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TORONTO - DundeeWealth Inc. (TSX:DW), a major independent Canadian mutual fund and financial advisory company, had a $49.7-million net loss in the first quarter after another steep writedown of asset-backed commercial paper on its books.

The Toronto-based company, which offers the Dynamic mutual funds and other services, said its loss amounted to 35 cents per share and compared with a profit of $7.9 million, seven cents per share in the year-earlier period.

Driving down earnings was a $75.9-million ABCP-related writedown, on top of $95.2 million written down last year. It did not record a similar writedown in the first quarter of 2007.

"We're required to do these fair-value analysis calculations on a quarterly basis, and markets have changed since the last time we did it," said chief financial officer Joanne Ferstman in a comment through a spokeswoman.

At the end of March, DundeeWealth held $379.4 million worth of ABCP - a type of short-term debt security that had been considered relatively conservative and safe until demand for ABCP notes suddenly evaporated last summer.

"In mid-August 2007, certain ABCP trusts failed to rollover their matured paper in the usual course of business, resulting in significant liquidity issues," DundeeWealth said in remarks accompanying its earnings.

"Affected ABCP has not traded in active markets since mid-August 2007 and there are currently no market quotations available for these securities."

Apart from the impact of the ABCP issue, DundeeWealth's first-quarter results were affected by turmoil in the stock and debt markets. Revenue was $211.3 million in the January-March period, off from $226.9 million a year earlier.

"While Canada generally continues to experience relatively strong economic fundamentals, market conditions in the first quarter of 2008 were extremely difficult as evidenced by a three per cent decline in the S&P/TSX index and a nine per cent decline in the S&P 500," the company said in a statement.

"These factors impacted investor confidence and exerted downward pressure on financial services as evidenced by an overall 23 per cent decrease in all major components of our financial services revenues, including our corporate finance area, as increased uncertainty forced many potential issuers to the sidelines."

Assets under management grew 11 per cent to $28 billion when compared with the year-ago quarter-end, but was down "marginally" since the end of last year.

According to the most recent industry statistics available, the Dynamic mutual funds were in the top 15 in Canada in terms of assets under management in April.

DundeeWealth is a publicly traded company controlled by Dundee Corp. (TSX:DC.A) which, in turn, is controlled through multiple-share votes by founder Ned Goodman and his family.

Dynamic is well behind industry leaders IGM Financial Inc. (TSX:IGM) and the mutual fund arms of Royal Bank (TSX:RY), TD (TSX:TD), CIBC (TSX:CM) and Bank of Montreal (TSX:BMO) and several others but just ahead of Scotiabank's mutual funds.

Last September, Bank of Nova Scotia (TSX:BNS) struck a $348-million deal to acquire 18 per cent of DundeeWealth Inc., with an option to increase its stake, and also agreed to pay $260 million to acquire Dundee Bank of Canada - a relatively small, specialized unit that had held much of the group's asset-backed commercial paper

Scotiabank's move was seen as a way for it to beef up its mutual fund presence through DundeeWealth, which became immediately the target of takeover rumours and publicly stated interest from CI Financial (TSX:CIX.UN), another major independent.

That came to an end in January after the Goodmans made it clear to the board of DundeeWealth that they had no intention of selling their stake.

DundeeWealth shares ended the day at $13.67 on the Toronto Stock Exchange, down seven cents from Monday's close.