Rule 497(b)
Registration No. 333-03961
("QUILTS")
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES
A Unit Investment Trust
Equity Strategic Ten, Series 2
Equity Strategic Five, Series 2
QUILTS consists of two separate unit investment trusts designated
QUILTS Equity Strategic Ten, Series 2 (the "Strategic Ten Trust") and QUILTS
Equity Strategic Five, Series 2 (the "Strategic Five Trust") (collectively, the
"Trusts"). The Sponsor of the Trusts is OCC Distributors (the "Sponsor"). The
objective of each Trust is to maximize total return through a combination of
capital appreciation and current dividend income. The Strategic Ten Trust seeks
to outperform the Dow Jones Industrial Average ("DJIA") by investing for a
period of approximately twelve (12) months in its ten highest dividend yielding
common stocks ("DJIA Strategic Ten") determined the day prior to the initial
Date of Deposit. The Strategic Five Trust seeks to outperform the DJIA by
investing for a period of approximately twelve (12) months in the five lowest
priced stocks of the DJIA's ten highest dividend yielding common stocks ("DJIA
Strategic Five") determined the day prior to the initial Date of Deposit. The
name "Dow Jones Industrial Average" is the property of Dow Jones & Company,
Inc., which is not affiliated with the Sponsor, has not participated in any way
in the creation of the Trusts or in the selection of the stocks included in each
Trust and has not reviewed or approved any information included in this
Prospectus. Dow Jones & Company, Inc. has not granted to the Trusts or the
Sponsor a license to use the Dow Jones Industrial Average. The value of the
Units of the Trusts will fluctuate with fluctuations in the value of the
underlying Securities in the portfolio of each Trust. Therefore, Unit Holders
who sell their Units prior to termination of the Trusts may receive more or less
than their original purchase price upon sale. No assurance can be given that
dividends will be paid or that the Units will appreciate in value. Units of the
Trusts may be suited for purchase by IRAs, self-employed retirement plans
(formerly Keogh Plans), pension, profit-sharing and other qualified retirement
plans. Investors considering participation in any such plan should review
specific tax laws and pending legislation related thereto and should consult
their attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. (See "Retirement Plans" and "Tax Status" in Part B
of this Prospectus.) The minimum purchase is 1,000 Units for individual
purchases, and 250 Units for purchases by Individual Retirement Accounts,
self-employed retirement plans (formerly Keogh Plans), pension funds and other
tax-deferred retirement plans.
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for each Trust including descriptive material relating to
each Trust, the Statements of Condition of the Trusts and the Portfolio of each
Trust. Part B contains general information about Trusts. Part A may not be
distributed unless accompanied by Part B.
QUILTS are not a deposit or other obligation of, or guaranteed by, a
depository institution. QUILTS are not insured by the FDIC and are subject to
investment risks, including possible loss of the principal amount invested.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES CORPORATION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED MAY 30, 1996
Please read and retain both parts of this Prospectus for future reference.
370022.2
<PAGE>
QUILTS
Equity Strategic Ten, Series 2
SUMMARY OF ESSENTIAL INFORMATION AS OF MAY 29, 1996 (The initial Date
of Deposit. The initial Date of Deposit is the date on which the Trust
Agreement was signed and the deposit of Securities with the Trustee was
made.)
<TABLE>
<S> <C>
CUSIP#: 747938124 Evaluation Time: 4:00 P.M. New York time.
Sponsor: OCC Distributors Minimum Purchase: 1,000 Units
Date of Deposit: May 29, 1996 Minimum Principal Distribution: $1.00 per 1,000 Units.
Aggregate Value Liquidation Period: From June 10, 1997 to the Mandatory
of Securities:.....................................$144,739 Termination Date.
Number of Units: (The number of Units will be Minimum Value of Trust: The Trust may be terminated if the
increased as the Sponsor deposits additional value of the Trust is less than 40% of the aggregate of the
Securities into the Trust.).........................149,062 Securities at the completion of the Deposit period.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of July 10, 1997 or
per 1,000 Units:..................................1/149,062 the disposition of the last Security in the Trust.
Public Offering Price: Trustee: The Chase Manhattan Bank (National Association).
Aggregate Value of Securities Trustee's Annual Fee and Estimated Expenses: $1.02 per
in Trust........................................$144,739 1,000 Units outstanding.
Divided By 149,062 Units multiplied Annual Supervisory Fee (Payable to an affiliate of the
by 1,000............................................$971.00 Sponsor): Maximum of $.25 per 1,000 Units outstanding
Plus Sales Charge of 2.90% of Public Offering (see "Trust Expenses and Charges" in Part B).
Price.............................................$29.00 Estimated Organizational Expenses:(3)(4) $1.49 per 1,000 Units.
Public Offering Price per 1,000 Units(1)..........$1,000.00 Record Date: December 13, 1996.
Redemption Price per 1,000 Units........................$971.00 Dividend Payment Date: December 31, 1996.
Sponsor's Repurchase Price and Redemption Rollover Notification Date(5): June 9, 1997 or another date as
Price per 1,000 Units:(2)........................$971.00 determined by the Sponsor.
Excess of Public Offering Price Over
Redemption Price per 1,000 Units: ..................$29.00
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000.....................$29.00
</TABLE>
(1) On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
(2) Any redemptions of over 25,000 Units may, upon request of redeeming Unit
Holders to the Trustee, be made in kind. The Trustee will forward the
distributed securities to the Unit Holder's bank or broker-dealer account at
the Depository Trust Company in book-entry form. See "Liquidity - Trustee
Redemption" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs") have
paid all the costs of establishing UITs, this Trust (and therefore the Unit
Holders) will bear all or a portion of its organizational costs. Such
organizational costs include: the cost of preparing and printing the
registration statement, the trust indenture and other closing documents; and
the initial audit of the Trust. Total organizational expenses will be
amortized over the life of the Trust. See "Trust Expenses and Changes" in
Part B.
(4) Assumes the Trust will reach a size of 10,000,000 Units as estimated by the
Sponsor; organizational expenses per 1,000 Units will vary with the actual
size of the Trust. If the Trust does not reach this Unit level, the
Estimated Organizational Expenses will be adversely affected.
(5) If a Unit Holder ("Rollover Unit Holder") so specifies prior to the Rollover
Notification Date, the Rollover Unit Holder's Units will be redeemed in kind
and the underlying distributed Securities will be sold by the Sponsor, on
behalf of the Trustee, during the Liquidation Period. The proceeds will be
reinvested as received in an available series of the QUILTS Equity Strategic
Ten, if offered (see "Trust Administration Trust Termination").
A-2
370022.2
<PAGE>
QUILTS
Equity Strategic Five, Series 2
SUMMARY OF ESSENTIAL INFORMATION AS OF MAY 29, 1996 (The initial Date of
Deposit. The initial Date of Deposit is the date on which the Trust
Agreement was signed and the deposit of Securities with the Trustee was
made.)
<TABLE>
<S> <C>
CUSIP#: 747938116 Evaluation Time: 4:00 P.M. New York time.
Sponsor: OCC Distributors Minimum Purchase: 1,000 Units
Date of Deposit: May 29, 1996 Minimum Principal Distribution: $1.00 per 1,000 Units.
Aggregate Value Liquidation Period: From June 10, 1997 to the Mandatory
of Securities:...................................$144,906 Termination Date.
Number of Units: (The number of Units will be Minimum Value of Trust: The Trust may be terminated if the
increased as the Sponsor deposits additional value of the Trust is less than 40% of the aggregate of the
Securities into the Trust.).......................149,003 Securities at the completion of the Deposit period.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of July 10, 1997 or
per 1,000 Units:................................1/149,003 the disposition of the last Security in the Trust.
Public Offering Price: Trustee: The Chase Manhattan Bank (National Association).
Aggregate Value of Securities Trustee's Annual Fee and Estimated Expenses: $1.02 per
in Trust......................................$144,906 1,000 Units outstanding.
Divided By 149,003 Units multiplied Annual Supervisory Fee (Payable to an affiliate of the
by 1,000.......................................$972.50 Sponsor): Maximum of $.25 per 1,000 Units outstanding
Plus Sales Charge of 2.75% of Public Offering (see "Trust Expenses and Charges" in Part B).
Price...........................................$27.50 Estimated Organizational Expenses:(3)(4) $1.49 per 1,000 Units.
Public Offering Price per 1,000 Units(1)........$1,000.00 Record Date: December 13, 1996.
Redemption Price per 1,000 Units......................$972.50 Dividend Payment Date: December 31, 1996.
Sponsor's Repurchase Price and Redemption Rollover Notification Date(5): June 9, 1997 or another date as
Price per 1,000 Units:(2)......................$972.50 determined by the Sponsor.
Excess of Public Offering Price Over
Redemption Price per 1,000 Units: ................$27.50
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 ..................$27.50
</TABLE>
(1) On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
(2) Any redemptions of over 25,000 Units may, upon request of redeeming Unit
Holders to the Trustee, be made in kind. The Trustee will forward the
distributed securities to the Unit Holder's bank or broker-dealer account at
the Depository Trust Company in book-entry form. See "Liquidity - Trustee
Redemption" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs") have
paid all the costs of establishing UITs, this Trust (and therefore the Unit
Holders) will bear all or a portion of its organizational costs. Such
organizational costs include: the cost of preparing and printing the
registration statement, the trust indenture and other closing documents; and
the initial audit of the Trust. Total organizational expenses will be
amortized over the life of the Trust. See "Trust Expenses and Changes" in
Part B.
(4) Assumes the Trust will reach a size of 10,000,000 Units as estimated by the
Sponsor; organizational expenses per 1,000 Units will vary with the actual
size of the Trust. If the Trust does not reach this Unit level, the
Estimated Organizational Expenses will be adversely affected.
(5) If a Unit Holder ("Rollover Unit Holder") so specifies prior to the Rollover
Notification Date, the Rollover Unit Holder's Units will be redeemed in kind
and the underlying distributed Securities will be sold by the Sponsor, on
behalf of the Trustee, during the Liquidation Period. The proceeds will be
reinvested as received in an available series of the QUILTS Equity Strategic
Five, if offered (see "Trust Administration - Trust Termination").
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370022.2
<PAGE>
QUALIFIED
UNIT INVESTMENT LIQUID TRUST SERIES
("QUILTS")
THE TRUSTS
The Trust consists of two separate unit investment trusts
designated QUILTS, Equity Strategic Ten, Series 2 ("Strategic Ten Trust") and
Equity Strategic Five, Series 2 ("Strategic Five Trust") (collectively, the
"Trusts"). The Trusts were created under the laws of the State of New York by a
Trust Indenture and Agreement (the "Trust Agreement"), dated the initial Date of
Deposit, between OCC Distributors, as sponsor (the "Sponsor") and The Chase
Manhattan Bank (National Association), as trustee (the "Trustee"). On the
initial Date of Deposit, the Sponsor deposited with the Trustee the underlying
Securities including delivery statements relating to contracts for the purchase
of certain such Securities (the "Securities") in the aggregate amount set forth
in the "Summary of Essential Information" for each Trust and cash or an
irrevocable letter of credit issued by a major commercial bank in the amount
required for such purchases. Thereafter, the Trustee, in exchange for the
Securities so deposited, delivered to the Sponsor a certificate evidencing the
ownership of all of the Units of the Trusts, which Units are being offered by
this Prospectus. (See "The Trust Organization" in Part B.) Each Trust will
terminate approximately one year after the initial Date of Deposit.
Objectives. The objective of each Trust is to maximize total
return through capital appreciation and current dividend income. The Strategic
Ten Trust will invest for twelve (12) months in approximately equal values of
the ten (10) common stocks in the Dow Jones Industrial Average ("DJIA") having
the highest dividend yield on the business day prior to the initial Date of
Deposit (the "DJIA Strategic Ten"). The Strategic Five Trust will invest for
twelve (12) months in approximately equal values of the five (5) common stocks
in the DJIA having the lowest per share stock price of the ten companies in the
DJIA having the highest dividend yield on the business day prior to the initial
Date of Deposit (the "DJIA Strategic Five"). As used herein, the term "highest
dividend yield" means the yield for each Security calculated by annualizing the
last quarterly or semi-annual ordinary dividend distributed on that Security and
dividing the result by the market value of that Security on the business day
prior to the initial Date of Deposit. This rate is historical, and there is no
assurance that any dividends will be declared or paid in the future on the
Securities in the Trusts. As used herein, the term "Securities" means the common
stocks initially deposited in each Trust and described under Portfolio and any
additional common stocks acquired and held by the Trust pursuant to the
provisions of the Indenture (see "The Trusts--Organization" and "Risk
Factors--Additional Securities" in Part B of this Prospectus). Further, the
Securities may appreciate or depreciate in value, dependent upon the full range
of economic and market influences affecting corporate profitability, the
financial condition of issuers and the prices of equity securities in general
and the Securities in particular. Therefore, there is no guarantee that the
objective of the Trusts will be achieved.
Portfolio Summary. General. The Trusts are comprised of those
Securities listed in each "Portfolio" in this Part A. The Strategic Ten Trust
contains an underlying portfolio of ten (10) common stocks issued by companies
engaged primarily in the following industries: Auto Manufacturing, 1 (10%);
Chemical Products, 1 (10%); Electronics, 1 (10%); Financial Services/Banking, 1
(10%); Forest Products and Paper, 1 (10%); Machinery-Construction and Mining, 1
(10%); Oil/Gas-International, 3 (30%); and Tobacco/Food Processing, 1 (10%). The
Strategic Ten Trust is deemed to be concentrated
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370022.2
<PAGE>
in the Oil/Gas-International category.* See "Risk Factors--Petroleum Refining
Companies" in Part B of this Prospectus. The Strategic Five Trust contains an
underlying portfolio of five (5) common stocks issued by companies engaged
primarily in the following industries: Auto Manufacturing, 1 (20%); Chemical
Products, 1 (20%); Forest Products and Paper, 1 (20%); Machinery - Construction
and Mining, 1 (20%); and Oil/Gas-International, 1 (20%). Although there are
certain risks of price volatility associated with investment in common stocks
(particularly with an investment in one or two common stocks), the risk to
investors is reduced because the Trusts' capital is divided among ten stocks
from eight different industry groups in the case of the Strategic Ten Trust or
among five stocks from five different industry groups in the case of the
Strategic Five Trust.
