2016 IMANT Annual Report - Final Draft with cover

Contents

Message from the Board Chair ..................................................................................................................... 1

Message from the President ......................................................................................................................... 2

Overview of IMANT ....................................................................................................................................... 4

Market Commentary ..................................................................................................................................... 7

Funds under Management............................................................................................................................ 9

Endowment Fund ................................................................................................................................... 10

Endowments with Investment Restrictions ........................................................................................... 20

Staff Pension Plan ................................................................................................................................... 22

Supplemental Arrangement ................................................................................................................... 29

Core Working Capital Fund ..................................................................................................................... 30

Investment Management Fees ................................................................................................................... 31

Endowment Fund and Staff Pension Plan Investment Policy Benchmarks ................................................ 32

Independent Auditor’s Report .................................................................................................................... 33

Financial Statements and Notes ................................................................................................................. 35

2015‐2016 IMANT Board of Directors ........................................................................................................ 45

Investment Managers by Mandate ............................................................................................................. 46

Advisors and Service Providers ................................................................................................................... 48

Cover photo: Lyle Wilson, Rendition of one side of a nineteenth century box drum (1992) The Transforming Image: Painted Arts of Northwest Coast First Nations Bill McLennan and Karen Duffek, UBC Press 2000 Courtesy of the Museum of Anthropology, UBC, Vancouver

1 | UBC IMANT 2016 Annual Report

Message from the Board Chair

In 2015/16, capital markets were volatile and one year investment

returns were either negative or in low single digits. Against this

backdrop, the Board remained focused on our long term investment

strategy and value creation for the UBC Endowment Fund, Staff

Pension Plan and other portfolios to support the University’s

research, scholarships and pension benefits. Although we expect

lower returns in the current environment, we remain confident that

the portfolios are well positioned as the market cycle shifts into the

next low but sustainable growth phase of the economy albeit with

very low interest rates globally. Despite the market uncertainty, we

are pleased to report that the Endowment Fund and Staff Pension

Plan exceeded their respective performance benchmarks for the year.

After consultation with the UBC faculty and students, the UBC Board of Governors approved creation of

the new Sustainable Future Fund. We are pleased to assist the University with implementing this new

fund in which Environmental, Social and Governance (ESG) factors will be considered as key criteria in

the investment process. This fund will help address a desire by the UBC community to invest in

environmentally and socially responsible companies with sustainable investment returns.

I would like to acknowledge the IMANT staff and thank them for their dedication and efforts in

implementing IMANT’s business objectives for 2015/16. To my fellow directors, thank you for your

commitment and support. I would like to recognize the contributions of Sarah Boatman, Jay Parker,

Peter Smailes and Cheryl Yaremko who retired as Board members. I am also pleased to welcome Orla

Cousineau, Emilian Groch, Lisa Pankratz and Andrew Simpson who joined as new directors this year.

Lastly, thank you to the UBC community and stakeholders for entrusting your portfolio assets with UBC

IMANT. It is important that we share the same long term vision and objective of delivering the

investment returns commensurate with each fund’s objectives, liability requirements and risk

parameters, while exercising the highest standard of prudence. We will continue striving to enhance the

risk/return characteristics of all investment portfolios, while strengthening our relationship with you

through regular reporting and other communications.

Martin Glynn

Chair of the IMANT Board of Directors


Message from the President

It is my pleasure to present UBC Investment Management Trust’s

2016 Annual Report on the University of British Columbia’s

investment portfolios for the fiscal year ended March 31, 2016. The

assets under IMANT’s management were $3.1 billion at March 31,

2016.

The Endowment Fund had a slightly negative return of ‐0.1% for the

year, net of external investment management fees, and was ahead of

the benchmark return of ‐0.5%. The Staff Pension Plan had a positive

return of 0.4% for the year, net of external investment management

fees, and was also ahead of its benchmark return of 0.1%. For the last

four years, the combined value added for the two portfolios over

policy benchmarks totaled $32 million.

2015/16 was a busy year for IMANT as several major projects were undertaken. A new custodian was

appointed for the University and Staff Pension Plan and transitioning of assets was successfully

completed in the beginning of July 2015. New commitments were made to alternative investment

managers to further transition the Endowment and Staff Pension Plan to their long‐term policy asset

mixes. IMANT also engaged a consultant during the year to review the investment structure of non‐

Canadian public equity investments. One of the recommendations of this study included consolidating

the US equity passive mid‐cap index into the US equity passive large‐cap index. For the Endowment

Fund, two‐thirds of the new 10% absolute return strategy allocation approved by the Board of

Governors in 2014 was funded.

Another project included a review of the Endowment Fund’s long‐term asset mix and return

expectations to confirm the sustainability of the current 3.5% spend rate. The results of the review were

presented to the Board of Governors and the current rate will be maintained for the upcoming fiscal

year. Further work on the Endowment’s asset mix is underway to determine whether any changes

should be made to the spend rate in the future.

IMANT continues to work with UBC’s Responsible Investing Policy Committee to incorporate ESG factors

to enhance our investment process and reporting. As part of the University’s new initiatives, IMANT will

be implementing the UBC Sustainable Future Fund which will invest in low‐carbon emission and high

ESG equity funds. This fund is expected to be available in 2016/17 and will provide donors another

investment option when contributing to the University.


I would like to thank the IMANT Board of Directors and staff for their commitment this past year in

achieving our investment and business objectives. I would also like to thank the UBC Board of

Governors, Staff Pension Plan Board and the greater University community for their support as we

continue our efforts in achieving the University’s investment objectives and stakeholders’ needs.

Jai Parihar, CFA, ICD.D

President and Chief Executive Officer


Overview of IMANT

UBC Investment Management Trust Inc. (IMANT), a wholly owned subsidiary of the University of British

Columbia (UBC), was established in 2003 in order to provide comprehensive portfolio management

services and related advice to UBC. IMANT's mission is to deliver the investment returns agreed upon

with our clients, commensurate with each fund's objectives, liability requirements and risk parameters,

while exercising the highest standard of prudence.

Governance Structure

The University, through its Board of Governors (BOG), is the Administrator of the investment portfolios

and is responsible for the overall management of the UBC Plans and funds. The BOG has established a

governance structure and delegated certain responsibilities and powers for investing the portfolios to

the IMANT Board of Directors.

The IMANT Board is comprised of ten directors ‐ seven unrelated members from the business

community and three UBC‐related members. Board members unrelated to UBC are appointed by the

UBC BOG on recommendation of the IMANT Board. UBC‐related directors, including those who are UBC

senior executives and representatives from the UBC BOG, are appointed directly by the UBC BOG. The

Board meets at least quarterly and provides oversight and governance to IMANT through its three

standing committees: Investment Committee, Audit Committee, and the Governance and Human

Resources Committee. The IMANT Board discharges its investment related responsibilities through its

Investment Committee, which consists of the entire Board. The responsibilities of the Investment

Committee include:

Formulating investment beliefs to guide the development of investment policies

Recommending investment policies for the UBC funds to the UBC BOG (with the exception of

the Staff Pension Plan), taking into account each fund’s objectives and risk tolerances. This

includes asset allocation with ranges, benchmarks, and the currency hedging policy

Ensuring the appropriateness of long term policy asset mixes relative to obligations/liabilities

and return objectives and advising the University if they are not aligned (with the exception of

the Staff Pension Plan)

Approving overall investment manager structures, asset class guidelines, and certain investment

transactions

Approving the manager selection process and manager appointment/termination

recommendations brought forward by the President and CEO

Monitoring and evaluating investment performance and cost effectiveness against objectives

and benchmarks

Overseeing the operations of IMANT


IMANT’s Responsibilities and Organizational Structure

Return requirements and risk preferences are established by the client (various groups at the University)

and factored into the investment policy recommendation. The investment policies for all portfolios are

recommended by IMANT’s President to the IMANT Board with the exception of the Staff Pension Plan

(SPP). All policies are reviewed by the IMANT Board and submitted to the UBC BOG for approval except

the SPP’s investment policy, which is prepared by the SPP Board with assistance from their investment

and pension consultants. The SPP investment policy is then recommended by the SPP Board to the UBC

BOG for approval.

