The CPP Investment Board is reporting positive investment returns for the first quarter of fiscal 2002. The results are a big turnaround from the losses incurred at the end of the previous fiscal year.

The market value of assets held by the CPP Investment Board totalled $11.0 billion on June 30, 2001, compared with $7.2 billion at fiscal year end on March 31, 2001.

These assets are invested exclusively in equities through externally managed index funds and represented approximately 20% of the consolidated assets available to the Canada Pension Plan, which directly owns a portfolio of federal and provincial bonds and an operating cash reserve, both administered by the federal department of finance.

The assets managed by the CPP Investment Board earned net income of $58.1 million in the first quarter ended June 30 2001, compared with a $786 million loss in the previous quarter. Investment income and losses represent realized and unrealized gains and losses on investments as well as dividends, interest and other distributions.

The rate of return for the quarter was 2.0%, versus 1.1% for the total portfolio benchmark. Approximately 71% of assets at market value were invested in Canadian equities, which earned 3.3%, compared with 2.1% for the Toronto Stock Exchange 300 Composite Index.

The Canadian portfolio did better than the market primarily because of the risk management policy of capping exposure to any single issuer. The 29% of assets at market value invested in foreign equities had a negative return of 1.1%, versus minus 1.3% for the benchmark (a blend of the S&P 500 Index for U.S. equities and the MSCI EAFE Index for international equities). The foreign portfolio did better than the benchmark due to the timing of investing funds received from the Canada Pension Plan in the market.

Based on the actuarial assumptions for the Canada Pension Plan, contributions are expected to exceed benefit payments until 2021, providing a 20-year period before investment income is needed to help pay pensions The value of assets under management is expected to grow to at least $130 billion by 2011.