Eaton Vance Launches Second eUnits™ Trust
eUnits™ 2 Year U.S. Market Participation Trust II: Upside to Cap / Buffered Downside
Raises $20,002,480 in Initial Public Offering
BOSTON, May 30, 2012 /PRNewswire/ -- Eaton Vance Corp. announced today the initial public offering of eUnits™ 2 Year U.S. Market Participation Trust II: Upside to Cap / Buffered Downside (the "Trust"). The Trust is issuing 2,000,248 units of beneficial interest ("Units") at $10 per Unit. Units begin trading today on NYSE MKT under the symbol "ETUB." This offering follows the initial public offering of eUnits™ 2 Year U.S. Market Participation Trust: Upside to Cap / Buffered Downside (NYSE MKT: ETUA) on January 26, 2012.
eUnits™ are exchange-traded structured investments that seek to enable holders to participate in the returns of a specified market benchmark over a defined term, typically up to a cap, while reducing exposure to loss in the event of a decline in the benchmark. Market exposures are provided by combining third-party dealer contracts with a portfolio of term-matched U.S. Treasuries. Different from structured notes, eUnits™ are registered under the Investment Company Act of 1940 as closed-end investment companies and avoid a concentrated credit exposure to a single corporate issuer. Unlike traditional closed-end funds, eUnits™ are fixed-term instruments with substantially fixed holdings, and seek to mitigate secondary market trading discounts by facilitating arbitrage versus a disclosed hedge portfolio using a methodology that is the subject of a pending U.S. patent.
The Trust seeks to provide purchasers of Units in the initial public offering the opportunity to earn returns over the investment life of the Trust based on the price performance of the S&P 500 Composite Stock Price Index® (the "Index"). If the Index appreciates over the investment life of the Trust, the Trust seeks to provide a return on the initial net asset value of the Units equal to the percentage change in the price of the Index, up to a maximum return of 20.5 percent. If the Index declines over the investment life of the Trust by 15 percent or less, the Trust seeks to return the initial net asset value of the Units. If the Index declines by more than 15 percent, the Trust seeks to outperform the Index price change by 15 percent of initial Index value. There can be no assurance that the Trust will achieve its investment objective. The Trust anticipates concluding its investment activities on or about May 21, 2014 (the "Termination Date") and making a liquidating cash distribution to Unit holders of the Trust's net assets within seven business days thereafter.
The Trust's investment program consists primarily of: (1) investing substantially all of the initial net assets of the Trust to purchase U.S. Treasury obligations that will mature on or shortly before the termination date of the Trust and (2) entering into private contracts (the "Contracts") that provide for the Trust to pay or receive cash at Contract settlement based on the price performance of the Index over the life of the Contracts, which are scheduled to conclude on the termination date of the Trust. Through payoff profiles embedded therein, the Contracts seek to provide exposure to the price performance of the Index corresponding to that which the Trust seeks to provide Unit holders. The Trust has entered into the Contracts with three global financial institutions or their affiliates, with each counterparty rated investment grade. The Trust's exposure to counterparty risk is limited to the in-the-money value of its Contract positions and mitigated by the anticipated daily posting of collateral.
Eaton Vance Distributors, Inc. ("EVD") was the underwriter of the offering and Eaton Vance Management ("EVM") is the Trust's investment adviser and administrator. Parametric Risk Advisors LLC ("PRA") is sub-adviser responsible for providing advice on and execution of the Contracts. EVD and EVM are wholly-owned subsidiaries, and PRA is an indirectly majority-owned subsidiary of Eaton Vance Corp. PRA is a leading manager of investment programs utilizing equity and equity index options.
Eaton Vance Corp. is one of the oldest investment management firms in the United States, with a history dating back to 1924. Eaton Vance and its affiliates managed $197.5 billion in assets as of April 30, 2012, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company's long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today's most discerning investors. For more information about Eaton Vance, visit www.eatonvance.com.
This news release contains statements that are not historical facts, referred to as "forward looking statements." Actual future results may differ significantly from those stated in any forward looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, the continuation of investment advisory, administration, and service contracts, and other risks discussed from time to time.
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