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SHININGBANK ENERGY INCOME FUND $23 (Toronto symbol SHN.UN; SI Rating: Speculative) focuses on natural gas production in west-central Alberta. Shiningbank’s revenues rose 32.3% in the three months ended March 31, 2006, to $106 million from $80.1 million a year earlier. Cash flow per unit rose 12.3%, to $0.91 from $0.81. Shiningbank’s average daily production of 21,828 barrels of oil per day equivalent is weighted 23% toward oil and liquids and 77% natural gas. In the latest quarter, the company’s average realized price for oil was $59.43 U.S. and $8.83 U.S. for gas....

PENGROWTH ENERGY TRUST $24.80 (Toronto symbol PGF.B; SI Rating: Average) produces oil and gas in western Canada. The company was one of the first Canadian royalty trusts, starting up in 1988. It’s now one of the largest energy trusts in North America. Pengrowth also holds an 8.4% interest in the Sable Offshore Energy Project. This project consists of six gas fields located near Sable Island, east of Halifax, Nova Scotia. In the three months ended March 31, 2006, Pengrowth’s revenue rose 21.7%, to $291.9 million from $239.9 million. Cash flow per unit rose 7.3%, to $0.88 from $0.82. Pengrowth’s average daily production of 58,825 barrels of oil per day equivalent is weighted 55% toward oil and liquids and 45% natural gas. In the latest quarter, the company’s average realized price for oil was $63.31 U.S. and $8.76 U.S. for gas....

ARC ENERGY TRUST $28.25 (Toronto symbol AET.UN; SI Rating: Speculative) produces oil and gas in western Canada. Like most oil and gas trusts, ARC holds mature, low-risk properties, with a focus on short-term cash flow for payout. In the three months ended March 31, 2006, ARC’s revenue rose 34%, to $318.9 million from $238.1 million. Cash flow per unit rose 25.3%, to $0.94 from $0.75. ARC’s average daily production of 64,600 barrels of oil per day equivalent is weighted 52% toward crude oil and liquids and 48% natural gas. In the quarter, the company’s average realized price for oil was $59.53 U.S. and $8.40 U.S. for gas....

WEYERHAEUSER CO. $63 (New York symbol WY; Conservative Growth Portfolio, Resources sector; WSSF Rating: Average) is a leading forest products company. It owns or leases 36 million acres of timberland in the United States, and Canada. We normally advise investors to avoid forest product stocks, due to high labor costs, excessive environmental regulations and international trade disputes. However, we feel Weyerhaeuser is different. Its large land holdings are worth around $41 a Weyerhaeuser share, and its U.S. and Canadian operations will benefit from a new deal between the two countries to settle a dispute over tariffs on Canadian lumber exports to the U.S. In fact, the company’s Canadian unit will probably get back $300 million of the $377 million in extra duties that it paid in the past five years....

APACHE CORP. $62 (New York symbol APA; Aggressive Growth Portfolio, Resources sector; WSSF Rating: Average) explores for and produces oil and natural gas in North America, the UK, Australia, Argentina, China and Egypt. In 2005, oil accounted for 54% of its production, while gas supplied 46%. In the past few years, Apache has expanded its operations in the Gulf of Mexico. It currently operates over 400 offshore platforms, which accounted for 18% of its 2005 production. Oil companies have operated in the Gulf of Mexico for 60 years. But many of the bigger firms are now looking elsewhere for new reserves, because the yearly threat of hurricane damage increases the risk of drilling in the Gulf. That’s why BP recently sold its remaining operations in the Gulf to Apache for $1.3 billion....

ENCANA CORP. $47 (New York symbol ECA; Conservative Growth Portfolio, Resources sector; WSSF Rating: Average) is a leading Canadian energy company. Natural gas accounts for about 75% of its production. In the past two years, EnCana has sold most of its overseas assets and conventional properties to focus on early-stage natural gas fields in North America. These properties are located mainly in remote mountainous areas, which makes them more expensive to develop....

