Cannon Equity Fund Factsheet - Cannon Asset Managers

CANNON EQUITY FUND
FEBRUARY 2011
CONTACT: Doug Turvey & Bella Shongwe +27-11-463-3140 unittrusts@cannonassets.co.za
INVESTMENT OBJECTIVES
The Cannon Equity Fund aims to deliver sustainable growth in capital
through exposure to listed equities over a three-to-five year investment
horizon. Recognising the relatively long-term horizon, we endeavour to
outperform the JSE’s All Share Index (ALSI) on a rolling basis and, in so
doing, deliver returns that ensure real growth in investors’ wealth. The
portfolio manager does not make use of gearing or derivative instruments to
achieve the investment objective. Asset class risk must be managed by
investors outside of the fund.
INVESTMENT COMMENT
With the first month of the new year out of the way, volumes picked up over
the course of February and the FTSE-JSE All Share Index made up for the lost
ground over January by returning 2.8 percent. The Cannon Equity Fund
returned 2.6 percent. This slight underperformance is largely attributable to
our overweight exposure to the construction sector, where we continue to see
deep value in this unloved sector, especially amongst some of the higher
quality businesses, including Aveng and Group 5. The political unrest in the
Middle East and North African regions proved to be a positive influence on
portfolio performance as the oil and gas sector was the top performing sector
over February. This was driven chiefly by Sasol, which has a high weight in
our investment portfolio and which returned 9.8 percent over the month.
As the market continues in this upward trend a frequent question that is
currently been raised is whether local equities remain the most prudent asset
class to invest in?
There are numerous methods for assessing the current valuation of a market.
One such commonly used method is the price earnings (PE) ratio. A problem
with the simple PE ratio, however, is that it is overly reliant on near term
events, such as the current phase of the economic cycle, because the E part is
determined only by recent earnings. For this reason we use a cyclically
adjusted PE ratio which inflates earnings over the past 5 to 10 years to
today’s prices, giving a cyclically adjusted earnings figure in the calculation
of the PE ratio. Based on this valuation method, we are of the view that the
local market is fairly valued, and hence opportunities for the active stock
picker remain.
PERFORMANCE METRICS
Fund Benchmark
Return Since Inception (% cumulative)
Return Since Inception (% annualised)
144.05
17.06
163.18
18.59
High Water Mark (cpu) 246.73 269.82
Low Water Mark (cpu) 98.78 100.00
% of Positive Months 64.18 62.69
CANNON EQUITY FUND VS ALSI (J203T)
Performance Annualised Benchmark Cumulative Benchmark
1 Year 18.03% 23.57% 18.03% 23.57%
2 Years
3 Years
33.99%
3.54%
35.37%
4.58%
79.54%
10.99%
83.26%
14.37%
Volatility
1 Year 12.44% 16.92%
2 Years
3 Years
15.51%
21.00%
19.36%
26.19%
Correlation
1 Year 0.75 1.00
2 Years
3 Years
0.74
0.72
1.00
1.00
FUND FACTS
Fund Manager
Dr Adrian Saville
Classification
Domestic Equity - General
Universe (Benchmark)
ALSI (J203T)
Objective
Capital Appreciation
Risk
Aggressive
Year End
December
Fund Inception 01 July 2005
Lump Sum (Minimum) R10 000
Recurring (Minimum)
R500
Current Unit Price
216.92cpu
Total Expense Ratio 1.44
Please note: the TER has been calculated using data from 1 st January 2010 till 31 st
December 2010. The TER is disclosed as % of the average Net Asset Value of the
portfolio that were incurred as charges, levies and fees related to the management
of the portfolio and underlying portfolios.
A higher TER ratio does not necessarily imply a poor return, nor does a low
TER imply a good return. The current TER cannot be regarded as an indication
of future TERs.
Income Declarations 30 June & 31 December
Income 7 July 2009 2.66cpu
7 January 2010 1.83cpu
7 July 2010 0.68cpu
7 January 2011 2.25cpu
FAIS CONFLICT OF INTEREST DISCLOSURE
Please note that in most cases where the Broker is a related party to Cannon Asset
Managers (Pty) Ltd and /or Metropolitan, Cannon Asset Managers (Pty) Ltd
and/or distributor earns additional fees apart from the Broker’s client advisory
fees. It is the Broker’s responsibility to disclose additional fees to you as the client.
