Unobservable inputs re\ufb02ect the Group\u2019s assumptions about the inputs market participants would use in pricing the asset or liability based on the best
information available in the circumstances. The fair value hierarchy is categorised into three levels based on the inputs as follows:
Level 1 \u2013 Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Group has the ability to access.
Valuation adjustments are not applied to Level 1 investments. Since valuations are based on quoted prices that are readily and regularly available in an
active market, valuation of these investments does not entail a signi\ufb01cant degree of judgement.
Level 2 \u2013 Valuations based on inputs, other than quoted prices included in Level 1, that are observable, either directly or indirectly.
Level 3 \u2013 Valuations based on inputs that are unobservable and signi\ufb01cant to the overall fair value measurement.
Investments in private investment companies measured using net asset value as a practical expedient are not categorised in the fair value hierarchy.
The availability of valuation techniques and observable inputs can vary from investment to investment and is a\ufb00ected by a wide variety of factors,
including the type of investment, whether the investment is new and not yet established in the marketplace, and other characteristics particular to
the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgement. Those estimated values do not necessarily represent the amounts that may be ultimately realised due to the
occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values
may be materially higher or lower than the values that would have been used had a ready market for the investments existed. Accordingly, the degree
of judgement exercised by the Group in determining fair value is greatest for investments categorised in Level 3. In certain cases, the inputs used to
measure fair value may fall into di\ufb00erent levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy
within which the fair value measurement falls in its entirety is determined based on the lowest level input that is signi\ufb01cant to the fair value
measurement.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-speci\ufb01c measure. Therefore, even
when market assumptions are not readily available, the Group\u2019s own assumptions are set to re\ufb02ect those that market participants would use in pricing
the asset or liability at the measurement date. The Group uses prices and inputs that are current as of the measurement date, including periods of
market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many investments. This condition could
cause an investment to be reclassi\ufb01ed to a lower level within the fair value hierarchy.
Fair value \u2013 valuation techniques and inputs
Investments in securities and securities sold short
Listed investments
The Group values investments in securities including exchange traded funds and securities sold short that are freely tradable and are listed on a
national securities exchange or reported on the NASDAQ national market at their closing sales price as of the valuation date. To the extent these
securities are actively traded and valuation adjustments are not applied, they are categorised in Level 1 of the fair value hierarchy. Securities traded on
inactive markets or valued by reference to similar instruments or where a discount may be applied are categorised in Level 2 or 3 of the fair value
hierarchy.
Unlisted investments
Unlisted investments are valued at fair value by the Directors following a detailed review and appropriate challenge of the valuations proposed by the
Investment Manager. As part of their valuation process, the Investment Manager engages Independent Valuers to challenge their assessed fair value
on certain unlisted investments. The Investment Manager\u2019s unlisted investment valuation policy applies techniques consistent with the IPEV
Guidelines.
The valuation techniques applied are either a market-based approach, an income approach such as discounted cash \ufb02ows, or where available, a net
asset value practical expedient approach. A combination of the valuation techniques mentioned may also be utilised. The IPEV Guidelines recognise
that the price of a recent transaction, if resulting from an orderly transaction, generally represents fair value as at the transaction date and may be an
appropriate starting point for estimating fair value at subsequent measurement dates. Consideration is given to the facts and circumstances as at the
subsequent measurement date including changes in the market and/or performance of the investee company. Milestone analysis is used where
appropriate to incorporate operational progress at the investee company level. In addition, a trigger event such as a subsequent round of \ufb01nancing by
the investee company would in\ufb02uence the market technique used to calibrate fair value at the measurement date. Where appropriate, a probability-
weighted expected return method (\u201cPWERM\u201d) may be employed when di\ufb00erent potential outcomes (e.g. IPO, round of \ufb01nancing, stay private,
dissolution, etc.) are utilised to derive the value of investments held.
The market approach utilises guideline public companies relying on projected revenues to derive an indicative enterprise value. Due to the nature of
the investments, being in the early stages of development, the projected revenues are used as a proxy for stable state revenue. A selected multiple is
then applied based on the observed market multiples of the guideline public companies. To re\ufb02ect the risk associated with the achievement of the
projected revenues and the early development stage of each of the investments, the indicative enterprise value is discounted at an appropriate rate.