DIAMONDS TRUST SERIES I, 485BPOS, 2000-02-23

DIAMONDS TRUST SERIES I
485BPOS, 2000-02-23

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File No. 811-9170
File No. 333-31247

As filed with the Securities and Exchange Commission
on February 23, 2000

================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 3

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:

DIAMONDS TRUST, SERIES 1

B. Name of Depositor:

PDR SERVICES LLC

C. Complete address of Depositor's principal executive office:

PDR SERVICES LLC
c/o AMERICAN STOCK EXCHANGE LLC
86 Trinity Place
New York, New York 10006

D. Name and complete address of agent for service:

Michael J. Ryan, Jr.
PDR SERVICES LLC
c/o AMERICAN STOCK EXCHANGE LLC
86 Trinity Place

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New York, New York 10006
Copy to:
Kathleen H. Moriarty
CARTER, LEDYARD & MILBURN
2 Wall Street
New York, New York 10005

E. Title and amount of securities being registered:

An indefinite number of units of Beneficial Interest pursuant to Rule
24f-2 under the Investment Company Act of 1940.

F. Proposed maximum aggregate offering price to the public of the
securities being registered:

Indefinite pursuant to Rule 24f-2

G. Amount of filing fee:

In accordance with Rule 24f-2, a fee in the amount of $152,096.00 was
paid on January 26,2000 in connection with the filing of the Rule
24f-2 Notice for the Trust's most recent fiscal year.

H. Approximate date of proposed sale to public:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT.

[X] Check box if it is proposed that this filing should become
effective on February 23, 2000 pursuant to paragraph (b) of Rule
485.

================================================================================

<PAGE>

DIAMONDS TRUST, SERIES 1

Cross Reference Sheet

Pursuant to Regulation C
Under the Securities Act of 1933, as amended

(Form N-8B-2 Items required by Instruction 1
as to Prospectus in Form S-6)

Form N-8B-2 Form S-6
Item Number Heading in Prospectus
- ----------- ---------------------

I. Organization and General Information
------------------------------------

1. (a) Name of Trust.................... Prospectus Front Cover

(b) Title of securities issued....... Prospectus Front Cover

2. Name, address and Internal
Revenue Service Employer
Identification Number of
depositor............................ Sponsor

3. Name, address and Internal
Revenue Service Employer
Identification Number of
trustee.............................. Trustee

4. Name, address and Internal
Revenue Service Employer
Identification Number
of principal underwriter............. *

5. State of organization of Trust....... Prospectus Summary - The Trust

6. (a) Dates of execution and
termination of Trust
Agreement............................ Prospectus Summary - The Trust;
Prospectus Summary - Termination
(b) Dates of execution and
termination of Trust
Agreement............................ Same as set forth in 6(a)

7. Changes of name...................... *

8. Fiscal Year.......................... *

9. Material Litigation.................. *

- ---------------
*Not applicable, answer negative or not required.

-i-
<PAGE>

II. General Description of the Trust
and Securities of the Trust
-------------------------------------

10. (a) Registered or bearer
securities....................... Prospectus Summary - The Trust

(b) Cumulative or distributive....... Prospectus Summary - Distributions

(c) Rights of holders as to
withdrawal or redemption......... Prospectus Summary - Redemption;
Redemption of DIAMONDS;
Administration of the Trust -
Rights of
Beneficial Owners

(d) Rights of holders as to
conversion, transfer, etc........ Prospectus Summary - Redemption;
Administration of the Trust -
Register of Ownership and
Transfer; - Rights of Beneficial
Owners; Redemption

(e) Lapses or defaults in
principal payments with
respect to periodic payment
plan certificates................ *

(f) Voting rights.................... Administration of the Trust - Voting

(g) Notice to holders as to
change in:

(1) Composition of Trust
assets...................... *

(2) Terms and conditions
of Trust's securities....... Administration of the Trust -
Amendment

(3) Provisions of Trust
Agreement................... Same as set forth in 10(g)(2)

(4) Identity of depositor
and trustee................. Resignation, Removal and Liability -
The Trustee; - The Sponsor

- -----------------------
*Not applicable, answer negative or not required.

-ii-
<PAGE>

(h) Consent of holders
required to change:

(1) Composition of Trust
assets...................... *

(2) Terms and conditions
of Trust's securities....... Administration of the Trust -
Amendment

(3) Provisions of Trust
Agreement................... Same as set forth in 10(h)(2)

(4) Identity of depositor
and trustee................. Resignation, Removal and Liability -
The Sponsor; - The Trustee
(i) Other principal
features of the securities.. Prospectus Summary - The Trust

11. Type of securities
comprising units..................... The Prospectus - Front Cover;
Prospectus Summary - The
Trust; The Portfolio; The DJIA;

12. Certain information regarding
securities comprising periodic
payment certificates................. *

13. (a) Certain information regarding
loads, fees, expenses
and charges...................... Prospectus Summary - Redemption;
Expenses of the Trust;
Redemption of DIAMONDS;

(b) Certain information regarding
periodic payment plan
certificates..................... *

(d) Reasons for certain
differences in prices............ *

(e) Certain other loads, fees, or
charges payable by holders....... *

- ---------------------
*Not applicable, answer negative or not required.

-iii-
<PAGE>

(f) Certain profits receivable
by depositor, principal
underwriters, custodian,
trustee or affiliated
persons.......................... The Portfolio - Adjustments to the
Portfolio

(g) Ratio of annual charges and
deductions to income............. *

14. Issuance of Trust's securities....... The Trust - Creation of Creation
Units
15. Receipt and handling of
payments from purchasers............. The Trust

16. Acquisition and disposition of
underlying securities................ The Trust - Creation of Creation
Units; The Portfolio; Administration
of the Trust

17. (a) Withdrawal or redemption by
holders.......................... Administration of the Trust - Rights
of Beneficial Owners; Redemption
of DIAMONDS

(b) Persons entitled or required
to redeem or repurchase
securities....................... Same as set forth in 17(a)

18. (a) Receipt, custody and
disposition of
income........................... Administration of the Trust-
Distributions to Beneficial Owners

(b) Reinvestment of distributions.... *

(d) Schedule of distributions........ *

- ---------------------
*Not applicable, answer negative or not required.

-iv-
<PAGE>

19. Records, accounts and reports........ The DJIA; Distribution of DIAMONDS;
Expenses; Administration of the
Trust- Records; - Distributions to
Beneficial Owners; - Statements to
Beneficial Owners; - Register of
Ownership and Transfer
20. Certain miscellaneous provi-
sions of Trust Agreement

(a) Amendments....................... Administration of the Trust -
Amendment

(b) Extension or termination......... Administration of the Trust -
Amendment; - Termination

(d) Successor trustee................ Same as set forth in 20(c)

(e) Removal or resignation of
depositor........................ Resignation, Removal and Liability-
The Sponsor

(f) Successor depositor.............. Same as set forth in 20(e)

21. Loans to security holders............. *

22. Limitations on liabilities........... Resignation, Removal and Liability -
The Trustee; - The Sponsor

23. Bonding arrangements................. *

24. Other material provisions of
Trust Agreement...................... *

III. Organization, Personnel and
Affiliated Persons of Depositor
-------------------------------

25. Organization of depositor............ Sponsor

26. Fees received by depositor........... *

- ---------------------
*Not applicable, answer negative or not required.

-v-
<PAGE>

27. Business of depositor................ Sponsor

28. Certain information as to
officials and affiliated
persons of depositor................. Sponsor

29. Ownership of voting securities
of depositor......................... Sponsor

30. Persons controlling depositor........ *

31. Payments by depositor for
certain services rendered
to Trust............................. *

32. Payments by depositor for
certain other services
rendered to Trust.................... *

33. Remuneration of employees of
depositor for certain
services rendered to Trust........... *

34. Compensation of other persons
for certain services rendered
to Trust............................. *

IV. Distribution and Redemption of Securities
-----------------------------------------

35. Distribution of Trust's
securities in states................. Distribution of DIAMONDS;

36. Suspension of sales of Trust's
securities........................... *

37. Denial or revocation of
authority to distribute.............. *

38. (a) Method of distribution........... Prospectus Summary - Underwriting;
The Trust - Creation of Creation
Units; Distribution of DIAMONDS

(b) Underwriting agreements.......... Prospectus Summary - Underwriting;
Distribution of DIAMONDS

- ---------------------
*Not applicable, answer negative or not required.

-vi-
<PAGE>

39. (a) Organization of principal
underwriter...................... Underwriter

(b) NASD membership of
principal underwriter............ Prospectus Summary - Underwriting;
Underwriter

40. Certain fees received by
principal underwriters............... *

41. (a) Business of principal
underwriters..................... Prospectus Summary - Underwriting;
Underwriter

(b) Branch offices of
principal underwriters............... *

42. Ownership of Trust's securities
by certain persons................... *

43. Certain brokerage commissions
received by principal
underwriters......................... *

44. (a) Method of valuation for
determining offering price........... The Portfolio; Valuation

(b) Schedule as to components of
offering price....................... *

45. Suspension of redemption
rights............................... *

46. (a) Certain information
regarding redemption or
withdrawal valuation............. Valuation; Redemption of DIAMONDS

(b) Schedule as to components
of redemption price.............. *

- ---------------------
*Not applicable, answer negative or not required.

-vii-
<PAGE>

47. Maintenance of position in
underlying securities................ The Trust; The Portfolio;
Distribution of DIAMONDS; Valuation;
Administration of the Trust -
Distribution to Beneficial Owners

V. Information Concerning the Trustee or Custodian
-----------------------------------------------

48. Organization and regulation of
trustee.............................. Trustee

49. Fees and expenses of trustee......... Expenses of the Trust; Redemptions of
DIAMONDS

50. Trustee's lien....................... Expenses of the Trust; Redemption of
DIAMONDS

VI. Information Concerning Insurance of Holders of Securities
---------------------------------------------------------

51. (a) Name and address of
insurance company............. *

(b) Types of policies............. *

(d) Coverage...................... *

(e) Beneficiaries................. *

(f) Terms and manner of
cancellation.................. *

(g) Method of determining
premiums...................... *

(h) Aggregate premiums paid....... *

(i) Recipients of premiums........ *

(j) Other material provisions
of Trust Agreement relating
to insurance..................... *

- ---------------------
*Not applicable, answer negative or not required.

-viii-
<PAGE>

VII. Policy of Registrant
--------------------

52. (a) Method of selecting and
eliminating securities from
the Trust........................ The Trust - Creation of Creation
Units; The Portfolio; Administration
of the Trust

(b) Elimination of securities....
from the Trust................... *

(d) Description of any other
fundamental policy of the
Trust............................ *

53. (a) Taxable status of the Trust...... Tax Status of the Trust

(b) Qualification of the Trust
as a regulated investment
company.......................... Same as set forth in 53(b)

VIII. Financial and Statistical Information
-------------------------------------

54. Information regarding the
Trust's last ten fiscal years........ *

55. Certain information regarding
periodic payment plan certifi-
cates................................ *

56. Certain information regarding
periodic payment plan certifi-
cates................................ *

57. Certain information regarding
periodic payment plan certifi-
cates................................ *

- ---------------------
*Not applicable, answer negative or not required.

-ix-
<PAGE>

58. Certain information regarding
periodic payment plan certifi-
cates................................ *

59. Financial statements
(Instruction 1(c) to Form S-6)...... *

- ---------------------
*Not applicable, answer negative or not required.

-x-
<PAGE>

Prospectus

DIAMONDSSM Trust, Series 1

(A Unit Investment Trust)

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

.DIAMONDS Trust is Designed to Closely Track the Price and Yield Performance
of the Dow Jones Industrial Average ("DJIA"SM).

.DIAMONDS Trust Portfolio Holds All of the DJIA Stocks.

.Each DIAMONDS Unit Represents an Undivided Ownership Interest in the
DIAMONDS Trust Portfolio.

.The DIAMONDS Trust Issues and Redeems DIAMONDS Units Only in Multiples of
50,000 (called "Creation Units") in Exchange for DJIA Stocks and Cash.

.Individual DIAMONDS Units Trade on the American Stock Exchange Like Any
Other Equity Security.

.Minimum Trading Unit: 1 DIAMONDS Unit.

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

SPONSOR: PDR SERVICES LLC
(Solely Owned by American Stock Exchange LLC)

[LOGO OF SPDR APPEARS HERE]
----------------------

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

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

This Prospectus consists of two parts: Part A and Part B.

Prospectus Part A Dated February 23, 2000

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

DIAMONDS TRUST, SERIES 1

TABLE OF CONTENTS

FRONT COVER PAGE
DIAMONDS PROSPECTUS PART A--HIGHLIGHTS
<TABLE>
<S> <C>
DIAMONDS Are Ownership Interests in the DIAMONDS Trust.................. A-2
DIAMONDS Trade on the American Stock Exchange........................... A-2
The DIAMONDS Trust Issues and Redeems DIAMONDS in Multiples of 50,000
DIAMONDS called "Creation Units"....................................... A-2
Brokerage Commissions on DIAMONDS....................................... A-3
DIAMONDS Are Based on the Dow Jones Industrial Average.................. A-3
DIAMONDS Should Closely Track the Value of the Underlying DJIA Stocks... A-3
Expenses of the Trust................................................... A-3
DIAMONDS Make Periodic Dividend Payments................................ A-4
The Trustee Votes the Underlying Shares................................. A-5
Termination of the DIAMONDS Trust....................................... A-5
Risk Factors............................................................ A-5
DIAMONDS PROSPECTUS PART B
Essential Information................................................... B-2
Report of Independent Accountants....................................... B-4
Statement of Assets and Liabilities..................................... B-5
Statement of Operations................................................. B-6
Statement of Changes in Net Assets...................................... B-7
Financial Highlights.................................................... B-8
Notes to Financial Statements........................................... B-9
Schedule of Investments................................................. B-13
Prospectus Summary...................................................... B-14
Risk Factors and Special Considerations................................. B-24
General................................................................. B-24
Net Asset Value and Market Prices....................................... B-26
Trading Considerations.................................................. B-26
Market Risks............................................................ B-27
Year 2000 Problem....................................................... B-28
The Trust............................................................... B-29
Creation of Creation Units.............................................. B-29
Procedures for Creation of Creation Units............................... B-32
Placement of Creation Orders Using DIAMONDS Clearing Process............ B-34
Placement of Creation Orders Outside DIAMONDS Clearing Process.......... B-34
</TABLE>

TABLE OF CONTENTS cont'd
<TABLE>
<S> <C>
Book-Entry-Only System.................................................. B-35
The Portfolio........................................................... B-38
Adjustments to the Portfolio............................................ B-38
Adjustments to the Portfolio Deposit.................................... B-41
Selection and Acquisition of Securities................................. B-44
The DJIA................................................................ B-44
License Agreement....................................................... B-49
Exchange Listing........................................................ B-50
Tax Status of the Trust................................................. B-51
Tax Consequences to Beneficial Owners................................... B-51
Continuous Offering of DIAMONDS......................................... B-54
Expenses of the Trust................................................... B-55
Redemption of DIAMONDS.................................................. B-59
Procedure for Redemption of DIAMONDS.................................... B-59
Placement of Redemption Orders Using DIAMONDS Clearing Process.......... B-63
Placement of Redemption Orders Outside DIAMONDS Clearing Process........ B-63
Valuation............................................................... B-65
Administration of the Trust............................................. B-65
Records................................................................. B-65
Voting.................................................................. B-66
Distributions to Beneficial Owners...................................... B-66
Trust Supervision....................................................... B-69
Statements to Beneficial Owners......................................... B-69
Register of Ownership and Transfer...................................... B-69
Rights of Beneficial Owners............................................. B-69
Amendment............................................................... B-70
Termination............................................................. B-71
Resignation, Removal and Liability...................................... B-72
The Trustee............................................................. B-72
The Sponsor............................................................. B-74
Sponsor................................................................. B-75
Trustee................................................................. B-75
Depository.............................................................. B-75
Legal Opinion........................................................... B-76
Independent Accountants................................................. B-76
Daily DIAMONDS Unit Trading Information................................. B-76
Information and Comparisons Relating to Trust, Secondary Market Trading,
Net Asset Size, Performance and Tax Treatment.......................... B-76
Dividend Reinvestment Service........................................... B-84
Glossary of Defined Terms............................................... B-85
</TABLE>

"Dow Jones Industrial Average"SM, "DJIA"SM, "Dow Jones"SM, "The Dow"SM, "THE
DOW INDUSTRIALS"SM and "DIAMONDS"SM and trademarks and service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by PDR Services LLC and American Stock Exchange LLC pursuant to a
License Agreement with Dow Jones. The Trust, based on the DJIA, is not
sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no
representation regarding the advisability of investing in the Trust.

A-1
<PAGE>

DIAMONDS PROSPECTUS PART A--HIGHLIGHTS

. DIAMONDS ARE OWNERSHIP INTERESTS IN THE DIAMONDS TRUST

The DIAMONDS Trust (the "Trust") is a unit investment trust that issues
securities called "DIAMONDS". DIAMONDS represent an undivided ownership
interest in the portfolio of stocks held by the DIAMONDS Trust. The DIAMONDS
Trust holds all of the common stocks of the Dow Jones Industrial Average (the
"DJIA") and is intended to provide investment results that, before expenses,
generally correspond to the price and yield performance of the DJIA.

. DIAMONDS TRADE ON THE AMERICAN STOCK EXCHANGE

DIAMONDS are listed for trading on the American Stock Exchange (the
"Exchange"). DIAMONDS are bought and sold in the secondary market like
ordinary shares of stock at any time during the trading day. DIAMONDS are
traded on the Exchange in 100 DIAMONDS round lots, but can be traded in odd
lots of as little as 1 DIAMONDS Unit. Note that trading of DIAMONDS on the
Exchange will be halted under the circumstances described in the paragraphs
below relating to the risks of investing in DIAMONDS.

. THE DIAMONDS TRUST ISSUES AND REDEEMS DIAMONDS IN MULTIPLES OF 50,000
DIAMONDS CALLED "CREATION UNITS"

The Trust only issues DIAMONDS in specified large-sized minimum numbers
(50,000 DIAMONDS or multiples thereof) referred to as "Creation Units." Most
DIAMONDS holders however, purchase and sell DIAMONDS in the secondary trading
market on the Exchange, in lots of any size.

Creation Units are issued by the Trust to anyone who, after placing a
creation order with the Distributor, deposits with State Street Bank and Trust
Company, the "Trustee" of the Trust, a specified portfolio of DJIA securities,
as well as a cash payment generally equal to accumulated dividends of the
securities (net of expenses) up to the time of deposit.

DIAMONDS are not individually redeemable, except upon termination of the
Trust. DIAMONDS can be redeemed only by tendering to the Trust 50,000 DIAMONDS
(or multiples thereof)--the same Creation Unit-sized minimum number. The Trust
will then deliver a portfolio of DJIA securities (based on net asset value of
the Trust), together with a cash payment (generally equal to accumulated
dividends as of the date of redemption) to the redeeming holder.

Procedures to be followed when engaging in these "creation" and redemption
transactions are set forth in Part B of this Prospectus.

A-2
<PAGE>

.BROKERAGE COMMISSIONS ON DIAMONDS

Secondary market purchases and sales of DIAMONDS are subject to ordinary
brokerage commissions.

. DIAMONDS ARE BASED ON THE DOW JONES INDUSTRIAL AVERAGE

The Sponsor selected the DJIA, composed of 30 publicly traded stocks, as the
basis for DIAMONDS because it is well-known to investors and contains some of
the most well known, liquid and highly capitalized companies in the U.S.
Current information regarding the market value of the DJIA is available from
market information services. Dow Jones obtains information for inclusion in or
for use in the calculation of the DJIA Index from sources which Dow Jones
considers reliable, but neither Dow Jones, the Sponsor, the Trust nor the
Exchange accepts responsibility for or guarantees the accuracy and/or
completeness of the DJIA or any data included in it.

. DIAMONDS SHOULD CLOSELY TRACK THE VALUE OF THE UNDERLYING DJIA STOCKS

To maintain the correspondence between the composition and weightings of
securities held by the Trust (the "Securities") and the stocks in the DJIA,
the Securities will be adjusted by the Trustee from time to time to conform to
periodic changes in the identity and/or corporate actions which change the
price of the DJIA Stocks, for example, a stock split. The DIAMONDS Trust
Agreement contains directions to the Trustee specifying how changes to the
DJIA are to be replicated by the Trust.

The value of DIAMONDS will fluctuate in relation to changes in the value of
the Trust's portfolio of securities. However, at any point in time, the market
price of each individual DIAMONDS Unit may not be identical to the net asset
value of such DIAMONDS Unit. Historically, these two valuations have been very
close. See Part B of this Prospectus for a description of the comparisons of
market price and net asset value. Of course, these comparisons only reflect
past performance and no guarantee can be made of future performance.

The current value of the DJIA will ordinarily continue to be reported even
when trading is interrupted in some or all of its component stocks. In that
event, the reported index level will be based on the current market price of
those stocks still being traded (if any) and the last reported prices for
those stocks that are not currently trading. As a result, reported index
levels may at times be based on non-current price information with respect to
some or even all of the stocks in the DJIA.

.EXPENSES OF THE TRUST

Fees and expenses to be charged to the Trust are described in Part B of this
Prospectus and as shown in the table below. These fees and expenses include,
among

A-3
<PAGE>

other costs, the Trustee's fees, Dow Jones licensing, federal registration
fees and expenses of the Sponsor relating to the printing and distribution of
marketing materials. The expenses of the Trust will be accrued daily and
reflected in the net asset value of the Trust. Before reflecting waivers and
credits, the Trust is currently accruing ordinary operating expenses at an
annual rate of 0.5559%*;

Estimated Trust Annual Ordinary Operating Expenses

<TABLE>
<CAPTION>
As a % of
Trust Net Assets
----------------
<S> <C>
Trustee's Fee 0.1460%
Dow Jones License Fee 0.1600%
Registration Fees 0.0243%
Marketing Expenses 0.1149%
Other Operating Expenses 0.1107%
------
*Total: 0.5559%
</TABLE>

Future accruals will depend primarily on the level of the Trust's net assets
and the level of expenses.

*For fiscal year 1999, the ordinary operating expenses of the Trust were not
permitted to exceed 0.1800% of the Trust's daily net asset value because the
Trustee voluntarily waived a portion of its fee and the Sponsor voluntarily
reimbursed the Trust for all ordinary operating expenses in excess of such
amount. The Sponsor and the Trustee each reserves the right to discontinue
this reimbursement policy in the future. Therefore, there is no guarantee that
the Trust's ordinary operating expenses will not exceed 0.18% of the Trust's
daily net asset value. Trust expenses were further reduced by a Trustee's
earnings credit to 0.1765% of the Trust's daily net asset value. This
Trustee's earnings credit is a reduction of Trust expenses principally as a
result of uninvested cash balances in the Trust. The appropriate annual
ordinary operating expense figure, for comparative purposes, is 0.1800%. See
"Expenses of the Trust" in Part B of this Prospectus. A substantial portion of
the expenses reimbursed by the Sponsor were expenses which typically are
highest during the early years of an investment product like DIAMONDS. See
"Statement of Operations for the Period ended October 31, 1999" in Part B of
this Prospectus.

.DIAMONDS MAKE PERIODIC DIVIDEND PAYMENTS

DIAMONDS holders will be paid each calendar month an amount corresponding to
the amount of any cash dividends on the Trust's portfolio of securities during
the applicable period, net of fees and expenses associated with operation of
the Trust. Because of such fees and expenses, the dividend yield for DIAMONDS
will ordinarily be less than that of the DJIA. The DIAMONDS holder should be
aware of the tax consequences associated with Trust dividends, as well as
those associated with DIAMONDS sales or redemptions. Investors should consult
their tax advisors in this regard.

A-4
<PAGE>

.THE TRUSTEE VOTES THE UNDERLYING SHARES

The Trustee will vote any voting stocks held by the Trust in the same
proportion as all other voting shares of such stocks are voted. Consequently,
holders of DIAMONDS will not be able to vote the shares of the stocks
underlying the DIAMONDS.

.TERMINATION OF THE DIAMONDS TRUST

The DIAMONDS Trust has a specified lifetime term. The Trust is scheduled to
terminate no later than January 13, 2123, but it may terminate earlier under
certain circumstances described in Part B of this Prospectus.

Trading of DIAMONDS cannot occur after termination of the underlying Trust.
Upon termination, the Trust may be liquidated, and DIAMONDS holders at that
time will receive a distribution of their pro rata share of the assets of the
Trust, net of certain fees and expenses.

.RISK FACTORS

Investors can lose money by investing in DIAMONDS. Investors should
carefully consider the risk factors described below together with all of the
other information included in Part B of this Prospectus before deciding to
invest in DIAMONDS.

. DIAMONDS are subject to the risks of any investment in a portfolio of
large capitalization common stocks, including the risk that the general
level of stock prices may decline. A significant decline in the value of
the Trust's portfolio can be expected to result in a similar decline in
value of the corresponding DIAMONDS. Therefore, the value an investor
receives from the sale of a DIAMONDS may be less than the investor's
original purchase price.

. Investors should understand that the Trust may never be able to replicate
exactly the performance of the DJIA because of the operational fees and
expenses incurred by the Trust or because of the temporary unavailability
of certain DJIA securities.

. Investors cannot be assured that the issuers of securities held by the
Trust will pay dividends, and distributions on such securities will
generally depend upon the declaration of dividends by the securities'
issuers.

. The market price that an investor pays per DIAMONDS Unit on the Exchange
may differ from the net asset value of the DIAMONDS Unit. This difference
in price may be due to the fact that the supply and demand in the market
for DIAMONDS at any point in time is not always identical to the supply
and demand in the market for the underlying basket of DJIA securities.

A-5
<PAGE>

. Investors will not be able to sell DIAMONDS during any period that the
Exchange halts trading in DIAMONDS. The Exchange may halt the trading of
DIAMONDS under certain circumstances described in Part B of this
Prospectus, for example, as a result of the activation of market-wide
"circuit breakers," or whenever Exchange officials determine that it is
appropriate in the interest of a fair and orderly market or to protect
investors.

. The Exchange maintains certain requirements to list securities, including
DIAMONDS, on the Exchange. Investors cannot be assured that the Trust will
continue to meet the requirements necessary to maintain the listing of
DIAMONDS on the Exchange or that the Exchange will not change the listing
requirements. The Trust shall be terminated if DIAMONDS are delisted from
the Exchange.

. The Sponsor of the Trust has been granted a license to use the DJIA as a
basis for determining the composition of the Trust and to use certain
trade names and trademarks of Dow Jones. The Trust may be terminated if
the license agreement is terminated.

. The Trust may also be terminated if at anytime up until January 13, 2001
the net asset value of the entire Trust falls below $150,000,000 or, at
anytime thereafter, the net asset value of the entire Trust falls below
$350,000,000.

. DIAMONDS are subject to the risk that extraordinary events may cause any
of the providers of services to the Trust, such as the Trustee or the
Sponsor, to close or otherwise fail to perform its obligations to the
Trust. In the event of such a failure, if no suitable successor is
available or willing to assume the obligations of its predecessor, the
Trust then will be terminated.

. Many computer systems were designed in such a way that they may be unable
to distinguish between the year 2000 and the year 1900 and therefore may
not properly process and calculate date-related information and data
(commonly known as the "Year 2000 Problem"). As with all investment and
financial entities, the Year 2000 Problem may have an adverse impact upon
the handling of securities trades, pricing and account services and other
activities conducted by or for the Trust. The Sponsor and the Trustee have
taken steps to address the Year 2000 Problem with respect to the computer
systems they use and to obtain reasonable assurances that similar steps
have been taken by the Trust's other service providers. Operations ran
smoothly from the last week in December through the first few weeks of
February, but the Year 2000 Problem may yet have an adverse impact on
financial market participants and other entities, including the companies
whose stocks are contained in the Trust's Portfolio.

A-6
<PAGE>

DIAMONDS Trust, Series 1

(A Unit Investment Trust)

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

[LOGO OF SPDR APPEARS HERE]

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

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

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

This Prospectus consists of two parts: Part A and Part B.

Prospectus Part B Dated February 23, 2000

----------------------
<PAGE>

ESSENTIAL INFORMATION AS OF OCTOBER 31, 1999+

Number of DIAMONDS
9,700,380

Fractional Undivided Interest in
Trust Represented by each DIAMONDS
Unit

1/9,700,380th

Record Date: Monthly++

Dividend Payment Dates: Monthly++

Trustee's Annual Fee: From 11/100 of one percent to 15/100 of
one percent, based on net asset value of
the Trust, as the same may be reduced by
certain amounts, plus (or minus) the
Adjustment Amount.+++

Estimated Ordinary Operating Expenses
of the Trust: 18/100 of one percent (0.18%) (inclusive
of Trustee's annual fee).+++

Net Asset Value per DIAMONDS Unit
(based on the value of the
Securities, other net assets of the
Trust and number of DIAMONDS
outstanding)

$107.31

Evaluation Time: Closing time of the regular trading
session on the New York Stock Exchange,
Inc. (ordinarily 4:00 p.m. New York
time).

Licensor: Dow Jones & Company, Inc.

Mandatory Termination Date: The first to occur of (i) January 13,
2123 or (ii) the date 20 years after the
death of the last survivor of fifteen
persons named in the Agreement, the
oldest of whom was born in 1994 and the
youngest of whom was born in 1997.

Discretionary Termination:
Trust may be terminated if at any time
after six months following and prior to
three years following the Initial Date
of Deposit the value of the securities
held by the Trust

B-2
<PAGE>

is less than $150,000,000 or if at any
time after three years following the
Initial Date of Deposit such value of
the securities held by the Trust is less
than $350,000,000, as such amount shall
be adjusted for inflation.++++
- -----------
+ The Trust Agreement became effective and the Initial Deposit was made on
January 13, 1998 (the "Initial Date of Deposit").
++ See "Administration of the Trust, Distributions to Beneficial Owners".
+++ Until further notice, the Sponsor has undertaken that the ordinary
operating expenses of the Trust as calculated by the Trustee will not be
permitted to exceed an amount which is 0.18% of the daily net asset value
of the Trust. Thereafter, such amount may be changed and may exceed
0.18%. Ordinary operating expenses are currently being accrued at an
annual rate of 0.1790% of the daily net asset value of the Trust; future
accruals will depend primarily upon the level of the Trust's net assets
and the level of Trust expenses. There is no guarantee that the Trust's
ordinary operating expenses will not exceed 0.1790% of the Trust's daily
net asset value and such rate may be changed without notice. See
"Expenses of the Trust".
++++ The Trust may also be terminated under other circumstances. See
"Administration of the Trust--Termination".

B-3
<PAGE>

DIAMONDS Trust Series 1

Report of Independent Accountants

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

To the Trustee and Unitholders of

DIAMONDS Trust Series 1

In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of DIAMONDS Trust
Series 1 (the "Trust") at October 31, 1999, and the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards, which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of investments owned at October 31, 1999 by correspondence with
the custodian, provides a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Boston, Massachusetts

December 22, 1999

B-4
<PAGE>

DIAMONDS Trust Series 1

Statement of Assets and Liabilities

October 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $1,049,298,154)..... $1,036,207,601
Cash.......................................................... 1,766,660
Receivable for investments sold............................... 140,019,380
Dividends receivable.......................................... 614,532
Deferred organization costs................................... 1,610,002
--------------
Total Assets.................................................... 1,180,218,175
==============
Liabilities
Payable for investments purchased............................. 136,405,089
Payable for income delivered for DIAMONDS issued/redeemed in-
kind........................................................ 83,187
Distributions payable......................................... 312,838
Due to Sponsor................................................ 2,192,040
Accrued expenses and other liabilities........................ 236,710
--------------
Total Liabilities............................................... 139,229,864
--------------
Net Assets...................................................... $1,040,988,311
==============
Net assets represented by:
Paid in surplus relating to 9,700,380 units of fractional
undivided interest ("DIAMONDS") outstanding; unlimited units
authorized.................................................. $1,072,236,724
Distribution in excess of net investment income............... (366,116)
Accumulated net realized loss on investments.................. (17,791,744)
Net unrealized depreciation on investments.................... (13,090,553)
--------------
Net Assets...................................................... $1,040,988,311
==============
Net asset value per DIAMOND ($1,040,988,311/9,700,380 DIAMONDS). $ 107.31
==============
</TABLE>

See accompanying notes to financial statements

B-5
<PAGE>

DIAMONDS Trust Series 1

Statements of Operations
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year For the Period
Ended Ended
October 31, 1999 October 31, 1998*
---------------- -----------------
<S> <C> <C>
Investment Income
Dividend income........................... $ 9,701,986 $ 3,218,084
------------ -----------
Expenses
DJIA license fee.......................... 1,000,000 797,260
Trustee expense........................... 912,453 240,341
Marketing expense......................... 712,625 2,780,541
Amortization of organization costs........ 502,266 195,661
Printing and postage expense.............. 154,540 641,161
SEC registration expense.................. 152,003 93,200
Legal and audit services.................. 39,097 136,370
Miscellaneous expense..................... 1,280 100
------------ -----------
Total expenses.............................. 3,474,264 4,884,634
Rebate from Sponsor....................... (1,418,867) (4,301,113)
Rebate from Trustee....................... (912,453) (231,341)
------------ -----------
Net expenses................................ 1,142,944 352,180
Trustee earnings credit..................... (22,000) (5,168)
------------ -----------
Net expenses after Trustee earnings credit.. 1,120,944 347,012
------------ -----------
Net investment income....................... 8,581,042 2,871,072
------------ -----------
Realized and unrealized gain on investments
Net realized gain on investment
transactions............................ 115,756,556 27,304,522
Net change in unrealized depreciation..... (7,307,187) (5,783,366)
------------ -----------
Net realized and unrealized gain on
investments............................... 108,449,369 21,521,156
------------ -----------
Net increase in net assets from operations.. $117,030,411 $24,392,228
============ ===========
</TABLE>
- -----------

* The Trust commenced operations on January 14, 1998.

See accompanying notes to financial statements

B-6
<PAGE>

DIAMONDS Trust Series 1

Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year For the Period
Ended Ended
October 31, October 31,
1999 1998*
-------------- --------------
<S> <C> <C>
Increase in net assets from operations:
Net investment income......................... $ 8,581,042 $ 2,871,072
Net realized gain on investment transactions.. 115,756,556 27,304,522
Net change in unrealized depreciation......... (7,307,187) (5,783,366)
-------------- ------------
Net increase in net assets from operations...... 117,030,411 24,392,228
-------------- ------------
Undistributed net investment income included in
price of units issued and redeemed, net....... 459,889 206,316
-------------- ------------
Distributions to unitholders from:
Net investment income......................... (8,581,042) (2,871,072)
In excess of net investment income............ (262,907) (103,209)
-------------- ------------
Total distributions to unitholders.............. (8,843,949) (2,974,281)
-------------- ------------
Net increase in net assets from issuance and
redemption of DIAMONDS........................ 575,660,769 296,396,278
-------------- ------------
Net increase in net assets during period........ 684,307,120 318,020,541
Net assets at beginning of period............... 356,681,191 38,660,650
-------------- ------------
Net assets end of period(a)..................... $1,040,988,311 $356,681,191
============== ============
(a) Includes distribution in excess of net
investment income............................. $ (366,116) $ (103,209)
-------------- ------------
</TABLE>
- -----------

* The Trust commenced operations on January 14, 1998.

See accompanying notes to financial statements

B-7
<PAGE>

DIAMONDS Trust Series 1

Financial Highlights

Selected data for a DIAMOND outstanding during the period
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year For the Period
Ended Ended
October 31, 1999(6) October 31, 1998(1)
------------------- -------------------
<S> <C> <C>
Net asset value, beginning of period... $ 85.94 $ 77.32
---------- --------
Investment Operations:
Net investment income................ 1.41 0.98
Net realized and unrealized gain on
investments........................ 21.36 8.59
---------- --------
Total from investment operations....... 22.77 9.57
---------- --------
Undistributed net investment income
included in price of units issued and
redeemed, net........................ 0.08 0.05
---------- --------
Less distributions from:
Net investment income................ (1.41) (0.98)
In excess of net investment income... (0.07) (0.02)
---------- --------
Total distributions.................... (1.48) (1.00)
---------- --------
Net asset value, end of period......... $ 107.31 $ 85.94
---------- --------
Total investment return (5)............ 26.71% 12.44%
Ratios and supplemental data
Ratios to average net assets:
Net expenses (2)..................... 0.18% 0.18%(3)
Net expenses after rebates and
trustee earnings credit (2) ....... 0.18% 0.18%(3)
Net investment income................ 1.37% 1.49%(3)
Portfolio turnover rate (4).......... 34.70% 3.23%
Net asset value, end of period (000's). $1,040,988 $356,681
</TABLE>
- ----------

(1) The Trust commenced operations on January 14, 1998.

(2) Net of expenses reimbursed by the Sponsor and Trustee. If the Trust had
borne all expenses rebated by the Sponsor and Trustee, the ratio of
expenses to average net assets would have increased by 0.37% and 2.35% in
1999 and 1998, respectively.

(3) Annualized.

(4) Portfolio turnover ratio excludes securities received or delivered from
processing creations or redemptions of DIAMONDS.

(5) Total returns for periods of less than one year are not annualized and do
not include transaction fees.

(6) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period.

See accompanying notes to financial statements

B-8
<PAGE>

DIAMONDS Trust Series 1

Notes to Financial Statements

October 31, 1999
- -------------------------------------------------------------------------------

Note 1--Organization

DIAMONDS Trust Series 1 (the "Trust") is a unit investment trust created
under the laws of the State of New York and registered under the Investment
Company Act of 1940. The Trust was created to provide investors with the
opportunity to purchase units of beneficial interest in the Trust representing
proportionate undivided interests in the portfolio of securities consisting of
substantially all of the component common stocks, which comprise the Dow Jones
Industrial Average (the "DJIA"). Each unit of fractional undivided interest in
the Trust is referred to as a "DIAMONDS Unit". The Trust commenced operations
on January 14, 1998 upon the initial issuance of 500,000 DIAMONDS (equivalent
to ten "Creation Units"--see Note 4) in exchange for a portfolio of securities
assembled to reflect the intended portfolio composition of the Trust.

Note 2--Significant Accounting Policies

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts and disclosures in the financial
statements. Actual results could differ from these estimates. The following is
a summary of significant accounting policies followed by the Trust.

Security Valuation

Portfolio securities are valued based on the closing sale price on the
exchange which is deemed to be the principal market for the security. If no
closing sale price is available, then the security is valued at the closing
bid price on the exchange which is deemed to be the principal market for the
security. If there is no closing bid price available, valuation will be
determined by the Trustee in good faith based on available information.

Investment Transactions

Investment transactions are recorded on the trade date. Realized gains and
losses from the sale or disposition of securities are recorded on the
identified cost basis. Dividend income is recorded on the ex-dividend date.

Distributions to Unitholders

The Trust declares and distributes dividends from net investment income to
its unitholders monthly. The Trust will distribute net realized capital gains,
if any, at least annually.

B-9
<PAGE>

DIAMONDS Trust Series 1

Notes to Financial Statements (continued)

October 31, 1999
- -------------------------------------------------------------------------------

Organization Costs

The Trust incurred organization costs of $2,307,929, which have been
capitalized and are being charged to operations ratably over a period of 60
months.

Federal Income Tax

The Trust has qualified and intends to continue to qualify for and elect
treatment as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended. By so qualifying and electing, the
Trust will not be subject to federal income taxes to the extent it distributes
its taxable income, including any net realized capital gains, for each fiscal
year. In addition, by distributing during each calendar year substantially all
of its net investment income and capital gains, if any, the Trust will not be
subject to federal excise tax. Income and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for income equalization, in-kind transactions and
losses deferred due to wash sales. During the fiscal year ended October 31,
1999, the Trust reclassified $133,264,769 of non-taxable security gains
realized in the in-kind redemption of Creation Units (Note 4) as an increase
to paid in surplus in the Statement of Assets and Liabilities. The Trust
incurred net capital losses of $282,282 for the fiscal period ended October
31, 1998, and $17,127,379 for the fiscal year ended October 31, 1999. These
losses may be utilized to offset any net realized capital gains through
October 31, 2006, and October 31, 2007, respectively.

Note 3--Transactions with the Trustee and Sponsor

In accordance with the Trust Agreement, State Street Bank and Trust Company
(the "Trustee") maintains the Trust's accounting records, acts as custodian
and transfer agent to the Trust, and provides administrative services,
including filing of all required regulatory reports. The Trustee is also
responsible for determining the composition of the portfolio of securities
which must be delivered in exchange for the issuance of Creation Units of the
Trust, and for adjusting the composition of the Trust's portfolio from time to
time to conform to changes in the composition and/or weighting structure of
the DJIA. For these services, the Trustee receives a fee at the following
annual rates:

<TABLE>
<CAPTION>
Net asset value of the Trust Fee as a percentage of net asset value of the Trust
- ---------------------------- ----------------------------------------------------------
<S> <C>
$0--$499,999,999 15/100 of 1% per annum plus or minus the Adjustment Amount
$500,000,000--
$999,999,999 13/100 of 1% per annum plus or minus the Adjustment Amount
$1,000,000,000--and
above 11/100 of 1% per annum plus or minus the Adjustment Amount
</TABLE>

B-10
<PAGE>

DIAMONDS Trust Series 1

Notes to Financial Statements (continued)

October 31, 1999
- -------------------------------------------------------------------------------

During the first two years of operation of the Trust, the Trustee's fee
shall be reduced to 12/100 of 1% per annum for any day on which the net asset
value of the Trust is below $350,000,000, plus or minus the Adjustment Amount.
The Adjustment Amount is the difference between expenses incurred by the
Trustee in processing orders for creations and redemptions of DIAMONDS less
transaction fees received and Trustee earnings credits. During the year ended
October 31, 1999, the Adjustment Amount decreased the Trustee's fee by
$27,385. The Adjustment Amount included an excess of net transaction fees from
processing orders of $5,385 and a Trustee earnings credit of $22,000.

For the fiscal year ended October 31, 1999, PDR Services LLC (the "Sponsor",
a wholly-owned subsidiary of the American Stock Exchange LLC) agreed to
reimburse the Trust for, or assume, the ordinary operating expenses of the
Trust which exceeded 18.00/100 of 1% per annum of the daily net asset value of
the Trust. The amount of such reimbursement by the Sponsor for the fiscal year
ended October 31, 1999 was $1,418,867. For the fiscal year ended October 31,
1999, State Street Bank and Trust Company (the "Trustee") agreed to waive the
Trustee's fee. The amount of such waiver by the Trustee for the fiscal year
ended October 31, 1999 was $912,453.

Note 4--Trust Transactions in DIAMONDS

Transactions in DIAMONDS were as follows.

<TABLE>
<CAPTION>
Year Ended
October 31, 1999
----------------------------
DIAMONDS Amounts
----------- ---------------
<S> <C> <C>
DIAMONDS sold..................................... 17,200,000 $ 1,822,509,789
DIAMONDS issued upon dividend reinvestment........ 194 19,408
DIAMONDS redeemed................................. (11,650,000) (1,246,408,539)
Net income equalization........................... -- (459,889)
----------- ---------------
Net Increase...................................... 5,550,194 $ 575,660,769
=========== ===============
<CAPTION>
Period Ended
October 31, 1998
----------------------------
DIAMONDS Amounts
----------- ---------------
<S> <C> <C>
DIAMONDS sold..................................... 6,900,000 $ 578,121,987
DIAMONDS issued upon dividend reinvestment........ 186 16,132
DIAMONDS redeemed................................. (3,250,000) (281,535,525)
Net income equalization........................... -- (206,316)
----------- ---------------
Net Increase...................................... 3,650,186 $ 296,396,278
=========== ===============
</TABLE>

B-11
<PAGE>

DIAMONDS Trust Series 1

Notes to Financial Statements (continued)

October 31, 1999
- -------------------------------------------------------------------------------

Except for under the Trust's dividend reinvestment plan, DIAMONDS are issued
and redeemed by the Trust only in Creation Unit size aggregations of 50,000
DIAMONDS. Such transactions are only permitted on an in-kind basis, with a
separate cash payment which is equivalent to the undistributed net investment
income per DIAMOND (income equalization) and a balancing cash component to
equate the transaction to the net asset value per unit of the Trust on the
transaction date. A transaction fee of $1,000 is charged in connection with
each creation or redemption of Creation Units through the DIAMONDS Clearing
Process per Participating party per day, regardless of the number of Creation
Units created or redeemed. Transaction fees are received by the Trustee and
used to offset the expense of processing orders.

Note 5--Investment Transactions

For the fiscal year ended October 31, 1999, the Trust had in-kind
contributions, in-kind redemptions, purchases and sales of investment
securities of $1,820,399,500, $1,148,977,924, $218,832,771 and $319,046,734,
respectively. At October 31, 1999, the cost of investments for federal income
tax purposes was $1,049,680,237, accordingly, gross unrealized appreciation
was $36,504,921 and gross unrealized depreciation was $49,977,557, resulting
in net unrealized depreciation of $13,472,636.

B-12
<PAGE>

DIAMONDS Trust Series 1
Schedule of Investments

October 31, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Common Stocks Shares Value
- ------------- ------- --------------
<S> <C> <C>
Alcoa, Inc. ............................................ 472,587 $ 28,709,660
Allied Signal, Inc...................................... 472,587 26,907,922
American Express Co..................................... 472,587 72,778,398
AT & T Corp............................................. 472,587 22,093,442
Boeing Co............................................... 472,587 21,768,539
Caterpillar, Inc........................................ 472,587 26,110,432
Citigroup, Inc.......................................... 472,587 25,578,771
Coca-Cola Co. .......................................... 472,587 27,882,633
Disney (Walt) Co. (The)................................. 472,587 12,464,482
Du Pont (E.I.) de Nemours & Co., Inc. .................. 472,587 30,452,325
Eastman Kodak Co........................................ 472,587 32,578,966
Exxon Corp.............................................. 472,587 35,000,975
General Electric Co. ................................... 472,587 64,065,075
General Motors Corp. ................................... 472,587 33,199,237
Hewlett-Packard Co. .................................... 472,587 35,000,975
Home Depot, Inc. ....................................... 472,587 35,680,318
Intel Corp. ............................................ 472,587 36,567,184
International Business Machines Corp.................... 472,587 46,490,746
International Paper Co. ................................ 472,587 24,869,891
Johnson & Johnson....................................... 472,587 49,503,488
McDonald's Corp......................................... 472,587 19,494,214
Merck & Co., Inc........................................ 472,587 37,600,203
Microsoft Corp. (a)..................................... 472,587 43,715,063
Minnesota Mining & Manufacturing Co. ................... 472,587 44,925,302
Morgan (J.P.) & Co., Inc. .............................. 472,587 61,849,824
Philip Morris Cos., Inc................................. 472,587 11,903,285
Procter & Gamble Co..................................... 472,587 49,562,562
SBC Communications, Inc. ............................... 472,587 24,072,400
United Technologies Corp. .............................. 472,587 28,591,513
Wal-Mart Stores, Inc. .................................. 472,587 26,789,776
--------------
Total Investments--(Cost $1,049,298,154)................ $1,036,207,601
==============
</TABLE>

See accompanying notes to financial statements

B-13
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in Part B of this Prospectus.

Objectives

The Sponsor formed the Trust to provide investors with the opportunity to
purchase units of beneficial interest in the Trust representing proportionate
undivided interests in the Securities which consist of all of the component
common stocks of the Dow Jones Industrial Average (the "DJIA") in the form of a
security that closely tracks the DJIA and that may be traded as a share of
common stock. The investment objective of the Trust is to provide investment
results that, before expenses, generally correspond to the price and yield
performance of the component common stocks of the DJIA (the component common
stocks of the DJIA are sometimes referred to herein as "Index Securities").
There can be no assurance that this investment objective will be met fully. For
example, it may not be possible for the Trust to replicate and maintain exactly
the composition of the Index Securities. It is also possible that, from time to
time, the Trust will be unable to purchase all of the Index Securities. In
certain circumstances, the Trust may be required to make distributions in
excess of the yield performance of the Index Securities (see "Tax Status of the
Trust"). The value of the Securities and, consequently, the value of DIAMONDS,
is subject to changes in the value of common stocks generally and to other
factors. Further, the payment of dividends and maintenance of capital are
subject to a number of conditions, including the financial condition of the
issuers of the Securities (see "Special Considerations and Risk Factors").

The Trust

The Trust is a unit investment trust organized under the laws of the State of
New York. The Trust is governed by a trust agreement (the "Trust Agreement")
between State Street Bank and Trust Company, a bank and trust company organized
under the laws of the Commonwealth of Massachusetts (the "Trustee"), and the
Sponsor dated and executed as of January 13, 1998.

Distributor

The Distributor for DIAMONDS is ALPS Mutual Funds Services, Inc., a
registered broker-dealer and a member of the National Association of Securities
Dealers, Inc. (see "Underwriting").

Portfolio Deposits

All orders to create DIAMONDS in Creation Unit size aggregations must be
placed with the Distributor (see "Underwriting" and "Procedure for Creation of
Creation Units"). To be eligible to place orders with the Distributor to create
Creation Unit size aggregations of DIAMONDS, an entity or person

B-14
<PAGE>

either must be (1) a "Participating Party", as hereinafter defined or (2) a
Depository Trust Company Participant (see "Book-Entry Ownership of DIAMONDS"),
and in each case must have executed a Participant Agreement, as hereinafter
defined (see "The Trust--Procedures for Creation of Creation Units" and "The
Trust--Placement of Creation Orders Using DIAMONDS Clearing Process"). As used
herein, the term "Participating Party" means a broker-dealer or other
participant in the DIAMONDS Clearing Process, as hereinafter defined, through
the Continuous Net Settlement ("CNS") System of the National Securities
Clearing Corporation ("NSCC"), a clearing agency that is registered with the
Securities and Exchange Commission (the "Commission"). Upon acceptance of an
order to create DIAMONDS, the Distributor will transmit such order to the
Trustee and instruct the Trustee to initiate the book entry movement of the
appropriate number of DIAMONDS to the account of the entity placing the order.
Payment for orders to create DIAMONDS will be made by deposits with the Trustee
of a portfolio of securities that is substantially similar in composition to
the Index Securities (see "The Trust--Creation of DIAMONDS"), together with a
cash payment in an amount which shall be equal to the Dividend Equivalent
Payment (as hereinafter defined), plus or minus, as the case may be, the
Balancing Amount (as hereinafter defined--see "The Portfolio--Adjustments to
the Portfolio Deposit"). The "Dividend Equivalent Payment" enables the Trustee
to make a distribution of dividends on the next Dividend Payment Date (as
hereinafter defined), and is an amount equal, on a per Creation Unit basis, to
the dividends on all the Securities with ex-dividend dates within the
accumulation period, net of expenses for such period (including, without
limitation, (x) taxes or other governmental charges against the Trust not
previously deducted, if any, and (y) accrued fees of the Trustee and other
expenses of the Trust (including legal and auditing expenses) and other
expenses not previously deducted (see "Expenses of the Trust")), as if all of
the Securities had been held for the entire accumulation period for such
distribution. For federal income tax purposes, a portion of dividend
distributions may result in a return of capital to Beneficial Owners (as
hereinafter defined) of DIAMONDS (see "Tax Status of the Trust").

The Dividend Equivalent Payment and the Balancing Amount are collectively
referred to herein as the "Cash Component" and the deposit of such a portfolio
of securities and the Cash Component are collectively referred to herein as a
"Portfolio Deposit". In connection with the creation of DIAMONDS, in the event
that the Trustee determines, in its discretion, that one or more Index
Securities are likely to be unavailable for delivery or available in
insufficient quantity for delivery to the Trust upon the creation of DIAMONDS
in Creation Unit size aggregations, then the Trustee shall have the right in
its discretion to permit the cash equivalent value of such Index Security or
Index Securities to be included in the Portfolio Deposit as a part of the Cash
Component in lieu of the inclusion of such Index Security or Index Securities
in

B-15
<PAGE>

the securities portion of the Portfolio Deposit (see "The Portfolio--
Adjustments to the Portfolio Deposit").

In connection with the creation of DIAMONDS, if a creator is restricted by
regulation or otherwise from investing or engaging in a transaction in one or
more Index Securities, the Trustee shall have the right, in its discretion, to
permit the cash equivalent value of such Index Security or Index Securities to
be included in the Portfolio Deposit based on the market value of such Index
Security or Index Securities as of the Evaluation Time on the date such
creation order is deemed received by the Distributor (see "Placement of
Creation Orders Outside DIAMONDS Clearing Process") as part of the Cash
Component in lieu of the inclusion of such Index Security or Index Securities
in the securities portion of the Portfolio Deposit. In such case such creator
will pay the Trustee the standard Transaction Fee, plus an additional amount
per Creation Unit not to exceed three (3) times the Transaction Fee applicable
for one Creation Unit as described below.

An entity or person placing creation orders with the Distributor must deposit
Portfolio Deposits either (i) through the CNS clearing processes of NSCC, as
such processes have been enhanced to effect creations and redemptions of
Creation Unit size aggregations of DIAMONDS, such processes being referred to
herein as the "DIAMONDS Clearing Process", or (ii) with the Trustee outside the
DIAMONDS Clearing Process (i.e., through the facilities of DTC).

Transaction Fee

A transaction fee is payable to the Trustee in connection with each creation
and each redemption made through the DIAMONDS Clearing Process of Creation Unit
size aggregations of DIAMONDS (the "Transaction Fee"), subject to the changes,
modifications or waivers, if any, described below. Such Transaction Fee is non-
refundable, regardless of the net asset value of the Trust.

Until further notice is given as described below, the Transaction Fee charged
in connection with each creation of Creation Units through the DIAMONDS
Clearing Process (see "Procedures for Creation of Creation Units") is $1,000
per Participating Party per day, regardless of the number of Creation Units
created on such day by such Participating Party. Likewise, until further notice
is given as described below, the Transaction Fee charged in connection with the
redemption of Creation Units through the DIAMONDS Clearing Process is $1,000
per Participating Party per day, regardless of the number of Creation Units
redeemed on such day by such Participating Party. This Transaction Fee may
subsequently be changed by the Trustee, upon the advice of the Sponsor in its
sole discretion, but will not in any event exceed 10/100 of one percent (10
basis points) of the value of a Creation Unit at the time of creation or
redemption, as the case may be, (the "10 Basis Point

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<PAGE>

Limit")*. No modifications to, or reductions, discounts or waivers of, the
Transaction Fee charged in connection with the creation of Creation Units are
scheduled or currently contemplated by the Sponsor.

If Creation Units are created or redeemed outside the DIAMONDS Clearing
Process, an additional amount not to exceed three (3) times the applicable
Transaction Fee will be charged to the creator or redeemer. Under the current
schedule, therefore, the total fee charged in connection with the creation or
redemption of Creation Units outside the DIAMONDS Clearing Process would be
$1,000 (the Transaction Fee for the creation or redemption of a Creation Unit)
plus an additional amount not to exceed $3,000 (3 times $1,000) for a total of
$4,000.

From time to time, and for such periods as the Sponsor, in its sole
discretion, may determine, the Transaction Fee (as well as any additional
amounts charged in connection with creations and/or redemptions outside the
DIAMONDS Clearing Process) may be increased, decreased or otherwise modified or
waived in its entirety for certain lot-size creations and/or redemptions of
DIAMONDS, or for creations and/or redemptions made under certain specified
circumstances without the consent of Beneficial Owners, subject to certain
conditions (see "The Trust--Creation of Creation Units" and "Procedures for
Redemption of DIAMONDS"). The Sponsor also reserves the right, from time to
time, to vary the lot-size of the creations and/or redemptions of DIAMONDS
subject to an increase or decrease and/or entitled to such waiver of the
Transaction Fee. Any change so made will not cause the amount of the
Transaction Fee to exceed the 10 Basis Point Limit at the time of a creation,
or redemption, as the case may be. Such changes or variations will be effected
by an amendment to the current Trust prospectus. The amount of the new
Transaction Fee in effect at any given time will be available from the Trustee.

Size of Creation Unit Aggregations of DIAMONDS

DIAMONDS may be created or redeemed only in Creation Unit size aggregations
of 50,000 DIAMONDS, or in multiples thereof (e.g., 100,000, 150,000, 200,000
DIAMONDS), and in no event will fractional Creation Units be created or
redeemed.** The Sponsor reserves the right to direct the Trustee to declare a
split or reverse split in the number of DIAMONDS outstanding and a
corresponding change in the number of DIAMONDS constituting a Creation Unit in
the event that the per DIAMONDS Unit price in the secondary market changes to
an amount that the Sponsor believes falls outside a desirable retail
- -----------
* The amount of the Transaction Fee currently in effect will be available from
the Trustee.
** See "Dividend Reinvestment Service," however, for a description of the sole
case in which DIAMONDS may be created by the Trustee in less than a Creation
Unit size aggregation of 50,000 DIAMONDS.

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<PAGE>

range. For example, if a 2-for-1 split were declared, the number of DIAMONDS in
a Creation Unit size aggregation of DIAMONDS would double (e.g., from 50,000 to
100,000 DIAMONDS per Creation Unit).

Portfolio Adjustments

To maintain the correspondence between the composition of the Trust and that
of the DJIA, the Trustee will make conforming changes to the Trust's portfolio
in accordance with the terms of the Agreement to conform, to the extent
practicable, to periodic changes in the Index Securities made by Dow Jones,
(see "The Portfolio--Adjustments to the Portfolio"). The composition of the
securities portion of a Portfolio Deposit is adjusted to conform to changes in
the DJIA resulting from certain capital changes that may affect the price, and
hence the weighting of a component security in the DJIA. Any such change will
result in a corresponding adjustment to the prescribed Portfolio Deposit
effective on the Business Day (a "Business Day" being any day that the New York
Stock Exchange is open for business) on which the change to the DJIA takes
effect. Changes to the DJIA are made after the close of the market (see "The
Portfolio--Adjustments to the Portfolio Deposit").

Book Entry Ownership of DIAMONDS

The Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York (the "Depository") or
its nominee will be the record or registered owner of all outstanding DIAMONDS.
Beneficial ownership of DIAMONDS will be shown on the records of the Depository
or its participants. Certificates will not be issued for DIAMONDS, whether in
Creation Unit size aggregations or otherwise (see "The Trust--Book-Entry-Only
System").

Expenses

The expenses incident to the organization of the Trust and its registration
as an investment company are being capitalized and amortized on a straight line
basis over five years following the Initial Date of Deposit unless the Trust is
sooner terminated or by law or regulation amortization must occur over a
shorter time period. (see "Expenses of the Trust"). The Trustee's fees are set
forth generally in the Summary of Essential Information and more specifically
in "Expenses of the Trust" below. Other expenses of the Trust are also
described more fully in "Expenses of the Trust".

Federal Income Tax Considerations

For the fiscal year ended October 31, 1999, the Trust believes that it
qualified for tax treatment as a "regulated investment company" under

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<PAGE>

Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
The Trust intends to continue to so qualify and to distribute annually its
entire investment company taxable income and net capital gain. Distributions
that are taxable as ordinary income to Beneficial Owners generally are expected
to constitute dividend income for federal income tax purposes and to be
eligible for the dividends-received deduction available to many corporations to
the extent of qualifying dividend income received by the Trust (see "Tax Status
of the Trust"). The Trust's regular monthly distributions will be based on the
dividend performance of the Securities held during such monthly distribution
period rather than the actual taxable income of the Trust. As a result, a
portion of the distributions of the Trust may be treated as a return of capital
or a capital gain dividend for federal income tax purposes or the Trust may be
required to make additional distributions to maintain its status as a regulated
investment company or to avoid imposition of income or excise taxes on
undistributed income (see "Tax Status of the Trust" and "Administration of the
Trust--Distributions to Beneficial Owners").

ERISA Considerations

In considering the advisability of an investment in DIAMONDS, fiduciaries of
pension, profit sharing or other tax-qualified retirement plans (including
Keogh Plans) and welfare plans (collectively, "Plans") subject to the fiduciary
responsibility requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), should consider whether an investment in DIAMONDS
is permitted by the documents and instruments governing the Plan and whether
the investment satisfies the exclusive benefit, prudence and diversification
requirements of ERISA. Individual retirement account ("IRA") investors should
consider that an IRA may make only such investments as are authorized by its
governing instruments.

The fiduciary standards and prohibited transaction rules of ERISA and Section
4975 of the Code will not apply to transactions involving the Trust's assets
while DIAMONDS are held by a Plan or IRA. Unlike many other investment vehicles
offered to Plans and IRAs, the Trust's assets will not be treated as "plan
assets" of the Plans or IRAs which acquire or purchase DIAMONDS. Although ERISA
imposes certain duties on Plan fiduciaries and ERISA and/or Section 4975 of the
Code prohibit certain transactions involving "plan assets" between Plans or
IRAs and their fiduciaries or certain related persons, those rules will not
apply to transactions involving the Trust's assets because DIAMONDS represent
an interest in the Trust, and the Trust is registered as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). ERISA,
the Code and U.S. Department of Labor regulations contain unconditional
language exempting the assets of registered investment companies from treatment
as "plan assets" in applying the fiduciary and prohibited transaction
provisions of ERISA and the Code.

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<PAGE>

Restrictions on Purchases by Investment Companies

The acquisition of DIAMONDS by registered investment companies is subject to
the restrictions set forth in section 12(d)(1) of the 1940 Act.

Investment Management

The Trust holds the Securities and cash and is not actively "managed" by
traditional methods, which typically involve effecting changes in the
Securities on the basis of judgments made relating to economic, financial and
market considerations. The composition of the Securities are, however, adjusted
to conform to changes in the composition of the Index Securities in the manner
set forth in the Trust Agreement (see "The Portfolio--Adjustments to the
Portfolio").

Distributions

Monthly distributions based on the amount of dividends payable with respect
to Securities held by the Trust and other income, if any, received by the
Trust, net of fees and expenses, are made via the Depository and its
participants to Beneficial Owners (see "The Trust--Book-Entry-Only System") on
each Dividend Payment Date (see "Administration of the Trust--Distributions to
Beneficial Owners"). Any capital gain income recognized by the Trust in any
taxable year that is not previously treated as distributed during the year
ordinarily is to be distributed at least annually in January of the following
taxable year. The Trust may make additional distributions after the end of the
year in order to satisfy certain distribution requirements imposed by the Code
(see "Tax Status of the Trust" and "Administration of the Trust--Distributions
to Beneficial Owners"). Although income distributions are currently planned to
be made on a monthly basis, the Trustee reserves the right to vary the
periodicity with which distributions are made (see "Administration of the
Trust--Distributions to Beneficial Owners"). Those Beneficial Owners interested
in reinvesting their monthly distributions may participate through DTC
Participants in the DTC Dividend Reinvestment Service available through certain
brokers. (See "Dividend Reinvestment Service" for a brief description thereof.)

Redemption

DIAMONDS in Creation Unit size aggregations are ordinarily redeemable in kind
only and are not redeemable for cash except under certain circumstances (see
"Redemption of DIAMONDS"). DIAMONDS can be redeemed only in Creation Unit size
aggregations effected by a Participating Party (with respect to redemptions
through the DIAMONDS Clearing Process) or a DTC Participant (with respect to
redemptions outside the DIAMONDS Clearing Process), in either case which has
executed a Participant Agreement (see "Redemption of DIAMONDS--Procedure for
Redemption of DIAMONDS"). Individual

B-20
<PAGE>

DIAMONDS are not redeemable, but entitle the owners thereof to certain payments
upon termination of the Trust (see "Administration of the Trust--Termination").
Prior to termination, DIAMONDS Unit owners may aggregate individual DIAMONDS to
Creation Unit size or multiples thereof (e.g., 50,000, 100,000 DIAMONDS, etc.)
and request that the Trustee redeem the DIAMONDS so aggregated. There can be no
assurance, however, that there always will be sufficient depth and liquidity in
the public trading market to complete all such transactions (see "Special
Considerations"). Owners of DIAMONDS in less than Creation Unit size
aggregations may have to pay brokerage fees and commissions to acquire
sufficient DIAMONDS (i.e., 50,000 DIAMONDS) to constitute a Creation Unit. Each
redemption will also be accompanied by a Cash Redemption Payment (as
hereinafter defined, see "Redemption of DIAMONDS--Procedure for Redemption of
DIAMONDS") which on any given Business Day is an amount typically identical to
the Cash Component of a Portfolio Deposit.

In the event that the Trustee determines in its discretion that an Index
Security is likely to be unavailable for delivery or available in insufficient
quantity for delivery by the Trust upon the redemption of DIAMONDS in Creation
Unit size aggregations, then the Trustee shall have the right in its discretion
to deliver the cash equivalent value of such Index Security or Index
Securities, based on the market value of such Index Security or Index
Securities as of the Evaluation Time on the date such redemption order is
deemed received by the Trustee (see "Procedure for Redemption of DIAMONDS"), as
part of the Cash Redemption Payment in lieu of delivering the Index Security or
Index Securities to the redeemer.

In connection with the redemption of DIAMONDS, if a redeeming investor
requests redemption in cash, rather than in kind, with respect to one or more
Index Securities, (for example, because a redeemer is restricted by regulation
or otherwise from investing or engaging in a transaction in one or more Index
Securities,) the Trustee shall have the right in its discretion to deliver the
cash equivalent value of such Index Security or Index Securities based on the
market value of such Index Security or Index Securities as of the Evaluation
Time on the date such redemption order is deemed received by the Trustee (see
"Placement of Redemption Orders Outside DIAMONDS Clearing Process") as a part
of the Cash Redemption Payment in lieu of delivering such Index Security or
Index Securities to the redeemer. In all such cases, such investor will pay the
Trustee the standard Transaction Fee, plus an additional amount per Creation
Unit not to exceed three (3) times the Transaction Fee applicable for one
Creation Unit.

The Trustee, in its discretion, upon the request of a redeeming investor, may
redeem Creation Units in whole or in part by providing such redeemer with a
Portfolio Deposit differing in composition, but not differing in net asset
value, from the then-current Portfolio Deposit. Such a redemption might be made
if it

B-21
<PAGE>

were determined to be appropriate in order to maintain the Trust portfolio's
correspondence to the price-weighted composition of the DJIA (i.e. an equal
number of shares of each component stock) when a stock split of one of the
Index Securities occurs. See ("The Portfolio" and "The DJIA").

DIAMONDS Unit owners may also be required to pay Excess Cash Amounts, (as
hereinafter defined) when applicable, in connection with a redemption of
DIAMONDS (see "Redemption of DIAMONDS--Procedure for Redemption of DIAMONDS").
The Transaction Fee will be charged in connection with the redemption of each
Creation Unit size aggregation of DIAMONDS. If a request for redemption is made
directly to the Trustee outside the DIAMONDS Clearing Process, an additional
amount not to exceed three (3) times the Transaction Fee applicable for one
Creation Unit will be charged to the redeemer due to the increased expense
associated with delivery outside the DIAMONDS Clearing Process (see "Prospectus
Summary--Transaction Fee").

Termination

The Trust will terminate by its terms on the first to occur of: (i) the date
one hundred twenty-five (125) years from the Initial Date of Deposit (i.e.,
January 13, 2123) or (ii) the date twenty (20) years after the death of the
last survivor of fifteen persons named in the Agreement, the oldest of whom was
born in 1994 and the youngest of whom was born in 1997 (the "Mandatory
Termination Date"). The Trust may also be terminated earlier upon the agreement
of the Beneficial Owners of 66 2/3% of the then outstanding DIAMONDS or in the
event that DIAMONDS are delisted from the Exchange (see "Exchange Listing").
The Sponsor will also have the discretionary right to direct the Trustee to
terminate the Trust if at anytime after six months following and prior to three
years following the Initial Date of Deposit the net asset value of the Trust
falls below $150,000,000 and if after three years following the Initial Date of
Deposit the net asset value of the Trust is less than $350,000,000, as such
dollar amount shall be adjusted for inflation in accordance with the National
Consumer Price Index for All Urban Consumers (the "CPI-U")* as published by the
United States Department of Labor, such adjustment to take effect at the end of
the fourth year following the Initial Date of Deposit and at the end of each
year thereafter and to be made so as to reflect the percentage increase in
consumer prices as set forth in the CPI-U for the twelve month period ending in
the month preceding the month in which such adjustment is made. The Trustee
shall also have the right to terminate the Trust in the event that (a) the
Sponsor resigns or becomes incapable of discharging its duties and a successor
is not appointed; (b) the Depository is unable or unwilling to
- -----------
* The CPI-U, as published by the United States Department of Labor, measures
the inflation rate of specified commodities deemed representative of the
purchases of all urban consumers.

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<PAGE>

continue to perform its functions as set forth under the Trust Agreement and a
comparable replacement is unavailable; (c) NSCC no longer provides clearance
services with respect to DIAMONDS, or if the Trustee is no longer a member of
NSCC; (d) Dow Jones ceases publishing the DJIA; or (e) the License Agreement
(as hereinafter defined) is terminated. The License Agreement currently is
scheduled to terminate five years from the commencement date of trading of
DIAMONDS, subject to a five-year renewal period following such date. The Trust
shall terminate if the Trustee resigns or becomes incapable of discharging its
duties and a successor is not appointed (see "Administration of the Trust--
Termination").

Underwriting

ALPS Mutual Funds Services, Inc. (the "Distributor") acts as underwriter of
DIAMONDS on an agency basis. All orders to create DIAMONDS in Creation Unit
size aggregations must be placed with the Distributor, and it is the
responsibility of the Distributor to transmit such orders to the Trustee. The
Distributor will furnish to those placing such orders confirmation that the
orders have been accepted, but the Distributor shall reject any order which is
not submitted in proper form. Upon acceptance of an order to create DIAMONDS,
the Distributor instructs the Trustee to initiate the book-entry movement of
the appropriate number of DIAMONDS to the account of the entity placing the
order. The Distributor is also responsible for delivering a prospectus to those
persons creating DIAMONDS. The Distributor also maintains records of both the
orders placed with it for the creation of DIAMONDS and the confirmations of
acceptance issued by it. In addition, the Distributor maintains a record of the
instructions given to implement delivery of DIAMONDS in response to orders
placed with it. The Distributor may also provide certain other administrative
services, such as those related to state securities law compliance. The
Distributor is a corporation organized under the laws of the State of Colorado
and is located at 370 17th Street, Suite 3100, Denver, CO 80202. The
Distributor is a registered broker-dealer and a member of the National
Association of Securities Dealers, Inc. The Sponsor pays the Distributor for
its services a flat annual fee. The Sponsor will not seek reimbursement for
such payment from the Trust without obtaining prior exemptive relief from the
Commission.

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<PAGE>

RISK FACTORS AND SPECIAL CONSIDERATIONS

General

Investment in the Trust should be made with an understanding that the value
of the Securities may fluctuate in accordance with changes in the financial
condition of the issuers of the Securities, the value of common stocks
generally and other factors. The identity of the Index Securities and the
Securities also changes from time to time (see "The Portfolio--Adjustments to
the Portfolio" and "The Portfolio--Selection and Acquisition of Securities").
There can be no assurance that the issuers of the Securities will pay
dividends on outstanding shares of common stock. Distributions on the
Securities will generally depend upon the declaration of dividends by the
issuers of the Securities; the declaration of such dividends generally depends
upon various factors, including the financial condition of the issuers and
general economic conditions. As discussed above, the Trust, unlike a managed
investment company, is not actively "managed" by traditional methods, and
therefore the adverse financial condition of an issuer will not result in the
elimination of its securities from the Securities held by the Trust unless the
Securities of such issuer are removed from the DJIA (see "The Portfolio--
Adjustments to the Portfolio").

An investment in the Trust should also be made with an understanding of the
risks inherent in an investment in equity securities, 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 deteriorate (either of
which may cause a decrease in the value of the Securities and thus in the
value of DIAMONDS). Common stocks are susceptible to general stock market
fluctuations and to volatile increases and decreases in value as market
confidence in and perceptions of their issuers change. These investor
perceptions are based on various and 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 and banking crises. As discussed above, the Trust
is not actively "managed" and therefore common stocks held by the Trust will
not be disposed of as a result of or in anticipation of normal fluctuations in
the market.

Holders of common stocks of any given issuer incur more risk than holders of
preferred stocks and debt obligations of such issuer because common
stockholders, as owners of such issuer, have generally inferior rights to
receive payments from such issuer in comparison with the rights of creditors
of, or holders of debt obligations or preferred stocks issued by, such issuer.
Further, unlike debt securities which typically have a stated principal amount
payable at maturity (whose value, however, will be subject to market
fluctuations prior thereto), or preferred stocks which typically have a
liquidation preference and which may have stated optional or mandatory
redemption provisions, common stocks have neither a fixed principal amount nor
a maturity. Common stock values are subject to market fluctuations as long as
the common stock

B-24
<PAGE>

remains outstanding. The value of the Securities thus may be expected to
fluctuate over the entire life of the Trust to values higher or lower than
those prevailing on the Initial Date of Deposit (see "Market Risks").

Although currently all of the Securities are listed on a national securities
exchange, in the future the principal trading market for some Securities may
be in the over-the-counter market. The existence of a liquid trading market
for certain Securities may depend on whether dealers will make a market in
such Securities. There can be no assurance that a market will be made for any
of the Securities, that any market for the Securities will be maintained or
that any such market will be or remain liquid. The price at which the
Securities may be sold and the value of the Trust will be adversely affected
if trading markets for the Securities are limited or absent.

An investment in the Trust should also be made with an understanding that
the Trust will not be able to replicate exactly the performance of the DJIA
because the total return generated by the Securities will be reduced by
transaction costs incurred in adjusting the actual balance of the Securities
and other Trust expenses, whereas such transaction costs and expenses are not
included in the calculation of the DJIA. It is also possible that for a short
period of time, the Trust may not fully replicate the performance of the DJIA
due to the temporary unavailability of certain Index Securities in the
secondary market or due to other extraordinary circumstances. Such events are
unlikely to continue for an extended period of time, because the Trustee is
required to correct such imbalances by means of adjusting the composition of
Portfolio Securities (see "The Portfolio--Adjustments to the Portfolio"). It
is also possible that the composition of the Trust may not exactly replicate
the composition of the DJIA if the Trust has to adjust its Portfolio holdings
in order to continue to qualify as a "regulated investment company" under the
Code (see "Tax Status of the Trust").

Neither the Depository nor Beneficial Owners of DIAMONDS are entitled either
to dispose of any of the Securities in the Trust, as such, or to vote the
Securities. As the beneficial owner of the Securities, the Trustee has the
right to vote all of the voting Securities (see "Administration of the Trust--
Voting").

Except as otherwise specifically noted, the time frames for delivery of
Securities, cash, or DIAMONDS in connection with creation and redemption
activity within the DIAMONDS Clearing Process as set forth herein are based on
NSCC's current "regular way" settlement period of three (3) days during which
NSCC is open for business (each such day an "NSCC Business Day"). NSCC may, in
the future, reduce such "regular way" settlement period, in which case it is
anticipated that there would be a corresponding reduction in settlement
periods applicable to DIAMONDS Unit creations and redemptions. Investors
should note that NSCC Business Days do not always coincide with the days
during which the Trustee is open for business.

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<PAGE>

Net Asset Value and Market Prices

The Trust's assets consist primarily of the Securities. Therefore, the net
asset value of DIAMONDS in Creation Unit size aggregations and,
proportionately, the net asset value per DIAMONDS Unit, changes as
fluctuations occur in the market value of Securities. Investors should also be
aware that the aggregate public trading market price of 50,000 DIAMONDS may be
different from the net asset value of a Creation Unit aggregation of DIAMONDS
(i.e., 50,000 DIAMONDS may trade at a premium over or at a discount to the net
asset value of a Creation Unit) and similarly the public trading market price
per DIAMONDS Unit may be different from the net asset value of a Creation Unit
on a per DIAMONDS Unit basis (see "Special Considerations and Risk Factors--
Market Risks"). This price difference may be due, in large part, to the fact
that supply and demand forces at work in the secondary trading market for
DIAMONDS will be closely related to, but not identical to, the same forces
influencing the prices of the DJIA component stocks trading individually or in
the aggregate at any point in time. The expenses of the Trust are reflected in
the net asset value of DIAMONDS in Creation Unit size aggregations and the
expenses of the Trust are accrued daily (see "Expenses of the Trust").

Trading Considerations

The Sponsor does not maintain a secondary market in DIAMONDS. DIAMONDS are
listed for trading on the Exchange. The market symbol for DIAMONDS is DIA.
Trading in DIAMONDS on the Exchange may be halted due to market conditions or,
in light of Exchange rules and procedures, for reasons that, in the view of
the Exchange, make trading in DIAMONDS inadvisable. In addition, trading in
DIAMONDS on the Exchange is subject to trading halts caused by extraordinary
market volatility pursuant to Exchange "circuit breaker" rules that require
trading in securities on the Exchange to be halted for a specified time period
based on a specified market decline. There can be no assurance that the
requirements of the Exchange necessary to maintain the listing of DIAMONDS
will continue to be met or will remain unchanged. The Trust will be terminated
in the event DIAMONDS are delisted from the Exchange. (For a description of
the conditions to listing of DIAMONDS and the circumstances under which the
Exchange would consider the suspension of trading in or the delisting of
DIAMONDS, see "Exchange Listing.") Further, the Trust may be terminated, among
other reasons, in the event that the License Agreement is terminated or the
net asset value of the Trust falls below a specified level (see
"Administration of the Trust--Termination").

B-26
<PAGE>

Market Risks

DIAMONDS are subject to the risks of an investment in a portfolio of large-
capitalization common stocks, including the risk that the general level of
stock prices may decline, thereby adversely affecting the value of such
investment. DIAMONDS are also subject to risks other than those associated
with an investment in such a portfolio of common stocks in that the selection
of the stocks included in the Trust's portfolio, the expenses associated with
the Trust or other factors distinguishing an ownership interest in a trust
from the direct ownership of a portfolio of securities may affect trading in
DIAMONDS as compared with trading in a portfolio of large-capitalization
common stocks. Additionally, DIAMONDS may perform differently than other
investments in portfolios containing large capitalization stocks which may be
based upon or derived from an index other than the DJIA (see "The DJIA"). For
example, the great majority of component stocks of the DJIA are drawn from
among the largest of the large capitalization universe, while other indexes
may represent a broader sampling of large capitalization stocks. Also, other
indexes may use different methods for assigning relative weights to the index
components than the price weighted method used by the DJIA. As a result, DJIA
accords relatively more weight to stocks with a higher price to market
capitalization ratio than a similar market capitalization weighted index.
DIAMONDS are further subject to the risk that extraordinary events may cause
any of the parties providing services to the Trust, such as the Trustee, the
Sponsor, the Distributor, the Depository or NSCC, to be closed or otherwise
unable to perform such party's obligations as set forth herein and in the
agreements between and among such parties. According to the terms of the Trust
Agreement, if any of the above named entities fails or is otherwise unable to
perform adequately its duties, a successor entity may be named or appointed to
assume all duties and obligations of its predecessor. If, however, no suitable
successor is available or willing to undertake all such duties and
obligations, under the Trust Agreement the Trust will then be terminated (see
"Administration of the Trust--Termination").

The Trustee will ordinarily deliver a portfolio of Securities for each
Creation Unit size aggregation of DIAMONDS delivered for redemption, identical
in composition to the securities portion of a Portfolio Deposit as in effect
on the date a request for redemption is deemed received by the Trustee (see
"Redemption of DIAMONDS"). If a redemption is processed through the DIAMONDS
Clearing Process, to the extent that the Securities to be delivered on
settlement date are not delivered, they will be covered by NSCC's guarantee of
the completion of such delivery. Any Securities not received on settlement
date will be marked to the market until delivery is completed. The Trust, to
the extent it has not already done so, remains obligated to deliver such
Securities to NSCC, and the market risk of any increase in the value of such
Securities until delivery is made by the Trust to NSCC could adversely affect
the net asset value of the Trust. Investors should note that the Securities to
be delivered to a redeemer

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<PAGE>

submitting a redemption request outside of the DIAMONDS Clearing Process that
are not delivered to such redeemer are not covered by NSCC's guarantee of
completion of such delivery.

Investors should also note that the size of the Trust in terms of total
assets held may change substantially over time and from time to time as
DIAMONDS in Creation Unit size aggregations are created and redeemed. Such
fluctuations in Trust size should not adversely impact the net asset value at
any time, because the amount of the Cash Component or the Cash Redemption
Payment upon creations or redemptions, respectively, of DIAMONDS in Creation
Unit size aggregations is determined each day to equate the value of the
Portfolio Deposit to the net asset value of the Trust, on a per Creation Unit
basis, at the close of business on the day such request is deemed received by
the Trustee (see "The Portfolio--Adjustments to the Portfolio Deposit").

Investors in the Trust should also be aware that there are tax consequences
associated with the ownership of DIAMONDS resulting from the distribution of
Trust dividends and sales of DIAMONDS as well as the sales of underlying
Securities held by the Trust in connection with redemptions or changes in the
DJIA under certain circumstances (see "Tax Status of the Trust--Tax
Consequences to Beneficial Owners").

Year 2000 Problem

Many computer systems were designed in such a way that they may be unable to
distinguish between the year 2000 and the year 1900 and therefore may not
properly process and calculate date-related information and data (commonly
known as the "Year 2000 Problem"). As with all investment and financial
entities, the Year 2000 Problem may have an adverse impact upon the handling
of securities trades, pricing and account services and other activities
conducted by or for the Trust. The Sponsor and the Trustee have taken steps to
address the Year 2000 Problem with respect to the computer systems they use
and to obtain reasonable assurances that similar steps have been taken by the
Trust's other service providers. Operations ran smoothly from the last week in
December through the first few weeks of February, but the Year 2000 Problem
may yet have an adverse impact on financial market participants and other
entities, including the companies whose stocks are contained in the Trust's
Portfolio.

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<PAGE>

THE TRUST

The Trust is a unit investment trust created under the laws of the State of
New York pursuant to the Trust Agreement.* The Securities held by the Trust
consist of a portfolio of common stocks or, in the case of securities not yet
delivered in connection with purchases made by the Trust or Portfolio
Deposits, confirmations of contracts to purchase such securities
(collectively, the "Portfolio").

Creation of Creation Units

Portfolio Deposits may be deposited with the Trustee through the clearing
processes of NSCC, following placement with the Distributor of orders to
create DIAMONDS. The Distributor shall reject any order that is not submitted
in proper form. Investors may deposit Portfolio Deposits through the DIAMONDS
Clearing Process or directly with the Trustee outside the DIAMONDS Clearing
Process. The Transaction Fee will be charged at the time of creation of a
Creation Unit size aggregation of DIAMONDS. An additional amount not to exceed
three (3) times the Transaction Fee applicable for a Creation Unit will be
charged to a creator creating outside the DIAMONDS Clearing Process (i.e.
depositing Portfolio Deposits directly with the Trustee through DTC,) in part
due to the increased expense associated with settlement outside the DIAMONDS
Clearing Process. See "Prospectus Summary--Transaction Fee" for a detailed
description of the amount of the Transaction Fee and the additional amounts
and reductions, limitations and waivers applicable thereto, if any.

The Trustee, at the direction of the Sponsor in its sole discretion, from
time to time and for such periods as may be determined by the Sponsor in its
sole discretion, may increase** or reduce the amount and/or waive the
imposition altogether of the Transaction Fee (and/or the additional amounts
charged in connection with creations and/or redemptions outside the DIAMONDS
Clearing Process) for certain lot-size creations and/or redemptions of
DIAMONDS, whether applied solely to creations and/or redemptions of DIAMONDS
made through the DIAMONDS Clearing Process (see "Procedures for Creation of
Creation Units"), solely to creations and/or redemptions made outside the
DIAMONDS Clearing Process, or to both methods of creation and/or redemption.
The Sponsor also reserves the right, from time to time, to vary the lot-size
of the creations and/or redemptions of DIAMONDS subject to such an increase
and/or entitled to such a reduction or waiver of the Transaction Fee and the
additional amounts charged in connection with creations and/or redemptions
outside the DIAMONDS Clearing Process. The existence of such increase,
reduction
- -----------
* Reference is hereby made to said Trust Agreement, and any statements
contained herein are qualified in their entirety by the provisions of said
Trust Agreement.
** Such increase is subject to the 10 Basis Point Limit discussed above under
"Prospectus Summary--Transaction Fee".

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<PAGE>

or waiver of the Transaction Fee (as well as any additional amounts, if
applicable) and the lot-size of Creation Units affected shall be disclosed in
the current DIAMONDS Unit Prospectus (see "Prospectus Summary--Transaction
Fee"). As of the date hereof, the Sponsor does not contemplate the reduction,
variation by lot-size or waiver of Transaction Fees in connection with the
creation or redemption of DIAMONDS or of the additional amounts charged in
connection with the creation or redemption of DIAMONDS outside the DIAMONDS
Clearing Process beyond that which is discussed herein under the caption
"Prospectus Summary--Transaction Fee".

The DJIA is a price-weighted stock index; that is, the component stocks of
the DJIA are represented in exactly equal share amounts and therefore are
accorded relative importance in the DJIA based on their prices. See "The
Portfolio" and "The DJIA". The shares of common stock of the securities
portion of a Portfolio Deposit on any date of deposit will reflect the
composition of the component stocks of the DJIA on such day. The portfolio of
Index Securities that is the basis for a Portfolio Deposit varies as changes
are made in the composition of the Index Securities (see "The Portfolio--
Adjustments to the Portfolio Deposit"). The Trustee will make available to
NSCC* prior to the commencement of trading on each Business Day a list of the
names and required number of shares of each of the Index Securities in the
current Portfolio Deposit as well as the amount of the Dividend Equivalent
Payment for the previous Business Day. Under certain extraordinary
circumstances which may make it impossible for the Trustee to provide such
information to NSCC on a given Business Day, NSCC shall use the information
regarding the identity of the Index Securities of the Portfolio Deposit on the
previous Business Day. The identity of each of the Index Securities required
for a Portfolio Deposit, as in effect on October 31, 1999, is set forth in the
above Schedule of Investments. The Sponsor makes available (a) on each
Business Day, the Dividend Equivalent Payment effective through and including
the previous Business Day, per outstanding DIAMOND, and (b) every 15 seconds
throughout the day at the Exchange a number representing, on a per DIAMONDS
Unit basis, the sum of the Dividend Equivalent Payment effective through and
including the previous Business Day, plus the current value of the securities
portion of a Portfolio Deposit as in effect on such day (which value will
occasionally include a cash in lieu amount to compensate for the omission of a
particular Index Security from such Portfolio Deposit--see "The Portfolio--
Adjustments to the Portfolio Deposit"). Such information is calculated based
upon the best information available to the Sponsor and may be calculated by
other persons
- -----------

* As of December 31, 1999, Stock Clearing Corporation, a wholly-owned
subsidiary of the New York Stock Exchange, owned 50% of the issued and
outstanding shares of common stock of NSCC. Also as of such date, National
Clearing Corporation, a wholly-owned subsidiary of the National
Association of Securities Dealers, Inc., the parent company of the
Exchange, owned 50% of the issued and outstanding shares of common stock
of NSCC.

B-30
<PAGE>

designated to do so by the Sponsor. The inability of the Sponsor to provide
such information will not in itself result in a halt in the trading of
DIAMONDS on the Exchange. Investors interested in creating DIAMONDS or
purchasing DIAMONDS in the secondary market should not rely solely on such
information in making investment decisions but should also consider other
market information and relevant economic and other factors (including, without
limitation, information regarding the DJIA, the Index Securities and financial
instruments based on the DJIA).

Upon receipt of a Portfolio Deposit or Deposits, following placement with
the Distributor of an order to create DIAMONDS, the Trustee will deliver
DIAMONDS in Creation Unit size aggregations to the Depository. In turn, the
DIAMONDS Unit position will be removed from the Trustee's account at the
Depository and will be allocated to the account of the DTC Participant acting
on behalf of the depositor creating Creation Unit(s) (see "The Trust--
Procedures for Creation of Creation Units" and "The Trust--Book-Entry-Only
System"). Each DIAMONDS Unit represents a fractional undivided interest in the
Trust in an amount equal to one (1) divided by the total number of DIAMONDS
outstanding. The Trustee may reject a request to create Creation Units made by
any depositor or group of depositors if such depositor(s), upon the acceptance
by the Trustee of such request and the issuance to such depositor(s) of
DIAMONDS, would own eighty percent (80%) or more of the outstanding DIAMONDS
(see "Tax Status of the Trust"). The Trustee also may reject any Portfolio
Deposit or any component thereof under certain other circumstances (see "The
Trust--Procedures for Creation of Creation Units").

Additional DIAMONDS in Creation Unit size aggregations will be created upon
receipt of the appropriate Portfolio Deposits from creators. As additional
DIAMONDS in Creation Unit size aggregations are created, the aggregate value
of the Portfolio will be increased and the fractional undivided interest in
the Trust represented by each DIAMONDS Unit will be decreased. As discussed
above, under certain circumstances (1) a portion of the securities portion of
a Portfolio Deposit may consist of contracts to purchase certain Index
Securities or (2) a portion of the Cash Component may consist of cash in an
amount to enable the Trustee to purchase such Index Securities. In the event
there is a failure to deliver the Index Securities which are the subject of
such contracts to purchase, the Trustee will be instructed pursuant to the
Agreement to acquire such Index Securities in an expeditious manner. To the
extent the price of any such Index Security increases or decreases between the
time of creation and the time any such Index Security is purchased and
delivered, DIAMONDS will represent fewer or more shares of such Index Security
and more or fewer of the other Index Securities in the Trust. Hence, price
fluctuations during the period from the time the cash is received by the
Trustee to the time the requisite Index Securities are purchased and delivered
will affect the value of all DIAMONDS.

The identity and appropriate number of shares of the Index Securities
required for a Portfolio Deposit are determined in the manner described
herein. Due to changes in the composition of the Index Securities, the
composition of the Securities and the

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<PAGE>

prescribed Portfolio Deposit will also change from time to time (see "The
Portfolio-- Adjustments to the Portfolio" and "The Portfolio--Adjustments to
the Portfolio Deposit"). The identity and appropriate number of shares of the
Index Securities to be delivered as part of a Portfolio Deposit are determined
daily and reflect the composition of the DJIA and, together with the Cash
Component, have a value equal to the net asset value of the Trust on a per
Creation Unit basis at the close of business on the day of request for
creation. The composition of the Portfolio is also adjusted from time to time
to conform to the changes to the DJIA as described herein and as set forth in
the Trust Agreement. As the appropriate number of shares and identities of the
Index Securities change, substantially identical changes to the composition of
the required Portfolio Deposit are made contemporaneously. Corresponding
adjustments to the composition of the Portfolio, however, are not necessarily
made contemporaneously with adjustments to the required Portfolio Deposit, but
are made in accordance with the specifications set forth herein and in the
Trust Agreement (see "The Portfolio--Adjustments to the Portfolio"). Although
the composition of the securities portion of a Portfolio Deposit changes from
time to time, the interests of Beneficial Owners will not be adversely
affected because the composition of such securities and the aggregate value
thereof, together with the Cash Component, will be calculated based upon the
proportionate net asset value of the Trust (see "The Portfolio--Adjustments to
the Portfolio").

Procedures for Creation of Creation Units

To be eligible to place orders with the Distributor to create DIAMONDS in
Creation Unit size aggregations, an entity or person must be (1) a
Participating Party, with respect to creations through the DIAMONDS Clearing
Process or (2) a DTC Participant with respect to creations/redemptions outside
the DIAMONDS Clearing Process. All DIAMONDS, however created, will be entered
on the records of the Depository in the name of Cede & Co. for the account of
a DTC Participant (see "The Trust--Book Entry Only System").

All orders to create DIAMONDS must be placed in multiples of 50,000 DIAMONDS
(Creation Unit size). All orders to create DIAMONDS, whether through the
DIAMONDS Clearing Process or outside the DIAMONDS Clearing Process, must be
received by the Distributor by no later than the closing time of the regular
trading session on the New York Stock Exchange, Inc. ("Closing Time")
(ordinarily 4:00 p.m. New York time) in each case on the date such order is
placed in order for creation of DIAMONDS to be effected based on the net asset
value of the Trust as determined on such date. The date on which a creation
order (or order to redeem as discussed below) is placed is herein referred to
as the "Transmittal Date". Orders must be transmitted by telephone or other
transmission method acceptable to the Distributor and Trustee, pursuant to
procedures set forth in the Participant Agreement, as described below (see
"Placement of Creation Orders Using DIAMONDS Clearing Process" and "Placement
of Creation Orders Outside DIAMONDS Clearing

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<PAGE>

Process"). Severe economic or market disruptions or changes, or telephone or
other communication failure, may impede the ability to reach the Trustee, the
Distributor, a Participating Party or a DTC Participant.

Orders to create Creation Unit sized aggregations of DIAMONDS shall be
placed with a Participating Party or DTC Participant, as applicable, in the
form required by such Participating Party or DTC Participant. Investors should
be aware that their particular broker may not have executed a Participant
Agreement, and that, therefore, orders to create Creation Unit sized
aggregations of DIAMONDS may have to be placed by the investor's broker
through a Participating Party or a DTC Participant who has executed a
Participant Agreement. At any given time there may be only a limited number of
broker-dealers that have executed a Participant Agreement. Those placing
orders to create DIAMONDS through the DIAMONDS Clearing Process should afford
sufficient time to permit proper submission of the order to the Distributor
prior to the Closing Time on the Transmittal Date.

Orders for creation that are effected outside the DIAMONDS Clearing Process
are likely to require transmittal by the DTC Participant earlier on the
Transmittal Date than orders effected using the DIAMONDS Clearing Process.
Those persons placing orders outside the DIAMONDS Clearing Process should
ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire
transfer system by contacting the operations department of the broker or
depository institution effectuating such transfer of securities and Cash
Component. The DTC Participant notified of an order to create DIAMONDS outside
the DIAMONDS Clearing Process shall be required to effect a transfer of (1)
the requisite Index Securities through DTC by 11:00 a.m. on the next Business
Day immediately following the Transmittal Date in such a way as to replicate
the Portfolio Deposit established on the Transmittal Date by the Trustee in
calculating the net asset value of the Trust and (2) the Cash Component
through the Federal Reserve Bank wire transfer system so as to be received by
the Trustee by 2:00 p.m. on the next Business Day immediately following the
Transmittal Date. If the Trustee does not receive both the Index Securities by
11:00 a.m. and the Cash Component by 2:00 p.m. on the next Business Day
immediately following the Transmittal Date, such order shall be cancelled.
Upon written notice to the Distributor, such cancelled order may be
resubmitted the following Business Day using a Portfolio Deposit as newly
constituted to reflect the current net asset value of the Trust.

All questions as to the number of shares of each of the Index Securities,
the amount of the Cash Component and the validity, form, eligibility
(including time of receipt) and acceptance for deposit of any Index Securities
to be delivered shall be determined by the Trustee, whose determination shall
be final and binding. The Trustee reserves the absolute right to reject a
creation order transmitted to it by the Distributor in respect of any
Portfolio Deposit or any component thereof if (a) the depositor or group of
depositors, upon obtaining the DIAMONDS ordered, would own 80% or more of the
current outstanding DIAMONDS (see "Tax Status of the Trust"),

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<PAGE>

(b) the Portfolio Deposit is not in proper form; (c) acceptance of the
Portfolio Deposit would have certain adverse tax consequences (see "Tax Status
of the Trust"); (d) the acceptance of the Portfolio Deposit would, in the
opinion of counsel, be unlawful; (e) the acceptance of the Portfolio Deposit
would otherwise, in the discretion of the Trustee, have an adverse effect on
the Trust or the rights of Beneficial Owners; or (f) in the event that
circumstances outside the control of the Trustee make it for all practical
purposes impossible to process creations of DIAMONDS. The Trustee and the
Sponsor are under no duty to give notification of any defects or
irregularities in the delivery of Portfolio Deposits or any component thereof
nor shall either of them incur any liability for the failure to give any such
notification.

A list of the Participating Parties or DTC Participants that have executed a
Participant Agreement (as hereinafter defined) is available at the office of
the Trustee at 1776 Heritage Drive, North Quincy, Massachusetts 02171 and the
office of the Distributor at 370 17th Street, Suite 3100, Denver, CO 80202
during normal business hours.

Placement of Creation Orders Using DIAMONDS Clearing Process

Portfolio Deposits created through the DIAMONDS Clearing Process must be
delivered through a Participating Party (see "Prospectus Summary--Portfolio
Deposits") that has executed a Participant Agreement with the Distributor and
with the Trustee (as the same may be from time to time amended in accordance
with its terms, the "Participant Agreement"). The Participant Agreement
authorizes the Trustee to transmit to NSCC on behalf of the Participating
Party such trade instructions as are necessary to effect the Participating
Party's creation order. Pursuant to such trade instructions from the Trustee
to NSCC, the Participating Party agrees to transfer the requisite Index
Securities (or contracts to purchase such Index Securities that are expected
to be delivered through the DIAMONDS Clearing Process in a "regular way"
manner by the third (3rd) NSCC Business Day) and the Cash Component to the
Trustee, together with such additional information as may be required by the
Trustee. An order to create DIAMONDS through the DIAMONDS Clearing Process is
deemed received by the Distributor on the Transmittal Date if (i) such order
is received by the Distributor not later than the Closing Time on such
Transmittal Date and (ii) all other procedures set forth in the Participant
Agreement are properly followed.

Placement of Creation Orders Outside DIAMONDS Clearing Process

Portfolio Deposits created outside the DIAMONDS Clearing Process must be
delivered through a DTC Participant that has executed a Participant Agreement
with the Distributor and with the Trustee. A DTC Participant who wishes to
place an order creating DIAMONDS to be effected outside the DIAMONDS Clearing
Process need not be a Participating Party, but such orders must state that the
DTC Participant is not using the DIAMONDS Clearing Process and that the
creation of DIAMONDS will

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<PAGE>

instead be effected through a transfer of securities and cash. The Portfolio
Deposit transfer must be ordered by the DTC Participant in a timely fashion so
as to ensure the delivery of the requisite number of Index Securities through
DTC to the account of the Trustee by no later than 11:00 a.m. of the next
Business Day immediately following the Transmittal Date. All questions as to
the number of Index Securities to be delivered, and the validity, form and
eligibility (including time of receipt) for the deposit of any tendered
securities, will be determined by the Trustee, whose determination shall be
final and binding. The cash equal to the Cash Component must be transferred
directly to the Trustee through the Federal Reserve Bank wire transfer system
in a timely manner so as to be received by the Trustee no later than 2:00 p.m.
on the next Business Day immediately following the Transmittal Date. An order
to create DIAMONDS outside the DIAMONDS Clearing Process is deemed received by
the Distributor on the Transmittal Date if (i) such order is received by the
Distributor not later than the Closing Time on such Transmittal Date and (ii)
all other procedures set forth in the Participant Agreement are properly
followed. However, if the Trustee does not receive both the requisite Index
Securities and the Cash Component in a timely fashion on the next Business Day
immediately following the Transmittal Date, such order will be cancelled. Upon
written notice to the Distributor, such cancelled order may be resubmitted the
following Business Day using a Portfolio Deposit as newly constituted to
reflect the current net asset value of the Trust. The delivery of DIAMONDS so
created will occur no later than the third (3rd) Business Day following the
day on which the creation order is deemed received by the Distributor. Under
the current schedule, the total fee charged in connection with the creation of
one Creation Unit outside the DIAMONDS Clearing Process would be $4,000 (see
"Prospectus Summary--Transaction Fee").

Book-Entry-Only System

The Depository acts as securities depository for DIAMONDS. DIAMONDS are
represented by a single global security (the "Global Security"), which is
registered in the name of Cede & Co., as nominee for the Depository and
deposited with, or on behalf of, the Depository. Certificates will not be
issued for DIAMONDS.

The Depository has advised the Sponsor and the Trustee as follows: The
Depository is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository was created to
hold securities of its participants (the "DTC Participants") and to facilitate
the clearance and settlement of securities transactions among the DTC
Participants in such securities through electronic book-entry changes in
accounts of the DTC Participants, thereby eliminating the need for physical
movement of securities certificates. DTC

B-35
<PAGE>

Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own the Depository.* Access to the Depository system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly (the "Indirect Participants"). The
Depository agrees with and represents to its participants that it will
administer its book-entry system in accordance with its rules and by-laws and
requirements of law.

Upon the settlement date of any creation, transfer or redemption of
DIAMONDS, the Depository will credit or debit, on its book-entry registration
and transfer system, the number of DIAMONDS so created, transferred or
redeemed to the accounts of the appropriate DTC Participants. The accounts to
be credited and charged shall be designated by the Trustee to NSCC, in the
case of a creation or redemption through the DIAMONDS Clearing Process, or by
the Trustee and the DTC Participant, in the case of a creation or redemption
transacted outside of the DIAMONDS Clearing Process (see "The Trust--
Procedures for Creation of Creation Units" and "Redemption of DIAMONDS").
Beneficial ownership of DIAMONDS is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and
Indirect Participants. Ownership of beneficial interests in DIAMONDS (owners
of such beneficial interests are referred to herein as "Beneficial Owners")
will be shown on, and the transfer of ownership will be effected only through,
records maintained by the Depository (with respect to DTC Participants) and on
the records of DTC Participants (with respect to Indirect Participants and
Beneficial Owners that are not DTC Participants). Beneficial Owners are
expected to receive from or through the DTC Participant a written confirmation
relating to their purchase of DIAMONDS. The laws of some jurisdictions may
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability of certain
investors to acquire beneficial interests in DIAMONDS.

So long as Cede & Co., as nominee of the Depository, is the registered owner
of DIAMONDS, references herein to the registered or record owners of DIAMONDS
shall mean Cede & Co. and shall not mean the Beneficial Owners of DIAMONDS.
Beneficial Owners of DIAMONDS will not be entitled to have DIAMONDS registered
in their names, will not receive or be entitled to receive physical delivery
of certificates in definitive form and will not be considered the record or
registered
- -----------

* As of December 31, 1999, the National Association of Securities Dealers,
Inc., the parent company of the Exchange, owned 4.6% of the issued and
outstanding shares of the common stock of the Depository, the Exchange owned
4.6% of the issued and outstanding shares of common stock of the Depository
and a wholly-owned subsidiary of the Exchange, American Stock Exchange
Clearing LLC, owned .00189% of the issued and outstanding shares of common
stock of the Depository. Also as of such date, the Trustee owned 5.1884% of
the issued and outstanding shares of the common stock of the Depository.

B-36
<PAGE>

holder thereof under the Trust Agreement. Accordingly, each Beneficial Owner
must rely on the procedures of the Depository, the DTC Participant and any
indirect Participant through which such Beneficial Owner holds its interests,
to exercise any rights of a holder of DIAMONDS under the Trust Agreement. The
Trustee and the Sponsor understand that under existing industry practice, in
the event the Trustee requests any action of DIAMONDS Unit holders, or a
Beneficial Owner desires to take any action that the Depository, as the record
owner of all outstanding DIAMONDS, is entitled to take, the Depository would
authorize the DTC Participants to take such action and that the DTC
Participants would authorize the indirect Participants and Beneficial Owners
acting through such DTC Participants to take such action or would otherwise
act upon the instructions of Beneficial Owners owning through them.

As described above, the Trustee recognizes the Depository or its nominee as
the owner of all DIAMONDS for all purposes except as expressly set forth in
the Trust Agreement. Conveyance of all notices, statements and other
communications to Beneficial Owners is effected as follows. Pursuant to the
agreement between the Trustee and the Depository (as the same may be from time
to time amended in accordance with its terms, the "Depository Agreement"), the
Depository is required to make available to the Trustee upon request and for a
fee to be charged to the Trust a listing of the DIAMONDS Unit holdings of each
DTC Participant. The Trustee shall inquire of each such DTC Participant as to
the number of Beneficial Owners holding DIAMONDS, directly or indirectly,
through such DTC Participant. The Trustee shall provide each such DTC
Participant with copies of such notice, statement or other communication, in
such form, number and at such place as such DTC Participant may reasonably
request, in order that such notice, statement or communication may be
transmitted by such DTC Participant, directly or indirectly, to such
Beneficial Owners. In addition, the Trust shall pay to each such DTC
Participant a fair and reasonable amount as reimbursement for the expenses
attendant to such transmittal, all subject to applicable statutory and
regulatory requirements.

DIAMONDS Unit distributions shall be made to the Depository or its nominee,
Cede & Co., as the registered owner of all DIAMONDS. The Trustee and the
Sponsor expect that the Depository or its nominee, upon receipt of any payment
of distributions in respect of DIAMONDS, shall credit immediately DTC
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in DIAMONDS as shown on the records of the
Depository or its nominee. The Trustee and the Sponsor also expect that
payments by DTC Participants to indirect Participants and Beneficial Owners of
DIAMONDS held through such DTC Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in a "street name,"
and will be the responsibility of such DTC Participants. Neither the Trustee
nor the Sponsor has or will have any responsibility or liability for any
aspects of the records relating to or notices to Beneficial Owners, or
payments made on account of

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<PAGE>

beneficial ownership interests in DIAMONDS, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for
any other aspect of the relationship between the Depository and the DTC
Participants or the relationship between such DTC Participants and the
indirect Participants and Beneficial Owners owning through such DTC
Participants.

Beneficial Owners may elect to have their distributions reinvested in
additional DIAMONDS (see "Dividend Reinvestment Service").

The Depository may determine to discontinue providing its service with
respect to DIAMONDS at any time by giving notice to the Trustee and the
Sponsor and discharging its responsibilities with respect thereto under
applicable law. Under such circumstances, the Trustee and the Sponsor shall
take action either to find a replacement for the Depository to perform its
functions at a comparable cost or, if such a replacement is unavailable, to
terminate the Trust (see "Termination of the Trust").

THE PORTFOLIO

Because the objective of the Trust is to provide investment results that
correspond substantially to the price and yield performance of the DJIA, the
Portfolio will at any time consist of as many of the Index Securities as is
practicable and under most circumstances, all of the Index Securities. It is
anticipated that cash or cash items (other than dividends held for
distribution) normally would not be a substantial part of the Trust's net
assets. Although the Trust may at any time fail to own certain of the Index
Securities, the Trust will be substantially invested in Index Securities and
the Sponsor believes that such investment should result in a close
correspondence between the investment performance of the DJIA and that derived
from ownership of DIAMONDS.

Adjustments to the Portfolio

The DJIA is a price-weighted index of 30 component common stocks, the
components of which are determined by the editors of The Wall Street Journal,
without any consultation with the companies, the respective stock exchange or
any official agency.

Because the investment objective of the Trust is to provide investment
results that generally correspond to the price and yield performance of the
DJIA, capital changes such as stock splits and composition changes to the DJIA
create the need for the Trust to make corresponding Portfolio adjustments as
described below.

The Trustee will adjust the composition of the Portfolio from time to time,
to the extent practicable, to conform to changes in the composition of the
Index Securities.

B-38
<PAGE>

Pursuant to the provisions of the Agreement, the Trustee will make conforming
changes to the Trust's portfolio in order to correlate the Securities with the
Index Securities comprising the DJIA, within three (3) Business Days before or
after the day on which such changes are scheduled to take effect at the close
of the market. While other DJIA changes may lead to adjustments in the Trust's
portfolio, the most common changes are likely to occur as a result of changes
in the Index Securities included in the DJIA and as a result of stock splits.
The Agreement sets forth the method of adjustments which may occur thereunder
as a result of corporate actions to the DJIA, such as stock splits or changes
in the identity of the component stocks.

For example, in the event of an Index Security change (in which the common
stock of one issuer held in the DJIA is replaced by the common stock of
another), the Trustee may sell all shares of the Security held in the
Portfolio corresponding to the old Index Security and use the proceeds of such
sale to purchase replacement Securities corresponding to the new Index
Security. If the share price of the removed Security was higher than the price
of its replacement Security, the Trustee will calculate how to allocate the
proceeds of the sale of the removed Security between purchase of the
replacement Security and purchases of additional shares of other Securities
currently held in the Portfolio so that the number of shares of each Security
in the Portfolio after the transactions would be as nearly equal as
practicable. If the share price of the removed Security was lower than the
price of the replacement Security, the Trustee will calculate the number of
shares of each of the other Securities currently held in the Portfolio that
must be sold in order to purchase enough shares of the replacement Security so
that the number of shares of each Security in the Portfolio after the
transactions would be as nearly equal as practicable.

In the event of a stock split, the price weighting of the stock which is
split will drop. The Trustee may make the corresponding Portfolio Adjustment
by selling the additional shares of the Security received from the stock
split. The Trustee may then use the proceeds of the sale to buy an equal
number of shares of each Security held in the Portfolio--including the
Security which had just experienced a stock split. In practice, of course, not
all the shares received in the split would be sold: enough of those shares
would be retained to make an increase in the number of split shares equal to
the increase in the number of shares in each of the other Securities held in
the Portfolio purchased with the proceeds of the sale of the remaining shares
resulting from such split.

As a result of the purchase and sale of Securities in accordance with these
requirements, or the creation of Creation Units, the Trust may hold some
amount of residual cash (other than cash held temporarily due to timing
differences between the sale and purchase of Securities, cash delivered in
lieu of Index Securities, undistributed income (including Dividend Equivalent
Payments), or undistributed capital gains) as a result of such transactions,
which amount shall not exceed for more than two (2) consecutive Business Days
5/10th of 1 percent of the aggregate value of

B-39
<PAGE>

the Securities. Cash in excess of such amounts will be used by the Trustee to
purchase additional Securities.

All adjustments to the Portfolio held by the Trustee shall be made by the
Trustee pursuant to the foregoing specifications and as set forth in the Trust
Agreement and shall be non-discretionary. All portfolio adjustments will be
made as described herein unless such adjustments would cause the Trust to lose
its status as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. Additionally, the Trustee is required to adjust the
composition of the Portfolio at any time if it is necessary to insure the
continued qualification of the Trust as a regulated investment company (see
"Tax Status of the Trust"). The adjustments provided herein are intended to
conform the composition of the Portfolio, to the extent practicable, to the
composition of the Index Securities. Such adjustments are based upon the DJIA
as it is currently determined by Dow Jones. To the extent that the method of
determining the DJIA is changed by Dow Jones in a manner that would affect the
adjustments provided for herein, the Trustee and the Sponsor shall have the
right to amend the Trust Agreement, without the consent of the Depository or
Beneficial Owners, to conform the adjustments provided herein and in the Trust
Agreement to such changes so that the objective of tracking the DJIA is
maintained.

In making the adjustments described herein, the Trustee shall rely on Dow
Jones for information as to the composition of the Index Securities. If the
Trustee becomes incapable of obtaining or processing such information or NSCC
is unable to receive such information from the Trustee on any Business Day,
then the Trustee shall use the composition and weightings of the Index
Securities for the most recently effective Portfolio Deposit for the purposes
of all adjustments and determinations described herein (including, without
limitation, determination of the securities portion of the Portfolio Deposit)
until the earlier of (a) such time as current information with respect to the
Index Securities is available or (b) three (3) consecutive Business Days have
elapsed. If such current information is not available and three (3)
consecutive Business Days have elapsed, the composition and weightings of the
Securities (as opposed to the Index Securities) shall be used for the purposes
of all adjustments and determinations herein (including, without limitation,
determination of the securities portion of the Portfolio Deposit) until
current information with respect to the Index Securities is available.

At such time as the Trustee gives written notice of the termination of the
Trust (see "Administration of the Trust--Termination"), from and after the
date of such notice the Trustee shall use the composition and weightings of
the Securities as of such notice date for the purpose and determination of all
redemptions or other required uses of the basket.

From time to time Dow Jones may make adjustments to the composition of the
DJIA as a result of a merger or acquisition involving one or more of the Index

B-40
<PAGE>

Securities. In such cases, the Trust, as shareholder of securities of an
issuer that is the object of such merger or acquisition activity, may receive
various offers from would-be acquirors of the issuer. The Trustee is not
permitted to accept any such offers until such time as it has been determined
that the securities of the issuer will be removed from the DJIA. Since
securities of an issuer are often removed from the DJIA only after the
consummation of a merger or acquisition of such issuer, in selling the
securities of such issuer the Trust may receive, to the extent that market
prices do not provide a more attractive alternative, whatever consideration is
being offered to the shareholders of such issuer that have not tendered their
shares prior to such time. Any cash received in such transactions will be
reinvested in Index Securities in proportion to the new composition of the
Index Securities in the DJIA. Any securities received as a part of the
consideration that are not Index Securities will be sold as soon as
practicable and the cash proceeds of such sale will be reinvested in
proportion to the new composition of the Index Securities in the DJIA.

Purchases and sales of Securities resulting from the adjustments described
above will be made in the share amounts dictated by the foregoing
specifications, whether round lot or odd lot. Certain Index Securities,
however, may at times not be available in the quantities that the foregoing
calculations require. For this and other reasons, precise duplication of the
proportionate relationship between the Portfolio and the Index Securities may
not ever be possible but nevertheless will continue to be the objective in
connection with all acquisitions and dispositions of Securities.

The Trust is a unit investment trust registered under the 1940 Act, and is
not a managed fund. Traditional methods of investment management for a managed
fund typically involve frequent changes to a portfolio of securities on the
basis of economic, financial and market analyses. The Portfolio held by the
Trust, however, is not managed. Instead, the only purchases and sales that are
made with respect to the Portfolio will be those necessary to create, to the
extent feasible, a portfolio that is designed to replicate the DJIA to the
extent practicable, taking into consideration the adjustments referred to
above. Since no attempt is made to "manage" the Trust in the traditional
sense, the adverse financial condition of an issuer will not be the basis for
the sale of its securities from the Portfolio unless the issuer is removed
from the DJIA.

The Trust will be liquidated on the fixed Mandatory Termination Date unless
terminated earlier under certain circumstances (see "Administration of the
Trust--Termination"). In addition, Beneficial Owners of DIAMONDS in Creation
Unit size aggregations have the right to redeem in kind (see "Redemption of
DIAMONDS").

Adjustments to the Portfolio Deposit

On each Business Day (each such day an "Adjustment Day"), the number of
shares and/or identity of each of the Index Securities in a Portfolio Deposit
is adjusted in accordance with the following procedure. At the close of the
market on each

B-41
<PAGE>

Adjustment Day, the Trustee calculates the net asset value of the Trust (see
"Valuation"). The net asset value is divided by the number of outstanding
DIAMONDS multiplied by 50,000 DIAMONDS in one Creation Unit, resulting in a
net asset value per Creation Unit (the "NAV Amount"). The Trustee then
calculates the number of shares of each of the component stocks of the DJIA in
a Portfolio Deposit for the following Business Day ("Request Day"), such that
(1) the market value at the close of the market on Adjustment Day of the
securities to be included in the Portfolio Deposit on Request Day, together
with the Cash Component or Cash Redemption Payment (defined below), as the
case may be, effective for requests to create or redeem on Adjustment Day,
equals the NAV Amount and (2) the securities in a Portfolio Deposit correspond
to the securities in the DJIA after the close of trading on Request Day. For
each security, the number resulting from such calculation is rounded down to
the nearest whole share. The securities so calculated constitute the
securities portion of the Portfolio Deposit effective on Request Day and
thereafter until the next subsequent Adjustment Day, as well as the Securities
to be delivered by the Trustee in the event of request for redemption of
DIAMONDS in Creation Unit size aggregations on Request Day and thereafter
until the following Adjustment Day (see "Redemption of DIAMONDS"). In addition
to the foregoing adjustments, in the event that there shall occur a stock
split, stock dividend or reverse split with respect to any Index Security that
results in an adjustment to the DJIA divisor, the Portfolio Deposit shall be
adjusted to take account of such stock split, stock dividend or reverse split.

On Request Day and on each day that a request for the creation or redemption
of DIAMONDS in Creation Unit size aggregations is deemed received, the Trustee
calculates the market value of the securities portion of the Portfolio Deposit
as in effect on Request Day as of the close of the market and adds to that
amount the Dividend Equivalent Payment effective for requests to create or
redeem on Request Day (such market value and Dividend Equivalent Payment are
collectively referred to herein as the "Portfolio Deposit Amount"). The
Trustee then calculates the NAV Amount, based on the close of the market on
Request Day. The difference between the NAV Amount so calculated and the
Portfolio Deposit Amount is the "Balancing Amount". The Balancing Amount
serves the function of compensating for any differences between the value of
the Portfolio Deposit Amount and the NAV Amount at the close of trading on
Request Day due to, for example, (1) differences in the market value of the
securities portion of the Portfolio Deposit and the market value of the
Securities on Request Day and (2) any variances in the composition of the
Portfolio Deposit from the composition of the Index.

As previously discussed, the Dividend Equivalent Payment and the Balancing
Amount in effect at the close of business on Request Date are collectively
referred to as the Cash Component or the Cash Redemption Payment (see
"Prospectus Summary--Portfolio Deposits" and "Prospectus Summary--
Redemption"). If the Balancing

B-42
<PAGE>

Amount is a positive number (i.e., if the NAV Amount exceeds the Portfolio
Deposit Amount) then, with respect to the creation of DIAMONDS, the Balancing
Amount shall increase the Cash Component of the then effective Portfolio
Deposit transferred to the Trustee by a creator, and with respect to
redemptions of DIAMONDS in Creation Unit size aggregations, the Balancing
Amount shall be added to the cash transferred to a redeemer by the Trustee. If
the Balancing Amount is a negative number (i.e., if the NAV Amount is less
than the Portfolio Deposit Amount) then, with respect to the creation of
DIAMONDS such amount shall decrease the Cash Component of the then effective
Portfolio Deposit to be transferred to the Trustee by the creator or, if such
cash portion is less than the Balancing Amount, the difference shall be paid
by the Trustee to the creator, and with respect to redemptions of DIAMONDS in
Creation Unit size aggregations, the Balancing Amount shall be deducted from
the cash transferred to the redeemer or, if such cash is less than the
Balancing Amount, the difference shall be paid by the redeemer to the Trustee.

In the event that the Trustee has included the cash equivalent value of one
or more Index Securities in the Portfolio Deposit because the Trustee has
determined that such Index Securities are likely to be unavailable or
available in insufficient quantity for delivery, the Portfolio Deposit so
constituted shall dictate the Index Securities to be delivered in connection
with the creation of DIAMONDS in Creation Unit size aggregations and upon the
redemption of DIAMONDS in Creation Unit size aggregations for all purposes
hereunder until such time as the securities portion of the Portfolio Deposit
is subsequently adjusted.

In connection with the creation or redemption of DIAMONDS, if an investor is
restricted by regulation or otherwise from investing or engaging in a
transaction in one or more Index Securities, the Trustee, in its discretion,
shall have the right to include the cash equivalent value of such Index
Securities in the Portfolio Deposit as part of the Cash Component (or the Cash
Redemption Payment, as the case may be) in lieu of the inclusion of such Index
Securities in the securities portion of the Portfolio Deposit for the
particular affected investor. The amount of such cash equivalent payment may
require the Trustee to purchase the appropriate number of shares of the Index
Security that such investor was unable to purchase. In any such case such
investor shall pay the Trustee the standard Transaction Fee, plus an
additional amount not to exceed three (3) times the Transaction Fee applicable
for a Creation Unit.

The Trustee, in its discretion, upon the request of the redeeming investor,
may redeem Creation Units in whole or in part by providing such redeemer with
a portfolio of Securities differing in exact composition from the Index
Securities but not differing in net asset value from the then-current
Portfolio Deposit. Such a redemption might be made, for example, if it were to
be determined that this composition would be appropriate in order to maintain
the Trust Portfolio correlation to the price-weighted composition of the DJIA
(i.e. an equal number of shares of each component stock), for instance when a
stock split in one of the DJIA Index Securities occurs.

B-43
<PAGE>

Selection and Acquisition of Securities

In prescribing the method described above for selecting the Index Securities
that constitute the prescribed Portfolio Deposit from time to time, the
Sponsor intends to duplicate, to the extent practicable, the component
securities of the DJIA as of the relevant date.

The yield and price of common stocks deposited in the Trust are dependent on
a variety of factors, including money market conditions and general conditions
of the corporate equity markets. The Schedule of Investments set forth above
in Part B of this Prospectus contains information as of the date set forth
therein with respect to the number of shares of each of the Index Securities
in the Portfolio Deposit as of such date. The proportionate relationship among
such Securities approximated (although it did not exactly duplicate) the
proportionate relationships of the Index Securities as of such date.

Because certain of the Securities from time to time may be sold or may
otherwise be changed under certain circumstances as described herein, no
assurance can be given that the Trust will retain for any length of time its
present size and composition (see "The Portfolio--Adjustments to the
Portfolio"). Also, the deposit of additional Portfolio Deposits and the
redemption of DIAMONDS in Creation Unit size aggregations will affect the size
and composition of the Trust. Neither the Sponsor nor the Trustee shall be
liable in any way for any default, failure or defect in any of the Securities.

THE DJIA

The Sponsor selected the DJIA as the basis for the selection of the
securities held by the Trust because it is well known to investors and
contains some of the most well known, liquid and highly capitalized companies
in the U.S. Many of the stocks in the DJIA are household names.

The DJIA was first published in 1896. Initially comprised of 12 companies,
the DJIA has evolved into the most recognizable stock indicator in the world,
and the only index composed of companies that have sustained earnings
performance over a significant period of time. In its second century, the DJIA
is the oldest continuous barometer of the U.S. stock market, and the most
widely quoted indicator of U.S. stock market activity.

The 30 stocks now comprising the DJIA are all leaders in their respective
industries, and their stocks are widely held by individuals and institutional
investors. These stocks represent more than one-quarter of the $15 trillion-
plus market value of all US stocks and more than one-quarter of the value of
stocks listed on the New York Stock Exchange.

B-44
<PAGE>

The Sponsor has been granted a license to use the DJIA as a basis for
determining the composition of the Trust and to use certain trademarks of Dow
Jones in connection with the Trust (see "License Agreement"). Dow Jones is not
responsible for and shall not participate in the creation or sale of DIAMONDS
or in the determination of the timing of, prices at, or quantities and
proportions in which purchases or sales of Index Securities or Securities
shall be made. The information in this Prospectus concerning Dow Jones and the
DJIA has been obtained from sources that the Sponsor believes to be reliable,
but the Sponsor takes no responsibility for the accuracy of such information.

The following table shows the actual performance of the DJIA for the years
1896 through 1999. Stock prices fluctuated widely during this period and were
higher at the end than at the beginning. The results shown should not be
considered as a representation of the income yield or capital gain or loss
that may be generated by the DJIA in the future, nor should the results be
considered as a representation of the performance of the Trust.

<TABLE>
<CAPTION>
Year DJIA Point Year % %
Ended Close Change Change Divs Yield
- ----- --------- -------- ------ ------ -----
<S> <C> <C> <C> <C> <C>
1999................................... 11,497.12 2,315.69 25.2% 168.52 1.47%
1998................................... 9,181.43 1,273.18 16.1 151.13 1.65
1997................................... 7,908.25 1,459.98 22.6 136.10 1.72
1996................................... 6,448.27 1,331.20 26.0 131.14 2.03
1995................................... 5,117.12 1,282.70 33.5 116.56 2.28
1994................................... 3,834.44 80.3 2.1 105.66 2.76
1993................................... 3,754.09 453 13.7 99.66 2.65
1992................................... 3,301.11 132.3 4.2 100.72 3.05
1991................................... 3,168.83 535.2 20.3 95.18 3.00
1990................................... 2,633.66 - 119.5 - 4.3 103.7 3.94
1989................................... 2,753.20 584.6 27.0 103 3.74
1988................................... 2,168.57 229.7 11.8 79.53 3.67
1987................................... 1,938.83 42.9 2.3 71.2 3.67
1986................................... 1,895.95 349.3 22.6 67.04 3.54
1985................................... 1,546.67 335.1 27.7 62.03 4.01
1984................................... 1,211.57 - 47.1 - 3.7 60.63 5.00
1983................................... 1,258.64 212.1 20.3 56.33 4.48
1982................................... 1,046.54 171.5 19.6 54.14 5.17
1981................................... 875 - 89 - 9.2 56.22 6.43
1980................................... 963.99 125.3 14.9 54.36 5.64
1979................................... 838.74 33.7 4.2 50.98 6.08
1978................................... 805.01 - 26.2 - 3.1 48.52 6.03
1977................................... 831.17 - 173.5 - 17.3 45.84 5.52
1976................................... 1,004.65 152.2 17.9 41.4 4.12
1975................................... 852.41 236.2 38.3 37.46 4.39
1974................................... 616.24 - 234.6 - 27.6 37.72 6.12
1973................................... 850.86 - 169.2 - 16.6 35.33 4.15
1972................................... 1,020.02 129.8 14.6 32.27 3.16
</TABLE>

B-45
<PAGE>

<TABLE>
<CAPTION>
Year DJIA Point Year % %
Ended Close Change Change Divs Yield
- ----- ------ ------- ------ ----- -----
<S> <C> <C> <C> <C> <C>
1971........................................ 890.2 51.3 6.1% 30.86 3.47%
1970........................................ 838.92 38.6 4.8 31.53 3.76
1969........................................ 800.36 - 143.4 - 15.2 33.9 4.24
1968........................................ 943.75 38.6 4.3 31.34 3.32
1967........................................ 905.11 119.4 15.2 30.19 3.344
1966........................................ 785.69 - 183.6 - 18.9 31.89 4.06
1965........................................ 969.26 95.1 10.9 28.61 2.95
1964........................................ 874.13 111.2 14.6 31.24 3.57
1963........................................ 762.95 110.9 17.0 23.41 3.07
1962........................................ 652.1 - 79 - 10.8 23.3 3.57
1961........................................ 731.14 115.3 18.7 22.71 3.11
1960........................................ 615.89 - 63.5 - 9.3 21.36 3.47
1959........................................ 679.36 95.7 16.4 20.74 3.05
1958........................................ 583.65 148 34.0 20 3.43
1957........................................ 435.69 - 63.8 - 12.8 21.61 4.96
1956........................................ 499.47 11.1 2.3 22.99 4.60
1955........................................ 488.4 84 20.8 21.58 4.42
1954........................................ 404.39 123.5 44.0 17.47 4.32
1953........................................ 280.9 - 11 - 3.8 16.11 5.74
1952........................................ 291.9 22.7 8.4 15.43 5.29
1951........................................ 269.23 33.8 14.4 16.34 6.07
1950........................................ 235.41 35.3 17.6 16.13 6.85
1949........................................ 200.13 22.8 12.9 12.79 6.39
1948........................................ 177.3 - 3.9 - 2.1 11.5 6.49
1947........................................ 181.16 4 2.2 9.21 5.08
1946........................................ 177.2 - 15.7 - 8.1 7.5 4.23
1945........................................ 192.91 40.6 26.6 6.69 3.47
1944........................................ 152.32 16.4 12.1 6.57 4.31
1943........................................ 135.89 16.5 13.8 6.3 4.64
1942........................................ 119.4 8.4 7.6 6.4 5.36
1941........................................ 110.96 - 20.2 - 15.4 7.59 6.84
1940........................................ 131.13 - 19.1 - 12.7 7.06 5.38
1939........................................ 150.24 - 4.5 - 2.9 6.11 4.07
1938........................................ 154.76 33.9 28.1 4.98 3.22
1937........................................ 120.85 - 59.1 - 32.8 8.78 7.27
1936........................................ 179.9 35.8 24.8 7.05 3.92
1935........................................ 144.13 40.1 38.5 4.55 3.16
1934........................................ 104.04 4.1 4.1 3.66 3.52
1933........................................ 99.9 40 66.7 3.4 3.40
1932........................................ 59.93 - 18 - 23.1 4.62 7.71
1931........................................ 77.9 - 86.7 - 52.7 8.4 10.78
1930........................................ 164.58 - 83.9 - 33.8 11.13 6.76
1929........................................ 248.48 - 51.5 - 17.2 12.75 5.13
1928........................................ 300 97.6 48.2 NA NA
1927........................................ 202.4 45.2 28.8 NA NA
1926........................................ 157.2 0.5 0.3 NA NA
</TABLE>

B-46
<PAGE>

<TABLE>
<CAPTION>
Year DJIA Point Year % %
Ended Close Change Change Divs Yield
- ----- ------ ------ ------ ---- -----
<S> <C> <C> <C> <C> <C>
1925........................................... 156.66 36.2 30.0% NA NA
1924........................................... 120.51 25 26.2 NA NA
1923........................................... 95.52 - 3.2 - 3.3 NA NA
1922........................................... 98.73 17.6 21.7 NA NA
1921........................................... 81.1 9.1 12.7 NA NA
1920........................................... 71.95 - 35.3 - 32.9 NA NA
1919........................................... 107.23 25 30.5 NA NA
1918........................................... 82.2 7.8 10.5 NA NA
1917........................................... 74.38 - 20.6 - 21.7 NA NA
1916........................................... 95 - 4.2 - 4.2 NA NA
1915........................................... 99.15 44.6 81.7 NA NA
1914........................................... 54.58 - 24.2 - 30.7 NA NA
1913........................................... 78.78 - 9.1 - 10.3 NA NA
1912........................................... 87.87 6.2 7.6 NA NA
1911........................................... 81.68 0.3 0.4 NA NA
1910........................................... 81.36 - 17.7 - 17.9 NA NA
1909........................................... 99.05 12.9 15.0 NA NA
1908........................................... 86.15 27.4 46.6 NA NA
1907........................................... 58.75 - 35.6 - 37.7 NA NA
1906........................................... 94.35 - 1.9 - 1.9 NA NA
1905........................................... 96.2 26.6 38.2 NA NA
1904........................................... 69.61 20.5 41.7 NA NA
1903........................................... 49.11 - 15.2 - 23.6 NA NA
1902........................................... 64.29 - 0.3 - 0.4 NA NA
1901........................................... 64.56 - 6.1 - 8.7 NA NA
1900........................................... 70.71 4.6 7.0 NA NA
1899........................................... 66.08 5.6 9.2 NA NA
1898........................................... 60.52 11.1 22.5 NA NA
1897........................................... 49.41 9 22.2 NA NA
1896........................................... 40.45 NA NA NA NA
</TABLE>

- -----------
* Source: Dow Jones. Year-end index values shown do not reflect reinvestment
of dividends nor costs, such as brokerage charges and transaction costs.
** Source: Dow Jones. Yields are obtained by dividing the sum of the then most
recent four quarters' cash dividends per share of each of the component
stocks in the DJIA by the sum of the prices at year end of the component
stocks in the DJIA.

The DJIA is a price-weighted stock index, meaning that the component stocks
of the DJIA are accorded relative importance based on their prices. In this
regard, the DJIA is unlike many other stock indexes which weight their
component stocks by market capitalization (price times shares outstanding).
The DJIA is called an "average" because originally it was calculated by adding
up the component stock prices and then dividing by the number of stocks. The
method remains the same today, but the number of significant digits in the
divisor (the number that is divided into the total of the stock prices) has
been increased to eight significant digits to minimize

B-47
<PAGE>

distortions due to rounding and has been adjusted over time to insure
continuity of the DJIA after component stock changes and corporate actions, as
discussed below.

The DJIA divisor is adjusted due to corporate actions that change the price
of any of its component shares. The most frequent reason for such an
adjustment is a stock split. For example, suppose a company in the DJIA issues
one new share for each share outstanding. After this two-for-one "split," each
share of stock is worth half what it was immediately before, other things
being equal. But without an adjustment in the divisor, this split would
produce a distortion in the DJIA. An adjustment must be made to compensate so
that the "average" will remain unchanged. At Dow Jones, this adjustment is
handled by changing the divisor.* The formula used to calculate divisor
adjustments is:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Adjusted Sum Unadjusted Sum
New Divisor = Current Divisor x of Prices / of Prices
</TABLE>

Changes in the composition of the DJIA are made entirely by the editors of
The Wall Street Journal without consultation with the companies, the
respective stock exchange, or any official agency. Additions or deletions of
components may be made to achieve better representation of the broad market
and of American industry.

In selecting components for the DJIA, the following criteria are used: 1)
the company is not a utility or in the transportation business; 2) the company
has a premier reputation in its field; 3) the company has a history of
successful growth; and 4) there is wide interest among individual and
institutional investors. Whenever one component is changed, the others are
reviewed. For the sake of historical continuity, composition changes are made
rarely.

Dow Jones & Co. announced the following changes in the components of the
DJIA, effective with trading Monday, November 1, 1999.

Companies removed were:

.Union Carbide Corp., which had been in the DJIA since 1928.

.Goodyear Tire & Rubber Co., which had been in the DJIA since 1930.

.Sears, Roebuck & Co., which had been in the DJIA since 1924.

.Chevron, formerly Standard Oil Company of California, which had been in
the DJIA since 1930.

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

* Currently, the divisor is adjusted after the close of business on the day
prior to the occurrence of the split; the divisor is not adjusted for
regular cash dividends.

B-48
<PAGE>

Companies added were:

.Home Depot Inc.

.Intel Corp.

.Microsoft Corp.

.SBC Communications

LICENSE AGREEMENT

Under the terms of a license agreement with Dow Jones (the "License
Agreement"), the Sponsor and the Exchange have been granted a license to use
the DJIA as a basis for determining the composition of the Trust and to use
certain trade names, trademarks and service marks of Dow Jones in connection
with the Trust. The License Agreement may be amended by the parties thereto
without the consent of any of the Beneficial Owners of DIAMONDS. Currently,
the License Agreement is scheduled to expire five years from the commencement
date of trading of DIAMONDS, in accordance with its terms and is subject to a
five year renewal period following such date. The parties thereto may extend
the term of the License Agreement beyond such date without the consent of any
of the Beneficial Owners of DIAMONDS.

None of the Trust, the Trustee, the Distributor, the Depository or any
Beneficial Owner of DIAMONDS is entitled to any rights whatsoever under the
foregoing licensing arrangements or to use the trademarks and service marks
"Dow Jones", "DIAMONDS", "THE DOW INDUSTRIALS", "The Dow", "DJIA" or "Dow
Jones Industrial Average", or to use the DJIA except as specifically described
herein or as may be specified in the Trust Agreement.

The Trust is not sponsored, endorsed, sold or promoted by Dow Jones. Dow
Jones makes no representation or warranty, express or implied, to the
Beneficial Owners of DIAMONDS or any member of the public regarding the
advisability of investing in securities generally or in the Trust
particularly. Dow Jones' only relationship to the Sponsor, the Exchange and
the Trust is the licensing of certain trademarks, trade names and service
marks of Dow Jones and of the DJIA which is determined, composed and
calculated by Dow Jones without regard to the Sponsor, the Exchange, the Trust
or the Beneficial Owners of DIAMONDS. Dow Jones has no obligation to take the
needs of the Sponsor, the Exchange, the Trust or the Beneficial Owners of
DIAMONDS into consideration in determining, comprising or calculating the
DJIA. Dow Jones is not responsible for and has not participated in the
determination of the timing of, prices at or quantities of the DIAMONDS to be
issued or in the determination or calculation of the equation by which the
DIAMONDS are to be redeemed. Dow Jones has no obligation or liability in
connection with the administration, marketing or trading of DIAMONDS.

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<PAGE>

DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DJIA OR ANY DATA INCLUDED THEREIN AND DOW JONES SHALL HAVE NO LIABILITY FOR
ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY,
EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, THE EXCHANGE,
THE TRUST, BENEFICIAL OWNERS OF DIAMONDS OR ANY OTHER PERSON OR ENTITY FROM
THE USE OF THE DJIA OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS
OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, WITH RESPECT TO
THE DJIA OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT SHALL DOW JONES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR
INDIRECT, PUNITIVE SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THERE ARE NO THIRD PARTY
BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN DOW JONES, THE SPONSOR
AND THE EXCHANGE.

EXCHANGE LISTING

As described above, DIAMONDS are listed on the Exchange. Transactions
involving DIAMONDS in the public trading market are subject to customary
brokerage charges and commissions.

The Sponsor's aim in designing DIAMONDS was to provide investors with a
security whose initial market value would approximate one-hundredth ( 1/100th)
the value of the DJIA. Thus, for example, if the DJIA were at 7500, investors
might expect a DIAMONDS Unit to trade at approximately $75. Note, however,
that the market price of a DIAMONDS Unit should also reflect its share of the
dividends accumulated on the Securities (see "Administration of the Trust,
Distributions to Beneficial Owners") and may also be affected by supply and
demand, market volatility, sentiment and other factors.

There can be no assurance that DIAMONDS will always be listed on the
Exchange. The Exchange will consider the suspension of trading in or removal
from listing of DIAMONDS:

(a) if the Trust has more than 60 days remaining until termination and
there are fewer than 50 record and/or beneficial holders of DIAMONDS for
30 or more consecutive trading days;

(b) if the DJIA is no longer calculated or available; or

B-50
<PAGE>

(c) if such other event shall occur or condition exists which, in the
opinion of the Exchange, makes further dealings on the Exchange
inadvisable.

The Trust is not required to pay a listing fee to the Exchange.

The Trust will be terminated in the event that DIAMONDS are delisted (see
"Administration of the Trust--Termination").

TAX STATUS OF THE TRUST

For the fiscal year ended October 31, 1999, the Trust believes that it
qualified for tax treatment as a "regulated investment company" under
Subchapter M of the Code. The Trust intends to continue to so qualify. To
qualify as a regulated investment company, the Trust must, among other things,
(a) derive in each taxable year at least 90% of its gross income from
dividends, interest, gains from the sale or other disposition of stock,
securities or foreign currencies, or certain other sources, (b) meet certain
diversification tests, and (c) distribute in each year at least 90% of its
investment company taxable income. If the Trust qualifies as a regulated
investment company, subject to certain conditions and requirements, the Trust
will not be subject to federal income tax to the extent its income is
distributed in a timely manner. Any undistributed income may be subject to
tax, including a four percent (4%) excise tax imposed by section 4982 of the
Code on certain undistributed income of a regulated investment company that
does not distribute to shareholders in a timely manner at least ninety-eight
percent (98%) of its taxable income (including capital gains).

Tax Consequences to Beneficial Owners

Dividends paid by the Trust from its investment company taxable income
(which includes dividends, interest and the excess of net short-term capital
gains over net long-term capital losses) will be taxable to Beneficial Owners
as ordinary income. A dividend paid in January will be considered for federal
income tax purposes to have been paid by the Trust and received by Beneficial
Owners on the preceding December 31 if the dividend was declared in the
preceding October, November or December to Beneficial Owners of record shown
on the records of the Depository and the DTC Participants (see "The Trust--
Book Entry Only System") on a date in one of those months.

Distributions paid by the Trust from the excess of net long-term capital
gains over net short-term capital losses are considered "capital gains
dividends" regardless of the length of time an investor has owned DIAMONDS.
Any loss on the sale or exchange of a share held for six months or less may be
treated as a long-term capital loss to the extent of any capital gain
dividends received by the Beneficial Owner. For corporate investors, dividends
from net investment income (but not return of capital distributions or capital
gain dividends) generally will qualify for the corporate

B-51
<PAGE>

dividends-received deduction to the extent of qualifying dividend income
received by the Trust, subject to the limitations contained in the Code.
Investors should note that the regular monthly dividends paid by the Trust
will not be based on the Trust's investment company taxable income and net
capital gain, but rather will be based on the dividends paid with respect to
the Securities. As a result, a portion of the distributions of the Trust may
be treated as a return of capital or a capital gain dividend for federal
income tax purposes or the Trust may make additional distributions in excess
of the yield performance of the Securities in order to distribute all of its
investment company taxable income and net capital gain.

Distributions in excess of the Trust's current or accumulated earnings and
profits (as specially computed) generally will be treated as a return of
capital for federal income tax purposes and will reduce a Beneficial Owner's
tax basis in DIAMONDS. Return of capital distributions may result, for
example, if a portion of the dividends declared represents cash amounts
deposited in connection with Portfolio Deposits rather than dividends actually
received by the Trust. Under certain circumstances, a significant portion of
the Trust's regular monthly dividends could be treated as return of capital
distributions. Such circumstances may be more likely to occur in periods
during which the number of outstanding DIAMONDS fluctuates significantly, as
may occur during the initial years of the Trust. Beneficial Owners will
receive annually notification from the Trustee through the DTC Participants as
to the tax status of the Trust's distributions (see "The Trust--Book-Entry-
Only System"). A distribution paid shortly after a purchase or creation of
DIAMONDS may be taxable even though in effect it may represent a return of
capital.

Distributions reinvested in additional DIAMONDS through the means of the
Service (see "Dividend Reinvestment Service") will nevertheless be taxable
dividends to Beneficial Owners acquiring such additional DIAMONDS to the same
extent as if such dividends had been received in cash.

The sale of DIAMONDS by a Beneficial Owner is a taxable event, and may
result in a gain or loss, which generally should be a capital gain or loss for
Beneficial Owners that are not dealers in securities. Capital gains realized
by non-corporate taxpayers are generally taxable at a maximum rate of 20% if
the taxpayer has a holding period of more than twelve months.

Under the Code, an in-kind redemption of DIAMONDS will not result in the
recognition of taxable gain or loss by the Trust but generally will constitute
a taxable event for the redeeming shareholder. Upon redemption, a Beneficial
Owner generally will recognize gain or loss measured by the difference on the
date of redemption between the aggregate value of the cash and securities
received and its tax basis in the DIAMONDS redeemed. Securities received upon
redemption (which will generally be comprised of the securities portion of the
Portfolio Deposit in effect on the date of

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<PAGE>

redemption) generally will have an initial tax basis equal to their respective
market values on the date of redemption. The Internal Revenue Service ("IRS")
may assert that any resulting loss may not be deducted by a Beneficial Owner
on the basis that there has been no material change in such Beneficial Owner's
economic position or that the transaction has no significant economic or
business utility apart from the anticipated tax consequences. Beneficial
Owners of DIAMONDS in Creation Unit size aggregations should consult their own
tax advisors as to the consequences to them of the redemption of DIAMONDS.

Dividend distributions, capital gains distributions, and capital gains from
sales or redemptions may also be subject to state, local and foreign taxes.

Deposit of a Portfolio Deposit with the Trustee in exchange for DIAMONDS in
Creation Unit size aggregations will not result in the recognition of taxable
gain or loss by the Trust but generally will constitute a taxable event to the
depositor under the Code, and a depositor generally will recognize gain or
loss with respect to each security deposited equal to the difference between
the amount realized in respect of the security and the depositor's tax basis
therein. The amount realized with respect to a security deposited should be
determined by allocating the value on the date of deposit of the DIAMONDS
received (less any cash paid to the Trust, or plus any cash received from the
Trust, in connection with the deposit) among the securities deposited on the
basis of their respective fair market values at that time. The IRS may assert
that any resulting losses may not be deducted by a depositor on the basis that
there has been no material change in the depositor's economic position or that
the transaction has no significant economic or business utility or purpose
apart from the anticipated tax consequences. Depositors should consult their
own tax advisors as to the tax consequences to them of a deposit to the Trust.

The Trustee has the right to reject the order to create Creation Units
transmitted to it by the Distributor if the depositor or group of depositors,
upon obtaining the DIAMONDS ordered, would own eighty percent (80%) or more of
the outstanding DIAMONDS, and if pursuant to section 351 of the Code such a
circumstance would result in the Trust having a basis in the securities
deposited different from the market value of such securities on the date of
deposit. The Trustee has the right to require information regarding DIAMONDS
Unit ownership pursuant to the Participant Agreement and from the Depository
and to rely thereon to the extent necessary to make the foregoing
determination as a condition to the acceptance of a Portfolio Deposit.

Ordinary income dividends received via the Depository by Beneficial Owners
who are non-resident aliens will be subject to a thirty percent (30%) United
States withholding tax unless a reduced rate of withholding or a withholding
exemption is provided under applicable tax treaties. Non-resident shareholders
are urged to consult their own tax advisors concerning the applicability of
United States withholding tax.

B-53
<PAGE>

Backup withholding at a rate of 31% will apply to dividends, capital gain
distributions, redemptions and sales of DIAMONDS unless (a) the Beneficial
Owner is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (b) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. The amount of any backup withholding from a payment to a
Beneficial Owner will be allowed as a credit against the holder's U.S. federal
income tax liability and may entitle such holder to a refund from the U.S.
Internal Revenue Service, provided that the required information is furnished
to the U.S. Internal Revenue Service.

