trustee investments act , 1961 . this act received the royal assent on August 3 , 1961 , and came into force on the same day . trustees can invest their trust funds only in investments authorised either by the express terms of their trust instrument or by statute . before this new act the investments authorised by statute did not include any equities and were a limited range prescribed , in England by the trustee act , 1925 , and in Scotland by the trusts ( Scotland ) act , 1921 , with subsequent statutory extensions . generally speaking , the statutory trustee list was restricted to stocks issued by the British government and by the governments of commonwealth countries and the colonies , stocks guaranteed by the British government , stocks and mortgages issued by British local authorities , and mortgages of land in Great Britain . most of the investments in the list earn interest at a fixed rate and , with certain notable exceptions , are eventually repayable at par . in recent years there have been serious disadvantages in the old list . the immediately realisable market values of investments eventually repayable at par have fluctuated widely , with the variations in the prevailing rates of interest ; and , in the case of the undated stocks in the list , market values have declined very seriously . eventual repayment of invested capital at its nominal par value takes no account of inflation and the decline in the value of money , and represents , in real values , a capital loss . in the case of a trust fund established twenty or more years ago , with investments limited to the statutory list , the annual trust income may be nominally the same today as when the trust began , although of course the income will buy far less than when the trust began . a life tenant depending for his income and standard of living on such a trust would be much worse off today than twenty years ago ; and the real value of the trust capital may be disastrously less than when the trust began . this sort of case history is , unhappily , not unusual . the statutory trustee list has always had two objects : first , the protection of trustees ; secondly , the protection of the beneficiaries , by ensuring both the preservation of trust capital and a steady yield of income . the first object has always been successfully achieved . trustees who invested within the range permitted by the statutory list were reasonably safe from legal attack by disgruntled beneficiaries . but , for more than twenty years before the passing of the new act , the second object had not been achieved at all . the statutory list ( which was always somewhat out of date ) provided no hedge against inflation and no protection against the continuous fall in the value of the &amp;pound; . experience of investment within the range provided by the statutory list offered a sad contrast with the profitable experience of other people able to invest in equities . for years most lawyers have advised settlors and testators to confer on their trustees much wider investment powers than those permitted by the statutory list . in the House of Lords debate on the second reading of the trustee investments bill a peer who is a solicitor of great experience said : in the course of some forty years of practice I have made it a point always to advise that settlors and testators should leave the widest possible discretion to their trustees ; that the powers contained in the trustee act were far too limited . naturally enough , the demand for reform of the list has grown and has commanded some powerful supporters . in 1952 the report of the ( Nathan ) committee on the law and practice relating to charitable trusts advocated reform . in 1955 a white paper on government policy on charitable trusts in England and Wales referred to the government &apos;s intention to propose a general reform of the statutory list . charities were already able to obtain from the court a general extension of investment powers ; and , particularly after a decision in 1955 drew professional attention to this , a number of the larger charities obtained wide powers of investment in the ordinary and other shares of the larger companies . in 1958 the variation of trusts act permitted applications to the court for ( inter alia ) extended powers of investment ; and applications under that act were soon very widely used for the purpose of obtaining power to invest in equities . but applications to the court cost money , and the power conferred by the 1958 act was no substitute for general reform of the statutory list . on May 13 , 1959 , a statement in the House of Lords promised early legislation ; and in December 1959 a white paper was published setting out the government &apos;s proposals . these proposals , with some minor changes , were embodied in the bill introduced into the House of Lords in November 1960 . the period of almost a year between the publication of the white paper and the introduction of the bill was intended to provide time for interested persons and bodies to consider , and make representations about , the government &apos;s proposals . this was a good idea , and the time was not wasted ; but the period might have been more useful if the white paper had included a draft of the intended bill . this bill , when published , turned out to be quite complicated ; and it soon received anxious scrutiny from professional bodies , including the law society , whose simplifying amendments were debated at length when the House of Commons was considering the bill in committee . the act replaces the former statutory trustee list . the new list , set out in the first schedule to the act , is divided into three parts . parts 1 and 2 list the narrower-range investments . part 3 lists the wider-range investments . the narrower-range comprises mainly fixed-interest investments , and includes the whole of the former statutory list with some changes and additions . these additions include fixed-interest securities issued in the U.K by the international bank for reconstruction and development ; the debentures ( not being convertible debentures ) of United Kingdom companies that comply with certain conditions ; and deposits in the ordinary and special investment departments of trustee savings banks . commonwealth government