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(January 31, 2007) Arrow Hedge Partners has announced the launch of Arrow Canadian Income Fund. The fund will invest primarily in Canadian income trusts and dividend-paying common shares, with a focus on North American securities.

The fund’s investment objective is to achieve a high level of income and potential capital gains in order to generate a risk-adjusted return with moderate volatility.

“With the recent changes to the income-trust legislation introduced by the Canadian government, we believe this is an ideal time to start a long/short fund that can take advantage of the considerable market opportunities created,” says Mark Purdy, chief investment officer of Arrow Hedge Partners.

The fund will be managed by Ben Cheng of Aston Hill Financial Ltd., a subsidiary of Overlord Financial Inc. Cheng use Aston Hill’s “bottom up” research approach, which concentrates on companies that operate in defensible niche markets and have strong cash flow and compelling growth prospects.

“The securities selected for Arrow Canadian Income Fund will go through a rigorous analytical process, with a focus on free cash flow,” Cheng said.

The fund will be available for purchase by accredited investors on February 1, 2007.

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Public accounting improving, but problems remain: report

(January 31, 2007) Canadian public accounting firms of all sizes need to do more to improve audit quality and meet internal and professional standards, the Canadian Public Accountability Board said Wednesday in its fourth public report on its inspections of accounting firms.

CPAB is an independent public accounting auditor that monitors the conduct of accounting firms.

Of particular note are CPAB inspections of Canada’s six national firms, BDO Dunwoody, Deloitte & Touche, Ernst & Young, Grant Thornton Canada, KPMG and PricewaterhouseCoopers. CPAB said these firms audit more than 4,500 public companies and other reporting issuers in Canada, representing about 70% of the total market share by number of clients and, CPAB estimates, more than 90% if measured by market capitalization.

“While high-quality audit work was evident throughout our inspections of the national firms, we were nevertheless disappointed that our work identified such a large number of instances where engagement teams did not fully comply with an aspect of the Generally Accepted Auditing Standards or with the firms’ own policies and procedures,” said CPAB CEO Keith Boocock. “We expect that each firm will share our sense of disappointment and will work diligently to impress upon its partners and staff the need to improve compliance in future.”

The report does ring an optimistic tone, saying that each of the big firms has made progress since CPAB’s inspections in previous years and that they have strong, quality leadership and generally effective controls over human resources, client acceptance and continuance.

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Conference Board predicts global economic slowdown

(January 31, 2007) According to the Conference Board of Canada’s World Outlook, economic slowdown in the United States will weaken growth in the world economy from 3.8% in 2006 to 3.2% in 2007.

The Conference Board said the U.S. is facing tumbling home sales nationally and falling prices in some parts of the country, as well as weaker vehicle and retail sales and orders of durable goods.

It does forecast, though, that the U.S. economy should have a soft landing. The United States is expected to avoid slipping into a recession because a weaker U.S. dollar will boost American exports and business investment will remain strong, leading to an anticipated economic growth of 2.2% in 2007.

“The health of the U.S. economy casts a long shadow over global growth,” said Kip Beckman, one of the Conference Board’s principal research associates. “A sharper-than-expected decline in the U.S. dollar would hurt countries that rely on the U.S. market for their exports, such as Canada, Mexico and those in the Asia-Pacific region.”

The Conference Board also foresees slowdowns in Western Europe and Japan, despite coming off of strong performances in 2006.

Europe’s real gross domestic product is expected to grow by 2% in 2007, but tax increases in Germany and a stronger euro will negatively affect the short-term outlook. The slowdown in the United States will affect the Asia-Pacific region by slowing Asian exports and weakening real GDP growth from the 5.3% recorded in 2006 to an estimated 4.6% in 2007.

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BCSC recovers some investor money from U.S. based Ponzi scheme

(January 31, 2007) British Columbia residents who collectively lost about $1.3 million in a U.S.-based “Ponzi” scheme (otherwise known as a pyramid scheme) could recover about half of their money after the B.C. Securities Commission negotiated a settlement with four men involved in enticing people — mostly evangelical Christians — to invest in the venture.

John DeVries, Ernest Reed Grafke, Ralph Bromley and Wesley Campbell have admitted that they directly or indirectly got B.C. residents to invest in Amber Enterprises without being registered or filing a prospectus, as required under securities laws.

DeVries, a Turks and Caicos resident, established Amber to allow people to invest in IPIC Investments, a California-based operation that supposedly ran an import–export business but was found to be a Ponzi scheme after U.S. regulators raided it.

In the settlement, DeVries and Grafke have together agreed to pay $500,000 to the BCSC for restitution to B.C. Amber investors. Also part of the settlement, DeVries and Grafke consented to an order by the Supreme Court of British Columbia enabling the B.C. Civil Forfeiture Office to provide restitution to investors.

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Hartford launches new fund, increases trailer fees

(January 31, 2007) Hartford Investments Canada announced on Wednesday it is launching a global balanced fund as well as implementing an automatic bump-up to the advisor trail commission upon expiry of its deferred sales charge.

The new Hartford Global Balanced Fund is designed to provide risk-averse investors with a balanced approach to global investing. The fund will be co-managed by Bill Kanko, president of Black Creek Investment Management Inc. and portfolio manager to the Hartford Global Leaders Fund, and Robert Crusha and Raymond Uy, Hartford Investment vice-presidents.

Kanko will manage the equity portion of the Hartford Global Balanced Fund, while Crusha and Uy will share leadership responsibilities for the fund’s fixed-income portion.

Hartford also announced there will be an automatic trail increase upon expiry of its deferred sales charge schedule on Class B units. The maximum annual service fee rate will increase from the current 0.50% to 1.00%.

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(01/31/07)