<PAGE>
As filed with the Securities and Exchange Commission on August 29, 1997
Registration No. 333-__________
Securities and Exchange Commission
Washington, D.C. 20549-1004
Form S-6
Registration Statement
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: HBI Equity Trust, Series 4
B. Name of Depositor: Howe Barnes Investments, Inc.
C. Complete address of Depositor's principal executive offices:
Howe Barnes Investments, Inc.
135 South LaSalle Street
Suite 1500
Chicago, Illinois 60603
D. Name and complete address of agents for service:
Howe Barnes Investments, Inc. Chapman and Cutler
135 South LaSalle Street Attention: Matthew C. Boba
Suite 1500 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
E. Title and amount of securities being registered: Indefinite number of Units
of fractional undivided interests pursuant to Rule 24f-2 promulgated under
the Investment Company Act of 1940, as amended
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Indefinite
G. Amount of filing fee, computed at one thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public: Not
Applicable
H. Approximate date of proposed public offering:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT
[_] Check box if it is proposed that this filing will become effective on
(______________________) at (______________) pursuant to Rule 487
The registrant hereby amends this 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.
<PAGE>
HBI Equity Trust
Series 4
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as to Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Front Cover
(b) Title of securities issued ) Front Cover
2. Name and address of Depositor ) Back Cover
3. Name and address of Trustee ) Back Cover
4. Name and address of principal ) Back Cover
underwriter
5. Organization of Trust ) The Trust
6. Execution and termination of ) Essential Information Regarding
Trust Indenture and Agreement ) the Trust; Administration of
) the Trust; Amendment of
) Indenture; The Trust;
) Termination of the Trust
7. Changes of Name ) *
8. Fiscal year ) *
9. Litigation ) *
- --------------------
* Not applicable, answer negative or not required.
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C>
II. General Description of the Trust and Securities of the Trust
10. General information regarding )
trust's securities and rights )
of holders )
(a) Type of Securities (Registered )
or Bearer) ) The Trust; Right of Unitholders
(b) Type of Securities (Cumula- )
tive or Distributive) ) *
(c) Rights of Holders as to with- ) The Trust; Redemption of Units; Public
drawal or redemption ) Offering of Units--Maintenance of
) Secondary Market
(d) Rights of Holders as to ) The Trust; Public Offering of Units--
conversion, transfer, etc. ) Maintenance of Secondary Market;
) Redemption of Units
(e) Rights if Trust issues periodic )
payment plan certificates ) *
(f) Voting rights as to Securities ) Rights of Unitholders
under the Indenture )
(g) Notice to Holders as to change in:
(1) Assets of Trust ) Administration of the Trust--Portfolio
) Supervision; Amendment of the Indenture
(2) Terms and Conditions of ) Administration of the Trust--Portfolio
the Trust's Securities ) Supervision; Amendment of the Indenture
(3) Provisions of Trust ) Amendment of the Indenture
(4) Identity of Depositor and )
Trustee ) Sponsor; Trustee
</TABLE>
- --------------------
* Not applicable, answer negative or not required
-ii-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
(h) Consent of Security Holders )
required to change )
(1) Composition of assets of ) Administration of the Trust--
Trust ) Portfolio Supervision;
Amendment of the Indenture
(2) Terms and conditions of ) Administration of the Trust
Trust's Securities )
(3) Provisions of Indenture ) Amendment of the Indenture
(4) Identity of Depositor and )
Trustee ) Sponsor; Trustee
(j) Other feature or right ) *
11. Type of securities comprising ) The Trust; Rights of;
security holder's interest ) Unitholders; Administration of
) the Trust--Portfolio
) Supervision
12. Information concerning periodic )
payment certificates ) *
13. (a) Load, fees, expenses, etc. ) Public Offering of Units;
) Expenses of the Trust
(b) Certain information regard- ) *
ing periodic payment )
certificates )
(c) Certain percentages ) Public Offering of Units;
) Expenses of the Trust
(d) Certain other fees, etc. ) Public Offering of Units--
payable by holders ) Public Offering Price
(e) Load, fees, expenses, and )
charges not covered in 13(a) ) Rights of Unitholders
- ----------
* Not applicable, answer negative or not required.
-iii-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
(f) Certain profits receivable by )
depositor, principal underwriters, ) Public Offering of Units--
trustee or affiliated persons ) Profits to the Sponsor
(g) Ratio of annual charges to )
income ) *
14. Issuance of trust's securities ) The Trust; Rights of
) Unitholders
15. Receipt and handling of payments ) Public Offering of Units--
from purchasers ) Profits to the Sponsor;
) Administration of the Trust
16. Acquisition and disposition of ) The Trust Administration of the
Underlying Securities ) Trust--Portfolio Supervision;
) Termination of the Trust
17. Withdrawal or redemption ) Public Offering of Units--
) Maintenance of a Secondary
) Market; Redemption of Units
18. (a) Receipt and disposition ) Distributions to Unitholders;
of income ) Administration of the Trust
(b) Reinvestment of distributions ) Administration of the Trust--
) Reinvestment
(c) Reserves or special funds ) Distributions to Unitholders;
) Administration of the Trust--
) Accounts; Administration of the
) Trust--Reinvestment
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Distributions to Unitholders;
) Administration of the Trust--
) Reports and Records
20. Certain miscellaneous provisions ) Sponsor; Termination of the
of Trust Agreement ) Trust; Amendment of the
) Indenture
21. Loans to security holders ) *
22. Limitations on liability ) Sponsor, Trustee
- ----------
* Not applicable, answer negative or not required.
-iv-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
23. Bonding arrangements ) Included in Form N-8B-2
24. Other material provisions of ) *
trust agreement )
III. ORGANIZATION PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor ) Sponsor
26. Fees received by Depositor ) Administration of the Trust--
) Portfolio Supervision;
) Expenses of the Trust
27. Business of Depositor ) Sponsor
28. Certain information as to ) Sponsor
officials and affiliated )
persons of Depositor )
29. Voting securities of Depositor ) Sponsor
30. Persons controlling Depositor ) Sponsor
31. Payments by Depositor to officers ) *
for certain other services )
rendered to trust )
32. Payments by Depositor to directors ) *
for certain other services rendered )
to trust )
33. Remuneration of employees of ) *
Depositor for certain services )
rendered to trust )
- ----------
* Not applicable, answer negative or not required.
-v-
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Public Offering of Units--
securities by states ) Distribution of Units
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution ) Public Offering of Units--
) Distribution of Units; Public
) Offering of Units--
) Maintenance of a Secondary
) Market
(b) Underwriting agreements ) Public Offering of Units--
) Distribution of Units; Public
) Offering of Units--
) Maintenance of a Secondary
) Market
(c) Selling agreements ) Public Offering of Units--
) Distribution of Units; Public
) Offering of Units--
) Maintenance of a Secondary
) Market
39. (a) Organization of principal ) Sponsor
underwriter )
(b) N.A.S.D membership by ) Sponsor
principal underwriter )
40. Certain fees received by ) Administration of the Trust--
principal underwriter ) Portfolio Supervision; Expenses
) of the Trust
41. (a) Business of principal ) Sponsor
underwriter )
(b) Branch offices of principal ) *
underwriter )
(c) Salesmen of principal ) *
underwriter )
- --------------------
* Not applicable, answer negative or not required.
-vi-
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
42. Ownership of trust's securities ) Sponsor
by certain persons )
43. Certain brokerage commissions ) *
received by principal )
underwriter )
44. (a) Method of valuation ) The Trust, Public Offering of
) Units--Maintenance of a
) Secondary Market; Valuation of
) Units; Redemption of Units
(b) Schedule as to offering price ) Essential Information Regarding
) the Trust; Public Offering of
) Units--Public Offering Price;
) Valuation of Units; Schedule of
) Investments
(c) Variation in offering price ) Public Offering of Units--
to certain persons ) Public Offering Price
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Valuation of Units; Redemption
) of Units
(b) Schedule as to redemption ) *
price )
V. Information Concerning the Trustee or Custodian
47. Maintenance of position in under- ) Redemption of Units
lying securities )
48. Organization and regulation of ) Trustee
Trustee )
49. Fees and expenses of Trustee ) Essential Information Regarding
) the Trust; Expenses of the
) Trust; Trustee; Administration
) of the Trust--Accounts;
) Distributions
50. Trustee's lien ) Expenses of the Trust
- --------------------
* Not applicable, answer negative or not required.
-vii-
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
VI. Information Concerning Insurance of Holders of Securities
51. (a) Name and address of )
Insurance Company ) *
(b) Type of policies ) *
(c) Type of risks insured and )
excluded ) *
(d) Coverage of policies ) *
(e) Beneficiaries of policies ) *
(f) Terms and manner of )
cancellation ) *
(g) Method of determining )
premiums ) *
(h) Amount of aggregate )
premiums ) *
(i) Who receives any part of )
premiums ) *
(j) Other material provisions of )
the Trust relating to ) *
insurance )
VII. Policy of Registrant
52. (a) Method of selecting and ) The Trust; Administration of
eliminating securities from ) the Trust--Portfolio
the Trust ) Supervision; Termination
) of the Trust
(b) Elimination of securities from ) *
the Trust )
- -------------------
* Not applicable, answer negative or not required.
-viii-
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
(c) Policy of Trust regarding ) The Trust; Administration of the
substitution and elimination ) Trust--Portfolio Supervision;
) Termination of the Trust
(d) Description of any fundamental ) The Trust; Administration of the
policy of the Trust ) Trust--Portfolio Supervision;
) Termination of the Trust
53. (a) Taxable status of the Trust ) Tax Considerations
(b) Qualification of the Trust as a ) Tax Considerations
regulated investment company )
VIII. Financial and Statistical Information
54. Information regarding the Trust's ) *
past ten fiscal years )
55. Certain information regarding ) *
periodic payment plan certificates )
56. Certain information regarding ) *
periodic payment plan certificates )
57. Certain information regarding ) *
periodic payment plan certificates )
58. Certain information regarding ) *
periodic payment plan certificates )
59. Financial statements ) Statement of Net assets
(Instruction 1(c) to Form S-6) )
- -------------------------------------
* Inapplicable, omitted, answer negative or not required.
