The Year in Review: September 22, 2014 – April 30, 2015 The Crescent School Investment Team (CSIT) is a student-run investment fund that invests in S&P/TSX 60 securities, while providing a unique learning experience for Upper School students. Founded in 2012, the 20142015 school year was the third year of operations for the Investment Team. The Investment Team kicked off the year in September with multiple investment lessons, before launching into production of stock presentations. Shortly after the Winter Break, the Investment Team made its first investment for the 2014-2015 school year, with the rest of the investments executed in the successive months. The portfolio was fully liquidated by April 30, 2015. - Ronald Chow, Chief Economist
Executive Team: Ryan Volk, Chief Executive Officer Matthew Hoffer, Chief Investment Officer Mark Richardson, Chief Financial Officer Ronald Chow, Chief Economist Mr. Gavin Muranaka Mr. Michael Stephens Ms. Mita Bhattacharyya
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Table of Contents The Investment Strategy
Page 2
CSIT Portfolio
Page 3
CSIT Portfolio Performance
Page 4
Final Remarks
Page 8
The Investment Strategy This year for the Investment Team has been very exciting, but with a few rough bumps in the road for our investments - including global oil prices sliding, a tough housing market, and a slow recovery both north and south of the border. When we got underway in September, the Executive Team worked very hard to maximize the Team’s potential. We knew we had a lot of talent from all members of the Investment Team. Minimizing risk, value investing and thinking long-term for all stock pitches were our investment goals. We were challenged to strike a balance between maximizing our potential profits and keeping down the amount of risk we wanted to take. This was achieved by careful analysis of all potential investments and all necessary information that was important for an informed and wise decision. Within the Investment Team, we had four sectors, each comprised of different types of companies. Each sector was broken down further into more specific sub-sectors. For example, in our Financials sector, we had one sub-sector for all six banks and one sub-sector for insurance and asset-management companies. When choosing how much money to allocate to each sub-sector, we took the weighting of each industry in the TSX 60 into account. For example, the six banks in the TSX 60 accounted for 30.37%; we proposed to have three or four bank stocks in our portfolio, with a weighting close to 30%. This method was applied to all of our sectors, and was an effective way of organizing our portfolio. The overarching goal of the Executive Team was to teach our peers through lessons, then apply it in real life; it allowed for a better understanding of the markets and the financial world. I honestly believe that we succeeded in executing our Investment Strategy, and accomplished our altruistic goal, as we acknowledge that every member embraced all that the Investment Team offered. - Matthew Hoffer, Chief Investment Officer
The Year in Review
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The Crescent School Investment Team (CSIT) Portfolio Summary: Starting Amount $25,782.34
CSIT Portfolio
Final Amount $25,986.98
% Change +0.79%
Investment Holdings and Capital Gains/Losses: Stock Name
Quantity
Purchase Price per share
Date of Purchase
Total Purchase Value
Sale Price per share
Date of Sale
Total Sale Value
% gains/loss
32
$61.25
Jan. 16
$1,966.95
$64.35
Apr. 10
$2,052.25
+4.34%
38
$50.08
Jan. 16
$1,909.99
$55.27
Apr. 9
$2,093.31
+9.60%
35 25
$27.24 $62.15
Jan. 23 Jan. 28
$987.59 $1,560.70
$26.89 $63.22
Apr. 30 Apr. 30
$961.09 $1,573.55
-2.68% +0.82%
26
$44.67
Feb. 4
$1,168.37
$43.00
Apr. 30
$1,111.05
-4.91%
27
$28.98
Feb. 18
$789.41
$28.69
Apr. 30
$767.68
-2.75%
20
$52.83
Feb. 27
$1,063.55
$55.85
Apr. 10
$1,110.05
+4.37%
25
$43.06
Mar. 5
$1,083.45
$39.23
Apr. 30
$973.80
-11.26%
9
$127.25
Mar. 6
$1,152.2
$136.00
Apr. 10
$1,217.05
+5.63%
25
$77.50
Mar. 6
$1,944.45
$80.26
Apr. 30
$1,999.55
+2.83%
22
$83.35
Mar. 27
$1,840.65
$78.50
Apr. 30
$1,720.05
-6.55%
Bank of Nova Scotia TorontoDominion Husky Energy Enbridge Rogers Communications iShares Cndn Short Term Bond Index CGI Group Potash of Saskatchewan Canadian Tire Royal Bank of Canada Canadian National Railway Dividends/Interest:
Stock Name iShares Canadian Short Term Bond Index Enbridge iShares Canadian Short Term Bond Index Rogers Communications Husky Energy Bank of Nova Scotia iShares Canadian Short Term Bond Index Toronto-Dominion Bank Potash of Saskatchewan
The Year in Review
Transaction Date Feb. 27 Mar. 1 Mar. 31 Apr. 1 Apr. 1 Apr. 28 Apr. 30 Apr. 30 May 4
Quantity 27 25 27 26 36 32 27 38 25
Total Amount $1.71 $11.63 $1.66 $12.48 $10.80 $21.76 $1.63 $19.38 $11.47
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Crescent School Investment Team (CSIT) Portfolio Performance
CSIT Portfolio vs. Crescent TSX 60 Benchmark To evaluate our portfolio’s performance, we specifically designed a benchmark (Crescent TSX 60 Benchmark, or BM) to compare with our portfolio. The BM tracked the performance of the TSX 60, with the exception that the weightings of individual companies were frozen, as they existed at the beginning. Overall, the CSIT Portfolio had an overall return of +0.79%, our TSX 60 Benchmark return was 0.02%, for an outperformance of +0.77%. The outperformance was heavily influenced by our large cash balance throughout the year, but in particular during down periods. % Change Since Inception (Sept. 2014 – May 2015)
CSIT Portfolio
Crescent TSX 60 Benchmark
+0.79%
+0.02%
CSIT Portfolio Value (Red Line) vs Crescent TSX 60 Benchmark (Blue Line)
The Year in Review
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The breakdown of the performance of both the CSIT Portfolio and the Crescent TSX 60 Benchmark, on a monthly basis is as follows: % Change Term 1 (Sept. 2014 – Dec. 2014) ! ! ! !
