By Scott Ronalds

We’ve decided to reduce the amount of the Income Fund’s quarterly distribution to $0.07/unit, from $0.10/unit, effective June 30th. The fund pays a fixed distribution for the first three quarters of the year (end of March, June and September), and a variable distribution in December, depending on the amount of interest and dividend income, and realized capital gains that has accrued. The year-end distribution will continue to be a variable amount.

We feel the distribution cut is necessary because the interest and dividend income that the fund is generating is lower than in previous quarters, primarily as a result of the current interest rate environment. As well, the manager, Connor, Clark & Lunn, has taken steps in recent months to reduce the fund’s credit risk (for example, CC&L has reduced the portfolio’s exposure to high yield bonds), which in turn has lowered the portfolio’s overall yield.

The fund has built up capital gains from the strong performance in the equity portion of the portfolio, but nonetheless, we feel a lower distribution rate is prudent. The manager will not compromise the fund’s objectives by stretching for additional yield or exposing the portfolio to undue risks.

In sum, we believe a distribution of $0.07/unit is more sustainable in the current environment and better representative of the portfolio’s overall yield.

If you have any questions about the fund’s distribution, don’t hesitate to contact us at 1-888-888-3147.