About Investment Trust

• Zero Dividend Preference shares - no dividends, only capital growth at a pre-established redemption price (assuming sufficient assets)
• Income shares - entitiled to most (or all) of the income generated from the assets of a trust until the wind-up date, with some capital protection
• Annuity Income shares - very high and rising yield, but virtually no capital protection
• Ordinary Income shares (aka Income & Residual Capital shares) - a high income and a share of the remaining assets of the trust after prior ranking shares
• Capital shares - entitiled most (or all) of the remaining assets after prior ranking share classes have been paid; very high risk

• [Closed end fund]
• [Income trust]
• [Royalty trust]
• [Real estate investment trust]
• [Venture Capital Trust]

• Association of Investment Companies

Investment trust

Questions and Answers

Unit trust or investment trust?

Q) Hi, Can anyone explain in simple language what the main differences between the two are, and which one would represent a better investment for someone who would like to make small regular contributions over the long term and prepared to accept a small element of risk. In addition, what type of fund is good at the moment e.g. trackers, emreging markets, IT etc? There seem to be so many to choose from! Many thanks

A) Unit trusts have been changed slightly in the last few years to make them fit European regulations. They are now called OEIC's. Investment Trusts and OEIC's are both collective investment funds. That means a group of people invest money and the company running the fund employs an investment manager to try and make a profit from this pool of cash by buying and selling assets. The main difference is the way the share price moves. The share price for an Investment Trust will go up when there are more people buying than selling and down when there are more people selling than buying. The share price for an OEIC will go up when the value of the assets it holds goes up and down when the value of the assets it holds goes down. In theory when the manager of an Investment Trust does well and increases the value of the assets it should lead to more people buying the shares and the price going up. However that does not always happen and there are dozens of Investment Trusts trading below asset value. That means (for example) you can pay £1.50 per share for a fund that owns assets worth £2.00 per share. Because Investment Trusts are legally companies traded on the London Stock Exchange you occasionally see large investors take a big stake in order to try and force a shareholder vote to sell the assets and distribute the cash to shareholders. Its just another way to make a buck in the market. However most Investment Trusts will trade for years below their asset value with no one showing much interest. The share price of an OEIC should pretty much reflect the value of its assets. There are many more of them and they are usually much more heavily traded (Investment Trusts are only available in the UK). The only reason not to buy an OEIC would be if you thought you could get in on an undervalued Investment Trust which would subsequently be broken up and the additional value distributed to shareholders. That's a mugs game, most Investment Trusts are just to small to be worth it for the big investors. They continue to trade below asset value for years at a time. The type of Fund you choose depends on a lot of things. The best advice I can give you is to diversify. Don't put all your money in one place. If you're prepared to take a little risk and can carry in onvesting regularly over a few years you might want to consider something like a managed fund investing in FTSE stocks or even a European fund. Emerging Markets and IT are possibilities, but they are generally considered medium risk. Good Luck.

I want to set up an investment trust.?

Q) I would like to set up a trust for myself, so that an adult can trade shares on my behalf. What company provide under 18's with trusts, and how does it work? I will greatly appreciate any help.

A) If you want to allow an adult to invest your money without giving them legal ownership of the investments then you need to approach a lawyer. From a legal point of view it's not a complex issue, most competent lawyers should be able to help. Basically your investment manager will have to report back to the representative of your trust (normally the lawyer) on a regular basis. You will agree reporting requirements and investment targets (to give the lawyers a framework to decide when they need to take action). As you are under 18 you will have no legal role in running the trust, but the lawyer will be legally responsible for the making sure the money is secure and you receive the maximum possible on your 18th birthday. Be aware that these arrangements need to be approved in court and will be hideously expensive. Unless we're talking about a trust worth £500k plus you should forget about it.

What's the name of that secret investment trust that Bush, Major are members of?

