FOURTH QUARTER 1998
For the year ending
December 31, 1998
Press Release
MINT ANNOUNCES YEAR END RESULTS
Message to Unitholders
Middlefield High Income Trust ("MINT") is pleased to announce its unaudited financial results for the year-ended December 31, 1998 which are attached.
For the twelve months ended December 31, 1998, the Trust generated net income of $0.95 per unit including a net realized gain from securities transactions of about $0.11 per unit. On January 29, 1999, MINT made a distribution of $0.22 per unit which is consistent with the $0.22 per unit distribution made for the previous three quarters for a total of $0.88 per unit for the full year. This represents a cash-on-cash return of approximately 9% on MINT's issue price of $10.00 per unit, consistent with the Fund's objectives of 8% to 10%. We anticipate the first quarter distribution for 1999 will be approximately $0.20 per unit. On an annualized basis, this represents a yield of approximately 12% on the current unit price of $6.50.
The Canadian equity market had an improved fourth quarter with the TSE 300 posting a 16.0% total return compared to a loss of 23.5% in the third quarter. The income trust sector also fared well during the quarter and was up 2.6% as measured by the SCM Income Trust Index versus a third quarter loss of 14.9%. The income trust sector underperformed the TSE in 1998 due to the sector's heavier weighting of resource related issuers which experienced price declines.
Canadian job growth continued during the quarter without evidence of inflation, but this positive employment news was accompanied by a less than robust recovery in the retail sector and continued commodity price-related weakness for the Canadian dollar. North American high yield debt markets also showed signs of recovery in the fourth quarter, paring back some of their losses from the third quarter following the lead of equity markets. Confidence was restored largely as a result of the easing of credit by the central banks on both sides of the border. Although capital market volatility appears to have subsided, future stability will be dependent on the continued health of global financial markets. Current values still reflect in particular the uncertainty faced by cyclical and commodity related businesses and we are continuing to actively rebalance our portfolio to reflect market conditions.
MINT is a closed-end investment trust that invests primarily in high yield equities supplemented by high yield debt. This news release contains forward-looking information. Actual future results may differ materially. The risks, uncertainties and other factors that could influence actual results are described in MINT's annual report to unitholders and other documents filed with regulatory authorities. MINT trades on the Toronto Stock Exchange under the symbol "MID.UN".
For further information, contact:
Mr. James S.
Parsons
Director
March 2, 1999.
| STATEMENTS OF NET ASSETS | ||
| As at December 31, 1998 | ||
| (unaudited) | ||
| 1998 | 1997 | |
| ASSETS: | ||
| Investments at Market Value | $ 68,496,411 | $ 91,198,445 |
| Cash and Short-Term Investments | 825,974 | 1,645,668 |
| Subscriptions Receivable | - | 38,990,400 |
| Income Receivable | 1,419,771 | 1,890,722 |
| 70,742,156 | 133,725,235 | |
| LIABILITIES: | ||
| Accounts Payable and Accrued Liabilities | 397,932 | 712,250 |
| Unitholder Distributions | 1,638,690 | 1,955,501 |
| Loan Payable | 17,390,643 | 37,383,404 |
| 19,427,265 | 40,051,155 | |
| Net Assets | $ 51,314,891 | $ 93,674,080 |
| Number of Units Issued and Outstanding | 7,405,192 | 9,767,607 |
| Net Asset Value per Unit | $ 6.93 | $ 9.59 |
| STATEMENTS OF OPERATIONS | ||
| For the year ended December 31, 1998 and the period March 13, 1997 (date of inception) to December 31, 1997 | ||
| (unaudited) 1998 | 1997 | |
| INVESTMENT INCOME: | ||
| Income from Investments | $ 6,210,913 | $ 4,019,835 |
| Interest | 3,282,955 | 2,050,704 |
| 9,493,868 | 6,070,539 | |
| EXPENSES: | ||
| Interest and Bank Charges | 1,489,920 | 805,657 |
| Management Fee | 798,684 | 823,893 |
| Custodian and Trustee Fee | 57,398 | 41,363 |
| Marketing | 51,075 | 85,780 |
| Network Fee | 34,614 | 11,253 |
| Audit and Legal | 40,700 | 109,468 |
| Transfer Agent Fee | 8,025 | 7,500 |
| 2,480,416 | 1,884,914 | |
| Net Investment Income | $ 7,013,452 | $ 4,185,625 |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
| Net Realized Gain from Securities Transactions | $ 879,290 | $ 817,371 |
