1 April 2011 and 31 March 2012 and total comprehensive income for the year ended 31 March 2012

A Financial Instruments

In the previous �nancial year, Treasury bill repurchase agreements and �xed income investments (commercial papers and placements with other banks) were accounted as investments and the accrued interest on such investments were accounted as accrued income and other receivables (2012 - Rs.1,559,073/- ) (2011 - Rs.11,621/-). Under SLFRS, Loans and receivables which falls in the de�nition of LKAS 39 need to be disclosed separately at amortised cost using e�ective interest rate, accordingly have been reclassi�ed the interest receivable as Loans and receivables. In the previous �nancial year, accrued interest on quoted debentures were accounted and disclosed as accrued income and other receiva-bles. Following the adoption of SLFRS, accrued interest on such was classi�ed and recorded as part of the �nancial asset to record at the fair value. As per SLFRS equity investments in quoted shares and quoted debentures, were classi�ed as held for trading. B Unit Holders' Funds In the previous �nancial year, realised gains and unrealised appreciation/(depreciation) on quoted equity securities and debentures have been disclosed and accounted in separate accounts in the balance sheet in accordance with Recommended Accounting Practice for Open Ended Unit Trust issued by Institute of Chartered Accountants of Sri Lanka (ICASL). Since Recommended Accounting Practice for unit trusts issued would be withdrawn and ICASL has requested to adopt SLFRS for unit trust, the realised gains and unrealised appreciation/(depreciation) is shown in Unit Holders' Funds.

C Realised gain/(loss) and unrealised appreciation/(depreciation) on �nancial assets held for trading In the previous �nancial year, realised gain/(loss) and unrealised appreciation/(depreciation) on marketable securities were classi�ed separately in the statement of total return. Upon the adoption of SLFRS, such is classi�ed as part of the investment income, in the statement of comprehensive income as 'realised gain/(loss) on �nancial assets held for trading and net change in unrealised gain/(loss) on �nancial assets held for trading'.


42


As at 5. FINANCIAL ASSETS - HELD FOR TRADING 2013 2012 1 April 2011

Rs. Rs. Rs.Quoted equity securities (5.1) 860,601,010 665,224,000 1,046,788,040Debt securities - quoted debentures (5.2) 19,571,646 18,774,277 -

880,172,656 683,998,277 1,046,788,0405.1 Quoted equity securities

Cost as at 31 March 868,309,056 667,189,581 603,268,420 (Depreciation) /appreciation of market value quoted equity securities (7,708,046) (1,965,581) 443,519,620 Market value as at 31 March 860,601,010 665,224,000 1,046,788,040

2013 2012 1 April 20115.1.1 Company Number of Market Holdings Number of Market Holdings Number of Market Holdings

Shares Value as a % of Shares Value as a % of Shares Value as a % of Net Asset Net Asset Net Asset

Rs. Value Rs. Value Rs. ValueBanks, Finance and InsuranceCentral Finance Company PLC 5,166 929,880 0% 5,166 884,935 0% 1,000 1,273,700 0%Commercial Bank of Ceylon PLC - Non Voting 385,188 37,324,717 4% 1,082,756 86,620,480 10% 500,000 82,800,000 7%Commercial Bank of Ceylon PLC - Voting 675,000 76,275,000 8% - - - - - -Hatton National Bank PLC - Non Voting 350,000 58,555,000 6% 450,000 42,525,000 5% 300,000 63,990,000 6%National Development Bank PLC 22,600 2,775,280 0% 11,300 3,846,520 0%Union Bank of Colombo PLC 1,215,789 20,668,413 2% 1,004,600 17,580,500 2% 4,600 164,680 0%

People's Leasing and Finance Company PLC (Previously named as People's Leasing Company) 1,198,600 15,701,660 2% 1,198,600 13,903,760 2% - - - Sampath Bank PLC 100,000 22,490,000 2% - - - - - -

231,944,670 24% 164,289,955 19% 152,074,900 13%

Beverages, Food and TobaccoCeylon Tobacco Company PLC - - - - - - 90,000 32,220,000 3%Distilleries Company of Sri Lanka PLC 626,400 104,295,600 11% 520,900 75,530,500 9% 270,900 48,762,000 4%Lion Brewery Ceylon PLC 200,000 66,600,000 7% 200,000 39,900,000 5% - - - Renuka Agri Foods PLC 8,220,240 33,702,984 3% 5,871,600 35,229,600 4% - - -

