Statement on Investment Management of Reserve Fund and National Wealth Fund’s Assets

Russia’s Finance Ministry hereby reports on investment management of the Reserve Fund and the National Wealth Fund’s assets over the period from January 1 to August 31, 2016.

Reserve Fund

In August 2016, in compliance with Federal Law No.359-FZ dd. 14 December 2015 On Federal Budget 2016 and the Russian Ministry of Finance’s Order No.104 dd. 1 April 2016 On Use of Reserve Fund’s Assets in 2016 to Finance Federal Budget Deficit, USD 2.92bn, EUR 2.46 bn and GBP 0.31bn worth of the Reserve Fund’s foreign currency assets on the accounts with the Bank of Russia were sold for RUB 390.00bn with the proceeds credited to the single federal budget account.

As at 1 September 2016, the Reserve Fund’s assets totaled RUB 2,090.10bn, or USD 32.20bn in equivalent. The balances of the Reserve Fund separate accounts comprised:

• USD 14.50bn;
• EUR 13.15bn;
• GBP 2.30bn.

Total estimated return on the Reserve Fund’s assets placed in foreign currency accounts with the Bank of Russia as denominated in US dollars for the period from January 15 to August 31, 2016 came to USD 0.23bn, or RUB 14.88bn in equivalent. The exchange rate difference from revaluation of balances of the said accounts for the period from January 1 to July 31, 2016 was a negative value of RUB (-)380.47bn.

National Wealth Fund

In April 2016, in compliance with the Russian Pension Fund’s application, matching funds required to build up pension savings of Russian citizens were transferred from the federal budget to the Pension Fund. The Pension Fund’s recalculation of additional insurance contributions to the funded pension as received in 2015 and subject to co-financing revealed a RUB 19.96mn surplus, which was returned to the federal budget and in August 2016 transferred from the single federal budget account to the NWF account.

As at 1 September 2016, the NWF assets totaled RUB 4,719.17bn, or USD 72.71bn in equivalent, including:

1) In separate accounts to record funds of the National Wealth Fund with the Bank of Russia:

• USD 19.56bn,
• EUR 20.76bn,
• GBP 3.83bn, and
• RUB 0.02bn held in the NWF separate accounts with the Bank of Russia;

2) RUB 195.03bn and USD 6.25bn deposited with Vnesheconombank;

3) USD 3.00bn invested in debt securities of foreign states based on an ad hoc decision by the Russian Government and subject to no long-term credit rating requirements.

4) RUB 112.63bn and USD 4.11bn invested in debt securities issued by Russian legal entities to deliver sustainable infrastructure projects included in the list approved by the Russian Government;

5) RUB 278.99bn invested in preferred shares in credit institutions;

6) RUB 164.43bn deposited with VTB Bank and Gazprombank to finance sustainable infrastructure projects included in the list approved by the Russian Government.

Total estimated return on the NWF assets placed in foreign currency accounts with the Bank of Russia as denominated in US dollars for the period from January 15 to August 31, 2016 came to USD 0.24bn, or RUB 15.41bn in equivalent. The exchange rate difference from revaluation of the Fund’s assets for the period from January 1 to August 31, 2016 was a negative value of RUB (-)501.25bn, including:

• RUB (-)394.63bn of the balances on foreign currency accounts with the Bank of Russia;
• RUB (-)49.88bn deposited with Vnesheconombank in US dollars;
• RUB (-)23.93bn invested in debt securities of foreign states based on an ad hoc decision by the Russian Government and subject to no long-term credit rating requirements.
• RUB (-)32.81bn invested in foreign currency-denominated debt securities issued by Russian entities to deliver sustainable infrastructure projects included in the list approved by the Russian Government.

In August 2016, the federal budget received RUB 0.18bn (or USD 0.003bn in equivalent) worth of return on investment of the NWF assets in securities issued by Russian issuers to deliver sustainable infrastructure projects included in the list approved by the Russian Government.

Total return on investment of the NWF assets in eligible financial assets minus the assets held in the accounts with the Bank of Russia from January to August 2016 amounted to RUB 24.26bn, or USD 0.36bn in equivalent.

Figures for the amount of the Reserve Fund and the National Wealth Fund, as well as estimated return on investment of the Funds’ assets are calculated at the official foreign exchange rates fixed by the Bank of Russia as of date preceding the reporting one, and at the cross rates calculated based thereon.

Detailed statistics on transactions in the assets of the Reserve Fund and the National Wealth Fund are posted on the Russian Finance Ministry website in the Reserve Fund and National Wealth Fund subsections in Russian and English and are regularly updated.

Source: Press Office of Russia’s Ministry of Finance