AGENDA - Finance Advisory Committee - 20220509Town of Aurora
Finance Advisory Committee
Meeting Agenda
Date:Monday, May 9, 2022
Time:5:45 p.m.
Location:Video Conference
Due to the COVID-19 pandemic, meetings will be available to the public via live stream only on
the Town’s YouTube Channel. To participate electronically, please visit aurora.ca/participation.
Pages
1.Call to Order
2.Land Acknowledgement
3.Approval of the Agenda
4.Declarations of Pecuniary Interest and General Nature Thereof
5.Receipt of the Minutes
5.1.Finance Advisory Committee Meeting Minutes of February 8, 2022 1
That the Finance Advisory Committee meeting minutes of February 8,
2022, be received for information.
6.Delegations
7.Matters for Consideration
7.1.Memorandum from Financial Management Advisor; Re: 2022 Prudent
Investor Regime Review
4
That the memorandum regarding 2022 Prudent Investor Regime
Review be received; and
1.
That the Finance Advisory Committee comments regarding 2022
Prudent Investor Regime Review be received and referred to
staff for consideration and further action as appropriate.
2.
7.2.Memorandum from Manager, Financial Management; Re: Town of Aurora
Debt Management Update
138
That the memorandum regarding Town of Aurora Debt
Management Update be received; and
1.
That the Finance Advisory Committee comments regarding the
Town of Aurora Debt Management Update be received and
referred to staff for consideration and further action as
appropriate.
2.
7.3.Memorandum from Project Management Office; Re: Town's Major
Capital Projects Update
142
That the memorandum regarding Town’s Major Capital Projects
Update be received for information.
1.
8.New Business
9.Adjournment
1
Town of Aurora
Finance Advisory Committee
Meeting Minutes
Date:
Time:
Location:
Tuesday, February 8, 2022
5:45 p.m.
Video Conference
Committee Members: Mayor Tom Mrakas (Chair)
Councillor Harold Kim
Councillor Michael Thompson
Other Attendees: Councillor Sandra Humfryes
Doug Nadorozny, Chief Administrative Officer
Rachel Wainwright-van Kessel, Director of Finance
Jason Gaertner, Manager, Financial Management
Sandeep Dhillon, Advisor, Financial Management
Linda Bottos, Council/Committee Coordinator
_____________________________________________________________________
1. Call to Order
The Chair called the meeting to order at 5:47 p.m.
2. Approval of the Agenda
Moved by Councillor Thompson
Seconded by Councillor Kim
That the agenda as circulated by Legislative Services be approved.
Carried
3. Declarations of Pecuniary Interest and General Nature Thereof
There were no declarations of pecuniary interest under the Municipal Conflict of
Interest Act, R.S.O. 1990, c. M.50.
Page 1 of 149
2
4. Receipt of the Minutes
4.1 Finance Advisory Committee Meeting Minutes of January 18, 2022
Moved by Councillor Kim
Seconded by Councillor Thompson
That the Finance Advisory Committee meeting minutes of January 18,
2022, be received for information.
Carried
5. Delegations
None.
6. Matters for Consideration
6.1 Memorandum from Senior Advisor, Financial Management; Re: Corporate
Revenues and Expenditures Reporting Improvements
Staff provided a brief overview of the memorandum and the Committee
expressed its support of the proposed reporting improvements. Further
clarification was provided by staff regarding item recategorization and the
management of grants, variances, budgeting, and reporting.
Moved by Councillor Thompson
Seconded by Councillor Kim
1. That the memorandum regarding Corporate Revenues and
Expenditures Reporting Improvements be received; and
2. That the Finance Advisory Committee comments regarding Corporate
Revenues and Expenditures Reporting Improvements be received and
referred to staff for consideration and further action as appropriate.
Carried
6.2 Memorandum from Manager, Financial Management; Re: Community
Benefits Charge Project Update
The Committee inquired about any comparison and financial benefits of
the new Community Benefits Charge (CBC) over the current system of
density bonusing, the Town's historical use of density bonusing, and the
downstream impacts of how revenue from the CBC is used. Staff provided
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3
clarification and the Committee expressed its support of the planned CBC
implementation process and alignment with future development charges
studies.
Moved by Councillor Thompson
Seconded by Councillor Kim
1. That the memorandum regarding Community Benefits Charge Project
Update be received; and
2. That the Finance Advisory Committee comments regarding the
Community Benefits Charge Project Update be received and referred
to staff for consideration and further action as appropriate.
Carried
7. New Business
None.
8. Adjournment
Moved by Councillor Kim
Seconded by Councillor Thompson
That the meeting be adjourned at 6:05 p.m.
Carried
Page 3 of 149
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: 2022 Prudent Investor Regime Review
To: Finance Advisory Committee
From: Laura Sheardown, Financial Management Advisor
Date: May 9, 2022
Recommendation
1. That the memorandum regarding 2022 Prudent Investor Regime Review be received;
and
2. That the Finance Advisory Committee comments regarding 2022 Prudent Investor
Regime Review be received and referred to staff for consideration and further action
as appropriate.
Background
Investing under the Municipal Act, 2001 and O. Reg 438/97 is divided into a prescribed
list of securities which is more commonly referred to as the Legal List and the Prudent
Investor regime. A Prudent Investor regime gives the municipality access to a wider
variety of investments, but also includes a new governance model.
The most cost-effective manner through which the town is able to access the Prudent
Investor regime is through a Joint Investment Board (JIB) as establishing its own
Investment Board is not financially feasible. There is currently one joint investment
board in Ontario that the town is able to join should its transition to a Prudent Investor
regime be approved.
To join a JIB, a municipality is required to relinquish its control and management of any
funds that are not required immediately to the JIB who will invest these funds on its
behalf subject to the municipality’s Investment Policy Statement and the overarching
portfolio investment plan.
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2022 Prudent Investor Regime Review
May 9, 2022 Page 2 of 7
Funds that are defined as being needed immediately by the Town remain under its
control and will continue to be invested as per the rules and limitations outlined through
the Legal List.
On November 19, 2019, Council reviewed the benefits of the new Prudent Investor
regime – FS19-033 Prudent Investor Option Analysis and directed staff to proceed with
an in-depth review of the investment options and revised investment policy with FAC.
On January 28, 2020, FAC completed their review of the Prudent Investor regime and
directed staff to proceed to General Committee for their final approval of the Town
transitioning to the Prudent Investor regime as a founding member.
On February 18, 2020, staff presented report FIN20-006 to General Committee. The
report’s recommendations were not supported by General Committee at the time due to
concerns with the Town joining the JIB as a founding member and outstanding
questions as to how exactly it would work. It was agreed to defer this decision until
such time the Town’s overarching Fiscal Strategy was finalized.
The following list of steps must be followed for the Town to implement a Prudent
Investor regime:
Adoption of an Investment Policy Statement, which outlines the way the Town of
Aurora will invest under the Prudent Investor regime
Execution of the ONE JIB Agreement which establishes the relationship between
the Town of Aurora, ONE JIB and ONE Investment
Approval of Prudent Investor Authorizing and Enabling By-law, which will officially
opt the municipality into the Prudent Investor regime as at the Prudent Effective
date
Analysis
The adoption of a prudent investor regime supports the Fiscal Strategy
The adoption of a Prudent investor regime is a strategic action under the revenue
management pillar of the Fiscal Strategy which supports the long-term financial
sustainability. Moving forward as a Prudent Investor will enable the Town to optimize
investment income, allowing for an overall reduction to the financial burden on tax and
rate payers. All investment income generated from capital asset reserve holdings, of
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2022 Prudent Investor Regime Review
May 9, 2022 Page 3 of 7
which are mostly funded through tax and user rates, must be maximized to offset the
impact of inflation on reserves in long-term.
The Prudent Investor under One Investment expands upon the investments available
under the Legal List
ONE Investment’s Prudent Investor offering a mix of its current Legal List options and
two funds that are only be available to Prudent Investors – a Global Equity fund and a
Global Bond fund. Additional details on these funds can be found in the 2020 ONE
Investment Annual Performance Report and 2020 ONE Investment Annual Report.
Table 1
Comparison of Conservative Portfolio Mix Under Both Options1
Assumed Asset Allocation Weights Legal
List
Prudent
Investor
Money Market Portfolio 25%
Bond Portfolio 20% 21%
Unconstrained Global Bonds 49%
Canadian Corporate Bonds 30%
Total Fixed Income 75% 70%
Canadian Equity 25% 5%
Global Equity 25%
Total Equity 25% 30%
Standard Deviation 3.50% 4.20%
Expected return 2.06% 3.48%
Expected worst case annual return -5.0% -5.0%
1 Modelling conducted by AON Hewitt and data provided by ONE Investment
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Table 1 above compares possible returns under the Legal List and the Prudent Investor
Standard for a relatively conservative asset mix. The allocations in this table were
designed to have downside risk that is nearly identical.
Under the Prudent Investor regime, a portfolio that is more heavily weighted towards
equities with the same negative risk can provide a 1.42% higher return. This increased
return is achieved by allocating 5% more to equity and shifting from purely Canadian
bonds and equities to global markets within the fund.
The two Prudent Investor global offerings are existing and established funds with an
existing client base and track record – Global Bond Fund is managed by Manulife Asset
Management and Global Equity is managed by Mawer Investment Management – this
information allows us to compare the actual past performance of a Prudent Investor
asset allocation to a comparable Legal List asset allocation. The 2020 information
below reflects actual returns for the ONE Investment for the partial year since inception.
Table 2
Historical Rates of Return for ONE Investments (2014-2020) 2
Year Money
Market
Gov’t Bond
Portfolio
Cdn Corp
Bond
Equity
Portfolio
Global
Bond
Global
Equity
2020 1.1% 5.7% 8.0% 6.5% 7.6% 11.2%
2019 1.9% 3.1% 5.6% 19.1% 19.4% 22.3%
2018 1.7% 2.0% 1.6% -1.9% 0.6% 5.7%
2017 0.8% 0.3% 2.6% 10.8% 4.6% 19.1%
2016 0.7% 1.2% 2.2% 15.3% 5.2% 0.9%
2015 0.9% 2.3% 3.7% 0.3% 7.6% 23.1%
2014 1.1% 3.4% 9.4% 20.2% 10.3% 15.9%
Using the following allocation of funds among investments, the total investment return
can be calculated.
2 Historical data provided by ONE Investment
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Using the Legal List and Prudent Investor allocations from Table 1 and the returns
achieved for each fund in Table 2, the Prudent Investor returns have fared better over
the 2014 to 2020 time period as shown in Table 3. The average annual difference over
the seven years was 3.61% in favour of the Prudent Investor option. 2020 Information
below reflects actual returns for this time period.
Table 3
Comparison of Investment Strategy Results (2014-2020)
Investment
Strategy
2014 2015 2016 2017 2018 2019 2020
Legal List 8.8% 1.9% 4.9% 3.8% 0.8% 7.5% 5.4%
Prudent
Investor 10.7% 10.0% 3.8% 7.6% 1.5% 16.7% 8.1%
Town of
Aurora –
Long-term
returns
n/a n/a n/a 2.48% 3.11% 2.92% 2.65%
Risks associated with the Prudent Investor Standard
Virtually all investment strategies carry some element of risk, the Prudent Investor
Standard is no exception. There is no guarantee of better returns as a result of investing
under the Prudent Investor regime. A broader array of investments exposes the investor
to a broader array of risk. Past performance is not indicative of future results. Moreover,
there is not a 100 percent guarantee that better performance will offset the initial or
continuing costs of the Prudent Investor regime.
Table 4 shows the initial process and balances from July 2, 2020 followed by the price
and balances at the end of the year. No additional funds were deposited for any investor
for the remainder of the year. The 2021 Annual Performance Report is not yet available.
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Table 4
ONE Investment Activity By Portfolio
Cdn Bond Cdn Corp
Bond
Global
Bond
Cdn Equity Global
Equity
At July 2,
2020
Balance
($M) 24.2 24.2 113.1 33.7 78.7
Price ($) 1000 1000 1000 1000 1000
At
December
31, 2020
Balance
($M) 24.5 24.6 118.5 39.5 84.1
Price ($) 1001.1 1002.9 1027.9 1147.1 1030.3
Difference
Balance
($M) 0.3 0.3 0.5 0.6 0.5
Price ($) 1.1 2.9 27.9 147.1 30.3
One other risk of note is once a municipality passes a by-law to adopt the Prudent
Investor Standard it cannot revoke that by-law and return to the Legal List unless the
Lieutenant Governor in Council authorizes the municipality to do so by regulation.
However, the Town could adjust the policy investment statement to use a similar mix
under Prudent Investor as the Legal List, as the Legal List options are still available.
A comparison of administration costs for legal list, ONE Fund and the Proposed ONE JIB
Investments
Legal List Investments:
Although the Town does not pay separate management fees, the Investment Brokers
through which the Town accesses legal list investments receive their compensation
through the difference between the wholesale rates offered by the banks and credit
unions and the intuitional rates that are offered to the Town by the investment brokers.
Although investment firms are required to disclose all fees paid to them for retail
clients, it is not a requirement for institutional clients, such as the Town.
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ONE Joint Investment Board:
As a not-for-profit entity, the ONE Investment structures fees so as to recover its
operating costs and set aside appropriate reserves for future investment. Neither ONE
JIB nor ONE Investment will charge fees directly to a participating municipality.
The ONE Investment Pools will be subject to management fees and other expenses,
which are described below. Except for taxes, ONE Investment bundles such fees and
expenses into a single fee, where the rate of such fee will differ depending on the ONE
Investment Pool. One Investment fees are approved by the ONE Investment Board and
are reviewed, at least annually.
A summary of the estimated administrative costs for each of these modes of
investment are presented below.
Table 5
Administrative Costs Charged by Investment
Broker/Investment Fund Basis Points
Charged
Legal List - Other Town Investment Brokers (charged on
rate of return)
3-15
ONE Investment (charged on assets under management)
Money Market Portfolio 19
Canadian Bond Portfolio 35
Corporate Bond 40
Global Bond 45
Global Equity 75
Canadian Equity 45
Attachments
Attachment #1: Town of Aurora’s Draft Investment Policy Statement
Attachment #2: ONE Investment Annual Performance Report – 2020
Attachment #3: ONE Investment Annual Report – 2020
Attachment #4: ONE Investment Unaudited Statement as of June 30, 2021
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13197104.14
INVESTMENT POLICY STATEMENT
FOR
THE CORPORATION OF THE TOWN OF AURORA (the “Municipality”)
MARCH 8, 2022
Attachment 1
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13197104.14
TABLE OF CONTENTS
OVERVIEW ................................................................................................................................................. 1
1. GLOSSARY AND DEFINITIONS .................................................................................................... 2
2. PURPOSE AND LEGISLATIVE FRAMEWORK ........................................................................... 5
2.1 Purpose of Policy ....................................................................................................................... 5
2.2 Governing Legislation ................................................................................................................ 6
2.3 Prudent Investor Standard ........................................................................................................ 7
3. MONEY REQUIRED IMMEDIATELY AND MONEY NOT REQUIRED IMMEDIATELY ........ 7
3.1 Determination of MNRI and MRI .............................................................................................. 7
3.2 Overview of Portfolios ................................................................................................................ 8
4. ROLES AND RESPONSIBILITIES ................................................................................................. 8
4.1 Role of ONE JIB ......................................................................................................................... 8
4.2 Role of Municipal Staff ............................................................................................................... 8
5. INVESTMENT .................................................................................................................................... 9
5.1 MRI: Short-Term Funds............................................................................................................ 9
5.1.1 Short-Term Funds: Investment Objectives .................................................................... 9
5.1.2 Short-Term Funds: Eligible Investments ..................................................................... 10
5.2 MNRI: Long-Term Funds ........................................................................................................ 11
5.2.1 Long-Term Funds: Investment Objectives ................................................................... 11
5.2.2 Long-Term Funds: Eligible Investments ....................................................................... 12
5.2.3 Long-Term Funds: Sinking Funds ................................................................................. 12
5.2.4 Long-Term Funds: Local Distribution Corporation (LDC) Securities ........................ 13
5.2.5 Long-Term Funds: Other ................................................................................................. 13
5.3 Third Party Trust Funds and Designated Funds ................................................................. 13
5.4 Investment Management ......................................................................................................... 13
5.4.1 Investment Management of Short-Term Funds ........................................................... 13
5.4.2 Investment Management of Long-Term Funds ........................................................... 13
5.5 Transition to Prudent Investor Regime ................................................................................. 13
5.6 Investment Constraints ............................................................................................................ 14
5.6.1 Environmental, Social and Governance (ESG) Investing .......................................... 14
5.6.2 Securities Lending ............................................................................................................ 14
5.6.3 Derivatives ......................................................................................................................... 14
5.6.4 Use of Leverage ............................................................................................................... 14
5.6.5 Pooled Funds .................................................................................................................... 15
5.6.6 Currency Hedging ............................................................................................................ 15
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5.7 Performance Monitoring, Rebalancing and Management ................................................. 15
5.7.1 Short-Term Funds ............................................................................................................ 15
5.7.2 Long-Term Funds ............................................................................................................. 15
6. ADMINISTRATIVE POLICIES ....................................................................................................... 16
6.1 Flow of Funds and Annual Municipal Budget ...................................................................... 16
6.1.1 Transfer to ONE JIB as Part of Budget Process ......................................................... 16
6.1.2 Transfer to Municipality as Part of the Budget Process ............................................. 16
6.2 Flow of Funds Otherwise than through the Budget Process ............................................. 16
6.2.1 Surplus Funds ................................................................................................................... 16
6.2.2 Contingencies ................................................................................................................... 16
6.3 Valuation of Investments ......................................................................................................... 16
6.4 Voting Rights ............................................................................................................................. 17
6.5 Internal Controls ....................................................................................................................... 17
6.6 Custodians................................................................................................................................. 17
6.7 Reporting ................................................................................................................................... 17
6.7.1 Short-Term Funds ............................................................................................................ 17
6.7.2 Long-Term Funds ............................................................................................................. 18
7. APPROVAL, SUBSEQUENT MODIFICATIONS AND EFFECTIVE DATE............................ 18
7.1 Revocation / Amendment of Previous Investment Policy .................................................. 18
7.2 Modifications to the IPS ........................................................................................................... 18
7.3 Effective Date ............................................................................................................................ 19
Appendix I: ONE JIB Agreement .......................................................................................................... 20
Appendix II: ONE External Portfolio Manager Mandates .................................................................. 21
Schedule A Third Party Trust Funds and Designated Funds ........................................................... 22
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Town of Aurora
Investment Policy Statement
OVERVIEW
Municipalities that are subject to the Municipal Act, 2001 (the “Act”) have no general power
to invest money. Such powers must be found either in express provisions of the Act or by
necessary implication.
Historically, municipalities that are subject to the Act had very limited express investment
powers under section 418 of the Act. Section 418 continues to apply to all municipalities
that are subject to the Act unless they elect to pass a by-law pursuant to the new section
418.1. Section 418 of the Act provides that “money that is not required immediately”
(MNRI) can only be invested in securities prescribed by the Province in O. Reg. 438/97
(the “Regulation”). These prescribed securities are generally referred to as the “Legal List
Securities” and are included in Part I of the Regulation.
Effective January 1, 2019, the new section 418.1 of the Act came into force. Section 418.1
provides that MNRI can be invested under that section in any security, provided that in
making the investment the municipality exercises the care, skill, diligence and judgment
that a prudent investor would exercise in making the investment. If a municipality elects
to pass a by-law under section 418.1, the effect will be that its MNRI must be invested in
accordance with the prudent investor regime. The rules, conditions and procedures that
apply to investments under section 418.1 are set out in Part II of the Regulation.
Investing MNRI in Legal List Securities or in accordance with the prudent investor regime
are mutually exclusive alternatives. That is to say, section 418 does not apply to a
municipality that has adopted the prudent investor regime under section 418.1.
Every municipality, regardless of whether section 418 or 418.1 applies to it, has MNRI and
also money that is required immediately (MRI). Municipalities retain the management and
control of their MRI. The Act does not include any express provisions that deal with the
investment of MRI. However, it is consistent with prudent practice to invest such money
until it is actually spent, in order to preserve the capital value of that money. Accordingly,
it is necessarily implied that a municipality has the power to invest such money on a short
term basis. Because the Act is silent as to how municipalities are to deal with MRI and
because of the historical investment powers under the Act, a conservative approach is to
invest MRI in appropriate Legal List Securities.
Municipalities that elect to pass a by-law pursuant to the new section 418.1 include in their
investment policy (i) the basis upon which they distinguish between MNRI and MRI, and
(ii) principles governing the investment of each category of money. This Investment Policy
Statement (IPS) is intended to respond to the foregoing requirements.
Town of Aurora staff and Council understand that the funds being invested belong to the
residents of Aurora. This investment and procedures documentation will ensure that all
funds are invested with care, diligence and judgement of a prudent investor with a primary
objective of principal preservation while maximizing returns.
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1. GLOSSARY AND DEFINITIONS
The following capitalized terms are defined terms which have the meanings set out below:
Act: means the Municipal Act, 2001, S.O. 2001, c. 25, as amended from time to time.
Agent: means any administrator, Custodian, payment servicer, portfolio manager,
investment counsel, consultant, banker, broker, dealer or other service provider engaged
or appointed by ONE JIB and authorized by ONE JIB to exercise any of the functions of
ONE JIB pursuant to a written agreement, in the manner and to the extent provided in the
Regulation and without limiting the generality of the foregoing, Agent includes ONE
Investment.
Asset Class: An asset class is a specific category of assets or investments, such as cash,
fixed income, equities, alternative investments, real estate etc.
Asset Mix (or Asset Allocation): means the proportion of each asset class in a portfolio.
Asset classes include bank deposits, money market securities, bonds and equities, among
other things.
Authorizing By-law: means a by-law of a Participating Municipality which authorizes: (i)
the approval of the Client Questionnaire and the adoption of the IPS; and (ii) the entering
into of the ONE JIB Agreement.
Benchmark: means an index that is representative of a specific securities market (e.g.
the S&P/TSX Composite Index, the FTSE/TMX 91 Day T-bill Index, etc.) against which
investment performance can be compared. Performance benchmarks refer to total return
indices in Canadian dollar terms.
CFA Institute: refers to the global, not-for-profit professional association that administers
the Chartered Financial Analyst (CFA) and the Certificate in Investment Performance
Measurement (CIPM) curricula and examination programs worldwide, publishes research,
conducts professional development programs, and sets voluntary, ethics-based
professional and performance reporting standards for the investment industry.
Credit Risk: means the possibility of a loss resulting from a borrower's failure to repay a
loan or meet contractual obligations. That is, the risk that a lender may not receive the
owed principal and interest.
Custodian: means a specialized financial institution that is responsible for safeguarding
a municipality's investments and is not engaged in "traditional" commercial or
consumer/retail banking. Global custodians hold investments for their clients in multiple
jurisdictions around the world, using their own local branches or other local custodian
banks ("sub-custodians" or "agent banks").
Derivative: A derivative is a contract between two or more parties whose value is based
on an agreed-upon underlying financial asset (like a security) or set of assets (like an
index). Common underlying instruments include bonds, commodities, currencies, interest
rates, market indexes, and stocks.
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Environmental, Social and Governance (ESG) Investing: means considering and
integrating ESG factors into the investment process, rather than eliminating investments
based on ESG factors alone. Integrating ESG information can lead to more
comprehensive analysis of a company.
External Portfolio Managers: means external third-party investment management firms
whose investment offerings are accessed by ONE JIB directly or through services
provided to a Pooled Fund. External Portfolio Managers are agents authorized by ONE
JIB in accordance with Part II of the Regulation.
Interest Rate Risk: refers to the possibility that the value of a bond or other fixed- income
investment will suffer as the result of a change in interest rates. Interest rate risk can be
managed to help improve investment outcomes.
Internal Controls: means a system of controls that may include authorities, policies,
procedures, separation and segregation of duties, compliance checks, performance
measurement and attribution, reporting protocols, measures for safekeeping of property
and data, and the audit process.
Investment Plan: means the investment plan applicable to the Long-Term Funds
investments and adopted by ONE JIB under the Regulation, as it may be amended from
time to time.
Investment Policy Statement (IPS): means the investment policy applicable to the
Municipality’s investments adopted and maintained by the Council of the Municipality for
Long-Term Funds under the Regulation, and for Short-Term Funds, as the same may be
amended from time to time. The IPS may also apply to the money and investments held
by the Municipality for the benefit of persons other than the Municipality itself and may
make reference to source(s) of money in which the Municipality may have an indirect
interest but which the Municipality has no authority to invest.
JIB: is short for Joint Investment Board and means a joint municipal service board that is
established under section 202 of the Act by two or more municipalities for the purposes of
Part II of the Regulation.
Legal List Securities: means the securities and other investments and financial
instruments that are included from time to time in Part I of the Regulation.
Local Distribution Corporation or LDC: means a corporation incorporated under
section 142 of the Electricity Act, 1998.
Long-Term Funds: means the Municipality’s money that and the municipality has defined
as long-term and characterized as money that is not required immediately by the
Municipality as described in section 5.2. Monies that are Long Term Funds will be invested
in accordance with the Prudent Investor Standard.
MNRI: means money that is not required immediately
Modern Portfolio Theory: means a theory of portfolio management that looks towards
the portfolio as a whole, rather than towards the prudence of each investment in the
portfolio. This is found in the CFA Institute Standards of Practice Handbook.
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MRI: means money required immediately.
Municipality: means The Corporation of the Town of Aurora.
ONE JIB: means ONE Joint Investment Board, established by certain founding
municipalities under section 202 of the Act as a JIB for purposes of Part II of the
Regulation, which is the duly appointed JIB for the Municipality, as constituted from time
to time and which acts in accordance with the Act, the Regulation, the ONE JIB
Agreement, including the Terms of Reference, this IPS and the Investment Plan.
ONE JIB Agreement: means the agreement effective as of DATE TBD, entered into in
accordance with the requirements of the Regulation, pursuant to which ONE JIB has
control and management of the Municipality’s Long-Term Funds.
Outcome: in the context of the municipality’s IPS the word ‘outcome’ is used
interchangeably with ‘solutions’. Investment outcomes are a set of investment allocations
with varying risk/return characteristics. The outcomes assigned to each investor are
intended to reflect the needs and circumstances of the municipality. MNRI may be
invested into several outcomes based on the characteristics of the municipality’s
accounts/reserves and its saving and spending needs.
