<PAGE> 1
MARKED TO REFLECT CHANGES
THIS PROSPECTUS CONSISTS OF TWO PARTS. PART A CONTAINS A SUMMARY OF ESSENTIAL
INFORMATION AND DESCRIPTIVE MATERIAL RELATING TO THE TRUST, THE TRUST'S
PORTFOLIO AND A STATEMENT OF FINANCIAL CONDITION OF THE TRUST. PART B CONTAINS
A GENERAL DESCRIPTION OF THE TRUST. PART A MAY NOT BE DISTRIBUTED UNLESS
ACCOMPANIED BY PART B.
- -------------------------------------------------------------------------------
Central Equity Trust
[LOGO]*
WORLDWIDE SERIES 1
UTILITY & TELECOMMUNICATIONS PORTFOLIO
48,050 Units
- -------------------------------------------------------------------------------
The Trust is formed for the purpose of providing current income and the
potential for capital appreciation through investment in a fixed portfolio
which may consist of common stocks, American Depositary Receipts ("ADRs") and
convertible securities (collectively, the "Securities") issued by domestic and
foreign electric, gas, water and telecommunications companies (the
"Portfolio"). The Securities may provide income or have the potential for
capital appreciation or both. Certain Securities on deposit in the Portfolio
may be restricted securities under Rule 144A of the Securities Act of 1933. See
"The Trust -- Summary Description of the Portfolio" in Part B. The issuers,
whether foreign or domestic, of the Securities in the Portfolio (including
issuers of common stock underlying any ADRs) are collectively referred to
herein as the "Issuers". The value of the Units of the Trust will fluctuate
with the value of the Portfolio.
An investment in units of the Trust entails certain risks which should be
understood before investing. See "Summary of Essential Information -- Risks" in
Part A and "The Trust -- Summary Description of the Portfolio and Risks
Associated Therewith" and "The Trust -- Risks and Other Considerations
Concerning Electric, Gas, Water and Telecommunications Industries" in Part B.
Unless terminated earlier, the Trust will terminate on June 1, 2001 and any
Securities then held will, within a reasonable time thereafter, be sold by the
Trustee. Any Securities sold in connection with termination of the Trust will
be sold at the then current market value for such Securities, therefore, the
amount distributable in cash to a Unitholder may be more or less than the
amount such Unitholder paid for his Units.
NEITHER THESE TRANSACTIONS NOR THE SECURITIES OFFERED HEREBY HAVE 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
FAIRNESS OR MERITS OF THESE TRANSACTIONS OR UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Sponsor:
Unison Investment Trusts Ltd.
Prospectus Part A dated May 24, 1994
Read and retain both parts of the Prospectus for further reference.
- ----------
* Refer to Appendix A for description of the logo.
<PAGE> 2
- -------------------------------------------------------------------------------
Parts A and B of this Prospectus do not contain all of the information with
respect to the Trust and the Sponsor set forth in the registration statement
and exhibits relating thereto which have been filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to which
reference is hereby made.
- -------------------------------------------------------------------------------
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
TABLE OF CONTENTS
-----------------
PART A
SUMMARY OF ESSENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 4
The Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Public Offering Price; Sales Charge. . . . . . . . . . . . . . . . . . . 7
Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Market for Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trust Summary as of the Date of Deposit. . . . . . . . . . . . . . . . . 9
Exchange Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . 13
STATEMENT OF FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . 14
SCHEDULE OF TRUST SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . 15
ISSUERS OF SECURITIES IN THE PORTFOLIO . . . . . . . . . . . . . . . . . . . 17
PART B
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Summary Description of the Portfolio and Risks Associated Therewith. . . 26
Risks and Other Considerations Concerning Electric, Gas, Water and
Telecommunications Industries. . . . . . . . . . . . . . . . . . . . 32
Objectives and Securities Selection. . . . . . . . . . . . . . . . . . . 35
PUBLIC OFFERING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Public Offering Price. . . . . . . . . . . . . . . . . . . . . . . . . . 36
Public Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Secondary Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Profit of Sponsor and Underwriter. . . . . . . . . . . . . . . . . . . . 38
FEDERAL TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
General Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Taxation of Trust Distributions. . . . . . . . . . . . . . . . . . . . . 39
Unitholder's Tax Basis in Units. . . . . . . . . . . . . . . . . . . . . 40
Sale, Exchange or Redemption of Units. . . . . . . . . . . . . . . . . . 40
Tax Consequences of In Kind Distributions. . . . . . . . . . . . . . . . 40
Investment in Foreign Securities and ADRs. . . . . . . . . . . . . . . . 41
Convertible Securities, Preferred Stock Redemption Premium . . . . . . . 41
Back-Up Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
STATUS OF THE TRUST UNDER NEW YORK STATE AND CITY LAW. . . . . . . . . . . . 42
<PAGE> 3
RIGHTS OF UNITHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Certain Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Redemption of Units. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Reinvestment Option . . . . . . . . . . . . . . . . . . . . . . . . . . 46
TRUST OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Initial Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Miscellaneous Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 48
ADMINISTRATION OF THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . 48
Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Distributions of Income and Capital. . . . . . . . . . . . . . . . . . . 48
Administration of the Portfolio. . . . . . . . . . . . . . . . . . . . . 48
Reports to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . 50
Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . 51
Limitations on Liabilities . . . . . . . . . . . . . . . . . . . . . . . 52
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
The Sponsor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Sub-Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
<PAGE> 4
SUMMARY OF ESSENTIAL INFORMATION
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
AS OF MAY 23, 1994 (1)
Number of Units (2). . . . . . . . . . . . . . . . . . . . . . . 48,050
Fractional Undivided Interest in the Trust Represented by Each
Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1/48,050th
Public Offering Price:
Aggregate market value of Securities in the Trust (3)(4) . . . . $ 937,118
Divided by 48,050 Units (times 100 Units). . . . . . . . . . . . $ 1,950
Plus Sales Charge (5) of 4.9% of Public Offering Price
(approximately 5.15% of Trust assets as determined by the
Trustee) per 100 Units . . . . . . . . . . . . . . . . . . . . $ 100
----------
Public Offering Price per 100 Units (4)(5) . . . . . . . . . . . $ 2,050
----------
Redemption Price per 100 Units (6) . . . . . . . . . . . . . . . $ 1,950
==========
Evaluation Time. . . . . . . . . . . . Close of trading on the New York
Stock Exchange (currently 4:00 P.M.
New York time).
Record Dates . . . . . . . . . . . . . The first day of July, 1994 (the
"First Record Date") and quarterly
thereafter.
Distribution Dates . . . . . . . . . . July 15, 1994 and quarterly
thereafter.
Capital Distribution Dates . . . . . . On or shortly after the fifteenth day
of each June and December commencing
December, 1994 unless the amount in
the Capital Account available to be
distributed is less than $1.00 per
100 Units outstanding or earlier if
the amount is greater than $10.00 per
100 Units outstanding.
Mandatory Termination Date . . . . . . June 1, 2001.
Minimum Termination Value. . . . . . . The Trust Agreement may be terminated
by the Sponsor if the market value of
the Trust at any time is less than
80% of the market value of the
Securities deposited in the Trust on
the Date of Deposit.
Trustee's Fee and Estimated
Expenses (7) . . . . . . . . . . . . $8.69 per 100 Units per annum.
Sponsor's Annual Portfolio
Supervision Fee. . . . . . . . . . . $.50 per 100 Units, maximum of $.60
per 100 Units.
First Settlement Date. . . . . . . . . June 1, 1994.
<PAGE> 5
- ----------
[FN]
(1) The Business Day prior to the date of Part A of this Prospectus (the "Date
of Deposit"). The Trust Agreement was signed and the deposit of Securities
with the Trustee was made on the date of Part A of this Prospectus.
(2) The number of Units will be increased as the Sponsor deposits additional
Securities into the Trust. (See "Introduction" in Part B.)
(3) Securities listed on a securities exchange are valued by the Trustee at the
last closing sale price, or if no such price exists, at the mean between
the closing bid and offer prices or other bases. (See "Rights of
Unitholders -- Redemption of Units" in Part B.)
(4) On the Initial Date of Deposit there will be no accumulated dividends or,
to the extent Securities include convertible debt securities, accrued
interest in the Income Account. Anyone purchasing Units after such date
will pay a pro rata share of any accumulated dividend, accrued interest and
amounts, if any, receivable in respect of Securities trading ex-dividend in
such Income Account and a pro rata share of amounts, if any, in the Capital
Account. The Public Offering Price as shown reflects the value of the
Securities as of the close of business on the day prior to the Initial Date
of Deposit. Amounts owing to the Sponsor as the sole Unitholder of record
on the Date of Deposit representing accrued interest in respect of all
Units from the Date of Deposit to the First Settlement Date for the Units
will be advanced by the Trustee to the Sponsor on such settlement date. The
Trustee will be reimbursed for such amounts so advanced from amounts in the
Trust. (See "Introduction" and "Public Offering -- Public Offering Price"
in Part B.)
(5) Certain purchasers of Units are entitled to a reduced sales charge. (See
"Public Offering -- Public Offering Price" and "Rights of Unitholders --
Reinvestment Option" in Part B.)
(6) This price is computed as of the day prior to the Date of Deposit and may
vary from such price on the date of this Prospectus or any subsequent date.
(7) The estimate of the Trustee's annual fees and expenses is based upon a
Trust with an aggregate market value of Securities deposited of up to
$1,000,000. The Trustee's annual fees and expenses per Unit will remain the
same if no additional Securities are deposited in the Trust after the Date
of Deposit and will be $2.39 per 100 Units per annum if the aggregate
market value of Securities deposited in the Trust is approximately
$12,000,000. The Trustee's fee for the period prior to the First Record
Date will be calculated based upon the aggregate number of Units
outstanding on the First Record Date without taking into account when such
Units were issued.
<PAGE> 6
SUMMARY OF ESSENTIAL INFORMATION
The Trust
Central Equity Trust, Worldwide Series 1, Utility and Telecommunications
Portfolio (the "Trust") is a unit investment trust composed of common stocks
and American Depositary Receipts ("ADRs") not less than 65% of the total
assets of which at the date of deposit shall have been issued by domestic
and foreign electric, gas, water and telecommunications companies. Such common
stocks and ADRs, or contracts for the purchase thereof, together with
irrevocable letters of credit or cash in amounts sufficient to make such
purchases, are referred to herein as "Securities". The Securities on deposit in
the Trust are referred to collectively as the "Portfolio". For a more detailed
description of the types of securities in the Portfolio, see "The Trust --
Summary Description of the Portfolio" in Part B. The issuers of the Securities,
which with respect to the ADRs includes the foreign issuer of the underlying
equity securities, are collectively referred to herein as the "Issuers". (See
"Summary of Essential Information -- Risk Disclosure" herein.) A Trust
designated as "Worldwide" will contain, on the initial date of deposit,
Securities of Issuers located in no less than three different countries.
On the Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Schedule of Trust Securities" herein and the
Trustee issued the number of units of beneficial interest in the Trust
("Units") set forth in the "Summary of Essential Information" herein. Cash or
letters of credit for the purchase of foreign securities may be held by a
foreign custodian on behalf of the Trustee. (See "Administration of the Trust
- -- The Sub-Custodians" herein.) At the discretion of the Sponsor, additional
Units may be issued from time to time by depositing in the Trust additional
Securities. (See "Introduction" in Part B.)
The Objectives
The objectives of the Trust are to provide investors with current income
and the potential for capital appreciation through a diversified portfolio, not
less than 65% of the total assets of which at the date of deposit shall
consist of utility and telecommunications Securities issued by both foreign and
domestic Issuers. Income from common stocks is received in the form of
dividends and as distributions of dividends in the case of ADRs. Unless the
context requires otherwise, any such income from Securities is referred to
herein as "dividends". The payment of dividends, if any, on common stocks is
dependent on the amounts made available by the Issuers thereof for
distribution. Declaration of dividends will generally depend upon several
factors, including the financial condition of the Issuers and general economic
conditions. The maximization of such dividend income was not considered by the
Sponsor when selecting Securities for inclusion in the Trust and is not an
objective of the Trust, but the dividend paying ability of a company is among
the factors considered by the Sponsor in determining whether to include a
Security issued by that company in the Trust. In addition, convertible
securities are considered for inclusion in the Portfolio if the underlying
common stock offers the potential for growth in earnings and dividends and is
otherwise consistent with the purpose and objectives of the Trust. Market
conditions may cause the market value of the Securities to be greater or less
than the market value upon their deposit in the Trust. There is no guarantee
that the objectives of the Trust will be achieved. (See "The Trust --
Objectives and Securities Selection" in Part B.)
<PAGE> 7
Distributions
All Unitholders purchasing Units during the initial public offering period
and prior to the first Record Date will have the right to receive the first
distribution of income. Thereafter, Record Dates for distributions of income
will be the first day of the month in which an income distribution is to be
made. Distributions of income will be made on or shortly after the fifteenth
day of the month of distribution. Distributions of capital, if any, will be
made on or shortly after the fifteenth day of June and December. (See
"Administration of the Trust -- Distributions of Income and Capital" and
"Rights of Unitholders -- Units" in Part B.)
Public Offering Price; Sales Charge
The Units are offered for sale at the Public Offering Price which is based
on the Trustee's evaluation of the aggregate market value of the Securities
plus the amount of cash, if any, in the Income Account and the Capital Account
of the Trust (other than amounts required to be distributed by the Trustee
pursuant to the Trust Agreement) and amounts receivable in respect of
Securities trading ex-dividend on the date deposited in the Trust, and includes
a sales charge of 4.9% of the Public Offering Price (approximately 5.15% of
such evaluation). Discounts are available for certain volume purchases and to
certain Unitholders who elect to participate in the reinvestment program
offered by the Underwriter. (See "Public Offering -- Public Offering Price" and
"Rights of Unitholders -- Reinvestment Option" in Part B.)
Units
The ownership of all Units will be recorded on the books of the Trustee in
the name of Cede & Co., as nominee of Depository Trust Company ("DTC").
Investors in Units ("beneficial owners") will have their beneficial ownership
of the Units recorded on the books of the DTC participant from which the
investors purchased or with whom such investors choose to hold their Units. The
Underwriter is a DTC participant. Distributions and notices will be given by
the Trustee to DTC and the beneficial owners of Units must rely on the DTC
participants to forward distributions and notices to them. See "Rights of
Unitholders -- Units", in Part B for a more complete discussion of the
consequences of DTC ownership and the book-entry system.
