As filed with the Securities and Exchange Commission on October 16, 1996
Registration No. 333-11215
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO.1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
---------------------
A. EXACT NAME OF TRUST:
Equity Securities Trust, Series 9, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust II
B. NAME OF DEPOSITOR:
Reich & Tang Distributors L.P.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Reich & Tang Distributors L.P. Battle Fowler LLP
600 Fifth Avenue 75 East 55th Street
New York, New York 10020 New York, New York 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Equity Securities Trust, Series 9,
Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust II is being registered under the Securities Act of
1933 pursuant to Section 24(f) of the Investment Company Act of 1940,
as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE
SECURITIES BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)*
H. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the
Registration Statement.
x Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- -------------------------
* Previously paid.
C/M: 11939.0009 412672.1
<PAGE>
Equity Securities Trust, Series 9, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust II
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
I. Organization And General Information
1. (a) Name of trust............................................... Front cover of Prospectus
(b) Title of securities issued.................................. Front cover of Prospectus
2. Name and address of trustee...................................... The Trustee
3. Name and address of each depositor............................... The Sponsor
4. Name and address of principal underwriters....................... Distribution of Units
5. State of organization of trust................................... Organization
6. Execution and termination of trust agreement..................... Trust Agreement, Amendment and Termination
7. Changes of name.................................................. Not applicable
8. Fiscal year...................................................... Not applicable
9. Litigation....................................................... None
II. General Description of The Trust and Securities of the Trust
10. (a) Registered or bearer securities............................. Certificates
(b) Cumulative or distributive securities....................... Interest and Principal Distributions
(c) Redemption.................................................. Trustee Redemption
(d) Conversion, transfer, etc................................... Certificates, Sponsor's Repurchase, Trustee Redemption
(e) Periodic payment plan....................................... Not Applicable
(f) Voting rights............................................... Trust Agreement, Amendment and Termination
(g) Notice to certificateholders................................ Records, Portfolio, Substitution of Securities, Trust
Agreement, Amendment and Termination, The
Sponsor, The Trustee
(h) Consents required........................................... Trust Agreement, Amendment and Termination
(i) Other provisions............................................ Tax Status
11. Type of securities comprising units.............................. Objectives, Portfolio, Portfolio Summary
12. Certain information regarding periodic payment certificates...... Not Applicable
13. (a) Load, fees, expenses, etc................................... Summary of Essential Information, Public Offering
Price, Market for Units, Volume and Other Discounts,
Sponsor's Profits, Trust Expenses and Charges
(b) Certain information regarding periodic payment
certificates............................................ Not Applicable
</TABLE>
-i-
C/M: 11939.0009 412672.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
(c) Certain percentages......................................... Summary of Essential Information, Public Offering
Price, Market for Units, Volume and Other Discounts
(d) Price differences........................................... Volume and Other Discounts, Distribution of Units
(e) Other loads, fees, expenses................................. Certificates
(f) Certain profits receivable by depositors, principal
underwriters, trustee or affiliated persons............. Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges to income........................... Not Applicable
14. Issuance of trust's securities................................... Organization, Certificates
15. Receipt and handling of payments from purchasers Organization
16. Acquisition and disposition of underlying securities............. Organization, Objectives, Portfolio, Portfolio
Supervision
17. Withdrawal or redemption......................................... Comparison of Public Offering Price, Sponsor's
Repurchase Price and Redemption Price, Sponsor's
Repurchase, Trustee Redemption
18. (a) Receipt, custody and disposition of income.................. Distributions, Dividend and Principal Distributions,
Portfolio Supervision
(b) Reinvestment of distributions............................... Not Applicable
(c) Reserves or special funds................................... Dividend and Principal Distributions
(d) Schedule of distributions................................... Not Applicable
19. Records, accounts and reports.................................... Records
20. Certain miscellaneous provisions of trust agreement
(a) Amendment................................................... Trust Agreement, Amendment and Termination
(b) Termination................................................. Trust Agreement, Amendment and Termination
(c) and (d) Trustee, removal and successor...................... The Trustee
(e) and (f) Depositor, removal and successor.................... The Sponsor
21. Loans to security holders........................................ Not Applicable
22. Limitations on liability......................................... The Sponsor, The Trustee, The Evaluator
23. Bonding arrangements............................................. Part II - Item A
24. Other material provisions of trust agreement..................... Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor........................................ The Sponsor
26. Fees received by depositor....................................... Not Applicable
27. Business of depositor............................................ The Sponsor
28. Certain information as to officials and affiliated persons of
depositor..................................................... Not Applicable
29. Voting securities of depositor................................... Not Applicable
30. Persons controlling depositor.................................... Not Applicable
31. Payments by depositor for certain services
rendered to trust....................................... Not Applicable
</TABLE>
-ii-
C/M: 11939.0009 412672.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
32. Payments by depositor for certain other services
rendered to trust............................................. Not Applicable
33. Remuneration of employees of depositor for certain services
rendered to trust............................................. Not Applicable
34. Remuneration of other persons for certain services
rendered to trust............................................. Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states..................... Distribution of Units
36. Suspension of sales of trust's securities........................ Not Applicable
37. Revocation of authority to distribute............................ None
38. (a) Method of distribution...................................... Distribution of Units
(b) Underwriting agreements..................................... Distribution of Units
(c) Selling agreements.......................................... Distribution of Units
39. (a) Organization of principal underwriters...................... The Sponsor
(b) N.A.S.D. membership of principal underwriters............... The Sponsor
40. Certain fees received by principal underwriters.................. The Sponsor
41. (a) Business of principal underwriters.......................... The Sponsor
(b) Branch offices of principal underwriters.................... The Sponsor
(c) Salesmen of principal underwriters.......................... The Sponsor
42. Ownership of trust's securities by certain persons............... Not Applicable
43. Certain brokerage commissions received by
principal underwriters.................................. Not Applicable
44. (a) Method of valuation......................................... Summary of Essential Information, Market for
Units,Offering Price, Accrued Interest, Volume and
Other Discounts, Distribution of Units, Comparison of
Public Offering Price, Sponsor's Repurchase Price and
Redemption Price, Sponsor's Repurchase, Trustee
Redemption
(b) Schedule as to offering price............................... Summary of Essential Information
(c) Variation in offering price to certain persons.............. Distribution of Units, Volume and Other Discounts
45. Suspension of redemption rights.................................. Not Applicable
46. (a) Redemption valuation........................................ Comparison of Public Offering Price, Sponsor's
Repurchase Price and Redemption Price, Redemption
Price, and Trustee Redemption
(b) Schedule as to redemption price............................. Summary of Essential Information
47. Maintenance of position in underlying securities................. Comparison of Public Offering Price, Sponsor's
Repurchase Price and Redemption Price, Sponsor's
Repurchase, Trustee Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee........................... The Trustee
</TABLE>
-iii-
C/M: 11939.0009 412672.1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
49. Fees and expenses of trustee..................................... Trust Expenses and Charges
50. Trustee's lien................................................... Trust Expenses and Charges
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's securities....................... None
VII. Policy of Registrant
52. (a) Provisions of trust agreement with respect to selection or
elimination of underlying securities.................... Objectives, Portfolio, Portfolio Supervision,
Substitution of Securities
(b) Transactions involving elimination of underlying
securities.............................................. Not Applicable
(c) Policy regarding substitution or elimination of underlying
securities.............................................. Submission of Securities
(d) Fundamental policy not otherwise covered.................... Not Applicable
53. Tax status of trust.............................................. Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during last ten years......................... Not Applicable
55. Hypothetical account for issuers of periodic payment plans....... Not Applicable
56. Certain information regarding periodic payment certificates...... Not Applicable
57. Certain information regarding periodic payment plans............. Not Applicable
58. Certain other information regarding
periodic payment plans.................................. Not Applicable
59. Financial statements (Instruction 1(c) to Form S-6).............. Statement of Financial Condition
</TABLE>
-iv-
C/M: 11939.0009 412672.1
<PAGE>
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES, INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R)
TRUST II
The Trust is a unit investment trust designated Equity Securities Trust, Series
9, Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust II (the "Trust"). The Sponsor is Reich & Tang Distributors
L.P. The objective of the Trust is to seek to achieve capital appreciation.
Neither the Sponsor nor the Portfolio Consultant can give assurance that the
Trust's objective can be achieved. The Trust contains an underlying portfolio
consisting primarily of common stock, and contracts and funds for the purchase
of such securities (collectively, the "Securities"), which have been purchased
by the Trust based upon the recommendations of the portfolio consultant, I.I.
Strategic Consultants, Inc. (the "Portfolio Consultant"). The Trust is
concentrated in the equity securities of technology and science companies
located within the United States. The Trust will terminate approximately one
year after the Initial Date of Deposit. It is not expected that there will be
distributions of dividends paid with respect to Units of the Trust. (See
"Rights of Certificateholders--Distributions" in Part B.) Minimum Purchase: 100
Units
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive material relating to the Trust and the
Statement of Condition of the Trust. Part B contains general information about
the Trust. Part A may not be distributed unless accompanied by Part B. Please
read and retain both parts of this Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED OCTOBER 16, 1996
C/M 11939.0009 398390.1
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION AS OF OCTOBER 15, 1996:*
<TABLE>
<S> <C> <C>
DATE OF DEPOSIT: October 16, 1996 MINIMUM VALUE OF TRUST: The Trust may be
AGGREGATE VALUE OF SECURITIES.................. $200,601 terminated if the value of the Trust is less than 40% of
AGGREGATE VALUE OF SECURITIES the aggregate value of the Securities at the completion
PER 100 UNITS............................... $970.50 of the Deposit Period.
NUMBER OF UNITS................................ 20,670 MANDATORY TERMINATION DATE: The earlier of
FRACTIONAL UNDIVIDED INTEREST IN December 15, 1997 or the disposition of the last
TRUST....................................... 1/20,670 Security in the Trust.
PUBLIC OFFERING PRICE+ TRUSTEE: The Chase Manhattan Bank.
Aggregate Value of Securities in TRUSTEE'S ANNUAL FEE: $.90 per 100 Units
Trust.................................... $200,601 outstanding
Divided By 20,670 Units (times 100)......... $970.50 ESTIMATED ANNUAL ORGANIZATIONAL
Plus Sales Charge of 2.95% of Public EXPENSES**: $.57 per 100 Units
Offering Price per 100 Units............. $29.50 ESTIMATED OFFERING COSTS**: $.43 per 100
Public Offering Price per 100 Units++....... $1,000.00 Units
SPONSOR'S REPURCHASE PRICE AND PORTFOLIO CONSULTANT: I.I. Strategic
REDEMPTION PRICE PER Consultants, Inc.
100 UNITS+++................................ $970.50 OTHER ANNUAL FEES AND EXPENSES: $.17 per
EXCESS OF PUBLIC OFFERING PRICE 100 Units outstanding
OVER REDEMPTION PRICE PER SPONSOR: Reich & Tang Distributors L.P.
100 UNITS................................... $29.50 SPONSOR'S ANNUAL SUPERVISORY FEE:
EVALUATION TIME: 4:00 p.m. New York Time. Maximum of $.25 per 100 Units outstanding (see
MINIMUM INCOME OR PRINCIPAL "Trust Expenses and Charges" in Part B).
DISTRIBUTION: $1.00 per 100 Units RECORD DATE: First day of the last month of each
LIQUIDATION PERIOD: Beginning 60 days prior to quarter.
the Mandatory Termination Date. ROLLOVER NOTIFICATION DATE***:
September 26, 1997 or another date as determined by the
Sponsor.
</TABLE>
- ------------------
* The business day prior to 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 made.
** Although historically the sponsors of unit investment trusts ("UITs")
have paid all the costs of establishing such UITs, this Trust (and therefore
the Certificateholders) 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 the closing documents; and the
initial audit of the Trust. Total organizational expenses will be amortized
over the life of the Trust. Offering costs, including the costs of registering
securities with the Securities and Exchange Commission and the states, will be
amortized over the term of the initial offering period, which may be between 30
and 90 days. See "Trust Expenses" in Part B. Assumes the Trust will reach a
size of 2,500,000 Units as estimated by the Sponsor; Organizational expenses
and offering costs per 100 Units will vary with the actual size of the Trust.