ONE JIB’s Outcome Framework: a set of Investment Outcomes designed by the ONE
JIB to categorize the potential goals of investing MNRI. Each Outcome has a unique
Asset Allocation with risk/return characteristics that are aligned with the intended use of
the funds assigned to the outcome.
Operational: means the funds required to meet annual operating and capital plan needs.
Participating Municipality: means from time to time each of the municipalities for whom
ONE JIB acts as the JIB under the terms of the ONE JIB Agreement.
Pooled Fund: means a unit trust established under a trust instrument, generally not
available to the public, in which institutional, sophisticated or high net worth investors
contribute funds that are invested and managed by an External Portfolio Manager. Funds
are pooled or combined with funds of other investors.
Portfolio: means any collection of funds that are grouped together and required for
specific purposes.
Proxy Voting: means a legal transfer to another party of a shareholder's right to vote
thereby allowing shareholders who cannot attend meetings to participate. External
Portfolio Managers usually vote proxies on behalf of their clients.
Prudent Effective Date: means DATE TBD, the date on which the prudent investor
regime applies to the Municipality.
Prudent Investor Standard: means the standard that applies when the Municipality
invests money that it does not require immediately under section 418.1 of the Act. It
requires the Municipality to exercise the care, skill, diligence and judgment that a prudent
investor would exercise in making such an investment and the standard does not restrict
the securities in which the Municipality can invest. The Prudent Investor Standard makes
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use of Modern Portfolio Theory and applies the standard of prudence to the entire portfolio
in respect of the Municipality’s Long-Term Funds rather than to individual securities. It
identifies the fiduciary's central consideration as the trade-off between risk and return as
found in the CFA Institute Standards of Practice Handbook.
Regulation: means Ontario Regulation 438/97.
Risk: means the uncertainty of future investment returns.
Risk Tolerance: means the financial ability to absorb a loss. Risk tolerance increases
with the build-up of capital funding.
Securities Lending: means loaning a security to another market participant. The
borrower is required to deliver to the lender, as security for the loan, acceptable collateral
with value greater than the value of the securities loaned. The Securities Lending program
is managed by the Custodian on behalf of investors. A Securities Lending program is
widely used by institutional investors to generate additional marginal returns on the total
portfolio.
Short-Term Funds: means money that is required immediately by the Municipality as
described in section 5.1 and which remains under the control and management of the
Municipality. The funds can be invested in appropriate Legal List Securities.
Sinking Fund: means a fund established to fulfil the requirements to make annual
contributions in respect of various debenture issues wherein money is to be regularly set
aside for the payment of the principal of the debentures at maturity.
Sinking Fund Required Contributions (Annual Sinking Fund Requirement): means
the amount of money to be set aside each year for deposit into a sinking fund or a
retirement fund, as applicable, for each sinking fund and term debenture issue in
accordance with the Municipality’s debenture by-laws when such debentures are issued.
Sinking Fund Required Earnings: means the investment earnings needed for the
Sinking Fund Contributions to continue to grow to a value sufficient to repay the principal
at maturity for each issue of sinking fund and term debentures.
Sinking Fund Excess Earnings: means the investment earnings in excess of the
required earnings.
2. PURPOSE AND LEGISLATIVE FRAMEWORK
2.1 Purpose of Policy
This IPS governs the investment of the Municipality's MNRI and MRl. It is
intended, among other things, to direct the Treasurer in the investment of MRI and
to direct ONE Joint Investment Board (ONE JIB) in the investment of MNRI by
implementing the Authorizing By-law XXXX-22 pursuant to which the Municipality
authorized the establishment of guidelines for the prudent management of the
Municipality's MNRI pursuant to section 418.1 of the Act.
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ln addition to the Municipality's MRI and MNRI, the Municipality is from time to time
entrusted with the management of money and investments for a third-party
beneficiary ("third party trust funds").
There are also source(s) of money in which the Municipality may have an indirect
interest but which the Municipality currently has no authority to invest. Such
source(s) of money, referred to in this IPS as "designated funds", are listed in
Schedule A attached hereto. The designated funds are identified in this IPS for the
sole purpose of enabling the Municipality to better see, on an aggregated basis,
the various financial assets in which the Municipality has an interest. The
Municipality is not responsible for the investment activities or performance of
designated funds.
The goals of this IPS are to:
● Define and assign responsibilities for investment of MRI and MNRI;
● Describe the Municipality’s responsibilities with respect to third party trust
funds and designated funds
● Ensure compliance with the applicable legislation;
● Direct ONE JIB as to the Municipality’s investment goals and risk tolerance;
● Provide guidance and limitations regarding the investments and their
underlying risks;
● Establish a basis of evaluating investment performance and the underlying
risks; and,
● Establish a reporting standard to Council.
This IPS applies to employees of the Municipality, to ONE JIB and to the
employees of ONE Investment. ONE JIB, the Treasurer, and any agent or advisor
providing services to ONE JIB in connection with the investment of the portfolio of
the Town of Aurora shall accept and strictly adhere to this IPS.
2.2 Governing Legislation
Investments of MRI will, in accordance with this IPS, only be made in Legal List
Securities.
Investments of MNRI are governed by the Prudent Investor Standard in
accordance with Section 418.1 of the Act. This standard is similar to that which
governs trustees and pension fund administrators and creates a fiduciary
responsibility. Prudent investment in compliance with the Act and the Regulation
enhances the potential for the Municipality to earn improved risk-adjusted rates of
return.
Money and investments that the Municipality holds as third-party trust funds or has
an interest in as designated funds will be subject to applicable legislation and any
related agreements or instruments.
The Act provides that the Municipality must consider the following criteria in
planning investments of MNRI, in addition to other criteria relevant to the
circumstances:
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● General economic conditions;
● The possible effect of inflation or deflation;
● The role that each investment plays within the Municipality’s total portfolio
of investments;
● The expected total return from income and the appreciation of capital; and
● Needs for liquidity, regularity of income and preservation or appreciation of
capital.
2.3 Prudent Investor Standard
For MNRI, the standard to be used by the Municipality and ONE JIB shall be the
“prudent investor” standard as required by section 418.1 of the Act and Part II of
the Regulation in the context of managing the Municipality’s MNRI and investments
thereof. Investments shall be made with the care, skill, diligence, and judgment,
taking into account the prevailing circumstances, which persons of prudence,
discretion and integrity would exercise in the management of investments,
considering the necessity of preserving capital as well as the need for income and
appreciation of capital. The Act includes a duty to obtain the advice that a prudent
investor would obtain under comparable circumstances.
As well, the Prudent Investor Standard makes use of Modern Portfolio Theory,
which looks towards the portfolio as a whole, rather than towards the prudence of
each investment in the portfolio.
Officers, employees and investment agents acting in accordance with written
procedures and the IPS and exercising due diligence shall take all necessary
actions to optimize performance of investments on a portfolio basis, taking into
account the prescribed risk and other parameters set out in this IPS and market
factors. The Municipality’s staff acting in accordance with written procedures and
this IPS, shall be relieved of personal responsibility for an investment’s
performance, provided underperformance relative to expectations is reported to
Council and the liquidation or sale of investments is carried out in accordance with
this IPS.
3. MONEY REQUIRED IMMEDIATELY AND MONEY NOT REQUIRED IMMEDIATELY
3.1 Determination of MNRI and MRI
Determination of the Municipality’s MNRI is the responsibility of Council. In making
the determination, Council may consider:
● the time horizon within which the monies are needed to meet financial
obligations
● the purpose for which the monies have been collected or set aside and are
to be used
● the source of the money
● any combination of the foregoing
The Municipality’s MNRI will be comprised of money that is to be used to meet
financial obligations that become due more than 18 months from the date of receipt
of such money by the Municipality.
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For certainty, all money of the Municipality that has not been identified as MNRI
(other than third party trust funds and any designated funds referenced in Section
2.1) shall be deemed for purposes of this IPS to be MRI.
Determination of the Municipality’s MNRI and MRI may be modified at any time
and from time to time by action of Council and with respect to specific funds by the
Treasurer in accordance with the provisions of Section 6.2.
Any changes in this IPS regarding the Municipality’s MNRI and MRI must be
communicated immediately in writing to ONE JIB.
3.2 Overview of Portfolios
The Municipality’s portfolios represent funds required for specific purposes. A high
level description of each of these portfolios and their objectives is provided in
Section 5 below. This IPS applies to the following money of the Municipality, its
agencies, boards and commissions including:
● MRI which is invested in Legal List Securities; and/or
● MNRI which is invested under the prudent investor regime.
4. ROLES AND RESPONSIBILITIES
4.1 Role of ONE JIB
ONE JIB has been appointed by the Municipality in accordance with the
requirements of the Act and the Regulation and on the terms and conditions set
out in the ONE JIB Agreement (Appendix I).
ONE JIB exercises control and management of the Municipality’s MNRI and the
investments made by it in accordance with the objectives and risk tolerance
established in this IPS..
Among the responsibilities of ONE JIB are the following:
● Reviewing this IPS;
● Adopting and maintaining an Investment Plan that complies with this IPS;
● Engaging External Portfolio Managers, Custodians, administrators and
other investment professionals (Agents);
● Allocating the money and investments under its control and management
among External Portfolio Managers;
● Monitoring the performance of the Agents; and,
● Reporting to the Municipality.
The foregoing is subject to the more detailed terms and conditions contained in the
ONE JIB Agreement.
4.2 Role of Municipal Staff
This IPS is approved and adopted by Council with input from the Treasurer, and
from ONE JIB with respect to MNRI. MRI of the Municipality, and any third-party
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trust funds referenced in Section 2.1, remain under the control and management
of the Treasurer.
Consistent with this IPS, the Treasurer is responsible for the implementation of the
investment program and the establishment of investment procedures which shall
include:
● Investment management of MRI and any third-party trust funds referenced
in Section 2.1 by, or under the direction of, the Treasurer;
● The deposit or withdrawal of MNRI, under the explicit delegation of
authority regarding MNRI, and the investment thereof, to ONE JIB, which
is responsible for the control and management of such funds and
investments; and,
● A system of controls exercised by the Treasurer to regulate the activities of
Deputy Treasurers and Financial Management Advisors.
No person including, without limitation, ONE JIB, may engage in an investment
transaction except as provided under the terms of this IPS.
In the management of MRI of the Municipality, and any third-party trust funds
referenced in Section 2.1, the Treasurer may engage one or more agents and
service providers. ONE Investment can assist with the investment of the
Municipality’s MRI, in Legal List Securities, and with the investment of third-party
trust funds, in accordance with the terms of the applicable trust, if permitted, at the
request of the Municipality.
4.3 Ethics and Conflicts of Interest
Individuals who are responsible for the Municipality’s Short-Term Portfolio shall
comply with the Municipality’s Conflict of Interest guidelines and the relevant
sections of the CPA Code of Professional Conduct.
ONE JIB, in its capacity as a joint municipal service board, in addition to being a
local board of each member Municipality is subject to a Code of Conduct as
required by the Municipal Act, 2001 (the “Act”). This Code of Conduct applies to
the Chair and the other Members of ONE JIB acting in their capacity as Members
of ONE JIB.
5. INVESTMENT
5.1 MRI: Short-Term Funds
The Municipality’s MRI is described in this IPS as Short-Term Funds. Short-Term
Funds consist of money needed to meet the financial obligations of the Municipality
coming due within 18 months from the date of receipt of such money and are
controlled and managed by the Treasurer.
5.1.1 Short-Term Funds: Investment Objectives
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The investment objectives, in the order of priority, for the Municipality for Short-
Term Funds are:
● Compliance with Portfolio Restrictions: The legal authority to invest
funds comes from the Act. All investments acquired shall be in conformity
with portfolio restrictions and permissions set out in O. Reg. 438/97 –
Eligible Investments and Related Financial Agreements, as amended from
time to time. The Municipality shall not invest in a security that is expressed
or payable in any currency other than Canadian dollars.
● Preservation of Principal: Investments shall be undertaken in a manner
that seeks to ensure the preservation of principal in the overall portfolio.
Investments shall be made with judgement and care, not for speculation,
but for investment, considering the probable safety of the principal invested
as well as the probable income derived. Staff shall also endeavor to
mitigate credit and interest rate risk by: pre-qualifying the financial
institutions, brokers/dealers and advisors with which the Municipality does
business; diversifying the investment portfolio; structuring the investment
portfolio so that maturing securities meet ongoing cash flow requirements;
and investing operating funds primarily in shorter-term securities or
approved liquid investment pools.
● Maintenance of Liquidity: The investment portfolio shall remain
sufficiently liquid to meet all operating requirements that may be reasonably
anticipated. All non-equity investments shall be interest bearing in nature
and equity exposure will be limited to investments in the ONE Investment
Program equity funds. The Municipalities portfolio should be well
staggered, using a ladder approach which allows investments to mature at
various times and provides the Municipality the opportunity to build up the
portfolio based on market conditions/opportunities. A portion of the
portfolio may be placed in the ONE Investment Program, which offers
compliance and liquidity.
● Maximization of the Rate of Return: The Investment Portfolio shall be
designed with the goal of maximizing the rate of return through budgetary
and economic cycles, taking into account the investment risk constraints
and liquidity needs. Staff will explore and utilize any eligible investment
vehicles in building the Municipality’s investment portfolio. The investment
portfolio will be managed with prudent investor principles, in order to
maximize returns within established risk parameters. To take advantage
of short-term fluctuations in interest rates, securities may be sold prior to
maturity. Investments shall be purchased once multiple bids are received
and analysed. The highest yielding bid, which meets the Municipality’s
cash flow requirements, will be accepted. If the highest yielding bid is not
selected, an explanation describing the rationale shall be provided. Staff
involved will retain written records of each transaction, including the name
of the financial institutions, rates quoted, description of the security,
investment selected, and any special considerations that had an impact on
the decision. With the goal of maximizing the rate of return on its
investments, staff may utilize eligible investment vehicles for which there is
a sole available supplier, such as the ONE Investment Program products.
In instances such as this, multiple bids will not be solicited.
5.1.2 Short-Term Funds: Eligible Investments
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Short Term Funds may be invested in high quality, short-term investments that are
also Legal List Securities available from banks, dealers and other financial
institutions. Investments issued or guaranteed by approved intistitutions will be
permitted by the Policy, as deemed eligible by Ontario Regulation 438/97 or as
authorized by subsequent provincial regulations.
5.2 MNRI: Long-Term Funds
The Municipality’s MNRI is described in this Section 3.2 as Long-Term Funds. In
accordance with the ONE JIB Agreement and this IPS, ONE JIB has exclusive
control and management of the Long-Term Funds and the investments made
therewith.
From time to time, the Municipality may require money immediately to meet
financial obligations and may require ONE JIB to liquidate one or more investments
in order to generate money to pay those obligations. ONE JIB will select the
investment(s) to be liquidated. The timing of such liquidation will be determined
by ONE JIB in consultation with the Treasurer.
5.2.1 Long-Term Funds: Investment Objectives
In setting the objectives noted below, the Municipality has taken into account the
following considerations:
• Preservation of capital;
• Adequate liquidity that takes into account the needs of financial obligations
and reasonably anticipated budgetary requirements;
• Diversification by asset class, market, sector, issuer, credit quality and term
to maturity;
• Income and capital appreciation; and,
• Macro risks, such as inflation, economic growth and interest rates.
The Municipality has identified the following investment objectives for its Long-
Term Funds.
Outcome
Category
Outcome Strategy Objective Risk Tolerance,
Liquidity
Investment
Horizon
Cash Cash Preservation of
Capital
Low risk; high
liquidity
< 3 years
Stable Return Stable Return Income
Generation; To
generate returns to
fund recurring
needs
Moderate risk with
emphasis on
growth and stable
returns, regular
liquidity
> 5 years
(Perpetual)
Contingency Contingency Contributions for
unexpected and
infrequent events
Higher risk;
emphasis on
longer-term
> 5 years
(Perpetual)
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capital growth
with some liquidity
Asset Mgt
Reserves
Contributions to
generate returns to
fund asset
management
reserves
Higher risk;
emphasis on
longer-term
capital growth
with some liquidity
> 10 years
(Perpetual)
Target Date Target Date 3-5 yrs Preservation of
capital
Low risk; high
liquidity
3 – 5 years
Target Date 5-10
yrs
Contributions
toward capital
projects, mitigate
inflation impacts
and meet target
funding
requirements
Moderate risk,
liquid
5 – 10 years
Target Date 10+
yrs
Contributions
toward capital
projects, mitigate
inflation impacts
and meet target
funding
requirements
Higher risk,
emphasis on
long-term
inflation-adjusted
growth
> 10 years
Investment of Long-Term Funds is managed by ONE JIB, which balances
expected investment risks and returns to generate asset mixes that create
outcomes to meet the needs and risk tolerances. Risk mitigation is achieved
primarily through the diversification of investment types. For example, assets will
be invested in a mix of fixed income, equity, and other investments in order to help
balance volatility and returns. Returns have an impact on revenues, as well as a
longer-term impact on future years’ budgets and should, at a minimum, keep pace
with inflation. To the extent possible, the Long-Term Funds’ investment horizons
are aligned with the Municipality’s obligations and cash flow requirements and may
consist of liquid and illiquid securities.
5.2.2 Long-Term Funds: Eligible Investments
Eligible investments for Long-Term Funds include any Pooled Fund or other
collective investment vehicle or institutional investment management product
sponsored or managed by ONE Investment for the Prudent Investment Program
(Prudent Investment Offering), provided always that the products and the
selection of products comply in all material respects with the IPS and that the
ONE JIB has approved them as part of the municipality’s investment plan.
Additionally, nothing in this IPS prevents Long-Term Funds from being held in
cash, short term money market instruments, or overnight deposits.
5.2.3 Long-Term Funds: Sinking Funds
Not applicable.
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5.2.4 Long-Term Funds: Local Distribution Corporation (LDC) Securities
Not applicable.
5.2.5 Long-Term Funds: Other
Not applicable.
5.3 Third Party Trust Funds and Designated Funds
Not applicable.
5.4 Investment Management
5.4.1 Investment Management of Short-Term Funds
The investment of Short-Term Funds shall be controlled and managed by the
Treasurer and his/her designate as documented in By-law #6219-19, Schedule
“C”.
5.4.2 Investment Management of Long-Term Funds
The investment of Long-Term Funds shall be controlled and managed by ONE JIB
in accordance with this IPS. An investment advisor shall be retained by ONE JIB
to define and manage the asset allocation using External Portfolio Managers.
Competent External Portfolio Managers shall be appointed by ONE JIB and they
shall enter into an agreement with ONE Investment that complies with this IPS and
Part II of the Regulation and provide compliance and performance reports. In
accordance with the applicable regulatory requirements, ONE JIB shall make any
External Portfolio Manager changes deemed in the best interest of the
Municipality. For each External Portfolio Manager, ONE Investment shall agree
on a set of operational guidelines including constraints, discretion limits,
diversification and quality standards, and performance expectations, which are
documented in each External Portfolio Manager’s guidelines.
5.5 Transition to Prudent Investor Regime
Until the Prudent Effective Date, the Municipality will continue to control and
manage its MRI, MNRI and investments in Legal List Securities. Some of such
investments were made with MRI and some with MNRI.
Upon and after the Prudent Effective Date, the control and management of money
and investments that are determined to be not required immediately shall be given
to ONE JIB. Nothing in this IPS requires that such investments need be liquidated
or disposed of. It is not contrary to this IPS for investments that the Municipality
does not require immediately to be held, and to continue to be held by ONE JIB,
in instruments such as term deposits, guaranteed investment certificates or
principal protected notes issued by a bank to be held to maturity and invested upon
receipt of cash proceeds.
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Management of third-party trust funds and any designated funds is not directly
affected by the Prudent Effective Date.
5.6 Investment Constraints
5.6.1 Environmental, Social and Governance (ESG) Investing
The Municipality supports ESG investing for Short-Term and Long-Term Funds.
The Town believes that well-managed companies are those that demonstrate high
ethical and environmental standards and respect for their employees, human
rights, and the communities in which they do business, and that these actions
contribute to long term financial performance.
For the investment of short-term funds will be done in compliance with the
investment objectives identified in section 5.1.1. Accommodating specific ESG
considerations may not be possible due to conflicts with the investment objectives.
The Town has chosen to monitor the developments of ESG factors and will
reconsider its approach to ESG investing for the Short-Term Portfolio as and when
appropriate to do so.
For the investment of Long-Term Funds, ONE JIB is required to explore how
External Portfolio Managers are implementing responsible investing principles at
the time of hiring and during periodic reviews. It may report on results periodically,
if requested. Accommodating specific ESG considerations may not be possible
either due to availability or to costs.
5.6.2 Securities Lending
For the investment of Short-Term Funds securities lending is permitted through
ONE Investment Program investments only.
For the investment of Long-Term Funds, the Municipality may invest in pooled
funds, and other investment funds that are controlled by an External Portfolio
Manager who may engage in Securities Lending if the policies of the External
Portfolio Manager that apply to such pools permit such an action.
5.6.3 Derivatives
Derivatives may not be used for speculative purposes. They may be used for the
investment of Long-Term Funds where they are fully covered by a backing asset,
e.g., as for currency or other hedging, to change portfolio duration or in covered
call strategies.
5.6.4 Use of Leverage
Nothing in this IPS prevents the use of leverage, provided it is prudent to do so.
Leverage is inherent in the use of certain types of investment strategies and
instruments. Where leverage is employed, ONE JIB (for MNRI) and the Treasurer
(for MRI) shall have in place monitoring procedures to manage overall exposure
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to any counterparty and in the aggregate. Leverage is not a strategy currently
employed by ONE JIB but may be considered at a later date.
5.6.5 Pooled Funds
All investment strategies may be pursued directly through holdings of corporate
and government issuers and indirectly via pooled funds and investment funds or
any combination thereof. The investment strategies may also include allocations
to cash or short-term investment vehicles.
5.6.6 Currency Hedging
The Short-Term Portfolio will not utilize currency hedging.
The Municipality’s funding requirements are in Canadian dollars. However, some
exposure to foreign currencies may be desirable to provide diversification and
potentially enhance returns. Therefore, it shall not be a violation of this IPS for
investments in global mandates to be unhedged, in whole or in part, where the
diversification benefits embedded in the currency exposure are considered to be
beneficial or desirable by ONE JIB.
5.7 Performance Monitoring, Rebalancing and Management
5.7.1 Short-Term Funds
For the investment of Short-Term Funds, Municipality staff will monitor the cash
flow needs of the Municipality on a periodic basis. Should the needs on the
Municipality no longer be met by the asset mix, staff will make changes, at the
discretion of the Treasurer, taking into consideration the Short-Term Investment
objectives.
5.7.2 Long-Term Funds
For the investment of Long-Term Funds, each account’s asset mix will be
monitored on a periodic basis by ONE JIB. Should the asset mixes deviate outside
the ranges set out in the Investment Plan, the account will be rebalanced as soon
as practicable taking into consideration variations in market liquidity and the
investment objectives. Cash inflows /outflows will be used to rebalance as much
as possible. If they are insufficient, investments will be sold in a commercially
reasonable manner and reallocated as required.
Investments are expected to achieve returns at least equal to their benchmarks
measured over a rolling five-year period. ONE JIB shall provide at least annual
reporting described in Section 6.6 that demonstrates the Municipality’s holdings,
declares compliance with this IPS and shows External Portfolio Manager
performance.
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6. ADMINISTRATIVE POLICIES
6.1 Flow of Funds and Annual Municipal Budget
6.1.1 Transfer to ONE JIB as Part of Budget Process
On an annual basis, as part of the Municipality’s budget process, the Municipality
shall identify the amount, if any, of Long-Term Funds that it holds. Any Long-
Term Funds not already under the control and management of ONE JIB shall be
transferred to ONE JIB as soon as practicable.
6.1.2 Transfer to Municipality as Part of the Budget Process
On an annual basis, as part of the Municipality’s budget process, ONE JIB shall
be notified by the Treasurer as to the amount, if any, required by the Municipality
from the Long-Term Funds then under the control and management of ONE JIB
for the Municipality’s operational purposes. Such amounts shall be deemed to be
Short-Term Funds and shall be returned to the Municipality in a lump sum or by
way of periodic payments, as directed by the Treasurer.
6.2 Flow of Funds Otherwise than through the Budget Process
6.2.1 Surplus Funds
The Short-Term Funds capture revenues received by the Municipality during each
year after the approval of the Municipality’s budget for the year. Any amounts
deemed to be surplus by the Treasurer at any such time during the year shall be
transferred to ONE JIB to be under its management and control as Long-Term
Funds. Amounts so transferred will be recorded annually in the Investment Plan
and allocated by ONE JIB in accordance with the Investment Plan.
6.2.2 Contingencies
The Treasurer is authorized, from time to time after the approval of the
Municipality’s budget, to direct ONE JIB to return any amounts determined by the
Treasurer to be required to meet expenditures for unexpected contingencies not
anticipated by the Municipality’s budget in force for that year. Provided however
that the aggregate of the amounts to be returned to the Municipality under this
Section 6.2.2 during the year shall not exceed 25% of the Long-Term Funds under
the control and management of ONE JIB as at the date that the Municipality
approved its budget for the year (the Budgeted Long-Term Funds). In determining
the Budgeted Long-Term Funds for purposes of calculating the 25% limit, any
Long-Term Funds to be transferred to the control and management of ONE JIB in
accordance with that year’s budget pursuant to Section 6.1.1 shall be included and
any amount to be returned by ONE JIB to the Municipality pursuant to Section
6.1.2 shall be excluded.
6.3 Valuation of Investments
Investments shall be valued according to the values provided by the Custodian(s).
For the investment of Long-Term Funds, the fair market values of unitized vehicles
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shall be valued according to the unit values published daily by the Custodian.
Other investments shall be valued at their market value when that is available from
regular public trading. If a market valuation of an investment is not available, then
a fair value shall be supplied by the External Portfolio Manager to the Custodian
no less frequently than quarterly.
6.4 Voting Rights
Where External Portfolio Managers have been appointed, such External Portfolio
Managers shall assume the responsibility of exercising voting rights and will report
their voting policies to ONE JIB annually. The Municipality may access these
policies at any time.
