Fund
(International Segregated Fund) /
AS OF DECEMBER 31, 2000
Objective N/A
Market Value of Assets Current Quarter $Cdn 12.8 million*
Market Value of Assets Previous Quarter $Cdn 38.2 million
Asset Allocation
Top 10 Holdings
SECURITY / % OF FUNDgeneral electric co / 1.87
citigroup inc / 1.49
vodafone group / 1.47
telecom italia spa / 1.41
exxon mobil corp / 1.29
shell trnspt&trdg / 1.19
bp amoco / 1.15
cisco systems / 1.10
glaxosmithkline / 1.00
microsoft corp / 0.91
Performance as of December 31, 2000
3 Mth / YTD / 1 Yr / 3 Yr / 5 Yr
Manulife NAL Global Equity Fund (%)
/ -8.86 / -5.51 / -5.51 / N/A / N/AMSCI World (%)
/ -6.42 / -8.62 / -8.62 / N/A / N/AValue Added (%) / -2.44 / 3.11 / 3.11 / N/A / N/A
Fund References
Maximis ID
/ E078Legal ID
/ 2078Cdn Div Sep Code
/ 120Associated Clients SRS Canadian Division
Portfolio Manager Richard Crook
Sub Managers Martin Gamble, Stephen Hill, Munsoor Khan, Hugh Williams
Maximis Name NAL Global Equity Fund
* Note: As of Nov 2000 part of the assets of this Fund were transferred to the Manulife International Global Equity Fund (which buys units of the E&P Cabot Global Multi Style Fund)
Management Style
MIIML adopts a multi-style approach to international fund management. Regional allocations are made using a top-down approach which is both quantitative and disciplined. The individual regional portfolio managers follow a style and methodology which is applicable for each region and our strategies have evolved over time to account for the changing behaviour of markets. We minimise risk by constantly monitoring funds as a whole and their conformity with the pre-determined benchmark. Asset Allocation decisions are helped by using proprietary quantitative model as a basis for making regional asset allocation decisions. The model is based on a confidence-weighted model incorporating market and economic views. The regional styles followed are: US Equities – Momentum; European Equities – Enterprise Value – model based on whether the market is correctly assessing the value added of a particular business; Pacific Asia – Growth at a Reasonable Price Japan – Sector Rotation
Fund Manager Commentary
Performance Attribution
Over Q4 the Fund underperformed the MSCI. This underperformance was mainly due to negative stock selection contributions in North America and Europe. The excellent stock selection in mid cap TMT stocks in these regions in the earlier part of the year turned negative in the latter part of the year. The Fund’s overweight position in cash and underweight position in North America offset some of the underperformance
Current Positioning of the Fund
The Fund increased its very underweight position in US equities at the beginning of the quarter, reducing positions in Europe. We have reduced the number of names in the European portfolio. All portfolios are defensively positioned at the regional level.
Fund Outlook
Global growth is likely to be slow for some time and this is likely to mean further downgrades to corporate earnings. However, the weakness of economic data and the falling oil price is increasing the possibility that other central banks will the Fed’s lead and ease monetary policy in early 2001. We expect continued volatility over the coming months in markets world-wide, and much will depend on whether the US economy can avoid a hard landing. The unexpected cut of 0.5% at the beginning of 2001 could indicate that the US economy is in weaker than anticipated. Although, the US economy is starting to weaken we could see a modest rally at the beginning of 2001, but we continue to be fairly cautious on the overall outlook. We believe that 2001 will be very much a year for careful stock selection if the US portfolios are to outperform benchmark. Portfolios are currently positioned neutrally against target index as regards sector allocation. Towards the end of the 2001, we are more optimistic for Pacific Asia ex Japan as we believe that markets will start to anticipate a global recovery later in the year, and Pacific Asia markets have already fallen more sharply than other markets. It might be argued that much of the doom and gloom has been priced into the Japanese stock market, and therefore it could be a good time to buy, if rates of growth world wide only slow and do not turn negative. Recent comments by central banks would suggest that they are ready to reduce interest rates in order to keep economies growing. Whilst the election of G. W. Bush would also suggest that an easier fiscal policy may be in the offing for the USA. On a medium term view, we therefore feel that Japanese shares, even with the economy’s shortcomings, offers a profitable opportunity at present levels. European portfolios are positioned defensively in regard to both sector allocation and maintaining a large cap bias. We remain cautious of European markets in the first half of the year as lower interest rates in the US may not help overcapacity in the US economy, and this could have a knock on effect in Europe.
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