Q) Bush used to chair it but got removed in a coup. It's got all the rich wiseacres like Fidel Ramos and that guy who got kicked out of Thailand too. Northumberland Trust, or something. Bit like Halliburton only not so open and well meaning. (Hardihaha)

A) You might be referring to one of three organizations: 1) The Skull & Bones, which is a secret fraternity of which all Bush men have been members; 2) The Bilderberg Conference, a secret group of wealthy elitists who are said to be planning for a new world order; 3) The Carlyle Group, which is a consultancy firm located in Washington, DC and whihc George H.W. Bush and his most trusted former cabinet members joined right after he left office as America's 41st President. Since then, the Carlyle Group has become one of the largest government contractors (along with Halliburton; both companies, of course have direct ties to the Bush White House). Among the investors in the Carlyle Group is a family by the last name of binLaden, who invested $2.5 million in the venture. -RKO- 05/27/07

What is the difference between an investment trust, unit trust and investment fund?

A) investment fund is generally actively managed as per mutual funds for example. The investments are bought and sold in an attempt to obtain best results. However, with the advent of index funds, that is no longer the case. The investments are not actively managed except as they must be to match the index. Unit trust is a set of investments, normally bonds, that are purchased, packaged, and pettled to the public as shares in the package. They are unmanaged. Investment trust are a little more difficult to define. Basically they are like mutual funds in that they are pools of investments. Unlike mutual funds they are actively traded on the stock exchanges ie real estate investment trusts but not always. Some are not actively traded, but nevertheless they are pools of investments in which shares have been sold to the public. There are other kinds besides real estate investment trusts. Under a broad definition, hedge funds might be considered investment trusts for example. Perhaps even mutual funds. Certainly closed end funds would fall under that category.

How does the rule against perpetuities apply to real estate investment trust?

A) Perhaps the answer is in a Dynasty Trust.

Investment unit trust fund?

A) sponsor puts together a basket of stocks or bonds and sells units to the public. sponsor takes management fees and the firm that sells it to you takes a big fat commission. usually not as liquid as a mutual fund or ETF. not the best way to invest your money.

Who are World Capital Partners and can I trust them with an investment?

Q) Their website looks great and they are promising high returns on investments in Las Vegas. The staff at their London office are well spoken and very helpful. So why am I hesitating?

A) You are hesitating because deep down you know it is all too good to be true. The best investment you can make is in buying one book to help you learn more about investing. An excellent starting point is "The Motley Fool UK Investment Guide", less than £10 on Amazon.co.uk, with a 5 star customer rating. An easy read, and you will learn so much about investing without risking a penny. You can even sell the book on Amazon.co.uk after you have read it and get most of your £10 back.

Is't internet investment, http://abfund.us is true and can trust?

A) It's a scam: http://blog.thestar.com.my/permalink.asp?id=9212

If i invest in a venture capital Trust (VCT) then after 5 years is the growth of my investment Tax Free?

A) Yes, providing:- 1) 70% of funds are invested in companies <3yrs/old. 2) The companies operate wholly or mainly in the UK. 3) You are under the limit of £200,000 per year (tight eh?) Dividends are also paid gross with no income tax taken.

worried about an investment i have just taken out?

Q) I have just bought a " Unit Trust Investment" with Legal and General and they told me it would cost me 1% per annum for it to be managed by them. I have just received the paper work from them and my first year will cost me approx. £574 if the interest rate is 5.5% in magagement fees. Also after 5 years at approx 5.5% interest all i will make with a £6000 investment is £1100 i could a better return from my ISA, am i missing something here or have i been wrongly advised. Terribly confused, can anybody help me. thanks My ISA are cash ISA's and at the moment their interest is 5.60% so there is no risk at all to them, thats why i am doubtful of this investment and i don't pay a management fee for the ISA as well, still worried!!!

A) I am not sure what you mean by "interest rate" as usually a Unit Trust investment is directly invested in equities, ie the stockmarket so performance would be dependent on that. The annual mangement charge (AMC) of 1% is standard however, don't forget that as well as the AMC that L&G charge, there could also be a fund management charge. L&G are one of the UK's leading insurers so you should be resassured by this. A lot depends on the fund you are invested in but your adviser should have discussed your attitude to investment risk before you made the investment to enable him to select the appropriate fund/s for your plan. Over the longer term, equity investments will outperform building society deposits but don't forget, there are no guarantees with this type of investment. By the way, Unit Trusts are identical to ISA investments - there is absolutely no difference in the investment itself. The only difference is that an ISA is placed in a tax free "wrapper". There are limits to your annual ISA allowance which you cannot exceed. If you have any queries, then talk to your adviser or Legal & General.