September 2014 October 2014 November 2014 December 2014
% Change Term 2 (Jan. 2015 – Feb. 2015) ! !
January 2015 February 2015 % Change
Term 3 (Mar. 2015 – May 2015) ! !
March 2015 April 2015
The Year in Review
CSIT Portfolio
Crescent TSX 60 Benchmark
+0.00%
-2.78%
+0.00% +0.00% +0.00% +0.00%
-1.44% -0.75% +2.28% -0.50%
CSIT Portfolio
Crescent TSX 60 Benchmark
+0.84%
+3.54%
-0.01% +0.53%
-0.51% +3.25%
CSIT Portfolio
Crescent TSX 60 Benchmark
-0.17%
-1.91%
-0.92% +0.73%
-4.17% +2.16%
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 CSIT Portfolio vs. Alternative Benchmark To evaluate our investment choices, we simulated a situation in which, every time we purchased or sold a stock in our real money, we would similarly purchase and sell the same value of XIU. XIU, iShares S&P/TSX 60 Index Fund, seeks to provide long-term capital growth by replicating the performance of the S&P/TSX 60 index. This method of analysis allowed us to compare our portfolio by removing the effect of cash balances Again, our CSIT Portfolio returned +0.79% this year. When we seek to compare our returns to the returns on XIU (investing the same amount and replicating the timing of our transactions), the alternative benchmark returned +2.18%, resulting in an underperformance of 1.39%. % Change Since Inception (Sept. 2014 – May 2015)
CSIT Portfolio
Alternative Benchmark
+0.79%
+2.18%
CSIT Portfolio Value (Blue Line) vs Alternative Benchmark (Red Line)
The Year in Review
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The breakdown of the performance of both the CSIT Portfolio and the Alternative Benchmark, on a monthly basis is as follows: % Change Term 1 (Sept. 2014 – Dec. 2014) ! ! ! !
September 2014 October 2014 November 2014 December 2014
% Change Term 2 (Jan. 2015 – Feb. 2015) ! !
January 2015 February 2015 % Change
Term 3 (Mar. 2015 – May 2015) ! !
March 2015 April 2015
The Year in Review
CSIT Portfolio
Alternative Benchmark
+0.00%
+0.00%
+0.00% +0.00% +0.00% +0.00%
+0.00% +0.00% +0.00% +0.00%
CSIT Portfolio
Alternative Benchmark
+0.84%
+1.59%
-0.01% +0.53%
+0.05% +0.07%
CSIT Portfolio
Alternative Benchmark
-0.17%
+0.47%
-0.92% +0.73%
-1.32% +1.72%
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Remarks of the Portfolio As the end of the school year approaches, I feel it is important to assess and recognize the success that we have had this year in the CSIT. This year proved to be particularly challenging due to market fluctuations and the uncertainty in Canada’s energy sector. However, despite the few nail-biting weeks throughout the year in which the market had fallen tremendously, our portfolio finished the year up 0.79 per cent. As with any business we learned through our successes and our failures. In particular, it’s important to reflect on what went wrong when an investment didn’t live up to expectations. Some of these companies included: POT (11.26%), CNR (-6.55%), and RCI (-4.91%), and resulted in good conversations and debates. With these opportunities for growth, also came great successes, shown through our investments such as: TD (+9.60%), CTC (+5.63%), and GIB (+4.37%). - Mark Richardson, Chief Financial Officer
Final Remarks It has been quite a year for the Investment Team. In our third year of existence, the Investment Team has finally able to complete the two main objectives our yearly portfolio always has – to outperform the Crescent TSX 60 benchmark, and to grow the size of our portfolio. In our first year, we were able to outperform the benchmark but had a slightly negative return. In our second year we had positive returns but underperformed the benchmark. This year we had positive overall returns and edged out our benchmark too. The portfolio is now worth just under $26,000, the highest it has ever been at the end of a school year, and to those shareholders who loaned us money for the year, they should be pleased to find out they will be getting a full return of their money. All these highlights have made 2014/15 a true landmark year for the Investment Team. This is my last year at Crescent School and I am proud to be able to say that I had the honour of running the Investment Team for the school year. Crescent’s Investment Team introduces students to the vast world of finance like no other high school program known, and I have no doubt in my mind that members of the Investment Team are much more well equipped to join the finance industry should they go down that path in life, than mostly any other people their age. I hope the Investment Team continues to grow for many years at Crescent, and for its continued prosperity. Best of luck in the coming years to the Crescent School Investment Team. - Ryan Volk, Chief Executive Officer
The Year in Review
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