Contact: Anthony Costanzo, Executive Administrator
WASHINGTON, D.C. – The Trust Fund Committee of the Trust Fund for the People of the Republic of the Marshall Islands (the Fund) has approved the Fiscal Year 2015 (FY15) Annual Report. The approval took place at the March 23rd Trust Fund Committee meeting. The Annual Audited Financial Statements were also completed by the independent auditor, Baker Tilly Virchow Krause, LLP, and presented to the Committee on the same date. Both reports have been released to the respective governments.
The Fund’s restricted fiduciary net position value increased 2.9% to $247,142,058 for FY15 from $240,121,187 for FY14. The increase was primarily due to interest and dividend income from investments of $11,102,119 and contributions from the United States government of $14,534,573, Taiwan of $2,400,000, and the Republic of the Marshall Islands of $650,000. There was a net investment income loss of -$10,370,058.
The Fund had a weighted annual rate of return of -4.1%, following three consecutive growth years: 8.0% for FY14, 13.9% for FY13, and 18.5% for FY12. On a performance basis, net of fees, the Fund lost 4.1% but outperformed the comparable benchmark loss of 4.8%. Overall, on a performance basis, net of fees, the Fund has had a 4.9% return since inception.
The annual 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 negative audit findings.
The Annual Report indicates that the Trust Fund Committee contracted Gallagher Fiduciary Advisors LLC during FY15 to conduct an independent and objective external evaluation of the Fund to help guide the Trust Fund Committee as the Trust Fund proceeds past the first ten years since inception of the Fund and anticipates that disbursements will begin after FY23. The evaluation found the Fund to be generally well governed with competent Committee and service provider performance according to industry standards and no non-compliance with the Trust Fund Agreement or Amended Compact.
A major finding of the independent and objective external evaluation was that costs for investment and administrative services were within the ranges of similar trust, endowment and foundation funds. The Committee has remained vigilant to contain such costs as an appropriate percentage of the Fund. As reported in the Annual Report, investment expenses for FY15 were 0.62% of restricted fiduciary net position compared to 0.57% for FY14. For FY15 administrative expenses were 0.08% of restricted fiduciary next position compared to 0.06% for FY14. The increase in administrative expenses is attributed to the cost of the external evaluation.
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.