With the deposit of the Securities in the Trusts on the
initial Date of Deposit, the Sponsor established a proportionate relationship
among the aggregate value of the specified Securities in the portfolio of each
of the Trusts. During the 90 days subsequent to the initial Date of Deposit, the
Sponsor may, but is not obligated to, deposit from time to time additional
Securities in the Trusts ("Additional Securities"), contracts to purchase
Additional Securities or cash (or a bank letter of credit in lieu of cash) with
instructions to purchase Additional Securities, maintaining to the extent
practicable the original proportionate relationship of the number of shares of
each Security in the portfolio of each of the Trusts immediately prior to such
deposit, thereby creating additional Units which will be offered to the public
by means of this Prospectus. These additional Units will each represent, to the
extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the number of shares of Securities in the
portfolio of each of the Trusts on the initial Date of Deposit with the deposit
of Additional Securities because of, among other reasons, purchase requirements,
changes in prices, or the unavailability of Securities. Deposits of Additional
Securities in the Trusts subsequent to the 90-day period following the initial
Date of Deposit must replicate exactly the proportionate relationship among the
shares of each Security in the portfolio of each of the Trusts at the end of the
initial 90-day period. The number and identity of Securities in the Trusts will
be adjusted to reflect the disposition of Securities and/or the receipt of a
stock dividend, a stock split or other distribution with respect to such
Securities. The portfolio of each of the Trusts may change slightly based on
such disposition. Securities received in exchange for shares will be similarly
treated. As additional Units are issued by each Trust as a result of the deposit
of Additional Securities, the aggregate value of the Securities in the Trusts
will be increased and the fractional undivided interest in the Trusts
represented by each Unit will be decreased. As of the Date of Deposit, Units in
each of the Trusts represent an undivided interest in the principal and net
income of the Trusts in the ratio of one thousand Units for the indicated
initial aggregate value of Securities in each of the Trusts on the initial Date
of Deposit as is set forth in the Summary of Essential Information (see "The
Trusts--Organization" in Part B) (For the specific number of Units in each of
the Trusts as of the initial Date of Deposit, see "Summary of Essential
Information" for each Trust in this Part A).
The DJIA Strategic Ten. The yield for each security was
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed and dividing the result by the market value of the Security one
business day prior to the initial Date of Deposit. This formula (an objective
determination) served as the basis for the Sponsor's selection of the DJIA
Strategic Ten. The companies represented in the Strategic Ten Trust are some of
the most well-known and highly capitalized companies in America. The Securities
were selected irrespective of any research recommendation by the Sponsor.
Investing in the stocks of the DJIA may be effective as well as
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* A Trust is considered to be "concentrated" in a particular category or
issuer when the Securities in that category or of that issuer
constitute 25% or more of the aggregate face amount of the portfolio.
A-5
370022.2
<PAGE>
conservative because regular dividends are common for established companies and
dividends have accounted for a substantial portion of the total return on stocks
of the DJIA as a group.
Although Equity Strategic Ten Portfolios were not available
until this year, during the last 20 years, the strategy of investing in
approximately equal values of the ten highest yielding stocks each year
generally would have yielded a higher total return than an investment in all 30
stocks which make up the DJIA. The following table shows the hypothetical
performance of investing approximately equal amounts in each of the DJIA
Strategic Ten (but not any QUILTS Equity Strategic Ten Series) at the beginning
of each year and rolling over the proceeds. They do not reflect sales charges,
commissions or taxes. These results represent past performance of the DJIA
Strategic Ten, and should not be considered indicative of future results of the
Trust. The DJIA Strategic Ten underperformed the DJIA in certain years. Also,
investors in the Trust may not realize as high a total return as on a direct
investment in the Strategic Ten since the Trust has sales charges and expenses
and may not be fully invested at all times. Unit prices fluctuate with the value
of the underlying stocks, and there is no assurance that dividends on these
stocks will be paid or that the Units will appreciate in value.
The following table compares the actual performance of the
DJIA and approximately equal values of the DJIA Strategic Ten in each of the
past 20 years, as of December 31 in each of these years:
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370022.2
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<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
DJIA Strategic Ten(1) Dow Jones Industrial Average (DJIA)
----------------------------------------------------------- -----------------------------------------------------------
Year Appreciation(2) Actual Dividend Yield (3) Total Return(4) Appreciation(2) Actual Dividend Yield (3) Total Return(4)
---- -------------- ------------------------- ---------------- --------------- ------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1976 27.80% 7.10% 34.90% 17.86% 4.86% 22.72%
1977 -7.58 5.82 -1.76 -17.27 4.56 -12.71
1978 -6.95 7.04 0.09 -3.15 5.84 2.69
1979 4.58 8.39 12.97 4.19 6.33 10.52
1980 18.69 8.53 27.22 14.93 6.48 21.41
1981 -0.88 8.37 7.49 -9.23 5.83 -3.40
1982 17.81 8.23 26.04 19.60 6.19 25.79
1983 30.52 8.38 38.90 20.30 5.38 25.68
1984 -8.19 13.99 5.80 -3.76 4.82 1.06
1985 22.19 7.23 29.42 27.66 5.12 32.78
1986 23.97 10.82 34.79 22.58 4.33 26.91
1987 0.94 5.13 6.07 2.26 3.76 6.02
1988 15.92 8.72 24.64 11.85 4.10 15.95
1989 18.65 6.60 25.25 26.96 4.75 31.71
1990 -12.61 5.04 -7.57 -4.34 3.77 -0.57
1991 28.11 6.97 35.08 20.32 3.61 23.93
1992 -5.12 12.96 7.84 4.17 3.18 7.35
1993 16.81 10.11 26.92 13.72 3.02 16.74
1994 0.06 4.09 4.15 2.14 2.81 4.95
1995 24.18 12.43 36.61 33.45 3.04 36.49
</TABLE>
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(1) The ten highest-yielding DJIA stocks. The DJIA Strategic Ten any given year
were selected by ranking the dividend yields for each of the stocks in the
DJIA as of the beginning of that year, based upon an annualization of the
last quarterly or semi-annual regular dividend distribution (which would
have been declared in the preceding year) divided by that stock's market
value on the first trading day on the New York Stock Exchange in that year.
(2) Appreciation for the DJIA Strategic Ten is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given year from the market value of those stocks as the
last trading day in that year, and dividing the result by the market value
of the stocks as of the first trading day in that year. Appreciation for the
DJIA is calculated by subtracting the opening value of the DJIA as of the
first trading dy in each year from the closing value of the DJIA as of the
last trading day in that year, and dividing the result by the opening value
of the DJIA as of the first trading day in that year.
(3) Actual Dividend Yield for the DJIA Strategic Ten is calculated by adding the
total dividends received on the stocks in the year and dividing the result
by the market value of the stocks as of the first trading day in that year.
Actual Dividend Yield for the DJIA is calculated by taking the total
dividends credited to the DJIA and dividing the result by the opening value
of the DJIA as of the first trading day in that year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
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The DJIA Strategic Five. The yield for each security was
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed and dividing the result by the market value of the Security one
business day prior to the initial Date of Deposit. This formula (an objective
determination) served as the basis for the Sponsor's selection of the DJIA
Strategic Five. The companies represented in the Trust are some of the most
well-known and highly capitalized companies in America. The Securities were
selected irrespective of any research recommendation by the Sponsor. Investing
in the stocks of the DJIA may be effective as well as conservative because
regular dividends are common for established companies and dividends have
accounted for a substantial portion of the total return on stocks of the DJIA as
a group.
Although Equity Strategic Five Portfolios were not available
until this year, during the last 20 years, the strategy of investing in
approximately equal values of the five lowest priced of the ten highest yielding
stocks each year generally would have yielded a higher total return than an
investment in all 30 stocks which make up the DJIA. The following table shows
the hypothetical performance of investing approximately equal amounts in each of
the DJIA Strategic Five (but not any QUILTS Equity Strategic Five Series) at the
beginning of each year and rolling over the proceeds. They do not reflect sales
charges, commissions or taxes. These results represent past performance of the
DJIA Strategic Five, and should not be considered indicative of future results
of the Trust. The DJIA Strategic Five underperformed the DJIA in certain years.
Also, investors in the Trust may not realize as high a total return as on a
direct investment in the DJIA Strategic Five since the Trust has sales charges
and expenses and may not be fully invested at all times. Unit prices fluctuate
with the value of the underlying stocks, and there is no assurance that
dividends on these stocks will be paid or that the Units will appreciate in
value.
The following table compares the actual performance of the
DJIA and approximately equal values of the DJIA Strategic Five in each of the
past 20 years, as of December 31 in each of these years:
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370022.2
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
DJIA Strategic Five(1) Dow Jones Industrial Average (DJIA)
----------------------------------------------------------- -----------------------------------------------------------
Year Appreciation(2) Actual Dividend Yield (3) Total Return(4) Appreciation(2) Actual Dividend Yield (3) Total Return(4)
---- -------------- ------------------------- ---------------- --------------- ------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1976 33.35% 7.41% 40.76% 17.86% 4.86% 22.72%
1977 -0.39 6.04 5.65 -17.27 4.56 -12.71
1978 -5.39 7.16 1.23 -3.15 5.84 2.69
1979 1.80 8.10 9.90 4.19 6.33 10.52
1980 31.87 8.65 40.52 14.93 6.48 21.41
1981 -4.39 8.02 3.63 -9.23 5.83 -3.40
1982 34.58 7.30 41.88 19.60 6.19 25.79
1983 27.33 8.78 36.11 20.30 5.38 25.68
1984 3.77 7.11 10.88 -3.76 4.82 1.06
1985 30.24 7.60 37.84 27.66 5.12 32.78
1986 24.13 6.18 30.31 22.58 4.33 26.91
1987 6.23 4.83 11.06 2.26 3.76 6.02
1988 10.30 11.54 21.84 11.85 4.10 15.95
1989 13.49 4.35 17.84 26.96 4.75 31.71
1990 -20.60 5.33 -15.27 -4.34 3.77 -0.57
1991 56.41 5.38 61.79 20.32 3.61 23.93
1992 1.91 21.08 22.99 4.17 3.18 7.35
1993 18.02 15.83 33.85 13.72 3.02 16.74
1994 5.04 3.56 8.60 2.14 2.81 4.95
1995 10.70 19.72 30.42 33.45 3.04 36.49
</TABLE>
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(1) The five lowest priced stocks of the ten highest-yielding DJIA stocks. The
DJIA Strategic Five for any given year were selected by ranking the dividend
yields for each of the stocks in the DJIA as of the beginning of that year,
based upon an annualization of the last quarterly or semi-annual regular
dividend distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day on the New
York Stock Exchange in that year.
(2) Appreciation for the DJIA Strategic Five is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given year from the market value of those stocks as the
last trading day in that year, and dividing the result by the market value
of the stocks as of the first trading day in that year. Appreciation for the
DJIA is calculated by subtracting the opening value of the DJIA as of the
first trading dy in each year from the closing value of the DJIA as of the
last trading day in that year, and dividing the result by the opening value
of the DJIA as of the first trading day in that year.
(3) Actual Dividend Yield for the DJIA Strategic Five is calculated by adding
the total dividends received on the stocks in the year and dividing the
result by the market value of the stocks as of the first trading day in that
year. Actual Dividend Yield for the DJIA is calculated by taking the total
dividends credited to the DJIA and dividing the result by the opening value
of the DJIA as of the first trading day in that year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
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RISK FACTORS
An investment in Units of the Trusts should be made with an
understanding of the risks inherent in any investment in the Securities
including, for common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may contribute directly to a decrease
in the value of the Securities and thus in the value of the Units). An
investment in the Strategic Five Trust may subject a Unit Holder to greater
market risk due to the relative lack of diversity in its portfolio, which
contains five stocks, than the Strategic Ten Trust, which contains ten stocks in
its portfolio. The portfolios of the Trusts are fixed and not "managed" by the
Sponsor. All the Securities in the Trust are liquidated during a 30 day period
at the termination of the approximately one-year life of each of the Trusts.
Since the Trusts will not sell Securities in response to ordinary market
fluctuation, but only at the Trusts' termination or to meet redemptions, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trusts. In addition,
the Strategic Ten Trust is considered to be "concentrated" in stocks of
companies deriving a substantial portion of their income from the petroleum
refining industry. Investment in this industry may pose additional risks
including the volatility of oil prices, the impact of oil cartels, political
uncertainty in the Middle East and increasing costs associated with
environmental damage caused by oil companies and compliance with environmental
regulations and legislation.
In connection with the deposit of Additional Securities subsequent to
the initial Date of Deposit, if cash (or a letter of credit in lieu of cash) is
deposited with instructions to purchase Securities, to the extent the price of a
Security increases or decreases between the deposit and the time the Security is
purchased, Units may represent less or more of that Security and more or less of
the other Securities in such Trust. In addition, brokerage fees incurred in
purchasing Securities with cash deposited with instructions to purchase the
Securities will be an expense of the Trusts. Price fluctuations during the
period from the time of deposit to the time the Securities are purchased, and
payment of brokerage fees, will affect the value of every Unit Holder's Units
and the income per Unit received by a Trust.
The Sponsor cannot give any assurance that the business and investment
objectives of the issuers of the Securities will correspond with or in any way
meet the limited term objective of the Trusts. (See "Risk Factors" in Part B of
this Prospectus).
