• Global Innovation Fund
  • The Fund
  • Performance
  • Fund Notes
  • Subscription
• Balanced Small Cap Fund
• High Income Fund
• Solar Income Fund

Tera Funds Performance Update – April 2012

	Price	YTD	1 Year	3 Year	5 Year
Tera Global Innovation	$148.40	-7.5%	-30.7%	1.6%	-9.3%
S&P/TSX Tech		5.6%	-22.4%	1.1%	-4.7%
Tera Balanced Small Cap	$27.37	-4.0%	-22.2%	8.4%	-5.8%
TSX Small Cap		2.0%	-17.7%	20.9%	-1.3%
Tera High Income Fund	$27.40	2.0%	1.5%	14.4%

• Tera Balanced Small Cap Fund commenced December 2005; 2008 distribution $1.336
• See Bottom Note for Disclosure: 3 and 5 yr are annual compounded returns
• Tera Income Fund commenced July 31, 2008; Distributions: '08- $0.795; '09 - $1.22; '10-$1.45; '11-$1.45

Market Commentary

April market returns were generally lower across most major North American markets. In the case of Canada, Resource stocks continued the underperformance they have shown since 1H 2011 and small cap stocks continued to languish. Nasdaq reversed its course, leading US markets on the downside. The market appears to be putting in a replay of what was seen in early 2010 as well as early 2011 whereby the year opens on optimism with respect to recovery and global growth, only to have its hope dashed by renewed fears of sovereign issues in Europe. We continue to be relatively cautious in this uncertain period. Small cap names have lost much of their liquidity and as a result we are hesitant to commit funds right now.

Tera Global Innovation Fund                                      Price:  $148.40
Howard Sutton – Portfolio Manager

The Innovation Fund was down 3.9% for the month closing at $148.40.

The CCPC (Canadian Controlled Private Company) holdings are a material asset class for the fund. We have been asked the question whether unitholders can use the $750,000 lifetime capital gains exemption for any gains associated with the QSBC shares (Qualified Small Business Corporation). The answer is yes. These gains will be reported on the annual T5013 so all unitholders that can use this exemption will have the opportunity for tax free gains.

The fund purchased some QID ultrashort proshares in mid April for a bit of a hedge as the run up in large cap US technology over the past 6 months has gotten ahead of fundamentals. The continued pullback of the VIQ Solutions holding continues to weigh on performance while the private holding embotics received a term sheet from Venture Capitalists to inject an additional $5M into the company. The company anticipates closing in mid May.

The fund remains invested in 40% public companies and 60% private companies.

Tera Balanced Small Cap Fund                         Price: $27.37
Lyle Stein – Portfolio Manager

The Balanced Small Cap Fund was down 1.5% in April, compared to the TSX Small Cap Index which was down 3.8%. Since its inception over five years ago, the Small Cap Fund has had an annualized return of 2.4% versus 2.2% for the Small Cap Index.

As in March, Resource stocks were a drag on April performance. Barkerville and Colonial Coal each were off more than 20%. Orbite and VIQ Solutions were the other holdings with double-digit declines. On the positive side, Points International was up 22% and Burcon was up 13%.

April transactions saw increases to holdings of both Points and Burcon. Cymat was sold and Morneau Sobeco trimmed.

At month-end the fund holdings are: Cash 7%, Resource/Energy 22%, Technology 26%, Industrial 12%, Financial 17% and Biotech 8%. Our inverse holdings are now 1%, all in the HQD. The yield of the Fund is 2.1%. We continue to look for yield-oriented names.

Tera High Income Fund                            Price: $27.40 Distributions: ('11-$1.45; '10-$1.45; '09-$1.22; '08-$0.80)
Lyle Stein – Portfolio Manager

The High Income Fund was down 0.9% in March. Since its inception over 3 years ago, the Fund has returned an annualized return of 7.4%, well above yields generally available on traditional fixed-income securities. In terms of go-forward expectations, we would maintain a total return expectation target of 6%-7%.

April performance saw a 10%+ declines in Pacific and Western Prefs and Common as well as Zargon. Offsetting the losses were positive moves in Pembina, First National, Temple REIT and Parkland. There were no transactions in April.

At month-end the holdings of the fund can be broken down as follows: Cash 7%, Debt 20%, Prefs 4%, Equities/Trusts 68%, and Shorts -2%. The cash-on-cash yield is 6.0%, primarily tax-advantaged dividends.

The Tera Funds are open to new subscriptions (accredited investors only).  Please contact Tera Capital at 416-368-8372 or the website at www.teracap.com for more information, or contact your broker/investment advisor directly.

 

*Commissions, management fees, performance fees and expenses all may be associated with investment funds.  Please read the limited partnership/trust agreements before investing.  The returns are the simple rates of return (1 month, year to date) or the historical annual compounded total returns (2 yr, 3 yr and 5yr).   All returns are net of fees and in Cdn$.   Rates of return shown do not take into account income taxes payable by any security holder or other charges that would have reduced returns.  Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.