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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Sladek who wrote (18873)	3/23/2004 9:20:35 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

Many investors in oil royalty trusts do not realize that their "dividends" are a combination of income and a "return of capital". There is no set date for "a repayment of the principal" because this event does not occur. Once the well is dry, there is essentially no residual value. Some people think they're buying a bond paying a 12% coupon. If the payments continue for only eight years, you receive back only an amount of money equal to your capital outlay without any profit.

To: John Sladek who wrote (18873)	3/24/2004 1:14:30 AM
From: James C. Mc Gowan	Respond to of 306849

Thanks for the news, I had been reading about this budget talk in regards to royalty trusts for some time. Today's pronouncements appear to have no impact now, and limited impact possibly in the future. We shall see. For those income trusts that pay out a very high percentage of income, there are inherent risks, one of which is potential competition from fixed income investments. I'm not buying any US bonds, however, I'd prefer something more tangible, something people will need to heat/cool those overbuilt dinosaurs-to-be. You must be very selective when choosing income trusts, no doubt. I am. James