Acquisitions of Canadian securities by non-residents, on the other hand, cooled down significantly to $335 million in August. This was a significant pull-back from months of strong purchases earlier in 2006. Investments were reduced to moderate levels for both debt instruments and equities.

Strong purchases of foreign bonds continue

Canadian investors extended the trend of heavy acquisitions of foreign bonds in August. The $4.9 billion of purchases over the month pushed the total amount so far in 2006 to $31.2 billion, surpassing the record annual purchase of $27.6 billion in 2005.

Over half of August's investment went to buy US government bonds and another one-third was channelled to acquire non-US bonds. The majority of these foreign bonds, $4.5 billion worth, were acquired from investors in the United States and the United Kingdom.

Record high investment in foreign money market paper

In August, Canadian investors acquired a record $2.2 billion of foreign money market paper, after adding $1.7 billion in July. August's investment was concentrated in non-US paper, totalling $2.1 billion. Canadians bought foreign paper from January to March, purchasing $1.0 billion worth over the quarter, but were sellers from April to June, divesting $1.1 billion.

Substantial foreign shares added to Canadian investment portfolio

Canadian investors posted the 19th straight month of foreign equity purchases in August. They acquired $5.1 billion worth over the month, up from the previous two months. The purchases totalled $23.9 billion over the first eight months of 2006, exceeding the annual buying of any of the previous four years.

While a sizable $1.9 billion was invested in US stocks, nearly double the amount went to acquire overseas shares in August. August's heavy purchases were driven by investment by Canadian pension funds.

Non-residents sell Canadian bonds but buy Canadian money market paper

Non-resident investors decreased their holdings of Canadian bonds by $788 million in August, after adding $4.0 billion the month before. Two-thirds of the sell-offs were in outstanding Canadian bonds. In August, Canadian long-term rates not only lagged behind US rates, but also dropped below Canadian short-term rates.

August's dispositions were concentrated in federal government bonds, slashing $3.0 billion of foreign holdings. This more than offset a $1.9 billion foreign acquisition of federal enterprise bonds and corporate bonds.

Geographically, American investors alone sold $2.2 billion worth of Canadian bonds in August, after acquiring $8.0 billion in July. Moreover, British investors switched their investment from a $4.9 billion acquisition in July to a $1.9 billion sell-off in August.

On a currency basis, foreign sales of Canadian bonds were equally split between Canadian-dollar denominated ($712 million) and US-dollar denominated ($727 million), while non-residents bought $650 million worth of bonds denominated in other foreign currencies.

After a big swing from purchases to sales over the previous two months, foreign investors bought a moderate $915 million worth of Canadian money market paper in August. Over three-quarters of the acquisition went to paper issued by corporations. On a regional basis, while investors from the European Union countries sold off $150 million worth of their holdings, investors from other countries added $1.1 billion into their investment portfolios.

Investment in Canadian stocks slows down

After two consecutive quarters of strong purchases in 2006, non-residents slowed down their acquisition of Canadian shares. They bought $209 million worth in August, despite a rising S&P/TSX Composite index.

The slowdown was widespread across regions. American investors purchased $1.0 billion in August, down from $1.6 billion in July. British investors bought a nominal $172 million over the month, compared to $1.0 billion in July. August's acquisitions of Canadian equities were entirely in outstanding shares.

TORONTO - Canada's corporate spending on research and development increased for the second year in a row, according to Canada's Top 100 Corporate R&D Spenders List 2006 released by Research Infosource Inc. Canada's top corporate R&D companies invested $12 billion in R&D activities in fiscal 2005, up 4.9%, a healthy gain over the modest rise of 3% in the previous year.

The top 7 companies held their positions from last year. In 1st place Nortel Networks continues to dominate the top 100 list, spending $2.25 billion on R&D in fiscal 2005, a drop of 11.8%. Bell Canada holds on to 2nd position with $1.74 billion, an increase of 19.9%, and Magna International stays in 3rd posting $824 million in R&D expenditures, a jump of 19.4%. Pratt & Whitney Canada is 4th with $472 million in R&D spending, a rise of 1.5%, ATI Technologies is 5th up 16% with expenditures of $451 million, IBM is in 6th place with $343 million in spending, a modest increase of 2.7%, and Alcan holds onto to 7th place with $275 million in spending, a drop of 11.6%.

