encana

BMO DIVIDEND FUND $34.97 (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 35.1% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 21.1%. The $3.7 billion BMO Dividend Fund’s largest holdings are Manulife Financial, Bank of Nova Scotia, CIBC, Royal Bank, Shoppers Drug Mart, TD Bank, TransCanada Corp., EnCana, Enbridge and Shaw Communications. The fund’s MER is 1.71%. Over the five years to November 30, 2008, the fund posted a 4.6% annual rate of return. The S&P/TSX gained 5.7% annually, but that was largely due to the big run up in resources prices that lasted until early in 2008. The S&P/TSX index holds a high 40% or so of its holdings in Resources stocks....

ENCANA CORP. $60 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.3 million; Market cap: $45.0 billion; SI Rating: Average) is a leading North American producer of natural gas and oil. Natural gas accounts for 80% of its production. EnCana prefers to focus on what it calls “key resource plays”. These are unconventional properties, such as early-stage gas fields and oil sands projects, which have much longer production lives than conventional properties. EnCana has postponed its plan to break itself up into two separate companies — one focusing on natural gas, the other on oil sands and oil refineries. That’s because falling energy prices and the problems in the credit markets make it difficult for the two new smaller companies to raise capital to fund new projects....

Oil prices have dropped from $148 U.S. a barrel in July, 2008 to its current price of around $44 U.S. That has prompted oil companies to delay big investments in Alberta’s oil sands until conditions improve. Still, oil sands projects have huge long-term potential, and will provide decades of growth for Imperial Oil, EnCana and Petro-Canada. Companies such as Finning International that supply equipment and services to oil sands operators should also see huge gains. All four of these companies have moved down lately, but we still see them as buys for long-term gains....

FIDELITY CANADIAN LARGE CAP FUND $17.11 (CWA Rating: Conservative) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests mostly in large-sized firms like those on the S&P/TSX Index, although it may also invest in small and mid-cap stocks. The top holdings of the $339.9 million Fidelity Canadian Large Cap Fund are Royal Bank of Canada, Suncor Energy, Manulife Financial, Canadian Natural Resources, Potash Corporation of Saskatchewan, Research in Motion, EnCana Corp., Bank of Nova Scotia, Barrick Gold and TD Bank. Fidelity Canadian Large Cap Fund’s one-year loss is 27.0%, compared to a loss of 31.4% for the S&P/TSX Index. The fund has averaged 7.8% annually for the last five years....

ISHARES CDN LARGECAP 60 INDEX FUND $12.71 (Toronto symbol XIU; buy or sell through a broker) (units split 4-for-1 in August, 2008) is a good low-fee way to buy the top stocks on the TSX. 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 TSX. Expenses on the units are just 0.17% of assets. 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 Biovail Corp. The index’s top holdings are: Royal Bank, 7.5%; EnCana Corporation, 5.8%; TD Bank, 4.8%; Bank of Nova Scotia, 4.7%; Manulife Financial, 4.6%; Barrick Gold, 4.3%; Canadian Natural Resources, 3.6%; Research in Motion, 3.5%; Suncor Energy, 3.5%; Goldcorp, 3.3%; Potash Corporation, 3.2%; Canadian National Railway, 2.8%; BCE Inc., 2.6%; Rogers Communications, 2.5%; and Bank of Montreal, 2.5%....

We still think high-quality mutual funds with a long-term focus will beat indexes over long periods. If funds invest as we advise — sticking with well-established companies and spreading their assets out across the five main economic sectors — they will tend to lose a lot less than the market indexes in periods when the indexes fall sharply. That’s because big market slides are particularly hard on the hottest, most popular stocks of the preceding market rise, and investing as we do leads you to avoid excessive investment in the hot stocks. Index funds, in contrast, do tend to load up on the hottest, most popular stocks as they rise. That’s because, as they rise, these stocks make up a rising proportion of the index. The most recent example is Potash Corporation of Saskatchewan, which had the highest market cap on the Toronto exchange in June, 2008, on the strength of soaring fertilizer and agriculture prices. The shares have since dropped 70%....

UNITED CORPORATIONS $47 (Toronto symbol: UNC) (165 University Ave., 10th Floor, Toronto, ON M5H 3B8. 416-947-2583. Buy or sell through a broker) invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks. At last report, 35.3% of the fund’s $1.0 billion portfolio was invested in Canadian equities, 23.7% in the U.S., 20.2% in Europe, 6.3% in the UK, 12.5% in Asia and 1.0% in Mexico and Latin America. The fund’s largest holdings included Bank of Nova Scotia, EnCana, Royal Bank, Nexen, Potash Corp., Chevron, ConocoPhillips, Manulife, TD Bank, Pfizer and CN Railway....

SCOTIA CANADIAN GROWTH FUND $44.12 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $460.9 million Scotia Canadian Growth Fund’s largest stock holdings include Manulife Financial, Royal Bank, TD Bank, Research in Motion, Potash Corp., Canadian Natural Resources, Suncor Energy, Bank of Nova Scotia and EnCana Corp. Scotia Canadian Growth currently holds 39.9% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 29.4%....

CIBC CANADIAN EQUITY FUND $18.87 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and also have growth potential. The $450.5 million fund’s top holdings are Manulife Financial, EnCana, Research in Motion, Bank of Nova Scotia, TD Bank, Potash Corp., Suncor Energy, Canadian Natural Resources and CN Railway. The fund’s MER is 2.20%. CIBC Canadian Equity holds 38.8% of its portfolio in Resource sector stocks and 33.5% in Financial services stocks....

BMO EQUITY FUND $24.41 (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 mostly in ‘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 Bank of Nova Scotia, Royal Bank of Canada, TD Bank, Canadian Natural Resources, Suncor Energy, EnCana Corporation, Potash Corp., Manulife Financial, CIBC and Research in Motion. The $1.8 billion fund currently holds 40.5% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 26.1%....