Download Recuperation and repair

News, Views
and Performance from
Your Scotiabank Team
VOL 8
ISSUE 4
Diversification
– page 2
Asset
Allocation
– page 3
ReOptimization
– page 3
Mutual Funds
Performance
– page 4
DEC 2010
Recuperation and repair
Making gains in a shifting world economy
The new year brings new risks and opportunities in the ever-changing
economic landscape as recovery continues throughout the global economy.
Overall activity in industrialized regions is expected to fall short of 2010’s
modest pace, with North American prospects better than those for Europe
and Japan. Debt-laden Spain, Portugal, Greece and Ireland are among
European nations continuing to deal with debt issues.
Throughout the Caribbean, fiscal challenges are also the focus. An
upward inflation trend has emerged in Trinidad & Tobago, with efforts
to stimulate domestic demand and reduce unemployment. Still, Prime
Minister Kamla Persad-Bissessar’s commitment to reducing crime is
boosting the nation’s investment profile and tourism industry, and political
and economic outlooks. In Mexico, an improved growth outlook can be
tied to outside factors, including the US economy.
Meanwhile, China, India and Brazil are among emerging powerhouses
with increasing financial resources. In 2009, China alone sold and produced
more cars and trucks than the US, Canada and Mexico combined. According
to Pablo Bréard, Vice President and Head of International Research, Scotia
Capital Inc., “These countries should remain important sources of global
growth, with their influence on financial markets also growing.”
New year... renewed commitments
The recent economic crisis proves that the only constant in life is change.
At Scotiabank, we’re dedicated to helping you manage inevitable changes,
whether in the economic landscape and in your own life. Make time to sit
down with your Scotiabank Mutual Funds investment advisor to discuss
how you’ll meet your financial objectives.
You’ll also notice a change in investment advisor, which, for the first
time, includes quarterly performance updates on Scotiabank Mutual Funds
and Asset Management Service Portfolios. This resource-saving format not
only underlines Scotiabank’s commitment to the environment, it also offers
a helpful performance snapshot on a quarterly basis.
investment advisor • PAGE 1
Diversification
Many eggs, many baskets
Why are mining companies doing so well when many manufacturers are
struggling? Is it time to invest in healthcare stocks and forget technology?
There’s no telling where or when
Unfortunately, no one can be certain of where the economy
is headed and when changes will occur. Because there is no
crystal ball for finding the winning sectors in the current
economic climate or, for that matter, at any time in the
business cycle, it’s important to ensure your investments
always cover a range of industries.
Shedding light on a changing economy
The Global Industry Classification Standard (GICS) is a widely
used method of classifying public companies into sectors and
industries based on their principal business activities. This
consistency can help us compare and understand the behaviour
of different sectors, industries and companies at a given time
– an important feature since different sectors behave differently
at each stage of the economic cycle due to factors such as
interest rates, demand and employment.
Hold a mix of sectors for portfolio protection
By diversifying your investments in a range of different
sectors, you can protect your investments from downturns in
a given industry or industries and, at the same time, benefit
from potential growth in other areas of the economy.
The Global Industry Classification Standard comprises
10 industry sectors that are well represented in
Scotiabank Mutual Funds:
GICS sector
1
2
3
4
5
6
7
8
9
10
Energy
Materials
Industrials
Consumer Discretionary
Consumer Staples
Health Care
Financials
Information Technology
Telecom Services
Utilities
Company
Held by Scotiabank
Suncor
Barrick Gold Corp.
Kuehne and Nagel
Harley-Davidson
CBC
Johnson & Johnson Inc.
Wells Fargo Company
Google Inc.
América Móvil
TransCanada Corp.
Canadian Growth
Canadian Growth
Global Growth
US Growth
US Growth
Global Growth
US Growth
Global Growth
Global Growth
Canadian Growth
Embracing diversification
In a well-built portfolio, non-correlated holdings work
together to minimize risk and maximize potential returns.
We know that not all investments perform the same
way at the same time. For example, a sector that shines
in recessionary times may lag other industries when the
economy is thriving. Although no one can precisely predict
the timing of such movements, we do know that the
economy and financial markets are cyclical. This makes it
prudent to hold a mix of stocks of companies that operate
You’re
never
alone
At Scotiabank, we know how
important it is to understand
your investments and we’ll
support you at every step of
your financial life.
investment advisor • PAGE 2
in different industry sectors.
Scotiabank Mutual Funds are multi-faceted investments
that incorporate sector diversification. In addition to providing
a mix of asset class, geographic regions and investment
styles, our Managers focus on diversification across industry
sectors. Further, Scotiabank Canadian Growth, US Growth
and Global Growth Funds give investors exposure to a variety
of industries represented by companies that are doing
business around the world.
To learn more about sector diversification or any other concepts
in this newsletter, and to access valuable tools and resources for
planning and reaching your investment goals, visit us at www.
scotiabank/intl/mutualfunds.com. Or book an appointment with
your Scotiabank Mutual Funds investment advisor today.
Asset Allocation
Rolling with the punches
The financial landscape has changed. How can we be confident Scotiabank Asset
Management Service Portfolios maintain their optimal asset allocations?
