Balance key to Bissett Income Fund: Stellar performer balances high yielding investments with growth-oriented trusts

Money Digest, Oct, 2002 by Doug Hawkins

Bissett Income Fund gained 2.68% in August, bringing its year-to-date return to 8.28%, and its trailing 12-month return to 11.91% for the period ending August 31, 2002. These strong numbers are particularly attractive in the context of a flat bond market and negative global equity returns for this period. Income trusts continue to trade at reasonable prices while providing stable cash distributions.

This fund seeks a high level of after-tax cash flow by investing in income-producing securities: common shares, preferred shares, income instruments and especially income trusts. It balances investments in high yielding trusts, which return capital, with lower-yielding growth-oriented trusts. It may invest up to 30% in foreign securities. Tax-efficient "non-taxable return of capital," represents about 59% of the fund's distributions. The fund can serve as an ideal complement to a diversified income strategy that may include bonds, GICs, and income funds. It makes income planning predictable given its well-established history of distributions and stable NAV. Currently, distributions are paid at a target rate of $0.08 per month.

Bissett Income Fund has a remarkable annualized return since inception to August 31, 2002 of 11.4% versus 10.6% for the benchmark. It has been a second-quartile performer in the last one-year and thee-year periods. Bissett Income Fund is ideal for retirement and income portfolios. Relative to other income investments, its risk level is moderate, suitable for investors looking for strong cash flow and safety of initial capital.

Doug Hawkins, MBA, is an investment advisor with Canaccord Capital, a member of major stock exchanges and the Canadian Investor Protection Fund. Phone (905) 683-9824; email: doug-hawkins@rogers. com.