SEMI-ANNUAL REPORT 1998
For
the period ending June 30, 1998
Press Release
SAGE ANNOUNCES SECOND QUARTER RESULTS
Message to Unitholders
SAGE High Yield Debt Trust ("SAGE") is pleased to announce its unaudited financial results for the second quarter ended June 30, 1998, the details of which are attached.
SAGE generated net investment income of $880,919 during the first six months of 1998 and, on July 15, 1998, made a distribution of $0.20 per unit bringing year-to-date distributions to $0.35 per unit. It is anticipated that distributions will continue at approximately $0.20 per quarter for the balance of 1998.
During the second quarter, spreads in the U.S. high yield sector came under pressure, in tandem with the equity market selloff, reflecting concerns about the direction of the economy and the quality of corporate earnings. Currently, market conditions continue to be challenging for new issuers of high yield debt in light of mutual fund outflows and increasing volatility in financial markets. The Canadian high yield market was somewhat affected by falling commodity prices, continuing concerns over Asia, and merger activity in the telecommunications sector. These factors translated into wider spreads for both the high yield and investment grade corporate bond sectors. Overall, however, the SAGE portfolio held up well with net asset value declining only about 1.0% during the quarter and about 1.3% during the first six months of the year.
We believe the companies in the SAGE portfolio are well positioned to weather economic downturns based upon the strength of their operating cash flows, competitive market position, management teams and solid credit statistics. Risk is further reduced in the portfolio through broad diversification across issuers, industries and commodities.
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.
SAGE trades on the Toronto Stock Exchange under the symbol "BBB.IR".
For further information, contact:
Mr. W. Garth
Jestley
Director
August 20, 1998
| STATEMENT OF NET
ASSETS As at June 30, 1998 |
|
| Unaudited | |
| |
|
| ASSETS: | |
| Investments at Market Value | $ 28,093,224 |
| Cash and Short-term Investments | 908,984 |
| Subscriptions Receivable | 15,782,200 |
| Income Receivable | 661,015 |
| |
|
| 45,445,423 | |
| |
|
| LIABILITIES: | |
| Accounts Payable and Accrued Liabilities | 132,678 |
| Unitholder Distributions | 457,000 |
| Loan Payable | 13,300,206 |
| |
|
| 13,889,884 | |
| |
|
| Net Assets | $ 31,555,539 |
| |
|
| Number of Units Issued and Outstanding | 2,254,603 |
| |
|
| Net Asset Value per Unit | $ 14.00 |
| |
|
| STATEMENT OF
OPERATIONS For the six months ended June 30, 1998 |
|
| Unaudited | |
| |
|
| INVESTMENT INCOME: | |
| Income from Investments | $ 481,103 |
| Interest | 886,047 |
| |
|
| 1,367,150 | |
| |
|
| EXPENSES: | |
| Interest and Bank Charges | 253,203 |
| Management Fee | 172,360 |
| Office | 26,506 |
| Custodian and Trustee Fee | 19,491 |
| Network Fee | 4,171 |
| Audit | 8,000 |
| Transfer Agent Fee | 2,500 |
| |
|
| 486,231 | |
| |
|
| Net Investment Income | $ 880,919 |
| |
|
| STATEMENT OF NET REALIZED
AND UNREALIZED LOSS ON INVESTMENTS: For the six months ended June 30, 1998 |
|
| Unaudited | |
| |
|
| Net Realized Gain From Securities Transactions | 31,999 |
| Change in Net Unrealized Depreciation of Investments | (491,186) |
| |
|
| Net Loss on Investments | (459,187) |
| |
|
| Net Increase in Net Assets Resulting from Operations | $ 421,732 |
| |
|
| |
|
| Net Income per Instalment Receipt | $ 0.40 |
| |
|
| STATEMENTS OF CHANGES IN
NET ASSETS For the six months ended June 30, 1998 |
|
| Unaudited | |
| |
|
| OPERATIONS: | |
| Net Investment Income | $ 880,919 |
| Net Realized Gain from Securities Transactions | 31,999 |
| Change in Net Unrealized Depreciation of Investments | (491,186) |
| |
|
| Net Increase in Net Assets Resulting from Operations | 421,732 |
| |
|
| Distributions to Unitholders | (794,270) |
| |
|
| UNITHOLDER TRANSACTIONS: | |
| Issue Costs | (142,361) |
| Repurchase of Units | (456,000) |
| Issuer Bid-surplus | 81,499 |
| Reinvested Distributions | 30 |
| |
|
| Net Decrease from Unitholder Transactions | (516,832) |
| |
|
| Net Assets, Beginning of Period | 32,444,909 |
| |
|
| Net Assets, End of Period | 31,555,539 |
| |
|
| INVESTMENT TRANSACTIONS: | |
| Proceeds on Sale of Securities | $ 3,655,108 |
| |
|
| Less: Cost of Securities Sold | |
| Owned, Beginning of Period | 12,331,398 |
| Purchased | 19,353,357 |
| Owned, End of Period | (28,061,646) |
| |
|
| Securities Sold | 3,623,109 |
| |
|
| Realized Gain on Sale of Securities | $ 31,999 |
| |
|
| Distribution per Instalment Receipt | $ 0.35 |
| |
|
| STATEMENT OF INVESTMENT PORTFOLIO As at June 30, 1998 |
||
| |
||
| Business | % Weight | |
| HIGH YIELD DEBT | ||
| Celestica International Inc. 10.5% due December 31, 2006 | Electronics Manufacturing | 8.7% |
| MDC Communications Corp. 10.5% due December 1, 2006 | Printing and Communications | 8.5% |
| Scott Paper Limited 10% due June 6, 2007 | Paper Products | 7.9% |
| Anchor Lamina Inc. 9.875% due February 1, 2008 | Tool and Die Manufacturing | 7.9% |
| TrizecHahn Corporation 7.95% due June 1, 2007 | Real Estate | 7.5% |
| Tembec Inc. 8.3% due January 30, 2003 | Forest Products | 7.3% |
| Norampac Inc. 9.375% due February 1, 2008 | Corrugated Packaging | 6.5% |
| Consumers International Inc. 10.25% due April 1, 2005 | Glass Manufacturing | 5.7% |
| Sealy Mattress Company 9.875% due December 15, 2007 | Mattress Manufacturing and Sales | 5.6% |
| Trench Electric S.A. 10.25% due December 15, 2007 | Electric Distribution Equipment | 5.3% |
| Finlay Enterprises Inc. 9% due May 1, 2008 | Jewelry Retail | 5.3% |
| Millar Western Forest Products Ltd. 9.875% due May 15, 2008 | Forest Products | 5.3% |
| |
||
| Total | 81.5% | |
| |
||
| HIGH YIELD EQUITY | ||
| Associated Freezers Income Trust | Public Refrigeration Warehousing | 7.6% |
| Westshore Terminals Income Fund | Coal Handling Facility | 4.7% |
| Koch Pipelines Canada L.P. | Oil Pipeline | 3.2% |
| Pembina Pipeline Income Fund | Oil Pipeline | 3.0% |
| |
||
| Total | 18.5% | |
| |
||
| |
||
| 100% | ||
| |
||