Make your mind up time for investors in Kleinwort trust

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The Independent Online
Deadline time is approaching for the 70,000-plus small shareholders in Kleinwort European Privatisation (Kepit), an investment trust that is being wound up after failing to produce good returns.

Shareholders have been given until 5pm on Saturday by Kepit's board to elect for one of three proposed choices for their investment. These are: to take cash; to have their investment rolled over into M&G European & General, a less specialist unit trust; or to have their investment rolled over into a new unit trust version of the old investment trust, which like Kepit will be managed by Kleinwort Benson and will specialise in privatisation shares. The deadline is for the sending in of "forms of election" that shareholders should by now have received (if you have not, ring 0171 956 6600).

Shareholders who do nothing or miss the deadline will automatically have their investment rolled over into the Kleinwort Benson European Privatisation unit trust.

Investors could also sell their Kepit shares themselves this week - either to take cash or to take advantage of one of the special deals being offered by other investment companies for people leaving Kepit.

Kleinwort Benson warns against this last option as it says investors are likely to receive less for their shares than, for example, taking the cash option proposed by the Kepit board.

They would also miss out on expected interim and special dividends that might amount to another 2 per cent of the value of Kepit investments.

Many investors are expected to take the cash option proposed by the board because of dissatisfaction about how their Kepit shares have performed. Last week these were still trading at less than the pounds 1 paid for them by investors at launch. By comparison, the stock market as a whole is now at an all-time high. Taking the Kepit board's cash option should enable most investors to get out with slightly more than they paid - around 106p is the estimate. This figure includes the value of the "free" warrants given to investors who bought the trust at launch. Investors who do not have these warrants to cash in should get around pounds 1 a share.

Alternatively, they could roll over this realisation value into one of the two unit trusts on offer. But investors should only do this if they want to stay in European stock markets. If, however, you do want to stay invested, both unit trusts are relatively cheaply managed.