FIRST QUARTER REPORT 1999
For the quarter ending March
31, 1999
SAGE ANNOUNCES FIRST QUARTER RESULTS
Message to Unitholders
SAGE High Yield Debt Trust ("SAGE") is pleased to announce its unaudited financial results for the three months ended March 31, 1999, the details of which are attached.
On April 29, 1999 SAGE made a distribution of $0.28 per unit for the first quarter compared with $0.20 per unit for the fourth quarter of 1998. The increase in distribution over last quarter is a result of the fund utilizing its allowable leverage and being substantially fully invested. We anticipate quarterly distributions for the balance of 1999 to continue at the same rate. For the first quarter 1999 SAGE posted a total return of 4.9% compared to the SCM Canadian High Yield Bond Index total return of 1.8% for the same period. The good performance was attributed to a strengthening in both bond and equity prices as a result of improving fundamentals, a rebound in commodity prices, and the addition of new names to the portfolio. On an annualized basis the current distribution rate represents a yield of approximately 9.3% on the current unit price of $12.00.
During the first quarter the high yield market continued to recover from its losses of last summer, posting strong gains against a backdrop of favourable economic conditions in North America. In February, SAGE added Stelco Inc. 8.0% bonds due in 2006 to its portfolio. On the equity side, we have added securities with stable cash flow generation along with potential for growth. We found the REITs to represent attractive value relative to other income trusts and as such have added Avista REIT and increased our position in Residential Equities REIT. These REITs offer attractive yields and potential for cash flow growth and have appreciated since their purchase.
SAGE is a closed-end investment trust that invests primarily in high yield corporate debt supplemented by high yield equity securities such as income funds and REITs. 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 SAGE's annual report to unitholders and other documents filed with regulatory authorities.
SAGE trades on the Toronto Stock Exchange under the symbol "BBB.UN".
For further information, contact:
Mr. James S.
Parsons
Director
May 26, 1999.
| STATEMENTS OF NET ASSETS | ||||
| As at March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| ASSETS: | ||||
| Investments at Market Value | $ | 30,204,086 | $ |
24,712,665 |
| Cash | 464,358 | 757,278 | ||
| Subscriptions Receivable | - | 15,995,000 | ||
| Income Receivable | 779,754 | 634,655 | ||
| 31,448,198 | 42,099,598 | |||
| LIABILITIES: | ||||
| Accounts Payable and Accrued Liabilities | 64,846 | 105,928 | ||
| Unitholder Distributions | 526,171 | 342,750 | ||
| Loan Payable | 5,959,311 | 9,276,604 | ||
| 6,550,328 | 9,725,282 | |||
| Net Assets | $ | 24,897,870 | $ | 32,374,316 |
| Units Issued and Outstanding | 1,879,184 | 2,285,000 | ||
| Net Asset Value per Unit | $ | 13.25 | $ | 14.17 |
| STATEMENTS OF OPERATIONS | ||||
| For the three months ended March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| INVESTMENT INCOME: | ||||
| Interest | $ | 518,995 | $ | 368,615 |
| Income from Investment Trust Units | 204,637 | 174,261 | ||
| 723,632 | 542,876 | |||
| EXPENSES: | ||||
| Management Fee | 67,561 | 85,729 | ||
| Interest and Bank Charges | 66,158 | 76,302 | ||
| Custodian and Trustee Fee | 10,402 | 9,433 | ||
| Network Fee | 2,488 | 1,738 | ||
| Audit and Legal | 1,338 | 4,000 | ||
| Transfer Agent Fee | 1,338 | 1,000 | ||
| Other | 2,400 | 4,961 | ||
| 151,685 | 183,163 | |||
| Net Investment Income | 571,947 | 359,713 | ||
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||||
| Net Realized Gain From Investment Transactions | - | 30,581 | ||
| Change in Net Unrealized Appreciation (Depreciation) of Investments | 444,708 | (102,817) | ||
| Net Gain (Loss) on Investments | 444,708 | (72,236) | ||
| Net Increase in Net Assets Resulting from Operations | $ | 1,016,655 | $ | 287,477 |
| Net Investment Income per Unit | $ | 0.30 | $ | 0.16 |
| STATEMENTS OF CHANGES IN NET ASSETS | ||||
| For the three months ended March 31 | ||||
| Unaudited | 1999 | 1998 | ||
| OPERATIONS: | ||||
| Net Investment Income | $ | 571,947 | $ | 359,713 |
| Net Realized Gain from Investment Transactions | - | 30,581 | ||
| Change in Net Unrealized Appreciation (Depreciation) of Investments | 444,708 | (102,817) | ||
| 1,016,655 | 287,477 | |||
| DISTRIBUTIONS TO UNITHOLDERS | (526,171) | (342,750) | ||
| UNITHOLDER TRANSACTIONS: | ||||
| Recoveries (Costs) of Issue | 52,055 | (15,320) | ||
| Repurchase of Units | (1,324,251) | - | ||
| (1,272,196) | (15,320) | |||
| Net Decrease in Net Assets | (781,712) | (70,593) | ||
| NET ASSETS: | ||||
| Beginning of Period | 25,679,582 | 32,444,909 | ||
| End of Period | $ | 24,897,870 | $ | 32,374,316 |
| INVESTMENT TRANSACTIONS: | ||||
| Proceeds from Sale of Investments | $ | - | $ | 2,309,412 |
| Less: Cost of Investments Sold - | ||||
| Owned at Beginning of Period | 29,474,867 | 12,331,398 | ||
| Purchased | 2,740,449 | 14,363,021 | ||
| Owned at End of Period | (32,215,316) | (24,415,588) | ||
| - | 2,278,831 | |||
| Net Realized Gain from Investment Transactions | $ | - | $ | 30,581 |
| Distribution per Unit | $ | 0.28 | $ | 0.15 |
| STATEMENT OF INVESTMENT PORTFOLIO | ||
| As at March 31, 1999 | ||
| Unaudited | BUSINESS |
% WEIGHT |
| HIGH YIELD DEBT | ||
| MDC Communications Corp. 10.5% due December 1, 2006 | Printing/Communications | 7.8% |
| Anchor Lamina Inc. 9.875% due February 1, 2008 | Tool and Die Manufacturing | 7.0% |
| Tembec Inc. 8.3% due January 30, 2003 | Forest Products | 6.7% |
| TrizecHahn Corporation 7.95% due June 1, 2007 | Real Estate | 6.7% |
| Scott Paper Limited 10% due June 6, 2007 | Paper Products | 6.3% |
| Norampac Inc. 9.375% due February 1, 2008 | Corrugated Packaging | 6.0% |
| Consumers International Inc. 10.25% due April 1, 2005 | Glass Manufacturing | 5.3% |
| Sealy Mattress Company 9.875% due December 15, 2007 | Mattress Manufacturing/Sales | 5.0% |
| Celestica International Inc. 10.5% due December 31, 2006 | Electronics Manufacturing | 4.9% |
| Finlay Enterprises Inc. 9% due May 1, 2008 | Jewelry Retail | 4.7% |
| Trench Electric S.A. 10.25% due December 15, 2007 | Electric Distribution Equipment | 4.7% |
| Millar Western Forest Products Ltd. 9.875% due May 15, 2008 | Forest Products | 4.5% |
| Stelco Inc. 8% due February 15, 2006 | Steel Production | 3.4% |
| 73.0% | ||
| HIGH YIELD EQUITY | ||
| Associated Freezers Income Trust | Public Refrigeration Warehousing | 5.5% |
| Pembina Pipeline Income Fund | Oil Pipeline | 5.4% |
| Koch Pipelines Canada L.P. | Oil Pipeline | 4.0% |
| Westshore Terminals Income Fund | Coal Handling Facility | 3.6% |
| Superior Propane Income Fund | Propane Distribution | 3.5% |
| Residential Equities Real Estate Investment Trust | Apartment Buildings | 3.2% |
| Rogers Sugar Income Fund | Sugar Production/Marketing | 0.9% |
| Avista Real Estate Investment Trust | Retail/Industrial/Office Buildings | 0.8% |
| Realfund Real Estate Investment Trust | Shopping Centres | 0.1% |
| 27.0% | ||
| 100% | ||
TRUST PROFILE
Sage High Yield Debt Trust closed its initial public offering in October 1997. The primary objective of the Trust is to provide unitholders with a high level of sustainable income while preserving capital. To achieve this objective, SAGE invests primarily in high yield debt securities supplemented with high yield equities. Unitholders of SAGE can acquire additional units by participating in the Distribution Reinvestment Plan. The Plan enables unitholders to reinvest their quarterly distributions in additional units of SAGE thereby achieving the benefit of compounding returns. SAGE is fully RRSP eligible.
| 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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