EXCHANGEABLE SECURITIES TRUST, N-2, 1996-05-06

EXCHANGEABLE SECURITIES TRUST
N-2, 1996-05-06

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 6, 1996
SECURITIES ACT FILE NO. 33-_____
INVESTMENT COMPANY ACT FILE NO. 811-____

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------------------

FORM N-2

/x/ Registration Statement Under The Securities Act of 1933
/ / Pre-Effective Amendment No.
/ / Post-Effective Amendment No.
and/or
/x/ Registration Statement Under The Investment Company Act of 1940

/ / Amendment No.
(check appropriate box or boxes)

EXCHANGEABLE SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)

SMITH BARNEY INC.
390 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (212) 816-6000

STEPHEN E. STONEFIELD
SMITH BARNEY INC.
390 GREENWICH STREET
NEW YORK, NEW YORK 10013

(Name and Address of Agent for Service)

COPIES TO:

ROBERT J. DONATUCCI, ESQ.
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable
after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, as amended, other than securities offered in connection with a
dividend reinvestment plan, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

<TABLE>
<CAPTION> CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------------------------
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities Being Offering Price Aggregate Offering Registration
Being Registered Registered Per Share(1) Price(1) Fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exchangeable
Securities
representing shares of
beneficial interest . 1,000,000 Shares $10.00 $10,000,000 $3,448.28
- --------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

The registrant hereby amends this 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.

i
<PAGE>
CROSS-REFERENCE SHEET*
PURSUANT TO RULE 404(C)

<TABLE>
<CAPTION>
Item Number in Form N-2 Caption in Prospectus
- ------------------------ ---------------------
<S> <C> <C>
PART A - INFORMATION REQUIRED IN A PROSPECTUS
1. Outside Front Cover . . . . . . . . . . . . Front Cover Page
2. Inside Front and Outside Back
Cover Page . . . . . . . . . . . . . . . . . Front Cover Page; Inside Front Cover Page
3. Fee Table and Synopsis . . . . . . . . . . . Prospectus Summary; Fee Table
4. Financial Highlights . . . . . . . . . . . . Not Applicable
5. Plan of Distribution . . . . . . . . . . . . Front Cover Page; Prospectus Summary; Underwriting
6. Selling Shareholders . . . . . . . . . . . . Not Applicable
7. Use of Proceeds . . . . . . . . . . . . . . Use of Proceeds; Investment Objective and Policies
8. General Description of the Registrant . . . Front Cover Page; Prospectus Summary; The Trust;
Investment Restrictions; Investment Objective and
Policies; Risk Factors
9. Management . . . . . . . . . . . . . . . . . Trustees and Officers; Management Arrangements
10. Capital Stock, Long-Term Debt and Other
Securities; Federal Income Tax
Considerations . . . . . . . . . . . . . . . Description of Exchangeable Securities
11. Defaults and Arrears on Senior Securities . Not Applicable
12. Legal Proceedings . . . . . . . . . . . . . Not Applicable
13. Table of Contents of the Statement of
Additional Information . . . . . . . . . . . Not Applicable

PART B - INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
14. Cover Page . . . . . . . . . . . . . . . . . Not Applicable
15. Table of Contents . . . . . . . . . . . . . Not Applicable
16. General Information and History . . . . . . The Trust
17. Investment Objective and Policies . . . . . Investment Objective and Policies; Investment
Restrictions
18. Management . . . . . . . . . . . . . . . . . Trustees and Officers; Management Arrangements
19. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . Management Arrangements
20. Investment Advisory and Other Services . . . Management Arrangements
21. Brokerage Allocation and Other Practices . . Investment Objective and Policies
22. Tax Status . . . . . . . . . . . . . . . . . Certain United States Federal Income Tax
Considerations
23. Financial Statements . . . . . . . . . . . . Financial Statements

PART C - OTHER INFORMATION

Information required to be included in Part C is set forth under the appropriate Item, so
numbered, in Part C to this Registration Statement.

</TABLE>
- ----------------------
*Pursuant to the General Instructions to Form N-2, all information required to
be set forth in Part B: Statement of Additional Information has been included
in Part A: The Prospectus.

ii
<PAGE>
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 the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED MAY 6, 1996

PROSPECTUS

1,000,000 EXCHANGEABLE SECURITIES
EXCHANGEABLE SECURITIES TRUST
(Subject to Exchange for Shares of Common Stock of Company
------------
(par value $. per share))

Exchangeable Securities Trust (the "Trust") is a newly organized
Delaware business trust established to purchase and hold (i) a series of
zero-coupon U.S. Government securities with face amounts and maturities
corresponding to the distributions payable with respect to the Exchangeable
Securities offered hereby (the "Exchangeable Securities") and the payment
dates thereof ("U.S. Treasury Securities"), and (ii) one or more forward
purchase contracts (the "Contracts") with a certain existing stockholder (the
"Seller") of Company (the "Company") relating to shares of common stock
of the Company (par value $. per share) (the " Common Stock"). Each
of the Exchangeable Securities represents the right to receive an annual
distribution of $ , payable quarterly on each , ,
and , commencing , 1996. Each Exchangeable
Security will be exchanged for between and 1.0 shares of the
Common Stock, upon the conclusion of the term of the Trust on
, 1999 (the "Exchange Date"). The Exchangeable Securities are not
subject to redemption. (continued on page 2)

SEE "RISK FACTORS" ON PAGE 15 OF THIS PROSPECTUS FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE EXCHANGEABLE SECURITIES.

Prior to the offering there has been no public market for the
Exchangeable Securities. Application will be made to list the Exchangeable
Securities on the New York Stock Exchange under the symbol " ".
Shares of closed-end investment companies have in the past frequently traded
at a discount from their net asset values and initial public offering prices.
The risks associated with this characteristic of closed-end investment
companies may be greater for investors expecting to sell shares of a closed-
end investment company soon after the completion of an initial public
offering of the company's shares.
This Prospectus sets forth concisely information about the Trust that a
prospective investor ought to know before investing and should be read and
retained for future reference. The Exchangeable Securities may be a suitable
investment for investors who are able to understand the unique nature of the
Trust and the economic characteristics of the Contracts and the U.S. Treasury
Securities held by the Trust.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION> Price to Sales Proceeds to
Public Load(1) the Trust(2)
<S> <C> <C>
Per Exchangeable Security $ $ $
Total(3) $ $ $
</TABLE>

__________________
(1) For information regarding indemnification of the Underwriter, see
"Underwriting."
(2) Expenses of the offering, estimated at $ , are payable by the
Seller.
(3) The Trust has granted to the Underwriter a 30-day option to purchase up
to additional Exchangeable Securities solely to cover over-
allotments, if any. If such option is exercised in full, the total
Price to Public, Sales Load and Proceeds to the Trust will be $ ,
$ and $ , respectively. In light of the fact that the
proceeds from the sale of the Exchangeable Securities will be used in
part to purchase Contracts from the Seller, the Purchase Agreement
provides that the Seller will pay to the Underwriter as compensation
("Underwriter's Compensation") $ per Exchangeable Security. See
"Underwriting."

The Exchangeable Securities are being offered by Smith Barney Inc. (the
"Underwriter"), subject to prior sale, when, as and if accepted by it and
subject to certain conditions. It is expected that delivery of the
Exchangeable Securities in book-entry form will be made through the
facilities of The Depository Trust Company on or about , 1996.

-------------------------------

SMITH BARNEY INC.

, 1996
1
<PAGE>

The Trust's investment objective is to provide each holder with a
quarterly distribution of $ per Exchangeable Security and on the
Exchange Date, in exchange for each Exchangeable Security, a number of shares
of Common Stock determined by reference to the Exchange Rate. The
Exchange Rate is equal to, subject to certain adjustments: (i) if the
Exchange Price per share of Common Stock is greater than or equal to __%
of the Initial Price (the "Threshold Appreciation Price"), shares of
Common Stock per Exchangeable Security, (ii) if the Exchange Price per
share of Common Stock is less than the Threshold Appreciation Price but
is greater than the Initial Price, a number of shares of Common Stock
per Exchangeable Security so that the value thereof (determined based on
the Exchange Price) equals the Initial Price and (iii) if the Exchange
Price per share of Common Stock is less than or equal to the
Initial Price, 1.0 shares of Common Stock per Exchangeable Security.
The Exchange Price means the average Closing Price per share of Common
Stock on the 20 Trading Days immediately prior to the second Trading Day
preceding the Exchange Date. The "Initial Price" is the last reported sale
price of the Common Stock on the (New York Stock Exchange) Composite
Tape on , 1996, which was $ per share. Holders otherwise
entitled to receive fractional shares in respect of their aggregate holdings
of Exchangeable Securities will receive cash in lieu thereof.

The yield on the Exchangeable Securities is higher than the current
dividend yield on the Common Stock. However, there is no assurance that
the yield on the Exchangeable Securities will be higher than the dividend
yield on the Common Stock over the term of the Trust. In addition, the
opportunity for equity appreciation afforded by an investment in the
Exchangeable Securities is less than that afforded by an investment in
Common Stock because holders of the Exchangeable Securities will realize no
equity appreciation if on the Exchange Date the Exchange Price does not
exceed the Threshold Appreciation Price, and will receive less than all of
the equity appreciation if on the Exchange Date the Exchange Price exceeds
the Threshold Appreciation Price. IF THE EXCHANGE PRICE IS LESS THAN THE
INITIAL PRICE, THE INVESTOR WILL RECEIVE LESS THAN THE INITIAL PRICE PAID FOR
THE EXCHANGEABLE SECURITIES, IN WHICH CASE AN INVESTMENT IN EXCHANGEABLE
SECURITIES WILL RESULT IN A LOSS. SEE "RISK FACTORS."

The Trust has adopted a fundamental policy that the Contracts may not be
disposed of during the term of the Trust and that the U.S. Treasury
Securities may not be disposed of prior to the earlier of their respective
maturities and the termination of the Trust. The Trust will continue to hold
the Contracts despite any significant decline in the market price of the
Common Stock or adverse changes in the financial condition of the Company.
The Trust will be treated as a grantor trust for Federal income tax purposes
and each holder of Exchangeable Securities will be treated as the owner of
its pro rata portion of the Contracts and the U.S. Treasury Securities. The
U.S. Treasury Securities held by the Trust will be treated for Federal income
tax purposes as having original issue discount and holders of Exchangeable
Securities will be required to recognize currently as income their pro rata
portion of such original issue discount as it accrues over the term of the
Trust. The quarterly cash distributions paid to the holders of Exchangeable
Securities, which distributions are anticipated to exceed the currently
includable original issue discount, will be treated as tax-free return of the
holders' costs of the U.S. Treasury Securities and any previously included
original issue discount, and therefore will not be considered current income
to holders upon receipt thereof for federal income tax purposes. Although
under current law holders of Exchangeable Securities should not recognize
income, gain or loss with respect to the Contracts over their term, holders
will recognize taxable gain or loss upon receipt of cash, if any, upon
termination of the Trust. For a discussion of certain United States Federal
income tax consequences for holders of the Exchangeable Securities, see
"Certain United States Federal Income Tax Considerations."

Reference is made to the accompanying prospectus of the Company with
respect to the shares of Common Stock which may be received by a holder
of Exchangeable Securities on the Exchange Date. The Company is not
affiliated with the Trust, will not receive any of the proceeds from the sale
of the Exchangeable Securities and will have no obligations with respect to
the Exchangeable Securities.

-------------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE EXCHANGEABLE
SECURITIES OR THE COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
2
<PAGE>
EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
PROSPECTUS SUMMARY

The following summary should be read in conjunction with the more
detailed information appearing elsewhere in this Prospectus.

THE TRUST

The Exchangeable Securities Trust (the "Trust") is a newly organized
Delaware business trust that will be registered as a non-diversified closed-
end management investment company under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Trust will have a term of
three years that will terminate on or shortly after , 1999 (the
"Exchange Date"), except that the Trust may be terminated prior to such date
under certain limited circumstances. The Trust will be treated as a grantor
trust for Federal income tax purposes.