Market for Units
Edward D. Jones & Co. (the "Underwriter"), though not obligated to do so,
intends to maintain a secondary market for the Units. (See "Public Offering --
Secondary Market" in Part B.) If such a market is not maintained, a Unitholder
will be able to dispose of his Units only by tendering his Units to the Trustee
for redemption at prices based on the market value of the underlying
Securities. Market conditions may cause such prices to be greater or less than
the amount paid for the Units. The Sponsor may, in its discretion, direct the
Trustee to redeem Units through an in kind distribution of Securities. (See
"Rights of Unitholders -- Redemption of Units" and "Federal Taxation -- Tax
Consequences of In Kind Distributions" in Part B.)
Risks
Set forth below is a brief description of various risks associated with an
investment in the types of Securities that may be deposited in the Trust. For a
more complete description of such risks and of risks associated with
<PAGE> 8
investments in the Utilities and Telecommunications industries see "The Trust
- -- Summary Description of the Portfolio and Risks Associated Therewith," and
"The Trust -- Risks and Other Considerations Concerning Electric, Gas, Water
and Telecommunications Industries" in Part B.
Since the Trust Portfolio consists of domestic and foreign common stocks
and ADRs, an investment in Units of the Trust should be made with an
understanding of the risks inherent in such an investment, including risks
associated with the rights of holders of common stock to receive payments from
Issuers. Such rights are inferior to those of creditors and holders of debt
obligations, including convertible securities, or preferred stock. Holders of
common stock and ADRs have rights to receive dividends only when, if, and in
the amounts, declared by the Issuer's board of directors and to participate in
amounts available for distribution only after all other claims on the Issuer
have been paid or provided for. Investors should also be aware that the market
value of the Securities may fluctuate in accordance with changes in the value
of common stocks generally. (See "The Trust -- Summary Description of the
Portfolio" and "The Trust -- Objective and Securities Selection" both in
Part B.)
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. An ADR is a receipt issued by an American depositary,
usually a bank, which evidences ownership of foreign securities on deposit with
a foreign entity, also usually a bank, which acts as custodian of such foreign
securities and as transfer and collection agent. Often, an ADR will represent
some multiple or fraction of the underlying foreign security, for example, an
ADR may represent ten shares of the foreign Issuer's underlying common stock.
The risks associated with an investment in foreign securities and ADRs
include currency fluctuations, which affect the U.S. dollar equivalents of the
foreign securities as quoted in their local currencies and, as a result, are
likely to affect the U.S. dollar value of the foreign security and any
dividends or other payments thereon. The foreign Securities may trade on
foreign exchanges on days that Units cannot be purchased or redeemed, which
limits Unitholders' ability to respond to changes in Unit value caused by
foreign market activity. Further, the varying economic, social and political
environments of the home countries of the foreign Issuers give rise to risks
not generally associated with investments in the securities of U.S.
corporations, such as expropriation, currency exchange restrictions,
withholding taxes and the inability to enforce judgments against the Issuer.
(See "The Trust -- Summary Description of the Portfolio" in Part B.)
Owning ADRs rather than the foreign securities themselves can provide
certain benefits, including greater ease of transferability, simplified
collection and conversion of dividends paid in foreign currencies into U.S.
dollars. However, in addition to the risks involved with foreign securities
generally, the voting and other ownership rights of holders of ADRs may be
different than those of holders of the actual foreign securities. ADRs can be
sponsored or unsponsored and both may be deposited in the Trust. There are
certain differences between sponsored and unsponsored ADRs that affect the
risks associated with ADRs generally. For more information about sponsored and
unsponsored ADRs, see "The Trust -- Summary Description of the Portfolio" in
Part B.
Holders of foreign Securities and ADRs, including holders of Units of the
Trust, will be subject to special tax consequences as a result of the receipt
<PAGE> 9
of distribution payments from foreign sources. (See "Federal Taxation --
Investment in Foreign Securities and ADRs" in Part B.)
Whether or not the Securities are listed on a national exchange, the
principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Securities may depend on whether dealers will make a market in the Securities.
There can be no assurance that a market will be made for any of the Securities,
that any market for the Securities will be maintained or of the liquidity of
the Securities in any markets made.
Underwriting
The Underwriter, Edward D. Jones & Co., has agreed to purchase all of the
Units. None of the Securities in the Trust were acquired through the
Underwriter's participation as sole underwriter or manager or as a member of
the underwriting syndicate for the public offering of such Securities. An
underwriter typically purchases securities, such as the Securities, from the
issuer on a negotiated or competitive bid basis in order to market such
securities to investors at a profit.
Trust Summary as of the Date of Deposit
The Trust contains 42 issues of Securities. On the Business Day prior to
the Date of Deposit, 20% of the aggregate market value of the Securities were
issued by entities located in the United Kingdom, which results in a portfolio
distribution which, to some extent, reduces the Trust's geographic distribution
of risk. On the Business Day prior to the Date of Deposit, the aggregate market
value of the Securities in the Trust was $937,118.
The Securities are listed or traded as follows:
Portfolio Numbers % of Aggregate
Market Value of Trust
--------------------- ---------------------
Listed on a U. S. National
Exchange....................... 1-8, 11-17, 19-21, 77%
24, 27-28, 30, 32-39,
41-42
Listed on a Foreign National
Exchange....................... 10, 22, 40 7%
Over-the-Counter................. 9, 18, 23, 25-26, 29, 16%
31 ----
100%
====
<PAGE> 10
On the initial Date of Deposit the distribution of Securities by type of
issuer were as follows:
Portfolio Numbers % of Aggregate
Market Value of Trust
--------------------- ---------------------
Electric......................... 6, 8-9, 11-13, 15, 40%
18, 22-23, 25-26,
28-31, 34
Gas.............................. 5, 10, 14, 16, 21, 13%
37
Water............................ 3, 40 5%
Combination -- Gas and Electric.. 20, 24, 27, 32, 39, 17%
41-42
Telecommunications............... 1-2, 4, 7, 17, 19, 25%
33, 35-36, 38 ----
100%
====
Portfolio Numbers % of Aggregate
Market Value of Trust
--------------------- ---------------------
Countries Represented
Argentina...................... 35 1%
Bolivia........................ 6 2%
Canada......................... 10, 37 4%
Hong Kong...................... 9, 18-19 6%
Mexico......................... 36 3%
Spain.......................... 13 3%
United Kingdom................. 7, 22-23, 25-26, 29,
31, 40 20%
United States.................. 1-5, 8, 11-12, 14-17, 61%
20-21, 24, 27-28, 30, ----
32-34, 38-39, 41-42
100%
====
<PAGE> 11
Exchange Rates
The following table sets forth the quarterly high and low United States
dollar exchange rates for the past seven years for the currencies in which
foreign Securities in the 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. The
table shows U.S. Dollars received for 100 foreign currency units.
<TABLE>
<CAPTION>
ARGENTINE BOLIVIAN CANADIAN HONG KONG MEXICAN SPANISH
PESO (1)(2) BOLIVIANO DOLLAR (4) DOLLAR (4) PESO (4) PESETA (4)
(1)(3)
-------------- -------------- -------------- -------------- -------------- --------------
High Low High Low High Low High Low High Low High Low
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mar. 31, 1987 79.67 64.78 53.33 .00005 76.56 72.53 12.95 12.75 109.40 89.40 0.79 0.76
Jun. 30, 1987 68.74 56.00 52.48 47.39 76.81 74.21 13.26 12.75 94.00 74.60 0.81 0.73
Sep. 30, 1987 55.55 38.00 49.35 47.34 76.42 74.76 12.86 11.84 73.90 63.30 0.83 0.78
Dec. 31, 1987 38.02 19.65 49.38 45.62 77.17 75.27 12.96 12.71 63.50 38.40 0.93 0.81
Mar. 31, 1988 19.65 15.00 47.39 43.61 80.87 79.95 12.92 12.73 45.30 43.10 0.92 0.86
Jun. 30, 1988 15.50 9.05 45.36 40.68 83.13 81.05 12.86 12.68 44.80 43.40 0.91 0.82
Sep. 30, 1988 8.93 6.78 44.74 38.85 83.63 80.66 12.91 12.66 62.50 43.00 0.83 0.79
Dec. 31, 1988 8.08 6.14 40.55 38.14 84.41 80.89 12.87 12.76 43.90 42.60 0.89 0.81
Mar. 31. 1989 6.12 1.99 40.78 38.01 84.73 83.14 12.88 12.72 43.80 41.50 0.89 0.85
Jun. 30, 1989 2.07 0.39 40.05 36.81 84.55 82.69 13.05 12.66 41.80 39.50 0.87 0.77
Sep. 30, 1989 0.39 0.15 39.79 35.27 85.41 83.66 12.87 12.74 40.70 38.30 0.86 0.80
Dec. 31, 1989 0.15 0.06 35.50 33.80 86.40 84.91 12.91 12.74 38.60 37.10 0.92 0.82
Mar. 31, 1990 0.06 0.02 34.79 31.53 86.51 82.89 12.80 12.77 38.10 35.90 0.93 0.92
Jun. 30, 1990 0.02 0.02 32.89 31.70 86.28 84.00 12.90 12.77 36.10 34.90 0.98 0.92
Sep. 30, 1990 0.02 0.02 32.67 29.99 88.44 85.41 12.88 12.83 37.20 34.30 1.05 0.98
Dec. 31, 1990 0.02 0.02 32.07 28.93 87.22 85.03 12.89 12.80 35.00 33.40 1.08 1.02
Mar. 31, 1991 0.02 0.01 30.13 27.63 87.07 85.87 12.85 12.81 34.00 31.90 1.10 0.94
Jun. 30, 1991 0.01 0.01 29.34 27.03 87.63 86.26 12.97 12.82 33.70 33.00 0.97 0.88
Sep. 30, 1991 0.01 0.01 28.91 26.64 88.33 86.23 12.92 12.86 33.50 32.60 0.95 0.87
Dec. 31, 1991 0.01 0.01 28.46 26.46 89.27 86.15 12.92 12.83 33.40 32.20 1.04 0.93
Mar. 31, 1992 102.34 0.01 27.25 25.65 87.64 83.28 12.96 12.85 34.10 32.10 1.04 0.94
Jun. 30, 1992 101.54 100.38 26.79 25.67 84.76 82.92 12.94 12.89 32.70 32.00 1.04 0.97
Sep. 30, 1992 101.37 100.00 26.36 22.59 84.64 79.80 12.95 12.85 32.70 32.00 1.11 0.94
Dec. 31, 1992 101.07 99.75 25.89 23.65 81.07 77.54 12.93 12.84 32.70 31.80 1.01 0.86
Mar. 31, 1993 100.95 99.87 25.11 22.98 80.48 77.82 12.94 12.92 32.77 31.56 0.90 0.84
Jun. 30, 1993 100.33 99.84 24.87 22.96 79.66 77.93 12.95 12.88 32.41 31.86 0.88 0.76
Sep. 30, 1993 101.01 99.67 23.89 22.64 78.26 74.93 12.94 12.88 32.26 31.92 0.78 0.69
Dec. 31, 1993 100.47 99.88 23.42 22.12 77.41 74.37 12.95 12.93 32.32 30.99 0.77 0.70
Mar. 31, 1994 100.23 99.99 22.54 21.66 76.49 72.27 12.95 12.90 32.21 29.78 0.73 0.69
<PAGE> 12
BRITISH
POUND (4)
--------------
High Low
------ ------
Mar. 31, 1987 161.70 156.25
Jun. 30, 1987 166.30 159.82
Sep. 30, 1987 166.00 162.70
Dec. 31, 1987 188.50 179.50
Mar. 31, 1988 186.91 176.80
Jun. 30, 1988 182.41 170.21
Sep. 30, 1988 170.47 166.72
Dec. 31, 1988 187.12 178.41
Mar. 31, 1989 172.53 168.52
Jun. 30, 1989 159.31 150.80
Sep. 30, 1989 162.15 153.65
Dec. 31, 1989 162.60 156.20
Mar. 31, 1990 166.47 159.71
Jun. 30, 1990 174.61 167.47
Sep. 30, 1990 191.97 184.77
Dec. 31, 1990 195.31 187.40
Mar. 31, 1991 190.15 173.55
Jun. 30, 1991 170.35 161.05
Sep. 30, 1991 175.16 169.31
Dec. 31, 1991 188.57 177.11
Mar. 31, 1992 175.40 170.01
Jun. 30, 1992 190.87 181.65
Sep. 30, 1992 200.40 170.73
Dec. 31, 1992 159.85 149.62
Mar. 31, 1993 151.23 143.30
Jun. 30, 1993 155.00 146.93
Sep. 30, 1993 155.10 149.63
Dec. 31, 1993 150.84 147.64
Mar. 31, 1994 150.30 147.55
- ----------
<FN>
(1) Source: Dow Jones Trade Line
(2) As of January 1, 1992, the Argentine government replaced the austral as the unit of currency with the peso. The
peso replaced the austral at a rate of 1 per 10,000.
(3) During the first quarter of 1987, the Bolivian government replaced the peso as the unit of currency with the
boliviano. The boliviano replaced the peso at a rate of 1 per 1,000,000.
(4) Source: FactSet Data Systems, Inc.
</TABLE>
<PAGE> 13
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of Unison Investment Trusts Ltd., The Bank of New York and the
Unitholders of Central Equity Trust, Worldwide Series 1, Utility and
Telecommunications Portfolio:
We have audited the statement of financial condition and the related
schedule of trust securities (included in the prospectus herein) of Central
Equity Trust, Worldwide Series 1, Utility and Telecommunications Portfolio as
of May 24, 1994. These financial statements are the responsibility of Unison
Investment Trusts Ltd., the Sponsor. Our responsibility is to express an
opinion on these financial 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. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall financial
statement presentation. In addition, the irrevocable letter of credit
arrangement for the purchase of securities, described in Note (a) to the
statement of financial condition, was confirmed by direct correspondence with
the Trustee. We believe that 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 Central Equity
Trust, Worldwide Series 1, Utility and Telecommunications Portfolio as of
May 24, 1994, in conformity with generally accepted accounting principles.
/S/ ARTHUR ANDERSEN & CO.
St. Louis, Missouri
May 24, 1994
<PAGE> 14
STATEMENT OF FINANCIAL CONDITION
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
AS OF DATE OF DEPOSIT, MAY 24, 1994
TRUST PROPERTY
Securities and Sponsor's Contracts to Purchase Securities (a)....... $937,118
=========
INTEREST OF UNITHOLDERS
Units of fractional undivided interest outstanding:
Cost to investors (a)(b).......................................... $985,175
Less: Gross underwriting commissions (c).......................... (48,057)
---------
Total..................................................... $937,118
=========
- ----------
[FN]
(a) The aggregate market value of the Securities and Securities represented by
contracts to purchase listed under "Schedule of Trust Securities" included
in Part A and their cost to the Trust are the same. The market value is
determined by the Trustee on the basis set forth under "Public Offering --
Public Offering Price" in Part B. An irrevocable letter of credit drawn on
Mercantile Bank of St. Louis National Association in the amount of
$1,500,000 has been deposited with the Trustee.
(b) The aggregate Public Offering Price is computed on the basis set forth
under "Public Offering -- Public Offering Price" in Part B.
(c) The aggregate sales charge of 4.9% of the Public Offering Price per Unit is
computed on the basis set forth under "Public Offering -- Public Offering
Price" in Part B.
<PAGE> 15
<TABLE>
<CAPTION>
SCHEDULE OF TRUST SECURITIES
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
MAY 24, 1994
Portfolio Number Name of Issuer of Securities or Percentage of Trust Cost of Securities
Number of Shares Securities Contracted For (1)(2) Based on Shares to Trust (3)
- --------- --------- ------------------------------------------------------- ------------------- ------------------
<C> <C> <C> <C> <C>
1 500 AT&T Corporation 1.10% $ 27,937
2 900 ALLTEL Corp. 1.98 23,625
3 800 American Water Works Company, Inc. 1.76 22,200
4 650 Ameritech Corporation 1.43 25,350
5 900 Bay State Gas Company 1.98 21,825
6 900 Bolivian Power Company Limited 1.98 21,038
7 1,200 Cable and Wireless plc (4) 2.64 25,500
8 1,000 Central & South West Corporation 2.20 22,375
9 3,800 China Light & Power Limited (5) 8.35 20,520
10 1,700 Consumers Gas Limited 3.74 21,620
11 1,100 DPL, Inc. 2.42 21,863
12 600 Duke Power Company 1.32 21,375
13 500 Empresa Nacional de Electricidad (4) 1.10 24,812
14 800 Enron Corporation 1.76 23,400
15 700 Entergy Corporation 1.54 19,863
16 600 Equitable Resources Incorporated 1.32 19,725
17 800 GTE Corporation 1.76 25,100
18 5,500 Hong Kong Electric Holdings Ltd. (4) 12.09 16,665
19 400 Hong Kong Telecommunications Limited (4) 0.88 23,800
20 800 Indiana Energy Incorporated 1.76 16,000
21 1,000 KN Energy,, Inc. 2.20 23,125
22 2,600 London Electricity plc 5.71 22,292
23 1,200 Midlands Electricity plc (4) 2.64 21,900
24 800 NIPSCO Industries, Inc. 1.76 24,600
25 400 National Power plc (4) 0.88 25,800
26 750 NORWEB plc (4) 1.65 21,188
27 800 Pacific Gas & Electric Company 1.76 20,200
28 1,000 Pennsylvania Power & Light Company 2.20 22,375
29 300 PowerGen plc (4) 0.66 21,900
30 1,200 The Southern Company 2.64 22,350
31 1,300 Southern Electric plc 2.86 23,237
32 800 Southern Indiana Gas & Electric Company 1.76 22,800
33 600 Southwestern Bell Corporation 1.32 24,225
34 1,100 TECO Energy, Inc. 2.42 22,138
35 200 Telefonica de Argentina 0.44 14,475
36 400 Telefonos de Mexico, S.A. de C.V. (4) 0.87 24,300
37 1,300 TransCanada PipeLines Limited 2.85 16,575
38 600 U S West Inc. 1.31 24,000
39 700 Union Electric Company 1.53 23,187
40 2,400 Welsh Water plc 5.26 22,133
41 900 Western Resources, Inc. 1.97 24,975
42 1,000 Wisconsin Energy Corporation 2.20 24,750
------ ------- --------
45,500 100% $937,118
====== ======= ========
(Continued)
<PAGE> 16
- ----------
<FN>
(1) The Securities were acquired between May 13, 1994 and May 23, 1994.
(2) All the Securities are represented by contracts to purchase.
(3) Valuation of Securities by the Trustee was made on the basis of the closing sale price on the securities exchange
on which they are listed on the day prior to the Date of Deposit, or, if no such price was available, the mean
between the closing bid and offer prices on the day prior to the Date of Deposit or other bases. The aggregate
purchase price to the Sponsor for the Securities deposited in the Trust is $946,180 and the Sponsor's net loss on
deposit is $9,062.
(4) Sponsored ADR. (See "The Trust -- Summary Description of the Portfolio and Risks Associated Therewith -- American
Depositary Receipts" in Part B.)
(5) Unsponsored ADR. (See "The Trust -- Summary Description of the Portfolio and Risks Associated Therewith --
American Depositary Receipts" in Part B.)
</TABLE>
<PAGE> 17
ISSUERS OF SECURITIES IN THE PORTFOLIO
The Sponsor anticipates that as of the initial Date of Deposit the Issuers
of the Securities will be the companies described below. However, depending
upon the availability of the Securities, the actual companies and the number of
companies represented may vary. The quality of the Securities in the final
Portfolio will be comparable to the quality of the Securities issued by the
companies described below.
AT&T Corporation
New York, New York. Dividends paid since 1984. AT&T is an industry leader
involved in moving and managing information via interstate and international
long distance telecommunications services, as well as systems, products and
services that combine communications and computers.
ALLTEL Corp.
Little Rock Arkansas. Dividends paid since 1961. ALLTEL provides local and
long-distance telephone service to more than 1.2 million customers in 25 of the
United States.
American Water Works Company, Inc.
Voorhees, New Jersey. Dividends paid since 1948. American Water Works is
the largest investor-owned water company in the United States operating more
than 100 water systems in 20 states.
Ameritech Corporation
Chicago, Illinois. Dividends paid since 1984. Ameritech is engaged in
providing exchange telecommunications and exchange access service to more than
12 million customers throughout the Great Lakes region of the United States.
Bay State Gas Company
Westborough, Massachusetts. Dividends paid since 1853. Bay State Gas
Company distributes natural gas to more than 264,000 customers in parts of
Maine, Massachusetts and New Hampshire.
Bolivian Power Company Limited
La Paz, Bolivia. Dividends paid since 1979. Bolivian Power Company is
engaged in the generation, transmission and sale of electricity in Bolivia.
Cable and Wireless plc
London, England. Dividends paid since 1979. Cable and Wireless provides
telecommunication services, including telephone services in the United Kingdom
and internationally. Cable and Wireless also operates worldwide digital radio
and fiber optic submarine cables.
<PAGE> 18
Central & South West Corporation
Dallas, Texas. Dividends paid since 1946. Central & South West is a public
utility holding company which engages in generating, purchasing and
distributing electricity. It's service area has a population of more than 4.1
million and covers 152,000 square miles.
China Light & Power Limited
Hong Kong. Dividends paid since 1974. China Light & Power is engaged in the
generation and supply of electricity in Kowloon and the New Territories in Hong
Kong.
Consumers Gas Limited
Toronto, Ontario, Canada. Dividends paid since 1981. Consumers Gas is
engaged in the distribution of gas, as well as in the exploration for and
production of oil and gas. Consumers Gas serves more than 1 million customers
in central and eastern Ontario.
DPL, Inc.
Dayton, Ohio. Dividends paid since 1919. DPL provides electric service to
an approximate area of 6,000 square miles in west central Ohio, as well as gas
service in 16 counties in Ohio.
Duke Power Company
Charlotte, North Carolina. Dividends paid since 1926. Duke Power provides
electricity to 4.5 million people in a 20,000 square mile area of central North
Carolina and western South Carolina.
Empresa Nacional de Electricidad
Madrid, Spain. Dividends paid since 1988. Empresa Nacional De Electricidad
generates electricity for sale to major distribution electric utilities in
Spain. The company, together with its subsidiaries, called ENDESA, is the
largest producer of electricity in Spain.
Enron Corporation
Houston, Texas. Dividends paid since 1935. Enron is in the business of
gathering, transportation and wholesale marketing of natural gas. Enron
operates a 44,000 mile pipeline system on two continents.
Entergy Corporation
New Orleans, Louisiana. Dividends paid since 1988. Entergy supplies
electricity to portions of Arkansas, Louisiana, Mississippi and Missouri
through its four subsidiaries.
Equitable Resources Incorporated
Pittsburgh, Pennsylvania. Dividends paid since 1950. This natural gas
distributor provides services to 263,000 residential, industrial and commercial
customers in parts of Pennsylvania, West Virginia and Kentucky.
<PAGE> 19
GTE Corporation
Stamford, Connecticut. Dividends paid since 1936. GTE owns the largest
non-Bell telecommunication system and serves more than 20 million access lines
in 40 of the United States.
Hong Kong Electric Holdings Ltd.
Hong Kong. Dividends paid since 1979. Hong Kong Electric's principal
activities are the generation and supply of electricity to Hong Kong and China.
Hong Kong Telecommunications Limited
Hong Kong. Dividends paid since 1989. Hong Kong Telecommunications has
exclusive franchises for local and international telecommunications services in
Hong Kong. The company has 2.82 million lines in service, which equates to
approximately 64 lines per 100 customers.
Indiana Energy Incorporated
Indianapolis, Indiana. Dividends paid since 1946. Indiana Energy is a
holding company whose main subsidiary, Indiana Gas, distributes natural gas in
lower two-thirds of Indiana.
KN Energy, Inc.
Lakewood, Colorado. Dividends paid since 1937. KN Energy is a natural gas
services company operating in more than 330 communities serving more than 226,
000 customers in Colorado, Kansas, Nebraska and Wyoming.
London Electricity plc
London, England. Dividends paid since 1989. London Electricity is in the
business of licensed distribution and supply of electricity to commercial,
domestic and industrial customers within the London area.
Midlands Electricity plc
Halesowen, West Midlands, England. Dividends paid since 1990. Midlands
Electricity distributes and supplies electricity, supplies natural gas,
electrical contracting and appliance retailing and servicing to the United
Kingdom.
NIPSCO Industries, Inc.
Hammond, Indiana. Dividends paid since 1944. NIPSCO is the holding company
for Northern Indiana Public Service which supplies electricity and natural gas
to 2.2 million customers in 30 northern communities of Indiana.
National Power plc
Wiltshire, England. Dividends paid since 1990. National Power's principal
business is the generation and sale of electricity; import of coal; and
purchase of gas throughout the United Kingdom.
<PAGE> 20
NORWEB plc
Manchester, Lancashire, England. Dividends paid since 1990. Norweb is
involved in the generation, distribution and supply of electricity to the
northwest region of the United Kingdom. It also provides electrical
contracting, and electrical appliance retail and service.
Pacific Gas & Electric Company
San Francisco, California. Dividends paid since 1919. Pacific Gas &
Electric provides electricity and natural gas to more than 7.5 million
customers in an area of northern and central California which includes the
cities of Oakland, San Francisco and San Jose.
Pennsylvania Power & Light Company
Allentown, Pennsylvania. Dividends paid since 1946. Pennsylvania Power &
Light supplies electricity to approximately 1.2 million customers in 29
counties in east central Pennsylvania.
PowerGen plc
London, England. Dividends paid since 1990. PowerGen is engaged in the
generation and sale of electricity throughout the United Kingdom.
The Southern Company
Atlanta, Georgia. Dividends paid since 1948. The Southern Company's five
subsidiaries supply electricity to 11 million customers across 120,000 square
miles in Alabama, Florida, Georgia and Mississippi.
Southern Electric plc
Maidenhead, Berkshire, England. Dividends paid since 1990. Southern
Electric is engaged in the generation of electricity, electrical and utility
contracting, electrical retailing, building environmental control systems and
gas marketing in the United Kingdom.
Southern Indiana Gas & Electric Company
Evansville, Indiana. Dividends paid since 1944. Southern Indiana Gas &
Electric sells electricity and gas to 212,000 customers in southwestern
Indiana.
Southwestern Bell Corporation
San Antonio, Texas. Dividends paid since 1984. Via its 12.8 million access
lines, Southwestern Bell provides communication services in Arkansas, Kansas,
Missouri, Oklahoma and Texas.
TECO Energy, Inc.
Tampa, Florida. Dividends paid since 1900. TECO's principal subsidiary,
Tampa Electric, sells electricity to nearly 500,000 customers in central west
Florida.
<PAGE> 21
Telefonica de Argentina
Buenos Aires, Argentina. Dividends paid since 1991. Telefonica de Argentina
provides telecommunication services and has exclusive rights to provide
services to approximately 53% of Argentina.
Telefonos de Mexico, S.A. de C.V.
Mexico City, Mexico. Dividends paid since 1986. Telefonos de Mexico,
Mexico's third largest company, provides all national and international long
distance as well as local telephone service to approximately 7,320 communities
throughout Mexico.
TransCanada PipeLines Limited
Calgary, Alberta, Canada. Dividends paid since 1964. TransCanada PipeLines
owns and operates a pipeline system to transport natural gas from western
Canada to domestic and United States markets.
U S West Inc.
Englewood, Colorado. Dividends paid since 1984. U S West, a regional
telephone holding company, has more than 12.9 million access lines in service
to 14 western states.
Union Electric Company
St. Louis, Missouri. Dividends paid since 1906. Union Electric supplies
electric and gas service to the metropolitan St. Louis area and nine Missouri
counties with a population of 2.7 million.
Welsh Water plc
Powys, Wales, England. Dividends paid since 1990. Welsh Water is engaged in
water and sewerage based activities and provides a range of engineering and
environmental services throughout Wales and internationally.
Western Resources, Inc.
Topeka, Kansas. Dividends paid since 1924. Western Resources is a
combination electric and natural gas operating public utility engaged in the
generation, distribution and sale of electric energy in Kansas, Missouri and
Oklahoma.
Wisconsin Energy Corporation
Milwaukee, Wisconsin. Dividends paid since 1939. Wisconsin Energy serves
1.1 million electric and gas customers in 400 communities in upper Michigan and
Wisconsin.
- ----------
While the stocks of many of these companies have impressive histories of
capital appreciation and dividend payments, no representation is made as to
future capital appreciation or the ability of any company to continue paying
dividends without interruption. (See "The Trust -- Summary Description of the
Portfolio" and "The Trust -- Risks and Other Considerations Concerning
Electric, Gas, Water and Telecommunications Industries" in Part B.)
<PAGE> 22
CENTRAL EQUITY TRUST, WORLDWIDE SERIES
Utility & Telecommunications Portfolio
SPONSOR: Unison Investment Trusts, Ltd.
The Case for Equities
One of your most important investment decisions may be how you allocate
your investment dollars among various investments. Each investment offers its
own rewards as well as risks. Spreading your investment dollars among different
types of investments can aid in balancing these rewards and risks. Many
investment experts recommend stocks for the potential of long term capital
growth and rising dividend income.
The following chart shows how a dollar invested on January 1, 1987 in each
of the investment options* would have performed over the seven year period
ended December 31, 1993 as compared to the rate of inflation over the same time
frame.
Inflation Common Stocks L-T Corp L-T Gov't T-Bills
Bonds Bonds
---------- ------------- ------------ ----------- ----------
Value of Value of Value of Value of Value of
$1.00 $1.00 $1.00 $1.00 $1.00
---------- ------------- ------------ ----------- ----------
12/31/87 1.0441 1.0523 0.9973 0.9729 1.0547
12/31/88 1.0902 1.2292 1.1040 1.0670 1.1217
13/31/89 1.1409 1.6163 1.2832 1.2602 1.2156
12/31/90 1.2107 1.5650 1.3702 1.3381 1.3105
12/31/91 1.2477 2.0431 1.6427 1.5963 1.3839
12/31/92 1.2839 2.1999 1.7970 1.7248 1.4325
12/31/93 1.3192 2.4196 2.0340 2.0395 1.4740
(The above chart is not intended to show how an investment in Central
Equity Trust, Worldwide Series would have performed or is predicted to perform
in the future.)
- ----------
* Total annual return is the sum of capital appreciation returns, income
returns, and reinvestment returns.
The data presented here are total returns for:
1. Common Stocks, represented by the Standard and Poor's 500 Stock
Composite Index (S&P 500);
2. Long-Term Corporate Bonds, represented by the Salomon Brothers
long-term, high-grade corporate bond total return index;
3. Long-Term Government Bonds, measured using a one-bond portfolio with a
maturity near twenty years;
4. U.S. Treasury Bills, measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the bill having
the shortest maturity not less than one month;
5. Inflation, measured by the Consumer Price Index for All Urban
Consumers (CPI-U), not seasonally adjusted.
Source: Stocks, Bonds, Bills, and Inflation 1994 Yearbook -- Ibbotson
Associates, Chicago
These investments possess different risk characteristics.
<PAGE> 23
Global Opportunities
The Sponsor believes promising investment opportunities that are consistent
with the objectives of the Trust exist in selected international equity
markets. Investments in these markets can also provide greater geographic
diversification of risk, although they may also present additional risks not
associated with domestic equity markets.
Why Central Equity Trust, Worldwide Series?
The objective of Central Equity Trust, Worldwide Series is to provide
investors with a simple and convenient way to receive current income and the
potential for capital appreciation through a diversified portfolio of utility
and telecommunications securities issued by both domestic and selected foreign
companies. By purchasing a unit of Central Equity Trust, Worldwide Series,
investors not only avoid the difficulties of selecting and supervising
securities by themselves, but also gain enhanced diversification of risk by
investing in securities of numerous issuers and geographic locations.
Central Equity Trust, Worldwide Series is suited for an investor who
prefers to seek the potential of capital appreciation by purchasing
professionally selected investments and holding them for a predetermined period
rather than through active trading. Although not actively "managed" by the
Sponsor or Trustee; securities may be sold in order to meet redemptions or
under certain limited circumstances.
<PAGE> 24
PROSPECTUS PART B
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
----------------------------------------
Part B of this Prospectus may not be
distributed unless accompanied by Part A
----------------------------------------
INTRODUCTION
This series of the Central Equity Trust (the "Trust") was created on the
date set forth on the cover of Part A of the Prospectus (the "Date of Deposit")
under the laws of the State of New York pursuant to a Trust Agreement (the
"Agreement") dated as of the Date of Deposit and a related Standard Terms and
Conditions of Trust (the "Indenture", collectively with the Agreement, the
"Indenture and Agreement")* by and between Unison Investment Trusts Ltd. (the
"Sponsor") and The Bank of New York (the "Trustee"). The purpose and objectives
of the Trust are to provide current income and the potential for capital
appreciation through investment in a fixed portfolio of securities which may
consist of common stocks, American Depositary Receipts ("ADRs") and convertible
securities (which may include dividend-paying convertible preferred stock or
interest paying convertible debt, such as debentures) issued by domestic and
foreign electric, gas, water and telecommunications companies. Some of the
securities in the Trust may be restricted securities under Rule 144A of the
Securities Act of 1933 ("Restricted Securities"). (Such common stock, ADRs and
convertible securities, or the contracts for the purchase thereof, together
with irrevocable letters of credit or cash in amounts sufficient to make such
purchases, are referred to herein as "Securities". The Securities on deposit in
the Trust are herein collectively referred to as the "Portfolio".) The
Portfolio allows investors greater diversification than they might be able to
acquire individually. The issuers of the Securities in the Portfolio, together
with the issuers of the foreign common stocks underlying any ADRs, are
collectively referred to herein as the "Issuers". The Securities may provide
income or are considered to have the potential for capital appreciation or
both. ADRs provide income in the form of distribution payments of dividends
received on the underlying foreign securities, while common stocks provide
income in the form of dividends. Any reference in this Prospectus to
"dividends" shall also refer to distribution payments made with respect to any
ADRs and, unless the context requires otherwise, interest payments on
convertible debt securities in the Portfolio. The value of the Units of the
Trust will fluctuate with the value of the Portfolio. There can be no assurance
that the Trust's objectives will be met due to the various investment risks
involved with the Securities. See "The Trust -- Summary Description of the
Portfolio", below. Furthermore, diversification of the Trust's assets will not
eliminate the risk of loss inherent in the ownership of common stock, ADRs or
securities convertible into common stock.
- ----------
* Reference is hereby made to the Indenture and Agreement and any statements
contained herein are qualified in their entirety by the provisions of the
Indenture and Agreement.
<PAGE> 25
On the Date of Deposit, the Sponsor deposited with the Trustee the
Securities described in the "Schedule of Trust Securities" in Part A. (See
"Schedule of Trust Securities" in Part A.) With the deposit of the Securities,
the Sponsor established a proportionate relationship (the "Proportionate
Relationship") among the number of shares of common and/or convertible
preferred stock, ADRs and convertible debt securities (based on the aggregate
face amount divided by the minimum authorized denomination) per Unit of each
Security in the Trust. The Trust was created simultaneously with the deposit of
the Securities with the Trustee and the execution of the Agreement. The Trustee
then immediately delivered to the Sponsor or to the order of the Sponsor the
units of beneficial interest (the "Units") comprising the entire ownership of
the Trust. Through this Prospectus, Edward D. Jones & Co. (the "Underwriter")
is offering the Units, including additional Units issued from time to time as
described below, for sale to the public. The holders of the Units (the
"Unitholders") will have the right to have their Units redeemed at a price
based on the market value of the Securities (the "Redemption Price"; see
"Rights of Unitholders -- Redemption of Units" herein), if they cannot be sold
in the secondary market which the Underwriter, although not obligated to do so,
proposes to maintain. (See "Public Offering -- Secondary Market" herein.)
From time to time following the initial Date of Deposit, the Sponsor, pursuant
to the Indenture, may deposit additional Securities in the Trust and Units may
be continuously offered for sale to the public by means of this Prospectus,
resulting in a potential increase in the outstanding number of Units of the
Trust. Any additional deposits of Securities into the Trust will maintain
substantially the Proportionate Relationship established on the Date of
Deposit, as adjusted to reflect the occurrence of any stock dividend, stock
split or a similar event which affects the capital structure of the Issuer of a
Security, but does not affect the Trust's percentage ownership of the common
stock equity of such Issuer at the time of such event; provided, however, that
in the event that an Issuer of Securities offers securities in exchange for, or
otherwise distributes different securities with respect to, Securities in the
Trust, the Sponsor may direct the Trustee to accept or reject such offer or
distribution and hold for deposit or sell such securities. The Proportionate
Relationship is also subject to adjustment to reflect the sale of Securities
for reasons described under "Administration of the Trust -- Administration of
the Portfolio" herein, to reflect the conversion of a convertible security to
common stock or an exchange of ADRs for underlying common stock. At the time of
a conversion or exchange the Proportionate Relationship will be re-established
by using the number of shares obtained as the basis for the new determination.
For a description of the circumstances under which convertible securities may
be converted to common stock or ADRs exchanged therefor see, "The Trust --
Summary Description of the Portfolio -- Convertible Securities" and "--
American Depositary Receipts", below. 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. Thus, although additional Units will be issued, each Unit will
continue to represent substantially the same number of each of the Securities,
and the Proportionate Relationship will remain substantially the same as was
the case prior to the deposit of additional Securities.
On the Date of Deposit, each Unit represented the fractional undivided
interest in the Trust described in the "Summary of Essential Information" in
Part A. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited in the
Trust by the Sponsor, a Unitholder's fractional undivided interest in the Trust
represented by each unredeemed Unit will increase or decrease accordingly,
<PAGE> 26
although the Trust assets represented by each Unit will not be changed as a
result of such additional Securities being deposited by the Sponsor.
The Sponsor may purchase certain Replacement Securities in the event of
certain failures of a contract to purchase a Security and the Sponsor may also
direct the Trustee to dispose of Securities upon the occurrence of adverse
credit factors or under other specified circumstances. (See "Administration of
the Trust -- Administration of the Portfolio" herein.) Furthermore, if any
Units are redeemed, the amount of Securities in the Trust will be reduced and
the fractional undivided interest represented by each remaining Unit in the
balance of the Trust will be increased, although the actual interest in the
Trust represented by each Unit will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unitholder (which
may include the Sponsor and the Underwriter) or until the termination of the
Trust pursuant to the Indenture and Agreement. Unless otherwise terminated as
provided in the Indenture and Agreement, the Trust will be terminated on the
Mandatory Termination Date set forth in the "Summary of Essential Information"
in Part A (the "Mandatory Termination Date"). Prior to the termination of the
Trust, the Trustee, unless directed otherwise by the Sponsor, will begin
selling the Securities. Upon termination, any remaining Securities will be
sold. The Trust may be terminated earlier than the Mandatory Termination Date
under certain conditions. (See "Administration of the Trust -- Amendment or
Termination" herein.)
THE TRUST
Summary Description of the Portfolio and Risks Associated Therewith
An investment in Units should be made with an understanding of the risks
that an investment in domestic and foreign common stock, ADRs, convertible
securities and Restricted Securities entails. The considerations described
herein with respect to common stock also apply generally to any ADRs and, to a
certain extent, those Securities that are convertible to common stock.
Whether or not the Securities are listed on a national exchange, the
principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Securities may depend on whether dealers will make a market in the Securities.
There can be no assurance that a market will be made for any of the Securities,
that any market for the Securities will be maintained or of the liquidity of
the Securities in any markets made.
In the event of a failure of a contract for the purchase of Securities for
reasons beyond the control of the Sponsor or Trustee (the "Failed Contract
Securities"), the Sponsor may purchase other securities of the type and
character of Securities in the Portfolio (the "Replacement Securities") and
deposit such Replacement Securities in the Trust. The Replacement Securities
must be purchased within 20 days after delivery by the Sponsor to the Trustee
of notice of the failed contract, and the cost to the Trust for such
Replacement Securities may not exceed the amount available under the letter of
credit deposited by the Sponsor with respect to such Failed Contract
Securities. In the event the Sponsor is unable to replace the Failed Contract
Securities as provided above, the Trustee shall distribute to the Unitholders
the amount of cash in the Trust attributable to such Failed Contract
Securities. Neither the Sponsor nor the Trustee shall be liable in any way for
any failure of any contract for the purchase of the Securities. However, should
any contract for the purchase of any of the Securities deposited hereunder
<PAGE> 27
fail, the Sponsor will, unless substantially all of the moneys held in the
Trust to cover such purchase are reinvested in Replacement 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. In the event of any refund, each individual Unitholder's
basis in his units will be reduced by the amount refunded to such Unitholder,
and each Unitholder's income would also be reduced by his pro rata interest in
the income attributable to the Failed Contract Securities.
The Trust is organized as a unit investment trust and not as a management
investment company. Therefore, neither the Trustee nor the Sponsor has the
authority to manage the Trust's assets fully in an attempt to take advantage of
various market conditions to improve the Trust's market value. However, because
certain of the Securities from time to time may be sold or, with respect to
convertible securities, converted to common stock or, with respect to ADR's,
exchanged for common stock, under certain circumstances described herein, and
because the proceeds from any such sales are to be distributed to Unitholders
and because under certain circumstances additional and/or different Securities
may be deposited into the Trust, no assurance can be given that the Trust will
retain for any length of time its present size and composition. (See
"Administration of the Trust -- Administration of the Portfolio" herein.)
Common Stock. Risks of common stock include those arising from the fact
that the rights of common stock owners to payments are generally inferior to
creditors, debt holders and preferred stock owners of the issuing company.
Common stock owners are also subject to risks of declines in the stock market
generally or in the market for stocks in the industry sector in which the
company operates and the worsening of the financial condition of a company or
the economy in which it operates. Such risks may result in declines in values
of the common stocks which in turn would negatively affect the value of Units.
Although actions have been taken to provide a diversified portfolio of equity
securities, which tends to reduce the effects of these risks, no guarantee can
be made that they will not occur and negatively affect the value of Units.
Holders of common stock of the type held in the Trust have a right to
receive dividends only when, if, and in the amounts declared by the issuer's
board of directors and to participate in amounts available for distribution by
the issuer only after all other claims on the issuer have been paid or provided
for. The issuance of debt securities and preferred stock will create superior
claims for payment of principal and interest (in the case of debt securities)
and dividends (in the case of preferred stock) which could adversely affect the
ability and inclination of the company to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to assets of
the company upon liquidation or bankruptcy. Further, unlike debt securities,
which typically have a stated principal amount payable at maturity (the value
of which will be subject to market fluctuations prior thereto), or preferred
stocks, which typically have liquidation preference and which may have stated
optional or mandatory redemption provisions, common stocks do not have a fixed
principal amount or a maturity date and their value is subject to market
fluctuations for as long as the common stocks remain outstanding. The market
value of the common stocks in the Trust thus is expected to fluctuate over the
entire life of the Trust to market values higher or lower than those prevailing
on the Date of Deposit. See also, "Convertible Securities" below for the
effects of market fluctuations on such Securities. The Sponsor may direct the
Trustee to dispose of Securities under certain specified circumstances but the
Securities will not be sold by the Trustee as a result of ordinary market
<PAGE> 28
fluctuations. (See "Administration of the Trust -- Administration of the
Portfolio" herein.)
Foreign Securities. An investment in Units should also be made with an
understanding of the additional risks and consequences an investment in foreign
common stock, either directly or through ADRs, entails, including the risk of
becoming subject to special tax consequences due to the receipt of income from
foreign sources. (See "Federal Taxation -- Investment in Foreign Securities and
ADRs" herein.)
Elements of risk associated with investing in foreign securities include
but are not limited to trade balances and imbalances and related economic
policies; currency exchange rate fluctuations; non-U.S. currency exchange
control policies; expropriation or confiscatory taxation; limitations on the
removal of funds or other assets; political or social instability; the diverse
structure and liquidity of securities markets in various countries and regions;
policies of government with respect to possible nationalization of their own
industries; and other specific local political and economic considerations.
Companies located outside the United States may operate under different
accounting, auditing and financial reporting regulations than U.S. companies.
Further, it may be more difficult to obtain and enforce a judgment against a
foreign Issuer. Securities traded on foreign exchanges may trade on days when
the Trust does not accept orders for purchase, redemption or exchange of Units.
Therefore, the value of Units may be affected by foreign market activity on
days when Units cannot be purchased or redeemed.
An investment in Units should be made with particular attention to risks
presented by probable changes in future currency exchange rate relationships,
especially during periods of broad adjustments in such relationships. Foreign
Securities in the Portfolio have been issued by corporations that, to the
extent they pay dividends, pay them in foreign currencies. In the past, the
values of most foreign currencies have fluctuated widely against the United
States dollar for many reasons, including supply and demand of the respective
currency, monetary policies, the soundness of the world economy and the
strength of a particular foreign economy as compared to the economies of the
United States and other countries. Thus, even though a foreign Issuer's
dividend payment may remain constant in its local currency, the U.S. dollar
value of the distribution will vary with fluctuations in the U.S. dollar
exchange rates for the relevant currency. The Sponsor anticipates that
dividends received by the foreign custodians in foreign currencies will be
converted on the date of receipt, or as soon as practicable thereafter, to U.S.
dollars. Due to fluctuations in exchange rates and possible delays in the
conversions of dividends to U.S. dollars, the U.S. dollar value of the dividend
on the date of receipt may not reflect, exactly, the actual amount in U.S.
dollars the Trust will receive. For a historical record of currency
fluctuations for the currencies represented by Securities in the Trust, see
"Summary of Essential Information -- Exchange Rates" in Part A.
To the best knowledge of the Sponsor on the Date of Deposit, none of the
foreign securities, including those underlying any ADRs, in the Portfolio were
subject to currency exchange control restrictions which would materially
interfere with the payment or receipt of dividends on such underlying
securities. However, there can be no assurance that currency exchange control
regulations will not be adopted in the future that would adversely affect such
payments.
<PAGE> 29
American Depositary Receipts. An ADR is a receipt that is issued by an
American depositary, usually a bank, and which is denominated in and represents
the ownership of a specified number of foreign securities on deposit with a
foreign entity, also usually a bank, that acts as custodian of and transfer and
collection agent with respect to such foreign securities. ADRs are generally
subject to the same risks associated with the foreign common stock of which
ADRs are comprised. See "Foreign Securities" above. However, the structure of
ADRs in some cases can mitigate those risks, but give rise to different ones.
Ownership of ADRs by U.S. investors can provide certain advantages over direct
ownership of the foreign securities, including greater ease of transferability
and simplified collection and conversion of dividends paid in foreign
currencies. However, ownership of ADRs also poses certain disadvantages in
comparison to direct ownership of the foreign securities. For example, holders
of ADRs may not be able to participate in foreign warrants and rights offerings
or in certain exchange or tender offers involving foreign issuers. ADR
depositaries will typically sell warrants and subscription rights, if they are
transferable, and distribute the proceeds, which are often less than the value
of the securities represented by such warrants or subscription rights, to the
ADR holders. Further, in some cases the voting rights of owners of foreign
stock are restricted by the home country, and the flow of information from the
foreign issuer to ADR holders may be delayed or reduced. The depositary and
custodian usually charge fees upon the deposit and withdrawal of securities,
the conversion of dividends to U.S. dollars, the disposition of non-cash
distributions and the performance of other services.
ADR holders have the right to demand and receive actual securities in
exchange for their ADRs. Furthermore, ADR facilities may be terminated, in
which case the ADR holder may come into possession of the underlying
securities. If such an event were to occur, the advantages of holding ADRs
described above would be lost and the tax consequences to the holder could
change. If the common stock underlying an ADR becomes listed on a United States
securities exchange or national market system and the Sponsor determines that
it is in the best interest of unitholders to do so, ADRs may be exchanged for
shares of the common stock underlying such ADRs. Otherwise, neither the
Trustee nor the Sponsor is authorized under the Indenture and Agreement to
initiate such an exchange. However, if an ADR facility is terminated, the
Sponsor may, but is not required to, direct the Trustee to sell any underlying
securities it may receive and distribute the proceeds of such sale to the
Unitholders pursuant to the terms of the Indenture and Agreement. In some
cases, an unsponsored ADR facility (see below for a discussion of sponsored and
unsponsored ADRs) may be terminated upon the creation of a sponsored ADR
facility. In such cases, it is the usual practice for the sponsor of the
facility to effect an exchange of its sponsored ADRs for the outstanding
unsponsored ADRs and to pay the costs of such exchange. Such an occurrence, in
and of itself, will not constitute an event that gives rise to the ability of
the Sponsor to direct the Trustee to sell the ADR. (See, "Administration of the
Trust -- Administration of the Portfolio" herein.)
An ADR facility may be established by a foreign issuer that seeks to have
its securities traded in the United States, in which case the ADRs are referred
to as "sponsored", or the ADR facility may be initiated by an entity unrelated
to the foreign issuer, usually a brokerage firm, that seeks to make a market in
the foreign security, in which case the ADRs are referred to as "unsponsored".
In the case of a sponsored ADR, the foreign issuer enters into an
arrangement with a single American depositary and a foreign custodian and
usually agrees to pay certain administrative and shareholder related fees and
<PAGE> 30
expenses, although ADR holders will bear certain costs. Under the terms of most
sponsored ADRs, depositaries undertake to distribute notices of shareholder
meetings and voting instructions and to make other shareholder communications
available to ADR holders upon the foreign issuer's instruction. Generally, the
underlying security of a sponsored ADR will be registered with the Securities
and Exchange Commission, making the ADR eligible for listing on United States
exchanges. In either the case of sponsored or unsponsored ADRs, however, there
may be less information generally available about the underlying Issuer than
there would be about a U.S. Issuer.
In the case of an unsponsored ADR, the fees and expenses of the facility
are generally born solely by the ADR holders. In addition, the depositary is
frequently under no contractual obligation to distribute shareholder
communications of any type or to pass through voting rights to the ADR holders.
Other unsponsored ADRs with respect to the same underlying security are often
established by other market makers and depositaries. Such duplicate ADRs are
treated as fungible in the trading markets. Therefore, when duplicate
unsponsored ADRs exist, there is no mechanism that links a particular
unsponsored ADR to its actual depositary or the distributions made by it.
Instead, unsponsored ADRs are usually held on deposit with U.S. clearing
agencies, which take in the various unsponsored ADR distributions and forward
them on to the ADR owners. Additionally, if a holder of an unsponsored ADR
seeks to exchange the ADR for the underlying securities there can be delays in
settlement if it becomes necessary to trace the ADR to its issuing depositary.
This may occur if other depositaries refuse to accept the ADR or have
insufficient securities to effect the exchange. Because the underlying
securities are not generally registered in the United States and because the
underlying securities may have been issued at different times, there is a
possibility that if an unsponsored ADR is exchanged for underlying securities,
or the ADR holder otherwise receives the underlying securities, such holder may
come into possession of unregistered restricted securities which cannot be sold
in the U.S. until certain statutory waiting periods have expired.
Convertible Securities. The Sponsor believes that the characteristics of
convertible securities make them appropriate investments for an investment
company seeking to achieve current income with the potential for capital
appreciation. These characteristics include the potential for capital
appreciation if the value of the underlying common stock increases or interest
rates decrease, the relatively high yield received from interest payments as
compared to common stock dividends and decreased risks of decline in value
relative to the underlying common stock due to their fixed income nature. As a
result of the conversion feature, however, the interest rate or dividend
preference on a convertible security is generally less than would be the case
if the securities were not convertible. During periods of rising interest
rates, it is possible that the potential for capital gain on a convertible
security may be less than that of a common stock equivalent if the yield on the
convertible security is at a level which would cause it to sell at a discount.
The Trust may convert a convertible security only (i) when necessary to permit
orderly disposition of the investment when it approaches maturity or has been
called for redemption, (ii) when the recurring regular dividend on the
underlying common stock, as determined by multiplying the number of underlying
shares represented by the convertible Securities in the Trust by the dividend
rate, exceeds the amount of interest or dividend income paid annually on such
convertible Securities and such common stock dividend income is expected to
remain above such interest or dividend income on the convertible security,
(iii) whenever the Issuer of the convertible Security has exercised its call or
similar option with respect thereto, or in connection with the final maturity,
<PAGE> 31
if any, of such convertible security, and the aggregate value of the underlying
common stock on the last Business Day prior to the day on which the owner of
the convertible Security cannot avoid the redemption thereof or the date of
such final maturity, as the case may be, exceeds the amount to be received upon
the redemption or maturity of the convertible Security, or (iv) to facilitate
its sale after the Sponsor determines that such sale is appropriate in
accordance with the guidelines set forth under "Administration of the Trust --
Administration of the Portfolio", below. If the circumstances described in
either clauses (ii) or (iii) above occur, the Trustee is required to exercise
the conversion option. Since the Trust is not a "managed" investment company,
the Trust will not be able to exercise its conversion rights for any other
reason nor may the Trust avoid conversions required pursuant to clauses (ii)
and (iii) above. Investors should be aware that the inability of the Trust to
otherwise exercise, or avoid exercising, its conversion rights may prevent the
Trust from taking advantage of market conditions that could make conversion
attractive to other holders of those convertible securities.
Many convertible securities are not deemed to be of investment grade, that
is, they are not considered to be among those securities with a relatively
strong likelihood of repayment. To the extent that the likelihood of payment on
such convertible securities is deemed lower than investment grade (i.e., "high
yield" or "junk bond" status) or such convertible securities are not rated by a
nationally recognized rating agency, there may be a greater risk as to the
timely repayment of the principal of, and timely payment of interest or
dividends on, those securities. Such securities are considered by the rating
agencies to be predominantly speculative and involve major risk exposures such
as increased sensitivity to interest rate and economic changes and limited
liquidity.
In the absence of adequate anti-dilution provisions in a convertible
security, dilution in the value of the Trust's holdings may occur in the event
the underlying stock is subdivided, additional securities are issued, a stock
dividend is declared, or the issuer enters into another type of corporate
transaction which increases its outstanding equity securities. Every
convertible security may be valued, on a theoretical basis, as if it did not
have a conversion privilege. This theoretical value is determined by the yield
it provides in comparison with the yields of other securities of comparable
character and quality which do not have a conversion privilege. This
theoretical value, which will change with prevailing interest rates, the credit
standing of the issuer and other pertinent factors, is often referred to as the
"investment value", and represents the security's theoretical price support
level.
"Conversion value" is the amount a convertible security would be worth in
market value if it were to be exchanged for the underlying equity security
pursuant to its conversion privilege. Conversion value fluctuates directly with
the price of the underlying equity security, usually common stock. If, because
of low prices for the common stock, the conversion value is substantially below
the investment value, the price of the convertible security is governed
principally by the factors described in the preceding paragraph. If the
conversion value rises near or above its investment value, the price of the
convertible security generally will rise above its investment value and, in
addition, will sell at some premium over its conversion value. This premium
represents the price investors are willing to pay for the privilege of
purchasing a fixed-income security with a possibility of capital appreciation
due to the conversion privilege. If this appreciation potential is not
realized, this premium may not be recovered. In its selection of convertible
<PAGE> 32
securities for the Trust, the Portfolio Consultant will not emphasize either
investment value or conversion value, but will consider both in light of the
Trust's overall investment objectives.
Some of the convertible securities in the Trust portfolio may be
"Pay-In-Kind" securities. During a designated period from original issuance,
the issuer of such security may pay dividends or interest to the holder by
issuing additional fully paid and nonassessable shares or units of the same
security. In addition, some convertible debt securities may be paid in shares
of common stock upon the maturity thereof. In such cases, such underlying
common stock will be deposited into the Trust.
Restricted Securities. Up to 15% of the net assets of the
Trust on the initial date of deposit may be exempt from registration under
Rule 144A of the Securities Act of 1933. Restricted Securities may be offered
and sold only to "qualified institutional buyers" as such term is defined under
that Rule. Such restriction of the offer and sale of Restricted Securities may
affect the market for such Securities and it is not possible to predict whether
a market will develop or if developed whether it will be maintained. This may
have a negative affect on the ability of the Sponsor to direct a sale of such
Securities if necessary and allowable under the Indenture and Agreement. See
"Summary of Essential Information" in Part A for the percentage of Restricted
Securities initially deposited in the Portfolio.
Risks and Other Considerations Concerning Electric, Gas, Water and
Telecommunications Industries
The Trust will invest in Securities of domestic and foreign companies in
the electric, gas, water and/or telecommunications industries. (See "Schedule
of Trust Securities" in Part A.) 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 domestic electric, gas, water
and/or telephone company common stock. In the U.S. 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
<PAGE> 33
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
("LDC's") to negotiate purchases directly with producers. These changes,
however, have resulted in significant transition costs and increased
competition. For example, LDC's now face the risk of losing major customers who
can fill their requirements through direct negotiation with producers if the
LDC's 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. LDC's that may have difficulty adjusting to the
deregulated environment or minimizing the transition costs in connection
therewith 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.
<PAGE> 34
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 interests 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
utility 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 U.S. 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 "Administration of the Trust -- Administration of the Trust Portfolio"
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.
<PAGE> 35
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 subject to greater competition and the risks
that come with that competition, such as pressures on pricing and operating
margins.
