CVS AUTOMATIC COMMON EXCHANGE SECURITY TRUST, 497, 1998-05-22

CVS AUTOMATIC COMMON EXCHANGE SECURITY TRUST
497, 1998-05-22

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<PAGE> 1

3,162,405 SHARES

CVS AUTOMATIC COMMON EXCHANGE SECURITY TRUST
$4.23 TRUST AUTOMATIC COMMON EXCHANGE SECURITIES (TRACES (TM/SM))
(SUBJECT TO EXCHANGE INTO SHARES OF COMMON STOCK OF CVS CORPORATION)

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

Each of the $4.23 Trust Automatic Common Exchange Securities (the
"Securities") of CVS Automatic Common Exchange Security Trust (the "Trust")
represents the right to receive an annual distribution of $4.23, and will be
exchanged for between 0.8197 shares and one share of Common Stock, par value
$.01 per share (the "Common Stock"), of CVS Corporation (the "Company") on the
Exchange Date as described below.
The Trust is a newly organized, finite-term Trust established to acquire
and hold a portfolio of stripped U.S. Treasury securities maturing on a
quarterly basis through the Exchange Date, and a forward purchase contract (the
"Contract") with an existing stockholder of the Company (the "Seller") relating
to the Common Stock. The Trust's investment objective is to provide each holder
of Securities (each, a "Holder") with a quarterly distribution of $1.0575 per
Security and, on the Exchange Date, a number of shares of Common Stock per
Security equal to the Exchange Rate.
The Exchange Date will be May 15, 2001, except that (i) the Seller may
elect to extend the Exchange Date to August 15, 2001, provided the Seller
delivers to the Trust additional U.S. Treasury securities sufficient to fund the
Trust's quarterly distribution on such date, and (ii) following such an
extension, the Seller may accelerate the Exchange Date to a date not earlier
than May 15, 2001, in connection with the consummation of a Rollover Offering
(as defined herein). Notwithstanding any such extension or acceleration, Holders
will be entitled to receive the quarterly distribution payable on May 15, 2001,
and the accrued distribution amount through the Exchange Date, if later.
The Exchange Rate will vary in accordance with a formula, depending on the
Average Market Price (as defined herein) of the Common Stock on the Exchange
Date:
- if the Average Market Price is less than the Appreciation Threshold Price
but equal to or greater than the Initial Price, the Exchange Rate will be
the number of shares of Common Stock having a value (determined at the
Average Market Price) equal to the Initial Price;
- if the Average Market Price is equal to or greater than the Appreciation
Threshold Price, the Exchange Rate will be 0.8197 shares of Common Stock;
and
- if the Average Market Price is less than the Initial Price, the Exchange
Rate will be one share of Common Stock.
For purposes of this formula, the Appreciation Threshold Price is $86.01 and the
Initial Price is $70.50. The formula will be subject to adjustment in certain
events.
(continued on next page)

SEE "RISK FACTORS" BEGINNING ON PAGE 21 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN THE SECURITIES.
------------------------

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.

<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO PUBLIC SALES LOAD (1) THE TRUST(2)
--------------- -------------- ------------
<S> <C> <C> <C>
Per Security........................................... $ 70.50 $ --(4) $ 70.50
Total(3)............................................... $222,949,553 $ --(4) $222,949,553
</TABLE>

- ---------------
(1) The Company and the Seller have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting".
(2) Expenses of the offering, which are payable by the Seller and Goldman, Sachs
& Co., are estimated to be $532,000.
(3) The Trust has granted to the Underwriters an option for 30 days to purchase
up to an additional 474,360 Securities at the price to public per Security,
solely to cover over-allotments. If the option is exercised in full, the
total Price to Public, Sales Load and Proceeds to the Trust will be
$256,391,933, $ -- and $256,391,933, respectively. See "Underwriting".
(4) In light of the fact that the proceeds of the sale of the Securities will be
used in part by the Trust to purchase the Contract from the Seller, the
Underwriting Agreement provides that the Seller will pay to the Underwriters
as compensation ("Underwriters' Compensation") $2.12 per Security. See
"Underwriting".
------------------------

The Securities are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that the Securities will be
ready for delivery in book entry form only through the facilities of The
Depository Trust Company, on or about May 27, 1998, against payment in
immediately available funds.

GOLDMAN, SACHS & CO.
------------------------

The date of this Prospectus is May 21, 1998.
<PAGE> 2

(continued from cover page)

In lieu of delivering Common Stock, the Contract entitles the Seller to
elect to pay cash upon settlement of such Contract in an amount equal to the
then Average Market Price of the number of shares of Common Stock determined
pursuant to the above formula (the "Cash Settlement Alternative"). To the extent
the Seller elects the Cash Settlement Alternative, Holders of Securities will
receive cash instead of Common Stock upon settlement of the Contract. Holders
otherwise entitled to receive fractional shares in respect of their aggregate
holdings of Securities will receive cash in lieu thereof.

Holders of Securities will receive distributions at a higher annual rate
than the current annual dividends paid on the Common Stock. There is no
assurance, however, that this relative relationship will prevail over the term
of the Trust. In addition, the opportunity for equity appreciation afforded by
an investment in the Securities is less than that afforded by an investment in
the Common Stock because Holders of Securities will realize no equity
appreciation if, on the Exchange Date, the Average Market Price of the Common
Stock is at or below the Appreciation Threshold Price, and less than all of the
appreciation if at that time the Average Market Price is above the Appreciation
Threshold Price. Holders of Securities will realize the entire decline in equity
value if the Average Market Price is less than the price to public per Security
shown on the cover of this Prospectus.

The Company is not affiliated with the Trust and will have no obligations
with respect to the Securities.

The Securities have been authorized for listing on the New York Stock
Exchange under the symbol "CTF". Prior to this offering there has been no public
market for the Securities. The last reported sale price of the Common Stock on
the New York Stock Exchange on May 20, 1998, was $70.50 per share.

The Trust has adopted a policy that the Contract may not be disposed of
during the term of the Trust. The Trust will continue to hold the Contract
despite any significant decline in the market price of the Common Stock or
adverse changes in the financial condition of the Company.

This Prospectus sets forth concisely information about the Trust that a
prospective investor ought to know before investing. Potential investors are
advised to read this Prospectus and to retain it for future reference.

The Securities may be a suitable investment for those investors who are
able to understand the unique nature of the Trust and the economic
characteristics of the Contract and the U.S. Treasury securities held by the
Trust.

The Trust will be a grantor trust for federal income tax purposes and each
holder of Securities will be treated as the owner of its pro rata portions of
the stripped U.S. Treasury securities and the Contract. For a discussion of the
principal United States federal income tax consequences of ownership of
Securities, see "Certain Federal Income Tax Considerations".

THE TRUST IS A NEWLY ORGANIZED CLOSED-END INVESTMENT COMPANY WITH NO
PREVIOUS HISTORY OF PUBLIC TRADING. TYPICAL CLOSED-END FUND SHARES FREQUENTLY
TRADE AT A DISCOUNT FROM NET ASSET VALUE. THIS CHARACTERISTIC OF INVESTMENTS IN
A CLOSED-END INVESTMENT COMPANY IS A RISK SEPARATE AND DISTINCT FROM THE RISK
THAT THE TRUST'S NET ASSET VALUE WILL DECREASE. THE TRUST CANNOT PREDICT WHETHER
ITS SHARES WILL TRADE AT, BELOW OR ABOVE NET ASSET VALUE. THE RISK OF PURCHASING
INVESTMENTS IN A CLOSED-END COMPANY THAT MIGHT TRADE AT A DISCOUNT MAY BE
GREATER FOR INVESTORS WHO WISH TO SELL THEIR INVESTMENTS SOON AFTER COMPLETION
OF AN INITIAL PUBLIC OFFERING.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE OFFERING.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING". SUCH STABILIZING
ACTIVITIES MIGHT MAINTAIN THE MARKET PRICE OF SUCH SECURITIES AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 3

PROSPECTUS SUMMARY

This summary of the provisions relating to the Securities does not purport
to be complete and is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus. Certain terms used in this summary are
defined elsewhere in this Prospectus.

THE TRUST

GENERAL. The Trust is a newly organized, finite-term trust. The Trust will
be registered as a non-diversified closed-end management investment company
under the Investment Company Act of 1940 (the "Investment Company Act"). Under
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable to grantor trusts, the Trustees will not have the power to vary the
investments held by the Trust.

INVESTMENT OBJECTIVE AND POLICIES. The Trust will acquire and hold a
portfolio of stripped U.S. Treasury securities maturing on a quarterly basis
through the Exchange Date, and the Contract with the Seller obligating the
Seller, on the Exchange Date, to deliver to the Trust a number of shares of
Common Stock equal to the product of the Exchange Rate times the initial number
of shares subject to the Seller's Contract (or an amount of cash equal to the
Average Market Price thereof). The Trust's investment objective is to provide
the Holders of Securities with a quarterly distribution of $1.0575 per Security
(which amount equals the pro rata portion of the fixed quarterly cash
distributions from the proceeds of the maturing U.S. Treasury securities held by
the Trust) and, on the Exchange Date, a number of shares of Common Stock per
Security equal to the Exchange Rate (or to the extent the Seller elects the Cash
Settlement Alternative, an amount in cash equal to the Average Market Price
thereof).

The Exchange Date will be May 15, 2001, except that (i) the Seller may
elect to extend the Exchange Date to August 15, 2001 (subject to subsequent
acceleration at the election of the Seller), provided the Seller delivers to the
Trust additional U.S. Treasury Securities sufficient to fund the Trust's
quarterly distribution on such date, and (ii) following such an extension, the
Seller may accelerate the Exchange Date to a date not earlier than May 15, 2001,
in connection with the consummation of a Rollover Offering. The Holders of
record on the regular quarterly record date will receive the full scheduled
quarterly distribution on May 1, 2001. If the Exchange Date occurs after May 1,
2001, the Holders of record on the Exchange Date will receive unpaid
distributions accruing to the Exchange Date but not thereafter.

The Exchange Rate will vary in accordance with a formula, depending on the
Average Market Price (as defined herein) of the Common Stock on the Exchange
Date:

- if the Average Market Price is less than the Appreciation Threshold
Price but equal to or greater than the Initial Price, the Exchange Rate
will be the number of shares of Common Stock having a value (determined
at the Average Market Price) equal to the Initial Price;

- if the Average Market Price is equal to or greater than the Appreciation
Threshold Price, the Exchange Rate will be 0.8197 shares of Common
Stock; and

- if the Average Market Price is less than the Initial Price, the Exchange
Rate will be one share of Common Stock.

For purposes of this formula, the Appreciation Threshold Price is $86.01
and the Initial Price is $70.50. The formula will be subject to adjustment in
certain events, including the Stock Split discussed below under "The Company."

The Exchange Rate formula provides the Trust with the potential for a
portion of any capital appreciation above the Appreciation Threshold Price on
the Common Stock, but no protection from depreciation of the Common Stock.
Holders otherwise entitled to receive fractional shares in respect of their
aggregate holdings of Securities will receive cash in lieu thereof. See
"Investment Objective and Policies -- Trust Termination".

3
<PAGE> 4

STRUCTURE. The purchase price under the Contract is equal to $58.991 per
share of Common Stock initially subject thereto and $186,552,906 (3,162,405
shares of Common Stock) in the aggregate (assuming no exercise of the
Underwriters' over-allotment option) and is payable to the Seller by the Trust
at the closing of the offering of the Securities, out of the proceeds of such
offering. The obligations of the Seller under the Contract will be secured by a
pledge of the Common Stock (or at the election of the Seller, by substitute
collateral consisting of short-term, direct obligations of the U.S. Government).
See "Investment Objective and Policies -- The Contract -- Collateral
Arrangements; Acceleration."

The balance of the offering proceeds will be used to purchase a fixed
portfolio comprised of stripped U.S. Treasury securities with face amounts and
maturities corresponding to the quarterly distributions payable with respect to
the Securities through May 15, 2001. The Seller may extend the Exchange Date to
August 15, 2001 (subject to subsequent acceleration at the election of the
Seller), provided it delivers to the Trust, on or prior to May 15, 2001,
additional U.S. Treasury securities with face amounts and maturities
corresponding to the quarterly distribution payable with respect to the
Securities on August 15, 2001. The Seller will be entitled, under the Contract,
to repurchase such additional U.S. Treasury securities from the Trust on or
prior to the Exchange Date at a price equal to the aggregate unpaid
distributions on the Securities accruing to the Exchange Date.

THE OFFERING

The Trust is offering 3,162,405 Securities to the public at a purchase
price of $70.50 per Security (which is equal to the last reported sale price of
the Common Stock on the date of this Prospectus) through Goldman, Sachs & Co.
("Goldman Sachs"). In addition, the Underwriters have been granted an option to
purchase up to 474,360 additional Securities solely for the purpose of covering
over-allotments. See "Underwriting".

THE SECURITIES

GENERAL. The Securities are designed to provide investors with a higher
distribution per Security than the dividend currently paid per share on the
Common Stock. The annual distribution per Security is $4.23. Based on the
current annual dividend rate of $.44 per share of Common Stock, the annual per
share distribution per Security is $3.79 greater than the current annual per
share dividend rate on the Common Stock. Future declarations of dividends on the
Common Stock by the Company and the amount of such dividends are discretionary
with its Board of Directors and subject to legal and other factors. Such further
declarations will necessarily depend on the Company's future earnings, financial
condition, capital requirements and other factors. Quarterly distributions on
the Securities will consist solely of the cash received from the U.S. Treasury
securities. The Trust will not be entitled to any dividends that may be declared
on the Common Stock. A portion of each year's distributions on the Securities
will constitute a return of capital for U.S. federal income tax purposes. See
"Investment Objectives and Policies -- Tax Treatment of Distributions".

Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. There is no assurance, however, that
this relative relationship will prevail over the term of the Trust. In addition,
the opportunity for equity appreciation afforded by an investment in the
Securities is less than that afforded by an investment in the Common Stock
because Holders will realize no equity appreciation if, on the Exchange Date,
the Average Market Price of the Common Stock is at or below the Appreciation
Threshold Price (which represents an appreciation of 122% of the Initial Price).
Moreover, because a Holder will only receive 0.8197 shares of Common Stock per
Security (or the Average Market Price thereof) if the Average Market Price
exceeds the Appreciation Threshold Price, Holders will only be entitled to
receive upon exchange 81.97% of any appreciation of the value of the Common
Stock in excess of the Appreciation Threshold Price. Holders of Securities will
realize the entire decline in equity value if

4
<PAGE> 5

the Average Market Price on the Exchange Date is less than the price to public
per Security shown on the cover page hereof.

DISTRIBUTIONS. Holders are entitled to receive distributions at the rate
per Security of $4.23 per annum or $1.0575 per quarter, payable quarterly on
each February 15, May 15, August 15 and November 15 or, if any such date is not
a business day, on the next succeeding business day, to Holders of record as of
each February 1, May 1, August 1 and November 1, respectively. The first
distribution will be payable on August 15, 1998 to Holders of record as of
August 1, 1998. See "Investment Objective and Policies -- Tax Treatment of
Distributions".

MANDATORY EXCHANGE. On the Exchange Date, each outstanding Security will
be exchanged automatically for between 0.8197 shares and one share of Common
Stock, subject to adjustment in the event of certain dividends or distributions,
subdivisions, splits, combinations, issuances of certain rights or warrants or
distributions of certain assets with respect to the Common Stock. In lieu of
delivering Common Stock, the Contract entitles the Seller to elect to pay cash
upon settlement of the Contract in an amount equal to the then Average Market
Price of the number of shares of Common Stock determined pursuant to the above
formula (the "Cash Settlement Alternative"). To the extent the Seller elects the
Cash Settlement Alternative, Holders of Securities will receive cash instead of
Common Stock on the Exchange Date.

The "Average Market Price" per share of Common Stock on any date means the
average Closing Price per share of Common Stock for the 20 Trading Days
immediately prior to, but not including, such date, provided that for purposes
of determining the payment required upon cash settlement of the Contract in
connection with a Rollover Offering, "Average Market Price" means the Closing
Price per share of Common Stock on the Trading Day immediately preceding the
date that the Rollover Offering is priced (the "Pricing Date") or, if the
Rollover Offering is priced after 4:00 P.M., New York City time, on the Pricing
Date, the Closing Price per share on the Pricing Date.

"Rollover Offering" means a reoffering or refinancing of all (but not less
than all) of the Securities effected not earlier than May 15, 2001 by means of a
completed public offering or offerings (which may include one or more exchange
offers) by or on behalf of the Seller. The Trustees will notify the Holders of
(i) any election of the Cash Settlement Alternative, and whether it is intended
to be in connection with a Rollover Offering, not less than 30 nor more than 90
days prior to the Exchange Date, and (ii) any acceleration of the Exchange Date
in connection with a Rollover Offering, not later than the Exchange Date.

In addition, in the event of a merger of the Company with another entity,
or the liquidation of the Company, or certain related events, Holders would
receive consideration in the form of cash or Marketable Securities (as defined
below under the caption "Investment Objective and Policies -- The
Contract -- Dilution Adjustments") rather than shares of Common Stock. Further,
the occurrence of certain defaults by the Seller under the Contract or the
collateral arrangements would cause the acceleration of the Contract and the
exchange of each Security for an amount of shares of Common Stock (or Marketable
Securities), cash, or a combination thereof, in respect of the shares of Common
Stock and the U.S. Treasury securities. See "Investment Objective and
Policies -- The Contract -- Collateral Arrangements; Acceleration"; "--The U.S.
Treasury Securities" and "--Trust Termination".

VOTING RIGHTS. Holders will have the right to vote on matters affecting
the Trust, as described below under the caption "Description of the Securities",
but will have no voting rights with respect to the Common Stock prior to receipt
of shares of Common Stock by the Holders as a result of the exchange of the
Securities for the Common Stock on the Exchange Date or upon earlier settlement.
See "Investment Objective and Policies -- The Company" and "Description of the
Securities".

5
<PAGE> 6

THE COMPANY

The Company is a leader in the chain drugstore industry in the United
States. As of March 31, 1998, after giving effect to the merger with Arbor
Drugs, Inc. completed on March 31, 1998, the Company operated approximately
4,100 stores in 25 states in the Northeast, Mid-Atlantic, Midwest and Southeast
regions and in the District of Columbia, making the Company one of the largest
drugstore chains in the nation in terms of store count. The combined Company is
expected to have revenues of approximately $15 billion in 1998. The Company's
stores are well positioned, operating in 49 of the top 100 drugstore markets in
the country. The Company commands the number one or two share position in
approximately 80% of these markets. The Company is also among the industry
leaders in terms of store productivity and operating profit margin.

On May 13, 1998, the Board of Directors of the Company declared a
two-for-one stock split (the "Stock Split") of the Common Stock distributable on
June 15, 1998 to its stockholders of record on May 25, 1998. The Board of
Directors also increased the dividend rate on the Common Stock after the Stock
Split. In that regard, the Board declared a quarterly cash dividend of $0.0575
per share, payable on August 1, 1998 to stockholders of record on July 23, 1998.
The historical information contained herein has not been adjusted to reflect the
Stock Split. Effective as of the record date of the Stock Split, pursuant to the
terms of the Contract the Exchange Rate for the Securities will be
proportionately increased and the Appreciation Threshold Price and the Initial
Price will be proportionately reduced.

Reference is made to the accompanying prospectus of the Company (pages A-1
through A-30 hereto) which describes the Company and the shares of Common Stock
of the Company deliverable to the Holders upon mandatory exchange of the
Securities on the Exchange Date. The Company is not affiliated with the Trust
and will not receive any of the proceeds from the sale of the Securities. The
Company will have no obligations with respect to the Securities. The Company
prospectus relates to an aggregate 3,162,405 of shares of Common Stock (plus an
additional 474,360 shares that may be delivered upon exercise of the
Underwriters' over-allotment option).

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The Trust will be treated as a grantor trust for federal income tax
purposes. Accordingly, each Holder will be treated for federal income tax
purposes as the owner of its pro rata portion of the U.S. Treasury securities
and the Contract initially acquired by the Trust, and income received (including
original issue discount treated as received) by the Trust will generally be
treated as income of the Holders. The U.S. Treasury securities initially
acquired by the Trust will be treated for federal income tax purposes as having
"original issue discount" that will accrue over the term of such U.S. Treasury
securities. Actual receipts of cash in respect of such U.S. Treasury securities
will not be included in income, however, but rather will reduce the aggregate
tax basis of the Securities. A holder will have taxable gain or loss upon
receipt by the Trust of cash in lieu of Common Stock. Holders should also be
aware that there are alternative characterizations of the assets of the Trust
and the Securities which could require Holders to include more interest in
income than they would include in income under the analysis set out above. See
"Certain Federal Income Tax Considerations".

MANAGEMENT AND ADMINISTRATION OF THE TRUST

The Trust will be internally managed and will not have an investment
adviser. The administration of the Trust will be overseen by three Trustees. The
day-to-day administration of the Trust will be carried out by The Chase
Manhattan Bank (or its successor) as trust administrator (the "Administrator").
The Chase Manhattan Bank will also act as custodian (the "Custodian") for the
Trust's assets and ChaseMellon Shareholder Services, L.L.C. (or its successor)
will act as paying agent (the "Paying Agent"), registrar and transfer agent with
respect to the Securities. Except as aforesaid, The Chase Manhattan Bank and
ChaseMellon Shareholder Services, L.L.C. have no

6
<PAGE> 7

other affiliation with, and are not engaged in any other transaction with, the
Trust. See "Management and Administration of the Trust".

LIFE OF THE TRUST

The Trust will terminate automatically on or shortly after the Exchange
Date. Promptly after the Exchange Date the shares of Common Stock or cash, as
the case may be, to be exchanged for the Securities and other remaining Trust
assets, if any, will be distributed pro rata to Holders. See "Investment
Objective and Policies -- Trust Termination".

