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Returns on funds in 2007

In 2007, financial markets for Canadian institutional investors were characterized mainly by:

• high returns of non-residential Real Estate, Private Equity and emerging countries portfolio;
• good returns of the Canadian Equity portfolio;
• low returns of foreign developed countries portfolio (The low returns were accentuated in certain cases by the increased value of the Canadian dollar.);
• low returns of Canadian bonds;
• a provision incidental to the liquidity crisis that occurred in August 2007 in the Canadian asset-backed commercial paper (ABCP).

Summary of the returns generated in 2007 by public sector pension plan funds administered by the Caisse de dépôt et placement du Québec

The Caisse de dépôt et placement du Québec administers the four following funds:

1. The Government and Public Employees Retirement Plan (RREGOP) Fund;
2. The Pension Plan of Management Personnel (PPMP) Fund;
3. The Pension Plan of Elected Municipal Officers (PPEMO) Fund;
4. The Special Plans Fund.

Management of the RREGOP, the PPMP and the PPEMO funds is supervised by a pension committee specific to each fund. Management of the special plans fund, which mainly contains the assets of the Pension plan for federal employees transferred to employment with the gouvernement du Québec (PPFEQ), is supervised by CARRA.

In order to meet the return targets and the credit limits set under the funds' investment policies, assets are distributed among 12 categories: Bonds, Canadian and Foreign Equity, Private Equity, Infrastructures and Real Estate.

The choice of asset categories and the proportion of assets in each category explain the annual return difference that can be observed between the four funds and Canadian major pension funds.

The following tables show that the return of the four funds is more than enviable in 2007 compared to that of other Canadian funds identified by specialized firms, which vary from 1.5% to 2.5%.

The RREGOP Fund

On the basis of the market value, the RREGOP fund's assets rose from 44.2 billion dollars as at December 31, 2006 to 46.1 billion dollars as at December 31, 2007.

The table below shows the annual rate of return generated by the RREGOP fund's assets in 2007 and the average annual rate of return obtained from 2004 to 2007 and from 1998 to 2007:

The PPMP Fund

On the basis of the market value, the PPMP fund's assets rose from 7.3 billion dollars as at December 31, 2006 to 7.7 billion dollars as at December 31, 2007.

The table below shows the annual rate of return generated by the PPMP fund's assets in 2007, and the average annual rate of return obtained from 2004 to 2007 and from 1998 to 2007:

The PPEMO Fund

On the basis of the market value, the PPEMO fund's assets rose from 164.5 million dollars as at December 31, 2006 to 172.8 million dollars as at December 31, 2007.

The table below shows the annual rate of return generated by the PPEMO fund's assets in 2007, and the average annual rate of return obtained from 2004 to 2007 and from 1998 to 2007:

The Special Plans Fund

On the basis of the market value, the special plans fund rose from 252.9 million dollars as at December 31, 2006 to 273.6 million dollars as at December 31, 2007.

The table below shows the annual rate of return generated by the special plans fund in 2007, and the average annual rate of return obtained from 2004 to 2007 and from 1998 to 2007: