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To: Thomas who wrote (2626)	4/17/1998 1:29:00 PM
From: Dragonfly	Respond to of 10852

Here's how one of the direct stock purchase plans I belong to works. It's Intel's plan. Every month all of the members of the plan have the option to send in cash to add to their shares. This can be as low as $50 and as high as $1,500. On the first of the month, the transfer agent takes all of the cash received in the previous month and buys stock on the open market for the shareholders. The transfer agent holds the stock for the members. So, for example, say Intel is trading at $100 a share. I decide to send in $75 this month. On the first of next month, the agent buys all the shares, and I get 0.75 shares added to my account. This way I can just buy $75 a month (many plans let you make this an automatic deduction from your checking account on payday!) and they purchase the shares on the open market at the prevailing price. The downside is you have less control of the timing of the purchase, but the upside is you can purchase as much or as little as you can afford, rather than having to get together a large chunk of cash to invest. Since employees cannot control the timing, this might be acceptable for employees (but I could be wrong). Many public companies have a regular employee purchase plan that is at an average market price. In the intel case, its all free. You just have to have 1 share to join the program... everything else they take care of. Since intel pays a dividend, and this is attacthed to their DRIP, they cover the cost of the DSP (Direct Stock Purchase) plan out of their dividend expenses. Other plans charge a fee, $2-3 a month, or a certain amount per share. Since the transfer agent is able to purchase very large blocks of shares at a market price they go dirctly to the market makers to do the purchase. In other words, they don't pay a commission because the people they purchase the shares from make their money in the spread. If you have large amounts of cash to invest in a lump sum and can adequately time the market, you'll get a better deal per share... but if you want to invest a couple hundread a month, the lack of commissions greatly improves your holdings. (And since you're dollar cost avergaing anyway, it shouldn't matter much if you pay an extra 1/8 at purchase time.) Contrary to popular belief, a company does NOT have to issue a dividend to have a DSP program. However, there is a bit of paperwork for the transfer agent, so there are costs... a lot less than broker's commission, though! Dragonfly