Table of Contents. Report of the Investment Manager 01. Statement of Total Return 03. Balance Sheet 04. Statement of Movement in Unit Holders Fund 05

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2 Table of Contents Report of the Investment Manager 01 Statement of Total Return 03 Balance Sheet 04 Statement of Movement in Unit Holders Fund 05 Distribution Table 06 Investment Portfolio 07 Summary of Assets 08 Corporate Information 09

3 REPORT OF THE INVESTMENT MANAGER Dear Investor, We take pleasure in presenting the interim report of the NAMAL Growth Fund (NGF) for the six months ended 30 th September Fund Performance: Your Fund has comfortably outperformed the Milanka Price Index (MPI) during the period under review. However, the Fund has marginally underperformed the All Share Price Index (ASPI) over the same period, partly caused by artificially inflated prices of many illiquid shares included in the ASPI. Our aim is to outperform both indices over the long term. While the Fund s relative performance numbers are attractive, in absolute terms, returns on the Colombo Stock Exchange have been negative during the period, reflecting overall global outlook for equities and the performance of the fund reflects the same. Your Fund s performance vs. the Colombo Stock Exchange s ASPI and the MPI is as follows: Performance comparison between the ASPI, Milanka, and NGF As at 30 September Year to date 12 Months 24 Months 36 Months Index / Period 30 September 30 September March September ASPI (6.12%) (3.05%) % % MPI (12.07%) (19.96%) 83.33% % NGF (8.10%) (11.75%) 87.33% % Investment Strategy The Fund invests in large, low-moderately geared companies with attractive growth prospects. The fund will retain a high allocation to listed equities, with a low level of fixed income holdings that are primarily held for liquidity requirements. As expected, Sri Lankan equities have been highly volatile in the last 2H of We see a continuation of such volatility in the short term as global economic growth continues to contract. Despite the weak year-to-date performance, Sri Lanka equity returns have remained attractive despite the on-going stress in international financial markets. Therefore, we intend to retain a high equity allocation and ride-out short term market fluctuations. Portfolio composition: In terms of sector exposures, your portfolio has a large concentration in the Diversified Holdings and Banks, Finance, and Insurance sectors. Free from the shackles of terrorism the country s economy is growing very rapidly and financing industries play a critical role in that development by intermediating between household savings and business investment requirements. The concentration in the diversified holdings segment is tolerable due to the diversified nature of the underlying 1

4 companies. Companies in the diversified holdings sector are large corporations with sound balance sheets that are unlikely to face any material stress during a tightening credit market. Sector Market Value % Banks, Finance and Insurance 54,865, % Beverage, Food and Tobacco 37,470, % Chemicals and Pharmaceuticals 9,750, % Manufacturing 12,340, % Diversified Holdings 59,103, % Healthcare 34,932, % Hotels & Travels 21,776, % Investment Trust 12,238, % Plantations 10,250, % Power & Energy 1,628, % Total 254,356, % Market Outlook: The phenomenal returns on the Colombo Stock Exchange in 2009 and 2010 were based on expectations of real economic growth, following the end of the terrorist conflict. Robust macro economic data, sound fiscal indicators and political stability, lent support for equity valuations. These returns were also supported by declining interest rates and large excess liquidity in the banking system both of which helped to increase asset prices. The weak performance of ASPI in 2011 can be attributed to: 1) The draining out of excess reserves from the banking system, and resultant upward pressure on interest rates. Systemic liquidity is now dependent on foreign direct or portfolio inflows and injections into the system by the Central Bank of Sri Lanka. 2) Weaker Global macro conditions on-going European & US economic crisis, Japanese Tsunami and social unrest in the Middle East has weakened investor confidence 3) Emerging markets concerns- slowing exports growth to developed nations, inflationary pressure has led to large scale outflow of foreign portfolios 4) Sri Lanka Macro Concerns: Net Foreign outflow and tightening monetary policy. Despite these significant concerns, we remain bullish on the long term economic growth prospects in Sri Lanka and have retained a high allocation to equity in your portfolio despite near term risks. Over time, we expect real economic growth to reflect upward revaluation of equities in your portfolio. Sincerely The Fund Management Team 21 December

5 STATEMENT OF TOTAL RETURN For the six months ended 30th September INCOME Interest Income Dividend Income DIRECT EXPENSES Manager's & Registrar's Fees (2.70) (2.08) Trustee & Custody Fees (0.41) (0.30) Audit Fees (0.09) (0.09) Sundry Expenses (0.05) (0.03) (3.25) (2.50) Net Income before Taxation Taxation - (0.03) Net Income after Taxation Net realised gains/ (loss) for the period Net unrealised appreciation/(depreciation) for the period (46.55) Net gains/(loss) on investments (32.87) Total earnings for the period (31.41) Income Equalisation Income received on units created Income paid out on units redeemed (0.99) (0.47) (0.58) 1.54 Total Return for the period (31.99) Net increase/(decrease) in unit holders' funds from investment activities (31.99)