Objectives and Securities Selection
The primary objectives of the Trust are to provide investors with dividend
and interest income and capital appreciation. The Trust seeks to achieve those
objectives through a diversified portfolio of Securities issued by both foreign
and domestic Issuers. There is no guarantee that the Trust's objectives will be
achieved because the Trust is subject to the continuing ability of the
respective Issuers to continue to declare and pay dividends or make interest
payments on the Securities and because the market value of the Securities can
be affected by a variety of factors. (See "The Trust -- Summary Description of
the Portfolio" herein.) The Securities may be especially susceptible to general
stock market movements and to volatile increases and decreases in value as
market confidence in and perception of the issuers change, thus investors
should be aware that there can be no assurance that the value of the Securities
will increase.
The Trust consists of such of the Securities listed under "Schedule of
Trust Securities" in Part A as may continue to be held from time to time in the
Trust and any additional Securities acquired and held by the Trust pursuant to
<PAGE> 36
the Indenture and Agreement together with cash held in the Income and Capital
Accounts. In selecting particular Securities for the Trust, the Sponsor
considered a number of factors, including 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 Sponsor also considered the prospective
growth in earnings and dividends in relation to price/earnings ratios, yield
and risk.
In selecting ADRs and foreign Securities for inclusion in the Portfolio, in
addition to the factors associated with the selection of Securities of any
Issuer, the Sponsor considers the following factors, among others: (1) the
location of the Issuer; (2) the likelihood of favorable market and political
conditions in the country in which the Issuer is located; (3) the amount of
publicly available information available from such Issuer; and (4) historical
and recent fluctuations in the exchange rate of the currency of such Issuer's
relative to the U.S. Dollar.
PUBLIC OFFERING
Public Offering Price
Units are offered for sale at the Public Offering Price which is based on
the Trustee's evaluation of the aggregate market value of the Securities in the
Trust plus the amount of cash, if any, in the Income Account and the Capital
Account of the Trust (other than amounts required to be distributed by the
Trustee pursuant to the Indenture and Agreement) and amounts receivable in
respect of Securities trading ex-dividend on the date deposited in the Trust,
and includes a sales charge of 4.9% of the Public Offering Price (which charge
is equivalent to approximately 5.15% of the net value of the Trust assets as
determined by the Trustee). The Public Offering Price on any particular date
will vary from the Public Offering Price on the Initial Date of Deposit (set
forth on the "Summary of Essential Information" in Part A) in accordance with
fluctuations in the aggregate market value of the Securities, the amount of
available cash on hand in the Trust, whether or not the Securities are trading
ex-dividend at the time deposited in the Trust and the amount of certain
accrued fees and expenses.
After the opening of business on the Date of Deposit, the Evaluator will
evaluate or cause to be evaluated daily the value of the underlying Securities
of each Trust as of 4:00 p.m. Eastern time on days the New York Stock Exchange
is open for business and will adjust the Public Offering Price of the Units
commensurate with such evaluation. See "Rights of Unitholders-- Redemption of
Units" for a discussion of evaluation. Such Public Offering Price will be
effective for all orders received at or prior to 4:00 p.m. Eastern time on each
such day. Orders received by the Trustee, Sponsor or any 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.
<PAGE> 37
The sales charge applicable to quantity purchases is reduced on a graduated
basis to any person acquiring 2,400 or more Units as follows:
Aggregate Number of Units Dollar Amounts of Sales Charge
Purchased Reduction Per 100 Units
------------------------- ------------------------------
2,400 -- 4,699 $ 5.25
4,700 -- 11,899 $10.50
11,900 -- 23,799 $21.00
23,800 -- 47,599 $31.50
47,600 and greater $42.00
The sales charge reduction will primarily be the responsibility of the
selling Underwriter or dealer. This reduced sales charge structure will apply
on all purchases of Units in the Trust by the same person on any one day from
any one underwriter or dealer. Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser under 21 years of age
will be deemed for the purposes of calculating the applicable sales charge to
be additional purchases by the purchaser. The reduced sales charges will also
be applicable to a trustee or other fiduciary purchasing Units for a single
trust estate or single fiduciary account.
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 applicable Public Offering Price
less a $10.00 per 100 Units reduction in the applicable sales charge.
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 in Units at a Public Offering Price
that includes the minimum sales charge, which is 2%. (See "Public Offering--
Secondary Market" and "Rights of Unitholders -- Reinvestment Option", below.)
The Trustee has no cash for distribution to Unitholders until it receives
dividend payments on the Securities in the Trust. The Trustee is authorized to
provide its own funds, at times, in order to advance income distributions. The
Trustee will recover these advancements when such dividend income is received.
In the event that the income actually received by the Trustee differs from that
estimated by the Trustee in calculating its distributions, the Trustee will
make an appropriate adjustment to future distributions from the Income Account
to account for such difference.
As more fully described in the Indenture and Agreement the aggregate market
value of the Securities is determined on each Business Day by the Trustee based
on the last closing sale prices, the mean between the bid and offer price or
other bases on the day the valuation is made. (See "Rights of Unitholders --
Redemption of Units" herein.) Determinations are effective for transactions
effected subsequent to the last preceding determination.
Public Distribution
During the initial offering period, Units will be distributed by the
Underwriter and through dealers at the Public Offering Price determined as
provided above. Upon the termination of the initial public offering period,
unsold Units or Units acquired by the Underwriter in the secondary market
<PAGE> 38
referred to below may be offered to the public by this Prospectus at the then
current Public Offering Price determined as provided above.
The Underwriter, through the initial or primary distribution of Units to
the public and to dealers, will receive a gross sales commission equal to the
sales charge of 4.9% of the Public Offering Price of the Units (approximately
5.15% of the net value of the Trust assets as determined by the Trustee).
The Sponsor intends to qualify Units in all states of the United States
except Alaska, for sale by the Underwriter and from time to time may offer
Units for sale through 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.
Secondary Market
While not obligated to do so, the Underwriter intends to maintain, at its
expense, a secondary market for Units of the Trust and to continuously offer to
repurchase Units from Unitholders at the Redemption Price calculated by the
Trustee. (See "Right of Unitholders -- Redemption of Units" herein.) Any Units
repurchased by the Underwriter at the Redemption Price may be reoffered to the
public by the Underwriter at the then current Public Offering Price, which
price includes a sales charge of 4.9%. Effective on each July 1 commencing the
second July 1 following the initial Date of Deposit, such sales charge will be
reduced by 1/2 of one percent to a minimum sales charge of 2%. Any profit or
loss resulting from the resale of such Units will belong to the Underwriter. In
addition, Unitholders whose accounts are with the Underwriter and who own 75 or
more Units will be provided with the opportunity to automatically reinvest
their distributions in Units at a Public Offering Price that includes the
minimum sales charge of 2%. (See "Rights of Unitholders -- Reinvestment
Option", below.)
If the supply of Units exceeds the demand (or for any other business
reason), the Underwriter may, at any time, from time to time, or permanently,
discontinue the repurchase of Units of this series at the Redemption Price.
Alternatively, Unitholders may redeem their Units through the Trustee, although
the Sponsor shall have the right to purchase such tendered Units at a price not
less than the price the Unitholder would receive from the Trustee upon tender.
(See "Rights of Unitholders -- Redemption of Units" herein.)
Profit of Sponsor and Underwriter
The Sponsor may either realize a profit or sustain a loss on the deposit of
the Securities in the Trust representing the difference between the cost of the
Securities to the Sponsor and the cost of the Securities to the Trust. (See
"Schedule of Trust Securities" in Part A.) The Sponsor may realize a similar
profit or loss in connection with each additional deposit of Securities in the
Trust. The Underwriter receives a sales charge on Units sold to the public or
dealers. The Underwriter may realize a profit or sustain a loss with respect to
Securities acquired from underwriting syndicates of which the Underwriter is a
member. In addition, the Underwriter may have acted as the broker in
transactions relating to the purchase of Securities for deposit in the Trust.
During the initial public offering period, the Underwriter may realize
additional profit (or sustain a loss) due to daily fluctuations in the offering
prices of the Securities in the Trust and thus in the Public Offering Price of
Units received by the Underwriter.
<PAGE> 39
The Underwriter may also realize a profit or sustain a loss while
maintaining a secondary market in the Units, in the amount of any difference
between the prices at which the Units were bought and the prices at which such
Units were resold (such prices include a sales charge) or the prices at which
such Units were redeemed, as the case may be.
Cash, if any, received by the Underwriter from the Unitholders prior to the
settlement date for purchase of Units or prior to the payment for Securities
upon their delivery may be used in the Underwriter's business subject to the
limitations of Rule 15c3-3 under the Securities Exchange Act of 1934 and may be
of benefit to the Underwriter.
FEDERAL TAXATION
The following discussion is a general description of certain of the federal
income tax consequences that will result from the purchase, ownership and
disposition of Units which generally will be applicable to individual
Unitholders. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders
should consult their tax advisors in determining the particular federal, state,
local and any other tax consequences of the purchase, ownership and disposition
of Units in the Trust which may apply to their specific circumstances.
General Consequences
The Trust intends to qualify for and elect tax treatment as a "regulated
investment company" under Subchapter M of the Code. This special tax treatment
is available to corporations and certain unincorporated associations or trusts
which, for federal income tax purposes are taxable as corporations. To qualify
for and elect such treatment the Trust must meet certain requirements relating
to its sources of income, diversification of its assets and distribution of its
income to Unitholders. By so electing and meeting such requirements, the Trust
is not subject to federal income and excise taxation on its net investment
income and net capital gain to the extent that such income and gain is
distributed to Unitholders in compliance with the requirements imposed by the
Code. The Trust may sell Securities to the extent necessary to fund
distributions to Unitholders if necessary to maintain the Trust's status as a
regulated investment company.
Taxation of Trust Distributions
The Trust intends to distribute to its Unitholders all of its net income,
including net capital gain, at least annually. Except as discussed below,
distributions are taxable to Unitholders in accordance with their method of
accounting (generally when received in the case of individual Unitholders using
the cash method of accounting). However, certain distributions of net income
and net capital gain from the prior year paid by the Trust in January of a
following year will be taxable to Unitholders as if received on December 31 of
the prior year. The Trust will provide each Unitholder with information
concerning what part of any distribution is subject to this special dividend
treatment.
Distributions of net income and net short term capital gain are taxable to
the Unitholders as ordinary income. When the Units are held by corporate
Unitholders, Trust distributions may qualify for the 70% dividends-received
deduction, subject to the limitations otherwise applicable to the availability
of the deduction, to the extent the distribution is attributable to dividends
<PAGE> 40
received by the Trust from United States corporations and is designated by the
Trust as being eligible for such deduction. The Trust will provide each
Unitholder with information annually concerning what part of Trust
distributions are eligible for the dividends received deduction.
Distributions from the Trust's net capital gain which are designated by the
Trust and otherwise qualify under the Code as "capital gain dividends" are
taxable to Unitholders as long-term capital gain. This tax treatment applies
regardless of the length of time the Units on which such distributions are paid
have been held by the Unitholder. Unitholders are to be informed as to the
amount and character of distributions made by the Trust for federal income tax
purposes.
Distributions also may be subject to state and local taxes, even if all or
a substantial part of such distributions are derived from interest on U.S.
government obligations which, if received by the Unitholder directly, would be
exempt from state income tax. Each Unitholder should consult his or her own tax
advisor about the federal, state and local tax consequences resulting from the
ownership of Units of the Trust.
Unitholder's Tax Basis in Units
A Unitholder's tax basis in its Units will equal the price (including
brokerage commissions) paid by such Unitholder for the Units. Investors
purchasing Units just prior to a distribution date should be aware the Unit
price at that time includes the amount of the forthcoming distribution, and the
distribution will be taxable to them even though it represents a return on the
Unitholder's investment.
Sale, Exchange or Redemption of Units
A Unitholder will recognize gain or loss upon the sale, exchange or
redemption of Units in a taxable transaction. In general, provided the
Unitholder holds the Unit as a capital asset (e.g., for investment), such gain
or loss will be long-term or short-term depending on the Unitholder's holding
period for the Unit. However, any loss realized by a Unitholder on the sale or
exchange of Units that have been held not more than six months will be treated
as a long-term capital loss to the extent of any "capital gain distribution"
that has been paid to the Unitholder with respect to such Units.
Tax Consequences of In Kind Distributions
As discussed in "Administration of the Trust -- Amendment or Termination"
herein, upon termination of the Trust, a Unitholder owning 1,200 or more Units
may request an In Kind Distribution of Securities. The Sponsor may also direct
the Trustee to make an In Kind Distribution in redemption of a Unitholder's
Units, if the Unitholder requests a redemption of more than 1,200 Units. A
Unitholder receiving an In Kind Distribution will have his Securities exchanged
entirely in kind, except that cash will be distributed in lieu of fractional
shares of stock or fractional portions of authorized denominations of
convertible debt securities.
The foregoing rules described above under "Sale, Exchange or Redemption of
Units" will apply to a Unitholder that receives an In Kind Distribution. In
such event the gain recognized by the Unitholder will be equal to the excess of
(i) the fair market value of the Securities and cash distributed to the
Unitholder for his or her Units over (ii) the Unitholder's tax basis in such
<PAGE> 41
Units. Unitholders receiving an In Kind Distribution should be aware that the
amount of tax due upon the distribution may exceed the amount of cash
distributed to them.
Investment in Foreign Securities and ADRs
Distributions paid on foreign Securities (including ADRs) may be subject to
a withholding tax imposed by foreign countries. Tax treaties between certain
countries and the United States may reduce or eliminate such withholding taxes.
Distributions received on foreign Securities and ADRs will be reduced by the
amount of any applicable, non-reclaimable foreign withholding tax. Unless the
election, as defined below, is made any withholding taxes deducted from
distributions paid on foreign Securities and ADRs may be used as a credit or a
deduction against the federal income tax liability of the Trust.
A Trust may be eligible to make an election under the Code to forego any
claim to a deduction or credit for foreign taxes and to pass through the
foreign tax credit or deduction directly to Unitholders (the "Election"). More
than 50% of the value of the Trust's total assets at the close of its taxable
year must consist of stock or securities of foreign corporations for the Trust
to make the Election. This determination is made for each taxable year of the
Trust. Thus, a Trust that qualifies to make the Election in one or more taxable
years may not be eligible to make the Election in any future taxable year. In
addition, the Election is made at the sole discretion and direction of the
Sponsor which may decide to forego the Election even if the Trust is eligible
to make the Election in any given year. If the Trust makes the Election, the
amounts to be treated by each Unitholder as his or her proportionate share of
gross income from, and taxes paid to, a foreign country will be designated by
the Trust in a written notice mailed to Unitholders not later than 60 days
after the close of the Trust's taxable year.
