What is a multi-class or split capital investment trust?
A split capital trust is an investment trust company with more than one class of share (hence “split capital”), each class having different rights to participate in income or capital returns. Split capital investment trusts were originally devised over 100 years ago and operate on the basis that shareholders look for either income or capital growth and are able to meet such requirements through choice of the different share classes. Split capital investment trusts have a fixed life span, at the end of which they are wound up or rolled over into a new fund. A zero dividend preference share or “zero” is a particular class of share within a split capital investment trust. Its principal characteristics are: • No dividend is payable at any stage to the zeroholder, who can only receive a capital return rather than income from the trust. • At the redemption date (the date when the split is due to wind up), the zeroholder is entitled to receive a pre-established redemption price provided that