RISK FACTORS

The Trust will not be managed in the traditional sense. The Trust has
adopted a policy that the Contract may not be disposed of during the term of the
Trust and that the U.S. Treasury securities held by the Trust may not be
disposed of prior to the earlier of their respective maturities and the
termination of the Trust. The Trust will continue to hold the Contract despite
any significant decline in the market price of the Common Stock or adverse
changes in the financial condition of the Company. See "Risk Factors -- Internal
Management; No Portfolio Management" and "Management and Administration of the
Trust -- Trustees".

Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. There is no assurance, however, that
this relative relationship will prevail over the term of the Trust. In addition,
the opportunity for equity appreciation afforded by an investment in the
Securities is less than that afforded by an investment in the Common Stock
because Holders will realize no equity appreciation if, on the Exchange Date,
the Average Market Price of the Common Stock is below the Appreciation Threshold
Price (which represents an appreciation of 122% of the Initial Price). Moreover,
because a Holder will only receive 0.8197 shares of Common Stock per Security
(or the Average Market Price thereof) if the Average Market Price exceeds the
Appreciation Threshold Price, Holders will only be entitled to receive upon
exchange 81.97% of any appreciation of the value of the Common Stock in excess
of the Appreciation Threshold Price. Holders of Securities will realize the
entire decline in equity value if the Average Market Price on the Exchange Date
is less than the price to public per Security shown on the cover page hereof.

The Trust is classified as a "non-diversified" investment company under the
Investment Company Act. Consequently, the Trust is not limited by the Investment
Company Act in the proportion of its assets that may be invested in the
securities of a single issuer. Since the only assets held by the Trust will be
the U.S. Treasury securities and the Contract, the Trust will be subject to
greater risk than would be the case for an investment company with diversified
investments. See "Investment Objective and Policies" and "Risk
Factors -- Non-Diversified Status".

The trading prices of the Securities in the secondary market will be
directly affected by the trading prices of the Common Stock in the secondary
market. Trading prices of Common Stock will be influenced by the Company's
operating results and prospects and by economic, financial and other factors and
market conditions.

Holders of the Securities will not be entitled to any rights with respect
to the Common Stock (including, without limitation, voting rights and rights to
receive any dividends or other distributions in respect thereof) unless and
until such time, if any, as the Seller shall have delivered shares of Common
Stock pursuant to the Contract.

LISTING

The Securities have been authorized for listing on the New York Stock
Exchange (the "NYSE") under the symbol "CTF".

7
<PAGE> 8

FEES AND EXPENSES

In light of the fact that the proceeds of the sale of the Securities will
be used in part by the Trust to purchase the Contract from the Seller, the
Underwriting Agreement provides that the Seller will pay Underwriters'
Compensation to the Underwriters of $2.12 per Security. See "Underwriting".
Estimated organization costs of the Trust in the amount of $10,000 and estimated
costs of the Trust in connection with the initial registration and public
offering of the Securities in the amount of $432,000 will be paid by Goldman
Sachs. Each of the Administrator, the Custodian and the Paying Agent, and each
Trustee, will be paid by Goldman Sachs at the closing of the offering of the
Securities a one-time, up-front amount in respect of its ongoing fees and, in
the case of the Administrator, anticipated expenses of the Trust (estimated to
be $350,000 in the aggregate), over the term of the Trust. Goldman Sachs have
agreed to pay any on-going expenses of the Trust in excess of these estimated
amounts and to reimburse the Trust for any amounts it may be required to pay as
indemnification to any Trustee, the Administrator, the Custodian or the Paying
Agent. See "Management and Administration of the Trust -- Estimated Expenses".

Regulations of the Securities and Exchange Commission ("SEC") applicable to
closed-end investment companies designed to assist investors in understanding
the costs and expenses that an investor will bear directly or indirectly require
the presentation of Trust expenses in the following format. Because the Trust
will not bear any fees or expenses, investors will not bear any direct expenses.
The only expenses that an investor might be considered to be bearing indirectly
are (i) the Underwriters' Compensation payable by the Seller with respect to
such investor's Securities and (ii) the ongoing expenses of the Trust (including
fees of the Administrator, Custodian, Paying Agent and Trustees), estimated at
$116,667 per year, payable by Goldman Sachs at the closing of the offering. See
"Investment Objective and Policies -- General".

<TABLE>
<S> <C>
INVESTOR TRANSACTION EXPENSES
Sales Load (as a percentage of offering price).............. 3.0%
Dividend Reinvestment and Cash Purchase Plan Fees........... N/A

ANNUAL EXPENSES
Management Fees............................................. 0%
Other Expenses (after reimbursement by the Underwriters).... 0.015%
-----
Total Annual Expenses (after reimbursement by the
Underwriters)*........................................ 0.015%
=====
</TABLE>

- ---------------
* Absent the reimbursement, the Trust "Total Annual Expenses" would be equal to
approximately 0.1334% of the Trust's average net assets. The Underwriters are
paying expenses on behalf of the Trust out of their normal underwriting
compensation.

SEC regulations also require that closed-end investment companies present
an illustration of cumulative expenses (both direct and indirect) that an
investor would bear. The example is required to factor in the applicable Sales
Load and to assume, in addition to a 5% annual return, the reinvestment of all
distributions at net asset value. INVESTORS SHOULD NOTE THAT THE ASSUMPTION OF A
5% ANNUAL RETURN DOES NOT ACCURATELY REFLECT THE FINANCIAL TERMS OF THE TRUST.
SEE "INVESTMENT OBJECTIVE AND POLICIES -- GENERAL". ADDITIONALLY, THE TRUST DOES
NOT PERMIT THE REINVESTMENT OF DISTRIBUTIONS.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------- ------ -------
<S> <C> <C>
You would bear the following expenses (i.e., the applicable
sales load and allocable portion of ongoing expenses paid
by the Seller) on a $1,000 investment, assuming a 5%
annual return............................................. $30.15 $30.47
</TABLE>

8
<PAGE> 9

THE TRUST

The Trust is a newly organized New York trust and is registered as a
closed-end investment company under the Investment Company Act. The Trust was
formed on December 5, 1997 pursuant to a trust agreement dated as of such date
and amended and restated as of May 20, 1998. The address of the Trust is 85
Broad Street, New York, New York 10004 (telephone no. (212) 902-1000).

USE OF PROCEEDS

The net proceeds of this offering will be used immediately upon the closing
of this offering (a) to purchase a fixed portfolio comprised of stripped U.S.
Treasury securities with face amounts and maturities corresponding to the
quarterly distributions payable with respect to the Securities and the payment
dates thereof, and (b) to pay the purchase price under the Contract to the
Seller.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

The Trust will acquire and hold a portfolio of stripped U.S. Treasury
securities maturing on a quarterly basis through the Exchange Date and the
Contract relating to the Common Stock of the Company. The Trust's investment
objective is to provide each Holder with a quarterly cash distribution of
$1.0575 per Security (which amount equals the pro rata portion of the fixed
quarterly distributions from the proceeds of the maturing U.S. Treasury
securities held by the Trust) and, on the Exchange Date, a number of shares of
Common Stock per Security equal to the Exchange Rate (or to the extent the
Seller selects the Cash Settlement Alternative, an amount in cash equal to the
Average Market Price thereof).

