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BMO EQUITY FUND $31.63 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) generally invests in the shares of 20 to 40 “blue-chip” Canadian companies. These stocks are selected based on the manager’s outlook for the industry they operate in, the earnings record of each company, the strength of management, and the potential for growth. BMO Equity Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Sun Life Financial, EnCana Corporation, Barrick Gold, CIBC, Bank of Nova Scotia and Telus. The $2.2 billion fund currently holds 35.9% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 20.0%....

RBC CANADIAN EQUITY FUND $27.30 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) invests mostly in larger-capitalization stocks, but also looks for opportunities in small and mid-cap stocks. The fund’s 10 largest holdings are TD Bank, Manulife Financial, Bank of Nova Scotia, Royal Bank, EnCana, Barrick Gold, CN Railway, CIBC, Suncor Energy and Bank of Montreal. The $4.7 billion fund holds 31.6% of its holdings in Financial stocks. It also holds 21.5% in Energy stocks....

TD CANADIAN EQUITY FUND $30.40 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Suncor Energy, Royal Bank, TD Bank, Rogers Communications, Canadian Oil Sands Trust, CN Railway, Tim Hortons, Canadian Natural Resources and Teck Cominco. The $2.9 billion fund currently holds about 28.0% of its portfolio in Financial services shares. It also has a bias towards Energy stocks, with 21.7% of its holdings in that sector....

ISHARES CANADIAN BOND BROAD INDEX FUND $28.97 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) (formerly the iUnits Government of Canada 10 Year Bond Fund) mirrors the performance of the Scotia Capital Universe Bond Index. This index consists of a diversified range of investment grade Canadian government and corporate bonds, with a term to maturity of more than one year. At last report, the bonds in the index were 45.3% Government of Canada bonds, 26.1% Provincial Government bonds, 1.2% Municipal bonds and 24.7% Corporate bonds....

MCDONALD’S CORP. $44 (New York symbol MCD; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.2 billion; Market cap: $52.8 billion; WSSF Rating: Above average) is now thinking about selling or spinning off its struggling Boston Market chain, which operates 620 rotisserie chicken restaurants in 28 states. Meanwhile, McDonald’s earned $0.61 a share in the fourth quarter of 2006, excluding a $0.39 gain on the Chipotle sale and share exchange. That’s 29.8% more than the $0.47 it earned in the year-earlier quarter. Strong demand for new products, including a chicken wrap and a new coffee blend, helped increase December same-store sales in the United States by 6.9%. Same-store sales rose 8.2% in Europe, and 4.8% in Asia....

IDEARC INC. $31 (New York symbol IAR; Income Portfolio, Consumer sector; Shares outstanding: 146.0 million; Market cap: $4.5 billion; WSSF Rating: Average) publishes over 1,200 white pages and yellow pages directories in 35 states. The company is the former directories division of Verizon Communications Inc. In November 2006, Verizon spun off Idearc to its stockholders as a tax-deferred dividend of one Idearc share for every 20 Verizon shares held. Idearc has a 30-year deal to supply Verizon with directories, which cuts its risk. Revenue from directories has weakened in the past few years, as more people use the Internet to locate individuals and businesses. Rising paper and transportation costs have also squeezed profits. But Idearc owns SuperPages.com, a leading online directory....

WINDSTREAM CORP. $15 (New York symbol WIN; Income Portfolio, Utilities sector; Shares outstanding: 476.8 million; Market cap: $7.2 billion; WSSF Rating: Average) provides traditional telephone services to over 3 million customers, mainly in rural areas across 16 states. It also offers Internet access and business communication services. The company took its present form in July 2006, when Alltel Corp. merged its telephone operations with Valor Communications Group Inc. Alltel investors received a tax-deferred dividend of 1.0339267 shares of Windstream for each Alltel share held. The spin-off let Alltel focus on its wireless operations....

TIM HORTONS INC. $31 (New York symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 191.8 million; Market cap: $5.9 billion; WSSF Rating: Extra risk) operates over 2,600 stores in Canada that sell coffee, donuts and a variety of other foods. The company also operates roughly 300 outlets in the United States, mostly near the Canadian border. Franchisees operate about 97% of its outlets. The company was a wholly owned subsidiary of Wendy’s International Inc. until March 2006, when Wendy’s sold 17.25% of its Tim Hortons’ shares to the public at $23.16 each. In September 2006, Wendy’s handed out its remaining 82.75% stake to its own shareholders as a tax-deferred special dividend....

AMERIPRISE FINANCIAL INC. $59 (New York symbol AMP; Conservative Growth Portfolio, Finance sector; Shares outstanding: 242.0 million; Market cap: $14.3 billion; WSSF Rating: Average) provides financial planning services and products to individuals and institutions. In October 2005, former parent American Express Inc. handed out one Ameriprise share for every five Amex shares held. As an independent company, Ameriprise launched a national advertising campaign to establish its brand. This seems to be paying off. In the three months ended September 30, 2006, earnings before unusual items rose 28.8%, to $0.94 a share from $0.73 a year earlier. Revenue rose 5.3%, to $2.0 billion from $1.9 billion....

ISHARES CANADIAN SHORT BOND INDEX FUND $28.12 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the Scotia Capital Short Bond Index. This index consists of a diversified range of investment grade federal, provincial, municipal and corporate bonds, with terms to maturity of between one and five years. Top issuers include Canada Mortgage and Housing, TD Capital Trust, Province of Quebec, GreatWest Lifeco, Bell Canada and Bank of Nova Scotia....

WELLS FARGO & CO. $37 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 3.4 billion; Market cap: $125.8 billion; WSSF Rating: Above average) is the fifth-largest bank in the U.S. by assets. Unlike the other big banks, Wells Fargo prefers small acquisitions that expand its presence in certain markets. That’s usually a cheaper way to enter new areas than building new branches. Wells Fargo also uses acquisitions to enter niche markets, such as crop insurance. The company still relies on home mortgages and its retail banking operations for the bulk of its profits. In the fourth quarter of 2006, it earned $0.64 a share, up 12.3% from $0.57 a year earlier. Revenue grew 10.6%, to $9.4 billion from $8.5 billion....

WACHOVIA CORP. $56 (New York symbol WB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 2.0 billion; Market cap: $112.0 billion; WSSF rating: Average) is the nation’s fourth-largest bank. Like Bank of America and J.P. Morgan, Wachovia has used acquisitions to grow in the past few years. In 2005, it tried to buy MBNA, but could not reach agreement on a price. However, Wachovia wound up with 150,000 of MBNA’s credit card accounts. That helped it start its own credit card business, and it now has 350,000 credit card accounts. Credit cards account for just 1% of Wachovia’s total loans, so there’s plenty of room to expand this business. Wachovia’s latest acquisition is its $24.2 billion cash and stock purchase of Golden West Financial Corp., one of our long-time WSSF recommendations. Golden West gave Wachovia a much greater presence in California and nine other western states, and increased its assets by roughly 20%....

J.P. MORGAN CHASE & CO. $50 (New York symbol JPM; Income Portfolio, Finance sector; Shares outstanding: 3.5 billion; Market cap: $175.0 billion; WSSF Rating: Above average) is the third-largest bank in the United States. In the past few years, J.P. Morgan has expanded its retail banking operations, which offsets its exposure to its more volatile businesses like stock trading. In 2003, it paid $58 billion in stock for Bank One Corp., which greatly expanded its presence in the Midwest. In October 2006, it swapped its corporate trust business, which provides securities custody and processing services, for Bank of New York’s 338 retail branches in the New York City area. Thanks to these new assets, income from continuing operations in the fourth quarter of 2006 rose 47.3%, to $1.09 a share (total $3.9 billion) from $0.74 a share ($2.6 billion) a year earlier. These figures exclude a $622 million gain on the swap....

BANK OF AMERICA CORP. $53 (New York symbol BAC; Income Portfolio, Finance sector; Shares outstanding: 4.5 billion; Market cap: $238.5 billion; WSSF Rating: Above average) is the second-largest bank in the United States by assets, after Citigroup. The company has used big acquisitions to expand in the past few years. In 2004, it acquired FleetBoston Financial for $47.3 billion in cash and stock. In 2006, it paid $34.6 billion in cash and stock for credit card specialist MBNA Corp. It recently agreed to pay $3.3 billion for U.S. Trust Corporation, which provides asset management to high net worth clients. The company aims to complete this purchase in the first quarter of 2007. Growth by acquisition can be a source of risk. But these purchases increased Bank of America’s presence in markets that it would probably never reach through internal growth....

CANADIAN IMPERIAL BANK OF COMMERCE $99 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the fifth-largest Canadian bank, with $304.0 billion in assets. CIBC ran into trouble a few years ago, and absorbed big losses on the shut down of its U.S. retail banking operations. It also had to pay $2.8 billion to settle a class action lawsuit over its involvement with Enron. But the bank’s focus on its less risky retail businesses is now paying off. It earned $2.32 a share (total $819 million) in its fourth fiscal quarter ended October 31, 2006, up 12.6% from $2.06 a share ($728 million) a year earlier. If you exclude unusual items, per-share income rose 38.9%, to $2.00 from $1.44. Foreign exchange losses helped cut revenue in the quarter by 14.7%, to $2.9 billion from $3.4 billion. The year-earlier figure also included several one-time gains....

BANK OF MONTREAL $68 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s fourth-largest bank, with assets of $320.0 billion. Outside of Canada, its biggest operation is Harris Bank, which operates 200 branches in Chicago. The United States accounts for roughly 15% of Bank of Montreal’s income. Harris aims to expand its operations in the U.S. Midwest to between 350 and 400 branches, which will give it the scale it needs to compete with bigger U.S. lenders. As part of this strategy, it recently acquired First National Bank & Trust for $325 million. That will add 32 branches in Indiana, and $1.3 billion U.S. in assets....

BANK OF NOVA SCOTIA $51 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the third-largest bank in Canada, with assets of $379.0 billion. Bank of Nova Scotia has few operations in the U.S. It prefers to focus on developing countries in Latin America and Asia where it has a better chance to improve its market share. Its operations outside of Canada now supply 30% of its earnings. A good example of the bank’s strategy is its recent $90 million purchase of a 68% stake in Dehring Bunting & Golding Ltd., one of Jamaica’s largest brokerage firms. Bank of Nova Scotia plans to use its retail branches in the Caribbean to promote Dehring’s services....

TORONTO-DOMINION BANK $69 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s second-largest bank with $392.9 billion in assets. Like Royal Bank, TD has expanded its American operations in the past few years. These businesses now provide around 45% of TD’s income, In 2006, TD combined the U.S. operations of its TD Waterhouse discount brokerage subsidiary with rival Ameritrade to form TD Ameritrade. TD owns 39.8% of this operation, which is now among the top three discount brokers in the U.S....

ROYAL BANK OF CANADA $54 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the largest bank in Canada, with assets of $536.8 billion. It also operates in the United States and 30 other countries. International operations supply a third of its income. Royal has steadily built up its U.S. operations in the past few years. It recently bought Flag Financial Corp. for $456 million U.S. Flag Financial operates 17 branches in Atlanta. Royal also agreed to buy 39 branches in Alabama for an undisclosed sum. se purchases will strengthen Royal’s retail banking business in the fast-growing southeastern U.S. It also gives Royal more opportunities to offer its retail customers other services, such as insurance and wealth management....

FPI LTD. $7.85 earned $0.25 a share in the third quarter of 2006 compared with a loss of $0.35 a year earlier, thanks to cost controls and the extra earnings from recent acquisitions. However, sales fell 15.4%, to $174.5 million from $206.2 million, due to lower selling prices for fish products and the high Canadian dollar. Hold. FORDING CANADIAN COAL TRUST $24 has reorganized itself from an income trust into a royalty trust. The change removed restrictions on foreign ownership, and should increase Fording’s liquidity (the units also trade in New York). The new structure will not affect Fording’s current $3.80 annual distribution rate, which yields 15.8%. Buy. GENNUM CORP. $14 has gained over 40% in the past six months, mainly due to a new plan to improve customer service. The company also aims to expand its overseas sales. Gennum probably earned $0.55 a share in its fiscal year ended November 30, 2006. But profits could grow to $0.77 in fiscal 2007, and the stock trades at 18.2 times that figure. Buy....

AIC DIVERSIFIED CANADA FUND $46.74 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds stocks of some U.S. firms. The $1.7 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, Loblaw, Thomson Corp., Brookfield Asset Management, Royal Bank, Manulife Financial and Royal Bank of Scotland. The fund holds just 23 stocks. The fund holds 47.8% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Consumer staples, 19.4%; Energy, 8.6%; Consumer discretionary, 7.6%; and Health care, 5.5%....

AIC AMERICAN ADVANTAGE FUND $8.21 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks, with over 99% of assets in the financial services area. This segment breaks down as follows: Investment banking & brokerage, 14.2%; Multi-line insurance, 13.5%; Property & casualty insurance companies, 12.9%; Life & health insurance, 12.6%; Diversified banks, 10.4%; Insurance brokers, 8.0%; Regional banks, 7.9%; Diversified financials, 7.3%; Wealth management, 6.1%; Consumer finance, 2.8%; Thrifts & mortgage finance, 2.3%; and Conglomerates, 1.2%. The $119.3 million AIC American Advantage’s top 10 holdings are Progressive Corp., ING Canada, AFLAC, Morgan Stanley, Hartford Financial Services, TD Bank, Northern Trust, Merrill Lynch, JP Morgan Chase and Willis Group Holdings. This fund holds just 18 stocks....

RIOCAN REAL ESTATE INVESTMENT TRUST $24.49 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has total assets of $4.5 billion consisting of ownership interests in a portfolio of 204 retail properties across Canada, including 8 under development. These properties contain over 50.7 million square feet of leasable area. RioCan is Canada’s largest owner of neighbourhood shopping centres. These are enclosed malls in smaller urban centres. But where it’s showing the strongest growth is as the largest owner of ‘New Format’ malls. These are in the suburbs of larger cities, and are made up largely of ‘Big Box’ stores with lots of parking and room for new building. RioCan’s revenue in the three months ended September 30, 2006 was $160.7 million, up 7.3% from $149.8 million a year earlier. Cash flow per unit rose 29%, to $0.40 from $0.31. Portfolio occupancy is at an all-time high of 97.5%. RioCan’s annual distribution of $1.32 gives it a current yield of 5.4%....

FORDING CANADIAN COAL TRUST $24.06 (Toronto symbol FDG.UN; SI Rating: Average) holds a 60% interest in Elk Valley Coal in B.C., the world’s second-largest supplier of metallurgical coal, a key ingredient in steelmaking. Elk Valley supplies approximately 21% of the global market. Fording has vast reserves of coal. Mining could continue at current rates for 25 years; with further development, its reserves could last 100 years. In the three months ended September 30, 2006, Fording’s revenues fell 20.8%, to $451.8 million from $570.8 million. Cash flow per unit fell 44.9%, to $0.92 from $1.67....

PEMBINA PIPELINE INCOME FUND $16.03 (Toronto symbol PIF.UN; SI Rating: Extra risk) has interests in 14 feeder pipeline systems with a total length of 8,350 kilometres. This includes the Pembina System, in operation since 1954. The company also holds a 50% interest in the Fort Saskatchewan Ethylene Storage Limited Partnership. Pembina’s total network is the largest feeder operation in Canada. These pipelines bring oil and gas from fields in northeastern B.C. and western and northern Alberta to refineries, or feed into major pipelines such as the Enbridge Pipeline System....