File No. 33-60317
CIK #896977
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen American Capital Equity Opportunity Trust, Series 15
(Exact Name of Trust)
Van Kampen American Capital Distributors, Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on April 24, 1997 pursuant to paragraph (b) of Rule 485.
Van Kampen American Capital Equity Opportunity Trust, Series 15
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.Please retain both parts of this Prospectus for future reference.
THE TRUST
The Central Equity Trust, Worldwide Series 2 (the "Trust" or "
Central Equity Trust" ) is one unit investment trust in the Van Kampen
American Capital Equity Opportunity Trust, Series 15 (the "Fund" ). The
Central Equity Trust, Worldwide Series offers investors the opportunity to
purchase Units representing proportionate interests in a fixed, diversified
portfolio of equity securities issued primarily by domestic and foreign
electric, gas, water and telecommunications companies, certain of which are in
American Depositary Receipt form ("ADRs" ). The Trust also contains
equity securities issued by real estate investment trusts ("REITs" ).
Unless terminated earlier, the Trust will terminate on July 1, 2002 and any
securities then held will, within a reasonable time thereafter, be liquidated
or distributed by the Trustee. Any Securities liquidated at termination will
be sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units.
PUBLIC OFFERING PRICE
The secondary market Public Offering Price of the Trust will include the
aggregate underlying value of the Securities in the Trust, the applicable
sales charge as described herein, and cash, if any, in the Income and Capital
Accounts held or owned by the Trust. See "Summary of Essential Financial
Information" .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is April 16, 1997
CENTRAL EQUITY TRUST, WORLDWIDE SERIES 2
Van Kampen American Capital Equity Opportunity Trust, Series 15
Summary of Essential Financial Information
As of March 5, 1997
Underwriter & Supervisor: Edward Jones
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Central
Equity
Trust
Worldwide
--------------
<S> <C>
General Information
Number of Units................................................................................... 797,127
Fractional Undivided Interest in the Trust per Unit .............................................. 1/797,127
Public Offering Price: ...........................................................................
Aggregate Value of Securities in Portfolio <F1>.................................................. $ 17,222,924
Aggregate Value of Securities per Unit (including accumulated dividends)......................... $ 21.81
Sales Charge 4.4% (4.6030% of Aggregate Value of Securities excluding principal cash) per Unit... $ 1.01
Public Offering Price per Unit <F2>.............................................................. $ 22.82
Redemption Price per Unit......................................................................... $ 21.81
Secondary Market Repurchase Price per Unit........................................................ $ 21.81
Excess of Public Offering Price per Unit Over Redemption Price per Unit........................... $ 1.01
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.005 per Unit
Evaluator's Annual Fee ...............Maximum of $.005 per Unit
Evaluations for purpose of sale, purchase or redemption of Units are made as of 4:00
P.M. Eastern time on days of trading on the New York Stock Exchange next following
receipt of an order for a sale or purchase of Units or receipt by The Bank of New
York of Units tendered for redemption.
Date of Deposit.......................July 25, 1995
Mandatory Termination Date............July 1, 2002
The Trust may be terminated if the net asset value of such Trust is less than $500,000
unless the net asset value of such Trust deposits has exceeded $15,000,000, then the Trust
Minimum Termination Value.............Agreement may be terminated if the net asset value of such Trust is less than $3,000,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Special Information......................................
Calculation of Estimated Net Annual Dividends per Unit...
Estimated Gross Annual Dividends per Unit............... $ .91158
Less: Estimated Expenses per Unit....................... $ .04314
Estimated Net Annual Dividends per Unit................. $ .86844
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee...........................$.016 per Unit
Estimated Annual Organizational Expenses<F5>...$.0174 per Unit
Income Distribution Record Date................TENTH day of March, June, September, and December.
Income Distribution Date.......................TWENTY-FIFTH day of March, June, September and December.
Capital Account Record Date....................TENTH day of December.
Capital Account Distribution Date <F4>.........TWENTY-FIFTH day of December.
- ----------
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at the
closing sale price, or if no such price exists, or if the Equity Securities
are not listed, at the closing bid price thereof. The aggregate value of
Securities of foreign issuers represents the U.S. dollar value on the basis of
the bid side value of the related currency exchange rates at the Evaluation
Time.
<F2>Anyone ordering Units will have added to the Public Offering Price a pro rata
share of any cash in the Income and Capital Accounts.
<F3>Effective on each July 28, commencing July 28, 1996, the secondary sales
charge will decrease by .5 of 1% to a minimum sales charge of 1.9%. See "
Public Offering-Offering Price" in Part Two.
<F4>Distributions from the Capital Account will be made on the Income Distribution
Date to Unitholders of record on the corresponding Income Distribution Record
Date if the amount available for distribution equals at least $1.00 per 100
Units.
<F5>The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee but not including
the expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over a five year
period. See "Expenses of the Trust" in Part Two and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
</TABLE>
PORTFOLIO
The Central Equity Trust, Worldwide consists of 35 different issues of Equity
Securities, issued primarily by domestic and foreign electric, gas, water and
telecommunications companies.
PER UNIT INFORMATION
<TABLE>
<CAPTION>
1995<F1> 1996
----------- -----------
<S> <C> <C>
Net asset value per Unit at beginning of period............................................................ $ 20.11 $ 21.42
=========== ===========
Net asset value per Unit at end of period.................................................................. $ 21.42 $ 21.33
=========== ===========
Distributions to Unitholders of investment income including accumulated dividends, paid on units redeemed
(average Units outstanding for entire period).............................................................. $ 0.31 $ 1.29
=========== ===========
Distributions to Unitholders from Equity Security redemption proceeds (average Units outstanding for
entire period)............................................................................................. $ -- $ 1.60
=========== ===========
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at end of period)........ $ 1.40 $ 1.31
=========== ===========
Units outstanding at end of period......................................................................... 550,000 764,000
</TABLE>
- ----------
For the period from July 25, 1995 (date of deposit) through December 31, 1995.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Central Equity Trust, Worldwide Series 2: (Van Kampen
American Capital Equity Opportunity Trust, Series15):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of the Central Equity Trust,
Worldwide Series 2 (Van Kampen American Capital Equity Opportunity Trust,
Series15) as of December 31, 1996, and the related statements of operations
and changes in net assets for the period from July 25, 1995 (date of deposit)
through December 31, 1995 and the year ended December 31, 1996. These
statements are the responsibility of the Trustee and the Sponsor. Our
responsibility is to express an opinion on such statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1996 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Central Equity Trust,
Worldwide Series 2 (Van Kampen American Capital Equity Opportunity Trust,
Series15) as of December 31, 1996, and the results of operations and changes
in net assets for the period from July 25,1995 (date of deposit) through
December 31, 1995 and the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 14, 1997
<TABLE>
CENTRAL EQUITY TRUST, WORLDWIDE
SERIES 2
Statements of Condition
December 31, 1996
<CAPTION>
Central
Equity
Trust
Worldwide
<S> <C>
Trust property
Securities at market value, (cost $14,390,892) (note 1)............................... $ 16,167,899
Accumulated dividends................................................................. 71,067
Receivable for securities sold........................................................ 743,208
Organizational costs.................................................................. 33,100
$ 17,015,274
===============
Liabilities and interest to Unitholders
Cash overdraft........................................................................ $ 717,419
Interest to Unitholders............................................................... 16,297,855
$ 17,015,274
===============
Analyses of Net Assets
Interest of Unitholders (764,000 Units of fractional undivided interest outstanding)
Cost to original investors of 764,000 Units (note 1).................................. $ 16,316,000
Less initial underwriting commission (note 3)......................................... 791,919
---------------
15,524,081
Less redemption of 0 Units............................................................ --
---------------
15,524,081
Undistributed net investment income
Net investment income................................................................. 1,015,328
Less distributions to Unitholders..................................................... 1,024,227
---------------
(8,899)
Realized gain (loss) on Security sale or redemption................................... 147,640
Unrealized appreciation (depreciation) of Securities (note 2)......................... 1,777,007
Distributions to Unitholders of Security sale or redemption proceeds.................. (1,141,974)
Net asset value to Unitholders........................................................ $ 16,297,855
===============
Net asset value per Unit (764,000 Units outstanding)................................... $ 21.33
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
CENTRAL EQUITY TRUST, WORLDWIDE SERIES 2
Statements of Operations
Period from July 25, 1995 (date of deposit) through December 31, 1995
and the year ended December 31, 1996
<CAPTION>
1995 1996
----------- -------------
<S> <C> <C>
Investment income
Dividend income..................................................... $ 141,095 $ 920,772
Expenses.............................................................
