What is a unit investment trust?
A unit investment trust or "UIT" is one of the types of investment funds in the U.S., along with mutual funds and exchange traded funds or "ETFs", as explained in our educational article investment fund types.
Unit investment trusts are governed by the Investment Company Act of 1940, a law that shapes how all registered investment companies must be structured and operated. All unit investment trusts must meet certain operating standards, observe strict antifraud rules, meet diversification requirements, and disclose complete information to investors. The Securities and Exchange Commission (SEC) oversees regulations under the ’40 Act. Like all registered investment companies, unit investment trusts must have a board of directors elected by the fund’s shareholders to oversee the management of the fund’s business affairs and to protect the fund’s interests, taking into account the interests of all shareholders.