Canadian World Fund Limited

Canadian World Fund Limited

July 25, 2012 13:51 ET

Canadian World Fund Limited Reports June 30, 2012 Interim Results

TORONTO, CANADA--(Marketwire - July 25, 2012) - Canadian World Fund Limited's (TSX:CWF) (CWF) net asset value at June 30, 2012 was $35,047,000, a decrease from the $35,540,000 at the end of 2011. CWF's net asset value per share (NAV) at June 30, 2012 was $4.87, down from $4.94 at year end 2011. The NAV return for the six months ended June 30, 2012 was -1.4%, compared with a 4.4% return for the benchmark Morgan Stanley Capital International (MSCI) All Country World Index, expressed in Canadian dollar terms. CWF's market return to common shareholders for the six months to June 30, 2012 was -10.1%.

Around the world, as economic activity has been slowing and, acknowledging the disappointing prospects for growth, central banks have kept monetary policy stimulative. The U.S. Federal Reserve extended its maturity-lengthening, bond-purchase program, better known as Operation Twist. The Bank of Canada is likely to keep interest rates low for the rest of this year and central banks in Europe and Asia are poised to ease as well. The People's Bank of China cut rates for the first time since 2008. Clearly, the European debt crisis is taking its toll. Indeed, many observers are expecting a Greek exit from the Eurozone and other countries remain in jeopardy.

The combination of slowing and weaker trend growth, the challenges presented by the ongoing Eurozone crisis and the uncertainty created by the U.S. 'fiscal cliff' will likely result in continued swings in risk appetite. Worries about the strength and/or sustainability of the global economy are also likely to continue given the overall slow pace of growth. It might be some time before a positive outcome occurs. Volatility and risk premiums are apt to remain elevated.

Positions in Apple Inc., Grupo Financiero Banorte (a large Mexican bank), HDFC Bank Ltd. (premier Indian retail bank) and Galaxy Entertainment Group Limited (casino operations in Macau, China) were the main positive contributors in the portfolio. Although emerging economies have suffered under worldwide pressures - bank lending and European market woes not least - CWF has fared relatively well in most of those country segments of the portfolio. A long-held group of Indian stocks, for example, has appreciated despite a major retreat in the rupee.

The benchmark is dominated by U.S. stocks, an underweighted section of the portfolio. The bearish performance of both large and smaller capitalized stocks has been widened, particularly through the Canadian bear market in resources. The Canadian weighting has been high in the CWF portfolio, mainly because of Canadian dollar strength. Blinkx plc, Calibre Mining Corp., and Niko Resources Ltd. were three of the largest negative contributors in the portfolio to June 30.

CWF is a TSX-listed global equities fund that provides one of few opportunities for bottom-up investment in securities of publicly traded, primarily growth companies in a global portfolio.

(in thousands of dollars, except per share amounts)
Six Months Ended
June 30, June 30,
2012 2011
Net investment loss (187 ) (245 )
Net loss on investments (373 ) (196 )
Decrease in net assets resulting from operations (560 ) (441 )
Decrease in net assets resulting from operations - per share (0.08 ) (0.06 )
As at
June 30,
December 31,
Selected data (1)
Net asset value 35,047 35,540
Net asset value per share 4.87 4.94
Selected data according to GAAP (1)
Net assets 34,789 35,349
Net assets per share 4.84 4.92
(1) The Company calculates the net asset value and net asset value per share on the basis of the valuation principles set out in its annual information form. These valuation principles differ from the requirements of Canadian generally accepted accounting principles (GAAP), with the main difference relating to securities that are listed on a public stock exchange. While the Company generally values such securities based on the latest sale price, GAAP requires the use of the closing bid price. Accordingly, bid prices are used in determining net assets and net assets per share for purposes of the interim and annual financial statements.

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