Unit Investment Trust
Consider Unit Investment Trusts for Diversification
Unit Investment Trust (UITs) were once primarily considered to be income producing investment products. Over the years, the demand for the products’ general strategy has prompted issuers of UITs to broaden their coverage to include not only municipal (tax-free) trusts, but also equity, treasury, and corporate trusts. UITs are simply a fixed portfolio of stocks, bonds, or a combination of both with a fixed maturity which are professionally selected.
Tax-Free unit Investment Trusts
There are many advantages to owning tax-free UITs:
- $1,000 initial investment (Individual municipal issues carry a $5,000 minimum.)
- Portfolio of 10-25 individual municipal bonds
- May be insured to guarantee repayment of principal and interest.*
- Specified maturity date, unlike a tax-free mutual fund
- Income exempt from Federal taxes. (State specific UITs may be double tax exempt - State and Federal - when residing in the named state.)**
Taxable Unit Investment Trusts
For those not seeking the advantage of tax-free investments, there are a variety of taxable UIT products available:
- Growth – A fixed portfolio of stocks professionally selected to satisfy a particular index or market sector, i.e., S&P 500 Index, technology or utility.
- Growth and Treasury – A portfolio consisting of the full 50% stocks and 50% U.S. Treasury zero coupon STRIPS. STRIPS are guaranteed by the full faith and credit of the U.S. Government. This strategy guarantees the return of the investor’s principal, while offering the growth potential of a portfolio of stocks.
- Treasury – A fixed portfolio of U.S. Treasuries, usually in a laddered maturity format.
The laddered portfolio attempts to minimize interest rate risk by buying Treasuries of
various maturities. - Corporate – A fixed portfolio of corporate bonds. These trust have varying average maturities as well as offering different levels of credit quality – from high-yield to insured structures.
UITs are sold by prospectus. Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other information about the investment company. A prospectus is available from an Investment Executive. Please read the prospectus carefully before investing.
* When insured, securities within the portfolio obtain a AAA rating by S&P and/or Moodys. This insurance is applicable only to repayment of principle and interest for portfolio securities. Insurance does not apply to market risk or the market value.
** Consult your tax counsel for advice and information concerning your particular circumstances. Neither PrimeVest nor any of its representatives may give tax advice. Income may be subject to federal alternative minimum tax.
*** UITs are not actively managed and do not sell securities in response to ordinary market fluctuations. Instead, securities will not usually be sold until termination, which could mean that the sale price of the trust securities may not be the highest price at which these securities traded during the life of the trust.
For more information, please call (901) 937-2948
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PrimeVest® Financial Services, Inc. is an independent, registered broker/dealer. Member SIPC/FINRA. Securities and insurance products offered by PrimeVest. Investment Executives are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with residents of other states will only be made upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside the United States. |