204,598,584 21% 150,660,100 17% 80,982,000 7%

Chemicals and Pharmaceuticals CIC Holdings PLC 118,000 7,198,000 1% 118,000 11,280,800 1% 200,000 31,000,000 3%

7,198,000 1% 11,280,800 1% 31,000,000 3%

Construction and EngineeringAccess Engineering Limited 615,000 12,115,500 1% - - - - - -

12,115,500 1% - - - -

Diversi�ed HoldingsCT Holdings PLC (Previously named as Ceylon Theaters PLC) 482,000 60,828,400 6% 553,800 83,125,380 9% 1,273,800 254,760,000 22%Hayleys PLC 118,100 35,276,470 4% 118,100 42,516,000 5% 88,100 33,663,010 3%John Keells Holdings PLC - - - - - - 261,200 74,598,720 7%Aitken Spence PLC - - - - - - 496,700 80,614,410 7%Free Lanka Capital Holdings PLC - - - 57,900 115,800 0% - - -

96,104,870 10% 125,757,180 14% 443,636,140 39%

Health Care Ceylon Hospitals PLC (Durdans) - Non Voting 800,000 60,080,000 6% 800,000 44,320,000 5% 800,000 64,080,000 6%Asiri Hospitals PLC 10,665,149 121,582,699 13% 5,250,000 39,900,000 5% - - -

181,662,699 19% 84,220,000 10% 64,080,000 6%

Hotels and TravelsAitken Spence Hotel Holdings PLC - - - - - - 1,400,000 137,200,000 12%Hotel Services (Ceylon) PLC 1,650,000 22,110,000 2% 1,650,000 28,710,000 3% 1,650,000 38,115,000 3%

22,110,000 2% 28,710,000 3% 175,315,000 15%

ManufacturingACL Cables PLC 500,000 32,750,000 3% 500,000 31,300,000 4% 500,000 47,000,000 4%ACME Printing & Packing PLC - - - - - - 1,500,000 31,950,000 3%Tokyo Cement Company Lank PLC - Non Voting 1,026,600 17,965,500 2% 1,026,600 27,718,200 3% - - -

50,715,500 5% 59,018,200 7% 78,950,000 7%

PlantationKegalle Plantations PLC 100,000 11,200,000 1% 100,000 10,300,000 1% 100,000 20,750,000 2%

11,200,000 1% 10,300,000 1% 20,750,000 2%Investment TrustsRenuka Holdings PLC 804,877 24,951,187 3% 804,877 30,987,765 4% - - -

24,951,187 3% 30,987,765 4% - -

TelecommunicationDialog Axiata PLC 2,000,000 18,000,000 2% - - - - -

18,000,000 2% - - - - Total value of quoted equity securities (At market value) 860,601,010 89% 665,224,000 76% 1,046,788,040 92%


43


5. FINANCIAL ASSETS - HELD FOR TRADING (contd..)

5.2 Quoted debentures

Cost Market Holding as a Cost Market Holding as a Cost Market Holding as aValue % of Net Value % of Net Value % of Net

Rs. Rs. Asset Value Rs. Rs. Asset Value Rs. Rs. Asset Value

Lanka Orix Leasing Company PLC20,000,000 19,571,646 2% 20,000,000 18,774,277 2% - - - 20,000,000 19,571,646 2% 20,000,000 18,774,277 2% - - -

5.3 Net realised in gains on �nancial assets held for trading 2013 2012Rs. Rs.

Equity securitiesProceeds on sale of equity shares 142,069,433 467,889,404 Average cost of equity shares sold (89,927,543) (267,874,021)

52,141,890 200,015,383

5.4 Net change in unrealised gains on �nancial assets held for trading

Equity securities (5,742,465) (445,485,202) Debt securities - quoted debentures 803,780 (1,809,120)

(4,938,685) (447,294,322)

6. FINANCIAL ASSETS - LOANS AND RECEIVABLES2012

Carrying Holding as a Carrying Holding as a Carrying Holding as aValue % of Net Value % of Net Value % of Net

Rs. Asset Value Rs. Asset Value Rs. Asset Value 6.1 Investments in commercial papers

Asia Capital PLC - - 25,204,447 3% - - Mercantile Investments and Finance PLC - - 43,256,812 5% - - People's Leasing and Finance Company PLC - - 39,812,330 4% - - Softlogic Finance PLC - - 8,595,730 1% - - Softlogic Holdings PLC 27,540,524 3% - - - -

