THE unexpected perils of launching a limited life split-capital investment trust seven years ago were underlined yesterday with results from Ivory & Sime Optimum Income showing an 80% loss of capital for ordinary shareholders. Preference shareholders, meanwhile, have been paid out a full 8.78% a year as promised.

Ordinary shareholders have, however, fared better than those in many rival trusts, as Optimum has at least paid out a 4% return a year in dividends.

The preference shareholders will be paid out in full providing the trust loses no more than 6.1% of current value by its wind-up date in March.

Alex Hammond-Chambers, trust chairman, said the board was about to offer shareholders the options of being paid out

in cash, or rolling over into another vehicle.

Optimum Income was itself a rollover from a previous trust in 1997, and attracted a large army of private shareholders who, until 2000, believed that both classes of shareholder had taken a good option.

The assets at November 30 stood at (pounds) 85m, a rise of 7.3% since launch, beating the 2.5% rise of the benchmark all-share index. However, the net asset value of the ordinaries was 19.15p, a fall of 80.5%. The obligation to the zeros amounted to (pounds) 33.5m, ''eating into the total assets and leaving less and less for ordinary shareholders''.

Hammond-Chambers said that over the past three years the trust had looked at ideas designed to mitigate the effect of the bear market, in vain. ''If the life of the company had been longer, it might have helped, if the amount attributable to the ZDP shareholders at the outset had been less, it would have helped but ordinary shareholders would have received lesser dividends.''