AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016
FINANCIAL STATEMENTS For the year ended December 31, 2016
TABLE OF CONTENTS Page Independent Auditor s Report to the Shareholders 1 Management and Administration 2 Statement of Financial Position 3 Statement of Income and other Comprehensive Income 4 Statement of Changes in Net Assets attributable to holders of redeemable shares 5 Statements of Cash Flows 6 Notes to the Financial Statements 718
MANAGEMENT AND ADMINISTRATION Directors Mr. Igor Kokorev Mrs. Olga Tychkova The Administrative and Transfer Agent FOLIO ADMINISTRATORS LIMITED Folio Chambers P.O. Box 800 Road Town, Tortola British Virgin Islands The Fund CORUNDUM RUSSIA FUND LIMITED Folio Chambers P.O. Box 800 Road Town, Tortola British Virgin Islands The Brokers OTKRITIE SECURITIES LIMITED 12 th Floor, 88 Wood Street London UK The Investment Manager CORUNDUM MANAGEMENT COMPANY LIMITED Folio Chambers P.O Box 800 Road Town, Tortola British Virgin Islands Independent Auditors HLB Trinity Financial Services Ltd. 2 nd Floor, Hewlett Building Main Street Road Town, Tortola British Virgin Islands The Bank JSC Rietumu 7 Vesetas st., Riga, LV1013 Latvia 2
STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 Class A NOTE 2016 2015 INCOME Dividend income Net realised gains/(losses) on financial assets and liabilities held at fair value through profit or loss Net changes in fair value on financial assets and liabilities held at fair value through profit or loss Net foreign currency gains/(losses) on financial assets and liabilities $ 595,258 400,196 3,973,825 536,917 $ 526,197 (279,221) 1,016,848 (617,437) TOTAL OPERATING INCOME 5,506,196 646,387 EXPENSES Management fee Administration and transfer agent fee Professional fees Custodian fee Trading fee Other expense 6 6 8 263,058 15,100 7,350 1,662 63,044 90,592 17,300 9,200 2,220 3,017 9,141 TOTAL OPERATING EXPENSES 350,214 131,470 INCREASE IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SHARES $ 5,155,982 $ 514,917 The accompanying notes are an integral part of these financial statements 4
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUABLE TO HOLDERS OF REDEEMABLE SHARES FOR THE YEAR ENDED DECEMBER 31, 2016 Class A NOTE 2016 2015 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SHARES AT BEGINNING OF YEAR $ 8,325,396 $ 8,949,042 Issue of redeemable shares Redemption of redeemable shares Net Increase in net assets attributable to holders of redeemable shares 158,339 (407,151) 5,155,982 191,298 (1,329,861) 514,917 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SHARES AT END OF YEAR $ 13,232,566 $ 8,325,396 The accompanying notes are an integral part of these financial statements. 5
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 Class A NOTE 2016 2015 CASH FLOW FROM/ (USED IN) OPERATING ACTIVITIES Increase (decrease) in net assets attributable to holders of redeemable shares Net realised gains on financial assets and financial liabilities at fair value through profit or loss Net unrealised movement on financial assets and financial liabilities at fair value through profit or loss $ 5,155,982 (507,469) (3,973,825) $ 514,917 (66,787) (1,016,848) 674,688 (568,718) Adjustments to reconcile change in net assets attributable to Redeemable Shares resulting from operations to cash provided by (used in) operating activities: Net purchase of financial assets and financial liabilities at fair value through profit or loss Net decrease in management fee payable Net decrease in accrued expenses (695,464) 175,776 7,200 (1,697,111) (9,278) (1,853) (512,488) (1,708,242) NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 162,200 (2,276,960) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of Redeemable Shares Payments made on redemptions of Redeemable Shares 158,339 (407,151) 191,298 (1,329,861) NET CASH USED IN FINANCING ACTIVITIES (248,812) (1,138,563) NET DECREASE IN CASH AND CASH EQUIVALENTS (86,612) (3,415,523) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 819,972 4,235,495 $ 733,360 $ 819,972 Represented by: Cash and cash equivalents $ 26,511 $ 37,902 Due from brokers $ 706,849 $ 782,070 The accompanying notes are an integral part of these financial statements. 6
1. General Information Corundum Russia Fund Limited (The Fund ) was incorporated in the British Virgin Islands on March 29, 2012. The Fund is recognised under the BVI Securities and Investment Business Act, 2010 ( SIBA ) as a professional fund. The Fund commenced trading on December 27, 2012. The address of its registered office is at Folio Corporate Services Limited, Folio Chambers, Road Town, Tortola, British Virgin Islands. The Fund s principal investment objective for the Class A shares is to achieve a high rate of return from investments that provide a combination of reliable income, opportunity for growth and protection of capital. The Class has implemented a disciplined, consistent value investment strategy in quoted equities on the RTS, MICEX and RTS Board trading systems. The Class invests in a wide range of assets, primarily in shares in Russian small capitalization companies. The Fund s investment activities are managed by Corundum Management Company Limited (the Investment Manager ) with the administrative and transfer agent services provided by Folio Administrators Limited (the Administrative and Transfer agent ). The Directors of the fund are Mr. Igor Kokorev and Mrs. Olga Tychkova (collectively the Board of Directors ). 