An Alternative to Money Market Investments

Versatile Bond Portfolio follows a conservative strategy for investors seeking high current income with minimal risk. To help limit exposure to interest-rate fluctuations, the Portfolio only invests in high-grade bonds with maturities of two years or less that are rated “A” or higher by Standard & Poor’s. While there are no guarantees of future performance, such bonds have historically out-paced money market yields by a substantial margin with only a relatively small increase in risk.

Versatile Bond Portfolio is not a money market fund, yet it offers a money-fund style check-writing privilege. Investors can redeem shares simply by writing a check and either depositing it in their bank account or using it to pay a bill. Because the Portfolio seeks high income, it isn’t restricted to investing only in money market instruments or government-guaranteed securities.  Nor does it keep its share price fixed at $1. The Portfolio also strictly avoids the risk of reaching for high yields with long-term bonds or bonds carrying low credit ratings.

High Yields and Credit Standards
Over the last twelve years, yields on high-grade corporate bonds eligible for purchase by Versatile Bond Portfolio have consistently outperformed the yields on U.S. Treasury bills of similar maturity. Only corporate bonds, rated “A” to “AAA” by Standard & Poor’s are considered for investment. The Portfolio avoids “junk” bonds entirely.

Tax Planning
Versatile Bond Portfolio is managed to reduce individual investor’s tax burdens. Instead of paying out all of its income in the form of dividends to shareholders each year, the Portfolio pays out only the minimum dividend needed for the Portfolio itself to avoid corporate income taxation. This allows investors the opportunity to redeem dividends and share value at any time, while encouraging unpaid dividends to accumulate and compound tax-free until funds are redeemed and subject to income tax. 

Since much of the Portfolio’s versatility comes from tax planning, it is especially attractive for people drawing on their investments for living expenses, saving for the future, or planning for their estate. Specifically, for estate planning, the appreciation earned in Versatile Bond Portfolio may never be subject to income tax if the shares pass directly to an investor’s estate.

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