PUBLIC OFFERING PRICE
The Public Offering Price of each Unit of the Trusts is equal to the
aggregate offering price of the Securities in each Trust divided by the number
of Units of each Trust outstanding, plus a sales charge of (a) 2.90% of the
Public Offering Price or 2.987% of the net amount invested in Securities per
1,000 Units of the Strategic Ten Trust and (b) 2.75% of the Public Offering
Price or 2.828% of the net amount invested in Securities per 1,000 Units of the
Strategic Five Trust (see "Summary of Essential Information"). Any cash held by
the Trusts will be added to the Public Offering Price. For additional
information regarding the Public Offering Price, the description of dividend and
principal distributions, repurchase and redemption of Units and other essential
information regarding the Trusts, see the "Summary of Essential Information" for
each Trust in this Part A. During the initial offering period orders involving
at least 25,000 Units or $25,000 will be entitled to a volume discount from the
Public Offering Price. The Public Offering Price per Unit may vary on a daily
basis in accordance with fluctuations in the aggregate value of the underlying
Securities. (See "Public Offering" in Part B.) The price of a single Unit, or
any multiple thereof, is calculated by dividing the Public Offering Price per
1,000 Units by 1,000 and multiplying by the number of Units. If the Units of
each of the Trusts had been available for sale on May 29, 1996, the Public
Offering Price per 1,000 Units would have been $1,000.00.
A-10
370022.2
<PAGE>
DISTRIBUTIONS
Distributions of dividends received, less expenses, will be made by
each of the Trusts on the Distribution Dates to all Unit Holders of record on
the corresponding Record Dates. (See "Rights of Unit Holders -- Distributions"
in Part B. For the specific dates representing the Distribution Dates and the
Record Dates, see "Summary of Essential Information" for each Trust in Part A.)
The final distribution will be made within a reasonable time after the
termination of the Trusts. Unit Holders may elect to automatically reinvest
distributions (other than the final distribution in connection with the
termination of the Trusts), into additional Units of a Trust, which will not be
subject to a sales charge. See "Rights of Unit Holders - Reinvestment" in Part
B.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, intends to maintain a
secondary market for the Units of the Trusts after the initial public offering
has been completed. The secondary market repurchase price will be based on the
market value of the Securities in the portfolio of each of the Trusts. (See
"Liquidity -- Sponsor Repurchase" for a description on how the secondary market
repurchase price will be determined.) If a market is not maintained a Unit
Holder will be able to redeem his or her Units with the Trustee (see Liquidity
- -- Trustee Redemption" in Part B). As a result, the existence of a liquid
trading market for these Securities may depend on whether dealers will make a
market in these Securities. There can be no assurance of the making or the
maintenance of a market for any of the Securities contained in the portfolio of
each of the Trusts or of the liquidity of the Securities in any markets made. In
addition, the Trusts may be restricted under the Investment Company Act of 1940
from selling Securities to the Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Units will be adversely affected
if trading markets for the Securities are limited or absent.
TERMINATION
During the 30 day period prior to the Mandatory Termination Date (the
"Liquidation Period"), Securities will begin to be sold in connection with the
termination of the Trusts and all Securities will be sold or distributed by the
Mandatory Termination Date. The Trustee may utilize the services of the Sponsor
for the sale of all or a portion of the Securities in the Trust. The Sponsor may
receive brokerage commissions from the Trusts in connection with such sales in
accordance with applicable law. The Sponsor will determine the manner, timing
and execution of the sales of the underlying Securities. Unit Holders may elect
one of the three options in receiving their terminating distributions. Unit
Holders may elect: (1) to receive their pro rata share of the underlying
Securities in kind, if they own at least 25,000 Units, (2) to receive cash upon
the liquidation of their pro rata share of the underlying Securities, or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of each
of the Trusts (if one is offered) at a reduced sales charge. See "Trust
Administration--Trust Termination" in Part B for a description of how to select
a termination distribution option.
The Sponsor will attempt to sell the Securities as quickly as it can
during the Liquidation Period without, in its judgment, materially adversely
affecting the market price of the Securities, but all of the Securities will in
any event be disposed of by the end of the Liquidation Period. The Sponsor does
not anticipate that the period will be longer than 30 days, and it could be as
short as one day, depending on the liquidity of the Securities being sold. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
It is expected (but not required) that the Sponsor will generally
follow the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsor will generally sell Securities on the first
A-11
370022.2
<PAGE>
day of the Liquidation Period; for less liquid Securities, on each of the first
two days of the Liquidation Period, the Sponsor will generally sell any amount
of any underlying Securities at a price no less than 1/2 of one point under the
last closing sale price of those Securities. On each of the following two days,
the price limit will increase to one point under the last closing sale price.
After four days, the Sponsor intends to sell at least a fraction of the
remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that day)
in the Liquidation Period, without any price restrictions.
During the Liquidation Period, Unit Holders who have not chosen to
receive distributions-in-kind will be at risk to the extent that Securities are
not sold; for this reason the Sponsor will be inclined to sell the Securities in
as short a period as they can without materially adversely affecting the price
of the Securities. Unit Holders should consult their own tax advisers in this
regard.
A-12
370022.2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of
Qualified Unit Investment Liquid Trust Series ("QUILTS")
Equity Strategic Ten, Series 2 and
Equity Strategic Five, Series 2
We have audited the accompanying Statements of Condition and Portfolios
of Qualified Unit Investment Liquid Trust Series ("QUILTS"), Equity Strategic
Ten, Series 2 and Equity Strategic Five, Series 2 as of May 29, 1996. These
statements are the responsibility of the Sponsor. Our responsibility is to
express an opinion on the Statements of Condition and Portfolios based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statements of Condition and Portfolios
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statements of Condition
and Portfolios. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. The irrevocable letters of credit deposited in
connection with the securities owned as of May 29, 1996, pursuant to contracts
to purchase, as shown in the Statements of Condition and Portfolios, were
confirmed to us by The Chase Manhattan Bank (National Association), the Trustee.
In our opinion, the accompanying Statements of Condition and Portfolios
present fairly, in all material respects, the financial position of Equity
Strategic Ten, Series 2 and Equity Strategic Five, Series 2 as of May 29, 1996
in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
May 29, 1996
A-13
370022.2
<PAGE>
QUILTS
STATEMENTS OF CONDITION
AS OF DATE OF DEPOSIT, MAY 29, 1996
TRUST PROPERTY
<TABLE>
<CAPTION>
EQUITY EQUITY
STRATEGIC STRATEGIC
TEN, FIVE,
SERIES 2 SERIES 2
--------- --------
<S> <C> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of........................... $ 144,739 $ 144,906
Organizational Costs(2)................................................. 14,900 14,900
--------------- ----------------
Total................................................................... $ 159,639 $ 159,806
=============== ================
INTEREST OF UNIT HOLDERS
Liabilities:
Accrued Liability(2).................................................... $ 14,900 $ 14,900
Interest of Unit Holders-- Units of Fractional
Undivided Interest Outstanding
Cost to Unit Holders(3)............................................. $ 149,062 $ 149,003
Less-Gross Underwriting Commissions(4).............................. 4,323 4,097
--------------- ----------------
Net Amount Applicable to Unit Holders............................... 144,739 144,906
--------------- ----------------
Total............................................................... $ 159,639 $ 159,806
=============== ================
</TABLE>
(1) Aggregate cost to the Trusts of the Securities listed in the Portfolio
is determined by the Trustee on the basis set forth under "Public
Offering--Offering Price" as of 4:00 p.m. on May 29, 1996. Irrevocable
letters of credit issued by Credit Lyonnais in an amount in excess of
$289,645 have been deposited with the Trustee to cover the purchase of
the Securities pursuant to contracts to purchase such Securities.
(2) Organizational costs incurred by the Trusts have been deferred and will
be amortized over the life of each of the Trusts. The Trusts will
reimburse the Sponsor for actual organizational costs incurred.
(3) Aggregate public offering price computed on 149,062 Units of Equity
Strategic Ten, Series 2 and on 149,003 Units of Equity Strategic Five,
Series 2 on the basis set forth under "Public Offering--Offering Price"
in Part B.
(4) Sales charge of 2.90% computed on 149,062 Units of Equity Strategic Ten,
Series 2 and 2.75% computed on 149,003 Units of Equity Strategic Five,
Series 2 on the basis set forth under "Public Offering Price" in Part B.
A-14
370022.2
<PAGE>
QUILTS
Equity Strategic Ten, Series 2
PORTFOLIO
AS OF MAY 29, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Portfolio Number of Name of Issuer of Value Securities
No. Shares and Ticker Symbol (2) Trust (1) Per Share to Trust (3)
- ----------- --------- --------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1 243 Chevron Corporation - 10.01% $59.625 $14,489
CHV
2 179 E.I. du Pont De Nemours & 10.03 81.125 14,521
Company - DD
3 169 Exxon Corporation - XON 9.97 85.375 14,428
4 176 General Electric Company - 10.00 82.250 14,476
GE
5 262 General Motors 10.00 55.250 14,476
Corporation - GM
6 360 International Paper 10.01 40.250 14,490
Company - IP
7 165 J.P. Morgan & Company, 9.99 87.625 14,458
Inc. - JPM
8 210 Minnesota Mining & 10.01 69.000 14,490
Manufacturing Company -
MMM
9 143 Philip Morris Companies, 9.99 101.125 14,461
Inc. - MO
10 171 Texaco, Inc. - TX 9.99 84.500 14,450
--------- --------
Total 100.00% $144,739
========= ========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Ten Trust.
(2) Forward contracts to purchase the Securities were entered into on May 29,
1996. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be June 4, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
Additional information regarding the Strategic Ten Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
-------------- ---------------------
$144,780 ($41)
A-15
370022.2
<PAGE>
QUILTS
Equity Strategic Five, Series 2
PORTFOLIO
AS OF MAY 29, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Portfolio Number of Name of Issuer (2) of Value Securities
No. Shares and Ticker Symbol Trust (1) Per Share to Trust (3)
--- -------- ----------------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
1 486 Chevron Corporation - CHV 20.00% $59.625 $28,978
2 357 E.I. duPont De Nemours & 19.99 81.125 28,962
Company - DD(4)
3 525 General Motors Corporation - GM 20.01 55.250 29,006
4 720 International Paper Company - IP 20.00 40.250 28,980
5 420 Minnesota Mining & 20.00 69.000 28,980
Manufacturing Company - MMM
============== ============
Total 100.00% $144,906
============== ============
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Five Trust.
(2) Forward contracts to purchase the Securities were entered into on May 29,
1996. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be June 4, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
(4) On the business day prior to the initial date of deposit the stock of E.I.
duPont De Nemours & Company and another company both had per share stock
prices which were the fifth lowest of the DJIA Strategic Ten. In the event
of companies with identical pricing under these circumstances, the stock
of the company with the higher dividend yield is selected for inclusion in
the Strategic Five Trust.
Additional information regarding the Strategic Five Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
-------------- ---------------------
$144,956 ($50)
UNDERWRITING
OCC Distributors, World Financial Center, 200 Liberty Street,
New York, NY 10281 will act as Underwriter for all of the Units of the Trusts.
The Underwriter will distribute the Units through various broker-dealers, banks
and/or other eligible participants (see "Public Offering - Distribution of
Units" in Part B).
370022.2
<PAGE>
PROSPECTUS PART B
Part B of this Prospectus may not be Distributed unless Accompanied by Part A
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
EQUITY STRATEGIC TEN, SERIES 2
EQUITY STRATEGIC FIVE, SERIES 2
THE TRUSTS
Organization. "QUILTS" is comprised of two separate "unit
investment trusts" designated as set forth above in Part A. The Trusts were
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement (the "Trust Agreement") dated the Date of Deposit between OCC
Distributors, as Sponsor, and The Chase Manhattan Bank (National Association),
as Trustee.
The Portfolio of the Strategic Ten Trust contains the ten (10)
common stocks in the Dow Jones Industrial Average ("DJIA") (which is not
affiliated with the Sponsor) having the highest dividend yield on the business
day prior to the initial Date of Deposit (the "DJIA Strategic Ten"). The
Portfolio of the Strategic Five Trust contains the five (5) common stocks in the
DJIA having the lowest per share stock price of the ten companies in the DJIA
having the highest dividend yield on the business day prior to the initial Date
of Deposit (the "DJIA Strategic Five"). As used herein, the term "highest
dividend yield" means the yield for each Security calculated by annualizing the
last quarterly or semi-annual ordinary dividend distributed on that Security and
dividing the result by the market value of that Security on the business day
prior to the initial Date of Deposit. This rate is historical, and there is no
assurance that any dividends will be declared or paid in the future on the
Securities in the Trusts. As used herein, the term "Securities" means the common
stocks initially deposited in each of the Trusts and described under the
Portfolios and any additional common stocks acquired and held by a Trust
pursuant to the provisions of the Indenture.
On the initial Date of Deposit, the Sponsor deposited with the
Trustee the Securities with an aggregate value as set forth in Part A and cash
or an irrevocable letter of credit issued by a major commercial bank in the
amount required for such purchases. Thereafter the Trustee, in exchange for the
Securities so deposited, delivered to the Sponsor the Certificates evidencing
the ownership of all Units of the Trusts. The Sponsor may also, in certain
circumstances, direct the Trustee to dispose of certain Securities if the
Sponsor believes that, because of market or credit conditions, or for certain
other reasons, retention of the Security would be detrimental to Unit Holders.
(See "Trust Administration--Portfolio Supervision.")
As of the day prior to the initial Date of Deposit, a "Unit"
represents an undivided interest or pro rata share in the Securities of a Trust
in the ratio of one thousand Units for the indicated amount of the aggregate
market value of the Securities initially deposited in that Trust as is set forth
in the "Summary of Essential Information" for each of the Trusts. To the extent
that any Units are redeemed by the Trustee, the fractional undivided interest or
pro rata share in such Trust represented by each unredeemed Unit will increase,
although the actual interest in the Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unit Holders, which may include the Sponsor, or until the
termination of the Trust Agreement.
