Canadian Income Funds E-Book

Peter Beck

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch
• Veröffentlichungsjahr: 2009

Seitenzahl: 222

Beschreibung

Income trusts are booming. They have been one of the best-performing classes of investments in one of the worst markets in decades. With over 150 trusts currently trading on the Toronto Stock Exchange at a combined value of over $90 billion, this relatively new vehicle, the income fund, is one of the hottest tickets on the Canadian investment landscape today. Written by two of the industry's top experts and commentators, this is the first book of its kind: a complete guide to the income trust industry in Canada. Includes complete coverage on: what income funds are and how to use them to your advantage; myths and facts about income funds; different types of income trusts; what to look for in an income trust, and how to assess the risks involved; how income trusts, and the investors in them, are taxed; funds of income funds; and much more. * Explains what business owners need to know if they are considering converting their businesses into an income trust. * Features listings and profiles of over 160 income funds currently available in Canada, including a description of each fund, performance history, and contact information. * Designed for anyone interested in knowing how Canadian income funds work, including: investors, business owners, directors, trustees, stockbrokers, financial advisors, lawyers, accountants, investment bankers, and commercial bankers.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Acknowledgements

Introduction

CHAPTER ONE - What Are Income Trusts Anyway?

TODAY’S INCOME TRUST LANDSCAPE

THE BASICS: WHAT IS A TRUST?

THE HISTORY OF TRUSTS

THE PLAYERS IN A TRUST: WHICH ONE IS THE INVESTOR?

REASONS FOR SETTING UP A TRUST

THE BASIC STRUCTURE OF AN INCOME TRUST

OTHER STRUCTURES

THE ECONOMIC CLIMATE: FUEL FOR THE RECENT BOOM

CHAPTER TWO - The Different Types of Income Trusts

HOW DOES AN INCOME TRUST DIFFER FROM A REGULAR PUBLIC COMPANY?

THE TYPES OF INCOME TRUSTS

RISKS

CHAPTER THREE - Tax Matters

INTRODUCTION

DEBT AND EQUITY

FINANCIAL LEVERAGE

INTERNAL LEVERAGE

THE TAX BENEFITS OF LEVERAGE TO THE INVESTOR

RETURN OF CAPITAL AND OTHER TAX NUANCES

IS THERE AN EFFECT ON OVERALL GOVERNMENT TAX REVENUES?

IDSs, IPSs AND OTHER PRODUCTS

CHAPTER FOUR - How to Choose an Income Trust

FIRST AND FOREMOST: DUE DILIGENCE

THE STAGES OF YOUR INVESTMENT LIFE

SOME ECONOMIC CONDITIONS TO CONSIDER

UNDERSTANDING THE UNDERLYING BUSINESS

WHEN TO SELL

SETTING YOUR OWN RISK CONTROLS

CASE IN POINT: SPECIALTY FOODS GROUP

CHAPTER FIVE - Measuring Risks: The Underlying Business

THE NATURE OF THE PARTICULAR INDUSTRY

VULNERABILITY TO GENERAL ECONOMIC CONDITIONS

INTEREST RATE FLUCTUATIONS

COMPETITION

LABOUR AND EMPLOYEE RELATIONS

REGULATORY OR ENVIRONMENTAL RISKS

FOREIGN EXCHANGE RISK

LITIGATION RISKS

THE QUALITY OF CORPORATE GOVERNANCE

THE EXTENT OF INSURANCE COVERAGE

SEASONALITY AND WEATHER

SUPPLIER-RELATED RISKS

THE NATURE OF CUSTOMERS AND CUSTOMER RELATIONSHIPS

COMMODITY PRICE RISKS

THE IMPACT OF TECHNOLOGY

OTHER RISKS

CHAPTER SIX - Measuring Risks: The Trust Structure

STRUCTURAL COMPLEXITY

POSSIBLE UNLIMITED LIABILITY TO UNIT HOLDERS

DEPENDENCE ON THE UNDERLYING BUSINESS

CASH DISTRIBUTIONS ARE NOT GUARANTEED AND FLUCTUATE WITH PERFORMANCE

RESTRICTIONS ON THE POTENTIAL GROWTH OF THE UNDERLYING BUSINESS

NATURE OF THE TRUST UNITS

DISTRIBUTIONS IN KIND ON REDEEMING UNITS, OR ON TERMINATION OF THE INCOME FUND

ABSENCE OF A PRIOR PUBLIC MARKET

ISSUE OF ADDITIONAL TRUST UNITS DILUTING EXISTING UNIT HOLDERS’ INTEREST

INVESTMENT ELIGIBILITY AND FOREIGN PROPERTY

INCOME TAX MATTERS

RESTRICTIONS ON NON-RESIDENT UNIT HOLDERS

LEVERAGE

CONCLUSION

CHAPTER SEVEN - Measuring Risks: Management, Sponsors, and Other Issues

MANAGEMENT ARRANGEMENTS

SPONSOR-RELATED RISKS

THE SPECTRE OF UNLIMITED LIABILITY OF UNIT HOLDERS

CHAPTER EIGHT - Measuring Risks: Stability Ratings

SOME THINGS TO CONSIDER ABOUT STABILITY RATINGS

STANDARD AND POOR’S (S&P)

