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A Unit Investment Trust (UIT) holds a fixed portfolio of securities, most often comprised of tax-exempt municipal bonds but also commonly consisting of government bonds, corporate bonds, mortgage-backed securities or common stocks. Unlike mutual funds, where securities are bought and sold as the portfolio manager deems appropriate considering the current market environment, the securities in a UIT are not actively managed. A UIT is sponsored by a securities firm or group of firms. The sponsor assembles a portfolio of stocks or bonds that remains unchanged for the life of the trust, which may run from 6 months to 30 years. Investors purchase trust units which represent ownership in the trust portfolio and an opportunity to share in the UIT's income and capital gains and appreciation, if any.

• Interest payments from bonds in a bond trust are distributed on a regular basis to investors in the trust, and each time a bond in the trust matures, the repaid principal is distributed to trust investors. When the last bond matures, the trust is liquidated.



• Similarly, dividend payments from stocks in a stock trust are distributed to investors on a regular basis. At the end of a specified period (set when the trust was created), the stocks are sold at that day's market price, the proceeds from the sale are distributed to investors, and the trust is liquidated.

Their steady, predictable income stream makes bond UITs appropriate for many retirees, although this very fixed-interest feature makes them more susceptible to inflation than bond mutual funds. Because stock UITs are subject to the volatility of the stock market, there is no such certainty of return in a stock trust; however, stock trusts do offer potential for capital appreciation. UITs must be purchased through a H&R Block Financial Advisors Investment Center registered representative. H&R Block Financial Advisors Investment Center registered representatives do not offer investment advice. However, they can provide you with more information on specific UIT offerings (including charges and expenses) and a free prospectus. If you decide that you might be interested in investing in UITs, you can call us at 1-800-HR BLOCK for this information. Since investors incur a sales charge for their purchase, UITs typically are not attractive short-term investments. Read the prospectus carefully before you invest or send money.