Annual General Meeting
November 1, 2012
Prepared by Aon Hewitt Consulting
Presentation to U of S Non-Academic Pension Plan
Aon Hewitt and the University of Saskatchewan
 Two decade relationship
 Services provided for the Non-Academic Plan
– Performance Measurement
– Performance Reporting—How are we doing?
– Investment Manager Reporting and Evaluation—How are our Managers doing?
– Investment Policy Reviews—What should we invest in?
– General Investment Research—What should we know ?
– Anything the Committee asks for!
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
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Market Update
 Globally investors were largely risk-averse early in the year. The tepid GDP growth in the
United States weighed heavily on investors, as did the poor growth in the Eurozone and
slowing growth in China.
 The U.S. Fed announced QE3 and the Euro Bank announced a bond buying program.
 Both programs are intended to keep borrowing rates low, restore investors confidence
and help alleviate the unemployment situations in the U.S. and the Eurozone.
Contribution to Global GDP Growth*
1600
1400
Billions of international $
1200
1000
800
600
400
200
0
-200
-400
-600
1992
1994
1996
1998
2000
2002
Euro Zone
*Nominal GDP (based on PPP exchange rates). Estimates Start After 2011.
Source : International Monetary Fund, Aon Hewitt.
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
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2004
China
2006
2008
United States
2010
2012
2014
Market Update
 The chart below shows the uncertainty created by the sovereign debt of countries such
as Greece, Portugal and Spain. For the past several quarters, the borrowing rates of
Greece and Portugal have exceeded even those of Brazil’s.
 The uncertainty of some countries had a positive impact on the bonds of more stable
countries such as Canada. When paired with an expansionist monetary policy, the desire
for stability creates an environment with low short- and long-term interest rates.
10-year bonds yields
45%
45%
40%
40%
35%
35%
30%
30%
25%
25%
20%
20%
15%
15%
10%
10%
C hina
US
Germany
France
Italy
C anada
Portugal
Spain
Greece
3
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Brazil
Source: Bloomberg, Aon Hewitt.
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
Sep-06
0%
Jul-06
0%
Apr-06
5%
Dec-05
5%
Market Update
 Stock markets generated strong returns in the third quarter, despite economic news
that cast some doubt on the sustainability of the recovery. Overall in the first nine
months of 2012 markets were positive
 The problems in Europe continued to slowly spread, with the Euro Bank’s actions
buying more time to address the issues.
Financial Markets Performance Review
Financial Markets Performance Review
3-Month Period Ending September 30, 2012
DEX 91-Day T-Bill
9-Month Period Ending September 30, 2012
Day T-Bill
0.2%
DEX Universe Bond
1.2%
DEX Long Term Bond
S&P/TSX Composite
4.0%
6.2%
2.3%
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
8.2%
ed (CAD)
S&P GSCI Light Energy (CAD)
0%
9.2%
dividend)
1.8%
HFR Funds of Funds Composite (USD)
6.4%
dividend)
3.0%
MSCI Emerging Markets (CAD) (Net dividend)
12.5%
dividend)
3.2%
MSCI World (CAD) (Net dividend)
5.4%
00 (CAD)
2.6%
MSCI EAFE (CAD) (Net dividend)
5.0%
omposite
7.0%
FTSE EPRA/NAREIT Developed (CAD)
3.3%
erm Bond
1.9%
S&P 500 (CAD)
0.7%
rse Bond
5%
10%
15%
4
17.5%
gy (CAD)
3.1%
ite (USD)
3.3%
0%
5%
10%
15%
20%
Current Plan Structure
Pure Specialist Structure
Total
Fund
Asset Class
(%)
Burgundy
Canadian
Equity
(% of TF)
Canadian Equities
Global Equities
Total Equities
Real Estate
Bonds
Short-Term Investments
Total Fixed Income
Total Fund
20.0
40.0
60.0
5.0
33.0
2.0
35.0
100.0
10.0
10.0
10.0
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CC&L
Canadian
Equity
(% of TF)
Harding
Global
Equity
(% of TF)
10.0
10.0
10.0
20.0
20.0
20.0
5
Sprucegrove
Global
Equity
(% of TF)
20.0
20.0
20.0
PH&N
Fixed
Income
(% of TF)
Greystone
Real
Estate
(% of TF)
33.0
2.0
35.0
35.0
5.0
5.0
Plan Structure By Asset Class
Asset Class
December 31, 2011
Market Value
$000s
Percent
Equities
Canadian equities
U.S. equities
Non-North American equitie
Global equities
Total Foreign Equities
Total Equities
Real Estate
Fixed Income
Bonds
Mortgages
Short-term investments
Total Fixed Income
Total Fund
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
September 30, 2012
Market Value
$000s
Percent
Policy Asset Mix %
Min Benchmark Max
39,897
39,795
32,531
15,475
87,801
18.0
17.9
14.7
7.0
39.5
44,743
0
0
88,672
88,672
18.9
0.0
0.0
37.5
37.5
10.0
127,698
18,758
57.5
8.1
133,414
19,323
65,505
5,143
6,024
76,672
222,008
29.5
2.3
2.7