Because investment trust funds are intended to generate income on an ongoing basis to be used to support the p

Q) Because investment trust funds are intended to generate income on an ongoing basis to be used to support the purposes for which the trust was created, they should use full accrual basis accounting. Discuss.

A) You are taking a significant risk when you post homework questions here, as you have no idea whether anyone who answers is academically gifted or not (i.e. a person can be very successful in world of investing but still not be able to answer finance or economics questions correctly). Not to mention the fact that you have a teacher, classmates, and textbook that are more familiar with material you are studying and would be better qualified to help you arrive at correct answer.

How risky is investment trust fund actually?

Q) How risky is investment trust fund actually? There are people telling me that trust funds are gimmick. The finance company is the real winner and the customers are just contributors to it, and they normally lose a lot of money.

A) The performance of a trust fund depends on the competence and the integrity of its manager. There are some good fund managers who do well and some not so good who do poorly for their investors. There is some risk involved in putting your money into a trust fund. And you should do research and find the best fund you can before putting any money into it. Also, it's a good idea to invest in more than one fund. This way if one of them doesn't work out well, then at least you will make some money in your other funds. A common financial advice experts give is that even good equity funds can go up and down in price short term. But long term on average they go up. This means of course that you should invest money which you will not need to use for anything else for 3 to 5 years at least. Or else you may have to take out your money when the market is down, and you will loose some of your money as a result.

What is the best real estate investment trust fund to invest in?

Q) I heard that REIT(real estate investment trust funds) are the way to go, I plan to invest in REIT through Fideletity, and was wondereing which company has the best reit funds I can invest in?

A) REITs have had a great run these last several years. Be aware it may not continue. I do not know the best one. But there are some index funds of REITs. Think about investing in those. They were among the best performing REITs this year. RWR and VNQ and IYR. Each is up about 38% ytd. Sort of a broad brush approach to picking the best. Just pick them all.

Where can I find detailed information on the about UNIT INVESTMENT TRUST? BOOKS?

Q) What i'm looking for is a complete information about how UNIT INVESTMENT TRUST are originated; who originates them; why they do it; what are its benefits; what are its risks;when does it come into legal existence; a published book if possible that I can purchase in the net.

A) No problem. At the link I include you should be able to find everything you're looking for & more. In addition I'm adding a link for statistics of UIT's. I had trouble opening this link myself but if you can make it work it'll help you. The 3rd link is from a biased source but still plenty of good reading.

Bill and Hillary's blind investment trust. Is it a conflict of interest?

Q) "Seeking Alpha, 6/18/07, Yahoo Financials" reveals that the Clintons' blind trust just sold Exxon Mobil and British Petroleum. BIG OIL! How long have they held these stocks and how is this any different from blind trusts presumably held by Bush and Cheney? Presumably none of these people know what is held in their blind trusts, and surely the Clintons' trustee will buy other stocks to replace XOM and BP.

A) its not buried now is it

Should I trust the investment broker at my bank?

Q) I have decided to switch my CDs over to mutual funds. My bank has set me up with a broker that works for the investment side of the bank. To me, he seems like a salesman. I dont know much about stocks, etc. How much should I trust this type of broker with my life savings? Do these guys really know what theyre talking about? Do they take their jobs seriously or do they just try to sign up as many customers as possible? He seems to listen to my needs pretty attentively, but I cant tell if its an act because he wants my account.

A) Usually these guys genuinely care about their customers...there are some who only care about their sales quotas. It is going to be that way any investment firm you go to. Shop around some, find someone you are comfortable, but I will suggest that you find someone you don't have to pay an annual fee to go to...it is ridiculus to pay someone to manage your money, they get a big cut from the investment companies they sell your investment to. There are some out there that charge large fees (Amex investments) and your bank probably doesn't.

