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TD HEALTH SCIENCES FUND $16.09 (CWA Rating: Speculative) (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) invests mostly in U.S. companies with a mixture of large-capitalization stocks and earlier-stage biotechnology shares. The fund’s managers believe all these firms will profit from an aging population stimulating higher spending by governments and individuals on health care, drugs and research. The fund’s top holdings include WellPoint, Amgen, Sepracor, ImClone Systems, Genentech, Gilead Sciences, UnitedHealth Group, Wyeth, Community Health Systems and Cephalon. Its MER is 2.79%. The $286.4 million fund’s manager is well-known U.S. fund manager T. Rowe Price Associates. TD Health Sciences gained 6.6% over the last year....

UNIVERSAL FUTURE FUND $18.38 (CWA Rating: Aggressive) has about half of its holdings invested in technology or information-related firms. However, it cuts risk by picking large-capitalization, well-established companies in those fields. As well, the rest of Universal Future Fund’s portfolio is invested in high-quality, conservative stocks. The top holdings of this $567 million fund are Research in Motion, Texas Instruments, Rogers Commmunications, Cognos Inc., Sun Life Financial, SAP AG, Shoppers Drug Mart, Workbrain Corp., eBay and Celestica Inc. Universal Future Fund’s one-year gain is 5.6%. The Nasdaq composite index (in Canadian dollars) lost 1.8% over the same period. The fund has an MER of 2.47%....

UNIVERSAL CANADIAN GROWTH FUND $20.66 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ont. M5S 3B5. Web site: www.mackenziefinancial.com. 1-800-387-0780; Load fund — available from brokers) holds companies with strong management and sound business prospects. The fund holds fewer than 40 stocks at all times. Top holdings include Bank of Montreal, Manulife Financial, Finning International, Avid Technology, Shoppers Drug Mart, Corus Entertainment, Industrial- Alliance Life Insurance, Edwards Lifesciences, Biosite Inc. and BCE Inc. The fund’s breakdown by economic sector is as follows: 19.3% in Financials, 17.9% in Information technology, 16.1% in Consumer discretionary, 9.2% in Health Care, 9.4% in Industrials, 5.7% in Energy, 6.0% in Consumer staples, 3.7% in Telecommunications and 2.1% in Materials....

LIMITED BRANDS, INC. $23 (New York symbol LTD; WSSF Rating: Average) operates three main retail chains: Limited Brands sells men’s and women’s casual clothing; Victoria’s Secret sells lingerie; and Bath & Body Works sells personal care products such as soaps and fragrances. The company’s move to reposition its Express chain of clothing stores to appeal to younger shoppers seems to be working. In December 2005, same-store sales rose 7% compared with an 18% drop a year earlier. Despite weakness at the Victoria’s Secret and Bath & Body Works chains, overall same-store sales improved by 3%, up from 2%. However, that’s still less than an earlier forecast of 3.4%. Limited Brands is also doing a good job of selling its products though catalogs and the Internet. Its biggest Internet operation is Victoria’s Secret Direct, whose sales in December 2005 rose 17%, compared with a 12% gain a year earlier....

LIZ CLAIBORNE, INC. $34 (New York symbol LIZ; WSSF Rating: Average) designs and markets clothing and accessories for women under roughly 40 labels, including Liz Claiborne, Ellen Tracy and Mexx. It sells these products through major department stores, and over 640 company-owned specialty stores and clearance outlets. It also makes men’s clothing, and licenses its brands to non-apparel manufacturers. Warren Buffett’s Berkshire Hathaway owns 9% of the stock. The company has used acquisitions to spur its growth in the past few years. This has helped it diversify into faster-growing segments of the apparel market, and cut its reliance on products aimed at businesswomen and other professionals. Liz Claiborne is now trying to buy The J. Jill Group, Inc., which sells upscale clothing to women age 35 and older through 175 stores in 34 states. The offer is about 7% more than the $2.84 a share (total $313.6 million) that Liz Claiborne earned in 2004....

JONES APPAREL GROUP, INC. $31 (New York symbol JNY; WSSF Rating: Average) designs and markets men’s, women’s and children’s clothing, footwear and accessories. Major brands include Jones New York, Gloria Vanderbilt and Nine West. Jones hires independent manufacturers to produce these products. It sells through big department stores, and through its own chain of roughly 1,050 retail outlets. To cut costs, Jones has consolidated its denim operations in Mexico into one plant, and closed a distribution center in Pennsylvania. It is also streamlining its production cycles and cutting administrative costs. These changes will cost Jones between $70 million and $80 million. But they should cut its annual costs by $100 million within three years. To put these figures in context, Jones probably earned $2.37 a share (total $276 million) in 2005. The stock now trades at 13.1 times that estimate. The $0.48 dividend yields 1.5%....

