FIRST QUARTER REPORT 1999
For the quarter ending March
31, 1999
MINT ANNOUNCES FIRST QUARTER RESULTS
Message to Unitholders
Middlefield High Income Trust ("MINT") is pleased to announce its unaudited financial results for the three months ended March 31, 1999, the details of which are attached.
In the first quarter of 1999, the Trust generated net investment income of $0.20 per unit and had a net realized loss from investment transactions of $0.08 per unit. On April 29, 1999, MINT made a distribution of $0.20 per unit which compares to $0.22 for the same period last year. The reduced distribution is due to the decline in income being received by the Trust on some of its commodity industry related investments. It is anticipated that distributions for the balance of the year should be approximately in line with the first quarter. Year-to-date, MINT's net asset value has appreciated from $6.93 per unit at the beginning of the year to $7.30 currently, an increase of approximately 5%.
During the first quarter, MINT had a total return of 4.8% compared to the total return of 4.5% posted by the SCM Income Trust Index. MINT was able to slightly exceed SCM Index performance despite its low weighting in oil and gas royalty trusts of about 4% relative to the Index's weighting of about 24%. With the strong recovery of oil prices in the first quarter, the royalty trust sector was the best performing, returning 16.1%. MINT's good performance was primarily related to further recovery in the high yield bond market. The real estate investment trusts have also begun to perform strongly relative to other sectors. The takeover offer for Realfund REIT by RioCan REIT sparked renewed interest and appreciation in REIT unit prices across the board.
We have recently been reducing MINT's weighting in securities with commodity price related exposure in favour of less volatile investments that present both value and growth opportunities. A recent addition to the portfolio was Rogers Sugar Income Fund which is the largest producer of refined sugar in western Canada and currently trades at a yield of about 12.1%. We believe high yield equities currently offer very attractive values and as such, are continuing to seek out undervalued investments in the sector.
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
May 27, 1999.
| STATEMENTS OF NET ASSETS | ||||
| As at March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| ASSETS: | ||||
| Investments at Market Value | $ | 67,952,320 | $ | 90,579,046 |
| Cash and Short-Term Investments | 1,694,499 | 19,712,708 | ||
| Income Receivable | 1,347,629 | 1,740,595 | ||
| 70,994,448 | 112,032,349 | |||
| LIABILITIES: | ||||
| Accounts Payable and Accrued Liabilities | 383,036 | 536,506 | ||
| Unitholder Distributions | 1,443,437 | 2,064,650 | ||
| Loan Payable | 18,278,498 | 24,889,291 | ||
| 20,104,971 | 27,490,447 | |||
| Net Assets | $ | 50,889,477 | $ | 84,541,902 |
| Units Issued and Outstanding | 7,207,489 | 9,167,071 | ||
| Net Asset Value per Unit | $ | 7.06 | $ | 9.22 |
| STATEMENTS OF OPERATIONS | ||||
| For the three months ended March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| INVESTMENT INCOME: | ||||
| Income from Investment Trust Units | $ | 1,312,605 | $ | 1,455,996 |
| Interest | 552,769 | 863,012 | ||
| 1,865,374 | 2,319,008 | |||
| EXPENSES: | ||||
| Interest and Bank Charges | 270,241 | 446,541 | ||
| Management Fee | 131,210 | 247,517 | ||
| Custodian and Trustee Fee | 12,298 | 14,127 | ||
| Network Fee | 8,184 | 8,485 | ||
| Marketing | 6,125 | 8,891 | ||
| Audit and Legal | 4,775 | 5,000 | ||
| Transfer Agent Fee | 2,006 | 1,900 | ||
| Other | 6,016 | 5,987 | ||
| 440,855 | 738,448 | |||
| Net Investment Income | 1,424,519 | 1,580,560 | ||
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||
| Net Realized Gain (Loss) from Investment Transactions | (606,083) | 233,873 | ||
| Change in Net Unrealized Appreciation (Depreciation) of Investments | 1,309,468 | (3,610,881) | ||
| Net Gain (Loss) on Investments | 703,385 | (3,377,008) | ||
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,127,904 | $ | (1,796,448) |
