About the Funds

The Pacific Salmon Commission oversees two endowment funds established in 1999 to support projects in Canada and the United States that develop improved information for resource management, rehabilitate and restore marine and freshwater salmon habitats and, enhance wild stock production through low technology techniques.

Origin and Purpose

In June of 1999, the United States and Canada reached a comprehensive new agreement (the “1999 Agreement”) under the 1985 Pacific Salmon Treaty.

Among other provisions, the 1999 Agreement established two bilateral funds:

  • The Northern Boundary and Transboundary Rivers Restoration and Enhancement Fund (the Northern Fund).
  • The Southern Boundary Restoration and Enhancement Fund (the Southern Fund).

The purpose of the two funds is to support three kinds of activities in both countries that support salmon stocks and their habitat:

  1. Develop improved information for resource management.
  2. Rehabilitate and restore marine and freshwater habitat.
  3. Enhance wild stock production through low technology techniques.

Capitalization

The United States agreed to capitalize the Northern and Southern Funds in the amount of US $75 million and US $65 million respectively. In addition to the amounts contributed by the United States, Canada contributed Can $250,000 to each of the two funds (total of Can $500,000).

The 1999 Agreement stipulates that “annual expenditures shall not exceed the annual earnings from the invested principal” of the funds, a provision that essentially makes them permanent endowment funds, subject only to the continuation of the Pacific Salmon Treaty.

The U.S. legislation that appropriates monies to capitalize the funds contains a similar provision and stipulates the Funds “shall be invested in interest bearing accounts, bonds, securities or other investment s in order to achieve the highest annual yield consistent with protecting the principal of each Fund”.

Investment Policy

After 1999 the Fund Committees initially focused their attention on developing internal and administrative operational procedures. Primary emphasis was placed on responsibilities relating to investing the funds.

Noting the substantial degree of concurrence between their respective views on initial investment strategies, the Committees mutually decided to establish a master trust that invests the funds as if they were a single entity but tracks income and expenses as if each were a separate, independent fund. This decision does not foreclose the option of dissolving the master trust arrangement and establishing two completely separate accounts in the future if distinct spending policies or other considerations indicate the wisdom of such separation.

The Fund’s investment managers use a mix of active and passive management styles. By diversifying the styles of its managers, the opportunity exists for the Fund to outperform specific investment benchmarks while minimizing risk in that returns will not be severely impacted by the possible under-performance of a particular investment style in changing market environments. The investment policy includes a formal re-balancing policy to reset the asset mix back to the long-term target periodically.

Expenditure Policy

Spending too much would erode the buying power of the Funds and potentially be inconsistent with the mandate of protecting the principal. Spending too little would protect or build the principal, but support fewer fishery projects, the purpose for which the Funds were established.

The Northern and Southern Funds have each established their own spending policies that give them the balance they seek between these two extremes.

While slightly different in the details, each Fund bases its annual spending on a percentage of the average monthly market value of the Funds over a trailing 2 (Northern) or 4 (Southern) year period. This strategy attempts to maximise the funding available for projects annually; leaves room for modest growth; protects against the erosive effects of inflation; reduces year-over-year volatility in potential spending to a greater or lesser extent; and, makes allowance for the costs of program administration, which are largely investment management fees.

Fund Activities to Date

Neither Fund solicited proposals until 2004 by which time Fund investments had earned sufficient interest to support projects. Between 2004 and 2014, total Fund project expenditures have been $55.9M US, in support of 798 projects.

Interactive Project Locations Map