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Unit Investment Trusts
Unit Investment Trusts can offer a simplified approach to a well-diversified stock and/or bond portfolio. UITs are baskets of stocks and/or bonds that are pre-selected by investment professionals according to specific criteria. Each UIT is designed to meet a specific goal (although there is no guarantee the UIT will meet its objectives). The criteria for selecting the holdings of a UIT generally provides for an unemotional methodology of choosing quality stocks within a particular sector, theme, or index.
UITs, as opposed to most mutual funds, are passively managed. The investments within the UITs are bought and held for a predetermined time, and the investments do not change except in rare circumstances, such as a company is bought or merged with another company, or the financial condition of a company becomes irreparable. Because of this passive strategy, UITs provide the investor with the ability to know what they own.
Since UITs are created for a specific period of time, investors must decide how to handle their investment at the end of the period. Most unit investment trusts provide investors with the ability of choosing to reinvest into the next UIT offering, transferring their holdings "in-kind" to a brokerage account of their choice, or taking the liquidated proceeds.
If an investor would like to sell their units prior to the UIT end date, the trust units can be sold back to the trust at any time for their net asset value (based on the value of the underlying securities) less any remaining deferred sales charges. This ability provides the investor with liquidity similar to that of a mutual fund.
Your Harvest advisor can help you determine whether unit investment trusts are good investments for you, and because we remain independent, your advisor can help you select a unit investment trust that is right for your situation.
Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the unit investment trust. The prospectus contains this and other important information, and you should always read the prospectus carefully before investing or sending money. A Harvest representative will gladly provide you with a prospectus for any unit investment trust currently available.