Note to readers

International investment position

Fourth quarter 2004

Additional estimates at market value

As of the first quarter 2004 additional series measuring portfolio investment at market value have been incorporated to the release. Canadian and foreign shares as well as bonds are available at market value. These additional series are part of a multi-year initiative to improve the balance sheet information for all sectors of the economy. The following analysis focuses on the book value series until a full set of market value estimates become available.

Market value estimates of foreign direct investment series that were initially scheduled to be released in June 2005 will be available in June of 2006. Methods to better measure market value for foreign direct investment are under review at the international level. Recommendations from direct investment experts which will be available later in 2005, will serve as a guide to define Canada’s methodology.

Currency valuation

The value of assets and liabilities denominated in foreign currency are converted to Canadian dollars at the end of each period for which a balance sheet is calculated. Most of Canada’s foreign assets are denominated in foreign currencies while less than half of our international liabilities are in foreign currencies.

When the Canadian dollar is appreciating in value, the restatement of the value of these assets and liabilities in Canadian dollars lowers the recorded value. The opposite is true when the dollar is depreciating.