Keiron Root replies:
Resources IT is not a member of the AIC and, therefore, does not appear in their ‘official’ sectors; but it was customary to compare it with other commodity and natural resources funds.
However, this fund is currently in the process of being wound up. At an EGM in October 2007, its shareholders instructed the board of Resources Investment Trust to ‘take action to realise the Company’s investments as soon as practicable, so as to put the Company in a position to return cash to shareholders, by way of share buybacks and/or the liquidation of the company as soon as reasonably practicable’ and modified the investment policies of the Company accordingly. The company’s articles were subsequently amended to require that a general meeting of the company be convened for a date not later than 31 March 2008, ‘at which a special resolution should be proposed for the company to be wound up voluntarily’.

This duly happened and the EGM on 31 March approved the winding up of the company and the cancellation of its ordinary shares on 31 March 2009.

As a consequence, its shares are suspended while distribution of its assets takes place. I presume that is why it is now classed as a ‘Liquidity’ fund and also explains the exceptionally high total return figure, which assumes that these large distributions are reinvested in the trust’s shares, even though it is not possible to do this in reality. This invariably happens with trusts that are winding up and distributing their assets.

The figures shown in our performance tables are intended to give an indication of total return over specified periods (i.e. with income reinvested) as this enables comparison between different types of funds – those targeting income with those targeting capital growth, for example. Unfortunately, because all funds are treated the same way, this means that distributions of the proceeds of trusts that are being wound up, as in this case, are automatically shown as being reinvested, giving rise to some fantastically large performance numbers!