PURPOSE OF THE TRUST

The Exchangeable Securities are designed to provide investors (the
"Holders") with a higher yield than the current dividend yield on the Common
Stock, while also providing the opportunity for Holders to share in the
appreciation, if any, of the Common Stock above the Threshold
Appreciation Price. The annual distribution on the Exchangeable Securities
is $ per Exchangeable Security. Based on the current annual dividend
rate of $ per share of Common Stock, the annual per share
distribution per Exchangeable Security is $ (or %) greater than the
current annual per share dividend rate on the Common Stock. There is no
assurance that the yield on the Exchangeable Securities will be higher than
the dividend yield on the Common Stock over the term of the Trust.

Although the yield on the Exchangeable Securities is higher than the
current dividend yield on the Common Stock, the opportunity for equity
appreciation afforded by an investment in the Exchangeable Securities is less
than that afforded by an investment in the Common Stock. Holders of the
Exchangeable Securities will realize no equity appreciation if, on the
Exchange Date, the Exchange Price (as defined below) does not exceed the
Threshold Appreciation Price (as defined below), which represents an
appreciation of % over the Initial Price. Moreover, because the
Holders of the Exchangeable Securities will only receive shares of
Common Stock if the Exchange Price exceeds the Threshold Appreciation Price,
Holders will only be entitled to receive upon exchange % of any
appreciation of the value of the Common Stock in excess of the Threshold
Appreciation Price.

INVESTMENT OBJECTIVE AND POLICIES

Holders will receive distributions at the rate per Exchangeable Security
of $ per annum or $ per quarter, payable quarterly on each ,
, and or, if any such date is not a business day, on the next
succeeding business day, to Holders of record as of each , ,
and , respectively. The first distribution will be payable on
, 1996 to Holders of record as of , 1996. There can
be no assurance that the Trust will achieve its investment objective. See
"Investment Objective and Policies--Trust Assets."

On the Exchange Date, each outstanding Exchangeable Security will be
exchanged for between and 1.0 shares of Common Stock, subject to
adjustment (i) in the event of certain dividends or distributions,
subdivisions, splits, combinations, issuances of certain rights or warrants
or distributions of certain assets with respect to the Common Stock, in
the event of a merger of the Company into another entity, or the liquidation
of the Company (in which event Holders would receive consideration in the
form of cash, Marketable Securities (as defined below) or a combination
thereof, rather than shares of Common Stock), or (ii) in certain related
events. The occurrence of certain defaults by the Seller under the Contracts
or the collateral arrangements would cause the acceleration of the Contracts
and the exchange of each Exchangeable Security for an amount of cash in
respect of the shares of Common Stock and the termination of the Trust.
See "Investment Objective and Policies--The Contracts."

4
<PAGE>
TRUST ASSETS

The Trust's assets will consist of: (i) a series of zero-coupon U.S.
Government securities with face amounts and maturities corresponding to the
distributions payable with respect to the Exchangeable Securities and the
payment dates thereof ("U.S. Treasury Securities") comprising approximately
% of the initial net assets of the Trust and (ii) one or more forward
purchase contracts (the "Contracts") with a certain existing stockholder (the
"Seller") of Company (the "Company") relating to the Common Stock
comprising approximately % of the initial net assets of the Trust.

The Trust will enter into Contracts with the Seller obligating the
Seller to deliver to the Trust on the Exchange Date a number of shares of
Common Stock determined by reference to the Exchange Rate. The Exchange
Rate is equal to, subject to certain adjustments: (i) if the Exchange Price
per share of Common Stock is greater than or equal to % of the
Initial Price (the "Threshold Appreciation Price"), the Seller will be
obligated to deliver under its Contracts shares of Common Stock for
each share of Common Stock subject to such Contracts, (ii) if the
Exchange Price per share of Common Stock is less than the Threshold
Appreciation Price but greater than the initial price, the Seller will be
obligated to deliver under its Contracts a number of shares of Common
Stock with an aggregate value equal to the product of the initial price times
the initial number of shares of Common Stock subject to such Contracts
and (iii) if the Exchange Price per share of Common Stock is less than
or equal to the Initial Price, the Seller will be obligated to deliver under
its Contracts a number of shares of Common Stock equal to the initial
number of shares of Common Stock subject to such Contracts. This
provides the Trust with the opportunity to share in the appreciation, if any,
of the Common Stock above the Threshold Appreciation Price. The
Exchange Price means the average Closing Price per share of Common Stock
on the 20 Trading Days immediately prior to the second Trading Day preceding
the Exchange Date. The purchase price under the Contracts is equal to $
per share of Common Stock and $ in the aggregate and is payable to
the Seller by the Trust on or about , 1996. No other
consideration is payable by the Trust to the Seller in connection with its
acquisition of the Contracts or the performance of the Contracts by the
Seller.

The obligations of the Seller under each Contract will be secured by a
pledge of 1.0 share of Common Stock for each share subject to the
Contract or, at the election of the Seller, by substitute collateral
consisting of U.S. Government securities. See "Investment Objective and
Policies--The Contracts."

TERM OF THE TRUST

The Trust will terminate on or shortly after the Exchange Date, except
if terminated earlier under certain limited circumstances. Promptly after
the Exchange Date, the shares of Common Stock and/or cash to be
exchanged for the Exchangeable Securities and any other remaining Trust
assets, net of any remaining Trust expenses, if any, will be distributed pro
rata to Holders. In the event that there is a default under the Contracts,
the Contracts will accelerate, the rest of the Trust's assets will be
liquidated and the net assets of the Trust will be distributed to Holders and
the term of the Trust will terminate. See "Investment Objective and
Policies--The Contracts" and "Investment Objective and Policies--Trust
Termination; No Fractional Shares of Common Stock," and "Risk Factors--Limited
Term."

THE COMPANY

The Company is [description].

Holders of the Exchangeable Securities will not have voting rights with
respect to the Common Stock prior to receipt of the Common Stock by
such Holders on the Exchange Date.

Reference is made to the accompanying prospectus of the Company with
respect to the shares of Common Stock which may be received by a Holder
of Exchangeable Securities on the Exchange Date. The Company is not
affiliated with the Trust, will not receive any of the proceeds from the sale
of the Exchangeable Securities and will have no obligations with respect to
the Exchangeable Securities. THE PROSPECTUS OF THE COMPANY IS BEING ATTACHED
HERETO AND DELIVERED TO PROSPECTIVE PURCHASERS OF EXCHANGEABLE SECURITIES
TOGETHER WITH THIS PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE
PROSPECTUS OF THE COMPANY DOES NOT CONSTITUTE A PART OF THIS PROSPECTUS, NOR
IS IT INCORPORATED BY REFERENCE HEREIN.

5
<PAGE>
THE OFFERING

The Trust is offering 1,000,000 Exchangeable Securities representing
shares of beneficial interest at an initial public offering price of $
per Exchangeable Security (which is equal to the last reported sale price of
the Common Stock on the [New York Stock Exchange] Composite Tape on
, 1996, the date of the offering, and is referred to herein as the
"Initial Price") (the "Offering"). All of the 1,000,000 Exchangeable
Securities are being offered by Smith Barney Inc. (the "Underwriter"). In
addition, the Underwriter has been granted an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to an aggregate of
additional Exchangeable Securities to cover over-allotments, if any. See
"Underwriting."

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The Trust will be taxable as a grantor trust for United States Federal
income tax purposes. Accordingly, each Holder of the Trust will be treated
for United States Federal income tax purposes as the owner of its pro rata
portion of the U.S. Treasury Securities and the Contracts, and income
received (including original issue discount treated as received) by the Trust
will generally be treated as income of the Holders. See "Certain United
States Federal Income Tax Considerations."

The U.S. Treasury Securities held by the Trust will be treated for
United States Federal income tax purposes as having "original issue discount"
which will accrue over the term of the U.S. Treasury Securities. It is
currently anticipated that each quarterly cash distribution to the Holders of
the Exchangeable Securities will be treated as a tax-free return of the
Holders' costs of the U.S. Treasury Securities and any previously included
original issue discount, and therefore will not be considered current income
to Holders upon receipt thereof for United States Federal income tax
purposes. However, a Holder (whether on the cash or accrual method of tax
accounting) must recognize currently as income original issue discount on the
U.S. Treasury Securities as it accrues. See "Certain United States Federal
Income Tax Considerations."

Under existing law, a Holder will not recognize income, gain or loss
upon the Trust's entry into the Contracts or over the term of the Contracts.
The delivery of Common Stock to the Trust pursuant to the Contracts and
the distribution of such Common Stock upon termination of the Trust will
not be taxable to the Holders. However, a Holder will generally be required
to recognize taxable gain or loss upon receipt of cash in lieu of fractional
shares upon termination of the Trust. Each Holder's initial tax basis in any
Common Stock received thereby will be equal to its basis in its pro rata
portion of the Contracts less the portion of such basis allocable to any
fractional shares of Common Stock for which cash is received. See
"Certain United States Federal Income Tax Considerations."

MANAGEMENT ARRANGEMENTS

The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will not be actively managed. The
administration of the Trust will be overseen by the Trustees. The day-to-day
administration of the Trust will be carried out by (or its
successor) as trust administrator (in such capacity, the "Administrator").
(or its successor) will also act as custodian for the Trust's
assets (in such capacity, the "Custodian") and as paying agent, registrar and
transfer agent (in such capacity, the "Paying Agent") with respect to the
Exchangeable Securities. Except as aforesaid, and except for its role as
Collateral Agent under the Trust's Collateral Agreements (see "Investment
Objective and Policies--The Contracts--Collateral Requirements of the
Contract"), has no other affiliation with, and is not engaged in
any other transaction with, the Trust. For their services, the Trust will
pay each of the Custodian and the Paying Agent a one-time, up-front amount in
respect of its fee. See "Management Arrangements."

RISK FACTORS

The yield on the Exchangeable Securities is higher than the current
dividend yield on the Common Stock. However, there is no assurance that the
yield on the Exchangeable Securities will be higher than the dividend yield
on the Common Stock over the term of the Trust. In addition, the
opportunity for equity appreciation afforded by an investment in the
Exchangeable Securities is less than that afforded by an investment in
Common Stock because Holders of the Exchangeable Securities will realize no
equity appreciation if on the Exchange Date the Exchange Price does not
exceed
6
<PAGE>
the Threshold Appreciation Price, and will receive less than all of the
equity appreciation if on the Exchange Date the Exchange Price exceeds the
Threshold Appreciation Price. IF THE EXCHANGE PRICE IS LESS THAN THE INITIAL
PRICE, THE HOLDER WILL RECEIVE LESS THAN THE INITIAL PRICE PAID FOR THE
EXCHANGEABLE SECURITIES, IN WHICH CASE AN INVESTMENT IN EXCHANGEABLE
SECURITIES WILL RESULT IN A LOSS. See "Risk Factors."

The Trust is classified as a "non-diversified" investment company under
the Investment Company Act. Consequently, the Trust is not limited by the
Investment Company Act in the proportion of its assets that may be invested
in the securities of a single issuer. Since the only securities held by the
Trust will be the U.S. Treasury Securities and the Contracts, the Trust may
be subject to greater risk than would be the case for an investment company
with more diversified investments.

The trading prices of the Exchangeable Securities in the secondary
market will be directly affected by the trading prices of the Common
Stock in the secondary market. Trading prices of Common Stock will be
influenced by the Company's operating results and prospects and by economic,
financial and other factors and market conditions.

Holders of the Exchangeable Securities will not be entitled to any
rights with respect to the Common Stock (including, without limitation,
voting rights and rights to receive any dividends or other distributions in
respect thereof) unless and until such time, if any, as the Seller shall have
delivered shares of Common Stock for Exchangeable Securities on the
Exchange Date.

LISTING

Application will be made to list the Exchangeable Securities on the New
York Stock Exchange (the "NYSE") under the symbol " ."

