Looking at the defined portfolios of Chicago's

John Nuveen & Co.

is like a taking trip down the snack isle of your local supermarket: There's lots to choose from, but you're not really sure you should be consuming this stuff.

Nuveen has been adding to its list of equity unit investment trusts at a feverish pace, each one targeting a more selective -- and hot -- segment of the market. Since last fall, it has introduced UITs focused on the Internet, e-commerce and, just last month, "Internet-related bandwidth." Those trendy products go along with some of Nuveen's more broadly based UITs targeting the

S&P 500

,

Dow Jones

indices,

Nasdaq 100

and sectors such as pharmaceuticals and precious metals.

UITs have become one of the

hottest investment vehicles around. Now, Nuveen is getting ready to roll out another one of these packaged investment products. The

1999 America's Most Admired Companies Portfolio

is based upon the annual

Fortune

magazine list, which itself is based on a survey of the business elite.

Unit investment trusts are fixed baskets of stocks, units of which can be bought and sold like mutual funds. The trust has a fixed end date, usually a few years, though investors can get out before that. When the trust expires, investors are paid their initial investment and return -- minus sales charges and fees -- for the entire investment in a lump sum. Like index funds, they're not actively managed.

The Most Admired portfolio will go active April 15 with a two-year term. William Adams, director of Nuveen's UITs -- which the firm calls "defined portfolios" -- says the

Fortune

list is a good premise on which to base an investment vehicle.

"Their research identifies companies that excel not only in financial terms but in other important attributes that we believe are drivers of long-term performance," says Adams.

Heck, the magazine endorses it.

"We are delighted to have John Nuveen create the first portfolio based on

Fortune's

America's Most Admired Companies list," says the magazine's president, Jolene Sykes, in a gushing press release. Nuveen says it compensates the magazine for use of its name through a standard licensing agreement (terms were not revealed) and plans to introduce portfolios based on future years' lists.

But financial advisers can be less than enthusiastic about UITs.

"The pros are that you know what you're getting up front. It's transparent," says Chris Cordaro, an adviser at

Bugen, Stuart, Korn & Cordaro

in Chatham, N.J. But for him, the advantages end there. "I'm trying to think of more pros."

One of the cons is costs, he says. Typically sold through brokers, UITs can carry high sales commissions. The Most Admired portfolio will charge 4.5% and tack on 0.3% per year in expenses. The investments can be tax efficient, though, because there isn't any trading in or out of the portfolio.

Cordaro also dislikes UITs because he says they're ready-made for marketing gimmicks.

"It goes with whatever theme you can put together," Cordaro says. "The 10 most admired companies, the 10 best companies for Y2K, you name it. Is there any academic research that says these are the 10 best companies you could invest in over the next five years? I don't even think

Fortune

says that."

Adams, Nuveen's UIT director, says the trusts don't lend themselves to gimmicks any more than any other product in any other industry. The trusts are simply good opportunities for small investors to get a piece of big, expensive companies, he says. After all, you can get in to the Most Admired portfolio for as little as $1,000, or $500 through an education IRA.

The companies on the

Fortune

list are nothing to sneeze at:

But

Fortune's

survey is based less on fundamental research and more on, well, surveys. Each year, the magazine commissions a poll of 10,000 executives, analysts and corporate board members, asking which companies they admire most. Admiration is a fickle lover and can be garnered for any number of reasons -- which may or may not have anything to do with a company's stock.

Still, in recent years, the stocks of the companies on the list tended to perform well.

"That list that you mentioned

for 1999 is high-quality, large-cap, quasi-growth stocks," says Kian Ghazi, senior analyst at

Midtown Research

in New York. "That's been the fuel of the market. That's been the place to be for the last couple of years."

And Adams points out that

Fortune

does ask survey participants finance-related questions, such as how companies rate in long-term investment value, financial soundness and use of corporate assets.

In fact, you have to go back to 1993 to find a Most Admired group that has underperformed the S&P 500 as a whole. The companies in that year's list rose an average of 143.8% through mid-March of this year, whereas the S&P 500 climbed 187%. But if you go back only two years -- which is the term of Nuveen's new trust -- the companies on 1997's list rose an average of 91.2% compared to a 65.6% gain in the S&P.

With just 10 companies in the portfolio, though, Cordaro says investors might be better off buying the stocks directly. With $10,000, an investor would pay $510 in sales charges and expenses over the two-year life of the term for the UIT.

But many online brokers have commissions as low as $10 to $25 per trade, and you can buy just one share of stock. So, if you bought $1,000 each of these 10 stocks, you could buy the Most Admired list for a bargain-basement commission price of $250. (Of course, a single B share of

Berkshire Hathaway

(BRK.B) - Get Report

trades at $2,444, so you would have to allocate more to it, and thus underweight all the other companies in the portfolio.)

Though it would be difficult to equally weight all the stocks, you would have complete control over your investment. And even Adams concedes that sophisticated investors with higher amounts of money to invest could do so more cheaply. But the investment would be hard to replicate for the UIT's minimum non-IRA investment of $1,000.

Cordaro also points out that, unlike a mutual fund, a UIT can't easily dump a poor-performing stock. Adams says that Nuveen can change companies in its UITs under "extraordinary" circumstances, such as a company declaring bankruptcy.

But Ghazi, the analyst, says one of the weaknesses of the Most Admired portfolio is that it's based on just 10 stocks. "Why not diversify more broadly beyond 10 names and buy a mutual fund of large-cap growth stocks?" Ghazi asks. "You get more diversification with a lower cost, on average."

Of course, Nuveen doesn't pitch UITs as a replacement for mutual funds. Adams says they're simply an investment vehicle coming of age at a time when investors' options are more numerous than ever.

Pointing to SPDRs, or

Standard & Poor's

Depositary Receipts, which are similar baskets of stocks that trade on the

American Stock Exchange

, Adams says UITs are an idea whose time has come.

"The market place is just beginning to see that this is another way to complement other investments," Adams says. "They're certainly not for everyone, but for a lot of people, they're the right thing."

See Results

April 15 is fast approaching. For some insights that may help you with your return, read our series, TSC Does Mike Bauer's Taxes. Yes, we really do a reader's tax return to illustrate how tax laws apply to real people. And join the series author, TSC tax reporter Tracy Byrnes, and Martin Nissenbaum of Ernst & Young for a Yahoo! Chat Tuesday at 5 p.m. EST.