Briefly:

(February 20, 2004) The Ontario Teachers’ Pension Plan (OTPP) posted an 18% return in 2003, the third-best performance in the fund’s 14-year history. The plan’s net assets climbed to $75.7 billion at the end of last year, compared to $66.2 billion in 2002.

“We were surprised at the strength of the markets this year. All asset classes performed very well for us in 2003, significantly outperforming market benchmarks,” said OTPP CEO Claude Lamoureux. “We also increased investments in infrastructure, private equity and alternative investments in our continued search for value.”

The OTPP’s long-term rate of return has averaged 11% since the fund was created in 1990.

Despite the strong performance, pension payments exceeded contributions by $1.8 billion in 2003 and actuarial studies have revealed a $6.2 billion shortfall of assets compared to the cost of future benefits.

Lamoureux attributed the shortfall to a decline in interest rates and said the responsibility for ensuring the plan remains fully funded rests with the Ontario government and the plan sponsor, the Ontario Teachers’ Federation.

• • •

Comment period extended on uniform securities act

(February 20, 2004) The Canadian Securities Administrators (CSA) is adding another 60 days to the comment period on its proposed uniform securities act, an effort to harmonize and streamline securities regulation across the country.

The draft legislation was released on December 19, 2003 — the initial deadline for comments was March 16, 2004.

The CSA says it will now accept responses until May 17, 2004 due to the complexity of the project and the number of other regulatory initiatives currently requiring attention.

The March deadline also conflicted with year-end reporting obligations for many firms and advisors, the CSA added.

• • •

CPP/OAS tax slips now available online

(February 20, 2004) Canada’s five million OAS and CPP recipients can now access their OAS and CPP tax slips on the Internet.

The online service will make it easier and more convenient for seniors filing their income tax returns, says Liza Frulla, minister of social development.

The department of social development will continue to mail CPP and OAS tax slips, but recipients will have the choice of discontinuing that service in favour of online access.

• • •

Loring Ward phasing out Assante brand in U.S.

(February 19, 2004) Loring Ward International — created last year when CI Funds purchased Assante’s Canadian division — is accelerating its plan to phase out the Assante name in the U.S.

Loring Ward CEO Martin Weinberg, who used to head Assante, says a number of the company’s subsidiaries changed from the Assante name to the Loring Ward brand on February 1, 2004. Other subsidiaries may move away from the Assante name later this year, he added.

Under the terms of the CI deal, Loring Ward is entitled to keep using the Assante name in the U.S. market until November 2005. However, Loring Ward has decided not to wait that long.

“As we gear up our marketing program, we want to ensure that we are investing in a brand with lasting equity,” Weinberg explained. “We’ve received positive feedback on the Loring Ward brand and are eager to move forward with all of our plans quickly and decisively.”

• • •

RBC launches new life insurance product

(February 19, 2004) RBC Insurance has introduced a new universal life insurance product, combining permanent life insurance with a low-risk investment component.

Foundational Life lets investors purchase permanent life insurance protection in a variety of amounts that are lower than most traditional universal life insurance policies, RBC says. In addition, part of the premiums paid accumulates as cash value, which is available if the policy is cashed in or terminated.

“In contrast, the cash value of a policy available to holders of typical universal life insurance products fluctuates with the performance of the investment options that are chosen,” RBC says.

“Our research has shown that clients want insurance that protects them for their entire life, but also offers the option of saving for the future through low-risk investments — and this is exactly what our product has been designed to provide,” said Neil Skelding, executive vice-president of RBC Insurance.

• • •

IDA applauds B.C. budget

(February 18, 2004) The IDA is applauding the balanced budget tabled in British Columbia yesterday, calling it “confidence-boosting.” The IDA also pointed out it believed the economic assumptions the budget was based on were conservative.

“The IDA commends the government for delivering a balanced budget and three-year fiscal plan that conforms to GAAP accounting for more comprehensive and transparent public accounts,” read a statement issued on the IDA Web site.

• • •

December good month for foreign stocks sales

(February 18, 2004) The Canadian economy got a vote of confidence from the international community in December, as foreign investors bought into our equity markets, adding $2.2 billion worth of stock to their holdings. For the full year, foreign investors added $12.9 billion worth of Canadian stock to their portfolios.

At the same time, foreign investors sold off their holdings in the debt market, with holdings in bonds dropping $1.6 billion, and money market holdings dropping $0.5 billion.

Canadian investors took a more balanced approach to foreign securities, picking up $2.7 billion in stock and $2.3 billion in bonds in December. Canadians invested $12.5 billion into foreign securities, preferring debt over equity two to one.

• • •

ICI finds fund costs dropping

(February 18, 2004) The Investment Company Institute (ICI) is reporting that American investors are being misinformed about the costs of mutual funds. According to ICI, the costs associated with equity-based mutual funds have dropped by 45% since 1980.

