Investing February 24, 2003

UIT Deposits Blast Off As New Year Opens

February 24, 2003 (PLANSPONSOR.com) - The new year started off strong for deposits into Unit Investment Trusts at $1.15 billion in January - up sharply from the month before.

Reported by

Fred Schneyer

January’s performance dramatically bettered the $847.6 million in new overall deposits in December, according to the Investment Company Institute (ICI)

Deposits to equity trusts totaled $906.3 million, up from December’s $665.6 million, but down from just over $1 billion a year earlier. Taxable bond trusts brought in $60.6 million in January deposits, down from $71.4 million in December while tax-free bonds tacked on $184.8 million in January, also up substantially from December’s $110.5 million.

There were 76 new trusts issuing shares in January including 40 equity trusts, 33 tax-free bond trusts, and three taxable bond trusts.

In terms of maturity, long-term bond trusts having an average weighted maturity of more than 15 years were the most commonly offered in January with $204.5 million in shareholder deposits.

Unit investment trusts, or UITs, are investment companies that purchase fixed portfolios of selected stocks or bonds, and hold them through a stated termination date.

Units in the trust are sold to investors, who receive a share of principal and interest, or dividends depending on the underlying investments. Fixed income UITs pay monthly income in contrast to bonds that only pay income semiannually or annually.