If the Trust does not reach this Unit level, the Estimated Organizational
Expenses and Offering Costs per 100 Units will be higher.
*** If a Certificateholder ("Rollover Certificateholder") so specifies prior
to the Rollover Notification Date, the Rollover Certificateholder's terminating
distribution will be reinvested as received in an available series of the
Equity Securities Trust, if offered (see "Trust Administration - Trust
Termination").
+ Per 100 Units.
++ 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.
+++ Any redemptions of over 2,500 Units may, upon request by a redeeming
Certificateholder, be made in kind. The Trustee will forward the distributed
securities to the Certificateholder's bank or broker-dealer account at The
Depository Trust Company in book-entry form. See "Liquidity--Trustee
Redemption" in Part B.
A-2
C/M 11939.0009 398390.1
<PAGE>
DESCRIPTION OF PORTFOLIO:
<TABLE>
<S> <C>
Number of Issues: 49 (49 issuers) Computer - Network.....................................4.10%
Percent of Issues represented by the Sponsor's contracts to Electronics............................................4.13%
purchase: 100% Food Manufacturer......................................2.03%
Expected settlement date: October 21, 1996 Footwear...............................................2.07%
(NYSE 14.21%; AMEX 2.02%; Healthcare Equipment...................................2.04%
Over the Counter 83.77%) Healthcare Facility....................................2.01%
Percent of Issues representing Restricted Securities: 0% Miscellaneous Goods....................................6.14%
Percent of Issues by Industry*: Office Supplies........................................2.08%
Advertising Agency........................................2.05% Oil Services...........................................6.09%
Agriculture - Crops.......................................2.03% Photo Equipment........................................2.02%
Bio-Technology - Drugs....................................4.08% Retail - Apparel.......................................2.02%
Building - Fixtures.......................................2.00% Semiconductor.........................................14.29%
Building - Machinery......................................2.08% Software...............................................8.17%
Business Services........................................12.24% Utility............................................. 2.06%
Car Parts.................................................2.01% --------
Computer Equipment........................................8.03% 100.00%
Computers.................................................2.06% =======
Computer Services ........................................4.17%
</TABLE>
- -----------------------------
* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or that industry constitute
25% or more of the aggregate face amount of the portfolio.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 Units of the Trust 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
the Trust divided by the number of Units outstanding times 100 plus a sales
charge of 2.95% of the Public Offering Price per 100 Units or 3.04% of the net
amount invested in Securities per 100 Units. The price of a single Unit, or any
multiple thereof, is calculated by dividing the Public Offering Price per 100
Units by 100 and multiplying by the number of Units. Any cash held by the Trust
will be added to the Public Offering Price. For additional information
regarding the Public Offering Price, repurchase and redemption of Units and
other essential information regarding the Trust, see the "Summary of Essential
Information." During the initial offering period orders involving at least
10,000 Units 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 and the price to be paid by each investor will be computed as of the
date the Units are purchased. (See "Public Offering" in Part B.)
DISTRIBUTIONS. It is not expected that there will be distributions of dividends
paid with respect to Units of the Trust. Dividend distributions, if any, will
be made on the fifteenth day of the last month of each quarter (the "Quarterly
Distribution Date") to all Certificateholders of record on the first day of the
last month of each quarter (the "Record Date"). The final distribution will be
made within a reasonable period of time after the termination of the Trust.
Certificateholders may elect to automatically reinvest distributions (other
than the final distribution in connection with the termination of the Trust)
into additional Units of a Trust, which will not be subject to a sales charge.
(See "Rights of Certificateholders--Distributions" in Part B.)
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units and to continuously offer to
repurchase the Units of the Trust both during and after the initial public
offering. The secondary market repurchase price will be based on the market
value of the Securities in the Trust portfolio and will be the same as the
redemption price. (See "Liquidity--Sponsor Repurchase" for a description on how
the secondary market repurchase price will be determined.) If a market is not
maintained a Certificateholder will be able to redeem his 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 the Trust or of the liquidity of the Securities in any
markets made. In addition, the Trust 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.
A-3
C/M 11939.0009 398390.1
<PAGE>
TERMINATION. During the 60 day period prior to the Mandatory Termination Date
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the Trust 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 Trust 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. 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 60 days, and it could be as
short as one day, depending on the liquidity of the Securities being sold.
Certificateholders may elect one of the three options in receiving their
terminating distributions: (1) to receive their pro rata share of the
underlying Securities in-kind, if they own at least 2,500 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 the Trust (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. Certificateholders 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 it can without materially adversely
affecting the price of the Securities. Certificateholders should consult their
own tax advisers in this regard.
RISK CONSIDERATIONS. An investment in Units of the Trust 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).
The technology, technology-related and science industries may be subject to
greater governmental regulation and companies in these industries may be
subject to risks of developing technologies and competitive pressures, all of
which may have a material adverse effect on these industries. Additionally,
investors should consider the greater risk of the Trust's concentration versus
the safety that comes with a less concentrated portfolio and should compare
returns available on more diversified portfolios before making an investment
decision. The portfolio of the Trust is fixed and not "managed" by the Sponsor
or the Portfolio Consultant. Since the Trust will not sell Securities in
response to ordinary market fluctuation, but only at the Trust's 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 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 Trust. (See "Risk
Considerations" in Part B of this Prospectus.)
UNDERWRITING. Reich & Tang Distributors L.P., 600 Fifth Avenue, New York, New
York 10020, will act as Underwriter for all of the Units of Equity Securities
Trust, Series 9, Signature Series, Individual Investor's America's Fastest
Growing Companies(R) Trust II. The Underwriter will distribute Units through
various broker-dealers, banks and/or other eligible participants (see "Public
Offering--Distribution of Units" in Part B).
A-4
C/M 11939.0009 398390.1
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES (R) TRUST II
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, OCTOBER 16, 1996
<CAPTION>
ASSETS
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $200,601) (Note 1)......................... $200,601
Organizational Costs(2)................................................................................. 14,250
Offering Costs(3)....................................................................................... 10,750
-----------------
Total................................................................................................... $225,601
================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND INTEREST OF CERTIFICATEHOLDERS
<S> <C>
Accrued Liabilities (2 and 3)........................................................................... $ 25,000
Interest of Certificateholders - Units of Fractional
Undivided Interest Outstanding (Series 9: 20,670 Units).......................................... 200,601
-----------------
Total................................................................................................... $225,601
================
Net Asset Value Per Unit $ 9.71
------------------
</TABLE>
- -------------------------
Notes to Statement:
(1) Equity Securities Trust, Series 9, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust II (the "Trust") is a
unit investment trust created under the laws of the State of New York and
registered under the Investment Company Act of 1940. The Trust, sponsored by
Reich & Tang Distributors L.P. (the "Sponsor"), was created to provide
investors with the opportunity to achieve capital appreciation through
investment in common stock of technology and science companies. On October 16,
1996, the "Date of Deposit", Portfolio Deposits were received by The Chase
Manhattan Bank, the Trust's Trustee, in the form of executed securities
transactions, in exchange for 20,670 units of the Trust. An irrevocable letter
of credit issued by The Bank of Boston in an aggregate amount of $1,200,000 has
been deposited with the Trustee to cover the purchases of such Securities as
well as any outstanding purchases of a previously-sponsored unit investment
trust of the Sponsor. Aggregate cost to the Trust 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 October 15, 1996. The Trust will
terminate on December 15, 1997 or earlier under certain circumstances as
further described in the Prospectus.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
(2) Organizational costs incurred by the Trust have been deferred and
will be amortized on a straight line basis over the life of the Trust. The
Trust will reimburse the Sponsor for actual organizational costs incurred.
(3) Offering costs incurred by the Trust will be charged to capital no
later than the close of the period during which Units of the Trust are first
sold to the public.
A-5
C/M 11939.0009 398390.1
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, OCTOBER 16, 1996
Number of Market Cost of Sec.
Portfolio Securities Percentage Value Per to the
No. (Shs./Princ.) Name of Issuer (2) of Trust (1) Share Trust(3)
----- ------------- ------------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Advertising Agency 2.05%
1 185 Shs. CKS Group, Inc. 2.05% $22.25 $4,116
------
4,116
Agriculture - Crops 2.03%
2 105 DEKALB Genetics Corp. 2.03 38.75 4,069
-----
4,069
Bio-Technology - Drugs 4.08%
Bio-Technology General
3 588 Corp. 2.05 7.00 4,116
4 209 Curative Technologies, Inc. 2.03 19.50 4,075
-----
8,191
Building - Fixtures 2.00%
5 279 Lone Star Technologies, Inc. 2.00 14.375 4,011
-----
4,011
Building - Machinery 2.08%
6 272 JLG Industries, Inc. 2.08 15.375 4,182
-----
4,182
Business Services 12.24%
ATC Communications Group,
7 206 Inc. 2.07 20.125 4,146
8 173 COREStaff, Inc. 2.04 23.625 4,087
9 212 Employee Solutions, Inc. 2.03 19.250 4,081
Horizon Mental Health
10 152 Management, Inc. 2.07 27.250 4,142
11 233 Mecklermedia Corp. 2.00 17.250 4,019
Pharmaceutical Product
12 163 Development, Inc. 2.03 25.000 4,075
-----
24,550
Car Parts 2.01%
13 170 Arvin Industries, Inc. 2.01 23.750 4,037
-----
4,037
</TABLE>
A-6
C/M 11939.0009 398390.1
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, OCTOBER 16, 1996
Number of Market Cost of Sec.
Portfolio Securities Percentage Value Per to the
No. (Shs./Princ.) Name of Issuer (2) of Trust (1) Share Trust(3)
----- ------------- ------------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Computer Equipment 8.03%
14 84 Shs. C-Cube Microsystems, Inc. 2.03% $48.500 $4,074
15 107 Davox Corp. 2.03 38.000 4,066
16 64 DSP Communications, Inc. 1.99 62.500 4,000
17 51 U.S. Robotics Corp. 1.98 78.000 3,978
-----
16,118
Computers 2.06%
Advanced Logic Research,
18 480 Inc. 2.06 8.625 4,140
-----
4,140
Computer Services 4.17%
19 102 The BISYS Group, Inc. 2.03 40.000 4,080
20 141 Verilink Corp. 2.14 30.500 4,300
-----
8,380
Computer - Network 4.10%
21 85 Sapient Corp. 2.02 47.75 4,059
Wandel & Goltermann
22 196 Technologies, Inc. 2.08 21.25 4,165
-----
8,224
Electronics 4.13%
23 122 HADCO Corp. 2.08 34.125 4,163
24 190 Jabil Circuit, Inc. 2.05 21.625 4,109
-----
8,272
Food Manufacturer 2.03%
25 347 UniMark Group, Inc. 2.03 11.750 4,077
-----
4,077
Footwear 2.07%
26 226 Vans, Inc. 2.07 18.375 4,153
-----
4,153
</TABLE>
A-7
C/M 11939.0009 398390.1
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, OCTOBER 16, 1996
Number of Market Cost of Sec.
Portfolio Securities Percentage Value Per to the
No. (Shs./Princ.) Name of Issuer (2) of Trust (1) Share Trust(3)
----- ------------- ------------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Healthcare Equipment 2.04%
Arterial Vascular
27 152 Shs. Engineering, Inc. 2.04% $26.875 $4,085
------
4,085
Healthcare Facility 2.01%
FPA Medical Management,
28 158 Inc. 2.01 25.500 4,029
-----
4,029
Miscellaneous Goods 6.14%
29 107 Gleason Corp. 2.05 38.375 4,106
30 302 Nortek, Inc. 2.05 13.625 4,115
31 180 Robbins & Myers, Inc. 2.04 22.750 4,095
-----
12,316
Office Supplies 2.08%
32 384 Data Documents, Inc. 2.08 10.875 4,176
-----
4,176
Oil Services 6.09%
33 111 ENSCO International, Inc. 2.04 36.875 4,093
34 231 Global Marine, Inc. 2.03 17.625 4,071
35 157 Swift Energy Co. 2.02 25.750 4,043
-----
12,207
Photo Equipment 2.02%
36 247 Ballantyne of Omaha, Inc. 2.02 16.375 4,045
-----
4,045
Retail - Apparel 2.02%
37 99 The TJX Companies, Inc. 2.02 40.875 4,047
-----
4,047
</TABLE>
A-8
C/M 11939.0009 398390.1
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES TRUST
SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, OCTOBER 16, 1996
Number of Market Cost of Sec.