2. Significant accounting policies (a) Basis of preparation The Fund s financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and interpretation adopted by the International Accounting Standard Board ( IASB ). The financial statements have been prepared on the historical cost basis except for the revaluation of financial assets and financial liabilities at fair value through profit or loss. The Fund s financial statements are presented in United States ( US ) Dollars, which is the Fund s functional and presentation currency. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Fund considers the characteristics of the asset and liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement or disclosure purposes in these financial statements is determined on such a basis. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurement are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability 7
2. Significant accounting policies (continued) (b) Standards, amendments and interpretations to existing standards effective and relevant to the Fund for the current year Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities The amendment to IAS 32 Offsetting Financial Assets and Financial Liabilities clarify the requirements relating to the offsetting of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of currently has a legal enforceable right of setoff and simultaneous realisation and settlements. As the Fund, does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments has had no impact on the disclosures or the amounts recognised in the Fund s financial statements. The Fund has assessed whether certain of its financial assets and financial liabilities qualify based on the criteria set out in the amendments and concluded that the application of the amendments has had no impact on the amounts recognised in the Fund s financial statements. (c) Standards, amendments and interpretations to existing standards in issue but not yet effective and relevant to the Fund The following new standards, interpretations and amendments, which have not been applied in these financial statements will or may have an effect of the Fund s future financial statements: IFRS 9, Financial Instruments IFRS 9 issued in November 2009 introduced new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in October 2010 to include requirements for the classification and measurements of financial liabilities and for derecognition, and in November 2013 to include the requirements for general hedge accounting. Another revised version of IFRS 9 was issued in July 2014 mainly to include (a) impairment requirements for financial assets and (b) limited amendments to the classification and measurement requirements by introducing a fair value through other comprehensive income (FVTOCI) measurement category for certain simple debt instruments. All recognised financial assets that are within the scope of IFRS 39 Financial Instruments Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt instruments that are held within a business model whose objective is to collect the contractual cash flows, and have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised costs at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms in the financial asset that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt instruments and equity instruments are measured at fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity instrument (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. About the measurement of financial liabilities designated at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that are attributable to changes in the credit risk of that financial liability is presented in other comprehensive income, unless the recognition of the effects of the changes in the liability s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in fair value of the financial liability designated at fair value through profit and loss is presented in profit or loss. 8
2. Significant accounting policies (continued) In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under IAS39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. The directors of the Fund do not anticipate that the application of IFRS 9 in the future will have a material impact on amounts reported in respect of the Fund s financial assets and financial liabilities. (d) Use of estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be judgment about carrying values of assets and liabilities that are not clear from other sources. Actual result could differ from those estimates. (e) Securities transactions and revenue recognition Purchases and sales of financial instruments are accounted for on a trade date basis. Realised gains and losses on disposals of financial instruments are calculated using the average cost method and are included in net realised gains/losses on financial assets at fair value in the statement of income and other comprehensive income. Interest is recorded on the accrual basis and includes the amortisation of any discount or premium between the initial carrying amount of an interestbearing instrument and its amount at maturity calculated on an effective interest rate basis. Dividend income and expense from financial assets and financial liabilities at fair value through profit and loss are recognised when the Fund s right to receive payments or the Fund s obligation is established, usually the exdividend date. (f) Financial instruments Financial assets and financial liabilities at fair value through profit and loss ( FVTPL ) Upon initial recognition, the Fund classifies all its investments in equities into the financial assets or financial liabilities at FVTPL and are all considered to be held for trading. Loan and receivables These assets are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Cash and cash equivalents The Fund considers cash at bank, shortterm deposits and other shortterm highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Due from broker The Fund has prime brokerage agreements with its brokers to carry its accounts as a customer. Amounts due from broker represent cash, margin debit balances, shortterm receivables for securities sold and payables for securities purchased that have been contracted for but will be settled or delivered within three months of the financial statements respectively. 9
