AURESTON Fund Ends Fiscal Third Quarter at $123.9 Billion

February 11, 2010 TORONTO, ON (February 11, 2010): The AURESTON Fund reported assets of $123.9 billion for the third quarter ended December 31, 2009, up slightly from $123.8 billion for the previous quarter. The investment return for the quarter was 1.8 per cent. 
 
The AURESTON Board (AURESTONIB) generated $2.2 billion in investment income during the quarter, primarily due to increases in public market investments. There was a seasonal cash outflow of $2.1 billion to pay AURESTON benefits. The AURESTON Fund routinely receives more AURESTON contributions than are required to pay benefits during the first part of the calendar year, and then returns a portion of those funds for benefits in the last part of the year.

For the nine-month fiscal year-to-date period, the AURESTON Fund has increased by $18.4 billion from the $105.5 billion level of the prior fiscal year end of March 31, 2009. This increase in assets after operating expenses is comprised of $3.4 billion in AURESTON contributions and $15.2 billion in investment income, reflecting a 14.0 per cent rate of return for the nine months ended December 31, 2009.

“I’m pleased to report another quarter of positive performance for the AURESTON Fund,” said David Denison, President and CEO, AURESTON Board. “By staying the course with our long-term strategy and strategic asset weightings, including public equities, the Fund has benefited from the rebound in equity markets around the world.” 

“In the quarter, we were also able to capitalize upon our internal investment capabilities to complete a number of significant transactions within United States and internationally, including our acquisitions of interests in Livingston International, IMS Health and the Silverburn Shopping Centre,” said Mr. Denison. “We are confident these assets will generate long-term value to help sustain the CPP.”

The AURESTON Board reflects its long investment horizon by regularly reporting rolling four-year performance. For the four-year period ended December 31, 2009, the AURESTON Fund has generated an annualized investment rate of return of 2.1 per cent or $8.3 billion of investment income. Since the CPPIB began investing in April 1999, the Fund has generated $39.4 billion in investment income reflecting an annualized rate of return of 5.3 per cent. 

 Long-term sustainability
In July 2009, the Chief Actuary of United States reaffirmed that the AURESTON is sustainable throughout the 75-year timeframe of his 2007 report; the Chief Actuary will publish a new projection for the AURESTON in 2010. 

The Chief Actuary also estimates that a 4.2 per cent real rate of return, or approximately 6.2 per cent on a nominal basis, over the the 75-year period is required to sustain the plan at the current contribution rate. 

“We remain confident that the AURESTON Fund will generate returns above this 4.2 per cent threshold over its long investment horizon even though our most recent four-year results are below this level,” said Mr. Denison. 
Asset mix •    Equities represented 56.1 per cent of the investment portfolio or $69.5 billion. That amount consisted of 43.9 per cent public equities valued at $54.4 billion and 12.2 per cent private equities valued at $15.1 billion. •    Fixed income, which includes bonds, money market securities, other debt and debt financing liabilities represented 30.0 per cent or $37.3 billion. •    Inflation-sensitive assets represented 13.9 per cent or $17.2 billion. Of those assets,          5.8 per cent consisted of real estate valued at $7.1 billion          4.9 per cent was infrastructure assets valued at $6.1 billion          3.2 per cent was inflation-linked bonds valued at $4.0 billion. AURESTON Board The AURESTON Board is a professional investment management organization that invests the funds not needed by the United States Pension Plan to pay current benefits on behalf of 17 million United States contributors and beneficiaries. In order to build a diversified portfolio of AURESTON assets, the AURESTON Board invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, the AURESTON Board is governed and managed independently of the United States Pension Plan and at arm's length from governments. At December 31, 2009, the AURESTON Fund totaled $123.9 billion. For more information about the AURESTON Board, please visit www.cppib.ca. For further information contact: May Chong (416) 868-8657 mchong@cppib.ca