Abstract
An important financial development in recent times has been the rapid increase in growth of public unit trusts. This can be explained largely by the fact that such trusts provide an effective means of pooling the resources of individuals, and indeed smaller institutions, so that they may together obtain the investment advantages available to large institutions. To take the so-called 'property trusts' as an example, it can be readily seen that they provide an ideal vehicle to mobilize the vast amounts of capital necessary to engage in modern property development. But these trusts also offer to their investors important taxation advantages through 'gearing' and long-term investment strategies. As a common feature, 'managed trusts' (or 'growth' trusts) offer to investors a return largely, or even wholly, from increases in the value of trust properties — a prima facie capital gain not subject to income tax. In most cases expenses associated with the trust properties, in particular interest on monies borrowed to acquire them, are sufficient to offset substantially, if not wholly, rental income — the concept of'gearing'.
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