AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 12, 1996
REGISTRATION NO. 333-_____
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
---------------------------
A. EXACT NAME OF TRUST:
Qualified Unit Investment Liquid Trust Series ("QUILTS"), QUILTS Laddered
Income - U.S. Treasury Series 18
B. NAME OF DEPOSITOR:
OCC Distributors
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
OCC Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10080-6116
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
SUSAN A. MURPHY MICHAEL R. ROSELLA, Esq.
Senior Vice President Battle Fowler LLP
Quest Cash Management Services Park Avenue Tower
Oppenheimer Capital 75 East 55th Street
Two World Financial Center New York, New York 10022
225 Liberty Street (212) 856-6858
New York, New York 10080-6116
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Qualified Unit Investment Liquid Trust
Series ("QUILTS"), QUILTS Laddered Income-U.S. Treasury Series 18 is being
registered under the Securities Act of 1933 pursuant to Section 24(f) of
the Investment Company Act of 1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
_____ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
===============================================================================
The registrant hereby amends the registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
325425.1
<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
QUILTS Laddered Income - U.S. Treasury Series 18
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust..................... Front cover of Prospectus
(b) Title of securities issued........ Front cover of Prospectus
2. Name and address of each depositor..... The Sponsor
3. Name and address of trustee............ The Trustee
4. Name and address of principal
underwriters........................... Distribution of Units
5. State of organization of trust......... Organization
6. Execution and termination of trust
agreement.............................. Trust Agreement, Amendment and
Termination
7. Changes of name........................ Not Applicable
8. Fiscal year............................ Not Applicable
9. Litigation............................. None
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities... Book Entry Units
(b) Cumulative or distributive
securities........................ Interest and Principal Distributions
(c) Redemption........................ Trustee Redemption
(d) Conversion, transfer, etc......... Book Entry Units, Sponsor
Repurchase, Trustee Redemption
(e) Periodic payment plan............. Not Applicable
(f) Voting rights..................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders...... Records, Portfolio, Substitution of
Securities, Trust Agreement,
Amendment and Termination, The
Sponsor, the Trustee
(h) Consents required................. Trust Agreement, Amendment and
Termination
(i) Other provisions.................. Tax Status
11. Type of securities comprising units.... Objectives, Portfolio, Portfolio
Summary
12. Certain information regarding
periodic payment certificates.......... Not Applicable
i
325425.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
13. (a) Load, fees, expenses, etc......... Summary of Essential Information,
Public Offering Price, Market for
Units, Volume and Other Discounts,
Sponsor's Profits, Trust Expenses
and Charges
(b) Certain information regarding
periodic payment certificates..... Not Applicable
(c) Certain percentages............... Summary of Essential Information,
Public Offering Price, Market for
Units, Volume and Other Discounts
(d) Price differences................. Volume and Other Discounts,
Distribution of Units
(e) Other loads, fees, expenses....... Book Entry Units
(f) Certain profits receivable by
depositors, principal
underwriters, trustee or
affiliated persons................ Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges to income. Not Applicable
14. Issuance of trust's securities......... Organization, Certificates
15. Receipt and handling of payments
from purchasers........................ Organization
16. Acquisition and disposition of
underlying securities.................. Organization, Objectives, Portfolio,
Portfolio Supervision
17. Withdrawal or redemption............... Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption
18. (a) Receipt, custody and
disposition of income............. Monthly Distributions, Interest and
Principal Distributions, Portfolio
Supervision
(b) Reinvestment of distributions..... Not Applicable
(c) Reserves or special funds......... Interest and Principal Distributions
(d) Schedule of distributions......... Not Applicable
19. Records, accounts and reports.......... Records
20. Certain miscellaneous provisions of
trust agreement
(a) Amendment......................... Trust Agreement, Amendment and
Termination
(b) Termination....................... Trust Agreement, Amendment and
Termination
(c) and (d) Trustee, removal and
successor.......................... The Trustee
(e) and (f) Depositor, removal and
successor.......................... The Sponsor
21. Loans to security holders.............. Not Applicable
22. Limitations on liability............... The Sponsor, The Trustee, The
Evaluator
23. Bonding arrangements................... Part II - Item A
24. Other material provisions of trust
agreement.............................. Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor.............. The Sponsor
26. Fees received by depositor............. Not Applicable
ii
325425.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
27. Business of depositor.................. The Sponsor
28. Certain information as to officials
and affiliated persons of depositor.... Not Applicable
29. Voting securities of depositor......... Not Applicable
30. Persons controlling depositor.......... Not Applicable
31. Payments by depositor for certain
services rendered to trust............. Not Applicable
32. Payments by depositor for certain
other services rendered to trust....... Not Applicable
33. Remuneration of employees of
depositor for certain services
rendered to trust...................... Not Applicable
34. Remuneration of other person for
certain services rendered to trust..... Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities
by states.............................. Distribution of Units
36. Suspension of sales of trust's
securities............................. Not Applicable
37. Revocation of authority to distribute.. None
38. (a) Method of distribution............ Distribution of Units
(b) Underwriting agreements........... Distribution of Units
(c) Selling agreements................ Distribution of Units
39. (a) Organization of principal
underwriters...................... The Sponsor
(b) N.A.S.D. membership of principal
underwriters...................... The Sponsor
40. Certain fees received by principal
underwriters........................... The Sponsor
41. (a) Business of principal
underwriters...................... The Sponsor
(b) Branch offices of principal
underwriters...................... The Sponsor
(c) Salesmen of principal
underwriters...................... The Sponsor
42. Ownership of trust's securities by
certain persons........................ Not Applicable
43. Certain brokerage commissions
received by principal underwriters..... Not Applicable
44. (a) Method of valuation............... Summary of Essential Information,
Market for Units, Offering Price,
Accrued Interest, Volume and Other
Discounts, Distribution of
Units, Comparison of Public Offering
Price, Sponsor's Repurchase Price
and Redemption Price, Sponsor
Repurchase, Trustee Redemption
(b) Schedule as to offering price..... Summary of Essential Information
(c) Variation in offering price to
certain persons................... Distribution of Units, Volume and
Other Discounts
45. Suspension of redemption rights........ Not Applicable
iii
325425.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
----------- ---------------------
46. (a) Redemption valuation.............. Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, and Redemption
Price, and Trustee Redemption
(b) Schedule as to redemption price... Summary of Essential Information
47. Maintenance of position in underlying
securities............................. Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of
trustee................................ The Trustee
49. Fees and expenses of trustee........... Trust Expenses and Charges
50. Trustee's lien......................... Trust Expenses and Charges
VI. Policy of Registrant
51. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities........................ Objectives, Portfolio, Portfolio
Supervision, Substitution of
Securities
(b) Transactions involving
elimination of underlying
securities........................ Not Applicable
(c) Policy regarding substitution
or elimination of underlying
securities........................ Substitution of Securities
(d) Fundamental policy not otherwise
covered........................... Not Applicable
52. Tax status of trust.................... Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
53. Trust's securities during last ten
years.................................. Not Applicable
54. Hypothetical account for issuers of
periodic payment plans................. Not Applicable
55. Certain information regarding
periodic payment certificates.......... Not Applicable
56. Certain information regarding
periodic payment plans................. Not Applicable
57. Certain other information regarding
periodic payment plans................. Not Applicable
58. Financial statements (Instruction
1(c) to Form S-6) ..................... Statement of Financial Condition
iv
325425.1
<PAGE>
Subject to Completion Dated April 12, 1996
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
QUILTS Laddered Income -- U.S. Treasury Series 18 (ACTP)
This Trust consists of a unit investment trust designated QUILTS
Laddered Income - U.S. Treasury Series 18 (the "Trust"). Investors will be
able to purchase units of the Trust upon the effectiveness of the registration
statement relating to the units of this Trust.
The attached final prospectus for previous series of QUILTS is hereby
used as a preliminary prospectus for this Series offering. The narrative
information and structure of the final prospectus for this Series will be
substantially similar to the attached final prospectus for a previous Series.
Information with respect to pricing, the number of units, dates and summary
information regarding the characteristics of securities to be deposited in
this Series is not now available and will be different since each Series has a
unique portfolio. Accordingly, the material found herein which reflects the
particular characteristics of a previous Series should not be taken as
applicable to the portfolios of this Series and should be considered only as a
general description of this Series.
The Trust will consist of underlying portfolios of U.S. Treasury
Obligations that are backed by the full faith and credit of the United States
Government.
- ------------------------------------------------------------------------------
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for the Trust including descriptive material relating to
the Trust, the Statement of Condition of the Trust and the Portfolio of the
Trust. Part B contains general information about the Trust. Part A may not be
distributed unless accompanied by Part B.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
PROSPECTUS PART A DATED APRIL __, 1996
Please read and retain both parts of this Prospectus for future
reference.
Information contained herein is subject to completion or amendment. A
registration statement relating to these Securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or
solicitation of an offer to buy nor shall there be any sale of these
Securities in any state in which said offer, solicitation or sale would be
unlawful prior to the registration or qualification under the Securities Laws
of any state.
355171.1
<PAGE>
The Trust is designed to have regularly scheduled payments of
principal during its life from a portfolio of Securities with laddered
maturities. The weighted average maturity of the securities in the portfolio
of the Trust will be specified in the final prospectus for the Trust and may
vary materially from that of the previous Series. The value of the Units of
the Trust will fluctuate with fluctuations in the value of the underlying
securities in the portfolio of the Trust. Therefore, Unit Holders who sell
their Units prior to termination of the Trust may receive more or less than
their original purchase price upon sale. The estimated current return and
estimated long term return for this Series will depend on the interest rates
and offering prices of the securities and may vary materially from that of the
previous Series. Investors should contact account executives of the Sponsor or
of any underwriter who will be informed of the expected effective date of this
Series and who will be supplied with complete information with respect to this
Series on the day of and immediately prior to the effectiveness of the
registration statement relating to the units of this Series.
The sales charge for QUILTS Laddered Income - U.S. Treasury Series 18
(ACTP) is expected to be not in excess of 1% of the Public Offering Price per
1,000 units for the Trust (1.010% of the net amount invested).
-2-
355171.1
<PAGE>
("QUILTS")
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES
A Unit Investment Trust
QUILTS Asset Builder--U.S. Treasury Series 15
QUILTS Laddered Income--U.S. Treasury Series 16
QUILTS Laddered Income--U.S. Treasury Series 17
QUILTS Laddered Income--Corporate Bond Series 2
QUILTS consists of four separate unit investment trusts designated
QUILTS Asset Builder--U.S. Treasury Series 15, QUILTS Laddered Income--U.S.
Treasury Series 16, QUILTS Laddered Income--U.S. Treasury Series 17 (QUILTS
Asset Builder--U.S. Treasury Series 15, QUILTS Laddered Income--U.S. Treasury
Series 16 and QUILTS Laddered Income--U.S. Treasury Series 17 are collectively
known as the "Treasury Trusts") and QUILTS Laddered Income--Corporate Bond
Series 2 (the "Corporate Income Trust") (collectively, the "Trusts"). The
Sponsor of the Trusts is Quest for Value Distributors (The "Sponsor"). The
objectives of the Trusts are to provide safety of principal and, with the
exception of QUILTS Asset Builder--U.S. Treasury Series 15, current monthly
distributions of interest. With respect to QUILTS Asset Builder--U.S. Treasury
Series 15, the Trust seeks to accumulate principal value in the Units over the
life of the Trust. Each Treasury Trust seeks to achieve these objectives by
investment in a portfolio of U.S. Treasury Obligations (the "Treasury
Securities") that are backed by the full faith and credit of the Untied States
Government. The Corporate Income Trust seeks to achieve these objectives by
investing in a portfolio of intermediate-term corporate debt obligations which
were rated "BBB" or better by Standard & Poor's Corporation or "Baa" or better
by Moody's Investors Service, Inc. on the Date of Deposit (the "Corporate
Securities"). (The Treasury Securities and the Corporate Securities are
sometimes collectively referred to as the "Securities".) Each Trust is
designed to have regularly scheduled payments of principal during its life
from a portfolio of Securities with laddered maturities. The value of the
Units of the Trusts will fluctuate with fluctuations in the value of the
underlying Securities in the portfolios of each Trust. Therefore, Unit Holders
who sell their Units prior to termination of the Trusts may receive more or
less than their original purchase price upon sale. Units of the Trusts may be
suited for purchase by IRAs, self- employed retirement plans (formerly Keogh
Plans), pension, profit-sharing and other qualified retirement plans.
Investors considering participation in any such plan should review specific
tax laws and pending legislation related thereto and should consult their
attorneys or tax advisers with respect to the establishment and maintenance of
any such plan. (See "Retirement Plans" and "Tax Status" in Part B of this
Prospectus.)
These Trusts may be particularly appropriate for foreign investors as
the income from the Trusts, provided certain conditions are met, will be
exempt from withholding for U.S. Federal income tax purposes. A foreign
investor must provide a completed W-8 Form to his financial representative or
the Trustee to avoid withholding on his account. The Treasury Trusts may also
be appropriate for investors who desire to participate in a portfolio of
taxable fixed income securities offering the safety of principal provided by
an investment backed by the full faith and credit of the United States. In
addition, many investors may benefit from the exemption from state and local
personal income taxes that will pass through the Treasury Trusts to Unit
Holders.
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for each Trust including descriptive material relating
to each Trust, the Statement of Condition of the Trusts and the Portfolios of
each Trust. Part B contains general information about the Trusts. Part A may
not be distributed unless accompanied by Part B.
QUILTS are not a deposit or other obligation of, or guaranteed by, a
depository institution. QUILTS are not insured by the FDIC and are subject to
investment risks, including possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES CORPORATION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED SEPTEMBER 22,
1995 Please read and retain both parts of this
Prospectus for future reference.
303533.2
<PAGE>
QUILTS Asset Builder
U.S. Treasury Series 15
SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 21, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 74834 K250 Evaluation Time: 12:00 Noon New York Time on
Sponsor: Quest for Value Distributors the initial Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: September 21, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000
of Securities:..........................................$ 500,000 Units.
Number of Units: (The number of Units will be Weighted Average Maturity of Securities in the Portfolio:
increased as the Sponsor deposits additional 2.11 Years
Securities into the Trust.)...............................500,000 Minimum Value of Trust: The Trust may be
Fractional Undivided Interest in Trust terminated if the value of the Securities in the Trust
is less than 40% of the original aggregate principal
amount of Securities in the Trust.
per 1,000 Units:............................................1/500
Public Offering Price: Mandatory Termination Date: The earlier of November 30,
Aggregate Offering Price of Securities 1999, or the disposition of the last Security in the
Trust.
in Trust.............................................$ 443,634 Trustee and Evaluator: The Chase Manhattan Bank
Divided By 500,000 Units multiplied by 1,000.............$ 887.27 (National Association).
Plus Sales Charge of 1.75% of Public Offering
Price..................................................$ 15.80 Trustee's Annual Fee and Estimated Expenses:
Public Offering Price per 1,000 Units(1).................$ 903.07 $.55 per 1,000 Units.
Redemption Price per 1,000 Units.........................$ 886.90 Annual Supervisory Fee (Payable to an affiliate of the
Sponsor's Initial Repurchase Price Sponsor):
per 1,000 Units:......................................$ 887.27 Maximum of $.10 per $1,000 principal amount of
Excess of Public Offering Price Over Securities (see "Trust Expenses and Charges" in
Redemption Price per 1,000 Units:.........................$ 16.17 Part B).
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:......................$ .37
</TABLE>
INFORMATION PER 1,000 UNITS
<TABLE>
<S> <C>
Gross annual interest income (cash) (Does not include income accrued from original issue discount bonds.) $1.03
Less organization expenses(3)......................................................................... .20
Less estimated annual fees and expenses (The Trustee will retain excess interest income in the Trust to pay
future expenses.)(4)............................................................................. .65
---
Estimated net annual interest income (cash) (Does not include income accrual from original issue discount
bonds.).......................................................................................... .18
Estimated long term return (Does not include income accrual from original
issue discount bonds.
The estimated long term return is increased for transactions entitled to a discount.)(2)(4)...... 4.93%
</TABLE>
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from September 27, 1995 to the date of
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to
September 27, 1995.
(2) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. This return does not include the effects of
any delay in payments to Unit Holders and a calculation which includes
those effects would be lower. See "Estimated Long Term Return and
Estimated Current Return" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs")
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per 1,000 Units per annum
for Asset Builder Series 15. Such organizational costs include: the cost
of preparing and printing the registration statement, the trust indenture
and other closing documents; registering units with the Securities and
Exchange Commission and the states; and the initial audit of the Trust.
Total organizational expenses will be amortized over the life of Asset
Builder Series 15. See "Trust Expenses and Changes" in Part B.
(4) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
A-2
<PAGE>
QUILTS Laddered Income
U.S. Treasury Series 16
SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 21, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 74834 K268 Evaluation Time: 12:00 Noon New York Time on
Sponsor: Quest for Value Distributors the initial Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: September 21, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000
of Securities:.............................................$ 500,000 Units.
Number of Units: (The number of Units will be Weighted Average Maturity of Securities in the
increased as the Sponsor deposits additional Portfolio: 2.93 Years
Securities into the Trust.)..................................500,000 Minimum Value of Trust: The Trust may be
Fractional Undivided Interest in Trust terminated if the value of the Securities in the
per 1,000 Units:...............................................1/500 Trust is less than 40% of the original aggregate
principal amount of Securities in the Trust.
Public Offering Price: Mandatory Termination Date: The earlier of
Aggregate Offering Price of Securities August 31, 2001, or the disposition of the last
Security in the Trust.
in Trust.................................................$502,828 Trustee and Evaluator: The Chase Manhattan Bank
Divided By 500,000 Units multiplied by 1,000...............$1,005.66 (National Association).
Plus Sales Charge of 1.80% of Public Offering Trustee's Annual Fee and Estimated Expenses:
Price......................................................$18.43 $1.25 per 1,000 Units.
Public Offering Price per 1,000 Units(1)...................$1,024.09 Annual Supervisory Fee (Payable to an affiliate of
Redemption Price per 1,000 Units...........................$1,005.16 the Sponsor): Maximum of $.10 per $1,000
Sponsor's Initial Repurchase Price principal amount of Securities (see "Trust Expenses
per 1,000 Units:........................................$1,005.66 and Charges" in Part B).
