Business and Personal Finance Dictionary

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• UNIT INVESTMENT TRUST (UIT)
  
  A UIT is generally a fixed portfolio of bonds with specific maturity dates, of income-producing stocks, or, in some cases, of all of the securities included in a particular index. Examples of the latter include the DIAMONDs Trust (DIA), which mirrors the compostion of the Dow Jones Industrial Average (DJIA), and Standard & Poor's Depositary Receipts (SPDR), which mirrors the Standard & Poor's 500-stock Index (S&P 500). UITs resemble mutual funds in the sense that they offer the opportunity to diversify your portfolio without having to purchase a number of separate securities. You buy units, rather than shares, of the trust, usually through a broker. However, most UITs trade more like stocks than mutual funds in the sense that you trade them in the secondary market if you want to sell rather than redeeming your holding by selling your units back to the issuing fund. Further, the price of a UIT fluctuates constantly throughout the trading day, just as the price of an individual stock does, rather than being repriced only once a day, after the close of trading. As a result most UITs (though not DIAMONDS or Spiders (as SPDRs are known) trade at prices higher or lower than their net asset value (NAV).
  
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