Portfolio Securities Percentage Value Per to the
No. (Shs./Princ.) Name of Issuer (2) of Trust (1) Share Trust(3)
----- ------------- ------------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Semiconductor 14.29%
38 203 Shs. Chips & Technologies, Inc. 2.00% $19.750 $4,009
Level One Communications,
39 125 Inc. 2.03 32.500 4,063
40 228 Silicon Valley Group, Inc. 1.99 17.500 3,990
41 241 SpeedFam International, Inc. 2.07 17.250 4,157
42 167 TriQuint Semiconductor, Inc. 2.10 25.250 4,217
43 98 Vitesse Semiconductor Corp. 2.05 42.000 4,116
44 206 Zoran Corp. 2.05 20.000 4,120
-----
28,672
Software 8.17%
45 310 Activision, Inc. 2.07 13.375 4,146
46 103 CIBER, Inc. 2.03 39.500 4,069
47 170 Engineering Animation, Inc. 2.03 24.000 4,080
48 90 Veritas Software Corp. 2.04 45.375 4,084
-----
16,379
Utility 2.06%
49 375 York Research Corp. 2.06 11.000 4,125
-----
4,125
Total Investment in Securities 100.00% $200,601
======= ========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Trust.
(2) Contracts to purchase the Securities were entered into on October 15,
1996. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be October 21, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsor's Purchase Price is $201,615. The Sponsor's Loss
on the Initial Date of Deposit is $1,014.
The accompanying notes form an integral part of the Financial Statements.
A-9
C/M 11939.0009 398390.1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Certificateholders,
Equity Securities Trust, Series 9,
Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust II
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, presents fairly, in all material respects, the
financial position of Equity Securities Trust, Series 9, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust II (the
"Trust") at opening of business, October 16, 1996, in conformity with generally
accepted accounting principles. This financial statement is the responsibility
of the Trust's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this
financial statement in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statement is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of the contracts for the securities at opening of business,
October 16, 1996, by correspondence with the Sponsor, provides a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 16, 1996
A-10
C/M 11939.0009 398390.1
<PAGE>
ABOUT THE TRUST
Individual Investor's America's Fastest Growing Companies(R) Trust II is
the second in a series of unit investment trusts designed to take part in many
of the most compelling segments of the U.S. economy: vibrant companies
operating across a range of industries, having shown earnings growth far above
the corporate norm, as measured by the Standard & Poor's 500 index.
Over the past 70 years, high-quality growth stocks have significantly
outperformed all other stocks* as measured by the Ibbotson Associates Small
Company Stock Index, according to a study by Ibbotson Associates for the period
ending December 1995.** (Past performance is no guarantee of future results.)
The AFGC Trust II is a unique vehicle designed for investors interested
in a broad-based group of growth stocks, recommended for their quality by the
portfolio consultant, and held for a one-year time horizon. The Trust will
contain equity holdings, identified by I.I. Strategic Consultants, Inc., as
having extraordinary potential for rapid earnings expansion.
INVESTMENT OBJECTIVE
Individual Investor's America's Fastest Growing Companies(R) Trust II
seeks capital appreciation over the year-long life of the Trust. There can be
no assurance that this objective will be realized.
THE SELECTION PROCESS
The stocks making up the AFGC Trust II are first subject to a rigorous
analytical process, which centers around a proprietary research model called
the Individual Investor Power Rating system.
To compile the index, the portfolio consultant's experienced analysts
have scoured the universe of U.S. public companies to find those firms whose
earnings are growing faster than all others.
An initial screen of companies identifies firms showing consistent
quarterly earnings growth in excess of 100%. All the stocks on the list have
total market capitalizations above $100 million. They also meet certain
liquidity parameters of daily trading volume.
From there, the research process incorporates a dozen different
parameters. These range from a pattern of buying by corporate insiders, to
historical earnings records, to projected future profitability, to balance
sheet strength, such as debt-to-equity figures and ratios of current assets to
current liabilities.
After paring the list down in this manner, the investment experts at
Individual Investor assess the finalists against each other, to determine the
relative financial merits of each. The ultimate components of the Trust--the
select group of firms explosive enough to be called America's Fastest Growing
Companies--are drawn from this final analysis.
I.I. STRATEGIC CONSULTANTS
The portfolio consultant to the AFGC Trust II is I.I. Strategic
Consultants, Inc., a wholly owned subsidiary of Individual Investor Group,
Inc., publishers of Individual Investor magazine. The consultant is charged
with identifying and recommending the securities that comprise the Trust.
Individual Investor is a monthly investment magazine whose editorial
mission emphasizes results-oriented investment content. The investment ideas
profiled in the magazine are generated by an experienced team of securities
analysts employing rigorous methods of financial analysis.
The research is performed by a ten-person staff of securities analysts,
under the direction of Jonathan Steinberg, chairman and chief executive of
Individual Investor Group, Inc. A nationally recognized expert on small-company
growth
- --------
* All stocks listed on NYSE, AMEX or OTC.
** The Ibbotson study is based on historical data of the returns from
various stocks, government and corporate bonds, U.S. Treasury bills and
consumer goods (as adjusted for inflation).
C/M 11939.0009 398390.1
<PAGE>
stocks, Mr. Steinberg is the six-time winner since January 1990 of one of Wall
Street's most prestigious biannual stock-selection contests known as the Dart
Contest, as featured in the "Your Money Matters" column of the Wall Street
Journal.
As a group, the research team boasts approximately 60 years of experience
at such firms as Morgan Stanley, Standard & Poor's, Bear Stearns, American
International Group, Smith Barney, and Bank Julius Baer.
In constructing the Trust's portfolio, I.I. Strategic Consultants, Inc.
has focused on small- to mid-sized companies having shown exceptionally rapid
earnings growth. The companies operate in a wide variety of industries.
FEATURES, OBJECTIVES, AND INVESTMENT BENEFITS
o Opportunity for Capital Growth
o Portfolio diversification
o Professional stock selection
o Liquidity of investment
o Convenience
o Low minimum investment
o Options at termination
RISK CONSIDERATIONS
Since the Trust consists of common stocks of domestic issuers, an
investment in Units of the Trust 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. Also, when redeemed, Units may be worth more or less
than the original cost.)
Investing in small-capitalization stocks ("small-cap companies") may
involve greater risk than investing in medium- and large-capitalization stocks,
since they can be subject to more abrupt or erratic movements. Small
capitalization companies are those with market capitalizations of $750 million
or less at the time of the Trust's investment. Many small-cap companies will
have had their securities publicly traded, if at all, for only a short period
of time and will not have had the opportunity to establish a reliable trading
pattern through economic cycles. The price volatility of small-cap companies is
relatively higher than larger, older, and more mature companies.
C/M 11939.0009 398390.1
<PAGE>
EQUITY SECURITIES TRUST
SERIES 9, SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES (R) TRUST II
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 9, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust II consists
of a "unit investment trust" designated as set forth in Part A. The Trust was
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement (the "Trust Agreement"), dated the Initial Date of Deposit, among
Reich & Tang Distributors L.P., as Sponsor, and The Chase Manhattan Bank, as
Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
common stock, including funds and delivery statements relating to contracts for
the purchase of certain such securities (collectively, 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 Trust. The Sponsor has a limited right to substitute other securities in
the Trust portfolio in the event of a failed contract. See "The
Trust--Substitution of Securities." 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
Certificateholders. See "Trust Administration Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities of the Trust in the ratio of one
hundred Units for the indicated amount of the aggregate market value of the
Securities initially deposited in the Trust as is set forth in the "Summary of
Essential Information". As additional Units are issued by the Trust as a result
of the deposit of Additional Securities, as described below, the aggregate
value of the Securities in the Trust will be increased and the fractional
undivided interest in the Trust represented by each Unit will be decreased. To
the extent that any Units are redeemed by the Trustee, the fractional undivided
interest or pro rata share in such Trust represented by each unredeemed Unit
will increase, although the actual interest in such Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Certificateholders, which may include the
Sponsor, or until the termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsor established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"), the Sponsor may deposit additional Securities
in the Trust that are substantially similar to the Securities already deposited
in the Trust ("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 Trust portfolio on
the Initial Date of Deposit. These additional Units, which may result in a
potential increase in the number of Units outstanding, 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 composition of the Trust portfolio
may change slightly based on certain adjustments made to reflect the
disposition of Securities and/or the receipt of a stock dividend, a stock split
or other
B-1
C/M 11939.0009 398390.1
<PAGE>
distribution with respect to such Securities, including Securities received in
exchange for shares or the reinvestment of the proceeds distributed to
Certificateholders. Deposits of Additional Securities in the Trust subsequent
to the Deposit Period must replicate exactly the existing proportionate
relationship among the number of shares of Securities in the Trust Portfolio.
Substitute Securities may be acquired under specified conditions when
Securities originally deposited in the Trust are unavailable (see "The
Trust--Substitution of Securities" below).
OBJECTIVE. The objective of the Trust is to seek to achieve capital
appreciation. The Trust seeks to achieve this objective by investing primarily
in a portfolio of equity securities selected by the Trust's Portfolio
Consultant, consisting of common stocks of domestic issuers, and contracts to
purchase such Securities, which the Portfolio Consultant believes will enable
the Trust to achieve its objective. All of the Securities in the Trust are
listed on the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers Automated Quotations ("NASDAQ")
National Quotation Market System and are generally followed by independent
investment research firms. See "Summary of Essential Information" for the
percentages of Securities in the Trust portfolio that are listed on particular
exchanges or that are Restricted Securities, if any (see "Risk
Considerations--Liquidity"). There is no minimum capitalization for the
selection of Securities for the Trust's portfolio. The market trading activity
of a Security may be a factor in its selection for the Trust's portfolio. There
can be no assurance that the Trust's investment objective can be achieved.
THE SECURITIES. In identifying the Securities for the Trust, the
Portfolio Consultant has identified stocks from its 1996 list of America's
Fastest Growing Companies(R) ("AFGC"). The parameters for inclusion on the AFGC
list are rigid, centered around a proprietary ranking system called the II
Power Rating. To compile the index, the Portfolio Consultant's research team
first extensively analyzed all of the stocks appearing on the AFGC list in the
past twelve months. In order to appear on that list, a company must: (i) post
earnings growth of 100% or more; (ii) show positive revenue comparisons; and
(iii) have at least $0.05 per share in earnings. The resulting list was further
narrowed down by applying a number of additional fundamental and subjective
criteria, ranging from revenue growth to cash flow analysis. The Portfolio
Consultant then applied its twelve Power Rating criteria to the remaining
companies. The rankings are based on the following criteria: three- and
one-year revenue growth; three- and one-year net income growth; balance sheet
strength; return on shareholders' equity; return on assets; the ratio of a
company's current price-earnings multiple to its projected earnings growth
rate; cash flows; price-sales multiples; debt-equity ratios; and operating
profit margins. Finally, the strongest remaining companies in the Power Rating
were judged against each other in order to determine their relative strength.
All of the Securities are publicly traded either on a stock exchange or
in the over-the-counter market. The contracts to purchase Securities deposited
initially in the Trust 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.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust. In addition, the Sponsor, at its option, is
authorized under the Trust Agreement to direct the Trustee to reinvest in
Substitute Securities the proceeds of the sale of any of the Securities only if
such sale was due to unusual circumstances as set forth under "Trust
Administration--Portfolio Supervision."
The Substitute Securities must be purchased within 20 days after the sale
of the portfolio Security or delivery of the notice of the failed contract.
Where the Sponsor purchases Substitute Securities in order to replace Failed
Securities, (i) the purchase price may not exceed the purchase price of the
Failed Securities and (ii) the Substitute Securities must be substantially
similar to the Failed Securities. Where the Sponsor purchases Substitute
Securities in order to replace Securities it sold, the Sponsor will endeavor to
select Securities which are equity securities that possess characteristics that
are consistent with the objective of the Trust as set forth above. Such
selection may include or be limited to Securities previously included in the
portfolio of the Trust. No assurance can be given that the Trust will retain
its present size and composition for any length of time.
