Types of Investment Companies

• Unit Investment Trust

• Managed Investment Trust
Unit Investment Trust
• Offers fixed portfolio, generally of stocks and bonds
• Reedemable units for investors for a fixed period of time
• Key features:
• All income and payment for principals from the portfolio are paid out
by the funds trustees to the shareholders
• Sponsers of units earn their profit by selling shares in the trust at
premium to the cost of acquiring the underlying assets
Managed Investment trust
• Companies focused to get higher return performance
• There is professional management team to manage the portfolio

• There are two types of managed companies:

 Open-End Investment Companies
 Closed-End Investment Companies
Open-End Investment Companies
• Companies that mobilizes the savings from small investors and invests
them in securities
• Earn interest through interest and dividends
• Also known as mutual funds
• Sells shares directly to investors
• Shares offered are unlimited
• Prices for open-end funds are fixed
• Do not pay taxes on their own, but pass on the tax burden to their
investors
Closed-End Investment Companies
• Issues fixed number of shares by putting out  an initial public offering
(IPO)
• Investors need to commission to the broker.
• Investors purchase shares through a brokerage firm on the secondary
market.
• Funds can be traded at any time of the day when the market is open
• Purchased or sold at whatever price the fund is trading at during the
day