stocks are included in the narrower-range without the governments concerned having to comply with the conditions laid down in the colonial stock acts . the difference between part 1 and part 2 of the narrower-range is that trustees may invest in part 1 without first obtaining advice , whereas they may not make an investment in part 2 of the narrower-range without obtaining and considering proper advice as to the suitability of the investment . part 1 is very simple . it includes defence bonds , national savings certificates and Ulster savings certificates ; and deposits in the post office savings bank , in the ordinary departments of a trustee savings bank and in savings banks certified under section 9 ( 3 ) of the finance act , 1956 . deposits with designated building societies are in part 2 of the narrower-range ; and it is puzzling that trustees should not be allowed to make such deposits without obtaining expert , written advice . the greatest interest , however , attaches to the new wider-range . this includes the shares , stock and convertible debentures of United Kingdom companies that comply with certain conditions ; the shares of designated building societies ; and units of authorised unit trusts ( i.e , authorised by order of the board of trade under the prevention of fraud ( investments ) act , 1958 , or by the ministry of commerce under the prevention of fraud ( investments ) act ( Northern Ireland ) , 1940 ) . the equities ( i.e , ordinary shares and stock ) and other securities of U.K companies are included in the wider-range only if the particular company has a total issued and paid-up share capital of at least &amp;pound;1 million and has paid dividends on all its issued shares in each of the five years preceding the year in which the investment is made . as with part 2 of the narrower-range , investments must not be made in the wider-range unless the trustees obtain and consider written expert advice about the particular investments . further , trustees are not to make or retain investments in the wider-range unless their trust fund has been divided into two parts . this once-for-all division of the trust fund is the most important ( and controversial ) feature of the new statutory scheme for permitting wider-range investments . the division must be into two equal parts ; but there is power for the Treasury , by statutory instrument , to order that division shall be into unequal parts ( provided that such an order shall not authorise a division in which the narrower-range part is less than one-quarter of the fund at the time of division ) . the division , once made , is permanent . thereafter , funds belonging to the narrower-range part must be invested in narrower-range investments , while funds belonging to the wider-range part may be invested in wider-range or narrower-range investments . it is not essential for the whole of the wider-range part to be invested immediately in wider-range investments . the discretion to invest in the wider-range is available only in respect of the wider-range part . if property is transferred from one part of the divided fund to the other , there must be a compensating transfer in the opposite direction . where any property accrues to a trust fund that has been divided , and the accruing property is not otherwise obviously attributable to some particular part of the fund , the accruing property must be divided so that each part of the fund is increased in value by the same amount . where capital is taken out of the trust fund ( as , for example , in the exercise of the statutory power of advancement ) , the trustees are not required to take it equally from the two parts of the divided fund : the act does not fetter their discretion as to the choice of property to be taken out . the new statutory powers of investment are additional to any special powers , e.g , those conferred expressly by the will or settlement . any property ( not including statutory narrower-range investments , but including statutory wider-range investments ) which trustees are authorised to hold pursuant to such special powers , must be carried to a separate special-range part of the fund . the effect may be that a single fund will be divided into three parts : the special-range part , the wider-range part and the narrower-range part . division of the fund into two parts and the subsequent maintenance of that division will require very careful administration and records ; and even greater care will be needed where the division is into three parts . will ordinary private trustees be able to do the necessary administration and keep satisfactory records ? in the case of the larger trust funds , where the expense of obtaining constant professional assistance is not regarded as extravagant , the additional work will present no problem . but , with a relatively small trust fund , the trouble and expense may perhaps be too great , and the trustees may therefore decide that they can not operate the statutory scheme for investment in the wider-range . the fear of undue complexity in the administration of relatively small trust funds led the law society to advocate a scheme permitting investment in the wider-range without a once-for-all division of the fund ; but the advocacy was unsuccessful ; the complexity remains ; and time will show to what extent , in practice , trustees of small trust funds take advantage of the new power to invest in the wider-range . the other provisions of the act do not call for extended comment . section 6 ( 1 ) is of interest in that it attempts a statutory definition of a trustee &apos;s duty in choosing investments . he must have regard - ( a ) to the need for diversification of investments of the trust in so far as is appropriate to the circumstances of the trust ; ( b ) to the suitability to the trust of investments of the description of investment proposed and of the investment proposed as an investment of that description . the new powers apply to persons and bodies , not being trustees , who have trustee investment powers . section 9 ( 1 ) amends section 10 ( 3 ) of the trustee act , 1925 to remove a defect ( disclosed in re Walker &apos;s settlement ) which has occasionally caused trouble where trustees hold shares in a company that is the subject of a take-over bid . 