27,540,524 3% 116,869,319 13% - - 6.2 Repurchase agreements

First Capital Treasuries Limited 14,087,002 1% - - - - Wealth Trust Securities Limited 30,174,843 3% 154,152 0% - - Seylan Bank PLC - - - - 61,482,928 5%

44,261,845 4% 154,152 0% 61,482,928 5%6.3 Placements with other banks - �xed deposits

Union Bank of Colombo PLC 20,443,521 2% 34,485,547 4% - - DFCC Bank - - 41,335,863 5% - -

20,443,521 2% 75,821,410 9% - -

92,245,890 9% 192,844,881 22% 61,482,928 5%

2013 As at 1 April 2011

2013 2012 As at 1 April 2011


44


As at 31 March 2013 Level 1 Level 2 Level 3 TotalRs. Rs. Rs. Rs.

Financial assets - Held for trading

Quoted equity investments 860,601,010 - - 860,601,010 Quoted debentures - 19,571,646 - 19,571,646

As at 31 March 2012

Financial assets - Held for trading

Quoted equity investments 665,224,000 - - 665,224,000 Quoted debentures - 18,774,277 - 18,774,277

8. ACCRUED INCOME AND OTHER RECEIVABLES As at2013 2012 1 April 2011Rs. Rs. Rs.

Dividend receivable 6,932,575 750,000 1,950,096 Share application - - 25,000,000

6,932,575 750,000 26,950,096

As at9. ACCRUED EXPENSES 2013 2012 1 April 2011

Rs. Rs. Rs.

Fund management fee payable 816,344 839,690 919,363 Trustee and Custodian fee payable 205,691 190,767 213,934 Audit fee 101,920 92,400 84,000 Withholding tax payable on management fees - - 48,388 Debit tax payable - - 2,418

1,123,955 1,122,857 1,268,103

7. FAIR VALUE OF FINANCIAL INSTRUMENTS Determination of fair value and fair value hierarchy SLFRS 7 Financial Instruments: Disclosures require fair value measurements to be disclosed by the source of inputs, using a three level hierarchy. The hierarchy for measuring fair value consists of Levels 1 to 3: Level 1 – An investment in a fund is classi�ed in Level 1 of the hierarchy when that investment is quoted in an active market and measured at the unadjusted quoted price at the reporting date. Level 2 – An investment in a fund is classi�ed in Level 2 of the hierarchy when that investment is measured using inputs that are directly observable at the reporting date.

Level 3 – An investment in a fund is classi�ed in Level 3 of the hierarchy when the investment is measured using unobservable inputs at the reporting date.

The following table shows an analysis of �nancial instruments recorded at fair value by level of the fair value hierarchy:


45


2013 201210. INVESTMENT INCOME Rs. Rs.

10.1 Dividend income 25,669,988 16,076,610

10.2 Interest incomeInterest on Treasury bill repurchase agreements (10.2.1) 4,460,818 8,645,805 Interest on Treasury bills (10.2.1) 503,339 - Interest on �xed deposits 3,292,355 621,409 Interest on trust certi�cates - 324,853 Interest on commercial papers 23,362,824 4,490,783 Interest on debentures 2,340,000 1,543,592 Interest on savings 62,147 -

34,021,483 15,626,442

10.2.1

11. INCOME TAX 2013 2012Rs. Rs.

11.1 Tax expense for the year 1,475,801 129,534 1,475,801 129,534

11.2

Operating pro�t before tax 93,869,944 (229,212,267) Aggregate allowable expenses/ net gains (47,266,031) 247,278,939Allowable tax credits (25,669,988) (16,076,610) Total statutory income 20,933,925 1,990,062

Utilisation of previously unrecognised tax losses (6,175,913) (696,522) Taxable income 14,758,012 1,293,540

Income tax at the rate of 10% (2012 - 10%)Income tax expense reported in the Statement of Comprehensive Income 1,475,801 129,354

Carried forward unutilised tax losses 6,175,913 6,872,435 Less: Tax losses claimed (6,175,913) (696,522) Brought forward unutilised tax losses - 6,175,913

12. DISTRIBUTION

The fund announced and paid the following dividends during the year.

Dividend per Unit No. of

units in issueTotal

Dividend

Rs. Rs.1.00 10,751,200 10,751,200

A reconciliation between the tax expense and the product of taxable pro�t multiplied by the statutory tax rate isas follows:

Interest income on Treasury bill repurchase agreements and Treasury bills have been recognised gross of notionaltaxes.

Date of declaration

23 October 2012


46


13. CONTINGENCIES There are no material contingencies existing as at the reporting date that require adjustments to or disclosures in the �nancial statements.

