The legal structure of an Exchange Traded Product (ETP) as legally defined and stated in the prospectus. There are five primary legal structures: open-end investment companies (most typical), unit investment trusts, limited partnerships, senior, unsecured, unsubordinated debt and grantor trusts. Legal structure is updated by Morningstar as necessary and as stated in the prospectus.

• Open-End Investment Company — This is an SEC-registered investment company under the Investment Company Act of 1940. This type of structure permits shares to be continuously issued and redeemed. The majority of ETPs are structured this way. With this structure, the portfolio is managed by an advisor and can hold many types of equity and fixed income securities, including derivatives. Capital gain and income distributions are governed by number of tax laws and dividends are allowed to be re-invested in the fund.
• Unit Investment Trusts (UITs) — This is another type of SEC-registered investment vehicle under the Investment Company Act of 1940. The two main types of Unit Investment Trusts (UITs) are stock (equity) trusts and bond (fixed income) trusts. The portfolio of securities held by the UIT is managed by a trustee. Investors purchase units that represent an undivided ownership in the entire portfolio of securities held by the UIT. Capital gain and income distributions are not permitted to be re-invested in the trust.
• Grantor Trust — Grantor Trusts are not registered under the Investment Company Act of 1940 and are not subject to the same regulatory requirements as mutual funds. This structure is used mostly with Holding Company Depository Receipts (HOLDRS), commodities and currencies. Exchange Grantor Trusts hold a fixed portfolio of assets and issues shares based on the value of those assets. The trust's holdings are locked; they cannot be added to or subtracted from at a later date and they are not rebalanced. Investors in grantor trusts are considered shareholders of the underlying assets held by the trust.
• Limited Partnership — Some ETPs are organized as partnerships, rather than corporations or trusts. This structure is used mostly for commodity ETPs. A partnership can hold derivatives and securities. Because partnerships are pass-through entities for tax purposes, the activities of the ETP get passed on to shareholders. This may result in investors incurring tax on profits without having received a distribution. Funds generally aren't required to distribute cash corresponding to an investor's partnership taxable income. Thus, investors may have a tax liability that will have to be paid from other sources. Partnerships issue a Schedule K-1 (Form 1065) rather than a Form 1099 form for tax purposes. It lists the partner's share of income, deductions, credits, etc. Speak with your tax advisor to determine how this may affect you.
• Senior, Unsecured, Unsubordinated Debt — An uncollateralized debt obligation which ranks below secured and collateralized debt of the same issuer in payment priority.