Trustee fees and expenses........................................... 2,161 19,632
Evaluator fees...................................................... 442 3,591
Supervisory fees.................................................... -- 2,556
Organizational fees................................................. 8,700 9,457
----------- -------------
Total expenses...................................................... 11,303 35,236
----------- -------------
Net investment income............................................... 129,792 885,536
Realized gain (loss) from Securities sale or redemption
Proceeds............................................................ -- 1,280,829
Cost................................................................ -- 1,133,189
----------- -------------
Realized gain (loss)................................................ -- 147,640
Net change in unrealized appreciation (depreciation) of Securities... 772,396 1,004,611
----------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 902,188 $ 2,037,787
=========== =============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
Period from July 25, 1995 (date of deposit) through December 31, 1995
and the year ended December 31, 1996
<CAPTION>
1995 1996
-------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income.............................................................................. $ 129,792 $ 885,536
Realized gain (loss) on Securities sale or redemption.............................................. -- 147,640
Net change in unrealized appreciation (depreciation) of Securities................................. 772,396 1,004,611
-------------- ---------------
Net increase (decrease) in net assets resulting from operations.................................... 902,188 2,037,787
Distributions to Unitholders from:
Net investment income.............................................................................. (102,270) (921,957)
Securities sale or redemption proceeds............................................................. -- (1,141,974)
Redemption of Units -- --
-------------- ---------------
Total increase (decrease).......................................................................... 799,918 (26,144)
Net asset value to Unitholders
Beginning of period................................................................................ 1,912,844 11,779,048
Additional Securities purchased.................................................................... 9,066,286 4,544,951
-------------- ---------------
End of period (including undistributed (overdistributed) net investment income of $27,522 and
$(8,899), respectively)............................................................................. $ 11,779,048 $ 16,297,855
============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
CENTRAL EQUITY TRUST, WORLD WIDE SERIES 2
PORTFOLIO as of December 31,
1996
<CAPTION>
Valuation of
Securities at
Number December 31,
Portfolio of Market Value 1996
Number Shares Name of Issuer Per Share (Note 1)
- ----------------------- ---------------------------------------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
1 28,174 American Water Works Company, Incorporated $ 20.625 $ 581,089
- -----------------------------------------------------------------------------------------------------------------
2 10,420 Ameritech Corporation 60.625 631,712
- -----------------------------------------------------------------------------------------------------------------
3 4,125 ASEA AB 111.750 460,969
- -----------------------------------------------------------------------------------------------------------------
4 22,277 Atmos Energy Corporation 23.875 531,863
- -----------------------------------------------------------------------------------------------------------------
5 17,632 Cable & Wireless PLC 24.625 434,188
- -----------------------------------------------------------------------------------------------------------------
6 28,757 China Light & Power Limited 4.330 124,518
- -----------------------------------------------------------------------------------------------------------------
7 26,041 Citizens Utilities Company 11.125 289,706
- -----------------------------------------------------------------------------------------------------------------
8 22,706 DPL, Incorporated 24.500 556,297
- -----------------------------------------------------------------------------------------------------------------
9 9,931 Empresa Nacional de Electricidad "ENDESA" 70.000 695,170
- -----------------------------------------------------------------------------------------------------------------
10 16,411 Energen Corporation 30.250 496,433
- -----------------------------------------------------------------------------------------------------------------
11 6,494 Enron Corporation 43.125 280,054
- -----------------------------------------------------------------------------------------------------------------
12 13,262 FPL Group Incorporated 46.000 610,052
- -----------------------------------------------------------------------------------------------------------------
13 107,387 Hong Kong Electric Holdings Limited 3.220 345,786
- -----------------------------------------------------------------------------------------------------------------
14 26,694 Hyder Plc 12.703 339,102
- -----------------------------------------------------------------------------------------------------------------
15 28,832 Hyder Plc Preferred 1.759 50,719
- -----------------------------------------------------------------------------------------------------------------
16 11,460 KN Energy, Incorporated 39.250 449,805
- -----------------------------------------------------------------------------------------------------------------
17 18,702 KU Energy Corporation 30.000 561,060
- -----------------------------------------------------------------------------------------------------------------
18 24,295 MCN Corporation 28.875 701,518
- -----------------------------------------------------------------------------------------------------------------
19 23,363 Mobile Gas Service Corporation 28.250 660,005
- -----------------------------------------------------------------------------------------------------------------
20 6,374 National Grid 33.375 212,732
- -----------------------------------------------------------------------------------------------------------------
21 12,834 National Power PLC 33.875 434,752
- -----------------------------------------------------------------------------------------------------------------
22 24,967 Piedmont Natural Gas Company, Incorporated 23.375 583,604
- -----------------------------------------------------------------------------------------------------------------
23 9,167 PowerGen PLC 39.500 362,096
- -----------------------------------------------------------------------------------------------------------------
24 3,513 Royal Dutch Petroleum Company 170.750 599,845
- -----------------------------------------------------------------------------------------------------------------
25 10,467 SBC Communications, Incorporated 51.750 541,667
- -----------------------------------------------------------------------------------------------------------------
26 19,833 Southern Company 22.625 448,722
- -----------------------------------------------------------------------------------------------------------------
27 42,968 Southern Electric PLC 13.500 580,068
- -----------------------------------------------------------------------------------------------------------------
28 16,808 SIGCORP, Incorporated 34.625 581,977
- -----------------------------------------------------------------------------------------------------------------
29 5,027 Telefonica de Argentina 25.875 130,074
- -----------------------------------------------------------------------------------------------------------------
30 14,041 Union Electric Company 38.500 540,578
- -----------------------------------------------------------------------------------------------------------------
31 39,728 United Dominion Realty Trust 15.500 615,784
- -----------------------------------------------------------------------------------------------------------------
32 11,842 US West, Incorporated 32.250 381,904
- -----------------------------------------------------------------------------------------------------------------
33 11,842 U.S. West Media Group 18.500 219,077
- -----------------------------------------------------------------------------------------------------------------
34 15,280 Weingarten Realty Investors 40.625 620,750
- -----------------------------------------------------------------------------------------------------------------
35 16,655 Western Resources, Incorporated 30.875 514,223
- -----------------------------------------------------------------------------------------------------------------
708,309 $ 16,167,899
========== =================
</TABLE>
The accompanying notes are an integral part of these statements.
CENTRAL EQUITY TRUST, WORLD WIDE SERIES 2
Notes to Financial Statements
December 31, 1995 and 1996
- --------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange are
valued at the last closing sales price or if no such price exists, or if the
Equity Securities are not listed, at the closing bid price thereof. The
aggregate value of Securities of foreign issuers represents the U.S. dollar
value on the basis of the bid side value of the related currency exchange
rates at the Evaluation Time.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange or relevent stock
exchange, on the closing sale prices on the exchange. The cost was
determined on the day of the various Dates of Deposit and in the case of
foreign traded securities included brokerage commissions.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as
described in Note 1 and (3) accumulated dividends thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes - The Trust has elected and intends to qualify on a
continuing basis for special federal income tax treatment as a "regulated
investment company" under the Internal Revenue Code (the "Code" ).
If the Trust so qualifies and timely distributes to Unitholders 90% or more of
its taxable income (without regard of its net capital gain, i.e. the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
Organizational Costs - The Trust will bear all or a portion of its
organizational costs, which will be deferred and amortized over five years.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Central
Equity
Trust
Worldwide
-------------
<S> <C>
Unrealized Appreciation $ 1,873,952
Unrealized Depreciation (96,945)
-------------
$ 1,777,007
=============
</TABLE>
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Underwriter intends
to maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities
in the portfolio of the Trust valued as described in Note 1, plus accumulated
dividends to the date of settlement. If the supply of Units exceeds demand, or
for other business reasons, the Underwriter may discontinue purchases of Units
at such prices. In the event that a market is not maintained for the Units, a
Unitholder desiring to dispose of his Units may be able to do so only by
tendering such Units to the Trustee for redemption at the redemption price.
Cost to Investors - The cost to original investors was based on the underlying
value of the Securities per Unit on the date of an investor's purchase, plus a
sales charge of 4.9% of the public offering price which is equivalent to
5.152% of the aggregate offering price of the Securities. The secondary market
cost to investors is based on the determination of the underlying value of the
Securities per Unit on the date of an investor's purchase plus a sales charge
of 4.9% of the public offering price which is 5.152% of the underlying value
of the Securities. Effective on each July 28, commencing July 28, 1996, the
secondary sales charge will decrease by .5 of 1% to a minimum sales charge of
1.9%.
NOTE 3 - OTHER (continued)
Compensation of Evaluator and Supervisor - the Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.005 per Unit, not to
exceed the aggregate cost of the Supervisor for providing such services to all
applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index.
Central Equity Trust
Prospectus Part Two
WORLDWIDE SERIES 2
UTILITY & TELECOMMUNICATIONS
PORTFOLIO
The Fund. Central Equity Trust, Worldwide Series 2, Utility &
Telecommunications Portfolio (the "Central Equity Trust" or "
Trust" ) is a unit investment trust which comprises Van Kampen American
Capital Equity Opportunity Trust, Series 15 (the "Fund" ). The Central
Equity Trust offers investors the opportunity to purchase Units representing
proportionate interests in a fixed, diversified portfolio of equity securities
issued primarily by domestic and foreign electric, gas, water and
telecommunications companies, certain of which are in American Depositary
Receipt form ("ADRs" ). The Trust also contains equity securities
issued by real estate investment trusts ("REITs" ). Unless terminated
earlier, the Trust will terminate on July 1, 2002 and any Securities then held
will, within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable
in cash to a Unitholder upon termination may be more or less than the amount
such Unitholder paid for his Units.
Objective of the Trust. The objective of the Central Equity Trust is to
provide investors with a simple and convenient way to receive current and
increasing income and the potential for capital appreciation through a
diversified portfolio primarily consisting of utility and telecommunications
securities issued by both domestic and selected foreign companies (certain of
which may be in ADR form) (the "Equity Securities" or "
Securities" ). See "Portfolio" in Part One. There is, of course, no
guarantee that the objective of the Trust will be achieved.
Public Offering Price. The secondary market Public Offering Price of the Trust
includes the aggregate underlying value of the Securities in the Trust, the
applicable sales charge as described herein, and cash, if any, in the Income
and Capital Accounts held or owned by the Trust.The minimum purchase is 75
Units. See "Public Offering."
Additional Deposits. The Sponsor may from time to time deposit additional
Securities in the Trust, provided it maintains, as nearly as is practicable,
the original proportionate relationship of the Equity Securities in the
Trust's portfolio. See "The Trust."
Dividend and Capital Distributions. Distributions of dividends received, and
capital, if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the "Summary of Essential Financial Information" in Part One. Any
distribution of income and/or capital will be net of the expenses of the
Trust. See "Federal Taxation." Additionally, upon termination of the
Trust, the Trustee will distribute, upon surrender of Units for redemption, to
each Unitholder his pro rata share of the Trust's assets, less expenses, in
the manner set forth under "Rights of Unitholders--Distributions of Income
and Capital."
Secondary Market for Units. Although not obligated to do so, Edward Jones
("EJ" or the "Underwriter" ) intends to maintain a market for
Units of the Trust and offer to repurchase such Units at prices which are
based on the aggregate underlying value of Equity Securities in the Trust
(generally determined by the closing sale or bid prices) plus or minus cash,
if any, in the Capital and Income Accounts of the Trust. If a secondary market
is not maintained, a Unitholder may redeem Units through redemption at prices
based upon the aggregate underlying value of the Equity Securities in the
Trust (generally determined by the closing sale or bid prices) plus or minus a
pro rata share of cash, if any, in the Capital and Income Accounts of the
Trust. See "Rights of Unitholders--Redemption of Units."
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
Both Parts of this Prospectus should be retained for future reference.
This Prospectus is dated as of the date of the Prospectus Part One
accompanying this Prospectus Part Two.
