The sharp growth of unit investment trusts in the late 1990s was halted last year, and it may be the emergence of exchange-traded funds that is the biggest reason, according to industry analysts.

Unit investment trusts, also known as defined asset funds, buy and hold a set basket of equities or fixed income securities for a predetermined period of time. They expire when the bonds mature or, in the case of equity unit investment trusts, at a specified date. Investors in unit investment trusts receive an undivided interest in the principal and income of the trust in proportion to how much they invest. John Nuveen & Co. of Chicago and Merrill Lynch and Smith Barney, both of New York, have offered unit investment trusts for over 35 years. Eight companies currently offer them, according to the ICI.

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