Excess of Public Offering Price Over
Redemption Price per 1,000 Units:.............................$18.93
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:..........................$.50
</TABLE>
INFORMATION PER 1,000 UNITS
BASED UPON MONTHLY DISTRIBUTIONS
<TABLE>
<S> <C>
Gross annual interest income (cash)................................................................... $58.00
Less organizational expenses(4)....................................................................... .20
Less estimated annual fees and expenses(5)............................................................ 1.35
------
Estimated net annual interest income (cash)(2)........................................................ 56.45
Estimated daily interest accrual (Does not include income accrual from original issue
discount bonds.)................................................................................. .157
Estimated current return based on Public Offering Price (Does not include income accrual
from original issue discount bonds. The estimated current return is increased for transactions
entitled to a discount.)(5)...................................................................... 5.51%
Estimated long term return (Does not include income accrual from original issue discount bonds.
The estimated long-term return is increased for transactions entitled to a discount.)(3)(5)...... 5.15%
First record date............................................................................................October 15, 1995
First interest payment date.................................................................................October 31, 1995
Subsequent record dates...............................................................................15th day of each month
Subsequent interest payment dates.....................................................................Last day of each month
</TABLE>
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from September 27, 1995 to the date of the
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to
September 27, 1995.
(2) The first interest distribution of $2.82 per 1,000 Units for Treasury
Income Series 16 will be made on October 31, 1995 (the "First Payment
Date") to all Unit Holders of record on October 15, 1995 (the "First
Record Date"). The regular monthly payment per 1,000 Units of Treasury
Income Series 16 will be $4.70 on November 30, 1995 and thereafter (the
"Monthly Payment Date").
A-3
<PAGE>
(3) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. Estimated current return is calculated by
dividing the estimated net annual interest income by the Public Offering
Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of
premium or accretion of discount on the underlying Securities, if any.
These returns do not include the effects of any delay in payments to Unit
Holders and a calculation which includes those effects would be lower.
See "Estimated Long Term Return and Estimated Current Return" in Part B.
(4) Although historically the sponsors of unit investment trusts ("UITs")"
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per $1,000 Units per annum
for Treasury Income Series 16. Such organizational costs include: the
cost of preparing and printing the registration statement, the trust
indenture and other closing documents; registering units with the
Securities and Exchange Commission and the states; and the initial audit
of the Trust. Total organizational expenses will be amortized over a five
year period for Treasury Income Series 16. See "Trust Expenses and
Changes" in Part B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
A-4
303533.2
<PAGE>
QUILTS Laddered Income
U.S. Treasury Series 17
SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 21, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 74834K 276 Evaluation Time: 12:00 Noon New York Time on
Sponsor: Quest for Value Distributors the initial Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: September 21, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000
of Securities:...........................................$ 500,000 Units.
Number of Units: (The number of Units will be Weighted Average Maturity of Securities in the Portfolio:
increased as the Sponsor deposits additional 2.09 Years
Securities into the Trust.)................................500,000 Minimum Value of Trust: The Trust may be
Fractional Undivided Interest in Trust terminated if the value of the Securities in the Trust
per 1,000 Units:.............................................1/500 is less than 40% of the original aggregate principal
amount of Securities in the Trust.
Public Offering Price: Mandatory Termination Date: The earlier of April 30,
Aggregate Offering Price of Securities 1999,or the disposition of the last Security .
in Trust...............................................$498,969 in the Trust
Divided By 500,000 Units multiplied by 1,000...............$997.94 Trustee and Evaluator: The Chase Manhattan Bank (National
Plus Sales Charge of 1.70% of Public Offering Association).
Price....................................................$17.26 Trustee's Annual Fee and Estimated Expenses:
Public Offering Price per 1,000 Units(1).................$1,015.20 $1.00 per 1,000 Units.
Redemption Price per 1,000 Units...........................$997.31 Annual Supervisory Fee (Payable to an affiliate of the
Sponsor's Initial Repurchase Price Sponsor):
per 1,000 Units:........................................$997.94 Maximum of $.10 per $1,000 principal amount of
Excess of Public Offering Price Over Securities (see "Trust Expenses and Charges" in Part B).
Redemption Price per 1,000 Units:...........................$17.89
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:........................$.63
</TABLE>
INFORMATION PER 1,000 UNITS
BASED UPON QUARTERLY DISTRIBUTIONS
<TABLE>
<S> <C>
Gross annual interest income (cash)................................................................... $57.80
Less organizational expenses(4)....................................................................... .20
Less estimated annual fees and expenses(5)............................................................ 1.10
------
Estimated net annual interest income (cash)(2)........................................................ 56.50
Estimated daily interest accrual (Does not include income accrual from original issue
discount bonds.)................................................................................. .157
Estimated current return based on Public Offering Price (Does not include income accrual
from original issue discount bonds. The estimated current return is increased for transactions
entitled to a discount.)(5)...................................................................... 5.56%
Estimated long term return (Does not include income accrual from original
issue discount bonds.
The estimated long-term return is increased for transactions entitled to a discount.)(3)(5)...... 4.87%
First record date..................................................................................... January 15, 1996
First interest payment date........................................................................... January 31, 1996
Subsequent record dates............................................................................... 15th day of the last month
` of each quarter
Subsequent interest payment dates..................................................................... Last day of each quarter
</TABLE>
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from September 27, 1995 to the date of the
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to
September 27, 1995.
(2) The first interest distribution of $17.25 per 1,000 Units for Treasury
Income Series 17 will be made on January 31, 1996 (the "First Payment
Date") to all Unit Holders of record on January 15, 1996 (the "First
Record Date"). The next quarterly payment per 1,000 Units of Treasury
Income Series 17 will be $14.11 on April 30, 1996 and thereafter (the
"Quarterly Payment Date").
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303533.2
<PAGE>
(3) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. Estimated current return is calculated by
dividing the estimated net annual interest income by the Public Offering
Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of
premium or accretion of discount on the underlying Securities, if any.
These returns do not include the effects of any delay in payments to Unit
Holders and a calculation which includes those effects would be lower.
See "Estimated Long Term Return and Estimated Current Return" in Part B.
(4) Although historically the sponsors of unit investment trusts ("UITs")
have paid all of the costs of establishing UITs, this Trust (and
therefore the Unit Holders) will bear all or a portion of its
organizational costs up to a maximum of $.20 per $1,000 Units per annum
for Treasury Income Series 17. Such organizational costs include: the
cost of preparing and printing the registration statement, the trust
indenture and other closing documents; registering units with the
Securities and Exchange Commission and the states; and the initial audit
of the Trust. Total organizational expenses will be amortized over the
life of Treasury Income Series 17. See "Trust Expenses and Changes" in
Part B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
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303533.2
<PAGE>
QUILTS Laddered Income
Corporate Bond Series 2
SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 21, 1995 (The initial Date of
Deposit which is the date on which the Trust Agreement was signed and the
deposit of Securities with the Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 74834 K284 Evaluation Time: 12:00 Noon New York Time on the
Sponsor: Quest for Value Distributors initial Date of Deposit and 4:00 P.M. thereafter.
Date of Deposit: September 21, 1995 Minimum Purchase: 1,000 Units
Aggregate Principal Amount Minimum Principal Distribution: $1.00 per 1,000 Units.
of Securities:..............................................$ 500,000 Weighted Average Maturity of Securities in the
Portfolio:
Number of Units: (The number of Units will be 8.608 Years
increased as the Sponsor deposits additional Minimum Value of Trust: The Trust may be terminated if
Securities into the Trust.)...................................500,000 the value of the Securities in the Trust is less
than 40% of the original aggregate principal amount
of Securities in the Trust.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of April 15,
per 1,000 Units:.............................................. 1/500 2007, or the disposition of the last Security in
the Trust.
Public Offering Price: Trustee: The Chase Manhattan Bank (National
Association)
Aggregate Offering Price of Securities Trustee's Annual Fee and Estimated Expenses: $1.58 per
in Trust..................................................$504,668 1,000 Units.
Divided By 500,000 Units multiplied Evaluator: Kenny S & P Evaluation Services
by 1,000.................................................$1,009.34 Evaluator's Fee: $2.00 per Security for each
valuation.
Plus Sales Charge of 3.05% of Public Offering Annual Supervisory Fee (Payable to an affiliate of the
Price.......................................................$31.75 Sponsor): Maximum of $.10 per $1,000 principal
Public Offering Price per 1,000 Units(1)....................$1,041.09 amount of Securities (see "Trust Expenses and
Redemption Price per 1,000 Units............................$1,007.56 Charges" in Part B).
Sponsor's Initial Repurchase Price
per 1,000 Units:.........................................$1,009.34
Excess of Public Offering Price Over
Redemption Price per 1,000 Units: .............................$33.53
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:..........................$1.78
</TABLE>
INFORMATION PER 1,000 UNITS
BASED UPON MONTHLY DISTRIBUTIONS
<TABLE>
<S> <C>
Gross annual interest income (cash)..................................................................... $67.40
Less organizational expenses(4)......................................................................... .20
Less estimated annual fees and expenses(5).............................................................. 1.68
----
Estimated net annual interest income (cash)(2).......................................................... 65.52
Estimated daily interest accrual (Does not include income accrual from original issue
discount bonds.)................................................................................... .182
Estimated current return based on Public Offering Price (Does not include income
accrual from original issue discount bonds. The estimated current return
is increased for transactions entitled to a discount.)(5).......................................... 6.29%
Estimated long term return (Does not include income accrual from original issue
discount bonds. The estimated long term return is increased for
transactions entitled to a discount.)(3)(5)........................................................ 6.05%
First record date....................................................................................... October 15, 1995
First interest payment date............................................................................. October 31, 1995
Subsequent record dates................................................................................. 15th day of each month
Subsequent interest payment dates....................................................................... Last day of each month
</TABLE>
(1) No accrued interest will be added for any person contracting to purchase
Units on the date of this Prospectus. Anyone ordering Units after such
Date will pay accrued interest from September 27, 1995 to the date of the
settlement (three business days after order) (the "First Settlement
Date"), less distributions from the Interest Account subsequent to
September 27, 1995.
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<PAGE>
(2) The first interest distribution of $3.28 per 1,000 Units for Corporate
Income Series 2 will be made on October 31, 1995 (the "First Payment
Date") to all Unit Holders of record on October 15, 1995 (the "First
Record Date"). The regular monthly payment per 1,000 Units of Corporate
Income Series 2 will be $5.46 on November 30, 1995 and thereafter (the
"Monthly Payment Date").
(3) Estimated long term return is calculated by each Trust by computing the
average of the yields to maturity (or earlier call date) of the
Securities in the portfolio of the Trust in accordance with accepted
practices (taking into account the amortization of premiums, accretion of
discounts, market value, and estimated retirement of each Security) and
subtracting from the average yield so calculated the fees, expenses and
sales charge of each Trust. Estimated current return is calculated by
dividing the estimated net annual interest income by the Public Offering
Price per Unit. In contrast to the estimated long term return, the
estimated current return does not take into account the amortization of
premium or accretion of discount on the underlying Securities, if any.
These returns do not include the effects of any delay in payments to Unit
Holders and a calculation which includes those effects would be lower.
See "Estimated Long Term Return and Estimated Current Return" in Part B.
(4) Although historically the sponsors of unit investment trusts ("UITs") have
paid all of the costs of establishing UITS, this Trust (and therefore the
Unit Holders) will bear all or a portion of its organizational costs up
to a maximum of $.20 per $1,000 Units per annum for Corporate Income
Series 2. Such organizational costs include: the cost of preparing and
printing the registration statement, the trust indenture and other
closing documents; registering units with the Securities and exchange
Commission and the states; and the initial audit of the Trust. Total
organizational expenses will be amortized over a five year period for
Corporate Income Series 2. See "Trust Expenses and Changes" in Part B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by
the Sponsor; expenses per Unit will vary with the actual size of the
Trust. If the Trust does not reach this Unit level, the Estimated Annual
Fees and Expenses per Unit, the Estimated Current Return and the
Estimated Long Term Return will be adversely affected.
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303533.2
<PAGE>
QUALIFIED
UNIT INVESTMENT LIQUID TRUST SERIES
("QUILTS")
The Trusts. QUILTS consists of four separate unit investment trusts
designated QUILTS Asset Builder--U.S. Treasury Series 15 ("Asset Builder
Series" or "Asset Builder Series 15"), QUILTS Laddered Income--U.S. Treasury
Series 16 ("Treasury Income Series 16"), QUILTS Laddered Income Series--U.S.
Treasury Series 17 ("Treasury Income Series 17") (Asset Builder Series 15,
Treasury Income Series 16 and Treasury Income Series 17 are collectively known
as the "Treasury Trusts") and QUILTS Laddered Income--Corporate Bond Series 2
("Corporate Income Trust" or "Corporate Income Series 2") (collectively, the
"Trusts"). The Trusts were created under the laws of the State of New York by
a Trust Indenture and Agreement (the "Trust Agreement"), dated the initial
Date of Deposit, between Quest for Value Distributors, as sponsor (the
"Sponsor"), The Chase Manhattan Bank (National Association), as trustee (the
"Trustee") and, for the Corporate Income Trust only, Kenny S&P Evaluation
Services, as evaluator (the "Evaluator"). The Trustee will act as the
Evaluator for the Treasury Trusts. On the initial Date of Deposit, the Sponsor
deposited with the Trustee United States Treasury Obligations that are backed
by the full faith and credit of the United States Government with respect to
the Treasury Trusts and corporate debt obligations with respect to the
Corporate Income Trust, including delivery statements relating to contracts
for the purchase of certain such Securities (the "Securities") in the
aggregate amount set forth in the "Summary of Essential Information" for each
Trust and cash or an irrevocable letter of credit issued by a major commercial
bank in the amount required for such purchases. Thereafter, the Trustee, in
exchange for the Securities so deposited, delivered to the Sponsor a
certificate evidencing the ownership of all of the Units of the Trusts, which
Units are being offered by this Prospectus. On the initial Date of Deposit,
each Unit in the Trusts represents an undivided interest in the principal and
net income of that Trust in the ratio of one Unit for each $1.00 principal
amount of Securities initially deposited in that Trust. (See "The Trust
Organization" in Part B.)
Objectives. The objectives of the Trusts are to obtain safety of
principal and, with respect to Treasury Income Series 16, Treasury Income
Series 17 and Corporate Income Series 2, current distributions of interest.
With respect to Asset Builder Series 15, the Trust seeks to accumulate
principal value in the Units over the life of the Trust. The Trusts also seek
to provide investment flexibility by allowing investors to choose among four
portfolios of Securities, each with a differing weighted average maturity and
quality. The Treasury Trusts seek to achieve these objectives through
investment in a fixed, laddered portfolio of United States Treasury
Securities. The Treasury Trusts are also structured to provide protection
against changes in interest rates and to pass through to Unit Holders the
exemption from state personal income taxes afforded to direct owners of United
States obligations. The Corporate Income Trust seeks to achieve these
objectives through investment in a fixed, laddered portfolio of
intermediate-term corporate debt obligations which were rated "BBB" or better
by Standard & Poor's Corporation or "Baa" or better by Moody's Investors
Service, Inc. on the initial Date of Deposit. For a discussion of the
significance of such ratings, see "Description of Bond Ratings" in Part B.
99% of the aggregate principal amount of the Securities in Asset
Builder Series 15 are stripped U.S. Treasury notes or bonds with maturities of 1
year or more (hereinafter referred to as "Zero Coupon Bonds"). 1% of the
aggregate principal amount of the Securities in Asset Builder Series 15 are
interest- bearing securities which are used to pay the expenses of this Trust.
Any excess amounts remaining after expenses are paid will be paid to Unit
Holders of this Trust in cash. Zero Coupon Bonds provide for payment at maturity
at par value, but do not provide for the payment of current interest. (For the
amount of Zero Coupon Bonds in Asset Builder Series 15, and the cost of such
Securities to that Trust, see "Portfolio" for Asset Builder Series 15 in this
Part A). Investors generally will be required to recognize interest currently,
even though they will not receive a corresponding amount of cash until
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<PAGE>
later years. Long-term capital gains based upon the difference, if any,
between the value of the Securities at maturity, redemption or sale and their
original purchase price at discount (plus the earned portion of acquisition
discount) are generally taxed, in the case of individuals, at a rate less than
the rate applicable to ordinary income. (See "Tax Status" in Part B.)
Investment in Asset Builder Series 15 should be made with the understanding
that the value of Zero Coupon Bonds may be subject to greater fluctuation in
response to changes in interest rates that interest-bearing Securities. In
addition, for certain investors, the accrual of the market discount from the
Zero Coupon Bonds is not taxable until the Securities in Asset Builder Series
15 are disposed of or mature. (See "Tax Status" in Part B.) Any gain realized
on the disposition or maturities of these securities is treated as ordinary
interest income to the extent it represents accrued market discount. Any
excess over that amount would generally be treated as long-term capital gain
if held for more than 1 year.
The Treasury Securities are direct obligations of the United States
and are backed by its full faith and credit. The value of the Units, the
estimated current return (not applicable to Asset Builder Series 15) and
estimated long-term return to new purchasers will fluctuate with the value of
the Securities included in the portfolio of each Trust which will generally
decrease or increase inversely with changes in prevailing interest rates. See
"Tax Status" in Part B of this Prospectus.
With the deposit of the Securities in the Trusts on the initial Date
of Deposit, the Sponsor established a proportionate relationship among the
face amounts of each Security in the portfolio of each Trust. During the
90-day period following the initial Date of Deposit, the Sponsor may deposit
additional Securities ("Additional Securities"), contracts to purchase
Additional Securities or cash (or a bank letter of credit in lieu of cash)
with instructions to purchase Additional Securities, in order to create new
Units, maintaining to the extent practicable the original proportionate
relationship among the face amounts of each Security in the portfolio of each
Trust. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the initial Date of Deposit
because of, among other reasons, purchase requirements, change in prices, or
unavailability of Securities. Replacement Securities may be acquired under
specified conditions (see "The Trust" and "Trust Administration" in Part B of
this Prospectus). Units may be continuously offered to the public by means of
this Prospectus (see "Public Offering" in Part B) resulting in a potential
increase in the number of Units outstanding. Deposits of Additional Securities
in the portfolio of each Trust subsequent to the 90-day period following the
initial Date of Deposit must replicate exactly the proportionate relationship
among the face amounts of Securities comprising the portfolio of each Trust at
the end of the initial 90-day period. No assurance can be given that the
Trusts' objectives will be achieved. In addition, an investment in a Trust can
be affected by fluctuations in interest rates.