MOLSON COORS BREWING CO. $63 (New York symbol TAP; WSSF Rating: Average) has agreed to sell 68% of Kaiser, its money-losing brewery in Brazil, for $68 million in cash. The buyer has also agreed to assume $60 million of Kaiser’s debt. To put these figures in perspective, the company earned $112.6 million or $1.44 a share in the nine months ended September 25, 2005. Following the sale, Molson Coors will still own 15% of Kaiser. That will help make it easier for the company to someday launch its Coors Light brand in Brazil. The stock recently fell $6 after the company said that strong competition from low-priced beers and rising energy and other costs will cut Molson Coors profits in the fourth quarter of 2005, and possibly part of 2006....

AVAYA INC. $10 (New York symbol AV; WSSF Rating: Average) makes telecommunications equipment that helps over one million businesses and government agencies manage their phone and data networks. Avaya was a division of Lucent Technologies Inc. until September 30, 2000, when Lucent handed out its Avaya shares to its investors. Selling equipment accounts for about 47% of Avaya’s total revenue. The remaining 53% comes from equipment rentals, plus maintenance and other services. Overseas markets account for 40% of its revenue. The company’s expertise with traditional phone systems puts it in position to profit from the spread of VoIP technology. Many businesses are now upgrading their systems to handle VoIP, since it can greatly cut their long distance bills. Many Avaya customers are likely to stick with it when they migrate to VoIP, instead of trusting their phones to an untested equipment supplier....

THE PROCTER & GAMBLE CO. $58 (New York symbol PG; WSSF Rating: Above average) is one the world’s largest makers of beauty, personal care and household products. It currently has 22 brands that each generate over $1 billion a year in sales. North American accounts for half of its sales. In October 2005, Procter acquired The Gillette Company, which makes a variety of consumer products such as razors, dental products and batteries. These products nicely complement Procter’s brands, and tend to earn higher profit margins. Procter paid $57 billion in stock for Gillette. But an aggressive stock buyback plan means it really financed 40% of the deal with cash....

VERIZON COMMUNICATIONS INC. $31 (New York symbol VZ; WSSF Rating: Average) provides local and long distance phone service to 145 million customers in 29 states. Through 55%-owned Verizon Wireless, it offers wireless service to 49 million customers across the United States. It also provides Internet access to homes and businesses, and publishes telephone directories. In January 2006, Verizon acquired long distance provider MCI, Inc. for $8.5 billion in cash and stock. The company hopes that MCI’s large corporate client base and fiber optic network will help it keep up with its main rivals, who are using acquisitions to expand market share. MCI will add about $15 billion to Verizon’s annual revenues of about $75 billion. However, integration costs may hurt Verizon’s earnings growth in the next two to three years. Verizon probably earned $2.55 a share (total $7 billion) in 2005....

FEDERATED DEPARTMENT STORES, INC. $71 (New York symbol FD; WSSF Rating: Average) operates around 990 department stores in 45 states. In August 2005, Federated paid $11.7 billion in cash and stock for rival May Department Stores Co. Thanks to the merger, Federated’s sales rose 65.7% in its third fiscal quarter ended October 29, 2005, to $5.8 billion from $3.5 billion. On a same-store basis (excluding the May stores), Federated’s third quarter sales grew just 0.6%. Federated had to borrow the cash to buy May. That increased its long-term debt from 0.4 times equity at the end of fiscal 2005 to 0.7 times....

ARKANSAS BEST CORP. $44 (Nasdaq symbol ABFS; WSSF Rating: Average) specializes in long-haul, less-than-truckload (LTL) shipping services, which combine freight from several different customers into a single truckload. LTL accounts for roughly 90% of Arkansas Best’s revenue. Freight carried by the company includes food, textiles, apparel and furniture. Arkansas Best’s fleet services customers in all 50 states, as well as parts of Canada and Mexico. The company also provides full-truckload shipping services, and transports cargo containers over long distances using trucks and railroads. It also provides logistical services, which help its customers better manage their shipping needs....

