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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1998
SECURITIES ACT FILE NO. 333-28245
INVESTMENT COMPANY ACT FILE NO. 811-08237
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 5 [X]
POST-EFFECTIVE AMENDMENT NO. [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 5 [X]
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READER'S DIGEST AUTOMATIC
COMMON EXCHANGE SECURITY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
C/O GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 902-1000
KENNETH L. JOSSELYN, ESQ.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C>
ROBERT E. BUCKHOLZ, JR., ESQ. DONALD B. BRANT, JR., ESQ.
SULLIVAN & CROMWELL MILBANK, TWEED, HADLEY & MCCLOY
125 BROAD STREET ONE CHASE MANHATTAN PLAZA
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10005
</TABLE>
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. [ ]
[ ] This form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is 333- .
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
Trust Automatic Common
Exchange Securities......... $11,854,496 $23.938 $283,772,926 $83,714(2)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Of this amount, $3,030.31 was previously paid by the Registrant in
connection with the initial filing of this Registration Statement on June 2,
1997 and $78,932.69 was previously paid by the Registrant in connection with
the filing of Amendment No. 2 to this Registration Statement on December 18,
1997. The balance of $1,751 is submitted herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part A -- Report of Independent Accountants. Statement of Assets and
Liabilities.
Part B -- None.
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(b) Exhibits
2.a.(i) Trust Agreement*
2.a.(ii) Form of Amended and Restated Trust Agreement*
2.d Form of Specimen Certificate of Trust Automatic Common Exchange Security
(included in Exhibit 2.a.(ii))*
2.h Form of Underwriting Agreement*
2.j Form of Custodian Agreement*
2.k.(i) Form of Administration Agreement*
2.k.(ii) Form of Paying Agent Agreement*
2.k.(iii) Form of Purchase Agreement*
2.k.(iv) Form of Collateral Agreement*
2.k.(v) Form of Fund Expense Agreement*
2.k.(vi) Form of Fund Indemnity Agreement*
2.l Opinion and Consent of Counsel to the Trust
2.n.(i) Tax Opinion of Counsel to the Trust
2.n.(iii) Consent of Independent Public Accountants
2.n.(iv) Consents to Being Named as Trustee*
2.p Form of Subscription Agreement*
2.r Financial Data Schedule*
</TABLE>
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* Previously filed.
ITEM 25. MARKETING ARRANGEMENTS
See the Form of Underwriting Agreement to be filed as Exhibit 2.h to this
Registration Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:
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Registration fees............................................. $ 81,963.00
New York Stock Exchange listing fee........................... 46,150.00
Printing (other than certificates)............................ 100,000.00
Fees and expenses of qualification under state securities laws
(excluding fees of counsel)................................. 0.00
Accounting fees and expenses.................................. 13,000.00
Legal fees and expenses....................................... 200,000.00
NASD fees..................................................... 30,500.00
Miscellaneous................................................. 128,387.00
Total............................................... $600,000.00
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</TABLE>
C-1
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ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Prior to June 2, 1997 the Trust had no existence. As of the effective date,
the Trust will have entered into a Subscription Agreement for one Security with
Goldman, Sachs & Co. and an Underwriting Agreement with respect to 10,308,257
Securities with Goldman, Sachs & Co. and Lazard Freres & Co. LLC, as
representatives of the Underwriters named therein.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
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<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
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Trust Automatic Common Exchange Securities.................... 1
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ITEM 29. INDEMNIFICATION
The Underwriting Agreement, to be filed as Exhibit 2.h to this Registration
Statement, provides for indemnification to the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
The Amended and Restated Trust Agreement filed as Exhibit 2.a.(ii) to this
Registration Statement provides for indemnification to each Trustee against any
claim or liability incurred in acting as Trustee of the Trust, except in the
case of willful misfeasance, bad faith, gross negligence or reckless disregard
of the Trustee's duties. The Custodian Agreement, Administration Agreement and
Paying Agent Agreement filed as Exhibits 2.j, 2.k.(i) and 2.k.(iii) to this
Registration Statement provide for indemnification to the Custodian,
Administrator and Paying Agent against any loss or expense incurred in the
performance of their obligations under the respective agreements, unless such
loss or expense is due to willful misfeasance, bad faith, gross negligence or
reckless disregard of their obligations. The Fund Indemnity Agreement filed as
Exhibit 2.k.(vi) to this Registration Statement provides that Goldman Sachs will
indemnify the Trust for certain indemnification expenses incurred under the
Amended and Restated Trust Agreement, the Custodian Agreement, the
Administration Agreement and the Paying Agent Agreement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Not Applicable.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The Trust's accounts, books and other documents are currently located at
the offices of the Registrant, c/o Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004 and at the offices of The Bank of New York, the
Registrant's Administrator, Custodian, paying agent, transfer agent and
registrar.