34.5
100.0
70,048
8,450
5,242
83,740
236,477
6
30.0
20.0
20.0
20.0
0.0
0.0
40.0
40.0
56.4
8.2
40.0
0.0
60.0
5.0
70.0
10.0
29.6
3.6
2.2
35.4
100.0
25.0
33.0
50.0
0.0
2.0
35.0
100.0
15.0
60.0
60.0
Plan Structure By Manager
Manager
December 31, 2011
Market Value
$000s
Percent
Canadian Equities
Burgundy
CC&L
0.0
0.0
0.0
22,661
22,497
45,159
9.6
9.5
19.1
5.0
5.0
10.0
10.0
15.0
15.0
0
0
15,475
15,475
0.0
0.0
7.0
7.0
44,277
45,671
0
89,948
18.7
19.3
0.0
38.0
10.0
10.0
20.0
20.0
0.0
40.0
30.0
30.0
70,910
117,960
188,870
31.9
53.1
85.1
1
82,022
82,023
0.0
34.7
34.7
25.0
35.0
35.0
60.0
17,639
7.9
19,323
8.2
0.0
5.0
10.0
25
0.0
25
0.0
222,008
100.0
236,477
100.0
Real Estate
Greystone
Operating Fund
Total Fund
Policy Asset Mix %
Min
Target
Max
0
0
0
Global Equities
Harding
Sprucegrove
Sceptre
Balanced / Fixed Income
Jarislowsky Frase
PH&N
September 30, 2012
Market Value
$000s
Percent
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100.0
Total Plan Investment Performance—
Periods Ending September 30
Benchmark
Total Fund
Total Value Added
Total Fund Real Return
Annual Returns %
2011
2010
2009
4-Year Annualized Returns %
2012
2011
2010
2009
10-Years
4-Year
Std Dev %
Quarter
2012
3.0
2.9
-0.2
10.5
11.1
0.6
1.2
-0.1
-1.3
6.1
5.7
-0.4
3.6
5.6
2.0
5.3
5.5
0.2
0.2
-0.1
-0.3
1.8
1.5
-0.2
2.1
1.6
-0.5
6.2
6.0
-0.2
7.7
7.8
1.2
2.5
9.8
-3.2
3.7
6.5
4.1
-2.0
-0.2
0.2
4.0
7.6
Blue numbers indicate positive value added.
Benchmark consists of: 20% S&P/TSX, 40% MSCI World ex-Cda, 5% IPD, 33% DEX UBI, 2% 91-Day T-Bills from February 2012;
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Total Plan Investment Performance—Key Drivers
 Year to Date: Total Fund 6.9% to 6.4% Benchmark
 One-Year Performance: Total Fund 11.1% to 10.5% Benchmark
– All markets strong over the year
– Above index results in all asset classes over the last 12 months
• In Canadian equities – Recent value added by Burgundy & CC&L offset earlier JF
and PH&N underperformance
• In Global equities – Recent value added by Harding & Sprucegrove offset
AllianceBernstein underperformance earlier in the year
 Four-Year Performance: Total Fund 5.5% to 5.3% Benchmark
– Benchmark positive due to most recent year – all major equity markets were positive
over four years, although EAFE was just above zero (0.4%)
– Bonds up 8.4% (annualized) over period
– Real Estate up 7.9% (annualized) over period
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Summary Returns—Periods Ending September 30
Year-to-Date
Quartile
Return %
Year
Quartile
Return %
4-Year
Quartile
Return %
Total Fund
Benchmark
6.9
6.4
2
M
11.1
10.5
1
2
5.5
5.3
3
3
PH&N - Balanced Fund / Fixed Income
Benchmark
5.4
5.1
4
4
8.9
8.8
4
4
5.4
5.1
3
4
Canadian Equities
Burgundy
CC&L
S&P/TSX Capped Composite
5.5
na
na
5.4
3
na
na
3
10.9
na
na
9.2
3
na
na
4
3.3
na
na
4.2
3
na
na
M
10.3
na
na
9.4
2
na
na
3
15.6
na
na
15.2
2
na
na
3
0.5
na
na
3.0
4
na
na
3
Bonds
PH&N
DEX Universe Bonds
3.8
4.4
3.3
M
1
4
6.0
6.8
5.5
2
1
3
8.4
9.1
7.4
2
1
4
Real Estate
Greystone
Investment Property Datab ank
9.5
7.4
na
na
15.5
14.8
na
na
7.9
7.5
na
na
Mortgages
PH&N
DEX Mortgages
2.7
3.5
na
na
3.3
5.4
na
na
6.3
6.8
na
na
Global Equities
Harding Lovener
Sprucegrove
MSCI World (ex-Canada)
Blue numbers indicate manager equaled or exceeded the index.
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Fee Summary
Account
Fee Schedule
Total
Market Value
Percentage of
Portfolio
Estimated Annual Average Retail Mutal
Fee (%)
Fund Fee (%)
$236,477,178
100.0%
0.506%
1.750%
PH&N
0.500%
0.300%
0.200%
0.150%
0.100%
of the first $5 Million
of the next $15 Million
of the next $100 Million
of the next $380 Million
of the balance
$82,021,967
34.7%
0.237%
1.500%
Greystone
1.000%
0.800%
0.600%
0.500%
of the first $10 Million
of the next $25 Million
of the next $65 Million
of the balance
$19,322,614
8.2%
0.904%
N/A
Burgundy
1.250% of the first $2 Million
0.750% of the next $3 Million
0.500% of the balance
$22,661,359
9.6%
0.599%
2.000%
CC&L
0.500% of the first $5 Million
0.400% of the next $20 Million
0.300% of the balance
$22,497,386
9.5%
0.422%
2.000%
Harding
1.000% of the first $20 Million
0.500% of the next $80 Million
0.450% of the balance
$44,276,541
18.7%
0.726%
2.600%
Sprucegrove
0.900%
0.650%
0.550%
0.500%
0.250%
0.200%
$45,671,158
19.3%
0.604%
2.600%
of the first $5 Million
of the next $10 Million
of the next $25 Million
of the next $35 Million
of the next $225 Million
of the balance
Operating Account
08700/Non-Academic/003/JAk.ppt-336-J9-29575 Nov 2012
$26,153
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Non-Academic Pension Plan AGM
Questions ?
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