Briefly:

(November 7, 2003) With the mutual fund industry coming under scrutiny, Manulife has announced it is making its proprietary ratings system for funds available to advisors on its Web site’s advisor portal, Repsource.

The firm says describes its i-Watch system as being a “manager for the managers,” rating them on both a quantitative and qualitative basis. Manulife says that the emphasis is on qualitative data, because higher quality will more consistently result in higher performance.

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Mackenzie merging funds

(November 7, 2003) Mackenzie Financial Corporation has announced it plans to merge 11 of its RSP funds inot its Capital Class funds, following October’s restructuring of the Capital Class as domestic properties.

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Surging markets swell CPP

(November 6, 2003) The surging stock market has given a $1.8 billion boost to the CPP’s investment holdings over the summer, according to the CPP Investment Board (CPPIB).

The total CPP portfolio grew by $2.8 billion, to $64.4 billion. The plan earned a 2.8% rate of return for the three months ending September 30, taking the earnings to $4.9 billion over the last six months, for a half-year rate of return of 8.4%. The 43% of the total portfolio managed by the CPPIB earned a three-month return of 5.4%, and a six-month return of 14.5%.

“While I’m again heartened by the most recent quarterly numbers, the CPPIB is not investing for quarterly results. We are investing for quarter-century results,” said John MacNaughton, president and CEO of CPPIB. “We are patient, long-term investors. Our strategy of steadily diversifying the fund into asset classes with higher return expectations continues.”

The portfolio is made up of $27.4 billion in equities and real estate managed by the CPPIB in Toronto, and $37 billion in fixed-income securities administered by the Department of Finance in Ottawa. The $27.4 billion CPPIB portfolio is broken down into 89% public equities, 6% private equities, 3% cash and 2% real estate.

Actuarial projections give the CPP until 2021 before a portion of the investment income is needed to help pay CPP benefits.

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Pro-Hedge offers Principal Protected Notes Series II

(November 6, 2003) Pro-Hedge Funds has announced the introduction of Pro-Hedge Principal Protected Notes Series II, which will feature 100% principal guarantee through Société Générale.

“It’s in keeping with our mission of offering Canadian investors greater access to these top managers who, until now, have been mostly the preserve of institutional investors, some with minimums as high as $1 million,” said Stuart McKinnon, CEO of Pro-Hedge Funds.

Minimum investment in Pro-Hedge Principal Protected Notes Series II is $2,500 and qualifies as 100% Canadian content for RSPs. The notes are available until December 15.

Performance is linked to the Pro-Hedge Series II Portfolio comprised of the Ontario Partners Global Fund (50%); the Sprott Canadian Equity Fund (20%); Lyxor Preservation Capital Fund (J.C. Clarke — 15%) and Lyxor Managed Accounts (15%).

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Mutual fund assets swell

(November 5, 2003) IFIC is reporting an early net new sales estimate of between $300 and $700 million for mutual funds in October.

“Net sales for the month of October are expected to be approximately $500 million, marking the highest month of sales for this year and the third positive sales month within the last four months,” says Tom Hockin, IFIC president and CEO. “Long-term fund sales for October are expected to be about $1 billion, the sixth consecutive positive month and the highest since April 2002.”

Hockin estimates total assets under administration at $420 billion at the end of October, a gain of 2.7% over September and the highest since May 2002.

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AIMR responds to mutual fund inquiry

(November 5, 2003) The Association for Investment Management and Research (AIMR) has issued a statement condemning the late-trading and market-timing practices in the mutual fund industry currently under investigation by the U.S. Senate.

“Fund managers’ use of fund information for their own personal gain or for favoured clients of the firm increases trading costs and reduces returns for the mutual fund and its investing clients,” the statement read. “This is clearly not in the best interests of ‘rank and file’ mutual fund investors.”

AIMR said the practices harm the reputation of the entire financial services sector, which has already suffered serious setbacks to its credibility in recent years. The association called for “a thorough investigation of all firms” allegedly engaged in these practices.

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B.C regulator warns against sloppy disclosure

(November 5, 2003) The B.C. Securities Commission (BCSC) has warned mining and exploration companies to ensure they fully meet their disclosure obligations, saying that investors rely on continuous disclosure.

“Many of the companies in this sector need financing and one of our key functions at the commission is to help foster a fair and competitive capital-raising environment for them,” said Angela Huxham, BCSC director of corporate finance.

BCSC’s chief mining advisor Greg Gosson has arranged two half-day workshops in November in Vancouver to give mining industry professionals guidance on the rules for technical reports and disclosure on mineral projects.