Portfolio Summaries. General. The Trusts are comprised of those
Securities listed in each "Portfolio" in this Part A. The portfolio of each
Treasury Trust initially consists of contracts to purchase U.S. Treasury
Obligations fully secured by the full faith and credit of the United States,
certain of which have been purchased at a market discount or premium. The
portfolio of the Corporate Income Trust initially consists of contracts to
purchase intermediate-term corporate debt obligations, certain of which have
been purchased at a market discount or premium. Certain Securities may have been
purchased on a "when, as, and if" issued basis. Interest on these Securities
begins accruing to the benefit of holders on their respective dates of delivery.
Unit Holders will be "at risk" with respect to these Securities (i.e. may derive
either gain or loss from fluctuations in the offering side evaluation of the
securities) from the date they commit for Units. The Trusts consist of the
Securities (or contracts to purchase the Securities) listed in each Portfolio as
may continue to be held from time to time in each Trust and any Additional
Securities deposited in the Trusts in connection with the sale of additional
Units to the public as described above, together with the accrued and
undistributed interest thereon and undistributed cash realized from the sale or
redemption of Securities (see "Trust Administration" in Part B of this
Prospectus). Neither the Sponsor nor the Trustee shall be liable in any way for
any default, failure or defect in any of the Securities. However, should any
deposited contract fail, the Sponsor shall, within 90 days from the initial Date
of Deposit, acquire replacement Securities and substitute them in the portfolios
of the Trust. If the failed Securities are not substituted or if the
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<PAGE>
purchase price of the substituted Securities does not exceed the cost
of the original contracts, the Sponsor shall make a pro rata distribution of
the amount, if any, by which the cost of the failed contract exceeded the cost
of the substituted security on the next scheduled distribution date.
On the Date of Deposit each Unit represented the fractional undivided
interest in each Trust set forth under "Essential Information" for each Trust.
Thereafter, if any Units are redeemed by the Trustee the face amount of
Securities in each Trust will be reduced by amounts allocable to redeemed
Units, and the fractional undivided interest represented by each Unit in the
balance will be increased. However, if additional Units are issued by each
Trust (through deposit of Securities by the Sponsor in connection with the
sale of additional Units), the aggregate value of Securities in each Trust
will be increased by amounts allocable to additional Units and the fractional
undivided interest represented by each Unit in the balance will be decreased.
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unit Holder (which may include the Sponsor) or until the termination of the
Indenture.
The Sponsor has a limited right to substitute other Securities in the
Trust portfolio in the event of a failed contract. (See "The
Trusts--Substitution of Securities" in Part B.) Each Unit in each Trust
represents an undivided interest in the principal and net income of that Trust
in the ratio of one Unit for each $1.00 principal amount of Securities
initially deposited in that Trust. (See "The Trusts--Organization" in Part B.)
(For the specific number of Units in each Trust, see the "Summary of Essential
Information" for each Trust in this Part A). The Sponsor has not participated
as a sole underwriter or manager, co-manager or member of underwriting
syndicates from which any of the Securities were acquired for the Trusts.
Asset Builder Series 15. Asset Builder Series 15 consists principally
of a fixed portfolio of stripped U.S. Treasury notes or bonds with maturities
of 1 year or more, which are referred to as Zero Coupon Bonds. Zero Coupon
Bonds provide for payment at maturity at par value, unless sooner sold or
redeemed, but do not provide for the payment of current interest. The market
value of Zero Coupon Bonds may be subject to greater fluctuations than coupon
bonds in response to changes in interest rates. See "The Trusts--Discount and
Zero Coupon Bonds" in Part B. The Securities in Asset Builder Series 15 have
consecutive maturities from November 15, 1996 to November 30, 1998 (referred
to as "laddered maturities"). As Securities mature, Asset Builder Series 15
will return to Unit Holders every 6 months beginning in November 1996
approximately 20% of the face amount of the amount invested.
On the initial Date of Deposit 100% of the Securities in Asset Builder
Series 15 were purchased at a "market" discount from par value at maturity.
Based on the offering side evaluation on the initial Date of Deposit 100% of the
aggregate principal amount of Securities in the portfolio were acquired at a
discount from par, none were at a premium over par and none were at par. A Unit
Holder
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<PAGE>
may receive more or less than his original purchase price upon disposition of
his Units because the value of Units fluctuates with the value of the
underlying Securities, which vary inversely with interest rates. On the
initial Date of Deposit, the bid side evaluation was lower than the offering
side evaluation by .04% of the aggregate offering price of the Asset Builder
Series 15. (See "Public Offering" in Part B.) All of the issues of Asset Builder
Series 15 are represented by the Sponsor's contracts to purchase, which are
expected to be settled on or about September 27, 1995 and none of the issues has
been deposited in the Trust.
Treasury Income Series 16. Treasury Income Series 16 consists of a
fixed portfolio of interest- bearing U.S. Treasury Obligations with laddered
maturities from August 15, 1996 to August 31, 2000. As Securities mature,
Treasury Income Series 16 will return to Unit Holders every 12 months
beginning in August 1996 approximately 20% of the face amount of the amount
invested.
On the initial Date of Deposit 40% of the Securities in Treasury
Income Series 16 were purchased at a "market" discount from par value at
maturity. Based on the offering side evaluation on the initial Date of Deposit
40% of the aggregate principal amount of Securities in the portfolio were
acquired at a discount from par, 60% were at a premium over par and none were
at par. A Unit Holder may receive more or less than his original purchase
price upon disposition of his Units because the value of Units fluctuates with
the value of the underlying Securities, which vary inversely with interest
rates. On the initial Date of Deposit, the bid side evaluation was lower than
the offering side evaluation by .05% of the aggregate offering price of the
Treasury Income Series 16. (See "Public Offering" in Part B.)
All of the issues of Treasury Income Series 16 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
September 27, 1995 and none of the issues has been deposited in the Trust.
Treasury Income Series 17. Treasury Income Series 17 consists of a
fixed portfolio of interest- bearing U.S. Treasury Obligations with laddered
maturities from April 30, 1997 to April 30, 1998. As Securities mature,
Treasury Income Series 17 will return to Unit Holders every three months
beginning in April 1997 approximately 20% of the face amount of the amount
invested.
On the initial Date of Deposit 60% of the Securities in Treasury
Income Series 17 were purchased at a "market discount from par value at
maturity. Based on the offering side evaluation on the initial Date of Deposit
60% of the aggregate principal amount of Securities in the portfolio were
acquired at a discount from par, 40% were at a premium over par and none were
at par. A Unit Holder may receive more or less than his original purchase
price upon disposition of his Units because the value of Units fluctuates with
the value of the underlying Securities, which vary inversely with interest
rates. On the initial Date of Deposit, the bid side evaluation was lower than
the offering side evaluation by .06% of the aggregate offering price of the
Treasury Income Series 17. (See "Public Offering" in Part B.)
All of the issues of Treasury Income Series 17 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
September 27, 1995 and none of the issues has been deposited in the Trust.
Corporate Income Series 2. Corporate Income Series 2 consists of a
fixed portfolio of interest- bearing corporate debt obligations with laddered
maturities from May 15, 2002 to April 15, 2006. As Securities mature,
Corporate Income Series 2 will return to Unit Holders every 10 to 14 months
beginning May 2002 approximately 20% of the face amount of the amount
invested.
The portfolio of the Corporate Income Trust consists of 5 issues of
Corporate Securities of 5 issuers. All of the Corporate Securities are senior
unsecured indebtedness. As of the initial Date of Deposit, 100% of the
Corporate Securities are intermediate-term corporate debt obligations. For an
explanation of the significance of these factors, see "Portfolios" in Part B.
None of the Corporate Securities have any equity or conversion features.
On the initial Date of Deposit 40% of the Securities in Corporate
Income Series 2 were purchased at a "market" discount from par value at
maturity. Based on the offering side evaluation on the initial Date of Deposit
40% of the aggregate principal amount of Securities in the portfolio were
acquired at a discount from par, 60% were at a premium over par and none were
at par. A
Unit Holder may receive more or less than his original purchase price upon
disposition of his Units because the value of Units fluctuates with the value
of the underlying Securities, which vary inversely with interest rates. On the
initial Date of Deposit, the bid side evaluation was lower than the offering
side evaluation by .18% of the aggregate offering price of the Corporate
Income Series 2. (See "Public Offering" in Part B.)
All of the issues of Corporate Income Series 2 are represented by the
Sponsor's contracts to purchase, which are expected to be settled on or about
September 27, 1995 and none of the issues has been deposited in the Trust.
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303533.2
<PAGE>
RISK FACTORS
An investment in Units of the Trusts should be made with an
understanding of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the portfolio of each Trust
and hence of the Units of each Trust will decline with increases in interest
rates. The value of the underlying Securities will fluctuate inversely with
changes in interest rates. The high inflation of prior years, together with
the fiscal measures adopted to attempt to deal with it, have resulted in wide
fluctuations in interest rates and, thus, in the value of fixed rate long term
debt obligations generally. The Sponsor cannot predict whether such
fluctuations will continue in the future.
In selecting Securities for deposit in the Trusts, the following
factors, among others, were considered by the Sponsor: (i) the prices of the
Securities relative to other comparable Securities; (ii) the maturities of
these Securities; and (iii) whether the Securities were issued after July 18,
1984. With respect to the Corporate Income Trust, the following additional
factors were considered by the Sponsor: (a) the quality of the Corporate
Securities and whether such Corporate Securities were rated "BBB" or better by
Standard & Poor's Corporation or "Baa" or better by Moody's Investors
Services, Inc., or had, in the opinion of the Sponsor, similar credit
characteristics, (b) income to the Unit Holders of the Corporate Income Trust
and (c) the diversification of the Corporate Income Trust's Portfolio, taking
into account the availability in the market of issues in various industry
classifications which meet the Trust's quality, rating, yield and price
criteria.
Investment in Asset Builder Series 15 should be made with the
understanding that the value of Zero Coupon Bonds is subject to greater
fluctuation in response to changes in interest rates. In addition, the accrued
market discount of such Securities is not taxable to certain categories of
Unit Holders of such Trust until the Securities in such Trust are disposed of
or mature.
PUBLIC OFFERING PRICE
The Public Offering Price of each Unit of the Trusts is equal to the
aggregate offering price of the Securities in each Trust divided by the number
of Units of each Trust outstanding, plus a sales charge of (a) 1.75% of the
Public Offering Price or 1.781% of the net amount invested in Securities per
Unit of Asset Builder Series 15, (b) 1.80% of the Public Offering Price or
1.833% of the net amount invested in Securities per Unit of Treasury Income
Series 16, (c) 1.70% of the Public Offering Price or 1.729% of the net amount
invested in Securities per Unit of Treasury Income Series 17 and (d) 3.05% of
the Public Offering Price or 3.146% of the net amount invested in Securities
per Unit of Corporate Income Series 2. In addition, for Units ordered after
the date hereof, accrued interest will be payable from the First Settlement
Date for Units of the Trust (three business days from the date hereof) to the
expected date of settlement (three business days after order). For additional
information regarding the Public Offering Price, the descriptions of interest
and principal distributions, repurchase and redemption of Units and other
essential information regarding the Trusts, see the "Summary of Essential
Information" for each Trust in this Part A. During the initial offering period
orders involving the lesser of at least 500,000 Units or $500,000 for Asset
Builder Series 15, 500,000 Units or $500,000 for Treasury Income Series 16,
500,000 Units or $500,000 for Treasury Income Series 17 and 250,000 Units or
$250,000 for Corporate Income Series 2 will be entitled to a volume discount
from the Public Offering Price. In addition, to the extent Units of each QUILT
trust are currently available from the Sponsor, Unit Holders may elect to
rollover principal distributions paid to them as Securities in their
respective Trust mature into additional units of such available QUILTS trusts
(upon receipt by the Trusts of an appropriate exemptive order from the
Securities and Exchange Commission) at a reduced sales charge. (See "Public
Offering--Volume and Other Discounts" in Part B.) The Public Offering Price
per Unit may vary on a daily basis in accordance with fluctuations in the
aggregate offering price of the Securities. (See "Public Offering--Offering
Price" in Part B.)
A-13
303533.2
<PAGE>
DISTRIBUTIONS
Distributions of interest income, less expenses, will be made by
Treasury Income Series 17 on a quarterly basis, and Treasury Income Series 16
and Corporate Income Series 2 on a monthly basis. The first interest
distributions will be made on the First Payment Date to all Unit Holders of
record on the First Record Date of the Trust and thereafter distributions will
be made on a quarterly basis for Treasury Income Series 17, and on a monthly
basis for Treasury Income Series 16 and Corporate Income Series 2.
Distributions of principal, if any, will be made semi-annually for Asset
Builder Series 15 beginning in 1996, annually for Treasury Income Series 16
beginning in 1996, quarterly for Treasury Income Series 17 beginning in 1997
and annually for Corporate Income Series 2 beginning in 2002 (See "Rights of
Unit Holders--Interest and Principal Distributions" in Part B.) For estimated
quarterly and monthly interest distributions, the amount of the first interest
distributions and the specific dates representing the First Payment Date and
the First Record Date see "Summary of Essential Information" for each Trust in
Part A.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
Units of the Trusts are offered to investors on a "dollar price"
basis (using the computation method previously described under "Public
Offering Price") as distinguished from a "yield price" basis often used in
offerings of tax exempt bonds (involving the lesser of the yield as computed
to maturity of bonds or to an earlier redemption date). Since they are offered
on a dollar price basis, the rate of return on an investment in Units of
Treasury Income Series 16, Treasury Income Series 17 and Corporate Income
Series 2 are measured in terms of "Estimated Current Return" and "Estimated
Long Term Return." The rate of return for Asset Builder Series 15 is only
measured in terms of "Estimated Long Term Return." This calculation of
performance is mandated by the rules of the Securities and Exchange
Commission.
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield)
for each Security in each Trust portfolio in accordance with accepted
practices, which practices take into account not only the interest payable on
the Securities but also the amortization of premiums or accretion of
discounts, if any; (2) calculating the average of the yields for the
Securities in each Trust portfolio by weighing each Security's yield by the
market value of the Security and by the amount of time remaining to the date
to which the Security is priced (thus creating an average yield for the
portfolio of each Trust); and (3) reducing the average yield for the portfolio
of each Trust in order to reflect estimated fees and expenses of each Trust
and the maximum sales charge paid by Unit Holders. The resulting Estimated
Long Term Return represents a measure of the return to Unit Holders earned
over the estimated life of each Trust. The Estimated Long Term Return as of
the day prior to the initial Date of Deposit is stated for the Trusts under
"Summary of Essential Information" for each Trust in Part A.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Securities in the portfolio of each Trust. Moreover, because
interest rates on Securities purchased at a premium are generally higher than
current interest rates on newly issued bonds of a similar type with comparable
rating, the Estimated Current Return per Unit may be affected adversely if
such Securities are redeemed prior to their maturity. On the initial Date of
Deposit, the Estimated Net Annual Interest Income per Unit divided by the
Public Offering Price resulted in the Estimated Current Return stated for each
applicable Trust under "Summary of Essential Information" for each Trust in
Part A.
The Estimated Net Annual Interest Income per Unit of each Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Securities in the Trusts. The Public Offering Price will
vary with changes in the offering prices (bid prices in the case of the
secondary market) of the Securities.
A-14
<PAGE>
Therefore, there is no assurance that the present Estimated Current Return or
Estimated Long Term Return will be realized in the future.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, currently intends to
maintain a secondary market for the Units of the Trusts after the initial
public offering has been completed. The secondary market repurchase price will
be based on the aggregate bid price of the Securities in a Trust portfolio;
and the reoffer price will be based on the aggregate offering price of the
Securities plus a sales charge of (a) 1.75% (1.781% of the net amount
invested) plus net accrued interest for Asset Builder Series 15, (b) 1.80%
(1.833% of the net amount invested) plus net accrued interest for Treasury
Income Series 16, (c) 1.70% (1.729% of the net amount invested) plus net
accrued interest for Treasury Income Series 17 and (d) 3.05% (3.146% of the
net amount invested) plus net accrued interest for Corporate Income Series 2.
If a market is not maintained a Unit Holder will be able to redeem his Units
with the Trustee at a price based on the aggregate bid price of the Unit. (See
"Liquidity--Sponsor Repurchase" in Part B.)
A-15
303533.2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of Qualified Unit Investment Liquid
Trust Series ("QUILTS") QUILTS Asset Builder--U.S. Treasury Series 15 QUILTS
Laddered Income--U.S. Treasury Series 16 QUILTS Laddered Income--U.S. Treasury
Series 17 QUILTS Laddered Income--Corporate Bond Series 2
We have audited the accompanying Statements of Condition and
Portfolios of Qualified Unit Investment Liquid Trust Series ("QUILTS"), QUILTS
Asset Builder--U.S. Treasury Series 15 ("Asset Builder Series 15"), QUILTS
Laddered Income--U.S. Treasury Series 16 ("Treasury Income Series 16"), QUILTS
Laddered Income--U.S. Treasury Series 17 ("Treasury Income Series 17") and
QUILTS Laddered Income--Corporate Bond Series 2 ("Corporate Income Series 2")
as of September 21, 1995. These statements are the responsibility of the
Sponsor. Our responsibility is to express an opinion on the Statements of
Condition and Portfolios 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 Statements of Condition and
Portfolios are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the Statement
of Condition and Portfolios. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The irrevocable letters of
credit deposited in connection with the securities owned as of September 21,
1995, pursuant to contracts to purchase, as shown in the Statements of
Condition and Portfolios, was confirmed to us by United States Trust Company
of New York, the Trustee.
In our opinion, the accompanying Statements of Condition and
Portfolios present fairly, in all material respects, the financial position of
Asset Builder Series 15, Treasury Income Series 16, Treasury Income Series 17
and Corporate Income Series 2 as of September 21, 1995 in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
September 21, 1995
A-16
303533.2
<PAGE>
QUILTS
STATEMENTS OF CONDITION
AS OF DATE OF DEPOSIT, SEPTEMBER 21, 1995
TRUST PROPERTY
<TABLE>
<S> <C> <C> <C> <C>
Asset Treasury Treasury Corporate
Builder Income Income Income
Series 15 Series 16 Series 17 Series 2
---------------- --------------- --------------- ------------
Investment in Securities:
Sponsor's Contracts to Purchase Underlying Securities
Backed by Irrevocable Letters of Credit(1)............ $ 443,634 $ 502,828 $ 498,969 $ 504,668
Accrued Interest to Date of Deposit on Securities(1)... 167 2,588 8,891 13,816
Organizational Costs(2)................................ 20,000 20,000 20,000 20,000
---------------- --------------- --------------- ----------------
Total.................................................. $ 463,801 $ 525,416 $ 527,860 $ 538,484
================ =============== =============== ================
LIABILITY AND INTEREST OF UNIT HOLDERS
Liability for Accrued Interest on Securities(1)(5)..... $ 167 $ 2,588 $ 8,891 $ 13,816
Accrued Liability(2) 20,000 20,000 20,000 20,000
---------------- --------------- --------------- ----------------
20,167 22,588 28,891 33,816
Interest of Unit Holders
Units of Fractional Undivided Interest Outstanding:
Cost to Unit Holders(3)....................... 451,534 512,044 507,598 520,544
Less Gross Underwriting Commissions(4)........ (7,900) (9,216) (8,629) (15,876)
---------------- --------------- --------------- ----------------
Net Amount Applicable to Unit Holders.................. 443,634 502,828 498,969 504,668
---------------- --------------- --------------- ----------------
Total $ 463,801 $ 525,416 $ 527,860 $ 538,484
================ =============== =============== ================
</TABLE>
(1) Aggregate cost to the Trusts of the Securities listed in the
portfolio of each Trust is based on offering prices determined by the
Evaluator on the basis set forth under "Public Offering--Offering
Price" as of 12:00 Noon on September 21, 1995. An irrevocable letter
of credit issued by Credit Lyonnais in an amount of $4,000,000 has
been deposited with the Trustee to cover the purchase of $2,000,000
principal amount of Securities pursuant to contracts to purchase such
Securities and $25,703 accrued interest on such Securities to the
expected dates of settlement.
(2) Organizational costs incurred by the Trusts have been deferred and
will be amortized over the life of each of the Trusts or five years,
whichever is shorter. The Trust will reimburse the Sponsor for actual
organizational costs incurred up to a maximum of $.20 per 1,000 Units
per annum. To the extent the Trust is larger or smaller, the actual
dollar amount reimbursed may vary.
(3) Aggregate public offering price (exclusive of interest) is computed
on 500,000, 500,000, 500,000, and 500,000 Units for Asset Builder
Series 15, Treasury Income Series 16, Treasury Income Series 17, and
Corporate Income Series 2, respectively, on the basis set forth under
"Public Offering--Offering Price" in Part B.
(4) Sales charge of 1.75% computed on 500,000 Units of Asset Builder
Series 15, 1.80% computed on 500,000 Units of Treasury Income Series
16, 1.70% computed on 500,000 Units of Treasury Income Series 17, and
3.05% computed on 500,000 Units of Corporate Income Series 2 on the
basis set forth under "Public Offering Price" in Part B.
(5) On the basis set forth under "Public Offering--Accrued Interest" in
Part B, the Trustee will advance the amount of accrued interest as of
September 27, 1995 (the "First Settlement Date"), and all accrued
interest to the First Settlement Date will be distributed to the
Sponsor as the Unit Holder of record as of the First Settlement Date.
Consequently, the amount of accrued interest to be added to the
public offering price of Units will include only accrued interest
from the First Settlement Date to date of settlement, less any
distributions from the Interest Account subsequent to the First
Settlement Date.
A-17
303533.2
<PAGE>
QUILTS
Asset Builder Series 15
AS OF DATE OF DEPOSIT, SEPTEMBER 21, 1995
<TABLE>
<CAPTION>
Aggregate Coupon/ Cost of
Portfolio Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Dates to Trust (2)
--- ------ ------------------ ----- ------------
<S> <C> <C> <C> <C>
1 $100,000 U.S. Treasury Strip 0.000%
11/15/96 $93,737
2 100,000 U.S. Treasury Strip 0.000% 91,058
5/15/97
3 100,000 U.S. Treasury Strip 0.000% 88,339
11/15/97
4 100,000 U.S. Treasury Strip 0.000% 85,802
5/15/98
5 90,000 U.S. Treasury Strip 0.000% 74,906
11/15/98
6 10,000 U.S. Treasury Note 5.125% 9,792
11/30/98
-------------------- ----------------------
$500,000 $443,634
==================== ======================
</TABLE>
A-18
303533.2
<PAGE>
QUILTS
Treasury Income Series 16
AS OF DATE OF DEPOSIT, SEPTEMBER 21, 1995
<TABLE>
<CAPTION>
Coupon/ Cost of
Portfolio Aggregate Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
<S> <C> <C> <C> <C>
1 $100,000 U.S. Treasury Note 4.375% $98,922
8/15/96
2 100,000 U.S. Treasury Note 5.625% 99,703
8/31/97
3 100,000 U.S. Treasury Note 5.875% 100,015
8/15/98
4 100,000 U.S. Treasury Note 6.875% 103,094
8/31/99
5 100,000 U.S. Treasury Note 6.250% 101,094
_________ 8/31/00 _________
$500,000 $ 502,828
======== ==========
</TABLE>
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated
distributions of interest and principal to Unit Holders. The table assumes no
changes in Trust expenses, no redemptions or sales of the underlying U.S.
Treasury Obligations prior to maturity and the receipt of all principal due
upon maturity. To the extent the foregoing assumptions change actual
distributions will vary.
<TABLE>
<CAPTION>
Estimated Interest Estimated Principal Estimated Total
Quilts Treasury Income Series 16 Distribution Distribution Distribution
- -------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
October 1995 2.82 2.82
November 1995 - July 1996 4.70 4.70
August 1996 4.70 200.00 204.70
September 1996 - July 1997 3.99 3.99
August 1997 3.99 200.00 203.99
September 1997 3.53 3.53
October 1997 - July 1998 3.07 3.07
August 1998 3.07 200.00 203.07
September 1998 - July 1999 2.11 2.11
August 1999 2.11 200.00 202.11
September 1999 1.55 1.55
October 1999 - July 2000 .98 .98
August 2000 1.47 200.00 201.47
</TABLE>
A-19
303533.2
<PAGE>
QUILTS
Treasury Income Series 17
AS OF DATE OF DEPOSIT, SEPTEMBER 21, 1995
<TABLE>
<CAPTION>
Coupon/ Cost of
Portfolio Aggregate Principal Title of Securities Maturity Securities
No. Amount Contracted for (1) Date(s) to Trust (2)
<S> <C> <C> <C> <C>
1 $100,000 U.S. Treasury Note 6.500% $101,140
4/30/97
2 100,000 U.S. Treasury Note 5.875% 100,172
7/31/97
3 100,000 U.S. Treasury Note 5.750% 99,891
10/31/97
4 100,000 U.S. Treasury Note 5.625% 99,516
1/31/98
5 100,000 U.S. Treasury Note 5.125% 98,250
_________ 4/30/98 _________
$500,000 $498,969
======== ========
</TABLE>
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated
distributions of interest and principal to Unit Holders. The table assumes no
changes in Trust expenses, no redemptions or sales of the underlying U.S.
Treasury Obligations prior to maturity and the receipt of all principal due
upon maturity. To the extent the foregoing assumptions change actual
distributions will vary.
<TABLE>
<CAPTION>
Estimated Interest Estimated Principal Estimated Total
Quilts Treasury Income Series 17 Distribution Distribution Distribution
- -------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
January 1996 17.25 17.25
April 1996 - January 1997 14.11 14.11
April 1997 14.11 200.00 214.11
July 1997 10.90 200.00 210.90
October 1997 8.00 200.00 208.00
January 1998 5.17 200.00 205.17
April 1998 2.80 200.00 202.80
</TABLE>
A-20
303533.2
<PAGE>
QUILTS
Corporate Income Series 2
AS OF DATE OF DEPOSIT, SEPTEMBER 21, 1995
<TABLE>
<CAPTION>
Coupon/
Aggregate Principal Title of Securities Maturity Cost of Securities
Portfolio No. Amount Contracted for (1) Ratings(3) Date(s) to Trust (2)
<S> <C> <C> <C> <C> <C>
1 $100,000 Wal-Mart Stores AA 6.750% $101,870
5/15/02
2 100,000 Bell South Telecom AAA 6.250% 98,794
5/15/03
3 100,000 AT&T Corp. AA 6.750% 101,590
4/01/04
4 100,000 Ford Motor Credit Co. A+ 6.750% 99,957
Global Bond 5/15/05
5 100,000 BankAmerica Corp. A- 7.200% 102,457
_________ 4/15/06 _________
$500,000 $504,668
======== ========
</TABLE>
ESTIMATED CASH FLOWS TO UNIT HOLDERS
The Table below sets forth the per 1,000 Units estimated
distributions of interest and principal to Unit Holders. The table assumes no
changes in Trust expenses, no redemptions or sales of the underlying Corporate
Securities prior to maturity and the receipt of all principal due upon
maturity. To the extent the foregoing assumptions change actual distributions
will vary.
<TABLE>
<CAPTION>
Estimated Interest Estimated Principal Estimated Total
Quilts Corporate Income Series 2 Distribution Distribution Distribution
- -------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
October 1995 3.28 3.28
November 1995 - April 2002 5.46 5.46
May 2002 5.46 200.00 205.46
June 2002 - April 2003 4.35 4.35
May 2003 4.35 200.00 204.35
June 2003 - March 2004 3.33 3.33
April 2004 2.78 200.00 202.78
May 2004 - April 2005 2.23 2.23
May 2005 2.23 200.00 202.23
June 2005 - March 2006 1.12 1.12
April 2006 1.12 200.00 201.12
</TABLE>
A-21
303533.2
<PAGE>
FOOTNOTES TO PORTFOLIOS
(1) Contracts to purchase the Securities were entered into on September
21, 1995, for Asset Builder 15, Treasury Income Series 16, Treasury
Income Series 17 and Corporate Income Series 2. All contracts are
expected to be settled on or about the First Settlement Date of each
Trust which is expected to be September 27, 1995, for Asset Builder
15, Treasury Income Series 16, Treasury Income Series 17 and
Corporate Income Series 2.
(2) Evaluation of Securities by the Evaluator was made on the basis of
current offering prices for the Securities. The offering prices are
greater than the current bid prices of the Securities which are the
basis on which Unit Value is determined for purposes of redemption of
Units. (See "Public Offering--Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption Price" in Part B.)
<TABLE>
<CAPTION>
The aggregate value of Securities in the Additional information regarding the Trust,
based on the bid prices on the Date of Trust is as follows:
Deposit, are as follows:
Value of Securities Based Upon
Bid Side Evaluation Sponsor's Purchase Price
<S> <C> <C>
Asset Builder Series 15 $443,451 $443,991
Treasury Income Series 16 $502,578 $502,859
Treasury Income Series 17 $498,656 $498,922
Corporate Income Series 2 $503,778 $502,259
Cost of Securities Based Upon Sponsor's Profit
Offering Side Evaluation (Date of Deposit)
Asset Builder Series 15 $443,634 $ (357)
Treasury Income Series 16 $502,828 $ (31)
Treasury Income Series 17 $498,969 $ 47
Corporate Income Series 2 $504,668 $2,409
Difference in Dollars Annual Interest Income
Asset Builder Series 15 $183 $ 513
Treasury Income Series 16 $250 $29,000
Treasury Income Series 17 $313 $28,875
Corporate Income Series 2 $890 $33,700
% Difference Between Bid Side Evaluation
and Offering Side Evaluation
Asset Builder Series 15 .04%
Treasury Income Series 16 .05%
Treasury Income Series 17 .06%
Corporate Income Series 2 .18%
</TABLE>
(3) All ratings are by Standard & Poor's Corporation. A brief description
of the ratings symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B of this Prospectus.
A-22
303533.2
<PAGE>
UNDERWRITING SYNDICATES
The names and addresses of the Underwriters of the Units and their
participation in the offering of QUILTS are as follows:
<TABLE>
<CAPTION>
Units of Units of Units of Units of
Asset Builder Treasury Income Treasury Income Corporate Income
Name and Address Series 15 Series 16 Series 17 Series 2
================ ========= ========= ========= ========
<S> <C> <C> <C> <C>
Sponsor
Quest for Value 400,000 300,000 300,000 400,000
World Financial Center
200 Liberty Street
New York, NY 10281
Underwriters
Oppenheimer & Co., Inc. 100,000 100,000 100,000 100,000
World Financial Center
200 Liberty Street
New York, NY 10281
Stephens Inc. -- 100,000 100,000 __
111 Center Street
Stephens Building
Little Rock, AR 72203 ________ ________ ________ ________
500,000 500,000 500,000 500,000
</TABLE>
A-23
303533.2
PROSPECTUS PART B
Part B of this Prospectus may not be Distributed unless Accompanied by Part A
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
QUILTS Asset Builder--U.S. Treasury Series 15 ("Asset Builder Series 15")
QUILTS Laddered Income--U.S. Treasury Series 16 ("Treasury Income Series 16")
QUILTS Laddered Income--U.S. Treasury Series 17 ("Treasury Income Series 17")
QUILTS Laddered Income--Corporate Bond Series 2 ("Corporate Income Series 2")
THE TRUST
Organization. "QUILTS" is comprised of four separate "unit investment
trusts" designated as set forth above in Part A. The Trusts were created under
the laws of the State of New York pursuant to a Trust Indenture and Agreement
(the "Trust Agreement"), dated the Date of Deposit, between Quest for Value
Distributors, as Sponsor, The Chase Manhattan Bank (National Association), as
Trustee, and, for the Corporate Income Trust only, Kenny S&P Evaluation
Services, as Evaluator. The Trustee acts as the Evaluator for the Treasury
Trusts.
On the Date of Deposit the Sponsor deposited with the Trustee the
underlying securities and contracts and funds (represented by the irrevocable
letter(s) of credit issued by major commercial bank(s) for the purchase of such
securities (the "Securities"). (See "Portfolio" for each Trust in Part A of this
Prospectus.) The Trusts are created simultaneously with the execution of the
Trust Agreement and the deposit of the Securities with the Trustee. The Trustee
then immediately delivered to the Sponsor certificates of beneficial interest
(the "Certificates") representing the units (the "Units") comprising the entire
ownership of the Trusts. Through this Prospectus, the Sponsor is offering the
Units, including Additional Units, as defined below, for sale to the public. The
holders of Units (the "Unit Holders") will have the right to have their Units
redeemed at a price based on the aggregate bid side evaluation of the Securities
(the "Redemption Price") if they cannot be sold in the secondary market which
the Sponsor, although not obligated to, proposes to maintain. In addition, the
Sponsor may offer for sale through this Prospectus Units which the Sponsor may
have repurchased in the secondary market or upon the tender of such Units for
redemption.
With the deposit of the Treasury Securities in the Treasury Trusts on
the initial Date of Deposit, the Sponsor established a proportionate
relationship among the principal amounts of interest bearing and non-interest
bearing U.S. Treasury Obligations of specified ranges of maturities on the
portfolios of each Treasury Trust. With the deposit of the Corporate Securities
in the Corporate Income Trust on the initial Date of Deposit, the Sponsor
established a proportionate relationship among the principal amounts of interest
bearing corporate debt obligations of specified ranges of maturity in the
portfolio of the Corporate Income Trust. During the 90-day period following the
Date of Deposit, the Sponsor is permitted under the Trust Agreement to deposit
additional Securities (the "Additional Securities") and any cash in the Trusts
not held for distribution to Unit Holders prior to the deposit, resulting in a
corresponding increase in the number of Units outstanding (the "Additional
Units"). Such Additional Units may be continuously offered for sale to the
public by means of this Prospectus. The Sponsor anticipates that any Additional
Securities deposited in the Trusts during the 90-day period subsequent to the
Date of Deposit will maintain, as far as practicable, the original proportionate
relationship among the principal amounts of U.S. Treasury Obligations or
Corporate Securities in the portfolios established on the Date of Deposit.
Precise duplication of this original proportionate relationship may not be
possible because fractions of U.S. Treasury Obligations or Corporate Securities
may not be purchased or for other reasons, but duplication will continue to be
the goal in connection with any such deposit of Additional Securities. (These
original proportionate relationships on the Date of Deposit are set forth in
"Summary of Essential Information," for each Trust in Part A.) Deposits of
Additional Securities in the portfolios of each Trust subsequent to the 90-day
period following the Date of Deposit must
304713.1
<PAGE>
replicate exactly the proportionate relationship among the principal amounts of
Securities comprising the portfolios of each Trust at the time of replication.
A "Unit" represents an undivided interest or pro rata share in the
principal and interest of each Trust in the ratio of one Unit for each $1.00
principal amount of Securities initially deposited in each Trust. Because
regular payments of principal are to be received and certain of the Securities
will mature in accordance with their terms or may be sold under certain
circumstances described herein and because Additional Securities may be
deposited into the Trusts from time to time, the Trusts are not expected to
retain their present size and composition. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest or pro rata share in
such Trust represented by each unredeemed Unit will increase, although the
actual interest in such Trust represented by such fraction will remain
unchanged. Units will remain outstanding until redeemed upon tender to the
Trustee by Unit Holders, which may include the Sponsor, or until the termination
of the Trust Agreement.
Objectives. The Trusts offer investors the opportunity to participate
in a portfolio of U. S. Treasury Obligations or Corporate Securities with a
greater diversification than they might be able to acquire themselves. The
objectives of the Trusts are to provide safety of principal and, with respect to
Treasury Income Series 16, Treasury Income Series 17 and Corporate Income Series
2, monthly distributions of interest. With respect to Asset Builder Series 15,
the Trust seeks to accumulate principal value in the Units over the life of the
Trust. The Trusts seek to provide investment flexibility by allowing investors
to choose among four portfolios of Securities that have differing maturities and
quality. Investors should be aware that there is no assurance the Trusts'
objectives will be achieved. Even though the portfolios of Treasury Income
Series 16 and Treasury Income Series 17 consist primarily of U.S. Treasury
Obligations and the portfolio of Corporate Income Series 2 consists primarily of
Corporate Securities, each of which pay interest no more often than
semi-annually, Treasury Income Series 17 will pay interest quarterly, and
Treasury Income Trust 16 and Corporate Income Series 2 will pay interest monthly
through advances made by the Trustee, which will then be reimbursed when
interest is received. (See "Interest and Principal Distributions" in this Part
B.) Since disposition of Units prior to final liquidation of the Trust may
result in an investor receiving less than the amount paid for such Units
(see"Public Offering--Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price" in this Part B), the purchase of a Unit should be
looked upon as a long-term investment. The Trust is not designed to be a
complete investment program.