As Canada's largest R&D spender, Nortel's numbers can often mask underlying R&D spending trends. Removing Nortel from the calculations puts the Top 100 Corporate R&D spending increase for fiscal 2005 at a robust 9.7% instead of 4.9%.

Another important gauge of healthy R&D activity is research intensity (R&D spending as a percentage of revenues). Overall research intensity for the 94 companies where complete data was available for fiscal 2005 was 3.8%, a drop of 3.5% over last year's figure of 4%.

Reseach Infosource's elite $100 Million Club, reserved for companies that invested $100 or more in R&D spending, boasts 22 members. Together they spent $8.6 billion on R&D activities in fiscal 2005, accounting for 72% of the total.

Four companies posted increases of 100% or more in R&D spending in fiscal 2005: Adherex Technologies (203.7%), Aspreva Pharmaceuticals Corporation (175%), TELUS (120.5%) and Aastra Technologies (110.6%). On the other end of the scale, 30 top 100 companies reported a drop in R&D spending. This is an improvement over last year when 35 companies lowered their R&D investments.

"The R&D outlook is optimistic," says Ron Freedman, CEO of Research Infosource Inc. Overall corporate investments in R&D are up for the second consecutive year. Spending has increased at over two-thirds of the top 100 companies, and in many instances, growth in R&D investments exceeds revenue growth. Governments at all levels are introducing measures to foster innovation. Ultimately, Canada's place in the knowledge economy depends on the ability of our companies to compete on a rapidly changing playing field."

Looking at various industry sectors, communications/telecom accounted for 26% of R&D investments in fiscal 2005, pharmaceuticals/biotechnology (16%), telecommunications services also (16%), aerospace (8%), software and computer services (7%), automotive (7%), energy/oil and gas (6%), computer equipment 4%, mining and metals (3%), electronic parts and components (2%).

Examining the regional picture, British Columbia's 13 top 100 companies accounted for $693.6 million in R&D spending or 6% of the total for fiscal 2005. This represents an increase of 14.1%. For the Prairies, 10 companies in Alberta spent $519.1 million for 4% of the total and an increase of 4.1% with Manitoba's single entry on the list chalking up $43 million in R&D expenditures. Ontario and Quebec based firms accounted for the lion's share of R&D spending. With 55% of the total, Ontario's 44 companies invested $6.6 billion in R&D in fiscal 2005, up 1.7% from the previous year. Removing Nortel from the calculation moves Ontario companies' growth in R&D spending to an impressive 10.6%. The 30 companies in Quebec spent $4.1 billion for 34% of the total and a strong increase of 7.2%.

Several successful venture capitalists and private equity players will comment on some of the key contributors to the Canadian venture capital industry's performance as reported by Gilles Duruflé in a study he undertook for the CVCA and funded by the CVCA and Summit 2000. Drawing from their experiences, these speakers will provide practical suggestions on how best to build a successful venture capital firm and thereby improve overall performance for the industry. Rick Nathan, CVCA’s President, will also highlight some of the initiatives the association is undertaking to support the growth of the venture capital industry in Canada. Our speakers include:

John Albright, J.L. Albright Venture Partners
Ron Dizy, Celtic House Venture Partners
Gilles Duruflé
Berry Gekiere, Ventures West Management
Bryan Kerdman, EdgeStone Capital Venture Partners
Rick Nathan, CVCA and Kensington Capital Partners
Christian Zabbal, ghSMART & Company, Inc.
Rosemary Zigrossi, Teachers’ Private Capital

Plus more …………………..

Special Discount:
4th Person from the same company free!*

*Special Discount: In Toronto the 4th person from the same company is free: Video conference attendees may spread discount over other sites.

Widespread corporate confidence belies an overall lack of alignment between business strategy and risk approach in the Canadian risk management structure

TORONTO - At a time when investors are prepared to avoid companies with poor risk management, many Canadian organizations are struggling with underdeveloped risk management programs that fail to provide the control expected from well-managed companies, says a new Ernst & Young LLP report released today, Risk Management in Canada: Moving Beyond Assessment.

