February 26, 2003

Third Quarter results show improved performance for Heritage Fund

Edmonton...The Alberta Heritage Savings Trust Fund made a strong recovery in the third quarter of this fiscal year, showing an increase in fair value of $522 million. As of December 31, 2002 the fair value of the Heritage Fund  is $11.6 billion, up 4.5 per cent from $11.1 billion at September 30, 2002.

“I am pleased with the results of the third quarter and encouraged by market activity,” said Alberta Revenue Minister Greg Melchin. “However, as the markets experience ongoing uncertainty and volatility due to tensions in the Middle East and continued weak investor confidence we remain cautiously optimistic.”

Overall, the Heritage Fund returned 4.8 per cent this quarter, with equity investments outperforming fixed income investments as world stock markets began to recover from one of the worst declines in history. The Fund’s public equity portfolio returned 7.1 per cent this quarter while the Fund’s bond portfolio returned 2.2 per cent, and real estate investments returned 2.5 per cent.

For the year to date, losses from equity investments of $901 million were partially offset by income from bonds, notes and short term paper totaling $215 million and real estate income of $35 million. A net loss of $578 million is still forecast for the fiscal year ending March 31, 2003. This is an improvement from the second quarter forecast of $627 million.

The Heritage Fund’s investment strategy is to invest in a diversified portfolio to optimize long-term returns at an acceptable level of risk. For the 2002-03 fiscal year, the policy asset mix is 35 per cent fixed income securities, 50 per cent public equities, 10 per cent real estate, 2 per cent private equities, and 3 per cent absolute return strategies.

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For media inquiries, please contact:

Cathy Housdorff Director of Communications Alberta Revenue (780) 427-5364

Barrie Harrison Communications Alberta Revenue (780) 427-6699

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