FEE TABLE

The following Fee Table is intended to assist investors in understanding
the costs and expenses that Holders of the Exchangeable Securities in the
Trust will bear directly or indirectly. In light of the fact that the
proceeds from the sale of the Exchangeable Securities will be used in part by
the Trust to purchase the Contracts from the Seller, the Purchase Agreement
(as defined below) provides that the Seller will pay Underwriter's
Compensation to the Underwriter of $ per Exchangeable Security. See
"Underwriting". Estimated organization costs of the Trust in the amount of $
and estimated costs of the Trust in connection with the initial
registration and public offering of the Exchangeable Securities in the amount
of $ will be paid by the Seller from the proceeds of the sale to the
Trust of the Contracts. Each of the Administrator, the Custodian and the
Paying Agent and each Trustee will be paid by the Seller at the closing of
the Offering of the Exchangeable Securities a one-time, up-front amount in
respect of its ongoing fees and, in the case of the Administrator,
anticipated expenses of the Trust (estimated to be $ in the aggregate),
over the term of the Trust. The Underwriter has agreed to pay any on-going
expenses of the Trust in excess of the estimated amounts and to reimburse the
Trust for any amounts the Trust may be required to pay as indemnification to
any Trustee, the Administrator, the Custodian or the Paying Agent. The
Underwriter will be reimbursed by the Seller for all fees and expenses of the
Trust and all reimbursements of indemnifications paid by it. Because the
Trust will not bear any fees or expenses, investors will not bear any direct
expenses. The only expense that an investor might be considered to be
bearing indirectly is the Underwriter's Compensation payable by the Seller
with respect to such investor's Exchangeable Securities. See "Management
Arrangements--Estimated Expenses." The Example set forth below assumes
reinvestment of all dividends and distributions and utilizes a 5% annual rate
of return as mandated by Securities and Exchange Commission (the
"Commission") regulations. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE EXPENSES OR ANNUAL RATES OF RETURN, AND ACTUAL
EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR
PURPOSES OF THE EXAMPLE.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES

<S> <C>
Maximum Sales Load (as a percentage of offering price) . . . . . . . . . . % (a)
Automatic Dividend Reinvestment Plan Fees . . . . . . . . . . . . . . . . Not Applicable
ANNUAL EXPENSES (as a percentage of net assets)
Management Fees(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%

Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
TOTAL ANNUAL EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%

</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Example 1 year 3 years
An investor would pay the following expenses on a $1,000
investment, including the maximum sales load of $ and
assuming (1) total annual expenses of 0% and (2) a 5%
annual return throughout the periods: $ $

</TABLE>

_____________
(a) See the cover page of this Prospectus and "Underwriting."
(b) See "Management Arrangements." The Trust will be internally managed;
consequently there is no separate investment advisory fee paid by the
Trust. will act as the Administrator of the Trust.
8
<PAGE>
THE TRUST

Exchangeable Securities Trust (the "Trust") is a newly organized
Delaware business trust and will be registered as a closed-end management
investment company under the Investment Company Act. The Trust was formed on
May 2, 1996 pursuant to a Trust Agreement dated as of May 2, 1996 (the "Trust
Agreement"). The Trust will have a term of three years that will terminate
on or shortly after , 1999, except that the Trust may be
terminated prior to such date under certain limited circumstances. The Trust
will be treated as a grantor trust for United States Federal income tax
purposes. The Trust's principal office is located at and its
telephone number is ( ) - .

USE OF PROCEEDS

The net proceeds of the Offering will be approximately $
(or approximately $ , if the Underwriter's over-allotment option
is exercised in full), after payment of the sales load and organizational and
offering costs. At the time of the closing of the Offering, or shortly
thereafter, the net proceeds of the Offering will be used (i) to purchase a
fixed portfolio comprised of a series of zero-coupon U.S. Government
securities with face amounts and maturities corresponding to the
distributions payable with respect to the Exchangeable Securities and the
payment dates thereof (the "U.S. Treasury Securities") and (ii) to pay the
purchase price under the Contracts.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

The Trust's investment objective is to provide each Holder with a
quarterly distribution of $ per Exchangeable Security and on the
Exchange Date, in exchange for each Exchangeable Security, a number of shares
of Common Stock determined by reference to the Exchange Rate, as set
forth below under "Investment Objective and Policies--The Contracts," subject
to certain adjustments. There can be no assurance that the amount receivable
by Holders of the Exchangeable Securities on the Exchange Date will be equal
to or greater than the Initial Price of the Exchangeable Securities. If
the Exchange Price of the Common Stock is less than the Initial Price,
such amount receivable on the Exchange Date will be less than the Initial
Price paid for the Exchangeable Securities, in which case an investment
in Exchangeable Securities will result in a loss. The numbers of shares
of Common Stock per Exchangeable Security specified in clauses (i)
and (iii) of the Exchange Rate are hereinafter referred to as the "Share
Components." Holders otherwise entitled to receive fractional shares in
respect of their aggregate holdings of Exchangeable Securities will receive
cash in lieu thereof. See "Investment Objective and Policies--Trust Termina-
tion; No Fractional Shares of Common Stock."

The Trust has adopted a fundamental policy as required by the Trust
Agreement to invest at least 65% of its portfolio in the Contracts. The
Contracts will comprise % of the Trust's initial assets. The Trust has
also adopted a fundamental policy that the Contracts may not be disposed of
during the term of the Trust and that the U.S. Treasury Securities may not be
disposed of prior to the earlier of their respective maturities and the
termination of the Trust. The foregoing fundamental policies of the Trust
may not be changed without the vote of 100% in interest of the Holders.

9
<PAGE>
TRUST ASSETS

The Trust's assets will consist primarily of: (i) U.S. Treasury
Securities and (ii) the Contracts. The Trust may also make certain temporary
investments. See "Investment Objective and Policies--Temporary Investments."
For illustrative purposes only, the following chart shows the number of shares
of Common Stock that a Holder would receive for each Exchangeable Security
at various Exchange Prices. The chart assumes that there would be no adjust-
ments to the number of shares of Common Stock deliverable under the
Contracts by reason of the occurrence of any of the events described under
"Investment Objective and Policies--The Contracts -- Dilution Adjustments."
There can be no assurance that the Exchange Price will be within the range
set forth below. Given the Initial Price of $ per Exchangeable Security
and a Threshold Appreciation Price of $ , a Holder would receive on the
Exchange Date the following number of shares of Common Stock per Exchange-
able Security:

Exchange Price of Number of Shares of
Common Stock Common Stock Amount of Cash

The following table sets forth information regarding the distributions
to be received on the U.S. Treasury Securities, the portion of each year's
distributions that will constitute a return of capital for United States
Federal income tax purposes and the amount of original issue discount
accruing on the U.S. Treasury Securities with respect to a Holder who
acquires its Exchangeable Securities at the issue price from the Underwriter
pursuant to the original Offering. See "Certain United States Federal Income
Tax Considerations."

<TABLE>
<CAPTION> Annual
Inclusion of
Annual Gross Annual Gross Original Issue
Distributions Distributions Annual Return Discount in
from U.S. from U.S. of Capital per Income per
Treasury Treasury Securities per Exchangeable Exchangeable
Year Securities Exchangeable Security Security Security

1996 $ $ $ $
1997
1998

</TABLE>

The anticipated annual distribution of $ per Exchangeable
Security is payable quarterly on each , , and
, commencing , 1996. Quarterly distributions on the
Exchangeable Securities will consist solely of the cash received from the
U.S. Treasury Securities. The Trust will not be entitled to any dividends
that may be declared on the Common Stock. See "Dividends and
Distributions."

There can be no assurance that the Trust will achieve its investment
objective.

10
<PAGE>

ENHANCED YIELD; LESS POTENTIAL FOR EQUITY APPRECIATION THAN COMMON STOCK

The yield on the Exchangeable Securities is higher than the current
dividend yield on the Common Stock. However, there is no assurance that the
yield on the Exchangeable Securities will be higher than the dividend yield
on the Common Stock over the term of the Trust. In addition, the
opportunity for equity appreciation afforded by an investment in the
Exchangeable Securities is less than that afforded by an investment in
Common Stock because Holders of the Exchangeable Securities will realize no
equity appreciation if on the Exchange Date the Exchange Price does not
exceed the Threshold Appreciation Price, and will receive less than all of
the equity appreciation if on the Exchange Date the Exchange Price exceeds
the Threshold Appreciation Price. If the Exchange Price is less than the
Initial Price, the investor will receive less than the Initial Price paid for
the Exchangeable Securities, in which case an investment in Exchangeable
Securities will result in a loss. See "Risk Factors."

THE COMPANY

[description of the Company]

The shares of Common Stock are traded on the [NYSE]. The following
table sets forth, for the indicated periods, the reported high and low sales
prices of the shares of Common Stock on the [NYSE] Composite Tape and
the cash dividends per share of Common Stock. As of ,
1996, there were record holders of the Common Stock,
including The Depository Trust Company (the "Depositary") which holds shares
of Common Stock on behalf of an indeterminate number of beneficial
owners.

<TABLE>
<CAPTION> Dividend
High Low Per Share

1994
2nd Quarter $ $ $
3rd Quarter
4th Quarter
1995
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
1996
1st Quarter
2nd Quarter (through ,
1996)

</TABLE>

Holders will not be entitled to rights with respect to the Common
Stock (including, without limitation, voting rights and rights to receive
dividends or other distributions in respect thereof) until receipt of the
Common Stock by the Holders of Exchangeable Securities on the Exchange
Date.

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, the
Company files reports, proxy and information statements and other information
with the Commission. Copies of such material can be inspected and copied at
the public reference facilities maintained by the Commission at the addresses
specified under "Available Information." Reports, proxy and information
statements and other information concerning the Company may also be inspected
at the offices of the [NYSE].

11
<PAGE>
THE COMPANY IS NOT AFFILIATED WITH THE TRUST, THE COMPANY WILL NOT
RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF THE EXCHANGEABLE SECURITIES AND
THE COMPANY HAS NO OBLIGATIONS WITH RESPECT TO THE EXCHANGEABLE SECURITIES.
THIS PROSPECTUS RELATES ONLY TO THE EXCHANGEABLE SECURITIES OFFERED HEREBY
AND DOES NOT RELATE TO THE COMPANY OR THE COMMON STOCK. THE COMPANY HAS
FILED A REGISTRATION STATEMENT ON FORM S-3 WITH THE COMMISSION WITH RESPECT
TO THE SHARES OF COMMON STOCK THAT MAY BE RECEIVED BY A HOLDER OF
EXCHANGEABLE SECURITIES ON THE EXCHANGE DATE. THE PROSPECTUS OF THE COMPANY
(THE " PROSPECTUS") CONSTITUTING A PART OF SUCH REGISTRATION STATEMENT
INCLUDES INFORMATION RELATING TO THE COMPANY AND THE COMMON STOCK,
INCLUDING CERTAIN RISK FACTORS RELEVANT TO AN INVESTMENT IN COMMON
STOCK. THE PROSPECTUS IS BEING ATTACHED HERETO AND DELIVERED TO
PROSPECTIVE INVESTORS IN THE EXCHANGEABLE SECURITIES TOGETHER WITH THIS
PROSPECTUS FOR CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS DOES NOT
CONSTITUTE A PART OF THIS PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE
HEREIN.

THE CONTRACTS

General. The Trust will enter into one or more Contracts with the
Seller obligating the Seller to deliver to the Trust on the Exchange Date
shares of Common Stock in accordance with the following Exchange Rate:
(i) if the Exchange Price per share of Common Stock is greater than or
equal to the Threshold Appreciation Price, the Seller will be obligated to
deliver under its Contracts shares of Common Stock for each share
of Common Stock subject to such Contracts, (ii) if the Exchange Price
per share of Common Stock is less than the Threshold Appreciation Price
but greater than the Initial Price, the Seller will be obligated to deliver
under its Contracts a number of shares of Common Stock with an aggregate
value equal to the product of the Initial Price times the initial number of
shares of Common Stock subject to such Contracts and (iii) if the
Exchange Price per share of Common Stock is less than or equal to the
Initial Price, the Seller will be obligated to deliver under its Contracts a
number of shares of Common Stock equal to the initial number of shares
of Common Stock subject to such Contracts.