UNITED TECHNOLOGIES LTD. $62 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Above average) operates in two main fields. Its aerospace businesses include Pratt & Whitney (aircraft engines), Sikorsky (helicopters) and Hamilton Sundstrand (aircraft electronics). These operations supply about 40% of the company’s revenue, and 45% of its profit. It also supplies building equipment and services, which include Carrier (heating and air conditioning), Otis (elevators) and UTC Fire & Security (which provides sprinkler systems, intruder alarms and security services under the Chubb and Kidde banners)....

CANADIAN IMPERIAL BANK OF COMMERCE $83 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the fifth-largest bank in Canada, with assets of $288.9 billion. In 2005, CIBC paid $2.8 billion to settle class-action lawsuits over its involvement with U.S. energy trading firm Enron Corp. We felt at the time that CIBC did not intentionally try to deceive investors, and the stock would bounce back. It’s now back to pre-settlement levels. The bank’s new managers now aim to cut costs by $250 million this year. To put that in context, CIBC earned $1.62 a share (total $580 million) in its first fiscal quarter ended January 31, 2006, down 16.5% from $1.94 a share ($707 million) a year earlier. If you exclude gains on the sale of assets in the year-earlier period, CIBC’s pershare earnings actually grew 11.7%....

BANK OF MONTREAL $62 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s fourth-largest bank, with assets of $305.8 million. The bank continues to expand its Chicago operations, where its Harris Bank subsidiary is the area’s second-largest bank in terms of deposits. In 2005, acquisitions added 21 branches to the Harris network, and expanded its geographic reach to Indiana. Harris now operates close to 200 branches, and supplies 10% of Bank of Montreal’s revenue, and 5% of its profit....

BANK OF NOVA SCOTIA $45 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s third-largest bank, with total assets of $325.0 billion. The bank has the highest international exposure of the big five Canadian banks, and now gets nearly 30% of its revenue and income from overseas assets. Bank of Nova Scotia prefers to invest in developing areas like the Caribbean and Latin America, where spreading prosperity is fueling demand for banking services. It has few operations in the United States. For example, Bank of Nova Scotia just agreed to pay an undisclosed sum for Citigroup Inc.'s retail banking business in the Dominican Republic. The purchase will make it that country’s fifth-largest bank, and enhances its credit card and consumer loan operations....

TORONTO-DOMINION BANK $62 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is the secondlargest Canadian bank, with $384.4 billion in assets. Like Royal, TD is aggressively expanding in the U.S., mainly through subsidiary TD Banknorth Inc., which operates 400 branches in northern New England and upstate New York. TD now gets 8% of its revenue from the U.S. operations. Also like Royal, TD is concentrating on markets close to its current operations. For example, TD Banknorth recently agreed to buy Interchange Financial Services Corp., which has 30 bank branches in northern New Jersey, for $480.6 million U.S. That will make TD Banknorth the ninth-largest bank in New Jersey, with around 130 branches....

ROYAL BANK OF CANADA $47 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s largest bank, with assets of $487.9 billion. In the past few years, Royal has steadily built up its U.S. operations, mainly through acquisitions of regional banks and wealth management firms. Royal prefers to focus on smaller markets like North Carolina where it can quickly build market share. This way, it avoids competing directly with larger U.S. banks. Thanks to a restructuring, earnings from Royal’s U.S. operations in its first fiscal quarter ended January 31, 2006 rose 3.1%, to $101 million from $98 million a year earlier. If you exclude the impact of the rising Canadian dollar, profit at the U.S. division grew 9%. Royal itself earned $0.89 a share (total $1.17 billion) from continuing operations in the quarter, up 18.7% from $0.75 a share ($977 million) a year earlier (all pershare amounts adjusted for a 2-for-1 stock split in April 2006)....