Portfolios. General. The Trusts consist of the Securities (or contracts
to purchase such Securities together with an irrevocable letter or letters of
credit for the purchase of such contracts) listed under "Portfolio" for each
Trust in Part A of this Prospectus, as long as such Securities may continue to
be held from time to time in the Trusts (including certain securities deposited
in the Trusts in exchange or substitution for any Securities pursuant to the
Trust Agreement) together with accrued and undistributed interest thereon and
undistributed and uninvested cash realized from the disposition of Securities.
Because certain of the Securities from time to time may be redeemed or will
mature in accordance with their terms or may be sold under certain circumstances
described herein, a Trust is not expected to retain for any length of time its
present size and composition.
The Sponsor although not obligated to do so, intends to maintain a
secondary market for the Units on the bid side of the market for the Units. (See
"Liquidity--Sponsor Repurchase", herein.) Unit Holders of the Trusts, in the
absence of a secondary market for Units will have the right to have one or more
of their Units redeemed with the Trustee at a price equal to the Redemption
Price thereof (see"Liquidity--Sponsor Repurchase" in this Part B) based on the
then aggregate bid price for the Securities in the portfolios of each Trust. Due
to fluctuations in the market price of the Securities in the portfolios and the
fact that the initial Public Offering Price is based on the offering side of the
market and includes a sales charge among other factors, the amount realized by a
Unit Holder upon the redemption or sale of Units may be less than the price paid
for such units by the Unit Holder.
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Treasury Trusts. The portfolio of each Treasury Trust consists of
Securities issued by the United States of America ("U.S. Treasury Obligations"),
which are direct obligations of the United States and therefore are backed by
the full faith and credit of the United States Government. The U.S. Treasury
Obligations are different issues of bonds, bills, notes, debentures and other
debt obligations with fixed final maturity dates. None of the U.S. Treasury
Obligations have any equity or conversion features. All of the U.S. Treasury
Obligations in Treasury Income Series 16 and Treasury Income Series 17 are
current interest-bearing obligations of the United States of America, or in the
case of U.S. Treasury Obligations not delivered on the initial Date of Deposit
contracts to purchase such obligations assigned to the Trustee. Most of the U.S.
Treasury Obligations in Asset Builder Series 15 consist of stripped U.S.
Treasury notes and bonds with maturities of 1 year or more (hereinafter referred
to as "Zero Coupon Bonds"). The balance of the portfolio of this Trust consists
of interest-bearing obligations used to pay expenses of the Trust. Any excess
amounts after expenses are paid will be paid to Unit Holders in cash. A Zero
Coupon Bond makes no present interest payments. Rather, it makes one payment on
its face amount at maturity.
U. S. Treasury Obligations represent 100% of the aggregate market value
of the portfolios of each Treasury Trust. These U.S. Treasury Obligations are
sold by the United States Department of Treasury (the "Treasury") to finance
shortfalls between the Treasury's income and expenditures. Such gaps may have
been planned and accounted for in the budget, or they may arise from unexpected
changes in economic, political, fiscal and other circumstances. U.S. Treasury
Obligations constitute public debt of the United States and are, therefore,
direct obligations of the United States.
When selecting U.S. Treasury Obligations for the Treasury Trusts, the
following factors, among others, were considered by the Sponsor: (i) the prices
and yields of such U.S. Treasury Obligations relative to other comparable
securities; (ii) the maturities of such U.S. Treasury Obligations; and (iii)
whether the U.S. Treasury Obligations were issued after July 18, 1984.
The yields on U.S. Treasury Obligations of the type deposited in the
Treasury Trusts are dependent on a variety of factors, including general money
market conditions, fluctuations in prevailing interest rates, general conditions
of the government securities markets, size of a particular offering and the
maturity of the obligations.
Corporate Income Trust. The portfolio of the Corporate Income Trust
consists of intermediate-term corporate debt obligations (the "Corporate
Securities"). All of the Corporate Securities in the Corporate Income Trust were
rated "BBB" or better by Standard & Poor's Corporation or "Baa" or better by
Moody's Investors Service, Inc. at the time originally deposited in the
Corporate income Trust. For a list of the ratings of each Corporate Security on
the initial Date of Deposit, see "Portfolio" in Part A.
For information regarding (i) the number of issues in the Corporate
Income Trust, (ii) the range of fixed maturities of the Corporate Securities and
(iii) the number of issues payable from the income of a specific project or
authority, see "Portfolio Summaries" in Part A of this Prospectus.
When selecting Corporate Securities for the Corporate Income Trust, the
following factors, among others, were considered by the Sponsor on the Date of
Deposit; (a) the quality of the Corporate Securities and whether such Corporate
Securities were rated as described above, or had, in the opinion of the Sponsor,
similar credit characteristics, (b) the yield and price of the Corporate
Securities relative to other debt securities of comparable quality and maturity,
(c) income to the Unit Holders of the Corporate Income Trust and (d) the
diversification of the Corporate Income Trust's Portfolio, taking into account
the availability in the market of issues in various industry classifications
which meet the Trust's quality, rating, yield and price criteria. Subsequent to
the Date of Deposit, a Corporate Security may cease to be rated or its rating
may be reduced below that specified above. Neither event requires an elimination
of such Corporate Security from the Corporate Income Trust but may be considered
in the Sponsor's determination to direct the Trustee to dispose of the Corporate
Security. For an interpretation of the Corporate Security ratings see
"Description of Bond Ratings." See "Portfolio Supervision" for a summary of the
factors considered in selecting substitute Corporate Securities.
Corporate debt obligations generally consist of bonds, debentures,
notes or other straight debt obligations with fixed final maturity dates. These
obligations represent a liability of the issuer with respect to the payment of
both interest and principal. Corporate debt obligations enjoy a seniority in
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right of payment over all equity securities of the issuer, although certain debt
obligations may be subordinated in right of payment to other debt obligations of
the same issuer. In addition, such debt obligations may be secured or unsecured.
Of the Corporate Securities in the Portfolio of the Corporate Income
Trust, none are subject to redemption prior to their stated maturity dates
pursuant to sinking fund or call provisions. A sinking fund is a reserve fund
appropriated specifically toward the retirement of a debt obligation. A callable
debt obligation is one which is subject to redemption or refunding prior to
maturity at the option of the issuer. A refunding is a method by which a debt
obligation is redeemed at or before maturity from the proceeds of a new issue of
debt obligations. In general, call provisions are more likely to be exercised
when the offering side evaluation of a debt obligation is at a premium over par
than when it is at a discount from par. A listing of the sinking fund and call
provisions, if any, with respect to each of the Corporate Securities is
contained under "Portfolio" in Part A. Unit Holders will realize a gain or loss
on the early redemption of such Corporate Securities depending on whether the
price of such Corporate Securities is at a discount from or at a premium over
par at the time the Unit Holders purchase their Units.
RISK FACTORS
Risk Factors. An investment in Units of the Trusts should be made with
an understanding of the risks which an investment in fixed rate debt obligations
may entail, including the risk that the value of the portfolios of each Trust,
and hence of the Units, will decline with increases in prevailing interest
rates. The value of the underlying Securities will fluctuate inversely with
changes in prevailing interest rates. In recent years, the national economy has
experienced significant variations in rates of inflation and economic growth,
substantial increases in the national debt, substantial increase in reliance
upon foreign investors to finance the national debt, and material reformulation
of federal tax, monetary and regulatory policies. These conditions have been
associated with wide fluctuations in prevailing interest rates and thus in the
value of fixed rate debt obligations. The Sponsor cannot predict whether such
fluctuations will continue in the future.
The Securities in the portfolios of each Trust were chosen in part on
the basis of their respective stated maturity dates. The ranges of maturity
dates of each of the Securities contained in the portfolios of each Trust are
shown on the "Portfolio" for each Trust in Part A of this Prospectus.
The Treasury Trusts may be appropriate for investors who desire to
invest in a portfolio of taxable fixed income federal securities offering the
safety of principal provided by an investment in U.S. Treasury Obligations
backed by the full faith and credit of the United States Government. With the
exception of the Rolling Treasury Trust, the Treasury Trusts generally pass
though to Unit Holders the exemptions from state and local personal income taxes
afforded to direct owners of U.S. Obligations. The Trusts are appropriate for
qualified retirement plans. (See "Retirement Plans" in this Part B.) With the
exception of the Rolling Treasury Trust, these Trusts may also be particularly
appropriate for foreign investors as the income from the Trusts, provided
certain conditions are met, will be exempt from withholding for U.S. Federal
income tax purposes. (See "Tax Status".)
Certain of the Securities in the Trusts may have been acquired at a
market premium. Securities trade at a premium because the prevailing interest
rates on the Securities are higher than interest on comparable debt securities
being issued at currently prevailing interest rates. The current returns of
securities trading at a market premium are higher than the current returns of
comparably rated debt securities of a similar type issued at currently
prevailing interest rates because premium securities tend to decrease in market
value as they approach maturity, when the face amount becomes payable. Because
part of the purchase price is thus returned not at maturity but through current
income payments, an early redemption at par of a security purchased at a premium
or a maturity at par of a security purchased at a premium will result in a
reduction in yield and a loss of principal to the Unit Holders. If currently
prevailing interest rates for newly issued and otherwise comparable securities
increase, the market premium of previously issued securities will decline and if
currently prevailing interest rates for newly issued comparable securities
decline, the market premium of previously issued
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securities will increase, all other things being equal. Furthermore, the value
of the Units will fluctuate with fluctuations in the value of the underlying
Securities in the portfolios of each Trust. Therefore, Unit Holders who sell
their Units prior to termination may receive more or less than their original
purchase price upon sale. Market premium attributable to interest rate changes
does not indicate market confidence in the issue.
Substitution of Securities. Neither the Sponsor nor the Trustee shall
be liable in any way for any default, failure or defect in any of the
Securities. In the event of a failure to deliver any Security that has been
purchased for the Trusts under a contract, including those Securities purchased
on a "when, as, and if" issued basis ("Failed Securities"), the Sponsor is
authorized under the Trust Agreement to direct the Trustee to acquire other
securities ("Replacement Securities") and to substitute them in the portfolios
of the Trusts within 90 days of the initial Date of Deposit.
Replacement Securities must be deposited with the Trustee within 20
days after delivery of notice of a Failed Security (but in no event later than
the 90th day following the initial Date of Deposit) and the purchase price
thereof (exclusive of accrued interest) may not exceed the amount of funds
reserved by the Trustee pursuant to a letter of credit supplied by the Sponsor
for the purchase of the failed Security. The Replacement Securities must (i) be
U.S. Treasury Obligations with respect to the Treasury Trusts or Corporate
Securities with respect to the Corporate Income Trust, (ii) have a fixed
maturity approximately the same as the fixed maturity of the Security replaced,
and (iii) be purchased at a price that results in a yield to maturity and in a
current return, in each case as of the date on which such Replacement are
deposited with the Trustee, which is equivalent (taking into consideration then
current market conditions and the relative creditworthiness of the underlying
obligation) to the yield to maturity and current return of the related Failed
Security. Whenever a Replacement Security has been acquired for a Trust, the
Trustee shall, within five days thereafter, notify all Unit Holders of the
acquisition of the Replacement Security and shall, no later than the next
Monthly Payment Date, make a pro rata distribution of the amount, if any, by
which the cost to the Trust of the Failed Security exceeded the cost of the
Replacement Security.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Securities in the event
of a failed contract, the Sponsor will refund to each Unit Holder the portion of
the sales charge and the pro rata portion of the cost of such Failed Securities,
and distribute the principal and accrued interest attributable to such Failed
Securities on the next Monthly Payment Date. In all cases, accrued interest
attributable to Failed Securities will be paid to Unit Holders until such time
as Replacement Securities are acquired. All such interest paid to a Unit Holder
which accrued after the expected date of settlement for purchase of his Units
will be paid by the Sponsor.
Because certain of the Securities from time to time may be redeemed or
will mature in accordance with their terms or may be sold under certain
circumstances, no assurance can be given that the Trusts will retain their
present size and composition for any length of time. The proceeds from the sale
of a Security or the exercise of any redemption or call provision will be
distributed to Unit
Holders except to the extent such proceeds are applied to meet redemptions of
Units. (See "Liquidity--Trustee Redemption" in this Part B.)
Discount and Zero Coupon Bonds. Most of the aggregate principal amount
of the Securities in Asset Builder Series 15 are stripped U.S. Treasury notes or
bonds with maturities of 1 year or more, which are referred to as Zero Coupon
Bonds. The balance of the portfolio of this Trust consists of interest-bearing
obligations used to pay expenses of the Trust. Any excess amounts remaining
after expenses are paid will be paid to Unit Holders in cash. Zero Coupon Bonds
do not provide for the payment of any current interest and provide for payment
at maturity at face value unless sooner sold or redeemed. The market value of
Zero Coupon Bonds is subject to greater fluctuation in response to changes in
prevailing interest rates. Zero Coupon Bonds generally are subject to redemption
at compound accreted value based on par value at maturity. Because the issuer is
not obligated to make current interest payments, Zero Coupon Bonds may be less
likely to be redeemed than coupon bonds issued at a similar prevailing interest
rates. In the case of certain categories of Unit Holders, the
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accrued market discount from Zero Coupon Bonds is not taxable until such
Securities are disposed of or have matured. The accrued portion of such discount
will generally be treated as taxable interest income for regular federal income
tax purposes. Upon sale or redemption, any gain realized that is in excess of
the earned portion of acquisition discount will be taxable as long-term capital
gain if the Zero Coupon Bonds have been held for more than one year. (See "Tax
Status" in this Part B.) The current value of a Zero Coupon Bond reflects the
present value of its face amount at maturity. (See"Portfolio Summary" in Part
A.)
Some of the aggregate principal amount of Securities in the Trusts may
have been purchased at a "market" discount from par value at maturity. The
coupon interest rates on the discount bonds at the time they were purchased and
deposited in the Trusts were lower than the current market interest rates for
newly issued bonds of comparable rating and type. At the time of issuance the
discount bonds were for the most part issued at then current coupon interest
rates. The current yields (coupon interest income as a percentage of market
price) of discount bonds will be lower than the current yields of comparably
rated bonds of similar type newly issued at current interest rates because
discount bonds tend to increase in market value as they approach maturity and
the full principal amount becomes payable. A market discount bond held to
maturity will have a larger portion of its total return in the form of capital
gain and less in the form of interest income than a comparable bond newly issued
at current yield and a lower current market value than otherwise comparable
bonds with a shorter term of maturity. If prevailing interest rates rise, the
value of discount bonds will decrease; and if prevailing interest rates decline,
the value of discount bonds will increase. The discount does not necessarily
indicate a lack of market confidence in the issuer.
PUBLIC OFFERING
Offering Price. The Public Offering Price per Unit of each Trust is
computed by adding to the aggregate offering price of the Securities in each
Trust divided by the number of Units outstanding for that Trust, an amount equal
to (a) 1.75% of the aggregate offering price of the Securities per Unit which is
equal to 1.781% of the Public Offering Price for Asset Builder Series 15, (b)
1.80% of the aggregate offering price of the Securities per Unit which is equal
to 1.833% of the Public Offering Price for Treasury Income Series 16, (c) 1.70%
of the aggregate offering price of the Securities per Unit which is equal to
1.729% of the Public Offering Price for Treasury Income Series 17 and (c) 3.05%
of the aggregate offering price of the Securities per Unit which is equal to
3.146% of the Public Offering Price for Corporate Income Series 2. A
proportionate share of accrued interest on the Securities from the First
Settlement Date to the expected date of settlement for the Units is added to the
Public Offering Price. Accrued interest is the accumulated and unpaid interest
on a Security from the last day on which interest was paid and is accounted for
daily by the applicable Trusts at the initial daily rate set forth under
"Summary of Essential Information" for each Trust in Part A. The Public Offering
Price for each Trust can vary on a daily basis from the amount stated in this
Prospectus in accordance with fluctuations in the prices of the Securities and
the price to be paid by each investor will be computed as of the date the Units
are purchased.
The aggregate offering side evaluation of the Securities is determined
by the Evaluator for such Trust (a) on the basis of current offering prices of
the Securities, (b) if an offering price is not available for any particular
Security, on the basis of current offering prices for comparable securities, (c)
by determining the value of the Securities on the offer side of the market by
appraisal, or (d) by any combination of the above. This evaluation is made on
the initial Date of Deposit as of 12:00 Noon New York Time and as of 4:00 P.M.
each business day thereafter during the initial public offering, effective for
all orders received during the preceding 24-hour period. With respect to the
initial evaluation of the offering prices of certain Securities which at the
initial Date of Deposit were subject to syndicate offering period pricing
restrictions, it is the practice of the Evaluator to determine such evaluation
on the basis of the syndicate offering price, unless other factors cause the
Evaluator to conclude that such syndicate offering price does not then
accurately reflect the free market value of such Securities, in
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which case the Evaluator will also take into account the other criteria
described above for the purpose of making its determination.
The Evaluator may obtain current bid or offering prices for the
Securities from investment dealers or brokers (including the Sponsor) that
customarily deal in U.S. Treasury Obligations with respect to the Treasury
Trusts or Corporate Securities with respect to the Corporate Income Trust, or
from any other reporting service or source of information which the Evaluator
deems appropriate.
Accrued Interest. Accrued interest is the accumulation of unpaid
interest on a bond from the last day on which interest thereon was paid.
Interest on Securities in the Trusts is actually paid semi-annually to the
Trusts. However, interest on the Securities in the applicable Trusts is
accounted for daily on an accrual basis. Because of this, the Trusts always have
an amount of interest earned but not yet collected by the Trustee because of
non-collected coupons. For this reason, the Public Offering Price of Units of
the Trusts will have added to it the proportionate share of accrued and
undistributed interest to date of settlement.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price on the sale
of Units to the public, the Trustee will advance the amount of accrued interest
as of the First Settlement Date as set forth in the "Summary of Essential
Information" for each Trust in Part A and the same will be distributed to the
Sponsor as the Unit Holder of record as of the First Settlement Date.
Consequently, the amount of accrued interest to be added to the Public Offering
Price of Units will include only accrued interest from the First Settlement Date
to date of settlement, less any distributions from the Interest Account
subsequent to the First Settlement Date. Thus, since the First Settlement Date
is the date of settlement for anyone ordering Units on the date of this
Prospectus, no accrued interest will be added to the Public Offering Price of
Units ordered on the initial Date of Deposit.
