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Investment Policy

OBJECTIVE

The Foundation serves the community as a repository for endowment funds established by concerned persons, corporations or charities to provide support for community needs.

SPECIFIC OBJECTIVES

  1. Preserve capital.
  2. Generate income sufficient to:
    1. Meet the needs of the community.
    2. Meet the realistic expectations of the donor(s).
    3. Comply with regulatory and statute requirements (CRA minimum requirement of 3.5% annual disbursement).
  3. Provide income flow as required for funding requests, administrative expenses and budgetary items.

INVESTMENT OBJECTIVES

The primary objective in investing the assets of the Foundation shall be:

The preservation and enhancement of the value of assets through prudent diversification of high quality investments and asset classes.

The achievement of a premium investment return over the benchmark portfolio resulting from active investment management, calculated over a normal market cycle. The benchmark portfolio shall be broken down as follows:

35%  TSE 300
9%    S&P 500
8%    EAFE
40%  Scotia McLeod Universe
8%    T-Bills

INVESTMENT GUIDELINES
 

Asset Mix

The investment policy is based on a balanced approach, with a diversified mix of equities and fixed income securities and cash. The permitted asset categories are defined as follows:
Equities: Listed Canadian, U.S. and Non-North American shares.
Fixed Income: Federal and Provincial bonds, high quality corporate bonds, high quality preferred shares.
Cash: Short term deposits and money market instruments, treasury bills, government bonds with term to maturity of less than one year.

Cash & Equivalents 0% - 20%
Bonds 30% - 50%
Canadian Equities 10% - 40%
U.S. Equities 10% - 55%
International Equities 0% - 40%


INVESTMENT STRATEGY
 

Canadian Equities

No more than 20% of the total market value of the Canadian equity section shall be invested in equity or quasi-equity securities of companies within any one generally recognized industry group.

No more than 10% of the total market value of the Canadian equity section shall be invested in the equity or quasi-equity securities of any one company.

No equity holding in the Fund shall exceed 5% of that company’s total outstanding voting shares.

U.S. Equities

No more than 20% of the total market value of the U.S. equity section shall be invested in equity or quasi-equity securities of companies within any one generally recognized industry group.

No more than 8% of the total market value of the U.S. equity section shall be invested in the equity or quasi-equity securities of any one company.

No equity holding in the Fund shall exceed 5% of that company’s total outstanding voting shares.

Non-North American Equities

Japan may have a minimum weight of 10% and a maximum weight of 50% in the portfolio. Europe may weigh between 40%-80%. Any other one EAFE country’s maximum weight is 20% or may be 25% over the index weight.

Emerging markets, which are not part of the EAFE index, are limited to a 10% maximum weighting. Each emerging country, which is not part of the EAFE index, may have a maximum weighting of 5%.

No single security may exceed 5% of the market value of the portfolio.

Short-term Securities

Investment of cash reserves in short-term paper shall be confined to securities of Federal or Provincial Governments, chartered banks, major trust companies, or top quality corporate credits (Ratings will be R1-low or better).

Bonds

The bond section may be invested up to 100% in corporate issues.

Not more than 20% of the total market value of the bond section shall be invested in any one generally recognized industry group, except utilities (40%) and finance (40%).

Not more than 20% of the total market value of the bond section shall be invested in private placements.

Not more than 20% of the total market value of the bond section shall be invested in foreign currency issues.

Based on bond quality rating agreed upon by the Investment Committee and Investment Counsel.

The average quality rating of all of the holdings in the bond section shall be A or better;

The minimum quality rating of any holding in the bond section shall be BBB;

The maximum aggregate holding of BBB rated bonds of any issuer shall be 10% of the total market value of the bond section.

 

GENERAL

The Investment Manager is delegated the responsibility of exercising all voting rights acquired through the Foundation’s investments.

The Investment Manager will meet with the Investment Committee at least once annually to review fund performance and objectives.

 

QUALITATIVE CRITERIA

The directors shall establish and the company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

 

ADMINISTRATION & REPORTING POLICIES

  • The Investment Manager will provide a written report at least quarterly, which is to include a portfolio valuation and performance summary.
  • The Investment Manager will be required to provide a comprehensive annual report. This report should include commentary on markets, economic outlook, and ongoing investment plans and tactics.
  • The Investment Manager is authorized to adjust the portfolio to meet objectives consistent with this policy document.
  • Any deviation from these policies, brought about by exceptional circumstances, must receive prior approval of the Investment Committee.
  • These policies will remain in effect until changed in writing and agreed to by the Foundation and the Investment Manager.
  • Separate or pooled portfolios may be maintained for each “managed” fund.
 

GENERAL POLICIES

  • Dividends received and net realized capital gains will be treated as income.
  • Premiums or discounts will be amortized for calculation of income.
  • No direct investment in Real Estate (purchase of buildings) is permitted, except where such property would be for the use of the Foundation.

    • Real Estate received from donor(s) will be considered on a case-by-case basis, and will generally only be held until the first reasonable opportunity to divest. This policy does not apply to real estate donated for the use of the Foundation.
  • Investments received from donor(s) may create exceptions to this policy document. Each such exception is subject to review and authorization by the Board of Director’s upon receipt of the donation, and at least semi-annually thereafter. The Board of Director’s retains the right to decline any donation should conditions of continuing investment attached to such donation not meet with the Board’s approval.
  • For years ending after June 30/00 the investment committee will review the undistributed income of each fund and determine what portion if any should be added to the capital of the fund.
  • Policy allows for investment in Pooled Funds, Common Trust Funds, and Mutual Funds.
  • Assets may have to be sold from time to time in order to meet funding requirements, and that the Investment Committee is authorized to determine the asset(s) to be sold, and the time of such sale(s).
  • The Annual Spending Limit for grants and Administrative Charges will be reviewed not less than annually by the Investment Committee and recommendations for changes will be made to the Board when considered appropriate.
  • Contributions made and placed in the Community Fund or designated fund must be invested for a period of not less than one (1) year before any grants can be made from the earnings (unless otherwise agreed upon by the Board of Directors.