CALGARY, ALBERTA--(CCNMatthews - Aug. 26, 2005) - MYDAS Fund (TSX:MYF.UN):
For the six months ended June 30, 2005 (unaudited)
Investment Highlights
Jun 30, Mar. 31, Dec. 31, Sep. 30, Jun 30,
2005 2005 2004 2004 2004
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Net Asset Value
per Unit $ 30.54 $ 30.62 $ 30.31 $ 28.51 $ 27.65
Market Price per Unit $ 28.88 $ 27.65 $ 29.18 $ 27.20 $ 26.55
Trading Premium
(Discount) (5.4%) (9.7%) (3.7%) (4.6%) (4.0%)
Quarterly
Distributions
per Unit $ 0.624 $ 0.624 $ 0.624 $ 0.624 $ 0.624
12 Month Trailing Yield 8.6% 9.0% 8.6% 9.2% 9.4%
Market Capitalization
($ millions) $ 280.5 $ 271.7 $ 289.4 $ 270.7 $ 263.2
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Investment Manager Report
At the end of March 2005, rising interest rate and inflation concerns dominated the income trust market which resulted in a sell-off similar to that experienced in the spring of 2004. Like 2004, the sell-off was short lived as positive year over year funds flow and declining bond yields boosted income trust valuations. With continued strength in oil and natural gas prices, the energy trust sector delivered a strong 8.6% total return in the second quarter of 2005, while real estate investment trusts surpassed the energy trusts with a 9.3% total return. As a result, the S&P/TSX Income Trust index produced a total return of 7.7% over the second quarter of 2005, again outperforming the S&P/TSX Composite index's return of 3.6%. On a net asset value basis, MYDAS generated a 1.8% total return. On a unit price basis, MYDAS' improved unit price helped boost its total return to 6.8% in the second quarter of 2005.
During the second quarter, MYDAS made significant changes to its portfolio, by adding a number of new investments and taking profits on many others. Dispositions of CCS, Energy Savings, ARC Energy, Northern Property Reit and various others generated realized gains of $20.8 million. In addition, the Fund enhanced its royalty trust and ongoing business trust exposure while reducing cash reserves from 18% at March 31, 2005 to 6% at June 30, 2005.
With favorable market sentiment returning to the income trust sector in the second quarter and into the third quarter of 2005, MYDAS expects to achieve its investment objectives in 2005 with maintenance of its monthly regular and special distributions.
Management's Discussion & Analysis (August 18, 2005)
Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited interim financial statements for the three months ended June 30, 2005, and the audited financial statements and MD&A for the year ended December 31, 2004.
MYDAS' net asset value closed the quarter at $30.54 per unit, down slightly from $30.62 per unit at March 31, 2005 as the portfolio was repositioned for longer term growth opportunities. The Fund's market price improved over the quarter, with a June 30, 2005 closing price of $28.88 per unit up from $27.65 per unit at the end of the first quarter. Despite an improved unit price, the discount to net asset value continued to persist, resulting in 122,810 units being repurchased under the mandatory repurchase program during the quarter as the Fund's unit price traded below 95% of its net asset value.
For the three months ended June 30, 2005, revenue totaled $7.0 million compared to $5.9 million for the same period in 2004 due to lower cash balances in 2005 compared to 2004. Revenue for the second quarter of 2005 was also up from the $5.9 million generated in the first quarter again due to lower cash balances. Administrative and investment manager fees were $0.86 million for the quarter ended June 30, 2005 compared to $0.80 million in the same quarter of 2004 as the net asset value increased over the year. Similarly, trailer fees, which totaled $0.29 million for the quarter, increased slightly due to the higher net asset value. General and administration costs declined marginally year over year. After total expenses of $1.3 million, net investment income of $5.7 million or $0.58 per unit was generated for the second quarter of 2005 compared to $4.7 million or $0.47 per unit for the second quarter of 2004. The Fund paid distributions to unitholders of $0.624 per unit for both the second quarters of 2005 and 2004.