-ix-
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 +
+THE 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 REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED AUGUST 29, 1997
SUBJECT TO COMPLETION
HBI
EQUITY TRUST, SERIES 4
A UNIT INVESTMENT TRUST
A PORTFOLIO OF MIDWEST BANK AND THRIFT STOCKS
- --------------------------------------------------------------------------------
The investment objective of this Trust is to provide for capital appreciation
through an investment in common stocks primarily consisting of certain banking
institutions and thrift institutions incorporated or headquartered in the
midwestern United States and having, in the Sponsor's opinion, on the Initial
Date of Deposit, the potential to outperform broad-based stock indices and bank
and thrift stocks generally over the three-year life of the Trust. The value of
the Units will fluctuate with the value of the portfolio of underlying
securities.
The minimum purchase in the initial public offering is 100 Units or
approximately $1,500. Only whole Units may be purchased. Units will be
available for purchase only during the initial public offering period.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
LOGO
HOWE BARNES INVESTMENTS, INC.
Read and retain this Prospectus for future reference. Prospectus dated
September , 1997
<PAGE>
ESSENTIAL INFORMATION REGARDING THE TRUST
As of September , 1997(1)
Sponsor: Howe Barnes Investments, Inc.
Trustee: The Bank of New York
Initial Date of Deposit..................................... September , 1997
<TABLE>
<S> <C>
Aggregate Value of Stocks in Trust (2).............................. $
Number of Units.....................................................
Fractional Undivided Interest in the Trust Represented by Each Unit.
Calculation of Public Offering Price per Unit (3)
Aggregate Value of Stocks in Trust (2)............................. $
Divided by Units........................................... $14.475
Plus Sales Charge of 3.500% of Public Offering Price (3.627% of net
amount invested).................................................. $.525
Public Offering Price per Unit..................................... $15.000
Redemption Price per Unit (3)....................................... $
Excess of Public Offering Price per Unit over Redemption Price per
Unit............................................................... $
</TABLE>
Evaluation Time......................................... 3:00 p.m. Chicago time
Income and Capital Account Distribution Dates.. December 15, 1997 and quarterly
thereafter
Record Dates......................... December 1, 1997 and quarterly thereafter
Mandatory Termination Date..................................... August 31, 2000
Discretionary Liquidation Amount...... 40% of the aggregate market value of the
Stocks
Trustee's Annual Fee................................................... $11,000
Estimated Annual Sponsor's Supervisory Fee...................... $.043 per Unit
Estimated Annual Miscellaneous Expenses......................... $.010 per Unit
- -------
(1) The date prior to the Initial Date of Deposit.
(2) Represents value of the Stocks in the portfolio based on the closing
prices at the offer side of the market on September , 1997, rather than
the closing prices at the bid side of the market. After the initial
offering, Net Asset Value of the Trust is calculated based on the closing
prices at the bid side of the market of the Stocks. See "Valuation of
Units." The aggregate value of the Stocks based on the closing bid prices
on September , 1997 is $ .
(3) The initial Public Offering Price per Unit on the Initial Date of Deposit
is based on the pro rata share of the aggregate value of the Stocks in the
Trust, valued at the offer side of the market, plus the applicable sales
charge. Thereafter, the Public Offering Price during the initial public
offering period will be based upon the Net Asset Value of the Trust next
computed (based, during the initial public offering period only, on
valuation at the offer side of the market) as described in "Valuation of
Units" plus the applicable sales charge. The Redemption Price per Unit
will be calculated based on the Net Asset Value next computed (based on
valuation at the bid side of the market) based on the pro rata share of
the aggregate value of the Stocks in the Trust as described in "Redemption
of Units."
2
<PAGE>
HBI EQUITY TRUST, SERIES 4
HBI Equity Trust. The objective of the HBI Equity Trust, Series 4 (the
"Trust") is to provide for capital appreciation through an investment in
common stocks primarily consisting of banking institutions and thrift
institutions incorporated or headquartered in the midwestern United States
(the "Stocks"). Stocks have been selected which, in the Sponsor's opinion, on
the Initial Date of Deposit have the potential to outperform broad-based stock
indices and bank and thrift stocks generally over the three-year life of the
Trust. The Trust is not a "managed" investment portfolio, but rather will
consist of the same portfolio of Stocks for the life of the Trust, subject to
adjustment or elimination in certain limited circumstances. Except for
temporary investment of any proceeds received in such limited circumstances,
the Trust's portfolio will consist primarily of common stocks. See
"Administration of the Trust."
The Trust will seek to achieve its objective of capital appreciation through
an investment in a portfolio primarily consisting of Stocks representing
banking institutions and thrift institutions incorporated or headquartered in
the midwestern United States. The Sponsor believes that changes in state
banking laws to permit wider interstate banking and the continuing
consolidation of the banking and thrift industries have created attractive
investment opportunities among numerous midwestern banking institution and
thrift institution stocks. The Sponsor believes these stocks have the
potential to achieve above-average capital appreciation over the next three
years primarily due to strong or improving fundamental characteristics of the
issuer companies, including among other factors, strength and depth of
management, strategic banking locations in stable or growing market areas,
high asset quality, and potential earnings growth.
In selecting the Stocks for the Trust, the Sponsor has considered, among
other financial criteria of the issuer (or its banking or thrift subsidiary),
regulatory capital levels, net interest margin, return on average assets,
return on average equity, the adequacy of the loan loss reserve, the level of
non-performing and non-accrual loans, and loan charge-off history. The Sponsor
did not base its selection of Stocks for the Trust on the payment of dividends
by the various issuers; however, many selected Stocks do currently pay
dividends.
Bank stocks (as represented by the NASDAQ Bank Index) have outperformed the
general market (as represented by the S&P 500 Index) over the last five years.
Over the period of January 3, 1992 through June 30, 1997, the NASDAQ Bank
Index grew from 356.54 to 1618.90, while the S&P 500 Index grew from 419.34 to
887.30. During the years 1992, 1993, 1994, 1995, 1996 and the first half of
1997, the price appreciation of the NASDAQ Bank Index was 52%, 29%, 1%, 45%,
26% and 27%, respectively, while the price of appreciation of the S&P 500
Index in the same periods was 5%, 7%, -2%, 34%, 20% and 20%. These figures
represent the price appreciation of the stocks included in each index and do
not include dividends paid on such stocks. The historical performance of the
indices is shown for illustrative purposes only and is not meant to forecast,
imply or guarantee the future performance of any particular investment or the
Trust, which will vary. The NASDAQ Bank Index is a broad-based,
capitalization-weighted index of domestic and foreign common stocks of banks
and thrifts that are traded on the Nasdaq National Market System and SmallCap
Market. The overall composition of the Trust will not be the same as that of
the indices. Unitholders are subject to fees, sales charges and taxes that are
not reflected in these figures.
3
<PAGE>
Termination. Unless advised to the contrary by the Sponsor, the Trustee will
begin to sell the Stocks held in the Trust 30 days prior to the Mandatory
Termination Date. Moneys held upon such sale of Stocks, to the extent not
reinvested in Treasury Obligations, and funds received from Treasury
Obligations upon maturity will be held in non-interest bearing accounts until
distributed and will be of benefit to the Trustee. See "Expenses of the Trust."
During the life of the Trust, Stocks will not be sold to take advantage of
market fluctuations. The Trust will terminate on the Mandatory Termination Date
regardless of market conditions at that time. See "Termination of the Trust"
and "Tax Considerations."
Public Offering Price. The initial Public Offering Price per Unit on the
Initial Date of Deposit is determined by dividing the aggregate value of the
Stocks, based on the closing prices at the offer side of the market on the date
prior to the Initial Date of Deposit, by the number of Units being sold, plus
the applicable sales charge. Thereafter, during the initial public offering
period, the Public Offering Price per Unit is computed by dividing the Net
Asset Value of the Trust (based, during the initial public offering period
only, on valuation of the Securities at the offer side of the market), as
determined by the Trustee as described under "Valuation of Units," by the
number of Units outstanding, then adding the applicable sales charge. During
the initial public offering period, the sales charge will be 3.500% of the
Public Offering Price (3.627% of the net amount invested); provided, however,
that a reduced sales charge will apply to employees and affiliates of the
Sponsor and certain of their relatives and transactions involving $500,000 or
more. See "Public Offering of Units--Public Offering Price."
Distributions. The Trustee will make pro rata distributions to Unitholders
from both the Income Account and the Capital Account on each Distribution Date
to the extent funds are available for distribution in the respective accounts.
See "Distributions to Unitholders." Upon termination of the Trust, the Trustee
will distribute to each Unitholder of record on such date his pro rata share of
the Trust's assets, less expenses. Holders may request to receive such
distribution "in kind." See "Redemption of Units" and "Termination of the
Trust." See "Tax Considerations" for a discussion of the tax consequences to an
investor of an "in kind" redemption. The sale of Stocks in the Trust in the
period prior to termination and upon termination may result in a lower amount
than might otherwise be realized if such sale were not required at such time
due to impending or actual termination of the Trust. For this reason, among
others, the amount realized by a Unitholder upon termination may be less than
the amount paid by such Unitholder.
Secondary Market. The Sponsor is not obligated, and currently does not
intend, to maintain a secondary market for the Units. Accordingly, a Unitholder
may currently only purchase Units in the initial public offering and only
dispose of his Units through redemption.
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among others, the possible
deterioration of either the financial condition of the issuer or the general
condition of the stock market, volatile interest rates, economic recession and
risk factors affecting banks and thrifts. See "The Trust--Risk Factors."
4
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND TRUSTEE
HBI EQUITY TRUST, SERIES 4
We have audited the accompanying statement of net assets, including the
schedule of investments, of HBI Equity Trust, Series 4, as of the opening of
business on September , 1997. This statement of net assets is the
responsibility of the Trust's Sponsor. Our responsibility is to express an
opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of net
assets. Our procedures included confirmation of the letter of credit held by
the Trustee and deposited in the Trust on September , 1997. An audit also
includes assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall presentation of the
statement of net assets. We believe that our audit of the statement of net
assets provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of HBI Equity Trust,
Series 4 at the opening of business on September , 1997 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September , 1997
HBI EQUITY TRUST, SERIES 4
STATEMENT OF NET ASSETS
At the opening of business on September , 1997, the Initial Date of
Deposit.
