February 27, 2002 Heritage Fund investment income rebounds in third quarter Edmonton...The Alberta Heritage Savings Trust Fund earned $151 million in investment income during the third quarter of fiscal 2001-02, resulting in net income of $70 million for the past nine months (ending December 31, 2001) and offsetting losses of $81 million in the first half of the fiscal year. The fair value of the Fund increased by $611 million in the third quarter from $11.849 billion to $12.460 billion and now exceeds the fair value at the Fund at the beginning of fiscal year 2001-02 by $337 million. "I’m pleased to see equity markets improving and investor confidence in an economic recovery increasing," said Greg Melchin, Alberta Revenue Minister. The third quarter forecast net income of the Fund for the fiscal year ending March 31, 2002 is $191 million, an increase of $20 million over the second quarter forecast. Earned income is not retained in the Fund, but used on priorities like health care, education, roads, tax reductions and debt payment. Over the past nine months, the transition of the Fund’s investment portfolio continued towards its goal of 65 per cent investment in equities and real estate and 35 per cent in fixed income securities. Generally, fixed income securities are less volatile and provide a steady stream of interest income. Equities are more volatile and produce capital gains or losses. Over the long term, equities produce higher rates of return than fixed income securities. The performance of the Heritage Fund is measured over the long-term. Over the past four-year period, the Fund generated an annualized return of 5.3 per cent. For the quarter ending December 31, 2001, the Fund generated a return of 6.0 per cent. It is the Government of Alberta’s goal to develop and implement sustainable revenue and investment frameworks that meet the province’s needs. To that end, questions about savings – how much, for what purpose – are being asked, through the recent Alberta Future Summit 2002 and in ongoing dialogue with the financial management community. "We have always said that no changes would be made to the Heritage Fund without consulting Albertans extensively first. After all, we’re talking about an investment fund with over $12 billion in assets," Melchin said. Go to:
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