The Trustee shall notify all Certificateholders of the acquisition of the
Substitute Security, within five days thereafter, and the Trustee shall, on the
next Quarterly Distribution Date which is more than 30 days thereafter, make a
pro rata distribution of the amount, if any, by which the cost to the Trust of
the Failed Security exceeded the cost of the Substitute Security plus accrued
interest, if any. In the event no reinvestment is made, the proceeds of the
sale of Securities will be distributed to Certificateholders as set forth under
"Rights of Certificateholders--Distributions." In addition, if the right of
substitution shall not be utilized to acquire Substitute Securities in the
event of a failed contract, the Sponsor will cause to
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C/M 11939.0009 398390.1
<PAGE>
be refunded the sales charge attributable to such Failed Securities to all
Certificateholders, and distribute the principal and dividends, if any,
attributable to such Failed Securities on the next Quarterly Distribution Date.
The proceeds from the sale of a Security or the exercise of any redemption or
call provision will be distributed to Certificateholders except to the extent
such proceeds are applied to meet redemptions of Units. (See
"Liquidity--Trustee Redemption.")
RISK CONSIDERATIONS
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 ability of an issuer to distribute dividends.
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 Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated during a 60 day period at the termination of the one-year
life of the Trust. Since the Trust will not sell Securities in response to
ordinary market fluctuation, but only at the Trust's termination 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 Trust. However, the Sponsor may direct the disposition
by the Trustee of Securities upon the occurrence of certain events. Some of the
Securities in the Trust may also be owned by other clients of the Sponsor, the
Portfolio Consultant and their affiliates. However, because these clients may
have differing investment objectives, the Sponsor or the Portfolio Consultant
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 fluctuations. (See "Trust Administration--Portfolio
Supervision" below.) Further, a security may be removed from the AFGC list but
remain in the Trust's portfolio. Potential investors also should be aware that
the Portfolio Consultant may change its views as to the investment merits of
any of the Securities during the life of the Trust and therefore should consult
their own financial advisers with regard to a purchase of Units. (See "Trust
Administration--Portfolio Supervision.")
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 the Trust. To the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and 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 Trust. 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 Trust. 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 Certificateholder's
Units and the Income per Unit received by the Trust. In particular,
Certificateholders 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 Trust during subsequent deposits of Additional Securities purchased
with cash deposited. In order to minimize these effects, the Trust 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 Trust contains common stocks of domestic issuers,
an investment in Units of the Trust 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
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C/M 11939.0009 398390.1
<PAGE>
Inclination of the issuer to declare or pay dividends on its common stock or
the economic interest of holders of common stock 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 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 Trust thus may be expected to fluctuate over
the life of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
THE TECHNOLOGY AND SCIENCE INDUSTRIES. Companies in the rapidly changing
fields of science and technology face special risks. For example, their
products or services may not prove commercially successful or may become
obsolete quickly. The value of the Trust's Units may be susceptible to factors
affecting the technology, technology-related and science industries and to
greater risk and market fluctuation than an investment in a trust that invests
in a broader range of portfolio securities not concentrated in any particular
industry. As such, the Trust may not be an appropriate investment for
individuals who are not long-term investors and who, as their primary
objective, require safety of principal or stable income from their investments.
The technology, technology-related and science industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policies and the need for regulatory approvals may have a material
adverse effect on these industries. Additionally, companies in these industries
may be subject to risks of developing technologies, competitive pressures and
other factors and are dependent upon consumer and business acceptance as new
technologies evolve.
SMALL CAPITALIZATION STOCK. Investing in small capitalization stocks may
involve greater risk than investing in medium and large capitalization stocks,
since they can be subject to more abrupt or erratic movements. Small market
capitalization companies ("Small-Cap Companies") are those with market
capitalizations of $750 million or less at the time of the Trust's investment.
Many Small-Cap Companies will have had their securities publicly traded, if at
all, for only a short period of time and will not have had the opportunity to
establish a reliable trading pattern through economic cycles. The price
volatility of Small-Cap Companies is relatively higher than larger, older and
more mature companies. The greater price volatility of Small-Cap Companies may
result from the fact that there may be less market liquidity, less information
publicly available or fewer investors who monitor the activities of these
companies. In addition, the market prices of these securities may exhibit more
sensitivity to changes in industry or general economic conditions. Some
Small-Cap Companies will not have been in existence long enough to experience
economic cycles or to know whether they are sufficiently well managed to
survive downturns or inflationary periods. Further, a variety of factors may
affect the success of a company's business beyond the ability of its management
to prepare or compensate for them, including domestic and international
political developments, government trade and fiscal policies, patterns of trade
and war or other military conflict which may affect particular industries or
markets or the economy generally.
PORTFOLIO CONSULTANT. Investors should be aware that an affiliate of the
Portfolio Consultant is an investment adviser for a private investment
partnership, which is currently its only advisory client, that may have similar
or different investment objectives than the Trust. Some of the Securities in
the Trust may also be owned by this other client of the Portfolio Consultant's
affiliate. However, because this client has a "managed" portfolio and may have
differing investment objectives, the Portfolio Consultant may sell certain
Securities for this account in instances where a sale of the Trust would be
impermissible, such as to maximize return by taking advantage of market
fluctuations. In addition, affiliates of the Portfolio Consultant are the
publishers of two investment information publications. The companies whose
Securities are included in the Portfolio may be profiled or otherwise reviewed
in those publications which are published by the affiliates of the Portfolio
Consultant. These publications may cause buying or selling activity in these
Securities for various reasons which may impact the prices of the Securities.
Further, a Security may be removed from the AFGC list but remain in the Trust's
Portfolio. These publications may recommend or cause selling activity regarding
certain Securities in instances where a sale by the Trust would be
impermissible. (See "Trust Administration--The Portfolio Consultant".)
LIQUIDITY. The Trust may purchase securities that are not registered
("Restricted Securities") under the Securities Act, but can be offered and sold
to "qualified institutional buyers" under Rule 144A under the Securities Act.
Since it is not possible to predict with assurance exactly how this market for
Restricted Securities sold and offered under Rule 144A will develop, the
Sponsor will carefully monitor the Trust's investments in these securities,
focusing on such factors, among others, as valuation, liquidity and
availability of information. This investment could have the effect of
increasing the level
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of illiquidity in the Trust to the extent that qualified institutional buyers
become for a time uninterested in purchasing these Restricted Securities. See
"Description of Portfolio" for the percentage of Restricted Securities held in
the Trust portfolio.
The principal trading market for certain other Securities may be in the
over-the-counter market. 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 Trust portfolio or of the
liquidity of the Securities in any markets made. In addition, the Trust may be
restricted under the Investment Company Act of 1940 from selling Securities to
the Sponsor.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of
the Securities to achieve their business and investment goals.
GENERALLY. There is no assurance that any dividends will be declared or
paid in the future on the Securities. Investors should be aware that there is
no assurance that the Trust's objective will be achieved.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, 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: if the
Securities are listed on a national securities exchange or on the NASDAQ
National Market System, this evaluation is generally based on the closing sale
prices on that exchange or that system as of the Evaluation Time (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 generally shall 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 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 are available at a volume discount from
the Public Offering Price during the initial public offering based upon the
number of Units purchased. This volume discount will result in a reduction of
the sales charge applicable to such purchases. The amount of the volume
discount and the approximate reduced sales charge on the Public Offering Price
applicable to such purchases are as follows:
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
--------------- --------------------------------
10,000 but less than 25,000 2.45%
25,000 but less than 50,000 2.20%
50,000 but less than 100,000 2.00%
100,000 or more 1.75%
These discounts will apply to all purchases of Units by the same
purchaser during the initial public offering period. Units purchased by the
same purchasers in separate transactions during the initial public offering
period will be aggregated for purposes of determining if such purchaser is
entitled to a discount provided that such purchaser must own at least the
required number of Units 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. The discount is also applicable to a
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account.
Employees (and their immediate families) of Reich & Tang Distributors
L.P. (and its affiliates), the Portfolio Consultant, and of the special counsel
to the Sponsor, may, pursuant to employee benefit arrangements, purchase Units
of the Trust at a price equal to the aggregate value of the underlying
securities in the Trust during the initial offering period, divided by the
number of Units outstanding at no sales charge. Such arrangements result in
less selling effort and selling
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expenses than sales to employee groups of other companies. Resales or transfers
of Units purchased under the employee benefit arrangements may only be made
through the Sponsor's secondary market, so long as it is being maintained.
Investors in any open-end management investment company or unit
investment trust that have purchased their investment within a twelve month
period prior to the date of this Prospectus can purchase Units of the Trust in
an amount not greater in value than the amount of said investment made during
this twelve month period at a reduced sales charge of 1.95% of the public
offering price.
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 (1) 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, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who, for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive the volume discount.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsor and dealers at the Public
Offering Price. The initial offering period is thirty days after each deposit
of Securities in the Trust and the Sponsor may extend the initial offering
period for successive thirty day periods. Certain banks and thrifts will make
Units of the Trust available to their customers on an agency basis. A portion
of the sales 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 for sale in substantially all
States through dealers who are members of the National Association of
Securities Dealers, Inc. Units may be sold to dealers at prices which represent
a concession of up to 2% per Unit, subject to the Sponsor's right to change the
dealers' concession from time to time. In addition, for transactions of at
least 100,000 Units or more, the Sponsor intends to negotiate the applicable
sales charge and such charge will be disclosed to any such purchaser. Such
Units may then be distributed to the public by the dealers at the Public
Offering Price then in effect. Units may be purchased by the Portfolio
Consultant at aggregate value. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units. The Sponsor reserves the
right to change the discounts from time to time.
Broker-dealers of the Trust, banks and/or others are eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their registered representatives who have sold a minimum
number of units of unit investment trusts created by the Sponsor during a
specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of brokers, dealers, banks and/or
others may be eligible to win other nominal awards for certain sales efforts or
under which the Sponsor will reallow to any such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate 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 brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of their own assets and not out of the assets of the
Trust. These programs will not change the price Certificateholders pay for
their Units or the amount that the Trust will receive from the Units sold.
SPONSOR'S PROFITS. The Sponsor will receive a combined gross underwriting
commission equal to up to 2.95% of the Public Offering Price per 100 Units
(equivalent to 3.04% of the net amount invested in the Securities).
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsor may realize profits
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or sustain losses with respect to Securities deposited in the Trust which were
acquired from underwriting syndicates of which they were a member. All or a
portion of the Securities deposited in the Trust may have been acquired through
the Sponsor. The Sponsor does not make a primary over-the-counter market in any
of the Securities in the Trust portfolio.
During the initial offering period and thereafter to the extent
additional Units continue to be offered by means of this Prospectus, the
Underwriter may also realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the aggregate value 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 Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF CERTIFICATEHOLDERS
CERTIFICATES. Ownership of Units of the Trust is evidenced by registered
Certificates executed by the Trustee and the Sponsor. Certificates may be
issued in denominations of one hundred or more Units. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed
and/or accompanied by a written instrument or instruments of transfer. Although
no such charge is presently made or contemplated, the Trustee may require a
Certificateholder to pay $2.00 for each Certificate reissued or transferred and
any governmental charge that may be imposed in connection with each such
transfer or interchange. Mutilated, destroyed, stolen or lost Certificates will
be replaced upon delivery of satisfactory indemnity and payment of expenses
incurred.
DISTRIBUTIONS. Dividends and interest received by the Trust are credited
by the Trustee to an Income Account for the Trust. Other receipts, including
the proceeds of Securities disposed of, are credited to a Principal Account for
the Trust. It is not expected that there will be distribution of dividends paid
with respect to Units of the Trust. A quarterly dividend distribution per 100
Units, if any, cannot be anticipated and may be paid as Securities are
redeemed, exchanged or sold, or as expenses of the Trust fluctuate. No
distribution need be made from the Income Account or the Principal Account
until the balance therein is an amount sufficient to distribute $1.00 per 100
Units.
