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Strategies & Market Trends : Z Best Place to Talk Stocks
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To: Ron McKinnon who wrote (19360)2/28/1999 12:16:00 PM
From: tom pope  Read Replies (2) of 53068
 
About a week ago I wrote that "principal protected equity linked notes" might make sense as a conservative investment that allowed participation in any increase in stock prices, and said that I was expecting the local Smith Barney office to send me a prospectus on one of their issues.

I got the material yesterday. Unfortunately, the killer in the deal is that the notes are treated as equivalent to original issue discount notes, and the holder is required to include in taxable income a "comparable yield" amount which in the case of the notes on which I have details is 6.12%. Moreover, any gain on disposition will be taxed as ordinary income, as would any gain if the notes are called.

Also, though the notes are not capped, the call feature effectively puts a cap on them.

So far as I'm concerned, that effectively kills my interest in them.
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