With the deposit of the Securities in the Trusts on the
initial Date of Deposit, the Sponsor established a proportionate relationship
among the initial aggregate value of specified Securities
370022.2
<PAGE>
in each of the Trusts. During the 90 days subsequent to the initial Date of
Deposit, the Sponsor may deposit additional Securities in the Trusts that are
substantially similar to the Securities already deposited in each of the Trusts
("Additional Securities"), contracts to purchase Additional Securities or cash
(or a bank letter of credit in lieu of cash) with instructions to purchase
Additional Securities, in order to create additional Units, maintaining to the
extent practicable the original proportionate relationship of the number of
shares of each Security in the portfolio of each of the Trusts on the initial
Date of Deposit. These additional Units will each represent, to the extent
practicable, an undivided interest in the same number and type of securities of
identical issuers as are represented by Units issued on the initial Date of
Deposit. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices, or
unavailability of Securities. The number and identity of Securities in the
Trusts will be adjusted to reflect the disposition of Securities and/or the
receipt of a stock dividend, a stock split or other distribution with respect to
shares. Securities received in exchange for shares will be similarly treated.
The portfolio of each of the Trusts may change slightly based on such
transaction. Units may be continuously offered to the public by means of this
Prospectus (see "Public Offering--Distribution of Units") resulting in a
potential increase in the number of Units outstanding. As additional Units are
issued by the Trusts as a result of the deposit of Additional Securities, the
aggregate value of the Securities in each of the Trusts will be increased and
the fractional undivided interest in each of the Trusts represented by each Unit
will be decreased.
Objectives. The objective of each of the Trusts is to maximize
total return through capital appreciation and current dividend income. The
Strategic Ten Trust will invest for one year in approximately equal values of
the ten (10) common stocks in the DJIA having the highest dividend yield one
business day prior to the initial Date of Deposit. The Strategic Five Trust will
invest for one year in approximately equal values of the five (5) common stocks
in the DJIA having the lowest per share stock price of the ten companies in the
DJIA having the highest dividend yield one business day prior to the initial
Date of Deposit. Investing in DJIA stocks with the highest dividend yields may
be effective in achieving the Trusts' investment objective because regular
dividends are common for established companies and dividends have accounted for
a substantial portion of the total return on DJIA stocks as a group. Further,
the Securities may appreciate or depreciate in value, dependent upon the full
range of economic and market influences affecting corporate profitability, the
financial condition of issuers and the prices of equity securities in general
and the Securities in particular. Investors should note that each Trust's
selection criteria were applied to the Securities one business day prior to the
initial Date of Deposit. Since the Sponsor may deposit additional Securities in
connection with the sale of additional Units, the yields on these Securities may
change subsequent to the initial Date of Deposit. Therefore, there is no
guarantee that the objective of either of the Trusts will be achieved.
The DJIA Strategic Ten. The Strategic Ten Trust is a fixed
diversified portfolio of the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield one business day prior to the initial
Date of Deposit. The Strategic Ten Trust seeks a higher total return than the
DJIA by acquiring these ten established, widely held stocks one business day
before the Strategic Ten Trust is created, and holding them for approximately
one year. There can be no assurance that the dividend rates will be maintained.
Reduction or elimination of a dividend could adversely affect the stock price as
well. Purchasing a portfolio of these stocks as opposed to one or two can
achieve a more diversified holding. There is only one investment decision
instead of ten. An investment in the Strategic Ten Trust can be cost-efficient,
avoiding the odd-lot costs of buying small quantities of securities directly.
Investment in a number of companies with high dividends relative to their stock
prices (usually because their stock prices are depressed) is designed to
increase the Strategic Ten Trust's potential for higher returns. The Strategic
Ten Trust's return will consist of a combination of capital appreciation and
current dividend income. The Strategic Ten Trust will terminate in approximately
one year, when investors may choose to either receive the distribution in kind
(if they
B-2
370022.2
<PAGE>
own at least 25,000 Units) in cash or reinvest in the next QUILTS Equity
Strategic Ten Series (if available) at a reduced sales charge.
The DJIA Strategic Five. The Strategic Five Trust is a fixed
diversified portfolio of the five common stocks in the Dow Jones Industrial
Average having the lowest per share stock price of the ten companies in the DJIA
having the highest dividend yield one business day prior to the initial Date of
Deposit. The Strategic Five Trust seeks a higher total return than the DJIA by
acquiring these five established, widely held stocks one business day before the
Strategic Five Trust is created, and holding them for approximately one year.
There can be no assurance that the dividend rates will be maintained. Reduction
or elimination of a dividend could adversely affect the stock price as well.
Purchasing a portfolio of these stocks as opposed to one or two can achieve a
more diversified holding. There is only one investment decision instead of five.
An investment in the Strategic Five Trust can be cost-efficient, avoiding the
odd-lot costs of buying small quantities of securities directly. Investment in a
number of companies with high dividends relative to their stock prices (usually
because their stock prices are depressed) is designed to increase the Strategic
Five Trust's potential for higher returns. The Strategic Five Trust's return
will consist of a combination of capital appreciation and current dividend
income. The Strategic Five Trust will terminate in approximately one year, when
investors may choose to either receive the distribution in kind (if they own at
least 25,000 Units) in cash or reinvest in the next QUILTS Equity Strategic Five
Series (if available) at a reduced sales charge.
The Dow Jones Industrial Average. Each of the Securities has
been taken from the DJIA. The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the broad market and of
American industry. The companies are major factors in their industries and their
stocks are widely held by individuals and institutional investors. Changes in
the components of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely. Most
substitutions have been the result of mergers, but from time to time, changes
may be made to achieve a better representation. The components of the DJIA may
be changed at any time for any reason. Any changes in the components of the DJIA
after the date of this Prospectus will not cause a change in the identity of the
common stocks included in the Trusts Portfolios, including any additional
Securities deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in The
Wall Street Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks
on October 1, 1928. Taking into account a number of name changes, 9 of the
original companies are still in the DJIA today. For two periods of 17
consecutive years each, there were no changes to the list: March 14, 1939 - July
1956 and June 1, 1959 - August 6, 1976.
<TABLE>
<CAPTION>
List as of October 1, 1928 Current List
- -------------------------- ------------
<S> <C>
Allied Chemical AT&T Corporation
American Can Allied Signal
American Smelting Aluminum Company of America
American Sugar American Express Company
American Tobacco Bethlehem Steel Corporation
Atlantic Refining Boeing Company
Bethlehem Steel Corporation Caterpillar Inc.
Chrysler Corporation Chevron Corporation
General Electric Company Coca-Cola Company
General Motors Corporation Walt Disney Company
General Railway Signal E.I. du Pont de Nemours & Company
Goodrich Eastman Kodak Company
International Harvester Exxon Corporation
</TABLE>
B-3
370022.2
<PAGE>
<TABLE>
<S> <C>
International Nickel General Electric Company
Mack Trucks General Motors Corporation
Nash Motors Goodyear Tire & Rubber Company
North American International Business Machines Corporation
Paramount Publix International Paper Company
Postum, Inc. McDonald's Corporation
Radio Corporation of America (RCA) Merck & Company, Inc.
Sears, Roebuck & Company Minnesota Mining & Manufacturing Company
Standard Oil of New Jersey J.P. Morgan & Company, Inc.
Texas Corporation Phillip Morris Companies, Inc.
Texas Gulf Sulphur Proctor & Gamble Company
Union Carbide Corporation Sears, Roebuck & Company
United States Steel Company Texaco, Inc.
Victor Talking Machine Union Carbide Corporation
Westinghouse Electric Corporation United Technologies Corporation
Woolworth Corporation Westinghouse Electric Corporation
Wright Aeronautical Woolworth Corporation
</TABLE>
Portfolio. The Trusts consist of those Securities listed in
the "Portfolio" for each Trust in Part A (or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts) and Additional Securities deposited upon the
creation of additional Units as set forth above and Substitute Securities
acquired by a Trust as long as such Securities may continue to be held from time
to time in the Trust together with uninvested cash realized from the disposition
of Securities. Because certain of the Securities from time to time may be sold
under certain circumstances, as described (see "Trust Administration"), no
assurance can be given that the Trusts will retain for any length of time their
present size and composition. The Trustee has not participated and will not
participate in the selection of Securities for the Trusts, and neither the
Sponsor nor the Trustee will be liable in any way for any default, failure or
defect in any Securities.
All of the Securities are publicly traded on the New York
Stock Exchange. The contracts to purchase Securities deposited initially in the
Trusts are expected to settle in three business days, in the ordinary manner for
such Securities. Settlement of the contracts for Securities is thus expected to
take place prior to the settlement of purchase of Units on the initial Date of
Deposit.
RISK FACTORS
Fixed Portfolio. The value of the Units will fluctuate
depending on all the factors that have an impact on the economy and the equity
markets. These factors similarly impact on the value of a Portfolio Security's
issuer and the ability of such an issuer to distribute dividends. The Trusts are
not a "managed registered investment company" and Securities will not be sold by
the Trustee as a result of ordinary market fluctuations. Unlike a managed
investment company in which there may be frequent changes in the portfolio of
securities based upon economic, financial and market analyses, securities of a
unit investment trust, such as the Trusts, are not subject to such frequent
changes based upon continuous analysis. However, the Sponsor may direct the
disposition by the Trustee of Securities upon the occurrence of certain events.
(See "Trust Administration--Portfolio Supervision" below.) Potential investors
also should be aware that the Sponsor may change its views as to the investment
merits of any of the Securities during the life of the Trusts and therefore
should consult their own financial advisers with regard to a purchase of Units.
In addition, investors should be aware that the Sponsor, and its affiliates,
currently act and will continue to act as investment adviser for managed
investment companies and managed private accounts that may have similar or
different investment objectives from the Trusts. Some of the Securities in the
Trusts may also be owned by these other
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clients of the Sponsor and its affiliates. However, because these clients have
"managed" portfolios and may have differing investment objectives, the Sponsor
may sell certain Securities from those accounts in instances where a sale by the
Trust would be impermissible, such as to maximize return by taking advantage of
market fluctuation. Investors should consult with their own financial advisers
prior to investing in either of the Trusts to determine its suitability. (See
"Trust Administration--Portfolio Supervision.") All the Securities in each of
the Trusts are liquidated or distributed during a 30-day period at the
termination of the approximately one-year life of the Trusts. Since the Trusts
will not sell Securities in response to ordinary market fluctuation, but only at
the termination of the Trusts or upon the occurrence of certain events, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trusts.
Additional Securities. Investors should be aware that in
connection with the creation of additional Units subsequent to the initial Date
of Deposit, the Sponsor may deposit Additional Securities, contracts to purchase
Additional Securities or cash (or letter of credit in lieu of cash) with
instructions to purchase Additional Securities, in each instance maintaining the
original proportionate relationship, subject to adjustment under certain
circumstances, of the numbers of shares of each Security in each of the Trusts.
To the extent the price of a Security increases or decreases between the time
cash is deposited with instructions to purchase the Security at the time the
cash is used to purchase the Security, Units may represent less or more of that
Security and more or less of the other Securities in the Trusts. In addition,
brokerage fees (if any) incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Trusts.
Price fluctuations between the time of deposit and the time the Securities are
purchased, and payment of brokerage fees, will affect the value of every Unit
Holder's Units and the Income per Unit received by the Trusts. In particular,
Unit Holders who purchase Units during the initial offering period would
experience a dilution of their investment as a result of any brokerage fees paid
by the Trusts during subsequent deposits of Additional Securities purchased with
cash deposited. In order to minimize these effects, the Trusts will try to
purchase Securities as near as possible to the Evaluation Time or at prices as
close as possible to the prices used to evaluate Trust Units at the Evaluation
Time.
Common Stock. Since the Trusts contain common stocks of
domestic issuers, an investment in Units of either of the Trusts should be made
with an understanding of the risks inherent in any investment in common stocks
including the risk that the financial condition of the issuers of the Securities
may become impaired or that the general condition of the stock market may worsen
(both of which may contribute directly to a decrease in the value of the
Securities and thus in the value of the Units). Additional risks include risks
associated with the right to receive payments from the issuer which is generally
inferior to the rights of creditors of, or holders of debt obligations or
preferred stock issued by, the issuer. Holders of common stocks have a right to
receive dividends only when, if, and in the amounts declared by the issuer's
board of directors and to participate in amounts available for distribution by
the issuer only after all other claims on the issuer have been paid or provided
for. By contrast, holders of preferred stocks usually have the right to receive
dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis. Dividends on cumulative preferred
stock must be paid before any dividends are paid on common stock and any
cumulative preferred stock dividend which has been omitted is added to future
dividends payable to the holders of such cumulative preferred stock. Preferred
stocks are also usually entitled to rights on liquidation which are senior to
those of common stocks. For these reasons, preferred stocks generally entail
less risk than common stocks.
Moreover, common stocks do not represent an obligation of the
issuer and therefore do not offer any assurance of income or provide the degree
of protection of debt securities. The issuance of debt securities or even
preferred stock by an issuer will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and inclination
of the issuer to declare or pay dividends on its common stock or the economic
interest of holders of common stock
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with respect to assets of the issuer upon liquidation or bankruptcy. Further,
unlike debt securities which typically have a stated principal amount payable at
maturity (which value will be subject to market fluctuations prior thereto),
common stocks have neither a fixed principal amount nor a maturity and have
values which are subject to market fluctuations for as long as the common stocks
remain outstanding. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases in value as market
confidence in and perceptions of the issuers change. These perceptions are based
on unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
The value of the common stocks in the Trusts thus may be expected to fluctuate
over the life of the Trusts to values higher or lower than those prevailing on
the initial Date of Deposit.
