Toronto-Dominion Bank

TD CANADIAN EQUITY FUND $32.70 (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 Royal Bank, Suncor Energy, TD Bank, Rogers Communications, Alcan, Canadian Oil Sands Trust, CN Railway, Ivanhoe Mines, Goldcorp and EnCana. The $3.1 billion fund currently holds about 27% of its portfolio in Financial services shares. It also has a bias towards Energy stocks, with 27% of its holdings in that sector....

Here are five large funds run by each of Canada’s big-five banks. Each holds the kind of conservative, well-balanced portfolios of high quality stocks we recommend. All five have a high weighting in Financial services and Energy stocks. However, they stick with high-quality issues with sound fundamentals, so these concentrations don’t add a lot of risk. Each has its quirks, but overall they are well positioned for low-risk returns. TD CANADIAN EQUITY FUND $32.70 (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 Royal Bank, Suncor Energy, TD Bank, Rogers Communications, Alcan, Canadian Oil Sands Trust, CN Railway, Ivanhoe Mines, Goldcorp and EnCana....

FIDELITY TRUE NORTH FUND $31.32 (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) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies. Fidelity True North Fund’s top holdings include high-quality stocks such as Manulife Financial, TD Bank, Suncor Energy, Rogers Communications, En- Cana, Bank of Montreal, Nexen, Telus Corporation and Royal Bank. The fund now invests 9.8% of its assets outside of Canada. The fund’s breakdown by economic segment is: 29.1% in Financials, 27.3% in Energy, 11.0% in Materials, 8.8% in Telecommunication services, 6.8% in Information technologies, 5.2% in Industrials, 4.7% in Consumer discretionary and 1.6% in Consumer staples....

TRIMARK CANADIAN FUND $25.19 (CWA Rating: Conservative) (AIM Funds Management, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.aimfunds.ca. Buy or sell through brokers.) uses a bottom-up stock-picking style, focusing on fundamentals like earnings, cash flow and low debt. The $1.2 billion fund’s 10 largest holdings are TD Bank, Bank of Nova Scotia, Power Corp., Royal Bank, Alimentation Couche-Tarde, Toromont Industries, Loblaw, Molex Inc., Willis Group Holdings and Manulife Financial. Trimark Canadian made 8.2% annually over the last 10 years. It made 14.3% in the past year, compared to the S&P/TSX’s gain of 12.7%. The fund’s MER is 1.64%. Trimark Canadian Fund is still a buy.

Here are two funds offered by Trimark. We rate both as conservative. Both cut risk by investing in high-quality, large-capitalization stocks. Note that the two funds emphasize different areas of the economy: Trimark Canadian has 26.8% of its holdings in financial services; its next largest holding is in consumer discretionary (consumer companies sensitive to economic cycles such as autos, leisure, hotels, consumer retailing) at 16.5%. Trimark U.S. Companies’ largest allocation is in financial services at 19.5%, followed by health care at 17.6%. TRIMARK CANADIAN FUND $25.19 (CWA Rating: Conservative) (AIM Funds Management, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.aimfunds.ca. Buy or sell through brokers.) uses a bottom-up stock-picking style, focusing on fundamentals like earnings, cash flow and low debt....

TORONTO-DOMINION BANK $69 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 719.0 million; Market cap: $49.6 billion; SI Rating: Above average) has competed its acquisition of the 41% of TD Banknorth Inc. that it did not already own for $3.2 billion U.S. That’s 17% more than the $3.1 billion (Canadian) or $4.29 a share that TD earned before one-time items in the fiscal year ended October 31, 2006. TD plans to restructure TD Banknorth’s operations, including closing 24 of its 600 branches in the northeast U.S. It also plans to bring in some of the techniques that have improved the performance of its Canadian operations, such as longer branch hours. Due to growing credit losses, restructuring costs and intense competition for new customers, TD Banknorth’s contribution to the parent’s second quarter earnings fell 61%, to $23 million from $59 million a year earlier. But lower costs will help this business earn around $108 million in the third quarter, and $123 million in the fourth quarter....

ISHARES DIVIDEND INDEX FUND $23.50 (Toronto symbol XDV; buy or sell through a broker) began trading in December, 2005. The fund currently holds the 30 highest yielding Canadian stocks. These stocks are included in the index based on their dividend growth, yield and average payout ratio. The weight of any one stock in the fund is limited to 10% of the fund’s assets. Its MER is 0.50%. iShares Dividend Index Fund now yields 2.8%. The fund’s top holdings are Manitoba Telecom at 6.8%; CIBC, 6.8%; Bank of Montreal, 6.2%; Russel Metals, 4.6%; TD Bank, 4.7%; National Bank, 4.5%; Teck Cominco, 4.3%; IGM Financial, 4.1%; Royal Bank, 4.0%; and BCE Inc., 3.9%....

TRIMARK CANADIAN FUND $25.14 (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.) uses a bottom-up stock-picking style (using fundamentals such as earnings, cash flow and low debt) that looks at valuation measures and then tries to pick stocks selling at a discount to long-term value. The fund’s 10 largest holdings are TD Bank, Bank of Nova Scotia, Manulife Financial, Power Corporation, Royal Bank, Alimentation Couche- Tard, Time Warner, Loblaw, Toromont Industries and Molex Inc. The fund’s portfolio breaks down by sector as follows: Financials, 26.6%; Consumer discretionary, 17.1%; Information technology, 14.6%; Industrials, 9.1%; Consumer staples, 8.3%; Materials, 6.7%; Energy, 5.7%; Health care, 5.7%; and Telecom, 3.2%....

HARBOUR FUND $21.92 (CWA Rating: Conservative)(C.I. Mutual Funds, 151 Yonge St., 7th Floor, Toronto, ON M5C 2W7. 1-800-268-9374; Web site: www.cifunds.com. Load fund — available from brokers) invests in only 25 to 40 high-quality Canadian stocks, and it may hold stocks for four or five years to realize their value. The $4.7 billion Harbour Fund’s top holdings include Royal Bank, Bank of Nova Scotia, Suncor Energy, Royal Bank of Scotland, CIBC, Alcan, EnCana Corp., Rio Tinto, TD Bank and BHP Billiton. The Harbour Fund gained 8.2% over the last year. Its MER is 2.34%....

ISHARES CDN LARGECAP 60 INDEX FUND $76.72 (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 Cott Corporation and Celestica. The index’s top holdings are: Royal Bank, 7.1%; Manulife, 6.0%; Bank of Nova Scotia, 5.1%; TD Bank, 4.9%; EnCana Corporation, 4.4%; Suncor Energy, 3.9%; Bank of Montreal, 3.9%; Canadian Natural Resources, 3.3%; CIBC, 3.3%; Sun Life Financial, 2.9%; Barrick Gold, 2.8%; BCE Inc., 2.6%; and Canadian National Railway, 2.5%....