Today’s increasingly unpredictable market environment makes
it challenging for investors to know how to best protect and
grow their investments. In this ever-shifting investment
landscape, Scotiabank is committed to maintaining the
optimal mix of investments in each Scotiabank Asset
Management Service Portfolio.
Analysis aims to minimize risk, maximize return
Based on in-depth work by Northern Trust Global Advisors
(NTGA), the Portfolios were recently re-balanced on
December 20, 2010 to reflect revised outlooks on the
economy and changes in capital markets. NTGA was
chosen for its 120 years of experience in risk management,
and portfolio construction and re-optimization.
As part of its customized work to optimize the Scotiabank
Asset Management Service Portfolios, NTGA analysed each
Portfolio on many levels. The main goal was to minimize risk
and maximize return by determining the five-year average
annual expected returns and risk for the asset classes and
world regions, based on market assumptions, such as
inflation, yields and valuations. Analysis also included the
expected risk and return of each Fund’s benchmark, portfolio
risk based on the Funds’ holdings, and past performance of
the Funds during significant market events – a so-called
“stress testing” of the Portfolios.
Building more efficient, better diversified Portfolios
Important changes to the Portfolios as a result of this
modelling are reduced levels of risk based on the historical
performance of each asset class. Portfolios with growth
components have been adjusted in terms of their exposure to
equities, bonds and cash. Regional exposures have also been
adjusted to reflect shifting risk-reward profiles for US and
Canadian markets compared to other international and
emerging markets.
Ensuring an optimal asset mix
Each Scotiabank Asset Management Service Portfolio is
expressly tailored to meet specific investor needs. Through
rebalancing to ensure the optimal mix of stocks, bonds and
cash, you can be confident that Scotiabank Asset
Management Service Portfolios continue to offer the full
benefits of asset allocation, including asset class, geographic
and sector diversification.
Scotiabank Asset Management Service optimization
New equity funds weightings reduce overall levels of risk while maintaining previous
allocations to cash, fixed income, and equity.
Conservative Income
Previous
New
Revised
Income &
Conservative Growth
Previous
New
Revised
Balanced Income
& Growth
Previous
New
Revised
Moderate
Growth
Previous
New
Revised
Aggressive
Growth
Previous
New
Revised
Money Market Fund
20.00%
20.00%
15.00%
15.00%
15.00%
15.00%
10.00%
10.00%
5.00%
5.00%
US Dollar Bond Fund
70.00%
70.00%
55.00%
55.00%
40.00%
40.00%
35.00%
35.00%
15.00%
15.00%
Global Growth Fund
3.33%
5.00%
10.00%
15.00%
15.00%
22.50%
18.33%
27.50%
26.67%
40.00%
US Growth Fund
3.33%
2.00%
10.00%
6.00%
15.00%
9.00%
18.33%
11.00%
26.67%
16.00%
Canadian Growth Fund
3.34%
3.00%
10.00%
9.00%
15.00%
13.50%
18.34%
16.50%
26.66%
24.00%
investment advisor • PAGE 3
Mutual Funds
Performance
Historical Fund & Portfolio
performance data
Average Compounded Returns
For the period ending December 31, 2010. All data is reported in $US.
Funds
Inception
Date†
Current
Yield
1
Month
3
6
Months Months
YTD
1
Year
3
Years
5
Years
10
Years
Since
Inception
0.03%
0.05%
0.05%
0.76%
2.30%
2.06%
2.42%
-1.82% -2.76% -0.37%
5.12%
5.12%
5.04%
5.05%
5.25%
5.14%
15.29%
Scotiabank Money Market Fund
10/27/1999
0.04‡
Scotiabank US Dollar Bond Fund
12/21/1992
N/A
Scotia DBG Caribbean Income Fund*
4/1/2009^
2.86‡
-0.17%
N/A
N/A
N/A
Scotiabank Global Growth Fund
6/23/1994
N/A
6.58%
8.86% 16.65%
1.31%
1.31%
-11.91%
-3.29%
0.48%
4.13%
10/27/1999
N/A
6.22%
9.30% 17.18%
9.74%
9.74%
-6.05%
-0.98%
-1.87%
-2.57%
6/23/1994
N/A
6.98% 11.48% 24.41%
15.81% 15.81%
-2.09%
6.73%
3.76%
Scotiabank US Growth Fund
Scotiabank Canadian Growth Fund
0.00%
0.00%
0.65%
3.71%
3
6
Months Months
13.23% 13.23%
YTD
1
Year
2
Years
7.26%
Asset Management Service Portfolios
1
Month
Since
Inception
Preservation of Capital
-1.72
-2.49
-0.52
3.92
3.92
2.47
N/A
N/A
3.09
Conservative Income
-0.61
-0.88
1.87
4.48
4.48
4.49
N/A
N/A
3.04
Income & Conservative Growth
0.70
1.07
4.96
5.29
5.29
8.21
N/A
N/A
2.49
Balanced Income & Growth
1.95
2.95
7.86
5.87
5.87
10.94
N/A
N/A
1.72
Moderate Growth
2.63
3.95
9.55
6.50
6.50
12.64
N/A
N/A
1.06
Aggressive Growth
4.82
7.37
15.35
7.78
7.78
17.32
N/A
N/A
-0.59
‡ Dividend Yield over the 12 months ending on December 31, 2010.
