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Chief Financial Officer's (CFO) Report to the Board

DIF Balance Sheet - First Quarter 2017

 

Fund Financial Results ($ in millions)
Balance Sheet
 

Mar-17

Dec-
17
Quarterly
Change

Mar-16
Year-Over-Year
Change
Cash and cash equivalents $3,374 $1,333 $2,041 $3,519 $(145)
Investment in U.S. Treasury securities 75,076 73,512 1,564 63,833 11,243
Assessments receivable, net 2,709 2,666 43 2,238 471
Interest receivable on investments and other assets, net 458 526 (68) 474 (16)
Receivables from resolutions, net 6,760 7,790 (1,030) 9,638 (2,878)
Property and equipment, net 340 358 (18) 370 (30)
Total Assets $88,717 $86,185 $2,532 $80,072 $8,645
Accounts payable and other liabilities 208 238 (30) 217 (9)
Liabilities due to resolutions 2,011 2,073 (62) 4,059 (2,048)
Postretirement benefit liability 232 232 - 233 (1)
Contingent liability for anticipated failures 1,335 477 858 443 892
Contingent liability for litigation losses and other 3 3 0 0 3
Total Liabilities $3,789 $3,023 $766 $4,952 $(1,163)
FYI: Unrealized gain (loss) on U.S. Treasury securities, net 28 21 7 403 (375)
FYI: Unrealized postretirement benefit (loss) gain (26) (26) - (34) 8
Fund Balance $84,928 $83,162 $1,766 $75,120 $9,808
 
 

Cumulative Quarter-End Unrealized Gain on U.S. Treasury Secuirities, Net (dollars in millions)

Cumulative Quarter-End Unrealized Gain on U.S. Treasury Securities, Net (dollars in millions)
Quarter Unrealized Gain on U.S. Treasury Securities, net
March 2016 $403
June 2016 $513
September 2016 $346
December 2016 $21
March 2017 $28

The unrealized gain on U.S. Treasury securities dropped dramatically beginning in November 2016. Following the election results earlier that month, Treasury yields increased considerably, as investors perceived that future fiscal policies and programs could result in faster economic growth, higher inflation, and increased Treasury security issuance, all of which would underpin higher interest rates and Treasury yields. The higher Treasury yields in late 2016 and year-to-date 2017 resulted in lower market prices for the investments and the correspondingly lower unrealized gains.