MYDAS Fund
TSX : MYF.UN

MYDAS Fund

May 30, 2005 19:09 ET

MYDAS Fund: 1st Quarter Report 2005

CALGARY, ALBERTA--(CCNMatthews - May 30, 2005) - MYDAS Fund (TSX:MYF.UN):

For the three months ended March 31, 2005 (unaudited)



Investment Highlights

March 31, Dec. 31, Sept. 30, June 30, March 31,
2005 2004 2004 2004 2004
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Net Asset Value
per Unit $30.62 $30.31 $28.51 $27.65 $29.00
Market Price per Unit $27.65 $29.18 $27.20 $26.55 $27.05
Trading Premium
(Discount) (9.7%) (3.7%) (4.6%) (4.0%) (6.7%)
Quarterly
Distributions
per Unit $0.624 $0.624 $0.624 $0.624 $0.624
12 Month Trailing
Yield 9.0% 8.6% 9.2% 9.4% 9.2%
Market Capitalization
($ millions) $271.7 $289.4 $270.7 $263.2 $270.4
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Investment Manager Report

After valuations peaked in mid-March, investor concerns over rising interest rates and inflation caused a broad sell-off in the income trust market late in the first quarter of 2005. The hardest hit sectors were the more interest rate sensitive trusts such as real estate and power generation. While oil & gas prices remained strong in the quarter, concerns over the high valuations in the oil & gas royalty trust sector precipitated a sell-off at quarter end as well. The S&P/TSX Income Trust index managed a positive total return of 4.5% during the first quarter of 2005, narrowly outpacing the S&P/TSX Composite index's return of 4.4%. Due to its unit price weakness late in the quarter, MYDAS generated a negative 3.1% return in the first quarter.

The Fund added new investments in Baytex Energy, Ketch Resources and AG Growth during the quarter, while disposing of a number of positions as valuations reached relative highs. Net dispositions resulted in increasing the Fund's cash reserves to 18% at March 31, 2005 from 10% at December 31, 2004.

Despite the pullback in March 2005, there is evidence that investor fears concerning economic slowdown and inflation may be overstated. With lower valuations and Standard and Poor's January 2005 decision to include trusts in the S&P/TSX Composite index, investor interest is expected to return. MYDAS remains well positioned with its significant cash balance to capitalize on lower valuations as opportunities arise.

Management's Discussion & Analysis (May 24, 2005)

Management's Discussion and Analysis ("MD&A") should be read in conjunction with the unaudited interim financial statements for the three months ended March 31, 2005, and the audited financial statements and MD&A for the year ended December 31, 2004.

During the first quarter of 2005, MYDAS' net asset value increased slightly to $30.62 per unit up from $30.31 per unit at December 31, 2004 as overall portfolio valuations rose during the quarter. Despite the strengthening net asset value, the Fund's market price fell from $29.18 per unit at the end of 2004 to $27.65 per unit at March 31, 2005 due to weak market sentiment in the income trust sector. As a result of this weakness 123,966 units were repurchased under the mandatory repurchase program during the quarter as the Fund's unit price fell below 95% of its net asset value.

For the three months ended March 31, 2005, revenue totaled $5.9 million compared to $6.1 million for the same period in 2004 due to lower yields generated on recent acquisitions. Administrative and investment manager fees increased to $0.89 million for the quarter ended March 31, 2005 from $0.83 million in the same quarter of 2004 as the net asset value increased. Similarly, trailer fees, which totaled $0.3 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 $4.7 million or $0.47 per unit was generated for the first quarter of 2005 compared to $4.9 million or $0.49 per unit for the first quarter of 2004. The Fund paid distributions to unitholders of $0.624 per unit for both the first quarters of 2005 and 2004.

Total results of operations were $9.1 million or $0.91 per unit for the first quarter of 2005 as a result of realized gains of $8.1 million offset by unrealized losses on existing investments of $3.7 million. Comparatively, results of operations were $20.5 million or $2.05 per unit in the same period in 2004 as realized and unrealized gains totaled $2.2 million and $13.4 million respectively for the first quarter of 2004.



Portfolio Holdings
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Ongoing Business Trusts 34%
Real Estate Investment Trusts 16%
Oil & Gas Royalty Trusts 23%
Cash & Term Deposits 18%
Power Generation Investments 2%
Pipeline / Energy Investments 7%
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MYDAS Fund
Statement of Net Assets
(Unaudited)

As at
March 31, December 31,
2005 2004
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Assets
Investments, at market $ 256,118,577 $ 269,995,160
Cash and term deposits 56,094,004 30,987,578
Revenue receivable 1,805,235 1,891,497
Accounts receivable 608,997 102,929
Prepaid expenses 77,416 6,471
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314,704,229 302,983,635
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Liabilities
Accounts payable 11,838,072 287,603
Distributions payable 2,043,572 2,062,804
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13,881,644 2,350,407
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Net Assets $ 300,822,585 $ 300,633,228
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Units outstanding 9,824,866 9,917,329
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Net asset value per unit $ 30.62 $ 30.31
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MYDAS Fund
Statement of Operations
(Unaudited)
March 31, March 31,
For the Three Months Ended 2005 2004
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Revenue
Investment income $ 5,938,418 $ 6,096,741
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5,938,418 6,096,741
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Expenses
Administrative and investment manager fees 888,121 827,507
Trailer fees 304,571 279,937
General and administration costs 82,992 104,355
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1,275,684 1,211,799
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Net investment income 4,662,734 4,884,942
Net realized gain 8,150,019 2,207,611
Net change in unrealized gain (loss) (3,739,877) 13,408,356
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Total results of operations $ 9,072,876 $ 20,500,909
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Results of operations per unit:
Net investment income $ 0.47 $ 0.49
Net realized gain 0.82 0.22
Net change in unrealized gain (loss) (0.38) 1.34
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$ 0.91 $ 2.05
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MYDAS Fund
Statement of Changes in Net Assets
(Unaudited)