After a fund’s investment policy is approved by the UBC BOG, IMANT is responsible for implementing

the investment policy asset mix. Rather than making direct investments, IMANT concentrates on

evaluating, hiring, monitoring, and replacing external investment managers as required. This “manager

of managers” approach is both best practice and the most cost effective for the size of assets under

management.

At March 31, 2016, IMANT managed $3.1 billion of UBC and UBC‐related portfolio assets. IMANT’s team

of investment professionals works under the direction of the President and CEO with oversight by the

IMANT Board of Directors.

IMANT BOARD OF DIRECTORS

President & CEO

Director, Manager Relations &

Investment Operations

Director, Quantitative Analysis & Strategic

Research

Associate, Analytics &

ResearchAnalyst

Administration Manager


The President’s responsibilities include:

Preparing the long term investment policies appropriate for the funds’ obligations and risk

tolerance for recommendation to the IMANT Board (for submission to the UBC BOG with the

exception of the Staff Pension Plan)

Implementing the long term policy asset mixes by recommending the overall investment

manager structure, asset class guidelines, and appointment/termination of external investment

managers

Evaluating the investment performance of portfolios to ensure efficient implementation of the

long term policy asset mix

Evaluating the appropriateness of the long term policy asset mixes relative to liabilities and

return objectives (with the exception of the Staff Pension Plan)

Monitoring and evaluating external investment managers

Reporting regularly to the IMANT Board, SPP Board and UBC BOG

Ensuring the effective operations of IMANT


Market Commentary The past fiscal year ended with asset classes generating mixed returns in Canadian dollar terms. The

collapse in crude oil prices to sub US$40 prices, a slowdown in China and overall pessimism in the global

economy contributed to instability in the financial markets. Furthermore, investors witnessed volatility in

interest rates as a result of diverging monetary policy actions by central banks and diverse views of

investors on the state of global economic growth. In the Canadian market, government bond yields

remained low as the Bank of Canada continued to hold the overnight policy rate at 0.5%.

Canadian equities declined ‐6.6% as commodity prices ended lower during the fiscal year despite a slight

rebound in the last quarter. Markets in the United States advanced 3.9% in Canadian dollar terms (1.4%

in US dollars) as signs of an economic recovery prompted the Federal Reserve to raise its benchmark

rates by a quarter percent for the first time in nearly a decade. International equity markets (EAFE)

declined ‐6.3% in Canadian dollars as central banks in Europe and Japan took aggressive measures to

stimulate the economy by pushing interest rates into negative territory. Concerns over economic growth

in China and Brazil resulted in poor returns for emerging market equities which was also hampered by

low commodity prices and a strengthening US dollar. The Canadian dollar depreciated against most

developed currencies during the year, resulting in currency gains for Canadian investors with foreign

currency investments including IMANT.

Note: Asset class returns shown are annualized returns. Currency returns shown are cumulative returns, not annualized, and are

based on Bank of Canada Noon Rates.

Asset Class Index 1 Year 4 Year 10 Year

Cash FTSE TMX 91 Day T‐Bills 0.5% 0.9% 1.7%

Universe Bonds FTSE TMX Universe Bond 0.8% 4.0% 5.2%

Long Bonds FTSE TMX Long Bond ‐0.6% 5.7% 6.9%

Real Return Bonds FTSE TMX Real Return Bond ‐2.2% 1.8% 4.9%

Canadian Equities S&P/TSX ‐6.6% 5.3% 4.0%

U.S. Equities S&P 500 3.9% 19.8% 8.1%

International Equities MSCI EAFE ‐6.3% 11.4% 2.9%

World Equities MSCI World ‐1.4% 15.3% 5.4%

Emerging Market Equities MSCI Emerging ‐10.2% 3.5% 4.1%

Hedge Fund of Funds HFRI FOF: Conservative ‐1.6% 9.5% 2.4%

CAD/USD Change ‐2.2% ‐23.0% ‐10.0%

CAD/EUR Change ‐7.8% ‐9.8% ‐4.1%

CAD/JPY Change ‐8.4% 5.0% ‐13.9%

CAD/GBP Change 1.0% ‐14.4% 8.8%

Returns to March 31, 2016 (in Canadian Dollars)


In alternative asset classes, demand for real estate and infrastructure investments remained strong,

reflecting the desire for additional yield by institutional investors. More attractive opportunities by

investors are being sought globally with mixed investment results. However, new investment activity by

private equity managers slowed as a result of recent volatility in global public equity markets.

Commercial real estate markets continued to provide investors stable income returns with some capital

appreciation. Given low capitalization rates, many real estate managers continue to be cautious in

making new acquisitions with some opting to construct new buildings for their portfolios. Similar to real

estate, both global and Canadian core infrastructure investments have become relatively expensive and

expected returns are lower due to greater competition with many large institutional investors.

In this difficult, low yielding market environment, IMANT remains focused on the University’s long term

objectives and continues to explore strategies to reduce risk and enhance net of fee returns across UBC

portfolios.


Funds under Management

At March 31, 2016, IMANT provided oversight on $3.1 billion of assets across four portfolios (listed in

the table below). Each portfolio has different risk and return objectives and varies in policy asset mix as

well as corresponding performance results. One of the portfolios is part of the University’s working

capital and is a shorter term fixed income portfolio. Others are balanced funds that contain traditional

public investments in bonds and equities, as well as alternative investments such as private equity, real

estate, infrastructure and absolute return strategies.

Note: Changes in market values reflect investment earnings as well as external cash flows made into and out of the portfolios.

There are an additional $144 million (2015: $142 million) of endowed assets at other foundations that support programs at UBC

that are not listed in the above table (see page 20‐21). IMANT reviews the performance results of these investments on behalf

of the University, but does not have discretion over these assets. During the year, total proceeds from the Brain Research

Centre Fund were transferred to the UBC Operating account and proceeds from the Special Working Capital Fund were

transferred to the Core Working Capital Fund.

Portfolios are constructed with multiple asset classes for risk diversification and to match assets to

liabilities. Client preferences, time horizon, and other factors such as investment management fees are

also considered during the asset allocation process.

Portfolio Mandate March 31, 2016 March 31, 2015

Endowment Fund Balanced 1,311.5 1,339.6

Staff Pension Plan Balanced 1,382.5 1,358.9

Supplemental Arrangement Plan Balanced 80.7 81.4

Core Working Capital Fund Fixed Income 315.3 307.4

Brain Research Centre Fund Immunized fixed income ‐ 11.3

Special Working Capital Fund Fixed Income ‐ 0.8

Total 3,089.9$ 3,099.4$

Market Value ($ millions)


Endowment Fund ($1,311 million)

The Endowment Fund is the result of the accumulation of over 100 years of philanthropy from generous

donors as well as prepaid endowment land lease sale proceeds. The Endowment Fund benefits over

3,000 specific areas throughout all faculties, helping to support learning, teaching, and research for the

current and future generations.