Petroleum Refining Companies. The Portfolio of the Strategic
Ten Trust may be considered to be concentrated in common stocks of companies
engaged in refining and marketing oil and related products. According to the
U.S. Department of Commerce, the factors which will most likely shape the
industry to 1996 and beyond include the price and availability of oil from the
Middle East, changes in United States environmental policies and the continued
decline in U.S. production of crude oil. Possible effects of these factors may
be increased U.S. and world dependence on oil from the Organization of Petroleum
Exporting Countries ("OPEC") and highly uncertain and potentially more volatile
oil prices and a higher rate of growth for natural gas production than for other
fuels. Factors which the Sponsor believes may increase the profitability of oil
and petroleum operations include increasing demand for oil and petroleum
products as a result of the continued increases in annual miles driven and the
improvement in refinery operating margins caused by increases in average
domestic refinery utilization rates. The existence of surplus crude oil
production capacity and the willingness to adjust production levels are the two
principal requirements for stable crude oil markets. Without excess capacity,
supply disruptions in some countries cannot be compensated for by others.
Surplus capacity in Saudi Arabia and a few other countries and the utilization
of that capacity during the Persian Gulf crisis prevented severe market
disruption. Although unused capacity can contribute to market stability, it
ordinarily creates pressure to overproduce and contributes to market
uncertainty. The likely restoration of a large portion of Kuwait and Iraq's
production and export capacity over the next few years could lead to such a
development in the absence of substantial growth in world oil demand. Formerly,
OPEC members attempted to exercise control over production levels in each
country through a system of mandatory production quotas. As a result of the
crisis in the Middle East, the mandatory system has since been replaced with a
voluntary system. Production under the new system has had to be curtailed on at
least one occasions as a result of weak prices, even in the absence of supplies
from Iraq. The pressure to deviate from mandatory quotas, if they are reimposed,
is likely to be substantial and could lead to a weakening of prices. In the
longer term, additional capacity and production will be required to accommodate
the expected increases in world oil demand and to compensate for expected sharp
drops in U.S. crude oil production and exports from the former Soviet Union.
Only a few OPEC countries, particularly Saudi Arabia, have the petroleum
reserves that will allow the required increase in production capacity to be
attained. Given the large-scale financing that is required, the prospect that
such expansion will occur soon enough to meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to
increased dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to environmental
concerns will also pose serious challenges to the industry over the coming
decade. Refiners are likely to be required to make heavy capital investments and
make major production adjustments in order to comply with increasingly stringent
environmental legislation, such as the 1990 amendments to the Clean Air Act. If
the cost of these changes is substantial enough to cut deeply into profit,
smaller refiners may be forced out of the industry entirely. Moreover, lower
consumer demand due to increases in energy efficiency and conservation, due to
gasoline reformulations that call for less
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crude oil, due to warmer winters or due to a general slowdown in economic growth
in this country and abroad, could negatively affect the price of oil and the
profitability of oil companies. Cheaper oil could also decrease demand for
natural gas. However, no assurance can be given that the demand for or the price
of oil will increase or that if either anticipated increase does take place, it
will not be marked by great volatility.
In addition, any future scientific advances concerning new
sources of energy and fuels or legislative changes relating to the energy
industry or the environment could have a negative impact on the petroleum
product or natural gas industry. While legislation has been enacted to
deregulate certain aspects of the oil industry, no assurances can be given that
new or additional regulations will not be adopted. Each of the problems referred
to could adversely affect the financial stability of the issuers of any
petroleum industry stocks in the Trusts.
Legislation. From time to time Congress considers proposals to
reduce the rate of the dividends-received deductions. Enactment into law of a
proposal to reduce the rate would adversely affect the after-tax return to
investors who can take advantage of the deduction. Unit Holders are urged to
consult their own tax advisers. Further, at any time after the Initial Date of
Deposit, legislation may be enacted, with respect to the Securities in the
Trusts or the issuers of the Securities. Changing approaches to regulation,
particularly with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in the
Trusts. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on the Trusts or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
PUBLIC OFFERING
Offering Price. The Public Offering Price per 1,000 Units of
each of the Trusts is equal to the aggregate value of the underlying Securities
(the price at which they could be directly purchased by the public assuming they
were available) in each Trust divided by the number of Units outstanding for
that Trust times 1,000 plus a sales charge of (a) 2.90% of the Public Offering
Price or 2.987% of the net amount invested in Securities per 1,000 Units of the
Strategic Ten Trust and (b) 2.75% of the Public Offering Price or 2.828% of the
net amount invested in Securities per 1,000 Units of the Strategic Five Trust.
In addition, the net amount invested in Securities will involve a proportionate
share of amounts in the Income Account and Principal Account, if any. The Public
Offering Price can vary on a daily basis from the amount stated in this
Prospectus in accordance with fluctuations in the market value of the Securities
and the price to be paid by each investor will be computed as of the date the
Units are purchased.
The aggregate value of the Securities is determined in good
faith by the Trustee on each "Business Day" as defined in the Indenture in the
following manner: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange
as of the Evaluation Time (unless the Trustee deems these prices inappropriate
as a basis for valuation). If the Trustee deems these prices inappropriate as a
basis for evaluation, then the Trustee may utilize, at the Trusts' expense, an
independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices for comparable securities, (b) by appraising the value of
the Securities on the bid side of the market or by such other appraisal deemed
appropriate by the Trustee, or (c) by any combination of the above, each as of
the Evaluation Time.
Volume and Other Discounts. Units of the Trusts are available
to Unit Holders at a volume discount ("Volume Discount") from the Public
Offering Price during the initial public offering.
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Volume Discount will result in a reduction of the sales charge applicable to
such purchases. Furthermore, Volume Discount applies to the cumulative Units
purchased by a Unit Holder during a period of 60 days from the initial date of
sale of the Units to such Unit Holder. Units purchased by the same purchasers in
separate transactions during the 60-day period will be aggregated for purposes
of determining if such purchaser is entitled to a Volume Discount provided that
such purchaser must own at least the lesser of either (i) the required number of
Units, or (ii) the required dollar amount at the Public Offering Price, at the
time such determination is made. Units held in the name of the spouse of the
purchaser or in the name of a child of the purchaser under 21 years of age are
deemed for the purposes hereof to be registered in the name of the purchaser.
Volume Discount is also applicable to a trustee or other fiduciary purchasing
securities for a single trust estate or single fiduciary account. As a result of
such discounts, units are sold to dealers/agents at prices which represent a
concession as reflected below. The Sponsor reserves the right to change these
discounts from time to time. The amount of Volume Discount, the approximate
sales charge and the dealer concession applicable to such purchases are as
follows:
<TABLE>
<CAPTION>
Volume Discount
from Public Approximate Approximate
Number of Units Sales Offering per Reduced Dealer/Agent
or Dollar Amounts Charge Unit Sales Charge Concession
----------------- ------ ---------------- ------------ -----------
<S> <C> <C> <C> <C>
Strategic Ten Trust
Less than 25,000 2.90% 0% 2.90% 2.00%
25,000 but less than 50,000 2.90% .05% 2.85% 2.00%
50,000 but less than 100,000 2.90% .30% 2.60% 1.75%
100,000 but less than 250,000 2.90% .65% 2.25% 1.45%
250,000 and above* 2.90% .90% 2.00% 1.25%
Strategic Five Trust
Less than 25,000 2.75% 0% 2.75% 1.80%
25,000 but less than 50,000 2.75% .05% 2.70% 1.80%
50,000 but less than 100,000 2.75% .25% 2.50% 1.65%
100,000 but less than 250,000 2.75% .60% 2.15% 1.35%
250,000 and above* 2.75% .80% 1.95% 1.15%
</TABLE>
Units may be purchased in the primary or secondary market at
the Public Offering Price (for purchases which do not qualify for a volume
discount) less the concession the Sponsor typically allows to brokers and
dealers for purchases (see "Public Offering-Distribution of Units") by investors
who purchase Units through registered investment advisers, certified financial
planners and registered broker-dealers who in each case either charge periodic
fees for financial planning, investment advisory or asset management service, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed.
Net Asset Value Purchases. No sales charge will be applied to
the following transactions: purchases by persons who for at least 90 days have
been directors, trustees, officers or full-time employees of any of (i) the
funds distributed by OCC Distributors, (ii) Op Cap Advisors and (iii) OCC
Distributors, or their affiliates, their immediate relatives or any trust,
pension, profit sharing or other benefit plan for any of them; purchases by any
account advised by Oppenheimer Capital, the parent of Op Cap Advisors; and
purchases by an employee of a broker-dealer having a dealer or servicing
agreement with OCC Distributors and/or a participating member of the Oppenheimer
Capital brokered CD selling group or of a bank or financial intermediary
currently offering QUILTS to its customers.
- --------
* For any transactions of 250,000 Units or more or over $250,000, the
Sponsor intends to negotiate the applicable sales charge and such charge
will be disclosed to any such purchaser.
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Distribution of Units. During the initial offering period (i)
Units issued on the initial Date of Deposit and (ii) Additional Units issued
after such date in respect of additional deposits of Securities, will be
distributed by the Sponsor and dealers at the Public Offering Price. The initial
offering period in each case is thirty days unless extended by the Sponsor for
Units specified in (i) and (ii) in the preceding sentence. In addition, Units
may be distributed through dealers who are members of the National Association
of Securities Dealers, Inc. or other financial intermediaries as permitted by
law. Certain banks and thrifts will make Units of the Trusts available to their
customers on an agency basis. A portion of the sale charge paid by their
customers is retained by or remitted to the banks. Under the Glass-Steagall Act,
banks are prohibited from underwriting Units; however, the Glass-Steagall Act
does permit certain agency transactions and the banking regulators have
indicated that these particular agency transactions are permitted under such
Act. In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
The Sponsor intends to qualify the Units of the Trusts for
sale in Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa,
Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and the District
of Columbia. Additional states may be added from time to time.
From time to time the Sponsor may implement programs under
which dealers of a Trust may receive nominal awards from the Sponsor for each of
their registered representatives who have sold a minimum number of UIT Units
during a specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales force of a dealer may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to any such dealer that sponsors sales contests or
recognition programs conforming to criteria established by the Sponsor, or
participates in sales programs sponsored by the Sponsor, an amount not exceeding
the total applicable sales charges on the sales generated by such person at the
public offering price during such programs. Also, the Sponsor, in its
discretion, may from time to time, pursuant to objective criteria established by
the Sponsor, pay fees to qualifying dealers for certain services or activities
which are primarily intended to result in sales of Units of the Trusts. Such
payments are made by the Sponsor out of its own assets, and not out of the
assets of a Trust. These programs will not change the price Unit holders pay for
their Units or the amount that a Trust will receive from the Units sold.
The Sponsor may provide additional concessions to its
affiliates in connection with the distribution of the Units. The Sponsor
reserves the right to change the dealers concession at any time. Such Units may
then be distributed to the public by the dealers at the Public Offering Price
then in effect. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. Also, the Sponsor in its discretion may
from time to time pursuant to objective criteria established by the Sponsor pay
fees to qualifying Underwriters, brokers, dealers, banks and/or others for
certain services or activities which are primarily intended to result in sales
of Units of the Trusts. Such payments are made by the Sponsor out of its own
assets and out of the assets of the Trusts. These programs will not change the
price Unit Holders pay for their Units or the amount that the Trusts will
receive from the Units sold.
Sponsor's Profits. The Sponsor will receive a gross
underwriting commission (although the net commission retained will be lower
because of the concession paid to dealers) equal to 2.90% of the Public Offering
Price (2.987% of the net amount invested in the Securities) for the Strategic
Ten Trust and 2.75% of the Public Offering Price per Unit (equivalent to 2.828%
of the net amount invested in the Securities) for the Strategic Five Trust.
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trusts representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trusts (see "Portfolio" in
Part A). The Sponsor may
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realize profits or sustain losses with respect to Securities deposited in the
Trusts which were acquired from underwriting syndicates of which it was a
member.
The Sponsor may have participated as a sole underwriter or
manager, co-manager or member of underwriting syndicates from which some of the
aggregate principal amount of the Securities were acquired for the Trusts in the
amounts set forth in Part A.
During the initial offering period and thereafter to the
extent Additional Units continue to be issued and offered for sale to the public
the Sponsor may also realize profits or sustain losses as a result of
fluctuations after the initial Date of Deposit in the offering prices of the
Securities and hence in the Public Offering Price received by the Sponsor for
the Units. Cash, if any, made available to the Sponsor prior to settlement date
for the purchase of Units may be used in the Sponsor's business subject to the
limitations of 17 CFR 240.15c3-3 under the Securities Exchange Act of 1934, and
may be of benefit to the Sponsor.
Both upon acquisition of Securities and termination of the
Trusts, the Trustee may utilize the services of the Sponsor for the purchase or
sale of all or a portion of the Securities in the Trusts. The Sponsor may
receive brokerage commissions from the Trusts in connection with such purchases
and sales in accordance with applicable law.
In maintaining a market for the Units (see "Liquidity--Sponsor
Repurchase") the Sponsor will realize profits or sustain losses in the amount of
any difference between the price at which they buy Units and the price at which
they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price. Although the Public Offering Price of Units of the
Trusts will be determined on the basis of the current offering prices of the
Securities in the Trusts, the value at which Units may be redeemed or sold in
the secondary market will be determined on the basis of the current bid prices
of such Securities. On the initial Date of Deposit, the Public Offering Price
and the Sponsor's Initial Repurchase Price per Unit of each of the Trusts (based
on the offering side evaluation of the Securities in the Trusts) each exceeded
the Redemption Price and the Sponsor's secondary market Repurchase Price per
Unit (based upon the current bid side evaluation of the Securities in the
Trusts) by the amounts shown under "Summary of Essential Information" for each
Trust in Part A of this Prospectus. On the initial Date of Deposit, the bid side
evaluation for each Trust was lower than the offering side evaluation for such
Trust by the amount set forth in Part A. For this reason, among others
(including fluctuations in the market prices of such Securities and the fact
that the Public Offering Price includes the applicable sales charge), the amount
realized by a Unit Holder upon any redemption or Sponsor repurchase of Units may
be less than the price paid for such Units. See "Liquidity--Sponsor Repurchase."
