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Merrill Lynch brings in new investment option

The new Merrill Lynch defined income and growth fund is an investment trust aimed at investors who are looking for either income or growth.

Investors can choose income shares that offer a yearly income of 9.25 per cent, paid quarterly, or zero dividend shares that give a capital rollup option of 30.4 per cent after three years. The trust aims to achieve these yields by investing in a portfolio of 30 large companies that cover eight sectors over three geographical areas.

It will invest in the banking, telecommunications, oil, pharmaceuticals, car industry, media, technology and consumer goods sectors in the UK, Europe and US. Some of the companies that it will invest in include British Telecom, Ford, Chase Manhattan, Siemens, Proctor & Gamble and Walt Disney.

By spreading the investment in this way, this makes defined income and growth a low risk investment. In the event that one company or sector falls in value, this can be counterbalanced by stability or a rise in value of one of the others.

According to Standard & Poor’s the Merrill Lynch keystone investment trust is ranked 20 out of 21 funds, based on £1,000 invested on a mid to mid basis with net income reinvested over three years to November 20, 2000.

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