2011 Report - Fortress Mutual Fund Ltd

Fortress Mutual Fund LimitedNotes to Consolidated Financial StatementsSeptember 30, 2011(expressed in Barbados dollars)4 Financial risk management …continuedMarket risk …continued(iii) Foreign currency risk...continuedThe theoretical decrease in net assets had these currencies depreciated by 5% against the Barbados dollarwith all other variables held constant is considered below:Effect of a 5%depreciation as ofSeptember 30, 2011$Effect of a 5%depreciation as ofSeptember 30, 2010$Balances denominated in JMD 1,723,732 871,679Balances denominated in GBP 971,844 767,280Balances denominated in GYD 286,382 209,148Balances denominated in EUR 22,280 145,335A 5% appreciation in the currencies will have an equal and opposite effect to that disclosed above.Credit riskCredit risk is the risk that an issuer or counterparty to a financial instrument will be unable or unwilling to meeta commitment thereby causing a financial loss to the Fund.The maximum exposure of the Fund to the credit risk is set out in the following table:2011$2010$Government bonds – 6,006,602Loans and receivables 1,648,178 25,751,854Due from brokers 3,386,919 6,089,530Accounts receivable 685,409 595,190Cash and cash equivalents 54,873,203 31,791,47760,593,709 70,234,653Government bonds are issued by the Government of Barbados $ nil (2010-$3,099,900) which maintains aBBB- rating by Standard and Poor’s and the Government of Jamaica $ nil (2010-$2,906,702) which maintains aB- rating by Standard and Poor’s.Credit risk from loans and receivables is minimised through holding a diversified portfolio of investments,purchasing securities after careful assessment of the borrower and placing deposits with financial institutionswith a strong capital base. The Fund’s loans and receivables are unrated.None of the Fund’s loans and receivables and accounts receivables are impaired or past due but not impaired.(11)