NET ASSETS
<TABLE>
<S> <C>
Investments (1)(2)............................................. $
==========
Units outstanding..............................................
==========
ANALYSIS OF NET ASSETS
Cost to investors (3).......................................... $
Less sales charge (3)..........................................
----------
Net proceeds to the Trust, equal to net assets................. $
==========
</TABLE>
- -------------------
(1) Aggregate cost to the Trust of the Stocks listed in the schedule of
investments is based on the closing prices at the offer side of the market
of the Stocks on September , 1997, the business day prior to the Initial
Date of Deposit, as determined by the Trustee in its capacity as
Evaluator.
(2) Investments consist of $ aggregate value of Stocks represented by
Sponsor's contracts to purchase the Stocks for which an irrevocable letter
of credit from Harris Trust and Savings Bank totaling $ has been
deposited with the Trustee.
(3) The aggregate cost to investors includes a sales charge computed at the
rate of 3.500% of the initial Public Offering Price (equivalent to 3.627%
of the net amount invested) and assumes no reduction in sales charges for
purchases by employees and affiliates of the Sponsor and certain of their
relatives or for quantity purchases.
5
<PAGE>
HBI EQUITY TRUST, SERIES 4
SCHEDULE OF INVESTMENTS
At the opening of business on September , 1997, the Initial Date of
Deposit.
<TABLE>
<CAPTION>
COST OF
STOCKS TO
TICKER NUMBER TRUST
SYMBOL NAME OF ISSUERS (LOCATION) OF SHARES (1)(2)
------ ---------------------------------------------- --------- ----------
<C> <S> <C> <C>
$
----------
TOTAL INVESTMENTS.................................. $
==========
</TABLE>
- --------------------
(1) Represents the aggregate value of the Stocks based on the closing prices on
September , 1997, the business day prior to the Initial Date of Deposit,
at the offer side of the market. The aggregate value of the Stocks based on
the closing prices at the bid side of the market on September , 1997 was
$ .
(2) The aggregate cost of the Stocks to the Sponsor, including brokerage
commissions, was $ and the profit to the Sponsor at the opening of
Business on the Initial Date of Deposit was $ . See "Public Offering
of Units--Profits to the Sponsor."
6
<PAGE>
THE TRUST
General. The Trust is one of a series of similar but separate unit
investment trusts created under New York law by the Sponsor pursuant to a
Trust Agreement dated as of the Initial Date of Deposit (the "Indenture"),
between Howe Barnes Investments, Inc. (the "Sponsor") and The Bank of New York
(the "Trustee"). Reference is made to the Indenture and any statements
contained herein are qualified in their entirety by the provisions of the
Indenture.
The portfolio of the Trust primarily consists of common stock of certain
issuers selected by the Sponsor, including, in the case of securities not
delivered on the Initial Date of Deposit, confirmations of contracts to
purchase such securities, and any additional stocks acquired and held in the
Trust pursuant to the Indenture (collectively, the "Stocks"). Portfolios of
additional series may include shares of preferred stock or other equity
securities convertible into common stock.
On the Initial Date of Deposit, the Sponsor deposited the Stocks with the
Trustee together with cash or an irrevocable letter or letters of credit of a
commercial bank or banks in an amount at least equal to the aggregate purchase
price of any of the Stocks represented by confirmation of contracts to
purchase such securities. The value of the Stocks on the Initial Date of
Deposit was determined on the basis of the closing prices at the offer side of
the market on the business day prior to the Initial Date of Deposit. In
exchange for the deposit of the Stocks, including any contracts to purchase
Stocks, the Trustee delivered to the Sponsor a receipt for Units representing
the entire ownership of the Trust.
On the Initial Date of Deposit, each Unit represented that fractional
undivided interest in each of the Stocks as set forth under "Essential
Information Regarding the Trust." If any Units are redeemed, the aggregate
value of Stocks in the Trust will be reduced, and the fractional undivided
interest represented by each remaining Unit will be increased proportionately.
Units will remain outstanding until redeemed upon tender to the Trustee by any
Unitholder (which may include the Sponsor) or until the termination of the
Trust. See "Termination of the Trust."
In the event a contract to purchase a Stock which is deposited on the
Initial Date of Deposit fails, funds attributable to such failed contract may
be reinvested in such other substantially similar stock or stocks, if any,
which have been identified as substitute stocks by the Sponsor as of the
Initial Date of Deposit or, if not so reinvested within 40 days after the
Initial Date of Deposit (the "Purchase Period"), distributed to Unitholders of
record on the last day of the month during which the end of the Purchase
Period occurred. The distribution will be made within 20 days following such
record date and, in the event of such a distribution, the Sponsor will refund
to each Unitholder the portion of the sales charge attributable to such failed
contract.
Additional Units of the Trust may be issued at any time by depositing in the
Trust additional Stocks or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by the
Trust as a result of the deposit of additional Stocks by the Sponsor, the
aggregate value of the Stocks in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Stocks into
the Trust following the Initial Date of Deposit, provided that such additional
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deposits will be in amounts which will maintain, as nearly as practicable, the
original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate relationship. Any
such difference may be due to the sale, redemption or liquidation of any of the
Stocks deposited in the Trust on the Initial, or any subsequent, Date of
Deposit.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent any Units are redeemed by the Trustee or additional Units are issued
as a result of additional Stocks being deposited by the Sponsor, the fractional
undivided interest in the Trust represented by each unredeemed Unit will
increase or decrease accordingly, although the actual interest in the Trust
represented by such fraction will remain unchanged. Investors should note that
the Stocks were selected for inclusion in the Trust as of the Initial Date of
Deposit. The Trust may continue to purchase or hold Stocks originally selected
through this process even though the evaluation of the attractiveness of the
Stocks may have changed and, if the evaluation were performed again at that
time, the Stocks would not be selected for the Trust.
Because the Trust is organized as a unit investment trust, rather than as a
management investment company, the Trustee and the Sponsor do not have
authority to manage the Trust's assets in an attempt to take advantage of
various market conditions to improve the Trust's Net Asset Value, but rather
may dispose of Stocks only under limited circumstances. The original
proportionate relationship among the Stocks is only subject to adjustment (i)
to reflect the occurrence of a stock split, stock dividend or a similar event
which affects the capital structure of the issuer of a Stock but which does not
affect the Trust's percentage ownership of the common stock equity of such
issuer at the time of such event, (ii) to reflect a sale of a Stock, (iii) to
reflect the acquisition (and subsequent disposition upon maturity) of Treasury
Obligations or (iv) to reflect a merger or reorganization by an issuer of a
Stock. See "Administration of the Trust--Portfolio Supervision" and
"Administration of the Trust--Reinvestment."
The Stocks are common stocks which have been selected by the Sponsor as
having, as of the Initial Date of Deposit, an above-average capital
appreciation potential over the life of the Trust. Stocks contained in the
Trust will not be sold to take advantage of market fluctuations nor will they
be sold solely because the Sponsor no longer considers them to have
appreciation potential. Proceeds from the sale of Stocks, if any (unless such
proceeds are reinvested in Treasury Obligations if and to the extent there is
no legal impediment thereto), and any dividends and distributions received will
be held by the Trustee in non-interest bearing accounts until used to pay
expenses or distributed to Unitholders on the next following Distribution Date.
See "Administration of the Trust--Reinvestment." To the extent that funds are
held in such non-interest bearing accounts, such funds will benefit the
Trustee.
Risk Factors. An investment in Units of the Trust should be made with an
understanding of the risks inherent in an investment in common stocks in
general, including the risk that the financial condition of the issuers of the
Stocks or the general condition of the stock market may worsen and the value of
the Stocks and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of the
issuers change. These perceptions are based on
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unpredictable factors including expectations regarding domestic and foreign
government, economic, monetary and fiscal policies, inflation and interest
rates, economic expansion or contraction, and global or regional political,
economic or banking crises. The general risks are associated with the rights to
receive payments from the issuer which are generally inferior to creditors of,
or holders of debt obligations or preferred stocks issued by, the issuer.
Holders of common stocks have a right to receive dividends only when and 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 against the issuer have been paid or provided for. By contrast,
holders of preferred stocks 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, but do not participate in other amounts available for
distribution by the issuing corporation. Dividends on cumulative preferred
stock must be paid before any dividends are paid on common stock. Preferred
stocks are also 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.
Common stocks do not represent an obligation of the issuer. Therefore they do
not offer any assurance of income or provide the degree of protection of debt
securities. The issuance of debt securities or 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 rights of holders of common
stock with respect to assets of the issuer upon liquidation or bankruptcy.
Unlike debt securities, which typically have a stated principal amount payable
at maturity, common stocks do not have a fixed principal amount or a maturity.
Additionally, the value of the Stocks in the Trust is subject to market
fluctuations for as long as the Stocks remain outstanding, and therefore over
the life of the Trust the Stocks in the Trust may be expected to fluctuate to
values higher or lower than those prevailing on the Initial Date of Deposit.
The Trust is concentrated in Stocks issued by companies in the banking and
thrift industries. In view of this, an investment in Units of the Trust should
be made with an understanding of the problems and risks inherent in the banking
and thrift industries in general. Banking institutions and thrift institutions
are especially subject to the adverse effects of economic recession, volatile
interest rates, portfolio concentrations in geographic markets and in
commercial and residential real estate loans, and competition from new entrants
in their fields of business. Economic conditions in the real estate markets can
have a significant effect upon banking institutions and thrift institutions
because they generally have a substantial percentage of their assets invested
in loans secured by real estate. Banking institutions and thrift institutions
are subject to extensive federal regulation and, when such institutions are
state-chartered, to state regulation as well. Regulatory actions, such as
increases in the minimum capital requirements applicable to commercial banks
and thrifts and increases in deposit insurance premiums required to be paid by
commercial banks and thrifts to the FDIC, can negatively impact earnings and
the ability of an institution to pay dividends. Furthermore, neither federal
insurance of deposits nor governmental regulation, however, ensures the
solvency or profitability of banking institutions or thrift institutions, or
insures against any risk of investment in the securities issued by such
institutions.