Such fees are paid out of the portfolio’s service charge and ranges between (excl
VAT)
Annual
Upfront
Metropolitan Up to 0.35% Up to 0.25%
Cannon Asset Managers (Pty) Ltd Up to 0.925% Nil
Maximum Broker Fee Up to 0.50% Up to 3.00%
Total Service Charge 1.25%
CANNON EQUITY FUND vs ALSI (J203T)
1 JULY 2005 = 100
290.0
270.0
250.0
230.0
210.0
190.0
170.0
150.0
130.0
110.0
90.0
ALSI (J203T)
Cannon Equity Fund
Jun-05
Aug-05
Oct-05
Dec-05
Feb-06
Apr-06
Jun-06
Aug-06
Oct-06
Dec-06
Feb-07
Apr-07
Jun-07
Aug-07
Oct-07
Dec-07
Feb-08
Apr-08
Jun-08
Aug-08
Oct-08
Dec-08
Feb-09
Apr-09
Jun-09
Aug-09
Oct-09
Dec-09
Feb-10
Apr-10
Jun-10
Aug-10
Oct-10
Dec-10
Feb-11
Source: Moneymate as at 28 February 2011
www.cannonassets.co.za

CANNON EQUITY FUND
FEBRUARY 2011
CONTACT: Doug Turvey & Bella Shongwe +27-11-463-3140 unittrusts@cannonassets.co.za
SECTOR ALLOCATION
TOP TEN HOLDINGS
Basic Materials
Financials
Industrials
Oil & Gas
Consumer Goods
Technology
Consumer Services
Telecommunications
15.07
10.22
8.32
6.72
3.26
2.05
22.48
31.21
Anglo American Plc 12.62
Sasol Ltd 10.22
Old Mutual Plc 5.67
Steinhoff Int Hld Ltd 4.97
ArcelorMittal SA Ltd 4.25
AECI Limited 4.10
Grindrod Limited 3.57
Aveng Limited 3.47
Assore Limited 3.42
Lewis Group Limited 3.25
TOTAL 55.55
Cash
0.67
ADMINISTRATION
If your complaint has not been resolved to your
satisfaction, kindly contact our Complaints
Resolution Committee: Tel: (021) 940 5880,
Fax:(021) 940 6205
Email: emoruck@metropolitan.co.za or metunit@metropolitan.co.za
Custodian: Standard Executors & Trustees: Tel (021) 401-2286. Metropolitan Collective
Investments Limited PO Box 925 Bellville 7535 Tel (021) 940-5981 Fax (021) 940-5885 Call
Centre, Tel: 0860 100 279 Registration No 1991/03741/06
Collective Investments are generally medium to long term investments. The
value of participating interests may go down as well as up and past
performance is not necessarily a guide to the future. Collective Investments are
traded at ruling prices and can engage in scrip lending. Forward pricing is
used. A schedule of fees and charges and maximum commissions is available
on request from Cannon Asset Managers. Commission and incentives may be
paid and if so, are included in the overall cost. This fund may be closed to new
investors. Graphs and performance figures are sourced from MoneyMate for
lump sum investments including income distribution, at NAV to NAV basis
and do not take any initial fees into account. Income is reinvested on the exdividend
date. Actual investment performance will differ based on the initial
fees applicable, the actual investment date and the date of reinvestment of
income. Collective Investment prices are calculated on a net asset value basis
and auditor’s fees, bank charges and trustee fees are levied against the
portfolio. The portfolio manager may borrow up to 10% of portfolio NAV to
bridge insufficient liquidity. The performance fee FAQ document is kept as a
public document at Metropolitan Head office. The FSP holds professional
indemnity cover and fidelity insurance cover. Metropolitan Collective
Investments Ltd is an authorised Financial Services Provider and a Full
member of the Association for Savings & Investments SA (ASISA).
FURTHER CONTACT DETAILS
Cannon Asset Managers (Pty) Ltd
First Floor, Building B,
Bryanston Corner,
18 Ealing Crescent
Bryanston, 2194.
PO Box 70997,
Bryanston, 2021
Unit 2 Rydall Vale Crescent,
Rydall Vale Park,
La Lucia Ridge, 4019.
PO Box 5200,
Rydall Vale Park, 4019.
Authorised Financial Services Provider #736.
www.cannonassets.co.za