Split capital investment trust

A split capital investment trust (split) is a type of investment trust which issues different classes of share to give the investor a choice of shares to match their needs. Most splits have a limited life determined at launch known as the wind-up date. Typically the life of a split capital trust is five to ten years. Structure Every split capital trust will have at least two classes of share: In order of (typical) priority and increasing risk Zero Dividend Preference shares - no dividends, only capital growth at a pre-established redemption price (assuming sufficient assets) Income shares - entitled 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 - entitled most (or all) of the remaining assets after prior ranking share classes have been paid; very high risk