2011 Report - Fortress Mutual Fund Ltd

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Investment PerformanceSince inception in 1996, the Caribbean Growth Fund has generated a compound annual rate ofreturn of 10.7% per year. It has accomplished this by investing selectively in a diversified mixof regional Caribbean as well as international stocks. We use a value conscious approach to allinvestments, seeking to position in securities with good fundamentals and compelling valuations.Approximately 36% of the portfolio is invested outside of the Caribbean region in US dollars and avariety of other currencies.In 2011, Caribbean markets generally gained while international stocks declined. This resulted in performance for theFund that was significantly below its long term average. For the year ended September 30, 2011 it gained only 0.3% invalue. As the table below shows, over longer time periods of time the Fund’s performance continues to far surpass acombination of regional and international indexes.Investment Performance as of 9/30/113 mo. 1 year 3 year 5 year InceptionFortress CGF -4.7% 0.3% -3.3% 2.2% 10.7%Jamaica (US$) 3.1% 8.9% -8.8% -4.0% 5.9%Trinidad 3.8% 18.9% -3.4% 2.1% 12.4%Barbados -0.9% 8.6% -6.9% -2.8% 6.8%MSCI World -16.5% -3.8% -6.9% -1.7% 4.2%* periods longer than 1 year are annual compound returnsOver the past 10 years, equity markets in the Caribbean and around the world have endured significant pressures. Therehave been two recessions, a US-based financial crisis, a European sovereign debt crisis, several hurricanes, a few debtrestructurings, and, not to be ignored, oil prices have more than quadrupled. As the graph below shows, through it allstocks still generally managed to generate positive – if not always consistent – returns. The Caribbean Growth Fund hasoutperformed all major indexes over this period with significantly more consistency along the way. This has sometimesmeant missing out on dramatic short term gains, as in the Trinidad and Jamaica markets in 2003-2005 when the Fundlagged these markets, but then continued to gain in subsequent years even as they dropped precipitously.Caribbean Growth Fund Performance vs Indices - 10 Years200%150%100%50%0%FORTRESS CGF 8.3%Barbados Index 4.4%T&T Index 7.7%MSCI World Index 4.2%Jamaica Index (US) 3.6%-50%Sept2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20114
Portfolio PositioningThe Fund is positioned relatively conservatively, reflecting our view that business conditions may be challenging in theforeseeable future, and equity valuations do not in all cases reflect this prospect. Cash and cash equivalents were justunder 17% of total assets at September 30. This gives the Fund significant resources with which to fund shareholderliquidity needs and purchases of securities as opportunities arise in regional and international markets.The investment portfolio is made up of a diversified combination of regional Caribbean and international stocks, with36% invested in the US and other markets outside the Caribbean. Many of the Caribbean companies represented in theportfolio have operations throughout the region. In addition to individual equity investments, the Fund has also allocatedto selected strategies and funds that use disciplined, value-based processes to select securities with good risk/rewardprospects. By paying close attention to the prices paid for investments within the Fund, the portfolio reduces the risk ofprice declines and positions for long term gains.The graph below summarise the geographic distribution of the portfolio.Geographic Distribution of PortfolioBARBADOS36%32%TRINIDAD & TOBAGOJAMAICAOTHER CARIBBEAN13%BERMUDA4%4%11%INTERNATIONALTop 5 HoldingsHolding Country/Region Sector WeightNeal & Massy Holdings Ltd. Trinidad Conglomerate 8.6%Fortress Global Value Fund Global Various 6.1%OAM European Value Fund Europe Various 5.0%GraceKennedy Ltd. Jamaica Conglomerate 5.5%Fortress Equity Income Strategy US Various 4.7%The Fund’s largest holdings are major Caribbean corporations and international funds and strategies. In the Caribbean,some of the best value is currently to be found in the diversified, steady operators such as Neal & Massy and GoddardEnterprises. Financial flexibility will be important in the coming months as business conditions likely deteriorate andput pressure on companies with limited ability to self-finance or to access other sources of funding. This may createopportunities for well-capitalised companies to expand their operations and position for future earnings growth.The Fund continues to allocate significant amounts to internally run strategies in US and international equities, andto funds run by other managers with special expertise in a particular area. With the exception of the Fortress EquityIncome Strategy and CG Portfolio Fund, these were generally down during the year due to pervasive weakness inglobal markets. Over time, though, such international investments have provided excellent returns and diversification,and we expect them to contribute positively in both respects in the future.For a complete listing of the Fund’s holdings at September 30, 2011, please see the accompanying financial statements.5
Page 1 and 2: 2011 Annual ReportFortress Mutual F
Page 3 and 4: FORTRESS MUTUAL FUND LIMITEDCaribbe
Page 5: Directors & AdministratorsDIRECTORS
Page 10 and 11: Directors’ ReportThe Fund’s net
Page 12 and 13: Directors’ Report Cont.Caribbean
Page 14 and 15: Directors’ Report Cont.The OAM fu
Page 17: Financial Statements15
Page 22 and 23: Fortress Mutual Fund LimitedConsoli
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Page 26 and 27: Fortress Mutual Fund LimitedNotes t
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2011 Report - Fortress Mutual Fund Ltd

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