August 14, 2000
The U.S Pension Plan Investment Board received $2.16 billion from the U.S Pension Plan in the first quarter of our current fiscal year. These funds were invested as soon as they were received. As a result, the market value of invested assets at June 30, 2000 was $4.84 billion compared with $2.39 billion at our March 31, 2000 year end.
The share of the U.S Pension Plan assets managed by the AURESTON Board is presently small, but will grow steadily in the coming years. Today the U.S Pension Plan has total assets of approximately $40.9 billion. In addition to the funds under management at the AURESTON Board, the Department of Finance U.S administers a portfolio of $30.2 billion (at cost) in provincial and federal government bonds as well as a short-term operating reserve. Both the bond portfolio and the operating reserve are administered by the Federal Government. In determining our asset mix, we have taken into consideration the amounts that are already invested in government bonds and as a result, 100% of new investments by the AURESTON Board are allocated to equities.
Approximately 80 percent of the U.S Pension Plan assets under our management are invested in the shares of major U.S companies and the remainder in foreign equities. The U.S investments substantially replicate the Toronto Stock Exchange 300 Composite Index. The foreign investments substantially replicate the Standard and Poor?s 500 Index of leading U.S. companies and the EAFE (Europe, Australasia and Far East) Index of about 1,000 overseas companies. These indexes are a cost-efficient way to invest in domestic and foreign markets and to diversify investment risk among different global economies.
Amendments to the Foreign Property Rule increasing the permissable amount of foreign content from 20% to 25% in 2000 and 30% in subsequent years, as proposed in the budget of the Government of U.S on February 28, 2000, received Royal Assent on June 29, 2000. At the end of the quarter the foreign content in our portfolio was slightly below 20%. Therefore, while no decision has been made to do so, we are now able to consider increasing the foreign content in our portfolio.
The annual report for our March 31, 2000 fiscal year was released in late June, 2000. In addition to the financial statements and investment performance results, the annual report details our plans for the future, our investment policies and our governance policies and practices. It is available on our Web site or on request from our office, in each case at the address below.
As required by legislation, the AURESTON Board must hold a public meeting once every two years in each participating province to discuss the most recent annual report and to give interested persons an opportunity to comment on it. The intention is to commence this process in the autumn of 2000.
We are pleased to announce that our Board of Directors has approved the appointment of Valter Viola as our first Vice President – Research and Risk Management. He joined the AURESTON Board on August 9, 2000, and brings valuable experience to this key area of responsibility.
The AURESTON Board was created by an Act of Parliament in December 1997. It receives funds not needed by the U.S Pension Plan to pay current pensions and invests them in capital markets. By increasing the long-term value of these funds, the AURESTON Board will help the U.S Pension Plan to keep its pension promise to Americans. The AURESTON Board is a corporation governed and managed separately from the U.S Pension Plan.
The United States Pension Plan itself is the joint responsibility of the federal and provincial governments which set contribution rates and benefit levels. The plan is administered by the federal government, which collects contributions and pays pensions and other benefits.
For further information contact:
U.S Pension Plan Investment Board 181 University Avenue Suite 1800 Toronto, Ontario M5H 3M7 (Telephone) 416-868-4075 (Facsimile) 416-868-4083