March 31, March 31,
For the Three Months Ended 2005 2004
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Net Assets - beginning of period $ 300,633,228 $ 277,871,263
Operations:
Net investment income 4,662,734 4,884,942
Net realized gain 8,150,019 2,207,611
Net change in unrealized gain (loss) (3,739,877) 13,408,356
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9,072,876 20,500,909
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Unitholder Transactions:
Issuance of trust units, net 936,175 1,121,369
Distributions to unitholders (6,147,196) (6,249,291)
Repurchase of trust units (3,672,498) (3,333,024)
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(8,883,519) (8,460,946)
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Net Assets - end of period $ 300,822,585 $ 289,911,226
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Distributions per unit $ 0.624 $ 0.624
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MYDAS Fund
Statement of Investments
(Unaudited)

As at March 31, 2005
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% of
Cost Market Market
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Ongoing Business Trusts
AG Growth Income Fund 5,670,000 5,460,000
Advanced Fiber Technologies
Income Fund 4,250,000 2,516,000
Arctic Glacier Income Fund 4,370,000 5,359,000
Atlas Cold Storage Income Trust 9,587,289 8,272,980
The Brick Group Income Fund 5,237,748 7,058,400
CMl Healthcare Income Fund 5,578,050 7,072,000
Chemtrade Logistics Income Fund 3,441,335 3,923,748
Custom Direct Income Fund 3,950,000 5,312,750
Davis + Henderson Income Fund 5,264,397 11,000,000
Great Lakes Carbon Income Fund 4,904,985 5,507,450
KCP Income Fund 4,866,790 5,451,210
Livingston International Income Fund 2,076,143 4,210,000
PRT Forest Regeneration Income Fund 3,713,242 3,755,430
Rogers Sugar Income Fund 5,741,286 5,936,000
SFK Pulp Fund 7,573,791 5,408,000
Sun Gro Horticulture Income Fund 6,142,000 4,981,162
Swiss Water Decaffeinated Coffee
Income Fund 1,217,000 1,610,091
TransForce Income Fund 4,494,500 9,100,000
Yellow Pages Income Fund 4,218,750 4,995,000
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92,297,296 106,929,221 34.2%
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Oil & Gas Royalty Trusts
Acclaim Energy Trust 9,892,118 14,737,273
ARC Energy Trust 10,889,190 16,335,000
Baytex Energy Trust 4,623,929 4,622,100
Enerplus Resources Fund 3,800,276 6,582,000
Esprit Energy Trust 4,008,050 4,108,500
Harvest Energy Trust 4,138,920 6,854,250
Ketch Resources Trust 5,863,500 5,940,000
Paramount Energy Trust 491,483 690,000
Shiningbank Energy Income Fund - -
Vermilion Energy Trust 3,877,500 6,250,750
Viking Energy Royalty Trust 5,391,950 5,632,000
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52,976,916 71,751,873 23.0%
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Real Estate Investment Trusts
Firm Capital Mortgage
Investment Trust 1,239,613 1,291,630
IPC U.S. Commercial Reit 5,335,275 5,830,000
Morguard Reit 2,754,620 3,242,075
Northern Properties Reit 3,000,000 5,310,000
O & Y Reit 10,633,000 15,376,200
Retirement Residences Reit 6,510,727 6,128,235
Royal Host Reit 7,364,165 6,724,993
Summit Reit 3,168,000 4,065,600
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40,005,400 47,968,733 15.4%
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Pipeline/Energy Investments
CCS Income Trust 2,424,179 10,289,700
Energy Savings Income Fund 3,833,040 9,870,000
Heating Oil Partners Income Fund 4,390,000 2,195,000
Inter Pipeline Fund - -
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10,647,219 22,354,700 7.2%
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Power Generation Investments
Algonquin Power Income Fund - -
Clean Power Income Fund 4,527,433 2,962,350
Countryside Power Income Fund 4,586,010 4,151,700
Transalta Power L.P. - -
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9,113,443 7,114,050 2.3%
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Investments 205,040,274 256,118,577 82.1%
Cash and Term Deposits 56,094,004 56,094,004 17.9%
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Total $261,134,278 $312,212,581 100.0%
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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 distribution 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 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 March 31, 2005, 123,966 units were repurchased pursuant to this program (March 31, 2004 - 126,026 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 fee in cash rather than in units of the Fund. During the quarter ended March 31, 2005, the Fund recorded an expense of $888,121 (March 31, 2004 - $827,507) 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 March 31, 2005, the Fund recorded an expense of $304,571 (March 31, 2004 - $279,937) 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: http://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


Contact Information