Unit investment trust (UIT).
In plain English
A unit investment trust, or UIT, is a pooled investment that buys a fixed portfolio of stocks or bonds at the start and holds it, largely unchanged, until a preset termination date, when it dissolves and pays out. Unlike a mutual fund, it is not actively managed and does not continuously trade, so it has a fixed lifespan and a defined set of holdings you can see up front. Investors buy units, each a slice of the basket. UITs are less common today, sit between a mutual fund and an individual portfolio, and can carry sales charges worth checking.
01Why it matters
A UIT locks in a fixed basket with an end date, so knowing it is unmanaged and terminates on a set day sets it apart from the mutual funds and ETFs most people default to.
02The math, step by step
You buy units of a UIT holding 25 dividend stocks with a two-year term. The trust holds those same stocks and pays you the dividends; at the end date it sells the holdings and returns your share of the proceeds.
03What this is NOT
A UIT is NOT actively managed. It holds a fixed basket until a set termination date rather than continuously trading, so its holdings and lifespan are defined from the start.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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