What is a unit investment trust and how is it different from a closed-end mutual fund?
A unit investment trust, or UIT, is a variation of a closed-end mutual fund, but it has a specified termination date. At the termination date, the money invested in the trust may be rolled over into a new UIT to maintain continuity. A UIT is one way to package a particular group of securities. Almost all types of securities may be placed in a unit investment trust portfolio, in accordance with the type of trust and its objectives. UITs typically invest in a fixed portfolio of bonds that are held until they mature. This distinguishes them from traditional bond mutual funds, which actively manage their portfolios by buying and selling. When you invest in a UIT, the units you buy represent your ownership interest in the trust s assets. The UIT collects the interest income and repayment of principal and passes a pro-rated share of this money on to you — for a fee, of course. Check the commissions and fees charged by the UIT. You do not need to be a savvy investor to duplicate the UIT for
