Performance 'The iavestlne~~t perfomlance of the po~tfolio for the past four years was as follows: Mar 31 Mar 31 Mar 31 Mar 31 Ending

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1 Board of Governors June 24,2008 APPENDIX I1 Annex 7 Report of the Investment Committee For Information This report outlines the perforn~ance of the operating and e~~dow~llent investment portfolio and the recent activities of the Investment Committee. Performance 'The iavestlne~~t perfomlance of the po~tfolio for the past four years was as follows: Asset Class Annual Annual Annual A111lila1 Annualized for Four years Mar 31 Mar 31 Mar 31 Mar 31 Ending Mar Bonds 6.4% 5.6% 5.0% 4.9% 5.5% Alternative Investments (hedge funds) (0.9) Equities Canadian US (10.8) Non North American % Torn1 Retzvn (2.21% 10.9% 13.4% 6.7% - Policy Return 12.11% 9.6% 14.1% 6.1% 6.8% For additio~lal infontlation, please refer to the attached pages, which show the amounts held by each investment manager at March 31,2008, the annual and annualized returns by manager over the five years ending March 31,2008. Returns in relation to the obiective of a 5% real rate of return One of the Investment Committee's objectives is to earn a 5% real rate of return over the long term (i.e., to earn 5% over the rate of inflation, as measu~ed by the Coilsu~ner Price Index). Inflation has averaged 1.8% per year for the past five years and 2.1% per year for the past 10 years, For rlle four years ending March 31, 2008, the annualized I.eal rare of return was 5.0%, coasisting of a nominal return of 7.0% less inflation of 2.0%. For the five years ending March 31,2008, the annualized - real rate of return for the portfolio was 8.5%, which consisted of a nominal (actual) annualized return of 10.3% less 1.8% for inflation. The 5 year an~~ualized return exceeds the Invest~nent Committee's performance objective of a rare of retmn of 5%. Value added by Active Marlagemeut Another of the Investment Committee's objectives is to earl) the return produced by the asset mix policy based on the returns of the market indices plus a pre~niilm to reflect the additional fees related to active ~nanagement. In order to achieve this objective, investment managers with active investment mandates need to outperfonn their benchmark indices. For example, Canadian equity managers need to outperform the TSX Composite Index over time. Over the five years ending March 3 1,2008, the actual annualized return for the portfolio was 10.3% and

2 the return generated by the market indices for the portfolio was 10.0% (the policy return). Over this period, our con~binatio~l of managers achieved slightly higher results than could have been achieved by a passive or index style of management. It should be noted that 45% of the total portfolio is actively managed and 55% is passively managed. Book and Market Value of the Portfolio As at March 3 I, 2008, the operating and endow~nent portfolio had a book value of $400,60 1,000 and market value of $436,026,000 as follows: Book Market Actilal * Policy * Value Value Asset Mix Asset ($OOO's, ($000'~) Mix Bonds $144,066 $167, % 35.0% Alternative Investments (hedge fi~nds) 17,200 21, Canadian equities 60, , US equities 86,793 80, Non-North American equities 92, M 20.0 Total $ $ ,0% 100.0% At March 31, 2008 the portfolio consisted of the following components: Pollion related to Endowed funds $186,434, % Portion related to Operathg and Non-endowed fi~nds 289,592, % Total market value of portfolio $436,026, % Update on Investment Committee Activities and Plans The Committee: 9 Is proceeding with the changes to the portfolio. Is in the process of setting up interviews with a shoi-t list of Real Estate Managers. The meetings are planned for July, Is in the process of issuing an RFP to a short list of Private Equity Managers. 9 Administration, on behalf of the Investment Committee, voted in favour of the settlement agreement related to the no11 bank asset backed commercial issue. 9 Discussed personnel changes at Northwater that have given the Committee reason to place Northwater on a watch list. 9 Discussed the motion put forward by Senate that the Board issue a public statement announcing its commitment to remain un-invested in any company on the Sudan Divestment Task Force's "Highest Offender" list. 9 Held a joint meeting with members of Foundation Western's Investment Committee. This was the first llleeting with the Foundation with intention of sharing infor~nation and getting a discussion going on ways in which the two Committees can work more closely, effectively and efficiently in areas of common ground. > Is participating in an RFP with the Pension Board that has been issued related to a search for a US Equity Manager.

3 Motion fiom the Investment Committee re STAND Subsequent to the meeting of the Investment Committee on May 21, 2008, the members passed a tnotion by elnail to provide the following advice to the Chair of the Board: "That the [nvestment Committee advise the University of Western Ontario Board of Governors through its Chair not to introduce I-estrictions on investments in suppot-t of the Sudan Divestment Task Force"

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