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[FSM News] FSM Office of SBOC Releases FY2012 Annual Report and Audited Financial Statements for the Compact Trust Fund

 

Press Release #13045-01
Palikir, Pohnpei – FSM Information Services
May 03, 2013

Resource

On April 26, 2013, the FSM Office of SBOC transmitted the Compact Trust Fund Committee’s recently released fiscal year 2012 Annual Report and Audited Financial Statement to FSM President Manny Mori and FSM Congress Speaker Isaac V. Figir.

According to the FY2012 Annual Report, the Trust Fund ended the fiscal year (as of September 30, 2012) with a significant gain in net asset value to $257.3 million- a 30% increase from the fiscal year 2011 amount of $198.5 million. The increase was due to a net investment gain of $35.3 million and a US government contribution of $23.6 million.

Overall, the Trust Fund had a dollar weighted rate of return (minus expenses and contributions) of 14.78%. The rate is the Trust Fund’s second best return since inception in 2004. Since inception, the Trust Fund has grown an average of 3.8% per annum (net of fees), a significant improvement over fiscal year 2011’s average of 2.2% annual growth.

The net annual investment gain was primarily due to strong performance in US and international public equity markets. The public equity growth was supported by growth in the diversified holdings of fixed income and alternative assets. The Trust Fund’s asset structure is balanced to maximize investment gains and minimize investment risks.

Given the positive returns, an allocation of $20.9 million was made to the “C” account for fiscal year 2012 bringing that account to $41.2 million. The “C” account is an account, per the Amended Compact’s Trust Fund Agreement, to potentially supplement Trust Fund distributions in fiscal year 2024 and beyond.

In an official submission to President Mori, SBOC Director Evelyn Adolph noted that while the Fund’s performance has improved in the last two years, projections remain that the Fund will still significantly fall short of the targeted amount required to provide a smooth transition from Compact sector grants when economic provisions of the Amended Compact are set to expire in 2023. Director Adolph indicated that, “Unless large contributions are made into the Compact Trust Fund, the FSM will not be able to meet its intended target in 2024.”

As of the end of fiscal year 2012, the US government has contributed $173.7 million and the FSM government $30.3 million into the Compact Trust Fund. Despite ongoing efforts by the Trust Fund Committee and the FSM National Government to explore opportunities to attract additional donors to the Fund, there are currently no other contributors.

The Trust Fund requires close oversight and management by a committee, which, under the terms of the Amended Compact, is made up of five members, three from the US Government and two from the FSM Government. The FSM’s current members are Mr. Aren Palik, President and CEO of the Pacific Islands Development Bank in Guam and Mrs. Rose Nakanaga, Assistant Secretary for Investment within the FSM Department of Finance & Administration.

For more information, please contact the Division of Compact Management at the FSM Office of Statistics, Budget and Economic Management, Overseas Development Assistance & Compact Management (SBOC) at (691) 320-6260 or emailslowe@sboc.fm.

 

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