I had a small position in oil and gas income trusts, thankfully pared down for profit taking a few months earlier. So it cost me a couple grand, nothing huge, but still sucks. Hard enough to make wise investment decisions without having the rug pulled out from under you.

Worse off is my dad, who has been retired for about 15 years. I still remember him talking to me about income trusts in 1998 or there abouts. They just seemed to good to be true. He called investing shows to determine if they were legit, then started to dabble. Naturally after several years of 10-15% payouts and little or no word on tax changes, he built on his position. Then in one day he had probably about 2 years of income wiped out.

I totally agree with Bill that this change needed to happen. To me, an income trust makes sense only if shareholders are 'retired' once the producing assets that their shares are funded by reach end of life. I.e. the payout has a portion called 'return of capital' or something like that, which i understand is basically depreciation that was subtracted from income. When your capital base is reduced to zero, not sure why you should get to ride the next wave of investment without ponying up.

Actually, the more I think about it, the more it would make sense for trust units to trade in ever-decreasing value. The unit should only represent the value left in the assets originally purchased with that unit, and eventually they would be worth 0.

Of course having billions wiped out from mom and pop investors' accounts is bad. The government must have realized and should have at least acknowledged problems with the structure many years ago, and phased in changes more gradually. What they did was lull investors into a false sense of security, then kick them in the teeth.

Have not really invested much in income trusts in the past as have never liked paying up for a business based on a tax model. Having said that, a lot of these trusts have really tanked and I expect that we'll see even lower prices as tax-loss selling kicks in, so am thinking it may be a good time to take a look at some of these and evaluate them as regular businesses. Any thoughts?

I was investing in Canroys since 2003 and made good profit over time. At some point I had about 50% of portfolio in Canroys but reduced my exposure to less then 5% by October for other reasons (mostly expecting general market weekness). So my loss is small (actually instead of gain 180% in positions which I chose to keep I have gain about 80%). But it is painful to see so many canadian retired people lost significant part of their capital due to government actions. It is not normal market risk, consevative government promissed not to touch trusts. I feel myself just lucky. I am U.S. investor and this was real lesson about investing abroad.

I own PWE. It is not a big percentage of my portfolio and I understand that any investment/trade has its own risk. I have to say though the way taxation announcement was handled does not give any investor/trader confidence in Canadian government. If the PM did not promise anything, then it was understandable. How could he state his intention unequivocally then did something completely opposite. If he is an CEO of any company, he would be sued. I tend to buy mutual funds when investing in emerging markets for fear of these sorts of things. I guess I should do so if I want to invest in Canada too.

I had a small position in income trusts...with the biggest position being cos.un which I am going to keep. When the dust settled after the Halloween night fiasco, I was actually a winner having fairly big positions in all the Canadian banks (along with leaps on ry, td, cm, bns)...all of which saw big inflows of capital from trusts. Although the govt. had to do something, I wish the moratorium had been 10 years instead of 4 years...it would have enhanced the protection of needed income for a lot of Canadian seniors and significantly reduced the near-term capital destruction that occurred.

I bought CNE and HTE about 2 wks prior to the announcement. I had resting limit orders about 20% below the market yet I still lost about 10%.It is a good lesson in humility and diversification.

I just read my comment above. That does not make sense. I placed the resting limit orders about 1 or two weeks prior to the announcement. Of course when it opened I bought the high of the day.

On Oct 31 I was fortunate and had only a small holding in royalty trusts so only dropped about $9000. Earlier in the year I would have been devestated at the amount I would have dropped. The reason I was out was because I didn't view the oil sector or general economy as being very attractive so it wasn't any great foresight with regards to trusts.

However, my father and his friends don't view it with quite the same nonchalance as a lot of others. He/they had a large percentage of their retirement investment funds in trusts as that is the only vehicle paying what could be considered a good return. Being from Alberta and investing in oil, if they would invest in XYZ as a corporation, why would they not feel comfortable investing in XYZ.UN? The assets were the same and over the past number of years the gain was as great or greater than investing in ordinary oil stocks. And in a lot of cases, the oil stocks were trading at even a greater P/NAV than the trusts because they were seen to be potential takeover targets at good multiples.

