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Determination of market values Fixed income consists of debt obligations of governments and corporate bodies paying interest at rates appropriate to the market at the date of their purchase. Bonds are recorded at prices based upon published market quotations. The fixed income portfolio's sensitivity to a change in market rates is represented by the duration of the portfolio. As at March 31, 2002, the average duration of the bonds and debentures in the portfolio, weighted on market values, was 3 years. Equities consist of pooled fund units. Pooled fund units are valued at prices based on the market value of the underlying securities held by the pooled funds. Investment risk Investment in financial instruments renders the Fund subject to investment risks. These include the risks arising from changes in interest rates, in rates of exchange for foreign currency, and in equity markets both domestic and foreign. They also include the risks arising from the failure of a counterparty to a financial instrument to discharge an obligation when it is due. The Fund has adopted investment policies, standards and procedures to control the amount of risk to which it is exposed. The investment practices of the Fund are designed to avoid undue risk of loss and impairment of assets and to provide a reasonable expectation of fair return given the nature of the investments. The maximum investment risk to the Fund is represented by the market value of the investments. a) Concentration risk Concentration risk exists when a significant proportion of the portfolio is invested in securities with similar characteristics or subject to similar economic, political or other conditions. The relative proportions of the types of investments, in the portfolio are as follows:
b) Foreign currency risk Foreign currency exposure arises from the Fund's holdings of non-Canadian denominated investments, as follows:
4. AMOUNTS TO BE RECOVERED The Administrator inadvertently made payments during the year to the estates of the persons who died prior to January 1, 1999 in respect of loss of services and loss of income in the period subsequent to their disability and prior to the year of their death. Such payments are not permissible under Section 5.01 of the Plan. The total amount of such payments is $787,868. The Administrator has agreed to reimburse the Trust for that amount in three separate instalments: $400,000 upon court ratification, and two equal payments of the balance on the payment anniversary dates in 2003 and 2004. The Administrator will be applying to the Court for approval of this repayment plan. The $787,868 is reported in these financial statements as amounts to be recovered and is not included in expenses for the current year. 5. FUNDING HELD FOR FUTURE EXPENSES Period-end balances consist of the following:
6. CLAIMS Claims recognized as expenses of the Fund during the current period consist of the following:
The Government of Canada paid certain HIV/AIDS claims on behalf of the Fund, prior to the Fund becoming operational. 7. START-UP COSTS The $6,644,379 of start-up costs incurred during the current year relate to counsel fees for the Quebec class actions, which had not been previously paid. The start-up costs incurred in the sixteen-month period ended March 31, 2001 include counsel fees for the class actions, class member notification advertisements, actuarial services and the development of the Fund's structure, facilities, and hardware and software for the Fund's systems. Also included are expenses of approximately $2,589,000 paid by the Government of Canada on behalf of the Fund, prior to the Fund becoming operational. 8. OPERATING EXPENSES
8. STATEMENT OF CASH FLOWS A statement of cash flows has not been prepared as information relating to cash flows is otherwise adequately disclosed. |
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