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Executive
Summary -
3rd Quarter 2006
This report highlights the
Corporation's financial activities and results for the nine-month
period ending September 30, 2006.
- The DIF
fund balance grew by approximately 3 percent to $50.0 billion
during the nine-month period ending September 30, 2006, versus
a 2 percent
increase for the comparative period last year. The DIF reported
comprehensive income of $1.4 billion for the first nine months
of 2006 compared to
$866 million for the same period in 2005.
- For the past four consecutive
years as well as the first nine-month period of 2006, the total return
on DIF’s investment portfolio
has exceeded the return of its benchmark Merrill Lynch 1-10 year
Treasury Index (Index) by an average of 62 basis points. The Treasury
Inflation-Protected
Securities (TIPS) segment of portfolio outperformed the Index in
2002 through 2004 by an average of 522 basis points. However beginning
in
2005, as rates increased all along the yield curve, overnight investments
have been the best performing segment of the portfolio; the average
return on overnights has beaten the Index by 129 basis points.
- For the
nine months ending September 30, 2006, expenditures under the
Corporate Operating Budget ran 10 percent below budget and expenditures
under
the Investment Budget ran 14 percent below budget. The variance
with respect to the Corporate Operating Budget was primarily the result
of limited spending on resolutions and receivership activities
in the
Receivership Funding component of the budget through the third
quarter 2006. Detailed quarterly reports are provided separately to
the Board
for those projects included in the Investment Budget, either
by the Capital Investment Review Committee (for all information technology
projects) or by the Division of Administration (for the Virginia
Square – Phase
II project).
- Approximately
$5.6 million (62 percent) of the $9.05 million supplemental budget
approved
by the Board of Directors in March of 2006
for the implementation of deposit insurance reform was spent through
September 30, 2006.
On
the pages following is an assessment of each of the three major finance
areas:
financial statements, investments, and budget.
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