In a lot of cases I have seen, those that have badmouthed trusts are those that missed the boat. It was a very bitter pill to swallow when they announced the changes, but for most that have been holding for an extended period, the drop since Nov 1 has only reduced potential gains back to the level they may have been at if they didn't invest in trusts and were in other dividend paying stocks. Those that only recently invested -- got screwed.

Sure there were good ones and there were bad ones. And maybe the accounting wasn't as standardized as it could have been. But if the structure was bad, I think it could have been tinkered with.

And if we are going to be very critical of trusts that are seen as old, staid businesses, is anyone here invested in junior gold and mineral companies? Do you think the accounting and transparency there is as good as the trusts?

In what I have read, either in the attached RBC/BMO reports or others, I fail to see where the major tax leakage is. I also fail to see where the brokerages are at fault for promoting trusts to their retired or boomer clients. The Conservative government stated in no uncertain terms that they weren't going to touch trusts. How could the brokerages not promote trusts? They were the ideal vehicle for most older people.

I currently own 2,000 shares of CNE. I am an American.

I bought more (averaged down) on the news.

I owned Petrofund years ago when there was similar nonsense by you Canucks. If CNE drops to the $12's again, I will add more. My investing strategy is called "balz". Ockham's razor holds that the simplest answer is often the correct one so here goes: this is political garbage and will get dramatically dialed back. I have bet on it. Too many poor Canucks live off this. Moreover, the price of oil ain't goin' down folks. You can make fun of ole' T. Boone all you want, but he's been in the oil patch a long time and made more money than you. When he says it's going back up, it'll go back up. That plays into Bill's "stagflation" theme.

I love the canroys here. Go ahead and make fun. I'll be back to gloat.

PS even if they convert to corporations...who cares? CNE, for one, is at a deep discount to its NAV, it's not like it's assets are crashing bleeding anytime soon (look at the proved reserves) and instead of monthly distribution, this wetback Yank will just end up with capital price appreciation instead. There's so much silly money floating around the world right now, you don't think the Chineese wouldn't love to have this? See how badly Falconbridge and Inco bungled other Canadian assets into the hands or foreigners. Either way - I win.

i always trade a portion of positions to lower the basis for the remainder - however, not tax efficient. i liked the trusts - bought PTF years ago at $11-ish and got out a bit too early before the takeover - happens. owned others too.

a buddy always figured the Canroys were near a buy if they were getting close at XX% yield, so i kinda used that as a rule-of-thumb, then adjusted for long- or short-lived resource. so after the all too typical backstab from 3rd World gov't, i figured with essentially a 25% tax change, the canroys should be close to buys near 133% of XX% yield or slightly above after allowing for manic selling! pretty sophisticated - eh? hahhahahha! :)

i expect there will be adjustments and price vibrations, and distro cuts are a big worry, but 18% - 21% per annum compounds pretty darn quick -even if only for 4 years. using this "guess", i stepped in on the big reversal day, but i was real nervous for a few days after. i have traded out of portions of my positions & have nibbled back in on dips, but mostly for daytrades - remember, 25-cents is 2% on a $12-stock. if/when they come back to test the lows, ill get in again in size and sell some on bounces - again, i admit this is not tax efficient, but over time you can get a "0" or negative basis depending upon the trading pos size relative to your base/"LT" position. i have a preferene for trading income-stocks anyway, particularly in this envirnoment.

the buy & holder crowd just got crushed by the backstab.

I've held canadian trusts for several years, and had a substantial position when the tax law changed. In actuality it was a lesson about diversification. I closed the HTE position for an $18K tax writeoff and added 500 shares to my PWE position, which I plan on holding indefinitely. I must have smelled something coming, I had sold a large number of AAV covered calls just prior to the ruling, which buoyed my loss somewhat.

It behooves any of us to remember that 12-18% returns are not without risk. I lost better than half of a year's income, an expensive but valuable lesson.

I believe there is value in the trusts still, particulary PWE and AAV as a riskier but better paying proposition. However I have no plan currently to increase my holdings.

There will almost certainly be some volatility and tax loss sales in the coming month, offering an opportunity for investment. I am considering a short term investment in HTE.

Again, return without commensurate risk does not exist.