Edward Jones
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Termination. Commencing on the Mandatory Termination Date Equity Securities
will begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of the
Equity Securities. Written notice of any termination of the Trust shall be
given by the Trustee to each Unitholder at his address appearing on the
registration books of the Trust maintained by the Trustee. Unitholders will
receive a cash distribution from the sale of the remaining Securities within a
reasonable time after the Trust is terminated. See "Trust
Administration--Amendment or Termination."
Reinvestment Option. Unitholders whose accounts are with the Underwriter and
who own 75 or more Units will be provided the opportunity by the Underwriter
to automatically reinvest their distributions into Units at the aggregate
underlying value of the Equity Securities in the Trust, if Units are available
at the time of reinvestment. See "Rights of Unitholders--Reinvestment
Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the
possible deterioration of either the financial condition of the issuers or the
general condition of domestic or international stock markets, governmental,
political, economic and fiscal policies of foreign countries, small market
capitalization and volatility of certain foreign markets, volatile interest
rates, economic recession, currency exchange fluctuations, foreign tax
withholding, and differences between domestic and foreign legal, auditing,
brokerage and economic standards. The Trust is not actively managed and Equity
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Units of the
Trust are not deposits or obligations of, or guaranteed or endorsed by, any
bank and are not generally insured or otherwise protected by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency
and involve investment risk, including the possible loss of principal. See
"Risk Factors."
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 15 is comprised
of one unit investment trust, Central Equity Trust, Worldwide Series 2,
Utility & Telecommunications Portfolio. The Trust was created under the laws
of the State of New York pursuant to a Trust Indenture and Agreement (the "
Trust Agreement" ), dated as of Initial Date of Deposit, among Van Kampen
American Capital Distributors, Inc., as Sponsor, American Portfolio Evaluation
Services, a division of an affiliate of the Sponsor, as Evaluator, Edward
Jones, as Supervisor, and The Bank of New York, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities including delivery statements relating to contracts for the
purchase of certain such Securities and an irrevocable letter of credit issued
by a financial institution in the amount required for such purchases.
Thereafter, the Trustee, in exchange for such Securities (and contracts) so
deposited, delivered to the Sponsor documentation evidencing the ownership of
Units of the Central Equity Trust. Unless otherwise terminated as provided in
the Trust Agreement, the Trust will terminate on the Mandatory Termination
Date, and Securities then held will within a reasonable time thereafter be
liquidated or distributed by the Trustee.
Additional Units of the Trust may be issued at any time by depositing in the
Trust additional Securities or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by the
Trust as a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities
into the Trust, provided that such additional deposits will be in amounts
which will maintain, as nearly as practicable, the original proportionate
relationship of the Securities in the Trust's portfolio based on the number of
shares of each of the Securities. Any deposit by the Sponsor of additional
Securities will duplicate, as nearly as is practicable, this original
proportionate relationship and not the actual proportionate relationship on
the subsequent date of deposit, since the actual proportionate relationship
may be different than the original proportionate relationship. Any such
difference may be due to the sale, redemption or liquidation of any of the
Securities deposited in the Trust on the Initial, or any subsequent, Date of
Deposit.
Each Unit of the Trust initially offered represents an undivided interest in
the Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being
deposited by the Sponsor, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase or decrease accordingly,
although the actual interest in the Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor or the Underwriter,
or until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Central Equity Trust are to provide the potential for
capital appreciation and increasing dividend income through a diversified
portfolio, not less than 65% of the total assets of which at the Initial Date
of Deposit consisted of utility and telecommunications Securities issued by
both foreign and domestic issuers. In addition, the Trust will also contain
equity securities issued by real estate investment trusts ("REITs" ).
The portfolio is described under "Trust Portfolio" herein and "
Portfolio" in Part One. An investor will be subjected to taxation on the
dividend income received from the Trust and on gains from the sale or
liquidation of Securities (see "Federal Taxation" ). Investors should
be aware that there is not any guarantee that the objectives of the Trust will
be achieved because they are subject to the continuing ability of the
respective Security issuers to continue to declare and pay dividends and
because the market value of the Securities can be affected by a variety of
factors. Common stocks may be especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. In addition to the risks
generally associated with the ownership of common stock, there are additional
risks associated with ownership of foreign securities and ADRs, including
among others, exchange rate fluctuations, volatile interest rates and foreign
economic conditions. Investors should be aware that there can be no assurance
that the value of the underlying Securities will increase or that the issuers
of the Equity Securities will pay dividends on outstanding common shares. Any
distributions of income will generally depend upon the declaration of
dividends by the issuers of the Securities and the declaration of any
dividends depends upon several factors including the financial condition of
the issuers and general economic conditions.
In selecting particular Equity Securities for the Trust, Edward Jones
considered a number of factors including the extent to which international
utilities will benefit from increasing consumer demand in less developed
countries, historical growth rates and rates of return on capital, financial
condition and resources, management skills, competition, geographic and
industrial diversification and, with respect to electric, gas and water
utilities, certain industry factors such as regulatory environment and energy
sources. The Underwriter also considered the prospective growth in earnings
and dividends in relation to price/earnings ratios, yield and risk.
In selecting the Equity Securities the Underwriter also considered the ability
of the Equity Securities to outpace inflation. While inflation in the United
States is currently relatively low, the United States and other countries have
historically experienced periods of double-digit inflation. While the prices
of equity securities will fluctuate over time, equity securities have
outperformed the rate of inflation and other less risky investments, such as
United States government bonds and United States Treasury bills. From 1972
through 1994, domestic utility stocks delivered an average annual growth rate
of 12.48% and from 1980 through 1994 the average annual dividends per share of
domestic utility stocks grew at an average annual rate of approximately 4.23%
(both as measured by the Standard & Poor's Utilities Index). Past performance
is, however, no guarantee of future results.
The following chart shows the average annual compounded rate of return of
selected asset classes from 1972 through 1994 compared to the rate of
inflation over the same period. Of course, this chart represents past
performance of these investment categories and there is no guarantee of future
results, either of these categories or of the Trust. The Trust also has sales
charges and expenses which are not reflected in the chart.
<TABLE>
<CAPTION>
<S> <C>
U.S. Utility Stocks (Standard & Poor's Utilities Index) 12.48%
Long-term U.S. Government bonds 8.69%
U.S. Treasury bills (short-term) 7.30%
Inflation (Consumer Price Index) 5.89%
</TABLE>
As of May 25, 1995, the Standard & Poor's Utilities Index consisted of 48
United States utility stocks: 25 electric company stocks, 14 natural gas
company stocks and 9 telephone company stocks. An investment in the Trust
should be made with an understanding that a significant number of the equities
in the portfolio are not included in the Standard & Poor's Utilities Index.
Furthermore, while the Standard & Poor's Utilities Index includes only United
States issuers, the Trust portfolio also includes a significant number of
foreign issuers. Units are not designed to correlate with this or any other
index, nor are their prices expected to correlate with this or any other index.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no
longer meet such criteria. Should an Equity Security no longer meet such
criteria, such Equity Security will not, simply as a result of such fact, be
removed from the portfolio of the Trust.
Investors should be aware that the Trust is not a "managed" fund and
as a result the adverse financial condition of a company will not result in
its elimination from the portfolio except under extraordinary circumstances
(see "Trust Administration--Portfolio Administration" ). In addition,
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected by Edward Jones as of the
date the Securities were purchased by the Trust. The Trust may continue to
purchase or hold Securities originally selected through this process even
though the evaluation of the attractiveness of the Securities may have changed
and, if the evaluation were performed again at that time, the Securities would
not be selected for the Trust.
TRUST PORTFOLIO
The Central Equity Trust consists of several different issues of Equity
Securities, most of which are issued by companies diversified within the
utility and telecommunications industries including common stocks of foreign
issuers, certain of which are ADRs. The Trust also includes equity securities
issued by REITs. All of the Equity Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market.
The Trust consists of (a) the Securities listed under "Portfolio" in
Part One as may continue to be held from time to time in the Trust, (b) any
additional Securities acquired and held by the Trust pursuant to the
provisions of the Trust Agreement and (c) any cash held in the Income and
Capital Accounts. Neither the Sponsor nor the Trustee shall be liable in any
way for any failure in any of the Securities. However, should any contract for
the purchase of any of the Securities initially deposited hereunder fail, the
Sponsor will, unless substantially all of the moneys held in the Trust to
cover such purchase are reinvested in substitute Securities in accordance with
the Trust Agreement, refund the cash and sales charge attributable to such
failed contract to all Unitholders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Although the portfolio is not
managed, the Sponsor may instruct the Trustee to sell Equity Securities under
certain limited circumstances. See "Trust Administration--Portfolio
Administration." Equity Securities, however, will not be sold by the Trust
to take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation.
The Underwriter in its general securities business acts as agent or principal
in connection with the purchase and sale of equity securities, including the
Equity Securities in the Trust, and may act as a market maker in certain of
the Equity Securities. The Underwriter also from time to time may issue
reports on and make recommendations relating to equity securities, which may
include the Equity Securities. From time to time, the Underwriter may act as
investment banker or an employee or an affiliate may be a director of a
company whose shares are included among the Equity Securities; nonpublic
information concerning such a company would not be disclosed to the
Underwriter or for the benefit of the Trust under such circumstances.
The Trust contains 35 issues of Securities. On the business day prior to the
Initial Date of Deposit 16.9% of the aggregate market value of the Securities
were issued by entities located in the United Kingdom. Such concentration may
involve more risk than if such Securities were issued by issuers located in
several jurisdictions. On the business day prior to the Initial Date of
Deposit, the aggregate market value of the Securities in the Trust was
$1,912,844.
On the Initial Date of Deposit the diversification of Securities by type and
location of issuer was as follows:
<TABLE>
<CAPTION>
Combination
Gas &
Gas Electric Electric Water Telecommunications Other TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
United States 16% 14% 13% 3% 13% 9% 68%
Argentina 1 1
Canada 3 3
China 1 1 1
Hong Kong 2 1 3
Netherlands 3 3
Spain 3 3
Sweden 2 2
United Kingdom 12 2 2 6
----------------------------------------------------------------------------
Total Foreign 3% 18% 0% 2% 3% 6% 32%
----------------------------------------------------------------------------
T O T A L 19% 32% 13% 5% 16% 15% 100%
============================================================================
</TABLE>
RISK FACTORS
The Trust will invest in Securities of domestic and foreign companies in the
electric, gas, water, telecommunications and in Securities of REITs. In view
of this, an investment in the Trust should be made with an understanding of
the risks inherent in those industries.