AIC DIVERSIFIED CANADA FUND $44.29 (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 $1.9 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, Sun Life Financial and Royal Bank of Scotland. The fund holds just 25 stocks. Its turnover was 9.1% in 2005. Turnover of 24.3% in 2004 was on the high side. The fund holds 46.7% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Consumer staples, 19.7%; Energy, 10.2%; Consumer discretionary, 8.5%; Health care, 6.1%; and Information technology, 3.8%. Over the last year, the S&P/TSX Index gained 28.4%, mainly due to strength in Resource sector stocks. The fund made 17.0%. Its MER is 2.42%....

AIC AMERICAN ADVANTAGE FUND $7.30 (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 almost 97% of assets in the financial services area. This segment breaks down as follows: Property & casualty insurance companies, 15.2%; Investment banking & brokerage, 14.0%; Multi-line insurance, 12.6%; Life & health insurance, 12.4%; Commercial Banks, 11.8%; Regional Banks, 7.5%; Diversified financials, 7.3%; Insurance brokers, 7.0%; Wealth management, 6.2%; and Consumer finance, 4.1%. AIC American Advantage’s top 10 holdings are Progressive Corp., ING Canada, AFLAC, Morgan Stanley, Hartford Financial Services, Washington Mutual, Northern Trust, Merrill Lynch, JP Morgan Chase and Willis Group Holdings. This fund holds just 17 stocks. Turnover was just 19.1% in 2005, after a high 28.7% in 2004. AIC American Advantage made 13.3% over the last year, compared to a gain of 7.8% for the S&P 500 Index. Its MER is 2.65%....

RBC DIVIDEND FUND $44.90 (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) has 43.3% of its portfolio in Financial services stocks. It has a further 17.4% in Energy stocks. The $7.3 billion Royal Dividend Fund’s top stock holdings are Royal Bank, Bank of Nova Scotia, TD Bank, Manulife Financial, CIBC, TransCanada Corp., Bank of Montreal, Petro-Canada and Power Corp. Over the last five years, Royal Dividend Fund has posted a 13.2% annual rate of return. That’s better than the S&P/TSX 60’s gain of 11.2% over the same period. The fund gained 24.9% over the last year, compared to the S&P/TSX 60’s gain of 30.2%. Royal Dividend’s MER is 1.74%....

BMO DIVIDEND FUND $45.82 (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) currently holds about 53.1% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 13.3%. BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank of Canada, Enbridge, Toronto-Dominion Bank, Canadian National Railway, TransCanada Corporation, Imperial Oil, Power Financial, Shell Canada and Sun Life Financial. Over the last five years, the $5 billion BMO Dividend Fund has posted a 13.3% annual rate of return. That’s much better than the S&P/TSX 60’s gain of 11.2%. The fund gained 24.1% over the last year, compared to a gain of 30.2% for the S&P/TSX 60. BMO Dividend’s MER is 1.75%....

ISHARES MCSI CANADA INDEX FUND $25 (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. These shares are managed by Barclays Global Investors. There are now 26 different MCSI index funds.

This fund has an MER of 0.59%. That’s a lot higher than the 0.17% MER on the S&P/TSE 60 units, also managed by Barclays. It’s also no better than most open-end index funds, which have MERs as low as 0.54%.

We think MCSI Canada’s high MER 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.

We don’t recommend iShares MCSI Canada Index Fund.

DIAMONDS TRUST SHARES $114 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Expenses are about 0.18% of assets. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, Altria Group, American International Group, Johnson & Johnson, Procter & Gamble and Exxon Mobil....

S&P DEPOSITORY RECEIPTS $131 (American Exchange symbol SPY; buy or sell through brokers) are commonly called ‘Spiders’. The fund holds the stocks in the S&P 500 Index. This index is comprised of 500 major U.S. stocks chosen for market size, liquidity, and industry group representation....

NASDAQ-100 TRUST SHARES $41.49 (Nasdaq Exchange symbol QQQQ; buy or sell through brokers) or ‘Qubes’, hold the stocks that represent the Nasdaq-100 Index. This index is made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. Expenses are about 0.20% of assets. At last report, the top 10 highest-weighted stocks were Qualcomm, Microsoft, Apple Computer, Google, Cisco, Intel, Amgen, eBay, Oracle and Starbucks. Nasdaq-100 Trust Shares are a buy for aggressive investors only.

ISHARES CDN LARGECAP 60 INDEX FUND $68.83 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSE. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSE. Most of the 60 stocks in the index are good quality companies. However, to meet the requirement that all sectors are represented, the index holds a few firms we wouldn’t include, such as Abitibi-Consolidated, Quebecor World and Rogers Communcations. The index’s top holdings are: Royal Bank, 6.4%; Manulife, 6.1%; EnCana Corporation, 5.2%; Bank of Nova Scotia, 4.8%; TD Bank, 4.8%; Suncor Energy, 4.8%; Canadian Natural Resources, 3.9%; Bank of Montreal, 3.4%; Barrick Gold, 3.2%; Petro-Canada, 3%; CIBC, 3%; Sun Life Financial, 2.9%; and Canadian National Railway, 2.9%....

TRIMARK CANADIAN RESOURCES FUND $18.17 (CWA Rating: Aggressive) (AIM Funds Management Inc., 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.aimfunds.ca. Buy or sell through brokers.) includes firms we’d rate as Speculative in its top picks. However, we like the fund’s value-seeking, conservative approach to picking stocks in the volatile resource sector. The $459.9 million fund’s MER is 2.47%. Over the last year, Trimark Canadian Resources made 34.7%. Its five-year record is 26.2% annually. The fund’s top holdings are West Fraser Timber, Kinross Gold Corporation, Barrick Gold, Inmet Mining, Mayr-Melnhof Karton AG (Austrian cardboard carton maker), Enerflex Systems, Inco Ltd., Labrador Iron Ore Royalty, Teck Cominco and Sherritt International....

TD RESOURCE FUND $31.13 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web ite:www.tdcanadatrust.ca. No load — deal directly with the bank) invests in companies with superior asset bases, proven management and the ability to internally finance growth. The $240.5 million TD Resource Fund’s top holdings are mostly of ‘Average’ quality or higher. They include Suncor Energy, Alcan, EnCana, Talisman Energy, Cameco Corp., Shell Canada, Petro-Canada, Nexen and Western Oil Sands. The fund’s industry breakdown is: Energy, 48.6%; and Materials, 44%. Its MER is 2.45%. Over the past year the fund has made 45.1%. The fund’s five-year average is 24.0% annually. TD Resource Fund is a buy.

With their first budget, the Conservatives are increasing the federal dividend tax credit on Canadian dividend income. If fully matched by the provinces, this will lower taxes on dividends by about five percentage points for top income earners. That means you’ll pay less tax on dividend income than on capital gains. However, that would make it more advantageous for investors to seek less risky dividends in place of risker capital gains. Just as dividends are taxed at a lower rate than lower-risk interest income, it stands to reason that in a future budget, the Conservatives will introduce measures to lower taxes on capital gains. This could take the form of deferring the capital gains tax for individuals on the sale of assets when the proceeds are reinvested within six months, as proposed in the election campaign....

TOYOTA MOTOR CORP. ADRs $116 (New York symbol TM; WSSF Rating: Above average) is Japan’s largest automobile maker, and the world’s second-largest after General Motors. Sales outside of Japan account for 60% of the total. Toyota also makes industrial equipment such as forklifts, and pre-fabricated housing. Like most automakers, it offers vehicle loans through its financing division. Each Toyota ADR represents two of Toyota’s common shares. Japan imposes a 15% withholding tax on dividends paid to U.S. stockholders. Toyota’s sales grew from $106.4 billion in 2001 (fiscal years end March 31) to $172.7 billion in 2005. Profits slipped from $2.92 per ADR (total $5.4 billion) in 2001 to $2.28 per ADR ($4.2 billion) in 2002, but jumped to $6.66 per ADR ($10.9 billion) in 2005....