Note 5. Investments, Net

Note 5.  Investments, Net

The HHS’ investments as of September 30, 2007 and 2006, are summarized below: 

The HHS invests entity trust fund balances in excess of current needs in U.S. Treasury securities. The Department of Treasury acts as the fiscal agent for the U.S. Government’s investments in securities. The HHS securities purchased and redeemed include Marketable, Non-Marketable (Par Value), and Non-Marketable Market-based (MK) securities. These investments are carried at face value as determined by Treasury. Interest income is compounded semiannually (June and December) and was adjusted to include an accrual for interest earned from July 1 to September 30.

The Medicare bonds interest rates ranged from 3.50 percent to 7.25 percent from October 1, 2006, to September 30, 2007, and 3.50 percent to 7.375 percent from October 1, 2005, to September 30, 2006. The One Day Certificates are short-term and paid between 4.50 percent and 4.75 percent from October 1, 2006, to September 30, 2007 and 4.75 to 5.25 percent from October 1, 2005, to September 30, 2006.

The HHS invests in One Day Certificates, Market-Based Notes and Market-Based Bills. The MK securities purchased by the HHS mirror marketable securities terms that are not traded on any securities exchange; these include Non-Marketable, MK, and One Day Certificates. The MKs are purchased by HRSA’s Vaccine Injury Compensation Program (VICP) trust fund. Discounts on Market-Based Bills are amortized on a straight-line basis, and discounts and premiums on Market-Based Notes are amortized on an effective interest basis. Currently, securities held by the VICP will mature in fiscal years 2008 through 2012. The Market-Based Notes paid from 3.00 percent to 5.50 percent from October 1, 2006, to September 30, 2007, and from 3.00 percent to 6.25 percent from October 1, 2005, to September 30, 2006. One Day Certificates paid from 4.58 percent to 5.34 percent from October 1, 2006, to September 30, 2007.

Marketable securities purchased by the NIH gift funds are recorded at cost based on market terms and are invested in interest bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.

AFR Section II Links:

• Message from the Chief Financial Officer
• Office of Inspector General Transmittal
• Independent Auditor's Reports
• Financial Statements and Notes
• Required Supplementary Stewardship Information
• Required Supplementary Information