Robin Hutchinson, a partner at Ernst & Young and leader of the Risk Advisory Services practice, says many companies are assessing risk but struggle with managing it. They aren't sure how to implement and sustain risk management across their organizations. Yet, most of the companies surveyed rate their overall risk management performance high.

Canadian companies rated their overall risk management an average 7.3 out of 10; 46% rated themselves between eight to 10 - significantly more than the 36% of global companies rating themselves so highly. However, a recent Ernst & Young survey of institutional investors indicated that they take a dimmer view of how well companies are managing risk globally, rating them an average 5.6 out of 10.

"Senior management and boards must realize that investors are becoming less tolerant of companies that don't address risk. Investors are also willing to pay a premium for those with strong plans in place. From our survey of institutional investors, we've learned that nearly half of them have walked away from an investment because of a lack of good risk management and 30% have pushed for changes in senior management to ensure the job was done right," notes Mr. Hutchinson.

The Risk Management in Canada report finds that many Canadian companies are failing to fully implement some of the very factors they themselves deem critical to a successful risk management program. For example, 85% of executives identified clear ownership of risk as the most important determinant of success in managing risk, but a meagre 2% actually believed their companies were identifying ownership well. Seventy-eight per cent of management said understanding risk throughout the organization is critical, but only 11% said they had actually achieved this understanding, and more than one in three decision-makers said some key risks were not being actively managed at all.

Despite all of these contradictory findings, 89% of respondents said they had an embedded risk management culture and 60% said they had an enterprise-wide view of risk. Furthermore, 88% of respondents were confident or very confident their boards were receiving sufficiently regular, transparent and robust communication on risk.

There's an obvious disconnect between aspiration and reality, Mr. Hutchinson says. "Good risk management decision-making hinges on good information, and it seems that executives are receiving assurances in good faith from their key people rather than credible information culled from a structured program."

The report also finds that Canadian business leaders are not capitalizing on the upside potential of risk: 71% identified risk management as important to their company's long-term growth strategy and 75% said it's important in building and enhancing their reputations; only 49% of respondents, however, linked risk management to business strategy. "Failing to make this link is unfortunate because risk can be a source of competitive advantage," says Mr. Hutchinson.

"Canadian organizations must move from assessing to really digging in and managing risk in order to close the gaps between objectives and performance," says Mr. Hutchinson. "They need a structured risk program that is aligned with business strategies and that helps boards and executives track and oversee risks, and helps line managers prioritize and accurately report on the status of risks."

<< Among other key findings of the survey:

- Seventy per cent of respondents said their risk levels have risen over the past two to three years, with nearly 32% reporting a significant increase and only 10% reporting a decrease

- Forty-three per cent of companies believe communication of risk to major investors is important, but only 2% think they manage their communication with external stakeholders well

- Only 9% of Canadian company management identify the board as the "owner" of risk, compared to 21% of global respondents and 40% of global board members

- Companies most often look to the CFO to monitor risk, with Canadians more likely to do so than global respondents (31% vs. 20%). >>

Investment in non-residential building construction hit a record high for the 13th consecutive quarter between April and June, thanks largely to huge gains in British Columbia and Alberta.

Investment in the three non-residential components combined (industrial, commercial and institutional) reached $8.7 billion, up 0.9% from the first quarter.

The biggest contributor was record spending in the two westernmost provinces. If Alberta and British Columbia were excluded from the national figure, the investment in non-residential construction would have declined 0.5% instead of rising 0.9%.


Nationally, investment reached a new record in two of the three components: commercial and institutional.

Second-quarter investment in commercial buildings rose 0.7% to $4.9 billion, while institutional investment increased 3.5% to $2.3 billion. Investment in the industrial component declined 2.7% to $1.4 billion.

Provincially, the largest contributions to the quarterly increase (in dollars) in the investment in non-residential construction came from Alberta (+8.8% to $1.6 billion) and British Columbia (+4.6% to $1.2 billion), the result of big gains in the commercial and institutional components.

Western Canada's dynamic economy continued to spark the non-residential sector. Other contributing factors were a strong labour market, which culminated in May's record surge in full-time jobs, and strong consumer demand for durable goods. In contrast, the picture in the rest of the country was less rosy, as shipments declined for a third month this year

Locally, 14 of the 28 census metropolitan areas recorded gains; the strongest was in Calgary where investment rose 12.7% to $606 million. In contrast, investment in Toronto fell sharply as a result of a marked decline in all three components.

