As filed with the Securities and Exchange Commission on September 16, 1997
Registration No. 333-32095
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
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 14, Signature Series, Zacks All-Star
Analysts Trust II
B. NAME OF DEPOSITOR:
Reich & Tang Distributors L.P.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Reich & Tang Distributors L.P. Battle Fowler LLP
600 Fifth Avenue 75 East 55th Street
New York, New York 10020 New York, New York 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Equity Securities Trust, Series 14,
Signature Series, Zacks All-Star Analysts Trust II is being registered
under the Securities Act of 1933 pursuant to Section 24(f) of the
Investment Company Act of 1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE
SECURITIES BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
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.
631324.1
<PAGE>
- -------------------------------------------------------------------------------
INSERT LOGO
- -------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 14, SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
The Trust is a unit investment trust designated Equity Securities Trust, Series
14, Signature Series, Zacks All-Star Analysts Trust II (the "Trust"). The
Sponsor is Reich & Tang Distributors L.P. The objective of the Trust is to seek
to achieve capital appreciation. Current income will be secondary to the
objective of capital growth. The Sponsor can not give any 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, Zacks
Investment Research Inc. ("Zacks"). The Trust will include stocks recommended as
"buy" or "strong buy" by analysts employed by United States brokerage firms, who
have had exceptional track records in selecting stocks (the "All-Star Analysts")
as identified in the annual Zacks/Wall Street Journal All-Star Analysts Survey.
The Wall Street Journal and its publisher, Dow Jones & Company, Inc., have no
interest in the Trust, have not endorsed the Trust, and have no opinion about
the suitability of the Trust as an investment. Neither Dow Jones nor The Wall
Street Journal has participated in or will participate in the selection of
securities for the Trust. These All-Star Analysts have been identified annually
during each of the last 5 years and their stock recommendations are monitored by
Zacks on a regular basis. The value of the Units of the Trust will fluctuate
with fluctuations in the value of the underlying Securities in the Trust.
Therefore, Unitholders who sell their Units prior to termination of the Trust
may receive more or less than their original purchase price upon sale. No
assurance can be given that dividends will be paid or that the Units will
appreciate in value. The Trust will terminate approximately fourteen months
after the Initial Date of Deposit. 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. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which is filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
Units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these Units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC 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 SEPTEMBER 16, 1997
631348.2
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 15, 1997:*
<TABLE>
<S> <C>
DATE OF DEPOSIT: September 16, 1997 MANDATORY TERMINATION DATE: The earlier of
AGGREGATE VALUE OF December 17, 1998 or the disposition of the last
SECURITIES.................................. $148,568 Security in the Trust.
AGGREGATE VALUE OF SECURITIES CUSIP NUMBERS: Cash: 294762190
PER 100 UNITS............................... $970.50 Reinvestment: 294762216
NUMBER OF UNITS................................ 15,308 TRUSTEE: The Chase Manhattan Bank
FRACTIONAL UNDIVIDED INTEREST IN TRUSTEE'S FEE: $.90 per 100 Units outstanding
TRUST....................................... 1/15,308 ESTIMATED ORGANIZATIONAL EXPENSES**:
PUBLIC OFFERING PRICE $.59 per 100 Units
Aggregate Value of Securities in ESTIMATED OFFERING COSTS**: $.71 per 100
Trust.................................... $148,568 Units
Divided By 15,308 Units (times 100)......... $970.50 OTHER FEES AND EXPENSES: $.21 per 100 Units
Plus Sales Charge of 2.95% of Public outstanding
Offering Price per 100 Units............. $29.50 SPONSOR: Reich & Tang Distributors L.P.
Public Offering Price per 100 Units+........ $1,000.00 SPONSOR'S SUPERVISORY FEE: Maximum of $.25
SPONSOR'S REPURCHASE PRICE AND per 100 Units outstanding (see "Trust Expenses and
REDEMPTION PRICE PER Charges" in Part B).
100 UNITS++................................. $970.50 PORTFOLIO CONSULTANT: Zacks Investment
EVALUATION TIME: 4:00 p.m. New York Time. Research Inc.
MINIMUM INCOME OR PRINCIPAL EXPECTED SETTLEMENT DATE***: September 19,
DISTRIBUTION: $1.00 per 100 Units 1997
LIQUIDATION PERIOD: Beginning 30 days prior to RECORD DATE: December 15 and June 15
the Mandatory Termination Date. DISTRIBUTION DATE: December 31 and June 30
MINIMUM VALUE OF TRUST: The Trust may be ROLLOVER NOTIFICATION DATE****: November
terminated if the value of the Trust is less than 40% of 17, 1998 or another date as determined by the Sponsor.
the aggregate value of the Securities at the completion
of the Deposit Period.
</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.
** The Trust (and therefore the Unitholders) will bear all or a portion of
its organizational costs, which 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. These
figures are based upon the assumption that the Trust will reach a size of
2,000,000 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.
*** The business day on which contracts to purchase securities in the Trust
are expected to settle.
**** If a Unitholder ("Rollover Unitholder") so specifies on or prior to the
Rollover Notification Date, the Rollover Unitholder's terminating distribution
will be reinvested as received in an available series of the Equity Securities
Trust, if offered (see "Trust Administration - Trust Termination").
+ 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
Unitholder, be made in kind. The Trustee will forward the distributed securities
to the Unitholder's bank or broker-dealer account at The Depository Trust
Company in book-entry form. See "Liquidity--Trustee Redemption" in Part B.
A-2
631348.2
<PAGE>
DESCRIPTION OF PORTFOLIO:
<TABLE>
<S> <C>
Percent of Issues represented by the Sponsor's contracts to Medical - Drugs......................... 7.50%
purchase: 100% Medical - Hospitals..................... 2.48%
NYSE 79.48%; Over the Counter 20.52% Oil-Field Services...................... 5.05%
Percent of Issues by Industry*: Oil-International...................... 2.51%
Aerospace........................................ 2.50% Oil-Production/Pipeline................. 2.50%
Automobile/Truck................................. 2.48% Retail - Discount....................... 2.50%
Banking.......................................... 2.96% Retail - Restaurants..................... 4.50%
Beverages........................................ 4.05% Retail-Regional Dept.................... 2.51%
Bread & Other Products........................... 4.01% Retail - Supermarkets................... 3.98%
Building - Residential........................... 2.51% Retail-Wholesale Computers............. 1.51%
Computers........................................ 12.42% Steel-Producers......................... 2.51%
Electronics...................................... 2.53% Tobacco................................. 2.52%
Finance.......................................... 5.99% Transportation - Airlines............... 1.97%
Hotels & Motels.................................. 3.96% Transportation - Railroad............... 1.99%
Insurance........................................ 5.99% Utility-Electric Power.................. 1.51%
Machinery-Farm................................... 2.52% Utility - Telephone........................... 2.54%
--------
100.00
</TABLE>
------------------
* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or that industry constitute
25% or more of the aggregate face amount of the portfolio.