Distributions, if any, to each Certificateholder from the Income Account
are computed as of the close of business on each Record Date for the following
payment date and consist of an amount substantially equal to such
Certificateholder's pro rata share of the income credited to the Income
Account, less expenses. Distributions, if any, from the Principal Account of
the Trust (other than amounts representing failed contracts, as previously
discussed) will be computed as of each Record Date, and will be made to the
Certificateholders of the Trust on or shortly after the next Quarterly
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 second succeeding Quarterly Distribution
Date. Persons who purchase Units between a Record Date and a Distribution Date
will receive their first distribution, if any, on the second Quarterly
Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account
of the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (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 Trust. 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.
RECORDS. The Trustee shall furnish Certificateholders 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 100 Units. Within a reasonable
time after the end of each calendar year, the Trustee will furnish
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to each person who at any time during the calendar year was a Certificateholder
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 Trust, 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 100 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 Trust, 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 100 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 100 Units
based upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Certificateholders during such calendar year
from the Income and Principal Accounts, separately stated, of the Trust,
expressed both as total dollar amounts and as dollar amounts representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year.
The Trustee shall keep available for inspection by Certificateholders 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
Certificateholders, Certificates issued or held, a current list of Securities
in the portfolio and a copy of the Trust Agreement.
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"). Certificateholders
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. The 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 the Trust as a grantor trust will cause
the Trust not to be subject to Federal income tax, and will cause the
Certificateholders 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 the Trust will be treated as income of the
Certificateholders in the manner set forth below.
2. The Trust is not subject to the New York Franchise Tax on
Business Corporations or the New York City General Corporation Tax. For a
Certificateholder who is a New York resident, however, a pro rata portion
of all or part of the income of the Trust will be treated as income of
the Certificateholder 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 Trust. This retained
right falls within the guidelines promulgated by the Internal Revenue
Service ("IRS") and should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each
Certificateholder when the Trust disposes of a Security (whether by sale,
exchange or redemption) or upon the sale, exchange or redemption of Units by
such Certificateholder. The price a Certificateholder pays for his Units,
including sales charges, is allocated among his pro rata portion of each
Security held by the Trust (in proportion to the fair market values thereof on
the date the Certificateholder purchases his Units) in order to determine his
initial cost for his pro rata portion of each Security held by the Trust.
For Federal income tax purposes, a Certificateholder's pro rata portion
of dividends paid with respect to a Security held by a Trust is 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
Certificateholder's pro rata portion of dividends paid on such Security that
exceed
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such current and accumulated earnings and profits will first reduce a
Certificateholder's tax basis in such Security, and to the extent that such
dividends exceed a Certificateholder's tax basis in such Security will
generally be treated as capital gain.
A Certificateholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the
Certificateholder has held his Units for more than one year. Long-term capital
gains are generally taxed at the same rates applicable to ordinary income,
although individuals who realize long-term capital gains may be subject to a
reduced tax rate on such gains, rather than the "regular" maximum tax rate of
39.6%. Tax rates may increase prior to the time when Certificateholders may
realize gains from the sale, exchange or redemption of the Units or Securities.
A Certificateholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss and will be long-term if the
Certificateholder 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 recognized by non-corporate Certificateholders may be deducted against
ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a
Certificateholder who itemizes his deductions may also deduct his pro rata
share of the fees and expenses of the Trust, but only to the extent that such
amounts, together with the Certificateholder'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
Certificateholder 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 Certificateholder 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 Certificateholder's pro rata
portion of dividends that are taxable as ordinary income to Certificateholders
which are 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 Certificateholder owns certain stock (or Units) the
financing of which is directly attributable to indebtedness incurred by such
corporation. Accordingly, corporate Certificateholders should consult their tax
adviser in this regard.
As discussed in the section "Termination," each Certificateholder may
have three options in receiving his termination distributions, which are (i) to
receive his pro rata share of the underlying Securities in kind, (ii) to
receive cash upon liquidation of his pro rata share of the underlying
Securities, or (iii) to invest the amount of cash he would receive upon the
liquidation of his pro rata share of the underlying Securities in units of a
future series of the Trust (if one is offered). There are special tax
consequences should a Certificateholder choose option (i), the exchange of the
Certificateholder's Units for a pro rata portion of each of the Securities held
by the Trust plus cash. Treasury Regulations provide that gain or loss is
recognized when there is a conversion of property into property that is
materially different in kind or extent. In this instance, the Certificateholder
may be considered the owner of an undivided interest in all of the Trust's
assets. By accepting the proportionate number of Securities of the Trust, in
partial exchange for his Unit, the Certificateholder should be treated as
merely exchanging his undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such,
there should be no material difference in the Certificateholder's ownership,
and therefore the transaction should be tax free to the extent the Securities
are received. Alternatively, the transaction may be treated as an exchange that
would qualify for nonrecognition treatment to the extent the Certificateholder
is exchanging his undivided interest in all of the Trust's Securities for his
proportionate number of shares of the underlying Securities. In either
instance, the transaction should result in a non-taxable event for the
Certificateholder to the extent Securities are received. However, there is no
specific authority addressing the income tax consequences of an in-kind
distribution from a grantor trust, and investors are urged to consult their tax
advisers in this regard.
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
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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
the Trust and gain from the sale of Units in the Trust or the Trust's 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 the 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 the Trust.
LIQUIDITY
SPONSOR REPURCHASE. Certificateholders 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 aggregate value of the Securities will be determined
by the Trustee on a daily basis and computed on the basis set forth under
"Trustee Redemption." The Sponsor does not guarantee the enforceability,
marketability or price of any Securities in the Portfolio or of the Units. 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 Certificates representing Units are physically received in
proper form, i.e., properly endorsed, by Reich & Tang Distributors L.P., 600
Fifth Avenue, New York, New York 10020. 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 Certificateholder 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 value of the
Securities in the Trust plus a 2.95% sales charge (or 3.04% of the net amount
invested) 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
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see "Trustee Redemption"). Factors which the Sponsor will consider
in making a determination will include the number of Units of all Trusts which
it has in inventory, its estimate of the salability and the time required to
sell such Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (three business days after
tender), the Sponsor may elect to purchase such Units. Such purchase shall be
made by payment to the Certificateholder 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. At any time prior to the termination of the Trust
(approximately one year from the Date of Deposit), Units may also be tendered
to the Trustee for redemption at its unit investment trust office at 770
Broadway, New York, New York 10003, upon proper delivery of Certificates
representing 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.
Certificates representing Units to be redeemed must be delivered to the
Trustee and must be properly endorsed or accompanied by proper instruments of
transfer with signature guaranteed (or by providing satisfactory indemnity, as
in the case of lost, stolen or mutilated Certificates). Thus, redemptions of
Units cannot be effected until Certificates representing such Units have been
delivered by the person seeking redemption. (See "Certificates.")
Certificateholders must sign exactly as their names appear on the faces of
their Certificates. In certain instances the Trustee may require additional
documents such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates of corporate
authority.
Within three business days following a tender for redemption, the
Certificateholder will be entitled to receive an amount for each Unit tendered
equal to the Redemption Price per Unit computed as of the Evaluation Time set
forth under "Summary
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of Essential Information" 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 (4:00 p.m. Eastern Time), the date of tender is the next day on
which such Exchange is open for 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 Certificateholder 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 the 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 Stock. 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 the 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 100 shares for
readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
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 Certificateholders of record as of the business day prior to the evaluation
being made. The Trustee may determine the value of the Securities in the 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 Certificateholder tendering 2,500 Units or more of the 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 Certificateholder'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 Certificateholder will receive his pro
rata number of whole shares of each of the Securities comprising the Trust
portfolio and cash from the Principal Accounts equal to the balance of the
Redemption Price to which the tendering Certificateholder is entitled. If funds
in the Principal Account are insufficient to cover the required cash
distribution to the tendering Certificateholder, 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 for redemption, in lieu of redeeming such Unit, to sell such
Unit in the over-the-counter market for the account of the tendering
Certificateholder at prices which will return to the Certificateholder an
amount in cash, net after deducting brokerage commissions, transfer taxes and
other charges, equal to or in excess of the Redemption Price for such Unit. The
Trustee will pay the net proceeds of any such sale to the Certificateholder 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 Bonds 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.
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A Certificateholder 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. The 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 Portfolio of the Trust, 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.
However, the Trust Agreement provides that the Sponsor may direct the
disposition of Securities upon the occurrence of certain events including: (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;
(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 Certificateholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security
occurs pursuant to provision (1) above and if the Sponsor fails to give
immediate instructions to sell or hold that Security, the Trustee, within
30 days of that failure by the Sponsor, shall sell the Security.
(b) 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.
(c) 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, which shall be retained,
shall be promptly sold unless the Sponsor directs that it be retained by
the Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsor is authorized to increase the size and number of
Units of the Trust 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 from time to time 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. 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 (i) deposit cash or a letter
of credit with instructions to purchase the Security when it becomes
available, or (ii) 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 Certificateholders:
(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
Certificateholders.
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 66 2/3% of the Units then outstanding for the purpose
of modifying the rights of Certificateholders; provided that no such amendment
or waiver shall reduce any Certificateholder'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
Certificates in the 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
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with the provisions of the Trust Agreement. The Trustee shall promptly notify
Certificateholders, in writing, of the substance of any such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate upon the maturity, redemption or other disposition, as the case may
be, of the last of the Securities held in such Trust but in no event is it to
continue beyond the Mandatory Termination Date. If the value of the Trust shall
be less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate the Trust. The Trust may also be terminated
at any time with the consent of the holders of Certificates representing 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 Trust, and in
so doing, the Sponsor will determine the manner, timing and execution of the
sales of the underlying Securities. The Sponsor may receive brokerage
commissions from the Trust 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 Certificateholders. Such notice will provide
Certificateholders with the following three options by which to receive their
pro rata share of the net asset value of the Trust and requires their election
of one of the three options by notifying the Trustee prior to the commencement
of the Liquidation Period by returning a properly completed election request
(to be supplied to Certificateholders 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):
1. A Certificateholder who owns at least 2,500 units and whose
interest in the Trust would entitle 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 Certificateholder'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. Certificateholders
subsequently selling such distributed Securities will incur brokerage
costs when disposing of such Securities. Certificateholders should
consult their own tax adviser in this regard;
2. to receive in cash such Certificateholder'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 60 days immediately following the commencement of the Liquidation
Period. The Certificateholder's pro rata share of its net assets of the
Trust will be distributed to such Certificateholder within three business
days of the settlement of the trade of the last Security to be sold;
and/or
3. to invest such Certificateholder's pro rata share of the net
assets of the Trust derived from the sale by the Sponsor as agent of the
Trustee of the underlying Securities over a period not to exceed 60 days
immediately following the commencement of the Liquidation Period, in
units of a subsequent series of Equity Trust (the "New Series") provided
one is offered. The Units of a New Series will be purchased by the
Certificateholder within three business days of the settlement of the
trade for the last Security to be sold. Such purchaser will be entitled
to a reduced sales load upon the purchase of units of the New Series. It
is expected that the terms of the New Series will be substantially the
same as the terms of the Trust described in this Prospectus, and that
similar options with respect to the termination of such New Series will
be available. The availability of this option does not constitute a
solicitation of an offer to purchase Units of a New Series or any other
security. A Certificateholder's election to participate in this option
will be treated as an indication of interest only. At any time prior to
the purchase by the Certificateholder of units of a New Series such
Certificateholder 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 Certificateholder from recognizing taxable
gain or loss (except in the case of a loss, if the New Series is treated
as substantially identical to the Trust) as a result of the liquidation,
even though no cash will be distributed to pay any taxes.
Certificateholders should consult their own tax advisers in this regard.
Certificateholders who do not make any election will be deemed to have
elected to receive the termination distribution in cash (option number 2).