6.5 Internal Controls
The Treasurer shall establish an annual process of review of all investments made
under this IPS. This review will provide internal control by assuring compliance
with governing legislation and with policies and procedures established by the
Treasurer. To the extent ONE JIB’s input is needed, these requirements will be
communicated in advance to ONE JIB.
6.6 Custodians
All investments and assets of the investment portfolios shall be held by a
Custodian and any of the Custodian's sub-custodians or nominees.
For Long-Term Funds, the Custodian shall be acceptable to ONE Investment.
For Short-Term Funds the following is a list of financial institutions authorized to
provide investment services to the Municipality. This list will be maintained and
updated as the business environment changes:
● TD Canada Trust
● CIBC Wood Gundy
● BMO Nesbitt Burns Inc.
● RBC Dominion Securities Inc.
● Raymond James Ltd.
● Canaccord Genuity
● ONE Investment
6.7 Reporting
6.7.1 Short-Term Funds
For the investment of Short-Term Funds, the Treasurer shall provide an annual
investment report to Council. The Investment report shall contain:
● A statement about the performance of the investments during the period
covered by the report;
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● A statement by the Treasurer as to whether or not, in their opinion, all
investments are consistent with the investments policies and goals of the
Municipality;
● Listing of all investments by maturity date;
● Percentage of total portfolio that each type of investment represents; and
● Such other information that Council may request, or that the Treasurer may
consider pertinent.
6.7.2 Long-Term Funds
The Regulation provides that ONE JIB shall submit an investment report to Council
in respect of the investment of Long-Term Funds at least annually. Such report
shall include the following.
● Investment performance during the period covered by the report;
● Asset mix of the total portfolio;
● A listing of individual investments held at the end of the reporting period
showing, where appropriate, their average term to maturity and yield
relative to the benchmark, book value, market value, realized/unrealized
gains/losses and actual income received;
● Dates of all transactions including the purchase and sale prices;
● A statement by the Treasurer as to whether all investments were made in
accordance with the IPS and as to whether all investments were made in
accordance with the Investment Plan; and
● Any other pertinent information in the opinion of the Treasurer.
All securities invested on behalf of the Municipality by ONE JIB or with the
assistance of ONE Investment shall be held for safekeeping in the name of the
Municipality by a Custodian, which shall provide monthly reporting showing all
securities held, their book values, market values and all income received.
7. APPROVAL, SUBSEQUENT MODIFICATIONS AND EFFECTIVE DATE
7.1 Revocation / Amendment of Previous Investment Policy
This policy replaces any existing investment policy of the Municipality, in its
entirety, and all previous investment policies are revoked and repealed.
7.2 Modifications to the IPS
At least annually Council shall review the IPS and update it, if required. In the
course of reviewing the IPS, Council may request comments from the Treasurer
with respect to the investment of Short-Term Funds and from ONE JIB with respect
to the investment of Long-Term Funds.
Following the Council’s review of the IPS, ONE JIB shall review the Investment
Plan and update it, if required.
At a minimum, the annual review will take into account:
● the adequacy of funding for capital works;
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13197104.14
● the Municipality’s ability to reduce other spending;
● flexibility of the timeframe to payout; and
● sensitivity to loss.
7.3 Effective Date
This IPS is adopted by Council of the Municipality effective DATE TBD The
Treasurer is directed to sign a copy of this IPS to evidence approval and to deliver
a copy of this IPS to ONE JIB.
Signed by:
Treasurer
Date
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13197104.14
Appendix I: ONE JIB Agreement
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13197104.14
Appendix II: ONE External Portfolio Manager Mandates
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13197104.14
Schedule A
Third Party Trust Funds and Designated Funds
Third Party Trust Funds
1. None
Designated Funds
2. None
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22 0 2 0 A N N U A L
PP E R F O R M A N C E R E P O R T
%XXEGLQIRX
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22020 ANNUAL PERFORMANCE REPORT
TTable of C on tents
About ONE Investment .............................................................................................................................. 3
ONE Prudent Investment Program ...................................................................................................... 7
ONE Legal List Offering ........................................................................................................................... 8
ONE Legal List Historic Returns ........................................................................................................... 9
2020 Legal List Review ......................................................................................................................... 10
ONE Prudent Investment Offering .................................................................................................... 16
2020 Prudent Investment Review ..................................................................................................... 18
Year- End Highlights – High Interest Savings Account ............................................................ 21
Year-End Highlights – Money Market ............................................................................................... 21
Year-End Highlights – Canadian Fixed Income ......................................................................... 22
Year-End Highlights – Global Bond ................................................................................................. 24
Year-End Highlights – Canadian Equity ........................................................................................ 25
Year-End Highlights – Global Equity ............................................................................................... 27
Investor Education and Outreach ..................................................................................................... 28
Your ONE Investment Team ................................................................................................................ 29
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AAbout ONE Inves t ment
ONE Investment is an investment solutions provider established to sustainably service the investing
needs of the Ontario municipal sector by building sector capacity and providing legally compliant
investment opportunities that meet municipal objectives.
With over 25 years of experience serving the sector, ONE Investment understands the needs of
municipalities. Since the 1990s, ONE has offered a Money Market portfolio and Bond portfolio. Over
the years, we expanded our investment offerings with an Equity portfolio in 2007 and a Universe
Corporate Bond portfolio in 2008. In 2010, we rebranded to “One Investment Program.” In 2015, we
introduced a high-interest savings account (HISA) that offers a competitive rate for short-term monies.
In 2018, ONE Investment incorporated as a not-for-profit organization and received an exemption from
the Ontario Securities Commission. This exemption granted ONE Investment the ability to provide
municipalities with investment advice. The ONE Board was also established, comprised of LAS and
MFOA/CHUMS representatives.
In 2019, the Municipal Advisory Team was formed; the team is comprised of a CFA Charterholder and
a municipal finance expert. The advisory team guides municipalities through each step of the municipal
investing process, from leveraging asset management plans and reserve and reserve fund knowledge
to develop long-term cash flow forecasts, to building municipal investments into a capital financing
strategy. In addition, the team provides guidance on the appropriate investment policy and portfolio
structure.
On May 19, 2020, the ONE Joint Investment Board (JIB) was established by six Founding
Municipalities: the Town of Innisfil, the Town of Whitby, the District Municipality of Muskoka, the Town
of Huntsville, the City of Kenora, and the Town of Bracebridge. ONE JIB is a joint municipal service
board, established under Section 202 of the Municipal Act, in accordance with Part II of O. Reg.
438/97. It is the first Joint Investment Board in the sector, providing access to the Prudent Investor
Standard to all municipalities in Ontario. ONE Investment serves as agent to ONE JIB.
At year-end 2020, 183 Ontario municipalities and broader public sector investors held investments
with ONE Investment. That is a year-over-year increase of 8 participants.
ONE Investment reached a milestone with total investment balances that surpassed $2.7 billion in
2020.
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OONE Investment ’s Core Values
Knowledge: We understand the municipal sector and provide resources that build municipal capacity
and support evidence-based decision-making. At the same time, we understand the sector’s need for
investment solutions and advice.
Professionalism: We maintain high standards of expertise in all of our activities and ensure our
investments and services are fully compliant with the legislation of Ontario.
Accountability: We assume responsibility for our decisions, actions, and operations. We monitor our
activities through robust governance practices.
Cost effective: We provide efficient investment opportunities that recognize the competing needs for
municipal resources.
Community: We give back to the municipal sector through the services provided by MFOA and
AMO.
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GGovernance
A robust governance and oversight structure is integral for ONE Investment to deliver on its core value
of accountability. Previously as a program of the CHUMS and LAS Boards and now for the ONE
Investment Board, the advice of municipalities and industry experts has been crucial. For over a decade,
the Peer Advisory Committee, comprised of Municipal Finance representatives across the province, has
been providing ONE with feedback regarding investments from the municipal perspective. In 2016, the
Investment Advisory Committee, comprised of industry experts, was formed to provide guidance to
ONE staff in making investment management decisions.
ONE Investment’s Board of Directors features 10 members, with five members being appointed by each
of the LAS and CHUMS boards.
ONE I nvest ment Board of Direct ors
Ken Nix, Town of Scugog (Chair)
Gary McNamara, Town of Tecumseh (Vice-chair)
Robin Jones, Village of Westport
Gary Kent, City of Mississauga
Trevor Pinn, Municipality of Clarington
Julie Pittini, Region of Peel
Jean-Pierre Ouellette, JPO Next
Julie Stevens, District Municipality of Muskoka
Nancy Taylor, Regional Municipality of Durham
Sandra Zwiers, County of Essex
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CC ommi ttee s
The following committees were established to provide advice to the Board of Directors and ONE staff:
Audit C ommi tte e
The Committee assists the ONE Investment Board (OIB) in its oversight responsibilities to review
financial reporting requirements under ONE Legal List Investment Program and ONE Prudent
Investment Program. The Committee also oversees the integrity of the financial management and
reporting systems to help monitor and develop the financial-related risk management policies. The
Committee consists of at least three Members, including representatives from the ONE Investment and
Joint Investment Boards. Each member is financially literate, and independent of any external auditors.
L ega l List Oversi ght Committees
Program and portfolio review and oversight of ONE Investment’s Legal List offerings is provided by
two complimentary committees who provide advice to ONE staff. The Peer Advisory Committee is
comprised of Ontario municipal financial professionals and provides a municipal perspective, while the
Investment Advisory Committee is comprised of members with institutional investment and municipal
finance experience to ensure the program is aligned with best practices and emerging trends in capital
markets.
Peer Advisory Committ ee
Ed Hankins, Region of York
Ed Stankiewicz, City of Greater Sudbury
Mark Martin, City of Ottawa
Michael Coffey, TBayTel
(a board of the City of Thunder Bay)
Michael McGovern, Township of Central Frontenac
Erika Kromm, Municipality of Neebing
Tara Baker – City of Guelph
Invest ment Advisory Committee
Jennifer Dowty, CFA
Heather Douglas, Committee Chair, WF
James Giles, CPA, CFA
Geri James, CFA
Bill Hughes, MBA, MES
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OONE Prudent Invest ment Program
ONE Joint Investment Board
ONE JIB is a joint municipal service board ultimately responsible for the plan and execution of
investments for participating municipalities under the Prudent Investor Regime as described in Part II
of O. Reg. 438/97. ONE Investment acts as agent to ONE JIB, providing the services it requires to
ensure it meets the requirements of a municipal service board and fulfill its duties with respect to
executing investment decisions and portfolio monitoring and oversight.
Launched May 19, 2020, ONE JIB manages combined Municipal Investments of over $300 million
dollars under the Prudent Investment Program. ONE JIB is comprised of current and former municipal
treasurers and investment industry professionals.
Many ONE JIB members have worked with ONE for several years through participation on ONE’s
Investment Advisory Committee (Legal List) and are committed to understanding the sector. Through
their role on the Investment Advisory Committee, they advised on the development of the Prudent
Investment Program, including providing expertise and oversight into the selection of the foundational
investment offerings included in ONE’s Prudent Investment Program.
Committees
The following Committees are established by and report to ONE JIB:
xNominating Committee – responsible for recruiting and recommending nominees to fill
vacancies in ONE JIB.
xNew Products Committee – responsible for researching and recommending appropriate
investment products for the Prudent Investment Program, as well as reviewing existing product
mandates and recommending changes, if necessary.
ONE Jo int Investment Board
Bill Hughes, Board Chair (MBA, MES)
Geri James, Board Vice Chair (CFA)
Heidi Franken, Board Member (CPA, CA)
James G. Giles, Board Member (CPA, CFA)
Jennifer Dowty, Board Member (CFA)
Mike Melinyshyn, Board Member (MBA, CPA, CMA)
Stephen Rettie, Board Member (CPA, CMA)
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OONE Legal Lis t O fferin g
In v estment Opti on s
1.High Interest Savings Account (HISA) - Recommended investment time horizon: 1+ months
The HISA preserves capital and maintains liquidity while maximizing short-term income via
secure deposits with a Schedule One Canadian Bank under a master LAS/CHUMS savings
account.
2.Money Market Portfolio - Recommended investment time horizon: 18 months
Portfolio Manager: MFS Investment Management Canada
The ONE Money Market Portfolio preserves capital and maintains liquidity while maximizing
short-term income through a diversified portfolio of Canadian Treasury Bills and high-quality
commercial paper.
3.Canadian Government Bond Portfolio - Recommended investment time horizon: 18 - 36
months
Portfolio Manager: MFS Investment Management Canada
The ONE Canadian Government Bond Portfolio is intended to provide a higher return over
longer investment horizons than the Money Market Portfolio or HISA. These higher returns are
garnered primarily through investment in a diversified selection of federal, provincial, and
municipal bonds maturing within five years, as well as high quality bank paper.
4.Canadian Corporate Bond Portfolio - Recommended investment time horizon: 3 to 5 years
Portfolio Manager: MFS Investment Management Canada
Launched in 2008, the ONE CCanadian Corporate Bond Portfolio (formerly known as the ONE
Universe Corporate Bond Portfolio) allows municipalities to invest in highly rated corporate
bonds, which historically have produced greater investment returns with only incremental
additional risk. This investment type is available to Ontario municipalities only through ONE
Investment, as per current municipal regulation.
5.Canadian Equity Portfolio - Recommended investment time horizon: 5+ years
Portfolio Manager: Guardian Capital LP
Launched in 2007, the ONE Equity Portfolio is the only opportunity for Ontario municipalities
to invest their long-term investment dollars in the equity market, as per current municipal
regulation. The portfolio has outperformed the major Canadian stock indices since inception as
well as other investment vehicles available to the sector.
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OONE Legal Lis t Hi storic Retur ns
ONE INVESTMENT ANNUALIZED PORTFOLIO RETURNS & COMPARATORS
1 year 2 year 3 year 5 year
High Interest Savings Account (HISA) 1.23% - - -
Money Market Portfolio 0.85% - - -
Canadian Government BBond Portfoolio 5.29% 3.94% 3.13% 1.97%
Canadian Corporate Bond Portffolio 7.54% 6.24% 4.52% 3.42%
Canadian Equity Porttfolio1 6.52% 12.26% 6.95% 9.00%
Comparator Investment Returns
Bank Prime less 1.75%
(Source: Bank of Canada) 0.7% - - -
Guaranteed Investment Certtificate (GIC)
(Source: Bank of Canada) 0.35% - 0.6% 0.8%
Canada Bond
(Source: Bank of Canada) - 0.51% 0.52% 0.59%
TSX Composite Index
(unmanaged without fees) 5.6% 16.91% 9.11% 8.26%
* All ONE Investment returns shown are net of fees.
1 13-year return annualized since January 2007 portfolio inception is 7.26%
The following chart illustrates the number of investors participating in each of the five ONE Investment
offerings under the Legal List, as well as the average and total deposit in each portfolio as of December
31, 2020. Year-over-year the number of active investors has increased by 14 in the HISA. Money
Market, Canadian Government Bond and Canadian Corporate Bond (CCB) portfolio had a slight
decrease whereas Canadian Equity portfolio had additional participants.
ONE’s Legal List Balances at December 31, 2020 ($ Miions)
HISA MM Bond Coorp Boond Equity
Participants 132 37 64 48 60
Change in
Participants
from 20199
+14 -6 -4 -2 +3
Average
Balance per
Participant
$9.9 $0.5 $2.7 $5.6 $11.7
Balance $1308.1 $19.4 $172.6 $270.5 $702.8
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220 20 Legal List Review
Legal List Program assets under management stood at $2.47 billion as of December 31, 2020, 8.5%
higher than the December 31, 2019 year-end balance of $2.28 billion.
The interest rate environment changed significantly in 2020 in response to the economic impacts
stemming from COVID-19. There were multiple rate cuts during the year that resulted in the overnight
rate having an effective lower bound of 0.25% at the end of 2020. During these highly uncertain times,
the Bank of Canada introduced quantitative easing programs to lower borrowing costs for businesses
and individuals. Global economic growth also slowed down in 2020 due to high uncertainty in financial
markets. Some resilience to maintain consumer activity was provided by quantitative easing in
emerging and developed markets around the world. ONE Investment’s fixed income portfolios have
performed well given the market conditions and conservative risk profile of the investment mandates
governed by the legislation.
As a result of the rate cuts noted above, the HISA rate was adjusted downward multiple times
throughout the year. The HISA paid an average of 1.22% -with revised rate calculation finalized from
bank prime rate to CIBC’s monthly average prime less 2.285%
Year--Oveer-YYear Change in ONE’s Legal List BBalance by Investment Offering
20199 ($M) 2020 ($M) $ Change % Change
HISA 1,360.9 1,308.1 -52.8 -3.8
Money Market 22.1 19.4 -2.7 -12.2
Govt BBond 227.9 172.6 -55.3 -24.3
Corp Bond 277.1 270.5 —6.6 -2.4
Equity 391.7 702.8 311.1 79.4
TOTAL 2,279.8 2,473.5 193.7 8.5
•The total balance for the four traditional ONE Investment portfolios under the Legal List at
year-end 2020 was $1,165.3M, up $246M or 8.4%, over the 2019 year-end balance of $918M.
•Under the Legal List, the ONE Equity Portfolio ended 2020 with a balance of $702.8M, almost
double the amount from the previous year regardless of the turbulent market situation last year.
This change can be attributed to a significant increase to investment in the fund coupled with
markets that rebounded from the decline in March 2020. The change represents close to an
80% increase, which is significantly higher than the 2019 closing balance.
•In 2020, four investment products from Legal List offering were cloned into Prudent Investment
Program, including High-Interest Savings Account, ONE Canadian Government Bond Fund,
ONE Canadian Corporate Bond Fund, and ONE Canadian Equity Fund. A significant portion
of Legal List assets was moved to the cloned investment products during 2020. Details of the
balance transitioned to the Prudent Investment Program are provided in the next section.
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BBal ance & P articip ation
The average monthly assets under management in the Canadian Equity portfolio was close to $702M
in 2020, up 79.4% from the average monthly balance of $391M in 2019. If the money transitioned to
the Prudent Investment Program’s Canadian Equity Fund are also included, the overall percentage
increase is 89.5%. These levels were higher than any other year since the portfolio’s inception in 2007.
Figure 1 presents investment balances for HISA and the four investment portfolios under the Legal
List at both 2019 and 2020 year-ends. On a year-over-year basis, the HISA the Canadian
Government Bond and the Canadian Corporate Bond portfolio have decreased by 3.9% 24.2% and
2.3% respectively, but the decrease was largely due to transfers from Legal List to Prudent
Investment Program, shown in Figure 2.
The Canadian Equity portfolio balance increased by 89.5% including the portion moved to Prudent
Investment Program and 79.4% based on the final balance at the year end. The Money Market
portfolio balance decreased by 12.1% as investors transitioned some of the monies to HISA or other
investment options given the unstable market conditions during 2020.
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
HISA Money Market Bond Corp Bond EquityMiLegal ListionsFigure 1: ONE Investment 2020 Year-End Balances
December 31, 2019 December 31, 2020
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Figure 3 shows growth in Legal List portfolios including the portion moved to Prudent Investment
Program offering. This chart is for illustration purposes with no compounding or market effect
projected on the portion moved to Prudent Investment Program from July 2, 2020 to December 31,
2020.
Figure 4 illustrates average quarterly balances over the last five years. ONE Investment saw consistent
growth over the last five years, and despite market uncertainty in 2020, the overall balances showed
significant growth in each quarter surpassing any period to date. This growth has resulted from a
combination of factors, including educational opportunities offered by ONE. This training equipped
municipal staff with the knowledge and expertise required to develop an investment approach suitable
for their investment needs and also built their confidence in ONE’s offerings. Another key factor is
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
HISA Money Market Bond Corp Bond EquityMiLegal Listions Figure 2: Legal List Portion Moved to Prudent Investor Offering
December 31, 2020
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̈́ͶͲͲ
̈́ͲͲ
̈́ͺͲͲ
̈́ͳǡͲͲͲ
̈́ͳǡʹͲͲ
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Figure 3: Growth in 2020 including the Legal List portion moved
to Prudent Investment Program
͵ͳǡʹͲͳͻ ͵ͳǡʹͲʹͲ
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22020 ANNUAL PERFORMANCE REPORT
ONE’s Investment Advisory Services Team consisting of a municipal finance expert and an in-house
CFA Charterholder. They assisted municipalities in making prudent decisions on their investible funds
combined with turnkey solutions for easier implementation.
Figure 5 shows an analysis of 2020 activity within each of the four co-mingled ONE Investment
portfolios including the unit price for each at both year-end 2019 and 2020. On a year-over-year basis,
there has been an overall increase in the balances, but the year-end amounts show HISA, Money
Market, Bond and Corporate Bond decrease by $52.8M, $2.7M, 55.3M and 6.6M respectively. The
decrease in year-end balance is due to money transitioned to the Prudent Investment Program offering
in July. The exact amounts moved for HISA, Bond, Corporate Bond and Equity Portfolio are $154M,
$56.1M, $32.1M and $57.1M respectively. The Equity portfolio’s year-end balance even after a significant
amount was moved to Prudent Investment Program is showing an increase of $311.1M.
FFigure 55:: Activity By Portfolio
HHISA MMM BBond CCoorp BBoond EEquity
At December
31st, 2019
Balance $M 1360.9 22.1 227.9 277.1 391.7
Price $ - 965.6 876.5 1099.3 25.1
At December
31st, 2020
Balance $M 1,308.1 19.4 172.6 270.5 702.8
Price $ - 964.7 895.5 1143.2 26.0
Difference Balance $M (52.8) (2.7) (55.3) (6.6) 311.1
Price $ (0.9) 21.0 43.9 0.9
Portion
Moved to PI
154 N/A 56.1 32.1 57.5
0
500
1,000
1,500
2,000
20 16 2017 2018 2019 2020Figu re 4: 2 02 0 Average Q uar te rl y Bal a n ce s ($)
Q1 Q2 Q3 Q4
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The two tables in Figures 6 and 6.1 represent the total investment on participant basis and year-end
2020 to 2019 balances provided for comparison. The number of active investors through 2019 grew
by 8 at the year-end. This is 4.5% increase in the total number of ONE investors. Much of this new
investor growth can be attributed to the rapid growth in the Equity Portfolio.
FFigure 66:: Total Deposits By Municipality Across All Products, as at December 31, 2020
IInvestment PParticipants TTotal Deposit in
RRange
AAverage Deposit
iin Range
%% of Total
DDeposit
Less than $100K 15 $513,337 $34,222.49 0.02%
$100K to $500K 22 $5,919,381 $269,062.77 0.2%
$500K to $1M 22 $16,111,345 $732,334 0.7%
$1M to $5M 57 $156,485,900 $2,745,367 6.3%
Greater than $5M 67 $2,294,465,880 $34,245,759 92.8%
TTotals 1183 $$2,473,495,844 1100.0%
Total investment in ONE’s Legal List products at December 31, 2020 was $2.47 billion, which is 8.5%
higher than the total ONE balance only one year prior. If the portion moved to Prudent Investment
Program is included than overall growth is under Legal List is 21.65% The December 31, 2019 balance
was $2.28 billion. Average deposits have a wide change in values but any new investment greater than
$5,000 is eligible within ONE Investment.
FFigure 66.1:: TTotal DDeposits BBy MMunicipality AAcross All Prroducts, as at December 31, 2019
IInvestment PParticipants TTotal Deposit in
RRange
AAverage Deposit
iin Range
%% of Total
DDeposit
Less than $100K 13 $309,572 $23,813 0.01%
$100K to $500K 22 $5,962,071 $271,003 0.3%
$500K to $1M 17 $11,946,266 $702,722 0.5%
$1M to $5M 61 $160,391,872 $2,629,375 7.0%
Greater than $5M 62 $2,101,200,568 $33,890,332 92.2%
TTotals 1175 $2,279,810,350 -- 100.0%
Figure 7 and 7.1 summarizes ONE Investment participation by municipal population for both year-end
2020 and 2019. Overall, ONE Investment activity grew by 8 new investors. Investors from
municipalities under 5,000 population grew by 6 additional investors. Two additional investors, one
from medium sized population i.e., 25,001 to 50,000 and other one from over100,000 population.
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The total investments from broader public sector organizations increased by 33.8%. The share of
investors with populations of more than 100,000 is close to half of the overall portfolio of ONE
Investment.
Figure 77: Total ONE Investment Participation by Population as at December 31, 20220
Population # of Investors % of Investors Investment (Millions) % of Total
Investment
Per IInvestor Total
Broader
Public Sector
18 10% $6.8 $122.5 4.9%
< 5,000 51 28% $2.0 $103.8 4.2%
5,001 to
25,000
64 35% $5.0 $316.7 12.8%
25,001 to
50,000
18 10% $20.9 $376.6 15.2%
50,001 to
100,000
12 7% $36.7 $439.9 17.8%
100,000 + 20 11% $55.7 $1,114.1 45.0%
Total 183 100% $2,473.5 100.0%
Figure 77.1: TTotal ONE Investment Participation by Population as at December 31, 2019
Population # of Investors % of Investors Investment (Millions) % of Total
Investment
Per IInvestor Total
Broader
Public Sector
16 9% $5.7 $91.5 4.0%
< 5,000 47 27% $1.9 $92.4 4.1%
5,001 to
25,000
62 35% $5.3 $327.6 14.4%
25,001 to
50,000
17 10% $18.2 $309.2 13.6%
50,001 to
100,000
12 7% $31.8 $381.6 16.7%
100,000 + 21 12% $51.3 $1,077.5 47.3%
Total 175 100% - $2,279.8 100.0%
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OONE Prudent Inve st men t Offering
ONE Investment’s approach for the Prudent Investment offering intends to set up a suite of funds
with a relatively low risk profile to be used as building blocks to construct investment offerings that
are suitable for the investment of long-term monies of Ontario municipalities. An outcome-based
approach is used as a mechanism for translating municipal investment needs into appropriate
investment allocations.
One of the primary goals of the prudent investor regime is to generate higher returns at acceptable
levels of risk. ONE Investment’s prudent investor funds are relatively low risk strategies by design. It
allows flexibility to increase equity allocations to achieve higher returns while still assuming
appropriate levels of investment risk.
ONE JIB’s outcomes framework is summarized in Figure 1. Each outcome strategy in the framework
has two key elements that connect the appropriate investment to money not required immediately
(MNRI) by municipal clients – the objective and the investment horizon.