Long Term Policy Asset Mix

The Endowment funds are invested in financial assets to generate annual distributions for various

programs in accordance with the Statement of Policies and Procedures approved by the UBC Board of

Governors. The following table contains the actual and long term policy asset mix as of March 31, 2016.

The Endowment Fund continued its multi‐year transition to its long term investment policy weights

during the year. As mentioned in the President’s message, a review of the portfolio’s non‐Canadian

equity structure review recommended elimination of the US equity mid‐cap allocation and consolidation

into the US large‐cap allocation. New commitments of $12 million USD and $25 million USD were made

to two new value‐add US and global real estate funds respectively. Additionally, two thirds of the 10%

target allocation to absolute return strategies (ARS) was funded to quantitative ($40 million USD) and

fundamental ($45 million CAD) multi‐strategy managers. This new allocation was approved by UBC’s

Board of Governors in 2014.

Commitments to private equity, real estate and infrastructure managers are drawn over time depending

on their investment type and fund structure. The total commitment may not be fully drawn by the

manager and later stage funds provide greater distributions back to their investors. As a result, the

Endowment tends to make commitments that exceed its target policy mix to maintain a stable

Asset Class Policy Mix Actual Mix

Fixed Income 20.0% 20.7%

Cash and Net Currency Forwards 2.0% 1.2%

Universe Bonds 13.0% 13.5%

Mortgages 5.0% 6.0%

Equities 40.0% 46.4%

Canadian Equities 15.0% 19.1%

Global Equities 15.0% 18.1%

Emerging Market Equities 10.0% 9.2%

Alternatives 40.0% 32.9%

Private Equity 10.0% 6.9%

Real Estate 10.0% 7.5%

Infrastructure Equity 10.0% 11.5%

Absolute Return Strategy 10.0% 7.0%

Total 100.0% 100.0%


allocation to these asset classes. Combining actual investments and outstanding commitments, the

Endowment has 9.9% allocated to private equity, 12.6% allocated to real estate and 14.1% allocated to

infrastructure equity compared to policy weights of 10.0% each. Additional opportunities in private

equity, real estate and infrastructure funds are currently being reviewed by the investment team.

Distributions from private equity funds were strong and pacing of new investments continued to be

slow. As alternative investment commitments are drawn by investment managers, funds will be

provided from the overweight allocations in Canadian and global equities.

Below is a table summarizing major transactions completed and opportunities reviewed in 2015/2016.

Actual Return Compared to Required Return

For the Endowment Fund to be sustainable, it needs to maintain its inflation‐adjusted value to be able

to achieve intergenerational equity for its beneficiaries. Therefore, its long‐term returns must equal or

exceed its required rate of return. The Endowment’s current required return objective is equal to the

sum of the University’s spend rate of 3.5%, administrative expenses of 0.65%, and annual inflation (as

proxied by CPI, the Canadian Consumer Price Index).

*The Endowment’s required return is equal to Spend Rate + Expenses + Inflation (1 Year = 3.5% + 0.65% + 1.27% = 5.4%).

**Note the 10‐year required return is higher as the spend rate was 5.0% prior to Apr 2009 and administrative expenses were

0.9% prior to Apr 2011.

Note: Returns are reported net of external investment management fees starting January 2010. Returns stated are annualized

for periods greater than one year. Numbers may not add due to rounding.

Public Equities and Fixed Income

• consolidated US equity mid‐cap allocation

into primary US large‐cap allocation

• made redemptions from global equities to

fund absolute return strategy funds

Alternatives

• commited $12 million USD to a value‐add

U.S. real estate fund

• committed $25 million USD to a value‐add

global real estate fund

• funded $40 million USD into a quantitative

multi‐strategy absolute return strategy fund

• funded $45 million CAD into a fundamental

multi‐strategy absolute return strategy fund

1 Year 2 Year 3 Year 4 Year 10 Year**

Actual Return ‐0.1% 6.6% 9.5% 9.9% 5.1%

Required Return* 5.4% 5.4% 5.5% 5.5% 6.5%

‐5.5% 1.2% 4.0% 4.4% ‐1.4%


The Endowment Fund’s actual return for the one year ending March 31, 2016 was ‐0.1% which was

behind the required return objective for the Fund. However, on a 2‐year to 4‐year basis, this objective

was met. On a 10‐year basis, the Fund has not met the required return objective partly due to the 2008

financial crisis and higher spend rate requirement prior to 2009.

Actual Return Compared to Policy Benchmark

The Endowment Fund return is also compared to its policy benchmark portfolio return to gauge the

effectiveness of asset mix implementation. The policy benchmark portfolio serves as a proxy for a

passively invested portfolio and consists of a policy weighted average return of different asset class

benchmarks. For public investments, public market indices are used. For alternatives, where investable

indices are not available, other industry indices, combinations of relevant public indices and inflation

plus premium benchmarks are used. For the components of the Endowment investment policy portfolio

benchmark, please see page 32.



The Endowment Fund’s 1‐year return of ‐0.1% is 40 basis points ahead of the policy benchmark return of

‐0.5%. Over a four year period, the Fund exceeded its benchmark portfolio return by 0.2% and over a

ten year period, the Fund lagged by 0.2%.

1 Year 2 Year 3 Year 4 Year 10 Year

Actual Return ‐0.1% 6.6% 9.5% 9.9% 5.1%

Inv. Policy Benchmark ‐0.5% 6.5% 9.4% 9.7% 5.3%

Value Added 0.4% 0.1% 0.1% 0.2% ‐0.2%


2015/16 investment results (net of investment manager fees) across all asset classes outperformed their

respective benchmarks with the exception of private equity. At the total fund level, manager selection

added value; however, this was partially offset by asset allocation due to an overweight in public

equities. Stock selection by public equity managers particularly Canadian and emerging markets resulted

in strong outperformance over their respective equity benchmarks. The results in alternative

investments were also positive as investments in real estate and infrastructure equity performed well

against their CPI‐based benchmarks. Depressed oil prices hurt valuations for energy‐related private

companies and private equity overall underperformed against its benchmark. The new addition of

absolute return strategies was also a strong outperformer during the year.

The Endowment Fund’s currency hedging policy remains unchanged and includes hedging back to

Canadian dollars non‐equity foreign investment currency exposures (e.g. foreign real estate,

infrastructure and absolute return strategy investments). Currency hedging is managed passively by an

external manager through currency forward contracts on major developed market currencies (e.g. US

dollar, Euro, Pound Sterling, and Japanese Yen) with investment grade counterparties.

5.5%

5.8%

5.3%

2.8%

‐10.2%

‐1.4%

‐6.6%

2.1%

0.8%

‐0.5%

7.1%

9.4%

8.4%

‐0.3%

‐6.5%

‐0.6%

‐5.6%

2.6%

1.0%

‐0.1%

‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0%

Absolute Return Strategy

Infrastructure Equity

Real Estate

Private Equity

Emerging Market Equities

Global Equities

Canadian Equities

Mortgages

Universe Bonds

Total Fund

1 Year Performance to March 31, 2016

Endowment Fund Benchmark


Endowment Fund Exposures

IMANT collects information on portfolio holdings to analyze the risk exposures of the Endowment Fund

including company concentration risk, currency risk, credit rating risk and interest rate risk. This is

monitored by IMANT and the IMANT Board to ensure that the fund is within established risk

parameters. The information is aggregated from the underlying holdings in external manager pooled

funds. Exposures at March 31, 2016 are provided for information below.

Endowment Total Fund Exposure by Geographical Region

Canada50%

United States22%

Western Europe11%

Asia Pacific12%

South America

1%

Other4%


Endowment Public Equity Exposure Geography Sector Breakdown

Endowment Fixed Income Exposure Credit Rating Issuer Type

Credit Rating

AAA 13%

AA 28%

A 14%

BBB 13%

Mortgages (unrated) 32%

Sector

Financials 27%

Consumer Staples 15%

Industrials 10%

Consumer Discretionary 10%

Telecommunications 9%

Energy 7%

Technology 7%

Materials 5%

Healthcare 5%

Utilities 5%

Federal8%

Provincial27%

Corporate33%

Mortgages32%

Canada37%

United States32%

Asia Pacific18%

Western Europe5%

South America

3%

Other5%


Endowment Private Equity Exposure

Fund Type

Endowment Real Estate Exposure Geography Fund Type

Property Type

Property Type

Industrial 28%

Residential 26%

Office 20%

Retail 13%

Hospitality 6%

Mixed Use 5%

Other 2%

Primary Funds31%

Co‐Investment

Funds20%

Fund of Funds22%

Secondary Funds27%

Core RE54%

Value Added RE

29%

Opportunistic RE10%

Mezzanine Debt8%

Canada72%

USA 19%

Other9%


Endowment Infrastructure Equity Exposure Geography Revenue Type*

* Excludes publicly listed infrastructure equity fund

Industry Sector

Industry Sector

Transportation 30%

Electric 26%


Water 8%

Oil & Gas Services 7%

Engineering & Construction 6%

Healthcare Services 3%

Diversified/Other 10%

Contracted29%

GDP Driven32%

Regulated31%

Other8%

Canada20%

USA 25%

UK23%

Western Europe ex

UK11%

South America10%

Australia6%

Other5%


Responsible Investing

As part of implementing the University’s Endowment Responsible Investment (RI) Policy established in

2014, IMANT continued integrating environmental, social and governance (ESG) factors into the

investment process. In the past year, IMANT made significant progress in incorporating and applying all

facets of the RI Policy. This included:

1. Development of an ESG implementation plan

2. Assisting UBC in evaluating a fossil fuel divestment proposal

3. Helping the University in establishing the UBC Sustainable Future Fund

4. Engagement with external investment managers

5. Review of monitoring services on external managers’ equity portfolio ESG ratings

6. Collective engagement with other investors and organizations on various issues

Over the course of the year, IMANT staff developed an ESG implementation plan that was approved by

the IMANT Board of Directors. This plan lays out specific ESG related goals to be implemented by

IMANT by the end of the next fiscal year.

In response to a fossil fuel divestment initiative that was considered by the UBC Responsible Investment

Committee, IMANT prepared a detailed analysis of the Endowment Fund’s holdings. IMANT also

provided a comparison of the CO2 emissions of broadly used global equity indexes versus fossil fuel free

portfolios and portfolios that emphasize ESG matters. Ultimately, IMANT’s research resulted in the

recommendation to the University that a mix of low carbon and high ESG‐rated investments would serve

as the best combination for achieving the greatest reduction in CO2 emissions and improvements in ESG

outcomes.

An outcome of the fossil fuel divestment initiative was the establishment of the UBC Sustainable Future

Fund (SFF) – a fund with a goal of delivering required investment returns while improving ESG outcomes

and materially reducing CO2 emissions compared to the typical, passive equity market index methods of

investment. The SFF will be seeded with $10 million from the University and will allow donors to direct

their donations to either the existing Endowment Fund or the SFF. Donors that made contributions in

the past will have the opportunity to redirect their donations to the SFF. After the development of a

suitable investment policy for the SFF, IMANT staff set out to identify appropriate investment managers

and investment products that could be expected to meet the requirements of the SFF in fiscal year

2016/2017. The initial, small size of the fund placed an additional challenge on keeping the fund well

diversified and costs low. As a result, the IMANT team has established some in‐house investment

capabilities that are expected to lower investment costs for the SFF.

Investor engagement is one of the cornerstones of the UBC Responsible Investment Policy. IMANT has

been engaging investment managers with respect to their approach to formally integrate ESG in their

investment process. IMANT is pleased to see one of its largest managers responding by establishing a


dedicated ESG team within its organization and making considerable improvement in ESG integration

and disclosure.

The University’s commitment to responsible investing enabled IMANT’s investment team to purchase

commercially available ESG ratings of publicly listed companies. Access to this information allows for

the monitoring of portfolio holdings of investment managers and enables IMANT to drive the

conversation with respect to the consistency of manager portfolio holdings with the responsible

investment objectives of the University. ESG rating monitoring services are still in the early stages of

commercial availability and towards the end of the year, IMANT staff switched to a more cost effective

data provider that better integrated with IMANT’s existing risk management tools.

Another area of implementation of the UBC Responsible Investment Policy is IMANT’s collective

engagement alongside other investors and industry groups in advancing ESG implementation. Within

the Pension Investment Association of Canada (PIAC) Investor Stewardship Committee, IMANT had the

opportunity to cooperate with other investors on improving proxy voting and discussed approaches to

ESG implementation and disclosure. As a member of the Canadian Coalition of Good Governance

(CCGG), IMANT contributed to the efforts to improve corporate board governance. Additionally, IMANT

and University of Toronto Asset Management (UTAM) actively encouraged the CCGG to expand its

mandate beyond governance matters to include environmental and social considerations. IMANT is

pleased to see that the CCGG is currently working with members to expand the mandate of the

organization.


Endowments with Investment Restrictions ($144.4 million)

Endowments with Investment Restrictions refer to the endowments specified for UBC at the Vancouver

Foundation, UBC Foundation, and Jarislowsky Fraser Limited Investment Counsel. IMANT reviews their

respective performance results on behalf of the University but does not have discretion over these

investments. At March 31, 2016, they totaled $144.4 million.

UBC Foundation

Assets held at the UBC Foundation consist of a donation of publicly traded common shares for Wall

Financial Corporation, a Canadian real estate investment and development company. The assets were

valued at $90.7 million on March 31, 2016.

Vancouver Foundation

At March 31, 2016, there was $50.1 million of endowment assets at Vancouver Foundation which were

invested in Vancouver Foundation’s Consolidated Trust Fund, a balanced fund. The policy and actual

asset mixes are provided in the table below along with performance information.

Endowments Held At Mandate March 31, 2016 March 31, 2015

UBC Foundation Canadian Equity 90.7 87.1

Vancouver Foundation Balanced 50.1 51.2

Jarislowsky Fraser Balanced 3.7 3.8

Total 144.4$ 142.1$

Market Value ($ millions)

Asset Class Long Term

Policy MixActual Mix


Cash and Cash Equivalents 0.0% 0.0%


Mortgages 5.5% 3.1%







Total 100.0% 100.0%


Note: Returns are reported gross of investment management fees. Returns stated are annualized for periods greater than one

year. Numbers may not add due to rounding.

