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Company Information

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Geoffrey Richards Securities
7570 S. Federal Hwy

Suite 3
Hypoluxo, FL 33462
561-586-0800
561-586-1411 Fax

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Unit Investment Trusts

What is a Unit Investment Trust (UIT)?

A UIT is a fixed portfolio of professionally selected securities. Investors purchase units of a trust, which represent an undivided ownership in the entire portfolio. The portfolio of a unit investment trust is fixed at the date of deposit, which gives the investor knowledge of exactly what is in the portfolio, when the trust matures, and the expected income that the trust is likely to generate.

There are three main categories of UITs:

  • Equity: Portfolios of equity securities typically fall under one of three categories:
    1. Strategy Trusts: The main approach to portfolio selection is to follow a specific investment strategy, such as the Dow Dividend theory of investing. An investor should consider their ability to participate in successive trust series as most strategies depend on a long term investment horizon.
    2. Sector Trusts: These trusts are portfolios of companies doing business in one sector such as an Energy Trust, which invests in 20-25 leading energy companies, for investors who wish to participate in the energy industry and do not wish to assume the risk of investing in only one company. Sector Trusts may entail greater risks since their investments are concentrated and may lack diversification.
    3. Index Trusts: These trusts, with a duration of 5 to 6 years, are portfolios of stocks based on certain indices in the market (i.e. NASDAQ 100, S&P 100, Dow 30). Suitable for investors with a long-term investment horizon.
  • Tax-Free Fixed Income: Portfolios of municipal bonds providing monthly or semi-annual tax-free income.
  • Taxable Fixed Income: Portfolios of U.S. Treasury, U.S. Agency, and corporate issues that provide monthly or semi-annual income.

Some Attractive Features for Unitholders

  • Scheduled maturity
  • Daily liquidity if sold prior to maturity, the trust may be worth more or less than its original cost
  • Diversification
  • Convenience
  • Low minimum investment
  • Professional portfolio selection


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