Figure 1: Prudent Investor Outcome Framework
Outcome
Category
Outcome
Strategy Objective Risk Tolerance, Liquidity Investment
Horizon
Cash Cash Preservation of capital Low risk; high liquidity < 3 years
Stable
Return Stable Return
Income generation: To
generate returns to fund
recurring needs
Moderate risk with
emphasis on growth and
stable returns, regular
liquidity
> 5 years
(Perpetual)
Contingency
Contingency
Contributions for
unexpected and infrequent
events
Higher risk, emphasis on
longer-term capital
growth with some
liquidity
> 5 years
(Perpetual)
Asset mgt
reserves
Contributions to generate
returns to fund asset
management reserves
Higher risk, emphasis on
longer-term capital
growth; low liquidity
> 10 years
(Perpetual)
Target Date
Target Date
3-5 yrs Preservation of capital Low risk; high liquidity 3 - 5 years
Target Date
5-10 yrs
Contributions toward
capital projects, mitigate
inflation impacts and meet
target funding
requirements
Moderate risk, liquid 5 - 10 years
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22020 ANNUAL PERFORMANCE REPORT
Target Date
10+ yrs
Contributions toward
capital projects, mitigate
inflation impacts and meet
target funding
requirements
Higher risk, emphasis on
long term inflation-
adjusted growth
> 10 years
Each outcome strategy has a unique asset allocation, which reflects the risk/return characteristics
appropriate for each outcome. A municipality may have portions of its MNRI allocated to several
different outcomes.
The investment funds/vehicles used in the ONE Investment Prudent Investment outcomes provide
exposure to the basic portfolio building blocks. They each represent the key asset classes required to
build diversified allocations as described in Figure 2.
FFigure 2: Initial Investment Vehicles
FFund/Investment Vehicle AAsset Class
ONE HISA Cash
ONE Canadian Government Bond Fund Domestic sovereign bonds
ONE Corporate Bond Fund Domestic corporate credit
ONE Global Bond Fund Global fixed income (including high yield bonds)
ONE Canadian Equity Fund Domestic equity
ONE Global Equity Fund Global equity (including Emerging Markets)
New Inve st ment Product s
In addition to replicating the Legal List (Canadian Fixed Income Bond and Canadian Equity Product),
the following Global Bond and Global Equity Funds were added:
1.Global Bond Fund
Lunched in 2020, the ONE Global Bond Fund is an unconstrained global bond mandate
managed by Manulife Asset Management. The unconstrained nature of the mandate means
that the fund will contain a mix of global government, corporate and securitized debt, including
emerging markets and high-yield securities. The mandate is not constrained by sector or
currency. Manulife aims to outperform the benchmark, which is Bloomberg Barclays Multiverse
Index Unhedged.
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22.Global Equity Fund
Launched in 2020, The ONE Global Equity Fund holds Global stocks managed by Mawer
Investment Management. Mawer aims to outperform the benchmark, which is MSCI All Country
World Index (ACWI). This mandate invests in both emerging and developed markets. Manager
will allocate capital to the best global opportunities, which may include both large and small
capitalization companies. This mandate is intended to be a broadly diversified portfolio of
wealth-creating companies bought at discounts to their intrinsic values that typically employ a
long-term holding period.
2020 P ruden t Investmen t Rev iew
The introduction of 418.1 in the Municipal Act, 2001 Prudent Investor Standard offered municipal
government’s broader investment options with proper governance structure and some qualification
requirements for municipalities to participate in the regime.
The launch of the first Joint Investment Board in collaboration with six Founding Municipalities, was a
milestone for ONE Investment. The creation of ONE JIB permits access to the Prudent Investor Regime
for any Ontario municipality that wishes to participate.
Bal ance and Parti cipation
The following chart indicates the number of investors and year-end balances in each of the six
investment offerings under the Prudent Investment Program. The total amount invested under the
Prudent Investment Program is $317.10 M. 28% of the Prudent Investment Program offering consists
of Canadian securities, 64% is invested in Global Bonds, and Global Equities and the remaining 8% is
held in cash under HISA to meet liquidity requirement for clients’ portfolios. Each portfolio distributes
Net Income and/or Net Realized Capital Gains at least annually. Net Income for fixed income funds
is distributed quarterly and for equity funds is distributed annually.
Figure 3: ONE’s Prudent Investor Balances at December 31, 2020 ($ Millions)
PI HHISA CAN
Bond
CAN
Corp
Bond
CAN
Equity
GLB
Bond
GLB
Equity
Participants 6 6 6 6 6 6
Average Balance
per Participant
$4.3 $4.0 $4.1 $6.6 $19.8 14.0
Balance $225.9 $224.5 $244.6 $339.5 $1118.5 $884.1
Figure 4 shows the initial price and balances from July 2, 2020 followed by price and balances at the
end of the year. No additional funds were deposited for any investor for the remainder of the year. The
fund’s price or Net Asset Value (NAV) per unit means the total market value of a Fund at a specific
Page 53 of 149
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22020 ANNUAL PERFORMANCE REPORT
point in time (including the valuation of all securities and cash held in the Fund, income received or
receivable, and Expenses paid or payable) divided by the total outstanding units of the Fund. There
was a positive development in the fund's NAV, which means that the value of securities held in each
fund increased by the end of the year. The price increase in Canadian Bond (CAN Bond), Canadian
Corporate Bond (CAN Corp Bond), and Canadian Equity (CAN Equity) Fund showed an upward trend
in the year-end balances by 1.1%, 1.4%, and 17.2%, respectively. Simultaneously, both Global Bond (GLB
Bond) and Global Equity (GLB Equity) Fund's value increased by 4.8% and 6.8%, respectively.
Figure 44: Activity By Portfolio (in millions)
PI HHISA CAN
Bond
CAN
Corp
Bond
GLB
Bond
CAN EEquity GLLB EEquity
At July 2,
2020
Balance
$M
$25.8 $24.2 $24.2 $113.1 $33.7 $78.7
Price $ 1000 1000 1000 1000 1000
At
December
31st, 2020
Balance
$M
$25.9 $24.5 $24.6 $118.5 $39.5 $84.1
Price $ 1001.1 1002.9 1027.9 1147.1 1030.3
Difference Balance
$M
0.1 0.3 0.3 0.5 0.6 0.5
Price $ 1.1 2.9 27.9 147.1 30.3
During 2020, the work was completed with Founding Municipalities to clearly define their investment
needs. By aligning their cash flow forecast with investment outcomes, ONE JIB had a better
understanding of the future use of funds and required investment horizons.
Figure 5 shows the overall allocations in each investment outcome for all municipalities. Due to the
long-term nature of these funds, only 1.2% is allocated to the cash outcome. Other outcomes with 10+
year time horizon i.e. Asset Management Reserves (AMR) and Target Date 10+ year comprised of
5.5%. The funds with moderate risk tolerance with a potential contribution to a capital project in 5 -10
years has the highest allocation under Target Date 5-10 year outcome at 38.9%. Target Date 3-5
year has comparatively higher liquidity requirement than other outcomes after cash and shows
second highest allocation of 32.4%. Contingency and Stable Return outcomes makes up a total of
22.1%.
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Figure 5: ONE’s Prudent Investor Balances by Outcome ($ Millions)
Date Cash &
Equivalents
Stable
Return Contingency
Asset
Management
Reserves
Target
Date 3-55
Years
Target
Date 5--
10 Years
Target
Date
10+
Years
Total
Balance
DDec 31,
2020
$3.9 $22.9 $47.1 $0.3 $102.6 $123.3 $16.9 $$317.1
% of
TTotal -
Dec 31,
22020
1.2% 7.2% 14.9% 0.1% 32.4% 38.9% 5.4% 100.0%
Figure 6 summarizes participation in Prudent Investment Program offering by municipal population
for the year-end 2020. There are three investors from a small population group of 5001 - 25000
and one each in medium to large sized population groups of 25, 001 to 50,000, 50,001 to
100,000 and over 100,000.
Figure 6: ONE’s Prudent Investor Balances Population at December 31, 2020 ($ Millions)
Population Municipal % Investment % of Total
Participants Investors
Per
Municipality Total Investment
5,001 to 25,000 3 50% $18.3 $54.9 17.3%
25,001 to 50,000 1 17% $16.1 $16.1 5.1%
50,001 to 100,000 1 17% $132.4 $132.4 41.7%
100,000+ 1 17% $113.5 $113.5 35.8%
Totals 6 100% $317.1 100.00%
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YYea r- End Highli ghts – Hi g h Inte rest Sa v ings Account
The High Interest Savings Account (HISA) generated annual interest income of 1.23% which compounds
daily for the period ended December 31, 2020. Bank of Canada changed the policy rates three times
during the year resulting in Bank Prime rate changes and its impact on HISA rate. Despite the changes
and market turmoil in 2020, HISA was still an efficient and competitive solution for municipal clients to
park their funds for emergency purposes. As the year unfolded, market uncertainty continued to grow
and the returns on the bank deposits continued to decrease. HISA still provided competitive interest
rates with full liquidity option that attracted more investment in the product. GIC’s were considered
safe way to invest for municipalities but not an optimal option for the low interest rates paid on them.
Also, locking money for longer term wasn’t a viable option for changing cash flow needs of
municipalities HISA has been historically used to invest provincial efficiency funding on a short-term
basis but heightened uncertainty during the year resulted in more conservative approach where monies
were parked in HISA not only for short term, but also for short to mid term investment horizon.
Yea r-End Hi ghlights – M oney Market
The fourth quarter of 2020 continued the rebound of risk assets as shown by strong equity market
performance in both the U.S. and Canada. This completed the rebound for the year from the spring
lows as both equity markets were up (about 11 and 9% respectively). The rebound from the sharp
economic contraction continued, but economic growth is still below the pre pandemic trend. A
rebound in value-oriented companies, financials, industrials, and commodities started in earnest in the
fourth quarter. Fixed income instruments of these and other economically sensitive sectors did better
than other sectors such as utilities.
In this risk on environment, credit spreads tightened, and rates of longer government bonds rose
slightly while short bond rates fell. This resulted in slightly positive returns on government bonds for
the quarter and bigger gains for corporate bonds. With rates ending the year lower than at the start
of the year, fixed income returns were positive across the maturity spectrum. Lower credit rated
bonds had a strong year. Credit spreads are now below long-term averages and in the U.S. are
where they were in the 2003-07 period, which was a time of very tight spreads.
Returns for the money market portfolio before fees were 9 basis points (0.09%) for the quarter and
106 basis points (bp) for the year, outperforming the benchmark on a net basis by 3 bp for the
quarter but underperforming by 40 bp for the year.
It appears as if the U.S. Federal Reserve is unlikely to raise interest rates anytime soon. They are
indicating that to get unemployment rates down, they are willing to let inflation rise without raising
rates. As well, fiscal stimulus will continue in the U.S. with a $1.9 trillion package and Canada will
continue to stimulate as well. The Bank of Canada is likely to follow the Fed’s lead on rates, otherwise
the already rapidly rising Canadian dollar would likely climb further, slowing economic growth.
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As a result, the portfolio is positioned with a high-quality bias with some corporate exposure. The
manager believes that while the Canadian economy is recovering, credit spreads are tight in
historical terms, so there is not adequate compensation for taking greater credit risk at this time.
YYea r-End Hi ghlights – Canadian Fixed In come
The fourth quarter of 2020 was a quarter where a risk on attitude prevailed. The combination of
interest rates being suppressed by central banks at the short end and the continued government
stimulus (with the central banks willing to support it) resulted in the riskier assets (equities and lower
quality credit bonds) having a strong quarter. Safer assets (such as government fixed income) had a
less strong quarter. Even within equities, smaller and lower quality equities outperformed larger more
stable companies. Rates were lower at the end of the year than they were at the beginning, so for the
year, fixed income returns were strongly positive.
The U.S. Federal Reserve continued to support the economic recovery with liquidity, low rates and
supporting federal government spending programs. Once it became clear that the Fed was not going
to let its balance sheet shrink meaningfully and not raise interest rates, investors became more
optimistic. The economic data then started to improve enough to support the idea that further
recovery lie ahead.
It looks like neither the U.S Federal Reserve nor the Bank of Canada will be raising rates anytime
soon. If anything, they appear willing to let inflation get ahead of policy ranges to support
employment growth. As rates at the long end of maturity spectrum tend to move more freely for now,
it will be interesting to see if the central banks intervene if rates rise significantly.
The ONE Canadian Corporate Bond Portfolio had a negative return of 74 basis points (0.74%) in the
fourth quarter, but a strong positive return of 787 basis points (bp) for the year. These are before
0
0.1
0.2
0.3
0.4
0.5
Q1 Q2 Q3 Q4Benchmark (%)Period
Money Mar ket Po r tfolio Ret urns in 2 02 0
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22020 ANNUAL PERFORMANCE REPORT
fees. Net performance slightly exceeded the benchmark for the quarter by 8 bp, it was positive for
year by 31 bp. Being overweight corporates generally and economically sensitive ones such as
financials and infrastructure helped.
The ONE Canadian Government Bond Portfolio has had a positive return of 44 bp (0.44%) in the
fourth quarter, but a strong positive return of 561 bp for the year. These are before fees. Performance
was positive for the quarter and year by 23 and 90 bp respectively. Being overweight corporates
generally and economically sensitive ones such as financials helped. Provincial bonds from Ontario
and Quebec hurt performance.
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22020 ANNUAL PERFORMANCE REPORT
The difference between the two portfolios is that the Universe portfolio has longer maturity bonds
and a higher duration. These result in higher coupon yields as longer bonds tend to have higher
yields. The Canadian Corporate bond portfolio will normally have a higher sensitivity to interest rate
changes (higher duration) and as interest rates rose at the long end in the fourth quarter, the
overweight to longer bonds hurt performance.
When looking at portfolio positioning for 2021 for both portfolios, there are several factors to
consider. Global trade tensions, especially between the U.S. and China are not resolved even with the
new president. This could slow the global economy but the question remains, will the global supply
chains be permanently affected by higher costs? Debt levels of consumers in Canada and
corporations and governments in North America are high enough that there may be a drag on
growth as well. There was a lot of debt issuance by corporations last year. Commodity prices are
important to the Canadian economy and are strengthening significantly (oil, lumber and base metals).
If you remember, oil was below zero in March and is now over $60 USD per barrel.
Given the aforementioned factors, the portfolio positioning is relatively conservative with high
portfolio quality, duration about the same as the benchmark and corporate exposure less than
normal. With credit spreads being tighter than normal, it is not easy to find issues where there is
sufficient compensation for taking the extra risk.
YYea r-End Highlights – Global Bond
Global fixed-income markets advanced in the fourth quarter, capping a solid year of performance. A
continued resurgence in COVID-19cases in many regions of the world led to increasingly stringent
restrictions and lockdowns, which put downward pressure on global economic activity. Despite this,
the rollout of vaccines for the virus began in many countries, sparking optimism about a return to
normality, which contributed to a sharp rally in corporate bonds, especially in lower credit quality
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ONE Canadian Corporate Bond Portfolio Performance Results
Dec 31, 2020
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22020 ANNUAL PERFORMANCE REPORT
bonds. This is a sign of recovering investor confidence that saw strength in investments, such as high
yield bonds and equities.
The improvement in credit markets is a continuing trend. In March 2020, investors reacted to the
news of a global pandemic by reducing risk, leading to a sell-off in equities and lower credit quality
bonds. This resulted in a dramatic widening of credit spreads, which peaked in March. The credit
spread, which is the yield premium investors receive for assuming credit risk, has continued to
contract for 3 consecutive quarters and now are below the historical average. This has prompted our
fixed income investment managers to trim the size of their overweight exposure to corporate credit.
YYea r-End Highlights – Canadian Equity
2020 was a volatile year for equities given uncertainties arising from the rapid spread of COVID-19
worldwide. Despite the extreme moves in global stock markets, most major equity indices were
resilient and ended the year in positive territory. In 2020, the ONE Canadian Equity Portfolio gained
8.2%, which exceeded the 5.6% return of its benchmark, the S&P/TSX Composite Total Return Index.
The positive return for the year was driven by strength realized in the final quarter of the year. The
stock market rallied sharply in the fourth quarter after positive clinical trial data released from several
pharmaceutical companies lifted prospects that vaccinations would be available in 2021. Cyclical
stocks which are poised to benefit from a resumption in normal business activity surged along with
depressed value stocks. In the fourth quarter, the ONE Canadian Equity Portfolio increased 11.2%,
surpassing the 9% gain realized by the S&P/TSX Composite Total Return Index.
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ONE Global Bond- Dec 31, 2020 (%)
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22020 ANNUAL PERFORMANCE REPORT
The ONE Canadian Equity Portfolio's outperformance relative to its benchmark during the quarter
was driven largely by gains in the consumer discretionary sector, which contributed approximately
2.1% to this outperformance. Of note are two of the portfolio's large positions in Magna International
and Gildan Activewear. These two consumer discretionary stocks rallied 48% and 36%, respectively,
in the fourth quarter.
The portfolio's roughly 9% underweight position in the financial sector relative to the S&P/TSX
Composite Total Return Index was the largest detractor, negatively impacting the portfolio’s relative
performance by approximately 0.9%. The Financials sector in the S&P/TSX Composite Total Return
Index rallied 16.7%.
At year-end, the portfolio held 36 securities, down from 42 stocks at the end of the third quarter. The
total number of securities held in the portfolio is at the lower end of the manager’s targeted range of
holding between 35 and 50 stocks.
During the quarter, two consumer stocks were added to the portfolio, Restaurant Brands and Maple
Leaf Foods with weightings of 2% and 1%, respectively at quarter-end. The portfolio manager
anticipates Restaurant Brands with its fast-food chains Burger King, Tim Hortons and Popeyes will
benefit from higher traffic as more people are vaccinated and lockdowns are lifted. Maple Leaf
Foods was added to the portfolio as the portfolio manager believes the stock is trading at a
compelling valuation and has longer-term earnings growth potential.
The portfolio manager remains disciplined to their Growth-at-a-Reasonable Price (GARP) investment
strategy. Consequently, eight securities were eliminated from the portfolio, Waste Connections,
Thomson Reuters, Enbridge, Canadian Natural Resources, Brookfield Renewable Partners, Bank of
Nova Scotia, and two gold stocks, Barrick Gold and Franco Nevada, most of which were due to high
valuations. The portfolio manager believed the valuations were stretched for shares of Thomson
Reuters, Brookfield Renewable Partners, Waste Connections, Franco Nevada and Barrick Gold, and
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22020 ANNUAL PERFORMANCE REPORT
decided to sell these positions and redeploy the proceeds into other stocks with greater upside
potential.
The company’s largest holding is its investment in Magna International with a 5.4 % weighting. The
portfolio was nearly fully invested with just 2.6 % in cash and cash equivalents as of Dec. 31.
Looking to the year ahead, the portfolio manager stresses the need for portfolio diversification noting
uncertainties surrounding the timing and speed of an economic recovery, the potential for inflation,
and risks arising from rising interest rates. As such, the manager has taken a balanced approach,
positioning the portfolio in high quality defensive as well as cyclical stocks.
Listed below are the portfolio’s Top 10 holdings representing 44% of the total portfolio.
Top 10 Holdings for Canadian Equity Portfolio - 2020
9Brookfield Asset Management 9Saputo
9Magna International 9Telus
9Gildan Activewear 9Bausch Health Companies
9
9Alimentation Couche-Tard 9Rogers Communications
9CGI 9Canadian National Railway Company
Yea r-End Hi ghlights – Global Equity
The ongoing global pandemic remains the key feature impacting the global economy and financial
markets. Yet with many countries grappling with surging COVID-19 infections in the fourth quarter,
investors propelled global stock markets to record highs. To a large extent, this renewed optimism
relates to positive vaccine developments which offer the potential to restore a semblance of normality
to daily life and allow economic reopening. The financial markets seem to have looked past peaking
Covid-19 infections. Households, that have reduced spending during the pandemic, have the potential
to unleash pent-up demand as restrictions are gradually lifted. These improving prospects and
promise of continued support from governments and central banks globally helped buoy equity
markets during the quarter. The positive market backdrop helped the Global Equity Fund appreciate
approximately 3% in the quarter. Strong returns in the Fund’s holdings in the consumer discretionary
and information technology sectors made a significant contribution to returns. The manager’s
allocation choices across other sectors were less of a driver of performance than the choice of
individual securities held. The manager focuses on companies that have a durable competitive
advantage which should lead to solid returns over the long term. The result is a portfolio that
prioritizes resilience and that is less exposed to cyclical or lower-quality stocks.
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22020 ANNUAL PERFORMANCE REPORT
Top 10 Holdings for Global Equity Portfolio - 2020
9Microsoft Corporation 9Accenture Plc
9Wolters Kluwer NV 9Visa Inc.
9Intercontinental Exchange Incorporated 9Marsh & McLennan Companies, Inc.
9Alphabet Inc. 9Roche Holding Ltd.
9Aon Plc 9Johnson & Johnson
Adhering to an investment philosophy means that performance doesn’t always fully participate in the
shorter-term themes impacting equity markets. The manager’s focus remains on wealth-creating
businesses, excellent management teams, and stocks priced at a discount to intrinsic value. This
approach is intended to provide meaningful downside protection in weak markets but may tend to
not fully capture the upside in rising markets.
In v estor Educat ion and O ut reach
• ONE has revamped existing communication channels and launched new channels while using more
focused approach for newsletters in 2020. ONE continued to deliver update and insights with topical
information on financial markets and municipal investing.
• ONE has also added podcasts to its communication toolkit. The podcast series is named “Main Street
to Bay Street”. The idea is to engage audience through different platforms and featuring updates in a
conversational format.
• ONE also collaborated on various series of webinars in 2020 in conjunction with our portfolio
managers. These webinars were developed for investors and municipal staff to help them understand
current financial market trends and portfolio level thinking used in actively managing ONE’s investment
portfolios.
• ONE also took the opportunity to review training needs for the sector in 2020 by moving the
Investment 101 course online so anyone can learn at their Pace from their Place.
• ONE Investment Advisory Service team combined efforts in building support for clients from a CFA
Charterholder and municipal finance expert. The team has helped numerous investors in translating
asset management plans to a financial strategy to fund the plan, create an investment policy and set
up investment portfolios.
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YYour O N E Invest ment Team
Judy Dezell
Co-President & Co-CEO
Tel:416.971.9856 x 306
JDezell@oneinvestment.ca
Donna Herridge
Co-President & Co-CEO
Tel:416.362.9001x233
dherridge@oneinvestment.ca
Eleonore Schneider
Program Ma nager, LAS
Tel: 416.971.9856 x320
ESchneider@oneinvestment.ca
Keith Taylor, CFA
Chief Investment Officer
Tel: 416.677.0994
KTaylor@oneivestment.ca
Wardah Mir
Client Service
Representative
Tel: 416.971.9856 x351
wmir@oneinvestment.ca
Colin MacDonald
Manager, Investment Services,
MFOA
Tel: 416.362.9001 x232
cmacdonald@oneinvestment.ca
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Evelyn Foo
Chief Compliance Officer
Tel: 416-970-9970
efoo@oneinvestment.ca
Page 65 of 149
ANNUAL REPORT 2020
Attachment 3
Page 66 of 149
Table of Contents
About ONE .....................................................................................................................................3
Vision .................................................................................................................................................3
Board of Directors ......................................................................................................................4
ONE Joint Investment Board .................................................................................................5
Message from Chair...................................................................................................................6
Message from Management Team ......................................................................................8
2020 Highlights .......................................................................................................................10
Financial Statements ...............................................................................................................13
Page 67 of 149
ONE INVESTMENT – 2020 Annual Report 3
Serving Ontario’s municipalities for more than 25 years
ONE Investment brings Ontario’s municipal sector together to benefit from the greater
options and lower fees made possible by combining their investment power.
ONE was first offered as a program in 1993 by Local Authority Services (LAS), the business
services arm of the Association of Municipalities of Ontario (AMO), and CHUMS Financing
Corp., a subsidiary of the Municipal Finance Officers’ Association of Ontario (MFOA). It has
evolved to meet changing needs and a new regulatory environment. ONE Investment is
now an incorporated not-for-profit organization focused on one thing: providing investment
options that support the needs of Ontario’s municipalities.
ONE aims to be the leader in best practices for municipal investment. Our purpose as a
not-for-profit is to offer enhanced investment services and to expand municipal capacity for
long-term investing and asset management planning. This includes education and training
for municipalities with respect to linking investments to funding asset management plans.
ONE Investment offers municipalities and municipal treasurers:
• Five different investment products for different timeframes and needs, all
compliant with the Province’s “Legal List” of eligible investments
• A Joint Investment Board to manage pooled municipal investments
for those who want the flexibility afforded by the Prudent Investor
Standard
• In-person and online education and training opportunities
• Tools and templates to support staff reports to council
About ONE
Vision
To be the leading
investment
solutions provider
that empowers
the Ontario
municipal sector to
effectively harness
the potential of
investments.
Page 68 of 149
ONE INVESTMENT – 2020 Annual Report 4
PROGRAM (PEER) ADVISORY COMMITTEE
BOARD OF DIRECTORS
As a not-for-profit, ONE Investment is governed by a Board of Directors, which provides oversight
and direction to the organization. This role is governed by federal not-for-profit legislation.
ONE is further guided by a Peer Advisory Committee comprised of municipal leaders and
an Investment Advisory Committee, comprised of investment sector experts and legal
representatives. These Committees were established prior to incorporation as a not-for-profit
and they continue to provide additional advice.
Board of Directors
Heather Douglas
Committee Chair, Partner Weir Foulds
Jennifer Dowty, CFA
James Giles, CFA, CPA
Bill Hughes, MBA, MES
Geri James, CFA
Tara Baker
City of Guelph
Michael Coffey
Tbaytel (a municipal service board of
the City of Thunder Bay)
Ed Hankins
Region of York
Erika Kromm
Municipality of Neebing
Mark Martin
City of Ottawa
Michael McGovern
Township of Central Frontenac
Ken Nix, Chair
CAO, Township of Scugog
Gary McNamara, Vice-Chair
Mayor, Town of Tecumseh
Robin Jones
Mayor, Village of Westport
Gary Kent
Commissioner, Corporate Services &
CFO, City of Mississauga
Jean-Pierre Ouellette
Consultant and retired CAO
Town of Cochrane
Trevor Pinn
Director of Financial Services/Treasurer,
Municipality of Clarington
Julie Stevens
CAO, District Municipality of Muskoka
Nancy Taylor
Commissioner of Finance/Treasurer,
Regional Municipality of Durham
Julie Pittini
Director of Treasury Services, Region of Peel
Sandra Zwiers
Director of Finance/Treasurer, County of Essex
INVESTMENT ADVISORY COMMITTEE
Page 69 of 149
ONE INVESTMENT – 2020 Annual Report 5
JOINT INVESTMENT BOARD
The ONE Joint Investment Board is responsible for the control and management of investments
under the Prudent Investor Regime. This Board is governed by the Municipal Act. Ontario’s
Prudent Investor regulation requires an arms-length, independent investment board to oversee
and implement a municipality’s investments.
