Trust Fund Committee Conducts Second Quarter Meeting and Reviews FY 2023 Performance and Business as it Prepares to Implement the 2023 Trust Fund Agreement as it Enters into Force

WASHINGTON, D.C. (April 8, 2024)– The Trust Fund Committee of the Trust Fund for the People of the Federated States of Micronesia (the Fund) conducted its Fiscal Year 2024 (FY 2024) second quarter meeting by teleconference on March 14 (Washington DC) and 15 (Pohnpei). The Committee reviewed the Fund’s investment performance from October 1, 2023, approved the fiscal year 2023 Annual Report, received a presentation of the independent audit, and discussed future planning including possible investment policy and potential administrative structures and functions to facilitate implementation of the 2023 Trust Fund Agreement following its entry into force. (Note: the 2023 Trust Fund Agreement entered into force as of March 18, 2024).

For the October-December quarter, the first quarter of FY 2024, the Fund had a net asset value of $1,102,101,743. The Fund had a gain for the quarter of 6.2%, net of fees, compared to a benchmark of 7.0%. As of February 29, the most recent complete month reviewed at the meeting, the Fund had a net asset value of $1,137,291,848. For FY 2024 performance from October 1 to February 29, the Fund has gained 8.3%, net of fees, compared to a benchmark of 9.0%. Since the inception of the Fund in 2004, the Fund has had an average annual rate of return of 6.0% (benchmark 6.4%). The Fund’s Investment Advisor, Mercer, also noted that the Fund received $17,267,268 in contributions to date for FY 2024 from the United States (U.S.) government. The contributions were invested per the Investment Policy Statement.

The Committee reviewed and approved the FY 2023 Annual Report. For FY 2023, the Fund ended the fiscal year with a restricted fiduciary net position value of $1,036,682,189 and a weighted annual rate of return of 9.1%. Over the past 20 years, the Fund had a total of $547,729,508 in contributions from the U.S. government (94.5% of contributions) and the Federated States of Micronesia (FSM) government (5.5% of contributions). The Fund gained a total of $488,952,681 on those contributions over the 20-year term—for every dollar invested, the Fund earned 0.89.3 cents.

The Trust Fund’s independent auditor, Baker Tilly, presented the FY 2023 audited financial statements. The audit was conducted according to U.S. and U.S government auditing principals and standards to include Generally Accepted Government Auditing Standards. There were no material weaknesses or deficiencies sited by the audit and the audit was completed on schedule. The Committee approved a resolution accepting the annual report and the transmittal of the annual report and audited financial statements to the U.S. and FSM governments.

The Committee also discussed plans and strategies to transition to the 2023 Trust Fund Agreement when it entered into force, including possible investment policy options, possible accounting and administrative changes, and accountability requirements. The Committee agreed to continue technical discussions before the next Committee meeting that may take place in late May or June 2024.

The Committee noted that on Saturday, March 9, 2024, President Joseph Biden signed into law, H.R. 4366, the Consolidated Appropriations Act, 2024 (Public Law 118-42), which included the Compact of Free Association Amendments Act of 2024 approving the 2023 U.S.-FSM Trust Fund Agreement. Since the meeting, on March 18, just days after the Trust Fund Committee met, Deputy Secretary of State Kurt Campbell exchanged diplomatic notes with President Wesley Simina of the FSM government.

As stated in Article III of the Agreement Between the Government of the United States of America and the Government of the Federated States of Micronesia Implementing Section 215 and Section 216 of the Compact, as Amended, regarding a Trust Fund, the purpose of the Fund is to contribute to the economic advancement and long-term budgetary self-reliance of the Federated States of Micronesia by providing an annual source of revenue after Fiscal Year 2023. For more information on the Fund, visit the official website at https://fsmcfatf.com/. 

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