Jarislowsky Fraser (Merilees Chair)

Assets at Jarislowsky Fraser are invested in the JF Global Balanced Fund. The policy and actual asset

mixes are provided in the table below along with performance information.


year. Numbers may not add due to rounding.


Actual Return 1.4% 6.6% 9.9% 9.9% 6.0%


Value Added 1.9% 1.1% 1.8% 1.6% 0.8%

Asset Class Long Term

Policy MixActual Mix



Canadian Bonds 40.0% 33.5%



U.S. Equities 16.0% 21.6%

International Equities 16.0% 18.8%

Total 100.0% 100.0%


Actual Return 0.5% 7.7% 10.6% 11.0% 6.5%


Value Added 1.8% 2.3% 2.6% 3.0% 1.3%


Staff Pension Plan ($1,382 million)

Established January 1, 1972, the Staff Pension Plan (SPP) is a target benefit pension plan that provides

retirement, termination, and death benefits for eligible staff of UBC and related employers. The Plan is

funded by fixed contributions from Plan members and the University and serves over 10,000 UBC staff

employees and retirees. The University has delegated the day‐to‐day administration of the Plan to the

SPP Board. Assets are the property of the plan members and beneficiaries.

Long Term Policy Asset Mix

The SPP funds are invested to provide stable lifetime retirement pensions in accordance with the

Statement of Policies and Procedures approved by the UBC Staff Pension Plan Board and UBC Board of

Governors. The following table contains the actual and long term policy mix as of March 31, 2016.

Investments in real estate and private equity will continue to be made to achieve a diversified portfolio

by vintage year and investment type.

During the year, IMANT continued to implement the Staff Pension Plan’s transition plan to reach its

target policy weights. Notable changes during the year include the transition from separate Long Bond

and Mortgages mandates into a combined Long Term Fixed Income mandate based on the latest long

term policy asset mix. Similar to the Endowment Fund, a review of the portfolio’s non‐Canadian equity

structure review recommended elimination of the US equity mid‐cap allocation and consolidation into

the US large‐cap allocation.

New commitments of $12 million USD and $25 million USD were made to two new value‐add US and

global real estate funds respectively. Commitments to private equity, real estate and infrastructure



Cash and Net Currency Forwards 1.0% 1.6%

Long Term Fixed Income 29.0% 29.4%

Real Return Bonds 5.0% 3.4%

Infrastructure Debt 10.0% 10.1%




Emerging Market Equities 5.0% 4.3%


Private Equity 5.0% 3.8%


Infrastructure Equity 12.5% 12.0%


Total 100.0% 100.0%


managers are drawn over time depending on its investment type and fund structure. The total

commitment may not be fully drawn by the manager and later stage funds provide greater distributions

back to their investors. As a result, the Staff Pension Plan may commit more than its target policy mix to

maintain a stable allocation to these asset classes. Combining actual investments and outstanding

commitments, the Staff Pension Plan has 5.3% allocated to private equity compared to a policy weight

of 5%, 14.0% allocated to real estate compared to a policy weight of 12.5%, 15.0% allocated to

infrastructure equity compared to a policy weight of 12.5% and 10.4% allocated to infrastructure debt

compared to a policy weight of 10%. Additional value‐add real estate and infrastructure funds in the US

and global markets are being reviewed by the investment team. As alternative investment commitments

are drawn by investment managers, funds will be provided from the overweight allocations in Canadian

and global equities. The Plan continues to receive distributions from legacy hedge fund investments,

reducing the asset class weight to 0.1%.

Below is a table summarizing major transactions completed and opportunities reviewed in 2015/2016.

Actual Return Compared to Policy Benchmark



The SPP return is compared to its benchmark portfolio return to gauge the effectiveness of asset mix

implementation. For the year, the Staff Pension Plan returned 0.4% and was ahead of the policy

benchmark return of 0.1%. Over a four year period, the Plan outperformed the benchmark portfolio by

0.6% and over a ten year period, the Plan underperformed by ‐0.5%. For the components of the Staff

Pension Plan investment policy portfolio benchmark, please see page 32.

Public Equities and Fixed Income

• consolidated US equity mid‐cap allocation

into primary US large‐cap allocation

• transitioned mortgage and long bond funds

into a long duration bond fund

Alternatives

• commited $12 million USD to a value‐add

U.S. real estate fund

• committed $25 million USD to a value‐add

global real estate fund


Actual Return 0.4% 7.8% 8.7% 9.0% 5.2%

Inv. Policy Benchmark 0.1% 7.7% 8.1% 8.5% 5.7%

Value Added 0.3% 0.1% 0.6% 0.6% ‐0.5%


2015/16 investment results (net of investment manager fees) across all asset classes outperformed their

respective benchmarks with the exception of infrastructure debt and private equity. At the total fund

level, manager selection added value; however, this was partially offset by asset allocation due to an

overweight in public equities. Canadian, global and emerging market equity managers performed well

against their respective equity benchmarks. In alternative investments, real estate and infrastructure

equity managers also outperformed their CPI‐based benchmarks. This was partially offset by

underperformance by private equity managers as depressed oil prices hurt valuations for energy‐related

private companies.

The Staff Pension Plan follows the same currency hedging policy as the Endowment Fund in which only

non‐equity foreign investment currency exposures will be hedged back to Canadian dollars (e.g. foreign

real estate and infrastructure investments). Currency hedging is managed passively by an external

manager through currency forward contracts on major developed market currencies (e.g. US dollar,

Euro, Pound Sterling, and Japanese Yen) with investment grade counterparties.

5.8%

5.3%

2.8%

‐10.2%

‐1.4%

‐6.6%

3.6%

‐2.2%

‐0.3%

0.1%

9.5%

6.7%

‐2.7%

‐6.5%

‐0.2%

‐5.1%

1.9%

‐2.3%

0.0%

0.4%

‐15.0% ‐10.0% ‐5.0% 0.0% 5.0% 10.0% 15.0%

Infrastructure Equity

Real Estate

Private Equity

Emerging Market Equities

Global Equities

Canadian Equities

Infrastructure Debt

Real Return Bonds

Long Term Fixed Income

Total Fund

1 Year Performance to March 31, 2016

Staff Pension Plan Benchmark


Staff Pension Plan Risk Exposures

IMANT collects information on portfolio holdings to analyze the risk exposures of the Staff Pension Plan

including company concentration risk, currency risk, credit rating risk and interest rate risk. This is

monitored by IMANT and the IMANT Board to ensure the fund is within established risk parameters. The

information is aggregated from the underlying holdings in external manager pooled funds. Exposures at

March 31, 2016 are provided for information below.

Staff Pension Plan Total Fund Exposure by Geographical Region

Canada67%

United States16%

Western Europe8%

Asia Pacific7%

Other2%


Staff Pension Plan Public Equity Exposure Geographical Region Sector Breakdown

Staff Pension Plan Fixed Income Exposure By Credit Rating Issuer Type

Sector

Financials 29%

Consumer Staples 14%

Industrials 11%

Consumer Discretionary 10%


Energy 7%

Technology 6%

Materials 5%

Utilities 5%

Healthcare 4%

Credit Rating

AAA 18%

AA 23%

A 27%

BBB 10%

Other (mortgages/unrated) 22%

Federal13%

Provincial37%

Corporate46%

Mortgages4%

Canada44%

United States31%

Asia Pacific14%

Western Europe7%

Other6%


Staff Pension Plan Private Equity Exposure

Fund Type

Staff Pension Plan Real Estate Exposure Geography Fund Type

Property Type

Property Type

Residential 29%

Office 28%

Industrial 23%

Retail 12%

Hospitality 5%

Other 3%

Primary Funds21%

Co‐Invest‐ment Funds29%

Fund of Funds20%

Secondary Funds34%

Canada83%

USA 15%

Other2%

Core RE69%

Value Added RE

23%

Mezzanine Debt6%

Opportun‐istic RE2%


Staff Pension Plan Infrastructure Exposure Geography Revenue Type*

* Excludes publicly listed infrastructure equity fund

Industry Sector

Industry SectorElectric 32%

Transportation 26%


Oil & Gas Services 7%

Water 6%

Healthcare Services 6%

Engineering & Construction 3%

Diversified/Other 13%

Contracted32%

GDP Driven25%

Regulated33%

Other10%

Canada29%

USA 18%

UK18%

Western Europe ex

UK11%

South America13%

Australia6%

Other5%


Supplemental Arrangement ($80.7 million)

The Supplemental Arrangement, serving about 1,000 members, is a tax deferred benefits plan for UBC

employees whose annual contributions exceed the limit allowed under the Income Tax Act for

registered pension plans. The Plan is an extension of the UBC Faculty Pension Plan (FPP) and has a

policy asset mix consisting of 60% equities and 40% fixed income.

The policy asset mix and actual asset mix at March 31, 2016 are presented below.

Note: Returns are reported net of investment management fees starting April 2015. Returns stated are annualized for periods

greater than one year. Numbers may not add due to rounding.

For the year, the Supplemental Arrangement returned ‐1.5% and was ahead of the policy benchmark.

Over a four year period, the Fund returned 8.2% and was 0.1% ahead of the policy benchmark. There is

no value add expected for the Fund as it is invested in an index fund structure to match the UBC Faculty

Pension Plan asset mix to the best extent possible.




Bonds & Mortgages 40.0% 39.2%




Emerging Market Equities 3.6%

Real Estate (REITs) 5.0% 5.1%

Total 100.0% 100.0%


Actual Return ‐1.5% 6.4% 8.2% 8.2% 5.3%


Value Added 0.2% 0.1% 0.0% 0.1% 0.0%


Core Working Capital Fund ($315.3 million)

The Core Working Capital Fund (CWCF) consists of monies from the reserves of the University’s working

capital pool. These include proceeds from provincial operating grants, tuition fees, private, corporate

and government research grants, operating income, and funds for capital projects. The Fund is

structured as a passive fixed income portfolio of Government of Canada, Provincial and agency bonds

with a duration of approximately 2.5 years and a focus on capital preservation. Overall responsibility for

the University's cash management rests with UBC Treasury.

The following table contains the policy asset mix and actual asset mix at March 31, 2016.


year. Numbers may not add due to rounding. The policy benchmark consists of the combined return of 50% 2‐year Canada

bond and 50% 3‐year Canada Bond. Prior to Oct 2014, the benchmark was 50% 3‐year Canada bond and 50% 5‐year Canada

bond.

For the year, the CWCF returned 1.2% and was 0.1% ahead of the policy benchmark return of 1.1% (see

the above table). Duration slightly declined during the year relative to the benchmark as cash inflows

were invested over a shorter time horizon pending cash needs from UBC. Over a four year period, the

Fund returned 2.5% and was ahead of the benchmark.



Cash and Cash Equivalents 19.4%

Bonds 80.6%

Total 0.0% 100.0%

1 Year 2 Year 3 Year 4 Year

Actual Return 1.2% 2.6% 2.1% 2.5%

Inv. Policy Benchmark 1.1% 2.6% 2.2% 2.3%

Value Added 0.1% ‐0.0% ‐0.1% 0.2%


Investment Management Fees

Investment management fees charged by IMANT’s external investment managers can vary widely

depending on the type of investments in the portfolios, the mandate size and whether there is a

performance incentive fee. Below is a summary of total external investment management fees as a

percentage of assets for the Endowment and Staff Pension Plan. The figures include base and incentive

fees, some of which are invoiced and some of which are charged directly to the funds by investment

managers.

Note: Infrastructure debt is classified as an alternative asset in the table above.

Overall fees are slightly higher for the Endowment Fund as a result of a larger allocation to alternative

assets which typically charge higher base and incentive fees. Additionally, the Staff Pension Plan has an

allocation to infrastructure debt (included in the alternative asset category), which charged higher front

loaded fees in previous years and resulted in lower fees in later years.

External investment management fees for the Supplemental Arrangement and Core Working Capital are

5 basis points (0.05%) and 3 basis points (0.03%), respectively.

In addition to the above, UBC portfolios also pay for other expenses including IMANT’s portfolio

management fees, custody fees, transaction fees, performance measurement fees, and fund

administration expenses. IMANT’s portfolio management fees are charged to UBC portfolios on a cost

recovery basis. For the fiscal year, IMANT’s fees totaled $1.8 million, representing a cost of 6 basis points

(0.06%) to UBC portfolio assets.

Endowment Fund Staff Pension Plan

Traditional Assets

Base Fees 0.28% 0.21%

Incentive Fees 0.00% 0.00%

Subtotal 0.28% 0.21%

Alternative Assets

Base Fees 1.26% 0.88%

Incentive Fees 0.40% 0.26%

Subtotal 1.66% 1.14%

Overall 0.68% 0.53%


Endowment Fund and Staff Pension Plan Investment Policy

Benchmarks

The Endowment Fund and Staff Pension Plan investment policy benchmarks as of March 31, 2016 are provided below for reference. Endowment Fund

Asset Class Investment Policy Portfolio Benchmark Long Term Policy

Allocation

Fixed Income 20.0%

Cash & Cash Equivalents FTSE TMX Canada 91 Day T‐Bill Index 2.0%

Universe Bonds FTSE TMX Canada Universe Bond Index 13.0%

Mortgages FTSE TMX Canada Short Term Bond Index + 1.0% 5.0%

Equities 40.0%

Canadian Equities S&P/TSX Composite Index 15.0%

Global Equities MSCI World Net Index (CAD) 15.0%

Emerging Market Equities MSCI Emerging Markets Net Index (CAD) 10.0%

Alternatives 40.0%

Private Equity MSCI World Net Index (CAD) + 2% (lagged 3 months) 10.0%

Real Estate CPI + 4.0% 10.0%

Infrastructure CPI + 4.5% 10.0%

Absolute Return Strategy FTSE TMX CA 91 Day T‐Bills + 5% 10.0%

Total 100.0%

Staff Pension Plan

Asset Class Investment Policy Portfolio Benchmark Long Term Policy

Allocation

Fixed Income 45.0%

Cash & Cash Equivalents FTSE TMX Canada 91 Day T‐Bill Index 1.0%

Long Term Fixed Income FTSE TMX Canada Long Term Overall Bond Index 29.0%

Real Return Bonds FTSE TMX Canada Real Return Bond Index 5.0%

Infrastructure Debt FTSE TMX Canada Long Term Federal Bond Index + 1.9% 10.0%

Equities 25.0%

Canadian Equities S&P/TSX Composite Index 10.0%

Global Equities MSCI World Net Index (CAD) 10.0%

Emerging Market Equities MSCI Emerging Markets Net Index (CAD) 5.0%

Alternatives 30.0%

Private Equity MSCI World Net Index (CAD) + 2% (lagged 3 months) 5.0%

Real Estate CPI + 4.0% 12.5%

Infrastructure Equity CPI + 4.5% 12.5%

Absolute Return Strategy HFRI Fund of Funds: Conservative Index (CAD) 0.0%

Total 100.0%


Independent Auditor’s Report

INDEPENDENT AUDITORS' REPORT

To the Directors, UBC Investment Management Trust Incorporated

Report on the Financial Statements

We have audited the accompanying financial statements of UBC Investment Management Trust Incorporated, which comprise the balance sheet as at 31 March 2016, and the statements of retained earnings (deficit), earnings and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for private enterprises, 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. Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the management's preparation and fair presentation of the financial statements 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 management's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.


