The trust’s board is awaiting the findings of an investigation by the Financial Services Authority into split-capital investment trust activity by Gartmore and 20 other companies. Once this has been published, the board will be in a better position to assess whether it has any claims against third parties.The directors add: “Should the liquidators consider the circumstances may justify incurring legal expenses in the future, they would consult with the principal shareholders as to whether they felt legal action was appropriate and, if so, whether they would be willing to provide funding.” The trust has set aside £50,000 for any possible legal action. The board has recommended a winding-up of the trust and GBAT Securities on November 1, 2004. Gartmore Balanced Assets was launched in 1999 to invest primarily in split-capital investment trusts. It was set up with gearing in the form of bank debt and zero-dividend preference shares, with the latter being issued by its subsidiary GBAT Securities. The bursting of the technology bubble and the subsequent collapse of more than 20 split-caps, combined with the trust’s gearing, led to a sharp fall in the value of its assets. In September 2002, the trust changed its investment focus to UK equities rather than split-caps. The trust has revealed that the amount due to zero-dividend preference shareholders on November 1 is £47.75m, but its total assets, after providing for the repayment of the bank debt, currently amount to only £17.77m. “In the light of the size of this shortfall, there is no realistic possibility of the ZDP shareholders being repaid in full, and therefore there will be no assets attributable to the ordinary shares of the company,” says the board. The figure of £17.77m, however, assumes the successful realisation of all the trust’s investments in split-caps at bid prices, and the board warns there is no guarantee the bid prices will be obtained. The liquidator may choose to hold investments for a longer period or to maturity if it cannot secure a price that “fairly reflects its underlying value”.