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IG offers DSC option on money market funds

(November 5, 2003) Investors Group has announced it will adopt a deferred sales charge (DSC) purchase option for its Investors Canadian Money Market Fund, Investors U.S. Money Market Fund and Investors Canadian High Yield Money Market Fund.

The new DSC option will be available on or about November 10, subject to regulatory approval. The no-load versions of these funds will remain available.

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RCMP arrest four in offshore investment fraud

(November 5, 2003) The RCMP Commercial Crime Section has arrested four people in London and the Hamilton-Niagara area over an alleged fraud scheme promising an offshore investment to its victims.

The RCMP alleges at least 15 victims from Hamilton, Stoney Creek, Grimsby, Ancaster, St. Catharines, Mississauga, Goderich and London were swindled for amounts ranging from $5,000 US to $103,000 US. The total value of the scheme is over $300,000 US.

The victims invest in a business known as Island Holdings Corporation, a company allegedly designed to accumulate funds for pooled offshore investment opportunities. Police allege that the victims were promised an overly attractive monthly return on their investment. So far they have received either no return or very little return and no refunds.

Charged with 15 counts of fraud over $5,000 are Robert John David Cranston, Robert Edward Solleveld and Desiree Maria Solleveld, all of London, and Gabriel Jorzak of Grimsby, Ontario.

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CSA: OSC can watch fund companies

(November 4, 2003) Despite the Congressional investigation into the American mutual fund industry, one of Canada’s top regulators says there is no sign of problems with Canadian funds.

“We’re not aware that there are significant problems,” said Stephen Sibold, chair of the Canadian Securities Administrators (CSA) in a breakfast speech to the Economic Club of Toronto. “We don’t have a suspicion but the Ontario Securities Commission (OSC) thought it was prudent in light of what’s going on in the U.S. that we take a look to satisfy ourselves.”

Sibold says that since the mutual fund industry is largely located in Ontario, the CSA is content to let the OSC conduct any investigation into late trading or market timing.

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Trimark funds made available in U.S.

(November 4, 2003) American investors will soon be able to invest in three new funds sub-advised by Trimark. The company is rolling out the AIM Trimark Fund, AIM Trimark Endeavor Fund and AIM Trimark Small Companies Fund in the U.S.

“The combination of the investment management expertise of AIM Trimark and the distribution strength of AIM Investments is an excellent example of resource sharing and cooperation of business units across AMVESCAP,” says Gene Needles, president of A I M Distributors, Inc.

The funds will be available through independent financial advisors and AIM Trimark’s American sister company, AIM Investments. Both are owned by Britain’s AMVESCAP PLC.

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Tradeshow brings investors, firms together

(November 4, 2003) Canadian businesses looking for private equity investment may find just what they need at ACG Capital Connection 2003, a one-day tradeshow bringing together $20 billion in private equity and the small companies seeking cash.

Hosted by the Association for Corporate Growth (ACG), the tradeshow will take place November 18 at the Westin Harbour Castle Hotel in Toronto.

The show is sponsored by Canadian Business magazine and Cassels Brock and Blackwell LLP, Comerica Bank, Deloitte & Touche LLP, EdgeStone Capital, Marsh Canada, Presidents of Entrepreneurial Organizations, and TD Capital.

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One Financial launches index-based note

(November 3, 2003) One Financial is introducing the Morgan Stanley Capital International (MSCI) hedge fund index to Canada in the form of a note. The MSCI Hedge Invest Index contains 74 hedge funds covering 11 strategies. The notes, which are on sale until December 15, have a “double guarantee,” offering 110% of principal at maturity.

“One Financial is delighted to be the first to offer Canadian investors the next step in hedge fund investing — a principal-guaranteed index-based product,” says Jeffrey O’Brien, One Financial CEO.

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Pro-Hedge opens second hedge fund offering

(November 3, 2003) Pro-Hedge Funds has assembled an all-star lineup of managers for a fund of funds, the Pro-Hedge Multi-Manager Elite Fund.

Managers include Eric Sprott, Jim O’Donnell, Frank Mersch, Gene Vollendorf from Savoy Capital in Calgary and Dennis Heskell from Mansur Capital in Chicago.

“Until now, some of the managers in this fund have been available only to the very wealthy and to institutional investors, with minimum initial investments as much as $1 million,” says Stuart McKinnon, Pro-Hedge president and CEO. “Pro-Hedge now offers Canadians access to these elite money managers through a product that’s right for the times and for an initial investment of just $5,000 for qualified investors.”

Pro-Hedge’s guaranteed note offering in the spring raised $40 million.

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(11/03/03)