Each Unitholder who is a citizen or resident of the United States will be
entitled either to (i) deduct the amount of such foreign taxes as an itemized
deduction, or (ii) subject to applicable limitations, credit the amount of such
taxes against the Unitholder's U.S. federal income tax liability. A Unitholder
who is a nonresident alien individual or which is a foreign corporation will be
entitled to a deduction or credit of the foreign tax only if the income
received from the Trust is effectively connected with the conduct of a trade or
business within the United States. Unitholders should be aware that, for
purposes of computing applicable limitations on the foreign tax credit,
dividends and interest received by the Trust in respect of the foreign
Securities and ADR's are expected to give rise to foreign source income but the
gains from the disposition of the foreign Securities and ADR's will be treated
as U.S. source income. Each Unitholder should consult his or her own tax
adviser regarding the application of the foreign tax credit to his or her
particular circumstance.
Convertible Securities, Preferred Stock Redemption Premium
In general, neither the Trust nor any Unitholder will recognize any gain or
loss upon the conversion of a Convertible Security in accordance with the terms
of the particular Convertible Security. The Trust's tax basis in the
Convertible Security following the conversion will be allocated to the
instrument into which it is converted.
The Trust may acquire a Convertible Security that was issued at a price
which is less than the stated redemption price for the Convertible Security at
<PAGE> 42
maturity (without regard to any conversion feature) or which provides for the
accrual of interest without current payment in each year. In either event, the
Convertible Security may be subject to the original issue discount rules. As a
result thereof, the Trust may be required to recognize original issue discount
income even though there has been no corresponding cash payment of interest.
Therefore, from time to time, the Trust may find it necessary to sell
Securities in taxable transactions to generate the cash necessary to make the
distributions required to maintain regulated investment company status. In
addition, the Trust may acquire Convertible Securities from a party other than
the original issuer for a price that is less than the stated redemption price
or, in the case of a Convertible Security issued with original issue discount,
the adjusted basis of such obligation ("market discount"). Upon the disposition
of such a Convertible Security in a taxable transaction, gain will be
recognized by the Trust as ordinary income rather than as capital gain to the
extent of such market discount.
The Trust may acquire preferred stock that is by its terms mandatorily
redeemable at a premium. In such event the Trust may be required to accrue in
income an amount equal to an allocable portion of the redemption premium
(determined under rules similar to the accrual of original issue discount) even
though the Trust receives no corresponding cash payment. As in the case of
Convertible Securities issued with original issue discount, in such event the
Trust may find it necessary to sell Securities in taxable transactions to
generate the cash necessary to make the distributions required to maintain
regulated investment company status.
Back-Up Withholding
Each Unitholder will be requested to provide the Unitholder's taxpayer
identification number to the Trustee (or, in the case of Units held in
book-entry only form, the owner of record of such Units) 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 31% back-up withholding. 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.
STATUS OF THE TRUST UNDER NEW YORK STATE AND CITY LAW
Under existing income tax laws of the State and City of New York, the Trust
is an association taxable as a corporation. By qualifying for and electing
regulated investment company status for Federal income tax purposes, the Trust
will be taxed under special provisions of the State and City of New York income
tax laws that do not impose a corporate income tax on that portion of Trust's
income which is distributed to Unitholders. To the extent the Trust has any New
York source income, it may be subject to State and City of New York income
taxes attributable to a portion of the taxes paid or deemed to have been paid
by the Trust to foreign jurisdictions to the extent such taxes were deducted by
the Trust in computing its federal taxable income.
The foregoing discussions relate only to United States federal and New York
State and City income taxes. Unitholders may be subject to state and local
taxation in other jurisdictions. Unitholders should consult their tax advisors
regarding potential state or local taxation with respect to the Units.
<PAGE> 43
RIGHTS OF UNITHOLDERS
Units
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
<PAGE> 44
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.
Certain Limitations
No Unitholder shall have the right to vote except in certain circumstances
relating to the amendment and termination of the Trust. (See "Administration of
the Trust -- Amendment or Termination" herein.) Unitholders shall have no right
to control the operation or administration of the Trust in any manner, except
upon the vote of 51% of the Unitholders outstanding at any time for purposes of
amendment or termination of the Trust, all as provided in the Agreement.
Unitholders will be unable to dispose of any of the Securities, as such, and
will not be able to vote the Securities. No Unitholder shall ever be under any
liability to any third party for any action taken by the Trustee or Sponsor.
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 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 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 by the Trustee. (See "Rights of
Unitholders -- Units", herein.)
On the seventh calendar day following such tender, or if the seventh
calendar day is not a Business Day, on the first Business Day prior thereto,
the Unitholder will be entitled to receive in cash an amount for each Unit
equal to the Redemption Price per Unit next computed as of the Evaluation Time
set forth in the "Summary of Essential Information" in Part A on the date of
tender. The "date of tender" is deemed to be the date on which the Units are
duly tendered to the Trustee, except that as regards Units received after the
Evaluation Time, the date of tender is the next day on which the exchange is
open for trading and such Units will be deemed to have been tendered at the
Redemption Price computed on that day. With respect to redemption requests in
excess of 1,200, the Sponsor may determine, in its discretion, to direct the
Trustee to redeem Units "in kind" by distributing Securities to the redeeming
Unitholder. There will be no distribution of fractional shares or portions of
convertible debt Securities less than the authorized denomination and,
therefore, a redeeming Unitholder may also receive cash with an in kind
distribution. The Sponsor may direct the Trustee to redeem Units in kind even
if it is then maintaining a secondary market in Units of the Trust. Securities
will be valued for this purpose as described herein. A Unitholder receiving a
redemption in kind may incur brokerage or other transaction costs in converting
<PAGE> 45
the Securities distributed into cash. The availability of redemption in kind is
subject to compliance with all applicable laws and regulations, including the
Securities Act of 1933, as amended.
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available. All other
amounts will be withdrawn from the Capital Account. The Trustee is empowered to
sell Securities in order to make funds available for redemption.
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be reduced, and the diversity of the Trust may be altered. 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 of the Trust is determined by the Trustee as
of the Evaluation Time on the date any such determination is made. The
Redemption Price per Unit is each Unit's pro rata share, determined by the
Trustee, of: (1) the aggregate market value of the Securities, (2) cash on hand
in the Trust including dividends receivable on stocks trading ex-dividend or
interest on convertible debt securities after the record date for payment
thereof, as of the date of computation, and (3) any other assets of the Trust,
less (a) amounts representing taxes or governmental charges payable out of the
Trust, (b) the accrued expenses of the Trust, and (c) cash held for
distribution to Unitholders of record as of a date prior to the evaluation.
The aggregate market value of the Securities is determined in good faith by
the Trustee in the following manner. If the Securities are listed on the New
York Stock Exchange, the American Stock Exchange, any other national securities
exchange, which includes foreign national exchanges for foreign Securities, or
on the NASDAQ National Market System ("National Exchange"), the evaluation will
be based on the last closing sale price as of the Evaluation Time on such
exchange (unless the Trustee determines such price is an inappropriate basis
for evaluation) or, if there is no closing sale price on such exchange, at the
mean between the closing bid and offer prices. If the Securities, other than
convertible debt securities, are not so listed or, if so listed and the
principal market therefore is other than on such exchange, the evaluation will
be based on the mean between the current bid and offer prices in the
over-the-counter market (unless the Trustee determines these prices are an
inappropriate basis for evaluation). If current bid or closing prices are
unavailable, the evaluation will be determined on the basis of any of the
following methods the Trustee deems appropriate (1) on the basis of the mean
between the current bid and offer prices of such Securities as obtained from
investment dealers or brokers who customarily deal in securities comparable to
those held by the Trust (which may include the Underwriter), (2) on the basis
of comparable bid prices for comparable securities, (3) by appraising the value
of the Securities at the mean between the bid and offer side of the market or
by such other appraisal deemed appropriate by the Trustee or (4) by any
combination of the above, each as of the Evaluation Time. If the Security being
evaluated is a convertible debt security, the market value shall be determined
by the Trustee on the basis of current bid side prices. A Security denominated
in a currency other than United States dollars shall be evaluated as described
above and the evaluator shall then state such evaluation based upon the
exchange rates, at the Evaluation Time, as reported by FactSet Data Systems,
Inc., or such other source as the Sponsor or Trustee deem appropriate.
<PAGE> 46
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 during which trading on such
exchange is restricted, or an emergency exists, as a result of which emergency
disposal or evaluation of the Securities is not reasonably practicable, or for
such other periods as the Securities and Exchange Commission may by order,
permit or require.
The Indenture requires that the Trustee notify the Sponsor of any tender of
Units for redemption. The Sponsor may, and so long as the Underwriter is
maintaining a secondary market for Units, the Underwriter may, prior to the
close of business on the day of tender, purchase any Units tendered to the
Trustee for redemption by making payment therefor to the Unitholder in an
amount not less than that which would have been paid by the Trustee had the
Units been redeemed by the Trustee. (See "Public Offering of Units -- Secondary
Market".) Units held by the Sponsor or the Underwriter may be tendered to the
Trustee for redemption in the same manner as any other Units.
The offering price of any Units resold by the Underwriter will be the
Public Offering Price determined in the manner provided in this Prospectus.
(See "Public Offering of Units -- Public Offering Price" herein.) 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. (See "Public Offering of Units --
Profit of Sponsor and Underwriter" herein.)
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 a reduced sales charge of 2% of the Public Offering Price
(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 a
Public Offering Price that includes a sales charge of 2% as of the Evaluation
Time on the related Income or Capital Distribution Dates. The 2% sales charge
reflects a reduction from the sales charges (except during periods after which
the secondary market sales charge has been reduced to 2%) otherwise paid by
investors for Units. (See "Public Offering -- Public Offering Price" herein.)
Under the reinvestment plan, the Underwriter receives the Unitholder's
<PAGE> 47
distribution and purchases for such Unitholder 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.
TRUST OPERATING EXPENSES
Initial Costs
All costs and expenses incurred in creating and establishing the Trust,
including the cost of the initial preparation, printing and execution of the
Indenture and Agreement, legal and auditing expenses, advertising and selling
expenses, expenses of the Trustee, including those related to foreign
custodians, and other out-of-pocket expenses have been borne by the Sponsor at
no cost to the Trust.
Fees
The Sponsor's supervisory fee, if any, earned for supervising the Portfolio
is based upon the largest number of Units outstanding at any time during the
calendar year and will be payable annually. The Sponsor's fee is currently
$0.50 per 100 Units (and shall not exceed $0.60 per 100 Units per year) and may
exceed the actual costs of providing these supervisory services, but at no time
will the total amount the Sponsor receives for these supervisory services, when
combined with all compensation received with respect to any other series of
trusts in any calendar year, exceed the aggregate cost to it of supplying such
services in such year.
Under the Indenture and Agreement, for its services as trustee and
evaluator the Trustee will receive fees in the amount set forth in "Summary of
Essential Information -- Trustee's Fee and Estimated Expenses" in Part A,
computed and paid on the basis of the largest number of Units outstanding at
any time during the calendar year. Such fees include amounts representing
certain regular and recurring expenses of the Trust, which include, but are not
limited to, the sub-custodians' fees. Certain regular and recurring expenses of
the Trust, including certain mailing and printing expenses, are borne by the
Trust and are payable as incurred.
The Sponsor's fee, if any, accrues monthly but is paid annually. The
Trustee's fees are payable monthly on or before the first business day of each
month from the Income Account, to the extent funds are available and thereafter
from the Capital Account. Any such fees may be increased without approval of
the Unitholders in proportion to increases under the classification "All
Services Less Rent" in the Consumer Price Index published by the United States
Department of Labor. The Trustee also receives benefits to the extent that it
holds funds on deposit in various non-interest bearing accounts created under
the Indenture and Agreement. For a discussion of the services rendered by the
Trustee pursuant to its obligations under the Indenture and Agreement, see
"Administration of the Trust" herein.
<PAGE> 48
Miscellaneous Expenses
The following additional charges are or may be incurred by the Trust: (a)
fees of the Trustee for extraordinary services, (b) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (c) various governmental charges, (d) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and interests of
Unitholders, (e) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or willful misconduct on its part and (f) 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 Securities in the Trust. Since the income stream produced by
dividend payments on the Securities 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 Securities to pay such amounts. These sales may result in capital
gains or losses to Unitholders. (See "Federal Taxation" herein.)
ADMINISTRATION OF THE TRUST
Records and Accounts
The Trustee will keep records and accounts of all transactions of the Trust
at its offices at 101 Barclay Street, New York, New York 10286. These records
and accounts will be available for inspection by Unitholders at reasonable
times during normal business hours. The Trustee will keep on file for
inspection by Unitholders an executed copy of the Indenture and Agreement
together with a current list of the Securities. In connection with the storage
and handling of certain Securities deposited in the Trust, the Trustee is
authorized to use the services of Depository Trust Company. These services
would include safekeeping of the Securities, coupon-clipping, computer
book-entry transfer and institutional delivery services. The Trustee is
authorized to engage custodians to act as its agents to effectuate certain of
the Trustee's responsibilities with respect to foreign Securities, including
holding and disposing of Securities in foreign markets and effecting currency
exchanges.
Distributions of Income and Capital
The Trustee will credit to the Income Account all cash dividends
received by and payable to the Trust and all amounts received from the Sponsor
in respect of payments by purchasers of Units relating to Securities trading
ex-dividend, or after an interest payment record date, on the date deposited in
the Trust. Other receipts are credited to the Capital Account. Income Account
distributions will be made as described below on or shortly after the fifteenth
day of the month of the applicable Record Date on a pro rata basis to
Unitholders of record as of that date. Amounts in the Capital Account will be
distributed on or shortly after the fifteenth day of each June and December
except that the Trustee shall not be required to make a distribution from the
Capital Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $1.00 per 100 Units. If
the amounts in the Capital Account are sufficient to distribute at least $10.00
per 100 Units, such amounts shall be distributed on or shortly after the next
<PAGE> 49
scheduled Distribution Date with respect to either income or capital, but not
later than the scheduled December Distribution Date with respect to the Capital
Account, after such amounts are accumulated. 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
Sponsor may direct the Trustee to invest amounts on deposit in the Income and
Cash accounts in United States Treasury Obligations that mature prior to the
next Distribution Date with respect to the particular Account.