Investment in non-residential building construction, by census metropolitan area
	Second quarter 2005	First quarter 2006	Second quarter 2006	First quarter to second quarter 2006
	Seasonally adjusted
	millions of dollars			% change
St. John's	57	65	55	-15.0
Halifax	117	118	137	16.4
Saint John	17	25	26	6.0
Saguenay	13	33	26	-22.6
Québec	151	174	161	-7.8
Sherbrooke	27	28	31	11.9
Trois-Rivières	24	34	30	-12.5
Montréal	731	701	659	-6.0
Ottawa–Gatineau, Ontario/Quebec	313	373	396	6.4
Ottawa–Gatineau (Que. part)	63	57	49	-13.6
Ottawa–Gatineau (Ont. part)	251	316	347	10.0
Kingston	41	31	23	-23.5
Oshawa	118	106	92	-13.4
Toronto	1,634	1,604	1,533	-4.4
Hamilton	134	154	162	5.1
St. Catharines–Niagara	73	57	64	11.0
Kitchener	170	130	123	-5.3
London	143	119	100	-16.1
Windsor	66	90	84	-7.5
Greater Sudbury / Grand Sudbury	33	28	24	-12.9
Thunder Bay	23	30	37	22.9
Winnipeg	155	206	207	0.9
Regina	60	76	74	-3.0
Saskatoon	55	87	97	11.4
Calgary	457	538	606	12.7
Edmonton	283	431	424	-1.5
Abbotsford	35	46	64	38.5
Vancouver	565	667	684	2.5
Victoria	65	74	81	9.9
Note: Go online to view the census subdivisions that comprise the census metropolitan areas.

Investment in office buildings at all-time high in Western Canada

Investment in commercial construction projects advanced for the 11th straight quarter as a result of robust activity in office building construction sites in Western Canada.

Provincially, the largest contributions to the quarterly increase (in dollars) in the commercial investment occurred in Alberta (+7.5% to $993 million) and in British Columbia (+3.8% to $704 million). Both were record high levels.

After hitting a record high in the first quarter, Ontario recorded the most significant decline in the wake of a slowdown in investment in office buildings, restaurants and warehouses construction.

A decline in vacancy rates and healthy economic growth in British Columbia and Alberta continued to fuel office building construction.

Institutional: New record level due to gains in the hospital category

Stronger investment in health care facilities accounted for the largest part of the 3.5% increase in institutional investment between April and June, a fifth consecutive increase.

The largest gains occurred in British Columbia and Alberta, where the investment rose 9.6% to $387 million and 10.8% to $331 million respectively. Ontario and Quebec, however, recorded the largest declines.

Investment was up in 19 census metropolitan areas. Ottawa led the growth for a second straight quarter (+21.7% to $159 million) as a result of investments in health care facilities.

The largest drop occurred in the Toronto area where investment in all institutional construction projects declined, except for religious buildings.

Slowdown in industrial investment

Investment in industrial construction fell 2.7%, halting eight consecutive quarters of steady gains. Investment fell in every category of industrial construction. Despite the decline, the $1.4 billion total was 10.9% higher than the average quarterly level recorded in 2005.

Investment in industrial construction declined in seven provinces and territories during the second quarter. The largest quarterly decrease (in dollars) occurred in Quebec (-8.7% to $499 million). In contrast, Alberta, Ontario and Prince Edward Island showed increases in industrial construction investment.

Overall, 11 census metropolitan areas recorded gains in investment. Calgary recorded the largest increase in industrial construction spending, which hit $56 million. Montréal posted the largest reduction.

In the second quarter, manufacturers continued to face increased production costs, stronger global competition and the appreciation of the Canadian dollar. Also, the industrial capacity utilization rate among Canadian industries edged down in the first three months of 2006.