Utilities Industries. The Trust may invest in both domestic and foreign
electric, gas, water and/or telephone company common stock. In the United
States such companies are considered public utilities and are generally
subject to extensive regulation of certain portions of their business by state
utility commissions which, for example, establish and approve the rates that
may be charged for their services and determine the appropriate rate of return
on an approved asset base. Certain public utilities have difficulty from time
to time persuading regulators to grant the rate increases necessary to
maintain an adequate return on investment and voters in many states have the
ability to impose limits on rate adjustments. There are substantial
differences between the regulatory policies and practices of various
jurisdictions, and any given regulatory agency may make major shifts in policy
from time to time. There is no assurance that regulatory authorities will in
the future grant rate increases or that any such increases will be adequate to
permit the payment of dividends on common stocks. Additionally, existing and
possible future regulatory legislation may make it even more difficult for
these utilities to obtain adequate rate relief. Similar regulations and
considerations and the risk inherent with them may exist with respect to
foreign companies in these industries. However, the Sponsor cannot say to what
extent and/or what countries and jurisdictions such regulations may exist.
Domestic and foreign issuers of public utility securities may face other
problems, including difficulty in financing large construction programs and
raising capital during inflationary periods, rising costs of fuels and the
transportation of fossil fuels, uncertainty of transmission service costs,
changes in tax laws which may adversely affect a utility's ability to operate
in a profitable manner, difficulty in estimating future demand for
electricity, gas, water and telephone in certain regions, restrictions on
operations and increased costs and delays attributable to environmental
regulations and the effects of energy conservation. There may also be risks
associated with a particular type of public utility.
In the United States, governmental authorities may from time to time review
existing requirements and impose additional requirements governing the
licensing, construction and operation of power plants by electric utilities.
On the other hand, electric companies in general have been favorably affected
by the full or near completion of major construction programs, and many
utility companies have generated cash flows in excess of current operating
expenses and some construction expenditures, permitting some degree of
diversification into unregulated businesses. The Energy Policy Act of 1992
(the "Energy Act" ) provides for, among other things, the promotion of
competition in the electric utility industry. The Energy Act reforms the
Public Utility Holding Company Act of 1935 by lifting restrictions on
independent producers of electric power who build and operate generating
plants in order to produce power for sale to utilities at competitive rates.
Further, the Energy Act provides that transmission lines will now be made
available to any producer, utility or independent entity who is willing to pay
for the transmission of power. This access makes the utility companies'
traditional customer base more uncertain and could have a significant effect
on the accuracy of, and the ability to make, the long-term demand projections
that are necessary to determine the need for new construction of plants and
for other capital expenditures.
Gas pipeline and distribution companies have had difficulties in adjusting to
short and surplus energy supplies, enforcing or being required to comply with
long-term contracts and avoiding litigation from their customers, on the one
hand, or suppliers, on the other. Recent deregulatory efforts by the Federal
Energy Regulatory Commission ("FERC" ) have resulted in a number of
important changes in the sale, transportation and delivery of natural gas.
FERC Orders have caused pipeline companies to become merely carriers, as
opposed to sellers, of natural gas, which in turn has allowed local
distribution companies ("LDCs" ) to negotiate purchases directly with
producers. These changes however, have resulted in significant transition
costs and increased competition. For example, LDCs now face the risk of losing
major customers who can fill their requirements through direct negotiation
with producers if the LDCs fail to provide competitive pricing. Finally,
although there has been deregulation by FERC, state regulators retain the
power to scrutinize LDC performance and rate setting. Certain LDCs may have
difficulty adjusting to the deregulated environment or minimizing the
transition costs in connection therewith and could therefore risk rejection of
rate increases to make up for those costs.
Water companies are subject to federal and state environmental laws and
regulation of water quality. Pending federal and state environmental rules and
regulations may require increased expenditures by the public water utilities
and may increase substantially operating costs and capital requirements for
those companies.
Because certain aspects of telephone company operations are being deregulated,
telephone companies face increasing competitive pressures that require the
commitment of substantial capital, technological and marketing resources.
Foreign utilities may face similar concerns and their securities may,
therefore, be subject to similar risks.
Each of the problems referred to above could adversely affect the ability and
the inclination of these public utilities to declare or to pay dividends or to
pay interest and the ability of holders of common stock to realize any value
from the assets of the issuer upon liquidation or bankruptcy. In the United
States, the electric, gas, water and telephone utilities which are issuers of
the Securities have been experiencing or may experience one or more of these
problems in varying degrees. Moreover, price disparities within selected
utility groups and discrepancies in relation to averages and indices have
occurred frequently for reasons not directly related to the general movement
of price levels of utility common stocks. Causes of these disparities and
discrepancies include changes in the overall demand for or supply of various
securities (including the potentially depressing effect of new stock
offerings), and changes in investment objectives, market expectations or cash
requirements of other purchasers and sellers of securities.
Furthermore, in the United States the Public Utility Holding Company Act of
1935 (the "1935 Act" ) regulates, among other things, certain
acquisitions of voting securities of electric utility companies and gas
utility companies by anyone who is an "affiliate" of a public utility
company (a person or organized group of persons that directly or indirectly
owns, controls or holds with power to vote 5% or more of the outstanding
voting securities of a public utility company). In addition, the 1935 Act
requires a "holding company" (among other categories, a company which
directly or indirectly owns, controls or holds with power to vote 10% or more
of the outstanding voting securities of a public utility company or a "
holding company" ) to register as such with the Securities and Exchange
Commission and be otherwise subject to certain restrictions on the acquisition
of securities and other interest in public utility companies. In order to
avoid becoming an "affiliate" , the Trust has adopted an investment
restriction that it will not purchase securities of a public electric or gas
company if by reason thereof the Trust would hold 5% or more of the
outstanding voting securities of the issuer. Nevertheless, if the Trust were
considered to be a member of an organized group of persons, the 1935 Act might
limit the Trust's acquisitions of the voting securities of public utility
companies by reason of the control by the group of 5% or more of the voting
securities of a public utility company. The Sponsor believes that even if the
Trust is appropriately included in a group, it is unlikely that the holdings
of such group will aggregate to as much as 5% of the voting securities of any
public electric or gas utility company.
To the extent the risks and concerns discussed concerning public utilities
reflect United States regulatory matters specifically, similar types of
concerns may exist with respect to foreign public utilities.
The issuers of utility securities have undertaken in the past and may
undertake in the future various types of reorganization, such as spin-offs,
split-offs, mergers, creation of holding companies and asset sales, in order
to, among other things, avoid or minimize the effects of regulatory
activities. Depending on the circumstances, the Sponsor may direct the Trustee
to either hold or sell the Securities that are distributed or otherwise the
subject of such an event. (See "Trust Administration--Portfolio
Administration" herein). In which case the Trust may contain Securities of
issuers not subject to the types of regulatory risks described above, but
subject instead to more general market risks.
Telecommunications Industries. In addition to the stock of companies in the
utilities industries described above, the Sponsor may deposit securities of
telecommunications companies in the Trust.
Telecommunications is defined as the science and technology of communicating
by electronic means. Companies in the telecommunications industry provide
products or services to facilitate the transmission of voice, data and video
communications electronically, such as global telephone service, wireless
communications services and equipment including cellular telephone, microwave
and satellite communications, paging and other emerging wireless technologies,
electric components and communications equipment, video conferencing,
electronic mail, local and wide area networking, and linkage of data and word
processing systems, publishing and information systems, videotext and
teletext, emerging technologies combining television, telephone and computer
systems and broadcasting over all media. Such entities include traditional
telephone companies, long-distance providers, cellular/wireless
telecommunication companies, cable television providers, telecommunications
equipment manufacturers and satellite communications companies. To some
degree, the deregulation of traditional telephone utilities and the growth of
other telecommunications technologies and companies is blurring the
distinction between these two types of companies.
Two key differences between telecommunications companies, as defined above,
and utilities in the electric, gas, water and traditional telephone industries
are the regulatory environment and competition. In the United States, for
example, local telephone service is currently regulated at the state level on
a return-on-equity basis, much like the electric, gas and water utilities.
However, other companies included in the telecommunications industry are not
regulated in the same manner or are not regulated at all. So far as the
competitive environment is concerned utilities have traditionally enjoyed
monopoly positions in their distinct service areas. To a certain degree,
however, telecommunications companies have broken into areas that had been
controlled by telephone company monopolies, such as providing long distance
service. Additionally, because the telecommunications companies do business in
unregulated areas, they are also subjected to greater competition and the
risks that come with the competition, such as pressures on pricing and
operating margins.
Real Estate Investment Trusts. REITs are financial vehicles that have as their
objective the pooling of capital from a number of investors in order to
participate directly in real estate ownership or financing. REITs are general
fully integrated operating companies that have interests in income-producing
real estate. REITs are differentiated by the types of real estate properties
held and the actual geographic location of properties and fall into two major
categories: equity REITs emphasize direct property investment, holding their
invested assets primarily in the ownership of real estate or other equity
interests, while mortgage REITs concentrate on real estate financing, holding
their assets primarily in mortgages secured by real estate. As of the Initial
Date of Deposit, the Trust contains two issues of equity REITs. REITs obtain
capital funds for investment in underlying real estate assets by selling debt
or equity securities on the public or institutional capital markets or by bank
borrowings. Thus, the returns on common equities of the REITs in which the
Trust invests will be significantly affected by changes in costs of capital
and, particularly in the case of highly "leveraged" REITs, i.e. those
with large amounts of borrowings outstanding, by changes in the level of
interest rates. The objective of an equity REIT is to purchase
income-producing real estate properties in order to generate high levels of
cash flow from rental income and a gradual asset appreciation, and they
typically invest in properties such as office, retail, industrial, hotel and
apartment buildings and health care facilities.
