BOSTON, Jan. 27, 2012 /PRNewswire/ -- Eaton Vance Corp.
announced today the successful initial public offering of eUnits™ 2
Year U.S. Market Participation Trust: Upside to Cap / Buffered
Downside (the "Trust"). The Trust is issuing approximately
2.62 million units of beneficial interest ("Units") at $10 per Unit. Units begin trading today on
NYSE Amex under the symbol "ETUA."
eUnits™ are a new type of exchange-traded structured investment
developed by Eaton Vance 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 17.85 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 January
24, 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 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 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.
"eUnits™ are designed to provide return profiles similar to
structured notes, but without the concentrated issuer credit
exposure that is an inherent feature of structured notes," said
Thomas E. Faust Jr., Chairman and
CEO of Eaton Vance Corp. "The success of this initial offering
affirms investor interest in the eUnits™ structure and Eaton
Vance's position as a leading developer of valued-added investment
strategies."
Eaton Vance Distributors, Inc. ("EVD") was lead 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 to 1924. Eaton Vance and its affiliates managed
$184.5 billion in assets as of
December 31, 2011, offering
individuals and institutions a broad array of investment strategies
and wealth management solutions. The Company's long record of
providing exemplary service 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.
SOURCE Eaton Vance Corp.