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PENGROWTH ENERGY TRUST (Toronto symbols PGF.A $28 and PGF.B $23; SI Rating: Average) owns all or part of several oil and gas properties in Alberta and B.C. Properties that Pengrowth operates account for 55% of its production. The remaining 45% comes from minority investments in other energy projects, including an 8.4% interest in the Sable Offshore Energy Project south of Nova Scotia. Pengrowth prefers to focus on proven properties with sizeable reserves. It also sticks mainly to conventional oil and gas properties, instead of more risky types of investments like oil sands. Conventional assets supply 80% of Pengrowth’s production, while heavy oil and natural gas liquids supply the other 20%. That gives it more stable cash flows, and keeps its operating costs down. Due to bad weather and a shortage of drilling equipment, Pengrowth’s capital spending in 2005 fell slightly, to around $1.15 a unit. Since Pengrowth will shift most of this work to 2006, capital spending will likely rise to roughly $1.45 a unit....

LEGACY HOTELS REAL ESTATE TRUST $8.05 (Toronto symbol LGY.UN; SI Rating: Extra risk) owns 24 luxury hotels with over 10,000 guestrooms in Canada and the United States, including The Fairmont Royal York in Toronto and the Fairmont Le Château Frontenac in Quebec City. Fairmont Hotels & Resorts Inc. (see box) owns roughly 24% of Legacy, and manages all of Legacy’s hotels. In the third quarter of 2005, Legacy earned $0.19 a unit, up 46.2% from $0.13 a year earlier, while cash flow per unit rose 26.8%, to $0.38 from $0.30. Revenue grew 5.9%, to $221.6 million from $209.3 million, as a 3.6% rise in occupancy offset a slight drop in the average daily room rate. Legacy’s Canadian hotels get about a third of their revenue from foreign travelers, mainly from the United States. The 8% rise in the Canadian dollar against the U.S. dollar in the first nine months of 2005 has hurt the flow of U.S. tourists to Legacy’s hotels, and cut into its revenue....

RIOCAN REAL ESTATE INVESTMENT TRUST $23 (Toronto symbol REI.UN; SI Rating: Average) owns or invests in over 200 retail properties in Canada, mainly large, outdoor suburban malls. Ontario and Quebec account for roughly 80% of its revenue. In the three months ended September 30, 2005, RioCan earned $0.22 a unit (total $41.8 million) from continuing operations, up 4.8% from $0.21 a unit ($39.1 million) a year earlier. Cash flow rose 2.6%, to $56.1 million from $54.7 million. But cash flow per unit fell to $0.29 from $0.30 due to more units outstanding. Revenue grew 8.6%, to $149.8 million from $138.0 million. In the past few years, RioCan has steadily sold older or smaller properties so it can focus on properties with greater earning potential, such as “Big Box"-style stores. Thanks to this strategy, the trust has leased nearly 97% of its available space. National chains like Loblaw, Wal-Mart and Canadian Tire accounted for 81.5% of RioCan’s rental revenue at September 30, 2005, up from 80.7% at the end of 2004....

CANADIAN PACIFIC RAILWAY LTD. $48 (Toronto symbol CP; SI Rating: Above average) transports freight such as grain, coal, and industrial products over a 14,000-mile rail network in Canada and the United States. Alliances with other rail companies extend CP’s operations to Mexico. In the three months ended September 30, 2005, CP earned $1.27 a share (total $204 million), up 14.4% from $1.11 a share ($177 million) a year earlier. If you exclude several unusual items, per-share profit rose 29.2%, to $0.84 from $0.65. Higher freight rates and the expansion of CP’s rail network in Western Canada offset higher fuel and labour costs. Consequently, CP’s operating ratio fell to 77.4% from 77.9%. Revenue rose 11.1%, to $1.1 billion from $989.7 million. CP rose to $52 in December 2005. It moved down after Fording Canadian Coal Trust cut its 2006 production estimate. Fording, CP’s biggest customer, accounts for about 15% of its total revenue. However, this will cut CP’s 2006 profits by just $0.10 a share, as rising volumes for grain and industrial goods should offset lower coal shipments....

CANADIAN NATIONAL RAILWAY CO. $92 (Toronto symbol CNR; SI Rating: Average) is Canada’s largest railway, with 19,300 miles of track in Canada and the United States. Goods shipped include forest products, petroleum and chemicals, and grain and fertilizers. In the third quarter of 2005, CN earned $1.47 a share (total $411 million), up 23.5% from $1.19 a share ($346 million) a year earlier. Most of the gain came from higher freight rates to offset rising fuel costs. Revenue rose 5.9%, to $1.8 billion from $1.7 billion. The company is still the most efficient railroad in North America. Its operating ratio (regular operating expenses divided by revenue — the lower, the better) fell to 63.3% in the most recent quarter, from 65.4% a year earlier....

