Home' Trinidad and Tobago Guardian : October 27th 2014 Contents B13
The Paria Fund
30 June, 2014
1. Description of the Fund
The following brief description of The Paria Fund (the "Fund") is provided for general information purposes only.
Reference should be made to the Trust Deed and Prospectus of the Fund for more complete information.
The Paria Fund is an open-ended mutual fund denominated in United States ("US") dollars and is registered and
regulated under the provisions of the Securities Industry Act, 1995 in Trinidad and Tobago. An open-ended fund
is one in which the number of units which may be issued in the fund is unlimited.
The Fund was established by the original trustee, First Citizens Bank Limited, under a Trust Deed dated July 26th
2004, in order to provide investors with high current income through investment in a diversified portfolio of high
quality debt instruments. In July 2007, First Citizens Trustee Services Limited (the "Trustee") was appointed Trustee
to replace the original trustee who retired.
Subscriptions into the Fund are made by investors at a price per unit (the "subscription price") based on the net
asset value per unit of US$10 each. Units may be subscribed at an initial minimum value of US$100 and in
multiples of US$25 each thereafter.
The net profits of the Fund are calculated and accrued to the investor daily and distributed monthly. Investors have
the option to either receive a cash distribution, or to reinvest income distributions into units at the prevailing
subscription price as at the date of distribution.
Units are redeemed without charge at a price per unit (bid price) based on the net asset value per unit at the date
of receipt of the request for redemption. The Trustee seeks to maintain as far as is reasonably possible a bid price
of US$10 per unit. Units may be redeemed in cash up to a limit of US$50,000 or one percent of the net asset value
of the Fund, whichever is lower, during any sixty day period for any one investor.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Fund's financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and are presented in United States (US) dollars. The financial statements have been
prepared under the historical cost convention, as modified by the revaluation of available for sale financial
(a) Use of estimates
The preparation of these financial statements in conformity with International Financial Reporting
Standards requires the use of estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of income and expenses during the reporting period. Although these
estimates are based on the Trustee's best knowledge of current events and actions, actual results may
differ from those estimates. The areas involving a higher degree of judgment or complexity or areas
where assumptions and estimates are significant to the financial statements are disclosed in Note 3.
(b) New and amended standards adopted by the Fund
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year
beginning on or after July 1, 2013 that was adopted and had a material impact on the Fund.
(c) New standards, amendments and interpretations issued but not effective for the financial year
beginning July 1, 2013 and not early adopted
The following new standards, interpretations and amendments, which have not been applied in these
financial statements, will or may have an effect on the Fund's future financial statements:
IAS 32 'Financial Instruments: Presentation' (Amendments) clarify some of the requirements for
offsetting financial assets and financial liabilities in the statement of financial position. The changes
are retrospectively applied, with an effective date of annual periods beginning on or after January 1,
2014. Master netting agreements where the legal right of offset is only enforceable on the
occurrence of some future event, such as default of the counterparty, continue not to meet the
offsetting requirements. The disclosures focus on quantitative information about recognized financial
instruments that are offset in the statement of financial position, as well as those recognized financial
instruments that are subject to master netting or similar arrangements irrespective of whether they
are offset. The new amendments are not expected to have any significant impact on the Fund's
financial position or performance.
IFRS 9, 'Financial instruments' -- This new standard introduces new requirements for the classification,
measurement and recognition of financial assets and financial liabilities and replaces parts of IAS 39.
The standard is tentatively effective for annual periods beginning on or after January 1, 2018 with
early adoption permitted. IFRS 9 is required to be applied retrospectively. IFRS 9 uses business model
and contractual cash flow characteristics to determine whether a financial asset is measured at
amortized cost or fair value, replacing the four category classification in IAS 39. The determination is
made at initial recognition. The approach is also based on how an entity manages its financial
instruments (its business model) and the contractual cash flow characteristics of the financial assets.
For financial liabilities, the standard retains most of the IAS 39 requirements.
