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Unit Investment Trusts

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Unit Investment Trusts


What is a UIT?
Whether your investment objective is long-term growth or current income, a Unit Investment Trust (UIT) may offer you a way to meet your financial goals while potentially minimizing your overall risk.

A UIT is a trust that holds a fixed portfolio of securities (equity or fixed income) that are offered to investors in "unit" increments. Investors receive a share of the trust’s earned income – and their pro rata share of the holdings at the trust’s maturity.

Unlike a mutual fund, a UIT is created for a specific length of time and is a fixed portfolio, meaning that the UIT’s securities will not be sold or new ones bought, except in certain limited situations.

How is a UIT Created?
Our investment professionals select both the duration and the portfolio holdings for each Unit Investment Trust, based on the current market environment and the trust's investment objective.

Each trust is designed to meet a stated investment objective, such as growth or income. Once the securities are selected, they are held until the Trust is dissolved and proceeds are distributed to unit holders.

While each trust has a fixed duration or term, investors may redeem their holdings prior to maturity.*

*For trusts with deferred sales charges, investors may be responsible for payment of the remaining deferred sales charges if they choose to sell their holdings prior to the trust’s maturity.

What can a UIT offer me?
A Unit Investment Trust (UIT) is attractive to individual investors for several reasons:
  • You gain access to a diversified portfolio through a single purchase
  • They employ a buy-and-hold strategy for a time period judged appropriate for each particular trust
  • Investors always know what they own
  • Liquidity - UIT investors may sell their units anytime. Even in the absence of a secondary market, trusts are required by law to buy back outstanding units at their net asset value (NAV), which is based on the current market value of the underlying securities. Redemption periods may vary depending on the terms of the individual trust.
  • Low administrative costs
  • What are the some of the risks of investing in a UIT?
  • Unit Investment Trusts are not actively managed. Therefore, stocks in the Trust will not be sold to take advantage of various market conditions. The Trust may continue to purchase or hold stocks even though their market value and dividend yields may have changed.
It is also possible that securities in the trust will depreciate, and that the trust may not achieve it’s intended objective. In addition, each trust is subject to specific risks which vary depending on the Trust's investment objectives and portfolio composition.

Unit Investment Trusts are sold only by prospectus, which contains more complete information including sales charges, expenses and risk factors. If you are considering investing in a UIT, please contact your Financial Advisor for a copy of the prospectus and review it carefully before investing or sending money.