Financial institutions and their holding companies are extensively regulated
under federal and state laws. As a result, the business, financial condition
and prospects of banks and thrifts can be
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materially affected not only by management decisions and general economic
conditions, but also by applicable statutes and regulations and other
regulatory pronouncements and policies promulgated by regulatory agencies with
jurisdiction over the banks and thrifts, such as the Board of Governors of the
Federal Reserve System ("FRB"), the Office of the Comptroller of the Currency
("OCC"), the Office of Thrift Supervision (the "OTS"), the Federal Deposit
Insurance Corporation ("FDIC") and the state banking regulators. The effect of
such statutes, regulations and other pronouncements and policies can be
significant, cannot be predicted with a high degree of certainty and can
change over time. Furthermore, such statutes, regulations and other
pronouncements and policies are intended to protect depositors and the FDIC's
deposit insurance funds, not to protect stockholders. Bank and thrift holding
companies as well as their subsidiary banks and thrifts are subject to
enforcement actions by their regulators for regulatory violations. In addition
to compliance with statutory and regulatory limitations and requirements
concerning financial and operating matters, regulated financial institutions
must file periodic and other reports and information with their regulators and
are subject to examination by each of their regulators.
The statutory requirements applicable to and regulatory supervision of bank
and thrift holding companies and their subsidiary banks and thrifts have
increased significantly and have undergone substantial change in recent years.
To a great extent, these changes are embodied in the Financial Institutions
Reform, Recovery and Enforcement Act ("FIRREA"), enacted in August 1989, the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
enacted in December 1991, and the regulations promulgated under FIRREA and
FDICIA. The impact of regulations promulgated pursuant to FDICIA on the
business and financial condition and prospects of banks and thrifts cannot be
predicted with certainty. Banks and thrifts currently face significant
competition from other financial institutions such as mutual funds, securities
and brokerage companies, credit unions, mortgage banking corporations and
insurance companies, and increased competition may result from broadening
national interstate banking powers and liberalization of certain restrictions
on the activities of nonbank subsidiaries of banks and thrifts. Many of these
competitors are much larger in total assets and capitalization, have greater
access to capital markets and offer a broader array of financial services than
the issuers of the Stocks. There can be no assurance that such issuers will be
able to compete effectively in their markets, and the results of operations
could be adversely affected if circumstances affecting the nature or level of
competition change.
Federal legislation became effective in 1995 which serves to lessen or
remove certain legal barriers to interstate banking and branching by financial
institutions. The legislation may result in an increase in the nationwide
consolidation activity occurring among financial institutions by facilitating
interstate bank operations and acquisitions. The legislation does, however,
allow states to "opt out" of interstate branching and certain states have
opted out of the legislation. The effects of changes in interstate banking
cannot be predicted, however, it is likely that there will be increased
competition within the regional banking industry which could have an adverse
impact on certain issuers. In addition, the Federal Reserve Board has approved
applications by bank holding companies to engage, through nonbank
subsidiaries, in certain securities-related activities, provided that the
subsidiaries would not be "principally engaged" in such activities for
purposes of Section 20 of the Glass-Steagall Act. In certain situations,
holding companies may be able to use such subsidiaries to underwrite and deal
in
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corporate debt and equity securities. The Federal Reserve Board has recently
liberalized the standards used in determining whether a subsidiary is
principally engaged in such activities. From time to time bills have been
introduced in Congress that would remove many of the Glass-Steagall Act
restraints, although no comprehensive bill has been enacted to date. This and
any future liberalization of Glass-Steagall could result in increased
competition which could have an adverse impact on certain issuers. The Sponsor
makes no prediction as to what, if any, additional bank and thrift regulatory
reform might be adopted or what ultimate effect such reform might have on the
Trust's portfolio.
Until distributed, proceeds received upon the sale of Stocks may be
reinvested in interest-bearing Treasury Obligations maturing prior to the next
Distribution Date or, if earlier, December 31 of the year of purchase to the
extent legally permissible. See "Administration of the Trust--Reinvestment."
The value of the Securities and, therefore, the value of Units, may be expected
to fluctuate.
The Sponsor has acquired or will acquire the Stocks and thereby benefits from
transaction fees. The Sponsor in its general securities business acts as agent
or principal in connection with the purchase and sale of equity securities,
including the Stocks in the Trust, and may act as a market maker in certain or
all of the Stocks. The Sponsor also from time to time may issue reports on and
make recommendations relating to equity securities, which may include the
Stocks. See "Public Offering of Units--Profits to the Sponsor."
TAX CONSIDERATIONS
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
the Trust. For purposes of the following discussion and opinions, it is assumed
that each Stock is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro
rata portion of each of the assets of the Trust under the Code; and the
income of the Trust will be treated as income of the Unitholders thereof
under the Code. Each Unitholder will be considered to have received his pro
rata share of income derived from each Stock when such income is considered
to be received by the Trust.
2. Each Unitholder will be considered to have received all of the
dividends paid on his pro rata portion of each Stock when such dividends
are received by the Trust. Unitholders will be taxed in this manner
regardless of whether distributions from the Trust are actually received by
the Unitholder.
3. Each Unitholder will have a taxable event when the Trust disposes of a
Stock (whether by sale, exchange, liquidation, redemption or otherwise) or
upon the sale of redemption of Units by such Unitholder. The price a
Unitholder pays for his Units, generally including sales charges, is
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allocated among his pro rata portion of each of the Stocks held by the
Trust (in proportion to the fair market values thereof on the valuation
date closest to the date the Unitholder purchases his Units) in order to
determine his initial tax basis for his pro rata portion of each of the
Stocks held by the Trust. It should be noted that certain legislative
proposals have been made which could affect the calculation of basis for
Unitholders holding securities that are substantially identical to the
Stocks. Unitholders should consult their own tax advisers with regard to
calculation of basis. For federal income tax purposes, a Unitholder's pro
rata portion of dividends, as determined under Section 316 of the Code,
paid by a corporation with respect to a Stock held by the Trust is
generally taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unitholder's pro rata
portion of dividends paid on such Stock which exceeds such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis
in such Stock, and, to the extent that such dividends also exceed a
Unitholder's tax basis in such Stock, the excess will generally be treated
as capital gain. In general, any such capital gain will be short-term
unless a Unitholder has held his Units for more than one year.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of any of the Stocks held by the Trust will
generally be considered a capital gain (except in the case of a Unitholder
which is a dealer or a financial institution). A Unitholder's portion of
loss, if any, upon the sale or redemption of Units or the disposition of
any of the Stocks held by the Trust will generally be considered a capital
loss (except in the case of a Unitholder which is a dealer or a financial
institution). Unitholders should consult their tax advisers regarding the
recognition of such capital gains and losses for federal, state and local
income tax purposes.
Dividends Received Deduction. A corporation that owns Units generally will
be entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the Trust (to the
extent such dividends are taxable as ordinary income, as discussed above, and
are attributable to domestic corporations) in the same manner as if such
corporation directly owned the Stocks paying such dividends (other than
corporate Unitholders, such as "S" corporations which are not eligible for the
deduction because of their special characteristics and other than for purposes
of special taxes such as the accumulated earnings tax and the personal holding
corporation tax). 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). Final Regulations have been issued which address special rules that
must be considered in determining whether the 46-day holding period
requirement is met. 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. It should be noted that various legislative proposals that
would affect the dividends received deduction have been introduced.
Unitholders should consult their tax advisers regarding the availability of
the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of
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1986, certain miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will be deductible
by an individual only to the extent they exceed 2% of such individual's
adjusted gross income. Unitholders may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions subject to this
limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Stocks or
Disposition of Units. As discussed above, a Unitholder may recognize taxable
gain (or loss) when any of the Stocks are disposed of by the Trust or if the
Unitholder disposes of a Unit. For taxpayers other than corporations, net
capital gains (which is defined as net long-term capital gain over net short-
term capital loss for the taxable year) are subject to a maximum marginal
stated tax rate of either 28% or 20%, depending upon the holding period of the
capital assets. In particular, net capital gain, excluding net gain from
property held more than one year but not more than 18 months and gain on
certain other assets, is subject to a maximum marginal stated tax rate of 20%
(10% in the case of certain taxpayers in the lowest tax bracket). Net capital
gain that is not taxed at the maximum marginal stated tax rate of 20% (or 10%)
as described in the preceding sentence, is generally subject to a maximum
marginal stated tax rate of 28%. The date on which a Unit is acquired (i.e.,
the "trade date") is excluded for purposes of determining the holding period
of the Unit. It should be noted that legislative proposals are introduced form
time to time that affect tax rates and could affect relative differences at
which ordinary income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision on
their investment in Units.
If the Unitholder disposes of a Unit, he is deemed thereby to have disposed
of his entire pro rata interest in all assets of the Trust involved including
his pro rata portion of all the Stocks represented by the Unit. The Taxpayer
Relief Act of 1997 (the "1997 Tax Act") includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and opportunities
for gain (e.g., short sales, offsetting notional principal contracts, futures
or forward contracts, or similar transactions) as constructive sales for
purposes of recognition of gain (but not loss) and for purposes of determining
the holding period. Unitholders should consult their own tax advisers with
regard to any such constructive sale rules.
"In Kind" Distributions. A Unitholder may request an "in kind" distribution
upon the termination of the Trust. In addition, with respect to redemption
requests during the term of the Trust of $100,000 or more, a Unitholder may be
required to take an "in kind" distribution if the Sponsor, in its sole
discretion, directs the Trustee to redeem Units "in kind". Treasury
Obligations held by the Trust will not be distributed to a Unitholder as part
of an "in kind" distribution. As previously discussed, a Unitholder is
considered to own a pro rata portion of each of the Trust assets for federal
income tax purposes. The receipt of an "in kind" distribution will result in a
Unitholder receiving an undivided interest in whole shares of Stock plus,
possibly, cash.
