3.4.  Unit Investment Trusts (UITs)

Unit investment trusts (UITs) are “pooled investments” like open-end and closed-end funds. UITs are investment companies that buy and hold a fixed portfolio of securities that are put into a trust and sold in “units” (also known as shares of beneficial interest, as in other trusts) to investors referred to as unit holders. The Investment Company Act of 1940 defines UITs and states that they are organized under a trust indenture, contract of custodianship, agency, or similar instrument. They have no board of directors. Unit investment trusts issue redeemable securities like an open-end fund. Like a closed-end fund, however, UITs offer investors a one-time offering of a fixed number of units, generally in $1,000 blocks. Because the units are issued new, they must be sold with a prospectus. UITs are not actively managed and the UIT does not employ an investment adviser, so the securities within the portfolio rarely change.

UITs have a stated termination date that varies according to the type of investments in