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ISHARES AUSTRALIA INDEX FUND $23.84 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 70 largest Australian stocks. Its MER is 0.50%.

The fund’s top holdings include BHP Billiton, 10.8%; Commonwealth Bank of Australia, 10.6%; Westpac Banking Corp., 8.9%; Australia and New Zealand Banking Group, 7.5%; National Australia Bank, 6.8%; Woolworths, 4.0%; Wesfarmers, 3.9%; CSL Ltd., 2.9%; Westfield Group, 2.4%; and Woodside Petroleum, 2.3%.

Australia benefits from its stable banking and political systems. It is also rich in natural resources, and it’s close to key Asian markets with vast potential, including India and China.
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TRANSCANADA CORP. $46.23 (Toronto symbol TRP; Shares outstanding: 707.0 million; Market cap: $33.5 billion; TSINetwork Rating: Above Average; Dividend yield: 4.0%; www.transcanada.com) plans to build a new 200-kilometre crude oil pipeline that will connect Edmonton to the storage hub at Hardisty, Alberta. From there, TransCanada will pump the oil to refineries in the U.S. Midwest through its Keystone pipeline (and link up later with its Keystone XL pipeline if it’s built).

The $900-million project also includes a new oil-storage facility. The company already has long-term contracts from producers, which cuts the risk of this investment. The new line should begin operating in the second half of 2015.

TransCanada is a buy....

IBM $202.74 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $228.6 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%) is paying an undisclosed sum for SoftLayer Technologies, which sells online data storage space and related services to over 21,000 businesses. SoftLayer has 13 data centres in the U.S., Asia and Europe.

Demand for cloud-computing, which mainly involves storing data and using software on remote servers, is growing strongly. That’s because it gives cost-conscious companies access to better software and services without the high cost of setting up their own servers.

SoftLayer’s technology will enhance IBM’s expertise in this expanding market.
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ISHARES MSCI BRAZIL INDEX FUND $50.15 (New York Exchange symbol EWZ; buy or sell through brokers) is an exchange traded fund that is designed to track the Brazilian stock market. The fund’s top holdings are Petrobras (oil and gas), 12.7%; Vale do Rio Doce (mining), 8.4%; Cia Itau Unibanco Holding (banking), 7.4%; Banco Brandesco (banking) preferred, 6.5%; Cia de Bebidas das Americas (beer and beverages), 5.5%; and BRF SA (food), 3.6%.

The ETF was launched on July 10, 2000. It has an expense ratio of 0.60%.

The fund’s focus on the resource sector and its concentration in certain stocks, such as Petrobras and Vale do Rio Doce, add risk. However, both are high-quality stocks.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $56.48 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange.

The fund’s top holdings are Enersis AS (electricity), 8.0%; Empresas Copec SA (conglomerate), 7.4%; Cencosud SA (retailer), 7.2%; S.A.C.I. Falabella (retail), 6.6%; Empresa Nacional de Electricidad (electricity), 6.2%; LATAM Airlines SA, 5.7%; Quimica y Minera de Chile (mining), 5.0%; Banco Santander Chile (banking), 4.4%; and Empresas CMPC (pulp and paper), 3.9%.

The fund’s industry breakdown is: Utilities, 24.8%; Financials, 17.2%; Consumer Staples, 13.6%; Materials, 12.6%; Industrials, 9.3%; Consumer Discretionary, 8.3%; Energy, 7.4%; Telecommunications, 3.2%; and Information Technology, 2.5%.
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ISHARES MSCI GERMANY FUND $25.89 (New York Exchange symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.

The ETF’s top holdings are BASF (chemicals), 8.7%; Siemens (engineering conglomerate), 8.6%; Bayer (diversified chemicals), 8.6%; Allianz (insurance), 6.9%; SAP (software), 6.7%; Daimler (autos), 5.7%; Deutsche Bank, 4.6%; Linde AG (industrial gases), 3.5%; and Munich Re (reisurance), 3.3%.

The fund’s industry breakdown is as follows: Consumer Discretionary, 19.3%; Financials, 17.2%, Materials, 15.4%; Industrials, 13.7%; Health Care, 13.1%; Information Technology, 7.9%; Utilities, 4.7%; Consumer Staples, 4.3%; and Telecommunication Services, 3.1%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $57.12 (New York Exchange symbol EWY; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Korea Index.

The ETF’s top holdings are Samsung Electronics, 23.1%; Hyundai Motor Co., 5.3%; Posco (steel), 3.4%; Hyundai Mobis (auto parts), 3.2%; SK Hynix Semiconductor, 2.8%; Shinhan Financial, 2.7%; Kia Motors, 2.6%; KB Financial, 2.2%; LG Chemical, 2.1%; and NHN (Internet content), 2.1%.

The fund’s industry breakdown is as follows: Information Technology, 32.3%; Consumer Discretionary, 18.2%; Financials, 14.7%; Industrials, 13.2%; Materials, 10.0%; Consumer Staples, 5.4%; Energy, 2.7%; Utilities, 1.4%; Telecommunication Services, 1.2%; and Health Care, 0.8%.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $40.56 (New York symbol EEM; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Emerging Markets Index. Its geographic breakdown includes China, 17.8%; South Korea, 14.8%; Brazil, 12.1%; Taiwan, 11.5%; South Africa, 6.7%; India, 6.7%; Russia, 5.6%; Mexico, 5.2%; Malaysia, 3.9%; and Indonesia, 3.0%.

The ETF’s top holdings are Samsung Electronics (South Korea), 4.1%; Taiwan Semiconductor (computer chips), 2.4%; China Mobile, 1.7%; China Construction Bank, 1.6%; Industrial & Commercial Bank of China, 1.2%; Gazprom (Russia: gas utility), 1.1%; America Movil (Brazil: wireless), 1.1%; and Itau Unibanco (Brazil: banking), 1.1%.

The fund’s industry breakdown is as follows: Financials, 27.4%; Information Technology, 14.6%; Energy, 11.5%; Materials, 9.9%; Consumer Staples, 9.4%; Consumer Discretionary, 8.1%; Telecommunication Services, 7.5%; and Industrials, 6.4%.
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ISHARES MSCI JAPAN INDEX FUND $10.60 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.6%; Mitsubishi UFJ Financial, 3.0%; Honda Motor, 2.5%; Sumitomo Mitsui Financial, 2.1%; Softbank Corp., 1.9%; Mizuho Financial Group, 1.8%; Canon, 1.6%; Japan Tobacco, 1.5%; Takeda Pharmaceutical, 1.4%; and Hitachi, 1.3%.

The fund’s industry breakdown is as follows: Consumer Discretionary, 21.8%; Financials, 20.1%; Industrials, 18.9%; Information Technology, 10.7%; Consumer Staples, 6.5%; Health Care, 6.2%; Materials, 6.2%; Telecommunication Services, 4.7%; Utilities, 3.1%; and Energy, 1.3%.
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GLOBAL X COPPER MINERS ETF $10.23 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes between 20 and 40 international companies that mine, refine or explore for copper. Germanybased Structured Solutions AG created this index.

Canadian companies make up 48.3% of the fund’s holdings. It also includes companies based in Australia (7.2%), Poland (5.0%), Peru (5.7%) and Mexico (6.7%). Global X Copper Miners ETF’s MER is 0.65%.

Its top 10 holdings are Turquoise Hill Resources at 5.8%; Capstone Mining, 5.5%; Vendanta Resources, 5.5%; Freeport Copper, 5.1%; First Quantum Minerals, 5.1%; Taseko Mines, 5.0%; Cudeco Ltd., 5.0%; Lundin Mining, 4.9%; Antofagasta plc, 4.9%; and Jiangxi Copper Company, 4.8%.
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GLOBAL X SILVER MINERS ETF $14.42 (New York symbol SIL; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Silver Miners Index.

This index includes 31 international companies that mine, refine or explore for silver. Germanybased Structured Solutions AG developed the Global X Silver Miners Index.

Canadian companies make up 46.6% of the fund’s holdings, but it also includes companies based in the U.S. (11.0%) and Mexico (14.6%). The ETF’s MER is 0.65%.
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ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $12.91 (Toronto symbol XGD; buy or sell through brokers; ca.ishares.com) aims to mirror the performance of the S&P/TSX Global Gold Index.

This index is made up of 54 gold stocks from Canada and around the world. The fund’s MER is 0.60%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001.

The fund’s top 10 holdings are Goldcorp at 13.1%; Barrick Gold, 13.8%; Newmont Mining, 11.3%; Yamana Gold, 5.8%; Kinross, 4.9%; Randgold Resources (ADR), 4.8%; AngloGold Ashanti (ADR), 4.6%; Franco Nevada, 4.1%, Eldorado Gold, 3.8%; and Agnico-Eagle Mines, 3.7%.
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MANITOBA TELECOM SERVICES INC. $35.75 (Toronto symbol MBT; Shares outstanding: 67.5 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 4.8%; www.mts.ca) has agreed to sell its Allstream subsidiary to Accelero Capital Holdings, a private firm controlled by Egyptian billionaire Naguib Sawiris.

In 2004, the company paid $1.6 billion for Allstream, which provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada.

The sale price is $520 million, which is equal to 22% of Manitoba Telecom’s $2.4-billion market cap. If you disregard closing costs, Manitoba Telecom will receive $405 million. Assuming regulators approve, the company expects to complete the sale in the second half of 2013.
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IMPERIAL OIL $39.57 (Toronto symbol IMO; Shares outstanding: 847.6 million; Market cap: $34.2 billion; TSINetwork Rating: Average; Dividend yield: 1.2%; www.imperialoil.ca) is a major integrated oil company with oil sands projects in Alberta and conventional oil and gas operations across Western Canada. Imperial also owns four refineries and operates 1,850 Esso gas stations.

Imperial produced 284,000 barrels of oil equivalent per day in the latest quarter, down 1.7% from 289,000 barrels a year earlier. The decline was mainly the result of planned maintenance at the Syncrude oil sands project, in which Imperial owns a 25.0% stake.

In the three months ended March 31, 2013, Imperial’s earnings fell 21.4%, to $798 million, or $0.94 a share, due to an 8% drop in the company’s selling price for oil. A year earlier, it earned $1.0 billion, or $1.19 a share. Cash flow per share fell 17.4%, to $1.19 from $1.44. However, revenue rose 3.3%, to $8.0 billion from $7.5 billion, largely because downstream sales (refineries and gas stations) rose 10.0%.
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Pat McKeough responds to many requests for specific advice on the best stocks to invest in and other questions on investment strategy and the economy from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle. This week, we received a question from an Inner Circle member about a stock that may not be well known to Canadian investors, but has a product which has made headlines. Israeli defense contractor Elbit Systems has seen its profits rise thanks to the sale of unmanned air vehicles, or drones. Pat looks at the company’s overall outlook and how much emphasis investors should put on one ‘hot’ product like drones....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks. Here are two international ETFs that we follow regularly. ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND (New York Exchange symbol ECH; us.ishares.com; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange....

FINNING INTERNATIONAL INC. $22 (www.finning.com) has increased its quarterly dividend by 8.9%, to $0.1525 a share from $0.14. The new annual rate of $0.61 yields 2.8%. Finning sells heavy equipment to the mining industry, and lower commodity prices have hurt the stock....

IGM FINANCIAL INC. $45 (www.igmfinancial.com) reported that it had $127.1 billion of assets under management on May 31, 2013, up 8.6% from $117.0 billion a year earlier. Improving stock markets were the main reason for the increase: IGM’s fee income rises and falls with the value of the investments it manages, and the market rose 5.3% in the past year....

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ CAE INC. $10 (www.cae.com) has sold six flight simulators to airlines in Turkey and Azerbaijan. These are the company’s first simulator sales in its 2014 fiscal year, which ends March 31, 2014....

TIM HORTONS INC. $54 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 153.4 million; Market cap: $8.3 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.9%; TSINetwork Rating: Average; www.timhortons.com) is the largest fast-food company in Canada, with 3,453 outlets that mainly serve coffee and donuts. The company also has 808 U.S. stores.

The stock has moved up lately in response to demands from Highfields Capital Management, a U.S.-based activist investment firm that owns 1.5% of Tim Hortons’ shares. Highfields has proposed several ways to boost shareholder value, including slowing Tim Hortons’ expansion in the U.S., where it faces intense competition from larger chains like McDonald’s, Dunkin’ Donuts and Starbucks.


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BOMBARDIER INC. (Toronto symbols BBD.A $4.68 and BBD.B $4.67; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $7.9 billion; Price-to-sales ratio: 0.5; Dividend yield: 2.1%; TSINetwork Rating: Average; www.bombardier.com) plans to begin test flights of its new CSeries jet planes by the end of June 2013.

The company’s plan to test the plane both in flight and using simulators should let it deliver the first CSeries in mid-2014.

The subordinate-voting class B shares are the better choice because of their slightly better liquidity and higher dividend yield.
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SUNCOR ENERGY INC. $31 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.5 billion; Market cap: $46.5 billion; Price-to-sales ratio: 1.2; Dividend yield: 2.6%; TSINetwork Rating: Average; www. suncor.com) has resumed normal operations at its oil refinery in Edmonton after it closed the facility for six weeks for unplanned maintenance.

The shutdown led to minor shortages at the company’s Petro-Canada gas stations in Western Canada. However, it also pushed up gas prices, which helped Suncor offset the lost sales.

Suncor is a buy.

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LINAMAR CORP. $28 ( T o r o n t o s y mb o l L N R ; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $1.8 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.1%; TSINetwork Rating: Extra Risk; www.linamar.com) is buying three plants in Germany that make automotive camshafts for various carmakers.

The company didn’t say how much it will pay for these facilities or when the deal will close. However, this purchase will add roughly $35 million to Linamar’s yearly sales of $3.2 billion. As well, the company plans to use this business’s expertise to improve its camshaft operations.

Linamar is a buy.

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LOBLAW COMPANIES LTD. $46 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 280.9 million; Market cap: $12.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.loblaw.ca) is spending $100 million to upgrade its 77 Provigo and 32 Loblaw supermarkets in Quebec. That’s equal to 58% of its 2013 firstquarter earnings of $171 million, or $0.61 a share.

These improvements include faster checkout lines, a better selection of fresh products, and the addition of on-site baked bagels and juice bars. In addition, the company will rebrand six of its existing Loblaw stores, plus one under construction, as Provigo Le Marché.

Loblaw is a buy.

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BLACKBERRY INC. $14 (Toronto symbol BB; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.0 million; Market cap: $7.3 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Average; www.blackberry.com) aims to increase its sales in developing markets like Africa, Asia and Latin America with the Q5, the third smartphone to use the company’s new BlackBerry 10 software.

Like the new Q10, this new model features a 3.1-inch display and a physical keyboard. However, it comes with less storage capacity and a slower processing chip. That will let the company sell the Q5 for about half the price of the Q10. The new phone should also help BlackBerry complete with low-cost phones powered by Google’s Android software.

BlackBerry is a hold.

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