BOOM IN FIXED TRUSTS

Wanganui Chronicle, Volume 79, Issue 306, 31 December 1935, Page 8

BOOM IN FIXED TRUSTS

BIG GROWTH IN BRITAIN The huge development of fixed trusts in Gre.it Brita.n recently is the subject of an editorial comment in The Accountant (published by the English Institute of Chartered Accountants}.

”lt 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 Hun dred 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 t-nan 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 lite of this trust is to be 21 years but the managers have power to terminate it after J 8 years.

“The British Empire Comprehensive Trust, which, as its name implies, belongs to the British Empire group, contains 150 securities. Dividends are io be paid quarterly and provision is j made for continuity of management I tthroughout 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 repurchase sub-units on the basis of Stock Exchange prices. A meeting may be called during Ibe last three yeirs of the trust’s 20 years’ life to give certificate holders the opportunity of converting their investment trust com“The Hundred Securities Trust belongs to the Dawna.y Day group, and. ns is also the case with rhe British Empire ,Compreh?nsive Trust, some of the securities are in the speculative | class. The managers undertake to rei purchase 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 J 5 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 al their discretion, and the proceeds may be disI tributed in cash, invested in trustee securities or in other investments already included in the trust. The i lauagers have also the choice of putting the proceeds into other securities of a similar >jaracter, although the number must not exceed five in any year or 50 in rhe whole 15-year period. ‘•A marked feature of recent fixed trusts is the tendency away from fixit,v and towards gr?at<r freedom in the powers of management.”