Briefly:

(December 24, 2004) Canadians receiving the Canada Pension Plan will receive a 1.7% increase in the new year, however Old Age Security rates will remain unchanged.

The federal government adjust CPP rates annually and OAS rates quarterly. CPP rates are based on inflation over the last 12 months.

The Guaranteed Income Supplement and Allowance programs, part of OAS, will also remain unchanged in the next quarter. Canadians eligible for the OAS have receive a 2.2% increase over the past year, Social Development Canada noted in a release today.

Earlier this week, Ottawa increased the tax bracket threshold on annual income by 1.7% and bumped up the child tax and GST benefits by the same amount, also to account for inflation.

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India to outperform in 2005, says Excel president

(December 24, 2004) India will outperform other world stock markets in 2005, says the president of Toronto-based Excel Funds, whose India China fund has enjoyed year-to-date returns of more than 30%.

Bhim Asdhir says India is attracting new business from around the world. But he says the country’s youth (more than 550 million Indians are under the age of 25) will be the real driving force going forward.

“India’s young people, more highly educated than ever before, are eager to catch up to our standards of living,” says Asdhir. “Couple this with an emerging middle class of about 300 million and you can begin to see that it’s this quest to consume that will continue to drive corporate earnings.”

Excel is adding an RSP version of its India China fund. Both funds are managed by Birla Sun Life AMC, based in Mumbai, India.

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Ottawa adjusts personal income tax rates

(December 23, 2004) The federal government is increasing the tax bracket threshold on annual income by 1.7%, beginning in the new year, to account for inflation.

The 22% tax bracket will now start with those earning a net income of $35,595, up from $35,000; the 26% bracket moves to $71,190, up from $70,000; and the 29% bracket rises to $115,739, up from $113,804.

The 1.7% indexation will also apply to the child tax benefit and the GST benefit, starting July 1, 2005.

Ottawa restored indexation of personal tax and benefit rates in 2000 as part of a five-year tax reduction plan.

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OSC introduces streamlining initiative

(December 23, 2004) In an attempt to speed up its enforcement process, the Ontario Securities Commission has adopted new procedures to deal with clear breaches of securities law.

Critics have frequently chided the OSC for its slow-moving enforcement process, with some cases take years to resolve.

“In certain cases, the facts are straightforward and the misconduct is easily identified,” said Michael Watson, the OSC’s director of enforcement. “These cases, which do not require a complicated investigation, should be brought forward and heard quickly.”

Missing filing deadlines or failing to obtain required registration of certification are examples of cases that can be dealt with swiftly, the OSC says.

The OSC is applying its new procedures to two cases filed on December 22, which will be heard on January 24, 2005.

The cases involve Wells Fargo Financial Canada, which is accused of failing to file prospectus supplements for distribution of debt securities, and chartered accountant Andrew Campbell, who will answer charges of failing to obtain registration from the Canadian Public Accountability Board.

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Canadians confident about their investments, poll suggests

(December 23, 2004) More than half of Canadians say they are better off financially now than they were five years ago, according to a poll released today by Manulife Financial. Twenty-eight per cent said they were in the same financial situation, while only 18% said they were worse off, compared to 1999.

Paying down consumer debt was named by respondents as their current top financial priority, followed by saving for retirement and paying down mortgages.

Manulife’s quarterly investor sentiment index rose compared to the previous survey, with nine out of 10 investment vehicles gaining ground.

“We’re seeing confidence rebuilding in a number of areas, and that’s a good sign as we head into the new year,” said Bruce Gordon, Manulife’s senior executive vice-president. “Canadians have remained positive about investing during the past six years, through some very interesting times,” he added.

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Regulators fine and ban Valentine

(December 23, 2004) Rogue broker Mark Valentine has been hit with a $100,000 fine and a permanent ban following a joint investigation by the Ontario Securities Commission and the IDA.

Valentine, who once headed the brokerage firm Thomson Kernaghan (TK), has been permanently banned from applying for securities registration in Ontario and is banned from trading for 15 years. He also agreed never to reapply for registration with the IDA.

In its statement of allegations, the Ontario regulator said that Valentine created a “culture of conflict and non-compliance at TK and breached Ontario securities laws” through a variety of questionable and complex trades and financings. He also breached the fiduciary and contractual duties owed to the unitholders of certain offshore funds.

In addition, Valentine was accused of failing to inform the IDA that his firm was receiving loans to keep the company afloat, effectively hiding the poor financial circumstances of TK from regulators.

In the settlement agreement, Valentine agreed that he had failed to act in the best interests of the fund’s investors in the course of two transactions, but rather placed his own interests ahead of those of his clients.

The brokerage firm went bankrupt in 2002 after the IDA suspended its licence. Valentine spent two months in jail in Florida that same year on fraud charges after being extradited from Germany.

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CIFSC names new chair

(December 22, 2004) The Canadian Investment Funds Standards Committee (CIFSC) has announced Rudy Luukko as its new chair, effective January 1, replacing outgoing chair John Campea. Luukko says a major overhaul in fund categories can be expected around mid-year.

“Among the new categories will be one called Canadian Income Balanced, which will focus on the growing number of diversified funds that make income distributions at least quarterly,” he says. “I expect that we will also be tightening up the criteria for Canadian Income Trust funds, and imposing significantly stricter requirements on the equity exposure of funds that we place in our fixed income categories.”

Luukko also says CIFSC will address issues such as how past performance should be reported for new classes of a fund, the accurate and timely reporting of management expense ratios and the impact of fund mergers on performance history.

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CIBC proposes fund mergers

(December 22, 2004) CIBC is seeking unitholder approval for the merger of certain CIBC 5-Year Protected Mutual Funds into similar funds in the CIBC Mutual Funds family.

If approved, the CIBC Canadian Fixed Income Index Fund, Canadian Equity Index Fund, U.S. Index Fund and International Equity Index Fund would disappear. CIBC points out that merging the CIBC U.S. Index Fund into the CIBC U.S. Equity Index Fund would entail changes to the investment strategy, switching from the S&P 500 Total Return Index to the Wilshire 5000 Index.

Subject to receipt of regulatory and unitholder approvals, the proposed mergers will occur on or about April 28, 2005.

Effective January 1, 2005, CIBC will be reducing the maximum management fee payable per year (exclusive of GST), for each of the Continuing Funds to 1%, since the actual management fees for each Continuing Fund have been below this level in recent years anyway.

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RBC changes fund team

(December 22, 2004) RBC Asset Management has announced the retirement of senior vice-president John Kellett, manager of the RBC Dividend Fund, the RBC Blue Chip Canadian Equity Fund and the RBC Private Dividend Pool.

John Varao, CFA, senior vice-president has been named as his replacement to oversee these funds. He currently manages the RBC Monthly Income Fund and the RBC Tax Managed Return Fund.

Shane Jones, vice-president and portfolio manager, will continue to co-manage the RBC Dividend Fund and Doug Raymond, associate portfolio manager, will also join the team managing the fund.

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Canadians optimistic over economic prospects, poll suggests

(December 21, 2004) Consumer expectations about future economic conditions are on the rise, a poll released today suggests. The quarterly Decima-Investors Group consumer confidence survey also reveals some “striking” regional differences.

Although the consumer confidence index was little changed from the previous survey, there was a slight bump in the consumer expectations sub-index.

“Consumers in Alberta, B.C. and the Atlantic provinces are increasingly positive in their outlook on the economy, while consumers in central Canada, and particularly Quebec, have become significantly more cautious about the future,” says Charles Feaver, vice-president of research at Investors Group.

The “wait and see” attitude of Canadian consumers likely reflects some mixed economic signals, adds Tony Coulson, vice-president of public affairs at Decima Research. “While the strengthening of the dollar and the growth in the TSX may be seen in positive terms from a consumer point of view, both prices and interest rates increased over the quarter.”