Joint Investment Board
Bill Hughes, MBA, MES – Chair
Senior Fellow
University of Toronto Institute on
Municipal Finance and Governance
Geri James, CFA – Vice Chair
Senior Investment Specialist
Former Director, Institutional Client Business
BlackRock Asset Management
Jennifer Dowty, CFA
Equities analyst/business reporter
Globe and Mail
Heidi Franken, CPA
Registrar, CPA Ontario
James G. Giles, CFA, CPA
Former Chief Investment Officer
Foresters Financial
Mike Melinyshyn, MBA, CPA, CMA
CFO/Director of Corporate
Services and Deputy Treasurer
Town of Innisfil
Stephen Rettie, CPA, CMA
CAO and Deputy Treasurer
Town of Bracebridge
Page 70 of 149
ONE INVESTMENT – 2020 Annual Report 6
I want to commend the ONE Investment team for their hard work
during an extraordinary year. Our staff not only helped clients navigate
financial markets, but also followed through on introducing the single
biggest change in municipal investing in a generation: the launch of the
ONE Joint Investment Board to manage a pool of municipal investments
under the Prudent Investment Standard.
After years of advocacy and preparation, ONE’s Prudent
Investment Program gives Ontario municipalities access to global
financial markets for the first time. The Prudent Investor Regime
allows municipalities to invest in any security that is prudent for its
circumstances, under the expert management of an investment board
or joint investment board.
The events of 2020 certainly highlighted the benefits of greater
flexibility when investing during times of market uncertainty. With more
diverse portfolios, municipal investors can better manage risk and
improve potential returns on long-term investments.
The ONE Joint Investment Board is Ontario’s first and only Joint
Investment Board bringing municipal governments together to invest
under the province’s Prudent Investor Regime. The City of Kenora,
District Municipality of Muskoka and Towns of Bracebridge, Huntsville,
Innisfil, and Whitby demonstrated leadership by becoming founders.
They recognized that by working together and pooling resources, they
could do more for their communities.
ONE Investment staff provided these Founding Municipalities with the
support and staff capacity to move through the regulatory process to
expand their investment powers. Each municipal portfolio is managed
and guided by Council-approved policies and overseen by the Joint
Investment Board. This group includes professionals with a mix of
expertise in the municipal sector and the investment industry, including
global markets and pensions.
Message from Chair
Ken Nix
Chair
Page 71 of 149
ONE INVESTMENT – 2020 Annual Report 7
In 2020, ONE’s team also pivoted quickly to support our existing “Legal List”
investors, ensuring continued staff support even as they shifted to working
remotely. Legal List investors are municipalities who limit their investments to a
list of provincially approved securities.
Our fund managers did an exceptional job navigating markets on behalf of
both our Legal List and Prudent Investment clients. We were very pleased
to see many Legal List investors seize the opportunity presented by market
downturns early in the year, with substantial increase in our Canadian Equity
Fund holdings. This demonstrates how Ontario’s municipalities are becoming
increasingly sophisticated in understanding the potential of long-term planning
and equity investments in their overall financial plans.
ONE is an investment organization created by municipalities, for
municipalities. As the pandemic wears on, our investment advisory team and
expert fund managers will continue to play an important role in ensuring that
our investments continue to meet our investors’ long-term goals.
Ken Nix
Chair ONE Investment Board
ONE Investment
is based on the
principle that by
having municipalities
combine their
investment power,
we can achieve
more, at lower cost,
generating greater
returns.
Page 72 of 149
ONE INVESTMENT – 2020 Annual Report 8
Judy Dezell
Co-President/CEO
In 2020, ONE Investment solidified our role as a leading provider of
investment solutions for Ontario’s municipal sector.
Business continuity and investment opportunities during the pandemic
As the COVID-19 pandemic began to shutter the province in early 2020,
ONE’s Advisory Services Team and staff moved quickly to ensure business
continuity and support. Early in 2020, we helped our investors understand
changing market conditions and hosted several webinars featuring our fund
managers to provide insights on their analysis and approach to markets.
After years of investor education, we were gratified to see municipal
investment in our Canadian Equity Portfolio increase substantially to almost
$700 million as municipalities recognized the opportunity to rebalance
their portfolios in 2020. Equities offered through ONE’s Canadian Equity
Portfolio are currently the only ones available to municipalities investing
through the Province’s approved “Legal List” of investment products.
Opening global markets to Ontario municipalities
ONE successfully launched our Prudent Investor Program, an effort that has
been years in the making. Switching to online tools and formats, ONE staff
supported six Founding Municipalities to form the ONE Joint Investment
Board (ONE JIB) in May 2020, in keeping with provincial requirements for
the Prudent Investor Regime. ONE JIB is comprised of experts in municipal
finance and investment markets, and it manages the pooled investments
of the participating municipalities. In July 2020, the enabling by-laws
came into effect to allow ONE JIB to begin managing the funds under the
Prudent Investment Regime. ONE JIB’s work is guided by Council-approved
investment policy statements to ensure investments are managed in keeping
with the goals of each municipality.
Part of the Prudent Investment Offering included launching the ONE
Global Equity Fund and the ONE Global Bond Fund. These products allow
participating municipalities to invest in global securities, guided by expert
fund managers. These funds open Ontario’s municipal investing to the world,
with the opportunity to develop truly diverse, global portfolios.
Building capacity
Our Investment Advisory Team provides municipal treasurers with trusted
expertise to help them manage their investments. This team includes a Chief
Investment Officer who is a CFA Charterholder with extensive experience
in global markets, a municipal finance expert, and a customer service
Message from Management Team
Page 73 of 149
ONE INVESTMENT – 2020 Annual Report 9
Donna Herridge
Co-President/CEO
representative with strong investment experience. About 60 municipalities took advantage of the
team’s services during 2020.
As municipal investing gets more sophisticated, ONE has made strengthening reporting and portfolio
management a priority. In 2020, our new portfolio management system was fully implemented.
This was critical to monitor Prudent Investment Funds for both compliance oversight and to
rebalance portfolios as needed. Importantly, the new system generated major benefits for all clients
in terms of improved quarterly reporting, with more in-depth performance metrics and analysis.
Training and education of the sector continued despite the pandemic. We shifted to online learning
opportunities. Webinar series were introduced to help investors navigate and understand the
markets and changes in spring and fall 2020. ONE also launched the podcast “Main Street to
Bay Street,” trying to reach a broader audience using new platforms. We also continued to use
other tools, such as the ONE Update e-newsletter, to deliver investment expertise, resources, and
knowledge to investors and municipal finance staff.
Serving municipal best interests
As a municipally focused, not-for-profit organization, ONE is consistently looking to provide the best
value to Ontario’s municipalities. On the Legal List, ONE took steps in late 2020 to protect investors
in our High Interest Savings Account. In December 2020, the Board approved dropping our fees
by four basis points (bps) to counteract lower interest rates. We will be going back to the market
to leverage the power of more than $2 billion in HISA holdings to get as competitive a rate as
possible. We also dropped our fees by 10 bps for both our Canadian Equity Portfolio
(Legal List) and the Canadian Equity Fund (Prudent Investment).
ONE remains strongly positioned to adapt to changing circumstances.
Our established team of municipal finance and investment experts are focused
on managing municipal investments to meet local communities’ goals and
aspirations. This team also provides municipalities with the added capacity
and expertise needed to pursue more strategic municipal investing.
We want to thank our staff for their efforts and hard work during a challenging
and eventful year, as well as our ONE Investment Board of Directors, members
of our Peer and Investment Advisory Committees, and members of the ONE Joint
Investment Board, for their support, guidance, and counsel. We also want to extend our
thanks to our municipal investors, who entrust us with their funds. We look forward to
continuing to work together towards our common goal of building a stronger Ontario.
Judy Dezell, Donna Herridge
Co-President/CEOs
Page 74 of 149
ONE INVESTMENT – 2020 Annual Report 10
ONE Investment had 183 active Ontario municipal and broader public sector investors, with
a total investment balance of $2.79 billion at the end of 2020.
Legal List Results Overview
• Municipal Legal List investments managed by ONE Investment ended 2020 with a total
balance at year-end 2020 of $2.47 billion, 8.5% higher than the 2019 year-end balance.
• Read more about ONE’s 2020 portfolio performance results.
• In 2020, ONE conducted a review of fees for existing Legal List Investment offerings.
Following this review, fees for the Canadian Equity fund were reduced by 10 basis points
(bps) for a new all-in rate of 50 bps effective January 1, 2021. (This fund is cloned under
the ONE Prudent Investment Program and the 10-bps reduction will also be implemented
under the ONE Prudent Investment Program.)
• As interest rates dropped in 2020, ONE moved to protect investors in the High-Interest
Savings Account (HISA). ONE has dropped administrative fees for the HISA program from
7.5 bps to 3.5 bps and plans to go to market in 2021 for a HISA provider. With $2 billion in
investments, ONE has considerable leverage in negotiating improved rates on behalf of
municipal investors.
• ONE Investment completed implementation of a new portfolio management system,
strengthening quarterly reporting and enhanced information and commentary. This system
improves municipal capacity to track investment performance and report back to council.
2020 Highlights
Page 75 of 149
ONE INVESTMENT – 2020 Annual Report 11
Launching the Prudent Investor Program
• In 2020, ONE Investment was proud to usher in a new era for municipalities that want to
build more diverse investment portfolios with the launch of the ONE Joint Investment Board
(ONE JIB) under the Prudent Investment Regime. This is the first and only Joint Investment
Board of its kind serving Ontario municipalities.
• Six founding municipalities came together to form the ONE JIB, including the City of Kenora,
District Municipality of Muskoka and Towns of Bracebridge, Huntsville, Innisfil, and Whitby.
JIB members boast deep experience in financial markets, institutional investing and municipal
finance.
• The ONE Global Equities Fund and the ONE Global Bond Fund were both developed as part
of the Prudent Investment Offering. These funds provide municipal investors with access to
global markets for the first time.
• ONE JIB began investing municipal funds in July of 2020. The Board manages each
municipalities’ investments, guided by their Council-approved investment policy statements.
At year end, investments were valued at $317 million.
• ONE JIB continues to identify new opportunities for municipal investors. In late 2020, it
created a New Products Committee to investigate and expand Prudent Investment Offerings.
This Board committee is guided by an external Technical Working Committee, comprised of
municipal finance experts to provide input on products that would interest municipal investors.
Page 76 of 149
ONE INVESTMENT – 2020 Annual Report 12
Building Municipal Capacity: Investment Advisory Services, Education
and Training
• ONE’s Investment Advisory Services team of experts includes a CFA Charterholder,
a municipal finance specialist, and a customer service representative with investment
expertise. In 2020, the team served more than 60 municipal investors both those on the
Legal List and the six Prudent Investor clients. The team guides municipalities through
each step from understanding their cash flow and asset management plan, to turning
municipal investments into a capital financing strategy. In addition, the team provides
guidance on the appropriate investment policy and portfolio structure.
• Bridging the gap between municipal finance and the world of financial markets requires
training and support. In 2020, ONE continued to support building capacity of municipal
staff. Four webinars were held in collaboration with our Legal List fund managers,
MFS and Guardian Capital to help our investors navigate changing markets due to
the pandemic. Regular e-newsletters also provided further insights and information on
municipal investing. In 2021, we are expanding our learning opportunities to increase
investment knowledge in the municipal sector.
“All municipalities deserve the opportunity to generate as much return
as we can on our existing tax dollars. We believe ONE is the right fit
for us based on our experience with the program over the years. They
understand the municipal sector. We believe in their strategy and
leadership in the municipal community.”
Mayor Graydon Smith, Bracebridge
Page 77 of 149
ONE INVESTMENT – 2020 Annual Report 13
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Page 78 of 149
ONE INVESTMENT – 2020 Annual Report 14
Independent Auditor's Report
To the Directors of ONE Investment
Opinion
We have audited the financial statements of ONE Investment (the "Organization"), which comprise
the statement of financial position as at December 31, 2020, and the statements of operations and
cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Organization as at December 31, 2020, and its results of operations and its
cash flows for the year then ended in accordance with Canadian accounting standards for not-for-
profit organizations.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Organization in
accordance with the ethical requirements that are relevant to our audit of the financial statements
in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with Canadian accounting standards for not-for-profit organizations, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Organization’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Organization or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Organization’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by gua rantee, and forms part of the
international BDO network of independent member firms.
Tel: 289 881 1111
Fax: 905 845 8615
www.bdo.ca
BDO Canada LLP
360 Oakville Place Drive, Suite 500
Oakville ON L6H 6K8 Canada
Page 79 of 149
ONE INVESTMENT – 2020 Annual Report 15
Auditor’s Responsibilities for the Audit of the Financial Statements (continued)
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
•Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
•Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Organization’s internal control.
•Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
•Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Organization’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Organization to cease to continue as a going concern.
•Evaluate the overall presentation, structure and content of the financial statements
including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
Chartered Professional Accountants, Licensed Public Accountants
Oakville, Ontario
June 11, 2021
Page 80 of 149
ONE INVESTMENT – 2020 Annual Report 16
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Page 86 of 149
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Page 87 of 149
www.oneinvestment.ca
Page 88 of 149
Unaudited Interim Financial Statements
One Investment Pooled Funds
June 30, 2021
Attachment 4
Page 89 of 149
ONE Canadian Government Bond Fund The accompanying notes are an integral part of the financial statements. 1 Statements of Financial Position (unaudited) as at June 30, 2021 and December 31, 2020 $ $ Assets Current assets Non-derivative financial assets 25,085,876 24,392,134 Cash 42,020 13,555 Interest receivable 88,647 93,553 25,216,543 24,499,242 Liabilities Current liabilities Management fees payable 7,262 7,249 Accrued expenses 944 942 8,206 8,191 Net assets attributable to holders of redeemable units 25,208,337 24,491,051 Net assets attributable to holders of redeemable units by series Series A 25,208,337 24,491,051 Net assets attributable to holders of redeemable units per unit Series A 982.33 1,001.09 Page 90 of 149
ONE Canadian Government Bond Fund The accompanying notes are an integral part of the financial statements. 2 Statement of Comprehensive Income (unaudited) for the period ended June 30, 2021 $ Gain (loss) on investments and derivatives: Interest income for distribution purposes 282,765 Realized gain (loss) on sale of investments (224,034) Change in unrealized appreciation (depreciation) on investments (241,980) Net gain (loss) on investments and derivatives (183,249) Expenses Management fees (note 7) 42,943 Harmonized sales tax 5,583 Total expenses 48,526 Increase (decrease) in Net Assets attributable to holders of redeemable units (231,775) Increase (decrease) in Net Assets attributable to holders of redeemable units by series Series A (231,775) Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A (9.30) Page 91 of 149
ONE Canadian Government Bond Fund The accompanying notes are an integral part of the financial statements. 3 Statement of Cash Flows (unaudited) for the period ended June 30, 2021 $ Cash flows from operating activities Increase (decrease) in Net Assets attributable to holders of redeemable units (231,775) Adjustments for: Net realized (gain) loss on sale of investments 224,034 Change in unrealized depreciation on investments 241,980 Change in interest receivable 4,906 Change in accrued liabilities 15 Purchase of investments (11,520,541) Proceeds from sale of investments 10,360,785 Net cash from operating activities (920,596) Cash flows from (used in) financing activities Proceeds from redeemable shares issued 949,061 Distributions paid to holders of redeemable units (234,225) Reinvestment of distributions to holders of redeemable units 234,225 Net cash from (used in) financing activities 949,061 Increase (decrease) in Cash 28,465 Cash - Beginning of period 13,555 Cash - End of period 42,020 Cash activities included in operating activities: Interest received 287,671 Page 92 of 149
ONE Canadian Government Bond Fund The accompanying notes are an integral part of the financial statements. 4 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units (unaudited) for the period ended June 30, 2021 $ Net assets attributable to holders of redeemable units at beginning of period 24,491,051 Increase (decrease) in net assets attributable to holders of redeemable units (231,775) Distributions paid or payable to holders of redeemable units From net investment income (234,225) Total distributions to holders of redeemable units (234,225) Redeemable unit transactions (note 6) Proceeds from issuance of redeemable units, net 949,061 Reinvestments of distributions to holders of redeemable units (note 5) 234,225 Net increase (decrease) from redeemable unit transactions 1,183,286 Net increase (decrease) in net assets attributable to holders of redeemable units 717,286 Net assets attributable to holders of redeemable units at end of period 25,208,337 Page 93 of 149
The accompanying notes are an integral part of the financial statements.
5
ONE Canadian Government Bond Fund
Schedule of Investments
As at June 30, 2021 (Unaudited)
Security
Shares/Par Value
Units
Average
Cost
Fair
Value
FIXED INCOME (92.17%)
CANADIAN FIXED INCOME (92.17%)
Corporate Bonds (34.27%)
Bank of Montreal, 2.280%, 2024/07/29 980,000 $ 1,014,728 $ 1,010,487
Bank of Nova Scotia, 2.360%, 2022/11/08 285,000 294,217 291,771
Bank of Nova Scotia, 2.160%, 2025/02/03 550,000 567,301 565,173
Canadian Imperial Bank of Commerce, 2.350%, 2024/08/28 825,000 855,697 852,125
Canadian Western Bank, 2.833%, 2022/03/14 840,000 851,755 853,536
Canadian Western Bank, Callable, 1.926%, 2026/04/16 120,000 120,000 120,383
Eagle Credit Card Trust, Series '171A', 2.631%, 2022/10/17 190,000 195,750 194,902
HSBC Bank Canada, 3.245%, 2023/09/15 535,000 563,538 560,733
Manulife Bank of Canada, 2.378%, 2024/11/19 545,000 569,448 565,357
National Bank of Canada, 2.983%, 2024/03/04 1,075,000 1,136,943 1,127,189
Royal Bank of Canada, 2.352%, 2024/07/02 235,000 244,291 242,827
Royal Bank of Canada, 2.609%, 2024/11/01 960,000 1,006,752 1,000,645
Toronto-Dominion Bank (The), 2.850%, 2024/03/08 580,000 612,379 606,611
Toronto-Dominion Bank (The), 2.496%, 2024/12/02 625,000 655,030 649,604
8,687,829 8,641,343
Government Bonds (23.78%)
Canada Housing Trust No. 1, 2.400%, 2022/12/15 880,000 922,187 905,862
Canada Housing Trust No. 1, 2.900%, 2024/06/15 1,870,000 1,997,834 1,986,334
Government of Canada, 0.500%, 2022/03/01 1,685,000 1,692,170 1,688,373
Government of Canada, 0.250%, 2026/03/01 250,000 240,513 241,767
Government of Canada, 1.500%, 2026/06/01 855,000 908,863 876,285
PSP Capital Inc., 1.340%, 2021/08/18 295,000 298,217 295,416
6,059,784 5,994,037
Municipal Bonds (0.16%)
Regional Municipality of Peel, 3.500%, 2021/12/01 40,000 41,743 40,537
41,743 40,537
Provincial Bonds (33.96%)
Province of Alberta, 3.400%, 2023/12/01 1,075,000 1,159,154 1,145,217
Province of Alberta, 3.100%, 2024/06/01 1,030,000 1,120,943 1,097,320
Province of Ontario, 3.150%, 2022/06/02 305,000 320,798 313,004
Province of Ontario, 2.850%, 2023/06/02 3,120,000 3,268,972 3,257,109
Province of Ontario, 2.400%, 2026/06/02 710,000 748,347 747,051
Province of Quebec, 3.500%, 2022/12/01 1,825,000 1,946,023 1,904,490
Province of Saskatchewan, 3.200%, 2024/06/03 90,000 98,491 96,148
8,662,728 8,560,339
TOTAL CANADIAN FIXED INCOME
23,452,084
23,236,256
TOTAL FIXED INCOME
23,452,084
23,236,256
SHORT TERM INVESTMENTS (7.34%)
Government of Canada Treasury Bill, 0.08%, 2021/07/22 850,000 849,847 849,847
Government of Canada Treasury Bill, 0.09%, 2021/08/12 700,000 699,860 699,860
Government of Canada Treasury Bill, 0.14%, 2021/09/16 300,000 299,913 299,913
1,849,620
1,849,620
TOTAL SHORT TERM INVESTMENTS
1,849,620
1,849,620
TOTAL INVESTMENT PORTFOLIO (99.51%)
$ 25,301,704
$ 25,085,876
Cash (0.17%)
42,020
Other assets less liabilities (0.32%) 80,441
TOTAL NET ASSETS (100.00%)
$ 25,208,337
Page 94 of 149
ONE Canadian Corporate Bond Fund The accompanying notes are an integral part of the financial statements. 6 Statements of Financial Position (unaudited) as at June 30, 2021 and December 31, 2020 $ $ Assets Current assets Non-derivative financial assets 24,939,826 24,432,473 Cash 38,117 324 Interest receivable 136,885 137,682 25,114,828 24,570,479 Liabilities Current liabilities Management fees payable 8,246 8,280 Accrued expenses 1,072 1,076 9,318 9,356 Net assets attributable to holders of redeemable units 25,105,510 24,561,123 Net assets attributable to holders of redeemable units by series Series A 25,105,510 24,561,123 Net assets attributable to holders of redeemable units per unit Series A 967.79 1,002.98 Page 95 of 149
ONE Canadian Corporate Bond Fund The accompanying notes are an integral part of the financial statements. 7 Statement of Comprehensive Income (unaudited) for the period ended June 30, 2021 $ Gain (loss) on investments and derivatives: Interest income for distribution purposes 302,916 Realized gain (loss) on sale of investments (96,839) Change in unrealized appreciation (depreciation) on investments (767,356) Net gain (loss) on investments and derivatives (561,279) Expenses Management fees (note 7) 48,524 Harmonized sales tax 6,308 Total expenses 54,832 Increase (decrease) in Net Assets attributable to holders of redeemable units (616,111) Increase (decrease) in Net Assets attributable to holders of redeemable units by series Series A (616,111) Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A (24.58) Page 96 of 149
ONE Canadian Corporate Bond Fund The accompanying notes are an integral part of the financial statements. 8 Statement of Cash Flows (unaudited) for the period ended June 30, 2021 $ Cash flows from operating activities Increase (decrease) in Net Assets attributable to holders of redeemable units (616,111) Adjustments for: Net realized (gain) loss on sale of investments 96,839 Change in unrealized depreciation on investments 767,356 Change in interest receivable 797 Change in accrued liabilities (38) Purchase of investments (9,220,478) Proceeds from sale of investments 7,848,930 Net cash from operating activities (1,122,705) Cash flows from (used in) financing activities Proceeds from redeemable shares issued 1,160,498 Distributions paid to holders of redeemable units (248,077) Reinvestment of distributions to holders of redeemable units 248,077 Net cash from (used in) financing activities 1,160,498 Increase (decrease) in Cash 37,793 Cash - Beginning of period 324 Cash - End of period 38,117 Cash activities included in operating activities: Interest received 303,713 Page 97 of 149
ONE Canadian Corporate Bond Fund The accompanying notes are an integral part of the financial statements. 9 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units (unaudited) for the period ended June 30, 2021 $ Net assets attributable to holders of redeemable units at beginning of period 24,561,123 Increase (decrease) in net assets attributable to holders of redeemable units (616,111) Distributions paid or payable to holders of redeemable units From net investment income (248,077) Total distributions to holders of redeemable units (248,077) Redeemable unit transactions (note 6) Proceeds from issuance of redeemable units, net 1,160,498 Reinvestments of distributions to holders of redeemable units (note 5) 248,077 Net increase (decrease) from redeemable unit transactions 1,408,575 Net increase (decrease) in net assets attributable to holders of redeemable units 544,387 Net assets attributable to holders of redeemable units at end of period 25,105,510 Page 98 of 149