RIGHTS OF UNIT HOLDERS
Book-Entry Units. Ownership of Units of the Trusts will not be
evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form either at Depository Trust Company ("DTC") through
an investor's broker's account or through registration of the Units on the books
of the Trustee. Units held through DTC will be deposited by the Sponsor with DTC
in the Sponsor's DTC account and registered in the nominee name CEDE & CO.
Individual purchases of beneficial ownership interest in the Trusts will be made
in book-entry form through DTC or the Trustee. Ownership and transfer of Units
will be evidenced and accomplished directly and indirectly by book-entries made
by DTC and its participants if the Units are evidenced at DTC, or otherwise will
be evidenced and accomplished by book-entries made by the Trustee. DTC will
record ownership and transfer of the Units among DTC participants and forward
all notices and credit all payments received in respect of the Units held by the
DTC participants. Beneficial owners of Units will
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receive written confirmation of their purchase and sale from the broker-dealer
or bank from whom their purchase was made. Units are transferable by making a
written request properly accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unit Holder. Unit Holders must sign such written request exactly as their
names appear on the record of the Trusts. Such signatures must be guaranteed by
a commercial bank or trust company, savings and loan association or by a member
firm of a national securities exchange.
Distributions. Dividends received by a Trust are credited by
the Trustee to an Income Account for that Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for the
Trust.
Distributions to each Unit Holder from the Income Account are
computed as of the close of business on each Record Date for the following
Distribution Date. Distributions from the Principal Account of the Trusts (other
than amounts representing failed contracts, as previously discussed) will be
computed as of each Record Date, and will be made to the Unit Holders of the
Trusts on or shortly after the Distribution Date. Proceeds representing
principal received from the disposition of any of the Securities between a
Record Date and a Distribution Date which are not used for redemptions of Units
will be held in the Principal Account and not distributed until the next
Distribution Date. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the Distribution Date
following the first Record Date on which they are a Unit Holder of record.
As of each Record Date the Trustee will deduct from the Income
Account of the Trusts, and, to the event funds are not sufficient therein, from
the Principal Account of the Trusts, amounts necessary to pay the expenses of
the Trusts (as determined on the basis set forth under "Trust Expenses and
Charges"). The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trusts. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The dividend distribution per 1,000 Units cannot be estimated
and will change and may be reduced as Securities are redeemed, exchanged or
sold, or as expenses of the Trusts fluctuate. No distribution need be made from
the Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 1,000 Units.
Reinvestment. Income and principal distributions on Units
(other than the final distribution in connection with the termination of the
Trusts) may be reinvested by participating in a Trust's reinvestment plan. Under
the plan, the Units acquired for participants will be either Units already held
in inventory by the Sponsor or new Units created by the Sponsor's deposit of
Additional Securities as described in "The Trusts-Organization" in this Part B.
Units acquired by reinvestment will not be subject to a sales charge. In order
to enable a Unit Holder to participate in the reinvestment plan with respect to
a particular distribution on their Units, written notification must be received
by the Trustee within 10 days prior to the Record Date for such distribution.
Each subsequent distribution of income or principal on the participant's Units
will be automatically applied by the Trustee to purchase additional Units of a
Trust. The Sponsor reserves the right to demand, modify or terminate the
reinvestment plan at any time without prior notice. The reinvestment plan for
the Trusts may not be available in all states.
Records. The Trustee shall furnish Unit Holders in connection
with each distribution a statement of the amount of dividends and interest, if
any, and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per 1,000 Units. Within a
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reasonable time after the end of each calendar year the Trustee will furnish to
each person who at any time during the calendar year was a Unit Holder of
record, a statement showing (a) as to the Income Account: dividends, interest
and other cash amounts received, amounts paid for purchases of Substitute
Securities and redemptions of Units, if any, deductions for applicable taxes and
fees and expenses of the Trusts, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each 1,000 Units outstanding on
the last business day of such calendar year; (b) as to the Principal Account:
the dates of disposition of any Securities and the net proceeds received
therefrom, deductions for payments of applicable taxes and fees and expenses of
the Trusts, amounts paid for purchases of Substitute Securities and redemptions
of Units, if any, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each 1,000 Units outstanding on the last
business day of such calendar year; (c) a list of the Securities held, a list of
Securities purchased, sold or otherwise disposed of during the calendar year and
the number of Units outstanding on the last business day of such calendar year;
(d) the Redemption Price per 1,000 Units based upon the last computation thereof
made during such calendar year; and (e) amounts actually distributed to Unit
Holders during such calendar year from the Income and Principal Accounts,
separately stated, of the Trusts, expressed both as total dollar amounts and as
dollar amounts representing the pro rata share of each 1,000 Units outstanding
on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unit
Holders at all reasonable times during usual business hours, books of record and
account of its transactions as Trustee, including records of the names and
addresses of Unit Holders, Certificates issued or held, a current list of
Securities in the portfolio and a copy of the Trust Agreement.
Expenses and Charges.
Initial Expenses
All or a portion of the expenses incurred in creating and
establishing the Trusts, including the cost of the initial preparation and
execution of the Trust Agreement, the initial fees and expenses of the Trustee,
legal expenses and other actual out-of-pocket expenses, will be paid by the
Trusts and amortized over the life of the Trusts. All advertising and selling
expenses, as well as any organizational expenses not paid by the Trusts, will be
borne by the Sponsor at no cost to the Trusts.
Fees
The Sponsor will not charge the Trusts a fee for their
services as such. (See "Sponsor's Profits.")
The Sponsor will receive for portfolio supervisory services to
the Trusts an Annual Fee in the amount set forth under "Summary of Essential
Information" in Part A. The Sponsor's fee may exceed the actual cost of
providing portfolio supervisory services for the Trusts, but at no time will the
total amount received for portfolio supervisory services rendered to all series
in any calendar year exceed the aggregate cost to the Sponsor of supplying such
services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services
to the Trusts, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unit Holders".
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The Trustee's fees applicable to the Trusts are payable from
the Income Account of the Trusts to the extent funds are available and then from
the Principal Account. Both fees may be increased without approval of the Unit
Holders by amounts not exceeding proportionate increases in consumer prices for
services as measured by the United States Department of Labor's Consumer Price
Index entitled "All Services Less Rent."
Other Charges
The following additional charges are or may be incurred by the
Trusts: all expenses (including audit and counsel fees) of the Trustee incurred
and advances made in connection with its activities under the Trust Agreement,
including annual audit expenses of independent public accountants selected by
the Sponsor (so long as the Sponsor maintains a secondary market, the Sponsor
will bear any audit expense which exceeds 50 cents per 1,000 Units), the
expenses and costs of any action undertaken by the Trustee to protect the Trusts
and the rights and interests of the Unit Holders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without negligence, bad
faith or willful misconduct on its part, arising out of or in connection with
its acceptance or administration of the Trusts; indemnification of the Sponsor
for any losses, liabilities and expenses incurred in acting as sponsor of the
Trusts without gross negligence, bad faith or willful misconduct on its part;
and all taxes and other governmental charges imposed upon the Securities or any
part of the Trusts (no such taxes or charges are being levied, made or, to the
knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
TAX STATUS
The following is a general discussion of certain of the
Federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code"). Unit Holders
should consult their tax advisers in determining the Federal, state, local and
any other tax consequences of the purchase, ownership and disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP
has examined the Agreement, the final form of Prospectus dated the date hereof
(the "Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein.
In the opinion of Battle Fowler LLP, special counsel for the
Sponsor, under existing law:
1. Each Trust will be classified as a grantor trust
for Federal income tax purposes and not as a partnership or association
taxable as a corporation. Classification of a Trust as a grantor trust
will cause the Trust not to be subject to Federal income tax, and will
cause the Unit Holders of the Trust to be treated for Federal income
tax purposes as the owners of a pro rata portion of the assets of the
Trust. All income received by a Trust will be treated as income of the
Unit Holders in the manner set forth below.
2. Each Trust is not subject to the New York State
Franchise Tax on Business Corporations or the New York City General
Corporation Tax. For a Unit Holder who is a New York resident, however,
a pro rata portion of all or part of the income of the Trust will be
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treated as the income of the Unit Holder under the income tax laws of
the State and City of New York. Similar treatment may apply in other
states.
3. During the 90-day period subsequent to the initial
issuance date, the Sponsor reserves the right to deposit additional
Securities that are substantially similar to those establishing the
Trusts. This retained right falls within the guidelines promulgated by
the Internal Revenue Service ("IRS") and should not affect the taxable
status of the Trusts.
A taxable event will generally occur with respect to each Unit
Holder when the Trusts dispose of a Security (whether by sale, exchange or
redemption) or upon the sale, exchange or redemption of Units by such Unit
Holder. The price a Unit Holder pays for his Units, including sales charges, is
allocated among his pro rata portion of each Security held by the Trusts (in
proportion to the fair market values thereof on the date the Unit Holder
purchases his Units) in order to determine his initial cost for his pro rata
portion of each Security held by the Trusts.
For Federal income tax purposes, a Unit Holder's pro rata
portion of dividends paid with respect to a Security held by a Trust are taxable
as ordinary income to the extent of such corporation's current and accumulated
"earnings and profits" as defined by Section 316 of the Code. A Unit Holder's
pro rata portion of dividends paid on such Security that exceed such current and
accumulated earnings and profits will first reduce a Unit Holder's tax basis in
such Security, and to the extent that such dividends exceed a Unit Holder's tax
basis in such Security will generally be treated as capital gain.
A distribution of Securities by the Trustee to a Unit Holder
(or to his agent, including the Sponsor) upon redemption of Units (or an
exchange of Units for Securities by the Unit Holder with the Sponsor) will not
be a taxable event to the Unit Holder or to other Unit Holders. The redeeming or
exchanging Unit Holder's basis for such Securities will be equal to his basis
for the same Securities (previously represented by his Units) prior to such
redemption or exchange, and his holding period for such Securities will include
the period during which he held his Units. A Unit Holder will have a taxable
gain or loss, which will be a capital gain or loss except in the case of a
dealer or a financial institution, when the Unit Holder (or his agent, including
the Sponsor) sells the Securities so received in redemption for cash, when a
redeeming or exchanging Unit Holder receives cash in lieu of fractional shares,
when the Unit Holder sells his Units for cash or when the Trustee sells the
Securities from the Trusts. However, to the extent a Rollover Unit Holder
invests his redemption proceeds in units of an available series of the QUILTS
Equity Strategic Ten or Equity Strategic Five (a "Rollover QUILTS"), such Unit
Holder generally will not be entitled to a deduction for any losses recognized
upon the disposition of any Securities to the extent that such Unit Holder is
considered the owner of substantially identical securities under the grantor
trust rules described above as applied to such Unit Holder's ownership of Units
in a Rollover QUILTS, if such substantially identical securities were acquired
within a period ending 30 days after such disposition. If a loss is incurred on
the disposition of a Security and, during the period beginning 30 days before
the disposition of such Security and ending 30 days after such date, the
taxpayer acquires, enters into a contract to acquire, or acquires an option to
acquire, substantially identical Securities, a tax loss is generally not
available.
A Unit Holder's portion of gain, if any, upon the sale,
exchange or redemption of Units or the disposition of Securities held by the
Trusts will generally be considered a capital gain and will be long-term if the
Unit Holder has held his Units for more than one year. Investors who acquire
Units after the date on which Units are initially sold will not qualify for
long-term capital gain treatment even though they hold Units until the Trust
terminates if Securities are sold on or before one year from the date on which
they acquired Units. Individuals who realize long-term capital gains may be
subject to a reduced tax rate on such gains. Such lower rate will be unavailable
to those non-corporate Unit Holders who, as of the Mandatory Termination Date
(or earlier termination of a Trust) have held their units for less than a year
and a day. Similarly, with respect to non-corporate Rollover Unit Holders, this
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lower rate will be unavailable if, as of the beginning of the Liquidation
Period, such Rollover Unit Holders have held their shares for less than a year
and a day. The deduction of capital losses is subject to limitations. Tax rates
may increase prior to the time when Unit Holders may realize gains from the
sale, exchange or redemption of Units or Securities.
A Unit Holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by a Trust will
generally be considered a capital loss and will be long-term if the Unit Holder
has held his Units for more than one year. Capital losses are deductible to the
extent of capital gains; in addition, up to $3,000 of capital losses of
non-corporate Unit Holders may be deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations,
a Unit Holder who itemizes his deductions may also deduct his pro rata share of
the fees and expenses of the Trusts, but only to the extent that such amounts,
together with the Unit Holder's other miscellaneous deductions, exceed 2% of his
adjusted gross income. The deduction of fees and expenses may also be limited by
Section 68 of the Code, which reduces the amount of itemized deductions that are
allowed for individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish
to each Unit Holder an annual statement containing information relating to the
dividends received by the Trust on the Securities, the gross proceeds received
by the Trust from the disposition of any Security, and the fees and expenses
paid by the Trust. The Trustee will also furnish annual information returns to
each Unit Holder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a
70% dividends received deduction with respect to such Unit Holder's pro rata
portion of dividends received by the Trust from a domestic corporation under
Section 243 of the Code or from a qualifying foreign corporation under Section
245 of the Code (to the extent the dividends are taxable as ordinary income, as
discussed above) in the same manner as if such corporation directly owned the
Securities paying such dividends. However, a corporation owning Units should be
aware that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days (as determined under Section 246(c) of the
Code). Moreover, the allowable percentage of the deduction will be reduced from
70% if a corporate Unit Holder owns certain stock (or Units) the financing of
which is directly attributable to indebtedness incurred by such corporation.