“The total shareholder cost approach to assessing mutual fund fee trends has been favourably received by government officials and many independent experts,” says ICI chief economist John Rea. “It measures both sales loads and annual fees, not just one or the other.”

“Each study found that the overwhelming majority of funds that experience significant growth reduce their fees, with the sharpest reductions at the funds that grew the most,” says Rea, referring to studies by the ICI, the Securities and Exchange Commission and the General Accounting Office.

• • •

Less than half of Canadians planning RRSP contribution: Survey

(February 17, 2004) Nearly half of Canadians say they will not make an RRSP contribution this year, according to an Ipsos-Reid survey conducted for Scotiabank.

The study found that although 63% of Canadians felt that saving for retirement is very important, only 47% planned to make an RRSP contribution for 2003.

Albertans were the most RRSP-friendly, with 60% indicating they would make a contribution. At the other end of the scale, only 40% of those in Saskatchewan, Manitoba and Atlantic Canada planned to contribute.

Albertans also had the highest retirement goals, with 24% hoping to stash away at least $1 million. Forty-one per cent of Albertans said they have a written financial plan, the highest rate in the country.

• • •

Housing market expected to cool off in 2004

(February 17, 2004) Canada’s red hot housing market is expected to moderate somewhat in 2004, according to a study released today by RBC Financial Group.

Low borrowing rates and solid affordability will keep the housing market humming in 2004, but an increasing supply suggests slightly weaker sales, the study concludes.

RBC says the influence of first-time homebuyers — who have dominated the market in recent years — will become less prevalent this year as existing homeowners looking to upgrade take centre stage.

RBC’s Affordability Index, which measures total housing costs against pre-tax household income, averaged 31.9% in 2003, just short of the all-time low of 31.7% posted in 2001.

Atlantic Canada is the most affordable area in Canada to own a home, while British Columbia is the least.

• • •

Federal debt falls to $510 billion

(February 17, 2004) Ottawa has reduced the federal debt to $510.6 billion, according to the federal government’s annual Debt Management Report.

In fiscal 2002-2003, Ottawa reduced interest-bearing debt by $2.1 billion, says federal Finance Minister Ralph Goodale.

In the last six years, the federal government has cut the debt by more than $52 billion. Goodale says the debt now stands at 44.2% of gross domestic product, compared to 68.4% in 1995-1996.

“This debt reduction is saving the government $3 billion each year in interest payments, providing greater financial security for Canadians, which is particularly important in the current economic environment,” the report states.

Goodale has pledged to continue the commitment to debt reduction in the next federal budget, expected in March.

• • •

Caisse posts strong 2003 returns

(February 17, 2004) Bolstered by rising equity markets, the Caisse de dépôt et placement du Québec earned a 15.2% return on its investments in 2003. Assets rose $11.5 billion to $89.4 billion, the country’s largest pension fund manager reported today.

Nearly 60% of the Caisse’s returns came from its holdings in the equities markets.

“After the substandard performances of 2001 and 2002, our return for 2003 is more in line with what is expected of the Caisse,” said Caisse CEO Henri-Paul Rousseau.

Rousseau called the results “satisfactory,” adding, “The challenge will be to repeat and improve in the years to come in order to achieve our medium- and long-term goals of joining the ranks of asset managers who sustain a superior performance over the years.”

• • •

Boomers giving up on early retirement, survey suggests

(February 16, 2004) Canadians over the age of 40 are shelving their dreams of early retirement, according to a study conducted for Desjardins Financial Security. Instead, boomers are planning a phased-in approach to retirement, involving self-employment or part-time work, the survey indicates.

Only 50% of baby boomers believe they will be able to stop working by age 58, the study found. More than 60% said they plan on working after retirement, around 21 hours a week on average. And 71% of those surveyed said they supported the scrapping of mandatory retirement at age 65.

“Boomers will create a new generation of progressive retirees as Canadians need to earn additional income to top up their savings or pension to maintain a standard of living that meets their requirements,” says Desjardin Financial’s Taylor Train.

Montreal-based polling firm SOM questioned more than 1,500 Canadians aged 40 to 54.

• • •

RBC settles dispute with Radobank

(February 16, 2004) Royal Bank of Canada has settled a legal tussle with Dutch bank Radobank, stating that the confidential agreement will result in a $74 million reduction in RBC’s quarterly earnings.

No other details of the settlement were released.

The dispute centres on a $517 million US transaction the two banks signed in January 2001, based on the sale of shares from a publicly traded company related to Enron. RBC says Radobank failed to meet its payment obligation after details involving Enron’s collapse were revealed.

“The settlement will allow us to put this matter behind us without the further expense and distraction of continued litigation,” said RBC spokesperson Paul Wilson.

• • •

(02/16/04)