Briefly:

(October 1, 2004) The Ontario Securities Commission says it has begun discussions with four mutual fund firms regarding allegations of market timing.

The regulator sent letters to CI, AIC, AGF, and Investors Group on September 20 asking for an explanation of frequent trading in certain funds between 2000 and 2003. They were given until yesterday to respond.

“We are committed to resolving these matters as expeditiously as possible,” said Michael Watson, the OSC’s director of enforcement.

The discussions are part of the OSC’s continuing review of potential trading abuses in the Canadian fund industry. Trading practices at other companies are also under investigation, the commission said, but to date, no other firms have been identified.

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Ethical launches new balanced, index funds

(October 1, 2004) Ethical Funds today announced the addition of two products to its fund family: the Ethical Monthly Income Fund and the Ethical Canadian Index Fund.

“The launch of these funds shows our continued commitment to leading the sustainable investment marketplace in Canada,” says Ethical president Don Rolfe.

The Ethical Monthly Income Fund is a balanced fund focused on providing investors with a steady flow of income, which will be paid monthly, the company said in a statement.

The Ethical Canadian Index Fund tracks the new Ethical Canadian Index, which matches, as closely as possible, the weightings of the individual investments within the S&P Total Return Composite Index. However, it excludes those companies that fail to meet Ethical’s sustainable investment guidelines.

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AIM Trimark makes portfolio manager changes

(October 1, 2004) AIM Trimark is making portfolio management changes to three of its global funds.

AIM Global Health Sciences Fund will be managed in Toronto by Heather Peirce and co-managed by Jim Young of AIM Trimark.

A Houston-based portfolio management team, consisting of Clas Olsson, Jason Holzer, Borge Endresen and Matt Dennis, will manage AIM European Growth Fund. The same team manages AIM’s International Growth Class Fund.

AIM Indo-Pacific Fund will be managed by British-based Stuart Parks and Paul Chesson, both with many years experience managing Asian equities, AIM Trimark says.

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Clarington announces plans for new closed-end trust fund

(October 1, 2004) Clarington Investments has filed a preliminary prospectus for the new Clarington Diversified Income and Growth Fund.

The fund is a closed-end unit trust, Clarington says, aimed at providing unitholders with monthly cash distributions targeted at 7% per year based on the initial $10 per unit original issue price.

The fund will invest in a diversified portfolio consisting primarily of income trusts, high-yield bonds, investment-grade bonds, growth equities and dividend-paying equities. KBSH Capital Management will manage the new offering.

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Manulife terminates two funds

(October 1, 2004) Manulife Mutual Funds is terminating all classes of the Elliott & Page Active Bond Fund and the Elliott & Page Global MultiStyle Fund, effective March 31, 2005.

Manulife says the funds are small and the company wants to focus resources on mandates more representative of investors’ needs.

As of August 31, 2004, the Elliott & Page Active Bond Fund held under $10 million in assets under management and the Elliott & Page Global MultiStyle Fund held under $5 million in assets.

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MD announces fund closures

(September 30, 2004) MD Funds Management today announced plans to terminate three funds. The MD International Growth RSP Fund, MD U.S. Large Cap Value RSP Fund and the MD Global Bond Fund will be closed to new unitholders effective immediately. Current unitholders have until December 10 to decide whether to redeem or switch to other MD funds, at no cost.

“The decision to terminate the funds was made after careful review and was approved by the board of directors,” the company said today in a statement. “MD Funds Management continually reviews their fund family to stay on top of current market changes and to meet the evolving needs of clients.”

MD Funds, whose products are sold to physicians, is a subsidiary of the Canadian Medical Association, with assets under management of $18 billion.

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Real Assets cuts ties with Gildan

(September 30, 2004) Real Assets Management has divested shares of Gildan Activewear from all its portfolios after the clothing firm shut down a factory in Honduras.

The Vancouver-based socially responsible fund firm says it has been working with Montreal’s Groupe Investissement Responsible since last year in an attempt to approve conditions and workers’ rights at Gildan factories.

Earlier this year, Gildan officials met with labour groups to discuss problems at the Honduras operation and potential solutions. At the same meeting, Gildan announced it was closing the factory, putting 1,800 people out of work.

“By shutting down a ‘problem’ factory Gildan is telling the workers in that region that they must keep quiet about labour and human rights violations or they’ll lose their jobs,” said Real Assets CEO, Deb Abbey. “We don’t believe that this is in the interest of shareholders or long-term company sustainability.”

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Ottawa bumps up OAS rates

(September 30, 2004) The federal government announced today that basic old age security (OAS) pension rates will rise to $471.76 per month, a 1.1% increase, effective October 1.

The OAS is available to all Canadians over the age of 65, although it is subject to a clawback for higher-income retirees.

The guaranteed income supplement (GIS), intended for lower income seniors, will also climb 1.1%. Ottawa adjusts OAS and GIS rates quarterly, based on inflation.

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Faircourt to launch new split trust

(September 30, 2004) Faircourt Asset Management today announced plans to introduce a new income and growth split trust, the fourth such product offered by the Toronto-based firm.

The split trust uses a dual security structure consisting of trust units and preferred securities. Faircourt says this format provides investors with greater ability to choose the tax character of distributions they will receive from an underlying portfolio composed primarily of income trusts, in addition to dividend-paying North American equities.

The trust will be advised by Acuity Investment Management.

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Saxon launches fixed income funds

(September 29, 2004) Saxon Funds Management have launched two new fixed income funds. The Saxon Bond Fund and Saxon Money Market Fund are immediately available to Canadian investors.

“These are the first new funds added to the Saxon family since 1997,” said Rick Howson, chief investment officer, Howson Tattersall Investment Counsel, which will manage both funds. “Saxon aims to meet investors’ needs in areas where we have demonstrated investment expertise and where we can bring value to our clients. With a broader portfolio management team, we can now offer fixed income funds that make sense for Saxon investors.”

The management fee for the Bond Fund is 1.15% and that for the Money Market Fund is 0.6%.

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Ottawa names O’Neill to review fiscal assumptions

(September 29, 2004) The federal government has announced that a comprehensive, independent review of the government’s economic and fiscal forecasting will be conducted by Tim O’Neill, chief economist and executive vice-president of BMO Financial Group.

“Since we last reviewed our forecasting a decade ago, we’ve gone from chronic deficits to seven consecutive budget surpluses,” said Minister Goodale. “This year the International Monetary Fund referred to Canada’s ‘considerable success’ in fiscal management, and our use of private sector economic forecasts and prudence factors. We want to build on this. We want to make sure we are equipped with the best possible projections and are benchmarked against the best in the world.”

The review is expected to be completed early next year.

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IFIC names new chairman

(September 29, 2004) The Investment Funds Institute of Canada has named Michel Fragasso as chairman of the board of directors. Fragasso is a senior vice-president with Norbourg Gestion d’actifs and has taught finance and marketing management courses at several universities and colleges.

Fragasso played an “instrumental” role in the creation of the Quebec Investment Funds Council and the recently established support office of the International Investment Funds Association, according to a release from IFIC. A member of the Board of Directors of The Investment Funds Institute of Canada since 1996, Fragasso also serves on the Board of Directors of FundSERV Inc.

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RSPs funding urban real estate sales

(September 28, 2004) While Canadians are slow to top up their RRSP contributions, they show little reluctance to the idea of taking the cash out through the federal Home Buyers’ Plan (HBP). More than 123,000 account-holders took advantage of the program in 2002, according to Canada Mortgage and Housing Corporation’s (CMHC) Mortgage Market Trends.

“Some 1.3 million individuals have benefited from the program since 1992,” said Ali Manouchehri, a senior economist at CMHC’s Market Analysis Centre. “Participants in this program have withdrawn over $13 billion from their RRSPs to purchase homes over the same period.”

Use of the program has been concentrated in Toronto and Montreal, with these two cities combined accounting for nearly 45% of funds withdrawn.

“A combination of continued economic growth and job creation, positive demographic factors, and low mortgage rates will sustain demand for homeownership in both new and resale housing markets,” said Manouchehri, predicting residential mortgage credit will top $600 billion in 2005.

