Topic: How To Invest

Dear Pat: What do you think SCITI ROCS Trust, and what are the implications of the scheduled windup of the trust? The tax deferral is attractive to me, and it offers a high yield. Thanks.

Article Excerpt

SCITI ROCS Trust, $5.46, symbol SCI.UN on Toronto (Units outstanding: 13.0 million; Market cap: $70.9 million), is an investment trust that aims to give investors diversification and tax-efficient monthly distributions through a roughly equally weighted portfolio of income funds that are included in the Scotia Capital Income Trust Index. These funds also have publicly traded shares with a market value of more than $200 million. Bank of Nova Scotia manages the trust through Scotia Capital. SCITI ROCS Trust first issued units at $10, and began trading on the Toronto exchange in May 2005. It is scheduled to wind up on May 18, 2010. The trust has a 0.94% MER, and its monthly distribution yields around 10.6%. For tax efficiency, the trust’s distributions are structured so that they are a return of capital. Amounts received as a return of capital are not taxable, but instead reduce the adjusted cost base of an investor’s units. Taxes are paid at the capital-gains rate, but…

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