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 60 days immediately following the commencement of the Liquidation Period
free of brokerage commissions. The Sponsor, on behalf of the Trustee, will
sell, 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, on each business
day during the 60 day period at least a number of shares of each Security which
then remains in the portfolio based on the number of shares of each issue in
the portfolio) multiplied by a
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fraction the numerator of which is one and the denominator of which is the
number of days remaining in the 60 day sales period. The Redemption Price Per
Unit upon the settlement of the last sale of Securities during the 60 day
period will be distributed to Certificateholders in redemption of such
Certificateholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series 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 60 day
period immediately following the commencement of 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 60 day period as described above is in the best interest of a
Certificateholder 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 60 days if, in the Sponsor's judgment, such sales are in the
best interest of Certificateholders. 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 Certificateholders. There can be no
assurance, however, that any adverse price consequences of heavy trading will
be mitigated.
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 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.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Certificateholder. If the Sponsor so decides, the Sponsor will
notify the Trustee of that decision, and the Trustee will notify the
Certificateholders before the commencement of the Liquidation Period. All
Certificateholders will then elect either option 1, if eligible, or option 2.
By electing to reinvest in the New Series, the Certificateholder
indicates his interest in having his terminating distribution from the Trust
invested only in the New Series created following termination of the Trust; the
Sponsor expects, however, that a similar reinvestment program will be offered
with respect to all subsequent series of the Trust, thus giving
Certificateholders a yearly opportunity to elect to "rollover" their
terminating distributions into a New Series. The availability of the
reinvestment privilege does not constitute a solicitation of offers to purchase
units of a New Series or any other security. A Certificateholder's election to
participate in the reinvestment program will be treated as an indication of
interest only. The Sponsor intends to coordinate the date of deposit of a
future series so that the terminating trust will terminate contemporaneously
with the creation of a New Series. The Sponsor reserves the right to modify,
suspend or terminate the reinvestment privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors L.P. (successor to
the Unit Investment Trust Division of Bear, Stearns & Co. Inc.), a Delaware
limited partnership, is engaged in the brokerage business and is a member of
the National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment advisor. Reich & Tang maintains its principal business
offices at 600 Fifth Avenue, New York, New York 10020. Reich & Tang Asset
Management L.P. ("RTAM L.P."), a registered investment adviser having its
principal place of business at 399 Boylston Street, Boston, MA 02116, is the
99% limited partner of the Sponsor. RTAM L.P. is 99.5% owned by New England
Investment Companies, L.P. ("NEIC L.P.") and Reich & Tang Asset Management,
Inc., a wholly owned subsidiary of NEIC L.P., owns the remaining .5% interest
of RTAM L.P. and is its general partner. NEIC L.P.'s general partner is New
England Investment Companies, Inc. ("NEIC"), a holding company offering a broad
array of investment styles across a wide range of asset categories through ten
investment advisory/management affiliates and two distribution affiliates.
These affiliates in the aggregate are investment advisors or managers to over
57 registered investment companies. Reich & Tang is successor Sponsor to Bear
Stearns for numerous series of unit investment trusts, including New York
Municipal Trust, Series 1 (and Subsequent Series), Municipal Securities Trust,
Series 1 (and Subsequent Series), 1st Discount Series (and Subsequent Series),
Multi-State Series 1 (and Subsequent Series), Mortgage Securities Trust, Series
1 (and Subsequent Series), Insured
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Municipal Securities Trust, Series 1 (and Subsequent Series) and 5th Discount
Series (and Subsequent Series) and Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust (and Subsequent Series).
On August 30, 1996, New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. RTAM L.P. remains a wholly-owned
subsidiary of NEIC L.P. but RTAM Inc., its sole general partner, is now an
indirect subsidiary of MetLife. Also, MetLife New England Holdings, Inc., a
wholly-owned subsidiary of MetLife, owns 55% of the outstanding limited
partnership interest of NEIC L.P. MetLife is a mutual life insurance company
with assets of $142.2 billion at March 31, 1996. It is the second largest life
insurance company in the United States in terms of total assets. MetLife
provides a wide range of insurance and investment products and services to
individuals and groups and is the leader among United States life insurance
companies in terms of total life insurance in force, which exceeded $1.2
trillion at March 31, 1996 for MetLife and its insurance affiliates. MetLife
and its affiliates provide insurance or other financial services to
approximately 36 million people worldwide.
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 will be under no liability
to Certificateholders 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 Trust; 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 with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at 770 Broadway, New York, New
York 10003. The customer service number will not change. The Trustee is subject
to supervision by the Superintendant of Banks of the State of New York, 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 any disposition of any
moneys, Securities or Certificates in accordance with the Trust Agreement,
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties; provided, however, that the
Trustee shall not in any event be liable or responsible for any evaluation made
by any independent evaluation service employed by it. 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 Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Certificateholders."
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
Certificateholders. 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 Certificateholder 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.
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Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any 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.
THE PORTFOLIO CONSULTANT. The Portfolio Consultant is I.I. Strategic
Consultants, Inc., a Delaware corporation, with offices at 333 Seventh Avenue,
New York, New York 10001. The Portfolio Consultant is a wholly-owned subsidiary
of Individual Investor Group Inc., a publicly-traded New York corporation which
is publisher of Individual Investor Magazine and Individual Investor Special
Situations Report.
The Portfolio Consultant is not a Sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense, to utilize its
equity expertise in selecting the Securities deposited in the Trust. The
Portfolio Consultant's only responsibility with respect to the Trust, in
addition to its role in Portfolio selection, is to monitor the Securities of
the Portfolio and make recommendations to the Sponsor regarding the disposition
of the Securities held by the Trust. The responsibility of monitoring the
Securities of the Portfolio means that if the Portfolio Consultant's views
materially change regarding the appropriateness of an investment in any
Security then held in the Trust based upon the investment objectives,
guidelines, terms, parameters, policies and restrictions supplied to the
Portfolio Consultant by the Sponsor, the Portfolio Consultant will notify the
Sponsor of such change to the extent consistent with applicable legal
requirements. The Sponsor is not obligated to adhere to the recommendations of
the Portfolio Consultant regarding the disposition of Securities. The Sponsor
has the sole authority to direct the Trust to dispose of Securities under the
Trust Agreement. The Portfolio Consultant has no other responsibilities or
obligations to the Trust or the Certificateholders.
The Portfolio Consultant may resign or may be removed by the Sponsor at
any time on sixty days' prior notice. The Sponsor shall use its best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Portfolio
Consultant. If upon resignation of the Portfolio Consultant no successor has
accepted appointment within sixty days after notice of resignation, the Sponsor
has agreed to perform this function.
EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering--Offering Price." The Sponsor and the Certificateholders
may rely on any evaluation furnished by the Trustee and shall have no
responsibility for the accuracy thereof. Determinations by the Trustee under
the Trust Agreement shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Trustee shall be under
no liability to the Sponsor or Certificateholders 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 Trustee, the Sponsor and
the Certificateholders may rely on any evaluation furnished to the Trustee by
an independent evaluation service and shall have no responsibility for the
accuracy thereof.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in creating and establishing
the Trust, including the cost of the initial preparation and execution of the
Trust Agreement, registration of the Trust and the Units under the Investment
Company Act of 1940 and the Securities Act of 1933, the initial fees and
expenses of the Trustee, legal expenses and other actual out-of-pocket
expenses, will be paid by the Trust and amortized over the life of the Trust.
Offering costs, including the costs of registering securities with the
Securities and Exchange Commission and the states, will be amortized over the
term of the initial offering period, which may be between 30 and 90 days. All
advertising and selling expenses, as well as any organizational expenses not
paid by the Trust, will be borne by the Sponsor at no cost to the Trust.
The Sponsor will receive for portfolio supervisory services to the Trust
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 Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the
Equity Securities Trust 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
Trust, 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 Certificateholders."
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The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both fees may be increased without approval of
the Certificateholders by amounts not exceeding proportionate increases in
consumer prices for services as measured by the United States Department of
Labor's Consumer Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trust: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the
expenses and costs of any action undertaken by the Trustee to protect the Trust
and the rights and interests of the Certificateholders; 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 gross
negligence, bad faith or willful misconduct on its part, arising out of or in
connection with its acceptance or administration of the Trust; indemnification
of the Sponsor for any losses, liabilities and expenses incurred in acting as
sponsors of the Trust 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 Trust (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.
The accounts of the Trust shall be audited not less than annually by
independent public accountants selected by the Sponsor. The expenses of the
audit shall be an expense of the Trust. So long as the Sponsor maintains a
secondary market, the Sponsor will bear any audit expense which exceeds $.50
Cents per 100 Units. Certificateholders covered by the audit during the year
may receive a copy of the audited financials upon request.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
EXCHANGE PRIVILEGE. Certificateholders will be able to elect to exchange
any or all of their Units of this Trust for Units of one or more of any
available series of Equity Securities Trust, Insured Municipal Securities
Trust, Municipal Securities Trust, New York Municipal Trust or Mortgage
Securities Trust (the "Exchange Trusts") at a reduced sales charge as set forth
below. Under the Exchange Privilege, the Sponsor's repurchase price during the
initial offering period of the Units being surrendered will be based on the
market value of the Securities in the Trust portfolio or on the aggregate offer
price of the Bonds in the other Trust Portfolios; and, after the initial
offering period has been completed, will be based on the aggregate bid price of
the Bonds in the particular Trust portfolio. Units in an Exchange Trust then
will be sold to the Certificateholder at a price based on the aggregate offer
price of the Bonds in the Exchange Trust portfolio (or for units of Equity
Securities Trust, based on the market value of the underlying securities in the
Trust portfolio) during the initial public offering period of the Exchange
Trust; and after the initial public offering period has been completed, based
on the aggregate bid price of the Bonds in the Exchange Trust Portfolio if its
initial offering has been completed plus accrued interest (or for units of
Equity Securities Trust, based on the market value of the underlying securities
in the Trust portfolio) and a reduced sales charge as set forth below.
Except for Certificateholders who wish to exercise the Exchange Privilege
within the first five months of their purchase of Units of the Trust, the sales
charge applicable to the purchase of units of an Exchange Trust shall be
approximately 1.5% of the price of each Exchange Trust unit (or 1,000 Units for
the Mortgage Securities Trust or 100 Units for the Equity Securities Trust).
For Certificateholders who wish to exercise the Exchange Privilege within the
first five months of their purchase of Units of the Trust, the sales charge
applicable to the purchase of units of an Exchange Trust shall be the greater
of (i) approximately 1.5% of the price of each Exchange Trust unit (or 1,000
Units for the Mortgage Securities Trust or 100 Units for the Equity Securities
Trust), or (ii) an amount which when coupled with the sales charge paid by the
Certificateholder upon his original purchase of Units of the Trust at least
equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following conditions:
1. The Sponsor must be maintaining a secondary market in both the
Units of the Trust held by the Certificateholder and the Units of the
available Exchange Trust. While the Sponsor has indicated its intention
to maintain a market in the Units of all Trusts sponsored by it, the
Sponsor is under no obligation to continue to maintain a secondary market
and therefore there is no assurance that the Exchange Privilege will be
available to a Certificateholder at any specific time in the future. At
the time of the Certificateholder's election to participate in the
Exchange Privilege, there also must be Units of the Exchange Trust
available for sale, either under the initial primary distribution or in
the Sponsor's secondary market.
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2. Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and the
selling Certificateholder will not be permitted to advance any new funds
in order to complete an exchange. Units of the Mortgage Securities Trust
may only be acquired in blocks of 1,000 Units. Units of the Equity
Securities Trust may only be acquired in block of 100 Units.
3. The Sponsor reserves the right to suspend, modify or terminate
the Exchange Privilege. The Sponsor will provide Certificateholders of
the Trust with 60 days' prior written notice of any termination or
material amendment to the Exchange Privilege, provided that, no notice
need be given if (i) the only material effect of an amendment is to
reduce or eliminate the sales charge payable at the time of the exchange,
to add one or more series of the Trust eligible for the Exchange
Privilege or to delete a series which has been terminated from
eligibility for the Exchange Privilege, (ii) there is a suspension of the
redemption of units of an Exchange Trust under Section 22(e) of the
Investment Company Act of 1940, or (iii) an Exchange Trust temporarily
delays or ceases the sale of its units because it is unable to invest
amounts effectively in accordance with its investment objectives,
policies and restrictions. During the 60-day notice period prior to the
termination or material amendment of the Exchange Privilege described
above, the Sponsor will continue to maintain a secondary market in the
units of all Exchange Trusts that could be acquired by the affected
Certificateholders. Certificateholders may, during this 60-day period,
exercise the Exchange Privilege in accordance with its terms then in
effect. In the event the Exchange Privilege is not available to a
Certificateholder at the time he wishes to exercise it, the
Certificateholder will immediately be notified and no action will be
taken with respect to his Units without further instructions from the
Certificateholder.
