re: on the move-march nta Hi Cupwinner,Some LICS do all the work...

re: on the move-march nta Hi Cupwinner,

Some LICS do all the work and produce these numbers for you (see HHV's last NTA announcement where they break this down line by line for dilution)

For LRF, the options will only be exercised if LRF is well over $1, if this is not the case, then no dilution will occur. Also as these are Company options I would guess that the exercise rate will be low (when I held and exercised VTPO I was in the minority, even though they were well in the money !)

So here is a calaculation :
Assume LRF is $1.15 at the end of the year, and say NTA is $1.50. (total LIC NTA is 131m x$1.5 = $197M)

60% of options exercised., LRF get $1 per option or an extra $78.6M

New NTA (inc new cash) is $275.6M, with 209.6M LRF then listed, giving DILUTED NTA of $1.31, i.e 19cents is lost with the dilution from Option exercise.

You can work out a number of different outcomes based on different assumptions of course, but beacuse the company alwasy gets $1 in cash for each option exercised the discount, dilution will never be anywhere near as high as you thought.

Hope this helps..

I have 4 LICS running now (and I am generally a direct investor) the discounts that have opened up in the last 18 months are just too big to ignore..

Finally, with all LICS there is a MER (Management Fee) and with the newer LICS a performance fee. These are very competivity against managed funds..