The Exchange Price means the average Closing Price per share of
Common Stock on the 20 Trading Days (as defined below) immediately prior to,
but not including, the second Trading Day preceding the Exchange Date. The
"Closing Price" of any security on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported
sale price) of such security on the [NYSE] on such date or, if such security
is not listed for trading on the [NYSE] on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which such security is so listed, or if such security is not so listed on a
United States national or regional securities exchange, as reported by The
NASDAQ Stock Market, or, if such security is not so reported, the last quoted
bid price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or, if such bid price is
not available, the market value of such security on such date as determined
by a nationally recognized independent investment banking firm retained for
this purpose by the Company. In the event that the Exchange Rate is adjusted
as described under "Investment Objective and Policies--The Contracts--
Dilution Adjustments" below, the Exchange Price is subject to adjustment
to reflect the average Closing Price per share of Common Stock on a
preadjusted basis. A "Trading Day" is defined as a day on which the security
the Closing Price of which is being determined (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at
least once on the national or regional securities exchange or association
or over-the-counter market that is the primary market for the trading of
such security.

12
<PAGE>

The purchase price under the Contracts is equal to $ per share of
Common Stock and $ in the aggregate and is payable to the Seller
by the Trust on or about , 1996. No other consideration is
payable by the Trust to the Seller in connection with its acquisition of the
Contracts or the performance of the Contracts by the Seller.

The purchase price of the Contracts was arrived at by arm's-length
negotiation between the Trust and the Seller taking into consideration
factors including the price, expected dividend level and volatility of the
Common Stock, current interest rates, the term of the Contracts, current
market volatility generally, the collateral security pledged by the Seller,
the value of other similar instruments and the costs and anticipated proceeds
of the Offering. All matters relating to the administration of the Contracts
will be the responsibility of either the Administrator or the Custodian.

Dilution Adjustments. The Exchange Rate is subject to adjustment if the
Company shall: (i) pay a stock dividend or make a distribution with respect
to Common Stock in shares of such stock; (ii) subdivide or split the
outstanding shares of Common Stock into a greater number of shares;
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares; (iv) issue by reclassification of shares of Common
Stock any shares of common stock of the Company; (v) issue rights or warrants
to all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the then
current market price of the Common Stock (other than rights to purchase
Common Stock pursuant to a plan for the reinvestment of dividends or
interest); or (vi) pay a dividend or make a distribution to all holders of
Common Stock of evidences of its indebtedness or other assets (excluding
any stock dividends or distributions referred to in clause (i) above or any
cash dividends other than any Extraordinary Cash Dividends (as defined below)
or issue to all holders of Common Stock rights or warrants to subscribe
for or purchase any of its securities (other than those referred to in clause
(v) above (any such event described in clause (i), (ii), (iii), (iv), (v) or
(vi), a "Dilution Event"). In the case of the events referred to in clauses
(i), (ii), (iii) and (iv) above, the Exchange Rate shall be adjusted and the
Trust will receive on the Exchange Date the number of shares of Common
Stock which the Trust would have owned or been entitled to receive
immediately following any event described above had such Exchangeable
Securities been paid and discharged immediately prior to such event or any
record date with respect thereto. Nevertheless, the Exchange Price shall
equal the average Closing Price per share of Common Stock on the 20
Trading Days immediately prior to, but not including, the second Trading Day
preceding the Exchange Date. In the case of the event referred to in clause
(v) above, the Exchange Rate shall be adjusted by multiplying each of the
Share Components in the Exchange Rate in effect immediately prior to the date
of issuance of the rights or warrants referred to in clause (v) above, by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants,
immediately prior to such issuance, plus the number of additional shares of
Common Stock offered for subscription or purchase pursuant to such
rights or warrants, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such
rights or warrants, immediately prior to such issuance, plus the number of
additional shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for subscription
or purchase pursuant to such rights or warrants would purchase at the market
price (determined as the average Closing Price per share of Common Stock
on the 20 Trading Days immediately prior to the date such rights or warrants
are issued), which shall be determined by multiplying such total number of
shares by the exercise price of such rights or warrants and dividing the
product so obtained by such market price. To the extent that shares of
Common Stock are not delivered after the expiration of such rights or
warrants, the Exchange Rate shall be readjusted to the Exchange Rate which
would then be in effect had such adjustments for the issuance of such rights
or warrants been made upon the basis of delivery of only the number of shares
of Common Stock actually delivered. In the case of the event referred
to in clause (vi) above, the Exchange Rate shall be adjusted by multiplying
each of the Share Components in the Exchange Rate in effect on the record
date, by a fraction of which the numerator shall be the market price per
share of Common Stock on the record date for the determination of
stockholders entitled to receive the dividend or

<PAGE>

distribution referred to in clause (vi) above (such market price being
determined as the average Closing Price per share of Common Stock on the
20 Trading Days immediately prior to such record date), and of which the
denominator shall be such market price per share of Common Stock less
the fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a
resolution adopted with respect thereto) as of such record date of the
portion of the assets or evidences of indebtedness to be distributed or of
such subscription rights or warrants applicable to one share of Common
Stock. An "Extraordinary Cash Dividend" means, with respect to any
consecutive 12-month period, all cash dividends on the Common Stock
during such period to the extent such dividends exceed on a per share basis
10% of the average Closing Price of the Common Stock over such period
(less any such dividends for which a prior adjustment to the Exchange Rate
was previously made). All adjustments to the Exchange Rate will be
calculated to the nearest 1/10,000th of a share of Common Stock (or if
there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of
a share). No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which by reason of the
foregoing are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. If an adjustment is made to the
Exchange Rate as described above, an adjustment will also be made to the
Exchange Price solely to determine which of clauses (i), (ii) or (iii) of the
Exchange Rate will apply on the Exchange Date. The required adjustment to
the Exchange Price will be made by multiplying each of the Closing Prices
used in determining the Exchange Price by a fraction of which the numerator
shall be the Share Component in clause (iii) of the Exchange Rate immediately
after such adjustment described above and of which the denominator shall be
the Share Component in clause (iii) of the Exchange Rate immediately before
such adjustment described above. Each such adjustment to the Exchange Rate
shall be made successively.

No adjustments will be made for certain other events, such as offerings
of Common Stock by the Company for cash or in connection with
acquisitions. Likewise, no adjustments will be made for any sales of
Common Stock by the Seller.

In the event of (A) any consolidation or merger of the Company, or any
surviving entity or subsequent surviving entity of the Company (a "Company
Successor"), with or into another entity (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Company or another corporation), (B) any sale, transfer, lease or conveyance
to another corporation of the property of the Company or any Company
Successor as an entirety or substantially as an entirety, (C) any statutory
exchange of securities of the Company or any Company Successor with another
corporation (other than in connection with a merger or acquisition) or (D)
any liquidation, dissolution or winding up of the Company or any Company
Successor (any such event described in clause (A), (B), (C) or (D), a
"Reorganization Event"), the Exchange Rate will be adjusted such that, on the
Exchange Date, the Trust will receive for each share of Common Stock
subject to such Contracts cash in an amount equal to: (i) if the Transaction
Value (as defined below) is less than the Threshold Appreciation Price but
equal to or greater than the Initial Price, the Initial Price, (ii) if the
Transaction Value is greater than or equal to the Threshold Appreciation
Price, multiplied by the Transaction Value and (iii) if the
Transaction Value is less than the Initial Price, the Transaction Value.
"Transaction Value" means (i) for any cash received in any such
Reorganization Event, the amount of cash received per share of Common
Stock, (ii) for any property other than cash or Marketable Securities (as
defined below) received in any such Reorganization Event, an amount equal to
the market value on the date the Reorganization Event is consummated of such
property received per share of Common Stock as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Seller and (iii) for any Marketable Securities received in any
such Reorganization Event, an amount equal to the Closing Price per share of
such securities on the date of the Reorganization Event, multiplied by the
number of such securities received for each share of Common Stock.
"Marketable Securities" means any securities listed on a U.S. national
securities exchange or reported by The NASDAQ Stock Market, but shall not
include any such securities that by their terms mature, expire or are
callable
14
<PAGE>

by the issuer thereof prior to the Exchange Date. Notwithstanding the
foregoing, if any Marketable Securities are received in such Reorganization
Event, then in lieu of delivering cash as provided above, the Seller may at
its option deliver an equivalent value of such Marketable Securities received
in such Reorganization Event, determined in accordance with clause (iii)
above. If the Seller elects to deliver Marketable Securities, Holders will
be responsible for the payment of any and all brokerage and other transaction
costs upon the sale of such securities.

The Trust is required, within ten Business Days following the occurrence
of a Dilution Event or a Reorganization Event (or if the Trust is not aware
of such occurrence, as soon as practicable after becoming so aware), to
provide written notice to the Holders of the occurrence of such event and a
statement in reasonable detail setting forth the adjusted Exchange Rate and
the method by which the adjustment to the Exchange Rate was determined. In
the case of a Dilution Event, in respect of any adjustment to the Exchange
Price, such notice will only disclose the factor by which each of the Closing
Prices used in determining the Exchange Price is so multiplied in order to
determine the Payment Rate on the Exchange Date. In the event of a Dilution
Event, it will not be possible to determine the Payment Rate until the
Exchange Date with respect to such Dilution Event.

Collateral Requirements of the Contracts. The Seller's obligations
under each Contract will be secured by a security interest in 1.0 share of
Common Stock for each share of Common Stock subject to such
Contract pursuant to a Security and Pledge Agreement between the Seller and
the Custodian, as collateral agent. Unless the Seller is in default in its
obligations under the Security and Pledge Agreement, the Seller will be
permitted to substitute for the pledged shares of Common Stock
collateral consisting of short-term, direct obligations of the U.S.
Government. Any U.S. Government obligations pledged as substitute collateral
will be required to have an aggregate market value at the time of
substitution and at daily mark-to-market valuations thereafter of not less
than % of the product of the market price of the Common Stock at
the time of each valuation times the number of shares of Common Stock
for which such obligations are being substituted.

In the event a Default (as defined herein) occurs, the Trust's assets
will be liquidated, the net assets of the Trust will be distributed to the
Holders and the term of the Trust will terminate. Failure by the Seller to
provide additional U.S. Government obligations to cover any collateral
shortfall or the bankruptcy or insolvency of the Seller (each such event, a
"Default"), will cause an automatic acceleration of the Seller's obligations
under the Contracts. In any such Default, or in the event that by the
Exchange Date any substitute collateral has not been replaced by a number of
shares of Common Stock sufficient to meet the obligations under any
Contract, the Custodian will (i) liquidate any U.S. Government obligations
pledged under the Security and Pledge Agreement and (ii) distribute to the
Trust for distribution pro rata to the Holders, with respect to the Seller's
Contracts, any shares of Common Stock then pledged by the Seller,
together with the net proceeds of the liquidation of the U.S. Government
obligations then pledged by the Seller in an amount equal to the market value
at such time of a number of shares of Common Stock equal to the
difference between the maximum number of shares of Common Stock subject
to the Seller's Contracts less the number of such shares pledged at such
time. Any net proceeds from the liquidation of such U.S. Government
obligations remaining after such distribution and after payment of any
expenses or other amounts owed by the Seller will be returned to the Seller.
The Security and Pledge Agreement will provide that, in the event of a
Reorganization Event, the Seller will pledge as security for its obligations
under the Contracts the consideration received by it in the Reorganization
Event in respect of the maximum number of shares of Common Stock subject
to its Contracts, except that, for consideration other than cash or
marketable securities, the Seller will be required to pledge cash in the
amount of the Transaction Value of such consideration.

Description of the Seller. The Seller is . [The
Seller may be an institutional investor in corporate, partnership or other
form or an individual, a trust, foundation or other entity through which such
institutional investor or individual holds its shares of Common Stock.
A brief description of the Seller will be added by amendment. Specific
information on the holdings of the Seller, as required by the Securities Act
of 1933, as amended (the "Securities Act"), will be included in Appendix A to
this Prospectus.]

15
<PAGE>

TEMPORARY INVESTMENTS

For cash management purposes, the Trust may invest the proceeds of the
U.S. Treasury Securities and any other cash held by the Trust in short-term
obligations of the U.S. Government maturing no later than the business day
preceding the next following distribution date.