OBJECTIVE. The objective of the Trust is to seek to achieve capital
appreciation. Current income will be secondary to the objective of capital
growth. The Trust seeks to achieve its objective by investing in a portfolio of
40 equity securities, each of which has been recommended as a "buy" or "strong
buy" by two or more Zacks/Wall Street Journal All-Star Analysts. These top
analysts have been identified and monitored by Zacks as part of Zacks analysis
of the historical performance of brokerage analyst stock recommendations in
conjunction with the annual publication of the Zacks/Wall Street Journal
All-Star Analysts Survey (see "The Trust--The Securities" in Part B). The Wall
Street Journal and its publisher, Dow Jones & Company, Inc., have no interest in
the Trust, have not endorsed the Trust, and have no opinion about the
suitability of the Trust as an investment. Neither Dow Jones nor The Wall Street
Journal has participated in or will participate in the selection of securities
for the Trust. As used herein, the term "Securities" means the common stocks
initially deposited in the Trust and described in "Portfolio" in Part A and any
additional common stocks acquired and held by the Trust pursuant to the
provisions of the Indenture. Further, the Securities may appreciate or
depreciate in value, dependent upon the full range of economic and market
influences affecting corporate profitability, the financial condition of issuers
and the price of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objective of the Trust will be
achieved.
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
A-3
631348.2
<PAGE>
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.)
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
Unitholders (based on the most recent quarterly or semi-annual ordinary dividend
distributed with respect to the Securities) as of the business day prior to the
Initial Date of Deposit per 100 Units was $7.34. This estimate will vary with
changes in the Trust's fees and expenses, actual dividends received, and with
the sale of Securities. In addition, because the issuers of common stock are not
obligated to pay dividends, there is no assurance that the estimated net annual
dividend distributions will be realized in the future.
DISTRIBUTIONS. Dividend distributions, if any, will be made on the Distribution
Dates to all Unitholders of record on the Record Date. For the specific dates
representing the Distribution Dates and Record Dates, see "Summary of Essential
Information" in Part A. The final distribution will be made within a reasonable
period of time after the termination of the Trust. (See "Rights of
Unitholders--Distributions" in Part B.) Unitholders may elect to automatically
reinvest distributions (other than the final distribution in connection with the
termination of the Trust), into additional Units of the Trust, which are subject
to a reduced sales charge. See "Reinvestment Plan" 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 of how
the secondary market repurchase price will be determined.) If a market is not
maintained a Unitholder 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.
Unitholders 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. Unitholders
who have not chosen to receive distributions-in-kind will be at risk to
A-4
631348.2
<PAGE>
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. Unitholders should
consult their own tax advisers in this regard.
ROLLOVER OPTION. Unitholders may elect to roll their terminating distributions
into the next available series of Equity Securities Trust at a reduced sales
charge. Rollover Unitholders must make this election on or prior to the Rollover
Notification Date. Upon making this election, a Unitholder's Units will be
redeemed when the last of the underlying Securities are sold 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). The
portfolio of the Trust is fixed and not "managed" by the Sponsor. Since the
Trust will not sell Securities in response to ordinary market fluctuation, but
only (except for certain extraordinary circumstances) 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. In connection with the deposit of Additional Securities subsequent to
the Initial Date of Deposit, if cash (or a letter of credit in lieu of cash) is
deposited with instructions to purchase Securities, to the extent the price of a
Security increases or decreases between the deposit and the time the Security is
purchased, Units may represent less or more of that Security and more or less of
the other Securities in the Trust. In addition, brokerage fees incurred in
purchasing Securities with cash deposited with instructions to purchase the
Securities will be an expense of the Trust. Price fluctuations during the period
from the time of deposit to the time the Securities are purchased, and payment
of brokerage fees, will affect the value of every Unitholder's Units and the
income per Unit received by 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.)
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust at a reduced sales
charge of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll
in the Reinvestment Plan.
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 14, Signature Series, Zacks All-Star Analysts Trust II. The
Underwriter will distribute Units through various broker-dealers, banks and/or
other eligible participants (see "Public Offering--Distribution of Units" in
Part B).
A-5
631348.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 14
SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, SEPTEMBER 16, 1997
<TABLE>
ASSETS
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $148,568)(Note 1).......................... $148,568
Organizational Costs (Note 2)........................................................................... 11,700
Offering Costs (Note 3)................................................................................. 14,300
--------------------
Total................................................................................................... $174,568
====================
LIABILITIES AND INTEREST OF UNITHOLDERS
Accrued Liabilities (Notes 2 and 3)..................................................................... $26,000
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (Series 14: 15,308 Units)......................................... 148,568
--------------------
Total................................................................................................... $174,568
====================
Net Asset Value per Unit................................................................................ $9.71
====================
</TABLE>
- -------------------------
Notes to Statement:
(1) Equity Securities Trust, Series 14, Signature Series, Zacks All-Star
Analysts Trust II (the "Trust") is a unit investment trust created under the
laws of the State of New York and registered under the Investment Company Act of
1940. The objective of the Trust, sponsored by Reich & Tang Distributors L.P.
(the "Sponsor") is to seek to achieve capital appreciation. Current income will
be secondary to the objective of capital growth. On September 16, 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 15,308 units of the Trust. An irrevocable letter of credit issued
by the Bank of Boston in an amount of $200,000 has been deposited with the
Trustee for the benefit of the Trust to cover the purchases of such Securities
as well as any outstanding purchases of previously-sponsored unit investment
trusts 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 September 15, 1997. The Trust will
terminate on December 17, 1998 or earlier under certain circumstances as further
described in the Prospectus.
(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 amortized over the term
of the initial offering period.
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.
A-6
631348.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 14
SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, SEPTEMBER 16, 1997
<TABLE>
<CAPTION>
Market Value of
Stocks as a Market Cost of Securities
Portfolio Number of Ticker Percentage Value Per to the Trust(3)
No. Shares Name of Issuer (1) Symbol of the Trust(2) Share
<S> <C> <C> <C> <C> <C> <C> <C>
Aerospace: 2.50%
1 72 Shs. The Boeing Co. BA 2.50% $ 51.5000 $ 3,708
Automobile/Truck:
2.48%
2 53 Magna International, Inc. MGA 2.48 69.6250 3,690
Banking: 2.96%
3 39 The Chase Manhattan Corp. CMB 2.96 112.7500 4,397
Beverages: 4.05%
4 159 PepsiCo, Inc. PEP 4.05 37.8125 6,012
Bread & Other Products:
4.01%
5 181 RJR Nabisco Holdings Corp. RN 4.01 32.9375 5,962
Building - Residential:
2.51%
6 70 Centex Corp. CTX 2.51 53.2500 3,728
Computers: 12.42%
7 76 3Com Corp. COMS 2.51 49.0000 3,724
8 52 Cisco Systems, Inc.. CSCO 2.44 69.7500 3,627
9 57 Hewlett-Packard Co. HWP 2.50 65.2500 3,719
10 38 International Business IBM 2.46 96.1250 3,653
Machines Corp.
11 98 Oracle Corp. ORCL 2.51 38.0625 3,730
Electronics: 2.53%
12 40 Applied Materials, Inc. AMAT 2.53 93.8750 3,755
Finance: 5.99%
13 109 MBNA Corp. KRB 3.00 40.9375 4,462
14 87 Morgan Stanley Dean MWD 2.99 51.1250 4,448
Witter, Discover and
Co.
Hotels & Motels:3.96%
15 61 Capstar Hotel Co. CHO 1.49 36.3125 2,215
16 53 HFS, Inc. HFS 2.47 69.3750 3,677
Insurance: 5.99%
17 44 American International AIG 2.97 100.1875 4,408
Group, Inc.
18 129 Sun America Inc. SAI 3.02 34.7500 4,483
Machinery - Farm:
2.52%
</TABLE>
A-7
631348.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 14
SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, SEPTEMBER 16, 1997
<TABLE>
<CAPTION>
Market Value of
Stocks as a Market Cost of Securities
Portfolio Number of Ticker Percentage Value Per to the Trust(3)
No. Shares Name of Issuer (1) Symbol of the Trust(2) Share
<S> <C> <C> <C> <C> <C> <C> <C>
19 70 Deere & Co. DE 2.52 53.4375 3,741
Medical - Drugs: 7.50%
20 80 Elan Corp plc (ADR) ELN 2.51 46.5625 3,725
21 92 Dura Pharmaceuticals, DURA 2.50 40.3750 3,714
Inc.
22 47 Bristol-Myers Squibb Co. BMY 2.49 78.5625 3,692
Medical - Hospitals:
2.48%
23 80 Universal Health UHS 2.48 46.1250 3,690
Services,
Inc.
Oil - Field Services:
5.05%
24 233 American Oilfield DIVE 2.55 16.2500 3,786
25 101 Pride International, Inc.PDE 2.50 36.7500 3,712
Oil - International:
2.51%
26 70 Total S.A. (ADR) TOT 2.51 53.3750 3,736
Oil - Production/Pipeline:
2.50%
27 78 The Williams Companies, WMB 2.50 47.6875 3,720
Inc.
Retail - Discount:
2.50%
28 58 Dayton Hudson Corp. DH 2.50 63.9375 3,708
Retail - Restaurants:
4.50%
29 107 Morton's Restaurant MRG 1.52 21.0625 2,254
Group,
Inc.
30 90 Applebee's APPB 1.50 24.6875 2,222
International, Inc.
31 111 Foodmaker, Inc. FM 1.48 19.8750 2,206
Retail - Regional Dept.:
2.51%
32 86 Federated Department FD 2.51 43.3125 3,725
Stores
Retail - Supermarket:
3.98%
</TABLE>
A-8
631348.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 14
SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, SEPTEMBER 16, 1997
<TABLE>
<CAPTION>
Market Value of
Stocks as a Market Cost of Securities
Portfolio Number of Ticker Percentage Value Per to the Trust(3)
No. Shares Name of Issuer (1) Symbol of the Trust(2) Share
<S> <C> <C> <C> <C> <C> <C> <C>
33 203 The Kroger Co. KR 3.98 29.1875 5,925
Retail - Wholesale
Computers: 1.51%
34 62 InaCom Corp. ICO 1.51 36.1875 2,244
Steel - Producers:
2.51%
35 133 British Steel PLC BST 2.51 28.0000 3,724
Tobacco: 2.52%
36 110 Consolidated Cigar CIG 2.52 34.0625 3,747
Holdings,
Inc.
Transportation - Airlines:
1.97%
37 107 Comair Holdings, Inc. COMR 1.97 27.3750 2,929
Transportation - Railroad:
1.99%
38 31 Burlington Northern Santa BNI 1.99 95.1875 2,951
Fe, Inc.
Utility - Electric Power:
1.51%
39 60 CMS Energy Corp. CMS 1.51 37.4375 2,246
Utility - Telephone:
2.54%
40 154 LCI International LCI 2.54 24.5000 3,773
---- --------
Total Investment in 100% $148,568
==== =======
Securities
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on September 15,
1997. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be September 19, 1997.
(2) Based on the cost of the Securities to the Trust.
(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 $149,102. The Sponsor's Loss
on the Initial Date of Deposit is $534. The accompanying notes form an
integral part of the Financial Statements.
A-9
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders,
Equity Securities Trust, Series 14,
Signature Series, Zacks All-Star Analysts Trust II
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, presents fairly, in all material respects, the
financial position of Equity Securities Trust, Series 14, Signature Series,
Zacks All-Star Analysts Trust II (the "Trust") at opening of business, September
16, 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, September 16, 1997, by correspondence with
the Sponsor, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
September 16, 1997
A-10
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Zacks All-Star Analysts Trust
INVESTING WITH WALL STREET'S TOP-RATED ANALYSTS
The All-Star Analysts Trust seeks to achieve capital appreciation by
creating a portfolio of stocks based on the current equity recommendations
of the Zacks/Wall Street All-Star Analysts.
The All-Star Analysts are selected by Zacks Investment Research, one of
the leading authorities on rating investment analysts. Zack's exhaustive,
quantitative research analyzes tens of thousands of "buy", "hold" and
"sell" recommendations published by thousands of analysts. At the end of
each year, Zacks tallies the performance of each analyst's stock
recommendations. The five analysts in each industry whose stock picks
performed the best are designated Zacks All-Stars.
"ZACKS is the premier service for specific statistics on what the analysts
think about stocks." - Forbes, June 3, 1996
"ZACKS Investment Research is the best known compiler of Wall Street
analysts' earnings estimates." - Barron's, May 27, 1996
THE ALL-STAR TRUST
The All-Stars' current picks are then reviewed by the Sponsor. Only those
stocks rated as "buy" or "aggressive buy" by two or more of the All-Stars
are considered for inclusion into the Trust. Of course, the analysts' past
performance does not guarantee future results of their current selections
or of all the All-Star Trust.
Once the stocks are selected for the Trust, they are balanced in
accordance with Standard & Poor' industry weightings to assure
diversification. The stocks will remain in the portfolio for the Trust's
fourteen months life, and will be monitored by the Sponsor for the
duration. Under limited circumstances, the stocks can be removed from the
Trust. Although the portfolio is fixed for one year, you can redeem your
units at the net asset value on any business day.
631348.2
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INVESTING IN A NEW GENERATION OF UNIT INVESTMENT TRUSTS
The popularity of equity UITs has surged in recent years, with new issues
up 205% in 1996, according to the Investment Company Institute (ICI).
Investors are discovering that the buy-and-hold advantages of fixed,
professionally selected portfolios are worth learning about - and
investing in.
[TO BE INSERTED]
SELECTING THE ALL-STAR PORTFOLIO
1. The Data
The selection process begins with Zacks - the authority on tracking
investment analysts. Zacks stock recommendation database holds over
700,000 "buy", "hold" and "sell" recommendations from 2,500 analysts made
during the last ten years.
2. Determining Eligibility
It takes more than just an opinion to qualify as a Zacks All-Star
analysts. Only investment analysts who publish "buy", "hold" or "sell"
opinions on at least five stocks within an industry, (including two of the
industry's ten largest stocks) are deemed to be experts. In addition, only
those analysts who have stayed at their firms for the entire year are
eligible.
3. Measuring Performance
A portfolio is created for each eligible analyst that includes only the
"buys" and "strong buys" published during the year. Each recommendation is
given equal weighting, and the portfolios are updated daily as the
analysts change their recommendations. The total return is calculated,
including dividends, for each analyst's portfolio.
4. Selecting the Best
At the end of the year, the five analysts in each industry whose
portfolios had the highest annual returns are designated Zacks All-Star
Analysts.
5. The Trust
Only those stocks recommended by two or more All-Stars will be considered
for inclusion into the Trust. The stocks are then weighted and diversified
in accordance with the Standard & Poor's composite weightings.