Decima surveyed more than 2,000 Canadians last month.

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Advocis confirms GAMA membership

(December 21, 2004) Advocis has confirmed that it has signed a letter of intent with GAMA International Canada to establish closer links between the two groups.

Under the terms of the agreement, reported last week on Advisor.ca, GAMA — a professional association exclusively for leaders in distribution management within the financial services industry — would become a conference of Advocis, similar to the Conference for Advanced Underwriting (CALU).

“Advocis is pleased to welcome GAMA members to Advocis and we look forward to providing additional value to both membership groups,” said Advocis president Steve Howard in a statement. “This arrangement allows us to achieve economies of scale; both associations promote designation programs, host national conferences, and attract corporate partners. This opportunity allows us to be more efficient in our overall membership offering.”

The agreement still has to approved by the boards of the two associations. That’s expected to happen early in the new year.

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BoC names Deputy Governor

(December 20, 2004) The Bank of Canada has announced the appointment of Tiff Macklem as Deputy Governor of the Bank, joining the Governing Council, effective December 29.

“Mr. Macklem brings to his role as Deputy Governor an outstanding knowledge of economics and monetary policy and a deep understanding of the Bank, its work, and its staff,” said Bank of Canada Governor David Dodge. “These strengths will be crucial to the Bank’s continuing effort to promote the economic and financial welfare of Canada.”

Macklem’s appointment fills the vacancy created by the departure of Mark Carney.

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BCSC raps Jarislowsky, Fraser

(December 20, 2004) The British Columbia Securities Commission has disciplined Jarislowsky, Fraser Limited for advising 43 B.C. clients over 13 years without being registered in that province. Based in Montreal, the firm is also registered in Ontario and Alberta

The firm agreed to pay $235,850 to the BCSC, a sum that includes registration fees that it would have had to pay to operate in B.C. had it been properly registered, along with $5,000 towards the costs of the investigation.

On August 18, 2004, the firm registered as a portfolio manager and investment counsel in B.C.

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Northwest closing Specialty Equity fund

(December 20, 2004) Northwest Mutual Funds Inc. will close its Northwest Specialty Equity Fund to new purchases, effective January 15, 2005. It will remain open for purchases of the Fund as part of the Northwest Quadrant Portfolio asset allocation service, dealing with existing pre-authorized payment plans and automatically reinvested distributions.

“The Northwest Specialty Equity Fund has flourished in the small cap sector for over 15 years,” says Michael Butler, president and COO, Northwest Mutual Funds. “But with success comes growth and maturity. At today’s level of assets, our management team felt that it was in the best interest of current unitholders to close the Fund to maintain the level of quality that Northwest strives to provide.”

Within five years, the fund’s assets rose 180% to $211.8 million.

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BCSC upgrades web presence

(December 20, 2004) The British Columbia Securities Commission has relaunched its website, making it easier for registrants and investors to use.

“People who come to our new website will see there’s a section for investors, companies, and dealers and advisors. Our objective is to provide important and relevant information for the particular user group,” said Brenda Leong, BCSC executive director. “We have arranged and organized the information to make it easier and faster for people to navigate and access our services through the website.”

The site now offers Microsoft Word versions of the most popular forms, which can be used as templates, as well the ability to file certain applications using e-services. The address for the site remains www.bcsc.bc.ca.

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InvestorEd improves fee calculator

(December 20, 2004) The Investor Education Fund is now offering a bilingual version of its popular online Mutual Fund Fee Impact Calculator available at www.investorED.ca. The tool demonstrates the impact mutual fund fees can have on investments over time, including sales fees and management fees.

“This tool is very popular during RRSP season when many investors are choosing mutual funds for their retirement savings plans,” says Terri Williams, president of the Investor Education Fund. “It is very important for investors to learn about the various types of fees they can pay for their investments and realize the impact these fees have over time.”

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