TRUST TERMINATION; NO FRACTIONAL SHARES OF COMMON STOCK

The Trust will terminate on or shortly after the Exchange Date, except
if terminated earlier under certain limited circumstances. Within
approximately business days after the Exchange Date following the
payment of any remaining expenses of the Trust, the shares of Common
Stock and/or cash to be received pursuant to the Contracts and any other
remaining assets of the Trust will be distributed pro rata to Holders. Each
Holder will receive the greatest number of whole shares of Common Stock
allocable to its Exchangeable Securities, plus the cash value, based on the
Exchange Price, of any fractional shares so allocable. Although the Trust
has adopted a policy that it will not dispose of the Contracts prior to the
Exchange Date, under certain circumstances the Contracts may terminate prior
to such Date. In the event of a Default by the Seller, the Trust's assets
will be liquidated, the net assets of the Trust will be distributed to
Holders and the term of the Trust will terminate. See "Investment Objective
and Policies--The Contracts--Collateral Requirements of the Contracts."

INVESTMENT RESTRICTIONS

The Trust has adopted a fundamental policy that the Trust may not:
purchase any securities or instruments other than the U.S. Treasury
Securities, the Contracts and the Common Stock or other assets received
pursuant to the Contracts and, for cash management purposes, short-term
obligations of the U.S. Government; issue any securities or instruments
except for the Exchangeable Securities; make short sales or purchase
securities on margin; write put or call options; borrow money; underwrite
securities; purchase or sell real estate, commodities or commodities
contracts; or make loans. The Trust has adopted a fundamental policy to
invest at least 65% of its portfolio in the Contracts. The Trust has also
adopted a fundamental policy that the Contracts may not be disposed of during
the term of the Trust and that the U.S. Treasury Securities may not be
disposed of prior to the earlier of their respective maturities and the
termination of the Trust.

RISK FACTORS

NO ACTIVE PORTFOLIO MANAGEMENT

It is a fundamental policy of the Trust that the Contracts may not be
disposed of during the term of the Trust and that the U.S. Treasury
Securities may not be disposed of prior to the earlier of their respective
maturities and the termination of the Trust. As a result, the Trust will
continue to hold the Contracts despite any significant decline in the market
price of the Common Stock or adverse changes in the financial condition
of the Company. The Trust will not be managed like a typical closed-end
investment company.

16
<PAGE>

ABSENCE OF TRADING HISTORY; MARKETABILITY; POSSIBILITY OF THE EXCHANGEABLE
SECURITIES TRADING AT A DISCOUNT FROM NET ASSET VALUE

Exchangeable Securities have no trading history and it is not possible
to predict how they will trade in the secondary market. The trading price of
the Exchangeable Securities may vary considerably prior to the Exchange Date
due to, among other things, fluctuations in the price of the Common
Stock (which may occur due to changes in the Company's financial condition,
results of operations or prospects, or because of complex and interrelated
political, economic, financial and other factors that can affect the capital
markets generally, the stock exchanges or quotation systems on which the
Common Stock is traded and the market segment of which the Company is a part)
and fluctuations in interest rates and other factors that are difficult to
predict and beyond the Trust's control.

The Underwriter currently intends, but is not obligated, to make a
market in the Exchangeable Securities. There can be no assurance that a
secondary market will develop or, if a secondary market does develop, that it
will provide the Holders of the Exchangeable Securities with liquidity of
investment or that it will continue for the life of the Exchangeable
Securities. Application will be made to list the Exchangeable Securities on
the NYSE. Assuming the acceptance of such application, there can be no
assurance that the Exchangeable Securities will not later be delisted or that
trading in the Exchangeable Securities on the NYSE will not be suspended. In
the event of a delisting or suspension of trading on such exchange, the Trust
will apply for listing of the Exchangeable Securities on another national
securities exchange or for quotation on another trading market. If the
Exchangeable Securities are not listed or traded on any securities exchange
or trading market, or if trading of the Exchangeable Securities is suspended,
pricing information for the Exchangeable Securities may be more difficult to
obtain, and the price and liquidity of the Exchangeable Securities may be
adversely affected.

The Trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies
frequently trade at a discount from their net asset value, which is a risk
separate and distinct from the risk that the Trust's net asset value will
decrease. The Trust cannot predict whether the Exchangeable Securities will
trade at, below or above their net asset value. The risk of purchasing
investments that might trade at a discount is more pronounced for investors
who wish to sell their investments in a relatively short period of time after
completion of the Trust's initial public offering because for those investors
realization of a gain or loss on their investments is likely to be more
dependent upon the existence of a premium or discount than upon portfolio
performance. Exchangeable Securities are not subject to redemption.

DILUTION ADJUSTMENTS; STOCKHOLDER RIGHTS

The number of shares of Common Stock that the Trust is entitled to
receive at the termination of the Trust is subject to adjustment for certain
events arising from stock splits and combinations, stock dividends and
certain other actions of the Company that modify its capital structure. See
"Investment Objective and Policies--The Contracts--Dilution Adjustments."
Such number of shares to be received by the Trust may not be adjusted for
other events, such as offerings of Common Stock for cash or in
connection with acquisitions, that may materially and adversely affect the
price of the Common Stock and, because of the relationship of the amount
to be received pursuant to the Contracts to the price of the Common
Stock, such other events may materially and adversely affect the trading
price of the Exchangeable Securities. There can be no assurance that the
Company will not take any of the foregoing actions, or that it will not make
offerings of, or that major shareholders will not sell any, Common Stock
in the future, or as to the amount of any such offerings or sales. Neither
the Company nor the Seller has any obligation to consider the interests of
the Holders of the Exchangeable Securities for any reason. In addition,
until the receipt of the Common Stock by Holders as a result of the
exchange of the Exchangeable Securities for the Common Stock, Holders
will not be entitled to any rights with respect to the Common

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Stock (including without limitation voting rights and the rights to receive
any dividends or other distributions in respect thereof).

LIMITED TERM

The Trust will have a limited term of three years and will terminate on
or shortly after the Exchange Date, unless the Trust is terminated earlier
under certain limited circumstances. On or shortly after the Exchange Date,
the Trust will distribute the shares of Common Stock received by the
Trust pursuant to the Contracts and other net assets held by the Trust pro
rata to Holders and terminate shortly thereafter. The Trust will terminate
in the event of a Default by the Seller.

NON-DIVERSIFIED PORTFOLIO

The Trust's assets will consist almost entirely of the Contracts and the
U.S. Treasury Securities. As a result, investments in the Trust may be
subject to greater risk than would be the case for a company with a more
diversified portfolio of investments.

COMPARISON TO OTHER EQUITY SECURITIES; RELATIONSHIP TO COMMON STOCK

The terms of the Exchangeable Securities are similar to those of
ordinary equity securities in that the value of the Common Stock that a
Holder of Exchangeable Securities will receive on the Exchange Date is not
fixed, but is based on the Exchange Price of the Common Stock. See
"Description of the Exchangeable Securities." THERE CAN BE NO ASSURANCE THAT
SUCH AMOUNT RECEIVABLE BY THE HOLDER ON THE EXCHANGE DATE WILL BE EQUAL TO OR
GREATER THAN THE ISSUE PRICE OF THE EXCHANGEABLE SECURITIES. IF THE EXCHANGE
PRICE OF THE COMMON STOCK IS LESS THAN THE INITIAL PRICE, SUCH AMOUNT
RECEIVABLE ON THE EXCHANGE DATE WILL BE LESS THAN THE INITIAL PRICE, IN WHICH
CASE AN INVESTMENT IN EXCHANGEABLE SECURITIES WILL RESULT IN A LOSS.
ACCORDINGLY, A HOLDER OF EXCHANGEABLE SECURITIES ASSUMES THE RISK THAT THE
MARKET VALUE OF THE COMMON STOCK MAY DECLINE, AND THAT SUCH DECLINE
COULD BE SUBSTANTIAL. REFERENCE IS MADE TO THE ACCOMPANYING PROSPECTUS OF
THE COMPANY, INCLUDING THE INFORMATION UNDER THE CAPTION "RISK FACTORS"
THEREIN.

The trading prices of the Exchangeable Securities in the secondary
market will be affected by the trading prices of the Common Stock in the
secondary market. It is impossible to predict whether the price of
Common Stock will rise or fall. Trading prices of Common Stock will be
influenced by the Company's operating results and prospects and by economic,
financial and other factors and market conditions that can affect the capital
markets generally, including the level of, and fluctuations in, the trading
prices of stocks generally and sales of substantial amounts of Common
Stock in the market subsequent to the offering of the Exchangeable Securities
or the perception that such sales could occur.

LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION; POTENTIAL LOSSES

The opportunity for equity appreciation afforded by an investment in the
Exchangeable Securities is less than the opportunity for equity appreciation
afforded by a direct investment in the Common Stock, because Holders of
the Exchangeable Securities will realize no equity appreciation if on the
Exchange Date the Exchange Price does not exceed the Threshold Appreciation
Price (which represents an appreciation of % over the Initial Price).
Moreover, Holders of the Exchangeable Securities will only be entitled to
receive on the Exchange Date % (the percentage equal to the Initial Price
divided by the Threshold Appreciation Price) of any appreciation of the value
of Common Stock in excess of the Threshold Appreciation Price. In
addition, there can be no assurance that the yield on the Exchangeable
Securities will be higher than the dividend yield on the Common Stock
over the term of the Trust.

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NO STOCKHOLDER RIGHTS

Holders of the Exchangeable Securities will not be entitled to any
rights with respect to the Common Stock (including, without limitation,
voting rights and rights to receive any dividends or other distributions in
respect thereof) until receipt of the Common Stock on the Exchange Date.
For example, in the event that amendment is proposed to the Articles of
Incorporation or By-Laws of the Company and the record date for determining
the stockholders of record entitled to vote on such amendment occurs prior to
such delivery, Holders of the Exchangeable Securities will not be entitled to
vote on such amendment.

The Seller is not responsible for the determination or calculation of
the amount receivable by Holders of the Exchangeable Securities at maturity.
The Contracts between the Trust and the Seller are commercial transactions
and do not create any rights in, or for the benefit of, any third party,
including any Holder of Exchangeable Securities.

TAX MATTERS

Investors should consult their own tax advisers concerning the proper
treatment of their pro rata share of the Trust's fees and expenses, and the
application of the United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Exchangeable Securities arising under the laws of any
other taxing jurisdiction. The tax consequences of investing in the
Exchangeable Securities are described in greater detail under "Certain United
States Federal Income Tax Considerations."

DESCRIPTION OF THE EXCHANGEABLE SECURITIES

Each Exchangeable Security represents an equal proportional beneficial
interest in the Trust, and a total of 1,000,000 Exchangeable Securities will
be issued in the Offering, assuming no exercise of the Underwriter's over-
allotment option. Upon liquidation of the Trust, Holders are entitled to
share pro rata in the net assets of the Trust available for distribution.
Exchangeable Securities have no preemptive, redemption or conversion rights.
The Exchangeable Securities, when issued and outstanding, will be fully paid
and nonassessable.

Holders are entitled to one vote for each Exchangeable Security held on
all matters to be voted on by Holders and are not able to cumulate their
votes in the election of Trustees. The Trustees of the Trust have been
selected initially by as the initial Holder of
the Trust. The Trust intends to hold annual meetings as required by the
rules of the NYSE. The Holders have the right, upon the declaration in
writing or vote of more than two-thirds of the outstanding Exchangeable
Securities, to remove a Trustee. The Trustees will call a meeting of Holders
to vote on the removal of a Trustee upon the written request of the record
Holders of 10% of the Exchangeable Securities or to vote on other matters
upon the written request of the record Holders of 51% of the Exchangeable
Securities (unless substantially the same matter was voted on during the
preceding 12 months).

BOOK-ENTRY SYSTEM

The Exchangeable Securities will be issued in the form of one or more
global securities (the "Global Securities") deposited with The Depository
Trust Company (the "Depository") and registered in the name of a nominee of
the Depositary.

The Depositary has advised the Trust and the Underwriter as follows:
The Depositary is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a

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"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to Section 17A of the
Exchange Act. The Depositary was created to hold securities of persons who
have accounts with the Depositary ("participants") and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of
certificates. Such participants include securities brokers and dealers,
banks, trust companies and clearing corporations. Indirect access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.

Upon the issuance of a Global Security, the Depositary or its nominee
will credit the respective Exchangeable Securities represented by such Global
Security to the accounts of participants. The accounts to be credited shall
be designated by the Underwriters. Ownership of beneficial interests in such
Global Securities will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in such Global Securities will be shown on, and the transfer of
those ownership interests will be effected only through, records maintained
by the Depositary or its nominee for such Global Securities. Ownership of
beneficial interests in such Global Securities by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to
transfer beneficial interests in a Global Security.