The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisors concerning the
federal, state, local and foreign tax consequences to them of an investment in
the Trust, including the effect of possible legislative changes.

CONTINUOUS OFFERING OF DIAMONDS

DIAMONDS in Creation Unit size aggregations are offered continuously to the
public by the Trust through the Distributor and are delivered upon the deposit
of a Portfolio Deposit (see "The Trust--Procedure for Creation of Creation
Units"). A list of the identity and number of shares of each of the Index
Securities in the current Portfolio Deposit and the amount of the Dividend
Equivalent Payment effective through and including the previous Business Day
is made available by the Trustee to NSCC on each Business Day. Under certain
extraordinary circumstances which may make it impossible for the Trustee to
provide such information to NSCC on a given Business Day, NSCC shall use the
composition and weighting of the Index Securities for the most recently
effective Portfolio Deposit. The minimum number of DIAMONDS that may be
created as described herein is 50,000 or one Creation Unit. Persons making
Portfolio Deposits and creating Creation Unit aggregations of DIAMONDS will
receive no fees, commissions or other form of compensation or inducement of
any kind from the Sponsor or the Distributor, nor will any such person have
any obligation or responsibility to the Sponsor or Distributor to effect any
sale or resale of DIAMONDS.

Because new DIAMONDS can be created and issued on an ongoing basis, at any
point during the life of the Trust a "distribution", as such term is used in
the Securities Act of 1933, may be occurring. Broker-dealers and other persons
are cautioned that some activities on their part may, depending on the
circumstances, result in their being deemed participants in a distribution in
a manner which could render them statutory underwriters and subject them to
the prospectus-delivery and liability provisions of the Securities Act. For
example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing a

B-54
<PAGE>

creation order with the Distributor, breaks them down into the constituent
DIAMONDS and sells the DIAMONDS directly to its customers; or if it chooses to
couple the creation of a supply of new DIAMONDS with an active selling effort
involving solicitation of secondary market demand for DIAMONDS. A
determination of whether one is an underwriter must take into account all the
facts and circumstances pertaining to the activities of the broker-dealer or
its client in the particular case, and the examples mentioned above should not
be considered a complete description of all the activities that could lead to
categorization as an underwriter.

Dealers who are not "underwriters" but are participating in a distribution
(as contrasted to ordinary secondary trading transactions), and thus dealing
with DIAMONDS that are part of an "unsold allotment" within the meaning of
Section 4(3)(C) of the Securities Act, would be unable to take advantage of
the prospectus-delivery exemption provided by Section 4(3) of the Securities
Act. Firms that do incur a prospectus delivery obligation with respect to
DIAMONDS are reminded that under Securities Act rule 153, a prospectus-
delivery obligation under Section 5(b)(2) of the Act owed to an Exchange
member in connection with a sale on the Exchange is satisfied by the fact that
DIAMONDS prospectuses will be available at the Exchange upon request. Of
course, the prospectus-delivery mechanism provided in rule 153 is only
available with respect to transactions on an exchange.

The Sponsor intends to qualify DIAMONDS in states selected by the Sponsor
and through broker-dealers who are members of the National Association of
Securities Dealers, Inc. Investors intending to create or redeem Creation Unit
size aggregations of DIAMONDS in transactions not involving a broker-dealer
registered in such investor's state of domicile or residence should consult
counsel regarding applicable broker-dealer or securities regulatory
requirements under such state securities laws prior to such creation or
redemption.

EXPENSES OF THE TRUST

Until further notice, the Sponsor has undertaken that the ordinary operating
expenses of the Trust as calculated by the Trustee will not be permitted to
exceed an amount which is 18/100 of 1% (0.18%) per annum of the daily net
asset value of the Trust after taking into account any expense offset credits.
To the extent during such period the ordinary operating expenses of the Trust
do exceed such 0.18% amount, the Sponsor will reimburse the Trust for or
assume such excess ordinary operating expenses. See "Statement of Operations
for the Period Ended October 31, 1999" and the accompanying notes for a
discussion of the amount of the Sponsor's reimbursement to the Trust. The
Sponsor retains the ability to be repaid by the Trust for expenses so
reimbursed or assumed to the extent that subsequently during the year expenses
fall below the 0.18% per annum level on any given day. For purposes of this
undertaking by the Sponsor, ordinary operating expenses of the Trust shall not

B-55
<PAGE>

include taxes, brokerage commissions and, of course, such extraordinary non-
recurring expenses as may arise, including without limitation the cost of any
litigation to which the Trust or Trustee may be a party. The Sponsor may
discontinue this undertaking or renew it for a specified period of time, or
may choose to reimburse or assume certain Trust expenses in later periods in
order to keep Trust expenses at a level it believes to be attractive to
investors, but is not obligated to do so. In any event, it is possible that,
on any day and during any period over the life of the Trust, total fees and
expenses of the Trust may exceed 0.18% per annum.

Ordinary operating expenses of the Trust are currently being accrued at an
annual rate of 0.1765%; future accruals will depend primarily on the level of
the Trust's net assets and the level of Trust expenses. There is no guarantee
that the Trust's ordinary operating expenses will not exceed 0.1765% of the
Trust's daily net asset value and such rate may be changed without notice. See
"Expenses of the Trust" in Part A of this Prospectus.

Subject to any applicable cap, the Sponsor reserves the right to charge the
Trust a special sponsor fee from time to time in reimbursement for certain
services it may provide to the Trust which would otherwise be provided by the
Trustee in an amount not to exceed the actual cost of providing such services.
The Sponsor or the Trustee from time to time may voluntarily assume some
expenses or reimburse the Trust so that total expenses of the Trust are
reduced, although neither the Sponsor nor the Trustee is obligated to do so
and either one or both parties may discontinue such voluntary assumption of
expenses or reimbursement at any time without notice.

The following charges are or may be accrued and paid by the Trust: (a) the
Trustee's fee as discussed more fully below, (b) fees payable to transfer
agents for the provision of transfer agency services; (c) fees of the Trustee
for extraordinary services performed under the Trust Agreement; (d) various
governmental charges; (e) any taxes, fees and charges payable by the Trustee
with respect to DIAMONDS (whether in Creation Unit size aggregations or
otherwise); (f) expenses and costs of any action taken by the Trustee or the
Sponsor to protect the Trust and the rights and interests of Beneficial Owners
of DIAMONDS (whether in Creation Unit size aggregations or otherwise); (g)
indemnification of the Trustee or the Sponsor for any losses, liabilities or
expenses incurred by it in the administration of the Trust without gross
negligence, bad faith, wilful misconduct or wilful malfeasance on its part or
reckless disregard of its obligations and duties; (h) expenses incurred in
contacting Beneficial Owners of DIAMONDS during the life of the Trust and upon
termination of the Trust; and (i) other out-of-pocket expenses of the Trust
incurred pursuant to actions permitted or required under the Trust Agreement.

In addition to the specific expenses discussed above, the following expenses
are or may be charged to the Trust: (a) reimbursement to the Sponsor of
amounts paid by it to Dow Jones in respect of annual licensing fees pursuant
to the License Agreement (see "License Agreement"), (b) federal and state
annual registration fees for the issuance of DIAMONDS, and (c) expenses of the
Sponsor relating to the printing and

B-56
<PAGE>

distribution of marketing materials describing DIAMONDS and the Trust
(including, but not limited to, associated legal, consulting, advertising, and
marketing costs and other out-of-pocket expenses such as printing). In
addition, initial fees and expenses totaling approximately $2,300,000, in
connection with the organization of the Trust, are being capitalized and
amortized over five years from the start of the Trust's operations on a
straight-line basis and charged to the Trust, unless the Trust is sooner
terminated or if by law or regulation the Trust is required to amortize such
costs over a shorter period of time. In such cases, the Trustee shall follow
the requisite time period for such amortization. Pursuant to the provisions of
an exemptive order, the expenses set forth in this paragraph may be charged to
the Trust by the Trustee in an amount equal to the actual costs incurred, but
in no case shall such charges exceed 20/100 of 1% (0.20%) per annum of the
daily net asset value of the Trust.

If the income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to cover Trust expenses, the
Trustee may make advances to the Trust to cover such expenses; otherwise the
Trustee may sell Securities in an amount sufficient to pay such expenses. The
Trustee may reimburse itself in the amount of any such advance, together with
interest thereon at a percentage rate equal to the then current overnight
federal funds rate, by deducting such amounts from (1) dividend payments or
other income of the Trust when such payments or other income is received, (2)
the amounts earned or benefits derived by the Trustee on cash held by the
Trustee for the benefit of the Trust, and (3) the sale of Securities.
Notwithstanding the foregoing, in the event that any advance remains
outstanding for more than forty-five (45) Business Days, the Trustee may sell
Securities to reimburse itself for the amount of such advance and any accrued
interest thereon. Such advances will be secured by a lien on the assets of the
Trust in favor of the Trustee. The expenses of the Trust are reflected in the
net asset value of the Trust (see "Valuation").

For services performed under the Trust Agreement, the Trustee is paid by the
Trust a fee at an annual rate of 11/100 of 1% to 15/100 of 1% of the net asset
value of the Trust, as shown below, such percentage amount to vary depending
on the net asset value of the Trust, plus or minus the Adjustment Amount (as
hereinafter defined). Such compensation is computed on each Business Day on
the basis of the net asset value of the Trust on such day, and the amount
thereof is accrued daily and paid quarterly. Notwithstanding the fee schedule
set forth in the table below, in the fourth year of the Trust's operation and
in subsequent years, the Trustee shall be paid a minimum fee of $400,000 per
annum as adjusted by the CPI-U to take effect at the beginning of the fourth
year and each year thereafter. To the extent that the amount of the Trustee's
compensation, prior to any adjustment in respect of the Adjustment Amount, is
less than specified amounts, the Sponsor has agreed to pay the amount of any
such shortfall. The Trustee, in its discretion, may also waive all or a
portion of such fee. See "Statement of Operations for the Period Ended October
31, 1999" and the accompanying notes for a discussion of the Trustee's waiver.

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<PAGE>

TRUSTEE FEE SCALE

<TABLE>
<CAPTION>
Net Asset Value Fee as a Percentage of Net
of the Trust Asset Value of the Trust
--------------- --------------------------
<C> <S>
$0-$499,999,999.......... 15/100 of 1% per annum plus or minus the Adjustment
Amount*
$500,000,000- 13/100 of 1% per annum plus or minus the Adjustment
$999,999,999........... Amount**
$1,000,000,000 and above. 11/100 of 1% per annum plus or minus the Adjustment
Amount**
</TABLE>
- -----------
* During the first two years of operation of the Trust, the Trustee's fee
shall be reduced to 12/100 of 1% per annum plus or minus the Adjustment
Amount for any day on which the net asset value of the Trust is below
$350,000,000.
** The fee indicated applies to that portion of the net asset value of the
Trust which falls in the size category indicated.

As of October 31, 1999, and as of December 31, 1999, the net asset value of
the Trust was $1,040,988,311 and $1,293,672,359, respectively. No
representation is made as to the actual net asset value of the Trust on any
future date as it is subject to change at any time due to fluctuations in the
market value of securities or to creations or redemptions made in the future.

The Adjustment Amount shall be calculated at the end of each quarter and
applied against the Trustee's fee for the following quarter. The "Adjustment
Amount" is an amount which is intended, depending upon the circumstances,
either to (1) reduce the Trustee's fee by the amount that the Transaction Fees
paid on creation and redemption exceeds the costs of those activities, and by
the amount of excess earnings on cash held for the benefit of the Trust or (2)
increase the Trustee's fee by the amount that the Transaction Fee (plus
additional amounts paid in connection with creations or redemptions outside
the DIAMONDS Clearing Process), if any, paid on creations or redemptions,
falls short of the actual costs of these activities. If in any quarter the
Adjustment Amount exceeds the fee payable to the Trustee as set forth above,
the Trustee shall use such excess amount to reduce other Trust expenses,
subject to certain federal tax limitations. To the extent that the amount of
such excess exceeds the Trust's expenses for such quarter, any remaining
excess shall be retained by the Trustee as part of its compensation. If in any
quarter the costs of processing creations and redemptions exceed the amounts
charged as a Transaction Fee (plus the additional amounts paid in connection
with creations or redemptions outside the DIAMONDS Clearing Process) net of
the excess earnings, if any, on cash held for the benefit of the Trust, the
Trustee will augment the Trustee's fee by the resulting Adjustment Amount. The
net Adjustment Amount is usually a credit to the Trust. To make the expense
ratio of the Trust comparable to the expense ratio of most other investment
companies, it is shown as a "below the line" adjustment to Trust expenses. If
the adjustment is negative it is shown "above the line".

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<PAGE>

REDEMPTION OF DIAMONDS

DIAMONDS in Creation Unit size aggregations are ordinarily redeemable in
kind only and are not redeemable for cash except under certain circumstances.
DIAMONDS in Creation Unit size aggregations may be redeemed by submitting a
request for redemption, the requisite number of DIAMONDS and the Excess Cash
Amount (as defined below), if applicable, to the Trustee in the manner
specified below. Beneficial Owners of DIAMONDS may sell DIAMONDS in the
secondary market, but must accumulate enough DIAMONDS to constitute a Creation
Unit (i.e., 50,000 DIAMONDS) in order to redeem through the Trust. DIAMONDS
can be redeemed only when Creation Unit size aggregations are owned by a
Beneficial Owner and held in the account of a single Participating Party (with
respect to redemptions through the DIAMONDS Clearing Process) or a single DTC
Participant (with respect to redemptions outside the DIAMONDS Clearing
Process). DIAMONDS will remain outstanding until redeemed or until the
termination of the Trust.

Procedure for Redemption of DIAMONDS

Requests for redemptions of Creation Units may be made on any Business Day
through the DIAMONDS Clearing Process to the Trustee at its Quincy office or
at such other office as may be designated by the Trustee. Requests for
redemptions of Creation Units may also be made directly to the Trustee outside
the DIAMONDS Clearing Process. Requests for redemption shall not be made to
the Distributor. In the case of redemptions made through the DIAMONDS Clearing
Process, the Transaction Fee will be deducted from the amount delivered to the
redeemer. In case of redemptions tendered directly to the Trustee outside the
DIAMONDS Clearing Process, a total fee will be charged equal to the
Transaction Fee plus an additional amount not to exceed three (3) times the
Transaction Fee applicable for a Creation Unit, (due in part to the increased
expense associated with delivery outside the DIAMONDS Clearing Process) and
such amount will be deducted from the amount delivered to the redeemer (see
"Prospectus Summary--Transaction Fee"). In all cases, both the tender of
DIAMONDS for redemption and distributions to the redeemer in respect of
DIAMONDS redeemed will be effected through the Depository and the relevant DTC
Participant(s) to the Beneficial Owner thereof as recorded on the book entry
system of the Depository or the relevant DTC Participant, as the case may be
(see "The Trust--Book-Entry-Only System").

The Trustee will transfer to the redeeming Beneficial Owner via the
Depository and the relevant DTC Participant(s) a portfolio of Securities for
each Creation Unit size aggregation of DIAMONDS delivered, typically identical
in weighting and composition to the securities portion of a Portfolio Deposit
as in effect (1) on the date a request for redemption is deemed received by
the Trustee as described below, in the

B-59
<PAGE>

case of redemptions made either through the DIAMONDS Clearing Process or
outside the DIAMONDS Clearing Process or (2) on the date that notice of the
termination of the Trust is given, in the case of the termination of the Trust
(see "Administration of the Trust--Termination" and "The Portfolio--
Adjustments to the Portfolio"). The Trustee will also transfer via the
relevant DTC Participant(s) to the redeeming Beneficial Owner in cash the
"Cash Redemption Payment", which on any given Business Day is typically an
amount identical to the amount of the Cash Component and is equal to a
proportional amount of the following: dividends on all the Securities for the
period through the date of redemption, net of expenses and liabilities for
such period including, without limitation, (x) taxes or other governmental
charges against the Trust not previously deducted if any, and (y) accrued fees
of the Trustee and other expenses of the Trust (including legal and auditing
expenses) and other expenses not previously deducted (see "Expenses of the
Trust"), as if all the Securities had been held for the entire accumulation
period for such distribution, plus or minus the Balancing Amount. To the
extent that any amounts payable to the Trust by the redeeming Beneficial Owner
exceed the amount of the Cash Redemption Payment ("Excess Cash Amounts"), such
Beneficial Owner shall be required to deliver payment thereof to the Trustee.
In the case of redemptions made through the DIAMONDS Clearing Process, the
Trustee will effect a transfer of the Cash Redemption Payment and Securities
to the redeeming Beneficial Owner by the third (3rd) NSCC Business Day
following the date on which request for redemption is deemed received. In the
case of redemptions made outside the DIAMONDS Clearing Process, the Trustee
will transfer the Cash Redemption Payment and the securities to the redeeming
Beneficial Owner by the third (3rd) Business Day following the date on which
the request for redemption is deemed received. The Trustee will cancel all
DIAMONDS delivered upon redemption.

In the event that the Trustee determines in its discretion that an Index
Security is likely to be unavailable or available in insufficient quantity for
delivery by the Trust upon the redemption of DIAMONDS in Creation Unit size
aggregations, the Trustee shall have the right in its discretion to deliver
the cash equivalent value of such Index Security or Index Securities, based on
the market value of such Index Security or Index Securities as of the
Evaluation Time on the date such redemption is deemed received by the Trustee
(see "Placement of Redemption Orders Using DIAMONDS Clearing Process") as a
part of the Cash Redemption Payment in lieu of delivering such Index Security
or Index Securities to the redeemer. In connection with the redemption of
DIAMONDS, if a redeeming investor requests redemption in cash, rather than in
kind, with respect to one or more Securities (for example, because such a
redeemer is restricted by regulation or otherwise from investing or engaging
in a transaction in one or more Index Securities), the Trustee shall have the
right in its discretion to deliver the cash equivalent value of such Index
Security or Index Securities based on the market value of such Index Security
or Index Securities as of the Evaluation Time on the date such redemption
order is deemed received by the

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Trustee (see "Placement of Redemption Orders Outside DIAMONDS Clearing
Process") as a part of the Cash Redemption Payment in lieu of delivering such
Index Security or Index Securities to the redeemer. In such case, such
investor will pay the Trustee the standard Transaction Fee, plus an additional
amount not to exceed three (3) times the Transaction Fee applicable for a
Creation Unit (see "Prospectus Summary--Transaction Fee").

The Trustee, in its discretion, upon the request of a redeeming investor,
may redeem Creation Units in whole or in part by providing such redeemer with
a portfolio of Securities differing in exact composition from the Index
Securities but not differing in net asset value from the then-current
Portfolio Deposit. Such a redemption might be made, for example, if it were to
be determined that this composition would be appropriate in order to maintain
the Trust Portfolio correlation to the price-weighted composition of the DJIA
(i.e. an equal number of shares of each component stock), for instance when a
stock split of one of the Index Securities occurs. See ("The Portfolio" and
"The DJIA").

The Trustee may sell Securities to obtain sufficient cash proceeds to
deliver to the redeeming Beneficial Owner. To the extent cash proceeds are
received by the Trustee in excess of the amount required to be provided to the
redeeming Beneficial Owner, such cash amounts shall be held by the Trustee and
shall be applied in accordance with the guidelines set forth under the caption
"The Portfolio--Adjustments to the Portfolio").

If the income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to allow distribution of the
Cash Redemption Payment, the Trustee may advance out of its own funds any
amounts necessary in respect of redemptions of DIAMONDS; otherwise, the
Trustee may sell Securities in an amount sufficient to effect such
redemptions. The Trustee may reimburse itself in the amount of such advance,
together with interest thereon at a percentage rate equal to the then current
overnight federal funds rate, by deducting such amounts from (1) dividend
payments or other income of the Trust when such payments or other income is
received, (2) the amounts earned or benefits derived by the Trustee on cash
held by the Trustee for the benefit of the Trust, and (3) the sale of
Securities. Notwithstanding the foregoing, in the event that any advance
remains outstanding for more than forty-five (45) Business Days, the Trustee
shall sell Securities to reimburse itself for such advance and any accrued
interest thereon. Such advances will be secured by a lien on the assets of the
Trust in favor of the Trustee.

The Trustee may, in its discretion, and will when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of
the net asset value for more than five (5) Business Days following the date on
which the request for redemption is deemed received by the Trustee: (1) for
any period during which the New York Stock Exchange is closed; (2) for any
period during which an emergency

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exists as a result of which disposal or evaluation of the Securities is not
reasonably practicable; or (3) for such other period as the Commission may by
order permit for the protection of Beneficial Owners. Neither the Sponsor nor
the Trustee is liable to any person or in any way for any loss or damages
which may result from any such suspension or postponement.

To be eligible to place orders with the Trustee to redeem DIAMONDS in
Creation Unit size aggregations, an entity or person must be (1) a
Participating Party with respect to redemptions through the DIAMONDS Clearing
Process, or (2) a DTC Participant with respect to redemptions outside the
DIAMONDS Clearing Process and, in either event, have executed a Participant
Agreement.

All orders to redeem DIAMONDS must be placed in multiples of 50,000 DIAMONDS
(Creation Unit size). Orders must be transmitted to the Trustee by telephone
or other transmission method acceptable to the Trustee so as to be received by
the Trustee not later than the Closing Time on the Transmittal Date, pursuant
to procedures set forth in the Participant Agreement. Severe economic or
market disruptions or changes, or telephone or other communication failure,
may impede the ability to reach the Trustee, a Participating Party, or a DTC
Participant.

Orders to redeem Creation Unit size aggregations of DIAMONDS shall be placed
with a Participating Party or DTC Participant, as applicable, in the form
required by such Participating Party or DTC Participant. Investors should be
aware that their particular broker may not have executed a Participant
Agreement, and that, therefore, orders to redeem Creation Unit size
aggregations of DIAMONDS may have to be placed by the investor's broker
through a Participating Party or a DTC Participant who has executed a
Participant Agreement. At any given time there may be only a limited number of
broker-dealers that have executed a Participant Agreement. Those placing
orders to redeem DIAMONDS should afford sufficient time to permit (1) proper
submission of the order by a Participating Party or DTC Participant to the
Trustee and (2) the receipt of the DIAMONDS to be redeemed and the Excess Cash
Amounts, if any, by the Trustee in a timely manner, as described below. Orders
for redemption that are effected outside the DIAMONDS Clearing Process are
likely to require transmittal by the DTC Participant earlier on the
Transmittal Date than orders effected using the DIAMONDS Clearing Process.
Those persons placing orders outside the DIAMONDS Clearing Process should
ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire
transfer system by contacting the operations department of the broker or
depository institution effectuating such transfer of DIAMONDS and Cash
Redemption Payment. These deadlines will vary by institution. The Participant
notified of an order to redeem outside the DIAMONDS Clearing Process will be
required to transfer DIAMONDS through DTC and the Excess Cash amounts, if any,
through the Federal Reserve Bank wire transfer system in a timely manner (see
"Placement of Redemption Orders Outside the DIAMONDS Clearing

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Process"). Information regarding Cash Redemption Payment amounts, number of
outstanding DIAMONDS and Transaction Fees may be obtained from the Trustee at
the toll-free number: 800-545-4189.

Placement of Redemption Orders Using DIAMONDS Clearing Process

Orders to redeem DIAMONDS in Creation Unit size aggregations through the
DIAMONDS Clearing Process must be delivered through a Participating Party (see
"Portfolio Deposit") that has executed the Participant Agreement with the
Distributor and with the Trustee (as the same may be from time to time amended
in accordance with its terms). An order to redeem DIAMONDS using the DIAMONDS
Clearing Process is deemed received on the Transmittal Date if (i) such order
is received by the Trustee not later than the Closing Time on such Transmittal
Date and (ii) all other procedures set forth in the Participant Agreement are
properly followed; such order will be effected based on the net asset value of
the Trust as determined as of the Evaluation Time on the Transmittal Date. An
order to redeem DIAMONDS using the DIAMONDS Clearing Process made in proper
form but received by the Trustee after the Closing Time will be deemed
received on the next Business Day immediately following the Transmittal Date.
The Participant Agreement authorizes the Trustee to transmit to NSCC on behalf
of the Participating Party such trade instructions as are necessary to effect
the Participating Party's redemption order. Pursuant to such trade
instructions from the Trustee to NSCC, the Trustee will transfer the requisite
Securities (or contracts to purchase such Securities which are expected to be
delivered in a "regular way" manner) by the third (3rd) NSCC Business Day
following the date on which such request for redemption is deemed received,
and the Cash Redemption Payment. The calculation of the value of the
Securities and the Cash Redemption Payment to be delivered by the Trustee to
the redeeming Beneficial Owner will be made according to the procedures set
forth under "Valuation," computed as of the Evaluation Time on the Business
Day on which a redemption order is deemed received by the Trustee.

Placement of Redemption Orders Outside DIAMONDS Clearing Process

Orders to redeem DIAMONDS outside the DIAMONDS Clearing Process must be
delivered through a DTC Participant that has executed the Participant
Agreement with the Distributor and with the Trustee. A DTC Participant who
wishes to place an order for redemption of DIAMONDS to be effected outside the
DIAMONDS Clearing Process need not be a Participating Party, but such orders
must state that the DTC Participant is not using the DIAMONDS Clearing Process
and that redemption of DIAMONDS will instead be effected through transfer of
DIAMONDS directly through DTC. An order to redeem DIAMONDS outside the
DIAMONDS Clearing Process is deemed received by the Trustee on the Transmittal
Date if (i) such order is received by the Trustee not later than the Closing
Time on such Transmittal Date, (ii) such order is preceded or accompanied by
the requisite number of DIAMONDS

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specified in such order, which delivery must be made through DTC to the
Trustee no later than 11:00 a.m. on the next Business Day immediately
following such Transmittal Date (the "DTC Cut-Off Time") and (iii) all other
procedures set forth in the Participant Agreement are properly followed. The
Excess Cash Amounts owed by the Beneficial Owner, if any, must be delivered no
later than 2:00 p.m. on the next Business Day immediately following the
Transmittal Date.

After the Trustee has deemed an order for redemption outside the DIAMONDS
Clearing Process received, the Trustee will initiate procedures to transfer
the requisite Securities (or contracts to purchase such Securities which are
expected to be delivered within three Business Days) and the Cash Redemption
Payment to the redeeming Beneficial Owner by the third Business Day following
the Transmittal Date on which such redemption order is deemed received by the
Trustee.

The calculation of the value of the Securities and the Cash Redemption
Payment to be delivered to the redeeming Beneficial Owner will be made by the
Trustee according to the procedures set forth under "Valuation," computed as
of the Evaluation Time on the Business Day on which a redemption order is
deemed received by the Trustee. Therefore, if a redemption order in proper
form is submitted to the Trustee by a DTC Participant not later than the
Closing Time on the Transmittal Date, and the requisite DIAMONDS are delivered
to the Trustee prior to the DTC Cut-Off Time on such Transmittal Date, then
the value of the Securities and the Cash Redemption Payment to be delivered to
the Beneficial Owner will be determined by the Trustee as of the Evaluation
Time on such Transmittal Date. If, however, a redemption order is submitted to
the Trustee by a DTC Participant not later than the Closing Time on a
Transmittal Date but either (1) the requisite DIAMONDS are not delivered by
the DTC Cut-Off Time on the next Business Day immediately following such
Transmittal Date or (2) the redemption order is not submitted in proper form,
then the redemption order will not be deemed received as of such Transmittal
Date. In such case, the value of the Securities and the Cash Redemption
Payment to be delivered to the Beneficial Owner will be computed as of the
Evaluation Time on the Business Day that such order is deemed received by the
Trustee, i.e., the Business Day on which the DIAMONDS are delivered through
DTC to the Trustee by the DTC Cut-Off Time on such Business Day pursuant to a
properly submitted redemption order.

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VALUATION

The net asset value of the Trust is computed as of the Evaluation Time shown
under "Essential Information" on each Business Day. The net asset value of the
Trust on a per DIAMONDS Unit basis is determined by subtracting all
liabilities (including accrued expenses and dividends payable) from the total
value of the Trust's investments and other assets and dividing the result by
the total number of outstanding DIAMONDS.

The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: If the Securities are listed on one or
more national securities exchanges, such evaluation shall generally be based
on the closing sale price on that day (unless the Trustee deems such price
inappropriate as a basis for evaluation) on the exchange which is deemed to be
the principal market therefor (the New York or American Stock Exchange if the
securities are listed thereon) or, if there is no such appropriate closing
sale price on such exchange, at the closing bid price (unless the Trustee
deems such price inappropriate as a basis for evaluation). If the Securities
are not so listed or, if so listed and the principal market therefor is other
than on such exchange or there is no such closing bid price available, such
evaluation shall generally be made by the Trustee in good faith based on the
closing price on the over-the-counter market (unless the Trustee deems such
price inappropriate as a basis for evaluation) or if there is no such
appropriate closing price, (a) on current bid prices, (b) if bid prices are
not available, on the basis of current bid prices for comparable securities,
(c) by the Trustee's appraising the value of the securities in good faith on
the bid side of the market, or (d) by any combination thereof.

ADMINISTRATION OF THE TRUST

Records

The Trustee maintains records of the transactions of the Trust, including a
current list of the identity and number of shares of each of the Securities in
the Portfolio. Records of the creation of DIAMONDS in Creation Unit size
aggregations are also maintained by the Distributor. Record of ownership of
DIAMONDS is maintained by the Depository and by DTC Participants as described
above (see "The Trust--Book-Entry-Only System").

A complete copy of the Trust Agreement is maintained by the Trustee. A copy
of the Trust Agreement is available to Beneficial Owners at the corporate
trust office of the Trustee at 225 Franklin Street, Boston, Massachusetts
02110 during normal business hours.

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Voting

The Trustee has the right to vote all of the voting stocks in the Trust. The
Trustee votes the voting stocks of each issuer in the same proportionate
relationship as all other shares of each such issuer are voted to the extent
permissible and, if not permitted, abstains from voting.

Distributions to Beneficial Owners

The regular monthly ex-dividend date for DIAMONDS is the third (3rd) Friday
in each calendar month of each fiscal year, unless such day is not a Business
Day, in which case the ex-dividend date is the immediately preceding Business
Day (the "Ex-Dividend Date"). Beneficial Owners as reflected on the records of
the Depository and the DTC Participants on the second Business Day following
the Ex-Dividend Date (the "Record Date") are entitled to receive an amount
representing dividends accumulated on the Securities through the monthly
dividend period which ends on the Business Day preceding such Ex-Dividend Date
(including Securities with ex-dividend dates falling within such monthly
dividend period), net of fees and expenses, accrued daily for such period. For
the purposes of all dividend distributions, dividends per DIAMONDS Unit are
calculated at least to the nearest 1/100th of $0.01. The payment of dividends
is made on the Monday preceding the third (3rd) Friday of the next calendar
month or the next subsequent Business Day if such Monday is not a Business Day
(the "Dividend Payment Date"). Dividend payments will be made through the
Depository and the DTC Participants to Beneficial Owners then of record with
funds received from the Trustee. DIAMONDS are registered in book entry only,
which records are kept by the Depository (see "The Trust--Book-Entry-Only
System").

Dividends payable to the Trust in respect of the Securities are credited by
the Trustee to a non-interest bearing account as of the date on which the
Trust receives such dividends. Other moneys received by the Trustee in respect
of the Securities, including but not limited to the Cash Component, the Cash
Redemption Payment, all moneys realized by the Trustee from the sale of
options, warrants or other similar rights received or distributed in respect
of the Securities as dividends or distributions and capital gains resulting
from the sale of Securities are also credited by the Trustee to a non-interest
bearing account. All funds collected or received are held by the Trustee
without interest until distributed or otherwise utilized in accordance with
the provisions of the Trust Agreement. To the extent the amounts credited to
such accounts generate interest income or an equivalent benefit to the
Trustee, such interest income or benefit is used to reduce the Trustee's
annual fee (see "Expenses of the Trust").

The Trust intends to qualify as a regulated investment company for federal
income tax purposes. A regulated investment company is not subject to federal
income

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tax on its net investment income and capital gains that it distributes to
shareholders, so long as it meets certain overall distribution and
diversification requirements and other conditions under Subchapter M of the
Code. The Trust intends to satisfy these overall distribution and
diversification requirements and to otherwise satisfy any required conditions.
The Trustee intends to make additional distributions to the minimum extent
necessary (i) to distribute the entire annual investment company taxable
income of the Trust, plus any net capital gains (from sales of securities in
connection with adjustments to the Portfolio or to generate cash for such
distributions), and (ii) to avoid imposition of the excise tax imposed by
section 4982 of the Code (see "Tax Status of the Trust"). The additional
distributions, if needed, would consist of (a) an increase in distribution
scheduled for January to include any amount by which estimated Trust
investment company taxable income and net capital gains for a fiscal year
exceeds the amount of Trust taxable income previously distributed with respect
to such year or, if greater, the minimum amount required to avoid imposition
of such excise tax, and (b) a distribution soon after actual annual investment
company taxable income and net capital gains of the Trust have been computed
of the amount, if any, by which such actual income exceeds the distributions
already made. The net asset value of the Trust will be reduced in direct
proportion to the amount of such additional distributions. The magnitude of
the additional distributions, if any, will depend upon a number of factors,
including the level of redemption activity experienced by the Trust. Because
substantially all proceeds from the sale of shares of the Securities in
connection with adjustments to the Portfolio will have been used to purchase
shares of Index Securities, the Trust may have no cash or insufficient cash
with which to pay any such additional distributions. In that case, the Trustee
typically will have to sell an approximately equal number of shares of each of
the Securities sufficient to produce the cash required to make such additional
distributions (see "The Portfolio--Adjustments to the Portfolio").

The Trustee further reserves the right to declare special dividends if, in
its reasonable discretion, such action is necessary or advisable to preserve
the status of the Trust as a regulated investment company or to avoid
imposition of income or excise taxes on undistributed income.

The Trustee further reserves the right to vary the frequency with which
periodic dividend distributions are made (e.g., from monthly to quarterly) if
it is determined by the Sponsor and the Trustee, in their discretion, that
such a variance would be advisable to facilitate compliance with the rules and
regulations applicable to regulated investment companies or would otherwise be
advantageous to the Trust. In addition, the Trustee reserves the right to
change the regular ex-dividend date for DIAMONDS to another date within the
month or quarter if it is determined by the Sponsor and the Trustee, in their
discretion, that such a change would be advantageous to the Trust. Notice of
any such variance or change (which notice shall include changes to the Record
Date, the Ex-Dividend Date, the Dividend Payment Date, and the accumulation
period resulting from such variance) shall be provided to Beneficial

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Owners via the Depository and the DTC Participants (see "The Trust--Book-
Entry-Only System").

The Trustee may, in its discretion, advance out of its own funds any amounts
necessary to permit distributions via the Depository to Beneficial Owners. The
Trustee may reimburse itself in the amount of such advance, together with
interest thereon at a percentage rate equal to then current overnight federal
funds rate, by deducting such amounts from (1) dividend payments or other
income of the Trust when such payments or other income is received, (2) the
amounts earned or benefits derived by the Trustee on cash held by the Trustee
for the benefit of the Trust, and (3) the sale of Securities. Notwithstanding
the foregoing, in the event that any advance remains outstanding for more than
forty-five (45) Business Days, the Trustee shall sell Securities to reimburse
itself for such advance and any accrued interest thereon. Such advances will
be secured by a lien on the assets of the Trust in favor of the Trustee.

In addition, as soon as practicable after notice of termination of the
Trust, the Trustee will distribute via the Depository and the DTC Participants
to each Beneficial Owner redeeming DIAMONDS in Creation Unit size aggregations
prior to the termination date specified in such notice a portion of the
Securities and cash as described above (see "Redemption of DIAMONDS" and
"Administration of the Trust--Termination"). Otherwise, the Trustee will
distribute to each Beneficial Owner (whether in Creation Unit size
aggregations or otherwise), as soon as practical after termination of the
Trust, such Beneficial Owner's pro rata share of the net asset value of the
Trust (see "Administration of the Trust--Termination").

All distributions are made by the Trustee through the Depository and the DTC
Participants to Beneficial Owners as recorded on the book entry system of the
Depository and the DTC Participants (see "The Trust--Book-Entry-Only System").

The settlement date for the creation of DIAMONDS in Creation Unit size
aggregations or the purchase of DIAMONDS in the secondary market must occur on
or prior to the Record Date in order for such creator or purchaser to receive
a distribution on the next Dividend Payment Date. If the settlement date for
such creation or a secondary market purchase occurs after the Record Date, the
distribution will be made to the prior security holder or Beneficial Owner as
of such Record Date.

Any Beneficial Owner interested in acquiring additional DIAMONDS with
proceeds received from distributions described above may elect dividend
reinvestment through DTC Participants by means of the DTC Dividend
Reinvestment Service, described herein (see "Dividend Reinvestment Service"),
if such service is available through such Beneficial Owner's broker.

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Trust Supervision

The Trust's Portfolio Securities are not managed and therefore the adverse
financial condition of an issuer of securities in the Trust does not, in
itself, require the sale of Securities from the Portfolio. The Trustee shall,
on a non-discretionary basis, make changes to the Portfolio as described above
(see "The Portfolio--Adjustments to the Portfolio").

The Trustee will direct its securities transactions only to brokers or
dealers, which may include affiliates of the Trustee, from whom it expects to
obtain the most favorable prices or execution of orders.

Statements to Beneficial Owners

With each distribution, the Trustee will furnish for distribution to
Beneficial Owners (see "The Trust--Book-Entry-Only System") a statement
setting forth the amount being distributed expressed as a dollar amount per
DIAMONDS Unit.

Promptly after the end of each fiscal year, the Trustee will furnish to the
DTC Participants for distribution to each person who was a Beneficial Owner of
DIAMONDS at the end of such calendar year, an annual report of the Trust
containing financial statements audited by independent accountants of
nationally recognized standing and such other information as may be required
by applicable laws, rules and regulations.

The Trustee maintains a record of the creation and redemption of DIAMONDS in
Creation Unit size aggregations as well as creations of DIAMONDS in connection
with the Dividend Reinvestment Service. The Depository maintains a record on
its book-entry system of the DTC Participant ownership of DIAMONDS and the
number of DIAMONDS owned (see "The Trust--Book-Entry-Only System").
Certificates are not issued for DIAMONDS, whether in Creation Unit size
denominations or otherwise. Beneficial Owners have the rights accorded to
holders of "book-entry" securities under applicable law. Beneficial Owners may
transfer DIAMONDS through the Depository by instructing the DTC Participant
holding the DIAMONDS for such Beneficial Owner in accordance with standard
securities industry procedures.

Rights of Beneficial Owners

DIAMONDS in Creation Unit size aggregations (i.e., 50,000 DIAMONDS) may be
tendered to the Trustee for redemption (see "Redemption of DIAMONDS").
Beneficial Owners may sell DIAMONDS in the secondary market, but must
accumulate enough DIAMONDS (i.e., 50,000 DIAMONDS) to constitute a full
Creation Unit in order to redeem through the Trust. The death or incapacity of
any

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Beneficial Owner will not operate to terminate the Trust nor entitle such
Beneficial Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of
the Trust.

Beneficial Owners shall not have the right to vote concerning the Trust,
except as described below with respect to termination and as otherwise
expressly set forth in the Trust Agreement, or in any manner control the
operation and management of the Trust, nor shall any Beneficial Owner be
liable to any other person by reason of any action taken by the Sponsor or the
Trustee.

Amendment

The Trust Agreement may be amended from time to time by the Trustee and the
Sponsor without the consent of any Beneficial Owners (a) to cure any ambiguity
or to correct or supplement any provision thereof which may be defective or
inconsistent or to make such other provisions in regard to matters or
questions arising thereunder as will not adversely affect the interests of
Beneficial Owners; (b) to change any provision thereof as may be required by
the Commission; (c) to add or change any provision as may be necessary or
advisable for the continuing qualification of the Trust as a "regulated
investment company" under the Code; (d) to add or change any provision thereof
as may be necessary or advisable in the event that NSCC or the Depository is
unable or unwilling to continue to perform its functions as set forth therein;
and (e) to add or change any provision thereof to conform the adjustments to
the Portfolio and the Portfolio Deposit to changes, if any, made by Dow Jones
in its method of determining the DJIA. The Trust Agreement may also be amended
from time to time by the Sponsor and the Trustee with the consent of the
Beneficial Owners of 51% of the outstanding DIAMONDS to add provisions to or
change or eliminate any of the provisions of the Trust Agreement or to modify
the rights of Beneficial Owners; provided, however, that the Trust Agreement
may not be amended without the consent of the Beneficial Owners of all
outstanding DIAMONDS if such amendment would (1) permit, except in accordance
with the terms and conditions of the Trust Agreement, the acquisition of any
securities other than those acquired in accordance with the terms and
conditions of the Trust Agreement; (2) reduce the interest of any Beneficial
Owner in the Trust; or (3) reduce the percentage of Beneficial Owners required
to consent to any such amendment.

Promptly after the execution of any such amendment, the Trustee shall
receive from the Depository, pursuant to the terms of the Depository
Agreement, a list of all DTC Participants holding DIAMONDS. The Trustee shall
inquire of each such DTC Participant as to the number of Beneficial Owners for
whom such DTC Participant holds DIAMONDS, and provide each such DTC
Participant with sufficient copies of a written notice of the substance of
such amendment for transmittal by each such DTC Participant to such Beneficial
Owners (see "The Trust--Book-Entry-Only System").

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Termination

The Trust Agreement provides that the Sponsor has the discretionary right to
direct the Trustee to terminate the Trust if at any time after six months
following and prior to three years following the Initial Date of Deposit the
net asset value of the Trust falls below $150,000,000 or if at any time after
three years following the Initial Date of Deposit the net asset value of the
Trust is less than $350,000,000, as such dollar amount shall be adjusted for
inflation in accordance with the CPI-U, such adjustment to take effect at the
end of the fourth year following the Initial Date of Deposit and at the end of
each year thereafter and to be made so as to reflect the percentage increase
in consumer prices as set forth in the CPI-U for the twelve month period
ending in the last month of the preceding fiscal year.

The Trust will also terminate in the event that DIAMONDS are delisted from
the Exchange. The Exchange will consider the suspension of trading in or the
delisting of DIAMONDS as discussed above (see "Exchange Listing").

The Trust may also be terminated (a) by the agreement of the Beneficial
Owners of 66 2/3% of outstanding DIAMONDS; (b) if the Depository is unable or
unwilling to continue to perform its functions as set forth under the Trust
Agreement and a comparable replacement is unavailable; (c) if NSCC no longer
provides clearance services with respect to DIAMONDS, or if the Trustee is no
longer a participant in NSCC; (d) if Dow Jones ceases publishing the DJIA; and
(e) if the License Agreement is terminated. Currently, the License Agreement
is scheduled to expire five years from the commencement date of trading of
DIAMONDS in accordance with its terms and is subject to a five year renewal
period following such date. The parties to the License Agreement may extend
its term beyond such date without the consent of any of the Beneficial Owners
of DIAMONDS. The Trust will also terminate by its terms on the Mandatory
Termination Date.

If either the Sponsor or the Trustee shall resign or be removed and a
successor is not appointed, the Trust will terminate (see "Resignation,
Removal and Liability--The Trustee" and "Resignation, Removal and Liability--
The Sponsor"). The dissolution of the Sponsor or its ceasing to exist as a
legal entity for any cause whatsoever, however, will not cause the termination
of the Trust Agreement or the Trust unless the Trustee deems termination to be
in the best interests of Beneficial Owners.

Prior written notice of the termination of the Trust will be given at least
twenty (20) days prior to termination of the Trust to all Beneficial Owners in
the manner described above (see "The Trust--Book-Entry-Only System"). The
notice will set forth the date on which the Trust will be terminated (the
"Termination Date"), the period during which the assets of the Trust will be
liquidated, the date on which Beneficial Owners of DIAMONDS (whether in
Creation Unit size aggregations or

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otherwise) will receive in cash the net asset value of the DIAMONDS held and
the date determined by the Trustee upon which the books of the Trust shall be
closed. Such notice shall further state that, as of the date thereof and
thereafter, neither requests to create additional Creation Units nor Portfolio
Deposits will be accepted, that no additional DIAMONDS will be created for the
purpose of reinvesting dividend distributions, and that, as of the date
thereof and thereafter, the portfolio of Securities delivered upon redemption
shall be identical in composition to the Securities held in the Trust as of
such date rather than the securities portion of the Portfolio Deposit as in
effect on the date request for redemption is deemed received. Beneficial
Owners of DIAMONDS in Creation Unit size aggregations may, in advance of the
Termination Date, redeem in kind directly from the Trust (see "Redemption of
DIAMONDS").

Within a reasonable period of time after the Termination Date the Trustee
shall, subject to any applicable provisions of law, use its best efforts to
sell all of the Securities not already distributed to redeeming Beneficial
Owners of Creation Units. The Trustee shall not be liable for or responsible
in any way for depreciation or loss incurred by reason of any such sale or
sales. The Trustee may suspend such sales upon the occurrence of unusual or
unforeseen circumstances, including but not limited to a suspension in trading
of a Security, the closing or restriction of trading on a stock exchange, the
outbreak of hostilities or the collapse of the economy. Upon receipt of
proceeds from the sale of the last Security, the Trustee shall deduct
therefrom its fees and all other expenses (see "Expenses of the Trust"). The
remaining amount shall be transmitted to the Depository for distribution via
the DTC Participants, together with a final statement setting forth the
computation of the gross amount distributed. DIAMONDS not redeemed prior to
termination of the Trust will be redeemed in cash at net asset value based on
the proceeds of the sale of the Securities. Such redemptions in cash at net
asset value shall be available to all Beneficial Owners, with no minimum
aggregation of DIAMONDS required (see "Administration of the Trust--
Distributions to DIAMONDS Unit Beneficial Owners").

RESIGNATION, REMOVAL AND LIABILITY

The Trustee

Under the Trust Agreement, the Trustee may resign and be discharged of the
Trust created by the Trust Agreement by executing a notice of resignation in
writing and filing such notice with the Sponsor and mailing a copy of the
notice of resignation to all DTC Participants that are reflected on the
records of the Depository as owning DIAMONDS for distribution to Beneficial
Owners as provided above (see "The Trust--Book-Entry-Only System") not less
than sixty (60) days before the date such resignation is to take effect. Such
resignation will become effective upon the appointment of and the acceptance
of the Trust by a successor Trustee or, if no successor is appointed within
sixty (60) days after the date such notice of resignation

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<PAGE>

is given, the Trust shall terminate (see "Administration of the Trust--
Termination"). The Sponsor, upon receiving notice of such resignation, is
obligated to use its best efforts to appoint a successor Trustee promptly.

In case the Trustee becomes incapable of acting as such or is adjudged a
bankrupt or is taken over by any public authority, the Sponsor may discharge
the Trustee and appoint a successor Trustee as provided in the Trust
Agreement. Notice of such discharge and appointment shall be mailed via the
DTC Participants to Beneficial Owners by the Sponsor.

Upon a successor Trustee's execution of a written acceptance of an
appointment as Trustee for the Trust, such successor Trustee will become
vested with all the rights, powers, duties and obligations of the original
Trustee.

A successor Trustee is required to be a trust company, corporation or
national banking association organized and doing business under the laws of
the United States or any state thereof; to be authorized under such laws to
exercise corporate trust powers; and to have at all times an aggregate
capital, surplus and undivided profit of not less than $50,000,000.

Beneficial Owners of 51% of the then outstanding DIAMONDS may at any time
remove the Trustee by written instrument(s) delivered to the Trustee and the
Sponsor. The Sponsor shall thereupon use its best efforts to appoint a
successor Trustee in the manner specified above and in the Trust Agreement.

The Trust Agreement provides that the Trustee is not liable for any action
taken in reasonable reliance on properly executed documents or for the
disposition of moneys or Securities or for the evaluations required to be made
thereunder, except by reason of its own gross negligence, bad faith, wilful
malfeasance, wilful misconduct, or reckless disregard of its duties and
obligations nor is the Trustee liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities in the Trust. In the event of the failure of the Sponsor to act,
the Trustee may act and is not liable for any such action taken by it in good
faith. The Trustee is not personally liable for any taxes or other
governmental charges imposed upon or in respect of the Securities or upon the
interest thereon or upon it as Trustee or upon or in respect of the Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee. The Trustee and its
directors, subsidiaries, shareholders, officers, employees, and affiliates
under common control with the Trustee (each a "Trustee Indemnified Party")
will be indemnified from the assets of the Trust and held harmless against any
loss, liability or expense incurred without gross negligence, bad faith,
wilful misconduct, wilful malfeasance on the part of such Trustee Indemnified
Party or reckless disregard of its duties and obligations,

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<PAGE>

arising out of, or in connection with its acceptance or administration of the
Trust, including the costs and expenses (including counsel fees) of defending
against any claim or liability.

The Sponsor

If at any time the Sponsor shall fail to undertake or perform or become
incapable of undertaking or performing any of the duties which by the terms of
the Trust Agreement are required of it to be undertaken or performed, or shall
resign, or shall become bankrupt or its affairs shall be taken over by public
authorities, the Trustee may appoint a successor Sponsor as shall be
satisfactory to the Trustee, agree to act as Sponsor itself, or may terminate
the Trust Agreement and liquidate the Trust (see "Termination"). Notice of the
resignation or removal of the Sponsor and the appointment of a successor shall
be mailed by the Trustee to the Depository and the DTC Participants for
distribution to Beneficial Owners (see "The Trust--Book-Entry-Only System").
Upon a successor Sponsor's execution of a written acceptance of such
appointment as Sponsor of the Trust, such successor Sponsor shall become
vested with all of the rights, powers, duties and obligations of the original
Sponsor. Any successor Sponsor may be compensated at rates deemed by the
Trustee to be reasonable.

The Sponsor may resign by executing and delivering to the Trustee an
instrument of resignation. Such resignation shall become effective upon the
appointment of a successor Sponsor and the acceptance of such appointment by
the successor Sponsor, unless the Trustee either agrees to act as Sponsor or
terminates the Trust Agreement and liquidates the Trust, which the Trustee
shall do if no successor Sponsor is appointed (see "Termination").

The dissolution of the Sponsor or its ceasing to exist as a legal entity for
any cause whatsoever will not cause the termination of the Trust Agreement or
the Trust unless the Trustee deems termination to be in the best interests of
the Beneficial Owners of DIAMONDS.

The Trust Agreement provides that the Sponsor is not liable to the Trustee,
the Trust or to the Beneficial Owners of DIAMONDS for taking any action or for
refraining from taking any action made in good faith or for errors in
judgment, but is liable only for its own gross negligence, bad faith, wilful
misconduct or wilful malfeasance in the performance of its duties or its
reckless disregard of its obligations and duties under the Trust Agreement.
The Sponsor is not liable or responsible in any way for depreciation or loss
incurred by the Trust by reason of the sale of any Securities of the Trust.
The Trust Agreement further provides that the Sponsor and its directors,
subsidiaries, shareholders, officers, employees, and affiliates under common
control with the Sponsor (each a "Sponsor Indemnified Party") shall be
indemnified from the assets of the Trust and held harmless against any loss,
liability or expense

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<PAGE>

incurred without gross negligence, bad faith, wilful misconduct or wilful
malfeasance on the part of any Sponsor Indemnified Party in the performance of
its duties or reckless disregard of its obligations and duties under the Trust
Agreement, including the payment of the costs and expenses of defending
against any claim or liability.

SPONSOR

The Sponsor of the Trust is PDR Services LLC, a Delaware limited liability
company incorporated on April 6, 1998 with offices c/o the Exchange, 86
Trinity Place, New York, New York 10006. The Sponsor's Internal Revenue
Service Employer Identification Number is 52-2127241. The Exchange is the sole
member of the Sponsor and the Exchange is a "control person" of the Sponsor as
such term is defined in the Securities Act of 1933.

The Sponsor, at its own expense, may from time to time provide additional
promotional incentives to brokers who sell DIAMONDS to the public. In certain
instances, these incentives may be provided only to those brokers who meet
certain threshold requirements for participation in a given incentive program,
such as selling a significant number of DIAMONDS within a specified time
period.

TRUSTEE

The Trustee is State Street Bank and Trust Company, a bank and trust company
organized under the laws of the Commonwealth of Massachusetts with its
principal place of business at 225 Franklin Street, Boston, Massachusetts
02110. The Trustee's Internal Revenue Service Employer Identification Number
is 04-1867445. The Trustee is subject to supervision and examination by the
Massachusetts Division of Banks and the Federal Reserve Bank of Boston.

DEPOSITORY

The Depository Trust Company, New York, New York, a limited purpose trust
company and member of the Federal Reserve System, acts as Depository for
DIAMONDS. The Depository receives customary fees for its services.

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<PAGE>

LEGAL OPINION

The legality of the DIAMONDS offered hereby has been passed upon by Carter,
Ledyard & Milburn, New York, New York, as counsel for the Sponsor.

INDEPENDENT ACCOUNTANTS

The financial statements as of October 31, 1999 included in this Prospectus
have been so included in reliance upon the report of PricewaterhouseCoopers
LLP independent accountants, 160 Federal Street, Boston Massachusetts, given
on the authority of said firm as experts in auditing and accounting.

DAILY DIAMONDS UNIT TRADING INFORMATION

The Sponsor makes available daily a list of the names and the required
number of shares of each of the Securities in the current Portfolio Deposit.
The Sponsor also intends to make available (a) on a daily basis, the Dividend
Equivalent Payment effective through and including the previous Business Day,
per outstanding DIAMONDS Unit, and (b) every 15 seconds throughout the trading
day at the Exchange a number representing, on a per DIAMONDS Unit basis, the
sum of the Dividend Equivalent Payment effective through and including the
previous Business Day, plus the current value of the securities portion of a
Portfolio Deposit as in effect on such day (which value may include a cash in
lieu amount to compensate for the omission of a particular Index Security from
such Portfolio Deposit). Intra-day information will be available with respect
to trades and quotes and underlying trading values will be published every 15
seconds throughout the trading day. Information with respect to net asset
value, net accumulated dividend, final dividend amount to be paid, shares
outstanding, estimated cash amount and total cash amount per Creation Unit
will be available daily prior to the opening of trading on the Exchange.

INFORMATION AND COMPARISONS RELATING TO TRUST, SECONDARY MARKET TRADING, NET
ASSET SIZE, PERFORMANCE AND TAX TREATMENT

Information regarding various aspects of the Trust, including the net asset
size thereof, as well as the secondary market trading, the performance and the
tax treatment of DIAMONDS, may be included from time to time in
advertisements, sales literature and other communications as well as in
reports to current or prospective Beneficial Owners.

Information may be provided to prospective investors to help such investors
assess their specific investment goals and to aid in their understanding of
various

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<PAGE>

financial strategies. Such information may present current economic and
political trends and conditions and may describe general principles of
investing such as asset allocation, diversification and risk tolerance, as
well as specific investment techniques such as indexing and hedging. In
addition, information may be presented to prospective or current Beneficial
Owners regarding the purchase of DIAMONDS in the secondary market, such as
margin requirements, types of orders that may be entered, and information
concerning short sales. Similarly, market data symbols, trading fractions,
other trading information and the CUSIP number relating to DIAMONDS may be
included in such information. Comparisons with other investment vehicles, such
as mutual funds, may be made with respect to the application of such
requirements; costs of fund management and administration; cost and advantages
of intraday trading; and rules applicable to short sales.

Information regarding the Trust's net asset size may be stated in
communications to prospective or current Beneficial Owners for one or more
time periods, including annual, year-to-date or daily periods. Such
information may also be expressed in terms of the total number of DIAMONDS
outstanding as of one or more time periods. Factors integral to the size of
the Trust's net assets, such as creation volume and activity, may also be
discussed, and may be specified from time to time or with respect to various
periods of time. Comparisons of such information during various periods may
also be made, and may be expressed by means of percentages.

Information may be provided to investors regarding the ability to engage in
short sales of DIAMONDS, including reference to the exemption from the "tick
test" provision of the SEC short sale rule (Rule 10a-1 under the Securities
Exchange Act of 1934), to permit short sales on "minus" or "zero-minus" ticks.
Selling short refers to the sale of securities which the seller does not own,
but which the seller arranges to borrow prior to effecting the sale.
Institutional investors may be advised that lending their DIAMONDS Unit shares
to short sellers may generate stock loan credits which may supplement the
return they can earn from an investment in DIAMONDS. These stock loan credits
may provide a useful source of additional income for certain institutional
investors who can arrange to lend DIAMONDS. Potential short sellers may be
advised that a short rebate (functionally equivalent to partial use of
proceeds of the short sale) may reduce their cost of selling short.

Information may be provided to investors regarding capital gains
distributions by the Trust, including historical information relating to such
distributions. Comparisons between the Trust and other investment vehicles
such as mutual funds may be made regarding such capital gains distributions,
as well as relative tax efficiencies between the Trust and such other
investment vehicles (e.g. realization of capital gains or losses to the Trust
and to such other investment vehicles in connection with redemption of their
respective securities). (See "Tax Status of the Trust" for discussion of tax
consequences to Beneficial Owners of DIAMONDS in connection with the sale or

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<PAGE>

redemption of DIAMONDS.) Based on projected differences between DIAMONDS and
conventional mutual funds with regard to capital gains distributions,
projections may be made regarding comparative capital gains distributions and
tax rates for taxable investors holding DIAMONDS over a long period of time.
Comparisons may also be provided regarding the probable tax impact resulting
from rebalancing of the Trust portfolio (see "The Portfolio--Adjustments to
the Portfolio") and adjustments to the portfolio of an actively managed
investment vehicle.