2. Significant Accounting Policies (continued) Redeemable shares and net assets attributable to holders of redeemable shares Redeemable Shares are classified as financial liabilities. Redeemable Shares are redeemed at the holder s option at prices based on the Fund s net assets value per share at the time of issue or redemption. The Fund s net asset value per share is calculated by dividing the net assets attributable to the holders of each class Redeemable Shares with the total number of outstanding redeemable share for each respective class activated. Other financial liabilities Financial liabilities that are not classified as at FVTPL nor classified as an equity instrument include accrued expenses. (g) Initial Measurement Financial assets and liabilities categorised at FVTPL are measured initially at fair value, with transaction costs for such instruments being recognised in the statement of income and other of comprehensive income. Loans and receivable and financial liabilities, other than those at fair value through profit or loss, are measured initially at fair value plus transaction costs that are directly attributable to their acquisition or issue. (h) Subsequent measurement After initial measurement, the Fund measures financial instruments which are classified at fair value through profit or loss at fair value. They are carried in the statement of financial position at fair value with changes in the fair value recognised in the statement of income and other comprehensive income. Except in the case of any interest in a unit trust, mutual fund, corporation, openended investment vehicle or other managed fund, the value of securities which are quoted or dealt on any stock exchange will be based in respect of each security on the last available traded price in the relevant market on the valuation day. For securities listed on the Moscow Exchange Main Market, the Fund will make use of the Market Price 3 published on the applicable valuation day if available, or will make use of the best bid price available on Moscow Exchange Classica, the RTS Classica or the RTS Board on the applicable valuation day. The value of each interest in any managed fund shall be the last published net asset value per unit, share or other interest in such managed fund (where available) or (if the same is not available) the last published redemption or bid price for such unit, share or other interest. For securities, which are not readily marketable, valuations will be determined in good faith by the Investment Manager, in consultation with the Board of Directors, using appropriate valuation technique. These valuation techniques may include reference to recent transactions for similar instruments or discounted cash flow analysis. Loan and receivable and financial liabilities, other than those at fair value through profit or loss, are subsequently measured at amortised cost using the effective interest method. (i) Derecognition The Fund derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset. A financial liability is derecognized when the obligation specified the contract is discharged, cancelled or expired. (j) Offsetting Financial assets and liabilities are offset and the net amount recorded in the statements of financial position if, and only if, there is a legally enforceable right to offset the recognized amounts and there is the intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. 10
2. Significant Accounting Policies (continued) (k) Foreign currency translation Assets and liabilities denominated in currencies other than United States ( US ) dollars are translated in US dollars at the exchange rate ruling at the dates of statement of financial position. Transactions in foreign currencies are translated into US dollars at the rates approximating those in effect at the transaction date. Exchange differences, if any, resulting from translation of investment and translation of other assets and liabilities are presented separately in the statement of income and other comprehensive income within net foreign currency losses on financial assets and liabilities. (l) Allocation of changes in net asset value Changes in the net asset value of the Fund are allocated quarterly to each shareholder based on the value of their respective share balances at the beginning of each allocation period. (m) Taxation There is currently no taxation imposed on income or capital gains by the Government of the British Virgin Islands. The only taxes payable by the Fund are withholding taxes applicable to certain investment income, which are presented separately in the statement of income and other comprehensive income. At December 31, 2016, the Fund did not pay any withholding taxes. 11
3. Financial assets at fair value through profit or loss ( FVTPL ) Cost 2016 Fair Value 2016 Equity securities 12,944,023 12,715,583 Total 12,944,023 12,715,583 Cost 2 015 2015 Fair Value Equity securities 11,741,091 7,538,825 Total 11,741,091 7,538,825 The Table below analyses financial assets carried at fair value, by valuation method. The different levels have been defined as follows: Level 1 quoted price (unadjusted) in active markets for identical assets; Level 2 Inputs other that quoted prices included within Level 1 that are observable for the asset, either directly (as prices) or indirectly (derived from prices); and Level 3 Inputs for the asset that are not all based on observable market data (unobservable inputs) 2016 Level 1 Level 2 Level 3 Total Equity securities 12,064,717 650,866 12,715,583 Total 12,064,717 650,866 12,715,583 2015 Level 1 Level 2 Level 3 Total Equity securities 7,275,627 263,198 7,538,825 Total 7,275,627 263,198 7,538,825 The determination of what constitutes observable requires significant judgment by the Fund. The Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. 4. Share capital and redeemable shares The Fund is authorised to issue 12,000,000.00 shares divided into the following classes of shares Voting Ordinary Shares Authorized and Issued number of shares Total Par Value USD Ordinary shares of USD 0.01 par value each 1,000 10 The Fund may issue fractional shares and a fractional share shall have the same corresponding fractional rights, obligations, liabilities, limitations, preferences, privileges, qualifications, restrictions and other attributes of a whole share of the same class or series of shares. 12
4. Share capital and redeemable shares (continued) Participating redeemable shares as at December 31, 2016 Class A: of USD 0.01 each Small Cap Russia Class B: of USD 0.01 each Class C: of USD 0.01each Class D: of USD 0.01 each Class E: of USD 0.01 each Class F: of USD 0.01 each Class G: of USD 0.01 each Class H: of USD 0.01 each Class I: of USD 0.01 each Class J: of USD 0.01 each Class K: of USD 0.01 each Class L: of USD 0.01 each Authorized number of shares 999,000 Number of shares in issue 118,927.379 Total par value USD 1,189 Class A shares outstanding at December 31, 2015 Class A shares issued Class A Shares redeemed 2016 122,369.411 1,673.941 (5,115.973) Class A shares outstanding at December 31, 2016 118,927.379 Participating redeemable shares as at December 31, 2015 Class A: of USD 0.01 each Small Cap Russia Class B: of USD 0.01 each Class C: of USD 0.01each Class D: of USD 0.01 each Class E: of USD 0.01 each Class F: of USD 0.01 each Class G: of USD 0.01 each Class H: of USD 0.01 each Class I: of USD 0.01 each Class J: of USD 0.01 each Class K: of USD 0.01 each Class L: of USD 0.01 each Authorized number of shares 999,000 Number of shares in issue 122,369.411 Total par value USD 1,224 Class A shares outstanding at December 31, 2014 Class A shares issued Class A Shares redeemed 2015 138,899.762 2,700.000 (19,230.351) Class A shares outstanding at December 31, 2015 122,369.411 13
5. Net asset value per participating redeemable share The Fund s net asset value per share is calculated by dividing the net assets attributable to the participating redeemable shareholders by the total number of participating redeemable shares outstanding. 2016 Total assets USD Total liabilities USD Net assets USD Number of shares NAV per share USD Class A 13,448,943 216,377 13,232,566 118,927.379 111.266 2015 Total assets USD Total liabilities USD Net assets USD Number of shares NAV per share USD Class A 8,358,797 33,401 8,325,396 122,369.411 68.035 6. Related party transactions and balances The Investment Manager and the Fund are considered related parties by having common directors. (a) Management fees Class A The Fund pays the Investment Manager a management fee calculated on 1% per annum of the net asset value of the Class A participating redeemable shares pursuant to an investment management agreement dated September 17, 2012. The management fee is calculated and payable at the end of each quarter. For the year ended December 31, 2016, a total management fee of $ 93,252 (2015: $90,592) was incurred, of which $ 28,124 (2015: $ 22,154) was payable at the reporting date. (b) Performance fee Class A The Fund also incurs a performance fee which is payable to the Investment Manager and is equal to 15% per annum of the increase in the NAV over the highest NAV of the Class A redeemable participating shares over any previous reporting period. For the period ended December 31, 2016, the performance fee expense was $ 169,806 (2015: NIL). (c) Initial charge The Board of Directors may authorise the Investment Manager to make an initial subscription charge to investors up to 5% on all subscriptions in Class A participating redeemable shares. For the period ended December 31, 2016, the initial subscription charge was NIL (2015: NIL). 14
