Board of Governors - APPENDIX III, Annex 9 - September 23, 1999

Report of the Investment Committee

This report outlines the recent activities of the Investment Committee.

Performance

The portfolio returns for various periods were as follows:

Investment Returns (%)

Asset Class	6 months to June 30, 1999	Annual June 30, 1999	Annual June 30, 1998	Annual, June 30, 1997
Bonds	(0.5)%	4.4%	11.0%	14.3%
Canadian Equities	6.9	(3.6)	14.0	27.8
U.S. Equities	8.7	24.0	38.6	36.0
Non North American Equities	9.9	7.0	16.9	8.3
Total Return	4.7%	6.8%	17.9%	22.3%
Return of Median fund	4.0%	3.6%	14.3%	23.1%

As indicated above, except for 1997, the performance of the University's portfolio exceeded the performance of the median fund in the Frank Russell universe of approximately 68 Canadian portfolios. Over the 5 year period ending June 30, 1999, the annualized performance of the portfolio was 15.2% in comparison to the median return of 13.6% in the Frank Russell universe. This represents first quartile performance for our portfolio.

For additional information, please refer to the attached pages which show amounts held by each Investment manager at June 30, 1999, the annual and annualized returns by manager over the 5 years ending June 30, 1999 and the returns in relation to other Canadian balanced portfolios in the Frank Russell Canada universe.

Returns in relation to the objective of a 5% real rate of return

One of the Investment Committee's objectives is to earn a 5% real rate of return over the long term. (i.e. to earn 5% over the rate of inflation, as measured by the Consumer Price Index). Inflation has averaged 1.7% per year for the past 5 years.

For the 5 years ending June 30, 1999, the annualized real rate of return for the portfolio was 13.5%, which consisted of a nominal (actual) annualized return of 15.2% less 1.7% for inflation. For the four years ending June 30, 1999, the annualized real rate of return was 13.7%, consisting of a nominal return of 15.1% less inflation of 1.4%. These returns exceed the Investment Committee's performance objective of a real rate of return of 5%.

Book and Market Value of the Portfolio

As at June 30, 1999, the operating and endowment portfolio had a book value of $146,358,000 and a market value of $173,325,000, as follows:

	Book Value ($000's)	Market Value ($000's)	Actual Asset Mix	Target Asset Mix
Bonds	$67,254	$66,703	38.5%	40.0%
Canadian Equities	39,028	45,084	26.0	24.0
U.S. Equities	23,377	39,382	22.7	23.0
Non North American Equities	16,699	22,156	12.8	13.0
Total	$146,358	$173,325	100.0%	100.0%

At June 30, 1999, the portfolio consisted of the following components:

Portion related to Endowed funds $ 88,625,000

Portion related to Operating and non-endowed funds 84,700,000

Total market value of portfolio $173,325,000

Manager Review

At the meeting of August 26th, 1999, the Investment Committee interviewed Greydanus (Canadian bond manager) and continues to be pleased with this manager's performance. The performance of Laketon (Canadian equities) is of concern to the Committee and as a result, the Committee will interview this manager at its next meeting on November 26^th, 1999.

Investments at Foundation Western and UWO

The University's total endowments are administered by Foundation Western (approximately $49 million) and by the University's Investment Committee (approximately $88 million). Each year, we combine the portfolios and the investment returns to report Western's total endowment activity for the University Investment Survey, prepared by the Canadian Association of University Business Officers.

In order to improve the communication of information between the Investment Committees of Foundation Western and the University, with the intent of improving the overall investment process at the University of Western Ontario, the following recommendations were approved by the University's Investment Committee:

That, subject to the approval of the Board of Governors of the University and the Board of Directors of Foundation Western,

the composition of the Investment Committee of the University of Western Ontario be amended by adding:

A member of the Investment Committee of Foundation Western, appointed thereby, may attend all meeting as an observer, with full floor privileges but to be excluded from moving/seconding motions and voting.

and that

the composition of the Investment Committee of Foundation Western be amended by adding:

A member of the Investment Committee of the University of Western Ontario, appointed thereby, may attend allmeetings as an Observer, with full floor privileges but to be excluded from moving/seconding motions and voting.

and that

these arrangements be reviewed by each organizations after 12 months time.

These recommendations will be presented to the Investment Committee of Foundation Western on September 13^th, 1999.

Schedules cited in this report are not available in electronic form. They may be obtained on request from the University Secretariat.