Real Estate Investment Trust - REIT?

A) As i guessed, you need an information about Real Estate Investment Trust. It is an investment vehicle that invests funds on behalf of its investors in real estate-related investments such as construction loans, mortgages, land and real estate company securities. Also search it on Wiki, Bizrates, etc.

What Japan Real Investment Trust(REIT) has Collin Francis as manager?

Q) This REIT is probably new, maybe 3-4 yrs.old.

A) If you’ve heard me speak this year, you’ve heard me talk about Japanese real estate... I think it’s the best investment opportunity for the next 15 years... I strongly believe that the investment I’ll share with you today has virtually no downside. Yet the upside potential is hundreds of percent. You see, right now, we’ve got the setup conditions for a ridiculous bull market in real estate in Japan. It’s really a “one-way bet.” It’s cheap, hated, and the uptrend is just beginning. Up until just a few months ago, property prices in Japan had been falling – for 16 years straight. The government had tried everything to entice people to spend their money. The Bank of Japan (Japan’s equivalent of the U.S. Federal Reserve) even went as far as lowering short-term interest rates to 0% – and it kept interest rates there for five years. Long-term interest rates are around 2% in Japan. Amazingly, property prices continued to fall, even in a low-interest world. Think about this for a moment... what do you think would happen to U.S. real estate prices if mortgage rates went from 6% to 2%? Real estate prices would soar... Most people don’t shop for homes based on the sticker price. It’s nearly irrelevant. Instead, most people buy based on what they can afford in a monthly payment. You see, at 6% interest, a $1,500 monthly payment will get you a mortgage of $250,000. Yet at a 2% interest rate, a $1,500 monthly payment will get you a mortgage of $400,000. In the U.S., we take it for granted that if mortgage rates fell from 6% to 2%, prices would soar. Americans believe that “you can’t go wrong in real estate.” However, after 16 years of falling prices, the Japanese now believe that “you’ll never make money in real estate.” Real estate prices in Japan fell between 50% and 90% from 1990 to 2000 (depending on where in Japan and what type of real estate we’re talking about). And they’ve stayed down. Now – finally – the Japanese are starting to buy real estate once again. And prices are starting to rise. The thing that kicked off the bust back in 1990 was the Bank of Japan raising interest rates too fast. And today, the Japanese government will do everything in its power to prevent going back into bust mode. It will NOT get in the way as property prices start to rise. And it will do everything possible to keep prices from falling. Therefore, we’ve got a one-way bet. Let me sum up the important details: • Prices are down 50%-90% in the last 16 years, but rising now. • Mortgage rates are ridiculously low. • The Japanese people are sitting on more cash than anyone. • The government will fuel the fire instead of put it out. Here’s How to Play It... The most profitable, and safest way to play this situation is with Japanese REITs. If you’re not familiar with REITs, (pronounced "reet") or Real Estate Investment Trusts, they are a similar to stocks... but unlike stocks, they get a special tax break that many companies don’t get. And in return, they have to by law pass on their earnings to you, the shareholder. And the best way to play Japanese real estate is through one REIT that owns apartments in Tokyo. The company actually sells for less than the liquidation value of its buildings. And it currently pays out nearly all the profits it receives from rent in the form of dividends... I expect that dividend will be about 5% a year. I like this play for a variety of reasons. But mostly because it fits into my philosophy of buying what’s cheap and hated, when the uptrend is just beginning. It is extremely hard to get all of these at once. But we have them in Japanese residential properties now. Another reason I like the stock is the folks behind it. Instead of being part of the old-boy network in Japan, where you can only deal with your old cronies, this business was started by an interesting American. His name is Collin Francis. Collin Francis first went to Japan at age 19 as a missionary. Now in his mid-40s, Francis has worked in Japanese investments for two decades. According to Barron’s, he worked in Tokyo in the 1980s with Nikko Securities and Shearson Lehman, and he worked with Deutsche Morgan Grenfell in the early 1990s. In 1994, he started his own company. By 2005, Collin was managing a billion dollars in Japanese stocks. In 2002, Francis had the foresight to see that Japanese real estate was going to bottom out soon. So in 2002 he got the wheels in motion to get a REIT started in Japan. Collin