The Exchange Date will be May 15, 2001, except that (i) the Seller may
elect to extend the Exchange Date to August 15, 2001 (subject to subsequent
acceleration at the election of the Seller), provided the Seller delivers to the
Trust additional U.S. Treasury securities sufficient to fund the Trust's
quarterly distribution on such date, and (ii) following such an extension, the
Seller may accelerate the Exchange Date, to a date not earlier than May 15,
2001, in connection with the consummation of a Rollover Offering. The Holders of
record on the regular quarterly record date will receive the full scheduled
quarterly distribution on May 15, 2001. If the Exchange Date occurs after May
15, 2001, the Holders of record on the Exchange Date will receive unpaid
distributions accruing to the Exchange Date, but not thereafter.

The Exchange Rate will vary in accordance with a formula, depending on the
Average Market Price of the Common Stock on the Exchange Date:

- if the Average Market Price is equal to or greater than the Appreciation
Threshold Price, the Exchange Rate will be 0.8197 shares of Common
Stock; and

- if the Average Market Price is less than the Initial Price, the Exchange
Rate will be one share of Common Stock.

The formula will be subject to adjustment in certain events, including the
Stock Split discussed below under "The Company." See "--The Contract -- Dilution
Adjustments". For purposes of the first part of the formula, the Exchange Rate
will be rounded upward or downward to the nearest 1/10,000 (or if there is not a
nearest 1/10,000, to the next lower 1/10,000). Holders otherwise

9
<PAGE> 10

entitled to receive fractional shares in respect of their aggregate holdings of
Securities will receive cash in lieu thereof. See "--Trust Termination".

The "Average Market Price" per share of Common Stock on any date means the
average Closing Price (as defined below) of a share of Common Stock on the 20
Trading Days (as defined below) immediately prior to but not including such
date, provided that for purposes of determining the payment required upon cash
settlement of the Contract in connection with a Rollover Offering, "Average
Market Price" means the Closing Price per share of Common Stock on the Trading
Day immediately preceding the date that the Rollover Offering is priced (the
"Pricing Date") or, if the Rollover Offering is priced after 4:00 P.M., New York
City time, on the Pricing Date, the Closing Price per share on the Pricing Date.

"Rollover Offering" means a reoffering or refinancing of all (but not less
than all) of the Securities effected not earlier than May 15, 2001, by means of
a completed public offering or offerings (which may include one or more exchange
offers) by or on behalf of the Seller.

The "Closing Price" of the Common Stock on any date of determination means
the daily closing sale price (or, if no closing sale price is reported, the last
reported sale price) of the Common Stock as reported on the NYSE Consolidated
Tape on such date of determination or, if the Common Stock is not listed for
trading on the NYSE on any such date, as reported in the composite transactions
for the principal United States securities exchange on which the Common Stock is
so listed, or if the Common Stock is not so listed on a United States national
or regional securities exchange, as reported by The NASDAQ National Market or,
if the Common Stock is not so reported, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, provided that if any event that results in an
adjustment to the number of shares of Common Stock deliverable under the
Contract as described under "--The Contract -- Dilution Adjustments" occurs
prior to the Exchange Date, the Closing Price as determined pursuant to the
foregoing will be appropriately adjusted to reflect the occurrence of such
event.

A "Trading Day" means a day on which the Common Stock (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.

A fundamental policy of the Trust is to invest at least 70% of its total
assets in the Contract. The Trust has also adopted a fundamental policy that the
Contract may not be disposed of during the term of the Trust and that the U.S.
Treasury securities held by the Trust may not be disposed of prior to the
earlier of their respective maturities and the termination of the Trust. The
foregoing investment objective and policies are fundamental policies of the
Trust that may not be changed without the approval of a majority of the Trust's
outstanding Securities. A "majority of the Trust's outstanding Securities" means
the lesser of (i) 67% of the Securities represented at a meeting at which more
than 50% of the outstanding Securities are represented, and (ii) more than 50%
of the outstanding Securities.

The value of the Common Stock (or cash or Marketable Securities received in
lieu thereof) that will be received by Holders in respect of the Securities on
the Exchange Date may be more or less than the amount paid for the Securities
offered hereby.

For illustrative purposes only, the following chart shows the number of
shares of Common Stock that a Holder would receive for each Security at various
Average Market Prices. The chart assumes that there would be no adjustments to
the number of shares of Common Stock deliverable under the Contract by reason of
the occurrence of any of the events described under "--The Contract -- Dilution
Adjustments". There can be no assurance that the Average Market Price on the
Exchange Date will be within the range set forth below. Given the Initial Price
of $70.50 per Security

10
<PAGE> 11

and the Appreciation Threshold Price of $86.01, a Holder would receive in
connection with the exchange of Securities on the Exchange Date the following
number of shares of Common Stock:

<TABLE>
<CAPTION>
AVERAGE MARKET PRICE NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK
-------------------- ----------------
<S> <C>
88.00................................................ 0.8197
86.01................................................ 0.8197
73.00................................................ 0.9658
70.50................................................ 1.0000
69.00................................................ 1.0000
65.00................................................ 1.0000
</TABLE>

TAX TREATMENT OF DISTRIBUTIONS

The following table sets forth information regarding the distributions to
be received on the U.S. Treasury securities to be acquired by the Trust with a
portion of the proceeds of the Offering (assuming no exercise of the
Underwriters' over-allotment option), the portion of each year's distributions
that will constitute a return of capital for U.S. federal income tax purposes
and the amount of original issue discount accruing (assuming a yield-to-maturity
accrual election in respect of any short-term U.S. Treasury securities) on such
U.S. Treasury securities with respect to a Holder who acquires its Securities at
the issue price from an Underwriter pursuant to the original offering. See
"Certain Federal Income Tax Considerations -- Recognition of Original Issue
Discount on the U.S. Treasury Securities". Holders should not be required to
include any amounts in income upon the Trust's receipt of additional U.S.
Treasury securities as a result of the extension of the Exchange Date and should
not be required to include any original issue discount in income in respect of
such U.S. Treasury securities. See "Certain Federal Income Tax Considerations --
Extension of the Exchange Date."

<TABLE>
<CAPTION>
ANNUAL GROSS
ANNUAL GROSS DISTRIBUTIONS FROM ANNUAL RETURN OF ANNUAL INCLUSION OF
DISTRIBUTIONS FROM U.S. TREASURIES CAPITAL PER ORIGINAL ISSUE DISCOUNT
YEAR U.S. TREASURIES PER SECURITY SECURITY IN INCOME PER SECURITY
- ---- ------------------ ------------------ ---------------- -----------------------
<S> <C> <C> <C> <C>
1998................. $ 6,242,590 $1.9740 $1.6230 $0.3510
1999................. 13,376,980 4.2300 3.7926 0.4374
2000................. 13,376,980 4.2300 4.0049 0.2251
2001................. 6,688,440 2.1150 2.0861 0.0289
</TABLE>

The annual distribution of $4.23 per Security is payable quarterly on each
February 15, May 15, August 15 and November 15, commencing August 15, 1998.
Quarterly distributions on the Securities will consist solely of the cash
received from the U.S. Treasury securities. The Trust will not be entitled to
any dividends that may be declared on the Common Stock. See "Management and
Administration of the Trust -- Distributions".

ENHANCED YIELD; LESS EQUITY APPRECIATION THAN COMMON STOCK; NO DEPRECIATION
PROTECTION

Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. However, there is no assurance that
this relative relationship will prevail over the term of the Trust. In addition,
the opportunity for equity appreciation afforded by an investment in the
Securities is less than that afforded by an investment in the Common Stock
because Holders will realize no equity appreciation if, on the Exchange Date,
the Average Market Price of the Common Stock is at or below the Appreciation
Threshold Price (which represents an appreciation of 122% of the Initial Price).
Moreover, because Holders will only receive 0.8197 shares of Common Stock per
Security (or the Average Market Price thereof) if the Average Market Price
exceeds the Appreciation Threshold Price, Holders will only be entitled to
receive upon exchange 81.97% (the percentage equal to the Initial Price divided
by the Appreciation Threshold Price) of any appreciation of the

11
<PAGE> 12

value of the Common Stock in excess of the Appreciation Threshold Price. Holders
of Securities will realize the entire decline in value if the Average Market
Price on the Exchange Date is less than the price to public per Security shown
on the cover page hereof.

THE COMPANY

The shares of Common Stock are traded on the New York Stock Exchange. The
following table sets forth, for the calendar quarters indicated, the reported
high and low sales prices of the shares of Common Stock on the New York Stock
Exchange Composite Tape and the cash dividends per share of Common Stock. As of
March 28, 1998, there were approximately 9,900 record holders of the Common
Stock, including The Depository Trust Company, which holds shares of Common
Stock on behalf of an indeterminate number of beneficial owners.

<TABLE>
<CAPTION>
DIVIDEND
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1996
1st Quarter.......................................... $36 3/8 $27 1/4 $0.11
2nd Quarter.......................................... 44 1/2 35 1/4 0.11
3rd Quarter.......................................... 46 36 5/8 0.11
4th Quarter.......................................... 44 3/4 36 3/8 0.11
1997
1st Quarter.......................................... $48 $39 $0.11
2nd Quarter.......................................... 53 3/4 44 1/4 0.11
3rd Quarter.......................................... 60 50 7/8 0.11
4th Quarter.......................................... 70 54 5/8 0.11
1998
1st Quarter.......................................... 77 13/16 60 7/8 $0.11
2nd Quarter (through May 19, 1998)................... 80 66 1/8 0.11
</TABLE>

On May 13, 1998, the Board of Directors of the Company declared a
two-for-one stock split of the Common Stock distributable on June 15, 1998 to
its stockholders of record on May 25, 1998. The Board of Directors also
increased the dividend rate on the Common Stock after the Stock Split. In that
regard, the Board declared a quarterly cash dividend of $0.0575 per share
payable on August 1, 1998 to stockholders of record on July 23, 1998. The
historical information contained herein has not been adjusted to reflect the
Stock Split.

Holders will not be entitled to rights with respect to the Common Stock
(including, without limitation, voting rights and rights to receive dividends or
other distributions in respect thereof) until receipt of shares of Common Stock
by the Holders as a result of the exchange of the Securities for the Common
Stock on the Exchange Date.

Reference is made to the accompanying prospectus of the Company, dated May
20, 1998 (pages A-1 through A-30 hereto) which describes the Company and the
shares of Common Stock deliverable to the Holders upon mandatory exchange of the
Securities on the Exchange Date. The Company is not affiliated with the Trust
and will not receive any of the proceeds from the sale of the

12
<PAGE> 13

Securities. The Company will have no obligations with respect to the Securities.
The Company prospectus relates to an aggregate of 3,162,405 shares of Common
Stock (plus an additional 474,360 shares that may be delivered upon exercise of
the Underwriters' over-allotment option).

THE CONTRACT

GENERAL. The Trust will enter into a Contract with the Seller obligating
the Seller to deliver to the Trust on the Exchange Date a number of shares of
Common Stock equal to the product of the Exchange Rate times the initial number
of shares of Common Stock subject to the Contract. The aggregate initial number
of shares of Common Stock under the Contract will equal the aggregate number of
Securities offered hereby (subject to increase in the event the Underwriters
exercise their over-allotment option). The Contract also provides that the
Seller may deliver to the Trust upon settlement of the Contract, at the Seller's
option, an amount of cash equal to the then Average Market Price of the number
of shares of Common Stock deliverable pursuant to the Contract (the "Cash
Settlement Alternative"). If the Seller elects to deliver cash in lieu of shares
of Common Stock, the Seller would be required to deliver cash in respect of all
shares deliverable pursuant to the Contract. The Trustees will notify the
Holders of (i) any election of the Cash Settlement Alternative, and whether it
is intended to be in connection with a Rollover Offering (which would affect the
computation of the Average Market Price in connection with such settlement, as
described under "-- General" above), not less than 30 nor more than 90 days
prior to the Exchange Date, and (ii) any acceleration of the Exchange Date in
connection with a Rollover Offering, not later than the Exchange Date. The cash
payment received by the Trust upon such settlement in connection with a Rollover
Offering will be distributed to Holders within five business days of the
Exchange Date. If notice of a cash settlement in connection with a Rollover
Offering is given but the Rollover Offering is not completed, the Contract will
settle by cash payment on May 15, 2001 (or August 15, 2001 if the Exchange Date
was previously extended) and the Average Market Price will be computed on the
basis of the average Closing Price for 20 Trading Days.

The Exchange Date may be extended to August 15, 2001 (subject to subsequent
acceleration at the election of the Seller), provided the Seller delivers to
Trust, on or prior to May 15, 2001, additional U.S. Treasury securities with
face amounts and maturities corresponding to the quarterly distribution payable
with respect to the Securities on August 15, 2001. The Seller will be entitled,
under the Contract, to repurchase such additional U.S. Treasury securities from
the Trust on or prior to the Exchange Date, at a price equal to the aggregate
unpaid distributions on the Securities accruing to the Exchange Date.

The Contract also provides that if the Seller delivers Securities to the
Trust on or prior to the Exchange Date, its obligation under the Contract will
be proportionately reduced. Such delivery of Securities in partial or complete
satisfaction of the Seller's obligations may affect the relative amounts of
Common Stock or cash receivable by Holders of Securities on the Exchange Date.

The purchase price of the Contract was arrived at by arm's-length
negotiation between the Trust and the Seller taking into consideration factors
including the price, expected dividend level and volatility of the Common Stock,
current interest rates, the term of the Contract, current market volatility
generally, the collateral security pledged by the Seller, the value of other
similar instruments and the costs and anticipated proceeds of the offering of
the Securities. All matters relating to the administration of the Contract will
be the responsibility of either the Administrator or the Custodian.

DILUTION ADJUSTMENTS. The Exchange Rate is subject to adjustment if the
Company (i) pays a stock dividend or makes a distribution with respect to the
Common Stock in shares of such stock, (ii) subdivides or splits its outstanding
shares of Common Stock, (iii) combines its outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues by reclassification of its
shares of Common Stock any shares of other common stock of the Company. In any
such event, the Exchange Rate shall be adjusted as follows: for each share of
Common Stock that would have been deliverable upon exchange prior to the
adjustment, the Holder will receive the number of shares of

13
<PAGE> 14

Common Stock (or, in the case of a reclassification referred to in clause (iv)
above, the number of shares of other common stock of the Company issued pursuant
thereto), or fraction thereof, that a shareholder who held one share of Common
Stock immediately prior to such event would be entitled solely by reason of such
event to hold immediately after such event. Effective as of the record date of
the Stock Split, pursuant to the terms of the Contract the Exchange Rate for the
Securities will be proportionately increased and the Appreciation Threshold
Price and the Initial Price will be proportionately reduced.

In addition, if the Company issues rights or warrants to all holders of
Common Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Then-Current Market Price of the Common Stock
(as defined below) (other than rights to purchase Common Stock pursuant to a
plan for the reinvestment of dividends or interest), then the Exchange Rate
shall be adjusted pursuant to the following formula:

<TABLE>
<S> <C> <C>
OS + AS

A = ER ---------------
x
OS + PS
</TABLE>

where

ER = the Exchange Rate prior to the adjustment;

OS = the number of shares of Common Stock outstanding immediately prior to
the time (determined as described below) the adjustment is calculated
by reason of the issuance of such rights or warrants;

AS -- the number of additional shares offered for subscription or purchase
pursuant to such rights or warrants; and

PS = the number of additional shares that the aggregate offering price of
the shares so offered for subscription or purchase would purchase at
the Then-Current Market Price.

To the extent that, after expiration of such rights or warrants, the shares
offered thereby shall not have been delivered, the Exchange Rate shall be
further adjusted to equal the Exchange Rate that would have been in effect had
the foregoing adjustment been made upon the basis of delivery of only the number
of shares of Common Stock actually delivered.

The "Then-Current Market Price" of the Common Stock means the average
Closing Price per share of Common Stock for a Calculation Period of five Trading
Days immediately prior to the time such adjustment is effected (or, in the case
of an adjustment effected at the opening of business on the business day
following a record date, as described below, immediately prior to the earlier of
the time such adjustment is effected and the related "ex-date" on which the
shares of Common Stock first trade regular way on their principal market without
the right to receive the relevant dividend, distribution or issuance); provided
that if no Closing Price for the Common Stock is determined for one or more (but
not all) of such Trading Days, such Trading Day shall be disregarded in the
calculation of the Then-Current Market Price (but no additional Trading Days
shall be added to the Calculation Period). If no Closing Price for the Common
Stock is determined for any of such Trading Days, the most recently available
Closing Price for the Common Stock prior to such five Trading Days shall be the
Then-Current Market Price. "Calculation Period" means any period of Trading Days
for which an average security price must be determined pursuant to the Contract.

In addition, if the Company pays a dividend or makes a distribution to all
holders of Common Stock, in either case, of evidences of its indebtedness or
other non-cash assets (excluding any stock dividends or distributions in shares
of Common Stock) or issues to all holders of Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than rights or

14
<PAGE> 15

warrants referred to in the second paragraph of this subsection), then the
Exchange Rate shall be adjusted pursuant to the following formula:

<TABLE>
<S> <C> <C>
T

A = ER ------
x
T - V
</TABLE>

where

ER = the Exchange Rate prior to adjustment;

T = the Then-Current Market Price per share of Common Stock; and

V = the fair market value (as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Administrator) as of the time the adjustment is calculated of the
portion of such evidences of indebtedness, non-cash assets or rights or
warrants payable in respect of one share of Common Stock.

In addition, if the Company distributes cash (other than an Excluded
Distribution), by dividend or otherwise, to all holders of Common Stock or makes
an Excess Purchase Payment, then the Exchange Rate shall be adjusted pursuant to
the following formula:

<TABLE>
<S> <C> <C>
T

A = ER ------
x
T - D
</TABLE>

where

ER = the Exchange Rate prior to adjustment;

T = the Then-Current Market Price on the record date in respect of such
distribution; and

D = the amount of such distribution applicable to one share of Common Stock
that would not be a Permitted Dividend (or in the case of an Excess
Purchase Payment, the aggregate amount of such Excess Purchase Payment
divided by the number of outstanding shares of Common Stock on such
record date).

For purposes of these adjustments,

(a) the term "Excluded Distribution" means any Permitted Dividend, any cash
distributed in consideration of fractional shares of Common Stock and
any cash distributed in a Reorganization Event;

(b) the term "Permitted Dividend" means any quarterly cash dividend in
respect of the Common Stock, other than a quarterly cash dividend that
exceeds the immediately preceding quarterly cash dividend, and then
only to the extent that the per share amount of such dividend results
in an annualized dividend yield on the Common Stock in excess of 12.5%;
and

(c) the term "Excess Purchase Payment" means the excess, if any, of (i) the
cash and the value (as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Administrator, whose determination shall be conclusive) of all other
consideration paid by the Company with respect to one share of Common
Stock acquired in a tender offer or exchange offer by the Company over
(ii) the Then-Current Market Price per share of Common Stock.

If any adjustment in the Exchange Rate is required to be calculated
pursuant to the formulas described above, corresponding adjustments to the
Initial Price and the Appreciation Threshold Price shall be calculated.

Dilution adjustments shall be effected: (i) in the case of any dividend,
distribution or issuance described above, at the opening of business on the
business day following the record date for

15
<PAGE> 16

determination of holders of Common Stock entitled to receive such dividend,
distribution or issuance or, if the announcement of any such dividend,
distribution or issuance is after such record date, at the time such dividend,
distribution or issuance shall be announced by the Company; (ii) in the case of
any subdivision, split, combination or reclassification described above, on the
effective date of such transaction; (iii) in the case of any Excess Purchase
Payment for which the Company shall announce, at or prior to the time it
commences the relevant share repurchase, the repurchase price for such shares to
be repurchased, on the date of such announcement; and (iv) in the case of any
other Excess Purchase Payment, on the date that the holders of Common Stock
become entitled to payment with respect thereto. There will be no adjustment
under the Contract in respect of any dividends, distributions, issuances or
repurchases that may be declared or announced after the Exchange Date. If any
announcement or declaration of a record date in respect of a dividend,
distribution, issuance or repurchase shall subsequently be canceled by the
Company, or such dividend, distribution, issuance or repurchase shall fail to
receive requisite approvals or shall fail to occur for any other reason, then
the Exchange Rate shall be further adjusted to equal the Exchange Rate that
would have been in effect had the adjustment for such dividend, distribution,
issuance or repurchase not been made. If after an announcement of a share
repurchase, the Company reduces the repurchase price or repurchases fewer shares
than announced, upon completion of such share repurchase, the Exchange Rate
shall be further adjusted to equal the Exchange Rate that would have been in
effect had the adjustment for such repurchase been based on the actual price and
amount repurchased. All adjustments described herein shall be rounded upward or
downward to the nearest 1/10,000 (or if there is not a nearest 1/10,000, to the
next lower 1/10,000). No adjustment in the Exchange Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent therein; provided, however, that any adjustments which by reason of the
foregoing are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.

In the event of a Reorganization Event, the Exchange Rate will be adjusted
such that, on the Exchange Date, each Holder will receive for each Security cash
in an amount equal to:

(i) if the Transaction Value (as defined below) is less than the
Appreciation Threshold Price but equal to or greater than the Initial
Price, the Initial Price,

(ii) if the Transaction Value is greater than or equal to the
Appreciation Threshold Price, 0.8197 multiplied by the Transaction Value,
and

(iii) if the Transaction Value is less than the Initial Price, the
Transaction Value;

provided, however, that if the consideration received by holders of Common Stock
in such Reorganization Event does not include Marketable Securities, then (a)
the Seller's delivery obligations under the Contract will be accelerated, and
the Transaction Value will be deliverable promptly upon consummation of the
Reorganization Event; (b) the Custodian will liquidate the U.S. Treasury
securities acquired by the Trust at closing and then held by the Trust; and (c)
such Transaction Value and the proceeds of such liquidation will be distributed
to the Holders.

Notwithstanding the foregoing, to the extent that any Marketable Securities
(as defined below) are received by holders of Common Stock in such
Reorganization Event, then in lieu of delivering cash as provided above, the
Seller may at its option deliver a proportional amount of such Marketable
Securities on the Exchange Date. If the Seller elects to deliver Marketable
Securities on the Exchange Date, Holders will be responsible for the payment of
any and all brokerage and other transaction costs upon the sale of such
securities.