To exercise the Exchange Privilege, a Certificateholder should notify the
Sponsor of his desire to exercise his Exchange Privilege. If Units of a
designated, outstanding series of an Exchange Trust are at the time available
for sale and such Units may lawfully be sold in the state in which the
Certificateholder is a resident, the Certificateholder will be provided with a
current prospectus or prospectuses relating to each Exchange Trust in which he
indicates an interest. He may then select the Trust or Trusts into which he
desires to invest the proceeds from his sale of Units. The exchange transaction
will operate in a manner essentially identical to a secondary market
transaction except that units may be purchased at a reduced sales charge.
EXAMPLE: Assume that after the initial public offering has been completed, a
Certificateholder has five units of a Trust with a current value of $700 per
unit which he has held for more than 5 months and the Certificateholder wishes
to exchange the proceeds for units of a secondary market Exchange Trust with a
current price of $725 per unit. The proceeds from the Certificateholder's
original units will aggregate $3,500. Since only whole units of an Exchange
Trust may be purchased under the Exchange Privilege, the Certificateholder
would be able to acquire four units (or 4,000 Units of the Mortgage Securities
Trust or 400 Units of the Equity Securities Trust) for a total cost of
$2,943.50 ($2,900 for units and $43.50 for the sales charge). The remaining
$556.50 would be remitted to the Certificateholder in cash. If the
Certificateholder acquired the same number of units at the same time in a
regular secondary market transaction, the price would have been $3,059.50
($2,900 for units and $159.50 for the sales charge, assuming a 5 1/2% sales
charge times the public offering price).
THE CONVERSION OFFER. Unit owners of any registered unit investment trust
for which there is no active secondary market in the units of such trust (a
"Redemption Trust") will be able to elect to redeem such units and apply the
proceeds of the redemption to the purchase of available Units of one or more
series of Municipal Securities Trust, Insured Municipal Securities Trust,
Mortgage Securities Trust, New York Municipal Trust or Equity Securities Trust
(the "Conversion Trusts") at the Public Offering Price for units of the
Conversion Trust based on a reduced sales charge as set forth below. Under the
Conversion Offer, units of the Redemption Trust must be tendered to the trustee
of such trust for redemption at the redemption price, which is based upon the
market value of the underlying securities in the Trust portfolio or the
aggregate bid side evaluation of the underlying bonds in other Trust portfolios
and is generally about 1 1/2% to 2% lower than the offering price for such
bonds. The purchase price of the units will be based on the aggregate offer
price of the underlying bonds in the Conversion Trust portfolio during its
initial offering period; or, at a price based on the aggregate bid price of the
underlying bonds if the initial public offering of the Conversion Trust has
been completed, plus accrued interest and a sales charge as set forth below. If
the participant elects to purchase units of the Equity Securities Trust under
the Conversion Offer, the purchase price of the units will be based, at all
times, on the market value of the underlying securities in the Trust portfolio
plus a sales charge.
Except for Certificateholders who wish to exercise the Conversion Offer
within the first five months of their purchase of units of a Redemption Trust,
the sales charge applicable to the purchase of Units of the Conversion Trust
shall be approximately 1.5% of the price of each Unit (or per 1,000 Units for
the Mortgage Securities Trust or 100 Units for the Equity Securities Trust).
For Certificateholders who wish to exercise the Conversion Offer within the
first five months of
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their purchase of units of Redemption Trust, the sales charge applicable to the
purchase of Units of a Conversion Trust shall be the greater of (i)
approximately 1.5% of the price of each Unit (or per 1,000 Units for the
Mortgage Securities or 100 Units for the Equity Securities Trust) or (ii) an
amount which when coupled with the sales charge paid by the Certificateholder
upon his original purchase of units of the Redemption Trust at least equals the
sales charge applicable in the direct purchase of Units of a Conversion Trust.
The Conversion Offer is subject to the following limitations:
1. The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there is
no active secondary market at the time the Certificateholder elects to
participate in the Conversion Offer. At the time of the unit owner's
election to participate in the Conversion Offer, there also must be
available units of a Conversion Trust, either under a primary
distribution or in the Sponsor's secondary market.
2. Exchanges under the Conversion Offer will be effected in whole
units only. Unit owners will not be permitted to advance any new funds in
order to complete an exchange under the Conversion Offer. Any excess
proceeds from units being redeemed will be returned to the unit owner.
Units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units. Units of the Equity Securities Trust may only be acquired in
blocks of 100 Units.
3. The Sponsor reserves the right to modify, suspend or terminate
the Conversion Offer at any time without notice to unit owners of
Redemption Trusts. In the event the Conversion Offer is not available to
a unit owner at the time he wishes to exercise it, the unit owner will be
notified immediately and no action will be taken with respect to his
units without further instruction from the unit owner. The Sponsor also
reserves the right to raise the sales charge based on actual increases in
the Sponsor's costs and expenses in connection with administering the
program, up to a maximum sales charge of 2% per unit (or per 1,000 units
for the Mortgage Securities Trust or 100 Units for the Equity Securities
Trust).
To exercise the Conversion Offer, a unit owner of a Redemption Trust
should notify his retail broker of his desire to redeem his Redemption Trust
Units and use the proceeds from the redemption to purchase Units of one or more
of the Conversion Trusts. If Units of a designated, outstanding series of a
Conversion Trust are at that time available for sale and if such Units may
lawfully be sold in the state in which the unit owner is a resident, the unit
owner will be provided with a current prospectus or prospectuses relating to
each Conversion Trust in which he indicates an interest. He then may select the
Trust or Trusts into which he decides to invest the proceeds from the sale of
his Units. The transaction will be handled entirely through the unit owner's
retail broker. The retail broker must tender the units to the trustee of the
Redemption Trust for redemption and then apply the proceeds to the redemption
toward the purchase of units of a Conversion Trust at a price based on the
aggregate offer or bid side evaluation per Unit of the Conversion Trust,
depending on which price is applicable, plus accrued interest and the
applicable sales charge. The certificates must be surrendered to the broker at
the time the redemption order is placed and the broker must specify to the
Sponsor that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain $5 of
the applicable sales charge.
EXAMPLE: Assume a unit owner has five units of a Redemption Trust which has
held for more than 5 months with a current redemption price of $675 per unit
based on the aggregate bid price of the underlying bonds and the unit owner
wishes to participate in the Conversion Offer and exchange the proceeds for
units of a secondary market Conversion Trust with a current price of $750 per
Unit. The proceeds for the unit owner's redemption of units will aggregate
$3,375. Since only whole units of a Redemption Trust may be purchased under the
Conversion Offer, the unit owner will be able to acquire four units of the
Conversion Trust (or 4,000 units of the Mortgage Securities Trust or 400 Units
of the Equity Securities Trust) for a total cost of $3,045 ($3,000 for units
and $45 for the sale charge). The remaining $330 would be remitted to the unit
owner in cash. If the unit owner acquired the same number of Conversion Trust
units at the same time in a regular secondary market transaction, the price
would have been $3,165 ($3,000 for units and $165 sales charge, assuming a 5
1/2% sales charge times the public offering price).
TAX CONSEQUENCES. A surrender of Units pursuant to the Exchange Privilege
or the Conversion Offer will constitute a "taxable event" to the
Certificateholder under the Internal Revenue Code. The Certificateholder will
realize a tax gain or loss that will be of a long- or short-term capital or
ordinary income nature depending on the length of time the units have been held
and other factors. (See "Tax Status".) A Certificateholder's tax basis in the
Units acquired pursuant to the Exchange Privilege or Conversion Offer will be
equal to the purchase price of such Units. Investors should consult their own
tax advisors as to the tax consequences to them of exchanging or redeeming
units and participating in the Exchange Privilege or Conversion Offer.
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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.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
INDEPENDENT ACCOUNTANTS. The Statement of Financial Condition, including
the Portfolio are included herein in reliance upon the report of Price
Waterhouse LLP, independent accountants, and upon the authority of said firm as
experts in accounting and auditing.
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<TABLE>
<S> <C>
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 INDIVIDUAL INVESTOR'S
authorized by the Trust, the Trustee or the Sponsor. The AMERICA'S FASTEST GROWING
Trust is registered as a unit investment trust under the COMPANIES(R)TRUST II
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 EQUITY SECURITIES TRUST
United States or any state or any agency or officer thereof. SERIES 9
SIGNATURE SERIES
------------------ INDIVIDUAL INVESTOR'S
AMERICA'S FASTEST GROWING
This Prospectus does not constitute an offer to sell,
or COMPANIES (R) TRUST II 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 (A UNIT INVESTMENT TRUST) such state.
PROSPECTUS
Table of Contents
DATED: OCTOBER 16, 1996
Title Page
PART A SPONSOR:
Summary of Essential Information...........................A-2
Statement of Condition.....................................A-5 REICH & TANG DISTRIBUTORS L.P.
Portfolio..................................................A-6 600 Fifth Avenue
Reports of Independent Accountants.........................A-9 New York, New York 10020
212-830-5400
PART B
The Trust..................................................B-1
Risk Considerations........................................B-3 PORTFOLIO CONSULTANT:
Public Offering............................................B-5
Rights of Certificateholders...............................B-7 I.I. STRATEGIC CONSULTANTS, INC.
Tax Status.................................................B-8 333 Seventh Avenue
Liquidity.................................................B-10 New York, New York 10001
Trust Administration......................................B-12
Trust Expenses and Charges................................B-16 TRUSTEE:
Exchange Privilege and Conversion Offer...................B-17
Other Matters.............................................B-20 THE CHASE MANHATTAN BANK
770 Broadway
New York, New York 10003
Parts A and B of this Prospectus do not contain all of
the information set forth in the registration statement and
exhibits relating 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.
</TABLE>
C/M 11939.0009 398390.1
<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors L.P. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
Price Waterhouse LLP
I.I. Strategic Consultants, Inc.
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain amendments to
the Trust Indenture and Agreement referred to under Exhibit
99.1.1.1 below.
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit 1.1.1
to Amendment No. 1 to Form S-6 Registration Statement No.
33-62627 of Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust on November 16,
1995 and incorporate herein by reference).
99.1.3.4 -- Certificate of Formation and Agreement among Limited
Partners, as amended, of Reich & Tang Distributors L.P. (filed
as Exhibit 99.1.3.4 to Post-Effective Amendment No. 10 to Form
S-6 Registration Statements Nos. 2-98914, 33-00376, 33-00856
and 33-01869 of Municipal Securities Trust, Series 28, 39th
Discount Series, Series 29 & 40th Discount Series and Series
30 & 41st Discount Series, respectively, on October 31, 1995
and incorporated herein by reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4
to Amendment No. 1 to Form S-6 Registration Statement No.
33-62627 of Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust on November 16,
1995 and incorporated herein by reference).
99.2.1 -- Form of Certificate (filed as Exhibit 99.2.1 to
Amendment No. 1 to Form S-6 Registration Statement No.
33-62627 of Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust on November 16,
1995 and incorporated herein by reference).
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to
the filing of their opinion regarding tax status of the Trust.
99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P.,
the Depositor, by its officers and a majority of its Directors
(filed as Exhibit 6.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-62627 of Equity Securities
Trust, Series 6, Signature Series, Gabelli Entertainment and
Media Trust on November 16, 1995 and incorporated herein by
reference). *99.27 - Financial Data Schedule (for EDGAR filing
only).
- -----------------
* Filed herewith.
C/M: 11939.0009 412672.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
The Registrant hereby identifies Equity Securities Trust, Series 7,
Signature Series, Individual Investor's America's Fastest Growing Companies(R)
Trust for the purposes of the representations required by Rule 487 and
represents the following:
1) That the portfolio securities deposited in the Series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the Series with respect to the securities of which
this registration statement is being filed, this registration
statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous Series as to which the effective date was determined by the
commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Equity Securities Trust, Series 9, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust II, has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 16th day of October, 1996.
