If there is a requirement of income from the portfolio beyond the interest and/or dividend income provided by the nascent Core/Satellite portfolio, it is recommended that a portion of the overall portfolio that is required for this additional income, or any portion of the portfolio that is expected to be withdrawn within three years, to be allocated to Cash and Cash Equivalents, or guaranteed Canadian Government Bonds only.

Further it is recommended that this portion of the portfolio be segregated from the investment and asset allocation guidelines provided elsewhere in the Investment Policy Statement as to not violate the fundamental principles of the Investment Policy Statement for longer term assets according to the following methodology:

Any portion of the portfolio required within 3 years which is to be placed in the appropriate Near Term investments shall be deducted from the overall portfolio’s value. The remaining portfolio value shall be allocated according to the original Core/Satellite allocations.

For example, if the portfolio is $475,000 with a 70% Core / 30% Satellite Allocation and there is a near term requirement of $50,000, then the Core / Satellite allocations should be applied to only $425,000 ($475,000 - $50,000), with the $50,000 required for income or for near term withdrawals invested in Cash, Cash Equivalents and/or Guaranteed Government of Canada Bonds.

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