Northern Rivers Monthly Income and Capital Appreciation Fund will be increasing its monthly distribution of tax-efficient income by 4%. The increase in monthly distribution is effective November 1, and will equate to 0.5¢ per unit per month.

“A 4% increase may not seem like a major achievement, but we think it’s very significant and we’re very proud of it,” says Robert Blakely, president of Northern Rivers Capital Management Inc.

“The Monthly Income Fund was very innovative when we launched it a year ago, and was not immediately understood by investors or advisors. Its sophisticated structure has delivered exactly what it was designed to do –delivering $1.50 in distributions in its first 12 months — all classified 100% as return of capital. In addition, the fund’s diversified structure has protected investors’ principal, in spite of the rising Canadian dollar and the sub-prime mortgage debacle,” Blakely adds.

The fund was launched in September 2006. It was one of the first mutual funds in Canada to distribute income primarily as return of capital and capital gains for tax purposes, while promising capital appreciation in the long term. The fund is managed to generate sufficient income to make consistent and increasing payouts over time.

“The fund has not only been able to generate the income required, but now, will increase the payout,” says Rob Cassels, president of Cassels Investment Management Inc., which manages the portfolio for Northern Rivers.

“We haven’t enjoyed the capital appreciation that we would have liked in the first year, due to considerable volatility in financial markets. Over the longer term, however, the fund is expected to grow enough to protect investors’ principal against inflation while producing reliable tax-efficient income each and every month,” Cassels says.

Since its launch, the fund has spawned several imitators. A proliferation of fund structures has recently come to market with the goal of offering the same tax benefits.

But Northern Rivers says not all of these are actually designed to generate enough income to fund the distributions.

The fund’s returns are linked to investments in a diversified pool of global, large capitalization, dividend-yielding equity securities, income trusts and fixed income securities. Brookfield Investment Funds Management Inc. acts as sub-advisor for the fixed income component of the portfolio.