So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the
Exchangeable Securities. Except as set forth below, owners of beneficial
interests in such Global Securities will not be entitled to have the
Exchangeable Securities registered in their names and will not receive or be
entitled to receive physical delivery of the Exchangeable Securities in
definitive form and will not be considered the owners or Holders thereof.

Payment of shares of Common Stock or amounts payable or other
consideration deliverable on exchange of, and any quarterly distributions on,
Exchangeable Securities registered in the name of or held by the Depositary
or its nominee will be made to the Depositary or its nominee, as the case may
be, as the registered owner or the holder of the Global Security. None of
the Trust, any Trustee, the Paying Agent or the Custodian for the
Exchangeable Securities will have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

The Trust expects that the Depositary, upon receipt of any payment in
respect of a permanent Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective
beneficial interests in the principal amount of such Global Security as shown
on the records of the Depositary. The Trust also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be the
responsibility of such participants.

A Global Security may not be transferred except as a whole by the
Depositary to a nominee or a successor of the Depositary. If the Depositary
is at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Trust within ninety days, the Trust will
issue Exchangeable Securities in definitive registered form in exchange for
the Global Security representing such Exchangeable Securities. In addition,
the Trust may at any time and in its sole discretion determine not to have
any Exchangeable Securities represented by one or more Global Securities and,
in such extent, will issue Exchangeable Securities in definitive form in
exchange
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<PAGE>

for all of the Global Securities representing the Exchangeable Securities.
Further, if the Trust so specifies with respect to the Exchangeable
Securities, an owner of a beneficial interest in a Global Security
representing Exchangeable Securities may, on terms acceptable to the Trust
and the Depositary for such Global Security, receive Exchangeable Securities
in definitive form. In any such instance, an owner of a beneficial interest
in a Global Security will be entitled to physical delivery in definitive form
of Exchangeable Securities represented by such Global Security equal in
number to that represented by such beneficial interest and to have such
Exchangeable Securities registered in its name.

TRUSTEES AND OFFICERS

The Trustees of the Trust consist of individuals, of whom
are not "interested persons" of the Trust as defined in the Investment
Company Act. The Trustees of the Trust are responsible for the overall
supervision of the operations of the Trust and perform the various duties
imposed on the trustees of management investment companies by the Investment
Company Act.

The Trustees and Officers of the Trust are:

COMPENSATION OF TRUSTEES

The Trust will pay each unaffiliated Trustee a fee of $ per year
plus $ per meeting attended and pays all Trustees' actual out-of-pocket
expenses relating to attendance at such meetings; the Trust also pays an
annual fee of $ to members of its audit committee and pays all Trustees'
actual out-of-pocket expenses relating to attendance at such audit committee
meetings. The Trustees will not receive any pension or retirement benefits
from the Trust. None of the Trustees receives any compensation for serving
as a trustee or director of any other affiliated investment company.

The following table sets forth for the calendar year ended December 31,
1995 the aggregate compensation paid by all investment companies advised by
and its affiliates ("__________ Advised Funds") to the non-interested
Trustees.

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TOTAL COMPENSATION FROM
ADVISED FUNDS
NAME OF TRUSTEE PAID TO TRUSTEES/(1)/
--------------- ------------------------

_______________
/(1)/ In addition to the Trust, the Trustees served on the boards of
other Advised Funds as follows:

MANAGEMENT ARRANGEMENTS

PORTFOLIO MANAGEMENT AND ADMINISTRATION

The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will not be actively managed. The Managing
Trustee will negotiate the terms of the Contracts and select the U.S.
Treasury Securities proposed for purchase by the Trust in accordance with and
subject to the terms of the Trust Agreement. The Trustees of the Trust will
authorize the purchase of the Contracts and the U.S. Treasury Securities as
directed by the Trust Agreement. It is a fundamental policy of the Trust
that the Contracts may not be disposed of during the term of the Trust and
that the U.S. Treasury Securities may not be disposed of prior to the earlier
of their respective maturities and the termination of the Trust.

ADMINISTRATOR

The day-to-day affairs of the Trust will be managed by ,
as Trust Administrator pursuant to an Administration Agreement (in such
capacity, the "Administrator"). Under the Administration Agreement, the
Trustees have delegated most of their operational duties to the
Administrator, including without limitation, the duties to: (i) receive
invoices for and pay, or cause to be paid, all expenses incurred by the
Trust; (ii) with the approval of the Trustees, engage legal and other
professional advisers (other than the independent public accountants for the
Trust); (iii) instruct the Paying Agent to pay distributions on Exchangeable
Securities as described herein; (iv) prepare and mail, file or publish all
notices, proxies, reports, tax returns and other communications and
documents, and keep all books and records, for the Trust; (v) at the
direction of the Trustees, institute and prosecute legal and other
appropriate proceedings to enforce the rights and remedies of the Trust; and
(vi) make all necessary arrangements with respect to meetings of Trustees and
any meetings of Holders of Exchangeable Securities. The Administrator will
not, however, select the independent public accountants for the Trust or sell
or otherwise dispose of the Trust assets (except in connection with an
acceleration of the Contracts as described under "Investment Objective and
Policies--The Contracts--Collateral Requirements of the Contracts", or the
settlement of the Contracts at the Exchange Date, or upon a Default by the
Seller).

The Administration Agreement may be terminated by either the Trust or
the Administrator upon 60 days' prior written notice, except that no
termination shall become effective until a successor Administrator has been
chosen and has accepted the duties of the Administrator.

Except for its roles as Administrator, Custodian and Paying Agent of the
Trust, and except for its role as Collateral Agent under the Collateral
Agreements, has no other affiliation with, and is not engaged
in any other transactions with, the Trust.

The address of the Administrator is .

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CUSTODIAN

The Trust's custodian is (in such capacity, the
"Custodian"), and serves as such pursuant to a custodian agreement with the
Trust (the "Custodian Agreement"). In the event of any termination of the
Custodian Agreement by the Trust or the resignation of the Custodian, the
Trust must engage a new Custodian to carry out the duties of the Custodian as
set forth in the Custodian Agreement. Pursuant to the Custodian Agreement,
all net cash received by the Trust will be invested by the Custodian in
short-term U.S. Government securities maturing on or shortly before the next
quarterly distribution date. The Custodian will also act as collateral agent
under the Security and Pledge Agreement and will hold a perfected security
interest in the Common Stock and U.S. Treasury Securities or other
assets consistent with the terms of the Contracts pledged thereunder.

PAYING AGENT

The transfer agent, registrar and paying agent for the Exchangeable
Securities is (in such capacity, the "Paying Agent"), and
serves as such pursuant to a paying agent agreement with the Trust (the
"Paying Agent Agreement"). In the event of any termination of the Paying
Agent Agreement by the Trust or the resignation of the Paying Agent, the
Trust will use its best efforts to engage a new Paying Agent to carry out the
duties of the Paying Agent.

INDEMNIFICATION

The Trust will indemnify each Trustee, the Administrator, the Paying
Agent and the Custodian, with respect to any claim, liability, loss or
expense (including the costs and expenses of the defense against any claim or
liability) which it may incur in acting as Trustee, Administrator, Paying
Agent or Custodian, as the case may be, except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of their
respective duties or where applicable law prohibits such indemnification.
The Underwriter has agreed to reimburse the Trust for any amounts it may be
required to pay as indemnification to any Trustee, the Administrator, the
Custodian or the Paying Agent. The Underwriter will in turn be reimbursed by
the Seller for all such reimbursements paid by it.

ESTIMATED EXPENSES

At the closing of the Offering, the Seller will pay to each of the
Administrator, the Custodian, the Paying Agent, and each Trustee, a one-time,
up-front amount in respect of its fee and, in the case of the Administrator,
anticipated expenses of the Trust over the term of the Trust. The
anticipated Trust expenses to be borne by the Administrator include, among
other things, expenses for legal and independent accountants' services, costs
of printing proxies, Exchangeable Securities certificates and reports to
Holders of the Exchangeable Securities, expenses of the Trustees, fidelity
bond coverage, stock exchange listing fees and expenses of qualifying the
Exchangeable Securities for sale in the various states. Organization costs
of the Trust in the amount of $ , offering costs estimated to be $
, and the aggregate of the one-time, up-front payments described above in the
amount of $ , will be paid from the proceeds of the Offering.

The amount payable in respect of ongoing expenses of the Trust was
determined based on estimates made in good faith on the basis of information
currently available to the Trust, including estimates furnished by the
Trust's agents. There cannot, however, be any assurance that actual
operating expenses of the Trust will not be substantially more than this
amount. Any excess expenses will be paid by the Underwriter or, in the event
of its failure to pay such amounts, the Trust. The Underwriter will be
reimbursed by the Seller for all fees and expenses of the Trust paid by it.

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DIVIDENDS AND DISTRIBUTIONS

The Trust intends to distribute to Holders on a quarterly basis the
proceeds of the U.S. Treasury Securities held by the Trust. The first
distribution, reflecting the Trust's operations from the date of the
Offering, will be made on , 1996 to Holders of record as of
, 1996. Thereafter, distributions will be made on ,
, and of each year to Holders of record as
of each , , and ,
respectively. Upon termination of the Trust as described in "Investment
Objective and Policies--Trust Termination; No Fractional Shares of
Common Stock," each Holder will share pro rata in any remaining net assets of
the Trust.

NET ASSET VALUE

The net asset value of the Exchangeable Securities will be calculated by
the Trust no less frequently than quarterly by dividing the value of the net
assets of the Trust (the value of its assets less its liabilities) by the
total number of Exchangeable Securities outstanding. The Trust's net asset
value will be published semi-annually as part of the Trust's semi-annual
report to Holders and at such other times as the Trustees may determine. The
U.S. Treasury Securities held by the Trust will be valued at the mean between
the last current bid and asked prices or, if quotations are not available, as
determined in good faith by the Trust under the direction of the Trustees.
Short-term investments having a maturity of 60 days or less are valued at
cost with accrued interest or discount earned included in interest
receivable. The Contracts will be valued at the mean of the bid prices
received by the Trust from at least three independent broker-dealer firms
unaffiliated with the Trust who are in the business of making bids on
financial instruments similar to the Contracts and with terms comparable
thereto.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

Set forth in full below is the opinion of Brown & Wood, counsel to the
Trust, as to certain United States Federal income tax consequences of the
purchase, ownership and disposition of the Exchangeable Securities. Such
opinion is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change (including retroactive changes in
effective dates) or possible differing interpretations. The discussion below
deals only with Exchangeable Securities held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, tax-exempt entities, or persons holding
Exchangeable Securities as a hedge against currency risks or as a position in
a "straddle" for tax purposes. It also does not deal with Holders of
Exchangeable Securities other than original purchasers thereof (except where
otherwise specifically noted herein). Moreover, the discussion below does
not address the tax consequences of ownership of the Common Stock or
Marketable Securities. The following discussion also does not address the
tax consequences of investing in the Exchangeable Securities arising under
the laws of any state, local or foreign jurisdiction. Persons considering
the purchase of the Exchangeable Securities should consult their own tax
advisers concerning the application of the United States Federal income tax
laws to their particular situations as well as any consequences of the
purchase, ownership and disposition of the Exchangeable Securities arising
under the laws of any other taxing jurisdiction.

As used herein, the term "U.S. Holder" means a beneficial owner of
Exchangeable Securities that is for United States Federal income tax purposes
(i) a citizen or resident of the United States, (ii) a corporation, a
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source. As used herein, the term "non-U.S. Holder" means a
beneficial owner of Exchangeable Securities that is not a U.S. Holder.

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<PAGE>

CLASSIFICATION OF THE TRUST

The Trust will be classified as a grantor trust under subpart E, Part I
of subchapter J of the Internal Revenue Code of 1986, as amended (the
"Code"). As such, Holders of the Exchangeable Securities will be treated for
United States Federal income tax purposes as owners of a pro rata undivided
interest in the Trust's assets which will consist of the U.S. Treasury
Securities and the Contracts. Accordingly, each Holder will be required to
report on its United States Federal income tax return its pro rata share of
the entire income on the Trust's assets in accordance with such Holder's
regular method of tax accounting.

