Packaged Securities - Unit investment trusts (UITs)

Unit investment trust companies are a hybrid of open- and closed-end funds. Like mutual funds, UITs typically issue redeemable securities. However, like closed-end funds, UITs typically make a one-time public offering of a fixed number of shares which are known as units.

  • Many UIT sponsors maintain a secondary market that allows owners of UIT units to sell them back to the sponsors and other investors to buy UIT units from the sponsors.

  • A UIT will have a date when the UIT will terminate and dissolve; this date is established when the UIT is created.

  • However, there is no set lifespan that applies to all UITs, and some may take more than 50 years to terminate.

  • In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments.

  • When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.

  • A UIT does not actively trade its investment portfolio: rather, it buys a relatively fixed portfolio of securities and holds them with little or no change for the life of the UIT.

  • Because the investment portfolio of a UIT generally is fixed, investors know what they are investing in for the duration of their investment.

  • Investors will find the portfolio securities held by the UIT listed in the UIT's prospectus.

  • A UIT does not have a board of directors, corporate officers or an investment advisor to provide advice during the life of the trust.
Other Types of Investment Companies


Related Articles
  1. Investing Basics

    What's a Unit Investment Trust?

    A unit investment trust is an unmanaged investment company that offers a fixed portfolio of stocks and bonds.
  2. Options & Futures

    20 Investments: Unit Investment Trusts (UITs)

    What Is It? A unit investment trust (UIT) is a registered trust in which a fixed portfolio of income-producing securities is purchased and held to maturity. UITs usually hold a large amount of ...
  3. Mutual Funds & ETFs

    Unit Investment Trusts

    Unit Investment Trusts Introduction
  4. Bonds & Fixed Income

    Investing In A Unit Investment Trust

    UITs offer professional portfolio selection and a definitive investment objective. Are they right for you?
  5. Mutual Funds & ETFs

    Early Redemption & Termination Date

    Early Redemption & Termination Date
  6. Mutual Funds & ETFs

    Investment, Taxes And Measuring Performance

    Investment, Taxes And Measuring Performance
  7. Mutual Funds & ETFs

    UITs, Hedge Fund and REITs

    UITs, Hedge Fund and REITs
  8. Options & Futures

    Who Needs Fund Managers?

    The only real difference between you and Warren Buffett is a few well-chosen stocks – the billion-dollar fortune is the result.
  9. Professionals

    A. Introduction: Investment Companies

    In this chapter, we will look at how an investment company pools investors’ funds in order to purchase a diversified portfolio of securities. Series 99 operations professionals will be ...
  10. Professionals

    Unit Investment Trust (UIT)

    FINRA Series 6: Section 10 Unit Investment Trust (UIT). In this section: Unit Investment Trust (UIT), Face Amount Certificates, Management Investment Companies, Closed-End and Open-End investment ...
RELATED TERMS
  1. Unit Investment Trust - UIT

    An investment company that offers a fixed, unmanaged portfolio, ...
  2. Initial Offering Date

    1. The date at which a security is first made available for public ...
  3. SEC Form NSAR-U

    An annual filing with the Securities and Exchange Commission ...
  4. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for ...
  5. Municipal Investment Trust

    A type of unit investment trust (UIT) that invests solely in ...
  6. Regulated Investment Company - ...

    A mutual fund, real estate investment trust (REIT) or unit investment ...
RELATED FAQS
  1. What is the difference between a closed end investment fund (CEF) and a unit investment ...

    Learn about the major differences between a closed-end fund and a unit investment trust, including how each investment is ... Read Answer >>
  2. What activities can an Investment Company Products/Variable Contracts Limited Representative ...

    If you have successfully completed your Series 6 exam and are registered as an Investment Company Products/Variable Contracts ... Read Answer >>
  3. How do I purchase shares of a closed-end investment?

    Understand the difference between open-end and closed-end funds, and learn how an investor can purchase shares in a closed-end ... Read Answer >>
  4. What are the primary differences between a closed end investment and an open end ...

    Learn what the primary differences are between open-end investments and closed-end investments, and the implications for ... Read Answer >>
  5. What risks are associated with a closed end investment?

    Explore the characteristics of closed-end funds as compared to open-end funds, and understand the risks associated with investing ... Read Answer >>
  6. What can cause the terminal growth rate to be negative?

    Learn about the assumptions built into terminal valuations and in what circumstances the applied terminal growth rate might ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center