—  CLIENT PROFILE  —

John is a 50-year-old mid-level manager at a construction company. He lives alone in his mortgage-free house in Daytona Beach Florida and has no debt except for a credit card balance which he pays off each month. From his job, he earns $100,000 per year and expects to receive modest annual salary increases to keep pace with inflation over the next 15 years when he hopes to retire.

John and his ex-wife, Hillary, have one child together who is 19 years old and in her second year of state college right now. John and Hillary contribute $5,000 each annually toward this education annually, the rest of which is funded by student loans.

— INVESTMENT OBJECTIVES AND CONSTRAINTS —

John currently has an investment portfolio in a taxable account valued at $300,000. The securities are mostly equities and index mutual funds, with some bond exposure as well. John would like to have 75% of his current income post-retirement (75% of $100,000 = $75,000) and estimates that his annual government and company benefits will amount to only $25,000, leaving him with a $50,000 per year shortfall.

John estimates that he will live until he is 85 years old, which would mean he will need an investment account worth $1,000,000 to be drawn down evenly over 20 years to maintain a comfortable lifestyle. His current $300,000 investment account is insufficient and he will require a growth rate of 8.36% to grow it to his target.

John is currently able to save approximately 10% of his before-tax income, or $10,000 annually. He plans to use this savings to make lump-sum additions to his investment account in order to reduce the growth rate required. By investing this $10,000 once per year over the next 15 years, his required rate of return would reduce to just 6.39%. This is John’s investment objective.

John is at an age where he does not have the ability to have a sustained drawdown of his portfolio. If his portfolio value is reduced by a large in any year, but especially as he nears retirement, he will unlikely meet his investment objectives. We have calculated that John’s maximum annual loss in any year should be no more than 15%. As he nears retirement, John can hopefully reduce his risk even further.

—  PORTFOLIO RESTRICTIONS—

John wants to invest in a mixture of North American equities and investment grade government and corporate bonds. He does not wish to invest in emerging markets as he feels they are too risky. Since he has no immediate need for income, he would prefer to seek out growth stocks which do not pay dividends in order to limit any taxes owing pre-retirement.

John is a climate change activist and wants to invest in such a way which reflects his beliefs. As such, he does not want to invest in any fossil fuel companies or any fund which indirectly invests in these companies. In addition, tobacco and pharmaceutical companies are off limits.

—  ASSET ALLOCATION & LOCATION —

John is targeting a strategic asset allocation of 65% equities, 35% fixed income and 5% cash. He is comfortable with a +/- 10% change to either equities or fixed income at any time, but would like to maintain a 5% cash balance in case any good market opportunities come up.

John would like to invest in the remaining 9 sectors (Excluding Energy and Health Care) with a target allocation of 11% each in the following sectors: Communication Services, Consumer Cyclicals, Consumer Staples, Financial Services, Industrials, Materials, Real Estate, Technology and Utilities.

John’s investments are entirely in his registered account. He does not have a taxable cash account and has no plans of implementing one.

—  INVESTMENT PHILOSOPHY—

John believes that it is possible to beat the stock market, but he doesn’t really have much time to dedicate to this due to his demanding job. He does, however, enjoy reading company earnings reports and discussing various stock ideas on investment forums, so he would like to provide for the option to invest in a few individual stocks. With fixed-income, John has no knowledge of how these markets work.

Given this, John would like to create a portfolio consisting primarily of ETFs with a few individual stocks as well.

—  SCHEDULE OF REVIEWS —

John has committed to doing a full review of his portfolio once per year on October 1. In addition, if any of his target allocations move outside his desired ranges, he will make trades in his account to revert the allocations back to his targets.

—  AGREEMENT —

John has committed to adhering to this investment policy statement in its entirety. Before he makes any trades, he will read this document in full and ensure that the trades are in compliance with this document.