14. POST BALANCE SHEET EVENTS There have been no material events occurring after the reporting date that require adjustments to or disclosures in the �nancial statements. 15. CAPITAL COMMITMENTS The fund does not has signi�cant capital commitments as at the reporting date. 16. UNITS IN ISSUE AND UNIT PRICE Units in issue and deemed to be issue as at 31 March 2013 is 10,751,200.0 (2012 - 10,751,200.0 ) and the net asset value as at that date per unit was Rs. 89.16 (2012 - Rs. 81.82). 17. RELATED PARTY TRANSACTIONS 17.1 The following have been identi�ed as related party transaction of NAMAL Acuity Value Fund for the year ended 31 March in accord-ance with LKAS 24 - "Related Party Disclosures".

National Asset Management Ltd.(Managing Company)

Deutsche Bank(Trustee)

DFCC Bank

Fund has paid Rs.9,859,070/- (2012 - Rs. 9,563,024) as management & registrar fees during the year. The fee payable as at 31 March 2013 is Rs. 816,344/- (2012 - Rs. 839,690/-).

DFCC holds 30% of equity of National Asset Management Limited. Value of Units held by DFCC Bank in NAMAL Acuity Value Fund is Rs. 269,111,628/- (2012 - Rs. 246,987,489) No of units held is 3,018,300 units, (2012 - 3,018,300 units)"

Fund has paid Rs. 2,277,999/- (2012 - Rs. 2,297,488/-) as trustee and custodian fees during the year. The fee payable as at 31 March 2013 is Rs. 205,690/- (2012 - 190,767/-).

The Fund invested in a �xed deposit with DFCC Bank amounting to Rs. 41,000,000 during the year. Interest received during the year is Rs. 801,690/-

Mr. A. N. FonsekaMr. T. W. De Silva(Senior Vice President)

Nature of TransactionsNames of Directors / ManagersCompany / Fund


Fund has paid Rs.9,859,070/- (2012 - Rs. 9,563,024) as management & registrar fees during the year. The fee payable as at 31 March 2013 is Rs. 816,344/- (2012 - Rs. 839,690/-).

47


17. RELATED PARTY TRANSACTIONS (Contd..)

17.2

Name Relationship2013 2012

Mr. Alexis Lovell Chairman of NAMAL - -Mr.Ajith Wijeyesekera Deputy Chairman NAMAL - -Mr. Jitendrakumar Warnakulasuriya Director NAMAL - -Mr. Anil Amarasuriya Director NAMAL - -Mr. A.N. Fonseka Director NAMAL - -Mrs. R.D. Fonseka Spouse of Mr. A.N Fonseka Rs. 445,800/-

(5,000 Units)Rs. 409,150/- (5,000 Units)

Ms. M. Gunawardhene Alternate to Mr. A.N Fonseka - -Mr. T.W. de Silva Director NAMAL - -Mr. Avancka Herat Director NAMAL - -Ms. Khoo Siew Bee Director NAMAL - -

Unit Holdings of the related parties of NAMAL Acuity Value Fund as at 31 March is as follows.

Value of Unit Holding

Union Bank of Colombo PLC

Ennid Capital (Private) Limited

"Union Bank of Colombo PLC holds 51% (2012 - 51%)of equity of National Asset Management Limited."

"Ennid Capital (Pvt) Limited holds 19% (2012 - 19%) of equity of National Asset Management Limited."

The value of �xed deposit investments during the year with Union Bank of Colombo PLC is Rs. Rs. 95,150,164/-. Interest received during the year is Rs. 2,275,777/-.

Investment in �xed deposit as at 31 March 2013 is Rs. 20,443,521/-

Mr. Alexis LovellMr. Anil AmarasuriyaMr. Jitendrakumar Warnakulasuriya(Consultant)

Nature of TransactionsNames of Directors / ManagersCompany / Fund

Mr. Avancka Herat


48

UNIT INFORMATION

Analysis of Unitholders according to the Number of Units as at 31st March 2013

Units Range

Categories of Unit Holders

No. ofUnitholders

No. ofUnits

1-200 240 201-1,000 233 1,001-2,000 73 2,001-4,000 47 4,001-6,000 27 6,001-8,000 9 8,001-10,000 11 10,001-20,000 23 20,001-40,000 14 40,001- & Above 10

27,901154,053123,433144,952142,995

64,818110,000318,686363,362

9,301,000

0.261.43

Individuals 641Company 46

1,263,6599,487,541

11.7588.25

100.00

1.151.351.330.601.022.963.38

86.51

100.00

687 10,751,200

687 10,751,200

Share Price MovementThe market prices during the year Rs.

