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UIT 101 Webinar

December 12, 2012

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Todays PresentersModerator:Suzanne Cullinane, Manager, OperationsHenderson GlobalPanelists:Scott Anderson, Partner Chapman and Cutler LLP Jack Tierney, Executive Director, Unit Trust ProductDevelopment, ResearchInvesco

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Scott Anderson

PartnerChapman & Cutler

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What is a UIT?Investment Company Act of 1940"Unit investment trust" means an investment company which (A) is organized under a trust indenture, contract of custodianship or agency, or similar instrument, (B) does not have a board of directors, and (C) issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?Investment VehicleUITs are organized as common law trusts (not statutory or business trusts) governed by a trust agreement/indentureNo board of directors/trusteesKey Parties:Depositor (Sponsor)TrusteeEvaluatorSupervisor

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?Fixed PortfolioPortfolio is selected at UIT inception by the Sponsor, another investment manager or by applying a quantitative screening strategyNo money manager actively buying and selling portfolio securities during lifeNo investment adviserPortfolio is supervised by a Supervisor that provides portfolio surveillanceDepositor can direct the Trustee to sell securities to:pay expensespay unit redemptionsin limited cases to protect the UIT (e.g., serious adverse credit factors related to an issuer)

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?InvestmentsU.S. and Non-U.S. StocksU.S. and Non-U.S. Corporate BondsMunicipal BondsTreasury and Non-U.S. Government SecuritiesPreferred SecuritiesGovernment Agency and GSE SecuritiesOpen-End Fund SharesClosed-End Fund SharesExchange-Traded Fund SharesOptions (including covered call strategies)OTC DerivativesCommodities

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?Defined LifeEquity StyleUIT has stated Mandatory Termination Date in prospectusCurrent market is primarily 15-24 monthsFixed-Income StyleUIT terminates when last bond matures, is called, or is otherwise liquidated from portfolioMost maturity ranges typically offered

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What is a UIT?Plain English

Investment vehicle that holds a fixed portfolio of investments for a defined life and offers redeemable units to investors

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What is a UIT?Redeemable UnitsUIT units are redeemable securities under the Investment Company Act of 1940Just like open-end fund sharesDaily redemption right like open-end fundsForward pricing rules apply to purchases and redemptionsDaily NAV and public offering price computed by:TrusteeEvaluator (Depositor, its RIA affiliate or third-party company)

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Who are the Key Players?

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Comparison of Typical Registered Funds

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Comparison of Typical Registered Funds

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Life of a Sample Equity UIT

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Life of a Sample Fixed Income UIT

6-10

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Jack Tierney

Executive Director Unit Trust ProductDevelopment, ResearchInvesco

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Understanding Unit Trusts

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Unit Trusts: A Wide Variety of OfferingsQuantitative Equity Strategies Enhanced Indexing

Alternative Strategies Multi-Asset Class

Closed-End Strategies Alternative Income

Fixed Income Strategies Traditional Taxable and Tax-Free

International & Global Strategies Developed and Developing Markets Thematic, Specialty and Sector StrategiesFocused and Research-Based

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Unit Investment Trust Advantages Speed to market, transparency, product innovation

Fixed-income yield curve, credit mix opportunities.

Tactical portfolio ideas centered around specific firm research and market shifts.

Rollover features offer high percentage growth opportunities for FAs, sponsors, investors

Internal expense ratio advantages over open-end funds

Access into new investment strategies, markets by utilizing instruments such as CEFs, ETFs

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Unit Investment Trust Industry Challenges Pricing structurevs. ETFsvs. load-waived open-end fundspotential in 401k type plans

Industry Data Reporting vs. ETF, Open-End Fund Industry

Visibility at investor, media, analytical firm levels

Growth Opportunities outside US

Investor analytics/demographics

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Q & A

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Thank you for attending!

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