As filed with the Securities and Exchange Commission on July 11, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
Schwab Trusts, Schwab Strategic Ten Trust, 1997 Series A
B. NAME OF DEPOSITORS:
Charles Schwab & Co., Inc. Reich & Tang Distributors L.P.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
Charles Schwab & Co., Inc. Reich & Tang Distributors L.P.
101 Montgomery Street 600 Fifth Avenue
San Francisco, California 94104 New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
<TABLE>
<S> <C> <C>
COPY OF COMMENTS TO:
FRANCES COLE, ESQ. PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Charles Schwab & Co., Inc. Reich & Tang Distributors L.P. Battle Fowler LLP
101 Montgomery Street 600 Fifth Avenue 75 East 55th Street
San Francisco, California 94104 New York, New York 10020 New York, New York 10022
(212) 856-6858
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Schwab Trusts, Schwab Strategic Ten
Trust, 1997 Series A is being registered under the Securities Act of
1933 pursuant to Section 24(f) of the Investment Company Act of 1940,
as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No filing fee required.
H. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
/ / Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
The registrant hereby amends the registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
606976.1
<PAGE>
Schwab Trust, Schwab Strategic Ten Trust, 1997 Series A
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization And General Information
<S> <C> <C>
1. (a) Name of trust.............................................. Front cover of Prospectus
(b) Title of securities issued................................. Front cover of Prospectus
2. Name and address of each depositor.............................. The Sponsors
3. Name and address of trustee..................................... The Trustee
4. Name and address of principal underwriters...................... Distribution of Units
5. State of organization of trust.................................. Organization
6. Execution and termination of trust agreement.................... Trust Agreement, Amendment and Termination
7. Changes of name................................................. None
8. Fiscal year..................................................... Not applicable
9. Litigation...................................................... None
II. General Description of The Trust and Securities of the Trust
10. (a) Registered or bearer securities............................ Book-Entry Units
(b) Cumulative or distributive securities...................... Interest and Principal Distributions
(c) Redemption................................................. Trustee Redemption
(d) Conversion, transfer, etc.................................. Book-Entry Units, Sponsors Repurchase, Trustee
Redemption
(e) Periodic payment plan...................................... Not Applicable
(f) Voting rights.............................................. Trust Agreement, Amendment and Termination
(g) Notice to certificateholders............................... Records, Portfolio, Substitution of Securities, Trust
Agreement, Amendment and Termination, The
Sponsors, The Trustee
(h) Consents required.......................................... Trust Agreement and Amendment, Trust Termination
(i) Other provisions........................................... Tax Status
11. Type of securities comprising units............................. Objective, Portfolio, The Securities, Substitution of
Securities
12. Certain information regarding periodic payment certificates..... Not Applicable
</TABLE>
-i-
606976.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
13. (a) Load, fees, expenses, etc.................................. Summary of Essential Information, Public Offering
Price, Discounts, Sponsors' Profits, Trust
Administration, Trust Expenses and Charges,
Reinvestment Plan
(b) Certain information regarding periodic payment
certificates........................................... Not Applicable
(c) Certain percentages........................................ Summary of Essential Information, Public Offering
Price, Discounts
(d) Price differences.......................................... Discounts, Distribution of Units
(e) Other loads, fees, expenses................................ None
(f) Certain profits receivable by depositors, principal
underwriters, trustee or affiliated persons............ Trust Termination
(g) Ratio of annual charges to income.......................... Not Applicable
14. Issuance of trust's securities.................................. Organization, Book-Entry Units
15. Receipt and handling of payments from purchasers................ Public Offering Price
16. Acquisition and disposition of underlying securities............ Organization, Substitution of Securities, Portfolio,
Portfolio Supervision
17. Withdrawal or redemption........................................ Summary of Essential Information, Market for Units,
Sponsors Repurchase, Trustee Redemption
18. (a) Receipt, custody and disposition of income................. Distributions
(b) Reinvestment of distributions.............................. Reinvestment Plan
(c) Reserves or special funds.................................. Distributions
(d) Schedule of distributions.................................. Not Applicable
19. Records, accounts and reports................................... Records
20. Certain miscellaneous provisions of trust agreement
(a) Amendment.................................................. Trust Agreement and Amendment, Trust Termination
(b) Termination................................................ Trust Agreement and Amendment, Trust Termination
(c) and (d) Trustee, removal and successor..................... The Trustee
(e) and (f) Depositor, removal and successor................... The Sponsors
21. Loans to security holders....................................... None
22. Limitations on liability........................................ The Sponsors, The Trustee Evaluation of the Trust
23. Bonding arrangements............................................ Part II - Item A
24. Other material provisions of trust agreement.................... None
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor....................................... The Sponsors
26. Fees received by depositor...................................... Not Applicable
27. Business of depositor........................................... The Sponsors
</TABLE>
-ii-
606976.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
28. Certain information as to officials and affiliated persons of
depositor.................................................... Not Applicable
29. Voting securities of depositor.................................. Not Applicable
30. Persons controlling depositor................................... None
31. Payments by depositor for certain services
rendered to trust...................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust............................................ Not Applicable
33. Remuneration of employees of depositor for certain services
rendered to trust............................................ Not Applicable
34. Remuneration of other persons for certain services
rendered to trust............................................ Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states.................... Distribution of Units
36. Suspension of sales of trust's securities....................... None
37. Revocation of authority to distribute........................... None
38. (a) Method of distribution..................................... Distribution of Units
(b) Underwriting agreements.................................... Distribution of Units
(c) Selling agreements......................................... Distribution of Units
39. (a) Organization of principal underwriters..................... The Sponsors
(b) N.A.S.D. membership of principal underwriters.............. The Sponsors
40. Certain fees received by principal underwriters................. The Sponsors
41. (a) Business of principal underwriters......................... The Sponsors
(b) Branch offices of principal underwriters................... None
(c) Salesmen of principal underwriters......................... Not Applicable
42. Ownership of trust's securities by certain persons.............. Not Applicable
43. Certain brokerage commissions received by
principal underwriters................................. Not Applicable
44. (a) Method of valuation........................................ Summary of Essential Information, Statement of
Financial Condition, Liquidity, Distributions
(b) Schedule as to offering price.............................. Summary of Essential Information
(c) Variation in offering price to certain persons............. Distribution of Units, Discounts
45. Suspension of redemption rights................................. Not Applicable
46. (a) Redemption valuation....................................... Summary of Essential Information, Market for Units,
Termination, Offering Price, Sponsors Repurchase,
Trustee Redemption
(b) Schedule as to redemption price............................ Summary of Essential Information
</TABLE>
-iii-
606976.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
47. Maintenance of position in underlying securities................ Market for Units, Offering Price, Sponsors Repurchase,
Trustee Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee.......................... The Trustee
49. Fees and expenses of trustee.................................... Trust Expenses and Charges
50. Trustee's lien.................................................. Trust Expenses and Charges
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's securities...................... Not Applicable
VII. Policy of Registrant
52. (a) Provisions of trust agreement with respect to selection or
elimination of underlying securities................... Portfolio Supervision, Substitution of Securities, Trust
Agreement and Amendment, Trust Termination
(b) Transactions involving elimination of underlying
securities............................................. Not Applicable
(c) Policy regarding substitution or elimination of underlying Portfolio Supervision, Substitution of Securities, Trust
securities............................................. Agreement and Amendment, Trust Termination
(d) Fundamental policy not otherwise covered................... None
53. Tax status of trust............................................. Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during last ten years........................ Not Applicable
55. Hypothetical account for issuers of periodic payment plans...... Not Applicable
56. Certain information regarding periodic payment certificates..... Not Applicable
57. Certain information regarding periodic payment plans............ Not Applicable
58. Certain other information regarding
periodic payment plans................................. Not Applicable
59. Financial statements (Instruction 1(c) to Form S-6)............. Statement of Financial Condition
</TABLE>
-iv-
606976.1
<PAGE>
SUBJECT TO COMPLETION DATED JULY 11, 1997
INSERT LOGO
SCHWAB TRUSTS
SCHWAB STRATEGIC TEN TRUST, 1997 SERIES A
The Trust is a unit investment trust designated Schwab Strategic Ten Trust, 1997
Series A (the "Trust"). The Sponsors are Charles Schwab & Co., Inc. and Reich &
Tang Distributors L.P. The objective of the Trust is to maximize total return
through a combination of capital appreciation and current dividend income. The
Sponsors cannot give any assurance that the Trust's objective can be achieved.
The Trust seeks to achieve its objective by attempting to outperform the Dow
Jones Industrial Average ("DJIA") by investing in a portfolio of the DJIA's ten
highest dividend yielding common stocks (the "Strategic Ten"), determined as of
two business days prior to the Initial Date of Deposit. The Strategic Ten
strategy is also commonly referred to as the "Dogs of the Dow". The name "Dow
Jones Industrial Average" is the property of Dow Jones & Company, Inc., which is
not affiliated with the Sponsors and has not participated in any way in the
creation of the Trust or in the selection of the stocks included in the Trust
and has not reviewed or approved any information included in this Prospectus.
Dow Jones & Company, Inc. has not granted to the Trust or the Sponsors a license
to use the Dow Jones Industrial Average. The value of the Units of the Trust
will fluctuate with fluctuations in the value of the underlying Securities in
the Trust. Therefore, Unitholders who sell their Units prior to termination of
the Trust may receive more or less than their original purchase price upon sale.
No assurance can be given that dividends will be paid or that the Units will
appreciate in value. The Trust will terminate approximately one year after the
Initial Date of Deposit. The minimum purchase is $1,000 or 100 Units for
individual purchasers, and $250 or 25 Units for purchases by Individual
Retirement Accounts, self-employed retirement plans (formerly Keogh Plans),
pension funds and other tax-deferred retirement plans.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive material relating to the Trust and the
Statement of Financial Condition of the Trust. Part B contains general
information about the Trust. Part A may not be distributed unless accompanied by
Part B. Please read and retain both parts of this Prospectus for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED ______ __, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
480911.6
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION AS OF _______ __, 1997:*
<TABLE>
<S> <C>
DATE OF DEPOSIT: _______ __, 1997 CUSIP NUMBERS:
AGGREGATE VALUE OF SECURITIES.................. $_____ Schwab Fee-Based Accounts:
AGGREGATE VALUE OF SECURITIES Cash: _________; Cash: __________
PER 100 UNITS............................... $_____ Reinvestment: __________ Reinvestment: _________
NUMBER OF UNITS................................ _____ TRUSTEE: The Chase Manhattan Bank
FRACTIONAL UNDIVIDED INTEREST IN TRUSTEE'S FEE: $___ per 100 Units outstanding
TRUST....................................... 1/____ ESTIMATED ORGANIZATIONAL EXPENSES****:
PUBLIC OFFERING PRICE PER 100 UNITS $___ per 100 Units
Aggregate Value of Securities in ESTIMATED OFFERING COSTS****: $___ per 100
Trust.................................... $_____ Units
Divided By ___ Units (times 100)............ $_____ OTHER FEES AND EXPENSES: $___ per 100 Units
Public Offering Price per 100 Units**+ outstanding
SPONSORS' REPURCHASE PRICE AND SPONSORS: Charles Schwab & Co., Inc. and Reich &
REDEMPTION PRICE PER Tang Distributors L.P.
100 UNITS++................................. $_____ AGENT FOR SPONSORS: Reich & Tang Distributors
EVALUATION TIME: 4:00 p.m. New York Time. L.P.
MINIMUM INCOME OR PRINCIPAL SPONSORS' PORTFOLIO SUPERVISORY,
DISTRIBUTION: $1.00 per 100 Units BOOKKEEPING AND ADMINISTRATIVE FEE:
LIQUIDATION PERIOD: Beginning 30 days prior to Maximum of $___ per 100 Units outstanding (see
the Mandatory Termination Date. "Trust Expenses and Charges" in Part B).
