CPP Fund Earns 1.2 Per Cent on Strength of Fixed Income

FISCAL 2005 SECOND-QUARTER RESULTS: CPP RESERVE FUND GROWS TO $75.2 BILLION

The CPP Investment Board announced today that for the three months ending September 30, 2004, assets available to the Canada Pension Plan earned $906 million, producing a rate of return of 1.2 per cent.

During the six months ending September 30, 2004, assets available to the Canada Pension Plan earned $679 million, producing a rate of return of 0.9 per cent.

The CPP reserve fund grew to $75.2 billion from $73.2 billion in the three months ending September 30, 2004, due to investment earnings and contributions to the CPP net of benefits paid. The $2 billion growth of the reserve fund was the result of $906 million in investment earnings plus $1.1 billion in contributions to the CPP net of benefits paid.

The equities, real estate and infrastructure portions of the overall portfolio were down slightly on the quarter to negative 0.02 per cent while the fixed income portfolio gained 2.2 per cent.

"Our focus remains on the long term," said John MacNaughton, President and CEO of the CPP Investment Board, "we are continuing to broadly diversify the portfolio in order to help ensure sustainability of the CPP for generations to come."

At September 30, 2004, the assets of the Canada Pension Plan consisted of $35.6 billion in bonds and money market securities, and $39.6 billion in publicly traded stocks, private equities, real estate and infrastructure.

The bonds and cash operating reserve held in Ottawa are gradually being transferred to the CPP Investment Board. The transfer of bonds began on May 1, 2004, and will take three years to complete. The transfer of the cash operating reserve began in September 2004, and will be completed in August 2005.

Based on actuarial projections, CPP contributions are expected to exceed benefits until 2021, providing a 17-year period before a portion of the investment income is needed to help pay CPP benefits.