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| June 24, 2003
Heritage Fund challenged by a tough year on the markets |
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| Edmonton… The three-year long bear
market continued to take its toll on the Alberta Heritage Savings Trust Fund.
"The global economy and global equity markets have been thrown a number of
challenges this year," said Greg Melchin, Minister of Revenue. "Highly
publicized corporate scandals shook investor confidence, the world economy
slowed, tensions in the Middle East rose, and when investor confidence started
to stabilize in the third quarter, a war broke out in Iraq. It has been
difficult for everyone."
The Heritage Fund recorded a net loss for the year of $894 million. Equity investment losses of $1.2 billion were offset by gains of $286 million from investments in bonds, notes, and short term paper, $39 million in real estate income, and a $5 million gain from absolute return strategies. The fair value of the Fund, as of March 31, 2003, was $11.1 billion. |
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"While this is disappointing, it has also been the worst bear market since the 1930s. History has shown that over time, just when it appears conditions are at their worst and investor patience is wearing thin, markets defy expectations and stage a recovery," said Melchin. "We remain cautiously optimistic, and indeed, since March 31st, when factored against the rising Canadian dollar, equity markets are already up between 6 and 11 per cent." The Heritage Fund's investment income (net gain) is transferred to the province's General Revenue Fund to support priority spending. As the Fund experienced a net loss, no transfers to the General Revenue Fund were made this year. Over the last 27 years more than $25 billion has been used for capital expenditures and programs including health care, education, and infrastructure. The Heritage Fund will continue to focus on a long-term investment strategy that includes a strong component of equities as, over time, equities out-perform fixed income securities. "We focus on the long-term outlook, not quarter to quarter, or in fact, year to year," said Melchin. "Volatility is in the short-term, and over the longer period of time, risk is minimized. The Heritage Fund is here to stay." Initiatives such as the Alberta Future Summit 2002 and the recent Looking Forward: Planning for the Future with the Alberta Heritage Savings Trust Fund survey continue to reinforce the Heritage Fund's mandate. Click on the links below for: |
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For media inquiries, please contact:
Cathy Housdorff
Alberta Revenue Communications
(780) 422-4591
(780) 719-4104 cellular