Accordingly, Unit Holders should consult their tax adviser in this regard.
Recent legislative proposals, if enacted, would reduce the rate of the dividends
received deduction.
As discussed in the section "Trust Administration--Trust
Termination", each Unit Holder may have three options in receiving their
termination distributions, which are (i) to receive their pro rata share of the
underlying Securities in kind, (ii) to receive cash upon liquidation of their
pro rata share of the underlying Securities, or (iii) to invest the amount of
cash they would receive upon the liquidation of their pro rata share of the
underlying Securities in units of a future series of the Trusts (if one is
offered).
Entities that generally qualify for an exemption from Federal
income tax, such as many pension trusts, are nevertheless taxed under Section
511 of the Code on "unrelated business taxable income." Unrelated business
taxable income is income from a trade or business regularly carried on by the
tax-exempt entity that is unrelated to the entity's exempt purpose. Unrelated
business taxable income generally does not include dividend or interest income
or gain from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from a Trust and gain from the sale of Units in a Trust or the
Trust's
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sale of Securities is not expected to constitute unrelated business taxable
income to such tax-exempt entity unless the acquisition of the Unit itself is
debt-financed or constitutes dealer property in the hands of the tax-exempt
entity.
Before investing in a Trust, the trustee or investment manager
of an employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in the Trust; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of the Trust are deemed "plan assets" under ERISA and the Department
of Labor regulations regarding the definition of "plan assets."
Prospective tax-exempt investors are urged to consult their
own tax advisers prior to investing in either of the Trusts.
Retirement Plans
These Trusts may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans, certain of which are briefly described below. Generally,
capital gains and income received in each of the foregoing plans are exempt from
Federal taxation. All distributions from such plans are generally treated as
ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Unit Holders in IRAs, Keogh plans
and other tax-deferred retirement plans should consult their plan custodian as
to the appropriate disposition of distributions. Investors considering
participation in any of these plans should review specific tax laws related
thereto and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any of these plans. These plans are offered by
brokerage firms, including the Sponsor of the Trusts, and other financial
institutions. Fees and charges with respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units of
the Trusts may be purchased by retirement plans established for self-employed
individuals, partnerships or unincorporated companies ("Keogh plans"). Qualified
individuals may generally make annual tax-deductible contributions up to the
lesser of 25% of annual compensation or $30,000 to Keogh plans. The assets of
the plan must be held in a qualified trust or other arrangement which meets the
requirements of the Code. Generally, there are penalties for premature
distributions from a plan before attainment of age 591/2, except in the case of
a participant's death or disability and certain other circumstances. Keogh plan
participants may also establish separate IRAs (see below) to which they may
contribute up to an additional $2,000 per year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual (including
one covered by an employer retirement plan) can establish an IRA or make use of
a qualified IRA arrangement set up by an employer or union for the purchase of
Units of the Trusts. Any individual can make a contribution in an IRA equal to
the lesser of $2,000 ($2,250 in a spousal account) or 100% of earned income;
such investment must be made in cash. However, the deductible amount an
individual may contribute will be reduced if the individual or the individual's
spouse (in the case of a married individual) participates in a qualified
retirement plan and the individual's adjusted gross income exceeds $25,000 (in
the case of a single individual or a married individual filing a separate return
not residing with such person's spouse) or $40,000 (in the case of married
individuals filing a joint return). Special rules apply in the case of married
individuals living together who file separate returns. Generally, there are
penalties for premature distributions from an IRA before the attainment of age
59 1/2, except in the case of the participant's death or disability and certain
other circumstances.
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Corporate Pension and Profit-Sharing Plans. A pension or
profit-sharing plan for employees of a corporation may purchase Units of the
Trusts.
LIQUIDITY
Sponsor Repurchase. The Sponsor, although not obligated to do
so, currently intends to maintain a secondary market for the Units and
continuously to offer to repurchase the Units. The Sponsor's secondary market
repurchase price after the initial public offering is completed, will be based
on the aggregate value of the Securities in the portfolio of each of the Trusts
and will be the same as the redemption price. The aggregate value will be
determined by the Trustee on a daily basis after the initial public offering is
completed and computed on the basis set forth under "Liquidity--Trustee
Redemption." During the initial offering period, the Sponsor's repurchase price
will be based on the aggregate offering price of the Securities in the Trusts.
Unit Holders who wish to dispose of their Units should inquire of the Sponsor as
to current market prices prior to making a tender for redemption. The Sponsor
may discontinue repurchase of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the date on
which Units are received in proper form by OCC Distributors, Two World Financial
Center, 225 Liberty Street, New York, NY 10080-6116. Units received after 4
P.M., New York Time, will be deemed to have been repurchased on the next
business day. In the event a market is not maintained for the Units, a Unit
Holder may be able to dispose of Units only by tendering them to the Trustee for
redemption.
Units purchased by the Sponsor in the secondary market may be
reoffered for sale by the Sponsor at a price based on the aggregate offering
price of the Securities in each of the Trusts plus (a) a 2.90% sales charge
(2.987% of the net amount invested) for the Strategic Ten Trust and (b) a 2.75%
sales charge (2.828% of the net amount invested) for the Strategic Five Trust,
plus a pro rata portion of amounts, if any, in the Income Account. Any Units
that are purchased by the Sponsor in the secondary market also may be redeemed
by the Sponsor if it determines such redemption to be in its best interest.
The Sponsor may, under certain circumstances, as a service to
Unit Holders, elect to purchase any Units tendered to the Trustee for redemption
(see "Liquidity--Trustee Redemption" in this Part B). Factors which the Sponsor
will consider in making a determination will include the number of Units of the
Trust which it has in inventory, its estimate of the salability and the time
required to sell such Units and general market conditions. For example, if in
order to meet redemptions of Units the Trustee must dispose of Securities, and
if such disposition cannot be made by the redemption date (seven calendar days
after tender), the Sponsor may elect to purchase such Units. Such purchase shall
be made by payment to the Unit Holder not later than the close of business on
the redemption date of an amount equal to the Redemption Price on the date of
tender.
Trustee Redemption. Units may also be tendered to the Trustee
for redemption at its corporate trust office at 770 Broadway, New York, New York
10003, upon proper delivery of such Units and payment of any relevant tax. At
the present time there are no specific taxes related to the redemption of Units.
No redemption fee will be charged by the Sponsor or the Trustee. Units redeemed
by the Trustee will be cancelled.
Within three business days following a tender for redemption,
the Unit Holder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time set forth under "Summary of Essential Information" for each Trust in Part A
on the date of tender. The "date of tender" is deemed to be the date on which
Units are received by the Trustee, except that with respect to Units received
after the close of trading on the New York Stock Exchange, the date of tender is
the next day on which such Exchange is open for
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trading, and such Units will be deemed to have been tendered to the Trustee on
such day for redemption at the Redemption Price computed on that day.
A Unit Holder will receive his redemption proceeds in cash and
amounts paid on redemption shall be withdrawn from the Income Account, or, if
the balance therein is insufficient, from the Principal Account. All other
amounts paid on redemption shall be withdrawn from the Principal Account. The
Trustee is empowered to sell Securities in order to make funds available for
redemptions. Such sales, if required, could result in a sale of Securities by
the Trustee at a loss. To the extent Securities are sold, the size and diversity
of such Trust will be reduced. The Securities to be sold will be selected by the
Trustee in order to maintain, to the extent practicable, the proportionate
relationship among the number of shares of each of the Securities in a
Portfolio. Provision is made in the Indenture under which the Sponsor may, but
need not, specify minimum amounts in which blocks of Securities are to be sold
in order to obtain the best price for a Trust. While these minimum amounts may
vary from time to time in accordance with market conditions, the Sponsor
believes that the minimum amounts which would be specified would be
approximately 1,000 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the
Unit in each Trust determined by the Trustee on the basis of (i) the cash on
hand in the Trust or moneys in the process of being collected, (ii) the value of
the Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unit Holders of record as of the business day prior to the evaluation being
made. The Trustee may determine the value of the Securities in each Trust in the
following manner: if the Securities are listed on a national securities exchange
or the NASDAQ national market system, this evaluation is generally based on the
closing sale prices on that exchange or that system (unless the Trustee deems
these prices inappropriate as a basis for valuation). If the Securities are not
so listed or, if so listed and the principal market therefor is other than on
the exchange, the evaluation shall generally be based on the closing purchase
price in the over-the-counter market (unless the Trustee deems these prices
inappropriate as a basis for evaluation) or if there is no such closing purchase
price, then the Trustee may utilize, at the Trust's expense, an independent
evaluation service or services to ascertain the values of the Securities. The
independent evaluation service shall use any of the following methods, or a
combination thereof, which it deems appropriate: (a) on the basis of current bid
prices for comparable securities, (b) by appraising the value of the Securities
on the bid side of the market or (c) by any combination of the above.
Any Unit Holder tendering 25,000 Units or more of a Trust for
redemption may request by written notice submitted at the time of tender from
the Trustee in lieu of a cash redemption a distribution of shares of Securities
and cash in an amount and value equal to the Redemption Price Per Unit as
determined as of the evaluation next following tender. To the extent possible,
in kind distributions ("In Kind Distributions") shall be made by the Trustee
through the distribution of each of the Securities in book-entry form to the
account of the Unit Holder's bank or broker-dealer at The Depository Trust
Company. An In Kind Distribution will be reduced by customary transfer and
registration charges. The tendering Unit Holders will receive his pro rata
number of whole shares of each of the Securities comprising the portfolio and
cash from the Principal Accounts equal to the balance of the Redemption Price to
which the tendering Unit Holder is entitled. If funds in the Principal Account
are insufficient to cover the required cash distribution to the tendering Unit
Holder, the Trustee may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if
the Sponsor does not elect to purchase a Unit tendered for redemption or if the
Sponsor tenders a Unit or Units for redemption, in lieu of redeeming such Unit,
to sell such Unit in the over-the-counter market for the account of the
tendering Unit Holder at prices which will return to the Unit Holder an amount
in cash, net after
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deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unit Holder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of
redemption and to postpone the date of payment of the Redemption Price per Unit
for any period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or trading on that Exchange is
restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. The Trustee and the
Sponsor are not liable to any person or in any way for any loss or damage which
may result from any such suspension or postponement.
A Unit Holder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.
TRUST ADMINISTRATION
Portfolio Supervision. Each Trust is a unit investment trust
and is not a managed fund. Traditional methods of investment management for a
managed fund typically involve frequent changes in a portfolio of securities on
the basis of economic, financial and market analyses. The Portfolios of each of
the Trusts, however, will not be managed and therefore the adverse financial
condition of an issuer will not necessarily require the sale of its Securities
from the Portfolio. Although the portfolios of the Trusts are regularly
reviewed, because of the formula employed in selecting the DJIA Strategic Ten
and DJIA Strategic Five, it is unlikely that the Trusts will sell any of the
Securities other than to satisfy redemptions of Units, or to cease buying
Additional Securities in connection with the issuance of additional Units.
Although the Sponsor may direct the disposition of Securities upon the
occurrence of the following events, it is unlikely that they will cause the
Trust to dispose of a Security or cease buying it:
1. default in payment of amounts due on any of the
Securities;
2. institution of certain legal proceedings;
3. default under certain documents materially and
adversely affecting future declaration or payment of
amounts due or expected; or
4. determination of the Sponsor that the tax treatment
of the Trust as a grantor trust would otherwise be
jeopardized; or
5. decline in price as a direct result of serious
adverse credit factors affecting the issuer of a
Security which, in the opinion of the Sponsor, would
make the retention of the Security detrimental to the
Trust or the Unit Holders.
Furthermore, the Trusts will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the DJIA
Strategic Ten or the DJIA Strategic Five, or even its deletion from the DJIA.
If a default in the payment of amounts due on any Security
occurs and if the Sponsor fails to give immediate instructions to sell or hold
that Security, the Trust Agreement provides that the Trustee, within 30 days of
that failure by the Sponsor, may sell the Security.
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The Trust Agreement provides that it is the responsibility of
the Sponsor to instruct the Trustee to reject any offer made by an issuer of any
of the Securities to issue new securities in exchange and substitution for any
Security pursuant to a recapitalization or reorganization, if any exchange or
substitution is effected notwithstanding such rejection, any securities or other
property received shall be promptly sold unless the Depositor directs that it be
retained.
Any property received by the Trustee after the initial Date of
Deposit as a distribution on any of the Securities in a form other than cash or
additional shares of the Securities received in a non-taxable stock dividend or
stock split, which shall be retained, shall be retained or disposed by the
Trustee as provided in the Trust Agreement. The proceeds of any disposition
shall be credited to the Income or Principal Account of the Trusts.
The Trust Agreement also authorizes the Sponsor to increase
the size and number of Units of the Trusts by the deposit of Additional
Securities, contracts to purchase Additional Securities or cash or a letter of
credit with instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units within 90 days subsequent to the
initial Date of Deposit, provided that the original proportionate relationship
among the number of shares of each Security established on the initial Date of
Deposit is maintained to the extent practicable. Deposits of Additional
Securities in a Trust subsequent to the 90-day period following the initial Date
of Deposit must replicate exactly the proportionate relationship among the
shares of each Security in that Trust portfolio at the end of the initial 90-day
period.
With respect to deposits of Additional Securities (or cash or
a letter of credit with instructions to purchase Additional Securities), in
connection with creating additional Units of the Trusts, the Sponsor may specify
the minimum numbers in which Additional Securities will be deposited or
purchased. If a deposit is not sufficient to acquire minimum amounts of each
Security, Additional Securities may be acquired in the order of the Security
most under-represented immediately before the deposit when compared to the
original proportionate relationship. If Securities of an issue originally
deposited are unavailable at the time of the subsequent deposit, the Sponsor may
(1) deposit cash or a letter of credit with instructions to purchase the
Security when it becomes available, or (2) deposit (or instruct the Trustee to
purchase) either Securities of one or more other issues originally deposited or
a Substitute Security.
