Brief Guide 
DEFINITION

Investment trusts are closed-end investment companies managing portfolios composed of capital market instruments, gold and other precious metals.

LEGAL STRUCTURE

Investment trusts are established in the form of joint-stock corporations and they have a legal personality. Their capital is registered and they issue shares. Their shares have to be issued in return for cash and quoted, traded and priced at a stock exchange.

TYPES

As in the case of mutual funds, there are two different types of investment trusts in Turkey, Type A and Type B and Type A investment trusts are required to invest at least 25% of their assets in equities that are issued by Turkish companies. Investment trusts that have no such obligations are classified as Type B. In practice, all of the 21 investment trusts established in Turkey are Type A.

FOUNDERS

There is no restriction on the founders accept for certifying that they have not been subjected to any legal prosecution due to bankruptcy or another disgraceful offence. Legal persons as well as real persons can be founders of an investment trust.

PORTFOLIO MANAGEMENT

Investment trusts are authorized to manage their own portfolios and may employ portfolio managers. They can also get portfolio management or investment advisory service from authorized investment advisers.

PORTFOLIO RESTRICTIONS

Portfolio restrictions for investment trusts are similar to those of the mutual funds.

CUSTODY

The assets of investment trusts have to be deposited in a depository institution (The ISE Settlement and Custodian Bank, Inc.).

VALUATION

The valuation of the assets of the investment trusts is similar to that of the mutual funds. Their portfolio value, net asset value and the net asset value per share is calculated daily.

SHARES

Investors buy shares of an investment trust in the stock exchange. In return they are paid dividends at the end of the years. They may also sell their shares in the exchange and receive capital gains anytime they want.

DISCLOSURE

After being approved by the CMB the article of incorporation of the investment trust is announced in the Turkish Commercial Registry Journal. As well as that; they have to prepare prospectus in the case of issuance and public offering of the shares. Besides, important developments about the investment trusts and their weekly portfolio tables including their assets and net asset value per share are announced to the investors in the bulletin of the stock exchange. Finally their annual and semiannual financial statements have to be audited by a certified external auditor and announced in the bulletin of the stock exchange.

PROTECTION OF INVESTORS

Apart from the disclosure liabilities stated above, that they are deposited in a central depository institution sustains safekeeping of the assets of the trust. On the other hand listing requirement of the trusts' shares in the stock exchage enables the investors to leave the trust anytime they want. Anyway, the investors have to know that the investment trusts are closed end investment companies and they can sell their shares only to other investors, but not back to the trust.

TAXATION

Investment trusts enjoy the same taxation incentives provided to the mutual funds.