MINIMUM VALUE OF TRUST: The Trust may be RECORD DATES: December 15 and June 15
terminated if the value of the Trust is less than 40% DISTRIBUTION DATES: December 31 and June 30
of the aggregate value of the Securities at the ROLLOVER NOTIFICATION DATE*****: ______
completion of the Deposit Period. __, 1998 or another date as determined by the
MANDATORY TERMINATION DATE: The earlier of Sponsors.
_____ __, 1998 or the disposition of the last Security DEFERRED SALES CHARGE PAYMENT DATES:
in the Trust. The ______ of each month commencing
EXPECTED SETTLEMENT DATE***: , 1997 ____________ ___, 1997.
</TABLE>
- ------------------
* The business day prior to the Initial Date of Deposit. The Initial Date
of Deposit is the date on which the Trust Agreement was signed and the deposit
of Securities with the Trustee made.
** A Deferred Sales Charge of 1.25% of the Public Offering Price will be
paid through ten monthly deductions subsequent to the Initial Date of Deposit.
See "Public Offering-Discounts" in Part B for a description of reduced deferred
sales charges for certain investors. The Deferred Sales Charge is paid through
reduction of the net asset value of the Trust by $______ per 100 Units on each
Deferred Sales Charge Payment Date. (See "Public Offering - Offering Price") On
a repurchase or redemption of Units before the last Deferred Sales Charge
Payment Date, any remaining Deferred Sales Charge payments will be deducted from
the proceeds. Units purchased pursuant to the Reinvestment Plan are subject to
that portion of the Deferred Sales Charge remaining at the time of reinvestment
(see "Reinvestment Plan").
*** The business day on which contracts to purchase securities in the
Trust are expected to settle.
**** The Trust (and therefore the Unitholders) will bear all or a portion
of its organizational costs, which include the following: the cost of preparing
and printing the registration statement, the trust indenture and the closing
documents; and the initial audit of the Trust. Total organizational expenses
will be amortized over the life of the Trust. Offering costs, including the
costs of registering securities with the Securities and Exchange Commission and
the states, will be amortized over the term of the initial offering period,
which may be between 30 and 90 days. See "Trust Expenses" in Part B. These
figures are based upon the assumption that the Trust will reach a size of
_________ Units as estimated by the Sponsors; organizational expenses and
offering costs per 100 Units will vary with the actual size of the Trust. If the
Trust does not reach this Unit level, the Estimated Organizational Expenses and
Offering Costs per 100 Units will be higher.
A-2
480911.6
<PAGE>
****** If a Unitholder ("Rollover Unitholder") so specifies on or prior to the
Rollover Notification Date, the Rollover Unitholder's terminating distribution
will be reinvested in an available series of the Schwab Strategic Ten Trust,
1998 Series, if offered (see "Trust Administration--Trust Termination").
+ On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have included
in the Public Offering Price a pro rata share of any cash in such Accounts.
++ Any redemptions of over ______ Units may, upon request by a redeeming
Unitholder, be made in kind. The Trustee will forward the distributed securities
to the Unitholder's broker-dealer account at The Depository Trust Company in
book-entry form. See "Liquidity--Trustee Redemption" in Part B. This reflects
deductions for the remaining Deferred Sales Charge payments ($________
initially).
A-3
480911.6
<PAGE>
FEE TABLE
- -------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See "Public Offering and Trust Expenses
and Charges." Although each Series has a term of only one year, and is a unit
investment trust rather than a mutual fund, this information is presented to
permit a comparison of fees, assuming the principal amount and distributions are
rolled over each year into a new Series subject only to the Deferred Sales
Charge.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unitholder Transaction Expenses Maximum Reduced
Deferred Sales Charge Deferred Sales Charge
--------------------- ---------------------
<S> <C> <C> <C> <C>
As a % of Amount As a % of Amount
Initial per Initial per
Offering 100 Units Offering 100 Units
Price --------- Price ---------
----- -----
Deferred Sales Charge per Year ........................................ 1.25%* $------ 1.00%** $ ------
----- -------- ----- --------
Maximum Sales Charge Imposed Per Year on Reinvested Dividends.......... 1.25%*** $------ 1.00%*** $------
===== ======= ===== =======
Estimated Annual Fund Operating Expenses Amount
per Amount
As a % of 100 As a % of per
Net Assets Units Net Assets 100 Units
---------- ----- ---------- ---------
Trustee's Fee.......................................................... ----% $------ ----% $------
Portfolio Supervision, Bookkeeping and Administrative Fees............. ----% ------ ----% ------
Organizational Expenses................................................ ----% ------ ----% ------
Other Operating Expenses............................................... ----% ------ ----% ------
----- ------- ----- -------
Total.............................................................. ----% $------ ----% $------
===== ======= ===== =======
Examples
Maximum Deferred Sales Charge Example: Cumulative Expenses Paid for Period:
-------------------------------------------------------
3 5 10
1 year years years years
------ ----- ----- -----
An investor would pay the following expenses on a $100 investment, assuming
the Trust estimated operating expense ratio of ______% and a 5% annual
return on investment throughout the periods.................................$----- $---- $---- $----
Reduced Deferred Sales Charge Example: Cumulative Expenses Paid for Period:
-------------------------------------------------------
3 5 10
1 year years years years
------ ----- ----- -----
An investor would pay the following expenses on a $100 investment, assuming
the Trust estimated operating expense ratio of ______% and a 5% annual
return on the investment throughout the periods....................... $---- $---- $---- $----
</TABLE>
The Examples assume reinvestment of all dividends and distributions and utilizes
a 5% annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. For purposes of the Examples, the
Deferred Sales Charge imposed on reinvestment of dividends is not reflected
until the year following payment of the dividend; the cumulative expenses would
be higher if sales charges on reinvested dividends were reflected in the year of
reinvestment. The Examples should not be considered a representation of past or
future expenses or annual rate of return; the actual expenses and annual rate of
return may be more or less than those assumed for purposes of the Examples.
- ------------------
* The actual fee is $_______ per month per 100 Units, irrespective of
purchase or redemption price, deducted in each of the last ten (10) months of
each one-year Portfolio. If a Holder sells Units before all of these deductions
have been made, the balance of the Deferred Sales Charge will be deducted from
the sales proceeds. If the Unit price exceeds $10 per Unit, the Deferred Sales
Charge will be less than _____%; if the Unit price is less than $10 per Unit,
the Deferred Sales Charge will exceed _____%.
** The actual fee is $________ per month per 100 Units, irrespective of
purchase or redemption price, deducted in each of the last ten (10) months of
each one-year Portfolio. If a Holder sells Units before all of these deductions
have been made, the balance of the Deferred Sales Charge will be deducted from
the sales proceeds. If the Unit price exceeds $10 per Unit, the Deferred Sales
Charge will be less than _____%; if the Unit price is less than $10 per Unit,
the Deferred Sales Charge will exceed _____%. See "Public Offering-Discounts" in
Part B for a description of which investors will be eligible for this reduced
Deferred Sales Charge.
*** Reinvested dividends will be subject only to the Deferred Sales Charge
remaining at the time of reinvestment (see "Reinvestment Plan" in this Part A).
A-4
C/M: 12429.0001 480911.6
<PAGE>
OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsors) by creating a portfolio that follows
the investment strategy of investing in the DJIA's ten (10) common stocks having
the highest dividend yield (the "Strategic Ten"), determined as of two business
days prior to the Initial Date of Deposit. The Trust's portfolio will be
comprised of these ten (10) stocks. The Trust's assets will be allocated in
approximately equal amounts among the Strategic Ten. For the actual percentage
of each stock in the portfolio, see "Portfolio" herein. (Also, see "The Trust -
Objective" and "The Trust - The Securities" in Part B.) As used herein, the term
"highest dividend yield" means the yield for each Security calculated by
annualizing the last quarterly or semi-annual ordinary dividend distributed on
that Security and dividing the result by the market value of that Security as of
two business days prior to the Initial Date of Deposit. This rate is historical,
and there is no assurance that any dividends will be declared or paid in the
future on the Securities in the Trust. The Trust may not exceed the DJIA in any
one year; however, historically, long term cumulative returns from this strategy
has outperformed the DJIA. As used herein, the term "Securities" means the
common stocks initially deposited in the Trust and described in "Portfolio" in
Part A and any additional common stocks acquired and held by the Trust pursuant
to the provisions of the Indenture. Further, the Securities may appreciate or
depreciate in value, dependent upon the full range of economic and market
influences affecting corporate profitability, the financial condition of issuers
and the price of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objective of the Trust will be
achieved.
PORTFOLIO. The Portfolio contains 10 issues of common stock. 100% of the issues
are represented by the Sponsor's contracts to purchase. Based upon the principal
business of each issuer and current market values, the following industries are
represented in the Portfolio:
PUBLIC OFFERING PRICE. The Public Offering Price per 100 Units of the Trust is
equal to the aggregate value of the underlying Securities (the price at which
they could be directly purchased by the public assuming they were available) in
the Trust divided by the number of Units outstanding times 100. The deferred
sales charge of 1.25% (the "Deferred Sales Charge") will be payable in ten
monthly installments over the life of the Trust. The price of a single Unit, or
any multiple thereof, is calculated by dividing the Public Offering Price per
100 Units by 100 and multiplying by the number of Units. Any cash held by the
Trust will be added to the Public Offering Price. For additional information
regarding the Public Offering Price, repurchase and redemption of Units and
other essential information regarding the Trust, see the "Summary of Essential
Information." The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying
Securities. The price to be paid by each investor will be computed as of the
date the Units are purchased. (See "Public Offering" in Part B.)
DEFERRED SALES CHARGE. The Deferred Sales Charge is a monthly charge which will
initially be $____ per 100 Units and is accrued in ten monthly installments
commencing on __________________, 1997 ($_____ total). See "Public
OfferingDiscounts" in Part B for a description of reduced deferred sales charges
for certain investors. This deferred method of payment keeps more of the
Unitholders' money invested over a longer period of time. (See "Public Offering
- - Offering Price" in Part B.)
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
Unitholders (based on the most recent quarterly or semi-annual ordinary dividend
distributed with respect to the Securities) as of two business days prior to the
Initial Date of Deposit per 100 Units was $________. This estimate will vary
with changes in the Trust's fee and expenses, actual dividends received, and
with the sale of Securities. There is no assurance that the estimated net annual
dividend distributions will be realized in the future.
A-5
480911.6
<PAGE>
DISTRIBUTIONS. Dividend distributions, if any, will be made on the Distribution
Dates to all Unitholders of record on the Record Date. For the specific on or
dates representing the Distribution Dates and Record Dates, see "Summary of
Essential Information" in Part A. The final distribution will be made within a
reasonable period of time after the termination of the Trust. (See "Rights of
Unitholders--Distributions" in Part B.) Unitholders may elect to automatically
reinvest distributions (other than the final distribution in connection with the
termination of the Trust), into additional Units of the Trust, which are subject
to the remainder of the Deferred Sales Charge. See "Reinvestment Plan" in Part
B.
MARKET FOR UNITS. The Sponsors, although not obligated to do so, intend to
maintain a secondary market for the Units and to continuously offer to
repurchase the Units of the Trust both during and after the initial public
offering. The secondary market repurchase price will be based on the market
value of the Securities in the Trust portfolio and will be the same as the
redemption price. (See "Liquidity--Sponsors Repurchase" for a description of how
the secondary market repurchase price will be determined.) If a market is not
maintained a Unitholder will be able to redeem his Units with the Trustee (see
"Liquidity--Trustee Redemption" in Part B). As a result, the existence of a
liquid trading market for these Securities may depend on whether dealers will
make a market in these Securities. There can be no assurance of the making or
the maintenance of a market for any of the Securities contained in the portfolio
of the Trust or of the liquidity of the Securities in any markets made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Securities to the Sponsors. The price at which the Securities may
be sold to meet redemptions and the value of the Units will be adversely
affected if trading markets for the Securities are limited or absent.