Foreign Issuers. Since certain of the Equity Securities in the Trust may
consist of securities of foreign issuers, an investment in the Trust involves
some investment risks that are different in some respects from an investment
in a trust that invests entirely in securities of domestic issuers. Those
investment risks include future political and governmental restrictions which
might adversely affect the payment or receipt of payment of dividends on the
relevant Equity Securities. In addition, for the foreign issuers that are not
subject to the reporting requirements of the Securities Exchange Act of 1934,
there may be less publicly available information than is available from a
domestic issuer. Also, foreign issuers are not necessarily subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. However, due
to the nature of the issuers of Equity Securities included in the Trust, the
Sponsor believes that adequate information will be available to allow the
Supervisor to provide portfolio surveillance.
The securities of certain of the foreign issuers in the Trust are in ADR form.
ADRs evidence American Depositary Receipts which represent common stock
deposited with a custodian in a depositary. American Depositary Shares, and
receipts therefor (ADRs), are issued by an American bank or trust company to
evidence ownership of underlying securities issued by a foreign corporation.
These instruments may not necessarily be denominated in the same currency as
the securities into which they may be converted. For purposes of the
discussion herein, the term ADR generally includes American Depositary Shares.
ADRs may be sponsored or unsponsored. In an unsponsored facility, the
depositary initiates and arranges the facility at the request of market makers
and acts as agent for the ADR holder, while the company itself is not involved
in the transaction. In a sponsored facility, the issuing company initiates the
facility and agrees to pay certain administrative and shareholder-related
expenses. Sponsored facilities use a single depositary and entail a
contractual relationship between the issuer, the shareholder and the
depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. The depositary bank that issues an
ADR generally charges a fee, based on the price of the ADR, upon issuance and
cancellation of the ADR. This fee would be in addition to the brokerage
commissions paid upon the acquisition or surrender of the security. In
addition, the depositary bank incurs expenses in connection with the
conversion of dividends or other cash distributions paid in local currency
into United States dollars and such expenses are deducted from the amount of
the dividend or distribution paid to holders, resulting in a lower payout per
underlying share represented by the ADR than would be the case if the
underlying share were held directly. Certain tax considerations, including tax
rate differentials and withholding requirements, arising from applications of
the tax laws of one nation to nationals of another and from certain practices
in the ADR market may also exist with respect to certain ADRs. In varying
degrees, any or all of these factors may affect the value of the ADR compared
with the value of the underlying shares in the local market. In addition, the
rights of holders of ADRs may be different than those of holders of the
underlying shares, and the market for ADRs may be less liquid than that for
the underlying shares. ADRs are registered securities pursuant to the
Securities Act of 1933 and may be subject to the reporting requirements of the
Securities Exchange Act of 1934.
For those Equity Securities that are ADRs, currency fluctuations will affect
the United States dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the value of
the ADRs and consequently the value of the Equity Securities. The foreign
issuers of securities that are ADRs may pay dividends in foreign currencies
which must be converted into dollars. Most foreign currencies have fluctuated
widely in value against the United States dollar for many reasons, including
supply and demand of the respective currency, the soundness of the world
economy and the strength of the respective economy as compared to the
economies of the United States and other countries. Therefore, for any
securities of issuers (whether or not they are in ADR form) whose earnings are
stated in foreign currencies, or which pay dividends in foreign currencies or
which are traded in foreign currencies, there is a risk that their United
States dollar value will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities are subject to exchange control
restrictions under existing law which would materially interfere with payment
to the Trust of dividends due on, or proceeds from the sale of, the Equity
Securities. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payment to the Trust. In addition, the adoption of exchange control
regulations and other legal restrictions could have an adverse impact on the
marketability of international securities in the Trust and on the ability of
the Trust to satisfy its obligation to redeem Units tendered to the Trustee
for redemption.
Exchange Rate. Certain of the Securities may be principally traded in foreign
currencies and as such involve investment risks that are substantially
different from an investment in a fund which invests in securities that are
principally traded in United States dollars. The United States dollar value of
the portfolio (and hence of the Units) and of the distributions from the
portfolio will vary with fluctuations in the United States dollar foreign
exchange rates for the relevant currency. Most foreign currencies have
fluctuated widely in value against the United States dollar for many reasons,
including supply and demand of the respective currency, the rate of inflation
in the respective economies compared to the United States, the impact of
interest rate differentials between different currencies on the movement of
foreign currency rates, the balance of imports and exports of goods and
services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973, dominated
by the Bretton Woods Treaty, which established a system of fixed exchange
rates and the convertibility of the United States dollar into gold through
foreign central banks. Starting in 1971, growing volatility in the foreign
exchange markets caused the United States to abandon gold convertibility and
to effect a small devaluation of the United States dollar. In 1973, the system
of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily
currency valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have continued to
"peg" their currencies to the United States dollar although there has
been some interest in recent years in "pegging" currencies to "
baskets" of other currencies or to a Special Drawing Right administered by
the International Monetary Fund. Currencies are generally traded by leading
international commercial banks and institutional investors (including
corporate treasurers, money managers, pension funds and insurance companies).
From time to time, central banks in a number of countries also are major
buyers and sellers of foreign currencies, mostly for the purpose of preventing
or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual
and proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital). Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing or selling
large amounts of the same currency or currencies. However, over the long term,
the currency of a country with a low rate of inflation and a favorable balance
of trade should increase in value relative to the currency of a country with a
high rate of inflation and deficits in the balance of trade.
The Evaluator will estimate current exchange rates based on activity in the
relevant currency exchange market. However, since these markets may be
volatile and are constantly changing, depending on the activity at any
particular time of the large international commercial banks, various central
banks, large multi-national corporations, speculators and other buyers and
sellers of foreign currencies, and since actual foreign currency transactions
may not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars a Trust would
receive had the Trustee sold any particular currency in a market. The foreign
exchange transactions of a Trust will be concluded by the Trustee with foreign
exchange dealers acting as principals on a spot (i.e., cash) buying basis.
Although foreign exchange dealers trade on a net basis, they do realize a
profit based upon the difference between the price at which they are willing
to buy a particular currency (bid price) and the price at which they are
willing to sell the currency (offer price).
The following table sets forth the high and low United States dollar exchange
rates for the past seven years for the currencies in which foreign Securities
in the Trust Portfolio are denominated. Fluctuations in or stability of rates
during the period shown are not necessarily indicative of fluctuations in or
stability of exchange rates over the term of the Trust.
<TABLE>
<CAPTION>
Annual
Period CANADIAN DOLLAR HONG KONG DOLLAR BRITISH POUND
- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HIGH LOW HIGH LOW HIGH LOW
------------------------------------------------------
1988 1.2990 1.1858 7.9115 7.7690 1.9050 1.6630
1989 1.2102 1.1570 7.8165 7.7750 1.8243 1.5120
1990 1.2068 1.1316 7.8170 7.7400 1.9830 1.5960
1991 1.1645 1.1203 7.8025 7.7155 2.0045 1.6025
1992 1.2887 1.1420 7.7770 7.6966 2.0063 1.4990
1993 1.3446 1.2425 7.7655 7.7215 1.5875 1.4180
1994 1.4065 1.3109 7.7501 7.7225 1.6382 1.4620
------------------------------------------------------
</TABLE>
General. An investment in Units should be made with an understanding of the
risks which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of
the issuers change. These perceptions are based on unpredictable factors
including expectations regarding government, economic, monetary and fiscal
policies, inflation and interest rates, economic expansion or contraction, and
global or regional political, economic or banking crises. Shareholders of
common stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or holders of
debt obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trust have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board of directors
and have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities may be expected to fluctuate over the
life of the Fund to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Cumulative preferred stock dividends must be
paid before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
The principal trading market for certain of the Equity Securities may be in
the over-the-counter market. As a result, the existence of a liquid trading
market for the Equity Securities may depend on whether dealers will make a
market in the Equity Securities. There can be no assurance that a market will
be made for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity Securities in
any markets made. In addition, the Trust may be restricted under the
Investment Company Act of 1940 from selling Equity Securities to the Sponsor.
The price at which the Equity Securities may be sold to meet redemptions, and
the value of the Trust, will be adversely affected if trading markets for the
Equity Securities are limited or absent.
Unitholders will be unable to dispose of any of the Equity Securities in the
portfolio, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all
of the voting stocks in the Trust and will vote such stocks in accordance with
the instructions of the Sponsor.
FEDERAL TAXATION
The Trust has elected and intends to qualify on a continuing basis for special
federal income tax treatment as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code" ). If the
Trust so qualifies and timely distributes to Unitholders 90% or more of its
taxable income (without regard to its net capital gain, i.e., the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders. In
addition, to the extent the Trust timely distributes to Unitholders at least
98% of its taxable income (including any net capital gain), it will not be
subject to the 4% excise tax on certain undistributed income of "regulated
investment companies." Because the Trust intends to timely distribute its
taxable income (including any net capital gain), it is anticipated that the
Trust will not be subject to federal income tax or the excise tax. Although
all or a portion of the Trust's taxable income (including any net capital
gain) for the taxable year may be distributed to Unitholders shortly after the
end of the calendar year, such a distribution will be treated for federal
income tax purposes as having been received by Unitholders during the calendar
year just ended.
Distributions to Unitholders of the Trust's taxable income (other than its net
capital gain) will be taxable as ordinary income to Unitholders. To the extent
that distributions to a Unitholder in any year exceed the Trust's current and
accumulated earnings and profits, they will be treated as a return of capital
and will reduce the Unitholder's basis in his Units and, to the extent that
they exceed his basis, will be treated as a gain from the sale of his Units as
discussed below.
Distributions of the Trust's net capital gain which are properly designated as
capital gain dividends by the Trust will be taxable to Unitholders as
long-term capital gain, regardless of the length of time the Units have been
held by a Unitholder. A Unitholder may recognize a taxable gain or loss if the
Unitholder sells or redeems his Units. Any gain or loss arising from (or
treated as arising from) the sale or redemption of Units will generally be a
capital gain or loss, except in the case of a dealer or a financial
institution. For taxpayers other than corporations, net capital gains are
presently subject to a maximum stated marginal tax rate of 28%. However, it
should be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed. A capital loss is long-term if the asset
is held for more than one year and short-term if held for one year or less. If
a Unitholder holds Units for six months or less and subsequently sells such
Units at a loss, the loss will be treated as a long-term capital loss to the
extent that any long- term capital gain distribution is made with respect to
such Units during the six-month period or less that the Unitholder owns the
Units.
