The Trust Fund Committee of the Trust Fund for the People of the Republic of the Marshall Islands (the Fund) approved the Fiscal Year 2017 (FY17) Annual Report on May 14th. The FY17 Audited Financial Statements were issued by the independent auditor, Baker Tilly Virchow Krause, LLP, on March 30th and presented to the Committee on March 22nd. Both reports were released to the respective governments.
The Fund’s restricted fiduciary net position value increased 21.2% to $356,933,415 for FY17 from $294,545,533 for FY16. The increase was primarily due to gross investment income of $44,558,126 and contributions from the United States government of $16,052,850 and Taiwan of $2,400,000. There was net investment income of $44,108,013.
The Fund had a weighted annual rate of return of 14.09%, following a gain of 10.37% for FY16. Overall, on a performance basis, net of fees, the Fund has had a 6.29% return since inception, above the benchmark return of 6.25%.
Total investment and administrative expenses decreased to 0.92% of restricted fiduciary net position in FY17 from 1.09% in FY16. Investment expenses slightly increased in dollar value but decreased to 0.87% of restricted fiduciary net position from 1.03% in FY16. Investment expenses are expected to decline further in FY18 given the selection of Vanguard Institutional Advisory Services as the Investment Adviser during FY17, resulting in a reduced fee structure. It was noted in the Report that investment expenses were revised for previous years to include hedge fund and private equity fund sub advisor fees. Administrative expenses slightly increased in dollar value due to the transition to the new Investment Adviser but decreased as a percent of restricted fiduciary net position to 0.05% from 0.06%.
The FY17 audit performed by Baker Tilly was completed on time and according to U.S Generally Accepted Auditing Standards and Generally Accepted Government Auditing Standards issued by the Comptroller General of the United States. There were no audit findings.
The Trust Fund for the People of the Republic of the Marshall Islands was established by the Compact of Free Association, as Amended, as codified in the Compact of Free Association Amendments Act of 2003 (U.S. Public Law 108-188, December 17, 2003). The Trust Fund’s purpose is to contribute to the economic advancement and long-term budgetary self-reliance of the RMI by providing a source of revenue for the government and the people of the Republic of the Marshall Islands when certain grants under the Amended Compact of Free Association expire in 2023.