631348.2
(ii)
<PAGE>
All-Star Advantages
PROFESSIONAL SELECTION
Your portfolio will be selected by using Wall Street's top-rated analysts'
stock picks and will be diversified in relation to the Standard & Poor's
industry weightings.
A BUY-AND-HOLD STRATEGY
The buy-and-hold fixed portfolio eliminates management fees and reduces
trading expenses. The savings are passed through to investors. Investors
purchasing units will be charged a sales charge.
MONITORED PORTFOLIO
The stocks in your portfolio are continuously monitored, and under certain
circumstances, can be removed from the portfolio.
DAILY PRICING /DAILY LIQUIDITY
You may redeem your units as the net asset value. The daily price will
fluctuate with the underlying securities, and may be worth more or less
than the original purchase price at redemption.
RETIREMENT PLAN QUALIFIED
The All-Star Trust can be held in IRA's and custodial accounts in addition
to your regular investment portfolio.
COMPOUNDED RETURNS
You have the option to automatically reinvest the semiannual distributions
(if any) back into additional units at a reduced sales charge.
THREE OPTIONS AT TERMINATION
When your Trust terminates, you have the option to A) receive your
distribution in cash, B) reinvest your proceeds into a new trust at a
reduced sales charge, or C) receive shares of the underlying stocks
(minimum apply).
Units of the Trust are not deposits or obligations of, or guarantee by,
any bank and Units are not federally insured or otherwise protected by the
Federal Deposit Insurance Corporation and involve investment risk. An
investment in Units of the Trust should be made with an understanding of
the risk associated with investment in common stocks, which include the
risks that the financial condition of the issuer may become impaired or
that the general condition of the stock market may worsen.
REICH & TANG DISTRIBUTORS L.P.
A Subsidiary of New England
Investment Companies, L.P.
600 Fifth Avenue
New York, NY 10020-2302
631348.2
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631348.2
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EQUITY SECURITIES TRUST
SERIES 14, SIGNATURE SERIES,
ZACKS ALL-STAR ANALYSTS TRUST II
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 14, Signature Series, Zacks
All-Star Analysts Trust II consists of a "unit investment trust" designated as
set forth in Part A. The Trust was created under the laws of the State of New
York pursuant to a Trust Indenture and Agreement (the "Trust Agreement"), dated
the Initial Date of Deposit, between 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 Unitholders.
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 Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
631348.2
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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 with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of Deposit. These additional Units, which will
result in an 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
Unitholders. 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. Current income will be secondary to the objective of capital
growth. The Trust seeks to achieve its objective by investing in a portfolio of
40 equity securities, each of which has been selected by two or more of the top
five analysts in each of 50 major industries. These top analysts have been
identified and monitored by the Portfolio Consultant (see "The Trust--The
Securities" below). As used herein, the term "Securities" means the common
stocks initially deposited in the Trust and described in "Portfolio" in Part A
and any additional common stocks acquired and held by the Trust pursuant to the
provisions of the Indenture. 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.
The Trust will terminate in approximately fourteen months, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if available) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the yields on these Securities may change subsequent to the Initial Date of
Deposit. Further, the Securities may appreciate or depreciate in value,
dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the prices of
equity securities in general and the Securities in particular. Therefore, there
is no guarantee that the objective of the Trust will be achieved.
THE SECURITIES. Each of the Securities in the Portfolio of the Trust was
recommended as "buy" or "strong buy" as of the business day prior to the Initial
Date of Deposit by two or more of the "All-Star Analysts" as identified by Zacks
in the Zacks/Wall Street Journal All-Star Analysts Survey. The Wall Street
Journal and its publisher, Dow Jones & Company, Inc., have no interest in the
Trust, have not endorsed the Trust, and have no opinion about the suitability of
the Trust as an investment. Neither Dow Jones nor The Wall Street Journal has
participated in or will participate in the selection of securities for the
Trust. The concept of All-Star Analysts was first formulated in 1990, when Zacks
and the Wall Street Journal began tracking the returns of stocks recommended by
brokerage firms. This initial study, which is updated quarterly by Zacks and
published as part of a special section in the Wall Street Journal, measured only
the performance of the "buy list" published by the major brokers. In 1993 this
analysis was expanded and Zacks began measuring the performance of the stocks
recommended by each of the individual analysts employed by the brokerage firms.
Each year Zacks and the Wall Street Journal identify the top analysts in each of
50 major industries based on the historical performance of the stocks they
recommend. Only analysts
631348.2
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<PAGE>
who do not change firms during the year, who follow at least five companies in
their industry and who follow at least 2 of the 10 largest firms in their
industry are included in the competition. Equal weighted portfolios are created
by Zacks throughout the year that contain all stocks recommended by each of the
analysts as "buys" or "strong buys." Whenever a recommendation is lowered, the
stock is removed from the hypothetical portfolio and whenever a new stock is
recommended, it is added to the hypothetical portfolio which is then rebalanced.
In each industry the five analysts with the best performing portfolio for the
year are designated "All-Star Analysts" for the industry and are published by
the Wall Street Journal in the annual Zacks/Wall Street Journal All-Star
Analysts Survey. Each stock in the portfolio of the Trust was recommended as
"buy" or "strong buy" as of the business day prior to the Initial Date of
Deposit by two or more of the 1996 All-Star Analysts. The number of shares of
each stock in the portfolio has been set by Zacks so that the relative market
value of the stock in the portfolio is proportionate to the weight of its
industry in the S&P 500 and within each industry if there were more than one
stock those stocks have been equally weighted in the portfolio. Depending on the
number of stocks that meet these criteria as of the business day prior to the
Initial Date of Deposit, the selection of the stocks for the portfolio will be
made from among such stocks by Zacks Investment Management.
The Trustee has not participated and will not participate in the selection
of Securities for the Trust, and neither the Sponsor, Zacks nor the Trustee will
be liable in any way for any default, failure or defect in any Securities.
The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust. In addition, the Sponsor, at its option, is
authorized under the Trust Agreement to direct the Trustee to reinvest in
Substitute Securities the proceeds of the sale of any of the Securities only if
such sale was due to unusual circumstances as set forth under "Trust
Administration-Portfolio Supervision."
The Substitute Securities must be purchased within 20 days after the sale
of the portfolio Security or delivery of the notice of the failed contract.
Where the Sponsor purchases Substitute Securities in order to replace Failed
Securities, (i) the purchase price may not exceed the purchase price of the
Failed Securities and (ii) the Substitute Securities must be substantially
similar to the Failed Securities. Where the Sponsor purchases Substitute
Securities in order to replace Securities it sold, the Sponsor will endeavor to
select Securities which are equity securities that possess characteristics that
are consistent with the objective of the Trust as set forth above. Such
selection may include or be limited to Securities previously included in the
portfolio of the Trust. No assurance can be given that the Trust will retain its
present size and composition for any length of time.
The Trustee shall notify all Unitholders of the acquisition of the
Substitute Security, within five days thereafter, and the Trustee shall, on the
next 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 Unitholders as set forth under "Rights of
Unitholders--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 Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date. The proceeds from the sale of a Security or the exercise of
any redemption or call provision will be distributed to Unitholders except to
the extent such proceeds are applied to meet redemptions of Units. (See
"Liquidity--Trustee Redemption.")
631348.2
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<PAGE>
RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact 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 or distributed during a 30-day period at the termination of
the approximately fourteen month life of the Trust. Since the Trust will not
sell Securities in response to ordinary market fluctuation, but only at the
Trust's termination, 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 and their affiliates.
However, because these clients may have differing investment objectives, the
Sponsor may sell certain Securities from those accounts in instances where a
sale by the Trust would be impermissible, such as to maximize return by taking
advantage of market fluctuations. Investors should consult with their own
financial advisers prior to investing in the Trust to determine its suitability.
(See "Trust Administration--Portfolio Supervision" below.)
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 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 Unitholder's Units and the Income per Unit received by
the Trust. In particular, Unitholders who purchase Units during the initial
offering period would experience a dilution of their investment as a result of
any brokerage fees paid by the Trust during subsequent deposits of Additional
Securities purchased with cash deposited. In order to minimize these effects,
the Trust will try to purchase Securities as near as possible to the Evaluation
Time or at prices as close as possible to the prices used to evaluate Trust
Units at the Evaluation Time. In addition, subsequent deposits to create such
additional Units will not be covered by the deposit of a bank letter of credit.
In the event that the Sponsor does not deliver cash in consideration for the
additional Units delivered, the Trust may be unable to satisfy its contracts to
purchase the Additional Securities. The failure of the Sponsor to deliver cash
to the Trust, or any delays in the Trust receiving such cash, may have
significant adverse consequences for the Trust.
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
631348.2
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<PAGE>
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.
LEGISLATION. From time to time Congress considers proposals to reduce the
rate of the dividends-received deduction which is available to certain
corporations. Enactment into law of a proposal to reduce the rate would
adversely affect the after-tax return to investors who can take advantage of the
deduction. Although recent legislation has established a reduced tax rate of 20%
for capital gains realized by individual investors who have held assets for more
than 18 months, this rate will generally not be available for Unitholders
because the term of the Trust is approximately fourteen months. Investors are
urged to consult their own tax advisers. Further, at any time after the Initial
Date of Deposit, legislation may be enacted, with respect to the Securities in
the Trust or the issuers of the Securities. Changing approaches to regulation,
particularly with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in the
Trust. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on the Trust or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
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.
631348.2
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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: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount from
the Public Offering Price during the initial public offering based upon the
number of Units purchased. This volume discount will result in a reduction of
the sales charge applicable to such purchases. The amount of the volume discount
and the approximate reduced sales charge on the Public Offering Price applicable
to such purchases are as follows:
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
10,000 but less than 25,000 2.45%
25,000 but less than 50,000 2.20%
50,000 but less than 100,000 2.00%
100,000 or more 1.75%
These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
Employees (and their immediate families) of Reich & Tang Distributors L.P.
(and its affiliates) 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 five-year 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 five-year
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
631348.2
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discretionary investment authority and that are held in a fiduciary, agency,
custodial or similar capacity, (3) any person who, for at least 90 days, has
been an officer, director or bona fide employee of any firm offering Units for
sale to investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything to
the contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive the volume discount.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsor and dealers at the Public
Offering Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsor may extend the initial offering period
for successive thirty day periods. Certain banks and thrifts will make Units of
the Trust available to their customers on an agency basis. A portion of the
sales charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
The Sponsor intends to qualify the Units for sale in substantially all
States through dealers who are members of the National Association of Securities
Dealers, Inc. Units may be sold to dealers at prices which represent a
concession of up to 2.0% 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. 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 Unitholders 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.
631348.2
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<PAGE>
During the initial offering period and thereafter to the extent additional
Units continue to be offered by means of this Prospectus, the Underwriter may
also realize profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the aggregate value of the Securities and hence in
the Public Offering Price received by the Sponsor for the Units. Cash, if any,
made available to the Sponsor prior to settlement date for the purchase of Units
may be used in the Sponsor's business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsor.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will either be
evidenced by registered Certificates executed by the Trustee and the Sponsor or
will be recorded in book-entry form at Depository Trust Company ("DTC") through
an investor's brokerage account. Units may be purchased and Certificates may be
issued in denominations of one hundred or more Units.
Any Certificates issued 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 Unitholder 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.
Units held through DTC will be deposited by the Sponsor with DTC in the
Sponsor's DTC account and registered in the nominee name CEDE & CO. Individual
purchases of beneficial ownership interest in the Trust may be made in
book-entry form through DTC. Ownership and transfer of Units will be evidenced
and accomplished directly and indirectly by bookentries made by DTC and its
participants. DTC will record ownership and transfer of the Units among DTC
participants and forward all notices and credit all payments received in respect
of the Units held by the DTC participants. Beneficial owners of Units will
receive written confirmation of their purchases and sale from the broker-dealer
or bank from whom their purchase was made. Units are transferable by making a
written request property accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unit Holder. Holders must sign such written request exactly as their names
appear on the records of the Trust. Such signatures must be guaranteed by a
commercial bank or trust company, savings and loan association or by a member
firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by 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.
631348.2
B-8
<PAGE>
Distributions to each Unitholder 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 Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions 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 Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date 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.
The 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.
RECORDS. The Trustee shall furnish Unitholders 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 Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders 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 Unitholders 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
Unitholders, Certificates issued or held, a current list of Securities in the
portfolio and a copy of the Trust Agreement.
631348.2
B-9
<PAGE>
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"). Unitholders 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
Unitholders 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 Unitholders 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
Unitholder 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
Unitholder 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 Unitholder when
the Trust disposes of a Security (whether by sale, exchange or redemption) or
upon the sale, exchange or redemption of Units by such Unitholder. The price a
Unitholder 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 Unitholder 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 Unitholder'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 Unitholder's pro rata portion
of dividends paid on such Security that exceed such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security will generally be treated as capital gain.
A Unitholder'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 Unitholder
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 of 28% on
such gains, rather than the "regular" maximum tax rate of 39.6%. Although recent
legislation has established a reduced tax rate of 20% for capital gains realized
by individual investors who have held assets for more than 18 months, this rate
will generally not be available for Unitholders because the term of the Trust is
approximately fourteen months. Tax rates may increase prior to the time when
631348.2
B-10
<PAGE>
Unitholders may realize gains from the sale, exchange or redemption of the Units
or Securities.
A Unitholder'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 Unitholder 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 Unitholders may be deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a
Unitholder 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 Unitholder'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
Unitholder 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
Unitholder 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 Unitholder's pro rata portion
of dividends that are taxable as ordinary income to Unitholders 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 Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Accordingly, corporate Unitholders
should consult their tax adviser in this regard.
As discussed in the section "Termination", each Unitholder 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 Unitholder choose
option (i), the exchange of the Unitholder'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
Unitholder 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 Units, the Unitholder 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 Unitholder'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 Unitholder 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 Unitholder to the extent Securities
are received. However, there is no specific authority addressing the income tax
631348.2
B-11
<PAGE>
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. Unitholders 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 the repurchase of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the date on
which Units are received in proper form (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
Unitholder 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 Unitholders,
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 calendar days after tender), the Sponsor may elect to
purchase such Units. Such purchase shall be made by payment to the Unitholder
not later than the close of business on the redemption date of an amount equal
to the Redemption Price on the date of tender.
631348.2
B-12
<PAGE>
TRUSTEE REDEMPTION. At any time prior to the termination of the Trust
(approximately one year from the Initial Date of Deposit), Units may also be
tendered to the Trustee for redemption at its corporate trust office at 4 New
York Plaza, New York, New York 10004, upon proper delivery of such Units and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be canceled. Any
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 "Ownership of Units.")
Unitholders 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
Unitholder 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 Unitholder 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
Unitholders 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: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange.
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 Unitholder 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
Unitholder'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 Unitholder will receive his pro rata number of whole shares of each of
631348.2
B-13
the Securities comprising the Trust portfolio and cash from the Principal
Accounts equal to the balance of the Redemption Price to which the tendering
Unitholder is entitled. If funds in the Principal Account are insufficient to
cover the required cash distribution to the tendering Unitholder, 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 Unitholder at
prices which will return to the Unitholder 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 Unitholder 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.
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. It
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. 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 Unitholders.
Furthermore, the Trust will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the "buy" or
"strong buy" recommendations of at least two of the All-Star Analysts in that
industry.
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 Sponsor directs that it be
retained.
631348.2
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<PAGE>
(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, or
shall be promptly sold unless the Sponsor directs that it be retained by
the Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsor is authorized to increase the size and number of
Units of the Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units from time to time subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on
the Initial Date of Deposit is maintained to the extent practicable. The
Sponsor may specify the minimum numbers in which Additional Securities
will be deposited or purchased. If a deposit is not sufficient to acquire
minimum amounts of each Security, Additional Securities may be acquired in
the order of the Security most under-represented immediately before the
deposit when compared to the original proportionate relationship. If
Securities of an issue originally deposited are unavailable at the time of
the subsequent deposit, the Sponsor may (i) deposit cash or a letter of
credit with instructions to purchase the Security when it becomes
available, or (ii) deposit (or instruct the Trustee to purchase) either
Securities of one or more other issues originally deposited or a
Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of Unitholders: (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 Unitholders.
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 Unitholders
evidencing 66 2/3% of the Units then outstanding for the purpose of modifying
the rights of Unitholders; provided that no such amendment or waiver shall
reduce any Unitholder'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 Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units 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 Unitholders, 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 Unitholders 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 Unitholders. Such notice will provide Unitholders 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
631348.2
B-15
<PAGE>
by notifying the Trustee prior to the commencement of the Liquidation Period by
returning a properly completed election request (to be supplied to Unitholders
at least 20 days prior to such date) (see Part A--"Summary of Essential
Information" for the date of the commencement of the Liquidation Period):
1. A Unitholder 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 Unitholder'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. Unitholders subsequently selling such
distributed Securities will incur brokerage costs when disposing of such
Securities. Unitholders should consult their own tax adviser in this
regard;
2. to receive in cash such Unitholder'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
Unitholder's pro rata share of its net assets of the Trust will be
distributed to such Unitholder within three days of the settlement of the
trade of the last Security to be sold; or
3. to invest such Unitholder'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. It is expected that a special redemption and liquidation
will be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust in Part A. The Units of a New Series will be
purchased by the Unitholder 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 Unitholder'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 Unitholder of units of a New Series such
Unitholder 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 Unitholder from recognizing taxable gain or loss (except
in the case of a loss, if and to the extent 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. Unitholders should
consult their own tax advisers in this regard.
Unitholders 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 that to the extent they 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 such sales will be 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 100 Units upon the settlement of the last sale of Securities during
the 30 day period will be distributed to Unitholders in redemption of such
Unitholders' interest in the Trust.
631348.2
B-16
<PAGE>
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
Unitholder 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 Unitholders. 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 Unitholders. There can be no assurance, however, that any
adverse price consequences of heavy trading will be mitigated.
It is expected (but not required) that the Sponsor will generally follow
the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsor will generally sell Securities on the first day of the
Liquidation Period; for less liquid Securities, on each of the first two days of
the Liquidation Period, the Sponsor will generally sell any amount of any
underlying Securities at a price no less than 1/2 of one point under the last
closing sale price of those Securities. On each of the following two days, the
price limit will increase to one point under the last closing sale price. After
four days, the Sponsor intends to sell at least a fraction of the remaining
underlying Securities, the numerator of which is one and the denominator of
which is the total number of days remaining (including that day) in the
Liquidation Period, without any price restrictions.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unitholders before
the commencement of the Liquidation Period. All Unitholders will then elect
either option 1, if eligible, or option 2.
By electing to "rollover" in the New Series, the Unitholder 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 Unitholders a yearly opportunity to
elect to roll 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 Unitholder's
election to participate in the reinvestment program will be treated as an
indication of interest only. The Sponsor intends to coordinate the date of
deposit of a future series so that the terminating trust will terminate
contemporaneously with the creation of a New Series. The Sponsor reserves the
right to modify, suspend or terminate the reinvestment privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors L.P. (successor to the
Unit Investment Trust Division of Bear, Stearns & Co. Inc.), a Delaware limited
partnership, is engaged in the brokerage business and is a member of the
National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment advisor. Reich & Tang maintains its principal business
offices at 600 Fifth Avenue, New York, New York 10020. Reich & Tang Asset
Management L.P. ("RTAM L.P."), a registered investment adviser having its
principal place of business at 399 Boylston Street, Boston, MA 02116, is the 99%
limited partner of the Sponsor. RTAM L.P. is 99.5% owned by New England
631348.2
B-17
<PAGE>
Investment Companies, L.P. ("NEIC L.P.") and Reich & Tang Asset Management, Inc.
("RTAM 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 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 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
Unitholders 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
631348.2
B-18
<PAGE>
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 Unitholders."
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
Unitholders. 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
Unitholder 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.
THE PORTFOLIO CONSULTANT. The Portfolio Consultant is Zacks Investment
Research Inc., an Illinois corporation, with offices at 155 North Wacker Drive,
Chicago, Illinois 60606. Zacks is a 150 person consulting firm that summarizes,
interprets, organizes, distributes, and evaluates the research produced by the
3000 analysts employed by 230 United States brokerage firms. This price driving
flow of information has been tracked by Zacks since 1980 and is delivered, on a
daily basis, to retail brokers at the Zacks Web site, www.reswizard.com, and is
delivered, on a weekly basis, to individual investors at the Zacks Web site,
www.zacks.com.
Zacks Investment Management, a wholly owned subsidiary of Zacks, is a
registered investment advisor, with $60 million under management in hedge funds.
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
Unitholders.
631348.2
B-19
<PAGE>
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 Unitholders 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 Unitholders 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 Unitholders 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 charged to capital 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 charged to capital over the term of the
initial offering period, which may be between 30 and 90 days. All advertising
and selling expenses, as well as any organizational expenses not paid by the
Trust, will be borne by the Sponsor at no cost to the Trust.
The Sponsor will receive for portfolio supervisory services to the Trust
an Annual Fee in the amount set forth under "Summary of Essential Information"
in Part A. The Sponsor's fee may exceed the actual cost of providing portfolio
supervisory services for the Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the Equity
Securities Trust in any calendar year exceed the aggregate cost to the Sponsor
of supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
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 Unitholders 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 Unitholders; 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
631348.2
B-20
<PAGE>
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. Unitholders covered by the audit
during the year may receive a copy of the audited financials upon request.
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of Additional Securities
as described in "The Trust-Organization" in this Part B. Units acquired by
reinvestment will be subject to a reduced sales charge of 1.00%. Investors
should inform their broker, dealer or financial institution when purchasing
their Units if they wish to participate in the reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer or financial institution if they
wish to modify or terminate their election to participate in the reinvestment
plan. In order to enable a Unitholder to participate in the reinvestment plan
with respect to a particular distribution on their Units, such notice must be
made at least three business days prior to the Record Day for such distribution.
Each subsequent distribution of income or principal on the participant's Units
will be automatically applied by the Trustee to purchase additional Units of the
Trust. The Sponsor reserves the right to demand, modify or terminate the
reinvestment plan at any time without prior notice. The reinvestment plan for
the Trust may not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders 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") subject to
a reduced sales charge as set forth in the prospectus of the Exchange Trust (the
"Exchange Privilege"). 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 an Exchange Trust (the "Conversion Trusts") at the Public Offering
Price for units of the Conversion Trust subject to a reduced sales charge as set
forth in the prospectus of the Conversion Trust (the "Conversion Offer"). 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 securities in
the particular Trust portfolio. 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. Units in an Exchange or Conversion Trust will be sold to the
Unitholder at a price based on the aggregate offer price of the securities in
the Exchange or Conversion 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 or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
631348.2
B-21
<PAGE>
Conversion 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.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or 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 Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by Unitholders is
subject to the following additional conditions (i) at the time of the
Unitholder's election to participate in the Exchange Privilege or the Conversion
Offer, there must be units of the Exchange or Conversion 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. Unitholders 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 Unitholder for exchange, or from units being redeemed
for conversion, will be remitted to such Unitholder.
The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Unitholders of the Trust with 60 days' prior written notice of any termination
or material amendment to the Exchange Privilege or 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 Trust eligible for the Exchange
Privilege or 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 Exchange Privilege or the Conversion Offer, (ii) there is a
suspension of the redemption of units of an Exchange or Conversion 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 Unitholders. Unitholders
may, during this 60-day period, exercise the Exchange Privilege in accordance
with its terms then in effect.
To exercise the Exchange Privilege, a Unitholder should notify the Sponsor
of his desire to exercise his Exchange Privilege. 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 an Exchange or Conversion Trust are at
the time available for sale and such Units may lawfully be sold in the state in
which the Unitholder is a resident, the Unitholder will be provided with a
current prospectus or prospectuses relating to each Exchange or Conversion 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
631348.2
B-22
<PAGE>
conversion 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 OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Unitholder under the Internal Revenue
Code. The Unitholder 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 Unitholder'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, is 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.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the stocks receiving "buy" or "strong
buy" recommendations of at least two of the All-Star Analysts monitored by the
Portfolio Consultant ("All-Star Analysts Recommendations") and this Trust may be
included from time to time in advertisements, sales literature and reports to
current or prospective investors. Total return shows changes in Unit price
during the period plus reinvestment of dividends and capital gains, divided by
the maximum public offering price as of the date of calculation. Average
annualized returns show the average return for stated periods of longer than a
year. Sales material may also include an illustration of the cumulative results
of like annual investments in the All-Star Analysts Recommendations during an
accumulation period and like annual withdrawals during a distribution period.
Figures for actual portfolios will reflect all applicable expenses and, unless
otherwise stated, the maximum sales charge. No provision is made for any income
taxes payable. Similar figures may be given for this Trust. Trust performance
may be compared to performance on a total return basis of the Dow Jones
Industrial Average, the S&P 500 Composite Price Stock Index, or performance data
from Lipper Analytical Services, Inc. and Morningstar Publications, Inc. or from
publications such as Money, The New York Times, U.S. News and World Report,
Business Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of a Trust's relative
performance for any future period.
631348.2
B-23
<TABLE>
<S> <C>
No person is authorized to give any information or to ----------------------------------------------------
make any representations not contained in Parts A and B of this EQUITY SECURITIES TRUST
Prospectus; and any information or representation not contained ----------------------------------------------------
herein must not be relied upon as having been authorized by the SIGNATURE SERIES, ZACKS
Trust, the Trustee or the Sponsor. The Trust is registered as ALL-STAR ANALYSTS TRUST II TRUST
a unit investment trust under the Investment Company Act of ----------------------------------------------------
1940. Such registration does not imply that the Trust or any of
its Units have been guaranteed, sponsored, recommended or EQUITY SECURITIES TRUST
approved by the United States or any state or any agency or SERIES 14, SIGNATURE SERIES,
officer thereof. ZACKS ALL-STAR ANALYSTS TRUST II
------------------ (A UNIT INVESTMENT TRUST)
This Prospectus does not constitute an offer to sell, or a PROSPECTUS
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 DATED: SEPTEMBER 16, 1997
state.
Table of Contents SPONSOR:
Title Page REICH & TANG DISTRIBUTORS L.P.
600 Fifth Avenue
PART A New York, New York 10020
Summary of Essential Information...........................A-2 212-830-5400
Statement of Financial Condition...........................A-6
Portfolio..................................................A-7
Report of Independent Accountants.........................A-10 PORTFOLIO CONSULTANT:
PART B ZACKS INVESTMENT RESEARCH INC.
The Trust.................................................B-1 155 North Wacker Drive
Risk Considerations.......................................B-4 Chicago, Illinois 60606
Public Offering...........................................B-6
Rights of Unitholders.....................................B-8
Tax Status................................................B-9 TRUSTEE:
Liquidity.................................................B-12
Trust Administration......................................B-14 THE CHASE MANHATTAN BANK
Trust Expenses and Charges................................B-20 4 New York Plaza
Reinvestment Plan.........................................B-21 New York, New York 10004
Exchange Privilege and Conversion Offer...................B-21
Other Matters.............................................B-23
</TABLE>
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
hereby made.
631348.2
<PAGE>
<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 13,
Signature Series, Zacks Wall Street All-Star Analysts Trust.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
Price Waterhouse LLP
Zacks Investment Research 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
631324.1
<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 13,
Signature Series, Zacks Wall Street All-Star Analysts Trust for the purposes of
the representations required by Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the Series with respect to the securities of which
this registration statement is being filed, this registration
statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous Series as to which the effective date was determined by the
commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Equity Securities Trust, Series 14, Zacks All-Star Analysts Trust II has duly
caused this Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of New York and
State of New York on the 16th day of September, 1997.
EQUITY SECURITIES TRUST, SERIES 14,
SIGNATURE SERIES, ZACKS ALL-STAR
ANALYSTS TRUST II
(Registrant)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.
By /s/ PETER J. DEMARCO
Peter J. DeMarco
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 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
STEVEN W. DUFF Director September 16, 1997
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary By: /s/ Peter J. DeMarco
RICHARD DE SANCTIS Vice President and Treasurer Attorney-in-Fact
</TABLE>
- ------------------------
* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to Amendment
No. 1 to Registration Statement No. 33-6267 on November 16, 1995.
