Research Pension Plan Update to Plan Participants December 10, 2013


Research Pension Plan

Update to Plan Participants

December 10, 2013

Canadian Equity Fund – Investment Manager Changes

Presently the funds in the Canadian Equity Fund of the Research Pension Plan are managed by Jarislowsky Fraser

(JF) and Sheer Rowlett and Associates (SRA) on a two thirds-one third basis, respectively. Effective December 13,

2013, the funds will be managed by BlackRock Asset Management Canada (BRC) and Triasima Portfolio

Management (TPM) on an equal basis. This newsletter sets out the reasons for these actions.

Over the past 18 months, succession issues related to the retirement of Mr. Jarislowsky have led to the resignation of many senior executives of JF who have been responsible for the investment decisions regarding Canadian equities. As a result of these resignations and the lack of resolution of the secession issues, our investment consultant AONHewitt lost confidence in the ability of JF to replicate its past performance going forward and recommended that the University terminate the services of JF. Concurrently, the Academic Money Purchase

Pension Committee (AMPPC)and Research Pension Plan Committee have been monitoring the underperformance of SRA. Over the past five years, the average return on its managed funds net of fees has been less than the performance benchmark and the volatility of returns has been higher than average. In light of these developments, the Committee decided to conduct an investment manager search for possible replacements for both JF and SRA.

AONHewitt was engaged to create a list of potential replacements and the AMPPC interviewed principals of three firms in September. On the basis of these interviews and reports prepared by the investment consultant, the

AMPPC recommended to the Board that BRC and TPM replace the existing managers. Further, it is the belief of committee members that the styles of these two firms will complement one another and that they should be allocated an equal share of the Canadian Equity Fund in their mandate. The Board accepted both recommendations on October 7 th .

The ten-year historical performance of both the BRC and TPM Canadian equity mandates have exceeded the

Canadian Equity Fund performance benchmark net of fees by a significant margin while simultaneously producing below average volatility of returns. The committee is confident that the management structures and investment processes of both firms are stable enough to continue to generate these desirable outcomes into the future.

Since the Canadian Equity Fund is a component of all three life-cycle funds, Conservative, Balanced and Aggressive, it follows that to the extent that you have allocated your pension funds to any of the life-cycle funds or the

Canadian Equity Fund, your pension funds will be managed in part by BRC and TPM after December 13, 2013 automatically without any action required on your part.

If you have any questions about the replacement of managers, please contact the Director of Pensions, Heather

Fortosky at 966-6276 or contact any of the Research Pension Plan committee members listed below.

S. Laycock (Human Resources)

O. Schemenauer (Financial Services)

K. DeMong (CLS)

L. Vanin (VIDO)

G. Camm (Plant Sciences)

This communication, future communications and other pension plan information are available online at: