What are UITs?
UITs are a fixed portfolio of stocks, bonds or other securities. These types of portfolios allow investors to know what securities are held within a UIT as of the date of deposit, as well as the mandatory termination date of the trust. A trust may terminate early as described in the prospectus. Like mutual funds, UITs offer an attractive opportunity for investors to own a portfolio of securities via a low minimum, liquid investment. Actively managed funds continually buy and sell securities, thereby changing their investment mix. The securities held in a UIT generally remain fixed.
How are UITs created?
Each Claymore UIT is created based on a stated investment objective. The trust sponsor selects the securities for, and also determines the mandatory life of the trust.
What are some of the features of UITs?
UITs may provide a convenient approach to investing. Some features of UITs include:
• a mandatory termination date1
• diversification
• daily liquidity2
• fully invested3
• known portfolio4
• no manager driven style drift
1 UITs may terminate early as described in the prospectus.
2 Redemptions will be at a price that may be more or less than the original price paid.
3 The trust may hold limited cash positions.
4 As of date of deposit.
When do I receive dividend payments?
Distributions paid from dividends, if any, are paid either monthly, quarterly, semi-annually or annually, depending on the provisions set forth in each trust's prospectus.
Is there a minimum investment for Claymore UITs?
There is a minimum investment of $250 for all Claymore UITs.
How do I sell my units?
Investors may sell their units on any business day by contacting their financial professional or, in some cases, the trustee. Unit prices are available daily on the UIT home page or through your financial professional. We often refer to the sale price of units as the liquidation price. Investors pay any remaining deferred sales fee when they sell or redeem their units. Certain broker-dealers may charge a transaction fee for processing unit redemptions or sale requests. The liquidation price may be more or less than the original amount paid.
What are my options when a trust matures?
Option #1: Rollover at a reduced sales charge
At a reduced sales charge, investors may roll over into a new series of the same trust, if available, or any other Claymore UIT available in the primary market*.
*Maturity rollover is considered a taxable event. If rolling from a non-Claymore trust, the roll must be done from a trust with a similar investment strategy. Please refer to each trust's prospectus for complete rollover option information. Investors should be aware that there is a time limit to notify the trustee of the rollover.
Option #2: Maturity
Investors may do nothing and allow the portfolio units to mature. The trust will liquidate and they will receive a cash distribution of the trust's proceeds, if any.
Option #3: In-kind distribution
Investors may generally request an in-kind distribution of the stocks underlying the units if the value of a particular account is $25,000 or more at either the time of purchase or maturity. Please see additional provisions set forth in the prospectus. Claymore Unit Investment Trusts are long-term strategies and investors should consider their ability to invest in successive portfolios, if available. Investors should consult their tax advisor to determine tax consequences associated with an investment from one portfolio to the next, if available. Claymore Securities, Inc. does not provide tax advice. Please refer to the trust prospectus for more complete in-kind distribution information. In-kind distribution is generally available for stocks traded and held in the United States. In-kind distribution may be modified or discountinued at any time without notice.
Do UITs have a sales charge?
There are characteristically two components of the UIT sales charge: the transactional sales fee and the creation and development ("C&D") fee. The transactional sales fee typically has both an initial and a deferred component and is a percentage of the Public Offering Price.* The C&D fee is paid to the sponsor of the trust for creating and developing the trust, which includes determining the trust objective, policies, composition and size, selecting service providers and information services as well as providing other similar administrative and ministerial functions. Your trust pays the creation and development fee as a fixed dollar amount at the close of the initial offering period. The sponsor does not use the fee to pay distribution expenses or as compensation for sales efforts.
*For unit prices other than $10, percentages of initial and deferred sales charges will vary. Early redemption of units will still cause payment of the deferred sales charge. Please refer to each trust's prospectus for complete sales charge information.
How are individual securities chosen for a trust?
The selection process used for each trust differs from one portfolio to the next. In general, through proprietary research, Claymore seeks to select securities believed to posess the ability to achieve each individual portfolio's investment objective.
Can a security held in a UIT be removed at any time?
While it is rare, a security held in a UIT may be removed from a portfolio under certain circumstances, such as a significant decline in credit rating. By and large, securities held in a UIT remain fixed for the life of the trust, regardless of market value.
How do I purchase units of a trust?
Investors can buy units of any Claymore unit investment trust at the public offering price on any business day by contacting their financial professional. Keep in mind that this price will be more or less than the original offering price. Public offering prices of units of any Claymore trust are available daily on the UIT home page.
Are UITs suitable for retirement accounts?
Certain UITs may be well suited for purchase by Individual Retirement Accounts ("IRAs") or other qualified retirement plans. Investors should consult their attorney or tax advisor regarding tax consequences associated with units held outside one of these tax-deferred vehicles. Please note that Claymore Securities, Inc. does not offer tax advice.
What types of UITs does Claymore offer?
Claymore UITs are available in a wide array of asset classes including domestic and global equity, taxable and municipal income, as well as theme, sector and multi-asset portfolios. An investor should consult a financial representative to best consider which UITs may be a fit for his or her investment strategy.