C-2
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ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(a) The Registrant hereby undertakes to suspend offering of its units until
it amends its prospectus if (1) subsequent to the effective date of its
Registration Statement, the net asset value declines more than 10 percent from
its net asset value as of the effective date of the Registration Statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.
(b) The Registrant hereby undertakes that (i) for the purpose of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the Registrant
under Rule 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; (ii) for the
purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of the securities at that time shall be deemed to be the initial
bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, State of New York, on the 10th
day of February, 1998.
READER'S DIGEST AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By: /s/ ERIC S. SCHWARTZ
------------------------------------
Eric S. Schwartz
Trustee
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registration Statement has been signed below by the following person, in
the capacities and on the date indicated.
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<CAPTION>
NAME TITLE DATE
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<C> <S> <C>
/s/ ERIC S. SCHWARTZ Principal Executive Officer, February 10, 1998
- ---------------------------------------- Principal Financial Officer,
Eric S. Schwartz Principal Accounting Officer
and Trustee
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C-4
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EXHIBIT INDEX
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<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
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2.a.(i) Trust Agreement*
2.a.(ii) Form of Amended and Restated Trust Agreement*
2.d Form of Specimen Certificate of Trust Automatic Common Exchange Security
(included in Exhibit 2.a.(ii))*
2.h Form of Underwriting Agreement*
2.j Form of Custodian Agreement*
2.k.(i) Form of Administration Agreement*
2.k.(ii) Form of Paying Agent Agreement*
2.k.(iii) Form of Purchase Contract*
2.k.(iv) Form of Collateral Agreement*
2.k.(v) Form of Fund Expense Agreement*
2.k.(vi) Form of Fund Indemnity Agreement*
2.l Opinion and Consent of Counsel to the Trust
2.n.(i) Tax Opinion of Counsel to the Trust
2.n.(iii) Consent of Independent Public Accountants
2.n.(iv) Consents to Being Named as Trustee*
2.p Form of Subscription Agreement*
2.r Financial Data Schedule*
</TABLE>
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* Previously filed.
<PAGE> 1
Exhibit 2.l
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
February 5, 1998
Reader's Digest Automatic Common Exchange Security Trust,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Sirs:
In connection with the registration under the Securities Act of 1933
(the "Act") and the Investment Company Act of 1940 (the "Investment Company
Act") of the Trust Automatic Common Exchange Securities (the "Securities") of
Reader's Digest Automatic Common Exchange Security Trust, a New York trust (the
"Trust"), we, as your counsel, have examined such records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such
examination, we advise you that, in
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Reader's Digest Automatic Common Exchange -2-
Security Trust
our opinion, when the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, the Trust's
Amended and Restated Trust Agreement has been duly executed and delivered by the
parties thereto, and the Securities have been duly issued and sold as
contemplated by the Registration Statement, the Securities will be validly
issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the
United States and the laws of the State of New York, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"Validity of Securities" in the Prospectus. In giving such consent, we do not
thereby admit that we are in a category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
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Exhibit 2.n.(i)
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
February 5, 1998
Reader's Digest Automatic Common
Exchange Security Trust,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Sirs:
We have acted as special tax counsel to Reader's Digest Automatic Common
Exchange Security Trust (the "Trust") in connection with the Registration
Statement on Form N-2 of the Trust filed with the Securities and Exchange
Commission (the "Registration Statement") and hereby confirm to you our opinion
as set forth under the heading "Certain Federal Income Tax considerations" in
the Prospectus included in the Registration Statement.
We hereby consent to the filing with the Securities and Exchange
Commission of this letter as an exhibit to the Registration Statement and the
reference to us under the heading "Certain Federal Income Tax Considerations".
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Sullivan & Cromwell
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Exhibit 2.n.(iii)
CONSENT OF INDEPENDENT ACCOUNTANTS
--------------------------
We consent to the inclusion in this registration statement on Form N-2
(Securities Act File No. 333-28245 and Investment Company Act File No.
811-08237) of our report dated February 5, 1998, on our audit of the statement
of assets and liabilities of Reader's Digest Automatic Common Exchange Security
Trust. We also consent to the reference to our firm under the caption
"Experts."
/s/ Coopers & Lybrand L.L.P.
New York, New York
February 5, 1998
