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THE WESTAIM CORP. $0.37 (Toronto symbol WED; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 94.1 million; Market cap: $34.8 million; SI Rating: Speculative) has two main subsidiaries: wholly owned iFire Technologies Corp. is developing a new, cheaper way to make flat-panel displays; 74.8%-owned Nucryst Pharmaceuticals Corp. (Toronto symbol NCS) makes medical products that prevent infection in burns and wounds. Based on current prices, Nucryst now accounts for $0.36 per Westaim share. Westaim was the technology development subsidiary of fertilizer producer Viridian Inc., a one-time recommendation of ours. In 1996, Viridian handed out its Westaim shares to its own shareholders as a special dividend. In the second quarter of 2007, Westaim’s losses fell to $0.08 a share from $0.13 a year earlier, thanks to a gain on sale of real estate. Revenue fell 4.3%, to $6.7 million from $7.0 million....

ARBOR MEMORIAL SERVICES INC. $30 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.6 million; Market cap: $318.0 million; SI Rating: Average) owns 41 cemeteries, 27 crematoria, three reception centres located on cemetery premises and 93 funeral homes in eight provinces. Arbor gets most of its revenue from advance sales of cemetery plots and memorial services. It holds this cash in trust until it performs a service. Meanwhile, it earns interest income from this cash. Interest income typically accounts for just under 10% of Arbor’s total revenue. In its third fiscal quarter ended July 31, 2007, revenue rose 8.1%, to $57.7 million from $53.4 million a year earlier. Most of the increase came from higher demand for funeral services, as well as value-added services such as receptions and catering. Sales of new cemetery plots rose 7.3%. Earnings in the quarter crept up to $0.40 a share from $0.39....

TORSTAR CORP. $20 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.7 million; Market cap: $1.6 billion; SI Rating: Above average) is a leading Canadian media company. Its main asset is The Toronto Star, the largest daily newspaper in Canada. It also publishes over 160 daily and weekly newspapers in Southern Ontario. Newspapers account for about 70% of Torstar’s total revenue. Torstar’s other main business is wholly owned Harlequin Enterprises Ltd., the world’s largest publisher of romance fiction. Harlequin sells its books in 110 countries. The company’s revenues grew slowly, from $1.42 billion in 2002 to $1.56 billion in 2005, but slipped to $1.53 billion in 2006. Profits fell from $1.62 a share (total $125.3 million) in 2002 to $1.41 a share ($112.7 million) in 2004. Earnings rebounded to $1.52 a share ($118.8 million) in 2005, but restructuring charges cut profit to $1.01 a share ($79.1 million) in 2006....

IVY CANADIAN FUND $30 (CWA Rating: Conservative) invests in high-quality, largecapitalization stocks. The $3.7 billion fund’s top holdings include Shoppers Drug Mart, Imperial Oil, Manulife Financial, Canadian National Railway, Reckitt Benckiser plc, McDonald’s Corp., Thomson Corporation, Diageo plc and PepsiCo. Ivy Canadian’s breakdown by industry is: Consumer staples, 22.3%; Financials, 13.9%; Consumer discretionary, 13.7%; Industrials, 12.4%; and Energy, 8.3%....

IVY EUROPEAN FUND $13.44 (CWA Rating: Aggressive) holds mostly good quality stocks, although it has underperformed the benchmark Morgan Stanley indexes. We don’t see any reason to hold a mutual fund that concentrates in Europe. If you want European exposure, consider Ivy Foreign Equity Fund (see above), or the closed-end European Equity Fund (see box this page). Ivy European Fund is a sell.

IVY ENTERPRISE FUND $4.85 invests in smaller and medium-sized companies. The $201.4 million fund has an MER of 2.42%. The fund’s overall choice of stocks doesn’t inspire our confidence. Its top holdings are Richie Brothers Auctioneers, National Instruments, Resources Connection, Idexx Laboratories, Astral Media, Canadian Western Bank, FirstService Corp., Henry Schein and Stratasys Inc. We think investors can do better by buying some of the other small-cap funds we recommend in Canadian Wealth Advisor....

IVY FOREIGN EQUITY FUND $28.24 (CWA Rating: Conservative) outperformed the Morgan Stanley benchmark international index over the last 10 years. The fund gained 6.2%, and that was better than the Morgan Stanley benchmark’s gain of 4.6%. Ivy Foreign Equity Fund made 4.4% over the last year. The fund invests in companies based outside of Canada, but cuts risk by avoiding direct investment in emerging markets. Ivy Foreign Equity is one of our top foreign fund recommendations. Still, we think non-U.S. international funds should make up at most 10% of the holdings of a conservative investor. The fund’s top 10 holdings are Reckitt Benckiser plc (UK household & healthcare products), Mc- Donald’s Corp., L’Oreal SA (French cosmetics), Shopper’s Drug Mart, Nestle SA, Henry Schein Inc., (U.S. healthcare), PepsiCo (U.S. food & beverage), William Demant (hearing health products), and Diageo plc (UK alcoholic drinks)....

IVY GROWTH AND INCOME FUND $23.41 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ont. M5S 3B5. 1-800-387-0780; Web site: www.mackenziefinancial.com. Load fund — available from brokers) is a balanced fund, holding a mixture of stocks, bonds and cash. The fund has returned 6.3% annually for the 10 years. It made 4.1% over the last year. The fund’s MER is 2.14%. The fund’s top stock holdings are Shoppers Drug Mart, PepsiCo, Canadian National Railway, Manulife Financial, Imperial Oil, Thomson Corp., McDonald’s Corp., Becton Dickinson (U.S. medical technology), Diageo plc (UK alcoholic beverages) and Reckitt Benckiser plc (UK household & healthcare products). This $3.0 billion fund holds 24% of its assets in bonds. Interest rates on bonds are now under 5% annually in Canada. That’s the total return that a bond can provide, from today until it matures. However, bonds leave investors at the mercy of inflation, which shrinks the purchasing power of all fixed-return investments. In fact, an upsurge in inflation could wipe out all returns on bonds, and some of their principal besides....

PENGROWTH ENERGY TRUST $17.85 (Toronto symbol PGF.UN; SI Rating: Average) produces oil and gas in western Canada, as well as offshore Nova Scotia. Pengrowth’s average daily production of 89,633 barrels of oil equivalent is weighted 48% toward oil and liquids and 52% natural gas. In the latest quarter, the company’s average realized price for oil was $71.81 U.S. and $7.61 U.S. for natural gas. In the three months ended June 30, 2007, Pengrowth’s revenue rose 56.6%, to $444 million from $283.5 million, largely due to acquisitions. Cash flow per unit rose 29.1%, to $1.02 from $0.79....

ARC ENERGY TRUST $20.75 (Toronto symbol AET.UN; SI Rating: Speculative) produces oil and gas in western Canada. In the three months ended June 30, 2007, ARC’s revenue fell slightly, to $305.6 million from $306.7 million. Cash flow per unit fell 16.7%, to $0.80 from $0.96. The decline in cash flow came largely from higher production costs. ARC’s average daily production of 61,637 barrels of oil per day equivalent is weighted 52% toward crude oil and 48% natural gas. In the latest quarter, its average realized price for oil was $65.21 U.S., down 9.3% from $71.86 a year earlier. However, natural gas was $7.38 U.S., up 16.2% from $6.35....

H&R REAL ESTATE INVESTMENT TRUST $23.88 (Toronto symbol HR.UN; SI Rating: Extra risk) holds interests in 35 office properties, 114 single-tenant industrial properties and 144 retail properties. Over half are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the U.S. The company now has an industry-leading portfolio occupancy rate of 99.7%. H&R recently acquired a portfolio of 12 refrigerated distribution facilities in six provinces for $215 million. The cold storage properties are leased for an average term of 19.3 years to a major Icelandic client. Revenue in the three months ended June 30, 2007 was $152.3 million, up 12.1% from $135.8 million a year earlier. Cash flow per unit was unchanged at $0.47. H&R’s units now pay $0.1142 per month for a yield of 5.7%....

CANADIAN REIT $30.23 (Toronto symbol REF.UN; SI Rating: Extra Risk) owns a portfolio of more than 140 income properties consisting of retail, industrial and office properties across Canada and in the Chicago, Illinois area. CREIT’s revenue in the three months ended June 30, 2007 was $70.9 million, up 8.5% from $65.3 million a year earlier. Cash flow per unit rose 8.8%, to $0.53 from $0.49. The units now yield 4.4%. CREIT focuses on acquiring properties in prime locations, usually near major metropolitan centres, that attract strong tenants, maintain high occupancy rates and deliver a reliable stream of rental income....

RIOCAN REAL ESTATE INVESTMENT TRUST $25.40 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 207 retail properties across Canada, including 10 under development. These properties contain over 53 million square feet of leasable area. RioCan’s revenue in the three months ended June 30, 2007 was $179.5 million, up 15.5% from $155.4 million a year earlier. Cash flow per unit rose 8.6%, to $0.38 from $0.35. RioCan recently increased its annual distribution by 2.3%, to $1.35 from $1.32. Its units now yield 5.2%. RioCan is still a buy.

NEWELL RUBBERMAID INC. $28 (New York symbol NWL; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 279.3 million; Market cap; $7.8 billion; WSSF Rating: Average) makes a wide variety of household goods, including plastic storage containers, tools, window blinds and writing instruments. The company is currently in the middle of a threeyear restructuring aimed at cutting its annual expenses by $150 million. This involves selling less profitable operations, and shifting production overseas. In the three months ended June 30, 2007, Newell’s profits before restructuring costs rose 19.6%, to $0.55 a share (total $154.6 million) from $0.46 a share ($131.6 million) a year earlier. Sales grew 3.7%, to $1.69 billion from $1.63 billion....

TUPPERWARE BRANDS CORP. $32 (New York symbol TUP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 61.8 million; Market cap: $2.0 billion; WSSF Rating: Above average) makes plastic containers for food and other items. It also makes beauty and personal care products. The company sells its products through independent dealers instead of traditional stores. In the second quarter of 2007, Tupperware’s earnings grew 36.6%, to $0.56 a share from $0.41 a year earlier. Sales grew 12.4%, to $492.9 million from $438.6 million, mainly due to strong growth in North America and Asia. If you exclude the positive impact of foreign exchange rates, per-share earnings rose 18.4%, and sales grew 8%. Tupperware is now targeting international markets for new growth. Expanding prosperity in Asia, Latin America and Eastern Europe is making Tupperware’s products more affordable....

BAXTER INTERNATIONAL INC. $56 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 644.7 million; Market cap: $36.1 billion; WSSF Rating: Average) makes medical equipment through three main divisions. Medication Delivery makes intravenous equipment and systems (roughly 40% of sales); BioScience makes various vaccines and drugs (40%); and Renal makes dialysis equipment (20%). Baxter gets 55% of its revenue from overseas customers. The company is still having problems with its Colleague medication delivery pumps. Earlier this year, it had to recall 4,500 of the 280,000 pumps in service to fix a defect that could inject too much medication into a patient....

INVACARE CORP. $24 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 30.9 million; Market cap: $741.6 million; WSSF Rating: Average) makes wheelchairs, motorized scooters and other mobility and home care products. It sells them through over 15,000 home health care and medical equipment dealers in the United States, Canada, Europe, Australia and New Zealand, as well as directly to government agencies. Foreign markets account for about a third of Invacare’s sales. In the second quarter of 2007, sales rose 5.8% to $393.3 million from $371.8 million a year earlier. Most of the increase came from favorable foreign exchange rates and an acquisition. Earnings before restructuring charges fell 41.7%, to $0.14 a share (total $4.3 million) from $0.24 a share ($7.6 million). Invacare spends roughly 2% of its sales on research....

C.R. BARD INC. $88 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.4 million; Market cap: $9.1 billion; WSSF Rating: Average) makes medical devices in four main areas: Vascular products such as stents and catheters (24% of 2006 sales); Urology products such as drainage and incontinence devices (30%); Oncology products that detect and treat various types of cancer (24%); and Surgical Tools (18%). Other devices provided the remaining 4% of sales. The company’s wide array of products cuts its reliance on a single device. Most of its products are single-use devices that hospitals and clinics must constantly replenish. That gives Bard predictable revenue streams. Overseas markets account for 30% of Bard’s sales, which cuts its geographic risk....

3M COMPANY $93 (New York symbol MMM; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 715.8 million; Market cap: $66.7 billion; WSSF Rating: Above average) is a diversified manufacturer formerly known as Minnesota Mining & Manufacturing. 3M owns a range of well-known brand names. Post-it notes, Scotch tape, Scotch-Brite household cleaning products, Scotchguard protection and Thinsulate insulation are just a tiny sample of its wide product line. The company sells more than 50,000 products in over 200 countries. Foreign sales are about 63% of total revenues. 3M’s six business segments comprise industrial and transportation (approximately 30% of sales), display and graphics (16%), health care (16%), consumer and office (14%), safety, security & protection (13%) and electronics and communications (11%)....

CAE INC. $13 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 252.3 million; Market cap: $3.3 billion; SI Rating: Average) makes commercial and military flight simulators. It also operates pilot training facilities in 19 countries. In its first fiscal quarter ended June 30, 2007, earnings excluding unusual items rose 25% to $0.15 a share from $0.12 a year earlier. Revenue grew 6.2%, to $358.3 million from $337.3 million. CAE spends about 9% of its revenue on research, so it’s more profitable than it appears. The $0.04 dividend yields 0.3%. The stock fell to below $3 after 9/11, but rose to $15.25 in July 2007. It now trades at 20.3 times the $0.64 a share it should earn in fiscal 2008. As well, rising fuel costs could slow demand for CAE’s products and services....

BOMBARDIER INC. (Toronto symbols BBD.A $6.29 and BBD.B $6.26; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.7 billion; Market cap: $10.6 billion; SI Rating: Extra risk) is the world’s third-largest maker of commercial aircraft, after Boeing and Airbus. It specializes in small business jets, and regional jets that carry around 100 passengers. The company also makes passenger railcars. In its second fiscal quarter ended July 31, 2007, Bombardier earned $0.05 a share, up 66.7% from $0.03 a year earlier (all amounts except share price and market cap in U.S. funds). The most recent quarterly figure excludes a one-time writedown of its investment in a group that’s refurbishing the London, UK subway system. Strong demand for business jets and railcars, particularly in China and Russia, expanded sales by 14.3%, to $4.0 billion from $3.5 billion. Bombardier should earn $0.21 U.S. a share in 2007, and the stock trades at 28.8 times that estimate. That’s reasonable in light of its improving prospects....

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $32 (Toronto symbol BA.UN; Conservative Growth Portfolio, Utilities sector; Units outstanding: 130.8 million; Market cap: $4.2 billion; SI Rating: Above average) is the main provider of telephone services in Atlantic Canada. It also serves rural parts of Ontario and Quebec. BCE Inc. controls 43.4% of Bell Aliant. As part of the deal that created Bell Aliant, the fund transferred the bulk of its wireless business to BCE. Without these operations, the fund now aims to spur growth by expanding the availability and capacity of its high-speed Internet service. Just 20% of Bell Aliant’s customers use its high-speed Internet service, so there’s plenty of room to grow....

MANITOBA TELECOM SERVICES INC. $49 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.6 million; Market cap; $3.2 billion; SI Rating: Average) is Manitoba’s main provider of local, long distance and wireless telephone service, with over 90% of the market. Other services include Internet access and a digital TV service. It also owns Allstream, a national provider of communication services to businesses. Allstream accounts for roughly 55% of Manitoba Tel’s revenue, but just 40% of its profit. That’s because the business telecom market is more competitive than Manitoba Tel’s traditional operations. But Allstream’s plan to focus on small businesses that its bigger competitors tend to ignore should help it improve its roughly 10% market share....

TELUS CORP. (Toronto symbols T $56 and T.A $54; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 331.7 million; Market cap: $18.5 billion; SI Rating: Above average) provides local and long distance telephone service in British Columbia, Alberta and parts of Quebec, and wireless service across Canada. A big part of the company’s success in the past few years is its wireless operations, which now account for 40% of its total revenue. Telus prefers to focus on long-term customers, which cuts the need for expensive promotions such as free phones. That has helped keep its wireless profit margins high compared to its main competitors (BCE and Rogers). Telus also tends to hang on to its customers longer....

ISHARES MCSI CANADA INDEX FUND $30 (American Exchange symbol EWC; buy or sell through brokers) invests in most of the stocks in the Morgan Stanley Capital International Canada Index. These stocks represent Canada’s largest and most-established public companies, accounting for about 60% of the market capitalization of all publicly traded stocks. This fund has an MER of 0.54%. These shares are managed by Barclays Global Investors. There are now 18 different MCSI index funds. MCSI Canada’s MER is more than triple the 0.17% MER on the S&P/TSE 60 units, also managed by Barclays. We think that defeats the main advantage of index funds. The spread between iShares MCSI Canada’s high MER and that of a low-fee fund may not appear to make a lot of difference in a single year, but there is no point in paying more than you need to....