U.S. HOLDERS

As previously discussed, each U.S. Holder will be considered the owner
of its pro rata portion of the U.S. Treasury Securities and the Contracts
held by the Trust. The cost to a U.S. Holder of its Exchangeable Securities
(net of its pro rata portion of the one-time fees payable to the Custodian
and the Paying Agent) will be allocated among such U.S. Holder's pro rata
portion of the U.S. Treasury Securities and the Contracts (in proportion to
the relative fair market values thereof on the date on which the U.S. Holder
acquires its Exchangeable Securities) in order to determine the U.S. Holder's
initial tax basis in the U.S. Holder's pro rata portion of the U.S. Treasury
Securities and the Contracts. It is currently anticipated that % and
% of the net proceeds of the Offering will be used by the Trust to purchase
the U.S. Treasury Securities and as payments under the Contracts,
respectively.

The U.S. Treasury Securities held by the Trust will be treated for
United States Federal income tax purposes as having original issue discount
which will accrue over the term of the U.S. Treasury Securities. In general,
a U.S. Holder will be treated as having purchased each U.S. Treasury Security
held by the Trust with original issue discount in an amount equal to the
excess of the U.S. Holder's pro rata portion of the amount payable on such
U.S. Treasury Security over the Holder's initial tax basis therefor as
discussed above. A U.S. Holder (whether on the cash or accrual method of tax
accounting) will be required to include such original issue discount in
income for United States Federal income tax purposes as it accrues in
accordance with a constant yield method. Because it is expected that 20% or
more of the Holders of Exchangeable Securities will be accrual basis
taxpayers, original issue discount on any short-term U.S. Treasury Securities
(i.e., any U.S. Treasury Security with a maturity of one year or less from
the date it is purchased by the Trust) held by the Trust will also be
currently includable in income by U.S. Holders as it accrues on a straight-
line basis (unless a U.S. Holder elects to accrue such original issue
discount on a constant yield basis). A U.S. Holder's tax basis in its pro
rata portion of a U.S. Treasury Security will be increased by the amount of
any original issue discount included in income by the U.S. Holder with
respect to such U.S. Treasury Security (as described above).

Each U.S. Holder will also be treated as having entered into a pro rata
portion of the Contracts. Under current law, a U.S. Holder will not be
required to recognize any income, gain or loss with respect to the Contracts
until the Exchange Date. On the Exchange Date, if the Seller delivers
Common Stock pursuant to the Contracts, a U.S. Holder will generally not
realize any taxable gain or loss upon the receipt of such Common Stock.
However, a U.S. Holder will generally be required to recognize taxable gain
or loss with respect to any cash received in lieu of fractional shares. The
amount of such gain or loss recognized by a U.S. Holder will be equal to the
difference, if any, between the amount of cash received by the U.S. Holder
and the portion of the U.S. Holder's tax basis in the Contracts that is
allocable to the fractional shares. Any such taxable gain or loss will be
treated as short-term capital gain or loss. A U.S. Holder will have an
initial tax basis in any Common Stock received thereby on the Exchange
Date in an amount equal to the U.S. Holder's tax basis in the Contracts less
the portion of such tax basis that is allocable to any fractional shares (as
described above) and will realize taxable gain or loss with respect to any
such Common Stock received thereby on the Exchange Date only upon the
subsequent sale or disposition by the U.S. Holder of such Common Stock.
In addition, a U. S. Holder's holding period for any Common Stock
received by such U.S. Holder on the Exchange Date will begin on the day
immediately following

<PAGE>

the Exchange Date and will not include the period during which the U.S.
Holder held the related Exchangeable Securities.

Upon the sale or other disposition of Exchangeable Securities prior to
the Exchange Date, a U.S. Holder generally will be required to allocate the
total amount realized by such U.S. Holder upon such sale or other disposition
between the U.S. Holder's pro rata portion of the U.S. Treasury Securities
and the Contracts based upon their relative fair market values (as determined
on the date of disposition). A U.S. Holder will generally be required to
recognize taxable gain or loss with respect to each such component (i.e., the
U.S. Holder's pro rata portion of the U.S. Treasury Securities and the
Contracts) in an amount equal to the difference, if any, between the amount
realized with respect to each such component upon the sale or disposition of
the Exchangeable Securities (as determined in the manner described above) and
the U.S. Holder's adjusted tax basis in each such component. Any such gain
or loss will generally be treated as long-term capital gain or loss if the
U.S. Holder has held the Exchangeable Securities for more than one year at
the time of disposition.

An individual U.S. Holder who itemizes deductions may amortize and
deduct over the term of the Trust (subject to any applicable limitations such
as Section 67(a) of the Code) its pro rata portion of the one-time, up-front
fees paid by the Trust to the Custodian and the Paying Agent, and may deduct
(subject to any applicable limitations such as those in Section 67(a) of the
Code) its pro rata portion of the other expenses described under "Management
Arrangements--Estimated Expenses" incurred by the Trust resulting from its
ongoing operations (including the fees payable to the Trustees) as such
expenses are incurred by the Trust. Counsel believes that a U.S. Holder's
pro rata portion of the expenses incurred in connection with the organization
of the Trust, underwriting discounts and commissions and other offering
expenses should be includable in the cost to the U.S. Holder of the
Exchangeable Securities. However, there can be no assurance that the
Internal Revenue Service (the "IRS") will not take a contrary view. If the
IRS were to prevail in treating such expenses as excludible from a U.S.
Holder's cost of the Exchangeable Securities, such expenses would not be
includable in the basis of the assets of the Trust and should instead,
subject to the limitations provided for under Section 67(a) of the Code, be
amortizable and deductible over the term of the Trust.

MISCELLANEOUS TAX MATTERS

Special tax rules may apply to persons holding Exchangeable Securities
as part of a "synthetic security" or other integrated investment, or as part
of a straddle, hedging transaction or other combination of offsetting
positions. For instance, Section 1258 of the Code may possibly require
certain U.S. Holders of the Exchangeable Securities who enter into hedging
transactions or offsetting positions with respect to the Exchangeable
Securities to treat all or a portion of any gain realized on the Exchangeable
Securities as ordinary income in instances where such gain may have otherwise
been treated as capital gain. U.S. Holders hedging their positions with
respect to the Exchangeable Securities or otherwise holding their
Exchangeable Securities in a manner described above should consult their own
tax advisers regarding the applicability of Section 1258 of the Code, or any
other provision of the Code, to their investment in the Exchangeable
Securities.

If as a result of a Reorganization Event, cash, Marketable Securities,
or a combination of cash and Marketable Securities is delivered pursuant to
the Contracts, U.S. Holders generally will be required to recognize taxable
gain or loss in respect of any cash received, including cash received in lieu
of fractional shares of Marketable Securities and, in some instances, in
respect of any Marketable Securities received upon receipt thereof.
Moreover, in some instances, U.S. Holders may be required to recognize at the
time of a Reorganization Event taxable gain or loss in respect of the amount
of cash (and, in some cases, Marketable Securities) which is fixed at the
time of such Reorganization Event and is to be delivered pursuant to the
Contracts. It is uncertain whether any taxable gain or loss recognized by a
U.S. Holder as a result of a Reorganization Event would be capital or
ordinary U.S. Holders
26

<PAGE>
are urged to consult their own tax advisers concerning the
specific tax consequences of a Reorganization Event on their investment in
Exchangeable Securities.

NON-U.S. HOLDERS

Subject to the discussion below concerning income that is effectively
connected with a trade or business conducted by a non-U.S. Holder in the
United States, payments of interest (including original issue discount) made
with respect to the U.S. Treasury Securities will not be subject to United
States withholding tax, provided that such non-U.S. Holder complies with
applicable certification requirements. In general, for a non-U.S. Holder to
qualify for this exemption from taxation, the last United States payor in the
chain of payment prior to payment to a non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a
statement that (i) is signed by the beneficial owner of the U.S. Treasury
Securities under penalties of perjury, (ii) certifies that such owner is not
a U.S. Holder and (iii) provides the name and address of the beneficial
owner. The statement may be made on an IRS Form W-8 or a substantially
similar form, and the beneficial owner must inform the Withholding Agent of
any change in the information on the statement within 30 days of such change.
If Exchangeable Securities are held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent.
However, in such case, the signed statement must be accompanied by a copy of
IRS Form W-8 or the substitute form provided by the beneficial owner to the
organization or institution.

Any capital gain realized in respect of Exchangeable Securities by a
non-U.S. Holder will generally not be subject to United States Federal income
tax if (i) such gain in not effectively connected with a United States trade
or business of such non-U.S. Holder and (ii) in the case of an individual
non-U.S. Holder, such individual is not present in the United States for 183
days or more in the taxable year of the sale or other disposition, or the
gain is not attributable to a fixed place of business maintained by such
individual in the United States and such individual does not have a "tax
home" (as defined for United States Federal income tax purposes) in the
United States.

If any interest or gain realized by a non-U.S. Holder is effectively
connected with the non-U.S. Holder's conduct of a trade or business in the
United States, such interest or gain will be subject to regular United States
Federal income tax in the same manner as if the non-U.S. Holder were a U.S.
Holder. In addition, in such event, if such non-U.S. Holder is a foreign
corporation, such interest or gain may be included in the earnings and
profits of such non-U.S. Holder in determining such non-U.S. Holder's United
States branch profits tax liability.

BACKUP WITHHOLDING AND INFORMATION REPORTING

A beneficial owner of Exchangeable Securities may be subject to
information reporting and to backup withholding at a rate of 31 percent of
certain amounts paid to the beneficial owner unless such beneficial owner
provides proof of an applicable exemption or a correct taxpayer
identification number, and otherwise complies with applicable requirements of
the backup withholding rules.

Any amounts withheld under the backup withholding rules from a payment
to a beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.

PROSPECTIVE INVESTORS IN THE EXCHANGEABLE SECURITIES SHOULD BE AWARE
THAT THERE IS NO AUTHORITY DIRECTLY ADDRESSING THE PROPER UNITED STATES
FEDERAL INCOME TAX TREATMENT OF THE EXCHANGEABLE SECURITIES OR SECURITIES
WITH TERMS SUBSTANTIALLY THE SAME AS THE EXCHANGEABLE SECURITIES, AND THAT NO
RULING HAS BEEN REQUESTED FROM THE IRS WITH RESPECT TO THE EXCHANGEABLE
SECURITIES. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE IRS WILL AGREE

<PAGE>

WITH THE FOREGOING DISCUSSION AND THAT THE IRS WILL NOT ASSERT A CONTRARY
POSITION AS TO THE PROPER UNITED STATES FEDERAL INCOME TAX TREATMENT OF THE
EXCHANGEABLE SECURITIES WHICH MIGHT CAUSE THE CHARACTER AND TIMING OF INCOME,
GAIN OR LOSS RECOGNIZED WITH RESPECT TO EXCHANGEABLE SECURITIES TO DIFFER
SIGNIFICANTLY FROM SUCH CHARACTER AND TIMING DISCUSSED ABOVE. PROSPECTIVE
INVESTORS IN THE EXCHANGEABLE SECURITIES ARE THEREFORE URGED TO CONSULT WITH
THEIR OWN TAX ADVISERS PRIOR TO MAKING AN INVESTMENT IN THE EXCHANGEABLE
SECURITIES.

28
<PAGE>
UNDERWRITING

The Underwriter has agreed, subject to the terms and conditions of the
Purchase Agreement, among the Trust, the Seller and the Underwriter (the
"Purchase Agreement"), to purchase 1,000,000 Exchangeable Securities from the
Trust.

In the Purchase Agreement, the Underwriter has agreed, subject to the
terms and conditions set forth therein, to purchase all of the Exchangeable
Securities being sold pursuant to such Agreement if any of the Exchangeable
Securities being sold pursuant to such Agreement are sold to investors.

The Underwriter has advised the Trust that it proposes initially to
offer the Exchangeable Securities to the public at the public offering price
set forth on the cover page of this Prospectus. The Underwriter has also
advised the Trust that it proposes to offer Exchangeable Securities to
certain dealers at the initial public offering price less a concession not in
excess of $ per Exchangeable Security. Such Underwriter may allow, and
such dealers may reallow, a discount not in excess of $ per
Exchangeable Security to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.