Investment in non-residential building construction
	Second quarter 2005	First quarter 2006	Second quarter 2006	First quarter to second quarter 2006
	Seasonally adjusted
	millions of dollars			% change
Canada	7,763	8,601	8,674	0.9
Newfoundland and Labrador	82	85	79	-6.5
Prince Edward Island	29	38	37	-2.0
Nova Scotia	211	226	243	7.5
New Brunswick	141	171	176	3.3
Quebec	1,399	1,442	1,383	-4.1
Ontario	3,283	3,417	3,365	-1.5
Manitoba	251	278	277	-0.3
Saskatchewan	172	238	234	-1.7
Alberta	1,182	1,495	1,627	8.8
British Columbia	944	1,169	1,223	4.6
Yukon	15	16	17	7.9
Northwest Territories	34	22	12	-45.7
Nunavut	21	5	1	-82.8

Note to readers

Unless otherwise stated, this release presents seasonally adjusted data, which ease comparisons by removing the effects of seasonal variations.

Investments in non-residential building construction exclude engineering construction. This series is based on the Building Permits Survey of municipalities, which collects information on construction intentions.

Work put-in-place patterns are assigned to each type of structure (industrial, commercial and institutional). These work patterns are used to distribute the value of building permits according to project length. Work put-in-place patterns differ according to the value of the construction project; a project worth several million dollars will usually take longer to complete than will a project of a few hundred thousand dollars.

Additional data from the capital and repair expenditures surveys are used to create this investment series. Investment in non-residential building data are benchmarked to Statistics Canada's System of National Accounts of non-residential building investment series.

For the purpose of this release, the census metropolitan area of Ottawa–Gatineau is divided into two areas: Ottawa–Gatineau (Que. part) and Ottawa–Gatineau (Ont. part).

The inaugural study establishes a benchmark for investor satisfaction and creates norms that allow individual investment institutions to evaluate how they compare to competitive firms in Canada. Six factors are examined within the study to evaluate overall customer satisfaction with full-service investors. They are: account set-up, account statement, convenience, cost, investment advisor/team and investment performance.

Edward Jones ranks highest in customer satisfaction with an overall index score of 796 points on a 1,000-point scale. The firm receives the highest factor ratings in convenience, account set-up, advisor/team, investment performance and account statement. Dundee Wealth Management Inc. follows Edward Jones in the rankings with an overall index score of 773 points and performs well in all drivers of customer satisfaction. Raymond James Limited ranks third overall with a score of 771 points and receives the highest ratings in the area of cost.

The study finds that when customers are asked to consider all aspects of their experience with their full-service investment firm, the role of the investment advisor/team is the most important driver of satisfaction (accounting for 24% of the overall score), followed by investment performance (20%). Additionally, investors are significantly more satisfied when there is an established leader on the team, as opposed to a team of advisors without a key leader. Satisfaction among customers who have a leader on their team of advisors averages 56 points higher than among customers who do not.

"Care and attention from the advisor impacts satisfaction considerably," said Charles Schade, senior director of research at J.D. Power and Associates. "For example, large-portfolio customers tend to be more satisfied than customers with portfolios of less than $50,000 because they generally receive more care and attention from their advisor. Establishing a meaningful, consistent relationship between the advisor and investor is crucial in achieving satisfaction, which in turn influences customer commitment and loyalty."

The study also examines consumers' attitudes, brand image, and experiences with their investor, and divides them into three groups: high, medium and low commitment. Customers who are highly committed are more loyal, use additional services, are more likely to recommend their financial institution and have a lower intent to switch investment firms than customers with low commitment. Nearly 80 percent of highly committed customers say they would definitely recommend their investment firm, while only 21 percent of customers with low commitment indicate the same. Also, 17 percent of customers with low commitment say they intend to switch investment firms within the next 12 months, while only 2 percent of highly committed customers intend to switch.

"Highly committed customers are one of an organization's most valuable assets," said Schade. "They contribute the most ROI, are more loyal and recommend the institution significantly more often than any other types of customers. These customers are vital to the success of any organization."

The 2006 Canadian Full-Service Investor Satisfaction Study is based on responses from 5,190 investors who use full-service investment institutions.

Grant Thornton Assurance Partner Rich Flowers and Advisory Services Manager Chris Rahne discuss the valuation of the New York Stock Exchange, a publicly traded security that was received in the exchange for NYSE seats in connection with the Archipelago business combination. According to Rich and Chris, the major issue at hand is what reduction should be applied to account for the three-year restriction on the NYX stock.