TERMINATION. During the 30-day period prior to the Mandatory Termination Date
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the Trust and all Securities will be sold or distributed by
the Mandatory Termination Date. The Trustee may utilize the services of the
Sponsors for the sale of all or a portion of the Securities in the Trust. Any
brokerage commissions received by the Sponsors from the Trust in connection with
such sales will be in accordance with applicable law. The Sponsors will
determine the manner, timing and execution of the sales of the underlying
Securities. The Sponsors will attempt to sell the Securities as quickly as they
are able during the Liquidation Period without, in their judgment, materially
adversely affecting the market price of the Securities, but all of the
Securities will in any event be disposed of by the end of the Liquidation
Period. The Sponsors do not anticipate that the period will be longer than 30
days, and it could be as short as one day, depending on the liquidity of the
Securities being sold.
Unitholders may elect one of the three options in receiving their terminating
distributions: (1) to receive their pro rata share of the underlying Securities
in-kind, if they own at least _______ Units, (2) to receive cash upon the
liquidation of their pro rata share of the underlying Securities or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of
Schwab Strategic Ten Trust (the "New Trust") (if one is offered) at a reduced
deferred sales charge (see "Rollover Option"). See "Trust Administration--Trust
Termination" in Part B for a description of how to select a termination
distribution option. Unitholders who have not chosen to receive
distributions-in-kind will be at risk to the extent that the market value of the
Securities declines prior to their being sold during the Liquidation Period; for
this reason the Sponsors will be inclined to sell the Securities in as short a
period as they can without materially adversely affecting the price of the
Securities. Unitholders should consult their own tax advisers in this regard.
ROLLOVER OPTION. Unitholders may elect to roll over their terminating
distributions into the next available New Trust at a reduced deferred sales
charge. Rollover Unitholders must make this election on or prior to the Rollover
Notification Date. Upon making this election, a Unitholder's Units will be
redeemed and the proceeds will be reinvested in units of the next available New
Trust. See "Trust Administration--Trust Termination" in Part B for details to
make this election.
RISK CONSIDERATIONS. An investment in Units of the Trust should be made with an
understanding of the risks inherent in an investment in any of the Securities
including for common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may
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contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). Investors should consider the greater risk of the Trust's
concentration and the effect on their investment versus a more diversified
portfolio and should compare returns available on less concentrated portfolios
before making an investment decision. The portfolio of the Trust is fixed and
not "managed" by the Sponsors. Investors should note that since the Portfolio of
the Trust will be determined as of two business days prior to the Initial Date
of Deposit, any changes in the components of the DJIA or the Strategic Ten
following such determination will not cause a change in the composition of the
Portfolio. Since the Trust will not sell Securities in response to ordinary
market fluctuation, but only (except for certain extraordinary circumstances) at
the Trust's termination or to meet redemptions, the amount realized upon the
sale of the Securities may not be the highest price attained by an individual
Security during the life of the Trust. In connection with the deposit of
Additional Securities subsequent to the Initial Date of Deposit, if cash (or a
letter of credit in lieu of cash) is deposited with instructions to purchase
Securities, to the extent the price of a Security increases or decreases between
the deposit and the time the Security is purchased, Units may represent less or
more of that Security and more or less of the other Securities in the Trust. In
addition, brokerage fees incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Trust.
Price fluctuations during the period from the time of deposit to the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Unitholder's Units and the income per Unit received by the Trust.
The Sponsors cannot give any assurance that the business and investment
objectives of the issuers of the Securities will correspond with or in any way
meet the limited term objective of the Trust. (See "Risk Considerations" in Part
B of this Prospectus.)
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust, subject only to
any remaining deductions of the Deferred Sales Charge. See "Reinvestment Plan"
in Part B for details on how to enroll in the Reinvestment Plan.
UNDERWRITING. Charles Schwab & Co., Inc., 101 Montgomery Street, San Francisco,
California 94104, will act as Underwriter for all of the Units of the Schwab
Strategic Ten Trust, 1997 Series A. Units of the Trust shall be distributed
exclusively by the Underwriter to its customers (see "Public
Offering--Distribution of Units" in Part B).
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SCHWAB STRATEGIC TEN TRUST,
1997 SERIES A
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, _______ __, 1997
ASSETS
<TABLE>
<S> <C>
Investment in Securities--Sponsors' Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $_______)(Note 1)...............$
-------
Organizational Costs (Note 2)............................................................-------
Offering Costs (Note 3)..................................................................-------
Total....................................................................................$
======
LIABILITIES AND INTEREST OF UNITHOLDERS
Accrued Liabilities (Notes 2 and 3).......................................................$
-------
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (1997 Series A: ______ Units)............................-------
Total......................................................................................$
======
Net Asset Value per Unit...................................................................$
======
</TABLE>
- -------------------------
Notes to Statement:
(1) Schwab Strategic Ten Trust, 1997 Series A (the "Trust") is a unit
investment trust created under the laws of the State of New York and registered
under the Investment Company Act of 1940. The objective of the Trust, jointly
sponsored by Charles Schwab & Co., Inc., and Reich & Tang Distributors L.P. (the
"Sponsors") is to maximize total return through capital appreciation and current
dividend income. On _______ __, 1997, the "Date of Deposit", Portfolio Deposits
were received by The Chase Manhattan Bank, the Trust's Trustee, in the form of
executed securities transactions, in exchange for ______ units of the Trust. An
irrevocable letter of credit issued by ___________ in an amount of $_______ has
been deposited with the Trustee for the benefit of the Trust to cover the
purchases of such Securities. Aggregate cost to the Trust of the Securities
listed in the Portfolio is determined by the Trustee on the basis set forth
under "Public Offering--Offering Price" as of 4:00 p.m. on _______ __, 1997. The
Trust will terminate on _____ __, 1998 or earlier under certain circumstances as
further described in the Prospectus.
(2) Organizational costs incurred by the Trust have been deferred and will
be amortized on a straight line basis over the life of the Trust. The Trust will
reimburse the Sponsors for actual organizational costs incurred.
(3) Offering costs incurred by the Trust will be amortized over the term
of the initial offering period.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
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SCHWAB STRATEGIC TEN TRUST,
1997 SERIES A
PORTFOLIO
AS OF OPENING OF BUSINESS, _______ __, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Market
Value of Cost of
Stocks as a Securities
Number Percentage Current Market to the
Portfolio of Ticker of the Dividend Value Per Trust
No. Shares Name of Issuer (1) Symbol Trust (2) Yield(3) Share (4)
----- -------- ------------------ ------ --------- -------- --------- --------
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
------ ------
Total Investment in Securities 100% $
====== ======
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on _______ __,
1997. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be ________ __, 1997.
(2) Based on the cost of the Securities to the Trust.
(3) Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend received on the security
and dividing the result by its market value as of the close of trading on
________ __, 1997.
(4) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsors' Purchase Price is $_______. The Sponsors'
Profit/(Loss) on the Initial Date of Deposit is $______.
The accompanying notes form an integral part of the Financial Statements.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders,
Schwab Strategic Ten Trust,
1997 Series A
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, presents fairly, in all material respects, the
financial position of Schwab Strategic Ten Trust, 1997 Series A (the "Trust") at
opening of business, _______ __, 1997, in conformity with generally accepted
accounting principles. This financial statement is the responsibility of the
Trust's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this financial
statement in accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation
of the contracts for the securities at opening of business, _______ __, 1997, by
correspondence with the Sponsors, provides a reasonable basis for the opinion
expressed above.
ERNST & YOUNG LLP
New York, New York
_______ __, 1997
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- --------------------------------------------------------------------------------
[INSERT LOGO]
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SCHWAB TRUSTS
SCHWAB STRATEGIC TEN TRUST, 1997 SERIES A
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Schwab Strategic Ten Trust consists of a "unit investment
trust" designated as set forth in Part A. The Trust was created under the laws
of the State of New York pursuant to a Trust Indenture and Agreement (the "Trust
Agreement"), dated the Initial Date of Deposit, among Charles Schwab & Co., Inc.
and Reich & Tang Distributors L.P., as Sponsors, and The Chase Manhattan Bank,
as Trustee.
On the Initial Date of Deposit, the Sponsors deposited with the Trustee
common stock, including funds and delivery statements relating to contracts for
the purchase of certain such securities (collectively, the "Securities") with an
aggregate value as set forth in Part A and cash or an irrevocable letter of
credit issued by a major commercial bank in the amount required for such
purchases. Thereafter the Trustee, in exchange for the Securities so deposited,
delivered to the Sponsors certificates evidencing the ownership of all Units of
the Trust. The Sponsors have a limited right to substitute other securities in
the Trust portfolio in the event of a failed contract. See "The
Trust--Substitution of Securities." The Sponsors may also, in certain
circumstances, direct the Trustee to dispose of certain Securities if the
Sponsors believe that, because of market or credit conditions, or for certain
other reasons, retention of the Security would be detrimental to Unitholders.
See "Trust Administration Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities of the Trust in the ratio of one
thousand Units for the indicated amount of the aggregate market value of the
Securities initially deposited in the Trust as is set forth in the "Summary of
Essential Information." As additional Units are issued by the Trust as a result
of the deposit of Additional Securities, as described below, the aggregate value
of the Securities in the Trust will be increased and the fractional undivided
interest in the Trust represented by each Unit will be decreased. To the extent
that any Units are redeemed by the Trustee, the fractional undivided interest or
pro rata share in such Trust represented by each unredeemed Unit will increase,
although the actual interest in such Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsors, or until the
termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsors established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"), the Sponsors may deposit
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additional Securities in the Trust that are substantially similar to the
Securities already deposited in the Trust ("Additional Securities"), contracts
to purchase Additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of Deposit. These additional Units, which will
result in an increase in the number of Units outstanding, will each represent,
to the extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
Initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date of
Deposit because of, among other reasons, purchase requirements, changes in
prices, or unavailability of Securities. The composition of the Trust portfolio
may change slightly based on certain adjustments made to reflect the disposition
of Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to such Securities, including Securities received in
exchange for shares or the reinvestment of the proceeds distributed to
Unitholders. Deposits of Additional Securities in the Trust subsequent to the
Deposit Period must replicate exactly the existing proportionate relationship
among the number of shares of Securities in the Trust portfolio. Substitute
Securities may be acquired under specified conditions when Securities originally
deposited in the Trust are unavailable (see "The Trust--Substitution of
Securities" below).
OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsors) by creating a portfolio that follows
the investment strategy of investing in the DJIA's ten (10) common stocks having
the highest dividend yield (the "Strategic Ten"), determined as of two business
days prior to the Initial Date of Deposit. The Strategic Ten strategy is also
commonly referred to as the "Dogs of the Dow". The Trust's portfolio will be
comprised of these ten (10) stocks. The Trust's assets will be allocated in
approximately equal amounts among the Strategic Ten. For the actual percentage
of each stock in the portfolio, see "Portfolio" in Part A. (Also see "The Trust
- - Objective" and "The Trust - The Securities" in Part B.) As used herein, the
term "highest dividend yield" means the yield for each Security calculated by
annualizing the last quarterly or semi-annual ordinary dividend distributed on
that Security and dividing the result by the market value of that Security as of
two business days prior to the Initial Date of Deposit. This rate is historical,
and there is no assurance that any dividends will be declared or paid in the
future on the Securities in the Trust. As used herein, the term "Securities"
means the common stocks initially deposited in the Trust and described in
"Portfolio" in Part A and any additional common stocks acquired and held by the
Trust pursuant to the provisions of the Indenture.
