READERS' LIVES
Is the Halifax paying out two windfalls - one for merging with the Leeds Permanent building society and one when it becomes a bank? CE, London

No, there's just one payout. If all goes to plan, you'll get your free shares in the summer when the society becomes a bank.

However the Halifax also has a lot of spare cash and could give it back to shareholders in the form of a special dividend sometime after it becomes a bank. This dividend could be big enough to feel like another windfall.

The Leeds and Halifax joined forces last year. There was no windfall payment for members, just a merger between the two building societies - the kind of merger between societies that has been taking place during most of this century.

With some building society mergers, savers of one of the two merging societies have been given a bonus, but usually it has been small. The idea behind such pay-outs is to compensate savers if their society is merging with a financially weaker society. It is only when a society becomes a bank (or is taken over by an existing bank) that members tend to get significant windfalls in the form of free shares or cash.

In a recent issue of the Independent on Sunday you featured names of investment companies including Pan European and Venture & Development Capital (investment trusts) and also Europe Eq and Financial & Property (unit trusts). How can I contact these companies? RF, London

Sorry to disappoint you, but you can't contact these companies because they don't exist. They are "sectors". The investment fund industry has traditionally categorised individual investment funds (such as unit and investment trusts) into sectors. The idea is that the performance of funds with similar investment aims can be compared. So, for example, unit trusts which focus on investing in financial and property shares are put in the same unit trust sector. This enables investors to see how individual funds have compared with the sector as a whole.

An individual fund may be showing excellent returns, but the performance may not be that good when compared with other funds in the sector. By the same token, a poorly performing fund may not seem quite so bad if it falls within a poorly performing sector. But, equally, beware a fund proudly claiming to be top of its sector. The sector may have done badly.

Categorising funds according to sectors can only provide a rough guide. Fund managers may assert that their funds are very different from others within the same sector and that comparison is not really valid.

If you want to get hold of sector league tables, the monthly magazine Money Management, available from many newsagents, could be worth hunting out. The Independent on Sunday and The Independent also carry figures regularly.

The sectors which caught your eye have all ranked high in our sector performance tables. However, be careful before choosing a sector or fund which has performed well recently. It may not have a lot more puff in it. A common mistake is to buy at the top of a market by putting your money in areas that have already done well.

Ask yourself, instead, which funds are likely to do well in the future, taking account of the economic, political, financial and currency background, as well as the fund manager's track record.

Write to Steve Lodge, Personal Finance Editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number. Do not enclose SAEs or any documents that you wish to be returned. We cannot give personal replies or guarantee to answer every letter we receive. We accept no legal responsibility for advice.

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