MTS Pension Plan - Manitoba Telecom Services Inc. and Participating Subsidiaries Employee Pension Plan

You are in: The Plan : Publications : 2000 Annual Report : Pension Plan Performance

Pension Plan Performance

In a year when most equity markets suffered losses, the MTS Pension Plan earned 6.3% for the year ending December 31, 2000.

The Investment Committee has two objectives for the Plan’s rate of return:

to exceed the annual rate of inflation by 4% and
to exceed the weighted market average return for the Plan’s various investments (the "benchmark")

Although annual returns are carefully reviewed, it is the Plan’s performance over longer periods – three to five years – that best indicates how well the Plan’s funds are invested.


	One Year	Four Years
MTS Pension Plan Return	6.3%	10.7%
Benchmark	4.8%	9.9%
Performance Goal (CPI + 4%)	7.3%	5.9%

The Plan’s investments earned a return of 6.3% in 2000. The Plan is invested in a variety of assets including Canadian equities, global equities, Canadian bonds, real estate, mortgages and short-term investments. It is this diversity of investments that reduces the risk of the Plan performing poorly. This is clearly seen when looking at the Plan’s performance in 2000.

In 2000, global equity markets in general produced negative returns. The MSCI World index (the broad measure of world’s equity markets) returned just under –10% in 2000. Canada’s TSE 300 return of 7.4% was one of the few positive returns around the world. Conversely, bond, mortgage and real estate markets performed very well with returns around 10%. This is almost the opposite of market performance in 1999, when global equity markets performed very well and bond markets had negative returns.

The Plan’s 6.3% return can be attributed to the Plan’s positive returns in Canadian bonds and Canadian equities being partially offset by negative returns in the US and other global equity markets. The Plan was able to outperform its benchmark return by 1.5% in 2000 because of the performance of the Plan’s investment managers. The Plan’s active Canadian equity, Canadian bonds, mortgage and real estate managers all beat their respective benchmark returns.

The Plan’s return in 2000 did not, however, meet its performance goal of CPI + 4%. This is not unusual in a year where equity markets had either low positive or negative returns. The performance goal is not a short-term objective, but instead, is meant to be achieved over a period of at least three to five years. Over four years, the Plan continues to beat both the performance goal as well as benchmark return. This is an indication of the strength of both the Plan’s asset mix and the investment management team put together by MTS.