10 The accompanying notes are an integral part of the financial statements.
ONE Canadian Corporate Bond Fund
Schedule of Investments
As at June 30, 2021 (Unaudited)
Security
Shares/Par Value
Units
Average
Cost
Fair
Value
FIXED INCOME (94.96%)
CANADIAN FIXED INCOME (94.96%)
Corporate Bonds (62.54%)
407 International Inc., Callable, 3.140%, 2030/03/06 230,000 $ 257,243 $ 248,269
AltaLink L.P., 3.668%, 2023/11/06 165,000 177,060 175,588
Bank of Montreal, 2.850%, 2024/03/06 435,000 509,088 492,888
Bank of Montreal, Callable, 4.609%, 2025/09/10 215,000 226,583 224,704
Bank of Montreal, 3.190%, 2028/03/01 225,000 253,670 245,374
Bank of Nova Scotia, 2.290%, 2024/06/28 520,000 544,035 538,528
Bank of Nova Scotia, 2.490%, 2024/09/23 480,000 501,374 498,142
bcIMC Realty Corp., Callable, 2.840%, 2025/06/03 330,000 352,741 347,516
bcIMC Realty Corp., Callable, 3.000%, 2027/03/31 260,000 284,020 276,766
Canadian Imperial Bank of Commerce, 3.290%, 2024/01/15 210,000 224,051 221,511
Canadian Imperial Bank of Commerce, 2.000%, 2025/04/17 485,000 497,911 495,405
Canadian Western Bank, Callable, 2.606%, 2025/01/30 805,000 839,108 834,086
Canadian Western Bank, Callable, 1.926%, 2026/04/16 240,000 240,000 240,766
Eagle Credit Card Trust, Series '171A', 2.631%, 2022/10/17 435,000 448,164 446,224
Enbridge Gas Distribution Inc., Callable, 5.210%, 2036/02/25 90,000 120,475 112,680
Enbridge Gas Inc., Callable, 2.500%, 2026/08/05 235,000 245,411 244,879
Enbridge Gas Inc., Callable, 2.880%, 2027/11/22 85,000 92,871 90,276
Enbridge Pipelines Inc., Callable, 5.080%, 2036/12/19 15,000 18,207 17,438
Energir Inc., Callable, 5.450%, 2021/07/12 215,000 224,937 215,257
Energir Inc., Series 'V', Callable, 2.100%, 2027/04/16 45,000 46,752 45,920
Federation des Caisses Desjardins du Québec, 2.091%, 2022/01/17 95,000 96,804 95,927
Federation des Caisses Desjardins du Québec, 2.394%, 2022/08/25 260,000 267,864 265,552
Glacier Credit Card Trust, 3.138%, 2023/09/20 435,000 455,887 455,238
Honda Canada Finance Inc, 3.176%, 2023/08/28 45,000 46,484 46,641
Honda Canada Finance Inc, 2.500%, 2024/06/04 210,000 220,570 219,494
Honda Canada Finance Inc, 3.444%, 2025/05/23 130,000 140,441 139,901
HSBC Bank Canada, 3.245%, 2023/09/15 670,000 705,739 702,226
Hydro One Inc., Callable, 2.160%, 2030/02/28 415,000 432,606 415,156
John Deere Financial Inc., 2.400%, 2024/09/17 70,000 73,059 72,597
John Deere Financial Inc., 2.580%, 2026/10/16 610,000 649,130 637,390
Lower Mattagami Energy L.P., Series '21-1', Callable, 2.433%, 2031/05/14 150,000 150,000 152,723
Manulife Financial Corp., Variable Rate, Callable, 2.237%, 2030/05/12 610,000 618,755 625,089
National Bank of Canada, 2.983%, 2024/03/04 470,000 496,336 492,817
National Bank of Canada, 2.580%, 2025/02/03 705,000 739,432 734,663
NAV Canada, Callable, 2.063%, 2030/05/29 260,000 268,082 259,373
NAV Canada, Callable, 3.534%, 2046/02/23 85,000 101,494 93,223
NAV Canada, Series '96-3', 7.400%, 2027/06/01 145,000 200,153 189,210
OMERS Realty Corp., Series '2', 3.358%, 2023/06/05 250,000 266,284 261,794
OMERS Realty Corp., Series '9', Callable, 3.244%, 2027/10/04 260,000 289,742 280,987
Ottawa MacDonald-Cartier International Airport Authority, Series 'F', Callable, 2.698%, 2031/05/05 160,000 160,000 163,382
PACCAR Financial Ltd., 0.985%, 2024/05/14 205,000 205,000 204,164
Royal Bank of Canada, 3.296%, 2023/09/26 415,000 441,764 435,915
Royal Bank of Canada, 4.930%, 2025/07/16 435,000 514,463 497,744
TMX Group Ltd., Series 'F', Callable, 2.016%, 2031/02/12 40,000 40,000 38,866
Toronto Hydro Corp., Callable, 3.540%, 2021/11/18 480,000 497,444 485,573
Toronto-Dominion Bank (The), 2.496%, 2024/12/02 950,000 995,645 987,398
Toyota Credit Canada Inc., 2.020%, 2022/02/28 175,000 177,636 176,855
Toyota Credit Canada Inc., 2.620%, 2022/10/11 75,000 77,402 76,841
Toyota Credit Canada Inc., 2.640%, 2024/03/27 465,000 485,458 483,868
15,917,375 15,702,824
Government Bonds (12.63%)
Government of Canada, 0.500%, 2022/03/01 3,050,000 3,060,038 3,056,105
Government of Canada, 1.000%, 2027/06/01 115,000 118,687 114,439
3,178,725 3,170,544
Municipal Bonds (2.03%)
City of Ottawa, 4.400%, 2033/10/22 30,000 38,832 36,421
City of Ottawa, 3.050%, 2046/04/23 175,000 200,212 184,214
City of Toronto, 3.400%, 2024/05/21 110,000 120,777 117,951
City of Toronto, 2.950%, 2035/04/28 50,000 55,747 53,100
City of Toronto, 5.200%, 2040/06/01 85,000 124,436 117,493
540,004 509,179
Provincial Bonds (17.76%)
Province of Alberta, 2.900%, 2029/09/20 575,000 643,687 620,164
Province of Alberta, 4.500%, 2040/12/01 95,000 130,892 122,965
Province of Alberta, 3.300%, 2046/12/01 350,000 422,796 389,014
Province of British Columbia, 3.200%, 2044/06/18 240,000 299,486 270,272
Province of British Columbia, 2.950%, 2050/06/18 980,000 1,216,219 1,058,142
Province of Manitoba, 5.700%, 2037/03/05 180,000 274,687 257,849
Page 99 of 149
11
Province of Manitoba, 4.050%, 2045/09/05 90,000 123,080 113,348
Province of Ontario, 4.700%, 2037/06/02 85,000 120,876 111,278
Province of Ontario, 3.450%, 2045/06/02 655,000 848,196 757,399
Province of Ontario, 2.900%, 2046/12/02 280,000 334,944 295,699
Province of Quebec, 3.500%, 2022/12/01 165,000 176,946 172,187
Province of Quebec, Series 'OS', 6.000%, 2029/10/01 140,000 197,155 184,946
Province of Saskatchewan, 3.200%, 2024/06/03 20,000 21,887 21,366
Province of Saskatchewan, 5.800%, 2033/09/05 60,000 88,268 82,928
4,899,119 4,457,557
TOTAL CANADIAN FIXED INCOME
24,535,223
23,840,104
TOTAL FIXED INCOME
24,535,223
23,840,104
SHORT TERM INVESTMENTS (4.38%)
Government of Canada Treasury Bill, 0.09%, 2021/08/12
450,000
449,910
449,910
Government of Canada Treasury Bill, 0.14%, 2021/09/16 650,000 649,812 649,812
1,099,722 1,099,722
TOTAL SHORT TERM INVESTMENTS
1,099,722
1,099,722
TOTAL INVESTMENT PORTFOLIO (99.34%)
$ 25,634,945
$ 24,939,826
Cash (0.15%) 38,117
Other assets less liabilities (0.51%) 127,567
TOTAL NET ASSETS (100.00%) $ 25,105,510
The accompanying notes are an integral part of the financial statements.
Page 100 of 149
ONE Global Bond Fund The accompanying notes are an integral part of the financial statements. 12 Statements of Financial Position (unaudited) as at June 30, 2021 and December 31, 2020 $ $ Assets Current assets Non-derivative financial assets 120,373,210 118,547,084 Cash 27,019 17,158 120,400,229 118,564,242 Liabilities Current liabilities Management fees payable 44,386 44,941 Harmonized sales tax payable 5,769 5,843 50,155 50,784 Net assets attributable to holders of redeemable units 120,350,074 118,513,458 Net assets attributable to holders of redeemable units by series Series A 120,350,074 118,513,458 Net assets attributable to holders of redeemable units per unit Series A 1,002.19 1,027.92 Page 101 of 149
ONE Global Bond Fund The accompanying notes are an integral part of the financial statements. 13 Statement of Comprehensive Income (unaudited) for the period ended June 30, 2021 $ Gain (loss) on investments and derivatives: Distribution of net investment income from underlying fund 2,977,360 Realized gain (loss) on sale of investments 4,181 Change in unrealized appreciation (depreciation) on investments (2,970,414) Net gain (loss) on investments and derivatives 11,127 Expenses Management fees (note 7) 264,426 Harmonized sales tax 34,375 Total expenses 298,801 Increase (decrease) in Net Assets attributable to holders of redeemable units (287,674) Increase (decrease) in Net Assets attributable to holders of redeemable units by series Series A (287,674) Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A (2.46) Page 102 of 149
ONE Global Bond Fund The accompanying notes are an integral part of the financial statements. 14 Statement of Cash Flows (unaudited) for the period ended June 30, 2021 $ Cash flows from operating activities Increase (decrease) in Net Assets attributable to holders of redeemable units (287,674) Adjustments for: Net realized (gain) loss on sale of investments (4,181) Change in unrealized depreciation on investments 2,970,414 Change in accrued liabilities (629) Purchase of investments (4,977,359) Proceeds from sale of investments 185,000 Net cash from operating activities (2,114,429) Cash flows from (used in) financing activities Proceeds from redeemable shares issued 2,124,290 Distributions paid to holders of redeemable units (2,678,559) Reinvestment of distributions to holders of redeemable units 2,678,559 Net cash from (used in) financing activities 2,124,290 Increase (decrease) in Cash 9,861 Cash - Beginning of period 17,158 Cash - End of period 27,019 Cash activities included in operating activities: Distributions received 2,977,360 Page 103 of 149
ONE Global Bond Fund The accompanying notes are an integral part of the financial statements. 15 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units (unaudited) for the period ended June 30, 2021 $ Net assets attributable to holders of redeemable units at beginning of period 118,513,458 Increase (decrease) in net assets attributable to holders of redeemable units (287,674) Distributions paid or payable to holders of redeemable units From net investment income (2,678,559) Total distributions to holders of redeemable units (2,678,559) Redeemable unit transactions (note 6) Proceeds from issuance of redeemable units, net 2,124,290 Reinvestments of distributions to holders of redeemable units (note 5) 2,678,559 Net increase (decrease) from redeemable unit transactions 4,802,849 Net increase (decrease) in net assets attributable to holders of redeemable units 1,836,616 Net assets attributable to holders of redeemable units at end of period 120,350,074 Page 104 of 149
The accompanying notes are an integral part of the financial statements. 16 ONE Global Bond Fund Schedule of Investments As at June 30, 2021 (Unaudited) Security Shares/ Units Average Cost Fair Value FIXED INCOME (100.02%) Investment Funds (100.02%) Manulife Strategic Income Pooled Fund 10,665,805 $ 120,178,375 $ 120,373,210 120,178,375 120,373,210 TOTAL FIXED INCOME 120,178,375 120,373,210 TOTAL INVESTMENT PORTFOLIO (100.02%) $ 120,178,375 $ 120,373,210 Cash (0.02%) 27,019 Other assets less liabilities (-0.04%) (50,155) TOTAL NET ASSETS (100.00%) $ 120,350,074 Page 105 of 149
ONE Canadian Equity Fund The accompanying notes are an integral part of the financial statements. 17 Statements of Financial Position (unaudited) as at June 30, 2021 and December 31, 2020 $ $ Assets Current assets Non-derivative financial assets 41,356,432 39,502,805 Cash 41,303 30,420 Interest receivable 41 4 Dividends receivable 74,268 78,958 41,472,044 39,612,187 Liabilities Current liabilities Payable for investments purchased - 55,695 Management fees payable 15,261 18,404 Accrued expenses 1,983 2,394 17,244 76,493 Net assets attributable to holders of redeemable units 41,454,800 39,535,694 Net assets attributable to holders of redeemable units by series Series A 41,454,800 39,535,694 Net assets attributable to holders of redeemable units per unit Series A 1,327.94 1,147.06 Page 106 of 149
ONE Canadian Equity Fund The accompanying notes are an integral part of the financial statements. 18 Statement of Comprehensive Income (unaudited) for the period ended June 30, 2021 $ Gain (loss) on investments and derivatives: Interest income for distribution purposes 330 Dividend income 462,315 Realized gain (loss) on sale of investments 1,566,121 Change in unrealized appreciation (depreciation) on investments 4,194,072 Net gain (loss) on investments and derivatives 6,222,838 Other income Foreign exchange gain (loss) on cash 227 Foreign exchange gain (loss) on foreign currency related transactions (60) Other income 167 6,223,005 Expenses Management fees (note 7) Commissions and other portfolio transaction costs 92,236 11,672 Harmonized sales tax 11,991 Total expenses 115,899 Increase (decrease) in Net Assets attributable to holders of redeemable units 6,107,106 Increase (decrease) in Net Assets attributable to holders of redeemable units by series Series A 6,107,106 Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A 184.49 Page 107 of 149
ONE Canadian Equity Fund The accompanying notes are an integral part of the financial statements. 19 Statement of Cash Flows (unaudited) for the period ended June 30, 2021 $ Cash flows from operating activities Increase (decrease) in Net Assets attributable to holders of redeemable units 6,107,106 Adjustments for: Net (gain) loss on foreign exchange on cash (227) Net realized (gain) loss on sale of investments (1,566,121) Change in unrealized (appreciation) depreciation on investments (4,194,072) Change in interest receivable (37) Change in dividends receivable 4,690 Change in accrued liabilities (3,554) Purchase of investments (11,500,185) Proceeds from sale of investments 15,351,056 Net cash from operating activities 4,198,656 Cash flows from (used in) financing activities Amounts paid for redemption of redeemable units (4,188,000) Net cash from (used in) financing activities (4,188,000) Increase (decrease) in Cash 10,656 Foreign exchange gain (loss) on cash 227 Cash - Beginning of period 30,420 Cash - End of period 41,303 Cash activities included in operating activities: Dividends received 467,005 Interest received 293 Page 108 of 149
ONE Canadian Equity Fund The accompanying notes are an integral part of the financial statements. 20 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units (unaudited) for the period ended June 30, 2021 $ Net assets attributable to holders of redeemable units at beginning of period 39,535,694 Increase (decrease) in net assets attributable to holders of redeemable units 6,107,106 Redeemable unit transactions (note 6) Redemption of redeemable units (4,188,000) Net increase (decrease) from redeemable unit transactions (4,188,000) Net increase (decrease) in net assets attributable to holders of redeemable units 1,919,106 Net assets attributable to holders of redeemable units at end of period 41,454,800 Page 109 of 149
21
One Canadian Equity Fund
Schedule of Investments
As at June 30, 2021 (Unaudited)
Security
Shares/
Units
Average
Cost
Fair
Value
EQUITIES (97.59%)
CANADIAN EQUITIES (92.30%)
Communication Services (6.26%)
Rogers Communications Inc., Class 'B' 12,200 $ 671,654 $ 803,980
TELUS Corp. 64,500 1,479,990 1,793,100
2,151,644 2,597,080
Consumer Discretionary (16.62%)
Boyd Group Services Inc. 4,400 909,823 992,552
Gildan Activewear Inc. 41,200 870,120 1,884,488
Magna International Inc. 19,006 1,159,055 2,181,319
Restaurant Brands International Inc. 22,925 1,833,500 1,831,020
4,772,498 6,889,379
Consumer Staples (5.30%)
Maple Leaf Foods Inc.
29,025
774,828
746,813
Saputo Inc. 39,200 1,277,566 1,449,224
2,052,394 2,196,037
Energy (5.15%)
Canadian Natural Resources Ltd. 10,700 402,153 481,500
Suncor Energy Inc. 41,925 919,278 1,244,753
TC Energy Corp. 6,650 378,295 407,911
1,699,726 2,134,164
Financials (26.73%)
Bank of Montreal 12,900 1,127,273 1,639,074
Brookfield Asset Management Inc., Class 'A' 34,900 1,572,916 2,207,076
Brookfield Asset Management Reinsurance Partners Ltd., Class 'A' 240 16,608 15,720
Brookfield Infrastructure Corp., Class 'A' 7,800 476,582 728,754
Canadian Apartment Properties REIT 7,900 371,017 459,148
Canadian Imperial Bank of Commerce 8,600 809,482 1,213,546
Intact Financial Corp. 3,375 437,158 568,384
Manulife Financial Corp. 27,200 501,459 663,680
Royal Bank of Canada 14,200 1,362,381 1,783,378
Sun Life Financial Inc. 8,500 419,157 543,320
Toronto-Dominion Bank (The) 14,500 961,483 1,259,615
8,055,516 11,081,695
Industrials (12.09%)
Canadian National Railway Co. 7,600 916,968 994,004
Canadian Pacific Railway Ltd. 12,375 901,633 1,179,585
Element Fleet Management Corp. 27,800 367,470 401,988
Finning International Inc. 43,692 910,297 1,417,805
Stantec Inc. 18,425 878,593 1,019,087
3,974,961 5,012,469
The accompanying notes are an integral part of the financial statements.
Page 110 of 149
22
Information Technology (11.83%)
CGI Inc. 15,200 1,320,167 1,708,328
Open Text Corp. 28,300 1,657,408 1,781,485
Shopify Inc., Class 'A' 780 1,079,994 1,414,039
Materials (5.94%)
4,057,569 4,903,852
Agnico Eagle Mines Ltd. 7,900 681,957 592,184
Cameco Corp. 16,875 232,118 400,950
CCL Industries Inc., Class 'B' 11,000 580,291 750,970
West Fraser Timber Co. Ltd. 3,875 191,579 344,836
Wheaton Precious Metals Corp. 6,800 399,908 371,552
Utilities (2.38%)
2,085,853 2,460,492
Fortis Inc. 18,000 961,951 987,660
TOTAL CANADIAN EQUITIES
29,812,112
38,262,828
UNITED STATES EQUITIES (5.29%)
Health Care (5.29%)
Bausch Health Cos. Inc.
60,300
1,589,743
2,193,714
TOTAL UNITED STATES EQUITIES
1,589,743
2,193,714
TOTAL EQUITIES
31,401,855
40,456,542
SHORT TERM INVESTMENTS (2.17%)
Government of Canada Treasury Bill, 0.09%, 2021/07/08
10,000
9,999
9,999
Government of Canada Treasury Bill, 0.10%, 2021/07/22 730,000 729,918 729,918
Government of Canada Treasury Bill, 0.11%, 2021/08/05 140,000 139,979 139,979
Government of Canada Treasury Bill, 0.14%, 2021/09/16 20,000 19,994 19,994
899,890 899,890
TOTAL SHORT TERM INVESTMENTS 899,890 899,890
Transaction Costs
(26,245)
TOTAL INVESTMENT PORTFOLIO (99.76%)
$ 32,275,500
$ 41,356,432
Cash (0.10%) 41,303
Other assets less liabilities (0.14%) 57,065
TOTAL NET ASSETS (100.00%) $ 41,454,800
The accompanying notes are an integral part of the financial statements.
Page 111 of 149
ONE Global Equity Fund The accompanying notes are an integral part of the financial statements. 23 Statements of Financial Position (unaudited) as at June 30, 2021 and December 31, 2020 $ $ Assets Current assets Non-derivative financial assets 91,594,971 84,103,804 Cash 25,270 7,216 91,620,241 84,111,020 Liabilities Current liabilities Management fees payable 55,568 52,691 Harmonized sales tax payable 7,224 6,849 62,792 59,540 Net assets attributable to holders of redeemable units 91,557,449 84,051,480 Net assets attributable to holders of redeemable units by series Series A 91,557,449 84,051,480 Net assets attributable to holders of redeemable units per unit Series A 1,121.98 1,030.28 Page 112 of 149
ONE Global Equity Fund The accompanying notes are an integral part of the financial statements. 24 Statement of Comprehensive Income (unaudited) for the period ended June 30, 2021 $ Gain (loss) on investments and derivatives: Realized gain (loss) on sale of investments 18,059 Change in unrealized appreciation (depreciation) on investments 7,828,107 Net gain (loss) on investments and derivatives 7,846,166 Expenses Management fees (note 7) 322,802 Harmonized sales tax 41,964 Total expenses 364,766 Increase (decrease) in Net Assets attributable to holders of redeemable units 7,481,400 Increase (decrease) in Net Assets attributable to holders of redeemable units by series Series A 7,481,400 Increase (decrease) in net assets attributable to holders of redeemable units per unit Series A 91.70 Page 113 of 149
ONE Global Equity Fund The accompanying notes are an integral part of the financial statements. 25 Statement of Cash Flows (unaudited) for the period ended June 30, 2021 $ Cash flows from operating activities Increase (decrease) in Net Assets attributable to holders of redeemable units 7,481,400 Adjustments for: Net realized (gain) loss on sale of investments (18,059) Change in unrealized (appreciation) depreciation on investments (7,828,107) Change in accrued liabilities 3,252 Proceeds from sale of investments 354,999 Net cash from operating activities (6,515) Cash flows from (used in) financing activities Proceeds from redeemable shares issued 24,569 Net cash from (used in) financing activities 24,569 Increase (decrease) in Cash 18,054 Cash - Beginning of period 7,216 Cash - End of period 25,270 Cash activities included in operating activities: Dividends received - Interest received - Page 114 of 149
ONE Global Equity Fund The accompanying notes are an integral part of the financial statements. 26 Statement of Changes in Net Assets Attributable to Holders of Redeemable Units (unaudited) for the period ended June 30, 2021 $ Net assets attributable to holders of redeemable units at beginning of period 84,051,480 Increase (decrease) in net assets attributable to holders of redeemable units 7,481,400 Redeemable unit transactions (note 6) Proceeds from issuance of redeemable units, net 24,569 Net increase (decrease) from redeemable unit transactions 24,569 Net increase (decrease) in net assets attributable to holders of redeemable units 7,505,969 Net assets attributable to holders of redeemable units at end of period 91,557,449 Page 115 of 149
The accompanying notes are an integral part of the financial statements. 27 ONE Global Equity Fund Schedule of Investments As at June 30, 2021 (Unaudited) Security Shares/ Units Average Cost Fair Value EQUITIES (100.04%) Investment Funds (100.04%) MAWER Global Equity Fund Class 'O' 2,296,494 $ 81,383,456 $ 91,594,971 81,383,456 91,594,971 TOTAL EQUITIES 81,383,456 91,594,971 TOTAL INVESTMENT PORTFOLIO (100.04%) $ 81,383,456 $ 91,594,971 Cash (0.03%) 25,270 Other assets less liabilities (-0.07%) (62,792) TOTAL NET ASSETS (100.00%) $ 91,557,449 Page 116 of 149
ONE INVESTMENT POOLED FUNDS
Notes to Financial Statements (Unaudited)
28
June 30, 2021
1. Establishment of funds
The ONE Investment Pooled Funds are open-ended unit trusts established under the laws of the Province of Ontario
by Declaration of Trust dated July 2, 2020 and consists of ONE Canadian Government Bond Fund, ONE Canadian
Corporate Bond Fund, ONE Global Bond Fund, ONE Canadian Equity Fund and ONE Global Equity Fund (the
“Funds” and each, a “Fund”). ONE Investment is the Manager of the Funds (the “Manager”). CIBC Mellon Trust
Company is the Trustee (the “Trustee”) and the Custodian of the Funds (the “Custodian”).
The Funds commenced operations on July 2, 2020.
The head office of the Funds is located at the offices of the Manager, 200 University Avenue, Suite 801, Toronto,
Ontario, M5H 3C6.
The investment objective of the ONE Canadian Government Bond Fund is to provide investors with competitive
rates of return through a diversified, conservatively managed portfolio consisting primarily of short-term Canadian
bonds where preservation of capital in real terms is of prime concern.
The investment objective of the ONE Canadian Corporate Bond Fund is to provide competitive rates of return
through a diversified, conservatively managed portfolio consisting primarily of Canadian bonds, debentures,
promissory notes or other evidences of indebtedness of corporations, governments or agencies thereof or
supranational organizations or agencies thereof.
The investment objective of the ONE Global Bond Fund is to deliver a strong, consistent total investment return
over a full market cycle by investing primarily in government and corporate debt securities from developed and
emerging markets.
The investment objective of the ONE Canadian Equity Fund is to provide superior long-term investment returns by
investing in a diversified, conservatively managed portfolio consisting primarily of equity securities issued by
Canadian corporations.
The investment objective of the ONE Global Equity Fund is to invest for above average long-term risk adjusted
returns in securities of companies around the world. The Fund will allocate capital to the best global opportunities,
which may include both large and small capitalization companies. The proportion invested in any one country will
vary depending upon the economic, investment and market opportunities in each area.
The Funds are authorized to issue an unlimited number of units issuable in an unlimited number of series. One
series is currently active.
2. Basis of presentation
These financial statements have been prepared in compliance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These interim financial statements were approved for issuance by the Manager on October 15, 2021.
3. Summary of significant accounting policies
The financial statements have been prepared on a going concern basis using the historical cost convention.
However, each Fund is an investment entity and primarily all financial assets and financial liabilities are measured
at fair value in accordance with IFRS. Accordingly, each Fund’s accounting policies for measuring the fair value of
Page 117 of 149
ONE INVESTMENT POOLED FUNDS
29
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
investments and derivatives are consistent with those used in measuring the Net Asset Value (“NAV”) for
transactions with unitholders. The accounting policies set out below have been applied consistently to all periods
presented in these financial statements. In applying IFRS, management may make estimates and assumptions that
affect the reported amounts of assets, liabilities, income and expenses during the reporting periods. Actual results
may differ from such estimates.
(a) Financial instruments
Classification and recognition of financial instruments
IFRS 9, Financial Instruments, requires assets to be carried at amortized cost or fair value, with changes in fair
value through profit or loss (“FVTPL”) or fair value through other comprehensive income based on the entity’s
business model for managing financial assets and the contractual cash flow characteristics of the financial assets.
Assessment and decision on the business model approach used is an accounting judgment.
Based upon the analysis of its business model and contractual cash flow characteristics of its financial instruments,
the Funds have determined that its financial assets and financial liabilities will be categorized as FVTPL.
Financial assets and liabilities at fair value through profit or loss (“FVTPL”)
All investments held by the Funds are designated as FVTPL upon initial recognition. The Funds included equities,
other investment funds, bonds and other interest-bearing investments in this category. These financial assets are
designated upon initial recognition on the basis that they are part of a group of financial assets that are managed
and have their performance evaluated on a fair value basis, in accordance with risk management and investment
strategies of each Fund, as set out in the Funds’ offering documents.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. The Funds include in this category amounts relating to receivables in respect of amounts receivable for
portfolio securities sold, receivable for unitholder subscriptions, accrued dividends receivable, accrued interest
receivable and other receivables.
Financial liabilities
This category includes all financial liabilities, other than those classified as FVTPL. The Funds include in this
category amounts relating to payables in respect of amounts payable for portfolio securities purchased, payable for
unitholder redemptions, management fees payable and other liabilities. These other liabilities are initially measured
at fair value and subsequently at amortized cost.
The Funds have a contractual obligation to repurchase redeemable units for cash or in kind. As a result, the Funds’
obligation for net assets attributable to holders of redeemable units represents a financial liability and is presented
at the redemption amount.
