The financial matters of
the WFSA are considered by the Management Group.In light of the present economy, financial issues are
frequently reviewed by this group during scheduled teleconferences, emails and
on rare occasions attended meetings.Because factors are changing daily, you should review
this report as a "snapshot" of the WFSA financial picture.We have kept our surplus from the WCA
2008 in cash accounts for two main reasons: 1) Up until this point there was no
reasonable investment that provided both safety and a reasonable rate of
return; and 2) having cash on hand allowed us to "ride out the market" so that
our investments were not liquidated at inopportune times.This allowed us to minimize losses and
avoid turning paper loss into real loss.
Audited
Financial Statements 2004 and Audited Financial Statements 2005
The
treasurer is required under the WFSA Statutes & Bylaws to present the
audited financial statements for previous years to the Executive Committee and
later to the General Assembly.
You can read elsewhere on this site, the Financial Statements.In all
cases, the Management Accounts as presented in the Revised Budgets contain the
same figures in the Audited Financial Statements.The appointed auditors are Hartley and Fowler LLP.
Summary Investment Report - 2nd Quarter 2009
Fund
values suffered a further decline at the end of the second quarter. The stock
market weakness continued, with a low point in February, before an upturn
began. The fundamentals affecting the market have not changed: (1) credit
freeze, (2) recession in the economy and (3) excessive build up of debt. This
has made the banking sector unattractive to investors and the Federation's
holdings were sold in the quarter, incurring losses.
The US
economy contracted sharply in the final quarter of 2008. Agreement by the G20
nations in early April to continue to apply huge fiscal stimulus to the global
economy confirms the extent of the problem, although the measures taken are
expected to have a combined effect in due course. This has provided a positive
stimulus to the stock market more recently, despite negative economic
indicators. The Chairman of the Federal Reserve Board has stated that the
recession in the US will end ‘probably this year'.
The
balance of the asset allocation, which has remained defensive, ensured that the
further fall in market values was again moderated. Equities in the portfolio
fell in value by 11.39%, more or less in line with the market, and this is a
similar magnitude to fall as in the first quarter a year ago. Bonds out
performed, with a gain of 1.24%.
Additions
in the quarter were the acquisition of a holding in Powershares Global Clean
Energy and an addition to the holding in Slumberger, an oil industry services
group. Losses were incurred in exits from the banking sector holdings in JP
Morgan Chase and Bank of America, together with the sale of Chubb. This
resulted in real losses.Equities
made up 40% of the portfolio at the end of the quarter. Cash holdings are
relatively high, although as stated earlier, they earn very little interest.
Funds
from the surplus on the WCA 2008 were transferred to Tirschwell & Loewy
(T&L). This transfer will enable T&L to position the portfolio to gain
from the recovery in stock markets. While high quality investment grade
corporate bond yields have declined significantly since last quarter, T&L
continue to search for attractive offerings in order to make additional
opportunistic purchases.
Our
investment manager has given his views on further investment:
‘We would
recommend continuing with the 50% equity / 50% fixed income asset
allocation
as a long-term target.Recently,
we reduced our financial stock exposure and increased our cash holdings to
focus more on capital preservation. We will gradually reinvest those funds and
any other new deposited funds.'
Summary
The
Outlook continues to be overshadowed by the weakness in the economy and in
consumer demand, mainly as a result of the recession and fall in housing
values, etc... The stock market will tend to respond to signs of recovery
before the main indicators like house prices and employments stabilize.We feel that by our efforts to
ride out the market, we will slowly regain our original market investments and
improve our position through movement of WCA surplus.Budgets have been reduced and will be re-evaluated by the
Management Group.Administrative
expenses and travel have been restricted to those necessary for performance of
our core missions.Our overall
financial posture is similar to that of 2001.