Investing in DJIA stocks with the highest dividend yields may be effective
in achieving the Trust's investment objective because regular dividends are
common for established companies and dividends have accounted for a substantial
portion of the total return on DJIA stocks as a group. There can be no assurance
that the dividend rates will be maintained. Reduction or elimination of a
dividend could adversely affect the stock price as well. Purchasing a portfolio
of these stocks as opposed to one or two stocks can achieve a more diversified
holding. There is only one investment decision instead of ten. An investment in
the Trust can be cost-efficient, avoiding the odd-lot costs of buying small
quantities of securities directly. An investment in a number of companies with
high dividends relative to their stock prices is designed to increase the
Trust's potential for higher returns. The Trust's return will consist of a
combination of capital appreciation and current dividend income. The Trust will
terminate in approximately one year, at which time investors may choose to
either receive the distributions in kind (if they own at least ________ Units),
in cash or reinvest in a subsequent series of the Schwab Strategic Ten Trust (if
available) at a reduced deferred sales charge. Further, the Securities may
appreciate or depreciate in value, dependent upon the full range of economic and
market influences affecting corporate profitability, the financial condition of
issuers and the prices of equity securities in general and the Securities in
particular. Investors should note that the Trust's selection criteria were
applied to the Securities two business days prior to the Initial Date of
Deposit. Since the Sponsors
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may deposit additional Securities in connection with the sale of additional
Units, the yields on these Securities may change subsequent to the Initial Date
of Deposit. Therefore, there is no guarantee that the objective of the Trust
will be achieved.
THE SECURITIES. Each of the Securities has been taken from the Dow Jones
Industrial Average ("DJIA"). The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the broad market and of
American industry. The companies are major factors in their industries and their
stocks are widely held by individuals and institutional investors. Changes in
the components of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely. Most
substitutions have been the result of mergers, but from time to time, changes
may be made to achieve a better representation. The components of the DJIA may
be changed at any time for any reason. Any changes in the components of the DJIA
after the date of this Prospectus will not cause a change in the identity of the
common stocks included in the Trust's portfolio, including any Additional
Securities deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. For two periods of 17 consecutive years each, there were no changes to
the list: March 1939 - July 1956 and June 1959 - August 1976. The DJIA last
changed on March 17, 1997.
Current DJIA
AT&T Corporation International Business Machines Corporation
Allied Signal International Paper Company
Aluminum Company of America Johnson & Johnson
American Express Company J.P. Morgan & Company, Inc.
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing Company
Coca-Cola Company Phillip Morris Companies, Inc.
E.I. du Pont de Nemours & Company Proctor & Gamble Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Group Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
Hewlett-Packard Co. Walt Disney Company
The yield for each Security was calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed and dividing the result
by the market value of the Security as of two business days prior to the Initial
Date of Deposit. This formula (an objective determination) served as the basis
for the Sponsors' selection of the Strategic Ten. The companies represented in
the Trust are some of the most well-known and highly capitalized companies in
America. The Securities were selected irrespective of any research
recommendation by the Sponsors. Investing in the stocks of the DJIA may be
effective as well as conservative because regular dividends are common for
established companies and dividends have accounted for a substantial portion of
the total return on stocks of the DJIA as a group.
Although the Schwab Strategic Ten Trust was not available until this year,
during the last 22 years, the strategy of investing in approximately equal
values of the ten highest yielding stocks each year generally would have yielded
a higher
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total return than an investment in all 30 stocks which make up the DJIA. The
following table shows the hypothetical performance of investing approximately
equal amounts in the Strategic Ten at the beginning of each year and rolling
over the proceeds. The total returns do not reflect sales charges, brokerage and
transaction costs, commissions or taxes and, therefore, will be different from
actual investment results. These results represent past performance of the
Strategic Ten and should not be considered indicative of future results of the
Trust. The Trust's annual total return may not exceed the DJIA in any one year;
however, historically, long term cumulative total returns from these strategies
has outperformed the cumulative returns of the DJIA. The Strategic Ten
underperformed the DJIA in certain years. Also, investors in the Trust may not
realize as high a total return as on a direct investment in the Strategic Ten
since the Trust has sales charges and expenses and may not be fully invested at
all times. Unit prices fluctuate with the value of the underlying stocks, and
there is no assurance that dividends on these stocks will be paid or that the
Units will appreciate in value.
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The following table compares the actual performance of the DJIA and
approximately equal values of the Strategic Ten Strategy in each of the past 21
years, as of December 31 in each of these years:
COMPARISON OF TOTAL RETURNS(1)
Dow Jones
Industrial
Year Ended Strategic Ten(2) Average (DJIA)
---------- ---------------- --------------
1976 34.80% 22.70%
1977 0.90 -12.70
1978 -0.10 2.70
1979 12.40 10.50
1980 27.22 21.50
1981 5.00 -3.40
1982 23.60 25.80
1983 38.70 25.70
1984 7.60 1.10
1985 29.50 32.80
1986 32.10 26.90
1987 6.10 6.00
1988 22.90 16.00
1989 26.50 31.70
1990 -7.60 -0.40
1991 39.30 23.90
1992 7.90 7.40
1993 27.30 16.80
1994 4.10 4.90
1995 36.70 36.40
1996 27.90 28.90
- --------------------------------
(1) Total Return represents the sum of Appreciation and Actual Dividend Yield.
(i) Appreciation for the Strategic Ten is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given year from the market value of those stocks as of
the last trading day in that year, and dividing the result by the market
value of the stocks as of the first trading day in that year. Appreciation
for the DJIA is calculated by subtracting the opening value of the DJIA as
of the first trading day in each year from the closing value of the DJIA as
of the last trading day in that year, and dividing the result by the opening
value of the DJIA as of the first trading day in that year. (ii) Actual
Dividend Yield for the Strategic Ten is calculated by adding the total
dividends received on the stocks in the year and dividing the result by the
market value of the stocks as of the first trading day in that year. Actual
Dividend Yield for the DJIA is calculated by taking the total dividends
credited to the DJIA and dividing the result by the opening value of the
DJIA as of the first trading day in that year. Total return does not take
into consideration any sales charges, commissions, expenses or taxes.
(2) The Strategic Ten in any given year were selected by ranking the dividend
yields for each of the stocks in the DJIA as of the beginning of that year,
based upon an annualization of the last quarterly or semi-annual regular
dividend distribution (which would have been declared in the preceding year)
divided by that stock's market value on the first trading day on the New
York Stock Exchange in that year.
These results represent past performance and should not be considered
indicative of future results of the Trust. Unit prices may fluctuate with
the value of the underlying stocks, and there is no assurance that dividends
on these stock will be paid or that the Units will appreciate in value.
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The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsors are authorized under the Trust Agreement to direct
the Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust. In addition, the Sponsors, at their option, are
authorized under the Trust Agreement to direct the Trustee to reinvest in
Substitute Securities the proceeds of the sale of any of the Securities only if
such sale was due to unusual circumstances as set forth under "Trust
Administration--Portfolio Supervision."
The Substitute Securities must be purchased within 20 days after the sale
of the portfolio Security or delivery of the notice of the failed contract.
Where the Sponsors purchase Substitute Securities in order to replace Failed
Securities, (i) the purchase price may not exceed the purchase price of the
Failed Securities and (ii) the Substitute Securities must be substantially
similar to the Failed Securities. Where the Sponsors purchase Substitute
Securities in order to replace Securities it sold, the Sponsors will endeavor to
select Securities which are equity securities that possess characteristics that
are consistent with the objective of the Trust as set forth above. Such
selection may include or be limited to Securities previously included in the
portfolio of the Trust. No assurance can be given that the Trust will retain its
present size and composition for any length of time.
The Trustee shall notify all Unitholders of the acquisition of the
Substitute Security, within five days thereafter, and the Trustee shall, on the
next Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security plus accrued interest, if
any. In the event no reinvestment is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders--Distributions." In addition, if the right of substitution shall not
be utilized to acquire Substitute Securities in the event of a failed contract,
the Sponsors will cause to be refunded the sales charge attributable to such
Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date. The proceeds from the sale of a Security or the exercise of
any redemption or call provision will be distributed to Unitholders except to
the extent such proceeds are applied to meet redemptions of Units. (See
"Liquidity--Trustee Redemption.")
RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated during a 30-day period at the termination of the one-year
life of the Trust. Since the Trust will not sell Securities in response to
ordinary market fluctuation, but only at the Trust's termination or upon the
occurrence of certain events (See "Trust Administration - Portfolio
Supervision") the amount realized upon the sale of the Securities may not be the
highest price attained by an individual Security during the life of the Trust.
Some of the Securities in the Trust may also be owned by other clients of the
Sponsors and their affiliates. However, because these clients may have differing
investment objectives, the Sponsors may sell certain Securities from those
accounts in instances where a sale by the Trust would be impermissible, such as
to maximize return by taking advantage of
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market fluctuations. Investors should consult with their own financial advisers
prior to investing in the Trust to determine its suitability. (See "Trust
Administration--Portfolio Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with
the creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsors may deposit Additional Securities, contracts to purchase Additional
Securities or cash (or letter of credit in lieu of cash) with instructions to
purchase Additional Securities, in each instance maintaining the original
proportionate relationship, subject to adjustment under certain circumstances,
of the numbers of shares of each Security in the Trust. To the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or less
of the other Securities in the Trust. In addition, brokerage fees (if any)
incurred in purchasing Securities with cash deposited with instructions to
purchase the Securities will be an expense of the Trust. Price fluctuations
between the time of deposit and the time the Securities are purchased, and
payment of brokerage fees, will affect the value of every Unitholder's Units and
the Income per Unit received by the Trust. In particular, Unitholders who
purchase Units during the initial offering period would experience a dilution of
their investment as a result of any brokerage fees paid by the Trust during
subsequent deposits of Additional Securities purchased with cash deposited. In
order to minimize these effects, the Trust will try to purchase Securities as
near as possible to the Evaluation Time or at prices as close as possible to the
prices used to evaluate Trust Units at the Evaluation Time.
COMMON STOCK. Since the Trust contains common stocks of domestic issuers,
an investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks including the risk that the
financial condition of the issuers of the Securities may become impaired or that
the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or
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banking crises. The value of the common stocks in the Trust thus may be expected
to fluctuate over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
LEGISLATION. From time to time Congress considers proposals to reduce the
rate of the dividends-received deduction which is available to certain
corporations. Enactment into law of a proposal to reduce the rate would
adversely affect the after-tax return to investors who can take advantage of the
deduction. Investors are urged to consult their own tax advisers. Further, at
any time after the Initial Date of Deposit, legislation may be enacted, with
respect to the Securities in the Trust or the issuers of the Securities.
Changing approaches to regulation, particularly with respect to the environment,
or with respect to the petroleum or tobacco industries, may have a negative
impact on certain companies represented in the Trust. There can be no assurance
that future legislation, regulation or deregulation will not have a material
adverse effect on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
GENERALLY. There is no assurance that any dividends will be declared or
paid in the future on the Securities. Investors should be aware that there is no
assurance that the Trust's objective will be achieved.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities and any cash held to purchase Securities is divided by
the number of Units outstanding. The aggregate value of the Securities is
determined in good faith by the Trustee on each "Business Day" as defined in the
Indenture in the following manner: because the Securities are listed on a
national securities exchange, this evaluation is based on the closing sale
prices on that exchange as of the Evaluation Time (unless the Trustee deems
these prices inappropriate as a basis for valuation). If the Trustee deems these
prices inappropriate as a basis for evaluation, then the Trustee may utilize, at
the Trust's expense, an independent evaluation service or services to ascertain
the values of the Securities. The independent evaluation service shall use any
of the following methods, or a combination thereof, which it deems appropriate:
(a) on the basis of current bid prices for comparable securities, (b) by
appraising the value of the Securities on the bid side of the market or by such
other appraisal deemed appropriate by the Trustee or (c) by any combination of
the above, each as of the Evaluation Time.
The sales charge consists of a Deferred Sales Charge of $_____ per
100 Units or 1.25% of the Public Offering Price. The Deferred Sales Charge will
be paid through ten monthly deductions commencing on the first Deferred Sales
Charge Payment Date as shown in the Summary of Essential Information. The
Deferred Sales Charge will initially be $_____ per 100 Units but will be reduced
each month by one tenth. To the extent the entire Deferred Sales Charge has not
been so deducted at the time of repurchase or redemption of the Units, any
unpaid amount will be deducted from the proceeds or in calculating an in kind
distribution. However, any remaining Deferred Sales Charge will be waived when
Units of any Schwab Strategic Ten Trust held at the time of the death (including
the death of a single joint tenant with rights of survivorship) or disability
(as defined in the Internal Revenue Code of 1986) of a Holder are repurchased or
redeemed. The Sponsors may require receipt of satisfactory proof of the death or
disability before releasing the portion of the proceeds representing the amount
waived. Units purchased pursuant to the Reinvestment Plan are subject only to
any remaining Deferred Sales Charge deductions (see "Reinvestment Plan"). The
implementation of the Deferred Sales Charge is contingent
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upon the granting of an order by the Securities and Exchange Commission
exempting the Sponsors from certain provisions of the Investment Company Act of
1940. The Sponsors intend to delay the Initial Date of Deposit until such order
is granted by the Commission.
DISCOUNTS. Employees (and their immediate families) of Charles Schwab &
Co., Inc., and Reich & Tang Distributors L.P. (and their affiliates) and of the
special counsel to the Sponsors may, pursuant to employee benefit arrangements,
purchase Units of the Trust at a price equal to the aggregate value of the
underlying securities in the Trust during the initial offering period, divided
by the number of Units outstanding plus a reduced Deferred Sales Charge of 1.0%
of the Public Offering Price. Such arrangements result in less selling effort
and selling expenses than sales to employee groups of other companies. Resales
or transfers of Units purchased under the employee benefit arrangements may only
be made through the Sponsors' secondary market, so long as it is being
maintained.
Units may be purchased in the primary or secondary market at the Public
Offering Price plus a reduced Deferred Sales Charge of 1.0% by investors who
purchase Units through registered investment advisers, certified financial
planners and registered broker-dealers who have agreements with Charles Schwab &
Co., Inc. ("Schwab Financial Advisor") or by investors in any unit investment
trust with an investment strategy based upon the Strategic Ten that have
purchased their investment within a two year period prior to the date of this
Prospectus who can purchase Units of the Trust in an amount not greater in value
than the amount of said investment made during this two year period.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsors at the Public Offering
Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsors may extend the initial offering period
for successive thirty-day periods.
The Sponsors intend to qualify the Units for sale in substantially all
States.
SPONSORS' PROFITS. The Sponsors will receive a combined gross underwriting
commission equal to up to 1.25% of the Public Offering Price per 100 Units
(equivalent to 1.266% of the net amount invested in the Securities).
Additionally, the Sponsors may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsors and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsors may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
they were a member. All or a portion of the Securities deposited in the Trust
may have been acquired through the Sponsors.
During the initial offering period and thereafter to the extent additional
Units continue to be offered by means of this Prospectus, the Sponsors may also
realize profits or sustain losses as a result of fluctuations after the Initial
Date of Deposit in the aggregate value of the Securities and hence in the Public
Offering Price received by the Sponsors for the Units. Cash, if any, made
available to the Sponsors prior to settlement date for the purchase of Units may
be used in the Sponsors' business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsors.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsors for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsors may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
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In maintaining a market for the Units (see "Sponsors Repurchase") the
Sponsors will realize profits or sustain losses in the amount of any difference
between the price at which they buy Units and the price at which they resell
such Units.
RIGHTS OF UNITHOLDERS
BOOK-ENTRY UNITS. Ownership of Units of the Trust will not be evidenced by
certificates. All evidence of ownership of the Units will be recorded in
book-entry form at Depository Trust Company ("DTC") through an investor's
broker's account. Units held through DTC will be deposited by the Sponsors with
DTC in the Sponsors' DTC account and registered in the nominee name CEDE & CO.
Individual purchases of beneficial ownership interest in the Trust will be made
in book-entry form through DTC. Ownership and transfer of Units will be
evidenced and accomplished directly and indirectly by book-entries made by DTC
and its participants. DTC will record ownership and transfer of the Units among
DTC participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchase and sale from Charles Schwab
& Co., Inc. from whom their purchase was made. Units are transferable by making
a written request properly accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unitholder. Unitholders must sign such written request exactly as their
names appear on the record of the Trust. Such signatures must be guaranteed by a
commercial bank or trust company, savings and loan association or by a member
firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the
Trustee to an Income Account for the Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for the
Trust.
Distributions to each Unitholder from the Income Account are computed as
of the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee. Distributions of amounts necessary to pay the Deferred Sales Charge
will be made from the Principal Account to an account maintained by the Trustee
for purposes of satisfying investors' sales charge obligations.
The dividend distribution per 100 Units, if any, cannot be anticipated and
may be paid as Securities are redeemed, exchanged or sold, or as expenses of the
Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
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RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately stated, of the Trust, expressed both
as total dollar amounts and as dollar amounts representing the pro rata share of
each 100 Units outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, Units held, a current list of Securities in the portfolio and a
copy of the Trust Agreement.
TAX STATUS
The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the Federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein. In the Opinion of Battle Fowler LLP, special
counsel for the Sponsors, under existing law:
1. The Trust will be classified as a grantor trust for Federal income
tax purposes and not as a partnership or association taxable as a
corporation. Classification of the Trust as a grantor trust will cause the
Trust not to be subject to Federal income tax, and will cause the
Unitholders of the Trust to be treated for Federal income tax purposes as
the owners of a pro rata portion of the assets of the Trust. All income
received by the Trust will be treated as income of the Unitholders in the
manner set forth below.
2. The Trust is not subject to the New York Franchise Tax on
Business Corporations or the New York City General Corporation Tax. For a
Unitholder who is a New York resident, however, a pro rata portion of all
or part
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of the income of the Trust will be treated as income of the Unitholder
under the income tax laws of the State and City of New York. Similar
treatment may apply in other states.
3. During the 90-day period subsequent to the initial issuance date,
the Sponsors reserve the right to deposit Additional Securities that are
substantially similar to those establishing the Trust. This retained right
falls within the guidelines promulgated by the Internal Revenue Service
("IRS") and should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each Unitholder when
the Trust disposes of a Security (whether by sale, exchange or redemption) or
upon the sale, exchange or redemption of Units by such Unitholder. The price a
Unitholder pays for his Units, including sales charges, is allocated among his
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases his Units) in order
to determine his initial cost for his pro rata portion of each Security held by
the Trust.
For Federal income tax purposes, a Unitholder's pro rata portion of
dividends paid with respect to a Security held by a Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits" as defined by Section 316 of the Code. A Unitholder's pro rata portion
of dividends paid on such Security that exceed such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security will generally be treated as capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has held his Units for more than one year. Long-term capital gains are generally
taxed at the same rates applicable to ordinary income, although individuals who
realize long-term capital gains may be subject to a reduced tax rate on such
gains, rather than the "regular" maximum tax rate of 39.6%. Tax rates may
increase prior to the time when Unitholders may realize gains from the sale,
exchange or redemption of the Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital loss and will be long-term if the Unitholder has held his
Units for more than one year. Capital losses are deductible to the extent of
capital gains; in addition, up to $3,000 of capital losses recognized by
non-corporate Unitholders may be deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a
Unitholder who itemizes his deductions may also deduct his pro rata share of the
fees and expenses of the Trust, but only to the extent that such amounts,
together with the Unitholder's other miscellaneous deductions, exceed 2% of his
adjusted gross income. The deduction of fees and expenses may also be limited by
Section 68 of the Code, which reduces the amount of itemized deductions that are
allowed for individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to such Unitholder's pro rata portion
of dividends that are taxable as ordinary income to Unitholders which are
received by the Trust from a domestic corporation under Section 243 of the Code
or from a qualifying foreign corporation under Section 245 of the Code (to the
extent the dividends are taxable as ordinary income, as discussed above) in the
same manner as if such
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corporation directly owned the Securities paying such dividends. However, a
corporation owning Units should be aware that Sections 246 and 246A of the Code
impose additional limitations on the eligibility of dividends for the 70%
dividends received deduction. These limitations include a requirement that stock
(and therefore Units) must generally be held at least 46 days (as determined
under Section 246(c) of the Code). Moreover, the allowable percentage of the
deduction will be reduced from 70% if a corporate Unitholder owns certain stock
(or Units) the financing of which is directly attributable to indebtedness
incurred by such corporation. Accordingly, corporate Unitholders should consult
their tax adviser in this regard.
As discussed in the section "Termination", each Unitholder may have three
options in receiving his termination distributions, which are (i) to receive his
pro rata share of the underlying Securities in kind, (ii) to receive cash upon
liquidation of his pro rata share of the underlying Securities, or (iii) to
invest the amount of cash he would receive upon the liquidation of his pro rata
share of the underlying Securities in units of a future series of the Trust (if
one is offered). There are special tax consequences should a Unitholder choose
option (i), the exchange of the Unitholder's Units for a pro rata portion of
each of the Securities held by the Trust plus cash. Treasury Regulations provide
that gain or loss is recognized when there is a conversion of property into
property that is materially different in kind or extent. In this instance, the
Unitholder may be considered the owner of an undivided interest in all of the
Trust's assets. By accepting the proportionate number of Securities of the
Trust, in partial exchange for his Units, the Unitholder should be treated as
merely exchanging his undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such, there
should be no material difference in the Unitholder's ownership, and therefore
the transaction should be tax free to the extent the Securities are received.
Alternatively, the transaction may be treated as an exchange that would qualify
for nonrecognition treatment to the extent the Unitholder is exchanging his
undivided interest in all of the Trust's Securities for his proportionate number
of shares of the underlying Securities. In either instance, the transaction
should result in a non-taxable event for the Unitholder to the extent Securities
are received. However, there is no specific authority addressing the income tax
consequences of an in-kind distribution from a grantor trust, and investors are
urged to consult their tax advisers in this regard.
Entities that generally qualify for an exemption from Federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on "unrelated business taxable income." Unrelated business taxable income
is income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include dividend or interest income or gain from the
sale of investment property, unless such income is derived from property that is
debt-financed or is dealer property. A tax-exempt entity's dividend income from
the Trust and gain from the sale of Units in the Trust or the Trust's sale of
Securities is not expected to constitute unrelated business taxable income to
such tax-exempt entity unless the acquisition of the Unit itself is
debt-financed or constitutes dealer property in the hands of the tax-exempt
entity.
Prospective tax-exempt investors are urged to consult their own tax
advisers prior to investing in the Trust.
RETIREMENT PLANS. This Trust may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans, certain of which are briefly described below. Generally,
capital gains and income received in each of the foregoing plans are exempt from
Federal taxation. All distributions from such plans are generally treated as
ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Five year averaging will not apply
to distributions after December 31, 1999. Ten year averaging has been preserved
in very limited circumstances. Holders of Units in IRAs, Keogh plans and other
tax-deferred retirement plans should consult their plan custodian as to the
appropriate disposition of distributions. Investors considering participation in
any such plan should review specific tax laws related thereto and should consult
their attorneys or tax advisers
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with respect to the establishment and maintenance of any such plan. Such plans
are offered by brokerage firms, including the Sponsor of this Trust, and other
financial institutions. Fees and charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
Retirement Plans for the Self-Employed - Keogh Plans. Units of the Trust
may be purchased by retirement plans established for self-employed individuals,
partnerships or unincorporated companies ("Keogh plans"). Qualified individuals
may generally make annual tax-deductible contributions up to the lesser of 25%
of annual compensation or $30,000 in a Keogh plan. The assets of the plan must
be held in a qualified trust or other arrangement which meets the requirements
of the Code. Generally there are penalties for premature distributions from a
plan before attainment of age 59 1/2, except in the case of a participant's
death or disability and certain other limited circumstances. Keogh plan
participants may also establish separate IRAs (see below) to which they may
contribute up to an additional $2,000 per year.
Individual Retirement Account - IRA. Any individual (including one covered
by employer retirement plan) can establish an IRA or make use of a qualified IRA
arrangement set up by an employer or union for the purchase of Units of the
Trust. Any individual can make a cash contribution to an IRA equal to the lesser
of $2,000 or 100% of earned income. A non-working spouse may also establish an
IRA and contribute up to $2,000 in cash provided the combined income of both
spouses is at least equal to the amount contributed by both spouses to IRAs.
However, the deductible amount an individual may contribute will be reduced if
the individual or the individual's spouse (in the case of a married individual)
participates in a qualified retirement plan and the individual's adjusted gross
income exceeds $25,000 (in the case of a single individual) or $40,000 (in the
case of married individuals filing a joint return). Special rules apply in the
case of married individuals living together who file separate returns.
Generally, there are penalties for premature distributions from an IRA before
the attainment of age 59 1/2, except in the case of the participant's death or
disability and certain other circumstances.
SIMPLE Plans. Certain employers that employ not more than 100 employees
may establish a savings incentive match plan (a "SIMPLE PLAN"). Participants in
a SIMPLE Plan are permitted to contribute up to $6,000 to the Plan on a pre-tax
basis and the employer makes either matching contributions not in excess of 3
percent of compensation or non-elective contributions equal to 2 percent of
compensation. SIMPLE Plans are subject to distribution rules similar to IRAs,
except there is a 25 percent early withdrawal penalty for withdrawals made
during the first 2 years of participation. Units of the Trust may be purchased
by SIMPLE Plans.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing
plan established for employees of a corporation may purchase Units of the
Trusts.
LIQUIDITY
SPONSORS REPURCHASE. The Sponsors may, under certain circumstances, as a
service to Unitholders, elect to purchase any Units tendered to the Trustee for
redemption (see "Trustee Redemption"). Factors which the Sponsors will consider
in making a determination will include the number of Units of all Trusts which
they have in inventory, their estimate of the salability and the time required
to sell such Units and general market conditions. For example, if in order to
meet
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redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (three calendar days after
tender), the Sponsors may elect to purchase such Units. Such purchase shall be
made by payment to the Unitholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.
Unitholders who wish to dispose of their Units should inquire of the
Sponsors as to current market prices prior to making a tender for redemption.
The aggregate value of the Securities will be determined by the Trustee on a
daily basis and computed on the basis set forth under "Trustee Redemption." The
Sponsors do not guarantee the enforceability, marketability or price of any
Securities in the Portfolio or of the Units. The Sponsors may discontinue the
repurchase of redemption requests if the supply of Units exceeds demand, or for
other business reasons. The date of repurchase is deemed to be the date on which
redemption requests are received in proper form by Charles Schwab & Co., Inc.,
except for redemption requests received after 4 P.M., New York Time when Units
will be deemed to have been repurchased on the next business day. In the event a
market is not maintained for the Units, a Unitholder may be able to dispose of
Units only by tendering them to the Trustee for redemption.
Units purchased by the Sponsors in the secondary market may be reoffered
for sale by the Sponsors at a price based on the aggregate value of the
Securities in the Trust plus the remaining Deferred Sales Charge plus a pro rata
portion of amounts, if any, in the Income Account. Any Units that are purchased
by the Sponsors in the secondary market also may be redeemed by the Sponsors if
they determine such redemption to be in their best interest.
TRUSTEE REDEMPTION. At any time prior to the termination of the Trust
(approximately one year from the Date of Deposit), Units may also be tendered to
the Trustee for redemption upon payment of any relevant tax by contacting the
Charles Schwab & Co., Inc. broker, dealer or financial institution holding such
Units in street name. In certain instances, additional documents may be
required, such as a trust instrument, certificate of corporate authority,
certificate of death or appointment as executor, administrator or guardian. At
the present time there are no specific taxes related to the redemption of Units.
No redemption fee will be charged by the Sponsors or the Trustee. Units redeemed
by the Trustee will be cancelled.
Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time set forth under
"Summary of Essential Information" in Part A on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the close of trading on the New
York Stock Exchange (4:00 p.m. Eastern Time), the date of tender is the next day
on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts paid
on redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each stock. Provision is made in the Indenture
under which the Sponsors may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may
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vary from time to time in accordance with market conditions, the Sponsors
believe that the minimum amounts which would be specified would be approximately
100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
The Trustee may determine the value of the Securities in the Trust in the
following manner: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering ______ Units or more of the Trust for redemption
may request by written notice submitted at the time of tender from the Trustee
in lieu of a cash redemption a distribution of shares of Securities and cash in
an amount and value equal to the Redemption Price Per Unit as determined as of
the evaluation next following tender. To the extent possible, in kind
distributions ("In Kind Distributions") shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to the Unitholder's
broker-dealer account at The Depository Trust Company. An In Kind Distribution
will be reduced by customary transfer and registration charges. The tendering
Unitholder will receive his pro rata number of whole shares of each of the
Securities comprising the Trust portfolio and cash from the Principal Accounts
equal to the balance of the Redemption Price to which the tendering Unitholder
is entitled. A Unitholder who elects to receive In Kind Distributions may incur
brokerage or other transaction costs in converting the Securities so distributed
into cash subsequent to their receipt of the Securities from the Trust. If funds
in the Principal Account are insufficient to cover the required cash
distribution to the tendering Unitholder, the Trustee may sell Securities in the
manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsors
do not elect to purchase a Unit tendered for redemption or if the Sponsors
tender a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unitholder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsors are not liable to any person
or in any way for any loss or damage which may result from any such suspension
or postponement.
A Unitholder who wishes to dispose of his Units should inquire of his
broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
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TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio.
Although the portfolio of the Trust is regularly reviewed, because of the
formula employed in selecting the Strategic Ten, it is unlikely that the Trust
will sell any of the Securities other than to satisfy redemptions of Units, or
to cease buying Additional Securities in connection with the issuance of
additional Units. However, the Trust Agreement provides that the Sponsors may
direct the disposition of Securities upon the occurrence of certain events
including: (1) default in payment of amounts due on any of the Securities; (2)
institution of certain legal proceedings; (3) default under certain documents
materially and adversely affecting future declaration or payment of amounts due
or expected; (4) determination of the Sponsors that the tax treatment of the
Trust as a grantor trust would otherwise be jeopardized; or (5) decline in price
as a direct result of serious adverse credit factors affecting the issuer of a
Security which, in the opinion of the Sponsors, would make the retention of the
Security detrimental to the Trust or the Unitholders. Furthermore, the Trust
will likely continue to hold a Security and purchase additional shares
notwithstanding its ceasing to be included among the Strategic Ten or even its
deletion from the DJIA.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsors fail to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsors, shall sell the Security.
(b) It is the responsibility of the Sponsors to instruct the Trustee
to reject any offer made by an issuer of any of the Securities to issue
new securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization, if any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsors direct that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, which shall be retained, or
shall be promptly sold unless the Sponsors direct that it be retained by
the Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsors are authorized to increase the size and number of
Units of the Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units from time to time subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on
the Initial Date of Deposit is maintained to the extent practicable. The
Sponsors may specify the minimum numbers in which Additional Securities
will be deposited or purchased. If a deposit is not sufficient to acquire
minimum amounts of each Security, Additional Securities may be acquired in
the order of the Security most under-represented immediately before the
deposit when compared to the original proportionate relationship. If
Securities of an issue originally deposited are unavailable at the time of
the subsequent deposit, the Sponsors may (i) deposit cash or a letter of
credit with instructions to purchase the Security when it becomes
available, or (ii) deposit
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(or instruct the Trustee to purchase) either Securities of one or more
other issues originally deposited or a Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsors without the consent of any of the Unitholders: (1) to
Cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency; or (3) to make such other provisions in regard to matters arising
thereunder as shall not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate upon the maturity, redemption or other disposition, as the case may
be, of the last of the Securities held in such Trust but in no event is it to
continue beyond the Mandatory Termination Date. If the value of the Trust shall
be less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsors, terminate the Trust. The Trust may also be terminated
at any time with the consent of investors holding 100% of the Units then
outstanding. The Trustee may utilize the services of the Sponsors for the sale
of all or a portion of the Securities in the Trust, and in so doing, the
Sponsors will determine the manner, timing and execution of the sales of the
underlying Securities. Any brokerage commissions received by the Sponsors from
the Trust in connection with such sales will be in accordance with applicable
law. In the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders. Such notice will provide Unitholders with the
following three options by which to receive their pro rata share of the net
asset value of the Trust and requires their election of one of the three options
by notifying the Trustee by returning a properly completed election request (to
be supplied to Unitholders at least 20 days prior to such date):
1. A Unitholder who owns at least ______ Units and whose interest in
the Trust would entitle him to receive at least one share of each
underlying Security will have his Units redeemed on commencement of the
Liquidation Period by distribution of the Unitholder's pro rata share of
the net asset value of the Trust on such date distributed in kind to the
extent represented by whole shares of underlying Securities and the
balance in cash within three business days next following the commencement
of the Liquidation Period. Unitholders subsequently selling such
distributed Securities will incur brokerage costs when disposing of such
Securities. Unitholders should consult their own tax adviser in this
regard;
2. to receive in cash such Unitholder's pro rata share of the net
asset value of the Trust derived from the sale by the Sponsors as the
agents of the Trustee of the underlying Securities over a period not to
exceed 30 days immediately following the commencement of the Liquidation
Period. The Unitholder's pro rata share of its net assets of the Trust
will be distributed to such Unitholder within three days of the settlement
of the trade of the last Security to be sold; and/or
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3. to invest such Unitholder's pro rata share of the net assets of
the Trust derived from the sale by the Sponsors as agents of the Trustee
of the underlying Securities over a period not to exceed 30 days
immediately following the commencement of the Liquidation Period, in units
of a subsequent series of the [Schwab Strategic Ten Trust] (the "New
Series") provided one is offered. It is expected that a special redemption
and liquidation will be made of all Units of this Trust held by a
Unitholder (a "Rollover Unitholder") who affirmatively notifies the
Trustee by the Rollover Notification Date set forth in the "Summary of
Essential Information" for the Trust in Part A. The Units of a New Series
will be purchased by the Unitholder within three business days of the
settlement of the trade for the last Security to be sold. Such purchaser
will be entitled to a reduced deferred sales charge upon the purchase of
units of the New Series. It is expected that the terms of the New Series
will be substantially the same as the terms of the Trust described in this
Prospectus, and that similar options with respect to the termination of
such New Series will be available. The availability of this option does
not constitute a solicitation of an offer to purchase Units of a New
Series or any other security. A Unitholder's election to participate in
this option will be treated as an indication of interest only. At any time
prior to the purchase by the Unitholder of units of a New Series such
Unitholder may change his investment strategy and receive, in cash, the
proceeds of the sale of the Securities. An election of this option will
not prevent the Unitholder from recognizing taxable gain or loss (except
in the case of a loss, if and to the extent the New Series is treated as
substantially identical to the Trust) as a result of the liquidation, even
though no cash will be distributed to pay any taxes. Unitholders should
consult their own tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsors have agreed to effect the sales of underlying securities for
the Trustee in the case of the second and third options over a period not to
exceed 30 days immediately following the commencement of the Liquidation Period
[free of brokerage commissions]. The Sponsors, on behalf of the Trustee, will
sell, unless prevented by unusual and unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, on each business
day during the 30-day period at least a number of shares of each Security which
then remains in the portfolio based on the number of shares of each issue in the
portfolio) multiplied by a fraction the numerator of which is one and the
denominator of which is the number of days remaining in the 30-day sales period.
The Redemption Price Per Unit upon the settlement of the last sale of Securities
during the 30-day period will be distributed to Unitholders in redemption of
such Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsors
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsors' buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsors' purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 30-day
period immediately following the commencement of the Liquidation Period;
depending on the number of sales required, the prices of and demand for
Securities, such sales may tend to depress the market prices and thus reduce the
proceeds of such sales. The Sponsors believe that the sale of underlying
Securities over a 30-day period as described above is in the best interest of a
Unitholder and may mitigate the negative market price consequences stemming from
the trading of large amounts of Securities. The Securities may be sold in fewer
than 30 days if, in the Sponsors' judgment, such sales are in the best interest
of Unitholders. The Sponsors, in implementing such sales of securities on behalf
of the Trustee, will seek to maximize the sales proceeds and will act in the
best interests of the Unitholders. There can be no assurance, however, that any
adverse price consequences of heavy trading will be mitigated.
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It is expected (but not required) that the Sponsors will generally follow
the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsors will generally sell Securities on the first day of the
Liquidation Period; for less liquid Securities, on each of the first two days of
the Liquidation Period, the Sponsors will generally sell any amount of any
underlying Securities at a price no less than 1/2 of one point under the last
closing sale price of those Securities. On each of the following two days, the
price limit will increase to one point under the last closing sale price. After
four days, the Sponsors intend to sell at least a fraction of the remaining
underlying Securities, the numerator of which is one and the denominator of
which is the total number of days remaining (including that day) in the
Liquidation Period, without any price restrictions.
The Sponsors may for any reason, in their sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsors so decide, the Sponsors will notify
the Trustee of that decision, and the Trustee will notify the Unitholders before
the commencement of the Liquidation Period. All Unitholders will then elect
either option 1, if eligible, or option 2.
By electing to reinvest in the New Series, the Unitholder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created following termination of the Trust; the Sponsors expect,
however, that a similar reinvestment program will be offered with respect to all
subsequent series of the Trust, thus giving Unitholders a yearly opportunity to
elect to "rollover" their terminating distributions into a New Series. The
availability of the reinvestment privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the reinvestment program will be treated as an
indication of interest only. The Sponsors intend to coordinate the date of
deposit of a future series so that the terminating trust will terminate
contemporaneously with the creation of a New Series. The Sponsors reserve the
right to modify, suspend or terminate the reinvestment privilege at any time.
THE SPONSORS. Charles Schwab & Co., Inc. ("Schwab") was established in
1971 and is one of America's largest discount brokers. The firm provides
low-cost securities brokerage and related financial services to over 3.3 million
active customer accounts and has over 200 branch offices. Schwab also offers
convenient access to financial information services and provides products and
services that help investors make investment decisions. Schwab is a wholly owned
subsidiary of The Charles Schwab Corporation. Charles R. Schwab is the founder,
Chairman, Chief Executive Officer and a director of The Charles Schwab
Corporation and, as of January 31, 1996, the beneficial owner of approximately
20.1% of the outstanding shares of that corporation. Mr. Schwab may be deemed to
be a controlling person of Schwab.
Reich & Tang Distributors L.P. (successor to the Unit Investment Trust
Division of Bear, Stearns & Co. Inc.), a Delaware limited partnership, is
engaged in the brokerage business and is a member of the National Association of
Securities Dealers, Inc. Reich & Tang is also a registered investment advisor.
Reich & Tang maintains its principal business offices at 600 Fifth Avenue, New
York, New York 10020. Reich & Tang Asset Management L.P. ("RTAM L.P."), a
registered investment adviser having its principal place of business at 399
Boylston Street, Boston, MA 02116, is the 99% limited partner of Reich & Tang
Distributors L.P. RTAM L.P. is 99.5% owned by New England Investment Companies,
L.P. ("NEIC L.P.") and Reich & Tang Asset Management, Inc. ("RTAM Inc."), a
wholly owned subsidiary of NEIC L.P., owns the remaining .5% interest of RTAM
L.P. and is its general partner. NEIC L.P.'s general partner is New England
Investment Companies, Inc. ("NEIC"), a holding company offering a broad array of
investment styles across a wide range of asset categories through eleven
subsidiaries, divisions and affiliates offering a wide array of investment
styles and products to institutional clients. These affiliates in the aggregate
are investment advisors or managers to over 54 registered investment companies.
Reich & Tang is successor Sponsor to Bear Stearns for numerous series of unit
investment trusts, including New York Municipal Trust, Series 1 (and Subsequent
Series), Municipal Securities Trust, Series 1 (and Subsequent Series), 1st
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Discount Series (and Subsequent Series), Multi-State Series 1 (and Subsequent
Series), Mortgage Securities Trust, Series 1 (and Subsequent Series), Insured
Municipal Securities Trust, Series 1 (and Subsequent Series) and 5th Discount
Series (and Subsequent Series) and Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust (and Subsequent Series).
On August 30, 1996, New England Mutual Life Insurance Company ("The New
England") and Metropolitan Life Insurance Company ("MetLife") merged, with
MetLife being the continuing company. RTAM L.P. remains a wholly-owned
subsidiary of NEIC L.P. but RTAM Inc., its sole general partner, is now an
indirect subsidiary of MetLife. Also, MetLife New England Holdings, Inc., a
wholly-owned subsidiary of MetLife, owns 55% of the outstanding limited
partnership interest of NEIC L.P. MetLife is a mutual life insurance company
with assets of $142.2 billion at March 31, 1996. It is the second largest life
insurance company in the United States in terms of total assets. MetLife
provides a wide range of insurance and investment products and services to
individuals and groups and is the leader among United States life insurance
companies in terms of total life insurance in force, which exceeded $1.2
trillion at March 31, 1996 for MetLife and its insurance affiliates. MetLife and
its affiliates provide insurance or other financial services to approximately 36
million people worldwide.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsors and their ability
to carry out their contractual obligations. The Sponsors will be under no
liability to Unitholders for taking any action, or refraining from taking any
action, in good faith pursuant to the Trust Agreement, or for errors in judgment
except in cases of their own willful misfeasance, bad faith, gross negligence or
reckless disregard of their obligations and duties.
The Sponsors may each resign at any time by delivering to the Trustee an
instrument of resignation executed by the individual Sponsor. If at any time
either of the Sponsors shall resign or fail to perform any of its duties under
the Trust Agreement or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may either (a)
appoint a successor Sponsor; (b) terminate the Trust Agreement and liquidate the
Trust; or (c) continue to act as Trustee without terminating the Trust
Agreement. Any successor Sponsor appointed by the Trustee shall be satisfactory
to the Trustee and, at the time of appointment, shall have a net worth of at
least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at 4 New York Plaza, New York, New
York 10004. The Trustee is subject to supervision by the Superintendent of Banks
of the State of New York, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Certificates in accordance with the Trust Agreement,
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties; provided, however, that the
Trustee shall not in any event be liable or responsible for any evaluation made
by any independent evaluation service employed by it. In addition, the Trustee
shall not be liable for any taxes or other governmental charges imposed upon or
in respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
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For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unitholders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsors, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsors are obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsors may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsors. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering--Offering Price." The Sponsors and the Unitholders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. Determinations by the Trustee under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Trustee shall be under no liability
to the Sponsors or Unitholders for errors in judgment, except in cases of its
own willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties. The Trustee, the Sponsors and the Unitholders may
rely on any evaluation furnished to the Trustee by an independent evaluation
service and shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in creating and establishing the
Trust, including the cost of the initial preparation and execution of the Trust
Agreement, registration of the Trust and the Units under the Investment Company
Act of 1940 and the Securities Act of 1933, the initial fees and expenses of the
Trustee, legal expenses and other actual out-of-pocket expenses, will be paid by
the Trust and charged to capital over the life of the Trust. Offering costs,
including the costs of registering securities with the Securities and Exchange
Commission and the states, will be charged to capital over the term of the
initial offering period, which may be between 30 and 90 days. All advertising
and selling expenses, as well as any organizational expenses not paid by the
Trust, will be borne by the Sponsors at no cost to the Trust.
The Sponsors will receive for portfolio supervisory, bookkeeping and
administrative services to the Trust an Annual Fee in the amount set forth under
"Summary of Essential Information" in Part A. The Sponsors' fee may exceed the
actual cost of providing portfolio supervisory, bookkeeping and administrative
services for the Trust, but at no time will the total amount received for
portfolio supervisory, bookkeeping and administrative services rendered to all
series of the Schwab Trusts in any calendar year exceed the aggregate cost to
the Sponsors of supplying such services in such year. (See "Portfolio
Supervision.")
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The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both the Sponsors' and Trustee's fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled "All Services
Less Rent."
The following additional charges are or may be incurred by the Trust: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the expenses
and costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsors for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsors, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsors otherwise direct, the accounts of the Trust shall be
audited not less than annually by independent public accountants selected by the
Sponsors. The expenses of the audit shall be an expense of the Trust. So long as
the Sponsors maintain a secondary market, the Sponsors will bear any audit
expense which exceeds $.50 cents per 1,000 Units. Unitholders covered by the
audit during the year may receive a copy of the audited financials upon request.
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsors or new Units created by the Sponsors' deposit of Additional Securities
as described in "The Trust--Organization" in this Part B. Units acquired by
reinvestment will be subject to any remaining deductions of the Deferred Sales
Charge. In order to enable a Unitholder to participate in the reinvestment plan
with respect to a particular distribution on their Units, written notification
must be received by the Trustee within 10 days prior to the Record Date for such
distribution. Each subsequent distribution of income or principal on the
participant's Units will be automatically applied by the Trustee to purchase
additional Units of the Trust. The Sponsors reserve the right to demand, modify
or terminate the reinvestment plan at any time without prior notice. The
reinvestment plan for the Trust may not be available in all states.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsors.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
B-23
480911.6
<PAGE>
INDEPENDENT ACCOUNTANTS. The Statement of Financial Condition, including
the Portfolio, is included herein in reliance upon the report of Ernst & Young
LLP, independent accountants, and upon the authority of said firm as experts in
accounting and auditing.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the Strategic Ten, the related index
and this Trust may be included from time to time in advertisements, sales
literature and reports to current or prospective investors. Total return shows
changes in Unit price during the period plus reinvestment of dividends and
capital gains, divided by the maximum public offering price as of the date of
calculation. Average annualized returns show the average return for stated
periods of longer than a year. From time to time, the Trust may compare the cost
of purchasing Trust shares to the cost of purchasing the individual securities
which constitute the Strategic Ten. In addition, the Trust may compare its
deferred sales charge to the sales charges assessed on unitholders by other unit
investment trusts. Sales material may also include an illustration of the
cumulative results of like annual investments in the Strategic Ten during an
accumulation period and like annual withdrawals during a distribution period.
Figures for actual portfolios will reflect all applicable expenses and, unless
otherwise stated, the maximum differed sales charge. No provision is made for
any income taxes payable. Similar figures may be given for this Trust applying
the Strategic Ten investment strategy to other indexes. Returns may also be
shown on a combined basis. Trust performance may be compared to performance on a
total return basis of the Dow Jones Industrial Average, the S&P 500 Composite
Price Stock Index, or the average performance of mutual funds investing in a
diversified portfolio of U.S. stocks generally or growth stocks, or performance
data from Lipper Analytical Services, Inc. and Morningstar Publications, Inc. or
from publications such as Money, The New York Times, U.S. News and World Report,
Business Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of a Trust's relative
performance for any future period.
B-24
480911.6
<PAGE>
<TABLE>
<S> <C>
No person is authorized to give any information or to ----------------------------------------------------
make any representations not contained in Parts A and B of SCHWAB TRUSTS
this Prospectus; and any information or representation not ----------------------------------------------------
contained herein must not be relied upon as having been
authorized by the Trust, the Trustee or the Sponsors. The SCHWAB STRATEGIC TEN TRUST,
Trust is registered as a unit investment trust under the 1997 SERIES A
Investment Company Act of 1940. Such registration does
not imply that the Trust or any of its Units have been (A UNIT INVESTMENT TRUST)
guaranteed, sponsored, recommended or approved by the
United States or any state or any agency or officer thereof. PROSPECTUS
------------------ DATED: ____________ ___, 1997
This Prospectus does not constitute an offer to sell, or
a solicitation of an offer to buy, securities in any state to SPONSORS:
any person to whom it is not lawful to make such offer in
such state. CHARLES SCHWAB & CO., INC.
101 Montgomery Street
Table of Contents San Francisco, California 94104
Title Page REICH & TANG DISTRIBUTORS L.P.
600 Fifth Avenue
PART A New York, New York 10020
Summary of Essential Information...........................A-2 800-237-7020
Statement of Financial Condition...........................A-8
Portfolio..................................................A-5
Report of Independent Accountants.........................A-10
TRUSTEE:
PART B
The Trust..................................................B-1 THE CHASE MANHATTAN BANK
Risk Considerations........................................B-6 4 New York Plaza
Public Offering............................................B-8 New York, New York 10004
Rights of Unitholders.....................................B-10
Tax Status................................................B-11
Liquidity.................................................B-14
Trust Administration......................................B-16
Trust Expenses and Charges................................B-22
Reinvestment Plan.........................................B-23
Other Matters.............................................B-23
</TABLE>
Parts A and B of this Prospectus do not contain all of the
information set forth in the registration statement and exhibits
relating thereto, filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933, and the Investment
Company Act of 1940, and to which reference is made.
480911.6
<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors L.P. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
Ernst & Young LLP
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain
amendments to the Trust Indenture and Agreement
referred to under Exhibit 99.1.1.1 below.
*99.1.1.1 -- Form of Trust Indenture and Agreement.
*99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of
the securities being registered, including their
consent to the filing thereof and to the use of their
name under the headings "Tax Status" and "Legal
Opinions" in the Prospectus, and to the filing of
their opinion regarding tax status of the Trust.
99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 6.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-62627 of Equity Securities Trust,
Series 6, Signature Series, Gabelli Entertainment and Media
Trust on November 16, 1995 and incorporated herein by
reference).
**99.6.1 -- Powers of Attorney of Charles Schwab & Co., Inc.,
the Depositor, by its officers and a majority of its
Directors.
*99.27 -- Financial Data Schedule (for EDGAR filing only).
- --------
* To be filed by amendment.
** Filed herewith.
II-1
606976.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Schwab Trusts, Schwab Strategic Ten Trust, 1997 Series A, has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 11th day of July, 1997.
SCHWAB TRUSTS, SCHWAB
STRATEGIC TEN TRUST,
1997 SERIES A
(Registrant)
CHARLES SCHWAB & CO., INC.
(Depositor)
By /S/ WILLIAM J. KLIPP
William J. Klipp
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of Charles
Schwab & Co., Inc., the Depositor, in the capacities and on the dates indicated.
Name Title Date
DAVID POTTRUCK Chief Executive Officer and Director
STEVEN SCHEID Chief Financial Officer and Director
CHARLES R. SCHWAB Director
July 11, 1997
By /S/ WILLIAM J. KLIPP
William J. Klipp
Attorney-In-Fact*
- --------
* Executed copies of Powers of Attorney are filed as Exhibit 6.1 hereto.
II-2
606976.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Schwab Trusts, Schwab Strategic Ten Trust, 1997 Series A, has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 11th day of July, 1997.
SCHWAB TRUSTS, SCHWAB
STRATEGIC TEN TRUST,
1997 SERIES A
(Registrant)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.
By /s/ PETER J. DEMARCO
Peter J. DeMarco
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of Reich &
Tang Asset Management, Inc., General Partner of Reich & Tang Distributors L.P.,
the Depositor, in the capacities and on the dates indicated.
Name Title Date
PETER S. VOSS President, Chief Executive Officer and
Director
July 11, 1997
By /s/ PETER J. DEMARCO
Peter J. DeMarco
Attorney-In-Fact*
G. NEAL RYLAND Executive Vice President,
Treasurer and Chief
Financial Officer
EDWARD N. WADSWORTH Clerk
RICHARD E. SMITH III Director
STEVEN W. DUFF Director
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Vice President and
Treasurer
- --------
* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to Amendment
No. 1 to Registration Statement No. 33-62627 on November 16, 1995.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
registration statement on Form S-6 (the "Registration Statement") of our report
dated _________ __, 1997, relating to the Statement of Financial Condition,
including the Portfolio, of Schwab Trusts, Schwab Strategic Ten Trust, 1997
Series A, which appears in such Prospectus. We also consent to the reference to
us under the heading "Independent Accountants" in such Prospectus.
Ernst & Young LLP
_________ __, 1997
II-3
606976.1
Exhibit 6.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT I, Charles R. Schwab, a director of
Charles Schwab & Co., Inc., a Delaware corporation, hereby constitute and
appoint William J. Klipp, Frances Cole, Jim White or any other Authorized
Person, jointly and severally, as my attorneys-in-fact, each with full power of
substitution, to sign on my behalf and in his name and to file with the
Securities and Exchange Commission, or the securities regulatory authority of
any state, a Registration Statement on Form S-6 under the Securities Act of
1933, as amended, or any successor form or forms, and the rules and regulations
promulgated thereunder, and any and all amendments thereto, including
post-effective amendments, exhibits and any and all other appropriate documents
in connection therewith or otherwise, relating to the proposed registration and
issuance of units, both in the primary and the secondary markets, of unit
investment trusts of every kind and nature of various and successive series
established in accordance with the Investment Company Act of 1940 for which
Charles Schwab & Co., Inc., alone or with others, will act as Depositor or
Sponsor and/or Underwriter, and hereby grant unto each of said attorneys-in-fact
full power and authority to do and perform each and every lawful act and deed
necessary to effectuate such Registration Statements, and to maintain the
effectiveness of such Registration Statements for such unit investment trust,
that each or any of them may lawfully do or cause to be done.
IN WITNESS WHEREOF, the undersigned director of Charles Schwab & Co.,
Inc. has hereunto set his hand this 7th day of July 1997.
/s/ CHARLES R. SCHWAB
Charles R. Schwab
Director
On this 7th day of July 1997 personally appeared before me, a
Notary Public in and for said County and State, the person named above who is
known to me to be the person whose name and signature are affixed to the
foregoing Power of Attorney and who acknowledged the same to be his voluntary
act and deed for the intents and purposes therein set forth.
/s/ ELIZABETH F. CASERZA
Notary Public
Elizabeth F. Caserza
Comm. #1023588
Notary Public - California
San Francisco County
My Comm. Expires April 17, 1998
612030.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT I, David Pottruck, a director and
Chief Executive Officer of Charles Schwab & Co., Inc., a Delaware corporation,
hereby constitute and appoint William J. Klipp, Frances Cole, Jim White or any
other Authorized Person, jointly and severally, as my attorneys-in-fact, each
with full power of substitution, to sign on my behalf and in his name and to
file with the Securities and Exchange Commission, or the securities regulatory
authority of any state, a Registration Statement on Form S-6 under the
Securities Act of 1933, as amended, or any successor form or forms, and the
rules and regulations promulgated thereunder, and any and all amendments
thereto, including post-effective amendments, exhibits and any and all other
appropriate documents in connection therewith or otherwise, relating to the
proposed registration and issuance of units, both in the primary and the
secondary markets, of unit investment trusts of every kind and nature of various
and successive series established in accordance with the Investment Company Act
of 1940 for which Charles Schwab & Co., Inc., alone or with others, will act as
Depositor or Sponsor and/or Underwriter, and hereby grant unto each of said
attorneys-in-fact full power and authority to do and perform each and every
lawful act and deed necessary to effectuate such Registration Statements, and to
maintain the effectiveness of such Registration Statements for such unit
investment trust, that each or any of them may lawfully do or cause to be done.
IN WITNESS WHEREOF, the undersigned director of Charles Schwab & Co.,
Inc. has hereunto set his hand this 2nd day of July 1997.
/s/ DAVID POTTRUCK
David Pottruck
Director and
Chief Executive Officer
On this 2nd day of July 1997 personally appeared before me, a
Notary Public in and for said County and State, the person named above who is
known to me to be the person whose name and signature are affixed to the
foregoing Power of Attorney and who acknowledged the same to be his voluntary
act and deed for the intents and purposes therein set forth.
/s/ ELIZABETH F. CASERZA
Notary Public
Elizabeth F. Caserza
Comm. #1023588
Notary Public - California
San Francisco County
My Comm. Expires April 17, 1998
612030.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT I, Steven Scheid, a director and
Chief Financial Officer of Charles Schwab & Co., Inc., a Delaware corporation,
hereby constitute and appoint William J. Klipp, Frances Cole, Jim White or any
other Authorized Person, jointly and severally, as my attorneys-in-fact, each
with full power of substitution, to sign on my behalf and in his name and to
file with the Securities and Exchange Commission, or the securities regulatory
authority of any state, a Registration Statement on Form S-6 under the
Securities Act of 1933, as amended, or any successor form or forms, and the
rules and regulations promulgated thereunder, and any and all amendments
thereto, including post-effective amendments, exhibits and any and all other
appropriate documents in connection therewith or otherwise, relating to the
proposed registration and issuance of units, both in the primary and the
secondary markets, of unit investment trusts of every kind and nature of various
and successive series established in accordance with the Investment Company Act
of 1940 for which Charles Schwab & Co., Inc., alone or with others, will act as
Depositor or Sponsor and/or Underwriter, and hereby grant unto each of said
attorneys-in-fact full power and authority to do and perform each and every
lawful act and deed necessary to effectuate such Registration Statements, and to
maintain the effectiveness of such Registration Statements for such unit
investment trust, that each or any of them may lawfully do or cause to be done.
IN WITNESS WHEREOF, the undersigned director of Charles Schwab & Co.,
Inc. has hereunto set his hand this 2nd day of July 1997.
/s/ STEVEN SCHEID
Steven Scheid
Director and
Chief Financial Officer
On this 2nd day of July 1997 personally appeared before me, a
Notary Public in and for said County and State, the person named above who is
known to me to be the person whose name and signature are affixed to the
foregoing Power of Attorney and who acknowledged the same to be his voluntary
act and deed for the intents and purposes therein set forth.
/s/ ELIZABETH F. CASERZA
Notary Public
Elizabeth F. Caserza
Comm. #1023588
Notary Public - California
San Francisco County
My Comm. Expires April 17, 1998
612030.1