| Change in Net Unrealized Appreciation (Depreciation) of Investments | (23,698,750) | 2,054,970 |
| Net Gain (Loss) on Investments | (22,819,460) | 2,872,341 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ (15,806,008) | $ 7,057,966 |
| Net Income per Unit | $ 0.95 | $ 0.51 |
| STATEMENTS OF CHANGES IN NET ASSETS | ||
| For the year ended December 31, 1998 and the period March 13, 1997 (date of inception) to December 31, 1997 | ||
| (unaudited) 1998 | 1997 | |
| OPERATIONS: | ||
| Net Investment Income | $ 7,013,452 | $ 4,185,625 |
| Net Realized Gain from Securities Transactions | 879,290 | 817,371 |
| Change in Net Unrealized Appreciation (Depreciation) of Investments | (23,698,749) | 2,054,970 |
| Net Increase (Decrease) in Net Assets Resulting from Operations | (15,806,007) | 7,057,966 |
| DISTRIBUTIONS TO UNITHOLDERS | (7,154,315) | (4,897,696) |
| UNITHOLDER TRANSACTIONS: | ||
| Proceeds from Issue of Units |
- |
98,000,000 |
| Agents' Fees |
- |
(5,145,000) |
| Issue Costs |
- |
(1,076,106) |
| Repurchase of Units | (19,517,900) | (464,706) |
| Reinvested Distributions | 119,034 | 199,622 |
| Net Increase (Decrease) from Unitholder Transactions | (19,398,866) | 91,513,810 |
| NET ASSETS: Beginning of Period | 93,674,080 | - |
| End of Period | $ 51,314,892 | $ 93,674,080 |
| INVESTMENT TRANSACTIONS: | ||
| Proceeds on Sale of Securities | $ 56,102,751 | $ 13,025,586 |
| Less: Cost of Securities Sold | ||
| Owned at Beginning of Period | 89,143,475 | - |
| Purchased | 56,220,177 | 101,351,690 |
| Owned at End of Period | (90,140,191) | (89,143,475) |
| Securities Sold | 55,223,462 | 12,208,215 |
| Realized Gain on Sale of Securities | $ 879,290 | $ 817,371 |
| Distribution per Unit | $ 0.88 | $ 0.50 |
| Portfolio Holdings as at December 31, 1998 | ||
| High Yield Equity | Business | % Weight |
| AEC Pipelines L.P. | oil pipeline | 8.4% |
| H&R Real Estate Investment Trust | office and industrial buildings | 7.0% |
| Realfund Real Estate Investment Trust | shopping centres | 6.2% |
| Westshore Terminals Income Fund | coal handling facility | 6.0% |
| Associated Freezers Income Trust | public refrigeration warehousing | 5.2% |
| Morrison Facilities Income Fund | gas plant, oil pipeline | 5.1% |
| Avista Real Estate Investment Trust | retail, industrial, office buildings | 5.0% |
| Northland Power Income Fund | cogeneration, electricity and steam | 4.9% |
| Luscar Coal Income Fund | coal production | 3.9% |
| Paperboard Industries International Inc. | boxboard packaging facility | 3.8% |
| Halterm Income Fund | container handling facility | 3.8% |
| Koch Pipelines Canada L.P. | oil pipeline | 3.4% |
| ARC Energy Trust | oil and gas production | 3.2% |
| Morguard Real Estate Investment Trust | office, industrial, retail properties | 2.4% |
| KMS Power Income Fund | electricity generation | 2.0% |
| Pembina Pipelines Income Fund | oil pipeline | 1.2% |
| Transalta Power L.P. | cogeneration, electricity and steam | 1.0% |
| Total | 72.5% | |
| High Yield Debt | Business | % Weight |
| Scott Paper Limited | paper products | 6.2% |
| Ainsworth Lumber Co. Ltd. | forest products | 4.5% |
| Anchor Lamina Inc. | tool and die manufacturing | 4.0% |
| Finlay Enterprises Inc. | jewelry retail | 3.8% |
| Algoma Steel Inc. | steel production | 3.2% |
| Millar Western Forest Products Ltd. | forest products | 3.2% |
| Greenstone Resources Ltd. | gold mining | 2.6% |
| Total | 27.5% | |
| TOTAL INVESTMENT PORTFOLIO | 100% | |
Trust Profile
MINT raised $98 million in March of 1997 through an initial public offering. The primary objectives of the Fund are to produce a high level of sustainable income and to minimize the risk of investing in high income securities on a cost effective basis. MINT comprises four classes of assets: income funds, high yield debt, real estate investment trusts and royalty trusts. Unitholders can acquire additional units by participating in the Distribution Reinvestment Plan. The Plan enables unitholders to reinvest their quarterly distributions in additional units of MINT thereby achieving the benefit of compounding returns.
| Head Office | Directors and Officers | ||||||||||||||||||||
| 1 First Canadian Place | James S. Parsons, President and Director | ||||||||||||||||||||
| 58th Floor | Anthony P. Traub, Secretary-Treasurer and Director | ||||||||||||||||||||
| P.O. Box 192 | Murray J. Brasseur, Director | ||||||||||||||||||||
| Toronto, Canada M5X 1A6 | W. Garth Jestley, Director | ||||||||||||||||||||
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