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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Peter W. Panchyshyn who wrote (3475)	6/16/2002 12:03:48 PM
From: Scott Mc	Read Replies (2) \| Respond to of 11633

EIT is a trust and not a fund holding trusts, and frankly while I much prefer a company issuing rights over shares, it strikes me as odd that they would issue rights and buy back shares at the same time. 1.0 Why funds holding trusts pay out less than trusts Give 1000$ to Fund: Fund buys 1000$ worth of REIT with a 10% payout REIT pays $100 to fund, fund takes 2.5% of $1000 or $25. $100 payout - $25 = $75 paid to shareholders REIT holder gets $100 Fund holder gets $75 Actual example would be worst, since a Fund never invests 100% and they would also take a % of the payouts. 2. Why Rights are dilutive Right is issued to buy shares at $10 You give $10 to your broker who passes it on to Fund Company. They take the $10 and pay the cost of issuing rights and collecting money etc etc, lets say $0.50. The company now has $9.50 to invest. Original shares $10.00 New shares $ 9.50 (Assume 1:1 rights offer) Average value of shares (10+9.50/2) $9.75 3. Can management add value on a fund: E.G. beat the index I wont tackle this topic, there have been books written on the subject, my belief is no, no on a continuos basis. I see a lot of advertising on Can eq funds, how they beat the index last year (and they did), they never say the reason that most of them did was because there are not allowed to have more than 10% of any one stock in their fund. NTel at one time was larger than 10% of the index and of course if you didn't hold too much NTel you did pretty good.