(b) Valuation of financial instruments
Financial assets and financial liabilities at FVTPL are recorded in the Statement of Financial Position at fair value
upon initial recognition. All transaction costs, such as brokerage commissions, incurred in the purchase and sale of
securities for such instruments are recognized directly in profit or loss. Receivables and other financial liabilities are
measured initially at their fair value plus any directly attributable incremental costs of acquisition or issue. For
financial assets and liabilities where the fair value at initial recognition does not equal the transaction price, the
Funds recognize the difference in the Statement of Comprehensive Income, unless specified otherwise.
Page 118 of 149
ONE INVESTMENT POOLED FUNDS
30
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
After initial measurement, the Funds measure financial instruments that are classified as FVTPL at fair value.
Subsequent changes in the fair value of those financial instruments (i.e., the excess/shortfall of the sum of the fair
value of portfolio investments over/below the sum of the average cost of each portfolio investment) are recorded in
net change in unrealized appreciation (depreciation) of investments. The applicable period net change in unrealized
appreciation (depreciation) of investments is included on the Statement of Comprehensive Income. The average
cost of portfolio investments represents the sum of the average cost of each portfolio investment. For the purposes
of determining the average cost of each portfolio investment, the purchase prices of portfolio investments acquired
by each Fund are added to the average cost of the particular portfolio investment immediately prior to the purchase.
The average cost of a portfolio investment is reduced by the number of shares or units sold multiplied by the average
cost of the portfolio investment at the time of the sale. The average cost per share or unit of each portfolio investment
sold is determined by dividing the average cost of the portfolio investment by the number of shares or units held
immediately prior to the sale transaction. Transaction costs incurred in portfolio transactions are excluded from the
average cost of investments, are recognized immediately in net income and are presented as a separate expense
item in the Statement of Comprehensive Income. Net realized gain (loss) on sale of investments is also calculated
based on the average costs, excluding transaction costs, of the related investment.
Receivables and other assets and liabilities (other than those classified as FVTPL) are measured at amortized cost.
The Funds’ obligation for net assets attributable to holders of redeemable units is presented at the redemption
amount.
The Funds measures its financial instruments, such as equities, other investment funds, bonds and other interest-
bearing investments and derivatives, at fair value at each reporting date. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous
market must be accessible to the Funds.
The fair values of each specific type of investments and derivatives are determined in the following manner:
Portfolio investments
For financial reporting purposes, investments are valued at their fair value. Investments held that are traded in an
active market through recognized public stock exchanges, over-the-counter markets or through recognized
investment dealers are valued at their last traded market price where the last traded market price falls within the
day’s bid-ask spread. In circumstances where the last traded price is not within that day’s bid-ask spread, the
Manager determines the point within the bid-ask spread that is most representative of fair value based on specific
facts and circumstances. Investments held may include equities, investment funds, bonds and other debt
instruments. Any investments that are not valued using the last traded price on the securities exchange can be
valued based on other observable market data at the discretion of the Manager. If no trade volume is reported to
have taken place, closing bid quotations for long positions from the primary exchange or market makers will be
used.
Investments held that are not traded in an active market, if any, are valued based on the results of valuation
techniques using observable market inputs where possible, on such basis and in such manner established by the
Manager. Investments in other investment funds are valued at the NAV per unit reported by the administrator of the
underlying investment fund. See Note 12 for more information about the Funds’ fair value measurements.
Other financial assets and liabilities
All other financial assets and liabilities of the Funds are measured at amortized cost. Cash, dividends, receivable
for units issued, receivable for portfolio securities sold, payable for portfolio securities purchased, distributions
Page 119 of 149
ONE INVESTMENT POOLED FUNDS
31
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
payable, other liabilities and payable for units redeemed are stated at the carrying amount, and short-term debt
instruments are stated at cost plus accrued interest, which in all cases is a reasonable approximation of fair value.
(c) Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount is reported in the Statement of Financial Position if
there is a currently legally enforceable right to offset recognized amounts and there is an intention to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
(d) Investments in associates, joint ventures and subsidiaries
An investment entity is an entity that obtains funds from one or more investors for the purpose of providing them
with investment management services, its business purpose is to invest funds solely for returns from capital
appreciation, income, or both, and it measures and evaluates the performance of substantially all of its investments
on a fair value basis. Subsidiaries are all entities, including investments in other investment entities, over which a
Fund has control. A Fund controls an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and the ability to affect those returns through its power over the entity. Each Fund has
determined that it is an investment entity, and as such, accounts for subsidiaries at fair value.
(e) Impairment of financial assets
At each reporting date, the Funds assess whether there is objective evidence that financial assets at amortized cost
are impaired. If such evidence exists, the Funds will recognize an impairment loss as the difference between the
amortized cost of the financial asset and the present value of the estimated future cash flows, discounted using the
instrument’s original effective interest rate. Impairment losses on financial assets at amortized cost are reversed in
subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognized. The Funds’ other financial assets and liabilities are short-term in
nature and not subject to impairment.
(f) Investment transactions and income recognition
Investment transactions are recorded on the trade date. Interest income, if any, for distribution purposes from
investments in bonds and short-term investments shown on the Statement of Comprehensive Income represents
the coupon interest received accounted for on an accrual basis. The Funds do not amortize premiums paid or
discounts received on the purchase of fixed income securities, except for zero coupon bonds, which are amortized
on a straight-line basis. Dividend income and distributions from underlying funds are recognized on the ex-dividend
or ex-distribution date when the Funds’ right to receive the payment is established. Realized gains and losses from
investment transactions are calculated on a weighted average cost basis. Income realized gains (losses) and
unrealized gains (losses) are allocated among the series on a pro-rata basis.
The Funds generally incur withholding taxes imposed by certain countries on investment income and capital gains.
Such income and gains are recorded on a gross basis, and the related withholding taxes are shown as a separate
expense in the Statement of Comprehensive Income.
(g) Functional currency, presentation currency and foreign currency translations
The functional currency in which the Funds operate is the Canadian dollar. Amounts received by the Funds on an
offering of its units and amounts payable on redemption are received or paid in the functional currency, and the
Funds’ performance is evaluated and its liquidity managed in the functional currency. Therefore, the functional
currency is considered as the currency that most accurately represents the economic effects of the underlying
transactions, events and conditions. The Funds’ presentation currency is also the Canadian dollar.
Page 120 of 149
ONE INVESTMENT POOLED FUNDS
32
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
Any currency other than Canadian dollar represents foreign currency to the Funds. Transactions during the period,
including purchases and sales of securities, income and expenses, are translated into Canadian dollars at the rate
of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are translated into Canadian dollars at the exchange rate prevailing at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value was determined.
Realized and unrealized gains and losses on foreign currency translation are included in the Statement of
Comprehensive Income as “Foreign exchange gain (loss) on foreign currency related transactions”.
(h) Cash and cash equivalents
Cash consists of deposits with financial institutions.
(i) Increase (decrease) in net assets attributable to holders of redeemable units per unit
Increase (decrease) in net assets attributable to holders of redeemable units from operations per unit in the
Statement of Comprehensive Income represents the increase (decrease) in net assets from operations attributable
to the series for the period divided by the weighted average number of units of the series outstanding during the
period.
(j) Unitholder transactions and net asset value attributable to holders of redeemable units per unit
Amounts received on the issuance of units and amounts paid on the redemption of units are included in the
Statement of Changes in Net Assets Attributable to Holders of Redeemable Units.
A separate NAV is calculated for each series of units of the Funds by taking the series’ proportionate share of the
Funds’ common assets less that series’ proportionate share of the Funds’ common liabilities and deducting from
this amount all liabilities that relate solely to a specific series. The NAV per unit for each series is determined by
dividing the NAV of each series by the number of units of that series outstanding on the valuation date.
(k) Distributions
Income earned by the Funds are distributed to holders of redeemable units at least once a year, and these
distributions are generally reinvested by holders of redeemable units of the Funds. Net realized capital gains
(reduced by loss carryforwards, if any) are distributed in December of each year to holders of redeemable units.
(l) Transaction costs
Transaction costs are expensed and are included in “Transaction costs” in the Statement of Comprehensive
Income. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of
an investment, which include fees and commissions paid to agents, advisors, brokers and dealers, levies by
regulatory agencies and securities exchanges, and transfer taxes and duties.
(m) Redeemable units
Redeemable units are classified as financial liabilities and are redeemable at the unitholder’s option at prices based
on the Funds’ NAV per unit at the time of redemption. The amounts are continuously measured at their redemption
value.
Page 121 of 149
ONE INVESTMENT POOLED FUNDS
33
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
4. Critical accounting estimates and judgments
The preparation of financial statements requires management to use judgment in applying its accounting policies
and to make estimates and assumptions about the future that affect the reported amounts of assets, liabilities,
income and expenses during the reporting periods. Actual results may differ from such estimates. The following
discusses the most significant accounting judgments and estimates that the Funds have made in preparing the
financial statements:
Fair value measurement of derivatives and securities not quoted in an active market
The Funds may hold financial instruments that are not quoted in active markets, including derivatives. Fair values
of such instruments are determined using valuation techniques and may be determined using reputable pricing
sources. Broker quotes as obtained from the pricing sources may be indicative and not executable. Where no
market data is available, the Funds may value positions using its own models, which are usually based on valuation
methods and techniques generally recognized as standard within the industry. The models used to determine fair
values are validated and periodically reviewed by the Manager, independent of the party that created them.
Models use observable data, to the extent practicable. However, areas such as credit risk, volatilities and
correlations require the Manager to make estimates. Changes in assumptions about these factors could affect the
reported fair values of financial instruments. The Funds consider observable data to be market data that is readily
available, regularly distributed and updated, reliable and verifiable, not proprietary, and provided by independent
sources that are actively involved in the relevant market. See note 12 for more information on the fair value
measurement of the Funds’ financial statements.
Assessment as investment entity
Entities that meet the definition of an investment entity within Consolidated Financial Statements, (“IFRS 10”), are
required to measure their subsidiaries at FVTPL rather than consolidate them. The criteria that define an investment
entity are as follows:
x an entity that obtains funds from one or more investors for the purpose of providing those investors with
investment services;
x an entity that commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
x an entity that measures and evaluates the performance of substantially all of its investments on a fair value
basis.
The Funds’ offering memorandum or supplemental trust agreements detail the objective of providing investment
management services to investors, which includes investing in equities and fixed income securities for the purpose
of returns in the form of investment income and capital appreciation.
The Funds report to its investors via semi-annual investor information, and to its management, via internal
management reports, on a fair value basis. All investments are reported at fair value to the extent allowed by IFRS
in the Funds’ financial statements.
The Manager has also concluded that the Funds meet the additional characteristics of an investment entity, in that
it has one or more investments; it has more than one investor and its investors are not related parties.
Page 122 of 149
ONE INVESTMENT POOLED FUNDS
34
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
5. Income taxes and withholding taxes
The Funds qualifies as a unit trust under the Income Tax Act (Canada). No provision for income taxes have been
recorded in the accompanying financial statements as all income and capital gains of the Funds for the period are
distributed to the unitholders to the extent necessary to reduce taxes payable under Part I of the Income Tax Act
(Canada) to nil. As a result, the Funds do not record income taxes or deferred tax benefits associated with loss
carryforwards and other temporary differences.
The Funds are subject to withholding taxes on foreign income at the prescribed rate on investment income and
capital gains. Income that is subject to the withholding taxes is recorded gross of withholding taxes, and the related
withholding taxes are shown as a separate expense in the Statement of Comprehensive Income.
6. Redeemable units issued and outstanding
The Funds may issue units in an unlimited number of series and an unlimited number of units of each series. Capital
movements are shown on the Statement of Changes in Net Assets Attributable to Holders of Redeemable Units. In
accordance with its investment strategies and risk management policies, the Funds endeavour to invest its
subscriptions received in appropriate investments while maintaining sufficient liquidity to meet redemptions. Unit
transactions of the Funds for the period ended June 30, 2021 are as follows:
ONE Canadian Government Bond Fund June 30, 2021
Units outstanding – beginning of period 24,464
Redeemable units issued 960
Redeemable units redeemed -
Redeemable units issued on reinvestments 238
Units outstanding – end of period 25,662
ONE Canadian Corporate Bond Fund June 30, 2021
Units outstanding – beginning of period 24,488
Redeemable units issued 1,196
Redeemable units redeemed -
Redeemable units issued on reinvestments 257
Units outstanding – end of period 25,941
ONE Global Bond Fund June 30, 2021
Units outstanding – beginning of period 115,294
Redeemable units issued 2,114
Redeemable units redeemed -
Redeemable units issued on reinvestments 2,679
Units outstanding – end of period 120,087
Page 123 of 149
ONE INVESTMENT POOLED FUNDS
35
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
ONE Canadian Equity Fund June 30, 2021
Units outstanding – beginning of period 34,467
Redeemable units issued -
Redeemable units redeemed (3,250)
Redeemable units issued on reinvestments -
Units outstanding – end of period 31,217
ONE Global Equity Fund June 30, 2021
Units outstanding – beginning of period 81,581
Redeemable units issued 23
Redeemable units redeemed -
Redeemable units issued on reinvestments -
Units outstanding – end of period 81,604
7. Management fees
The Funds have appointed the Manager to provide management services including key management personnel.
The Manager receives an annual fee plus applicable taxes based on the NAV of the Funds units, accrued daily and
payable monthly. The foregoing fees include fees paid to external portfolio managers and all operating expenses
of the Funds, other than trading costs and expenses, fees paid in respect of securities regulatory filings, taxes and
interest are charged as an expense in the Statement of Comprehensive Income. The annual management fees are
noted in the following table:
Fund Management Fee
ONE Canadian Government Bond Fund 0.35%
ONE Canadian Corporate Bond Fund 0.40%
ONE Global Bond Fund 0.45%
ONE Canadian Equity Fund 0.45%
ONE Global Equity Fund 0.75%
The management fees received by the Manager is subsequently paid equally between Local Authority Services
(“LAS”) and CHUMS Financing Corporation (CHUMS) who are members of ONE Investment.
The manager was created jointly by LAS and CHUMS. See note 8 for more information on the related parties.
8. Related Party Transactions
ONE Investment (“ONE”) is the Manager of the Funds. It is a not for profit organization incorporated without share
capital. The members of the ONE Investment are LAS and CHUMS. There are no units held by the Manager in any
of the Pooled Funds as at June 30, 2021. Management fees paid by the Manager during the period were:
LAS $ 435,576
CHUMS 435,576
Total $ 871,152
Page 124 of 149
ONE INVESTMENT POOLED FUNDS
36
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
9. Tax loss carryforwards
Capital losses for income tax purposes may be carried forward indefinitely and applied against capital gains realized
in future periods. Non-capital loss carryforwards may be applied against future years’ taxable income. Non-capital
losses that are realized may be carried forward for 20 years. Since the Funds do not record income taxes, the tax
benefit of capital and non-capital losses has not been reflected in the Statement of Financial Position as a deferred
income tax asset.
The Funds did not have non-capital losses or capital losses as at December 31, 2020.
10. Brokerage commissions on securities transactions
The Funds pay brokerage commissions related to its direct holdings in equities and other transaction costs for
portfolio transactions for the period ended June 30, 2021. Neither the Manager nor the Funds have received
investment or research services from brokers in exchange for the commissions paid by the Funds to execute
securities transactions (“soft dollars”). The brokerage commissions and transaction cost paid by the Funds in the
period ended June 30, 2021 are as follows:
Fund
June 30, 2021
Brokerage commissions
and transaction costs
$
ONE Canadian Government Bond Fund -
ONE Canadian Corporate Bond Fund -
ONE Global Bond Fund -
ONE Canadian Equity Fund 11,672
ONE Global Equity Fund -
11. Financial instruments risk
The Funds’ activities expose it to various types of risks that are associated with its investment strategies, financial
instruments held and markets in which it invests. The most significant risks to potentially affect the Funds include
credit risk, liquidity risk, and market risk (which includes currency risk, interest rate risk and other price risk). In order
to create and protect shareholder value, the Funds seek to manage risk through a process of identifying, measuring
and monitoring its activities, subject to risk limits and other controls. The Funds have investment guidelines that set
out its overall business strategies and general risk management philosophy. Some Funds invest in Underlying
Funds. These Funds are indirectly exposed to market risk, credit risk, and liquidity risk in the event that the
Underlying Funds invest in financial instruments that are subject to those risks. These risks and related risk
management practices employed by the Funds are discussed below:
(a) COVID-19
The outbreak of a novel and highly contagious form of coronavirus (“COVID-19”) has resulted in numerous deaths,
adversely impacted global commercial activity and contributed to significant volatility in various economic markets.
The extent of the impact of COVID-19 or any other public health emergency will depend on many factors, including
the duration and scope of such public health emergencies, the impact of such public health emergencies on overall
supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity.
As a result of the uncertain implications of COVID-19, factors used for the sensitivity analysis in the relevant risk
sections below, where applicable, were adjusted to reflect a more volatile risk variable than usual as at June 30,
2021.
Page 125 of 149
ONE INVESTMENT POOLED FUNDS
37
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
(b) Credit risk
The Funds are exposed to credit risk, which is the risk that a security issuer or counterparty will be unable to pay
amounts in full when due. The fair value of debt securities includes consideration of the credit worthiness of the issuer.
All transactions in listed securities are settled upon delivery using approved brokers. The risk of default is considered
minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a
purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its
obligations. The Funds also may invest in derivative instruments such as forward currency contracts; therefore, the
Funds are subject to credit risk if the counterparty fails to meet its obligations. The Manager may choose to utilize
multiple counterparties and those that have a high credit rating in order to minimize credit risk.
As at June 30, 2021 and December 31, 2020, the following Funds had exposure to credit risks:
ONE Canadian Government Bond Fund
June 30, 2021 December 31, 2020
% of Nets Assets % of Nets Assets
AAA 24.58 33.20
AA 44.07 32.71
A 23.39 29.60
Cash & Cash Equivalents 7.46 4.08
99.50 99.59
ONE Canadian Corporate Bond Fund
June 30, 2021 December 31, 2020
% of Nets Assets % of Nets Assets
AAA 16.19 22.28
AA 35.76 33.90
A 42.82 34.94
BBB 0.10 7.33
Cash & Cash Equivalents 4.38 1.02
99.25 99.48
ONE Global Bond Fund (proportionate share of
the underlying fund’s exposure to credit risk)
June 30, 2021
% of Nets Assets
December 31, 2020
% of Nets Assets
AAA 15.10 17.70
AA 4.00 6.70
A 8.30 11.40
BBB 23.40 23.50
Below BBB 39.30 28.30
Unrated 5.30 6.40
95.40 94.00
(c) Liquidity risk
Liquidity risk is the possibility that investments of the Funds cannot be readily converted into cash when required.
The Funds may be subject to liquidity constraints because of insufficient volume in the markets for the securities of
the Funds or the securities may be subject to legal or contractual restrictions on their resale. In addition, the Funds
are exposed to cash redemptions of redeemable units. The units of the Funds are redeemed on demand at the
current NAV per unit at the option of the unitholder. Liquidity risk is managed by investing the majority of the Funds’
assets in investments that are traded in an active market and can be readily disposed. The Funds aim to retain
Page 126 of 149
ONE INVESTMENT POOLED FUNDS
38
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
sufficient cash and cash equivalent positions to maintain liquidity; therefore, the liquidity risk for the Funds are
considered minimal.
With the exception of derivative contracts, where applicable, all of the Funds’ financial liabilities are short-term
liabilities maturing within 90 days after the period end.
(d) Market risk
The Funds’ investments are subject to market risk, which is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices. The following include sensitivity analyses
that show how the net assets attributable to holders of redeemable units would have been affected by a reasonably
possible change in the relevant risk variable at each reporting date. In practice, the actual results may differ and
the differences may be material.
(i) Currency risk
The Funds hold assets and liabilities that are denominated in currencies other than its functional currency. It is
therefore exposed to currency risk, as the value of the securities denominated in other currencies will fluctuate due
to changes in exchange rates. As well, the Funds may enter into forward foreign exchange contracts primarily with
the intention to offset or reduce exchange rate risks associated with the investments and also, periodically, to
enhance returns to the portfolio. The Canadian dollar value of forward foreign exchange contracts is determined
using forward currency exchange rates supplied by an independent service provider. Losses may arise due to a
change in the value of the foreign currency or if the counterparty fails to perform under the contract.
The Funds were exposed to currency risk to the extent that its investments in financial instruments denominated in
a foreign currency.
The tables below summarize the exposure of the Funds to currency risk as at June 30, 2021 and December 31,
2020. The tables also include the impact to net assets attributable to holders of redeemable units if the Canadian
dollar had strengthened or weakened by 5% in relation to all foreign currencies, with all other factors remaining
constant. In practice, actual results may differ from this sensitivity analysis and the difference could be material.
Page 127 of 149
ONE INVESTMENT POOLED FUNDS
39
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
As at June 30, 2021 and December 31, 2020, the following Funds had exposure to currency risk through its
investment in underlying funds. The tables summarize the Funds’ share of the underlying funds’ exposure to
currency risk:
June 30, 2021
ONE Global Bond Fund Currency risk Forward foreign As a % of Impact on
exposed holdings exchange contracts Net exposure NAV NAV
$ (‘000) $ (‘000) $ (‘000) (%) $ (‘000)
Australian Dollar 2,821 (2,782) 39 0.03
Brazilian Real 1,834 (1,773) 61 0.05
British Pound Sterling 1,735 - 1,735 1.44
Chinese renminbi 1,181 - 1,181 0.98
Colombia Peso 855 - 855 0.71
Euro 10,607 (1,145) 9,462 7.86
Indonesian Rupiah 2,876 - 2,876 2.39
Japanese Yen 1,114 (279) 835 0.69
Malaysian Ringgit 1,244 - 1,244 1.03
Mexican Peso 1,355 - 1,355 1.13
New Zealand Dollar 831 (818) 13 0.01
Norwegian Krone 1,905 (496) 1,409 1.17
Philippines Peso 197 - 197 0.16
Singapore Dollar 982 (990) (8) (0.01)
United States dollars 87,947 (88,603) (656) (0.44)
Total 117,484 (96,886) 20,598 17.20 1,030
December 31, 2020
ONE Global Bond Fund Currency risk Forward foreign As a % of Impact on
exposed holdings exchange contracts Net exposure NAV NAV
$ (‘000) $ (‘000) $ (‘000) (%) $ (‘000)
Australian Dollar 2,698 (2,320) 378 0.32
Brazilian Real 795 - 795 0.67
British Pound Sterling 2,010 (90) 1,920 1.62
Chinese renminbi 172 - 172 0.15
Colombia Peso 309 - 309 0.26
Euro 12,576 (11,804) 772 0.65
Indonesian Rupiah 3,141 - 3,141 2.65
Japanese Yen 1,169 (550) 619 0.52
Malaysian Ringgit 1,306 - 1,306 1.10
Mexican Peso 424 (204) 220 0.19
New Zealand Dollar 878 (846) 32 0.03
Norwegian Krone 2,029 (1,484) 545 0.46
Philippines Peso 314 - 314 0.26
Singapore Dollar 1,006 (1,005) 1 -
United States dollars 81,192 (77,336) 3,856 3.25
Total 110,019 (95,639) 14,380 12.13 719
Page 128 of 149
ONE INVESTMENT POOLED FUNDS
40
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
June 30, 2021
ONE Global Equity Fund Currency risk Forward foreign As a % of Impact on
exposed holdings exchange contracts Net exposure NAV NAV
$ (‘000) $ (‘000) $ (‘000) (%) $ (‘000)
British Pound Sterling 9,420 - 9,420 10.28
Danish Krone 2,119 - 2,119 2.31
Euro 12,440 - 12,440 13.58
Japanese Yen 3,533 - 3,533 3.86
South Korean Won 1,106 - 1,106 1.21
Swedish Krona 2,953 - 2,953 3.22
Swiss Franc 5,513 - 5,513 6.02
Taiwan Dollar 2,211 - 2,211 2.41
Singapore Dollar 1,210 - 1,210 1.32
United States dollars 46,065 - 46,065 50.29
Total 86,570 - 86,570 94.50 4,329
December 31, 2020
ONE Global Equity Fund Currency risk Forward foreign As a % of Impact on
exposed holdings exchange contracts Net exposure NAV NAV
$ (‘000) $ (‘000) $ (‘000) (%) $ (‘000)
British Pound Sterling 9,650 - 9,650 11.47
Danish Krone 1,682 - 1,682 2.00
Euro 9,815 - 9,815 11.67
Hong Kong Dollar 25 - 25 0.03
Japanese Yen 2,878 - 2,878 3.42
Singapore Dollar 1,077 - 1,077 1.28
South Korean Won 1,160 - 1,160 1.38
Swedish Krona 2,283 - 2,283 2.71
Swiss Franc 5,408 - 5,408 6.43
Taiwan Dollar 1,745 - 1,745 2.07
United States dollars 44,194 - 44,194 52.55
Total 79,917 - 79,917 95.01 3,996
(ii) Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values
of financial instruments. Interest rate risk arises when the Funds invest in interest-bearing financial assets or
financial liabilities. The Funds would be exposed to the risk that the value of such financial assets or financial
liabilities will fluctuate due to changes in the prevailing levels of market interest rates. In addition, as interest rates
fall and fixed-income security issuers prepay principal, the Funds may have to reinvest this money in securities with
lower interest rates. The Funds’ exposure to interest rate risk would be concentrated in its investment in money
market instruments and fixed income securities. Other assets and liabilities are short-term in nature and/or non-
interest bearing.
Page 129 of 149
ONE INVESTMENT POOLED FUNDS
41
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
As at June 30, 2021 and December 31, 2020 the following Funds were exposed to interest rate risk:
June 30, 2021 Term to Maturity
Fund <1 year
$
1-3 years
$
3 to 5 Years
$
>5 Years
$
ONE Canadian Government Bond Fund 5,040,486 13,173,687 6,871,703 -
ONE Canadian Corporate Bond Fund 5,129,439 5,562,612 5,341,106 8,906,670
ONE Global Bond Fund (proportionate share
of the underlying fund’s exposure to interest
rate risk)
2,642,143 11,848,021 21,215,423 79,129,351
December 31, 2020 Term to Maturity
Fund <1 year
$
1-3 years
$
3 to 5 Years
$
>5 Years
$
ONE Canadian Government Bond Fund 4,213,764 9,094,367 7,526,208 3,557,795
ONE Canadian Corporate Bond Fund 3,041,496 6,360,100 4,934,013 10,096,864
ONE Global Bond Fund (proportionate share of
the underlying fund’s exposure to interest rate
risk)
2,720,953 12,106,443 22,293,077 70,511,947
As at June 30, 2021 and December 31, 2020, had prevailing interest rates raised or lowered by 1%, with all other
variables held constant, net assets attributable to holders of redeemable units would have increased or decreased,
respectively, by approximately the amounts indicated below. In practice, actual results may differ from this sensitivity
analysis.
