Unit Investment Trusts

A unit investment trust (UIT) is an investment that gives you the comfort of knowing what you own:

• Defined strategy
• Diversification
• Professional selection
• Performance based on consistency and discipline
• Ease of investing
• Daily liquidity
• Periodic rebalancing opportunities
• Scheduled maturity
• Low minimum investment

A unit investment trust, also known as defined portfolio, is an investment in a fixed, fully invested portfolio of securities with a designated maturity date. Different types of portfolios may include fixed income investments to address principal preservation and current income, or equity investments to provide growth potential.

Types of UITs:

• Asset allocation portfolios invest in different asset classes, styles, capitalization, and meet specific investment objectives to help better manage investors’ asset allocation needs.
• Sector portfolios invest in companies involved in a specific industry such as energy, healthcare, financial services, technology, etc.
• Strategy portfolios seek to outperform a benchmark such as specific widely held indices, using sound, fundamental screens that reflect the historical behavior of the securities.
• Income portfolios typically seek to provide dividend and/or interest income and may also provide potential capital appreciation.

Benefits of Investing in UITs:

• Greater diversification than an investment in a single security since a UIT portfolio represents pro-rata ownership in a pool of securities.
• Daily liquidity. UIT can be redeemed at NAV, which may be more or less than the original purchase price.
• Rebalancing opportunities. Studies have shown that rebalancing can provide benefits to your long-term investment plan. With UITs, rebalancing is simple. When the portfolio terminates, investors have the option to reinvest their proceeds, at a reduced sales charge¹, into a new, rebalanced portfolio. It is important to note that rebalancing may cause a taxable event unless units of the portfolio are purchased in an IRA or other qualified plan.
• Discipline. Unlike actively managed funds, the securities in the portfolio remain fixed over the life of the investment.
• No manager-driven style drift. Because a UIT is clearly defined and not actively managed, there will be no style drift as a result of manager-driven trading. There can be, however, changes to a trust’s style from changes in market conditions.
• In the case of equity-related securities, there are no embedded capital gains. Capital gains taxes are only paid if there is a profit at the time of UIT termination or liquidation.

An investment in any unmanaged unit investment trust should be made with an understanding of the risks involved with owning common stocks, such as an economic recession and the possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.

If you are interested in learning more about investing in unit investment trusts or for a copy of a prospectus, contact your Raymond James financial advisor today or use the office locator to find our offices nearest you.

A UIT prospectus contains specific information about risks relative to the types of securities in the portfolio, as well as costs and expenses associated with this type of investment. Read the prospectus carefully before you invest or send money.

1 Rollover discounts apply to purchases made with the proceeds of a terminated or/and liquidated UIT. Volume discounts (also known as breakpoints) apply to orders exceeding levels set in the prospectus.

Unit Investment Trusts are buy-and-hold type alternatives and are not meant for short-term trading. Past performance is no guarantee of future results and the actual current performance of the portfolio may be lower or higher than the past or hypothetical performance of the strategy. Investors should note that diversification does not ensure a profit or guarantee against loss.