| An investment trust that sells shares and uses the pooled proceeds to buy shares in other companies, in which the equity capital is divided into at least two classes Ñ such as income shares and capital shares. Holders of income shares receive the majority of the trusts income throughout its life and a specified capital amount on liquidation while holders of capital shares receive virtually no income during the trusts life but on liquidation receive all the assets after repayment of capital to holders of income shares, benefiting from the capital growth. The raison detre<$> of split capital investment trusts is that a single trust can accommodate the requirements of different types of investor in one fund, and provide better performance than they would be able to achieve if they invested in separate funds. In the UK, some split capital trusts ran into trouble after the stock market falls of 2000-2002 because of a collapse in the value of the underlying assets, exacerbated by trusts being invested in each other and high gearing.
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