Except through an advancement of its own funds, the Trustee will have
no cash for distribution to Unit Holders until it receives interest payments on
the Securities in the Trust. The Trustee has agreed to make advancements of its
own funds in order to reduce the amount of time before monthly or quarterly
distributions of interest in Unit Holders commence (see "Interest and Principal
Distributions"). The Trustee will recover its advancements without interest or
other costs to such Trust from interest received on the Securities in the Trust.
When these advancements have been recovered, regular distributions of interest
to Unit Holders will be commenced. The Interest Account during the initial
months of the Trusts will include some cash representing interest which has been
collected but will predominantly consist of uncollected accrued interest which
is not available for distribution. Since the Trusts normally receive the
interest on Securities twice a year and the interest on the Securities in the
Trusts is accrued on a daily basis, the Trusts usually will have an amount of
interest accrued but not actually received and distributed to Unit Holders. A
Unit Holder will not recover his proportionate share of accrued interest until
the Units are sold or redeemed, or such Trust is terminated. At that time, the
Unit Holder will receive his proportionate share of the accrued interest
computed to the settlement date in the case of sale or termination and to the
date of tender in the case of redemption.
Volume and Other Discounts. Units of the Trust are available to Unit
Holders at a volume discount ("Volume Discount") from the Public Offering Price
during the initial public offering. Volume Discount will result in a reduction
of the sales charge applicable to such purchases. Furthermore, Volume Discount
applies to the cumulative Units purchased by a Unit Holder during a period of 60
days from the initial date of sale of the Units to such Unit Holder. Units
purchased by the same purchasers in separate transactions during the 60-day
period will be aggregated for purposes of determining if such purchaser is
entitled to a Volume Discount provided that such purchaser must own at least the
lesser of either (i) the required number of Units or (ii) the required dollar
amount at the Public Offering Price, at the time such determination is made.
Units held in the name of the spouse of the purchaser or in the name of a child
of the purchaser under 21 years of age are deemed for the purposes hereof to be
registered in the name of the purchaser. Volume Discount is also applicable to a
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account. As a result of such
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discounts, units are sold to dealers/agents at prices which represent a
concession as reflected below. The Sponsor reserves the right to change these
discounts from time to time. The amount of Volume Discount, the approximate
sales charge and the dealer concession applicable to such purchases are as
follows:
<TABLE>
<CAPTION>
Volume Discount Approximate Approximate
Lesser of Number of from Public Reduced Dealer/Agent
Units or Dollar Amount Sales Charge Offering per Unit Sales Charge Concession
- ---------------------- ------------ ----------------- ------------ ----------
<S> <C> <C> <C> <C>
Treasury Income Series 15
Less than 500,000............................ 1.75% 0% 1.75% 1.00%
500,000 to 999,999........................... 1.75% .15% 1.60% .90%
1,000,000 and above*......................... 1.75% .40% 1.35% .75%
Treasury Income Series 16
Less than 500,000............................ 1.80% 0% 1.80% 1.05%
500,000 to 999,999........................... 1.80% .15% 1.65% 1.00%
1,000,000 and above*......................... 1.80% .40% 1.40% .85%
Treasury Income
Series 17
Less than 500,000............................ 1.70% 0% 1.70% 1.00%
500,000 to 999,999........................... 1.70% .10% 1.60% .95%
1,000,000 and above*......................... 1.70% .35% 1.35% .80%
Corporate Income Series 2
Less than 250,000............................ 3.05% 0% 3.05% 2.20%
250,000 to 499,999........................... 3.05% .15% 2.90% 2.10%
500,000 to 999,999*.......................... 3.05% .35% 2.70% 1.95%
</TABLE>
- --------------
* For any transactions of 1,000,000 Units or more or over $1,000,000, the
Sponsor intends to negotiate the applicable sales charge and such
charge will be disclosed to any such purchaser.
Rollover Privilege. In addition, to the extent Units of each QUILTS
trust are currently available from the Sponsor, Unit Holders of the Trusts may
elect to rollover principal distributions paid to them as Securities in their
respective Trusts mature into additional units of such available QUILTS trusts
at a reduced sales charge equal to the first breakpoint of the Trust purchased
described above on the day the rollover is executed. Reduced sales charges are
available only on proceeds received from principal distributions from maturing
Securities of the Trust. Furthermore, for rollover transactions of any amount,
dealers/agents will receive concessions equal to the first breakpoint of the
Trust purchased described above on the day the rollover is executed. For more
complete information concerning the rollover privilege, including charges and
expenses, the Unit Holders should contact their broker.
Net Asset Value Purchases. No sales charge will be applied to the
following transactions: purchases by persons who for at least 90 days have been
directors, trustees, officers or full-time employees of any of (i) the funds
distributed by Quest for Value Distributors, (ii) Quest for Value Advisors and
(iii) Quest for Value Distributors, or their affiliates, their immediate
relatives or any trust, pension, profit sharing or other benefit plan for any of
them; purchases by any account advised by Oppenheimer Capital, the parent of
Quest for Value Advisors; and purchases by an employee of a broker-dealer having
a dealer or servicing agreement with Quest for Value Distributors and/or a
participating member of the Oppenheimer Capital brokered CD selling group or of
a bank or financial intermediary currently offering QUILTS to its customers.
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Distribution of Units. During the initial offering period (i) Units
issued on the initial Date of Deposit and (ii) Additional Units issued after
such date in respect of additional deposits of Securities, will be distributed
by the Sponsor and dealers at the Public Offering Price plus accrued interest.
The initial offering period in each case is thirty days unless extended by the
Sponsor for Units specified in (i) and (ii) in the preceding sentence. In
addition, Units may be distributed through dealers who are members of the
National Association of Securities Dealers, Inc. or other financial
intermediaries as permitted by law. Certain banks and thrifts will make Units of
each Trust available to their customers on an agency basis. A portion of the
sale charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
The Sponsor intends to qualify the Units of the Trusts for sale in
Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois,
Indiana, Kansas. Maryland, Michigan, Missouri, Nevada, New Jersey, New York,
Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Virginia, Washington and the
District of Columbia. Additional states may be added from time to time.
The Sponsor may provide additional concessions to its affiliates in
connection with the distribution of the Units. The Sponsor reserves the right to
change the dealers concession at any time. Such Units may then be distributed to
the public by the dealers at the Public Offering Price then in effect. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units. Also, the Sponsor in its discretion may from time to time
pursuant to objective criteria established by the Sponsor pay fees to qualifying
Underwriters, brokers, dealers, banks and/or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trusts. Such payments are made by the Sponsor out of its own assets and out of
the assets of the Trusts. These programs will not change the price Unit Holders
pay for their Units or the amount that each Trust will receive from the Units
sold.
Sponsor's Profits. The Sponsor will receive a gross underwriting
commission (although the net commission retained will be lower because of the
concession paid to dealers) equal to 1.75% of the Public Offering Price per Unit
(equivalent to 1.781% of the net amount invested in the Securities) for Asset
Builder Series 15, 1.80% of the Public Offering Price per Unit (equivalent to
1.833% of the net amount invested in the Securities) for Treasury Income Series
16, 1.70% of the Public Offering Price per Unit (equivalent to 1.729% of the net
amount invested in the Securities) for Treasury Income Series 17 and 3.05% of
the Public Offering Price per Unit (equivalent to 3.146% of the net amount
invested in the Securities) for Corporate Income Series 2. Additionally, the
Sponsor may realize a profit on the deposit of the Securities in the Trust
representing the difference between the cost of the Securities to the Sponsor
and the cost of the Securities to the Trusts (see "Portfolios" in Part A). The
Sponsor may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
it was a member.
The Sponsor may have participated as a sole underwriter or manager,
co-manager or member of underwriting syndicates from which some of the aggregate
principal amount of the Securities were acquired for the Trusts in the amounts
set forth in Part A.
During the initial offering period and thereafter to the extent
Additional Units continue to be issued and offered for sale to the public the
Sponsor may also realize profits or sustain losses as a result of fluctuations
after the initial Date of Deposit in the offering prices of the Securities and
hence in the Public Offering Price received by the Sponsor for the Units. Cash,
if any, made available to the Sponsor prior to settlement date for the purchase
of Units may be used in the Sponsor's business subject to the limitations of 17
CFR 240.15c3-3 under the Securities Exchange Act of 1934, and may be of benefit
to the Sponsor.
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In maintaining a market for the Units (see "Liquidity--Sponsor
Repurchase") the Sponsor will realize profits or sustain losses in the amount of
any difference between the price at which they buy Units and the price at which
they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase Price and
Redemption Price. Although the Public Offering Price of Units of the Trusts will
be determined on the basis of the current offering prices of the Securities in
the Trusts, the value at which Units may be redeemed or sold in the secondary
market will be determined on the basis of the current bid prices of such
Securities. On the initial Date of Deposit, the Public Offering Price and the
Sponsor's Initial Repurchase Price per Unit of each Trust (each based on the
offering side evaluation of the Securities in the Trusts) each exceeded the
Redemption Price and the Sponsor's secondary market Repurchase Price per Unit
(based upon the current bid side evaluation of the Securities in the Trusts) by
the amounts shown under "Summary of Essential Information" for each Trust in
Part A of this Prospectus. On the initial Date of Deposit, the bid side
evaluation for each Trust was lower than the offering side evaluation for such
Trust by the amount set forth in Part A. For this reason, among others
(including fluctuations in the market prices of such Securities and the fact
that the Public Offering Price includes the applicable sales charge), the amount
realized by a Unit Holder upon any redemption or Sponsor repurchase of Units may
be less than the price paid for such Units. See "Liquidity--Sponsor Repurchase."
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
Units of the Trusts are offered to investors on a "dollar price" basis
(using the computation method previously described under "Public Offering
Price") as distinguished from a "yield price" basis (involving the lesser of the
yield as computed to maturity of bonds or to an earlier redemption date). Since
they are offered on a dollar price basis, the rate of return on an investment in
Units of Treasury Income Series 16, Treasury Income Series 17 and Corporate
Income Series 2 is measured in terms of "Estimated Current Return" and
"Estimated Long Term Return." The rate of return for Asset Builder Series 15 is
only measured in terms of "Estimated Long Term Return." This calculation of
performance is mandated by the rules of the Securities and Exchange Commission.
Estimated Long Term Return is calculated by: (1 ) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Security in each Trust's portfolio in accordance with accepted practices,
which practices take into account not only the interest payable on the Security
but also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Securities in each Trust's
portfolio by weighing each Security's yield by the market value of the Security
and by the amount of time remaining to the date to which the Security is priced
(thus creating an average yield for the portfolio of each Trust); and (3)
reducing the average yield for the portfolio of each Trust in order to reflect
estimated fees and expenses of such Trust and the maximum sales charge paid by
Unit Holders. The resulting Estimated Long Term Return represents a measure of
the return to Unit Holders earned over the estimated life of the Trusts. The
Estimated Long Term Return as of the day prior to the initial Date of Deposit is
stated for each Trust under "Summary of Essential Information" in Part A.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Securities in the portfolio of each Trust. Moreover, because
prevailing interest rates on Securities purchased at a premium are generally
higher than current interest rates on newly issued bonds of a similar type with
comparable rating, the Estimated Current Return per Unit may be affected
adversely if such Securities are redeemed prior to their maturity. On the
initial Date of Deposit, the Estimated Net Annual Interest Income per Unit
divided by the Public Offering Price resulted in the Estimated Current Return
stated for the applicable Trust under "Summary of Essential Information" in Part
A.
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The Estimated Net Annual Interest Income per Unit of each Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Securities in such Trust. The Public Offering Price will vary
with changes in the offering prices (bid prices in the case of the secondary
market) of the Securities. Therefore, there is no assurance that the present
Estimated Current Return or Estimated Long Term Return will be realized in the
future.
RIGHTS OF UNIT HOLDERS
Book-Entry Units. Ownership of Units of the Trusts will not be
evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form either at Depository Trust Company ("DTC") through
an investor's broker's account or through registration of the Units on the books
of the Trustee. Units held through DTC will be deposited by the Sponsor with DTC
in the Sponsor's DTC account and registered in the nominee name CEDE & CO.
Individual purchases of beneficial ownership interest in the Trust will be made
in book-entry form through DTC or the Trustee. Ownership and transfer of Units
will be evidenced and accomplished directly and indirectly by book-entries made
by DTC and its participants if the Units are evidenced at DTC, or otherwise will
be evidenced and accomplished by book-entries made by the Trustee. DTC will
record ownership and transfer of the Units among DTC participants and forward
all notices and credit all payments received in respect of the Units held by the
DTC participants. Beneficial owners of Units will receive written confirmation
of their purchase and sale from the broker-dealer or bank from whom their
purchase was made. Units are transferable by making a written request properly
accompanied by a written instrument or instruments of transfer which should be
sent registered or certified mail for the protection of the Unit Holder. Unit
Holders must sign such written request exactly as their names appear on the
record of the Trusts. Such signatures must be guaranteed by a commercial bank or
trust company, savings and loan association or by a member firm of a national
securities exchange.
Interest and Principal Distributions. Interest received by the Trusts
is credited by the Trustee to an Interest Account for the Trusts and a deduction
is made to reimburse the Trustee without interest for any amounts previously
advanced. Proceeds representing principal received from the maturity,
redemption, sale or other disposition of the Securities are credited to a
Principal Account of the Trust. Cash credited to the Interest Account and
Principal Account will not be reinvested by the Trusts prior to distribution.
Such cash balances are maintained by the Trustee and any income generated
thereon inures to the benefit of the Trustee and not the Trusts.
Distributions to each Unit Holder from the Interest Account are
computed as of the close of business on each Record Date for the following
Payment Date and consist of an amount substantially equal to one-quarter (for
quarterly payments) or one-twelfth (for monthly payments) of such Unit Holder's
pro rata share of the Estimated Net Annual Interest Income in the Interest
Account Distributions from the Principal Account of the Trusts (other than
amounts representing failed contracts, as previously discussed) will be computed
as of each quarterly Record Date for Treasury Income Series 17, and as of each
monthly Record Date for Treasury Income Series 16 and Corporate Income Series 2,
and will be made to the Unit Holder of the Trusts on or shortly after the next
Quarterly or Monthly Payment Date. Proceeds representing principal received from
the disposition of any of the Securities between a Record Date and a Payment
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Quarterly or Monthly
Payment Date. Persons who purchase Units between a Record Date and a Payment
Date will receive their first distribution on the second Payment Date after such
purchase.
Normally, interest payments on the Securities in the portfolios of the
Trusts which pay interest, are made on a semi-annual basis. Therefore, it
usually takes several months after the Date of Deposit for the Trustee to
receive sufficient interest payments on the Securities to begin quarterly or
monthly distributions of interest to Unit Holders. However, the Trustee has
agreed to advance sufficient funds to the Trusts in order to reduce the amount
of time before quarterly or monthly distributions of interest
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to Unit Holders commence. Further, because interest payments are not received by
the Trusts at a constant rate throughout the year, interest distributions may be
more or less than the amount credited to the Interest Account as of a given
Record Date. For the purpose of minimizing fluctuations in the distributions
from the Interest Account, the Trustee will advance sufficient funds, without
interest, as may be necessary to provide interest distributions of approximately
equal amounts. All funds in respect of the Securities received and held by the
Trustee prior to distribution to Unit Holders may be of benefit to the Trustee
and do not bear interest to Unit Holders.
In order to acquire the "when, as, and if issued" Securities contracted
for by the Trusts, if any, it may be necessary to pay on the settlement dates
for delivery of such Securities amounts covering accrued interest on such
Securities which exceed (1) the amounts paid by Unit Holders and (2) the amount
which will be made available under the letter of credit furnished by the Sponsor
on the initial Date of Deposit for the purchase of such Securities. The Trustee
has agreed to pay for any amounts necessary to cover any such excess and will be
reimbursed therefor, without interest, when funds become available from interest
payments on the particular Securities with respect to which such payments may
have been made. Also, since interest on the Securities in the portfolios of the
Trusts does not accrue to the benefit of Unit Holders until their respective
dates of delivery, the Trustee will, in order to provide income to the Unit
Holders for this period of non-accrual, reduce its fee applicable to the Trust
in an amount equal to the amount of interest that would have so accrued on such
Securities in the Trust between the date of settlement for the Units and such
dates of delivery. To the extent such non-accrual is in excess of the reduction
in the Trustee's fee, the amount of such excess will be distributed to Unit
Holders as a return of capital.
As of the first day of each month, the Trustee will deduct from the
Interest Account of the Trusts, and, to the extent funds are not sufficient
therein, from the Principal Account of the Trusts, amounts necessary to pay the
expenses of the Trusts (see "Trust Expenses and Charges" in this Part B). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trusts. Amounts so withdrawn shall not be
considered a part of the Trusts' 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 Interest and Principal Accounts such amounts
as may be necessary to cover purchases of Replacement Securities and redemptions
of Units by the Trustee.
The estimated quarterly interest distribution per Unit for Treasury
Income Series 17, and the estimated monthly interest distribution per Unit for
Treasury Income Series 16 and Corporate Income Series 2 will initially be in the
amount shown under "Summary of Essential Information" for each Trust in Part A
and will change and may be reduced as Securities mature or are redeemed,
exchanged or sold, or as expenses of the Trusts fluctuate. No distribution need
be made from the Principal Account until the balance therein is an amount
sufficient to distribute $1.00 per 1,000 Units.
Records. For each of the Trusts, the Trustee shall furnish Unit Holders
in connection with each distribution a statement of the amount of interest, if
any, and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per Unit. Within a reasonable time
after the end of each calendar year the Trustee will furnish to each person who
at any time during the calendar year was a Unit Holder of record, a statement
showing (a) as to the Interest Account: interest received (including any earned
original issue discount and amounts representing interest received upon any
disposition of Securities), amounts paid for purchases of Replacement Securities
and redemptions of Units, if any, deductions for applicable taxes and fees and
expenses of the Trusts, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (b) as to the Principal Account: the dates of
disposition of any Securities and the net proceeds received therefrom (including
any unearned original issue discount but excluding any portion representing
accrued interest), deductions for payments of applicable taxes and fees and
expenses of the Trusts, amounts paid for purchases of Replacement Securities and
redemptions of Units, if any, and the balance remaining after such distributions
and deductions, expressed both as a
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total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (c) a list
of the Securities held and the number of Units outstanding on the last business
day of such calendar year; (d) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (e) amounts actually
distributed to Unit Holders during such calendar year from the Interest and
Principal Accounts, separately stated, of each Trust, expressed both as total
dollar amounts and as dollar amounts representing the pro rata share of each
Unit outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of Unit
Holders, certificates issued or held, a current list of Securities in the
portfolio of each Trust and a copy of the Trust Agreement.