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The potential tax consequences that may occur under an "in-kind" distribution
will depend on whether or not a Unitholder receives cash in addition to
Securities. A "Security" for this purposes is a particular class of stock
issued by a particular corporation. A Unitholder will not recognize gain or
loss if a Unitholder only receives Securities in exchange for his or her pro
rata portion in the Securities held by the Trust. However, if a Unitholder also
receives cash in exchange for a fractional share of a Security held by the
Trust, such Unitholder will generally recognize gain or loss based upon the
difference between the amount of cash received by the Unitholder and his tax
basis in such fractional share of a Security held by the Trust.
Because the Trust will own several Stocks, a Unitholder who receives an "in
kind" distribution will have to analyze the tax consequences with respect to
each Stock owned by the Trust. The total amount of taxable gain (or loss)
recognized upon such an exchange will generally equal the sum of the gains (or
losses) recognized under the rules described above by such Unitholder with
respect to each Stock owned by the Trust. Unitholders who request or receive
"in kind" distributions are advised to consult their tax advisers in this
regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Stocks held in the
Trust in accordance with the proportion of the fair market values of such
Stocks on the valuation date nearest to the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Stock.
A Unitholder's tax basis in his Units and his pro rata portion of a Stock
held by the Trust will be reduced to the extent dividends paid with respect to
such Stock are received by the Trust which are not taxable as ordinary income
as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject to
back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by the
Trust to such Unitholder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by the Trust
(other than those that are not treated as U.S. source income, if any) will
generally be subject to United States income taxation and withholding in the
case of Units held by non-resident alien individuals, foreign corporations or
other non-United States persons. Such persons should consult their tax
advisers.
Each Unitholder will be notified annually of the amounts of dividend income
includable in the Unitholder's gross income and the amount of Trust expenses
which may be claimed as deductions.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal income tax. Unitholders
may be subject to state taxation and should consult their own tax advisors in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a
Unit in the Trust that (a) is (i) for United States federal income tax purposes
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the
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laws of the United States or of any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source or (b) does not qualify as a U.S. Unitholder
in paragraph (a) but whose income from a Unit is effectively connected with
such Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
PUBLIC OFFERING OF UNITS
Public Offering Price. The initial Public Offering Price per Unit on the
Initial Date of Deposit is based on the pro rata share of the aggregate value
of the Stocks in the Trust based on the closing prices at the offer side of
the market on the business day prior to the Initial Date of Deposit, plus the
sales charge of 3.500% (3.627% of the net amount invested). Thereafter, during
the initial public offering period, the Public Offering Price per Unit is the
Net Asset Value per Unit, which is based on the aggregate market value of the
Securities valued at the closing prices at the offer side of the market, plus
the 3.500% sales charge. See "Valuation of Units."
The Sponsor intends to permit a reduced sales charge with respect to Units
purchased by its employees and affiliates of the Sponsor and certain of their
relatives who may purchase Units of the Trust (individually or for their
retirement programs) at a reduced sales charge of 0.515% (0.518% of the net
amount invested). In addition, the Sponsor will permit a reduced sales charge
of 2.500% of the Public Offering Price (2.591% of the net amount invested)
with respect to Units purchased by any person in the amount of $500,000 or
more.
Distribution of Units. The minimum purchase in the initial public offering
is 100 Units, or approximately $1,500. Only whole Units may be purchased.
The Sponsor will be the sole underwriter of Units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD") at prices which include a concession of 3.000% of the
Public Offering Price per Unit at the highest sales charge, subject to change
from time to time. The difference between the sales charge and the dealer
concession will be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of Units. The Sponsor intends to qualify the Units for sale in
the State of Illinois as well as in selected other states. Units will be sold
only to individuals and other investors resident in such states and to
institutional and other investors in other states to the extent there are
available exemptions from applicable state securities registration
requirements.
The Net Asset Value per Unit at the time of sale or transfer or upon
redemption may be less than the price at which the Unit was purchased.
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Profits to the Sponsor. In addition to the applicable sales charges, the
Sponsor realizes a profit (or sustains a loss) in the amount of any difference
between the cost of the Stocks to the Sponsor and the price at which it
deposits the Stocks in the Trust in exchange for Units. For purposes of any
deposit, the Stocks will be valued at the closing prices at the offer side of
the market on the business day prior to the related date of deposit. The spread
between the cost of the Stocks to the Sponsor and the price at which the Stocks
were deposited in the Trust on the Initial Date of Deposit is set forth in
footnote (2) to the "Schedule of Investments." The cost of Stocks to the
Sponsor includes the amount paid by the Sponsor, if any, for brokerage
commissions. These amounts are not an expense of the Trust.
Cash, if any, received from Unitholders prior to the settlement date for the
purchase of Units or prior to the payment for Stocks upon their delivery may be
used in the Sponsor's business subject to the limitations of Rule 15c3-3 under
the Securities Exchange Act of 1934, as amended, and may be of benefit to the
Sponsor.
In selling Units in the initial public offering, the Sponsor may realize
profits or sustain losses to the extent there are any fluctuations in the
Public Offering Price of the Units after a date of deposit before completion of
the sale of the Units in the initial public offering.
Maintenance of a Secondary Market. The Sponsor is not obligated, and
currently does not intend, to maintain a secondary market for the Units; though
the Sponsor may, however, decide to do so during the life of the Trust.
Accordingly, a Unitholder may currently only purchase Units in the initial
public offering and only dispose of his Units through redemption. With respect
to redemption requests of $100,000 or more, the Sponsor may, in its sole
discretion, direct the Trustee to redeem Units "in kind" by distributing stocks
to the redeeming Unitholder. See "Redemption of Units." If the Sponsor decides
to maintain a secondary market for the Units, the Public Offering Price per
Unit in the secondary market will be the Net Asset Value per Unit, which will
be based on the aggregate market value of the Stocks valued at the closing
prices at the bid side of the market, plus the 3.500% sales charge. See
"Valuation of Units."
REDEMPTION OF UNITS
Units held in uncertificated form may be redeemed by delivering a written
request for redemption to the Trustee at its office. Units held in certificated
form may be tendered to the Trustee at its office (currently located at the
address indicated on the back cover), must be properly endorsed or accompanied
by a written instrument of transfer in form satisfactory to the Trustee, and
must be executed by the Unitholder or his authorized attorney. In either case
the Unitholder must pay any transfer or similar tax which must be paid to
effect redemption and, Unitholders of uncertificated Units must sign such
written request and Unitholders of certificated Units must sign such
certificate transfer instrument, exactly as their name appears on the records
of the Trustee and on any certificate representing the Units to be redeemed.
Such signature(s) must be guaranteed by a participant in the Securities
Transfer Agents Medallion Program ("STAMP") or such other signature guarantee
program in addition to, or in substitution for, STAMP, as may be accepted by
the Trustee. A Unitholder may tender his Units for redemption at any time after
the settlement date or purchase. The Unitholder
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upon redemption will receive the Net Asset Value per Unit determined as of the
close of business on the day of tender. There is no sales charge incurred when
a Unitholder tenders his Units to the Trustee for redemption unless the
redemption is an amount less than 7,500 Units in which case a fee of $150 will
be charged. The amount received by a Unitholder upon redemption may be more or
less than the amount paid by the Unitholder depending on the value of the
Stocks in the portfolio at the time of redemption. The redemption price per
Unit on the Initial Date of Deposit will be less than the initial Public
Offering Price per Unit both because the sales charge in included in the
offering price and because the redemption price is based on valuations of the
Stocks at the bid side of the market rather than the closing prices at the
offer side of the market. See "Essential Information Regarding the Trust."
Prior to redeeming such Units from the Trust, the Trustee shall offer such
Units for sale to the Sponsor at the Net Asset Value per Unit. Subject to
payment of applicable tax or governmental charges, if any, the Net Asset Value
of Units tendered for redemption will be paid to the redeeming Unitholder no
later than the seventh calendar day following the day of tender. See "Valuation
of Units."
With respect to cash redemptions, amounts representing income received shall
be withdrawn from the Income Account, and, to the extent the Income Account is
insufficient and for remaining amounts, from the Capital Account. The Trustee
is empowered, to the extent necessary, to sell Stocks to meet redemptions.
Treasury Obligations, if any, held by the Trust must be held to maturity and
cannot be disposed of by the Trustee. The Trustee will sell Stocks in such
manner as is directed by the Sponsor. With respect to redemption requests of
$100,000 or more, the Sponsor may, in its sole discretion, direct the Trustee
to redeem Units "in kind" by distributing Stocks to the redeeming Unitholder.
When Stocks are so distributed, the Unitholder will receive that number of
whole shares of each Stock representing the aggregate of his interest in each
of the Stocks, plus cash in lieu of fractional shares. Stocks will be valued
for this purpose as set forth under "Valuation of Units." A Unitholder
receiving a redemption "in kind" may incur brokerage or other transaction costs
in converting the Stocks distributed into cash. For information on the tax
effects of receiving a redemption "in kind", see "Tax Considerations."
To the extent that shares of Stocks are distributed pursuant to redemption
"in kind" or sold, the size of the Trust will, and the diversity of the Trust
may, be reduced. Sales may be required at a time when Stocks would not
otherwise be sold and may result in lower proceeds than might otherwise be
realized. In addition, because of the minimum amounts in which Stocks are
required to be sold, the proceeds of sale may exceed the amount required at the
time to redeem Units; these excess proceeds will be distributed to the
remaining Unitholders on the next Distribution Date.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment for
Units tendered for redemption to a date more than seven calendar days following
the day of tender, (i) for any period during which the New York Stock Exchange
is closed other than for weekend and holiday closings; (ii) for any period
during which the Securities and Exchange Commission determines that trading on
the New York Stock Exchange is restricted; (iii) for any period during which an
emergency exists as a result of which disposal or evaluation of the Stocks is
not reasonably practicable; or (iv) for such other period as the Securities and
Exchange Commission may by order permit for the protection of Unitholders. The
Trustee is not liable to any person in any way for any loss or damages which
may result from any such suspension or postponement, or any failure to suspend
or postpone, when done in the Trustee's discretion.
