Fund set aside by a corporation or government agency for the purpose of periodically redeeming stocks .
The fund is accumulated from earnings, and payments into the fund may be based on either a fixed percentage of the outstanding debt or a fixed percentage of {{link=profit">profits . Sinking funds are administered separately from the corporation's working funds by a trust company or trustee. The purpose of a sinking fund is to assure investors that provision has been made for the repayment of bonds at maturity.