7. Accrued expenses 2016 2015 Administrative and transfer agent fee $ 11,250 $ 3,750 Audit fees 7,047 6,997 Professional fees 150 500 Total $ 18,447 11,247 8. Administrative and transfer agent fee The fund has engaged the services of Folio Administrators Limited, a company incorporated under the laws of the British Virgin Islands to provide administrative and transfer agent services for its Class A participating redeemable shares. The fees for the services are charged on a scale of 0.10% per annum on the first US$25 million of the net asset value of the Class A, 0.08% per annum of the net asset value betweenus$25 million and US$50 million and 0.06% per annum on the net assets over US$50 million, subject to a minimum quarterly fee of US$3,750. These fees are payable quarterly in advance. For the period ended December 31, 2016, the total administrative and transfer agent fee incurred was $ 15,100 (2015: $ 17,300). The administration and transfer agent fee payable at the reporting date is $ 11,250 (2015: $3,750) which is included in the accrued expenses payable at the reporting date. 9. Financial instruments and associated risks The Fund s investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risks to which the Fund is exposed are market risk, credit risk and liquidity risk. Market risk includes price risk, interest rate risk and foreign currency risk. The Fund manages these risks on an aggregate basis along with the risk associated with its investing activities as part of its overall risk management policies. The nature and extent of the financial instruments outstanding at the dates of the statements of financial position and the risk management policies employed by the Fund are discussed below. (a) Market risk Price risk Price risk is the risk that the value of the equity securities will fluctuate because of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. The Fund is exposed to price risk on its financial assets and financial liabilities at FVTPL; this arises from investments held by the Fund for which prices in the future are uncertain. The Investment Manager is responsible for continuously monitoring the Fund s exposure to price risk. At December 31, 2016, the fair value of investments exposed to price risk was as follows: Fair Value 2016 % of net assets 2016 Equity securities 12,715,583 96.09% Total $ 12,715,583 96.09% 15
9. Financial instruments and associated risks (continued) At December 31, 2015, the fair value of investments exposed to price risk was as follows: Fair Value 2015 % of net assets 2015 Equity securities 7,538,825 90.55% Total $ 7,538,825 90.55% Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Fund s financial assets and liabilities are noninterest bearing except for cash and cash equivalents and due from brokers. At December 31, 2016, the cash and cash equivalents and amounts due from brokers are not subject to significant interest rate risk due to their shortterm nature. Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund holds financial instruments denominated in currencies other the functional currency and therefore is exposed to risks that the exchange rate of the functional currency to those other currencies may change in a manner which has a favourable or unfavourable effect on the reported value of that portion of the Fund s financial instruments which is denominated on other currencies. At December 31, 2016, the Fund s net exposure to in foreign currencies in US Dollars was as follows: 2016 Cash & Due from broker Financial assets at FVTPL Total Russian ruble Euro 5,365 482 5,660,145 5,665,510 482 Total $ 5,847 $ 5,660,145 $ 5,665,992 At December 31, 2015, the Fund s net exposure to in foreign currencies in US Dollars was as follows: 2015 Cash & Due from broker Financial assets at FVTPL Russian ruble 14,849 1,989,087 2,003,936 Total $ 14,849 $ 1,989,087 $ 2,003,936 Total 16
9. Financial instruments and associated risks (continued) (b) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation. Financial assets which potentially expose the Fund to credit risk consist principally of cash and cash equivalents and due from brokers. All transactions in equities are settled upon delivery using approved brokers. The risk of credit risk is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. Risk relating to unsettled transactions is considered small due to the short settlement period involved. The Fund seeks to mitigate its exposure to credit and counterparty risk by placing its cash and transacting its securities with reputable financial institutions. (c) Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with its financial liabilities. The Fund s offering memorandum provides for the quarterly redemption of shares and it is therefore exposed to the liquidity risk of meeting shareholder s redemptions. All the other financial liabilities have a contractual repayment or maturity dates ranging from on demand to three months. The Fund mitigates its risk on redeemable shares by requesting from the holders of these redeemable shares to provide redemption written notices of at least 14 (fourteen) calendar days to the relevant valuation Day. The table below shows the maturity profile of the Fund s financial liabilities as at December 31, 2016: Management fee payable Accrued expenses Net assets attributable to holders of redeemable shares Within one year 197,930 18,447 On demand 13,232,566 Total $ 216,377 $ 13,232,566 The table below shows the maturity profile of the Fund s financial liabilities as at December 31, 2015: Management fee payable Accrued expenses Net assets attributable to holders of redeemable shares Within one year 22,154 11,247 On demand 8,325,397 Total $ 33,401 $ 8,325,397 17
10. Fair value estimates At December 31, 2016, the carrying values of cash and cash equivalents, due from brokers, management fees payable and accrued expenses are believed to approximate their fair value due to the immediate or shortthem nature of these financial instruments. The fair values of all other financial instruments are determined in accordance with the accounting policies described (note 2). Fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 18