Unit Investment Trusts
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This article is from the What Every Investor Should Know.
Unit Investment Trusts
The portfolio of securities of a unit investment trust is fixed and not actively managed. However, as with mutual funds, interests in a unit investment trust are redeemable at their net asset value at the option of their holders. In addition, there often is a secondary trading market for the shares of unit investment trusts.
These trusts have a limited life and, although a few invest in equity securities, most invest their assets in debt securities. Units in a trust are often sold to the public at a price of at least $1,000. Distributions of interest may be made on a monthly, quarterly, bi-annual, or annual basis. Some unit investment trusts may offer automatic reinvestment of distributions, either in the trust or in a mutual fund run by the same sponsor.
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