Inuvialuit Investment Corporation

The Inuvialuit Investment Corporation (IIC) oversees management of a diverse securities portfolio that was initially established with proceeds from the Inuvialuit Final Agreement. IIC's mandate is to achieve the highest possible returns using conservative investment strategies that preserve capital and increase financial resources in order to benefit of future generations of Inuvialuit.

Its specific objectives are to:

• Protect the value of the investment funds entrusted to IIC.
• Earn a before-tax real rate of return of 5% over the long-term.
• Manage investment funds on behalf of other members of the Inuvialuit Corporate Group, the Inuvialuit Harvesters Assistance Trust, and the Community Corporations.

In order to balance risk and return objectives, in 1977 IIC adopted a revised Statement of Investment Policies and Goals. The resulting asset allocation model set investment targets of 60% equities and 35% fixed income securities, with permissible deviations of up to 5%.

IIC ended the year with a recorded net loss of $434,000 reflecting the fall in market value of the portfolio. Although IIC initially experienced growth by mid-2007, this was reversed by year end due to the volatility of the major stock markets. Concerns about “sub-prime mortgages” in the U.S. caused nervousness in financial markets worldwide.

In 2004, new Canadian accounting rules changed the way IIC reports its financial results. Up to the end of 2003 changes in the value of the portfolio were recognized only when the individual assets (stocks or bonds) were sold. Since 2004, changes in the market value of the assets in the portfolio have been reported as an increase or decrease in revenue. This results in IIC reporting wider swings in profit (and loss) caused by the markets.

Removing the unrealized gains and losses from the financial report, IIC had actual earnings of $9,275,000 in 2007 compared to $10,505,000 in 2006. This is the amount incorporated in the Inuvialuit Corporate Group results and used to calculate IIC’s share of the distribution to beneficiaries.

IIC’s ongoing obligations require it to generate significant amounts of cash throughout the year. Major cash outlays in 2007 included $1,634,000 to fixed income participants in the portfolio (Community Corporations, ISDP, IEF and ICF, etc.), management fees to IRC of $2,318,000, net portfolio administration fees of $804,000, a share of the beneficiary distribution of $1,159,000 and administrative expenses of $784,000.

At the end of 2007, IIC had a net value of $193,400,000, a decrease from $195,000,000 in 2006. Over a four-year evaluation period, IIC achieved a 10.3% return compared to the target or benchmark of 10.6%.

In 2005, the market value of the financial assets administered by IIC was $276,300,000 at year-end compared to $257,000,000 at year-end in 2004.

The IIC Board members in 2007 were Frank Hansen (Chair), Janet Kanayok, Evelyn Storr, Michael M. Koerner and Barry Wainstein.

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