In October 2003, StatsCan reported that tax filers had used only 9% of the available limit on contributions in 2002, leaving roughly $274 billion of unused space. Eighty per cent of those filing taxes had room to contribute to their RRSP, but only 34% did so.

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Empire introduces “Solution 20” term

(September 28, 2004) Empire Financial Group has introduced a new Term 20 life insurance product and improved rates for Term 10 products in the Canadian marketplace.

“Solution 20 provides, what we think is, a better alternative to creditor insurance offered by major banks,” says Jim Gibson, director of individual marketing. “Solution 20 lets the insured name the beneficiary instead of the funds going to the creditor. Also, the face amount remains the same over the life of the policy. That’s different than typical creditor insurance which has a declining value.”

The new Term 20 offering is specifically designed for the mortgage market. The new rates for Solution 10 term insurance have been targeted to be most affordable for people between the ages of 35 and 55 needing insurance amounts between $100,000 and $1 million. Both products are convertible and renewable up to age 100, regardless of change in health or insurability.

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MDRT names executive committee

(September 28, 2004) The Million Dollar Round Table has named its new executive committee, including its first female President, Adelia C. Chung, CLU, ChFC, of Honolulu. The MDRT Foundation also named Vancouver’s James E. Rogers, CLU, CFP, as Secretary.

Rogers is a 31-year member of the Round Table, has earned 22 Top of the Table qualifications and served as Chair of its 1988 Advisory Board. Chung is a 22-year Round Table qualifier with six Top of the Table and seven Court of the Table honours, designations reserved for producers who achieve the highest levels of production and client service.

Also named to the executive committee are George B. Pickett, J.D., CLU, of Jackson, Mississippi, immediate past president; Stephen O. Rothschild, CLU, ChFC, of St. Louis, Missouri, first vice-president; Philip E. Harriman, CLU, ChFC, of Portland, Maine, second vice-president.

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VenGrowth getting into structured products

(September 27, 2004) VenGrowth Capital Partners has announced the creation of a new structured products division and has tapped a former bank executive to lead the new firm. Ian McPherson, who comes to VenGrowth from National Bank Financial, has been appointed president of Criterion Investments.

“An entrance to the structured products space is central to VenGrowth’s strategy to be a leading Canadian alternative asset manager,” the firm said in a release today.

“VenGrowth is a market leader in the alternative asset sector and I’m excited to be joining a firm committed to playing a leading role in the growing Canadian structured products market,” said McPherson.

VenGrowth — best known for its labour-sponsored funds — has more than $1 billion in assets and expects to issue its first structured product this fall.

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Sentry Select announces new series of deposit notes

(September 27, 2004) Sentry Select Capital today launched its third series of principal-protected blue chip notes. The deposit notes are issued by National Bank and their performance is linked to a benchmark portfolio of 15 Canadian income trusts, 15 Canadian stocks and 15 American stocks, chosen by Sentry Select.

The deposit notes mature after eight years, after which investors will be repaid their principal, plus any appreciation in the benchmark portfolio.

The issue price of the new notes is $100 each with a minimum investment of $2,000. The second series raised gross proceeds of $51.5 million.

“With over $91 million raised with the first two series of linked notes, it confirms our belief that investors want the security of principal protection with the opportunity for long-term growth potential,” said Sentry Select vice president Raniero Corsini.

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Norshield nabs hedge fund expert

(September 27, 2004) Norshield Financial Group has appointed hedge fund industry veteran Tristram Lett as senior vice president, effective October 4.

Lett has more than 20 years of experience as a portfolio manager and began managing hedge funds in 1990 with Trafalgar Capital. He comes to Montreal-based Norshield from RBC Capital Markets, where he held the position of director of alternative investments.

“With growing interest in our investment and risk management processes both in Canada and globally, we are delighted to have Tristram join our team. His wealth of knowledge and expertise in the hedge fund sector will significantly augment our already strong position in the hedge funds business, as well as assist us in responding to the attention that our unique investment philosophy is receiving,” said Norshield CEO John Xanthoudakis.

Lett is co-chair of AIMA Canada’s Education and Research Committee and is a member of the editorial advisory board of Canadian Investment Review.

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