A unit trust is a type of mutual fund.  Money from a number of investors (referred to as unit holders) is managed by a fund manager to achieve returns by investing the money.  The fund manager will invest in bonds, shares, ETFs etc, and the fund is split into units - when you invest in the fund, you buy a unit.  As with the other investments discussed in the Stock Market Section, you'll incur fund manager's charges (such as initial / entry charges, an annual ongoing and transaction charges), and charges from your investment platform (such as a dealing charge and a custody charge).

An investment trust is a fund that has been set up as a public limited company (PLC), to allow its shares to be bought and sold on the stock market.  The fund manager of the investment trust will invest in a portfolio of shares, property or other assets that they have selected and fit the aims and objectives of the trust.  When you invest in the trust, you are buying a portion of the portfolio.  In addition to the charges mentioned above, you'll also incur stamp duty reserve tax (SDRT) charges if the investment trust is UK based.

In both cases, you make money when the value of the assets or portfolio increases, and you sell your portion for more than you paid, and you lose money if the value of the assets or portfolio decreases, and you sell it for less than you paid.  With an income trust, you gain from any dividend payments received from shares in the fund, or from interest on bonds.  For an accumulation trust, dividends and interest payments are automatically reinvested by the fund manager - check how the fund operates before investing.

For a more comprehensive explanation of trusts, follow the links below or search online: