As filed with the Securities and Exchange Commission on April 1, 1997
Registration No. 333-22963
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 11, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust III
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 11,
Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust III 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:
No Filing Fee Required
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.
C/M: 11939.0011 471989.1
<PAGE>
INSERT LOGO
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES, INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R)
TRUST III
The Trust is a unit investment trust designated Equity Securities Trust, Series
11, Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust III (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 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 Financial 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 APRIL 1, 1997
471997.2
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 31, 1997:*
<S> <C> <C>
DATE OF DEPOSIT: April 1, 1997 MINIMUM VALUE OF TRUST: The Trust may be terminated if the
AGGREGATE VALUE OF SECURITIES.................. $114,354 value of the Trust is less than 40% of the aggregate value of the
AGGREGATE VALUE OF SECURITIES Securities at the completion of the Deposit Period.
PER 100 UNITS............................... $ 970.50 MANDATORY TERMINATION DATE: The earlier of May 1, 1998
NUMBER OF UNITS................................ 11,783 or the disposition of the last Security in the Trust.
FRACTIONAL UNDIVIDED INTEREST IN TRUSTEE: The Chase Manhattan Bank.
TRUST .................................... 1/11,783 TRUSTEE'S ANNUAL FEE: $.90 per 100 Units outstanding.
PUBLIC OFFERING PRICE+ ESTIMATED ANNUAL ORGANIZATIONAL EXPENSES**: $.57
Aggregate Value of Securities in per 100 Units.
Trust................................... $114,354 ESTIMATED OFFERING COSTS**: $.43 per 100 Units.
Divided By 11,783 Units (times 100)......... $ 970.50 PORTFOLIO CONSULTANT: I.I. Strategic Consultants, Inc.
Plus Sales Charge of 2.95% of Public OTHER ANNUAL FEES AND EXPENSES: $.17 per 100 Units
Offering Price per 100 Units............ $ 29.50 outstanding.
Public Offering Price per 100 Units++....... $ 1,000.00 SPONSOR: Reich & Tang Distributors L.P.
SPONSOR'S REPURCHASE PRICE AND SPONSOR'S ANNUAL SUPERVISORY FEE: Maximum of $.25 per
REDEMPTION PRICE PER 100 UNITS+++........... $ 970.50 100 Units outstanding (see "Trust Expenses and Charges" in Part B).
EXCESS OF PUBLIC OFFERING PRICE RECORD DATE: First day of the last month of each quarter.
OVER REDEMPTION PRICE PER 100 UNITS......... $ 29.50 ROLLOVER NOTIFICATION DATE***:
EVALUATION TIME: 4:00 p.m. New York Time. April 1, 1998 or another date as determined by the Sponsor.
MINIMUM INCOME OR PRINCIPAL
DISTRIBUTION: $1.00 per 100 Units
LIQUIDATION PERIOD: Beginning 30 days prior to the Mandatory
Termination Date.
</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.
<TABLE>
<CAPTION>
DESCRIPTION OF PORTFOLIO:
<S> <C> <C> <C>
Number of Issues: 53 Energy Resources & Services................... 9.31%
Percent of Issues represented by the Sponsor's contracts to purchase: Finance ...................................... 3.77%
100% Furniture & Fixtures........................... 1.91%
Expected settlement date: April 4, 1997 Healthcare.................................... 1.94%
(NYSE 35.79%; Over the Counter 64.21%) Iron & Steel.................................. 3.76%
Machinery..................................... 3.73%
Percent of Issues by Industry: Miscellaneous Services........................ 11.56%
Aerospace......................................................... 1.89% Packaging & Containers......................... 1.85%
Chemicals.......................................................... 1.86% Photography.................................... 1.85%
Computers & Office Equip......................................... 17.05% Printing & Publishing......................... 1.88%
Data Processing.................................................... 11.35% Retail Trade.................................. 1.87%
Electrical & Electronics........................................... 1.89% Scientific & Tech. Instruments................ 5.74%
Semiconductors................................ 5.49%
Shipbuild. & Water Transport.................. 1.85%
Telecommunication Services & Equipment........ 3.77%
Textiles...................................... 3.79%
Wholesale Trade.............................. 1.89%
100.00%
</TABLE>
A-2
471997.2
<PAGE>
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.
TERMINATION. During the 30 day period prior to the Mandatory Termination Date
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the 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. Any
brokerage commissions received by the Sponsor from the Trust in connection with
such sales will be 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 30 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
Equity Securities Trust (if one is offered) at a reduced sales charge (see
"Rollover Option"). 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.
A-3
471997.2
<PAGE>
ROLLOVER OPTION. Certificateholders may elect to roll over their terminating
distributions into the next available series of Equity Securities Trust at a
reduced sales charge. Rollover Certificateholders must make this election prior
to the Rollover Notification Date. Upon making this election, a
Certificateholder's Units will be redeemed and the proceeds will be reinvested
in units of the next available series of Equity Security Trust. See "Trust
Administration -- Trust Termination" in Part B for details to make this
election.
RISK CONSIDERATIONS. An investment in Units of the Trust should be made with an
understanding of the risks inherent in an investment in any of 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).
Additionally, investors should consider the greater risk of the Trust's
concentration and the effect on their investment versus a more diversified
portfolio and should compare returns available on less concentrated 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 11, Signature Series, Individual Investor's America's Fastest
Growing Companies(R) Trust III. 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
471997.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES (R) TRUST III
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, APRIL 1, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $114,354) (Note 1)................................ $ 114,354
Organizational Costs(2)......................................................................................... 14,250
Offering Costs(3)............................................................................................... 10,750
-----------
Total........................................................................................................... $ 139,354
===========
</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 11: 11,783 Units)................................................ 114,354
-----------
Total........................................................................................................... $ 139,354
===========
Net Asset Value Per Unit $ 9.71
===========
</TABLE>
- -------------------------
Notes to Statement:
(1) Equity Securities Trust, Series 11, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust III (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 objective of the Trust,
sponsored by Reich & Tang Distributors L.P. (the "Sponsor"), is to provide
investors with the opportunity to achieve capital appreciation. On April 1,
1997, 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 11,783 units of the Trust. An irrevocable letter
of credit issued by The Bank of Boston in an aggregate amount of $1,500,000 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 March 31, 1997. The Trust will
terminate on May 1, 1998 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
471997.2
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1997
<CAPTION>
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>
Aerospace 1.89%
1 86 Aviation Sales Co. 1.89% $25.125 $ 2,161
--------
2,161
Chemicals 1.86%
2 36 Petrolite Corp. 1.86 59.125 2,128
-----
2,128
Computers &
Office Equip. 17.05%
Advanced Digital Information
3 170 Corp. 1.89 12.750 2,168
4 76 Applied Magnetics Corp. 1.87 28.125 2,138
5 109 CHS Electronics, Inc. 1.94 20.375 2,221
6 127 Data General Corp. 1.89 17.000 2,159
7 31 Dell Computer Corp. 1.83 67.625 2,096
8 72 Encad, Inc. 1.88 29.875 2,151
9 211 Procom Technology, Inc. 1.94 10.500 2,215
10 73 STB Systems, Inc. 1.87 29.250 2,135
11 125 Stratasys, Inc. 1.94 17.750 2,219
-------
19,502
Data Processing 11.35%
12 180 ACT Networks, Inc. 1.85 11.750 2,115
13 78 BARRA, Inc. 1.84 27.000 2,106
14 93 Engineering Animation, Inc. 1.89 23.250 2,162
15 131 International Telecom 1.95 17.000 2,227
Systems, Inc.