The main change is that, in cases where the fair value option is taken for financial liabilities, the part
of a fair value change due to an entity's own credit risk is recorded in other comprehensive income
rather than the income statement, unless this creates an accounting mismatch. The Fund is yet to
assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning
on or after January 1, 2018.
Other standards, amendments and interpretations to existing standards in issue but not yet effective
are not considered to be relevant to the Fund and have not been disclosed.
(d) Standards and amendments to published standards early adopted by the Fund
The Fund did not early adopt any new, revised or amended standards.
2.2 Foreign currency
(a) Functional and presentational currency
The accounting records, as well as the financial statements of the Fund, are maintained in United
States ("US") dollars. US dollars is the functional and reporting currency of the Fund and subscriptions
and redemptions are performed in US dollars. The Trustee considers the US dollar to be the currency
that most faithfully represents the economic effects of the underlying transactions, events and
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the
functional currency using the exchange rate prevailing at the statement of financial position date.
Foreign exchange gains and losses arising from translation of financial assets and liabilities are
included in the statement of comprehensive income.
2.3 Available for sale financial assets
Available for sale financial assets are those which are intended to be held for an indefinite period of time,
which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity
All purchases and sales of available for sale financial assets are recognized on the trade date which is
the date on which the Fund commits to purchase or sell the financial asset. Available for sale financial
assets are derecognized when the rights to receive cash flows from the financial assets have expired
or the Fund has transferred substantially all risks and rewards of ownership.
Available for sale financial assets are initially recognized at purchase price inclusive of transaction
costs, which is equivalent to the fair value at the date of recognition, and are subsequently
re-measured at fair value based on quoted market prices where available or discounted cash flow
models. Unrealized gains and losses arising from changes in the fair value of available for sale
financial assets are recognized in the statement of comprehensive income.
Realized gains and losses on available for sale financial assets are recognized in the statement of
comprehensive income in the period in which they arise.
(c) Fair value estimation
The fair values of quoted financial assets in active markets are based on the last traded prices. For
unlisted financial assets and those where the market is not active, the Fund establishes fair value by
using valuation techniques in good faith. These include the use of recent arm's length transactions,
discounted cash flow analysis and other valuation techniques commonly used by market participants.
2.4 Due to/due from related party
Due to/due from related party represents the net balance of daily cash redemptions and subscriptions of
redeemable units with related party at year-end. Due to/due from related party are carried at cost.
2.5 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term
highly liquid investments with original maturities of three months or less. Cash and cash equivalents, are
carried at cost.
2.6 Net Assets Attributable to Unit holders
Units are redeemable at the unit holder's option subject to certain restrictions as outlined in Note 1 and are
classified as equity. The distribution on these units is recognized in the statement of changes in equity. The
units can be put back to the Fund at any time for cash equal to the Fund's net asset value per share as
determined under the Trust Deed. Units are carried as net assets attributable to unit holders at the
redemption amount that is payable at the statement of financial position date, if the unit holder exercised
its right to put the unit back into the Fund.
2.7 Interest and dividend income
Interest income is recognized in the statement of comprehensive income for all interest bearing instruments
on an accrual basis using the effective interest method. The effective interest method is a method of
calculating the amortized cost of an available for sale financial asset and of allocating the interest income
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments or receipts over the expected life of the investment security.
Dividend income is recognized when the right to receive payment is established.
Expenses are accounted for on the accrual basis.
2.9 Transaction costs
Transaction costs are costs incurred to acquire available for sale financial assets. They include the bid-ask
spread, fees and commissions paid to agents, advisers, brokers and dealers. Transaction costs, when
incurred, are capitalized at initial recognition by inclusion in the purchase price of the investment.
2.10 Subscriptions and redemptions
Subscriptions and redemptions are accounted for on the accrual basis.
2.11 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position
where there is a legally enforceable right to set off the recognized amounts and there is an intention to
settle on a net basis, or realize the asset and settle the liability simultaneously.
(Expressed in United States dollars)
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