INDEPENDENT AUDITORS' REPORT - Continued

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of UBC Investment Management Trust Incorporated as at 31 March 2016, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for private enterprises.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada 3 June 2016

The accompanying notes are an integral part of these financial statements.


Financial Statements and Notes

UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDBalance Sheet

31 March 2016

2016 2015

Assets

Current Cash $ 192,849 $ 157,101 Accounts receivable 1,913 25,565 Prepaid expenses 30,656 29,272 225,418 211,938 Equipment and leasehold improvements (Note 3) 34,050 39,265 Security deposit 5,941 5,941 $ 265,409 $ 257,144

Liabilities Current Accounts payable and accrued liabilities (Note 4) $ 334,878 $ 324,065 Deferred lease inducement (Note 6) 284 3,692 335,162 327,757 Commitments (Note 7)

Shareholder's Equity (Deficit) Share capital (Note 8) 100 100 Retained earnings (deficit) (69,853) (70,713) (69,753) (70,613) $ 265,409 $ 257,144

APPROVED BY THE DIRECTORS: Director

Director



UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Retained Earnings (Deficit)

For the year ended 31 March 2016

2016 2015 Balance - beginning of year $ (70,713) $ (101,625) Net earnings for the year 860 30,912 Balance - end of year $ (69,853) $ (70,713)



UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Earnings


2016 2015 Revenue Portfolio management fees (Note 5) $ 1,746,447 $ 1,635,293 Expenses Salaries and related benefits 1,081,693 1,065,335 Directors fees and expenses 196,414 180,147 Office lease 114,096 111,474 Computer support and licenses 92,080 76,835 Travel, conferences, and seminars 64,665 83,270 Executive search 64,052 - Consulting and research 39,926 13,022 Office 26,136 24,457 Audit and accounting 18,725 14,375 Telephone 12,259 10,242 Dues and memberships 10,418 3,270 Insurance 5,000 - Legal 4,919 8,477 Advertising and promotion 2,314 1,416 Bank charges and interest 2,268 1,373 Repairs and maintenance - 180 Amortization of equipment and leasehold improvements 10,622 10,508 1,745,587 1,604,381 Net earnings for the year $ 860 $ 30,912



UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDStatement of Cash Flows


2016 2015 Cash provided by (used in): Operating activities Net earnings for the year $ 860 $ 30,912 Items not involving cash

Amortization of equipment and leasehold improvements 10,622 10,508 Amortization of deferred lease inducement (3,409) (3,409) 8,073 38,011 Changes in non-cash working capital balances

Accounts receivable 23,652 (17,236) Prepaid expenses (1,384) (4,231) Accounts payable and accrued liabilities 10,813 9,173 41,154 25,717 Investing activity

Purchase of equipment and leasehold improvements, net (5,406) (10,531) Financing activity Advances to shareholder - (56,598) Net increase (decrease) in cash 35,748 (41,412) Cash - beginning of year 157,101 198,513 Cash - end of year $ 192,849 $ 157,101


UBC INVESTMENT MANAGEMENT TRUST INCORPORATEDNotes to the Financial Statements


1. Incorporation

The Company was incorporated on 28 March 2003 under the provisions of the Company Act of British Columbia and commenced operations on that date. The Company is a wholly owned subsidiary of the University of British Columbia (UBC). The Company manages four of UBC’s investment funds and the Company earns a portfolio management fee for its services.

2. Summary of significant accounting policies

These financial statements are prepared in accordance with Canadian accounting standards for private enterprises. The significant policies are detailed as follows:

(a) Financial instruments (i) Measurement of financial instruments

The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm’s length transactions. The Company subsequently measures all of its financial assets and financial liabilities at amortized cost, except for investments in equity instruments that are quoted in an active market, which are measured at fair value. Changes in fair value are recognized in net income. Financial assets measured at amortized cost include cash and accounts receivable. Financial liabilities measured at amortized cost include accounts payable and accrued liabilities.

(ii) Impairment Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income.



2. Summary of significant accounting policies - Continued

(a) Financial instruments - Continued


(iii) Transaction costs The Company recognizes its transaction costs in net income in the period incurred.However, financial instruments that will not be subsequently measured at fair valueare adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

(b) Revenue recognition Fees for services are recognized as revenue when the services are rendered and billed. (c) Equipment

Equipment is recorded at cost and is being amortized over its estimated useful life on thefollowing basis:

Furniture and fixtures 20% Declining balance Computer equipment 30% Declining balance

(d) Leasehold improvements

Leasehold improvements are recorded at cost and are amortized on a straight-line basis over six years.

(e) Impairment of long-lived assets

The Company tests for impairment whenever events or changes in circumstances indicatethat the carrying amount of the assets may not be recoverable. Recoverability is assessed bycomparing the carrying amount to the projected undiscounted future net cash flows thelong-lived assets are expected to generate through their direct use and eventual disposition.When a test for impairment indicates that the carrying amount of an asset is not recoverable,an impairment loss is recognized to the extent carrying value exceeds its fair value.



2. Summary of significant accounting policies - Continued


(f) Income taxes

The Company follows the future income taxes payable method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated incometaxes payable for the current year. Future income tax assets and liabilities are recognized forthe estimated tax consequences attributable to temporary differences between the amounts reported in the financial statements and their respective tax basis, using enacted income taxrates. The effect of a change in income tax rates on future income tax assets and liabilities isrecognized in operations in the period that the rate becomes substantially enacted.

(g) Use of estimates The preparation of financial statements in accordance with Canadian accounting standards

for private enterprises requires management to make estimates and assumptions that affectthe reported amounts of assets, liabilities and revenues and expenses and disclosure of contingent assets and liabilities at the balance sheet date. Accounts subject to significantestimates include amortization of equipment and accrued liabilities. Management believesthat the estimates utilized in preparing the financial statements are prudent and reasonable, however, actual results could differ from those estimates.

3. Equipment and leasehold improvements

CostAccumulatedAmortization

2016 Net

2015 Net

Furniture and fixtures $ 100,104 $ 83,787 $ 16,317 $ 16,448 Computer equipment 67,488 58,906 8,582 9,977 Leasehold improvements 73,606 64,455 9,151 12,840 $ 241,198 $ 207,148 $ 34,050 $ 39,265

4. Accounts payable and accrued liabilities

2016 2015

Accounts payable and accrued liabilities $ 323,147 $ 310,046 GST payable 11,731 14,018 $ 334,878 $ 324,065




5. Shareholder transactions

(a) During the year the Company entered into the following transactions with UBC:

2016 2015 Portfolio management fees $ 1,746,447 $ 1,635,293 Operating expenses $ 3,107 $ 11,356 Interest expense $ - $ 696

These transactions were in the normal course of operations and were measured at the

exchange value which represented the amount of consideration established and agreed to by the related parties.