Portfolio Holdings -------------------------------------------------- Ongoing Business Trusts 42% Real Estate Investment Trusts 16% Oil & Gas Royalty Trusts 33% Cash & Term Deposits 6% Power Generation Investments 2% Pipeline / Energy Investments 1% --------------------------------------------------
Total results of operations were $5.1 million or $0.52 per unit for the second quarter of 2005 as a result of realized gains of $20.8 million offset by unrealized losses on existing investments of $21.4 million. Comparatively, results of operations were negative $7.3 million or negative $0.74 per unit in the same period in 2004 as realized gains and unrealized losses totaled $1.4 million and $13.4 million respectively for the second quarter of 2004.
MYDAS Fund
Statement of Net Assets
(Unaudited)
As at June 30, 2005 December 31, 2004
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Assets
Investments, at market $ 279,958,600 $ 269,995,160
Cash and term deposits 16,550,844 30,987,578
Revenue receivable 2,297,920 1,891,497
Accounts receivable 89,736 102,929
Prepaid expenses 53,721 6,471
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298,950,821 302,983,635
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Liabilities
Accounts payable 291,386 287,603
Distributions payable 2,020,277 2,062,804
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2,311,663 2,350,407
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Net Assets $ 296,639,158 $ 300,633,228
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Units outstanding 9,712,868 9,917,329
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Net asset value per unit $ 30.54 $ 30.31
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MYDAS Fund
Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
For the periods ended 2005 2004 2005 2004
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Revenue
Investment income $ 6,979,977 $ 5,923,734 $ 12,918,395 $12,020,475
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6,979,977 5,923,734 12,918,395 12,020,475
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Expenses
Administrative
and investment
manager fees 861,654 799,145 1,749,775 1,626,652
Trailer fees 291,386 277,563 595,957 557,500
General and
administration
costs 107,362 164,206 190,354 268,561
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1,260,402 1,240,914 2,536,086 2,452,713
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Net investment
income 5,719,575 4,682,820 10,382,309 9,567,762
Net realized gain 20,825,779 1,382,731 28,975,798 3,590,342
Net change in
unrealized gain
(loss) (21,446,984) (13,401,230) (25,186,861) 7,126
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Total results of
operations $ 5,098,370 $(7,335,679) $ 14,171,246 $13,165,230
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Results of
operations
per unit:
Net investment
income $ 0.58 $ 0.47 $ 1.05 $ 0.96
Net realized gain 2.12 0.14 2.94 0.36
Net change in
unrealized gain
(loss) (2.18) (1.35) (2.56) -
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$ 0.52 $ (0.74) $ 1.43 $ 1.32
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MYDAS Fund
Statement of Changes in Net Assets
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
For the periods ended 2005 2004 2005 2004
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Net Assets
- beginning
of period $ 300,822,585 $ 289,911,226 $ 300,633,228 $277,871,263
Operations:
Net investment
income 5,719,575 4,682,820 10,382,309 9,567,762
Net realized
gain 20,825,779 1,382,731 28,975,798 3,590,342
Net change in
unrealized
gain (loss) (21,446,984) (13,401,230) (25,186,861) 7,126
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5,098,370 (7,335,679) 14,171,246 13,165,230
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Unitholder
Transactions:
Distributions
to unitholders (6,058,582) (6,177,324) (12,205,778) (12,426,615)
Issuance of trust
units, net 322,617 1,056,868 1,258,792 2,178,238
Repurchase of
trust units (3,545,832) (3,364,619) (7,218,330) (6,697,644)
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(9,281,797) (8,485,075) (18,165,316) (16,946,021)
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Net Assets - end
of period $ 296,639,158 $ 274,090,472 $ 296,639,158 $274,090,472
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Distributions
per unit $ 0.624 $ 0.624 $ 1.248 $ 1.248
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MYDAS Fund
Statement of Investments
(Unaudited)
As at June 30, 2005
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% of
Cost Market Market
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Ongoing Business Trusts
AG Growth Income Fund $ 5,670,000 $ 6,510,000
Advanced Fiber Technologies
Income Fund 4,250,000 1,207,000
Aeroplan Income Fund 485,000 572,300
Arctic Glacier Income Fund 4,833,200 5,475,000
Atlas Cold Storage Income Trust 9,587,289 7,782,210
The Brick Group Income Fund 5,237,748 6,331,800
CML Healthcare Income Fund - -
Chemtrade Logistics Income Fund 5,612,405 6,300,000
Clearwater Seafoods Income Fund 3,747,339 3,048,857
Colabor Income Fund 3,750,000 3,900,000
Custom Direct Income Fund 3,950,000 5,541,850
Davis + Henderson Income Fund 5,264,397 10,460,000
E. D. Smith Income Fund 1,485,000 1,753,785
Entertainment One Income Fund
(formerly ROW Entertainment) 5,791,500 5,335,000
Great Lakes Carbon Income Fund 4,904,985 5,873,010
KCP Income Fund 8,430,084 9,385,740
Livingston International Income Fund 2,076,143 4,256,000
PRT Forest Regeneration Income Fund 3,713,242 4,172,700
Rogers Sugar Income Fund 5,741,287 6,161,250
SFK Pulp Fund 7,573,791 3,992,000
Spinrite Income Fund 4,368,807 5,041,932
Sun Gro Horticulture Income Fund 6,142,000 4,962,736
Swiss Water Decaffeinated
Coffee Income Fund 1,217,000 1,718,404
TransForce Income Fund 4,494,500 9,340,800
Yellow Pages Income Fund 3,431,250 4,547,550
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111,756,967 123,669,924 41.7%
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Oil & Gas Royalty Trusts
Acclaim Energy Trust 8,167,542 12,272,000
ARC Energy Trust 3,024,775 4,985,000
Baytex Energy Trust 9,179,829 8,627,200
Bonavista Energy Trust 2,136,150 2,328,000
Enerplus Resources Fund 2,660,193 4,914,000
Esprit Energy Trust 9,075,240 8,835,600
Harvest Energy Trust 4,208,833 7,588,769
Ketch Resources Trust 7,831,350 6,840,000
NAL Oil & Gas Trust 8,696,350 9,262,500
Paramount Energy Trust 8,673,647 9,030,000
Shiningbank Energy Income Fund 6,559,247 7,111,500
Trilogy Energy Trust 4,586,580 5,193,900
Vermilion Energy Trust 2,961,000 4,905,600
Viking Energy Royalty Trust 6,782,150 7,080,000
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84,542,886 98,974,069 33.4%
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Real Estate Investment Trusts
Firm Capital Mortgage Investment Trust - -
Huntingdon Reit 4,400,000 4,766,667
Innvest Reit 6,836,991 7,260,000
IPC U.S. Reit 5,335,275 6,044,500
Morguard Reit 2,754,620 3,416,040
Northern Properties Reit - -
O & Y Reit 10,633,000 14,700,000
Retirement Residences Reit 6,588,110 5,908,500
Royal Host Reit - -
Summit Reit 3,168,000 4,512,200
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39,715,996 46,607,907 15.7%
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Power Generation Investments
Algonquin Power Income Fund - -
Clean Power Income Fund 4,527,433 2,827,500
Countryside Power Income Fund 4,935,373 4,620,000
Transalta Power, L.P. - -
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9,462,806 7,447,500 2.5%
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Pipeline/Energy Investments
CCS Income Trust 458,628 2,030,000
Energy Savings Income Fund - -
Heating Oil Partners Income Fund 4,390,000 1,229,200
Inter Pipeline Fund - -
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4,848,628 3,259,200 1.1%
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Investments 250,327,283 279,958,600 94.4%
Cash and Term Deposits 16,550,844 16,550,844 5.6%
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Total $266,878,127 $296,509,444 100.0%
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MYDAS Fund
Notes to the Financial Statements
(Unaudited)
THE TRUST
MYDAS Fund (the "Fund" or "MYDAS") is a closed-end investment trust, established under the laws of Alberta pursuant to a Declaration of Trust dated December 18, 2001. The Fund commenced operations upon the completion of its initial public offering on February 14, 2002. The term of the Fund continues until June 30, 2007, or such earlier or later date as the unitholders may determine in accordance with the Declaration of Trust.
The Fund's investment objectives are to provide unitholders with a stable, tax effective monthly distributions targeted at $0.1875 per unit and to return the original issue price to unitholders upon termination of the Fund.
SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include estimates and assumptions made by management. Actual results may differ from these estimates. The significant accounting policies employed include:
a) Cash and cash equivalents consists of cash on hand and short term bankers' acceptances with maturities of less than 90 days on acquisition.
b) Investments are stated at market values based on closing market quotations. Average cost is used to compute realized and unrealized gains or losses on investments. Transactions are recorded on the trade date.
c) The Fund qualifies as a unit trust within the meaning of the Income Tax Act (Canada). Provided that the Fund distributes to its unitholders its net income for tax purposes, the Fund will not generally be liable for income tax under Part 1 of the Canadian Income Tax Act.
d) Dividend income is recorded on the ex-dividend date, distribution income is recorded on the ex-distribution date and interest is recognized as earned.
UNITHOLDERS' CONTRIBUTION
The authorized capital of the Fund consists of an unlimited number of trust units which are transferable non-redeemable units of beneficial interest.
The Fund issued 10,812 units under its distribution reinvestment plan during the second quarter of 2005.
The Fund has a mandatory repurchase program whereby units offered for sale at a discount to the Fund's net asset value per unit of greater than 5% are repurchased for cancellation, subject to a maximum of 1.25% of the total number of units outstanding at the beginning of each calendar quarter. During the quarter ended June 30, 2005, 122,810 units were repurchased pursuant to this program (June 30, 2004 - 124,971 units).
ADMINISTRATIVE AND INVESTMENT MANAGER FEES
MYDAS Management Inc. is the administrator of the Fund and Bloom Investment Counsel, Inc. is the investment manager of the Fund. The administrator and investment manager are entitled to receive fees totaling 1.1% of the average weekly net asset value of the Fund. Effective March 2005, the Fund commenced paying the administrative and investment management fees in cash rather than in units of the Fund. During the quarter ended June 30, 2005, the Fund recorded an expense of $861,654 (June 30, 2004 - $799,145) in respect of these fees.
TRAILER FEES
The Fund pays a trailer fee to investment dealers calculated and payable quarterly in arrears at an annual rate of 0.4% of the net asset value of the Fund held by unitholders in accounts with investment dealers. During the quarter ended June 30, 2005, the Fund recorded an expense of $291,386 (June 30, 2004 - $277,563) related to the trailer fee.
CORPORATE INFORMATION Administrator MYDAS Management Inc. Suite 3500, 350 - 7th Avenue S.W. Calgary, Alberta T2P 3N9 Telephone: (403) 261-9674 Fax: (403) 261-8670 Website: www.citadelfunds.com Investment Manager Bloom Investment Counsel, Inc. Suite 1710, 150 York Street Toronto, Ontario M5H 3S5 Trustee Computershare Trust Company of Canada 6th Floor, 530 - 8th Avenue S.W. Calgary, Alberta T2P 3S8 Stock Exchange Listing Toronto Stock Exchange Trust units: MYF.un
FOR FURTHER INFORMATION PLEASE CONTACT:
MYDAS Fund
Joe MacDonald
Executive Vice President, Sales and Marketing
1-877-261-9674
Website: www.citadelfunds.com