6 BALANCE SHEET As at 30th September Investments Investments in Shares Investments in Debentures Current Assets Cash & Bank Balances Treasury Bill Repurchase Agreements Dividend Receivable Income Tax Recoverable Receivable on unit creations Accrued Income Current Liabilities Management Fees Payable Trustee Fees Payable Audit Fees Payable Other Payables NET CURRENT ASSETS ASSETS EMPLOYED Represented By : Capital Account Unit Capital Net realised gains/ (loss) Net unrealised gains/ (loss) Undistributed Income Carried Forward Signed on behalf of the Management Company

7 STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND For the Six months ended 30th September Balance at the beginning of the period Movement due to Sale and Purchase of Units Received on creation of units Payments on cancellation of units (1.33) (0.70) (0.78) 2.35 Net increase/(decrease) in unit holders' fund from investment activities (31.99) Balance carried forward at the end of the period Net Assets Value per Unit Rs Rs Applicable to 2,994,404.8 units as at (Applicable to 3,047,296.5 units as at ) NOTES TO THE ACCOUNTS (a) (b) (c) All figures are provisional and unaudited Income is recognised on accrual basis Interest on repurchase agreements is shown together with the applicable notional tax credit which is set off against the income tax payable by the fund. (d) Forward pricing methods being used in creating and redeeming units (e) The profit and income of the fund is liable for income tax at the rate of 10% for the year of assessment 2011/2012 as specified in part A of the Second Schedule to the Inland Revenue Act No. 10 of

8 DISTRIBUTION TABLE 1st April 2011 to 30th September 2011 UNIT NET NET NET TOTAL CAPITAL REALISED UNREALISED INCOME GAINS/ APPRECIATION/ (LOSS) (DEPRECIATION) Balance as at Movement due to creation & redemption of Units Capital (0.78) (0.78) Capital Adjustment (1.15) (1.15) Income Equalisation (0.58) (0.58) Capital Gains/ (Loss) (4.54) (4.54) Net Income earned during the Period Gains during the Period Appreciation/ (Depreciation) (45.40) (45.40) During the period Distribution Balance at the end of the period

9 INVESTMENT PORTFOLIO As at 30th September 2011 LISTED SHARES No of Market % of Shares Value Assets (a) (b) (C) (d) (e) (h) (f) (g) (h) (i) Bank, Finance & Insurance Commercial Bank of Ceylon PLC 148, % Hatton National Bank PLC - NV 143, % Union Bank PLC 1, % Sampath Bank PLC 10, % Central Finance PLC 103, % Beverages, Food and Tobacco 407, % Distilleries Company of Sri Lanka PLC 100, % Lion Brewery PLC 100, % Bairaha Farms PLC - - Hotels and Travels 200, % Aitken Spence Hotel Holding PLC 182, % Hotel Services PLC 392, % Manufacturing 575, % ACL Cables PLC 121, % ACME PLC % Tokyo Cement PLC - NV 80, % Diversified Holdings 201, % Ceylon Theatres 159, % Free Lanka Capital holding PLC 22, % Aitken Spence PLC 45, % Hayleys PLC 60, % 287, % Investment Trust Ranuka holding PLC - V 197, % Plantation 197, % Kegalle Plantation PLC 50, % Horana Plantation PLC 75, % 125, % Chemicals & Pharmaceuticals CIC 75, % 75, % Health Care Durdans 100, % Durdans - Nv 54, % Asiri 2,200, % 2,355, % Power & Energy Laugfs Gass PLC 40, % 40, % Grand Total 4,464, % 7

10 SUMMARY OF TOTAL ASSETS As at 30th September 2011 Principal Market % of Amount Value Assets Debentures Shares - Listed % Sub Total % Other Investments and Receivables Treasury Bills & Repurchase Agreements % Income Tax Recoverable % Cash % Sub Total % Total % 8

11 CORPORATE INFORMATION Trustee & Custodian Deutsche Bank AG 86,Galle Road Colombo 03 Auditors Ernst & Young Chartered Accountants 201, De Saram Place Colombo 10 Bankers Deutsche Bank AG 86, Galle Road Colombo 03 Lawyers F J & G De Saram Attorneys-at-Law & Notries Public 216, De Saram Place Colombo 10 Managers & Registrars National Asset Management Limited (NAMAL) Tower 1, 3 rd Floor, Aitken Spence Building 305, Vauxhall Street Colombo 02 National Asset Management Limited Board of s (30 th September 2011) Mr. Ajita de Zoysa Chairman Mr. Alexis Lovell Mr. Anil Amarasuriya Mr. Jitendrakumar Warnakulasuriya Mr. Yui Joe Toh Ms. Khoo Siew Bee Mr. Avancka Herat Mr. Nihal Fonseka Mr. Tyrone de Silva Ms. Manohari Gunawardhena (Alternate) 9