Unit Investment Trust Law and Legal Definition
Unit Investment trust is a trust in which funds are pooled and invested in income-producing securities. Units of the trust are sold to investors, who maintain an interest in the trust in proportion to their investment.
It also refers to an SEC-registered investment company which purchases a fixed, unmanaged portfolio of income-producing securities and then sells shares in the trust to investors. A UIT is created by a document called the Trust Indenture. This document is drafted by the Sponsor of the fund, and names the Trustee and the Evaluator. The sponsor selects and assembles the securities to be included in the fund. The trustee keeps the securities, maintains unit holder records, and performs all accounting and tax reporting for the portfolio. These companies do not have board of directors and issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities.