by Scott Ronalds

We’ve decided to reduce the quarterly distributions for the Income Fund and Founders Fund. The Income Fund’s distribution will be lowered to $0.045/unit, from $0.07/unit, effective June 30th. Similarly, the Founders Fund’s distribution will be reduced to $0.045/unit, from $0.05/unit.

Both funds pay 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 have accrued. The year-end distributions will continue to be variable amounts.

We feel the distribution cuts are necessary because the interest and dividend income that the funds are generating is lower than in previous quarters, largely as a result of the current interest rate environment (see Diversification vs. returns: The great bond challenge for insights on today’s interest rates).

A lower distribution rate is prudent at this point because our fund managers will not compromise the funds’ objectives by stretching for additional yield or exposing the portfolios to undue risks.

In sum, we believe the reduced distributions of $0.045/unit are more sustainable in the current environment and better representative of the funds’ overall yields.

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