An income trust is an entity created specifically to distribute cash flow from an underlying business to its unitholders. The main attraction of trusts is their ability to offer higher yields to investors than traditional equities and bonds. Income generated by the underlying business flows through the trust as income to the unitholders, which creates a favorable tax situation for both the trust and the unitholders, and adds to the attractiveness of this type of investment.

Energy trusts, such as True, and other Oil & Gas trusts, are among the oldest and most common types of income trusts in Canada. In the case of Oil & Gas income trusts the principal business of the underlying company is the production and sale of oil and natural gas. These trusts pay out to unitholders a varying amount of the cash flow received from the production and sale of the oil and natural gas. Naturally, the amount of distributions paid will vary based on announced payout ratios, capital expenditure requirements, production levels, and commodity prices.