The Revenue Reconciliation Act of 1993 (the "Act" ) raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Act, the Act includes a
provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes. When Units are held by
corporate Unitholders, Trust distributions may qualify for the 70% dividends
received deduction, subject to limitations otherwise applicable to the
availability of the deduction, to the extent the distribution is attributable
to dividends received by the Trust from United States corporations (other than
Real Estate Investment Trusts) and is designated by the Trust as being
eligible for such deduction. To the extent dividends received by the Trust are
attributable to foreign corporations, a corporation that owns Units will not
be entitled to the dividends received deduction with respect to its pro rata
portion of such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations. The
Trust will provide each Unitholder with information annually concerning what
part of the Trust distributions are eligible for the dividends received
deduction.
The Trust may elect to pass through to the Unitholders the foreign income and
similar taxes paid by the Trust in order to enable such Unitholders to take a
credit (or deduction) for foreign income taxes paid by the Trust. If such an
election is made, Unitholders of the Trust, because they are deemed to own a
pro rata portion of the ADRs held by the Trust, must include in their gross
income, for federal income tax purposes, both their portion of dividends
received by the Trust and also their portion of the amount which the Trust
deems to be the Unitholders' portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of the Trust from
its foreign investments. Unitholders may then subtract from their federal
income tax the amount of such taxes withheld, or else treat such foreign taxes
as deductions from gross income; however, as in the case of investors
receiving income directly from foreign sources, the above described tax credit
or deduction is subject to certain limitations. Unitholders should consult
their tax advisers regarding this election and its consequences to them.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust so long as the Units
are held by or for 500 or more persons at all times during the taxable year or
another exception is met. In the event the Units are held by fewer than 500
persons, additional taxable income may be realized by the individual (and
other noncorporate) Unitholders in excess of the distributions received from
the Trust.
Distributions reinvested into additional Units of the Trust will be taxed to a
Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
Under certain circumstances a Unitholder may be able to request an In Kind
Distribution upon the redemption of Units or the termination of the Trust. See
"Rights of Unitholders--Redemption of Units." Unitholders electing an
In Kind Distribution of shares of Equity Securities should be aware that the
exchange is subject to taxation and Unitholders will recognize gain or loss
based on the value of the Equity Securities received.
The federal tax status of each year's distributions will be reported to
Unitholders and to the Internal Revenue Service. The foregoing discussion
relates only to the federal income tax status of the Trust and to the tax
treatment of distributions by the Trust to United States Unitholders.
Distributions by the Trust will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons. Such
persons should consult their tax advisers. Units in the Trust and Trust
distributions may also be subject to state and local taxation and Unitholders
should consult their own tax advisers in this regard. Each Unitholder will be
requested to provide the Unitholder's taxpayer identification number to the
Trustee and to certify that the Unitholder has not been notified that payments
to the Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
A Unitholder who is a foreign investor (i.e. an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from the Trust which constitute dividends for Federal income tax
purposes (other than dividends which the Trust designates as capital gains
dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from
the Trust that are designated by the Trust as capital gain dividends should
not be subject to United States income taxes, including withholding taxes, if
all of the following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) the foreign investor (if an
individual) is not present in the United States for 183 days or more during
his or her taxable year, and (iii) the foreign investor provides all
certification which may be required of his or her status. Foreign investors
should consult their tax advisers with respect to United States tax
consequences of ownership of Units.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
TRUST OPERATING EXPENSES
Compensation of Sponsor, Evaluator and Underwriter. The Sponsor will not
receive any fees in connection with its activities relating to the Trust. The
Evaluator shall receive that evaluation fee, payable in any month incurred,
set forth under "Summary of Essential Financial Information" in Part
One (which is based on the number of Units outstanding on January 1 of each
year for which such compensation relates) for regularly evaluating the Trust
portfolio. The Underwriter will receive an annual supervisory fee, payable in
monthly installments, which is not to exceed the amount set forth under "
Summary of Essential Financial Information" in Part One (which is based on
the number of Units outstanding on January 1 of each year for which such
compensation relates) for providing portfolio supervisory services for the
Trust. Such fee may exceed the actual cost of providing such supervision
services for this Trust, but at no time will the total amount paid to the
Underwriter for providing portfolio supervision services to unit investment
trusts for which Edward Jones is the principal underwriter in any calendar
year exceed the aggregate cost to the Supervisor of supplying such services in
such year. Both of the foregoing fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. The Sponsor and the
Underwriter will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Equity
Securities as described under "Public Offering--Sponsor and Underwriter
Compensation."
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial
Information" in Part One (which amount is based on the number of Units
outstanding on January 1 of each year for which such compensation relates).
The Trustee's fees are payable in monthly installments on or before the tenth
day of each month from the Income Account to the extent funds are available
and then from the Capital Account. The Trustee benefits to the extent there
are funds for future distributions, payment of expenses and redemptions in the
Capital and Income Accounts since these Accounts are non-interest bearing and
the amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "
Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and closing documents), federal and
state registration fees, the initial fees and expenses of the Trustee, legal
and accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over a five year period. The
following additional charges are or may be incurred by the Trust: (a) normal
expenses (including the cost of mailing reports to Unitholders) incurred in
connection with the operation of the Trust, (b) fees of the Trustee for
extraordinary services, (c) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor, (d) various
governmental charges, (e) expenses and costs of any action taken by the
Trustee to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or wilful
misconduct on its part and (g) expenditures incurred in contacting Unitholders
upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owing to the Trustee, they are secured by a
lien on the Trust's portfolio. Since the Equity Securities are all common
stocks, and the income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be sufficient to
meet any or all expenses of the Trust. If the balances in the Income and
Capital Accounts are insufficient to provide for amounts payable by the Trust,
the Trustee has the power to sell Equity Securities to pay such amounts. These
sales may result in capital gains or losses to Unitholders. See "Federal
Taxation."
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. The secondary market
public offering price is based on the aggregate underlying value of the
Securities in the Trust, an applicable sales charge (initially 4.9% of the
Public Offering Price which will be reduced by .5 of 1% on each July 28
commencing July 28, 1996, to a minimum sales charge of 1.9%), and cash, if
any, in the Income and Capital Accounts held or owned by the Trust. Such
underlying value is based on the aggregate value of Securities of foreign
issuers computed on the basis of the bid side value of the related currency
exchange rate expressed in U.S. dollars as of the Evaluation Time for
secondary market transactions. Such underlying value shall include the
proportionate share of any undistributed cash held in the Capital and Income
Accounts.
The Underwriter intends to permit certain of its partners, officers and
employees and those of its affiliated companies and certain relatives of such
persons to purchase Units of the Trust at the current Public Offering Price
less a $10.00 per 100 Units reduction in the applicable sales charge.
Registered representatives of selling brokers, dealers, or agents may purchase
Units of the Trust at the current Public Offering Price less the dealer's
concession for secondary market transactions.
In addition, Unitholders whose accounts are with the Underwriter and who own
75 or more Units will be provided the opportunity by the Underwriter to
automatically reinvest their distributions into Units at the Public Offering
Price, if Units are available at the time of reinvestment as described herein.
See "Rights of Unitholders--Reinvestment Option," below.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
Part One in accordance with fluctuations in the prices of the underlying
Securities in the Trust. The Public Offering Price per Unit is based on the
aggregate value of Securities of foreign issuers computed on the basis of the
bid side value of the related currency exchange rate expressed in U.S. dollars
during the secondary market.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
initially equal to 5.152% of such value and dividing the sum so obtained by
the number of Units outstanding. Such underlying value shall include the
proportionate share of any cash held in the Capital Account. This computation
produced a gross underwriting profit initially equal to 4.9% of the Public
Offering Price. Such price determination as of the close of business on the
day before the Initial Date of Deposit was made on the basis of an evaluation
of the Securities in the Trust prepared by Interactive Data Corporation a firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities. After the close of business on the day before the
Initial Date of Deposit, the Evaluator will appraise or cause to be appraised
daily the value of the underlying Securities as of the Evaluation Time on days
the New York Stock Exchange is open and will adjust the Public Offering Price
of the Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on each such
day. Orders received by the Trustee, Sponsor or Underwriter for purchases,
sales or redemptions after that time, or on a day when the New York Stock
Exchange is closed, will be held until the next determination of price.
Effective on each July 28, commencing July 28, 1996, such sales charge will be
reduced by .5 of 1% to a minimum sales charge of 1.9%.
The aggregate underlying value of the Equity Securities is determined on each
business day by the Evaluator in the following manner: if the Equity
Securities are listed on a national securities exchange, this evaluation is
generally based on the closing sale prices on that exchange (unless it is
determined that these prices are inappropriate as a basis for valuation) or,
if there is no closing sale price on that exchange, at the closing bid prices.
If the Equity Securities are not so listed or, if so listed and the principal
market therefore is other than on the exchange, the evaluation shall generally
be based on the closing bid price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
closing bid prices are unavailable, the evaluation is generally determined (a)
on the basis of closing bid prices for comparable securities, (b) by
appraising the value of the Equity Securities on the bid side of the market or
(c) by any combination of the above. The value of Securities of foreign
issuers is based on the aggregate value of such Securities computed on the
basis of the bid side value of the related currency exchange rate expressed in
U.S. dollars.
In offering the Units to the public, neither the Underwriter nor any
broker-dealers are recommending any of the individual Securities in the Trust
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary market Public Offering Price in
the manner described above.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 75 Units. Lower minimum
purchase amounts may be available for certain qualified retirement plans. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time.
Sponsor and Underwriter Compensation. The Underwriter will receive a gross
sales commission initially equal to 4.9% of the Public Offering Price of the
Units (initially equivalent to 5.152% of the net amount invested), less any
reduced sales charge (as described under "General" above). Any
discount provided to investors will be borne by the selling Underwriter,
dealer or agent as indicated under "General" above.
