WASHINGTON, D.C. (March 31st, 2020)– The Trust Fund Committee of the Trust Fund for the People of the Republic of the Marshall Islands (the Fund) conducted its fiscal year 2020 (FY20) second quarter meeting on March 26th (EDT) and 27th (Majuro) via teleconference.
The meeting covered the Fund’s investment performance for the October-December 2019 quarter as well as a current market update given the COVID-19 pandemic and the effect on the Fund as well as the global economy and financial markets.
For the October-December 2019 quarter, the Fund gained 6.94%, above the benchmark of 6.90%. The net asset value of the Fund was $484,872,501 as of 12/31/19. The Fund received a scheduled contribution from the U.S. government of $18,645,000 on 10/1/19 and an additional contribution from the Republic of the Marshall Islands (RMI) government of $250,000 on 10/22/19. The Fund also received a contribution of $5 million on 2/19/20 that, in accordance with Section 216(b) of the Amended Compact, was recorded as an RMI government contribution. This contribution was for a compensatory adjustment for the adverse financial and economic impact resulting from the effect of Title IV of the Compact of Free Association Act of 1986 upon Title Two of the Compact, consistent with the Compact of Free Association Act of 1986, and its successor, the Compact of Free Association Amendments Act of 2003.
The Fund experienced the volatility of financial markets in late January to March as the effect of COVID-19 spread among economies and financial markets. As of the end of February, the Fund lost 4.5% for the month but remained positive at 1.0% for fiscal year 2020 (10/1/19-9/30/20). The net asset value as of 2/29/20 was $463,121,430, preliminary and unaudited. As of 3/25/20, it is estimated the Fund declined about 12.0% to $405,730,320, preliminary and unaudited, from the start of the fiscal year (10/1/19). The Fund’s Investment Adviser, Vanguard Institutional Advisory Services, and the Committee are monitoring the Fund to ensure the asset allocation is in line with the long-term investment objectives of the Committee approved Investment Policy Statement.
The Committee approved the fiscal year 2019 Annual Report and reviewed the fiscal year 2019 audit. For fiscal year 2019, the Fund had a restricted fiduciary net position value of $434,666,826 as of 9/30/19 and a weighted annual rate of return of 2.8%. The Fund’s independent auditor, Baker Tilly, presented the annual audit document. The audit was conducted in accordance with U.S. Generally Accepted Accounting Standards (GAAS) and U.S. Generally Accepted Government Accounting Standards (GAGAS). No deficiencies, material weakness or noncompliance were identified according to these standards.
The next quarterly meeting will take place in late May or early June 2020.