KISONIYAMINAW HERITAGE TRUST FUND A NNUAL REPORT TO CHIEF AND COUNCIL - - PowerPoint PPT Presentation

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KISONIYAMINAW HERITAGE TRUST FUND A NNUAL REPORT TO CHIEF AND COUNCIL - - PowerPoint PPT Presentation

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KISONIYAMINAW HERITAGE TRUST FUND A NNUAL REPORT TO CHIEF AND COUNCIL August 25, 2017 1 THE START OF A TRUST 1970s Samson Cree Nation attempts to obtain Samson Capital monies from Canadian Government attempt fails 1980 Resolutions

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KISONIYAMINAW HERITAGE TRUST FUND

ANNUAL REPORT TO CHIEF AND COUNCIL August 25, 2017

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THE START OF A TRUST

1970’s – Samson Cree Nation attempts to obtain Samson Capital monies from Canadian Government – attempt fails 1980 – Resolutions of Chief and Council submitted to Ottawa directing Government to transfer the monies to Samson Cree – attempt fails 1984 – The concept of a Heritage Trust discussed and submitted to Ottawa – attempt fails

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… THE START OF A TRUST CONT’D …

1989 – Samson decides to take legal action Nov 1991 – Samson files in Federal Court to appoint a Receiver for the Capital monies May 1992 – The Application is dismissed May 2002 – A Trial begins

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AT LAST, POSITIVE RESULTS

Dec 2004 – Samson lawyers request that the Capital monies be transferred to an independent Trust controlled by Samson Jan 27 2005 – The Court sets out the conditions for such a transfer

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CONDITIONS

  • External Trustees
  • Trust Deed satisfactory to the court
  • Trust Deed to set out financial plan and rules

for investment

  • Rules for engaging agents
  • Provision for monitoring performance and

the investment policy

  • Independent Trust Fund

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… CONDITIONS CONT’D …

  • Provision for auditing the Trust Fund
  • Results reported to Samson Cree
  • Future capital (royalties) be transferred

to the Trust Fund

  • Samson Cree hold a referendum to seek

approval of the Trust Fund

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KISONIYAMINAW HERITAGE TRUST FUND

  • Nov 2005 - Referendum held with all Samson

members aged 18 and over eligible to vote

  • Significant majority voted in favour
  • KHTF ‘born’
  • Board of Trustees appointed

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FIRST BOARD OF TRUSTEES

Alan Marchment Chairperson John Butler Vice-Chairperson Allan Markin Michael Mills

  • J. Wilton Littlechild

The Trust Deed was signed by all Trustees and Chief Victor Buffalo on behalf of Samson

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THE TRUSTEES SET TO WORK

  • Engagement of RBC Dexia as custodian of the

assets

  • Statement of Investment Policy and Procedures

(SIP&P) developed and adopted

  • 4 investment managers hired, all with different

investment styles

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THE MONEY ARRIVES!

Feb 1 2006 - $348.7 million deposited in the Custodial Account Dec 31 2016 - amount has grown to $455.9 million Amount paid to Samson = $201.8 million

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WHAT IS A HERITAGE TRUST FUND?

  • A Trust Fund is a sum of money held on behalf of a beneficiary
  • It specifies that the Trustees must pay an amount each year to

the Beneficiary

  • The importance of the word “Heritage” is that the Trust Fund

is meant to be preserved for future generations of Samson not yet born: this presents a constant challenge for the Trustees given the large sums paid to Samson each year

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DUTIES OF THE TRUSTEES

The Trustees are charged with the responsibility of

  • perating the Trust Fund and exercising prudence in

managing the assets:

  • First step – develop a Statement of Investment Policy

and Procedures (SIP&P)

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WHAT IS THE SIP&P?

  • A document which sets out how the Trustees believe it is

best to invest the assets for the long term

  • A dynamic document which the Trustees review annually
  • Original SIP&P modified several times over the years to

reflect the changing investment environment and evolving thinking of the Trustees

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… SIP&P CONT’D …

Sets out the proportion of the Trust Fund to be invested in different asset classes Currently the Trust Fund invests in:

  • Common shares from around the world
  • Canadian bonds and preferred shares
  • Canadian real estate
  • A small and declining allocation to hedge funds

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… SIP&P CONT’D …

Sets out the performance criteria expected for the Trust Fund as a whole, and for each asset class and each Investment Manager

  • Trustees review Investment Managers’ performance

quarterly and use an independent consulting firm to assist with this

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INVESTMENT MANAGERS

  • Currently there are 5 Investment Managers
  • 2 have managed money for the Trust Fund since inception
  • Trustees have engaged Investment Managers for particular

expertise

  • Trustees have dismissed Investment Managers for

unsatisfactory performance

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TRUSTEES’ OTHER DUTIES

Trustees engage and monitor services of various experts to assist with day-to-day operation of the fund, including:

  • Accountant for bookkeeping
  • Independent auditor
  • Legal counsel (lawyer)
  • Administrator for the day-to-day operation

Due to the expertise of the Trustees and of the specialists the Trust Fund fees have been kept lower than other trusts of this size

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SAFETY MEASURES ADOPTED BY THE TRUSTEES

  • Procedure that requires all transactions be signed off by

at least 2 Trustees before any payment is made

  • Independent audit
  • Legal review of all contracts
  • Quarterly review of performance
  • Hiring consultants as needed for special studies

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‘HERITAGE’

  • Trustees annually direct how much to pay to Samson in

accordance with the Trust Deed

  • The word ‘Heritage’ requires a long-term view to

maintain the purchasing power of the Trust Fund

  • Trustees measure growth of the Trust Fund against a

nominal fund based on rates of inflation

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HOW ARE WE DOING?

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50,000,000 100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000 500,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Purchasing Power Parity Actual Value after deducting annual payments to the beneficiary Inflation Adjusted Value

  • f transfers into

Trust

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COMPARED TO AANDC

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5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Comparison of amounts: KHTF -v- (notional) AANDC Amount paid from KHTF Notional amount paid from AANDC

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TRUSTEES TODAY

Since inception Chairperson and Vice-Chairperson resigned and were replaced Current Board: Michael D Mills Chair Heather Gore-Hickman Vice Chair and Audit Committee Mark Campbell Investment Committee Allan Markin J Wilton Littlechild

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REPORT ON THE YEAR 2016

Trustees met quarterly and made the decision to hire Mercer (Consultants) to conduct a thorough review and analysis of the SIP&P Mercer’s report suggested that it is possible to improve long- term expected rate of return on the Trust Fund, by making some changes that include:

  • Revisions of the allocation to different asset classes

within the SIP&P

  • Addition of several new asset classes

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… REPORT ON 2016 CONT’D …

Expected that these changes will be made in 2017 Important Point: expected rate of return will increase by a full 1% over the long-term but costs will only increase by 0.1%

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… REPORT ON 2016 CONT’D …

At the end of 2015, Hedge Fund Manager announced it was discontinuing the fund in which we were invested During the year it has gradually been returning our investment - this money has been re-deployed in our global assets

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ASSETS BY CLASS AT DECEMBER 31 2016

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Canadian Stocks Global Stocks Canadian Bonds Short-term and Cash Real Estate Hedge Funds

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ALLOCATION OF ASSETS - $M

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$176.89 $170.55 $68.59 $29.46 $12.90

Leith Wheeler BMO Zechner Bentall Kennedy Private Advisors

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… REPORT ON 2016 CONT’D …

MONITORING INVESTMENT MANAGERS

  • Review quarterly reports from Investment Managers
  • Meet with each Investment Manager twice per year
  • Compare performance using RBC Investment Analytics

Report

  • Dismiss and replace Investment Managers when

warranted by performance or Investment Manager no longer meets requirements of the Trust

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… REPORT ON 2016 CONT’D …

PRESERVING CAPITAL

  • A very difficult task in an environment of great

uncertainty in Markets

  • The payments to the Nation are high: since inception

a total of $202 million has been paid, while

  • AANDC would have paid $125 million

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… REPORT ON 2016 CONT’D …

Preserving capital as of December 2016 Capital adjusted by CPI $466 million Actual capital $456 million AANDC notional value $321 million

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… REPORT ON 2016 CONT’D …

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2 4 6 8 10 12 14 1 YEAR 5 YEARS 10 YEARS

Performance to December 2016 Total Fund Benchmark Median Fund

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AUDIT REPORT FOR 2016

The independent auditor Collins Barrow again gave the Trust Fund an unqualified audit report with no identifiable problems

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AUDIT HIGHLIGHTS - $MILLIONS

Year 2016 2015 Assets 459.3 426.0 Revenue 53.7 17.4 Expenses 2.2 2.5 Distribution 20.9 17.9

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TRUSTEES’ PLANS FOR 2017

  • Continue to meet at least quarterly
  • Implement new SIP&P
  • Continue performance monitoring
  • Maintain close expense control
  • Receive another clean audit

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KHTF REPORT 2016

Thank you! Any questions?

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