In addition, the Sponsor has realized a profit or sustained a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to the Trust on the
Initial Date of Deposit as well as on subsequent deposits. The Sponsor has not
participated as sole underwriter or as manager or as a member of the
underwriting syndicates or as an agent in a private placement for any of the
Securities in the Trust portfolio. The Underwriter may have further realized
additional profit or loss as a result of the possible fluctuations in the
market value of the Securities in the Trust after a date of deposit, since all
proceeds received from purchasers of Units (excluding dealer concessions and
agency commissions allowed, if any) will be retained by the Underwriter.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Underwriter
prior to the date of settlement for the purchase of Units may be used in the
Underwriter's business and may be deemed to be a benefit to the Underwriter,
subject to the limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Underwriter intends to
maintain a secondary market for Units of the Trust. In so maintaining a
market, the Underwriter will also realize profits or sustain losses in the
amount of any difference between the price at which Units are purchased and
the price at which Units are resold (which price includes the applicable sales
charge). In addition, the Underwriter will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Underwriter intends
to maintain a market for the Units offered hereby and offer continuously to
purchase Units at prices, subject to change at any time, based upon the
aggregate underlying value of the Equity Securities in the Trust. The
aggregate underlying value of Securities of foreign issuers is computed on the
basis of the bid side value of the related currency exchange rate expressed in
U.S. dollars. If the supply of Units exceeds demand or if some other business
reason warrants it, the Underwriter may either discontinue all purchases of
Units or discontinue purchases of Units at such prices. In the event that a
market is not maintained for the Units and the Unitholder cannot find another
purchaser, a Unitholder desiring to dispose of his Units may be able to
dispose of such Units only by tendering them to the Trustee for redemption at
the Redemption Price. See "Rights of Unitholders--Redemption of Units."
A Unitholder who wishes to dispose of his Units should inquire of his broker
as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee
Pension Plans for employees, qualified plans for self-employed individuals,
and qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trust may be limited by the plans' provisions and
does not itself establish such plans.
RIGHTS OF UNITHOLDERS
General. A certificate representing 100% of the fractional undivided interest
in and ownership of the Units will be registered in the name or to the order
of the Underwriter on the books of the depository, The Depository Trust
Company ("DTC" or the "Depository" ). Accordingly, the
Underwriter or its designee will be the holder of record of the Units.
The Units will be issued in book-entry form only and the Unitholders will not
be entitled to receive physical certificates representing their Units. A
Unitholder's ownership of Units will be recorded on or through the records of
the Underwriter or any other brokerage firm that maintains such Unitholder's
account for such purpose. In turn, the brokerage firm's record ownership of
such Units will be recorded on the records of the Depository (or of a DTC
participating firm that acts as agent for the brokerage firm if a Unitholder's
brokerage firm is not a DTC participant). Therefore, a Unitholder must rely
upon the foregoing procedures to evidence such Unitholder's beneficial
ownership of a Unit. Beneficial ownership of a Unit may only be transferred by
compliance with the procedures of such brokerage firms and DTC participants.
Neither the Trustee nor the Sponsor will have any responsibility or liability
for any aspect of the records relating to or payments made by such brokerage
firms or DTC participants on account of beneficial ownership interests in the
Units or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of whom (and/or whose representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record
separately the positions held by each DTC participant in the Units, whether
held for its own account or as a nominee for another person. The Underwriter
is a DTC participant.
Each distribution from the Income Account and payment upon redemption of a
Unit will be paid to the Depository for the benefit of the record holder of
the Units as shown on the books of the Depository. The Depository will be
responsible for crediting the amount of such payments to the accounts of the
applicable DTC participants in accordance with the Depository's normal
procedures. Each DTC participant will be responsible for disbursing such
payments to the beneficial owners of the Units that it represents and to each
brokerage firm for which it acts as agent. Each such brokerage firm will be
responsible for disbursing funds to the beneficial owners of the Units that it
represents.
If the foregoing book-entry procedures are terminated for any reason,
definitive Certificates will be issued in appropriate amounts as requested by
the DTC participants holding the Units.
The Trustee is authorized to treat as the record owner of Units that person
who is registered as such owner on the books of the Trustee. Units are
transferable by presentation of transfer instructions to the Trustee
accompanied by such documents executed by the Unitholder or his authorized
attorney and such Unitholder's brokerage firm as the Trustee deems necessary
to establish the authority of the person making such transfer. In certain
instances, the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each Unit transferred and to pay any
governmental charge that may be imposed in connection with each such transfer.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account of the Trust. In the
case of Securities of foreign issuers, dividends to be credited to such
accounts are first converted into U.S. dollars at the applicable exchange rate
for the related currency.
The Trustee will distribute any net income received with respect to any of the
Securities in the Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary
of Essential Financial Information" in Part One. Proceeds received on the
sale of any Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will be distributed annually on the
Capital Account Distribution Date to Unitholders of record on the preceding
Capital Account Record Date. Proceeds received from the disposition of any of
the Securities after a record date and prior to the following distribution
date will be held in the Capital Account and not distributed until the next
distribution date applicable to such Capital Account. Proceeds received on the
sale of any Equity Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will, however, be distributed on the
Income Distribution Date to holders of record on the corresponding Income
Distribution Record Date if the amount available for distribution equals at
least $1.00 per 100 Units. The Trustee is not required to pay interest on
funds held in the Capital or Income Accounts (but may itself earn interest
thereon and therefore benefits from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because dividends are not received by the Trust at a
constant rate throughout the year, such distributions to Unitholders are
expected to fluctuate from distribution to distribution. Persons who purchase
Units will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker-dealer.
As of the tenth day of each month, the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Capital
Account amounts necessary to pay the expenses of the Trust (as determined on
the basis set forth under "Trust Operating Expenses" ). The Trustee
also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw
from the Income and Capital Accounts such amounts as may be necessary to cover
redemptions of Units.
Reinvestment Option. The Underwriter offers to those Unitholders who own 75 or
more Units in an account with the Underwriter the ability to elect to have
each distribution of income and capital gains on such Units automatically
reinvested in additional Units of the Trust at the aggregate underlying value
of the Equity Securities (to the extent Units may be lawfully offered for sale
in the state in which the Unitholder resides). To participate in the
reinvestment plan, a Unitholder must file a written notice of election with
his or her broker at least ten days prior to the Record Date for which the
first distribution is to apply. A Unitholder's election to participate in the
reinvestment plan will apply to all Units of the Trust owned by such
Unitholder and such election will remain in effect until changed by the
Unitholder or until such plan is terminated by the Underwriter. The
Underwriter may suspend or terminate the reinvestment option at any time
without notice.
Under the reinvestment plan, distributions will be used to purchase Units
already held in inventory by the Underwriter or to purchase Units created for
such purpose by the deposit of additional Securities. If the reinvestment
option has been suspended or terminated, which may occur if Units are
unavailable for such purpose, distributions which would otherwise have been
reinvested shall be distributed to the Unitholder on the applicable
Distribution Date.
Purchases of Units made pursuant to the reinvestment plan will be made at the
aggregate underlying value of the Equity Securities as of the Evaluation Time
on the related Income or Capital Distribution Dates. (See "Public
Offering" herein). Under the reinvestment plan, the Underwriter receives
the Unitholder's distribution and purchases for such Unitholder's full and
fractional Units of the Trust. The Unitholder will receive confirmation of
such purchases in the next regular brokerage statement following such
investment.
A participating Unitholder may, at any time prior to five days preceding the
next succeeding Distribution Date, by so notifying the Underwriter in writing,
elect to terminate his or her reinvestment plan and receive future
distributions in cash on applicable Distribution Dates. There will be no
charge or other penalty for such termination.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. For as long as the Sponsor deems it to be
in the best interest of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants, and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder a statement (i)
as to the Income Account: income received, deductions for applicable taxes and
for fees and expenses of the Trust, for redemptions of Units, if any, and the
balance remaining after such distributions and deductions, expressed in each
case both as a total dollar amount and as a dollar amount representing the pro
rata share of each Unit outstanding on the last business day of such calendar
year; (ii) as to the Capital Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payment of
applicable taxes, fees and expenses of the Trust held for distribution to
Unitholders of record as of a date prior to the determination and the balance
remaining after such distributions and deductions expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each
Unit outstanding on the last business day of such calendar year; (iii) a list
of the Securities held and the number of Units outstanding on the last
business day of such calendar year; (iv) the Redemption Price per Unit based
upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Income and
Capital Accounts, separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. Requests for redemption of a Unit at the option of a
Unitholder must first be presented to the Unitholder's brokerage firm. Such
brokerage firm (if such firm is a DTC participant and, if not, through the DTC
participant acting on behalf of such firm) will present such redemption
request to DTC and DTC, in turn, will present such request to the Trustee for
processing in accordance with the applicable redemption provisions of the
Trust Agreement. The Trustee may require a Unitholder and such Unitholder's
brokerage firm to submit additional information or certifications to the
Trustee to evidence compliance with the applicable redemption provisions of
the Trust Agreement. Units will be deemed to be "tendered" to the
Trustee when the Trustee is in physical possession of transfer instructions
and such other documentation as may be required by the Trustee to effect the
redemption of the Units. Compliance with the foregoing procedures may result
in delays in the processing of redemption requests by Unitholders. No
redemption fee will be charged. On the third business day following such
tender the Unitholder will receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed after receipt by the Trustee of
such tender of Units (converted into U.S. dollars as of the Evaluation Time in
the case of foreign Securities). The "date of tender" is deemed to be
the date on which Units are received by the Trustee, except that as regards
Units received after the Evaluation Time the date of tender is the next day on
which such Exchange is open for trading and such Units will be deemed to have
been tendered to the Trustee on such day for redemption at the redemption
price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the Supervisor
for this purpose. Units so redeemed shall be cancelled.
To the extent that Securities are liquidated or sold, the size of the Trust
will be, and the diversity of the Trust may be, reduced. Sales may be required
at a time when Securities would not otherwise be sold and may result in lower
prices than might otherwise be realized. The price received upon redemption
may be more or less than the amount paid by the Unitholder depending on the
value of the Securities in the portfolio at the time of redemption.