The distribution to the Unitholders as of each Record Date will be made
on the following Distribution Date or shortly thereafter and shall consist of
an amount substantially equal to one quarter of the Unitholders' pro rata share
of the estimated annual dividend distributions in the Income Account after
deducting estimated expenses, calculated quarterly. Because dividends are not
received by the Trust at a constant rate throughout the year, such
distributions to Unitholders may be more or less than the amount credited to
the Income Account as of the Record Date. For the purpose of minimizing
fluctuation in the distributions from the Income Account, the Trustee is
authorized to advance such amounts as may be necessary to provide income
distributions of approximately equal amounts. The Trustee shall be reimbursed,
without interest, for any such advances from funds in the Income Account on the
ensuing Record Date. The Sponsor and the Trustee may declare an additional
distribution in December in the event the amounts received by the Trust during
the year substantially exceed the receipts estimated by the Trustee in
calculating the quarterly distribution. A person who purchases 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. See "Rights of Unitholders -- Units", herein.
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 they are incurred (as determined on the basis set
forth under "Trust Operating Expenses" herein). The Trustee may also withdraw
from the Income and Capital Accounts such amounts, if any, as it deems
necessary to establish a reserve for any applicable taxes or other 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.
Administration of the Portfolio
The Trust is not "managed" by the Sponsor or the Trustee; their activities
described below are governed solely by the provisions of the Indenture and
Agreement. The original proportionate relationship between the number of shares
of each Security in the Trust will be adjusted to reflect the occurrence of a
stock dividend, stock split, merger, reorganization or a similar event which
affects the capital structure of the Issuer of a Security in the Trust but
which does not affect the Trust's percentage ownership of the common stock
equity of such Issuer at the time of such event or if the Securities are
disposed of for any of the reasons listed in (1) through (10) below, in
connection with a Failed Contract Security, or in the event a convertible
security is converted to common stock or an ADR is exchanged for the underlying
common stock. The Sponsor may direct the Trustee to dispose of Securities (1)
upon default in payment of dividends, after declared, or interest when either
are due and payable, (2) if any action or proceeding has been instituted at law
<PAGE> 50
or equity seeking to restrain or enjoin the payment of dividends or interest on
any such Securities, or if there exists any legal question or impediment
affecting such Securities or the payment of dividends or interest 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 or interest 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 Indenture and 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, (9) to maintain the status of the Trust as a
Regulated Investment Company under the Code, or (10) 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. The proceeds of a
disposition of the Securities are to be deposited in the Capital Account of the
Trust and distributed to Unitholders in accordance with the Indenture and
Agreement. If a failure to pay declared cash dividends or interest on any of
the Securities occurs and if the Sponsor does not, within 30 days after
notification, instruct the Trustee to sell or hold such Securities, the
Indenture provides that the Trustee may in its discretion sell such Securities
and distribute the proceeds of such sale. As the holder of the 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 or, in
the absence of such instructions, according to the recommendations, if any, of
the Issuer's management.
Reports to Unitholders
In connection with each distribution, the Trustee shall furnish Unitholders
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 for each 100 Units
outstanding. 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: dividends and interest received, deductions for applicable taxes, fees
and expenses of the Trust, cash amounts paid for purchases of Securities to
replace Failed Contract Securities and 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 per 100 Units 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, cash amounts paid for
purchases of Securities to replace Failed Contract Securities and for
redemption of Units, deductions for payment of applicable taxes and fees and
<PAGE> 51
expenses of the Trust 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 per 100 Units 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 Trustee evaluation thereof made
during such calendar year; and (v) amounts actually distributed during such
calendar year from the Income and Capital Accounts, separately stated,
expressed both as total dollar amounts and as dollar amounts representing the
pro rata share per 100 Units outstanding. See "Rights of Unitholders -- Units",
herein.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, with evaluations of
the Securities in the Trust. See "Rights of Unitholders -- Units", herein.
Amendment or Termination
The Indenture and Agreement may be amended by the Trustee and the Sponsor
without the consent of any of the Unitholders (i) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent with any other provision, (ii) to add or change any provision as
may be necessary or advisable for the continuing qualification of the Trust as
a Regulated Investment Company, or (iii) to make such other provisions as shall
not adversely affect the Unitholders, provided, however, that the Indenture and
Agreement may not be amended to (a) increase the number of Units, except as the
result of the deposit of additional Securities pursuant to the Indenture and
Agreement, (b) permit the acquisition of additional or substitute securities
except as expressly provided therein or (c) permit the Trust to engage in any
kind of business. The Indenture and 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. See "Rights of Unitholders --
Units", herein.
The Trust may be liquidated at any time by consent of Unitholders
representing 51% of the Units then outstanding or by the Trustee when the value
of the Trust, as shown by any evaluation, is less than the Minimum Termination
Value indicated under "Summary of Essential Financial Information" in Part A.
The Trust will be liquidated by the Trustee in the event that a sufficient
number of Units not yet sold are tendered for redemption by the Underwriter so
that the net worth of the Trust would be reduced to less than 40% of the value
of the Trust on the date of deposit and thereafter. If the Trust is liquidated
because of the redemption of unsold Units by the Underwriter, the Trustee will
refund to each purchaser of Units the entire sales charge paid by such
purchaser. The Indenture and 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 Information" in Part A.
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. If the Trust will terminate on the
<PAGE> 52
Mandatory Termination Date, the Trustee will provide written notice thereof to
all Unitholders at least 30 days before such Mandatory Termination Date. The
notice will include a form enabling Unitholders owning 1,200 or more Units to
request an In Kind Distribution rather than payment in cash upon termination of
the Trust. (See "Rights of Unitholders -- Redemption of Units", herein.) Such
request must be returned to the Trustee at least five business days prior to
the termination date. To the extent the Trust holds Securities that are
Restricted Securities or are unavailable for ownership by individuals in the
United States, such Securities will not be distributed in kind but will be
disposed of with other Securities in connection with the distribution. The
Unitholder will receive his pro rate share of the remaining Securities
comprising the Portfolio and cash in an amount equal to his pro rata share of
the proceeds of such dispositions and the value of any fractional shares that
would otherwise be distributable to him. (See "Federal Taxation -- Tax
Consequences of In Kind Distributions" herein.)
The Sponsor may direct the Trustee to dispose of Securities prior to the
Mandatory Termination Date in order to minimize the market effects of such
dispositions. Within a reasonable period of time after termination, the Trustee
will sell any Securities remaining in the Trust. The Trustee will deduct from
the funds of the Trust any accrued costs, expenses, advances or indemnities
provided by the Indenture and Agreement, including estimated compensation of
the Trustee and costs of liquidation and any amounts required as a reserve to
provide for payment of any applicable taxes or other governmental charges. The
Trustee will then distribute to each Unitholder who does not request an In Kind
Distribution his pro rata share of the balance of the Income and Capital
Accounts. For this reason, among others, the amount realized by a Unitholder
upon termination may be less than the amount paid by such Unitholder for Units.
Any sale of 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.
With such distribution to the Unitholders the Trustee will furnish 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 determines that any amounts held in reserve are
no longer necessary, it will make distributions thereof to Unitholders in the
same manner.
Limitations on Liabilities
The Sponsor 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 Indenture and Agreement, or for errors in judgment or, in the
case of the Sponsor, for errors in judgment in directing or failing to direct
the Trustee, but shall be liable only for their own willful misfeasance, bad
faith or negligence (gross negligence in the case of the Sponsor) 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
Indenture and Agreement, the Trustee may act thereunder and shall not be liable
for any action taken by it in good faith under the Indenture and 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 Indenture and Agreement or upon or in respect of
<PAGE> 53
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 Indenture and Agreement contain other customary
provisions limiting the liability of the Trustee.
The Sponsor and Unitholders may rely on any evaluation furnished by the
Trustee and shall have no responsibility for the accuracy thereof.
Determinations by the Trustee under the Indenture and Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Trustee shall be under no liability to the Sponsor or
Unitholders for errors in judgment. This provision shall not protect the
Trustee in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
MISCELLANEOUS
The Sponsor
Unison Investment Trusts L.P., d/b/a Unison Investment Trusts Ltd., a
Missouri limited partnership formed on March 24, 1987 ("Unison"), is the
Sponsor of the Trust. The Jones Financial Companies, A Limited Partnership, a
Missouri limited partnership ("JFC"), which owns Edward D. Jones & Co., a
Missouri limited partnership ("EDJ"), is the limited partner in Unison, and
Unison Capital Corp., Inc. ("UCC"), a Missouri corporation, is the general
partner of Unison. UCC is a wholly-owned subsidiary of LHC, Inc. ("LHC"), which
is a wholly-owned subsidiary of JFC. The principal offices of Unison, JFC, EDJ,
UCC and LHC are located at 201 Progress Parkway, Maryland Heights, Missouri
63043. The Sponsor has also acted as the sponsor of Insured Tax-Free Income
Trust ("ITFIT"), a unit investment trust consisting of a portfolio of state,
municipal and public authority debt obligations and 21st Century Trust ("21st
Century"), a unit investment trust consisting of a portfolio of common stocks,
"zero coupon" obligations issued by the United States government and ADRs. Both
ITFIT and 21st Century were established pursuant to separate Standard Terms and
Conditions of Trust and related Trust Agreements by and among the Sponsor,
United States Trust Company of New York, as trustee, and Kenny Information
Systems, Inc., as evaluator. As Sponsor of ITFIT and 21st Century, the Sponsor
performs activities that are substantially similar to those it performs for the
Trust.
The Sponsor is liable for the performance of its obligations under the
Indenture and Agreement. If the Sponsor shall fail to perform any of its duties
under the Indenture and Agreement or become incapable of acting or become
bankrupt or its affairs are taken over by public authorities, then the Sponsor
shall be discharged. In such event, the Trustee shall: (i) appoint a successor
Sponsor or Sponsors or (ii) terminate the Indenture and Agreement and liquidate
the Trust in accordance with the provisions thereof. The Sponsor may also
resign if the Sponsor and Trustee together appoint a new Sponsor by written
instrument executed among the Sponsor, the Trustee and the new sponsor. The
Indenture and Agreement provide for the appointment of a new Sponsor with a net
worth of at least $1,000,000 to replace a resigning Sponsor prior to such
resignation. However, it is not an ongoing obligation of the Sponsor to
maintain this level of net worth. The Indenture and Agreement also provide that
the Trustee shall mail to each Unitholder notice of the discharge or
resignation of the Sponsor and of any appointment of a new Sponsor.
<PAGE> 54
The Trustee
The Trustee is The Bank of New York, a banking corporation organized under
the laws of the State of New York, with its offices at 101 Barclay Street, New
York, New York 10286, (800) 221-7668.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities. 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. See "The Sub-Custodians",
herein.
Under the Indenture and Agreement, the Trustee or any successor trustee may
resign and be discharged from the Trust created by the Indenture and 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 of 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. In case the Trustee becomes incapable of acting, is
adjudged to be bankrupt or is taken over by public authorities or under certain
changes in control of the Trustee, the Sponsor may remove the Trustee and
appoint a successor trustee as provided in the Indenture and Agreement. 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 corporation which is authorized to exercise trust powers, is
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.
The Sub-Custodians
The foreign Securities will be acquired by, or otherwise delivered to, and
held in certain of the Trustee's overseas branches and in branches of other
United States banks located in the countries in which the respective foreign
Issuers are located or in which the primary market for the foreign Security is
made (each a "Sub-Custodian"). Dividends and other distributions that are paid
or made with respect to foreign Securities held by Sub-Custodians are, unless
they are Securities to be deposited in the Trust, to be converted to U.S.
dollars by the Sub-Custodians and then transferred to the Trustee.
<PAGE> 55
Underwriting
EDJ is the Underwriter for the Units. EDJ is a Missouri limited partnership
formed on May 23, 1969. EDJ's principal office is located at 201 Progress
Parkway, Maryland Heights, Missouri, 63043. EDJ is a member of the New York
Stock Exchange, as well as other securities exchanges and the National
Association of Securities Dealers, Inc. EDJ 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. EDJ 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.
Legal Opinions
The legality of the Units offered hereby has been passed upon by Bryan
Cave, One Metropolitan Square, 211 North Broadway, Suite 3600, St. Louis,
Missouri 63102-2750, which firm has also rendered an opinion regarding certain
tax law matters with respect to the Trust. Bryan Cave acted as counsel to the
sponsor and to the Underwriter with respect to the Trust.
Auditors
The statement of financial condition and schedule of Trust Securities
included in this Prospectus have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their report with respect
thereto in Part A of this Prospectus, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
<PAGE> 56
CENTRAL EQUITY TRUST
Sponsor Unison Investment Trusts Ltd.
201 Progress Parkway
Maryland Heights, Missouri 63043
Trustee and The Bank of New York
Evaluator 101 Barclay Street
New York, New York 10286
Legal Counsel Bryan Cave
to Sponsor One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Independent Public Arthur Andersen & Co.
Accountants 1010 Market Street
for the Trusts St. Louis, Missouri 63101
Except as to statements made herein furnished by the Trustee, the Trustee
has assumed no responsibility for the accuracy, adequacy and completeness of
the information contained in this Prospectus.
This Prospectus does not contain all the information with respect to the
Trust and the Sponsor set forth in the registration statement and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, and to which reference is
hereby made.
No person is authorized to give any information or to make representations
not contained in this Prospectus or in supplementary sales literature prepared
by the Sponsor, and any information or representations not contained therein
must not be relied upon as having been authorized by either the Trust, the
Trustee or the Sponsor. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, units in any State to any person to whom
it is not lawful to make such offer in such State. The trust is registered as a
Unit Investment Trust under the Investment Company Act of 1940, as amended.
Such registration does not imply that the Trust or any of its Units has been
guaranteed, sponsored, recommended or approved by the United States or any
State or agency or officer thereof.
CENTRAL EQUITY TRUST
[LOGO]*
WORLDWIDE SERIES 1
------------------
UTILITY & TELECOMMUNICATIONS PORTFOLIO
PROSPECTUS
48,050 Units
A Unit Investment Trust
May 24, 1994
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* Refer to Appendix A for description of logo.
<PAGE> 57
APPENDIX A
DESCRIPTION OF LOGO
One large square, containing a black square in each corner, each black
square containing within it a white symbol: an electric plug symbolizing
electricity; a flame symbolizing natural gas; a satellite dish symbolizing
telecommunications and a running faucet symbolizing water. The center of the
large square contains a picture of the world.
