PURPOSE OF INVESTMENT POLICY STATEMENT
The purpose of the Investment Policy Statement is to establish and deﬁne the investment parameters of the discretionary investment management relationship for the Muskoka Community Foundation. Speciﬁcally, the Investment Policy Statement will:
- Outline the Foundation’s current situation.
- Identify the investment objectives and constraints of the Foundation.
- Determine an appropriate asset mix that is consistent with these investment objectives and constraints.
- Establish an appropriate reporting and review process.
- Conﬁrm the Foundation’s agreement to the above points.
Muskoka Community Foundation is a Registered Charity Corporation. The date of incorporation was July 27, 2007 in the Province of Ontario.
The current signing ofﬁcers are:
- Daniel Bradbury ( Chairperson)
- Gordon Harper Duman ( Vice-Chairman)
- William Fee ( Treasurer)
- Jane Findlay Hunt ( Secretary)
The current directors are:
- Marg French
- Scott Young
- Eva Zachary
- Jennifer Tournour
- David Sprague
It is important to establish the Foundation’s goals for these investments and clearly state the investment objectives in order of priority. The investment strategy developed for the portfolio will be designed to meet the Foundation’s goals while working within the Foundations’ acceptable level of risk. The return on the portfolio will vary over different time periods and will be inﬂuenced by a number of factors, including the asset mix (i.e. equities vs. ﬁxed income) within the portfolio, the time frame and economic conditions. Please keep in mind that previous return patterns are not guaranteed to repeat themselves.
The primary goals of the portfolio are to grow the assets and to distribute capital in accordance with the Canadian Income Tax Act. The current minimum annual disbursement is 3.50%.
To achieve your goals, you would like your desire for a balanced growth portfolio to be a primary consideration. This investor proﬁle will seek to provide long-term capital appreciation and modest income by investing primarily in equity or equity-type investments and ﬁxed-income investments.
The Foundation is required to disburse 3.50% at minimum on an annual basis according to the Canadian Income Tax Act. Large capital disbursements are not anticipated.
Your portfolio will be constructed and managed to accommodate any Withdrawal requirements. Your Withdrawal requirements will be met from money market investments, dividends or by liquidation of bond and/or equity investments. From time to time, it may be necessary to draw from any capital gains and in certain circumstances, the capital base of your portfolio to meet your withdrawal requirements.
There is always some degree of uncertainty (investment risk) concerning the rate of return or growth of assets that may be generated over any ﬁlture period. Investment risk may be deﬁned as the frequency and magnitude of negative returns over a given period.
The Foundation’s ability to assume investment risk is dependent on the Foundation’s ﬁnancial goals and the time frame within which these goals must be met. As the investment portfolio grows or the time horizon lengthens, the Foundation develops alternative ways to recover from investment shortfalls. Equally important is the Signing Ofﬁcer’s willingness to assume investment risk. While the Foundation may be ﬁnancially able to accommodate market value ﬂuctuations, the directors may not be comfortable with a drop in portfolio value.
The tolerance for risk and volatility is considered to be moderate that implies in any one year period, the Foundation can tolerate a drop in value of the portfolio of as much as 11-15% before the Signing Ofﬁcers feels distinctly uncomfortable with the Foundation’s investment strategy.This range is a representation of the Foundation’s tolerance for risk and volatility; however, please note that in times of higher volatility in the ﬁnancial markets the portfolio may experience ﬂuctuations in value that are higher than this range.
The portfolio will be managed to minimize ﬂuctuations in a manner that is consistent with stated
objectives over the time horizon.
The time horizon of a portfolio is the period that can lapse before the Foundation is likely to need a substantial portion of the capital. In accordance with the primary goal, the Foundation’s time horizon is greater than ten years.
Liquidity is the ability to quickly convert securities into cash for disbursement without negatively impacting the value of the securities or disrupting the overall portfolio. Your liquidity requirement is determined by the amount of cash you will require from the capital of the portfolio in the near term or on short notice. This requirement will determine the appropriate level of cash and liquid securities in your overall asset mix.
It is unlikely that the Foundation will withdraw a signiﬁcant amount of this investment earlier
Taxes are not applicable as the Foundation is recognized by Revenue Canada.
Unique / Legal:
There are no unique or operational constraints at this time. There are no legal constraints at this time.
ASSET ALLOCATION GUIDELINES
Your Portfolio Asset Allocation
The following asset mix has taken the Foundation’s return requirements, risk tolerance and constraints into consideration. The table indicates the minimum and maximum ranges for each asset class within the strategy for the portfolio. Should exposure to a particular asset class exceed the maximum or be less than the minimum of its permitted range, a portfolio rebalancing within a reasonable timeframe to maintain the portfolio within the permitted ranges is anticipated.
The neutral weightings represent the long-term expected average weighting of the asset classes that comprise the portfolio. Depending on our outlook for the markets, the current weighting for any one asset class or sub-asset class may deviate from the neutral weighting; however, the weightings should always lie within the prescribed range.
The portfolio may invest in the following asset categories, (these assets may be obligations or securities of Canadian or non-Canadian entities):
- Publicly traded equity securities or preferred shares
- Bonds, debentures, notes or other debt investments of governments, government agencies or corporations, including mortgage or asset-backed securities; high yield bonds,
- Cash or money market securities issued by governments or corporations
- Pooled funds of the aforementioned securities
REPORTING AND REVIEW PROCESS
Portfolio Manager Contact:
We will endeavour to meet with you quarterly to review the portfolio structure and reconﬁrm the Foundation’s objectives. We will also endeavor to contact you quarterly to discuss the progress of the portfolio.
You are encouraged to contact us if there is a change to the Foundation’s circumstances or if a change to the investment strategy may be required.
The Foundation will receive a detailed consolidated monthly statement of the account which includes a report of the Foundation’s portfolio’s holdings as well as a summary of transactions
during the period.
The Foundation will receive Straight Forward, a quarterly newsletter providing information on investment strategies as well as insights into recent economic and capital market developments.
In addition to managing the investment portfolio in accordance with the Foundation’s needs, our services include discussing other needs and requirements such as:
- Retail Banking
ACKNOWLEDGEMENT AND AGREEMENT
All investment activities will be conducted in accordance with requirements of federal and provincial regulatory bodies, the CFA Institute Code of Ethics and Standards of Professional Conduct and TD Bank Financial Group internal trading and compliance policies and audits.
I/We acknowledge the information contained herein is correct and I/we am in agreement with the investment strategy outlined in this document.