ENCANA CORP. $53 (Toronto symbol ECA; SI Rating: Average) is one of North America’s largest independent natural gas producers. In the past two years, EnCana has sold most of its conventional properties to focus on early-stage assets, particularly natural gas deposits. These properties are usually located in remote, mountainous areas of North America, which makes them more expensive to operate. However, these new deposits are much larger than conventional gas fields. EnCana feels that these assets will last decades longer than its older properties. That extra cash flow should more than offset the higher costs, particularly as production from conventional sources of gas starts to fall....

PETRO-CANADA $49 (Toronto symbol PCA; SI Rating: Average) is Canada’s second-largest oil company, with major production areas in Western Canada and off the coast of Newfoundland. It also sells gasoline through over 1,400 retail stations. In the third quarter of 2005, the company’s production fell 3% from a year earlier due to shutdowns for maintenance and lower output at it older properties. However, higher oil prices offset the lower production. Petro-Canada should start to realize the benefits of several major projects in the next few years. Production should rise between 4% and 7% by 2008 thanks to higher production at Syncrude (Petro- Canada has a 12% interest) and the start-up of the new White Rose offshore oil platform near Newfoundland....

IMPERIAL OIL LTD. $119 (Toronto symbol IMO; SI Rating: Average) is Canada’s biggest producer of oil and natural gas. It also operates a nationwide chain of retail gasoline stations under the “Esso” banner. U.S.-based ExxonMobil Corp. owns 69.9% of Imperial. Production at many of Imperial’s mature properties in Western Canada is dropping, so it’s investing heavily in new sources of oil. It owns 25% of the massive Syncrude oil sands joint venture in Northern Alberta. Syncrude is now expanding and it’s hard to predict costs in complex projects like this. For instance, Syncrude’s latest upgrades will cost twice their original forecast. Imperial is also building its own oil sands project at Kearl Lake for $6.5 billion, although ExxonMobil will share some of the cost. That’s more than three times the $2.05 billion or $5.74 a share that Imperial earned in 2004. The company aims to start work on the project in 2007, and begin production in 2010....

CANADIAN TIRE CORP., LTD. $69 (Toronto symbol CTR.NV; SI Rating: Above average) is best known for its 459 Canadian Tire retail stores, which carry a unique mix of automotive, home improvement and sporting goods. The company also sells its goods over the Internet. Other operations include Canada’s largest independent chain of gasoline stations, consisting of 253 gas bars, 242 convenience stores and kiosks and 65 car washes, plus the Mark’s Work Wearhouse chain of 335 casual clothing stores. In 1994, Canadian Tire began replacing its traditional stores with “New-Format” stores, which are bigger and better lit. The company later refined this design into the “Concept 20/20" store, whose more flexible layout lets stores carry more fast-selling merchandise. Concept 20/20 stores also feature other innovations, such as a central customer service counter and improved signage....

RBC CANADIAN EQUITY FUND $24.09 (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 Montreal, Bank of Nova Scotia, Royal Bank, EnCana Corporation, Petro- Canada, CN Railway, Suncor Energy and Manulife Financial. The $4.1 billion fund is reasonably well-balanced by industry sector. But it does hold a relatively high 31.7% of its holdings in Financial stocks. These stocks will benefit as the economy continues to recover, and it’s hard to match the big-five banks’ record of consistent earnings and dividend growth. But if you hold this fund, remember to adjust your overall portfolio to reflect the addition of a large Financial services component....

TD CANADIAN EQUITY FUND $29.13 (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 Manulife Financial, Suncor Energy, Royal Bank, EnCana, TD Bank, Petro-Canada, Rogers Communications, Bank of Nova Scotia, Falconbridge and Valero Energy.

The $2.4 billion fund currently holds about 31.8% of its portfolio in Financial services shares....

FIDELITY FOCUS TECHNOLOGY FUND $9.19 (CWA Rating: Aggressive) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-407 7; Web site: www.fidelity.ca. Load fund — available from brokers) invests mainly in technology companies. This includes computer services, computer software, computer systems, communications systems, electronics, office equipment, scientific instruments and semiconductors (computer chips). The fund expanded in June, 2003 from primarily a U.S. focus to a global scope in its stock selections. Right now, it sees the most attractive opportunities for technology investing in the U.S., Japanese and South Korean markets. The fund looks for stocks with strong earnings growth that appear undervalued....