In light of the fact that proceeds from the sale of the Exchangeable
Securities will be used by the Trust to purchase the Contracts from the
Seller, the Purchase Agreement provides that the Seller will pay to the
Underwriter the Underwriter's Compensation of $ per Exchangeable
Security.

The Trust has granted to the Underwriter an option, exercisable for 30
days after the date hereof, to purchase up to an aggregate of
additional Exchangeable Securities to cover over-allotments, if any, at the
initial public offering price less the sales load. To the extent the
Underwriter exercises such option, the Underwriter will have a firm
commitment, subject to certain conditions, to purchase a number of option
Exchangeable Securities.

Prior to the Offering, there has been no public market for the
Exchangeable Securities. Application will be made to list the Exchangeable
Securities on the NYSE under the symbol " ".

The Company and the Seller have agreed not to offer, sell or otherwise
dispose of shares of Common Stock or any securities convertible into or
exchangeable or exercisable for shares of Common Stock (other than
pursuant to employee stock option plans) for a period of 90 days from the
date of this Prospectus without the prior written consent of the Underwriter.

The Trust and the Seller have agreed to indemnify the Underwriter against
certain civil liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

Certain legal matters will be passed upon for the Trust and the
Underwriter by Brown & Wood.

EXPERTS

The statement of assets, liabilities and capital included in this
Prospectus has been audited by , independent
auditors, as stated in their opinion appearing herein, and has been included
in reliance upon such opinion given on the authority of said firm as experts
in auditing and accounting.

29
<PAGE>

ADDITIONAL INFORMATION

The Trust has filed with the Commission, Washington D.C. 20549, a
Registration Statement under the Securities Act with respect to the
Exchangeable Securities offered hereby. Further information concerning the
Exchangeable Securities and the Trust may be found in the Registration
Statement, of which this Prospectus constitutes a part. The Registration
Statement may be inspected without charge at the Commission's office in
Washington, D.C. and copies of all or any part thereof may be obtained from
such office after payment of the fees prescribed by the Commission.

30
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Trustees and Shareholders of Exchangeable Securities
Trust:

We have audited the accompanying statement of assets, liabilities and
capital of Exchangeable Securities Trust as of , 1996.
This financial statement is the responsibility of the Trust's management.
Our responsibility is to express an opinion on this financial statement 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 statement of assets,
liabilities and capital is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statement. An audit also includes assessing the accounting
principles used and significant estimates made by the Trust's management, as
well as evaluating the overall financial statement presentation. We believe
that our audit of the financial statement provides a reasonable basis for our
opinion.

In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of Exchangeable
Securities Trust, as of , 1996 in conformity with generally
accepted accounting principles.

New York, New York
, 1996

31
<PAGE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
, 1996

ASSETS

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Deferred organization and offering costs (Note 1) . . . . . . . . . _________

Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . $
_________
LIABILITIES

Deferred organization and offering costs payable (Note 1) . . . . . $
_________
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
_________

CAPITAL

Exchangeable Securities, par value $.10 per share;
shares authorized;
shares issued and outstanding (Note 1) . . . . . . . . . . $
_________

Paid-in Capital in excess of par . . . . . . . . . . . . . . .
_________

Total Capital-Equivalent of $
net asset value per share of
Exchangeable Securities (Note 1) . . . . . . . . . . . $
_________

(1) Exchangeable Securities Trust (the "Trust") was established as a
Delaware business trust on May 2, 1996 and is registered as a non-
diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. Costs incurred by the Trust
in connection with its organization, estimated at $ , will be
amortized on a straight-line basis over a three-year period beginning at
the commencement of operations of the Trust.

(2) Offering expenses, estimated at $ , will be payable upon
completion of the offering and will be charged to capital upon the
commencement of operations of the Trust.

32
<PAGE>

NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED
IN THIS PROSPECTUS AND, IF GIVE N
OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY 1,000,000
THE TRUST OR THE UNDERWRITER. EXCHANGEABLE SECURITIES
THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING OF ANY
SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT EXCHANGEABLE SECURITIES
RELATES OR AN OFFER TO ANY PERSON TRUST
IN ANY STATE OR JURISDICTION OF
THE UNITED STATES OR ANY COUNTRY
WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE FACTS SET FORTH IN ____________________
THIS PROSPECTUS OR IN THE AFFAIRS
OF SINCE THE DATE HEREOF OR
SINCE THE DATES AS OF WHICH PROSPECTUS
INFORMATION IS SET FORTH HEREIN.
______________ ____________________

TABLE OF CONTENTS
Page
----

Prospectus Summary . . . . .
Fee Table . . . . . . . . . .
The Trust . . . . . . . . . .
Use of Proceeds . . . . . . .
Investment Objective
and Policies . . . . . . .
Investment Restrictions . . .
Risk Factors . . . . . . . . SMITH BARNEY INC.
Description of the
Exchangeable
Securities . . . . . . . .
Trustees and Officers . . . .
Management Arrangements . . .
Dividends and Distributions .
Net Asset Value . . . . . . .
Certain United States
Federal Income Tax
Considerations . . . . . . , 1996
Underwriting . . . . . . . .
Legal Matters . . . . . . . .
Experts . . . . . . . . . . .
Additional Information . . .
Independent Auditors'
Report . . . . . . . . . .
Statement of Assets,
Liabilities and
Capital . . . . . . . . .
Appendix A . . . . . . . . .

-----------------------
UNTIL , 1996 (25
DAYS AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING
TRANSACTIONS IN THE EXCHANGEABLE
SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

1
<PAGE>
THE FOLLOWING PROSPECTUS OF COMPANY IS ATTACHED AND DELIVERED FOR
CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF COMPANY DOES NOT
CONSTITUTE A PART OF THE FOREGOING PROSPECTUS OF EXCHANGEABLE SECURITIES
TRUST, NOR IS IT INCORPORATED BY REFERENCE THEREIN.

<PAGE>
APPENDIX A

[ Prospectus]

1
<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

1. FINANCIAL STATEMENTS

Independent Auditors' Report
Statement of Assets, Liabilities and Capital as of , 1996

2. EXHIBITS

(a)(1) Trust Agreement//
(2) Certificate of Trust//
(b) Not applicable
(c) Not applicable
(d)(1) Specimen Certificate for Exchangeable Securities/*/
(2) Portions of the Trust Agreement of the Registrant
defining the rights of Holders of Exchangeable
Securities/*/
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1) Form of Purchase Agreement/*/
(2) Smith Barney Inc. Standard Dealer Agreement/*/
(i) Not applicable
(j) Custodian Agreement/*/
(k)(1) Paying Agent, Registrar and Transfer Agent Agreement/*/
(2) Form of Forward Purchase Contract/*/
(l) Opinion and Consent of Brown & Wood, counsel to the Trust/*/
(m) Not applicable
(n) Consent of , independent auditors for the
Trust/*/
(o) Not applicable
(p) Certificate of /*/
(q) Not applicable
(r) Financial Data Schedule/*/

___________________
//
/*/ To be filed by amendment.

ITEM 25. MARKETING ARRANGEMENTS

See Exhibits (h)(1) and (h)(2) to this Registration Statement.

C-1
<PAGE>
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:

SEC Registration fees . . . . . . . . . . . . . . . . . . . . . . $ *
New York Stock Exchange listing fee . . . . . . . . . . . . . . . *
Printing (other than certificates) . . . . . . . . . . . . . . . *
Engraving and printing certificates . . . . . . . . . . . . . . . *
Fees and expenses of qualification under state securities
laws (including fees of counsel) . . . . . . . . . . . . . . *
Accounting fees and expenses. . . . . . . . . . . . . . . . . . . *
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . *
NASD fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ *
=======

_______________
/*/ To be furnished by amendment.

ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

The Registrant will be internally managed and will not have an
investment adviser. The information in the Prospectus under the caption
"Management Arrangements" is incorporated herein by reference.

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

There will be one record Holder of the Exchangeable Securities as of the
effective date of this Registration Statement.

ITEM 29. INDEMNIFICATION

Article of the Trust Agreement and Section of the Purchase
-----
Agreement provide for indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to trustees,
officers and controlling persons of the Registrant, pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

The Trust is internally managed and does not have an investment adviser.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

C-2
<PAGE>

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the
rules promulgated thereunder are maintained at the offices of the Registrant
( ), its custodian (
) and its paying agent ( ).

ITEM 32. MANAGEMENT SERVICES

Not applicable.

ITEM 33. UNDERTAKINGS

(a) The Registrant hereby undertakes to suspend the offering of the
shares covered hereby until it amends its prospectus contained herein if (1)
subsequent to the effective date of this Registration Statement, its net
asset value per share declines more than 10 percent from its net asset value
per share as of the effective date of the Registration Statement or (2) the
net asset value per share increases to an amount greater than its net
proceeds as stated in the prospectus contained herein.

(b) The Registrant hereby undertakes that (i) for purpose of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant under Rule 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
(ii) for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed to
be the initial bona fide offering thereof.

C-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
3rd day of May, 1996.

EXCHANGEABLE SECURITIES TRUST

By: /s/ Stephen E. Stonefield
-------------------------
Stephen E. Stonefield
Trustee

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person, in the
capacities and on the date indicated.

Name Title Date
- ---- ----- ----

/s/ Stephen E. Stonefield Principal Executive Officer, May 3, 1996
- -------------------------- Principal Financial Officer,
Principal Accounting Officer
and Trustee

C-5

<PAGE>
Exhibit (a)(1)

TRUST AGREEMENT OF EXCHANGEABLE SECURITIES TRUST

TRUST AGREEMENT, dated as of May 2, 1996, between Stephen J. Bujno,
as Depositor, and Stephen E. Stonefield, as Trustee. The Depositor and the
Trustee hereby agree as follows:
1. The trust created hereby shall be known as " Exchangeable
Securities Trust", in which name the Trustee may conduct the business of the
Trust, make and execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over
to the Trustee the sum of $1. The Trustee hereby acknowledges receipt of
such amount in trust from the Depositor, which amount shall constitute the
initial trust estate. The Trustee hereby declares that it will hold the
trust estate in trust for the Depositor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under
Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801, et
-------
seq. and that this document constitute the governing instrument of the Trust.
The Trustee is hereby authorized and directed to execute and file a
certificate of trust with the Delaware Secretary of State in the form
attached hereto.
3. The Depositor and the Trustee will enter into an amended and
restated Trust Agreement, satisfactory to each such party, to provide for the
contemplated operation of the Trust created hereby. Prior to the execution
and delivery of such amended and restated Trust Agreement, the Trustee shall
not have any duty or obligation hereunder or with respect to the trust
estate, except as otherwise required by applicable law or as may be necessary
to
1
<PAGE>
obtain prior to such execution and delivery any licenses, consents or
approvals required by applicable law or otherwise.
4. This Trust Agreement may be executed in one or more
counterparts.
5. The Trustee may resign upon thirty days' prior notice to the
Depositor.

IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.

DEPOSITOR

/s/Stephen J. Bujno
---------------------------
Stephen J. Bujno,
as Depositor

TRUSTEE

/s/ Stephen E. Stonefield
----------------------------------
Stephen E. Stonefield,
as Trustee

<PAGE>
Exhibit (a)(2)

CERTIFICATE OF TRUST OF EXCHANGEABLE SECURITIES TRUST

This Certificate of Trust of Exchangeable Securities Trust (the
"Trust"), dated May 2, 1996, is being duly executed and filed by Stephen
Stonefield, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801, et seq.)
------- ------
1. Name. The name of the business trust formed hereby is
----
Exchangeable Securities Trust.

2. Registered Office; Registered Agent. The business address of
-----------------------------------
the registered office of the Trust in the State of Delaware is One Rodney
Square, 10th Floor, Tenth and King Streets in the City of Wilmington, County
of New Castle, 19801. The name of the Trust's registered agent at such
address is RL&F Service Corp.

3. Effective Date. This Certificate of Trust shall be effective
--------------
upon the date and time of filing.

4. Other Matters. The Trust will be a registered investment
-------------
company under the Investment Company Act of 1940, as amended.

IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above-
written.

/s/ Stephen E. Stonefield
----------------------------------------
Sole Trustee