16 259 Larscom, Inc. 1.90 8.375 2,169
17 157 Red Brick Systems, Inc. 1.92 14.000 2,198
------
12,977
Electrical & Electronics 1.89%
18 104 ACT Manufacturing, Inc. 1.89 20.750 2,158
-----
2,158
</TABLE>
A-6
471997.2
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1997
<CAPTION>
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>
Energy Resources
& Services 9.31%
19 31 Cooper Cameron Corp. 1.86% $68.500 $ 2,123
20 99 Global Marine, Inc. 1.85 21.375 2,116
21 132 Quaker Chemical Corp. 1.85 16.000 2,112
22 108 Veritas DGC, Inc. 1.86 19.750 2,133
23 72 Vintage Petroleum, Inc. 1.89 30.000 2,160
------
10,644
Finance 3.77%
24 121 E* TRADE Group, Inc. 1.90 18.000 2,178
25 52 Jefferies Group, Inc. 1.87 41.125 2,138
-----
4,316
Furniture & Fixtures 1.91%
26 173 O'Sullivan Industries 1.91 12.625 2,184
-----
Holdings, Inc. 2,184
Health Care 1.94%
27 115 FPA Medical Management, 1.94 19.250 2,214
-----
Inc. 2,214
Iron & Steel 3.76%
28 103 AFC Cable Systems, Inc. 1.87 20.750 2,137
29 114 Lone Star Technologies, Inc. 1.89 19.000 2,166
-----
4,303
</TABLE>
A-7
471997.2
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1997
<CAPTION>
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>
Machinery 3.73%
30 178 Figgie International, Inc. 1.89% $12.125 $2,158
31 107 Nortek, Inc. 1.84 19.625 2,100
-----
4,258
Miscellaneous Service 11.56%
32 133 Accustaff, Inc. 1.95 16.750 2,228
33 83 APAC Teleservices, Inc. 1.89 26.000 2,158
34 99 NCO Group, Inc. 1.89 21.875 2,166
35 170 Profit Recovery Group 2.04 13.750 2,337
International, Inc.
36 96 Valassis Communications, 1.88 22.375 2,148
Inc.
37 46 Volt Information Sciences, 1.91 47.500 2,185
------
Inc. 13,222
Packaging & Containers 1.85%
38 41 Crown Cork & Seal 1.85 51.625 2,117
-----
Company, Inc. 2,117
Photography 1.85%
39 59 Cymer, Inc. 1.85 35.875 2,117
-----
2,117
Printing & Publishing 1.88%
40 72 CSS Industries, Inc. 1.88 29.875 2,151
-----
2,151
Retail Trade 1.87%
41 50 TJX Companies, Inc. 1.87 42.75 2,137
-----
2,137
</TABLE>
A-8
471997.2
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1997
<CAPTION>
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>
Scientific & Tech
Instruments 5.74%
42 150 GenRad, Inc. 2.00% $15.25 $2,287
43 180 Trimble Navigation Ltd. 1.85 11.75 2,115
44 98 Wandel & Goltermann 1.89 22.00 2,156
-----
Technologies, Inc. 6,558
Semiconductors 5.49%
45 153 Benchmarq Microelectronic, 1.67 12.50 1,913
Inc.
46 95 MRV Communications, Inc. 1.85 22.25 2,114
47 114 QLogic Corp. 1.97 19.75 2,252
-----
6,279
Shipbuild & Water
Transport 1.85%
48 93 Hvide Marine, Inc. 1.85 22.75 2,116
-----
2,116
Telecommunication Services
& Equipment 3.77%
49 114 Boston Technology, Inc. 1.88 18.875 2,152
50 225 DSP Communications, Inc. 1.89 9.625 2,166
-----
4,318
Textiles 3.79%
51 136 Galey & Land, Inc. 1.90 16.00 2,176
52 166 Quaker Fabric Corp. 1.89 13.00 2,158
-----
4,334
</TABLE>
A-9
471997.2
<PAGE>
<TABLE>
EQUITY SECURITIES TRUST
SERIES 11
SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1997
<CAPTION>
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>
Wholesale Trade 1.89%
53 160 MicroAge, Inc. 1.89% $13.50 $ 2,160
-------
2,160
Total Investment in Securities 100.00% $114,354
====== ========
</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 March 31, 1997.
All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be April 4, 1997.
(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 $118,080. The Sponsor's Loss
on the Initial Date of Deposit is $3,726.
The accompanying notes form an integral part of the Financial Statement.
A-10
471997.2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Certificateholders,
Equity Securities Trust, Series 11,
Signature Series, Individual Investor's America's Fastest Growing
Companies(R) Trust III
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 11, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust III (the
"Trust") at opening of business, April 1, 1997, 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, April 1, 1997, by
correspondence with the Sponsor, provides a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, Massachusetts
April 1, 1997
A-11
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ABOUT THE TRUST
Individual Investor's America's Fastest Growing Companies(R) Trust III 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 75 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 1996.** (Past performance is no guarantee of future results.)
The AFGC Trust III 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 III
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 III are first subject to a rigorous
analytical process, which centers around a proprietary research model called the
Individual Investor Power Rating(sm) 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 generally in excess of 100%. All the stocks on the
list have total market capitalizations above $100 million.
From there, the research process incorporates twenty-five different
parameters. These fall under four categories: liquidity, efficiency,
profitability and growth. These companies are ranked on such items as historical
earnings records, estimated earnings growth, balance sheet strength, and return
on equity.
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.
- --------
* All stocks listed on NYSE, AMEX or NASDAQ.
** 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).
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I.I. STRATEGIC CONSULTANTS
The portfolio consultant to the AFGC Trust III is I.I. Strategic
Consultants, Inc., a wholly owned subsidiary of Individual Investor Group, Inc.,
publishers of Individual Investor and Ticker magazines. The consultant is
charged with identifying 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 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
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.
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 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.
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[INSERT LOGO]
EQUITY SECURITIES TRUST
SERIES 11, SIGNATURE SERIES
INDIVIDUAL INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES (R) TRUST III
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 11, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust III 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
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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 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 1997 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(sm). 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) generally post quarterly
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 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 are picked by the
Portfolio Consultant as a function of 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
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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 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 30 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
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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 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.
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 manages the investments and itself maintains investment
funds of domestic and offshore private investment funds that may have similar or
different investment objectives than the Trust and that such funds may contain
some of the same securities as in the Trust
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portfolio. 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, an affiliate of the
Portfolio Consultant is the publisher of three 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 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.
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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 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
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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 2.25% 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 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.
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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 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
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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 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.
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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,
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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 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 4 New York
Plaza, New York, New York 10004, upon proper delivery of Certificates
representing such Units and payment of any relevant tax.
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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 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
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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.
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
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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 underrepresented 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
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. Any brokerage commissions received by the Sponsor
from the Trust in connection with such sales will be 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 by returning a properly
completed election request (to be supplied to Certificateholders at least 20
days prior to such date).
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
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<PAGE>
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 30 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 30 days
immediately following the commencement of the Liquidation Period, in units
of a subsequent series of Equity Securities 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 30 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 30 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 fraction the numerator of which is one and the
denominator of which is the number of days remaining in the 30 day sales period.
The Redemption Price Per Unit upon the settlement of the last sale of Securities
during the 30 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 30 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 30 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 30 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.
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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., 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 eleven
subsidiaries, divisions and affiliates offering a wide array of investment
styles and products to institutional clients. These affiliates in the aggregate
are investment advisors or managers to over 54 registered investment companies.
Reich & Tang is successor Sponsor to Bear, Stearns & Co. Inc. 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 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
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<PAGE>
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 4 New York Plaza, New York, New
York 10004. The Trustee is subject to supervision by the Superintendent 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.
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.
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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
through another subsidiary is the publisher of Individual Investor Magazine,
Ticker Magazine and Individual Investor's 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.")
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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."
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.
Unless the Sponsor otherwise directs, 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, any
purchaser who purchases Units under the Exchange Privilege will pay a lower
sales charge than that which would be paid for the Units by a new investor. 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) the
reduced sales charge or (ii) an amount which when coupled with the sales charge
paid by the Certificateholder upon his original purchase of Units of the Trust
would equal the sales charge applicable in the direct purchase of units of an
Exchange Trust.
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Exercise of the Exchange Privilege by Certificateholders is subject to the
following conditions (i) the Sponsor must be maintaining a secondary market in
the units of the available Exchange Trust, (ii) at the time of the
Certificateholder's election to participate in the Exchange Privilege, there
must be units of the Exchange Trust available for sale, either under the initial
primary distribution or in the Sponsor's secondary market, (iii) exchanges will
be effected in whole units only, (iv) Units of the Mortgage Securities Trust may
only be acquired in blocks of 1,000 Units and (v) Units of the Equity Securities
Trust may only be acquired in blocks of 100 Units. Certificateholders will not
be permitted to advance any funds in excess of their redemption in order to
complete the exchange. Any excess proceeds received from a Certificateholder for
exchange will be remitted to such Certificateholder.
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.
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.
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 determined as set forth in
the relevant Redemption Trust's prospectus. The purchase price of the units will
be based on the aggregate offer price of the in the Conversion Trust's portfolio
securities 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,
any Certificateholder who purchases Units under the Conversion Offer will pay a
lower sales charge than that which would be paid for the Units by a new
investor. For Certificateholders who wish to exercise the Conversion Offer
within the first five months of 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) the reduced sales charge 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 would equal the sales charge applicable in the
direct purchase of Units of a Conversion Trust.
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The exercise of the Conversion Offer is subject to the following
limitations: (i) the Conversion Offer is limited only to unit owners of any
Redemption Trust, (ii) 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,
(iii) exchanges under the Conversion Offer will be effected in whole units only,
(iv) units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units, (v) units of the Equity Securities Trust may only be acquired in
blocks of 100 Units. 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.
The Sponsor reserves the right to modify, suspend or terminate the
Conversion Offer. The Sponsor will provide Certificateholders with 60 days prior
written notice of any termination or material amendment to the Conversion Offer,
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 Trusts eligible for the Conversion
Offer, to add any new unit investment trust sponsored by Reich & Tang or a
sponsor controlled by or under common control with Reich & Tang, or to delete a
series which has been terminated from eligibility for the Conversion Offer, (ii)
there is a suspension of the redemption of units of a Conversion Trust under
Section 22(e) of the Act, or (iii) a Conversion 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.
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 a portion of the sales
charge.
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.
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.
B-21
475941.1
<PAGE>
[This page intentionally left blank]
B-22
475941.1
<PAGE>
<TABLE>
<S> <C>
No person is authorized to give any information or ----------------------------------------------------
to make any representations not contained in Parts A and B [INSERT LOGO]
of this Prospectus; and any information or representation ----------------------------------------------------
not contained herein must not be relied upon as having INDIVIDUAL INVESTOR'S
been authorized by the Trust, the Trustee or the Sponsor. AMERICA'S FASTEST GROWING
The Trust is registered as a unit investment trust under COMPANIES (R)TRUST III
the Investment Company Act of 1940. Such registration does ----------------------------------------------------
not imply that the Trust or any of its Units have been
guaranteed, sponsored, recommended or approved by the EQUITY SECURITIES TRUST
United States or any state or any agency or officer SERIES 11
thereof. SIGNATURE SERIES
------------------ INDIVIDUAL INVESTOR'S
AMERICA'S FASTEST GROWING
COMPANIES (R) TRUST III
This Prospectus does not constitute an offer to (A UNIT INVESTMENT TRUST)
sell, or a solicitation of an offer to buy, securities in
any state to any person to whom it is not lawful to make
such offer in such state.
PROSPECTUS
Table of Contents
DATED: APRIL 1, 1997
Title Page
PART A SPONSOR:
Summary of Essential Information........................A-2
Statement of Financial Condition........................A-5 REICH & TANG DISTRIBUTORS L.P.
Portfolio...............................................A-6 600 Fifth Avenue
Report of Independent Accountants......................A-11 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-8 I.I. STRATEGIC CONSULTANTS, INC.
Tax Status..............................................B-9 333 Seventh Avenue
Liquidity..............................................B-11 New York, New York 10001
Trust Administration...................................B-13
Trust Expenses and Charges.............................B-18 TRUSTEE:
Exchange Privilege and Conversion Offer................B-19
Other Matters..........................................B-21 THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
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>
475941.1
<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 (incorporated by reference to the
Cross-Reference Sheet to the Registration Statement of Equity
Securities Trust, Series 9, Signature Series, Individual Investor's
America's Fastest Growing Companies(R) Trust II). 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: 11939.0011 471989.1
<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 9,
Signature Series, Individual Investor's America's Fastest Growing Companies(R)
Trust II 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 11, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust III, 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 1st day of April, 1997.
EQUITY SECURITIES TRUST, SERIES 11, SIGNATURE SERIES, INDIVIDUAL
INVESTOR'S AMERICA'S FASTEST GROWING COMPANIES(R) TRUST III
(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.
<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 April 1, 1997
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.
II-2
C/M: 11939.0011 471989.1
<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 April 1, 1997, relating to the Statement of Condition, including the
Portfolio, of Equity Securities Trust, Series 11, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust III which appears in
such Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in such Prospectus.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, Massachusetts
April 1, 1997
II-3
C/M: 11939.0011 471989.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
The Sponsor, Trustee and Certificateholders
Equity Securities Trust, Series 11, Signature Series,
Individual Investor's America's Fastest Growing Companies(R) Trust III
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
April 1, 1997
II-4
C/M: 11939.0011 471989.1
EQUITY SECURITIES TRUST, SERIES 11
SIGNATURE SERIES, INDIVIDUAL INVESTOR'S
AMERICA'S FASTEST GROWING COMPANIES(R)
TRUST III
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated April
1, 1997 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 instrument except that the following sections of the Indenture hereby are
amended as follows:
317036.1
<PAGE>
(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 3.1 is hereby amended by deleting the phrase
provided, however, the Trust shall not bear such expenses in excess of the
amount shown in the Statement of Condition included in the Prospectus, and any
such excess shall be borne by the Depositor".
(d) 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..."
(e) 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..."
(f) Section 9.2 is hereby amended by replacing the phrase "60
business days" with "30 days" in the first sentence of the sixth paragraph.
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 April 1, 1997, 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.
-2-
317036.1
<PAGE>
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 Indenture and
Agreement is the Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in
exchange for the Securities referred to in Section 2.3 is 11,783.
(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 1/11783 as of the date hereof.
(d) The term Record Date shall mean the first business day of
July, October, January and April commencing on July 1, 1997.
(e) The term Distribution Date shall mean the fifteenth day of
July, October, January and April commencing on July 15, 1997.
(f) The First Settlement Date shall mean April 4,
1997.
(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
-3-
317036.1
<PAGE>
(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 May 1, 1998 or the
earlier disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on
December 31 of each year.
(l) For purposes of this series of Equity Securities Trust,
the form of Certificate set forth in Indenture shall be 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
THE CHASE MANHATTAN BANK
Trustee
By: /s/ THOMAS CENTRONE
-------------------
Vice President
(SEAL)
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 26th day of March, 1997, 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 27th day of March, 1997, 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 8/31/98
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
April 1, 1997
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 11
Signature Series, Individual Investor's America's
Fastest Growing Companies(R) Trust III
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 11, Signature Series, Individual
Investor's America's Fastest Growing Companies(R) Trust III (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 Form N-8B-2, as amended, relating
317062.1
<PAGE>
Reich & Tang Distributors L.P.
April 1, 1997
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. 333-22963) 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 Order of Exemption from certain provisions of Sections 11(a) and
11(c) of the 1940 Act, filed on behalf of Reich & Tang Distributors L.P.; 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) granted on October 9, 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 general application relating to or
affecting the enforceability of
317062.1
<PAGE>
Reich & Tang Distributors L.P.
April 1, 1997
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
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the statement of
financial condition as of opening of business on
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> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> APR-01-1997
<PERIOD-TYPE> OTHER
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 114,354
<INVESTMENTS-AT-VALUE> 114,354
<RECEIVABLES> 0
<ASSETS-OTHER> 25,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,354
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25,000
<TOTAL-LIABILITIES> 25,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 114,354
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 114,354
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 114,354
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.71
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