DOMINION BOND RATING SERVICE (DBRS)

A FINAL NOTE ON RISK

CHAPTER NINE - IPOs and Conversions: The Recipe for Making Income Trusts

THE IPO PROCESS

THE INCOME TRUST CONVERSION PROCESS

CHAPTER TEN - The Legal State of Affairs in Canada

ONTARIO’S BILL 198

MAKING THE FACTS CLEAR: THE DISCLOSURE POLICY

DISCLOSURE COMPLIANCE SYSTEM

INSIDER TRADING POLICIES

CORPORATE GOVERNANCE MATTERS

CHAPTER ELEVEN - Selling a Business to an Income Trust—Issues for Business Owners

WHY SELL YOUR BUSINESS TO AN INCOME TRUST?

FIRST STEPS

PRICING

EXCHANGEABLE SECURITIES, RETAINED INTERESTS, AND SUBORDINATION

AUDITED FINANCIAL STATEMENTS

REPORTING SYSTEMS AND INTERNAL CONTROLS

BUSINESS AND STRATEGIC PLAN

PRE-IPO RESTRUCTURING OR CHANGES

OUTSIDE DIRECTORS AND TRUSTEES

THE PROSPECTUS

THE UNDERWRITING AND SALE AGREEMENTS

THE MARKETING PROCESS

POST-IPO OBLIGATIONS

INSIDER TRADING

CONCLUSION

CHAPTER TWELVE - The Canadian Income Trust Market Today

THE TWO MAIN BENEFITS

LOOKING TO THE FUTURE OF INCOME TRUSTS

A KEY QUESTION: IS THIS A BUBBLE?

THE LONG-TERM UNDER-INVESTMENT RISK FACING CANADA

CONCLUSION

Canadian Income Fund Profiles

Index of Funds

About the Authors

Copyright© 2004 by Peter Beck and Simon Romano

All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical—without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit www.accesscopyright.ca or call toll free, 1-800-893-5777.

Care has been taken to trace ownership of copyright material contained in this book. The publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

This book consists of general information that is provided solely for informational and educational purposes and is not to be construed as an offering or solicitation of securities, as advice in respect of securities, general or specific, or as advice as to the investing in or the buying or selling of securities, express or implied. This book is intended to provide general information, and is not intended to assist in the making of investment decisions, which should generally be made only in consultation with a financial advisor or dealer.

The securities mentioned in this book may not be suitable for all types of investors; their prices, value and/or income they produce may fluctuate and/or be adversely affected by exchange and interest rates, among other things. This publication does not take into account the investment objectives, financial situation or specific needs of any particular investor. Before making an investment decision in any security, an investor should consider whether such security is appropriate given the investor’s particular investment needs, objectives and financial circumstances. The authors suggest that, prior to investing in any security, you contact a registered dealer or a registered advisor in your jurisdiction to discuss your particular circumstances.

This book is not to be construed as providing tax advice, express or implied. As with any transaction having potential tax implications, investors should consult with their tax advisors.

The information and any statistical data contained herein were obtained from sources that we believe to be reliable, but the authors do not represent that they are accurate or complete, and they should not be relied upon as such. All estimates and opinions expressed herein constitute judgements as of the date of this publication and are subject to change without notice.

John Wiley & Sons Canada Ltd 6045 Freemont Boulevard Mississauga, Ontario L5R 4J3

Library and Archives Canada Cataloguing in Publication Beck, Peter, 1955-

Canadian income funds : your complete guide to income trusts, royalty trusts and real estate investment trusts / Peter Beck, Simon Romano.

Includes index.

eISBN : 978-0-470-73903-7

1. Mutual funds--Canada. 2. Fixed-income securities--Canada. I. Romano, Simon, 1959- II. Title. HG5154.5.B.63’27 C2004-904833-3

Production CreditsCover: Kyle Gell Design Interior text design: Interrobang Graphic Design Inc. Printer: Transcontinental

To my father, on his 95th birthday. —Peter Beck

I would also like to dedicate this book to Emma and Colin Romano. —Simon Romano

Acknowledgements

The authors wish to thank Chris Hunt of Swift Trade and John Lorito and Jennifer Estrela of Stikeman Elliott LLP for their assistance. All errors are our own.

Introduction

Sitting outside on a shady patio on a warm day having a light lunch is one of summer’s greatest joys. On the corner of Roxborough and Yonge street in Toronto, Café Doria has a beautiful patio, capable of seating 20 to 25 people under the natural shade of a large oak tree. On this particular July Saturday I was having lunch with my dad, who had come to visit us from Hungary. The fact that he’s 93 years old certainly didn’t prevent him from enjoying some of the simple luxuries of life, such as having a meal on a patio with his only son, whose latest book on hedge funds had been written up in the that morning. William Hanley’s article, was on the main page of the business section of the paper. Dad was very proud to see my picture, and although his English is not as good as it used to be, he managed to read the whole article right after breakfast. By the time we arrived at the restaurant for lunch, he had read it three more times and could have recited paragraphs from it by heart.