Fund
June 30, 2021 December 31, 2020
Impact on NAV
$ (‘000)
Impact on NAV
$ (‘000)
ONE Canadian Government Bond Fund 550 629
ONE Canadian Corporate Bond Fund 1,345 1,466
ONE Global Bond Fund (proportionate share of the underlying
fund’s interest sensitivity risk)
4,146 4,144
(iii) Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices (other than those arising from interest rate risk or currency risk). The Manager aims to
moderate this risk through a careful selection and diversification of securities and other financial instruments within
the limits of the Funds’ investment objectives and strategy.
The impact on net assets attributable to holders of redeemable units of the Funds due to a 10% change in market
prices, as at June 30, 2021 and December 31, 2020, are shown in table below, with all other variables held constant.
In practice, actual results may differ from this sensitivity analysis.
Page 130 of 149
ONE INVESTMENT POOLED FUNDS
42
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
Fund
June 30, 2021 December 31, 2020
Impact on NAV
$
Impact on NAV
$
ONE Global Bond Fund 12,037,321 11,854,708
ONE Canadian Equity Fund 4,045,654 3,866,782
ONE Global Equity Fund 9,159,497 8,410,380
(e) Portfolio concentration risk
Concentration risk indicates the relative sensitivity of the Funds’ performance to developments affecting a particular
industry or geographical location. Concentration of risk arises when a number of financial instruments or contracts
are entered into with the same counterparty, or where a number of counterparties are engaged in similar business
activities, or activities in the same geographical region, or have similar economic features that would cause their
ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions.
The portfolio management team manages the risk through diversification and a thorough understanding of each
investment in the portfolios. The following are a summary of the Funds’ concentration risk as at June 30, 2021 and
December 31, 2020:
ONE Canadian Government Bond Fund June 30, 2021 December 31, 2020
% %
Canadian Fixed Income
Corporate 34.27 35.54
Government 23.78 32.33
Municipal 0.16 1.21
Provincial 33.96 26.47
Short-Term Investments 7.34 4.04
Cash 0.17 0.06
Other Assets, less Liabilities 0.32 0.35
Total 100.00 100.00
ONE Canadian Corporate Bond Fund June 30, 2021 December 31, 2020
% %
Canadian Fixed Income
Corporate 62.54 63.46
Government 12.63 13.32
Municipal 2.03 2.67
Provincial 17.76 19.01
Short-Term Investments 4.38 1.02
Cash 0.15 -
Other Assets, less Liabilities 0.51 0.52
Total 100.00 100.00
Page 131 of 149
ONE INVESTMENT POOLED FUNDS
43
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
ONE Global Bond Fund June 30, 2021 December 31, 2020
(as a % of net assets held by the
underlying fund)
% %
Bonds
United States 50.70 51.10
International 35.20 30.50
Canada 9.40 9.20
Equities
United States 3.30 3.70
Canada 0.30 -
Other Assets, less Liabilities 1.10 5.50
Total 100.00 100.00
ONE Canadian Equity Fund June 30, 2021 December 31, 2020
% %
Canadian Equities
Communication Services 6.26 8.02
Consumer Discretionary 16.62 14.00
Consumer Staples 5.30 12.26
Energy 5.15 3.94
Financials 26.73 23.76
Industrials 12.09 12.37
Information Technology 11.83 10.46
Materials 5.94 6.02
Utilities 2.38 2.60
United States Equities
Health Care 5.29 4.37
Short-Term Investments 2.17 2.11
Cash 0.10 0.08
Other Assets, less Liabilities 0.14 0.01
Total 100.00 100.00
Page 132 of 149
ONE INVESTMENT POOLED FUNDS
44
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
ONE Global Equity Fund June 30, 2021 December 31, 2020
(as a % of net assets held by the
underlying fund)
% %
China
-
0.04
Japan 3.86 3.42
Singapore 1.32 1.29
South Korea 1.20 1.38
Taiwan 2.42 2.08
Denmark 2.32 2.01
Finland 0.71 0.73
France 1.84 3.15
Germany 3.59 1.43
Italy 1.47 1.58
Netherlands 5.99 4.79
Sweden 3.23 2.72
Switzerland 6.75 8.44
United Kingdom 10.29 11.50
Chile 0.61 0.31
Canada 2.80 2.35
United States 48.99 49.50
Treasury Bills 2.59 3.26
Cash and Cash Equivalents 0.02 0.02
Total 100.00 100.00
12. Fair value measurement
The Funds classify fair value measurements within a hierarchy that gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). The three levels of the fair value hierarchy are as follows:
Level 1: Fair value based on unadjusted quoted prices in active markets for identical assets or liabilities that
the Manager has the ability to access at the measurement date.
Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly,
including inputs in markets that are not considered to be active.
Level 3: Inputs based on at least one significant non-observable input that is not supported by market data.
There is little if any market activity. Inputs into the determination of fair value require significant
management judgment or estimation.
If inputs of different levels are used to measure an asset’s or liability’s fair value, the classification within the
hierarchy is based on the lowest level input that is significant to the fair value measurement. The following fair value
hierarchy tables present information about the Funds’ assets and liabilities measured at fair value within the fair
value hierarchy as at June 30, 2021 and December 31, 2020:
June 30, 2021 Level 1 Level 2 Level 3 Total
ONE Canadian Government Bond Fund $ $ $ $
Financial Assets
Fixed Income - 23,236,256 - 23,236,256
Short-Term Investments - 1,849,620 - 1,849,620
Total Financial Assets - 25,085,876 - 25,085,876
Page 133 of 149
ONE INVESTMENT POOLED FUNDS
45
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
December 31, 2020 Level 1 Level 2 Level 3 Total
ONE Canadian Government Bond Fund $ $ $ $
Financial Assets
Fixed Income - 23,402,352 - 23,402,352
Short-Term Investments - 989,782 - 989,782
Total Financial Assets - 24,392,134 - 24,392,134
June 30, 2021 Level 1 Level 2 Level 3 Total
ONE Canadian Corporate Bond Fund $ $ $ $
Financial Assets
Fixed Income - 23,840,104 - 23,840,104
Short-Term Investments - 1,099,722 - 1,099,722
Total Financial Assets - 24,939,826 - 24,939,826
December 31, 2020 Level 1 Level 2 Level 3 Total
ONE Canadian Corporate Bond Fund $ $ $ $
Financial Assets
Fixed Income - 24,182,520 - 24,182,520
Short-Term Investments - 249,953 - 249,953
Total Financial Assets - 24,432,473 - 24,432,473
June 30, 2021 Level 1 Level 2 Level 3 Total
ONE Global Bond Fund $ $ $ $
Financial Assets
-
120,373,210
-
120,373,210 Investment Funds
Total Financial Assets - 120,373,210 - 120,373,210
December 31, 2020 Level 1 Level 2 Level 3 Total
ONE Global Bond Fund $ $ $ $
Financial Assets
-
118,547,084
-
118,547,084 Investment Funds
Total Financial Assets - 118,547,084 - 118,547,084
June 30, 2021 Level 1 Level 2 Level 3 Total
ONE Canadian Equity Fund $ $ $ $
Financial Assets
Equities 40,456,542 - - 40,456,542
Short-Term Investments - 899,890 - 899,890
Total Financial Assets 40,456,542 899,890 - 41,356,432
December 31, 2020 Level 1 Level 2 Level 3 Total
ONE Canadian Equity Fund $ $ $ $
Financial Assets
Equities 38,667,824 - - 38,667,824
Short-Term Investments - 834,981 - 834,981
Total Financial Assets 38,667,824 834,981 - 39,502,805
Page 134 of 149
ONE INVESTMENT POOLED FUNDS
46
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
June 30, 2021 Level 1 Level 2 Level 3 Total
ONE Global Equity Fund $ $ $ $
Financial Assets
-
91,594,971
-
91,594,971 Investment Funds
Total Financial Assets - 91,594,971 - 91,594,971
December 31, 2020 Level 1 Level 2 Level 3 Total
ONE Global Equity Fund $ $ $ $
Financial Assets
-
84,103,804
-
84,103,804 Investment Funds
Total Financial Assets - 84,103,804 - 84,103,804
All fair value measurements above are recurring. Fair values are classified as Level 1 when the related security or
derivative is actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2,
unless the measurement of the instrument’s fair value requires the use of significant unobservable inputs, in which
case it is classified as Level 3.
There were no transfers into or out of Level 1, Level 2 and Level 3 during the periods ended June 30, 2021 and
December 31, 2020.
(a) Equities
The Funds’ equity positions are classified as Level 1 when the security is actively traded and a reliable price is
observable.
(b) Fixed income and short-term investments
Fixed income include primarily government and corporate bonds, which are valued using quotation services with
inputs including interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are
generally observable and therefore the Funds’ bonds and short-term investments have been classified as Level 2.
(c) Investment funds
The Funds’ holdings in underlying mutual funds are classified as Level 2 and priced by the underlying funds’
investment managers based on the NAV of the funds.
(d) Derivative assets and liabilities
Derivative assets and liabilities consist of foreign currency forward contracts that are valued based primarily on the
contract notional amount, the difference between the contract rate and the forward market rate for the same
currency, interest rates and credit spreads. Contracts for which counterparty credit spreads are observable and
reliable, or for which the credit-related inputs are determined not to be significant to fair value, are classified as
Level 2.
Page 135 of 149
ONE INVESTMENT POOLED FUNDS
47
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
13. Interest in Unconsolidated Structured Entities
The Funds qualify as investment entities under IFRS 10, Consolidated Financial Statements, and therefore
accounts for investments at FVTPL. The Funds’ primary purpose are to obtain funds from investors to provide them
with investment management services and to obtain a return primarily from capital appreciation and/or investment
income. The Funds also measure and evaluate their performance on a fair value basis. In determining whether the
Funds had control over an investee, the Funds assessed the voting rights, the exposure to variable returns and its
ability to use the voting rights over the investee to affect the amount of the returns.
The table below describes the entities that the Funds does not consolidate but in which it holds an interest as at
June 30, 2021 and December 31, 2020:
June 30, 2021
% of net assets of
% of ownership
ONE Global Bond Fund the Fund interest
Manulife Investment Management Strategic Income Pooled Fund 100.02 3.94
December 31, 2020
% of net assets of
% of ownership
ONE Global Bond Fund the Fund interest
Manulife Investment Management Strategic Income Pooled Fund 100.03 3.58
June 30, 2021
% of net assets of
% of ownership
ONE Global Equity Fund the Fund interest
Mawer Global Equity Fund, Class O 100.04 0.91
December 31, 2020
% of net assets of
% of ownership
ONE Global Equity Fund the Fund interest
Mawer Global Equity Fund, Class O 100.06 1.05
14. Capital management
Units issued and outstanding are considered to be capital of the Funds. The Funds are not subject to externally
imposed capital requirements and have no legal restrictions on the issue, repurchase or resale of redeemable units
beyond those included in the Funds’ offering memorandum. The capital received by the Funds are managed to
achieve its investment objective, while maintaining liquidity to satisfy unitholder redemptions.
Units of a series are redeemable at the NAV per unit of the respective series. Changes in the units issued and
outstanding of each series for the period ended June 30, are reported in note 6 above.
Page 136 of 149
ONE INVESTMENT POOLED FUNDS
48
Notes to Financial Statements (Unaudited)
June 30, 2021 (continued)
15. Increase (decrease) in net assets attributable to holders of redeemable units
The increase (decrease) in net assets attributable to holders of redeemable units per unit for the period ended June
30, 2021 and June 30, 2020 are as follows:
June 30, 2021
Increase (decrease) Increase (decrease) in
in net assets net assets attributable
attributable to Weighted average to holders of
holders of units outstanding in redeemable units per
redeemable units
$
the period Unit
$
ONE Canadian Government Bond Fund
(231,775)
24,930
(9.30)
ONE Canadian Corporate Bond Fund (616,111) 25,063 (24.58)
ONE Global Bond Fund (287,674) 117,054 (2.46)
ONE Canadian Equity Fund 6,107,106 33,102 184.49
ONE Global Equity Fund 7,481,400 81,587 91.70
16. Filing exemption
In reliance upon the exemption in Section 2.11, NI 81-106, Investment Fund Continuous Disclosure, the financial
statements of the Funds will not be filed with the securities regulatory authorities.
Page 137 of 149
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: Town of Aurora Debt Management Update
To: Finance Advisory Committee
From: Jason Gaertner, Manager, Financial Management
Date: May 9, 2022
Recommendation
1. That the memorandum regarding the Town of Aurora Debt Management Update be
received; and
2. That the Finance Advisory Committee comments regarding the Town of Aurora Debt
Management Update be received and referred to staff for consideration and further
action as appropriate.
Background
Presently, the Town does not have a documented debt management policy; however, it
does have established best practices that have guided its historical debt management.
These best practices include:
Debt will only be considered as an interim funding source for capital projects
when a funding source can be confidently assured for the repayment of the debt
being considered.
Debt will only be considered for growth & new capital projects.
Debt will only be considered if the Town is able to remain well under its Annual
Debt Repayment Limit (ARL) in consideration of existing and proposed new debt
annual carrying costs.
The Town has responsibly used both external and internal debt financing for several
years as an interim funding source for necessary Town capital asset creation which has
included indoor and outdoor recreation spaces, as well as needed library and cultural
infrastructure. In all instances, all debt obligations were repaid on time.
Page 138 of 149
Town of Aurora Debt Management Update
May 9, 2022 Page 2 of 4
Analysis
The Town’s current debt obligation remains in a healthy position
The Town’s existing debt obligations are in a healthy position with all required funding
for repayment being identified and assured. Table 1 presents a summary of the Town’s
current debt obligations as of December 31, 2021.
Table 1
Debt Financing Summary
Amortization
Length
Outstanding
Principal
Debt
Conclusion
Repayment Funding
Source(s)
Short Term
Financing:
Aurora Town
Square
Construction Line
of Credit
- 15,338,000
Substantial
project
completion
Multiple funding
sources, as per
FIN20-019.
SARC Gymnasium
Construction Line
of Credit
- -
Substantial
project
completion
Long term debenture
financing.
Subtotal Short Term
Financing 15,338,000
Long Term
Financing:
Hallmark Baseball
Diamonds 20 3,375,000 2041 Parks & Recreation
DCs
SARC Construction 20 1,164,737 2025 Parks & Recreation
DCs
Aurora Sports
Dome Purchase &
Retrofit
15 1,600,000 2036
Aurora Sports Dome
annual operating
revenues
LED Streetlight
Conversion 10 1,562,792 2026 Annual operating
budget utility savings
JOC Construction 10 3,749,277 2028 Parks & Recreation
and Roads DCs
Subtotal Long Term
Financing 11,451,806
Total Debt
Obligation 26,789,806
Page 139 of 149
Town of Aurora Debt Management Update
May 9, 2022 Page 3 of 4
The total annual carrying costs of this debt is $1,670,300, representing a value that well
under the Town’s legislated annual debt repayment limit of $23,130,500. When the
approved short to long term debt conversions of $10,000,000 and $8,200,000,
respectively for the Aurora Town Square and SARC Gymnasium projects are exercised
the estimated total annual debt carrying costs will grow to $2,928,000. This will reduce
the available room in the annual debt repayment limit to $20,202,500.
Parks & recreation development charges are a key debt funding source that needs to be
closely managed to ensure financial sustainability
Historically, most of the Town’s debt financed projects have related to the construction
of new indoor and outdoor recreation facilities, this debt’s primary repayment funding
source is parks & recreation development charges. On June 6, 2019, the province
amended the Development Charge Act (DCA) to combine the previous indoor and
outdoor recreation services into a single parks & recreation service category. Since this
funding source has and continues to be heavily used, its use must be closely managed.
Figure 1 presents a 10-year summary of the parks & recreation development charges
reserve. This summary considers all identified requirements over this time period
including the estimated debenture repayment costs for the proposed new recreation
centre, as well as all existing debt repayment obligations.
Figure 1
Parks & Recreation Development Charges Reserve Summary
As can be seen from Figure 1, the Town’s existing requirements place this reserve under
considerable stress. For this reserve to accommodate any further requirements
previously identified items will need to be removed, delayed or find an alternate funding
source.
Page 140 of 149
Town of Aurora Debt Management Update
May 9, 2022 Page 4 of 4
The Town’s debt management best practices will be formalized into a Council approved
debt policy in 2022
Council approved the Town’s first Fiscal Strategy on June 22, 2021, of which one key
identified pillar was debt management. This pillar’s key focus is on ensuring that debt
financing is used effectively to manage the long-term financial flexibility of the Town.
Multiple key strategic objectives are defined in support of this pillar within the fiscal
strategy. To ensure these strategic objectives are met, a detailed action plan has been
developed; with the highest priority identified action being the development of formal
debt management policy. The development of this policy by staff is underway and is
expected to be presented to the Finance Advisory Committee for its review and
feedback on May 10th and is expected to be presented to Council for its review and
approval in June. This policy will document the Town’s debt management best
practices.
Attachments
None
Page 141 of 149
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Corporate Services
_______________________________________________________________________________________
Re: Town’s Major Capital Projects Update
To: Finance Advisory Committee
From: Project Management Office, Corporate Services
Date: May 9, 2022
Recommendation
1. That the memorandum regarding Town’s Major Capital Projects Update be received
for information.
Background
The Town currently has multiple major capital projects underway in varying stages of
completion. These major projects include the following:
Aurora Town Square
Fire Hall 4-5
Joint Operations Centre Additional Work
Financial System
Analysis
Aurora Town Square
Activities during the months of March and April 2022:
The galvanized metal stair at the north Library reading garden was installed and
installation of the wood slat ceiling within the main corridor has commenced.
The floor slab adjacent to the old café egress door has been chipped out and will
be receiving a frost slab in the coming weeks (weather dependent).
The entire 3rd floor structure of the Cultural Centre has been poured and stripped
of all re-enforcement.
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Town’s Major Capital Projects Update
May 9, 2022 Page 2 of 8
Chandos continues to pump excess ground water to the local storm sewers as
the temporary site grading has caused low points throughout the site.
The Town has engaged Blackwell Engineering directly to undertake an
independent structural investigation of the existing School House in response to
preliminary results of the crack monitoring testing.
Seventy-eight (78) Request for Change Orders (RFCOs) issued by Chandos.
Twenty-seven (27) CCNs / RFCOs have been rejected totaling an estimated value
of ~$340k
One-hundred and twenty-four (124) Change Orders (COs) have been approved to-
date totaling a value of ~$1.586M
Notable Change Orders that were approved during the month of March 2022
include:
o Exterior Signage - $19,116.20
o Additional Ceiling Demolition / Reinstatement at First Floor of Library -
$92,439.07
o Parapet Details - $39,600.00
o Additional Roof Gutters for Bridge - $18,025.70
Project Schedule:
Following the Schedule meeting held on February 2nd, 2022, with Chandos’ executive team,
a revised Library schedule was issued on February 13th, 2022. The targeted turn-over date
for the Library remains on April 29th, 2022.
On March 1, Chandos provided an updated schedule for the School House and the New
Cultural Centre (NCC). The revised Occupancy date for the NCC is now May 2023.
Milestone Expected Completion Actual/Forecast
Substantial Completion Fall 2022 Winter 2023
Total Completion Winter 2022 Spring 2023
Budget Status:
Colliers continues to note the Budget status as “Yellow” in this reporting period indicating a
moderate risk to the project outcome. This is based on the approved and pending /
forecasted Change Orders accumulating at a quicker pace than base construction works.
The combined percentage of approved + forecasted changes for this reporting period
(76.2% of the Contingency). Colliers anticipates that the progression of changes should
Page 143 of 149
Town’s Major Capital Projects Update
May 9, 2022 Page 3 of 8
slow as the construction works progress and the project moves out of renovation and
underground site works, however, current market conditions continue to create volatile
material and labour pricing and we believe this is being reflected in Chandos’ quotes.
Colliers Project Leaders have baselined the project budget at $51,939,700 (including HST).
Chandos’ contract price excluding Cash Allowances is $39,394,615. The Cash Allowance
amount of $1,615,250 will be tracked separately as the various areas of scope are
implemented throughout the Construction process. Currently there are 159 Contemplated
Change Notices issued by RAW and TPP, and 67 Request for Change Orders issued by
Chandos. Any potential costs for these will be drawn from the construction contingency.
Description Total Budget Committed
Forecast
Cost at
Completion
Forecast
Variance at
Completion
Consultant Fees $4,750,272 $4,772,357 $4,772,357 -$22,085
Construction
Costs $41,009,865 $41,009,865 $41,009,865 $0
Town Allowances $1,280,735 $508,507 $1,280,735 $0
Contingencies $4,000,500 $962,269 $3,978,415 $22,085
HST $898,328 $831,653 $898,328 $0
Total $51,939,700 $48,084,650 $51,939,700 0
Fire Hall 4-5
Overall progress of the project is satisfactory.
Page 144 of 149
Town’s Major Capital Projects Update
May 9, 2022 Page 4 of 8
Site Work
Curbing and asphalt base course has been completed. Top coat to be completed in
spring 2022.
Tree planting has been completed. Shrub planting to be completed in spring 2022.
Installation of paving stones has commenced.
Building Progress
The below list provides an overview of key building progress accomplishments;
Roofing is complete.
Exterior masonry works complete; however, requires cleaning.
Plumbing rough ins have been completed, plumbing appliances are being installed
Electrical rough in has been completed.
Mechanical (HVAC) is ongoing.
Stud framing and drywalling is ongoing.
Exterior aluminum cladding has commenced and is approximately 60%
complete.
Elevator installation is in progress.
Painting of the apparatus bay is complete.
Millwork installation has commenced
All services to the site have been installed and are active.
Communications
Virtual site meetings have taken place on a bi-weekly basis since the commencement of
construction. At present, 43 site meetings have been conducted.
Risks and Issues
Supply chain issues continue to be of concern; however, both the contractor and
architect are working to resolve these issues. Coordination of I.T. and security is being
conducted by the architect, Town of Newmarket and Central York Fire Services.
Project Schedule
As a result of weather impacts, supply chain issues and accommodations for approved
change orders, the schedule has been modified as indicated below:
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Town’s Major Capital Projects Update
May 9, 2022 Page 5 of 8
Occupancy: March 7, 2022 has been extended to May 24, 2022
Substantial Performance: March 15 has been changed to May 31, 2022
Total Completion: June 1 has been changed to June 15, 2022
These changes in schedule have no impact on proposed move-in date for firefighters
and administrative staff.
Milestone Baselined Completion Expected Completion
Occupancy February 28, 2022 May 24, 2022
Substantial Performance March 8, 2022 May 31, 2022
Total Completion May 25, 2022 June 15, 2022
Budget Status:
Description Approved Budget Committed Payment to Date
Architect $600,000 $600,000 $589,700
Tender Revised Bid $11,027,545 $11,027,545 $8,791,644
Non-Construction Costs $856,500 $349,500 $0
Other Costs $75,299 $75,299
Contingency (10%) $1,083,682 $1,232,964 $1,232,964
Public Art $36,100 $36,100 $36,100
Project Management $51,200 $51,200 $0
Total Budget $13,655,027 $13,372,608 $10,725,707
Note: The Non-recoverable HST (1.76%) is included in all figures
Joint Operations Centre Additional Work
The objective of this project is to complete the outstanding capital works of the JOC.
The project is divided into thirteen (13) sub-projects. The following table reflects the
status of each sub-project.
Page 146 of 149
Town’s Major Capital Projects Update
May 9, 2022 Page 6 of 8
Sub-Project
Status
Back Lot Paving and Full Build Out Complete
Upper Parking Lot and Rear Yard Complete
Garbage Tipping Station Complete
Automated Gate Control Complete
South Side Exterior Finishing Complete
Furniture Complete
Entry Pylon Exterior Sign This is a part of the Exterior Pylon Sign project
for the Town’s facilities.
Intercom System Cancelled
Third Floor Build Out Complete
Building Exterior Sign Complete
Soil Quality at Back of Property Complete
JOC Landscaping Complete
Storage Buildings
In progress – Borehole investigation underway,
design phase 95% complete, tender for
construction to be released in April 2022
Budget Status:
Budget Status Cost Note
Approved Budget $2,185,200
Committed $1,445,525 66% project budget
Financial System
Overall Project Status:
In late 2020, Finance engaged the assistance of the Government Finance Officers
Association (GFOA) in the development of the requirements for the new financial
system. GFOA is a non-profit organization which does not sell financial systems. They
have extensive experience in assisting municipalities across Canada and the US in
Page 147 of 149
Town’s Major Capital Projects Update
May 9, 2022 Page 7 of 8
developing system requirements. Developing the requirement involved many meetings
with staff in Finance and representatives from all the other departments in the town to
ensure the list was comprehensive. The procurement was posted publicly as planned in
Q3 of 2021.
The procurement process for the proposals included the following stages which must
be passed prior to moving on to the next stage and to the final stage of evaluating the
price:
Technical proposal submitted in Bids & Tenders (written proposal)
Presentation/interview (virtual meeting)
Demonstration (virtual meeting)
The procurement is in the contract negotiation stage which is still underway.
Project Schedule
Milestone Baselined Completion Expected Completion
Phase I - Financial System
Requirements Development End of Q3, 2021 End of Q3, 2021
Phase II – New Financial System
Purchase and Implementation End of Q4, 2023 End of Q4, 2023
Budget Status:
The budget for this project includes the cost for the consulting engagement, the new
system, and the cost for two full-time equivalent staff to be assigned to the project
through-out its implementation. Staff plan to bring forward a report to General
Committee on April 19th, 2022, the report will revise the budget requirements now that
the project has reach the stage in the procurement to more accurately estimate the
implementation costs.
Budget Status Cost Note
Approved Budget $1,500,000
Committed $135,869 9% project budget
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Town’s Major Capital Projects Update
May 9, 2022 Page 8 of 8
Attachments
None
Page 149 of 149