Specifically, information may be provided to prospective or current
investors comparing and contrasting the tax efficiencies of conventional
mutual funds with DIAMONDS. Both conventional mutual funds and the DIAMONDS
Trust may be required to recognize capital gains incurred as a result of
adjustments to the composition of the DJIA and therefore to their respective
portfolios. From a tax perspective, however, a significant difference between
a conventional mutual fund and the DIAMONDS Trust is the process by which
their shares are redeemed. In cases where a conventional mutual fund
experiences redemptions in excess of subscriptions ("net redemptions") and has
insufficient cash available to fund such net redemptions, such fund may have
to sell stocks held in its portfolio to raise and pay cash to redeeming
shareholders. A mutual fund will generally experience a taxable gain or loss
when it sells such portfolio stocks in order to pay cash to redeeming fund
shareholders. In contrast, the redemption mechanism for DIAMONDS does not
ordinarily involve selling the portfolio stocks held by the DIAMONDS Trust in
the event of a redemption. Instead, the DIAMONDS Trust usually delivers the
actual portfolio of stocks in an "in-kind" exchange to any person redeeming
DIAMONDS Unit in Creation Unit size aggregations (i.e., 50,000 DIAMONDS per
Creation Unit). While this "in-kind" exchange is a taxable transaction to the
redeeming entity (usually a broker/dealer) making the exchange, it generally
does not constitute a taxable transaction at the DIAMONDS Trust level and,
consequently, there is no realization of taxable gain or loss by the DIAMONDS
Trust with respect to such "in-kind" exchanges. In a period of market
appreciation of the DJIA and, consequently, appreciation of DIAMONDS Unit ,
this "in-kind" redemption mechanism has the effect of eliminating the
recognition and distribution of those net unrealized gains at the DIAMONDS
Trust level. Investors should note that although the same result would occur
for conventional mutual funds utilizing an "in-kind" redemption mechanism, the
opportunities to redeem fund shares by delivering portfolio stocks "in-kind"
are limited in most mutual funds.

Investors may be informed that, while no unequivocal statement can be made
as to the net tax impact on a conventional mutual fund resulting from the
purchases and sales of its portfolio stocks over a period of time,
conventional funds that have accumulated substantial unrealized capital gains,
if they experience net redemptions and do not have sufficient available cash,
may be required to make taxable capital gains distributions that are generated
by changes in such fund's portfolio. In contrast,

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<PAGE>

the "in-kind" redemption mechanism of DIAMONDS may make them more tax
efficient investments under most circumstances than comparable conventional
mutual fund shares. As discussed above, the "in-kind" redemption feature of
the DIAMONDS Trust tends to lower the amount of annual net capital gains
distributions to DIAMONDS Unit holders as compared to their conventional
mutual fund counterparts. Since shareholders are generally required to pay
income tax on capital gains distributions, the smaller the amount of such
distributions, the less taxes that are payable currently. To the extent that
the DIAMONDS Trust is not required to recognize capital gains, the DIAMONDS
Unit holder is able, in effect, to defer tax on such gains until he sells or
otherwise disposes of his shares, or the DIAMONDS Trust terminates. If such
holder retains his shares until his death, under current law the tax basis of
such shares would be adjusted to their then fair market value.

Information regarding the secondary market trading activity of DIAMONDS also
may be presented over one or more stated time periods, such as for daily,
monthly, quarterly or annual periods. DIAMONDS Unit secondary market trading
volume information may be compared with similar information relating to other
issues trading on the Exchange during the same reporting period. Average daily
secondary market trading volume of DIAMONDS may also be reported from time to
time. Comparisons of such information during various periods may also be made,
and may be expressed by means of percentages.

Information may also be provided in communications to prospective investors
or current Beneficial Owners comparing and contrasting the relative advantages
of investing in DIAMONDS as compared to other investment vehicles, such as
mutual funds, both on an individual and a group basis (e.g., stock index
mutual funds). Such information may include comparisons of costs and expense
ratios, expressed either in dollars or basis points, stock lending activities,
permitted investments and hedging activities (e.g., engaging in options or
futures transactions), and portfolio turnover data and analyses. In addition,
such information may quote, reprint or include portions of financial,
scholarly or business publications or periodicals, including model allocation
schedules or portfolios, as the foregoing relate to the comparison of DIAMONDS
to other investment vehicles, current economic, financial and political
conditions, investment philosophy or techniques, or the desirability of owning
DIAMONDS.

In addition, information on the performance of DIAMONDS on the basis of
changes in price per DIAMONDS Unit with or without reinvesting all dividends
and/or any distributions of capital in additional DIAMONDS may be included
from time to time in such information. Total return measures the percentage
growth in the total dollar value of an investment in DIAMONDS (reflecting
dividends and capital appreciation but without provision for any income taxes
payable). Average annualized performance will be stated for various periods.
Total return figures may also be stated for a period from the Initial Date of
Deposit, a date at least twelve months prior to the end of the reporting
period or for annual periods for the life of the Trust. Information

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<PAGE>

on the DJIA contained in this Prospectus, as updated from time to time, may
also be included from time to time in such material. The performance of the
Trust, of the DJIA (provided information is also given reflecting the
performance of the Trust in comparison to that DJIA) or both may also be
compared to the performance of money managers as reported in market surveys
such as SEI Fund Evaluation Survey (a leading data base of tax-exempt funds)
or mutual funds such as those reported by Lipper Analytical Services Inc.,
Money Magazine Fund Watch, Wiesenberger Investment Companies Service,
Morningstar Incorporated and Value Line Investment Survey each of which
measures performance following their own specific and well-defined calculation
measures, or of the New York Stock Exchange Composite Index, the American
Stock Exchange Index (indices of stocks traded on the New York and American
Stock Exchanges, respectively), S&P 500 Index ( a broad-based index of 500
publicly traded common stocks) or similar measurement standards during the
same period of time. In addition to all other sources of comparative
information, comparative performance figures published by other funds or money
managers may be included from time to time. Information may also be included
regarding the aggregate amount of assets committed to index investing
generally by various types of investors, such as pension funds and other
institutional investors, which currently exceeds $300 billion.

Information on the relative price performance of DIAMONDS in relation to
other securities and/or indices may be represented in the form of
"correlation". Correlation is a standard measure of the degree of linear
association between two price series, and ranges from minus one hundred
percent (-100%) (i.e. perfect negative linear association) to positive one
hundred percent (100%) (i.e., perfect linear association).

One important difference between DIAMONDS and conventional mutual fund
shares is that the DIAMONDS are available for purchase or sale on an intraday
basis on the American Stock Exchange. An investor who buys shares in a
conventional mutual fund will usually buy or sell shares at a price at or
related to the closing net asset value per share, as determined by the fund.
In contrast, DIAMONDS are not offered for purchase or redeemed for cash at a
fixed relationship to closing NAV.

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<PAGE>

The tables below illustrate the distribution relationship of DIAMONDS
closing prices to NAV for the period 1/13/98 (the commencement date of the
DIAMONDS Trust) through 12/31/99, the distribution relationships of high, low
and closing prices over the same period, and distribution of bid/asked spreads
for 1999. This table should help investors evaluate some of the advantages and
disadvantages of DIAMONDS relative to funds sold and redeemed at prices
related to closing NAV. Specifically, the table illustrates in an approximate
way the risks of buying or selling DIAMONDS at prices less favorable than
closing NAV and, correspondingly, the opportunities to buy or sell at prices
more favorable than closing NAV.

The investor who purchases or sells DIAMONDS may wish to evaluate the
opportunity to buy or sell on an intraday basis versus the assurance of a
transaction at or related to closing NAV. To assist investors in making this
comparison, the table illustrates the distribution of percentage ranges
between the high and the low price each day and between each extreme daily
value and the closing NAV for all trading days from 1/20/98 through 12/31/99.
The investor may wish to compare these ranges with the average bid/asked
spread on DIAMONDS and add any commissions charged by a broker. The trading
ranges for this period will not necessarily be typical of trading ranges in
future years and the bid/asked spread on DIAMONDS may vary materially over
time and may be significantly greater at times in the future. There is some
evidence, for example, that the bid/asked spread will widen in more volatile
markets and narrow when markets are less volatile. Consequently, the investor
should expect wider bid/asked spreads to be associated with wider daily spread
ranges.

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<PAGE>

Daily Percentage Price Ranges: Average and Frequency Distribution for

DIAMONDS Trust and DJIA: Highs and Lows vs. Close*

(From Inception of Trust through 12/31/99)

Dow Jones Industrial Average
<TABLE>
<CAPTION>
Intraday High Intraday Low
Daily % Price Value Above Value Below
Range Closing Value Closing Value
---------------- ---------------- ----------------
% of % of % of
Range Frequency Total Frequency Total Frequency Total
- ----- --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
0-.25%.................... 0 0.00% 149 30.22% 98 19.88%
.25-.5%................... 5 1.01% 85 17.24% 99 20.08%
.5-1%..................... 103 20.89% 139 28.19% 135 27.38%
1-1.5%.................... 171 34.69% 60 12.17% 89 18.05%
1.5-2%.................... 117 23.73% 30 6.09% 42 8.52%
2-2.5%.................... 55 11.16% 19 3.85% 20 4.06%
2.5-3%.................... 21 4.26% 5 1.01% 3 0.61%
3-3.5%.................... 11 2.23% 3 0.61% 3 0.61%
>3.5%..................... 10 2.03% 3 0.61% 4 0.81%
--- ------ --- ------ --- ------
Total..................... 493 100.00% 493 100.00% 493 100.00%
</TABLE>

Average Daily Range: 1.620%

DIAMONDS TRUST
<TABLE>
<CAPTION>
Intraday High Intraday Low
Daily % Price Value Above Value Below
Range Closing Value Closing Value
---------------- ---------------- ----------------
% of % of % of
Range Frequency Total Frequency Total Frequency Total
- ----- --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
0-.25%................... 0 0.00% 128 25.96% 112 22.72%
.25-.5%................... 2 0.41% 100 20.28% 80 16.23%
.5-1%..................... 95 19.27% 133 26.98% 151 30.63%
1-1.5%.................... 191 38.74% 69 14.00% 87 17.65%
1.5-2%.................... 101 20.49% 29 5.88% 34 6.90%
2-2.5%.................... 57 11.56% 22 4.46% 13 2.64%
2.5-3%.................... 25 5.07% 6 1.22% 8 1.62%
3-3.5%.................... 10 2.03% 2 0.41% 2 0.41%
>3.5%..................... 12 2.43% 4 0.81% 6 1.22%
--- ------ --- ------ --- ------
Total..................... 493 100.00% 493 100.00% 493 100.00%
</TABLE>

- ----------- Average Daily Range: 1.685%

*Source: Bridge Information Systems, Inc.

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<PAGE>

Frequency Distribution for DIAMONDS Trust: Closing Price vs. Net

Asset Value; Bid/Asked Spread Distribution*

(From Inception of Trust through 12/31/99 except as noted)

DIAMONDS TRUST

<TABLE>
<CAPTION>
Closing Price on Closing Price on
AMEX Above AMEX Below
Trust NAV Trust NAV
-------------------- --------------------
Range Frequency % of Total Frequency % of Total
- ----- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
0-.25%................................ 191 78.93% 199 79.60%
.25-.5%............................... 45 18.60% 44 17.60%
.5-1%................................. 5 2.07% 7 2.80%
1-1.5%................................ 1 0.41% 0 0.00%
1.5-2%................................ 0 0.00% 0 0.00%
2-2.5%................................ 0 0.00% 0 0.00%
2.5-3%................................ 0 0.00% 0 0.00%
3-3.5%................................ 0 0.00% 0 0.00%
>3.5%................................. 0 0.00% 0 0.00%
--- ------- --- -------
Total................................. 242 100.00% 250 100.00%
</TABLE>

Note: The closing price on the AMEX equaled the NAV on one day.

Close was within .25% of NAV better than 79.3% of the time.

DIAMONDS BID/ASKED SPREAD DISTRIBUTION (1999 only)

<TABLE>
<CAPTION>
% of
Range Total
----- -------
<S> <C>
1/64- 1/16............... 1.72%
5/64- 1/8................ 13.01%
9/64- 3/16............... 82.61%
13/64- 1/4............... 2.46%
17/64- 5/16.............. 0.07%
21/64- 3/8............... 0.05%
> 25/64.................. 0.07%
-------
Total.................... 100.00%
</TABLE>

The price range of shares for 1999 was from 90 3/8 to 115 23/32,

consequently, 1/8 was from 0.14% to 0.11% of the share price.
- -----------

*Source: American Stock Exchange

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<PAGE>

Information relating to the relative price performance of DIAMONDS may be
compared against a wide variety of investment categories and asset classes,
including common stocks, small capitalization stocks, long and intermediate
term corporate and government bonds, Treasury bills, the rate of inflation in
the United States (based on the Consumer Price Index ("CPI") and combinations
of various capital markets. Historical returns of these and other capital
markets in the United States may be provided by independent statistical
studies and sources, such as those provided by Ibbotson Associates of Chicago,
Illinois. The performance of these capital markets is based on the returns of
different indices. Information may be presented using the performance of these
and other capital markets to demonstrate general investment strategies. So,
for example, performance of DIAMONDS may be compared to the performance of
selected asset classes such as short-term U.S. Treasury bills, long-term U.S.
Treasury bonds, long-term corporate bonds, mid-capitalization stocks, foreign
stocks and small capitalization stocks and may also be measured against the
rate of inflation as set forth in well-known indices (such as the CPI).
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. Performance of DIAMONDS may also
be compared to that of other indices or compilations that may be developed and
made available to the investing public in the future. Of course, such
comparisons will only reflect past performance of DIAMONDS and the investment
categories, indices or compilations chosen and no guarantees can be made of
future results regarding the performance of either DIAMONDS or the asset
classes chosen for such comparisons.

DIVIDEND REINVESTMENT SERVICE

The Trust has made the DTC book-entry Dividend Reinvestment Service (the
"Service") available for use by Beneficial Owners through DTC Participants for
reinvestment of their cash proceeds. Note that some DTC Participants may not
elect to utilize the Service; therefore, after the Service is made available
for DIAMONDS, an interested DIAMONDS Unit investor may wish to contact such
investor's broker to ascertain the availability of the Service through such
broker. Interested Beneficial Owners should also note that each broker may
require investors to adhere to specific procedures and timetables in order to
participate in the Service and such investors should ascertain from their
broker such necessary details. DIAMONDS acquired pursuant to the Service will
be held by the Beneficial Owners in the same manner, and subject to the same
terms and conditions, as for original ownership of DIAMONDS.

Distributions reinvested in additional DIAMONDS through the Service will
nevertheless be taxable dividends to Beneficial Owners to the same extent as
if received in cash.

B-84
<PAGE>

The Trustee will utilize the cash proceeds of dividends received from all
Beneficial Owners participating in reinvestment through the Service to obtain
Index Securities necessary to create the requisite number of DIAMONDS at the
close of business on each DIAMONDS Unit distribution date. Any cash balance
remaining after the requisite number of DIAMONDS has been created will be
distributed, on a pro rata basis, to all Beneficial Owners who participated in
the Service. Note that brokerage commissions, if any, incurred in obtaining
the Index Securities necessary to create additional DIAMONDS with the cash
from the distributions will be an expense of the Trust.*
- -----------

* It is difficult to estimate the annual dollar amount of brokerage
commissions that might be incurred in connection with the Dividend
Reinvestment Service during any fiscal year. The Trustee estimates that
during fiscal year 1999, the approximate amount of annual brokerage
commissions incurred in implementing the Service was $0.001 per DIAMONDS
Unit. There can be no guarantee that either the size of the Trust or the
number of outstanding DIAMONDS will remain constant, or that dividend
payments, the cost of brokerage commissions incurred to purchase Index
Securities or Beneficial Owner participation will remain the same from year
to year.

B-85
<PAGE>

GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
"Adjustment Amount"................................................. B-58
"Adjustment Day".................................................... B-41
"Balancing Amount".................................................. B-42
"Beneficial Owners"................................................. B-36
"Business Day"...................................................... B-18
"Cash Component".................................................... B-15
"Cash Redemption Payment"........................................... B-60
"Closing Time"...................................................... B-32
"Code".............................................................. B-19
"Commission"........................................................ B-15
"Creation Unit"..................................................... A-2
"Depository Agreement".............................................. B-37
"Depository"........................................................ B-18
"DIAMONDS".......................................................... Front Cover
"DIAMONDS Clearing Process"......................................... B-16
"DIAMONDS Unit"..................................................... Front Cover
"DJIA".............................................................. B-14
"Distributor"....................................................... B-14
"Dividend Equivalent Payment"....................................... B-15
"Dividend Payment Date"............................................. B-66
"Dow Jones"......................................................... A-1
"DTC Cut-Off Time".................................................. B-64
"DTC Participants".................................................. B-35
"Evaluation Time"................................................... B-2
"Ex-Dividend Date".................................................. B-66
"Excess Cash Amounts"............................................... B-60
"Exchange".......................................................... A-2
"Global Security"................................................... B-35
"Index Securities".................................................. B-14
"Indirect Participants"............................................. B-36
"Initial Date of Deposit"........................................... B-3
"License Agreement"................................................. B-49
"Mandatory Termination Date"........................................ B-2
"NAV Amount"........................................................ B-42
"NSCC Business Day"................................................. B-25
"NSCC".............................................................. B-15
"Participant Agreement"............................................. B-34
"Participating Party"............................................... B-15
"Portfolio Deposit Amount".......................................... B-42
"Portfolio Deposit"................................................. B-15
"Portfolio"......................................................... B-29
"Record Date"....................................................... B-66
"Request Day"....................................................... B-42
"Securities"........................................................ A-3
"Service"........................................................... B-84
"Sponsor"........................................................... Front Cover
"Transaction Fee"................................................... B-16
"Transmittal Date".................................................. B-32
"Trust Agreement"................................................... B-14
"Trust"............................................................. A-2
"Trustee"........................................................... A-2
</TABLE>

B-86
<PAGE>

DIAMONDS TRUST, SERIES 1

SPONSOR:
PDR SERVICES LLC

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

This Prospectus does not include all of the information with respect to the
DIAMONDS Trust set forth in its Registration Statement filed with the
Securities and Exchange Commission (the "Commission") in Washington, D.C. under
the:

. Securities Act of 1933 (File No. 333-31247) and
. Investment Company Act of 1940 (File No. 811-9170).

To obtain copies from the Commission at prescribed rates--
Write: Public Reference Section of the Commission

450 Fifth Street, N.W., Washington, D.C. 20549-0102

Call: 1-202-942-8090
Visit: http://www.sec.gov

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

No person is authorized to give any information or make any representation
about the DIAMONDS Trust not contained in this Prospectus, and you should not
rely on any other information. Read and keep both parts of this Prospectus for
future reference.

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

Prospectus dated February 23, 2000
<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
regulations of the Commission heretofore or hereafter duly adopted pursuant
to authority conferred in that section.
<PAGE>

CONTENTS OF REGISTRATION STATEMENT

This amendment to the Registration Statement on Form S-6 comprises the following
papers and documents:

The facing sheet.

The cross-reference sheet.

The prospectus.

The undertaking to file reports.

The signatures.

1. Written Consents of the following persons:

PricewaterhouseCoopers LLP
(included in Exhibit 99.C2)

Carter, Ledyard & Milburn
(included in Exhibit 99.C1)

The following exhibits:

1. Ex-99.C1 -- Opinion of Counsel as to legality of securities being
registered and consent of Counsel.

2. EX-99.C2 -- Consent of Independent Accountants.
<PAGE>

FINANCIAL STATEMENTS
--------------------

1. Statement of Financial Condition of the Trust as shown in the current
Prospectus for this series herewith.

2. Financial Statements of the Depositor:

PDR Services LLC - Financial Statements, as part of American Stock
Exchange, LLC current consolidated financial statements incorporated by
reference to the Amendment to Form 1-A, dated June 28, 1999.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant, DIAMONDS Trust, Series 1, certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, all in the City of New York, and State of New York,
on the 23rd day of February, 2000.

DIAMONDS TRUST, SERIES 1
(Registrant)

By: PDR Services LLC
(Depositor)

/s/ Joseph Stefanelli
-----------------------------
Joseph Stefanelli
Executive Vice President of
American Stock Exchange LLC,
the sole member of PDR Services LLC

Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed on behalf of PDR
Services LLC the Depositor by the following persons who constitute a majority of
its Board of Directors and by the named persons who are in the following
capacities, in the City of New York and State of New York, on the date above
indicated.

PDR SERVICES LLC

Name Title/Office
- ---- ------------

Joseph Stefanelli Executive Vice President of American
Stock Exchange LLC, the sole member
of PDR Services LLC and Director*

Gary Gastineau Director*

Lawrence G. Larkin Director*

Clifford J. Weber Director*

By /s/ Joseph Stefanelli
------------------------------
Joseph Stefanelli
Attorney-in-fact*

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

* Executed copies of the powers of attorney were previously filed with
the Securities and Exchange Commission on January 26, 2000 in
connection with Post Effective Amendment No. 8 to the Registration
Statement for the SPDR Trust, Series 1 (File No. 33-46080)as
Exhibit No. 3.
<PAGE>

EXHIBIT INDEX

<TABLE>
<S> <C>
1. Ex-99.C1 -- Opinion of Counsel as to legality of securities being
registered and Consent of Counsel.

2. EX-99.C2 -- Consent of Independent Accountants.
</TABLE>

<PAGE>

Exhibit 99.C1

(212) 238-8665

February 23, 2000

PDR Services LLC
c/o American Stock Exchange LLC
86 Trinity Place
New York, New York 10006

State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

Re: DIAMONDS Trust Series 1
-----------------------

Ladies and Gentlemen:

We have served as counsel to the American Stock Exchange LLC (the
"Exchange") and PDR Services LLC as sponsor (the "Sponsor") of DIAMONDS Trust
Series 1 (hereinafter referred to as the "Trust"). It is proposed that Post-
Effective Amendment No. 3 to the Trust's registration Statement ("Post-Effective
Amendment No. 3") will be filed with the Securities and Exchange Commission (the
"Commission") and dated as of the date hereof in connection with the continued
issuance by the Trust of an indefinite number of units of fractional undivided
interest in the Trust (hereinafter referred to as the "Units") pursuant to Rule
24f-2 promulgated under the provisions of the Investment Company Act of 1940, as
amended.

In this regard, we have examined executed originals or copies of the
following:

(a) the Certificate of Incorporation, as amended, and the By-Laws of the
Sponsor, as amended, certified by the Secretary of the Sponsor as of
the date hereof;

(b) resolutions of the Board of Directors of the Sponsor adopted on June
1, 1997 and December 1, 1997 relating to the Trust and the issuance of
the Units, certified by the Secretary of the Sponsor on the date
hereof;

<PAGE>

(d) the Registration Statement on Form S-6 (File No. 333-31247) filed with
the Commission in accordance with the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder (collectively, the "1933 Act") and amendments thereto
including Amendment No. 1 ("Amendment No. 1") filed on January 14,
1998 (the "Registration Statement") and Post-Effective Amendment No. 3
thereto proposed to be filed and dated as of the date hereof;

(e) the Notification of Registration of the Trust filed with the
Commission under the Investment Company Act of 1940, as amended and
the rules and regulations of the Commission promulgated thereunder
(collectively, the "1940 Act") on Form N-8A, as amended, (the "1940
Act Notification");

(f) the registration of the Trust filed with the Commission under the 1940
Act on Form N-8B-2 (File No. 811-9170), as amended (the "1940 Act
Registration");

(g) the prospectus included in Post-Effective Amendment No. 3 (the
"Prospectus");

(h) the Application of DIAMONDS Trust Series 1 and the Sponsor for
exemptions under Sections 4(2), 14(a), 17(a), 22(d), 22(e), 24(d) and
26(a)(2)(C) of the 1940 Act and Rule 22c-1 and pursuant to Section 17
d-1, as amended, the notice published and the order granted in
connection therewith (File No. 812-22979, collectively, the "Order");

(i) the Standard Terms and Conditions of the Trust dated as of January 1,
1998 between the Sponsor and State Street Bank and Trust Company (the
"Trustee"), as amended (the "Standard Terms");

(j) the Trust Indenture dated January 13, 1998 between the Sponsor and the
Trustee (the "Trust Indenture" and, collectively with the Standard
Terms, the "Indenture and Agreement");

(k) the Distribution Agreement dated as of December 1, 1997 among the
Sponsor, the Trust and ALPS Mutual Funds Services, Inc. (the
-------------------------------
"Distribution Agreement"),

(l) the License Agreement between Dow Jones and Company and the
Sponsor dated June 5, 1997;

(m) the form of global certificate of ownership for units (the
"Certificate") to be issued under the Indenture and Agreement; and
<PAGE>

(n) such other pertinent records and documents as we have deemed
necessary.

With your permission, in such examination, we have assumed the following:
(a) the authenticity of original documents and the genuineness of all
signatures; (b) the conformity to the originals of all documents submitted to us
as copies; (c) the truth, accuracy, and completeness of the information,
representations, and warranties contained in the records, documents, instruments
and certificates as we have reviewed; (d) except as specifically covered in the
opinions set forth below, with due authorization, execution, and delivery on
behalf of the respective parties thereto of documents referred to herein and the
legal, valid and binding effect thereof on such parties; and (e) the absence of
any evidence extrinsic to the provisions of the written agreement(s) between the
parties that the parties intended a meaning contrary to that expressed by those
provisions. However, we have not examined the securities deposited pursuant to
the Indenture and the Agreement (the "Securities") nor the contracts for the
Securities.

We express no opinion as to matters of law in jurisdictions other than the
State of New York (except "Blue Sky" laws) and the federal laws of the United
States, except to the extent necessary to render the opinion as to the Sponsor
and the Indenture and Agreement in paragraphs (i) and (iii) below with respect
to Delaware law. As you know, we are not licensed to practice law in the State
of Delaware, and our opinion in paragraph (i) as to Delaware law is based solely
on review of the official statutes of the State of Delaware.

Based on such examination, and having regard for legal considerations which
we deem relevant, we are of the opinion that:

(i) the Sponsor is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware with
full corporate power to conduct its business as described in the
Prospectus;

(ii) the Sponsor is duly qualified as a foreign corporation and is in
good standing as such within the State of New York;

(iii) the Indenture and Agreement has been duly authorized, executed
and delivered by the Sponsor and, assuming the due authorization, execution
and delivery by the other parties thereto, is a valid and binding agreement
of the Sponsor, enforceable against the Sponsor in accordance with its
terms;

(iv) the Trust has been duly formed and is validly existing as an
investment trust under the laws of the
<PAGE>

State of New York and has been duly registered under the 1940 Act;

(v) the terms and provisions of the Units conform in all material
respects to the description thereof contained in the Prospectus;

(vi) the consummation of the transactions contemplated under the
Indenture and the fulfillment of the terms thereof will not be in violation
of the Sponsor's Certificate of Incorporation, as amended, or By-Laws, as
amended and will not conflict with any applicable laws or regulations
applicable to the Sponsor in effect on the date hereof; and

(vii) the Units to be issued by the Trust, when duly issued by the
Trustee in accordance with the Indenture and Agreement, upon delivery
against payment therefor as described in the Registration Statement and
Prospectus will constitute fractional undivided interests in the Trust
enforceable against the Trust in accordance with its terms, will be
entitled to the benefits of the Indenture and Agreement and will be fully
paid and non-assessable.

In addition, we have participated in conferences with
representatives of the Sponsor, the Exchange, the Trustee, the Trust's
accountants and others concerning the Registration Statement and the Prospectus
and have considered the matters required to be stated therein and the statements
contained therein, although we have not independently verified the accuracy,
completeness or fairness of such statements. Based upon and subject to the
foregoing, nothing has come to our attention to cause us to believe that the
Registration Statement, as of the date hereof, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, as of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that we have not
been requested to and do not make any comment in this paragraph with respect to
the financial statements, schedules and other financial and statistical
information contained in the Registration Statement or the Prospectus).

Our opinion that any document is valid, binding, or enforceable
in accordance with its terms is qualified as to:
<PAGE>

(a) limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to
or affecting the enforcement of creditors' rights generally;

(b) rights to indemnification and contribution which may be limited by
applicable law or equitable principles; and

(c) general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

We hereby represent that the Amendment contains no disclosure which would
render it ineligible to become effective immediately upon filing pursuant to
paragraph (b) of Rule 485 of the Commission.

We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 3 and to the use of our name where it appears in
the Post-Effective Amendment No. 3

and the Prospectus.

Very truly yours,

Carter, Ledyard & Milburn

<PAGE>

EXHIBIT 99.C2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in Part B the Prospectus constituting part of this
Post Effective Amendment No. 3 to the registration statement on Form S-6 of our
report dated December 22, 1999 relating to the financial statements and
financial highlights of DIAMONDS Trust, Series 1, which appears in Part B of the
Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in Part B of the Prospectus.

PricewaterhouseCoopers LLP
Boston, Massachusetts

February 23, 2000