| Investment trusts (ITs) are companies whose | | | | market value of the underlying investments (the |
| business is buying, holding and selling shares in | | | | net asset value or NAV) and the percentage |
| other companies, so they make the investment | | | | discount varies from time to time as well as |
| decisions for you. Investment trust shares can be | | | | between individual Investment Trusts at any one |
| bought and sold on the stock exchange and | | | | time. In recent times discounts have been as high |
| dividends are paid. | | | | as 10% and as low as 2%. Occasionally the share |
| Some companies invest generally while others | | | | price is at a premium to the net asset value. |
| specialise, either in income or growth shares or in | | | | Investment Trusts can borrow money to invest. |
| particular sectors, countries or world regions. | | | | This is called gearing because the opportunity for |
| Some specialise in fixed interest investments. | | | | growth and/or income increase is geared up. It |
| A newly introduced category global recognises the | | | | does of course also increase the risk of loss. |
| trend towards a world wide approach to investing, | | | | The cost of managing the investments is a |
| picking out what are thought to be the best | | | | charge against profits. |
| companies world wide, perhaps restricted to a | | | | Eighty five per cent of income must be paid out. |
| sector (especially high tech stocks). In any case, | | | | Information about Investment Trusts can be |
| many large companies have significant operations | | | | obtained from the Association of Investment |
| extending beyond their national boundaries. | | | | Trusts. |
| The share price is usually at a discount to the | | | | |