Highest Price 70.00Lowest Price 60.70Last Traded Price 64.20

Net Asset Value of a unit as at 31st March, 2013 89.16

Holding%

No. ofUnitholders

No. ofUnits

Holding%


49

List of 20 Major Unit Holders based on their unitholdings as at 31st March, 2013

Name No. ofUnits

Holding%

3,018,300 28.073,000,000 27.902,744,900 25.53

137,500 1.28100,000 0.93

80,000 0.7473,200 0.6855,100 0.5150,000 0.4742,000 0.3934,400 0.3231,540 0.2930,900 0.2925,525 0.2425,000 0.2325,000 0.2325,000 0.2325,000 0.2325,200 0.2325,200 0.23

DFCC BankHatton National Bank PLCCentral Finance Company PLCLife Insurance Corporation Lanka Ltd.Bartleet Mallory Stock Brokers (Pvt) Ltd.HNB Assurance Ltd (Life Insurance Fund)East West Properties PLCMr. W. A. D. U. C. PereraMr.W.K.G.N. PereraMrs. G. MuralidaranHNB Assurance Ltd (General Insurance Fund)Mr.J.R.De SilvaMerchant Bank of Sri Lanka Mr.K.S.M.De SilvaMr. A. N. DiasPerera and Sons Caterers (Pvt) LtdPerera and Sons Distributors (Pvt) LtdMr.S.M.SanganiSenkadagala Finance Company LtdSingalanka Standard Chemicals PLC


50

NATIONAL ASSET MANAGEMENT LIMITED

DIRECTORS

Mr Alexis Lovell – Chairman

Mr. Ajith Wijesekera- Deputy Chairman

Mr. Anil Amarasuriya

Mr. Jitendrakumar Warnakulasuriya

Mr. A N Fonseka(Alternate: Ms. M. Gunawardhene)

Mr. T W De Silva

Mr. Avancka Herat

Ms. Khoo Siew Bee

Corporate Information

UNIT TRUST INFORMATIONMANAGEMENT COMPANY

TRUSTEE & CUSTODIAN

AUDITORS

BANKERS

LAWYERS

National Asset Management Ltd7th Floor, Union Bank Head O�ce64,Galle Road ,Colombo 3.

Deutsche Bank AG86 Galle Road, Colombo 3.

Ernst and YoungChartered Accountants201, De Saram PlaceColombo 10.

Union Bank Of Colombo PLC64,Galle Road, Colombo 3

Deutsche Bank AG86, Galle Road, Colombo 3.

F J & G de SaramAttorneys-at-Law & Notaries Public216, De Saram Place, Colombo 10


51

Declaration By Trustees And Managing Company

Declaration by Trustee and Management Company as per SEC Circular No: 02/2009 on Guidelines for Trustees and Managing Companies of Unit Trusts Funds.

Deutsche Bank AG, the Trustee and National Asset Management Ltd, the Managers of the NAMAL Acuity Value Fund hereby declare that

The requirements of the Guidelines for Trustees and Managing Companies of Unit Trust Funds set by the Securities and Exchange Commission of Sri Lanka (SEC), the Trust Deed, the SEC Act, the Explanatory Memorandum, directives issued by the SEC from time to time have been complied with during the period.

The transactions were and will be carried out at an arm’s length basis and on terms which are best available for the fund, as well as act, at all times, in the best interest of the fund’s unit holders.

1.

2.

Deutsche Bank AG, the Trustee and National Asset Management Ltd, the Managers of the NAMAL Acuity Value Fund hereby declare that the requirements of the Trust Deed, the Securities and Exchange Commission of Sri Lanka Act No 36 of 1987, the Explanatory Memorandum, directives issued by the Securities and Exchange Commission from time to time have been complied with and is in compliance.

DECLARATION 1

DECLARATION 2

As per the section 4.3 c (iv) of the Listing Rule of the Colombo Stock Exchange.

……………………………..……………………………..



……………………………………………

Authorised SignatoriesTrustee

NAMAL Acuity Value Fund


"The SEC in approving this Annual Report has taken reasonable care to ensure the accuracyof the information included herein. However, National Asset Management Limitedis at all times responsible for the information included in this Annual Report"

National Asset Management Ltd.No.64 Galle Road, Colombo 03.T: 9411 2445911 www.namalfunds.com

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