Francis had the IPO of his apartment REIT just over a year ago. And today, this stock is the cheapest way for you to buy into Japanese real estate... By buying the stock now, you are actually buying at less than the liquidation value of the company’s properties! If Collin Francis sold all the apartments today, and gave us our money, we’d get more money than the stock is worth now. It’s crazy. When we compare Francis’ REIT with the four largest REITs in Japan, we can easily see what kind of value we’re looking at... COMPARING THE BIG REITS TO OURS Market Value (in US$ millions) Dividend Yield Price-to-Book Value Nippon Building Fund 5,312 3.1% 1.77 Japan Real Estate Investment 2,966 3.3% 1.70 Japan Retail Fund Investment 2,220 3.6% 1.42 Nomura Real Estate Office Fund 1,869 3.1% 1.73 Collin Francis’ REIT 244 4.4% 0.82 Sources: Datastream and www.tse.or.jp/english The far right column tells the story... most REITs in Japan trade at significant premiums to the value of the properties they own. The far right column shows the price-to-book-value, which represents purchase price, not market price. It shows that you only pay 82 cents for every dollar of property the REIT owns! The REIT bought its properties very recently – it just had its IPO last year. And while the price of shares may seem high you’re able to buy in for a steal... at 82 cents on the dollar. The business this company is in is not complicated... It simply owns 42 apartment buildings in Tokyo. Prospect’s occupancy rate is 95.1%. The property market in Japan is just about to go nuts. And thanks to this REIT, American investors can get in on the action with just a simple phone call. New laws passed in Japan from 1996 to 2002 have deregulated the industry and allowed REITs to be publicly traded like stocks. In the U.S., our massive boom is coming to an end. In Japan, their massive boom is just about to begin. If you get on board now, with Collin Francis’ REIT, you’ll be an instant real estate mogul in Japan, owning an interest in 42 apartment buildings in Tokyo... Be proud that you bought them for less than liquidation value... And enjoy your dividends, which could be as high as 5% as we see substantial price appreciation over both the near term and the long term. Your upside potential here is triple digits. I would like to hold this one for a very long time. If you like the sound of this investment idea and would like to learn more, I suggest you act quickly. But I have to warn you... A Warning This is not your typical stock investment. I can almost guarantee you will not hear about this unique investment anywhere else. It might be too unconventional for you. So, if you want to take advantage of this market, I recommend you first read my new investment research report on this situation. This research report is called; FINALLY! The 16-Year Bear Market Just Ended... It's Time to Buy. You can have a free look at this report before you decide whether or not this investments are right for you. It couldn't be easier to participate. One phone call is all you need to get started. It's happened over and over again in the past few years... I find unusual opportunities which I simply can't recommend to my True Wealth newsletter subscribers... I had to keep these ideas to myself. But now I've figured out a way to share these kinds of limited opportunities with you... if you're interested.

What is a Real estate investment trust?

Q) Where are some good places to find some good one?

A) A REIT was set up in the 70s under Carter as a way to get people to "own" property with little money. A thousand people with a thousand dollars each can own $1 million worth of property. The REIT is responsible for the paperwork and are required to give 90% of the profits back to the "owners" in the form of dividends. Generally you want to look at sector REITs, for instance business, medical and housing are different sectors in the REIT industry. You want to focus on which sector has staying power. For instance a REIT that runs a mall during a downturn is a bad investment while a retirement home REIT with 80 million people retireing in the next 11 years might be a good long term investment. barchart.com breaks them down into sectors.

Explain the purpose of an investment trust fund & describe its accounting treatment.?

A) You are taking a risk when you post homework questions here, as you have no idea whether anyone who answers is academically gifted or not (i.e. a person can be very successful in world of investing but still not be able to answer finance or economics questions correctly). Not to mention the fact that you have a teacher, classmates, and textbook that are more familiar with material you are studying and would be better qualified to help you arrive at correct answer. (I think I've said this same thing to you before - but I hate seeing a question sit out here for days on end and get no response.)