(b) Included in accounts payable are amounts due to:

2016 2015 UBC $ 1,269 $ 14,541

6. Deferred lease inducement

2016 2015 Office lease $ 284 $ 3,692

The Company received a lease inducement of $20,450 as part of its office lease agreement. This amount has been recorded as a deferred lease inducement and is being amortized as a reduction of rent expense on a straight-line basis over the term of the agreement. The deferred portion of the lease inducement will be amortized into income as follows:

2017 $ 284




7. Commitments The Company is committed to the rental of office premises which expires November 2021. The minimum annual lease payments are as follows:

2017 $ 64,987 2018 65,685 2019 66,440 2020 67,950 2021 67,950 Subsequent years 45,300 $ 378,312

8. Share capital

Authorized

100,000 common shares without par value

Issued

2016 2015 100 common shares $ 100 $ 100

9. Financial instruments

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company’s risk exposure and concentrations at the balance sheet date, 31 March 2016.

(a) Liquidity risk Liquidity risk is the risk that a company will encounter difficulty in meeting obligations associated with financial liabilities. The Company is exposed to liquidity risk mainly inrespect of its accounts payable and accrued liabilities. The Company manages liquidity riskby maintaining adequate cash. There has been no change to this risk exposure from 2015.


(b) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss forthe other party by failing to discharge an obligation. The Company’s main credit risk relatesto its cash and accounts receivable. Cash is in place with a major financial institution. The Company provides credit to its customers in the normal course of the operations.

(c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risk comprises three types of risk:currency risk, interest rate risk and other price risk. The Company is mainly exposed tointerest rate risk.

(d) Interest rate risk

Interest rate risk is the risk that the fair market value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company isexposed to interest rate risk on its floating interest rate financial instruments. Floating-rate instruments subject the Company to a cash flow risk.

10. Non-capital losses

The Company has non-capital losses carried forward of $54,176 which are available to reduce the taxable income of future years. If not utilized, these non-capital losses will expire as follows:

2032 $ 30,050 2033 3,401 2034 10,032 2035 8,335 2036 2,358

$ 54,176


2015‐2016 IMANT Board of Directors

Ken Bancroft Corporate Director Orla Cousineau Executive Director, Pensions, UBC Staff and Faculty Pension Plans Diane Fulton Vice President, Chief Investment Officer Vancouver Foundation Martin Glynn Corporate Director & Board Chair Emilian Groch Corporate Director

Paul Haggis Corporate Director Brian Kenning Corporate Director & Vice Chair Alice Laberge Corporate Director, UBC Board of Governors Lisa Pankratz Corporate Director Andrew Simpson Vice President, UBC Finance

Standing (L‐R): Paul Haggis, Orla Cousineau, Ken Bancroft, Andrew Simpson, Diane Fulton, Emilian Groch Sitting (L‐R): Alice Laberge, Brian Kenning (Vice Chair), Martin Glynn (Chair), Lisa Pankratz


Investment Managers by Mandate

As at March 31, 2016

Manager Mandate(s)

Market Value

($ millions)

Canadian Fixed Income & Mortgages 1,062.2$

Cash and Cash Equivalents N/A

ACM Advisors Commerical Mortgages

Addenda Capital Commerical Mortgages

Manulife Asset Management Long Bond

Phillips, Hager & North Investment Management Universe Bond, Mortgages, Long Bond

State Street Global Advisors Universe Bond Index, Long Bond Index, Real

Return Bond Index

Currency Hedging N/A

State Street Global Advisors Passive

Infrastructure Debt 139.1

Fiera Capital Corporation Infrastructure Debt ‐ Canadian

Stonebridge Financial Corporation Infrastructure Debt ‐ Canadian

Canadian Equity 425.5

Beutel, Goodman & Company Ltd. Canadian Dividend

BlackRock Asset Management Enhanced Canadian Index

Leith Wheeler Investment Counsel Ltd. Canadian Value

Global Equity (including Emerging Markets) 608.7

Acadian Asset Management Emerging Markets Managed Volatility

Leith Wheeler (subadvised by Sprucegrove Investment

Management)

International Value

State Street Global Advisors US Index

TD Asset Management Global Low Volatility

Vontobel Asset Management Emerging Markets Growth at a Reasonable

Price

Private Equity 142.7

Commonfund Fund of funds ‐ Global

Fulcrum Capital Partners Buyout/Mezzanine ‐ Global

GE Asset Management Buyout ‐ Global

Hamilton Lane Co‐investment ‐ Global

Azimuth Capital Management Energy ‐ North America

Lexington Capital Secondaries ‐ Global

MatlinPatterson Global Advisors Distressed ‐ Global

NB Alternatives Secondaries ‐ Global

Northleaf Capital Fund of funds ‐ Global

Pantheon Ventures Fund of funds ‐ Global

The Carlyle Group Buyout ‐ US and Asia


Manager Mandate(s)

Market Value

($ millions)

Real Estate 220.3

Aetos Capital Real Estate ‐ Asia

British Columbia Investment Management Corporation

(bcIMC)

Real Estate ‐ Canada

Bentall Kennedy Real Estate ‐ Canada

Brookfield Asset Management Real Estate ‐ US, Global

Fiera Properties Ltd. Real Estate ‐ Canada

GPM Investment Management Real Estate ‐ Canada

LaSalle Investment Management Real Estate ‐ Canada, Asia, Japan

Second City Real Estate Real Estate ‐ US

Starwood Capital Real Estate ‐ US, Asia, Europe

Woodbourne Canada Management Real Estate ‐ Canada

Infrastructure Equity 317.1

Direct co‐investments (administered by Kindle Capital) Infrastructure co‐investments ‐ Worldwide

British Columbia Investment Management Corporation

(bcIMC)

Infrastructure Equity ‐ Global

Fengate Real Asset Investments Infrastructure Equity ‐ Canada (public‐private

partnerships)

Macquarie Infrastructure Partners Infrastructure Equity ‐ North America

Deutsche Asset Management Infrastructure Equity ‐ Europe

IFM Investors Infrastructure Equity ‐ Global

RARE Infrastructure Infrastructure Equity ‐ Global (listed equity)

Absolute Return Strategy 93.7

AQR Capital Management Quantitative Multi‐Strategy

BlackRock Alternative Advisors Hedge Fund of Funds (in wind up)

Blackstone Alternative Asset Management Mortgage Credit (in wind up)

Diversified Global Asset Management Hedge Fund of Funds (in redemption)

Standard Life Investments Fundamental Multi‐Strategy

Balanced Funds 80.7

BlackRock Asset Management Passive Index

Total Assets Under Management 3,089.9$

Endowments with Investment Restrictions 144.4

UBC Foundation Canadian Equity

Vancouver Foundation Balanced

Jarislowsky Fraser Balanced

Grand Total 3,234.3$


Advisors and Service Providers

Auditor Rolfe, Benson LLP Chartered Accountants Custodians/Administrators Northern Trust, Sun Life Financial Legal Counsel Bull, Housser & Tupper LLP Performance Consultant Northern Trust

UBC Investment Management Trust Inc. 1055 West Hastings Street, Suite 1188

Vancouver, BC V6E 2E9 Canada

Tel: +1 (604) 681‐7858 Fax: +1 (604) 681‐7895 www.ubcimant.ca

Documents

2016 IMANT Annual Report - Final Draft with cover