trust

Arrangement whereby a person or group of people (the trustee or trustees) hold property for others (the beneficiaries) entitled to the beneficial interest. A trust can be a legal arrangement under which A is empowered to administer property belonging to B for the benefit of C. A and B may be the same person; B and C may not.

A unit trust holds and manages a number of marketable securities; by buying a ‘unit’ in such a trust, the purchaser has a proportionate interest in each of the securities so that his or her risk is spread. Nowadays, an investment trust is not a trust, but a public company investing in marketable securities money subscribed by its shareholders who receive dividends from the income earned. A charitable trust, such as the Ford Foundation, administers funds for charitable purposes.

A business trust is formed by linking several companies by transferring shares in them to trustees; or by the creation of a holding company, whose shares are exchanged for those of the separate companies. Competition is thus eliminated, and in the US both types were outlawed by the Sherman Antitrust Act 1890 (first fully enforced by ‘trust buster’ Theodore Roosevelt, as in the breakup of the Standard Oil Company of New Jersey by the Supreme Court 1911).