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On the business day prior to the Initial Date of Deposit, the initial Public
Offering Price per Unit (which figure includes the sales charge) exceeds the
Net Asset Value per Unit. See "Essential Information Regarding the Trust." The
initial Public Offering Price per Unit is determined by dividing the aggregate
value of the Stocks based on the closing prices at the offer side of the market
on the business day prior to the Initial Date of Deposit, by the number of
Units being sold, plus the applicable sales charge. The prices of the Stocks
will generally vary. For these reasons and others, including the fact that the
Public Offering Price includes the sales charge, the amount realized by a
Unitholder upon redemption of Units may be less than the price paid by the
Unitholder for such Units.
VALUATION OF UNITS
The Trustee will calculate the Trust's value (the "Net Asset Value") at the
Evaluation Time set forth under "Essential Information Regarding the Trust" (i)
on each Trust Business Day (as hereinafter defined) until completion of the
initial public offering, (ii) on the Trust Business Day on which any Unit is
tendered for redemption, (iii) on any other day desired by the Sponsor or the
Trustee and (iv) upon termination, by adding:
(a) The aggregate value of Stocks in the Trust (including the value of
Stocks subject to purchase contracts, if any, deposited with the Trustee on
the Deposit Date), as determined by the Trustee in its capacity as
Evaluator of the Trust; and
(b) The sum of (i) cash on hand in the Trust other than cash deposited to
purchase Stocks or cash credited to any reserve account established under
the Indenture and (ii) dividends receivable on Stocks trading ex-dividend.
The Trustee will deduct from the resulting figure: amounts representing any
applicable taxes or governmental charges payable by the Trust for the purpose
of making an addition to any reserve account established under the Indenture;
amounts representing estimated accrued fees and expenses of the Trust,
including amounts representing unpaid fees of the Trustee and the Sponsor; and
cash or Stocks held to redeem tendered Units and for distribution to
Unitholders of record as of a Trust Business Day prior to the evaluation being
made on the days or dates set forth above.
For the purpose of the redemption of Units, the Net Asset Value per Unit is
computed by the Trustee by dividing the result of the above computation by the
total number of Units outstanding on the date of such evaluation. A Trust
Business Day is a day on which the New York Stock Exchange is open, other than
federal or New York state bank holidays.
For the purpose of the redemption of Units, the value of Stocks shall be
determined in good faith by the Trustee acting in its capacity as Evaluator of
the Trust in the following manner: (i) if the Stocks are listed on one or more
national securities exchanges such evaluation shall be based on the closing
sale price on that day (unless the Sponsor deems such price inappropriate as a
basis for evaluation) on the exchange which is the principal market thereof
(deemed to be the New York Stock Exchange if the Stocks are listed thereon),
(ii) if the Stocks are listed but there is no such appropriate closing sales
price on such exchange, and for Stocks that are not so listed but are quoted on
the Nasdaq National Market, at the closing bid prices on such exchange or
system (unless the Sponsor deems such price
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inappropriate as a basis for evaluation), (iii) if the Stocks are not listed or
quoted or, if so listed or quoted and the principal market therefor is other
than on such exchange or system or there are no such appropriate closing bid
prices available, such evaluation shall be made by the Sponsor in good faith
based on the closing sales price in the over-the-counter market (unless the
Sponsor deems such price inappropriate as a basis for evaluation) or (iv) if
there is no such appropriate closing price, then (a) on the basis of current
bid prices obtained from dealers or brokers (which may include the Sponsor),
(b) if bid prices are not available, on the basis of current bid prices for
comparable securities, (c) by the Sponsor's appraising the value of the Stocks
in good faith on the bid side of the market or (d) by any combination thereof.
The tender of a Stock pursuant to a tender offer will not affect the method of
valuing such Stock.
The Treasury Obligations, if any, are valued on the basis of bid prices. The
aggregate bid prices of the Treasury Obligations are the prices obtained from
dealers or brokers (which may include the Sponsor) who customarily deal in
Treasury Obligations; or, if there is no market for the Treasury Obligations,
and bid prices are not available, on the basis of current bid prices for
comparable securities; or by appraisal; or by any combination of the above.
EXPENSES OF THE TRUST
The Sponsor will receive a fee, which is earned for portfolio supervisory
services, based upon the largest number of Units outstanding during the
calendar year. The portfolio supervisory services include providing certain
bookkeeping and other administrative services to the Trust, monitoring the
market prices of portfolio securities to confirm Net Asset Value calculations
of the Evaluator and handling Unitholder inquiries and services. The Sponsor's
fee is that amount set forth under "Essential Information Regarding the Trust."
Such fee may exceed the actual costs of providing portfolio supervisory
services for this particular series of the Trust, but at no time will the total
amount the Sponsor receives for such services rendered to all series of the
Trust in any calendar year exceed the aggregate cost to it of supplying such
services in such year. Thus, the Sponsor will not profit from fees received
from the Trust for portfolio supervisory services.
For its services as Trustee and Evaluator, the Trustee will be paid that
amount set forth under "Essential Information Regarding the Trust." The Trustee
will also benefit to the extent that it holds funds in non-interest bearing
accounts. In addition, the regular and recurring annual expenses of the Trust,
including without limitation certain mailing, printing, and other miscellaneous
expenses, are currently estimated to be that amount set forth under "Essential
Information Regarding the Trust." Actual miscellaneous expenses payable by the
Trust may be more or less than this estimate.
If Units are redeemed, per Unit annual expenses of the Trust will increase.
The Trustee's fee and the Sponsor's supervisory fee are payable monthly, from
the Income Account, to the extent funds are available, and then from the
Capital Account. Either of such fees may be increased without approval of the
Unitholders by an amount not exceeding a proportionate increase in the category
entitled "All Services Less Rent" in the Consumer Price Index published by the
United States Department of Labor.
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The cost of the preparation and printing of the Indenture and this
Prospectus, the initial fees and expenses of the Trustee, advertising expenses
and expenses incurred in establishing the Trust, including legal and auditing
fees, are paid by the Sponsor and not by the Trust.
In addition to the above, the following charges are or may be incurred by the
Trust and paid from the Income Account, or, to the extent funds are not
available in such Account, from the Capital Account: (i) fees for the Trustee
for extraordinary services; (ii) reimbursable expenses of the Trustee
(including legal and auditing expenses, but not including any fees and expenses
charged by any agent for custody and safekeeping of Securities); (iii) various
governmental charges; (iv) expenses and costs of any action taken by the
Trustee to protect the Trust and the rights and interests of the Unitholders;
(v) indemnification of the Trustee for any loss, liabilities or expenses
(including reasonable attorneys' fees) incurred by it in the administration of
the Trust without gross negligence, bad faith or willful misconduct on its
part; (vi) indemnification of the Sponsor for any loss, liability or expenses
(including reasonable attorneys' fees) incurred in acting in such capacity
other than by reason of its own gross negligence, bad faith or willful
misconduct; (vii) brokerage commissions in connection with the sale of Stocks;
and (viii) expenses incurred upon termination of the Trust. See "Administration
of the Trust--Accounts."
The fees and expenses set forth above are payable out of the Trust and when
unpaid will be secured by a lien on the Trust. To the extent that dividends
paid with respect to the Stocks are not sufficient to meet the expenses of the
Trust, the Trustee is authorized to sell Stocks to meet the expenses of the
Trust.
RIGHTS OF UNITHOLDERS
Each Unit represents a pro rata fractional undivided interest in each of the
Stocks and other assets held in the Trust.
Ownership of Units is evidenced by recordation on the books of the Trustee.
In order to avoid additional operating costs and for investor convenience,
certificates will not be issued unless a request, in writing with signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee, is delivered by the
Unitholder to the Sponsor. Issued certificates are transferable by presentation
and surrender to the Trustee at its office (currently located at the address on
the back cover) properly endorsed or accompanied by a written instrument or
instruments of transfer. Uncertificated Units are transferable by presentation
to the Trustee of a written instrument of transfer.
Certificates may be issued in denominations of one Unit or any integral
multiple thereof as deemed appropriate by the Trustee. A Unitholder may be
required to pay a reasonable fee (currently $25.00 per certificate) for each
certificate issued, reissued or transferred, and shall be required to pay any
governmental charge that may be imposed in connection with each such transfer
or interchange. For new certificates to be issued to replace destroyed,
mutilated, stolen or lost certificates, the Unitholder
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must furnish indemnity satisfactory to the Trustee and must pay such expenses
as the Trustee may incur. Mutilated certificates must be surrendered to the
Trustee for replacement.
Unitholders will have no voting rights, except in the unlikely event of
resignation or removal of the Sponsor as provided under "Termination of the
Trust" and in the event of an amendment to the Indenture as provided under
"Amendment of the Indenture." As the holder of the Stocks, the Trustee will
have the right to vote all of the voting stocks in the Trust and will vote such
stocks in accordance with the instructions of the Sponsor. The rights the
Unitholders have in distributions from the Income and Capital Accounts are set
forth below under "Distributions to Unitholders."
DISTRIBUTIONS TO UNITHOLDERS
The Trustee will make distributions from the Income Account, if any, on the
quarterly Distribution Date to Unitholders of record on the preceding Record
Date. Distributions from the Capital Account will be made on each quarterly
Distribution Date to Unitholders of record on the preceding Record Date. See
"Essential Information Regarding the Trust." Whenever required for regulatory
or tax purposes, the Trustee will make special distributions on special
distribution dates to Unitholders of record on special record dates when and as
declared by the Trustee.
Upon termination of the Trust, each Unitholder of record on such date will
receive his pro rata share of the amounts realized upon disposition of the
Securities plus any other assets of the Trust, less liabilities of the Trust.
See "Termination of the Trust."
ADMINISTRATION OF THE TRUST
Accounts. All dividends received on Stocks, proceeds from the sale of Stocks
or other moneys received by the Trustee on behalf of the Trust will be held in
trust in non-interest bearing accounts except that proceeds of sale may be
reinvested in Treasury Obligations until required to be disbursed. See
"Administration of the Trust--Reinvestment."
The Trustee will credit on its books to an Income Account dividends and
interest, if any, on Securities in the Trust. All other receipts (i.e., return
of principal and capital gains) are credited on its books to a Capital Account.
The pro rata share of the Income Account and the pro rata share of the Capital
Account represented by each Unit will be computed by the Trustee as set forth
under "Valuation of Units."
The Trustee will deduct from the Income Account and, to the extent funds are
not sufficient therein, from the Capital Account, amounts necessary to pay
expenses incurred by the Trust. See "Expenses of the Trust." In addition, the
Trustee may withdraw from the Income Account and the Capital Account such
amounts as may be necessary to cover redemption of Units by the Trustee. See
"Redemption of Units."
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The Trustee may establish reserves (the "Reserve Account") within the Trust
for state and local taxes, if any, and any other governmental charges payable
out of the Trust.
Reports and Records. With any distributions from the Trust, the Trustee will
furnish each Unitholder a statement setting forth the amount being distributed
from each account. In addition, the Trustee shall notify the Unitholders within
five days of substitute stocks, if any, which are acquired for the portfolio.
See "The Trust."
The Trustee keeps records and accounts of the Trust at its office (currently
located at the address on the back cover), including records of the names and
addresses of Unitholders, a current list of underlying Stocks in the portfolio
and a copy of the Indenture. Records pertaining to a Unitholder or to the Trust
(but not to other Unitholders) are available to the Unitholder for inspection
at reasonable times during business hours.
Within a reasonable period of time after the end of each calendar year, the
Trustee will furnish each person who was a Unitholder at any time during the
calendar year a report containing the following information, expressed in
reasonable detail both as a dollar amount and as a dollar amount per Unit: (i)
a summary of transactions for the Trust in the Income and Capital Accounts and
any Reserve Account; (ii) Securities sold or purchased, if any; (iii) the Net
Asset Value per Unit, based upon the last computation thereof made during the
year; and (iv) amounts distributed to Unitholders during the year.
Portfolio Supervision. The portfolio of the Trust is not "managed" by the
Sponsor or the Trustee; their activities described herein are governed solely
by the provisions of the Indenture. 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
Trust, however, will not be managed. The Indenture provides that the Sponsor
may (but need not) direct the Trustee to dispose of a Stock in certain events
such as the issuer having defaulted on the payment on any of its outstanding
obligations or the price of a Stock has declined to such an extent or other
such credit factors exist so that in the opinion of the Sponsor, the retention
of such Stocks would be detrimental to the Trust. Pursuant to the Indenture and
with limited exceptions, the Trustee may sell any securities or other
properties acquired in exchange for Stocks such as those acquired in connection
with a merger or other transaction. If offered such new or exchanged securities
or property, the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the Trust, they may be
accepted for deposit in the Trust and either sold by the Trustee or held in the
Trust pursuant to the direction of the Sponsor. Therefore, except as stated
under "The Trust" for failed securities, as provided under "Administration of
the Trust--Reinvestment" and as provided in this paragraph, the acquisition by
the Trust of any securities other than the Stocks is prohibited. Proceeds from
the sale of Stocks (or any securities or other property received by the Trust
in exchange for Stocks), unless held for reinvestment as herein provided, are
credited to the Capital Account for distribution to Unitholders, to meet
redemptions or to pay charges and expenses of the Trust.
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Stock may also be sold in the manner described under "The Trust." The Trustee
may dispose of Stocks where necessary to pay Trust expenses or to satisfy
redemption requests as directed by the Sponsor and the proceeds of such sale
may not be reinvested except as provided below.
Reinvestment. Cash received upon the sale of Stocks (except for proceeds used
to meet redemption requests) may, if and to the extent there is no legal
impediment, be reinvested in Treasury Obligations which mature on or prior to
the next scheduled Distribution Date. The Sponsor anticipates that, where
permitted, such proceeds will be reinvested in Treasury Obligations unless
factors exist such that such reinvestment would not be in the best interests of
Unitholders or would be impractical. Such factors may include, among others,
(i) short reinvestment periods which would make reinvestment in Treasury
Obligations undesirable or infeasible and (ii) amounts not sufficiently large
so as to make a reinvestment economical or feasible. Any moneys held and not
reinvested will be held in a non-interest bearing account until distribution on
the next Distribution Date to Unitholders of record.
AMENDMENT OF THE INDENTURE
The Indenture may be amended by the Trustee and the Sponsor without the
consent of any of the Unitholders to cure any ambiguity, to correct or
supplement any provision thereof which may be defective or inconsistent, or to
make such other provisions as will not materially adversely affect the interest
of the Unitholders or as required by the Securities and Exchange Commission, so
long as the Trustee provides the Unitholders with notice as required by the
Indenture.
The Indenture may be amended in any respect by the Sponsor and the Trustee
with the consent of the holders of 66 2/3% of the Units then outstanding;
provided that no such amendment shall (i) permit the acquisition of any stocks
other than those specified in Schedule A of the Indenture or (ii) reduce the
percentage of Unitholders required to consent to any such amendment, without
the consent of all Unitholders.
The Trustee will promptly notify Unitholders of the substance of any
amendment affecting Unitholders' rights or their interest in the Trust.
TERMINATION OF THE TRUST
The Indenture provides that the Trust will terminate upon the following
circumstances: (i) occurrence of the Mandatory Termination Date (as defined in
"Essential Information Regarding the Trust"); or (ii) written consent to
termination by 66 2/3% of the Units then outstanding. In addition, the Trust
may terminate if the value of the Trust as shown by any evaluation is less than
40% of the market value, based on closing bid prices, of the Stocks at the time
they were deposited in the Trust. In no event will the Trust continue beyond
the Mandatory Termination Date.
Unless advised to the contrary by the Sponsor, approximately 30 days prior to
the termination of the Trust, the Trustee will begin to sell the Stocks held in
the Trust other than those Stocks to be distributed "in kind" as discussed
below. Upon termination of the Trust, the Trustee will sell any
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Stocks then remaining in the Trust (other than those distributed "in kind") and
will then, after deduction of any fees and expenses of the Trust and payment
into the Reserve Account of any amount required for taxes or other governmental
charges that may be payable by the Trust, distribute to each Unitholder, after
due notice of such termination, such Unitholder's pro rata share in the Income
and Capital Accounts. Cash held upon the sale of Stocks may be held in non-
interest bearing accounts created by the Indenture until distributed and will
be of benefit to the Trustee. The sale of Stocks in the Trust in the period
prior to the termination and upon termination may result in a lower amount than
might otherwise be realized if such sale were not required at such time due to
impending or actual termination of the Trust. For this reason, among others,
the amount realized by a Unitholder upon termination may be less than the
amount paid by such Unitholder. Notwithstanding the foregoing, the Sponsor
reserves the right to direct the Trustee to make an "in kind" distribution of
the Stocks to all Unitholders upon termination in lieu of a cash distribution.
Prior to termination of the Trust, and in no event less than 75 days prior to
the Mandatory Termination Date, the Trustee shall furnish to Unitholders
written notice of the date of termination and election forms pursuant to which
Unitholders will be permitted to receive an "in kind" distribution upon
termination in lieu of cash in the event the Sponsor does not elect to direct
the Trustee to distribute all Stocks "in kind" as described above. Any
Unitholders who make appropriate elections no less than 30 days prior to the
date of termination shall be entitled to receive distribution "in kind" of all
of their Units. Upon the distribution following termination of the Trust, such
Unitholders will receive that number of whole shares of each Stock representing
the aggregate of their respective interests in each of the Stocks, plus cash
representing their pro rata shares of other Trust assets and cash in lieu of
fractional shares, if any. No partial "in kind" distributions will be made. See
"Tax Considerations" for information concerning the tax consequences to a
Unitholder of a distribution "in kind."
SPONSOR
The Sponsor, Howe Barnes Investments, Inc., is an investment services firm
which since 1915 has served a wide range of institutional and individual
investors, corporations and fiduciaries, as well as other securities dealers.
The Sponsor, a Delaware corporation, is registered as a broker/dealer and
through its subsidiary, Marshall Capital Management, Inc., is registered as an
investment adviser with the Securities and Exchange Commission. The Sponsor is
also a member of the National Association of Securities Dealers, the New York
Stock Exchange and the Chicago Stock Exchange. Services offered by the Sponsor
include investment research and trade execution services for listed and over-
the-counter equity and fixed-income securities and options; execution and
clearing services for small brokers and dealers; investment banking services
for corporations; and underwriting services for the equity and fixed income
markets, including municipal and corporate bonds. Among other specialities, the
Sponsor is recognized for its concentrated focus on research and securities
analysis with respect to midwestern regional and subregional banking
institutions and thrift institutions. The Sponsor may, but need not, make a
principal market as dealer in one or more of the Stocks in the Trust. In
addition, the Sponsor may act as an investment advisor for one or more of the
banking or thrift institutions with Stocks in the Trust.
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The Indenture provides that the Sponsor will not be liable to the Trust, the
Trustee or to the Unitholders for taking any action or for refraining from
taking any action made in good faith or for errors in judgment, but will be
liable only for its own gross negligence, bad faith or willful malfeasance in
the performance of its duties or by reason of its reckless disregard of its
obligation and duties. The Sponsor will not be liable or responsible in any
way for depreciation or loss incurred by reason of the sale of any Stocks in
the Trust.
The Indenture further provides that the Sponsor shall be indemnified by the
Trust and held harmless from and against any loss, liability or expense
incurred in acting as Sponsor of the Trust other than by reason of its own
gross negligence, bad faith or willful malfeasance in the performance of its
obligations or by reason of its own reckless disregard of its obligations and
duties.
The Indenture is binding upon any successor to the business of the Sponsor.
The Sponsor may transfer all or substantially all of its assets to a
corporation which carries on the business of the Sponsor and duly assumes all
the obligations of the Sponsor under the Indenture. In such event the Sponsor
shall be relieved of all further liability under the Indenture.
