Fixed Portfolio

A unit investment trust differs from an open-end management company in that a UIT:

1. A.Trades on an exchange throughout the day at a price set by supply and demandThat describes a closed-end fund or an exchange-traded product, not a UIT structure generally.
2. B.Holds a fixed portfolio that is not actively managed and has a stated termination dateCorrect. Fixed, unmanaged, and finite in life - the three defining UIT traits.
3. C.May charge a performance fee based on the portfolio's appreciationThere is no manager to compensate. A UIT has no ongoing portfolio management to pay for.
4. D.Has a board of directors that hires and fires an investment adviserThis is the open-end management company structure. A UIT has trustees but no managing adviser to supervise.

Why: A UIT buys a fixed portfolio at inception, holds it, and terminates on a stated date. There is no investment adviser making ongoing decisions and no board of directors, which is why UIT expenses are typically low. An open-end fund, by contrast, is actively supervised by an adviser overseen by a board and has no termination date.

A unit investment trust (UIT) is characterized by:

1. A.A fixed, unmanaged portfolio with a termination dateCorrect - fixed and self-liquidating.
2. B.An actively traded, manager-run portfolioThat describes an open-end management company (a mutual fund), where an adviser buys and sells continuously. A UIT has no portfolio manager - the securities are selected once at creation and simply held.
3. C.Perpetual active managementThis gets two features wrong at once: a UIT is neither actively managed nor perpetual. It has a stated termination date, at which the trust liquidates and pays out its holders.
4. D.No defined holdingsThis is the opposite of a UIT. Its holdings are defined and disclosed at the outset and then stay fixed, which is precisely what makes the portfolio unmanaged.

Why: A UIT has a fixed portfolio, is not actively managed, and has a preset termination date.