Tax Facts

7973 / What is a unit trust?

A unit trust (unit investment trust) holds a fixed portfolio of specified assets, such as tax-exempt bonds, Ginnie Maes, corporate bonds, or certificates of deposit. The trust issues redeemable securities, each of which represents an undivided interest in the assets held by the trust.1 The assets in the trust are not traded, but are monitored instead. When the assets mature, the trust ends. A contractual or periodic payment plan mutual fund is a type of unit trust.

1. 15 USC §80a-4.

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