TAX STATUS
In the opinion of Battle Fowler LLP, counsel for the Sponsor, under
existing law:
Each Trust is not an association taxable as a corporation for
United States federal income tax purposes and income of the Trusts will
be treated as income of the Unit Holders in the manner set forth below.
Each Unit Holder will be considered the owner of a pro rata portion of
each asset of a Trust under the grantor trust rules of Sections 671-678
of the Internal Revenue Code of 1986, as amended (the "Code").
Each Unit Holder will be considered to have received his pro
rata share of interest derived from each Trust asset when such interest
is received by the Trust. Each Unit Holder will be required to include
in his gross income, as determined for Federal income tax purposes,
original issue discount with respect to his interest in a Security held
by the Trust at the same time and in the same manner as though the Unit
Holder were the direct owner of such interest. Each Unit Holder's pro
rata share of each expense paid by the Trust is deductible by the Unit
Holder to the same extent as though the expense had been paid directly
by him.
Each Unit Holder will have a taxable event when a Security is
disposed of (whether by sale, exchange, redemption, or payment at
maturity) or when the Unit Holder redeems or sells his Units. The total
tax cost of each Unit to a Unit Holder must be allocated among the cash
and Securities held in the Trust in accordance with their relative fair
market value on the date the Unit Holder purchases his Units in order
to determine his per Unit tax basis for the Securities represented
thereby. If a Unit Holder's tax cost of his pro rata interest in a
Security exceeds the amount payable in respect of such pro rata
interest upon the maturity of the Security, such excess is a "bond
premium" which may be amortized by the Unit Holder at the Unit Holder's
election as provided in Section 171 of the Code.
The tax basis of a Unit Holder with respect to his interest in a
Security will be increased by the amount of original issue discount thereon
properly included in the Unit Holder's gross income as determined for Federal
income tax purposes.
The amount of gain recognized by a Unit Holder on a disposition of a
Security by a Trust will be equal to the difference between such Unit Holder's
pro rata portion of the gross proceeds realized by the Trust on the disposition
and the Unit Holder's tax cost basis in his pro rata portion of the Security
disposed of. Any gain recognized on a sale or exchange of a Unit Holder's pro
rata interest in a Security, and not constituting a realization of accrued
"market discount" in the case of a Security issued after July 18, 1984, and any
loss will be a capital gain or loss, except in the case of a dealer or financial
institution. Gain realized on the disposition of the interest of a Unit Holder
in a market discount Security is treated as ordinary income to the extent the
gain does not exceed the accrued market discount. A Unit Holder has an interest
in a market discount Security in a case in which the Unit Holder's tax cost for
his pro rata interest in the Security is less than the stated redemption price
thereof at maturity (or the issue price plus original issue discount accrued up
to the acquisition date,
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in the case of an original issue discount Security). If a Unit Holder has an
interest in a market discount Security and has incurred debt to acquire Units,
the deductibility of a portion of the interest incurred on such debt may be
deferred. Any capital gain or loss arising from the disposition of Unit Holder's
pro rata interest in a Security will be a long-term capital gain or loss if the
Unit Holder has held his Units and the Trust has held the Security for more than
one year. Net capital gains (i.e., the excess of net long-term capital gain over
net short-term capital loss) of individuals, estates and trusts are subject to a
maximum nominal tax rate of 28%. Such net capital gains may, however, result in
a disallowance of itemized deductions and/or affect a personal exemption
phase-out. For taxable year beginning after December 31, 1992, net capital gain
from the disposition of property held for investment is excluded from investment
income for purposes of computing the limitation on the deduction for investment
interest applicable to individuals. A taxpayer may, however, elect to include
such net capital gain in investment income if the taxpayer reduces the amount of
net capital gain that is otherwise eligible for the maximum 28% rate by such
amount.
If the Unit Holder sells or redeems a Unit for cash, he is deemed
thereby to have disposed of his entire pro rata interest in all Trust assets
represented by the Unit and will have a taxable income or loss measured by the
difference between his per Unit tax basis for such assets, as described above,
and the amount realized.
Under the personal income tax laws of the State and City of New York,
the income of Trust will be treated as the income of the Unit Holders.
Each Trust may contain one or more Securities which were originally
issued at a discount ("original issue discount"). In general, original issue
discount can be defined as the difference between the price at which a Security
was issued and its stated redemption price at maturity. In the case of a
Security issued before July 2, 1982, original issue discount is deemed to accrue
(be "earned") ratably over the period from the date of issuance of the Security
to the date of maturity and is apportioned among the original holder of the
obligation and subsequent purchasers in accordance with a ratio, the numerator
of which is the number of calendar days the obligation was owned by the holder
and the denominator of which is the total number of calendar days from the date
of issuance of the obligation to its date of maturity. Gain or loss upon the
disposition of an original issue discount Security is measured by the difference
between the amount realized upon disposition and the amount paid for such
obligation. A holder may, however, exclude from gross income that portion of
such gain attributable to accrued interest and the "earned" portion of original
issue discount.
In the case of a Security issued after July 1, 1982, original issue
discount is deemed to accrue on a constant interest method, which corresponds in
general to the economic accrual of interest (adjusted to eliminate
proportionately on an elapsed-time basis any excess of the amount paid for the
Security over the sum of the issue price and the accrued original issue discount
on the acquisition date). Unit Holders generally will be required to recognize
the accrual of original issue discount as interest income currently even though
they will not receive a corresponding amount of cash until later years. The tax
basis in the Security is increased by the amount of original issue discount that
is deemed to accrue while the Security is held. The difference between the
amount realized on a disposition of the Security (excluding accrued interest)
and the adjusted tax basis of the Security will give rise to taxable gain or
loss upon a disposition of the Security by the Trust (or a sale or redemption of
Units by a Unit Holder).
The general rule that requires the holder of a debt instrument issued
at a discount to include in gross income on a current basis the sum of the daily
portions of original issue discount does not apply to a debt instrument that has
a fixed maturity not more than one year from the date of issue. For short-term
Government obligations held by a cash method taxpayer, if no special election is
made by the holder, income is not realized until the sale, maturity, or other
disposition of the obligation, and is ordinary income to the extent the gain
realized does not exceed an amount equal to the ratable share of acquisition
discount. Gain, if any, in excess of such amount should be a short-term capital
gain. Acquisition discount is the excess of the stated redemption price at
maturity of the obligation over the basis of the taxpayer in the obligation. For
accrual basis taxpayers and taxpayers treated for this purpose as if they use
the accrual method (dealers, banks, regulated investment companies, common
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trust funds, and taxpayers engaged in hedging transactions), acquisition
discount on short-term Governmental obligations is includible in income as it
accrues, on a straight line basis, unless a special election is made.
Limitations apply to the deductibility of interest on loans incurred to acquire
short-term obligations and special rules apply to short-term obligations that
are a stripped bond or stripped coupon.
A Unit Holder who is neither a citizen nor a resident of the United
States and is not a United States domestic corporation (a "foreign Unit Holder")
will not generally be subject to United States Federal income tax on his, her or
its pro rata share of interest and original issue discount on a Security held in
the Trust or any gain from the sale or other disposition of his, her or its pro
rata interest in a Security held in the Trust, which interest or original issue
discount is not effectively connected with the conduct by the foreign Unit
Holder of a trade or business within the United States and which gain is either
(i) not from sources within the United States or (ii) not so effectively
connected, provided that:
(a) with respect to interest and original issue
discount the Security was issued after July 18, 1984;
(b) with respect to any U.S. source capital gain, the
foreign Unit Holder (if an individual) is not present in the
United States for 183 days or more during his or her taxable
year in which the gain was realized and so certifies; and
(c) the foreign Unit Holder provides the required
certifications regarding (i) his, her or its status and,
(ii) in the case of U.S. source income, the fact that the
interest, original issue discount or gain is not effectively
connected with the conduct by the foreign Unit Holder of a
trade or business within the United States.
The interest and/or dividend income received by a foreign Unit Holder
from an entity of which it owns 10% or more of the voting stock in the case of a
corporation or 10% or more of the profits or capital interest in the case of a
partnership, will, however, be subject to federal income taxation. Foreign Unit
Holders should consult their own tax counsel with respect to United States tax
consequences of ownership of Units.
Each Unit Holder (other than a foreign Unit Holder who has properly
provided the certifications described above) will be requested to provide the
Unit Holder's taxpayer identification number to the Trustee and to certify that
the Unit Holder has not been notified that payments to the Unit Holder are
subject to back-up withholding. If the taxpayer identification number and an
appropriate certification are not provided when requested, 31% back-up
withholding will apply.
The foregoing discussion relates only to United States Federal and, to
the extent stated, New York State and City income taxes.
Investors should consult their tax counsel for advice with respect to
their own particular tax situations.
After the end of each calendar year, the Trustee will furnish to each
Unit Holder an annual statement containing information relating to the interest
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or payment
at maturity of any Security or the sale by the Trust of any Security), and the
fees and expenses paid by the Trust. The Trustee will also furnish required
annual information returns to each Unit Holder and to the Internal Revenue
Service.
The Sponsor believes that Unit Holders who are individuals should not
generally be subject to state personal income taxes on the interest (including
original issue discount) received through each Treasury Trust. However, Unit
Holders (including individuals) may be subject to state and local taxes on any
capital gains (or market discount treated as ordinary income) derived from each
Treasury Trust and to other state and local taxes with respect to the interest
derived from each Treasury Trust. Moreover, Unit Holders will probably not be
entitled to a deduction for state tax purposes for their share of the fees and
expenses paid by the Treasury Trusts or for any interest on indebtedness
incurred to purchase or carry their Units. Even though the Sponsor believes that
interest income (including original issue discount) received through each
Treasury Trust is exempt from state personal income taxes on
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individuals in most states, Unit Holders should consult their own tax advisers
with respect to state and local taxation matters.
LIQUIDITY
Sponsor Repurchase. The Sponsor, although not obligated to do so,
currently intends to maintain a secondary market for the Units and continuously
to offer to repurchase the Units. The Sponsor's secondary market repurchase
price after the initial public offering is completed, will be based on the
aggregate bid price of the Securities in each Trust portfolio and will be the
same as the redemption price. The aggregate bid price will be determined by the
Evaluator on a daily basis after the initial public offering is completed and
computed on the basis set forth under "Liquidity--Trustee Redemption." During
the initial offering period, the Sponsor's repurchase price will be based on the
aggregate offering price of the Securities in the Trusts. Unit Holders who wish
to dispose of their Units should inquire of the Sponsor as to current market
prices prior to making a tender for redemption. The Sponsor may discontinue
repurchase of Units if the supply of Units exceeds demand, or for other business
reasons. The date of repurchase is deemed to be the date on which Units are
received in proper form by Quest of Value Distributors, Two World Financial
Center, 225 Liberty Street, New York, NY 10080-6116. Units received after 4
P.M., New York Time, will be deemed to have been repurchased on the next
business day. In the event a market is not maintained for the Units, a Unit
Holder may be able to dispose of Units only by tendering them to the Trustee for
redemption.
Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate offering price of the
Securities in the Trusts plus (a) a 1.75% sales charge (1.781% of the net amount
invested) plus net accrued interest for Asset Builder Series 15, (b) a 1.80%
sales charge (1.883% of the net amount invested) plus net accrued interest for
Treasury Income Series 16, (c) a 1.70% sales charge (1.729% of the net amount
invested) plus net accrued interest for Treasury Income Series 17 and (d) a
3.05% sales charge (3.146% of the net amount invested) plus net accrued interest
for Corporate Income Series 2. Any Units that are purchased by the Sponsor in
the secondary market also may be redeemed by the Sponsor if it determines such
redemption to be in its best interest.
The Sponsor may, under certain circumstances, as a service to Unit
Holders, elect to purchase any Units tendered to the Trustee for redemption (see
"Liquidity--Trustee Redemption" in this Part B). Factors which the Sponsor will
consider in making a determination will include the number of Units of all
Trusts which it has in inventory, its estimate of the salability and the time
required to sell such Units and general market conditions. For example, if in
order to meet redemptions of Units the Trustee must dispose of Securities, and
if such disposition cannot be made by the redemption date (seven calendar days
after tender), the Sponsor may elect to purchase such Units. Such purchase shall
be made by payment to the Unit Holder not later than the close of business on
the redemption date of an amount equal to the Redemption Price on the date of
tender.
Trustee Redemption. Units may also be tendered to the Trustee for
redemption at its corporate trust office at 770 Broadway, New York, New York
10003, upon proper delivery of such Units and payment of any relevant tax. At
the present time there are no specific taxes related to the redemption of Units.
No redemption fee will be charged by the Sponsor or the Trustee. Units redeemed
by the Trustee will be cancelled.
Within seven calendar days following a tender for redemption, or, if
such seventh day is not a business day, on the first business day prior thereto,
the Unit Holder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time set forth under "Summary of Essential Information" for each Trust in Part A
on the date of tender. The "date of tender" is deemed to be the date on which
Units are received by the Trustee, except that with respect to Units received
after the close of trading on the New York Stock Exchange, the date of tender is
the next day on which such Exchange is open for trading, and such Units will be
deemed to
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have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from the
Interest Account, or, if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. The Trustee is empowered to sell Securities in order to make
funds available for redemptions. Such sales, if required, could result in a sale
of Securities by the Trustee at a loss. To the extent Securities are sold, the
size and diversity of such Trust will be reduced.
The Redemption Price per Unit is the pro rata share of each Unit in
each Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust based on the bid prices of such Securities and (iii)
interest accrued thereon, less (a) amounts representing taxes or other
governmental charges payable out of each Trust, (b) the accrued expenses of such
Trust and (c) cash allocated for the distribution to Unit Holders of record as
of the business day prior to the evaluation being made. The Evaluator may
determine the value of the Securities in each Trust (1) on the basis of current
bid prices of the Securities obtained from dealers or brokers who customarily
deal in bonds comparable to those held by the Trusts, (2) on the basis of bid
prices for bonds comparable to any Securities for which bid prices are not
available, (3) by determining the value of the Securities by appraisal, or (4)
by any combination of the above. The Evaluator will determine the aggregate
current bid price evaluation of the Securities in each Trust, taking into
account the market value of the Securities in the manner described as set forth
under "Public Offering--Offering Price."
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit or Units for redemption, in lieu of redeeming such Unit, to sell
such Unit in the over-the-counter market for the account of the tendering Unit
Holder at prices which will return to the Unit Holder an amount in cash, net
after deducting brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Price for such Unit. The Trustee will pay the
net proceeds of any such sale to the Unit Holder on the day he would otherwise
be entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and
to postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which 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. The Trustee and the Sponsor are not liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.
A Unit Holder who wishes to dispose of his Units should inquire of his
bank or broker in order to determine if there is a current secondary market
price in excess of the Redemption Price.
RETIREMENT PLANS
The Trusts may be an appropriate investment for retirement plans such
as IRAs, self-employed retirement plans (formerly Keogh Plans), pension,
profit-sharing plans and other qualified retirement plans.
Generally, capital gains and income received under each of the
foregoing plans are deferred from Federal taxation. All distributions from such
plans are generally treated as ordinary income but may, in some cases, be
eligible for special income averaging or tax-deferred rollover treatment.
Investors considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan. Such plans are
offered by brokerage firms and other financial institutions. Fees and charges
with respect to such plans may vary.
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Individual Retirement Account--IRA. Any individual under age 70 1/2 may
contribute the lesser of $2,000 or 100% of compensation to any IRA annually.
Such contributions are fully deductible if the individual (and spouse if filing
jointly) is not covered by a retirement plan at work.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar year
following the year during which the participant attains age 70 1/2.
Distributions made before attainment of age 59 1/2, except in the case of the
participant's death or disability, or where the amount distributed is to be
rolled over to another IRA, or where the distributions are taken as a series of
substantially equal periodic payments over the participant's life or life
expectancy (or the joint lives or life expectancies of the participant and the
designated beneficiary) are generally subject to a surtax in an amount equal to
10% of the distribution. The amount of such periodic payments may not be
modified before the later of five years or attainment of age 59 1/2.
Excess contributions are subject to an annual 6% excise tax.
IRA applications disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of each Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing and
pension plans is the lesser of 25% of compensation or $30,000. Prototype plan
documents for establishing qualified retirement plans are available from the
Sponsor upon request. The latest date by which a participant must commence
receiving benefits from a plan is generally the same as for an IRA. The 10%
early distribution surtax also applies, except that distributions received after
age 55 or as a result of a separation of service, and distributions received to
pay deductible medical expenses or pursuant to qualified domestic relations
order are not subject to the tax.
Excess Distributions Tax. In addition to the other taxes due by reason
of a plan distribution, a tax of 15% may apply to certain aggregate
distributions from IRAs, Keogh Plans, and corporate retirement plans to the
extent such aggregate taxable distributions exceed specified amounts (generally
$150,000, as adjusted during a tax year). This 15% tax will not apply to
distributions on account of death, qualified domestic relations order or to
eligible distributions that are rolled over to an IRA or other qualified plan.
In general, for lump sum distributions the excess distribution over $750,000 (as
adjusted) will be subject to the 15% tax.
TRUST ADMINISTRATION
Portfolio Supervision. Except for the purchase of Replacement
Securities, Additional Securities or, as discussed herein, the acquisition of
any Securities for the Trust other than Securities initially deposited by the
Sponsor is prohibited. The Sponsor may direct the Trustee to dispose of
Securities upon (i) default in payment of principal or interest on such
Securities, (ii) default under other documents adversely affecting debt service
on such Securities, or (iii) decline in price or the occurrence of other market
or credit factors that in the opinion of the Sponsor would make the retention of
such Securities in the Trusts detrimental to the interests of the Unit Holders.
