1.    PURPOSE 

1.01     This Statement of Policy sets out guidance related to the allocation of Investment income / (loss) related to MakeWay’s investment portfolio.  This policy supports the overarching MakeWay Investment Policy Statement.

2.    SCOPE

2.01     This policy applies to all MakeWay employees.

3.    POLICY

3.01     Investment income / (losses) including dividend income, realized gains / (losses) and unrealized gains / (losses) due to market fluctuations shall be recorded on a monthly basis as part of the month-end procedures.

3.02     In accordance with MakeWay’s Investment Policy, MakeWay funds are categorized into one of three time horizons:

•     Short-Term Time Horizon - These funds have short-term (one year) time horizons and are intended to be fully disbursed within one year.

•     Mid-Term Time Horizon - These funds have medium term time horizons and are intended to be fully disbursed over 2 – 9 years, generating income and preserving capital over this time.

•     Long-Term Time Horizon - These funds will generate income and preserve principal for 10 or more years.

3.03     Short-term funds are not invested and remain in MakeWay’s bank accounts to ensure funds are accessible as needed.  As a result, short-term funds are not included in the MakeWay investment portfolio and do not receive an allocation of investment income.

3.04     Mid-term funds are invested in MakeWay's mid-term portfolio.  This includes the following types of funds:

•     Non-long term DAF’s and Restricted Purpose Funds, currently defined as;  

①     Annual Funds (“A”),

②     Giving Funds (“D”),

③     Restricted Purpose Funds (“R”)

3.05     Investment income earned on funds that are invested in MakeWay’s mid-term portfolio is recorded as revenue for MakeWay's operations. There is no specific identification of the source of the funds that are invested in the medium term portfolio.  It is a portion taken from the pooled funds identified in the medium term listing as per 3.04. 

3.06     Long-term funds are invested in Tides Canada’s long-term portfolio.  This includes the following types of funds;

•     MakeWay excess working capital 

•     Invested Giving Funds ("E" /"L" / "F")

•     Internally Managed Funds ("X")

Note that as at December 31, 2015, MakeWay fund agreements have been revised so that MakeWay no longer holds any true “endowment funds”.  “E” and “F” funds are long-term funds but there is no restriction on accessing capital.

3.07     Realized and unrealized investment income / (losses) earned on MakeWay’s long-term portfolio will be allocated to the funds.

3.08     Realized and unrealized investment income / (losses) will be allocated to long-term funds on a pro-rata basis based on the closing fund market value balance at month-end as compared to the total long-term portfolio fund market value balance at month-end.

3.09     Investment management fees will be allocated to the mid-term and long-term funds on a pro-rata basis based on the prior month book value.

3.10        MakeWay management and administrative fees will be allocated to the mid-term and long-term funds on a pro-rata basis based on the prior month fair market value. 

3.11     When granting from a fund, only the current book value of the fund will be available to grant. The market value of the fund that relates to unrealized gains / (losses) will not be available for granting. 

4.    RESPONSIBILITY

4.01     It is the responsibility of the Senior Accounting Coordinator and Controller to review investment statements, calculate the allocation and review reasonability, and prepare related journal entries.

4.02     It is the responsibility of the Fund Holder to review their fund statements for accuracy.

5.    DEFINITIONS 

5.01     “Short-term funds” have short-term (one year) time horizons and are intended to be fully disbursed within one year.

 5.02     “Mid-term funds” have medium term time horizons and are intended to be fully disbursed over 2 – 9 years, generating income over this time.

5.03     “Long-term funds” will generate income for 10 or more years.

6.    REFERENCES 

013 – Statement of Policy & Procedures - Bank Charges & Interest Allocation Policy

               Finance Month-End Procedures Checklist

               Memo – Unrealized Gains on Investment – Fund Closing