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities in the Trust, plus or minus cash, if any, in the Income
and Capital Accounts. On the date hereof the Public Offering Price per Unit
(which includes the sales charge) exceeded the values at which Units could
have been redeemed by the amounts shown under "Summary of Essential
Financial Information" in Part One. While the Trustee has the power to
determine the Redemption Price per Unit when Units are tendered for
redemption, such authority has been delegated to the Evaluator which
determines the price per Unit on a daily basis. The Redemption Price per Unit
is the pro rata share of each Unit in the Trust determined on the basis of (i)
the cash on hand in the Trust, (ii) the value of the Securities in the Trust
and (iii) dividends receivable on the Equity Securities trading ex-dividend as
of the date of computation, less (a) amounts representing taxes or other
governmental charges payable out of the Trust and (b) the accrued expenses of
the Trust. The Evaluator may determine the value of the Equity Securities in
the Trust in the following manner: if the Equity Securities are listed on a
national securities exchange, this evaluation is generally based on the
closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange, at the closing bid prices. If the Equity
Securities are not so listed or, if so listed and the principal market
therefor is other than on the exchange, the evaluation shall generally be
based on the closing bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If closing bid prices are
unavailable, the evaluation is generally determined (a) on the basis of
closing bid prices for comparable securities, (b) by appraising the value of
the Equity Securities on the bid side of the market or (c) by any combination
of the above. The value of Securities of foreign issuers in the secondary
market is based on the aggregate value of such Securities computed on the
basis of the bid side value of the related currency exchange rate expressed in
U.S. dollars as of the Evaluation Time.
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size of the Trust will be, and the diversity of the
Trust may be, reduced. Such sales may be required at a time when Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Underwriter Purchases of Units. The Trustee shall notify the Underwriter of
any tender of Units for redemption. If the Underwriter's bid in the secondary
market at that time equals or exceeds the Redemption Price per Unit, it may
purchase such Units by notifying the Trustee before the close of business on
the next succeeding business day and by making payment therefor to the
Unitholder not later than the day on which the Units would otherwise have been
redeemed by the Trustee. Units held by the Underwriter may be tendered to the
Trustee for redemption as any other Units.
The offering price of any Units acquired by the Underwriter will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Underwriter which likewise will bear any loss
resulting from a lower offering or redemption price subsequent to its
acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is not "managed"
by the Sponsor, Supervisor, Underwriter or the Trustee; their activities
described herein are governed solely by the provisions of the Trust Agreement.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. While the Trust will not be managed,
the Trust Agreement does provide that the Sponsor may (but need not) direct
the Trustee to dispose of an Equity Security (1) upon default in payment of
dividends, after declared, when either are due and payable, (2) if any action
or proceeding has been instituted at law or equity seeking to restrain or
enjoin the payment of dividends on any such Securities, or if there exists any
legal question or impediment affecting such Securities or the payment of
dividends on any such Securities, or if there exists any legal question or
impediment affecting such Securities or the payment of dividends on the same,
(3) if there has occurred any breach of covenant or warranty in any document
relating to an issuer which would adversely affect either immediately or
contingently the payment of dividends on such Securities, or the general
credit standing of an issuer or otherwise impair the sound investment
character of such Securities, (4) if there has been a default in the payment
of interest or dividends, or the principal or interest or premium, if any, on
any other outstanding obligations of an issuer (which, for purposes of this
clause, shall mean either or both the issuer of the security underlying an ADR
and the depositary for such ADR), (5) if the price of any such Securities has
declined to such an extent or other such market or credit factors exist that
in the opinion of the Sponsor as evidenced in writing to the Trustee, the
retention of such Securities would be detrimental to the Trust and to the
interests of the Unitholders, (6) if all of the Securities will be sold
pursuant to termination of the Trust as provided in the Trust Agreement, (7)
if such sale is required due to Units tendered for redemption, (8) upon the
occurrence of a change in the business of an issuer (which, for purposes of
this clause, shall mean either or both the issuer of the security underlying
an ADR and the depositary for such ADR) that would have caused the Sponsor not
to include the securities of such issuer in the portfolio had such
circumstances existed prior to the formation of the Trust or (9) to prevent
the Trust from becoming subject to the provisions of the Public Utility
Holding Company Act of 1935 and the rules and regulations promulgated
thereunder.
In addition, the Sponsor will instruct the Trustee to dispose of certain
Securities and to take such further action as may be needed from time to time
to ensure that the Trust continues to satisfy the qualifications of a
regulated investment company, including the requirements with respect to
diversification under Section 851 of the Internal Revenue Code. Pursuant to
the Trust Agreement, the Sponsor is not authorized to direct the reinvestment
of the proceeds of the sale of Securities in replacement securities except in
the event the sale is the direct result of serious adverse credit factors
affecting the issuer of the Security which, in the opinion of the Sponsor,
would make the retention of such Security detrimental to the Trust. If such
factors exist, the Sponsor is authorized, but is not obligated, to direct the
reinvestment of the proceeds of the sale of such Securities in any other
securities which meet the criteria necessary for inclusion in the Trust on the
Initial Date of Deposit (including other Securities already deposited in the
Trust). Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other properties acquired in exchange for
Equity Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for
deposit in the Trust and either sold by the Trustee or held in the Trust
pursuant to the direction of the Sponsor (who may rely on the advice of the
Supervisor). Therefore, except as stated under "Trust Portfolio" for
failed securities and as provided in this paragraph, the acquisition by the
Trust of any securities other than the Securities is prohibited. Proceeds from
the sale of Securities (or any securities or other property received by the
Trust in exchange for Equity Securities), unless held for reinvestment as
herein provided, are credited to the Capital Account for distribution to
Unitholders or to meet redemptions.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if not
so directed, in its own discretion, for the purpose of redeeming Units of the
Trust tendered for redemption and the payment of expenses.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
individual issues of Equity Securities. To the extent this is not practicable,
the composition and diversity of the Equity Securities may be altered. In
order to obtain the best price for the Trust, it may be necessary for the
Supervisor to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor
and the Trustee), provided, however, that the Trust Agreement may not be
amended to increase the number of Units (except as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders of 51% of the Units then outstanding, provided that no
such amendment or waiver will reduce the interest in the Trust of any
Unitholder without the consent of such Unitholder or reduce the percentage of
Units required to consent to any such amendment or waiver without the consent
of all Unitholders. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Central Equity Trust Units then outstanding or by the Trustee
when the value of the Equity Securities owned by the Trust, as shown by any
evaluation, is less than that amount set forth under "Minimum Termination
Value" in the "Summary of Essential Financial Information" in Part
One. The Trust Agreement will terminate upon the sale or other disposition of
the last Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information" in Part One.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Trustee will deduct from the funds of the Trust any accrued
costs, expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee, costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes
or other governmental charges. Any sale of Equity Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder his pro rata share of the balance of the Income and Capital
Accounts.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor, the
Underwriter and the Trustee shall be under no liability to Unitholders for
taking any action or for refraining from taking any action in good faith
pursuant to the Trust Agreement, or for errors in judgment, but shall be
liable only for their own wilful misfeasance, bad faith or gross negligence
(negligence in the case of the Trustee) in the performance of their duties or
by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities. In the event of
the failure of the Sponsor to act under the Trust Agreement, the Trustee may
act thereunder and shall not be liable for any action taken by it in good
faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor, Underwriter and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available
to it, provided, however, that the Evaluator shall be under no liability to
the Trustee, Sponsor or Unitholders for errors in judgment. This provision
shall not protect the Evaluator in any case of willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties.
Underwriter. EJ is the Underwriter for the Units. EJ is a Missouri limited
partnership formed on May 23, 1969. EJ's principal office is located at 12555
Manchester Road, St. Louis, Missouri, 63131. EJ is a member of the New York
Stock Exchange, as well as other securities exchanges and the National
Association of Securities Dealers, Inc. EJ is engaged in the securities
brokerage business as well as underwriting and distributing new issues and
acting as a dealer in unlisted securities and municipal bonds. EJ purchases
the Units on the date they are issued by the Trust and is entitled to the
benefits thereof, as well as subjected to the risks inherent therein.
Units may also be sold by the Underwriter to dealers who are members of the
National Association of Securities Dealers, Inc. Such dealers, if any, may be
allowed a concession or agency commission by the Underwriter. However, resales
of Units by such dealers to the public will be made at the Public Offering
Price described in the Prospectus. The Underwriter reserves the right to
reject, in whole or in part, any order for the purchase of Units and the
Underwriter reserves the right to change the amount of the concession to
dealers from time to time.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser (MSAM" ), Morgan Stanley & Co.
Incorporated, a registered broker-dealer and investment adviser, and Morgan
Stanley International, are engaged in a wide range of financial services.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisory activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. As of September 30,
1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Trust Agreement and liquidate the Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio. The
Trustee may engage custodians to act as its agents to effectuate certain of
its responsibilities with respect to foreign Securities, including the holding
and disposition of Securities in foreign markets and effecting currency
exchanges.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of Unitholders--Reports Provided" ).
The Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract LLP has acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in this Prospectus have been audited by
Grant Thornton LLP, independent certified public accountants, as set forth in
their report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust or the Sponsor. This Prospectus does not constitute an offer to sell, or
a solicitation of an offer to buy, securities in any state to any person to
whom it is not lawful to make such offer in such state.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
The Trust 2
Objectives and Securities Selection 2
Trust Portfolio 3
Risk Factors 4
Federal Taxation 8
Trust Operating Expenses 9
Public Offering 9
Rights of Unitholders 11
Trust Administration 13
Other Matters 15
</TABLE>
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
PROSPECTUS PART TWO
Central Equity Trust
WORLDWIDE SERIES 2
UTILITY & TELECOMMUNICATIONS PORTFOLIO
Van Kampen American Capital Equity Opportunity Trust, Series 15
Note: This Prospectus May Be Used Only When Accompanied by Part One. Both
Parts of this Prospectus should be retained for future reference.
Dated as of the date of the Prospectus Part One accompanying this Prospectus
Part Two.
Edward Jones
12555 Manchester Road
St. Louis, Missouri 63131
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
15, certifies that it meets all of the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 24th
day of April, 1997.
Van Kampen American Capital Equity Opportunity
Trust, Series 15
(Registrant)
By Van Kampen American Capital Distributors,
Inc.
(Depositor)
By: Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on
April 24, 1997 by the following persons who constitute a majority of the
Board of Directors of Van Kampen American Capital Distributors, Inc.:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
William R. Molinari President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Sandra A. Waterworth ) (Attorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and with the Registration Statement on Form S-6
of Insured Municipals Income Trust, 170th Insured Multi-Series (File
No. 33-55891) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 21, 1997 accompanying the
financial statements of Van Kampen American Capital Equity Opportunity
Trust, Series 15 as of December 31, 1996, and for the period then ended,
contained in this Post-Effective Amendment No. 2 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
April 24, 1997
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