2011 Report - Fortress Mutual Fund Ltd

Fortress Mutual Fund LimitedNotes to Consolidated Financial StatementsSeptember 30, 2011(expressed in Barbados dollars)5 Investments….continued2011 2010Cost$Amortisedcost$Cost$Amortisedcost$Loans and receivablesDeposits 740,000 747,856 24,696,690 24,851,532Fortress St. Lucia Limited (note 11) 900,322 900,322 900,322 900,322Total loans and receivables 1,640,322 1,648,178 25,597,012 25,751,854Total investments 248,805,699 263,726,191 244,538,122 259,513,861The effective yield on loans and receivables is 4.42% (2010 – 3.60%).6 Real estate available for re-saleThe detail portfolio of real estate available for resale is as follows:2011$2010$Coral Cove – Unit 11 2,337,231 2,880,239Canouan Resorts Development – Lot E24 – 6,660,0002,337,231 9,540,239During the year an impairment test on the carrying value of the real estate available for re-sale was performed.Based on these tests the Coral Cove Unit 11 property was subsequently adjusted to its net realisable valueresulting in impairment losses of $543,008 on the property being recognised in the statement of comprehensiveincome.During the year the Canouan Resorts Development – Lot E24 property was sold for $7,900,000. A net gain onthe sale of the property of $1,240,000 was recognised in the statement of comprehensive income.7 Derivative financial instrumentsThe Fund in the past used put and call options primarily to reduce the market risk from its portfolio of equityinvestments as conditions warrant. An option is a contractual arrangement under which the seller (writer) grantsthe purchaser (holder) the right, but not the obligation, either to buy (in the case of a “call” option) or sell (inthe case of a “put” option) a specified amount of an underlying security at a specified price on or before theexpiry date of the option. The seller receives a premium from the purchaser in return for this right. The marketvalues of these options change primarily in response to changes in values of the underlying assets.(20)