II-2
631324.1
<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 September 16, 1997, relating to the Statement of Financial Condition,
including the Portfolio, of Equity Securities Trust, Series 14, Signature
Series, Zacks All-Star Analysts Trust II which appears in such Prospectus. We
also consent to the reference to us under the heading "Independent Accountants"
in such Prospectus.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
September 16, 1997
II-3
631324.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
The Sponsor, Trustee and Certificateholders
Equity Securities Trust, Series 14, Signature Series,
Zacks All-Star Analysts Trust II
We hereby consent to the use of the name "Zacks" included herein and to the
reference to our Firm in the Prospectus.
ZACKS INVESTMENT RESEARCH INC.
New York, New York
September 16, 1997
II-4
631324.1
EQUITY SECURITIES TRUST, SERIES 14
SIGNATURE SERIES
ZACKS ALL-STAR ANALYSTS TRUST II
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated
September 16, 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 shall be amended to
read in its entirety as follows:
"Section 2.6 Deposit of Additional Securities.
(a) Subject to the requirements set forth below in
this Section, the Depositor may, on any Business
Day (the "Trade Date"), subscribe for Additional
Units as follows:
(1) Prior to the Evaluation Time on the Trade Date,
the Depositor shall provide notice (the "Subscription
Notice") to the Trustee, by telecopy or by written
communication, of the Depositor's intention to
subscribe for Additional Units. The Subscription
Notice shall identify the Additional Securities to be
acquired (unless such Additional Securities are a
precise replication of the then existing portfolio)
and shall either (i) specify the quantity of
Additional Securities to be deposited by the
Depositor on the settlement date for such
subscription or (ii) instruct the Trustee to purchase
Additional Securities with an aggregate value as
specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such
Business Day, the Depositor shall verify with the
Trustee, by telecopy, the number of Additional Units
to be created.
(3) Not later than the time on the settlement date
for such subscription when the Trustee is to deliver
the Additional Units created hereby (which time shall
not be later than the time by which the Trustee is
required to settle any contracts for the purchase of
Additional Securities entered into by the Trustee
pursuant to the instruction of the Depositor referred
to in subparagraph (1) above), the Depositor shall
deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or
contracts to purchase such Additional Securities
together with cash or a letter of credit in the
amount necessary to settle such contracts) or (ii)
cash or a letter of credit in the amount equal to the
aggregate value of the Additional Securities
specified in the Subscription Notice, together with,
in each case, Cash as defined below. "Cash" means, as
to the
-2-
317036.1
<PAGE>
Principal Account, cash or other property (other than
Securities) on hand in the Principal Account or
receivable and to be credited to the Principal
Account as of the Evaluation Time on the Business Day
preceding the Trade Date (other than amounts to be
distributed solely to persons other than persons
receiving the distribution from the Principal Account
as holders of Additional Units created by the
deposit), and, as to the Income Account, cash or
other property (other than Securities) received by
the Trust as of the Evaluation Time on the Business
Day preceding the Trade Date or receivable by the
Trust in respect of dividends or other distributions
declared but not received as of the Evaluation Time
on the Business Day preceding the Trade Date, reduced
by the amount of any cash or other property received
or receivable on any Security allocable (in
accordance with the Trustee's calculation of the
monthly distribution from the Income Account pursuant
to Section 3.5) to a distribution made or to be made
in respect of a Record Date occurring prior to the
Trade Date. Each deposit made during the 90 days
following the deposit made pursuant to Section 2.1
hereof shall replicate, to the extent practicable, as
specified in subparagraph (b), the Original
Proportionate Relationship. Each deposit made after
the 90 days following the deposit made pursuant to
Section 2.1 hereof (except for deposits made to
replace Failed Securities if such deposits occur
within 20 days from the date of a failure occurring
within such initial 90 day period) shall maintain
exactly the proportionate relationship existing among
the Securities as of the expiration of such 90 day
period. Each such deposit shall exactly replicate
Cash.
(4) On the settlement date for a subscription, the
Trustee shall, in exchange for the Securities and
cash or letter of credit described above, issue and
deliver to or on the order of the Depositor the
number of Units verified by the Depositor with the
Trustee.
(5) Each deposit of Additional Securities, shall
be listed in a Supplementary Schedule to an
Addendum to the Reference Trust Agreement stating
the date of such deposit and the number of
Additional Units being issued therefor. The
Trustee shall acknowledge in such Addendum the
receipt of the Deposit and the number of
Additional Units issued in respect thereof. The
-3-
317036.1
<PAGE>
Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein
provided for the Securities.
(6) The acceptance of Additional Units by the
Depositor in accordance with the provisions of
paragraph (a) of this Section shall be deemed a
certification by the Depositor that the deposit or
purchase of Additional Securities associated
therewith complies with the conditions of this
Section 2.06."
(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 September 16, 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.
-4-
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 15,308.
(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 1/15308 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of June
and December commencing on December 15, 1997.
(e) The term Distribution Date shall mean the last business
day of June and December commencing on December 31, 1997.
(f) The First Settlement Date shall mean September 19,
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
(i) For purposes of Section 7.4, the Depositor's
maximum annual supervisory fee is hereby specified to be $.25 per
100 Units outstanding.
-5-
317036.1
<PAGE>
(j) The Termination Date shall be December 17, 1998 or
the earlier disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on June 30
of each year.
(l) For purposes of this series of Equity Securities Trust,
the form of Certificate set forth in Indenture shall be 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]
-6-
317036.1
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ ROSALIA RAVIELE
-------------------
Vice President
(SEAL)
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 15th day of September, 1997, before me personally appeared
Rosalia Raviele, 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/ ADA IRIS VEGA
-----------------------------------------
Notary Public
ADA IRIS VEGA
NOTARY PUBLIC, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6/30/98
315855.1
<PAGE>
REICH & TANG DISTRIBUTORS L.P.
Depositor
By: Reich & Tang Asset Management, Inc.,
as General Partner of Depositor
By: /s/ PETER J. DEMARCO
--------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 15th day of September, 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
September 16, 1997
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 14
Signature Series, Zacks
All-Star Analysts Trust II
Dear Sirs:
We have acted as special counsel for Reich & Tang Distributors
L.P., as Depositor, Sponsor and Principal Underwriter (collectively, the
"Depositor") of Equity Securities Trust, Series 14, Signature Series, Zacks
All-Star Analysts Trust II(the "Trust") in connection with the issuance by the
Trust of units of fractional undivided interest (the "Units") in the Trust.
Pursuant to the Trust Agreements referred to below, the Depositor has
transferred to the Trust certain securities and contracts to purchase certain
securities together with an irrevocable letter of credit to be held by the
Trustee upon the terms and conditions set forth in the Trust Agreements. (All
securities to be acquired by the Trust are collectively referred to as the
"Securities").
In connection with our representation, we have examined copies
of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (collectively the "Trust Agreements") among the Depositor and The Chase
Manhattan Bank, as Trustee; (b) the Notification of Registration on Form N-8A
and the Registration Statement on Form N-8B-2, as amended, relating to the
Trust, as filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940
317062.1
<PAGE>
Reich & Tang Distributors L.P.
September 16, 1997
(the "1940 Act"); (c) the Registration Statement on Form S-6 (Registration No.
333-32095) 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 creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
317062.1
<PAGE>
Reich & Tang Distributors L.P.
September 16, 1997
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
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<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.
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<MULTIPLIER> 1
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<CURRENCY> US DOLLARS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> SEP-16-1997
<PERIOD-END> SEP-16-1997
<PERIOD-TYPE> OTHER
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<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
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