For the period ending December 31, 2010. All data is reported in $US.
Funds
Category
Assets
Calendar Year Return
NAV/Share 2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Scotiabank Money Market Fund
Money Market 249,566,046 13.05
0.10
0.15
2.10
4.74
4.55
2.82
1.04
0.55
1.01
3.77
Scotiabank US Dollar Bond Fund
US Dollar Bond
22,310,528 2.47
5.10
1.56
8.55
7.10
3.08
2.53
3.36
2.02
11.44
8.18
Scotia DBG Caribbean Income Fund* Caribbean Bond
43,296,481 3.50
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
12,914,647 1.94
1.30 34.43 -49.82
4,628,211 7.48
9.70 23.66 -38.89
Scotiabank Global Growth Fund
Global Equity
Scotiabank US Growth Fund
US Equity
Scotiabank Canadian Growth Fund
Canadian Equity 39,686,595 3.15
Asset Management Service Portfolios
1.88 12.66
2.06
7.68 25.10 -25.51 -15.09
15.80 47.04 -44.87 28.14 15.14 22.27 20.55
-8.29 -17.95 -5.87
Calendar year return performance for 2008 started on January 22, 2008
Preservation of Capital
3.92
1.04 4.42
Conservative Income
4.48
4.51 0.03
Income & Conservative Growth
5.29 11.21 -8.67
Balanced Income & Growth
5.87 16.25 -15.39
Moderate Growth
6.50 19.13 -19.72
Aggressive Growth
7.78 27.70 -30.06
Scotiabank Mutual Funds is the brand name under which the Scotiabank group of companies,
including Scotiabank & Trust (Cayman) Ltd. and Scotia DBG Fund Managers Limited markets and
distributes mutual funds.
The information contained herein is for informational purposes only and is subject to change without
notice. Always consult your professional tax and legal advisors with respect to your particular
circumstances. Commissions, management fees and expenses all may be associated with mutual fund
investments. Important information about Scotiabank Mutual Funds and the Scotia DBG Caribbean
Income Fund is contained in their respective Funds’ prospectus. Copies are available from your local
Investment Advisor, the Bank of Nova Scotia and affiliates’ branches and should be read carefully
before investing. Share values and investment returns for the Funds will fluctuate. The performance
data provided assumes reinvestment of distributions and does not take into account sales or fees
(excludes Asset Management Service Portfolios), redemption, distribution or income taxes payable by
any security holder that would have reduced returns. Past performance is not indicative of future
performance and may not be repeated. Mutual Funds are not covered by your local Deposit Insurance
Corporation or other government deposit insurer. Scotiabank Mutual Funds and the Scotia DBG
Caribbean Income Funds are not insured by, nor guaranteed by, The Bank of Nova Scotia. Nothing
herein is intended to constitute an offer or solicitation to transact business for either products or
services in any jurisdiction where such an offer or solicitation would be unlawful. Products and
services described herein are only available in jurisdictions where they can be lawfully provided.
investment advisor • PAGE 4
-1.11 25.17 10.33 15.53 29.06 -13.48 -12.84
Tell us what you think
Do you have a comment or a question?
Send us an email at:
[email protected]
*Trademark of The Bank of Nova Scotia, used under license. *Scotia DBG Caribbean Income Fund is
not available for sale in the Cayman Islands.
GENERAL INFORMATION
Dealing Details: The Scotiabank Mutual Funds that are distributed trade daily at Net Asset Value (each
respective trading day being the Dealing Day). A duly signed Purchase Confirmation with cleared funds
must be received by the designated cut-off time on the relevant Dealing Day. Cleared funds received prior
to daily valuation will be held without interest until the next Dealing Day. Initial minimum investment is US
$5,000 in any Asset Management Service Portfolio, with investments of US $100. Initial minimum
investment is US $1,000 per Fund with subsequent investments of US $100.†The inception date of returns
for Scotiabank Money Market Fund was November 19, 1999, Scotiabank US Dollar Bond Fund was January
1, 1993, Scotiabank Global Growth Fund was August 31, 1994, Scotiabank US Growth Fund was
November 19, 1999 and Scotiabank Canadian Growth Fund was August 31, 1994. The minimum initial
investment in the Scotia DBG Caribbean Income Fund is US $5,000 with subsequent investments of US
$1,000. Pre-Authorized Contribution plans are subject to a minimum of US $100 after completion of initial
investment. ^The Fund was incorporated on March 29, 2006. Net Asset Value information of the
Scotiabank Mutual Funds can be found on Bloomberg, in the equities section, and on the Cayman Islands
Stock Exchange (CSX), website www.csx.ky under “Scotiabank”. This report does not constitute an
invitation to purchase or sell shares of the Funds. Information also available directly from: Scotiabank &
Trust (Cayman) Ltd. 6 Cardinal Ave, Box 689 Grand Cayman, KY1 1107 (345) 949-7666