BOOM IN FIXED TRUSTS

Timaru Herald, Volume CXLI, Issue 20308, 6 January 1936, Page 14

BOOM IN FIXED TRUSTS

BIG GROWTH IN BRITAIN The huge development of fixed trusts in Great Britain recently is the subject of an editorial comment in “The Accountant” (published by the English Institute of Chartered Accountants) . “It Is almost impossible,” the writer declares, “to keep pace with the newcomers to the Fixed Trust Movement, so rapidly do they follow upon each others’ heels. Among recent additions to the list are the Trust of Bank and Insurance Shares, the British Empire Comprehensive Trust, and the Hundred Securities Trust. The first has on its list of permitted investments 24 banks, three discount houses, and 25 insurance companies, and the holdings may be changed within that list as circumstances may dictate, provided that not more than 71 per cent, of the funds of the trust may be in any one company, and not more than 5 per cent, of the issued capital of any one company may be held. The life of this trust is to be 21 years but the managers have power to terminate it after 18 years. “The British Empire Comprehensive Trust, which, as its name implies, belongs to the British Empire group, contains 150 securities. Dividends are to be paid quarterly and provision is made for continuity of management throughout the life of the trust by the creation of a separate fund out of the service charge of 7 per cent., and the managers undertake to purchase sub-units on the basis of Stock Exchange prices. A meeting may be called during the last three years of the trust’s 20 years’ life to give certificate holders the opportunity of converting their investment into shares of a management investment trust company. “The Hundred Securities Trust belongs to the Dawnay Day group, and, as is also the case with the British Empire Comprehensive Trust, some of the securities are in the speculative class. The managers undertake to repurchase sub-units at not less than their liquidation value, and they have power to call a meeting within the last five years of the trust period, which is in this case 15 years, to authorise and exchange into a managed investment trust company. They have also power to sell the whole or reduce the amount of any security at their discretion, and the proceeds may be distributed in cash, i: .vested in trustee securities or in other investments already included in the trust. The managers have also the choice of putting the proceeds into other securities of a similar character, although the number must not exceed five in any year or 50 in the whole 15-year period. “A marked feature of recent fixed trusts is the tendency away from fixity and towards greater freedom in the powers of management.”