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Four analysts and top management from twenty sector firms examine the investing in Canada sector in this special 129-page Investing in Canada issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info490.htm.

TWST: Were there any issues that were specific to the Canadian market?

Mr. Bradley: No, I’m not sure there were. I’d say that most of the larger cap companies are very exposed to the US market as their principal source of business. As a result, it’s really the US economy that counts; if the US economy catches a cold, then Canadian companies are going to catch it immediately afterward. So I’m not sure there are any specifically Canadian issues there. If you went back 18 months before that, I think there were serious issues linked to the attractions of dot-com and other types of startups in the US. US startups were attracting staff away from many Canadian software companies and into the US, where employees believed they would have better opportunities. And certainly there was a period of time when a number of business leaders in Canada — they wouldn’t have been specifically talking about software companies but they would have been talking about technology companies — were complaining that Canadian tax rates, Canadian treatment of employee option schemes, and so on were less favorable than the same treatment in the US, and that therefore these companies were all operating at a disadvantage. But to be perfectly honest, in the aftermath of the Internet bubble bursting, those issues have faded out of sight, and I don’t think they’re really prime in people’s minds. The flip side to much of the discussion of the relative economic benefits of the US and Canada is that research and development spending gets a very favorable tax treatment in Canada, so it’s a very low-cost environment in which to do high quality research and software development.

TWST: How are you approaching the group for 2002?

Mr. Bradley: I’m approaching it from the point of view that it’s a recovery year. One of the strong themes that is emerging is that the IT services sector looks set to perform better than software. The reason that is coming out from talking to people at different companies or enterprises and from discussion with people on the supplier side of the business as well is that lots of software has been purchased over the last year or two years in various states of integration or implementation with existing enterprise systems, and the emphasis seems to be on completing those projects. Most of these projects revolve around consultants, IT specialists or applications programmers plying their trade inside organizations to get everything up and running rather than going out and buying more licenses or deciding to implement new systems, which tends to favor the IT services companies.

TWST: Should investors be getting involved in investing in Canada right now?

Mr. Bradley: The answer isn’t a straight yes or no. If you’re a US investor, one of the issues you do have to worry about is the relative weakening of the Canadian dollar against the US dollar. So although your choice of investment in Canada may perform well in Canadian dollar terms, if the Canadian dollar continues to depreciate against the US dollar, then you’ve got to make up for the exchange-rate risk. In the software sector, effectively, investors can hedge themselves by buying the NASDAQ-listed stocks. The ones that I would recommend are the large cap, more liquid stocks. Cognos (Nasdaq:COGN) would be near the top of my list as a perennial solid performer with an excellent management team. Another choice would be CGI (NYSE:GIB), which is North America’s fourth largest IT services company. We did think it was a little pricey and our target was C13, but it’s backed off a bit, so there’s a little bit of return left. CGI has been on a massive acquisition program, which has built the business up fairly rapidly and enhanced diversification both geographically and by vertical market segment. The company is likely to perform well, particularly because, as I’ve said, the IT services sector is set to see more business this year than it has over the last couple of years.

This special issue includes:

1) Investing in Cananda - In an in-depth (4,700 words) Analyst Interview, Nick Majendie, Director and Senior Vice President of Canaccord Capital Corporation, examines the outlook for the sector and shares specific stock recommendations.

2) Canadian Telecommunications - In an in-depth (3,700 words) Analyst Interview, Peter Rhamey, Managing Director at BMO Nesbitt Burns, Inc., examines the outlook for the sector and shares specific stock recommendations.

3) Canadian Software & IT Services - In an in-depth (4,200 words) Analyst Interview, Paul Bradley, Technology-Software Analyst at Canaccord Capital Corporation, examines the outlook for the sector and shares specific stock recommendations.

4) Canadian Asset Management - In an in-depth (3,800 words) Analyst Interview, Bruce Brewington, Vice President at Putnam Lovell, examines the outlook for the sector and shares specific stock recommendations.

5) CEO interviews (average 2,500 words). Top management of twenty sector firms examine the outlook for their firm and the sector.