EQUITY SECURITIES TRUST, SERIES 9, SIGNATURE SERIES, INDIVIDUAL
INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST II
(Registrant)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.
By /s/ PETER J. DEMARCO
---------------------
Peter J. DeMarco
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons,
who constitute the principal officers and a majority of the directors of Reich
& Tang Asset Management, Inc., General Partner of Reich & Tang Distributors
L.P., the Depositor, in the capacities and on the dates indicated.
The Registrant hereby identifies Equity Securities Trust, Series 7,
Signature Series, Individual Investor's America's Fastest Growing Companies(R)
Trust for the purposes of the representations required by Rule 487 and
represents the following:
1) That the portfolio securities deposited in the Series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the Series with respect to the securities of which
this registration statement is being filed, this registration
statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous Series as to which the effective date was determined by the
commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
PETER S. VOSS President, Chief Executive Officer
and Director
G. NEAL RYLAND Executive Vice President,
Treasurer and Chief
Financial Officer
EDWARD N. WADSWORTH Clerk
RICHARD E. SMITH III Director October 16, 1996
STEVEN W. DUFF Director
BERNADETTE N. FINN Vice President By /s/ Peter J. DeMarco
--------------------
Peter J. DeMarco
Attorney-In Fact*
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Vice President and
Treasurer
</TABLE>
--------
* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to Amendment
No. 1 to Registration Statement No. 33-62627 on November 16, 1995.
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
registration statement on Form S-6 (the "Registration Statement") of our report
dated October 16, 1996, relating to the Statement of Financial Condition,
including the Portfolio, of Equity Securities Trust, Series 9, Signature
Series, Individual Investor's America's Fastest Growing Companies(R) Trust II
which appears in such Prospectus. We also consent to the reference to us under
the heading "Independent Accountants" in such Prospectus.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 16, 1996
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C/M: 11939.0009 412672.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
The Sponsor, Trustee and Certificateholders
Equity Securities Trust, Series 9, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust II
We hereby consent to the use of the name "Individual Investor" included
herein and to the reference to our Firm in the Prospectus.
I.I. STRATEGIC CONSULTANTS, INC.
New York, New York
October 16, 1996
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C/M: 11939.0009 412672.1
EQUITY SECURITIES TRUST, SERIES 9
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST
GROWING COMPANIES(R) TRUST II
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated
October 16, 1996 between Reich & Tang Distributor L.P., as Depositor and The
Chase Manhattan Bank, as Trustee, sets forth certain provisions in full and
incorporates other provisions by reference to the document entitled "Equity
Securities Trust, Series 6, Signature Series, Gabelli Entertainment and Media
Trust, and Subsequent Series, Trust Indenture and Agreement" dated November 16,
1995 and as amended in part by this Agreement (collectively, such documents
hereinafter called the "Indenture and Agreement"). This Agreement and the
Indenture, as incorporated by reference herein, will constitute a single
instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as
defined in Section 1.1 of the Indenture, and shall be amended and modified from
time to time by an Addendum as defined in Section 1.1 (1) of the Indenture,
such Addendum setting forth any Additional Securities as defined in Section 1.1
(2) of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor and the Trustee as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all
the provisions contained in the Indenture are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent as though said provisions had been set forth in full in
this
317036.1
<PAGE>
instrument except that the following sections of the Indenture
hereby are amended as follows:
(a) All references to "The Chase Manhattan Bank
(National Association)" are replaced with "The Chase Manhattan
Bank".
(b) Paragraph (a) of Section 2.6 is amended to replace the
words "last preceding" in clause (ii) of the first sentence of such paragraph
with the word "next".
(c) Section 3.5 is hereby amended by inserting the phrase "or
Income" in the second sentence of the sixth paragraph after the words "The
Trustee shall not be required to make a distribution from the Principal..."
(d) Section 3.14 is hereby amended by inserting the phrase
"including, but not limited to securities received as a result of a spin-off"
in the first sentence after the words "Any property received by the Trustee
after the initial date of Deposit in a form other than cash or additional
shares of the Securities listed on Schedule A..."
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor and Trustee hereby agree that their
respective representations, agreements and certifications contained in the
Closing Memorandum dated October 16, 1996, relating to the initial deposit of
Securities continue as if such representations, agreements and certifications
were made on the date of such Additional Closings and with respect to the
deposits made therewith, except as such representations, agreements and
certifications relate to their respective By-Laws and as to which they each
represent that their has been no amendment affecting their respective abilities
to perform their respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are
hereby agreed to:
(a) The Securities (including Contract Securities) listed in
the Prospectus relating to this series of Equity Securities Trust (the
"Prospectus") have been deposited in the Trust under this Agreement (see
"Portfolio" in Part A of the Prospectus which for purposes of this Indecture
and Agreement is the Schedule of Securities or Schedule A).
-2-
317036.1
<PAGE>
(b) The number of Units delivered by the Trustee in
exchange for the Securities referred to in Section 2.3 is 20,670.
(c) For the purposes of the definition of Unit in item (22)
of Section 1.1, the fractional undivided interest in and ownership of the Trust
initially is 1/20670 as of the date hereof.
(d) The term Record Date shall mean the first day of March,
June, September and December commencing on December 1, 1996.
(e) The term Distribution Date shall mean the fifteenth day
of the month on which a Record Date occurs (or the last business day prior
thereto) commencing on December 15, 1996.
(f) The First Settlement Date shall mean October 21,
1996.
(g) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities at the
completion of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid
per annum an amount computed according to the following schedule, determined on
the basis of the number of Units outstanding as of the Record Date preceding
the Record Date on which the compensation is to be paid, provided, however,
that with respect to the period prior to the first Record Date, the Trustee's
compensation shall be computed at $.90 per 100 Units:
rate per 100 units number of Units outstanding
$0.90 5,000,000 or less
$0.84 5,000,001 - 10,000,000
$0.78 10,000,001 - 20,000,000
$0.66 20,000,001 or more
(i) For purposes of Section 7.4, the Depositor's
maximum annual supervisory fee is hereby specified to be $.25 per
100 Units outstanding.
(j) The Termination Date shall be December 15, 1997 or
the earlier disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on June 30
of each year.
(l) For purposes of this series of Equity Securities
Trust, the form of Certificate set forth in Indenture shall be
-3-
317036.1
<PAGE>
appropriately modified to reflect the title of this Series and
represent as set forth above.
IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-4-
317036.1
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ THOMAS CENTRONE
-------------------
Vice President
(SEAL)
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 11th day of October, 1996, before me personally
appeared Thomas Centrone, to me known, who being by me duly sworn, said that he
is an Authorized Signator of The Chase Manhattan Bank, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation and that he signed his name thereto by like authority.
/s/ CHRISTINE S. CONWAY
-----------------------
Notary Public
CHRISTINE S. CONWAY
NOTARY PUBLIC, State of New York
No. 018A4774410
Qualified in Queens County
Commission Expires 3/30/98
315855.1
<PAGE>
REICH & TANG DISTRIBUTORS L.P.
Depositor
By: Reich & Tang Asset Management, Inc.,
as General Partner of Depositor
By: /s/ PETER J. DEMARCO
--------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 15th day of October, 1996, before me personally
appeared Peter J. DeMarco, to me known, who being by me duly sworn, said that
he is an Authorized Signator of Reich & Tang Asset Management, Inc. as General
Partner of the Depositor, one of the corporations described in and which
executed the foregoing instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
/s/ TERESA SCILLA
--------------------
Notary Public
TERESA SCILLA
NOTARY PUBLIC, State of New York
No. 31-4752676
Qualified in the County of New York
Term Expires 8/31/985
315855.1
<PAGE>
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
October 16, 1996
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 9, Signature Series,
Individual Investor's America's Fastest Growing
Companies(R) Trust II
----------------------------------------------------
Dear Sirs:
We have acted as special counsel for Reich & Tang
Distributors L.P., as Depositor, Sponsor and Principal Underwriter
(collectively, the "Depositor") of Equity Securities Trust, Series 9, Signature
Series, Individual Investor's America's Fastest Growing Companies(R) Trust II
(the "Trust") in connection with the issuance by the Trust of units of
fractional undivided interest (the "Units") in the Trust. Pursuant to the Trust
Agreements referred to below, the Depositor has transferred to the Trust
certain securities and contracts to purchase certain securities together with
an irrevocable letter of credit to be held by the Trustee upon the terms and
conditions set forth in the Trust Agreements. (All securities to be acquired by
the Trust are collectively referred to as the "Securities").
In connection with our representation, we have examined
copies of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (collectively the "Trust Agreements") among the Depositor and The Chase
Manhattan Bank, as Trustee; (b) the Notification of Registration on Form N-8A
and the Registration Statement on
317062.1
<PAGE>
2
Form N-8B-2, as amended, relating to the Trust, as filed with the Securities
and Exchange Commission (the "Commission") pursuant to the Investment Company
Act of 1940 (the "1940 Act"); (c) the Registration Statement on Form S-6
(Registration No. 333-11215) filed with the Commission pursuant to the
Securities Act of 1933 (the "1933 Act"), and all Amendments thereto (said
Registration Statement, as amended by said Amendment(s) being herein called the
"Registration Statement"); (d) the proposed form of final Prospectus (the
"Prospectus") relating to the Units, which is expected to be filed with the
Commission this day; (e) certified resolutions of the Board of Directors of the
general partner of the Depositor authorizing the execution and delivery by the
Depositor of the Trust Agreements and the consummation of the transactions
contemplated thereby; (f) the Certificate of formation and Agreement Among
Limited Partners of the Depositor; and (g) a certificate of an authorized
officer of the Depositor with respect to certain factual matters contained
therein.
We have examined the Application for Orders of Exemption from
certain provisions of Sections 14(a) and 22(d) of the 1940 Act and Rules 19b-1
and 22c-1 thereunder, and the First Amendment thereto. In addition, we have
examined the Application for an Order of Exemption from certain provisions of
Sections 11(a) and 11(c) of the 1940 Act, and the First Amendment thereto,
which has been filed with the Commission by the Depositor; Equity Securities
Trust (Series 1, Signature Series and Subsequent Series), Mortgage Securities
Trust (CMO Series 1 and Subsequent Series), Municipal Securities Trust, Series
1 (and Subsequent Series) (including Insured Municipal Securities Trust, Series
1 (and Subsequent Series and 5th Discount Series and Subsequent Series)); New
York Municipal Trust (Series 1 and Subsequent Series); and A Corporate Trust
(Series 1 and Subsequent Series) on July 19, 1996.
We have not reviewed the financial statements, compilation of
the Securities held by the Trust, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you
have been furnished with the reports of the accountants appearing in the
Registration Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of
317062.1
<PAGE>
3
general application relating to or affecting the enforceability of creditors'
rights, and (ii) to limitations under equitable principles governing the
availability of equitable remedies.
We are not admitted to the practice of law in any
jurisdiction but the State of New York and we do not hold ourselves out as
experts in or express any opinion as to the laws of other states or
jurisdictions except as to matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion
that under existing law:
(1) The Trust Agreements have been duly authorized and
entered into by an authorized officer of the Depositor and is a valid and
binding obligation of the Depositor in accordance with its terms.
(2) The execution and delivery of the Certificate evidencing
the Units has been duly authorized by the Depositor and such Certificate, when
executed by the Depositor and the Trustee in accordance with the provisions of
the Certificate and the respective Trust Agreements and issued for the
consideration contemplated therein, will constitute fractional undivided
interests in the Trust, will be entitled to the benefits of the Trust
Agreements, will conform in all material respects to the description thereof
for the Units as provided in the Trust Agreements and the Registration
Statement, and the Units will be fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee
and the Trustee may rely on this opinion as fully and to the same extent as if
it had been addressed to it.
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
317062.1
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the statement of
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date of deposit and is qualified in its entirety
by reference to such financial statement.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<CURRENCY> US DOLLARS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-16-1996
<PERIOD-END> OCT-16-1996
<PERIOD-TYPE> OTHER
<EXCHANGE-RATE> 1
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<RECEIVABLES> 0
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 225,601
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
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<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 200,601
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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