The WMF does not invest in stocks, only in bonds.

Op wo 9 nov. 2022 21:51 schreef Andreas Kolbe <jayen466@gmail.com>:
Dear Steven,

Thank you for your explanation. I had naively assumed the investment income in the "Support and revenue" section of the financial statements was only for income from investments (i.e. dividend payments etc.), without tracking changes in the value of investments as well. So what you say makes sense.

There is still something odd though. The US stock market dropped in 2019–2020 as well, as a result of Covid. The Dow Jones Index went from about 26,600 at the end of June 2019 to about 25,000 by the end of June 2020, having fallen below 20,000 in the spring. But even so, the WMF had a positive investment income of $5.5 million that year.[1]

The following year, 2020–2021, the stock market rose very substantially, with the DJI going from the said 25,000 to 34,500 by the end of June 2021 – an increase of almost 10,000 points. Yet WMF investment income was $1 million less than the year prior: just $4.4 million.[1]

In the 2021–2022 year, as you say, the stock market went down again, the DJI dropping from the said 34,500 to 31,100 at the end of June 2022. So that drop is indeed twice as large as the drop in 2019–2020, but to go from a $5.5 million gain in a year where the DJI dropped by 1,600 points to a $12 million loss in a year where the DJI dropped by 3,400 points struck me as odd.

And I still don't quite understand why the Q3 tuning session forecast a $26 million surplus,[2] while the actual surplus turned out to be just $8 million. I guess the fact that most of the drop in the markets occurred from April onwards could explain part of it.

Andreas


On Wed, Nov 9, 2022 at 7:36 PM Steven Walling <steven.walling@gmail.com> wrote:


On Wed, Nov 9, 2022 at 10:37 AM Andreas Kolbe <jayen466@gmail.com> wrote:
Dear WMF Finance staff,

I inquired over a week ago on Meta-Wiki why the WMF is reporting a negative investment income (–$12 million). There has been no answer to date.[1]

I am a layperson, but how can an investment income be negative? Would you mind sharing what this is about?

You probably didn't get a prompt answer because "how can investment income be negative" is something you could have Googled before asking the finance team. 

Investments can lose value.* The US stock market has lost a tremendous amount of value over the last year, so it would not be surprising that most investments would have a negative return recently.
 

I was also surprised to find that the reported increase in net assets for the 2021–2022 financial year was "only" $8.2 million. The third-quarter F&A tuning session published in May (based on data as of March 31) forecast a far higher surplus, with an increase in net assets of $25.9 million.[2] 

Would you mind sharing what happened in the fourth quarter to reduce the surplus by so much?

Best wishes,
Andreas


On Tue, Nov 1, 2022 at 3:45 PM Andreas Kolbe <jayen466@gmail.com> wrote:
Dear all,

The WMF's audited financial statements are now available here:


Some key figures from the page numbered 4 (page 6 in the pdf):

– Net invest income was negative: –$12M (down $16M)
– Total support and revenue was $155M (down $8M due to that negative investment income)
– Total expenses were $146M (up $34M)
– Salaries and wages were $88M (up $20M)
– Net assets at end of year increased by $8M

For reference, the end-of-year increase in net assets forecast in the third-quarter Finance & Administration tuning session deck published in May 2022 was $25.9M:


Best,
Andreas

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