Insurance, Annuities, and Investments
Unit Investment Trusts
A Unit Investment Trust (UIT) is an investment vehicle comprised of a fixed portfolio of securities that are sold via units consisting of an interest in that portfolio. A UIT is passively managed as it buys a relatively fixed portfolio of securities with little or no change for the life of the UIT. A UIT will have a termination date that is established when the UIT is created.
CostThere is a sales charge for purchases, but there is no management fee because the portfolio is not actively managed and may be changed only in unusual circumstances...
UIT FeaturesUITs generally hold a known portfolio, which is purchased when the UIT is started. Many UIT sponsors maintain a secondary market to allow owners to sell their units back to the sponsors and other investors to buy those units from the sponsors. (Unit prices in the secondary market may be above or below the net asset value of the trust's actual holdings.)
Reinvestment OptionAt maturity, investors will generally have the option of reinvesting their proceeds into a new UIT at a reduced sales charge. They may also receive cash distribution of the proceeds, or request an in-kind distribution of the underlying securities in the trust if that option is available.