File No. 33-52591
CIK #918868
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Central Equity Trust World Wide Series 1
(Exact Name of Trust)
Unison Investment Trusts Ltd.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on September 24, 1996 pursuant to paragraph (b) of Rule 485.
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.Please retain both parts of this Prospectus for future reference.
The Trust
The objectives of the Trust are providing current income and capital
appreciation through investment in a fixed portfolio primarily consisting of
common stocks and American Depositary Receipts ("ADRs" ) (collectively,
the "Securities" ) issued by domestic and foreign electric, gas, water
and telecommunications companies (the "Portfolio" ). See "The
Trust--Summary Description of the Portfolio" in Part Two. 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. See "Summary of Essential
information" in this Part One and "The Trust" in Part Two.
Public Offering Price
The Public Offering Price of the Units is based on the Evaluator's evaluation
of the aggregate market value of the Securities in the Portfolio of the Trust
divided by the number of Units outstanding plus a sales charge of 3.90% of the
Public Offering Price (4.058% of the aggregate market value of the underlying
Securities) until July 1, 1997 for Series 1, at which time the sales charge
will decrease. See "Summary of Essential Financial Information" in
this Part One. Unless terminated earlier, the Trust will terminate on the
Mandatory Termination Date as set forth in the "Summary of Essential
Financial Information" in this Part One, and any Securities then held
will, within a reasonable time thereafter, be sold by the Trustee. Any
Securities sold at termination 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is September 18, 1996
Unison Investment Trusts Ltd.
CENTRAL EQUITY TRUST, WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
Summary of Essential Financial Information
As of July 1, 1996
Sponsor & Supervisor: Unison Investment Trusts Ltd.
Administrator: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Administrator)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Central Equity
Trust
------------------
<S> <C>
General Information
Number of Units....................................................................................... 547,475
Fractional Undivided Interest in Trust per Unit....................................................... 1/547,475
Public Offering Price:
Aggregate Value of Securities in Portfolio <F1>...................................................... $ 12,448,945
Aggregate Value Securities per Unit (including accumulated dividends)................................ $ 23.31
Sales charge 3.90% (4.058% of Aggregate Value of Securities excluding principal cash per Unit)<F3>... $ .95
Public Offering Price per Unit <F2><F3>.............................................................. $ 24.26
Redemption Price per Unit............................................................................. $ 23.31
Excess of Public Offering Price per Unit over Redemption Price per Unit............................... $ .95
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.005 per Unit
Evaluator's Annual Fee ...............$10.00 per evaluation
</TABLE>
Evaluations for purpose of sale, purchase or redemption of Units are made as
of 4:00 P.M. Eastern time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by The Bank of New York of Units tendered for redemption.
<TABLE>
<CAPTION>
<S> <C>
Date of Deposit.....................May 24, 1994
Mandatory Termination Date..........May 1, 2001
The Trust may be terminated if the market value of such Trust at any time is less than 80% of
Minimum Termination Value...........the market value of the Securities deposited in the Trust on the date of deposit.
Trustee's Annual Fee................$.008 per Unit
Income Distribution Record Date.....Tenth day of each month.
Income Distribution Date............Twenty-fifth day of each month.
Twenty-fifth day of each June and December, 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
Capital Account Distribution Date...greater than $10.00 per 100 Units outstanding.
- ----------
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at the
closing sale price, or if no such price exists or if the Equity Security is
not listed, at the closing bid price thereof.
<F2>Anyone ordering Units will have included in the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
<F3>Effective on each July 1, commencing July 1, 1995, the secondary sales charge
will decrease by .5 of 1% to a minimum sales charge of 1.4%. See "Public
Offering-Offering Price" in Part Two.
</TABLE>
PORTFOLIO
As of May 31, 1996, Central Equity Trust, Worldwide Series 1, Utility and
Telecommunications Portfolio, consists of 45 issues of Securities, of which
20% of the aggregate market value were issued by entities located in the
United Kingdom. 32 issues are listed or traded on U.S. National Exchanges, 6
issues are listed or traded on a Foreign National Exchange and 7 issues are
listed or traded on the Over-the-Counter market. The number of Securities by
type of issuer and percentage of market value is as follows: Electric, 18
(41%); Gas, 6 (13%); Water, 4 (5%); Combination -- Gas and Electric, 7 (18%)
and Telecommunications, 10 (23%). See related portfolio herein in Part One.
<TABLE>
<CAPTION>
1995<F1> 1996
------------ -----------
<S> <C> <C>
Net asset value per Unit at beginning of period........................................................... $ 19.50 $ 20.86
============ ===========
Net asset value per Unit at end of period................................................................. $ 20.86 $ 22.82
============ ===========
Distributions to Unitholders of investment income including accumulated dividends paid on Units redeemed
(average Units outstanding for entire period)............................................................. $ 0.51 $ 1.16
============ ===========
Distributions to Unitholders from Security redemption proceeds (average Units outstanding for entire
period)................................................................................................... $ -- $ 0.72
============ ===========
Unrealized appreciation (depreciation) of Securities (per Unit outstanding at end of period).............. $ 1.00 $ 2.36
============ ===========
Units outstanding at end of period........................................................................ 555,975 552,975
</TABLE>
PER UNIT INFORMATION
- ----------
For the period from May 24, 1994 (date of deposit) through May 31, 1995.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of Unison Investment Trusts Ltd. and the Unitholders of
Central Equity Trust, Worldwide Series 1, Utility and Telecommunications
Portfolio:
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Central Equity Trust,
Worldwide Series 1, Utility and Telecommunications Portfolio as of May 31,
1996, and the related statements of operations and changes in net assets for
the year then ended. These statements are the responsibility of the Trustee
and the Administrator. Our responsibility is to express an opinion on such
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at May 31, 1996 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe 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 31,
1996, and the results of operations and changes in net assets for the year
then ended, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
July 26, 1996
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Partners of Unison Investment Trusts Ltd. and the Unitholders of
Central Equity Trust, Worldwide Series 1, Utility and Telecommunications
Portfolio:
We have audited the accompanying statements of operations and changes in net
assets of Central Equity Trust, Worldwide Series 1, Utility and
Telecommunications Portfolio for the period from May 24, 1994 (date of
deposit) through May 31, 1995. These financial statements are the
responsibility of the Trustee and the Administrator. Our responsibility is to
express an opinion on such statements based on our audits.
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 Trustee and the Sponsor, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of operations and changes in net assets
referred to above present fairly, in all material respects, the results of
operations and changes in net assets of Central Equity Trust, Worldwide Series
1, Utility and Telecommunications Portfolio for the period from May 24, 1994
(date of deposit) through May 31, 1995, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
September 27, 1995
CENTRAL EQUITY TRUSTWORLDWIDE SERIES 1UTILITY AND TELECOMMUNICATIONS
PORTFOLIOStatements of ConditionMay 31, 1996
<TABLE>
<CAPTION>
Central
Equity
Trust
--------------
<S> <C>
Trust property
Cash.................................................................................. $ 157,339
Securities at market value, (cost $10,545,728) (note 1)............................... 12,404,669
Accumulated dividends................................................................. 54,645
$ 12,616,653
==============
Liabilities and interest to Unitholders
Interest to Unitholders............................................................... 12,616,653
$ 12,616,653
==============
Analyses of Net Assets
Interest of Unitholders (552,975 Units of fractional undivided interest outstanding)
Cost to original investors of 555,975 Units (note 1).................................. $ 11,457,770
Less initial underwriting commission (note 3)......................................... 560,825
--------------
10,896,944
Less redemption of 3,000 Units........................................................ 67,770
--------------
10,829,174
Undistributed net investment income
Net investment income................................................................. 1,134,796
Less distributions to Unitholders..................................................... 923,601
--------------
211,195
Realized gain (loss) on Security sale or redemption................................... 114,965
Unrealized appreciation (depreciation) of Securities (note 2)......................... 1,858,941
Distributions to Unitholders of Security sale or redemption proceeds.................. (397,622)
Net asset value to Unitholders........................................................ $ 12,616,653
==============
Net asset value per Unit (552,975 Units outstanding)................................... $ 22.82
==============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
CENTRAL EQUITY TRUST
WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
Statements of Operations
For the Period from May 24, 1994 (date of deposit)
through May 31, 1995 and the year ended
May 31, 1996
<CAPTION>
1995 1996
----------- -------------
<S> <C> <C>
Investment income
Dividend income..................................................... $ 444,040 $ 724,606
Expenses
Trustee fees and expenses........................................... 9,737 16,216
Evaluator fees...................................................... 868 1,727
Supervisory fees.................................................... 2,522 2,780
----------- -------------
Total expenses...................................................... 13,127 20,723
----------- -------------
Net investment income............................................... 430,913 703,883
Realized gain (loss) from Security sale or redemption
Proceeds............................................................ -- 466,180
Cost................................................................ -- 351,215
----------- -------------
Realized gain (loss)................................................ -- 114,965
Net change in unrealized appreciation (depreciation) of Securities... 553,596 1,305,345
----------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... $ 984,509 $ 2,124,193
=========== =============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
For the Period from May 24, 1994 (date of deposit)
through May 31, 1995 and the year ended
May 31, 1996
<CAPTION>
1995 1996
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income............................................................................... $ 430,913 $ 703,883
Realized gain (loss) on Security sale or redemption................................................. -- 114,965
Net change in unrealized appreciation (depreciation) of Securities.................................. 553,596 1,305,345
-------------- --------------
Net increase (decrease) in net assets resulting from operations..................................... 984,509 2,124,193
Distributions to Unitholders from:
Net investment income............................................................................... (280,502) (643,099)
Security sale or redemption proceeds................................................................ -- (397,622)
Redemption of Units -- (67,770)
-------------- --------------
Total increase (decrease)........................................................................... 704,007 1,015,702
Net asset value to Unitholders
Beginning of period................................................................................. 937,118 11,524,798
Additional Securities purchased..................................................................... 9,883,673 76,153
-------------- --------------
End of period (including undistributed net investment income of $150,411 and $211,195, respectively) $ 11,524,798 $ 12,616,653
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
CENTRAL EQUITY TRUST, WORLDWIDE SERIES 1, UTILITY AND TELECOMMUNICATIONS
PORTFOLIO as of May 31,
1996
<CAPTION>
Current
Number Annualized Aggregate
Portfolio of Dividend Market
Number Shares Name of Issuer of Securities per Share <F1> Value
- ------------ ---------- --------------------------------------------- ----------------- --------------
<S> <C> <C> <C> <C>
1 5,785 AT&T Corporation $1.320 $ 360,839
2 10,414 ALLTEL Corporation 1.040 328,041
3 9,257 American Water Works Company, Incorporated 1.400 329,781
4 7,521 Ameritech Corporation 2.120 424,936
5 10,414 Bay State Gas Company 1.540 274,669
6 10,414 Bolivian Power Company Limited 0.800 386,620
7 13,885 Cable & Wireless plc 0.480 286,378
8 11,571 Central & South West Corporation 1.740 319,649
9 43,969 China Light & Power Limited 0.161 204,895
10 19,670 Consumers Gas Limited 0.760 303,886
11 12,727 DPL, Incorporated 1.300 286,358
12 6,942 Duke Power Company 2.040 334,952
13 5,785 Empresa Nacional de Electricidad <F2> 1.130 360,116
14 9,257 Enron Corporation 0.850 370,280
15 8,100 Entergy Corporation 1.800 212,625
16 6,942 Equitable Resources, Incorporated 1.180 206,525
17 9,257 GTE Corporation 1.880 395,737
18 63,639 Hong Kong Electric Holdings Ltd. <F2> 0.128 197,917
19 13,839 Hong Kong Telecommunications Limited <F2> 0.880 256,021
20 23,141 Hyder plc <F2> 0.549 269,269
21 24,992 Hyder plc Preferred <F2> 0.000 39,691
22 9,257 Indiana Energy, Incorporated 1.100 219,854
23 11,571 KN Energy, Incorporated 1.040 390,521
24 25,786 London Electricity plc 0.411 289,258
25 27,770 Midlands Electricity plc <F2> 0.491 367,952
26 9,257 NIPSCO Industries, Incorporated 1.680 344,823
27 11,571 National Power plc <F2> 1.490 368,826
28 4,247 National Grid 0.000 119,447
29 25,655 National Grid Group 0.000 72,345
30 6,268 Pacific Gas & Electric Company 1.960 145,731
31 11,571 PP & L Resources Incorporated 1.670 264,687
32 8,678 PowerGen plc <F2> 0.340 282,035
33 13,885 Southern Company 1.260 321,091
34 28,197 Southern Electric plc 0.609 310,167
35 9,257 SIGCORP, Incorporated 1.730 308,952
36 6,942 SBC Communications, Incorporated 1.720 342,761
37 12,727 TECO Energy, Incorporated 1.120 300,675
38 4,614 Telefonica de Argentina 1.030 134,383
39 4,628 Telefonos de Mexico S.A. de C.V. <F2> 0.930 152,724
40 15,042 TransCanada PipeLines Limited 0.760 218,109
41 6,942 U S West Incorporated 2.140 226,483
42 6,942 U S West Media 0.000 131,030
43 8,100 Union Electric Company 2.500 318,938
44 10,414 Western Resources, Incorporated 2.060 300,704
45 11,571 Wisconsin Energy Corporation 1.520 323,988
618,413 $ 12,404,669
=========== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
- ----------
Based on the latest quarterly or semi-annual declaration. There can be no
assurance that future dividend payments will be maintained in an amount equal
to the dividend listed above.
Sponsored ADR
CENTRAL EQUITY TRUST WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
Notes to Financial Statements
May 31, 1995 and 1996
- --------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange or
the NASDAQ National Market System are valued at the last closing sales price,
or if no such price exists, at the closing bid price.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange or the NASDAQ National
Market System, on the closing sale prices on the exchange. In each case, the
costs were determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in such Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value determined
by the Evaluator and (3) accumulated dividends thereon, less accrued expenses
of the Trust, if any.
Federal Income Taxes - The Trust has elected and intends to qualify on a
continuing basis for special federal income tax treatment as a "regulated
investment company" under the Internal Revenue Code (the "Code" ).
If the Trust so qualifies and timely distributes to Unitholders 90% or more of
its taxable income (without regard to its net capital gain, i.e., the excess
of its net long-term capital gain over its net short-term capital loss), it
will not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
Certain Reclassifications - Certain reclassifications have been made to
conform to the 1996 presentation.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at May 31, 1996 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized Appreciation $ 2,037,591
Unrealized Depreciation (178,650)
-------------
$ 1,858,941
=============
</TABLE>
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Underwriter intends
to maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities
in the portfolio of the Trust, plus accumulated dividends to the date of
settlement. If the supply of Units exceeds demand, or for other business
reasons, the Underwriter may discontinue purchases of Units at such prices. In
the event that a market is not maintained for the Units, a Unitholder desiring
to dispose of his Units may be able to do so only by tendering such Units to
the Trustee for redemption at the redemption price.
Cost to Investors - The cost to original investors was based on the underlying
value of the Securities per Unit on the date of an investor's purchase, plus a
sales charge of 4.9% of the public offering price which is equivalent to
5.152% of the aggregate value of the Securities. The secondary market cost to
investors is based on the determination of the underlying value of the
Securities per Unit on the date of an investor's purchase, plus a sales charge
of 5.40% of the public offering price which is 5.708% of the underlying value
of the Securities. Effective on each July 1, commencing on July 1, 1995, the
secondary sales charge will decrease by .5 of 1% to a minimum sales charge of
1.4%.
Compensation of Sponsor - The Sponsor receives a fee for providing portfolio
supervisory services for the Trust ($.005 per Unit, not to exceed the
aggregate cost of the Sponsor for providing such services to all applicable
Trusts). This fee may be adjusted for increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index.
Compensation of Evaluator - The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio.
NOTE 4 - REDEMPTION OF UNITS
During the periods ended May 31, 1995 and 1996, 0 Units and 3,000 Units were
presented for redemption.
PROSPECTUS PART TWO
CENTRAL EQUITY TRUST WORLDWIDE SERIES 1
UTILITY AND TELECOMMUNICATIONS PORTFOLIO
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
INTRODUCTION
Central Equity Trust, Worldwide Series 1, Utility and Telecommunications
Portfolio (the "Trust" ) was created under the laws of the State of New
York pursuant to the Trust Agreement (the "Agreement" ) and a related
Standard Terms and Conditions of Trust (the "Indenture" , as amended
and restated, collectively with the Agreement, the "Indenture and
Agreement" ) by and between Unison Investment Trusts Ltd. (the "
Sponsor" ), The Bank of New York (the "Trustee" ) and Van Kampen
American Capital Investment Advisory Corp. as successor Evaluator to the Bank
of New York (the "Evaluator" ), effective June 19, 1995. The purpose
and objectives of the Trust are to provide current income and capital
appreciation through investment in a fixed portfolio of securities consisting
of common stocks and Depositary Receipts ("ADRs" ) issued by domestic
and foreign electric, gas, water and telecommunications companies. (Such
common stock and ADRs 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 Part Two to "dividends" shall also refer
to distribution payments made with respect to any ADRs. The value of the Units
of the Trust will fluctuate with the value of the Portfolio. There can be no
assurance that these objectives will be met due to the various investment
risks involved with the Securities. Furthermore, diversification of the
Trust's assets will not eliminate the risk of loss inherent in the ownership
of common stock or ADRs.
THE TRUST
Summary Description of the Portfolio and Risks Associated Therewith
An investment in Units of the Trust should be made with an understanding of
the risks that an investment in domestic and foreign common stock and ADRs,
entails. The considerations described herein with respect to common stock also
apply generally to any ADRs.
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.
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 ADRs, 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 the Trust was established. 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
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 investment 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.
To the best knowledge of the Sponsor 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.
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 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.
Risks and Other Considerations Concerning Electric, Gas, Water and
Telecommunications Industries
The Trust invested in Securities of domestic and foreign companies in the
electric, gas, water and/or telecommunications industries. (See "
Portfolio" in Part One.) 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 invested 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
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.
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 \QAdministration 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.
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 objective of the Trust is 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 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 "Portfolio"
in Part One 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 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
General
Units of the Trust are offered for sale at the Public Offering Price which in
the secondary market 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 includes a sales charge.
Public Offering Price
The Public Offering Price on any particular date will vary from the amounts
set forth on the "Summary of Essential Information" in Part One in
accordance with fluctuations in the aggregate market value of the Securities,
the amount of available cash on hand in the Trust and the amount of certain
accrued fees and expenses.
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, 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.
Although payment is normally made three business days following an order for
the purchase of Units, payment may be made prior thereto. However, evidence of
ownership of the Units so ordered will be made three business days following
such order or shortly thereafter. A person will become the owner of Units on
the date of settlement provided payment has been received. Cash, if any, made
available to the Underwriter prior to the date of settlement for the purchase
of Units may be used in the Underwriter's businesses and may be deemed to be a
benefit to the Underwriter, subject to the limitations of the Securities
Exchange Act of 1934.
Unite Distribution
Units purchased by the Underwriter in the secondary market, if any, may be
offered by this Prospectus at the secondary Public Offering Price in the
manner described.
The Sponsor intends to qualify Units in all states 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.
The Underwriter reserves the right to reject in whole or in part, any order
for the purchase of Units and to change the amount of the concessions to
dealers from time to time.
Sponsor's and Underwriter's Profits
As stated in "Public Offering - Public Market" below, the Underwriter
intends to maintain a secondary market for the Units of the Trust. In so
maintaining a market, the Underwriter will also realize profits or sustain
losses in the amount of any difference between the 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.
Public 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
Evaluator. (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. Effective on each July 1 such
sales charge will be reduced as set forth under "Summary of Essential
Information" in Part One. Any profit or loss resulting from the resale of
such Units will belong to the Underwriter.
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 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.
Unitholders may be able, upon request, to receive an "in kind"
distribution of the Securities evidenced by their Units. (See "Rights of
Unitholders - Redemption of Units" herein.) A Unitholder who wishes to
dispose of his Units should inquire of his broker as to current market prices
in order to determine whether there is in existence any price in excess of the
Redemption Price and, if so, the amount thereof.
FEDERAL TAXATION
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of Units which will
generally apply 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, (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, which is an association taxable as a
corporation under the Code, intends to qualify on a continuing basis for
special Federal income tax treatment as a regulated investment company. If the
Trust so qualifies and timely distributes to Unitholders 90% or more of its
taxable income (without regard to its net capital gain, i.e. the excess of its
long-term capital gain over its net short-term capital loss), it will not be
subject to Federal income tax on the portion of its taxable income (including
any net capital gain) that it distributes to Unitholders. In addition, to the
extent that the Trust distributes to Unitholders at least 98% of its taxable
income (including any net capital gain), it will not be subject to the 4%
excise tax on certain undistributed income of "regulated investment
companies." The Trust intends to timely distribute its taxable income
(including any net capital gains) to avoid the imposition of Federal income
tax or the excise tax.
Taxation of Trust Distributions. Distributions of the Trust's taxable income,
other than distributions which are designated as capital gain dividends, will
be taxable to the Unitholders as ordinary income. To the extent that
distributions to a Unitholder in any year exceed the Trust's current and
accumulated earnings and profits, they will be treated as a return of capital
and will reduce the Unitholder's basis in his Units and, to the extent that
they exceed his basis, will be treated as a gain from the sale of his Units as
discussed below. Although distributions generally will be treated as
distributed when paid, distributions declared in October, November or
December, payable to Unitholders of record on a specified date in one of those
months and paid during January of the following year will be treated as having
been distributed by the Trust on December 31 of the year such distributions
are declared. Distributions from the Trust's net capital gain which are
designated by the Trust as capital gain dividends will be taxable to
Unitholders as long-term capital gain regardless of the length of time the
Units have been held by the Unitholder. Distributions which are taxable as
ordinary income to Unitholders will constitute dividends for federal income
tax purposes. When Units are held by corporate Unitholders, Trust
distributions may qualify for the 70% dividends received deduction, subject to
limitations otherwise applicable to the availability of the deduction, to the
extent the distribution is attributable to dividends received by the Trust
from United States corporations (other than Real Estate Investment Trusts) and
is designated by the Trust as being eligible for such deduction. To the extent
dividends received by the Trust are attributable to foreign corporations, a
corporation that owns Units will not be entitled to the dividends received
deduction with respect to its pro rata portion of such dividends, since the
dividends received deduction is generally available only with respect to
dividends paid by domestic corporations. The Trust will provide each
Unitholder with information annually concerning what part of the Trust
distributions are eligible for the dividends received deduction.
Sale, Exchange or Redemption of Units. A Unitholder may recognize a taxable
gain or loss if the Unitholder sells or redeems his Units. Any gain or loss
arising from (or treated as arising from) the sale or redemption of Units will
generally be capital gain or loss, except in the case of a dealer. For
taxpayers other than corporations, net capital gains are presently subject to
a maximum stated marginal tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time which affect tax rates
and could affect relative differences at which ordinary income and capital
gains are taxed. 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 long-term "capital gain distribution" that has
been paid to the Unitholder with respect to such Units. Unitholders are to be
informed annually as to the amount and character of distributions made by the
Trust for federal income tax purposes.
General. The "Revenue Reconciliation Act of 1993" (the "Tax
Act" ) raised tax rates on ordinary income while capital gains remain
subject to a 28% maximum stated rate for taxpayers other than corporations.
Because some or all capital gains are taxed at comparatively lower rates under
the Tax Act, the Tax Act includes a provision that recharacterized capital
gains as ordinary income in the case of certain financial transaction that are
"conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult
their tax advisers regarding the potential effect of this provision on their
investment in Units.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust as long as the Units
of the Trust are held by or for 500 or more persons at all times during the
taxable year or another exception is met. In the event the Units of the Trust
are held by fewer than 500 persons, additional taxable income may be realized
by the individual Unitholders in excess of the distributions received from the
Trust.
Tax Consequences of In Kind Distributions. As discussed in "Administration
of the Trust - Amendment or Termination" herein, upon the redemption of
Units or the termination of the Trust, a Unitholder owning 1,200 or more Units
may request an In Kind Distribution of Securities. A Unitholder receiving an
In Kind Distribution of shares of the Securities should be aware that the
exchange is subject to taxation and Unitholders will recognize gain or loss
based on the value of the Securities received.
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.
The Trust may elect to pass through to the Unitholders the foreign income and
similar taxes paid by the Trust in order to enable such Unitholders to take a
credit (or deduction) for foreign income taxed paid by the Trust. If such an
election is made, Unitholders of the Trust, because they are deemed to own a
pro rata portion of the ADRs held by the Trust, must include in their gross
income, for Federal income tax purposes, both their portion of dividends
received by the Trust and also their portion of the amount which the Trust
deems to be the Unitholders' portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of the Trust from
its foreign investments. Unitholders may then subtract from their federal
income tax the amount of such taxes withheld, or else treat such foreign taxes
as deductions from gross income; however, as in the case of investors
receiving income directly from foreign sources, the above described tax credit
or deductions is subject to certain limitations. Unitholders should consult
their tax advisers regarding this election and its consequences to them.
A Unitholder who is a foreign investor (i.e. an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from the Trust which constitute dividends for Federal income tax
purposes (other than dividends which the Trust designates as capital gain
dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from
the Trust that are designated by the Trust as capital gain dividends should
not be subject to United States income taxes, including withholding taxes, if
all of the following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United State, (ii) the foreign investor (if an individual)
is not present in the United States for 183 days or more during his or her
taxable year, and (iii) the foreign investor provides all certification which
may be required of his or her status. Foreign investors should consult their
tax advisers with respect to United States tax consequences of ownership of
Units.
Back-Up Withholding. Each Unitholder will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify that
the Unitholder has not been notified by the Internal Revenue Service that
payments to the Unitholder are subject to back-up withholding. If the proper
taxpayer identification number and appropriate certification are not provided
when requested, distributions by the Trust to such Unitholder (including
amounts received upon the redemption of Units) will be subject to back-up
withholding. Distributions by the Trust will generally be subject to United
States income taxation and withholding in the case of Units held by
non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
RIGHTS OF UNITHOLDERS
Units
A certificate representing 100% of the fractional undivided interest in and
ownership of the Units was 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 is the
holder of record of the Units.
The Units will be issued in book-entry form only and the Unitholders will not
be entitled to receive physical certificates representing their Units. A
Unitholder's ownership of Units will be recorded on or through the records of
the Underwriter or any other brokerage firm that maintains such Unitholder's
account for such purpose. In turn, the brokerage firm's record ownership of
such Units will be recorded on the records of the Depository (or of a DTC
participating firm that acts as agent for the brokerage firm if a Unitholder's
brokerage firm is not a DTC participant). Therefore, a Unitholder must rely
upon the foregoing procedures to evidence such Unitholder's beneficial
ownership of a Unit. Beneficial ownership of a Unit may only be transferred by
compliance with the procedures of such brokerage firms and DTC participants.
Neither the Trustee nor the Sponsor will have any responsibility or liability
for any aspect of the records relating to or payments made by such brokerage
firms or DTC participants on account of beneficial ownership interests in the
Units or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DTC, which is a New York-chartered limited purpose trust company, performs
services for its participants, some of whom (and/or whose representatives) own
DTC. In accordance with its normal procedures, DTC is expected to record
separately the positions held by each DTC participant in the Units, whether
held for its own account or as a nominee for another person. The Underwriter
is a DTC participant.
Each distribution from the Income Account and payment upon redemption of a
Unit will be paid to the Depository for the benefit of the record holder of
the Units as shown on the books of the Depository. The Depository will be
responsible for crediting the amount of such payments to the accounts of the
applicable DTC participants in accordance with the Depository's normal
procedures. Each DTC participant will be responsible for disbursing such
payments to the beneficial owners of the Units that it represents and to each
brokerage firm for which it acts as agent. Each such brokerage firm will be
responsible for disbursing funds to the beneficial owners of the Units that it
represents.
If the foregoing book-entry procedures are terminated for any reason,
definitive Certificates will be issued in appropriate amounts as requested by
the DTC participants holding the Units.
The Trustee is authorized to treat as the record owner of Units that person
who is registered as such owner on the books of the Trustee. Units are
transferable by presentation of transfer instructions to the Trustee
accompanied by such documents executed by the Unitholder or his authorized
attorney and such Unitholder's brokerage firm as the Trustee deems necessary
to establish the authority of the person making such transfer. In certain
instances, the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each Unit transferred and to pay any
governmental charge that may be imposed in connection with each such transfer.
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 (unless the redeeming Unitholder is receiving
an In Kind Distribution pursuant to the Indenture and Agreement as described
herein) next computed as of the Evaluation Time set forth in the "Summary
of Essential Information" in Part One 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.
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.
Unitholders owning and tendering 1,200 Units or more for redemption may
request from the Trustee in lieu of a cash redemption a distribution in kind
("In Kind Distributions" ) of an amount and value of Securities per
Unit equal to the Redemption Price per Unit as determined as of the evaluation
next following the tender. Such Unitholder must elect to have its Units
redeemed either entirely in kind plus cash for fractional shares and foreign
exchange traded Securities or entirely in cash. An In Kind Distribution of
such Units will be made by the Trustee through the distribution of each of the
Securities which are traded in the United States in book-entry form to the
account of the Unitholder's bank or broker-dealer at Depository Trust Company.
The tendering Unitholder will receive his pro rata number of whole shares of
each of the Securities comprising the Portfolio and cash from the Capital
Account equal to the fractional shares and foreign exchange traded Securities
to which the tendering Unitholder is entitled. In implementing these
redemption procedures, the Trustee shall make any adjustments necessary to
reflect differences between the Redemption Price of the Securities distributed
in kind as of the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Securities according to the criteria
discussed above.
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 Evaluator 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
Evaluator, of: (1) the aggregate market value of the Securities, (2) cash on
hand in the Trust including dividends receivable on stocks trading
ex-dividend, 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 Evaluator 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, ("National Exchange" ), the evaluation will be based on the
last closing sale price as of the Evaluation Time on such exchange (unless the
Evaluator determines such price is an inappropriate basis for evaluation) or,
if there is no closing sale price on such exchange, at the closing bid 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 current bid prices in the
over-the-counter market (unless the Evaluator 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 Evaluator deems appropriate (1) on the basis of the
current bid 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 bid side of the market or by such other appraisal deemed
appropriate by the Evaluator or (4) by any combination of the above, each as
of the Evaluation Time. 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 Reuters Holdings, or such other source as the Sponsor or
Evaluator deem appropriate.
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 - Public
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 - Public Market" 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 - Sponsor's and
Underwriter's Profits" 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 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. Other than the Sponsor's Supervisory Fees described
below, the Sponsor will not receive any fees in connection with its activities
relating to the Trust. However, the Underwriter, an affiliate of the Sponsor,
will receive sales commissions and may realize other profits (or losses) in
connection with the sale of Units as described under "Public Offering -
Sponsor's and Underwriter's Profits" above and will be indemnified by the
Trust described under "Miscellaneous Expenses" below.
Fees
The Sponsor's supervisory fee, if any, earned for supervising the Portfolio is
based upon the largest number of Units for the Trust outstanding at any time
during the calendar year and will be payable annually. The Sponsor's current
fee is $0.50 per 100 Units (which 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, the Trustee
will receive fees in the amount set forth in "Summary of Essential
Information - Trustee's Fee and Estimated Expenses" in Part One, computed
and paid on the basis of the largest number of Units outstanding at any time
during the calendar year. The Evaluator's Fee is $0.20 per 100 units per annum
and is accrued daily and paid monthly. 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.
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 of Shelter" 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.
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 of the relevant 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 then held in the Trust. 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. Other receipts are credited to the Capital Account.
Amounts in the Income Account received by the Trust will be distributed on or
shortly after the twenty-fifth day of the month of the applicable Record Date
on a pro rata basis to Unitholders of the Trust as of record as of that date.
Amounts in the Capital Account will be distributed on or shortly after the
twenty-fifth 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 twenth-fifth day of the next succeeding
month, 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 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. 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. 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.
As of the tenth day of each month, the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Capital
Account, amounts necessary to pay the expenses of the Trust (as determined on
the basis set forth under "Trust Operating Expenses" 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 owner ship of
the common stock equity of such issuer at the time of such event or in the
event an ADR is exchanged for the underlying common stock. The Sponsor may
direct the Trustee to dispose of Securities under such circumstances as are
indicated in the "Summary of Essential Information" in Part One. The
proceeds of a disposition of the Securities are to be deposited in the Capital
Account of the Trust and distributed to related Unitholders in accordance with
the Indenture and Agreement. If a failure to pay declared cash dividends 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. 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 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
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.
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.
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.
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
One. 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 One.
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
applicable Trust maintained by the Trustee. If the Trust will terminate on the
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. Such request must be returned to the Trustee at least five
business days prior to the termination date. 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
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.
THE TRUSTEE
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 for the Trust. 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 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.
The Evaluator
The Evaluator is Van Kampen American Capital Investment Advisory Corp., a
Delaware corporation, with main offices located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181. Van Kampen American Capital Investment
Advisory Corp. is a wholly owned subsidiary of Van Kampen American Capital,
Inc. which, through a subsidiary, is a sponsor of a substantial number of unit
investment trusts.
The duty of the Evaluator is to accurately determine the Market Value of the
Securities (1) at any time upon the request of the Trustee and/or Sponsor, (2)
during the initial offering period, (3) after the initial offering and (4) at
any time to determine Redemption Price.
Under the Indenture and Agreement, the Evaluator or any successor evaluator
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 and the Trustee. The Evaluator or successor evaluator must mail a copy
of the notice of resignation to the Sponsor and the Trustee, not less than 60
days before the date such notice of resignation is to take effect. The Sponsor
and the Trustee upon receiving notice of such resignation are obligated to
appoint a successor evaluator promptly. If, upon such resignation, no
successor evaluator has been appointed and has accepted the appointment within
30 days after notification, the retiring Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor. Upon execution of a
written acceptance of such appointment by such successor evaluator, all the
rights, powers, duties and obligations of the original Evaluator shall vest in
the successor. The resignation or removal of an Evaluator becomes effective
only when the successor evaluator accepts its appointment as such or when a
court of competent jurisdiction appoints a successor evaluator.
Any corporation into which an Evaluator may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which an Evaluator shall be a party, shall be the successor evaluator.
Effective June 19, 1995, The Bank of New York resigned as Evaluator and Van
Kampen American Capital Investment Advisory Corp. was appointed successor
evaluaton
Legal Opinions
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, 111 W. Monroe, Chicago, Illinois 60603, which firm has also rendered
an opinion regarding certain tax law matters with respect to the Trust.
Auditors
The financial statements and schedule of Trust Securities included in this
Prospectus have been audited by Grant Thornton LLP, independent public
accountants, as indicated in their report with respect thereto in Part One of
this Prospectus, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.
CENTRAL EQUITY TRUST
Sponsor: Unison Investment Trusts Ltd.
12555 Manchester Road
St. Louis, Missouri 63131
Trustee: The Bank of New York
101 Barclay Street
New York, New York 10286
Evaluator: Van Kampen American Capital Investment Advisory Corp.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Legal Counsel: Chapman and Cutler
111 West Monroe
Chicago, Illinois 60603
Independent Grant Thornton LLP
Public 130 East Randolph Drive
Accountants: Chicago, Illinois 60601
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 set forth in the
registration statements and exhibits relating thereto, 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. Each 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 the Units have been
guaranteed, sponsored, recommended or approved by the United States or any
State or agency or officer thereof.
PROSPECTUS
PART TWO
Central Equity Trust
WORLDWIDE SERIES 1
UTILITY & TELECOMMUNICATIONS
PORTFOLIO
Note: This Prospectus May Be Used Only When Accompanied by Part One. Both
Parts of this Prospectus should be retained for future reference.
Dated as of the date of the Prospectus Part One accompanying this Prospectus
Part Two.
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Central Equity Trust World Wide Series 1, certifies that it
meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the
City of Chicago and State of Illinois on the 24th day of September, 1996.
Central Equity Trust World Wide Series 1
(Registrant)
By Van Kampen American Capital Distributors,
Inc.
(Administrator)
By Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Post Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities on September 24, 1996:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
)
William R. Molinari President and Chief )
Operating Officer )
)
Ronald A. Nyberg Executive Vice President )
and General Counsel )
)
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Sandra A. Waterworth ) (Attorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and with the Registration Statement on Form S-6
of Insured Municipals Income Trust, 170th Insured Multi-Series (File
No. 33-55891) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated July 19, 1996 accompanying the
financial statements of Central Equity Trust World Wide Series 1 as of
May 31, 1996, and for the period then ended, contained in this Post-
Effective Amendment No. 2 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
September 24, 1996
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