Trust Agreement and Amendment. The Trust Agreement may be
amended by the Trustee and the Sponsor without the consent of any of the Unit
Holders: (1) to cure any ambiguity or to correct or supplement any provision
which may be defective or inconsistent; (2) to change any provision thereof as
may be required by the Securities and Exchange Commission or any successor
governmental agency; or (3) to make such other provisions in regard to matters
arising thereunder as shall not adversely affect the interests of the Unit
Holders.
The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the consent of
the holders of Certificates evidencing 662/3% of the Units then outstanding for
the purpose of modifying the rights of Unit Holders; provided that no such
amendment or waiver shall reduce any Unit Holder's interest in the Trust without
his consent or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of the holders of all Certificates. The
Trust Agreement may not be amended, without the consent of the holders of all
Units in a Trust then outstanding, to increase the number of Units issuable or
to permit the acquisition of any Securities in addition to or in substitution
for those initially deposited in such Trust, except in accordance with the
provisions of the Trust Agreement. The Trustee shall promptly notify Unit
Holders, in writing, of the substance of any such amendment.
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Trust Termination. The Trust Agreement provides that the
Trusts shall terminate upon the maturity, redemption or other disposition, as
the case may be, of the last of the Securities held in such Trust but in no
event is it to continue beyond July 10, 1997. If the value of a Trust shall be
less than the minimum amount set forth under "Summary of Essential Information"
for that Trust in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate the Trust. The Trusts may also be terminated
at any time with the consent of the holders of 100% of the Units then
outstanding. The Trustee may utilize the services of the Sponsor for the sale of
all or a portion of the Securities in the Trusts. The Sponsor may receive
brokerage commissions from the Trusts in connection with such sales in
accordance with applicable law. In the event of termination, written notice
thereof will be sent by the Trustee to all Unit Holders. Such notice will
provide Unit Holders with three options by which to receive their pro rata share
of the net asset value of the Trust.
1. A Unit Holder who owns at least 25,000 Units and
whose interest in a Trust would entitle him to receive at least one
share of each Security, and who so elects by notifying the Trustee
prior to the commencement of the Liquidation Period by returning a
properly completed election request (to be supplied to Unit Holders at
least 20 days prior to such date) (see Part A - "Summary of Essential
Information" for the date of the commencement of the Liquidation
Period), and whose interest in the Trust entitles him to receive at
least one share of each underlying Security, will have his Units
redeemed on commencement of the Liquidation Period by distribution of
the Unit Holder's pro rata share of the net asset value of the Trust on
such date distributed in kind to the extent represented by whole shares
of underlying Securities and the balance in cash within three business
days next following the commencement of the Liquidation Period. Unit
Holders subsequently selling such distributed Securities will incur
brokerage costs when disposing of such Securities. Unit Holders should
consult their own tax adviser in this regard.
A Unit Holder may also elect prior to the
commencement of the Liquidation Period by so specifying in a properly
completed election request, the following two options with regard to
the termination distribution of such Unit Holder's interest in the
Trust as set forth below.
2. to receive in cash such Unit Holder's pro rata
share of the net asset value of the Trust derived from the sale by the
Sponsor as the agent of the Trustee of the underlying Securities over a
period not to exceed 30 days immediately following the commencement of
the Liquidation Period. The Unit Holder's Redemption Price per Unit on
the settlement date of the last trade of a Security in the Trust will
be distributed to such Unit Holder within three business days of the
settlement of the trade of the last Security to be sold; and/or
3. to invest such Unit Holder's pro rata share of the
net asset value of a Trust derived from the sale by the Sponsor as
agent of the Trustee of the underlying Securities over a period not to
exceed 30 days immediately following the commencement of the
Liquidation Period, in units of an available series of QUILTS Equity
Strategic Ten or Equity Strategic Five, as the case may be ("Rollover
QUILTS"), provided one is offered. It is expected that a special
redemption and liquidation will be made of all Units of this Trust held
by Unit Holder (a "Rollover Unit Holder") who affirmatively notifies
the Trustee in writing by the Rollover Notification Date set forth in
the "Summary of Essential Information" for each Trust in Part A. The
availability of this option does not constitute a solicitation of an
offer to purchase Units of a Rollover QUILTS or any other security. A
Unit Holder's election to participate in this option will be treated as
an indication of interest only. A Rollover Unit Holder's Units will be
redeemed in kind and the Securities disposed of over the Liquidation
Period. As long as the Unit Holder confirms his interest in purchasing
units of the Rollover QUILTS and units are available, the proceeds of
the sales (net of brokerage commissions,
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<PAGE>
governmental charges and any other selling expenses) will be reinvested
in units of the Rollover QUILTS at their net asset value plus the
applicable sales charge. Such purchaser may be entitled to a reduced
sales load of approximately 1.95% of the Public Offering Price upon the
purchase of units of the Rollover QUILTS. It is expected that the terms
of the Rollover QUILTS will be substantially the same as the terms of
the Trusts described in this Prospectus, and that a similar procedure
for redemption, liquidation and investment in a subsequent QUILTS
Equity Strategic Ten or Equity Strategic Five series will be available
for each new Trust approximately one year after the creation of that
Trust. At any time prior to the purchase by the Unit Holder of units of
a Rollover QUILTS such Unit Holder may change his investment strategy
and receive, in cash, the proceeds of the sale of the Securities. An
election of this option will not prevent the Unit Holder from
recognizing taxable capital gain or loss (except in the case of a loss,
if the Rollover QUILTS is treated as substantially identical to the
Trust) as a result of the liquidation, even though no cash will be
distributed to pay taxes. Unit Holders should consult their own tax
advisers in this regard. (See "Tax Status".)
The Sponsor has agreed to effect the sales of underlying
securities for the Trustee in the case of the second and third options over a
period not to exceed 30 days immediately following the commencement of the
Liquidation Period. The Sponsor, on behalf of the Trustee, will sell the
distributed Securities as quickly as practicable, unless prevented by unusual
and unforeseen circumstances, such as, among other reasons, a suspension in
trading of a Security, the close of a stock exchange, outbreak of hostilities
and collapse of the economy. The Redemption Price Per Unit upon the settlement
of the last sale of Securities during the Liquidation Period will be distributed
to Unit Holders in redemption of such Unit Holders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of
Rollover QUILTS and the amount of other orders for Units in Rollover QUILTS, the
Sponsor may purchase a large amount of securities for Rollover QUILTS in a short
period of time. The Sponsor's buying of securities may tend to raise the market
prices of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsor believes that the sale of
underlying Securities over a 30-day period as described above is in the best
interest of a Unit Holder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than 30 days if, in the Sponsor's judgment, such
sales are in the best interest of Unit Holders. The Sponsor, in implementing
such sales of securities on behalf of the Trustee, will seek to maximize the
sales proceeds and will act in the best interests of the Unit Holders. There can
be no assurance, however, that any adverse price consequences of heavy trading
will be mitigated.
Unit Holders who do not make any election will be deemed to
have elected to receive the Redemption Price per Unit in cash (option number 2).
The Sponsor may for any reason, in its sole discretion, decide
not to sponsor any subsequent series of the Trusts, without penalty or incurring
liability to any Unit Holder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unit Holders prior
to the commencement of the Liquidation Period. All Unit Holders will then elect
either option 1, if eligible, or option 2.
The Sponsor reserves the right to modify, suspend or terminate
the reinvestment privilege at any time.
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Investors should be aware that the staff of the Division of
Investment Management of the Securities and Exchange Commission ("SEC") is of
the view that the rollover described in option 3 above would constitute an
"exchange offer" for the purposes of Section 11(c) of the Investment Company Act
of 1940, and would therefore be prohibited absent an exemptive order. The
Sponsor has received an exemptive order under Section 11(c) which it believes
permits it to offer the rollover option, but no assurance can be given that the
SEC will concur with the Sponsor's position and additional regulatory approvals
may be required.
The Sponsor. Effective as of November 28, 1995 the Sponsor,
Quest for Value Distributors, changed its name to OCC Distributors. The Sponsor
is a majority-owned subsidiary of Oppenheimer Capital. Since 1969, Oppenheimer
Capital has managed assets for many of the nation's largest pension plan
clients. Today, the firm has over $37 billion under management from separate
accounts and money market funds. The Quest for Value organization was created in
1988 to introduce mutual funds designed to help individual investors achieve
their financial goals. OCC Distributors is committed to retirement planning and
services geared to the long term investment goals of the individual investor.
The Sponsor, a Delaware general partnership, is engaged in the mutual fund
distribution business. It is a member of the National Association of Securities
Dealers, Inc.
The information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations.
The Sponsor is liable for the performance of its obligations
arising from its responsibilities under the Trust Agreement, but will be under
no liability to Unit Holders for taking any action, or refraining from taking
any action, in good faith pursuant to the Trust Agreement, or for errors in
judgment except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the
Trustee an instrument of resignation executed by the Sponsor. If at any time the
Sponsor shall resign or fail to perform any of its duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then the Trustee may either (a) appoint a
successor Sponsor; (b) terminate the Trust Agreement and liquidate the Trusts;
or (c) continue to act as Trustee without terminating the Trust Agreement. Any
successor sponsor appointed by the Trustee shall be satisfactory to the Trustee
and, at the time of appointment, shall have a net worth of at least $1,000,000.
The Trustee. The Trustee is The Chase Manhattan Bank (National
Association), a national banking association with its principal executive office
located at 1 Chase Manhattan Plaza, New York, New York 10081 and its unit
investment trust office at 770 Broadway, New York, New York 10003 (800)
428-8890. The Trustee is subject to the supervision by the Comptroller of the
Currency, the Federal Deposit Insurance Corporation and the Board of Governors
of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for
taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for an
disposition of any moneys, Securities or Certificates in accordance with the
Trust Agreement, except in case of its own willful misfeasance, bad faith,
negligence or reckless disregard of its obligations and duties. In addition, the
Trustee shall not be liable for any taxes or other governmental charges imposed
upon or in respect of the Securities or the Trusts which it may be required to
pay under current or future law of the United States or any other taxing
authority having jurisdiction. The Trustee shall not be liable for depreciation
or loss incurred by reason of the sale by the Trustee of any of the Securities
pursuant to the Trust Agreement.
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<PAGE>
For further information relating to the responsibilities of
the Trustee under the Trust Agreement, reference is made to the material set
forth under "Rights of Unit Holders."
The Trustee may resign by executing an instrument in writing
and filing the same with the Sponsor, and mailing a copy of a notice of
resignation to all Unit Holders. In such an event the Sponsor is obligated to
appoint a successor Trustee as soon as possible. In addition, if the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Trust Agreement. Notice of such removal and appointment shall
be mailed to each Unit Holder by the Sponsor. If upon resignation of the Trustee
no successor has been appointed and has accepted the appointment within thirty
days after notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or an corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and
certain matters relating to federal tax law have been passed upon by Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel for the
Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York, New York
10005 have acted as counsel for the Trustee.
Independent Auditors. The Statements of Condition and
Portfolios are included herein in reliance upon the report of BDO Seidman, LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
Performance Information. Total returns, average annualized
returns or cumulative returns for various periods of the DJIA Strategic Ten and
the DJIA Strategic Five, the related index and the current Strategic Ten Trust
or Strategic Five Trust may be included from time to time in advertisements,
sales literature and reports to current or prospective investors. Total return
shows changes in Unit price during the period plus reinvestment of dividends and
capital gains, divided by the maximum public offering price. Average annualized
returns show the average return for stated periods of longer than a year. Sales
material may also include an illustration of the cumulative results of like
annual investments in the DJIA Strategic Ten and the DJIA Strategic Five during
an accumulation period and like annual withdrawals during a distribution period.
Figures for actual portfolios will reflect all applicable expenses and, unless
otherwise stated, the maximum sales charge. No provision is made for any income
taxes payable. Similar figures may be given for the Strategic Ten Trusts or the
Strategic Five Trusts applying the DJIA Strategic Ten and the DJIA Strategic
Five to other indexes. Returns may also be shown on a combined basis. Trust
performance may be compared to performance on a total return basis of the Dow
Jones Industrial Average, the S&P 500 Composite Price Stock Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York Times, U.S.
News and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
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<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
(A Unit Investment Trust)
Equity Strategic Ten, Series 2
Equity Strategic Five, Series 2
Prospectus Dated: May 30, 1996
Sponsor: Trustee:
OCC Distributors The Chase Manhattan Bank
Two World Financial Center (National Association)
225 Liberty Street 770 Broadway
New York, New York 10080- 6116 New York, New York 10003
(800) 628-6664 (800) 428-8890
============================
Table of Contents
Title Page
PART A
Summary of Essential Information......................................... A-2
Independent Auditors' Report............................................ A-13
Statement of Condition...................................................A-14
Portfolio and Cash Flow Information......................................A-15
Underwriting.............................................................A-16
PART B
The Trusts................................................................B-1
Risk Factors..............................................................B-4
Public Offering...........................................................B-7
Rights of Unit Holders ..................................................B-10
Tax Status...............................................................B-13
Liquidity................................................................B-16
Trust Administration.....................................................B-19
Other Matters............................................................B-24
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the Sponsor.
The Trust is a registered as unit investment trust under the Investment Company
Act of 1940. Such registration does not imply that the Trust or any of its Units
have been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, securities in any state to any person to whom it is not
lawful to make such offer in such state.
Parts A and B of this Prospectus do not contain all of the information
set forth in the registration statement and exhibits thereto, filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933, and the Investment Company Act of 1940, and to which reference is made.
370022.2
