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Joint FSM & RMI Compact Trust Fund Committee Meeting Held in Honolulu, Hawaii

Palikir, Pohnpei (FSM Information Services): March 17, 2010 - A joint meeting between the FSM and the Republic of the Marshall Islands (RMI) Compact Trust Fund Committees was recently held the week of March 8, 2010, in Honolulu, Hawaii. This is the first time since the establishment of the two Funds to hold such a joint meeting. Representing the FSM Government were Fabian Nimea, Director of the Office of Statistics, Budget & Economic Management, Overseas Development Assistance, and Compact Management (S.B.O.C.) and Aren Palik, President/CEO, Pacific Islands Development Bank (PIDB). The RMI was represented by Casten Nemra, Chief Secretary, and Jefferson Barton, Secretary of the Ministry of Finance. The US Government was represented by Nikolao Pula, Director of the Office of Insular Affairs, Department of Interior, Mark Bezner, Senior Adviser, Office of Australia, New Zealand, and the Pacific, Department of State, Dr. Bill Gallo, Director of the Office of Hawaii and the Pacific Islands, Centers for Disease Control (CDC), Department of Health and Human Services, and Jeanette Lim, Senior Adviser to the Director of Risk Management, Office of the Secretary, Department of Education. Technical and support staff from RMI and the US Government were also in attendance.

The principal purpose of the joint meeting was to interview and hear presentations from respondents to Request for Proposal (RFP) for investment advisory services for the funds. In the last annual trust fund committee meetings in September 2009, both committees decided to reassess every aspect of the funds management to optimize value and attain financial equilibrium. The financial crisis in 2008 resulted in the two funds sustaining significant losses. The firms that were being interviewed were invited by the administration of the two sovereign funds and include Goldman Sachs Investment Management, Morgan Stanley Smith Barney, Mercer Investment Consulting, Inc., and Strategic Investment Group. The investment firms presented how they would help the governments maintain the desired balance of investment income, capital gains, and acceptable level of risk by asset allocation. Their proposals also include background information of their respective firms, macroeconomic forecast of the financial markets, analysis of the structure and viability of the funds, formulation of investment policies, spending assumptions in 2024 and beyond, funding sources, fees and cost structure, trustee and custodian of funds, and money managements.

The two committees also had separate side formal trust fund committee meetings. As of December 31, 2009, the total fund assets for the FSM Compact Trust Fund were $163.7 million. Both committees agreed to continue to gather pertinent information before making a final selection on the investment advisors, followed by an Executive Administrator and Custodian of the funds. A joint meeting is scheduled to be held within 30 days from March 12, 2010 to make such decision and to take the appropriate next steps.

For more information on the FSM Trust Fund, please contact the FSM Office of SBOC at (691) 320-6260 or email address: fnimea@sboc.fm.