If a default in the payment of principal or interest on any of the Securities
occurs and if the Sponsor fails to instruct the Trustee to sell or hold such
Securities, the Trust Agreement provides that the Trustee may sell such
Securities. The Trustee shall not be liable for any depreciation or loss by
reason of any sale of Securities or by reason of the failure of the Sponsor to
give directions to the Trustee. An affiliate of the Sponsor, Quest For Value
Advisors, will perform the portfolio supervisory functions noted herein on
behalf of the Sponsor and receive the Annual Supervisory Fee noted in Part A.
The Sponsor is authorized by the Trust Agreement to direct the Trustee
to accept or reject certain plans for the refunding or refinancing of any of the
Securities. Any bonds received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Agreement to the same extent
as the Securities originally deposited. Within five days after such deposit,
notice of such
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exchange and deposit shall be given by the Trustee to each Unit Holder
registered on the books of the Trustee, including an identification of the
Securities eliminated and the Securities substituted therefor.
Trust Agreement, Amendment and Termination. The Trust Agreement may be
amended by the Trustee the Sponsor and the Evaluator without the consent of any
of the Unit Holders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any provision
thereof as may be required by the Securities and Exchange Commission or any
successor governmental agency; or (3) to make such other provisions in regard to
matters arising thereunder as shall not adversely affect the interests of the
Unit Holders.
The Trust Agreement may also be amended in any respect, or performance
of any of the provisions thereof may be waived, with the consent of the Unit
Holders owning 662/3% of the Units then outstanding for the purpose of modifying
the rights of Unit Holders; provided that no such amendment or waiver shall
reduce any Unit Holder's interest in a Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of Unit Holders. The Trust Agreement may not be amended, without the
consent of all Unit Holders then outstanding, to increase the number of Units
issuable or to permit the acquisition of any securities in addition to or in
substitution for those initially deposited in the Trusts, or to provide the
Trustee with the power to engage in business or investment activities not
specifically authorized in the Indenture as originally adopted or so as to
adversely affect the characterization of a Trust as a grantor trust for federal
income tax purposes, except in accordance with the provisions of the Trust
Agreement. The Trustee shall promptly notify Unit Holders, in writing, of the
substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
maturity, redemption or other disposition, as the case may be, of the last of
the Securities held in the Trust but in no event is it to continue beyond the
end of the calendar year preceding the fiftieth anniversary of the execution of
the Trust Agreement. If the value of a Trust shall be less than the minimum
amount set forth under "Summary of Essential Information" in Part A, the Trustee
may, in its discretion, and shall when so directed by the Sponsor, terminate the
Trusts. The Trust may also be terminated at any time with the consent of the
Unit Holders representing 100% of the Units then outstanding. In the event of
termination, written notice thereof will be sent by the Trustee to all Unit
Holders. Within a reasonable period after termination, the Trustee must sell any
Securities remaining in the terminated Trust, and, after paying all expenses and
charges incurred by the Trust, distribute to each Unit Holder, upon surrender
for cancellation of his Units, his pro rata share of the Interest and Principal
Accounts.
Alternatively, upon the termination of the Trust and further upon
receipt by the Trust, and subject to the conditions of an appropriate exemptive
order from the Securities and Exchange Commission, each Unit Holder's pro rata
share of the net asset value of the Trust will automatically be invested on
behalf of each Unit Holder in a mutual fund which invests in U.S. government
securities (the "Reinvestment Fund"). A copy of the current Prospectus of the
Reinvestment Fund will be delivered to Unit Holders at least 30 days prior to
the time reinvestment is made. At any time prior to the time of reinvestment,
Unit Holders may elect not to invest in the Reinvestment Fund, in which case,
their pro rata share of liquidation proceeds will be sent to them. This
investment in the Reinvestment Fund will not prevent Unit Holders from
recognizing taxable gain or loss as a result of the liquidation of the Trust,
even though no cash will be distributed to Unit Holders to pay any taxes.
However, Unit Holders may redeem any shares in the Reinvestment Fund in order to
generate cash to pay these taxes. Unit Holders should consult their own tax
advisers regarding this matter.
The Sponsor. Quest for Value Distributors is the Sponsor of Quest for
Value's Unit Investment Laddered Trust Series and all subsequent series. The
Sponsor is a majority-owned subsidiary of Oppenheimer Capital. Since 1969,
Oppenheimer Capital has managed assets for many of the nation's largest pension
plan clients. Today, the firm has over $28 billion under management, including
$5 billion in the Quest for Value funds. The Quest for Value organization was
created in 1988 to introduce mutual funds designed to help individual investors
achieve their financial goals. Quest for Value is committed to retirement
planning and services geared to the long term investment goals of the
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individual investor. The Sponsor, a Delaware general partnership, is engaged in
the mutual fund distribution business. It is a member of the National
Association of Securities Dealers, Inc.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations.
The Sponsor is liable for the performance of its obligations arising
from its responsibilities under the Trust Agreement, but will be under no
liability to Unit Holders for taking any action, or refraining from taking any
action, in good faith pursuant to the Trust Agreement, or for errors in judgment
except in cases of its own willful misfeasance, bad faith, negligence or
reckless disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may either (a) appoint a successor Sponsor;
(b) terminate the Trust Agreement and liquidate the Trusts; or (c) continue to
act as Trustee without terminating the Trust Agreement. Any successor sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.
The Trustee. The Trustee is The Chase Manhattan Bank (National
Association), a national banking association with its principal executive office
located at 1 Chase Manhattan Plaza, New York, New York 10081 and its unit
investment trust office at 770 Broadway, New York, New York 10003 (800)
428-8890. The Trustee is subject to the supervision by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking
any action, or for refraining from taking any action, in good faith pursuant to
the Trust Agreement, or for errors in judgment; or for an disposition of any
moneys, Securities or Certificates in accordance with the Trust Agreement,
except in case of its own willful misfeasance, bad faith, negligence or reckless
disregard of its obligations and duties. In addition, the Trustee shall not be
liable for any taxes or other governmental charges imposed upon or in respect of
the Securities or the Trusts which it may be required to pay under current or
future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unit Holders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to all
Unit Holders. In such an event the Sponsor is obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsor may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unit Holder by the Sponsor. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. 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.
Any corporation into which the Trustee may be merged or with which it
may be consolidated, or an corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
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The Evaluator. The Evaluator for the Corporate Income Trust is Kenny
S&P Evaluation Services, a division of J.J. Kenny Co., Inc., with its main
offices located at 65 Broadway, New York, New York 10006. The Evaluator is a
wholly-owned subsidiary of McGraw Hill, Inc. The Evaluator is a registered
investment advisor and also provides financial information services. The Trustee
will act as Evaluator for the Treasury Trusts.
The Trustee, the Sponsor and the Unit Holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it, provided, however, that the Evaluator shall be under no liability to the
Sponsor or Unit Holders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, negligence or reckless disregard of its
obligation and duties. The Evaluator shall not be liable or responsible for
depreciation or losses incurred by reason of the purchase, sale or retention of
any Securities.
The Evaluator may resign or may be removed by the Sponsor and Trustee,
and the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation of
the Evaluator no successor has accepted appointment within thirty days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in creating and establishing
the Trusts, including the cost of the initial preparation and execution of the
Trust Agreement, registration of the Trusts and the Units under the Investment
Company Act of 1940 and the Securities Act of 1933, blue sky registration fees,
the initial fees and expenses of the Trustee, legal expenses and other actual
out-of-pocket expenses, will be paid by the Trusts and amortized over the life
of each of the Trusts or five years, whichever is shorter. All advertising and
selling expenses, as well as any organizational expenses not paid by the Trusts,
will be borne by the Sponsor at no cost to the Trusts.
The Sponsor will not charge the Trusts a fee for its services as such.
The Sponsor's affiliate will receive for portfolio supervisory services
to the Trusts an annual fee in the amount set forth under "Summary of Essential
Information" for each Trust in Part A. The Sponsor's fee may exceed the actual
cost of providing portfolio supervisory services for the Trusts, but at no time
will the total amount received for portfolio supervisory services rendered to
all series of the Quest for Value's Unit Investment Laddered Trust Series in any
calendar year exceed the aggregate cost to the Sponsor of supplying such
services in such year. (See "Trust Administration--Portfolio Supervision.")
The Trustee's annual fee and estimated expenses are set forth under
"Summary of Essential Information" for each Trust in Part A. For a discussion of
the services performed by the Trustee pursuant to its obligations under the
Trust Agreement, see "Trust Administration" and "Rights of Unit Holders."
The Evaluator will receive, for each evaluation of the Corporate
Securities in the Corporate Income Trust, a fee in the amount set forth under
"Summary of Essential Information" for such Trust in Part A.
The Trustee's and Evaluator's fees applicable to the Trusts are
calculated based upon the principal amount of Securities in the Trusts on the
Record Date of such month, payable monthly as of the Record Date from the
Interest Account of the Trusts to the extent funds are available and then from
the Principal Account. Both the supervisory fee and the Trustee's fee may be
increased without approval of the Unit Holders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled "All Services
Less Rent."
The following additional charges are or may be incurred by the Trusts:
all expenses (including counsel fees) of the Trustee incurred and advances made
in connection with its activities under the
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Trust Agreement, including the expenses and costs of any action undertaken by
the Trustee to protect the Trusts and the rights and interests of the Unit
Holders; fees of the Trustee for any extraordinary services performed under the
Trust Agreement; indemnification of the Trustee for any loss or liability
accruing to it without negligence, bad faith or willful misconduct on its part,
arising out of or in connection with its acceptance or administration of the
Trusts; indemnification of the Sponsor for any losses, liabilities and expenses
incurred in acting as sponsors of the Trusts without negligence, bad faith or
willful misconduct on its part; and all taxes and other governmental charges
imposed upon the Securities or any part of the Trusts (no such taxes or charges
are being levied, made or, to the knowledge of the Sponsor, contemplated). The
above expenses, including the Trustee's fees, when paid by or owing to the
Trustee are secured by a first lien on the Trusts to which such expenses are
charged. In addition, the Trustee is empowered to sell Securities in order to
make funds available to pay all expenses.
The accounts of the Trusts shall be audited not less than annually by
independent public accountants selected by the Sponsor. The expenses of the
audit shall be an expense of the Trust. So long as the Sponsor maintains a
secondary market, the Sponsor will bear any audit expense which exceeds 50 Cents
per 1,000 Units. Unit Holders covered by the audit during the year may receive a
copy of the audited financial upon request.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Messrs. Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel for the
Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York, New York
10005 have acted as counsel for the Trustee.
Independent Auditors. The Statements of Condition and Portfolios are
included herein in reliance upon the report of BDO Seidman, LLP, independent
auditors, and upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF BOND RATINGS1
Standard & Poor's Corporation. A brief description of the applicable
Standard & Poor's Corporation rating symbols and their meanings is as follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific debt
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase or sell a security,
inasmuch as it does not comment as to market price. The ratings are based on
current information furnished to Standard & Poor's by the issuer and obtained by
Standard & Poor's from other sources it considers reliable. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
- --------
1 As described by the rating agencies.
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AAA -- This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and they differ from AAA
issues only in small degrees.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
BB, B, CCC, CC -- Bonds rated BB, B, CCC and CC are regarded on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Plus ( +) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AA" to "BB" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
P -- Provisional Ratings (Prov.) following a rating indicates the
rating is provisional which assumes successful completion of the project being
financed by the issuance of the bonds being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. Accordingly, the
investor should exercise his own judgment with respect to such likelihood and
risk.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's Investors Service, Inc's rating symbols and their meanings is as
follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
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Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well. The market
value of the Baa-rated bonds is more sensitive to changes in economic
circumstances. Aside from occasional speculative factors and the aforementioned
economic circumstances applying to some bonds of this Class, Baa market
valuations move in parallel with Aaa, Aa and A obligations during periods of
economic normalcy, except in instances of oversupply.
Those bonds in the A and Baa group which Moody's believes possess the
strongest investment attributes are designated by the symbol A 1 and Baa 1.
Other A bonds comprise the balance of the group. These rankings (1) designate
the bonds which offer the maximum in security within their quality group, (2)
designate bonds which can be bought for possible upgrading in quality and (3)
additionally afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the marketplace.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may be
small.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Con-Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are debt
obligations secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Rating denotes probable credit stature upon completion of construction
or elimination of basis of condition.
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Qualified Unit Investment Liquid Trust Series ("QUILTS")
(A Unit Investment Trust)
QUILTS Asset Builder--U.S. Treasury Series 15
QUILTS Laddered Income--U.S. Treasury Series 16
QUILTS Laddered Income--U.S. Treasury Series 17
QUILTS Laddered Income--Corporate Bond Series 2
Prospectus Dated: September 22, 1995
Sponsor: Trustee and Evaluator (for the
Quest for Value Distributors Treasury Trusts):
Two World Financial Center The Chase Manhattan Bank
225 Liberty Street (National Association)
New York, New York 10080- 770 Broadway
6116 New York, New York 10003
(800) 628-6664 (800) 428-8890
============================
Evaluator (for the Corporate
Income Trust):
Kenny S&P Evaluation Services
65 Broadway
New York, New York 10006
Table of Contents
Title Page
PART A
Summary of Essential Information...........................A-2
Independent Auditors' Report..............................A-16
Statements of Condition...................................A-17
Portfolio and Cash Flow Information.......................A-18
Underwriting Syndicates...................................A-23
PART B
The Trust....................................................1
Risk Factors.................................................4
Public Offering..............................................6
Estimated Long Term Return and
Estimated Current Return..................................10
Rights of Unit Holders .....................................11
Tax Status..................................................13
Liquidity...................................................16
Retirement Plans............................................17
Trust Administration........................................18
Trust Expenses and Charges..................................21
Other Matters...............................................22
Description of Bond Ratings.................................22
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the Sponsor.
The Trust is a registered as unit investment trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its Units
have been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any state to any person to whom it is not
lawful to make such offer in such state.
Parts A and B of this Prospectus do not contain all of the information
set forth in the registration statement and exhibits thereto, filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933, and the Investment Company Act of 1940, and to which reference is made.
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Quest for Value Distributors are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $1,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers
and documents: The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
BDO Seidman, LLP
The Chase Manhattan Bank (National Association) (included in
Exhibit 5.1)
The following exhibits:
*1.1 -- Reference Trust Agreement including certain Amendments to
the Trust Indenture and Agreement referred to under Exhibit
1.1.1 below.
1.1.1 -- Trust Indenture and Agreement (filed as Exhibit 1.1.1 to Form
S-6 Registration Statement No. 33-60017 of Quest for Value's
Unit Investment Laddered Trust Series ("QUILTS") on June 29,
1995 and incorporated herein by reference)..
1.3.4 -- Agreement of General Partnership of Quest for Value
Distributors dated July 9, 1987 (filed as Exhibit 1.3.4 to
Form S-6 Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Treasury Securities
("QUILTS") on January 21, 1993 and incorporated herein by
reference).
1.4 -- Form of Master Agreement Among Underwriters (filed as Exhibit
1.4 to Amendment No. 2 to Form S-6 Registration Statement
No. 33-57284 of Quest for Value's Unit Investment Laddered
Trust Series ("QUILTS") on March 19, 1993 and incorporated
herein by reference).
2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment No. 2
to From S-6 Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Trust Series ("QUILTS") on
March 19, 1993 and incorporated herein by reference).
*3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the Prospectus,
and to the filing of their opinion regarding tax status of
the Trust.
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* To be filed by Amendment.
II-i
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<PAGE>
*5.1 -- Consent of the Evaluator.
6.0 -- Powers of Attorney of Quest for Value Distributors, by the
majority of the Board of Directors and certain officers of
Oppenheimer Financial Corp., its Managing General Partner
(filed as Exhibit 6.0 to Amendment No. 2 to Form S-6
Registration Statement No. 33-57284 of Quest for Value's Unit
Investment Laddered Trust Series ("QUILTS") on March 19, 1993
and as Exhibit 6.0 to Pre-Effective amendment No. 1 to Form
S-6 Registration Statement No. 33-57284 of Quest for Value's
Investment Unit Investment Laddered Trust Series ("QUILTS") on
March 5, 1993 and incorporated herein by reference).
*27 -- Financial Data Schedule (for EDGAR filing only).
- --------
* To be filed by Amendment.
II-ii
325425.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Qualified Unit Investment Liquid Trust Series ("QUILTS"), QUILTS Laddered
Income-U.S. Treasury Series 18 has duly caused this Registration Statement to be
signed on its behalf by the undersigned, hereunto duly authorized, in the City
of New York and State of New York on the 12th day of April, 1996.
QUILTS LADDERED INCOME - U.S. TREASURY SERIES 18
(Registrant)
OCC DISTRIBUTORS
(Depositor)
By: OPPENHEIMER FINANCIAL CORP.,
as Managing General Partner of the Depositor
By: /s/ SUSAN A. MURPHY
------------------------------------------------
(Susan A. Murphy, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of
Oppenheimer Financial Corp., the Managing General Partner of the Depositor, in
the capacities and on the date indicated.
NAME TITLE DATE
- ---- ----- ----
STEPHEN ROBERT* Chief Executive Officer and Director
- ------------------
Stephen Robert
NATHAN GANTCHER* Chief Operating Officer and Director
- ------------------
Nathan Gantcher
ROGER EINIGER* Chief Administrative Officer and Director
- ------------------
Roger Einiger
JOSEPH LAMOTTA* Director
- ------------------
Joseph LaMotta
ANTONIO FERNANDEZ* Chief Financial Officer and Treasurer
- ------------------
Antonio Fernandez
*By: /s/ SUSAN A. MURPHY April 12, 1996
-----------------------
(Susan A. Murphy, Attorney-in-Fact)
- ----------------
* Executed copy of Power of Attorney filed as Exhibit 6.0 to Amendment No. 2
to Registration Statement No. 33-57284 on March 19, 1993, and as Exhibit
6.0 to the Pre-Effective Amendment No. 1 to Registration Statement
No. 33-57284 on March 5, 1993.
II-iii
325425.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee, and Unit Holders of
QUILTS Laddered Income - U.S. Treasury Series 18
We have issued our report dated April __, 1996 on the Statement of
Condition and Portfolio of Qualified Unit Investment Liquid Trust Series
("QUILTS"), QUILTS Laddered Income - U.S. Treasury Series 18 as of April __,
1996 contained in the Registration Statement on Form S-6 and the Prospectus. We
consent to the use of our report in the Registration Statement and Prospectus
and to the use of our name as it appears under the caption "Independent
Auditors."
BDO Seidman, LLP
New York, New York
April __, 1996
II-iv
325425.1
<PAGE>