The Indenture provides that the Sponsor may resign its position as Sponsor
by delivering to the Trustee an instrument of resignation. This resignation
will only be effective if prior to or concurrent with the delivery of the
instrument the Trustee has either (i) appointed a successor Sponsor or (ii)
agrees to act as Sponsor thereby succeeding to all the rights and duties of
the resigning Sponsor. The Trustee must notify the Unitholders of any such
resignation or appointment of a successor Sponsor.
If the Sponsor fails to undertake any of its duties under the Indenture,
becomes incapable of acting, becomes bankrupt, or has its affairs taken over
by public authorities, the Trustee may appoint a successor Sponsor or Sponsors
to serve at rates of compensation determined as provided in the Indenture.
TRUSTEE
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286, telephone (800) 856-
8487. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal
Deposit Insurance Corporation to the extent permitted by law.
The Indenture provides that the Trustee shall be indemnified by the Trust
and held harmless from and against any loss, liability or expense incurred
without gross negligence, bad faith or willful malfeasance in the performance
of its duties or by reason of its reckless disregard of the duties of the
Trustee arising out of or in connection with the administration of this Trust.
The Trustee may resign and be discharged of its duties with respect to the
Trust pursuant to the Indenture by delivering an instrument of resignation to
the Sponsor and mailing such instrument to
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the Unitholders then of record not less than 60 days before the resignation
date. The Trustee shall not, however, resign until either (i) the Trust has
been completely liquidated and the proceeds distributed to the Unitholders, or
(ii) a successor Trustee, having the qualifications prescribed in the governing
securities laws, has been designated and has accepted the duties as Trustee.
The Sponsor may remove the Trustee, upon the occurrence of certain events as
set forth in the Indenture. In addition, the Unitholders may remove the Trustee
upon the vote or written consent of 66 2/3% of the Units then of record. Upon
the resignation or removal of the Trustee as set forth above and in the
Indenture, the Sponsor shall use its best efforts promptly to appoint a
successor Trustee. The Indenture is binding upon any successor to the business
of the Trustee. The Trustee may transfer all or substantially all of its assets
to a corporation which carries on the business of the Trustee and duly assumes
all the obligations of the Trustee under the Indenture. In such event the
Trustee shall be relieved of all further liability under the Indenture.
LEGAL OPINIONS
The legality of the Units offered hereby has been passed upon by Chapman and
Cutler, Chicago, Illinois, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments, as of the
opening of business on the Initial Date of Deposit appearing in this prospectus
and in the registration statement has been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and in the registration statement, and is included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ESSENTIAL INFORMATION REGARDING THE TRUST................................... 2
HBI EQUITY TRUST, SERIES 4.................................................. 3
REPORT OF INDEPENDENT AUDITORS.............................................. 5
STATEMENT OF NET ASSETS..................................................... 5
SCHEDULE OF INVESTMENTS..................................................... 6
THE TRUST................................................................... 7
TAX CONSIDERATIONS.......................................................... 11
PUBLIC OFFERING OF UNITS.................................................... 15
REDEMPTION OF UNITS......................................................... 16
VALUATION OF UNITS.......................................................... 18
EXPENSES OF THE TRUST....................................................... 19
RIGHTS OF UNITHOLDERS....................................................... 20
DISTRIBUTIONS TO UNITHOLDERS................................................ 21
ADMINISTRATION OF THE TRUST................................................. 21
AMENDMENT OF THE INDENTURE.................................................. 23
TERMINATION OF THE TRUST.................................................... 23
SPONSOR..................................................................... 24
TRUSTEE..................................................................... 25
LEGAL OPINIONS.............................................................. 26
INDEPENDENT AUDITORS........................................................ 26
</TABLE>
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This Prospectus does not contain all of the information set forth in the
registration statements and exhibits relating thereto, filed with the
Securities and Exchange Commission, Washington, D.C. under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended, and
to which reference is made.
--------------------
No person is authorized to give any information or to make any
representations not contained in 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 Sponsor. The Trust is registered
as a unit investment trust under the Investment Company Act of 1940. Such
registration does not imply that the Trust or the Units have been guaranteed,
sponsored, recommended or approved by the United States or any state or any
agency or officer thereof.
--------------------
This Prospectus does not constitute an offer to sell securities to, or a
solicitation of an offer to buy securities from, any person in any state to
whom it is not lawful to make such offer or solicitation in such state.
HBI
EQUITY TRUST, SERIES 4
A UNIT INVESTMENT TRUST
A PORTFOLIO OF MIDWEST BANK AND THRIFT STOCKS
SPONSOR:
HOWE BARNES INVESTMENTS, INC.
135 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
TRUSTEE:
THE BANK OF NEW YORK
101 BARCLAY STREET
NEW YORK, NEW YORK 10286
<PAGE>
Part II
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.
Contents of Registration Statement
This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus
The undertaking to file reports
The signatures
Written consents of the following persons:
Chapman and Cutler
(included as Exhibit 3.1)
Ernst & Young LLP
(included as Exhibit 6.1)
The following exhibits:
*Exhibit 1.1 - Form of Trust Agreement between Howe Barnes Investments,
Inc., as Sponsor, and The Bank of New York, as Trustee.
Exhibit 1.2 - List of Officers and Directors of Depositor.
*Exhibit 3.1 - Opinion of Chapman and Cutler as to the legality of
securities being registered.
*Exhibit 3.2 - Opinion of Chapman and Cutler as to federal income tax
status of securities being registered.
*Exhibit 6.1 - Consent of Ernst & Young LLP, Independent Auditors.
Exhibit 6.2 - Powers of Attorney.
- -----------------------
* To be filed by amendment.
S-1
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, HBI Equity Trust, Series 4, has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Chicago and State of Illinois, on the 29th day of
August, 1997.
HBI Equity Trust, Series 4
By Howe Barnes Investments, Inc.
Depositor
By GEORGE H. SHELTON
-----------------------------
George H. Shelton
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on August 29, 1997 by the following
persons in the capacities indicated.
Signature Title
GEORGE H. SHELTON Director and President
- ---------------------------------- (Principal Executive Officer)
George H. Shelton
PHILLIP C. ALLEN Director
- ----------------------------------
Phillip C. Allen
THEODORE M. PERKOWSKI Director
- ----------------------------------
Theodore M. Perkowski
RICHARD W. TERRELL Director
- ----------------------------------
Richard W. Terrell
MICHAEL E. SAMMON Director
- ----------------------------------
Michael E. Sammon
MICHAEL R. OCHOA Director
- ----------------------------------
Michael R. Ochoa
DANIEL E. COUGHLIN Director
- ----------------------------------
Daniel E. Coughlin
S-2
<PAGE>
Signature Title
MARK PAUL SHELSON Director and Treasurer
- ---------------------------------- (Principal Financial and
Mark Paul Shelson Accounting Officer)
MARIO G. BERNARDI Director
- ----------------------------------
Mario G. Bernardi
CHARLES V. DOHERTY Director
- ----------------------------------
Charles V. Doherty
BETTEANN KESLINKE Director
- ----------------------------------
Betteann Keslinke
MICHAEL E. SAMMON
------------------------
Michael E. Sammon
(Attorney-in-fact*)
- -----------------
* An executed copy of the power of attorney is filed herewith.
S-3
<PAGE>
Exhibit 1.2
List of Officers and Directors of
Howe Barnes Investments, Inc.
George H. Shelton Director and President
(Principal Executive Officer)
Phillip C. Allen Director
Theodore M. Perkowski Director
Richard W. Terrell Director
Michael E. Sammon Director
Michael R. Ochoa Director
Daniel E. Coughlin Director
Mark Paul Shelson Director and Treasurer (Principal
Financial and Accounting Officer)
Mario G. Bernardi Director
Charles V. Doherty Director
Betteann Keslinke Director
<PAGE>
Exhibit 6.2
Power of Attorney
-----------------
Know All Men By These Presents, that the undersigned director or officer of
Howe Barnes Investments, Inc., a Delaware corporation, hereby constitutes and
appoints George H. Shelton and Michael E. Sammon, and each of them (with full
power to each of them to act alone) his/her true and lawful attorney-in-fact and
agent, for him/her and on his/her behalf and in his/her name, place and stead,
in any and all capacities, to sign, execute and affix his/her seal thereto and
file any exemptive applications or other requests with the Securities and
Exchange Commission or other regulatory authority as may be necessary,
desirable or appropriate under applicable law, and one or more Registration
Statements on Form S-6 under the Securities Act of 1933 or Form N-8B-2 or Form
N-8A under the Investment Company Act of 1940, including any amendment or
amendments thereto, with all exhibits, and any and all other documents required
to be filed with respect to any other unit investment Trust sponsored by Howe
Barnes Investments, Inc. and any successors thereof whether or not in existence
at the date hereof and which may be created after the date hereof with any
regulatory authority, federal or state, relating to the registration thereof or
the issuance of units of fractional undivided interests therein, without
limitation, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises in order to effectuate the same
as fully to all intents and purposes as he might or could do if personally
present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may lawfully do or cause to be done by virtue hereof.
Signed this 29th day of August, 1997.
<TABLE>
<CAPTION>
<S> <C> <C>
GEORGE H. SHELTON MARK PAUL SHELSON RICHARD W. TERRELL
- ----------------- --------------------- ------------------
George H. Shelton Mark Paul Shelson Richard W. Terrell
MICHAEL E. SAMMON THEODORE M. PERKOWSKI DANIEL E. COUGHLIN
- ----------------- --------------------- ------------------
Michael E. Sammon Theodore M. Perkowski Daniel E. Coughlin
PHILIP C. ALLEN MICHAEL R. OCHOA BETTEANN KESLINKE
- ----------------- --------------------- ------------------
Philip C. Allen Michael R. Ochoa Betteann Keslinke
MARIO G. BERNARDI CHARLES V. DOHERTY
- ----------------- ---------------------
Mario G. Bernardi Charles V. Doherty
</TABLE>
