KEY POINTS:
The $117 million UK-based New Zealand Investment Trust will be wound up at the end of next month.
Its New Zealand shareholders will have the option of taking the cash or rolling it over into a Brook Asset Management unit trust.
The trust's shareholders voted in May last year against it continuing due to "recent major tax reforms in New Zealand which have resulted in a UK investment trust no longer being the optimal structure for an investment by those of our shareholders resident in New Zealand".
Local spokesman Paul Irwin of First NZ Capital said the wind-up of the trust, which is about 50 per cent owned by New Zealanders, was driven by the changes to the overseas investment tax rules which came into effect last year.
The changes mean investors' shares and funds outside Australasia will be taxed up to 5 per cent of the value of the portfolio at the beginning of the year.
The trust, like Guinness Peat Group, secured a temporary exemption from the rules. However when shareholders voted against the trust continuing when the two-year exemption expired, it began moving assets into cash. That breached the conditions of its exemption and therefore brought forward plans to wind it up.
The shift of assets into cash proved timely given the recent market volatility, said Irwin.
The trust has been successful over its 20-year life in achieving its aim of providing shareholders "with the maximum possible total return" from New Zealand, and to a lesser extent Australian securities.
In the year to December 31 its shares rose 7.7 per cent against the New Zealand sharemarket's benchmark index's flat performance, and its net asset value rose 6.4 per cent. Over the past five years its shares and net asset value has risen 135 per cent.
The trust is managed by UK-based Exeter Asset Management but is advised by Brook Asset Management.
New Zealand shareholders are being given the option of either being paid out in cash or rolling over their investment into the Brook Tasman Fund unit trust, which has a similar mandate to the trust:
"To outperform the market over the long term by investing on a long-term basis in New Zealand and Australian securities."
Two general meetings will be held on February 22 and February 29 to gain final shareholder approval for the plan.
The trust's shares, which are listed in the UK and New Zealand, will cease trading on the NZSX on February 14 and the company will be delisted on March 3.
Irwin said the trust's performance had been staggering over its life.
"It's certainly delivered the goods for shareholders."
The trust's shares closed flat at $11 on Friday.
END OF THE LINE
* The UK-based NZ Investment Trust will be wound up next month.
* Established in 1988, the trust invests in New Zealand and Australian stocks.
* It had a net asset value of $117 million as at December 31 last year.
* About three-quarters of its shareholders are New Zealanders who own about 50 per cent of its shares.