| Net Investment Income per Unit | $ | 0.20 | $ | 0.17 |
| STATEMENTS OF CHANGES IN NET ASSETS | ||||
| For the three months ended March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| OPERATIONS: | ||||
| Net Investment Income | $ | 1,424,519 | $ | 1,580,560 |
| Net Realized Gain (Loss) from Investment Transactions | (606,083) | 233,873 | ||
| Change in Net Unrealized Appreciation (Depreciation) of Investments | 1,309,468 | (3,610,881) | ||
| 2,127,904 | (1,796,448) | |||
| DISTRIBUTIONS TO UNITHOLDERS | (1,425,801) | (2,016,756) | ||
| UNITHOLDER TRANSACTIONS: | ||||
| Issue Cost Recoveries | 161,052 | - | ||
| Repurchase of Units | (1,288,570) | (5,438,040) | ||
| Reinvested Distributions | - | 119,064 | ||
| (1,127,518) | (5,318,976) | |||
| Net Decrease in Net Assets | (425,415) | (9,132,180) | ||
| NET ASSETS: | ||||
| Beginning of Period | 51,314,892 | 93,674,082 | ||
| End of Period | $ | 50,889,477 | $ | 84,541,902 |
| INVESTMENT TRANSACTIONS: | ||||
| Proceeds from Sale of Investments | $ | 2,501,726 | $ | 14,396,369 |
| Less: Cost of Investments Sold - | ||||
| Owned at Beginning of Period | 90,140,191 | 89,143,475 | ||
| Purchased | 1,254,250 | 17,153,979 | ||
| Owned at End of Period | (88,286,632) | (92,134,958) | ||
| 3,107,809 | 14,162,496 | |||
| Net Realized Gain (Loss) from Investment Transactions | $ | (606,083) | $ | 233,873 |
| Distribution per Unit | $ | 0.20 | $ | 0.22 |
| STATEMENT OF INVESTMENT PORTFOLIO | ||
| As at March
31, 1999 |
||
| Unaudited | BUSINESS | % WEIGHT |
| HIGH YIELD EQUITY | ||
| AEC Pipelines L.P. | Oil Pipeline | 9.2% |
| H&R Real Estate Investment Trust | Office/Industrial Buildings | 7.5% |
| Realfund Real Estate Investment Trust | Shopping Centres | 6.4% |
| Associated Freezers Income Trust | Public Refrigeration Warehousing | 5.1% |
| Avista Real Estate Investment Trust | Retail/Industrial/Office Buildings | 5.0% |
| Westshore Terminals Income Fund | Coal Handling Facility | 4.7% |
| Western Facilities Fund | Gas Plant/Oil Pipeline | 4.5% |
| Northland Power Income Fund | Cogeneration-Electricity/Steam | 4.4% |
| ARC Energy Trust | Oil and Gas Production | 3.8% |
| Paperboard Industries International Inc. | Paperboard/Packaging | 3.8% |
| Koch Pipelines Canada L.P. | Oil Pipeline | 3.6% |
| Halterm Income Fund | Container Handling Facility | 3.2% |
| Luscar Coal Income Fund | Coal Production | 3.2% |
| Morguard Real Estate Investment Trust | Office/Industrial/Retail Properties | 2.1% |
| Rogers Sugar Income Fund | Sugar Production/Marketing | 1.8% |
| KMS Power Income Fund | Electricity Generation | 1.3% |
| Pembina Pipeline Income Fund | Oil Pipeline | 1.2% |
| Transalta Power L.P. | Cogeneration/Electricity/Steam | 1.0% |
| 71.8% | ||
| HIGH YIELD DEBT | ||
| Scott Paper Limited 10% due June 6, 2007 | Paper Products | 4.9% |
| Ainsworth Lumber Co. Ltd. 12.5% due July 15, 2007 | Forest Products | 4.7% |
| Algoma Steel Inc. 12.375% due July 15, 2005 | Steel Production | 4.3% |
| Anchor Lamina Inc. 9.875% due February 1, 2008 | Tool and Die Manufacturing | 4.2% |
| Finlay Enterprises Inc. 9% due May 1, 2008 | Jewelry Retail | 4.2% |
| Millar Western Forest Products Ltd. 9.875% due May 15, 2008 | Forest Products | 4.0% |
| Greenstone Resources Ltd. 9% due February 28, 2002 | Gold Mining | 1.9% |
| 28.2% | ||
| 100% | ||
TRUST PROFILE
MINT raised $98 million in March of 1997 through an initial public offering. The primary objectives of the Trust are to produce a high level of sustainable income and to minimize the risk of investing in high yield securities on a cost effective basis. MINT is comprised of four asset classes: income funds, high income 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. MINT is fully RRSP eligible.
| Head Office | Directors and Officers | ||||||||||||||||||
| One First Canadian
Place 58th Floor P.O. Box 192 Toronto, Canada M5X 1A6 |
Murray J. Brasseur,
Director W. Garth Jestley, Director James S. Parsons, President and Director Anthony P. Traub, Secretary-Treasurer and Director |
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