TORONTO - Sentry Select Capital Corp., the Trustee and Manager of Mortgage-Backed Securities Trust (the “Trust”), announces that the Trust is changing its monthly distributions from C$0.06 per unit to $0.035 per unit, effective with the November distribution. For those unitholders who have elected to receive their distributions in U.S. currency, the distribution will be US$0.029 per unit. The November distribution is payable on December 15, 2005 to unitholders of record on November 30, 2005. The net asset value of Mortgage-Backed Securities Trust has been negatively impacted by movements in the Canadian dollar versus the U.S. dollar. As a result, the monthly distribution was changed to preserve the net asset value of the Trust. The monthly distributions for MBS Adjustable Rate Income Fund and Sentry Select MBS Adjustable Rate Income Fund II remain at $0.06 per unit. Both of these funds have a currency hedge in place and therefore did not incur a decrease in net asset value resulting from the strong Canadian dollar that negatively impacted Mortgage-Backed Securities Trust. Distribution reduction - The principal reason for the change in the monthly distribution is the rise of the Canadian dollar. The monthly distribution did not reflect the rise in the Canadian dollar from the time of issue to the present. Distributions are based on average 10-year U.S. Treasury yield and on expected exchange rates. The monthly distribution was maintained despite currency movements until it became apparent that the change in exchange rates was not short-lived. Another reason for the decision includes the flattening of the U.S. yield curve, which has compressed the interest rate spread used to generate income for the units. The decision to reduce the monthly distribution was based on the desire to preserve the net asset value of the Trust.
Current yield - The new monthly distribution represents an annualized distribution amount of C$0.42 per unit. Based on the net asset value of C$5.71 per unit and the market price of C$5.09 per unit as at November 10, 2005, the annualized yields would be 7.36% and 8.25% respectively. The stated objective of the Trust is to provide unitholders with a stream of monthly cash distributions that, in any year, are targeted to approximate the average 10-year U.S. Treasury yield plus 3.50%. As at November 10, 2005, the 10-year U.S. Treasury yield was 4.56%. Therefore, the Trust’s current target yield would be 8.06%.
Mortgage-Backed Securities - Trust Mortgage-Backed Securities Trust (“MBS Trust”) invests, through a limited partnership, in a portfolio consisting primarily of AAA-rated mortgage-backed securities issued by the U.S. agencies commonly known as Ginnie Mae, Fannie Mae and Freddie Mac.
Future Distributions - The Manager expects to continue to pay the current monthly distribution based on current market conditions. However, if market conditions change, future distributions may differ. Forward looking statements This news release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, the future performance of the Trust, including the potential for future distributions. When used in this news release, the words “in the future” and “believe” and the use of the future tense generally identify forward-looking statements. These statements reflect Sentry Select’s current expectations, but are subject to a number of risks and uncertainties. Due to the many risks and uncertainties, Sentry Select cannot give assurances that the forward-looking statements contained in this news release will be realized. Investment Manager - Fixed Income Discount Advisory Company (FIDAC) is the investment manager of Mortgage-Backed Securities Trust. FIDAC is a one of the leading fixed-income management companies specializing in U.S. agency mortgage-backed and Treasury securities. FIDAC and its related companies are responsible for the management of approximately US$46 billion in gross assets.
The Manager - Sentry Select is a wealth management company with gross assets under management in excess of $9 billion. It is the manager of 18 closed-end trusts, 4 flow-through limited partnerships, 11 mutual funds and an investment corporation; the marketing agent for a series of principal-protected notes; and the administrator of 3 closed-end trusts.
More Information - Investor Services for broker/investor inquiries or Brian McOstrich for media inquiries. Tel: 1-888-246-6656 Fax: 416-364-1197 email@example.com www.sentryselect.com
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