"Reorganization Event" means (A) any consolidation or merger of the
Company, or any surviving entity or subsequent surviving entity of the Company
(a "Company Successor"), with or into another entity (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or consolidation is
not exchanged for cash, securities or other property of the Company or another

16
<PAGE> 17

corporation), (B) any sale, transfer, lease or conveyance to another corporation
of the property of the Company or any Company Successor as an entirety or
substantially as an entirety, (C) any statutory exchange of securities of the
Company or any Company Successor with another corporation (other than in
connection with a merger or acquisition) or (D) any liquidation, dissolution or
winding up of the Company or any Company Successor.

"Transaction Value" means (i) for any cash received in any such
Reorganization Event, the amount of cash received per share of Common Stock,
(ii) for any property other than cash or Marketable Securities received in any
such Reorganization Event, an amount equal to the market value on the date the
Reorganization Event is consummated of such property received per share of
Common Stock as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Administrator and (iii) for any
Marketable Securities received in any such Reorganization Event, an amount equal
to the average Closing Price per share of such securities on the 20 Trading Days
immediately prior to the Exchange Date multiplied by the number of such
securities received for each share of Common Stock; provided that if no Closing
Price for such Marketable Securities is determined for one or more (but not all)
of such Trading Days, such Trading Days shall be disregarded in the calculation
of such average Closing Price (but no additional Trading Days shall be added to
the Calculation Period). If no Closing Price for the Marketable Securities is
determined for all such Trading Days, the calculation in the preceding clause
(iii) shall be based on the most recently available Closing Price for the
Marketable Securities prior to such 20 Trading Days. The number of shares of
Marketable Securities included in the calculation of Transaction Value for
purposes of the preceding clause (iii) shall be subject to adjustment if a
dilution event of the type described above shall occur with respect to the
issuer of the Marketable Securities between the time of the Reorganization Event
and the Exchange Date.

For purposes of determining Transaction Value, the term "Trading Day" and
"Closing Price" will have the same meaning, as applied to the Marketable
Securities, as these terms have as applied to the Common Stock for purposes of
determining the Average Market Price.

"Marketable Securities" means any common equity securities (whether voting
or non-voting) listed on a U.S. national securities exchange or reported by The
NASDAQ National Market.

No dilution adjustments will be made for events, other than those described
above, such as offerings of Common Stock (other than through the issuance of
rights or warrants described above) for cash or in connection with acquisitions.

COLLATERAL ARRANGEMENTS; ACCELERATION. The Seller's obligations under the
Contract initially will be secured by a security interest in the maximum number
of shares of Common Stock subject to the Contract (subject to adjustment in
accordance with the dilution adjustment provisions of the Contract, described
above), pursuant to a Collateral Agreement between the Seller and The Chase
Manahattan Bank, as collateral agent (the "Collateral Agent"). Unless the Seller
is in default in its obligations under the Collateral Agreement, the Seller will
be permitted to substitute for the pledged shares of Common Stock collateral
consisting of short-term, direct obligations of the U.S. Government. Any U.S.
Government obligations pledged as substitute collateral will be required to have
an aggregate market value at the time of substitution and at daily
mark-to-market valuations thereafter of not less than 150% (or, from and after
any Insufficiency Determination that shall not be cured by the close of business
on the next business day thereafter, as described below, 200%) of the product of
the market price of the Common Stock at the time of each valuation times the
number of shares of Common Stock for which such obligations are being
substituted. The Collateral Agreement will provide that, in the event of a
Reorganization Event, the Seller will pledge as alternative collateral any
Marketable Securities received by it in respect of the maximum number of shares
of Common Stock subject to the Contract at the time of the Reorganization Event,
plus cash in an amount equal to 100% of the Seller's Cash Delivery Obligations
(or U.S. Government obligations having an aggregate market value when pledged
and at daily mark-to-market valuations thereafter of not less than 105%
thereof). The Collateral Agent will be required, under the Collateral

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<PAGE> 18

Agreement, to invest any such cash in U.S. Treasury securities maturing on or
before May 15, 2001. The Seller's "Cash Delivery Obligations" shall be the
Transaction Value of any consideration other than Marketable Securities received
by the Seller in respect of the maximum number of shares subject to the Contract
at the time of the Reorganization Event. The number of shares of Marketable
Securities required to be pledged shall be subject to adjustment if any event
requiring a dilution adjustment under the Contract shall occur. The Seller will
be permitted to substitute U.S. Government obligations for Marketable Securities
pledged at the time of or after any Reorganization Event. Any U.S. Government
obligations so substituted will be required to have an aggregate market value at
the time of substitution and at daily mark-to-market valuations thereafter of
not less than 150% (or, from and after any Insufficiency Determination that
shall not be cured by the close of business on the next business day thereafter,
as described below, 200%) of the product of the market price per share of
Marketable Securities at the time of each valuation times the number of shares
of Marketable Securities for which such obligations are being substituted. The
Collateral Agent will promptly pay over to the Seller any dividends, interest,
principal or other payments received by the Collateral Agent in respect of any
collateral pledged by the Seller, including any substitute collateral, unless
the Seller is in default of its obligations under the Collateral Agreement, or
unless the payment of such amount to the Seller would cause the collateral to
become insufficient under the Collateral Agreement. The Seller shall have the
right to vote any pledged shares of Marketable Securities for so long as such
shares are owned by it and pledged under its Collateral Agreement, including
after an event of default under the Contract or Collateral Agreement.

If the Collateral Agent shall determine (an "Insufficiency Determination")
that U.S. Government obligations pledged by the Seller as substitute collateral
shall fail to meet the foregoing requirements at any valuation, or that the
Seller has failed to pledge additional collateral required as a result of a
dilution adjustment increasing the maximum number of shares of Common Stock or
shares of Marketable Securities subject to the Contract, and such failure shall
not be cured by the close of business on the next business day after such
determination, then, unless a Collateral Event of Default (as defined below)
under the Collateral Agreement shall have occurred and be continuing, the
Collateral Agent shall commence (i) sales of the collateral consisting of U.S.
Government obligations and (ii) purchases, using the proceeds of such sales, of
shares of Common Stock or shares of Marketable Securities, in an amount
sufficient to cause the collateral to meet the requirements under such
Collateral Agreement. The Collateral Agent shall discontinue such sales and
purchases if at any time a Collateral Event of Default under such Collateral
Agreement shall have occurred and be continuing. A "Collateral Event of Default"
under the Collateral Agreement shall mean, at any time, (A) if no U.S.
Government obligations shall be pledged as substitute collateral at such time,
failure of the collateral to consist of at least the maximum number of shares of
Common Stock subject to the Contract at such time (or, if a Reorganization Event
shall have occurred at or prior to such time, failure of the collateral to
include the maximum number of shares of any Marketable Securities required to be
pledged as described above); (B) if any U.S. Government obligations shall be
pledged as substitute collateral for shares of Common Stock (or shares of
Marketable Securities) at such time, failure of such U.S. Government obligations
to have a market value at such time of at least 105% of the market price per
share of Common Stock (or the then-Average Market Price per share of Marketable
Securities, as the case may be) times the difference between (x) the maximum
number of shares of Common Stock (or shares of Marketable Securities) subject to
the Contract at such time and (y) the number of shares of Common Stock (or
shares of Marketable Securities) pledged as collateral at such time; and (C) at
any time after a Reorganization Event in which consideration other than
Marketable Securities shall have been delivered, failure of any U.S. Government
obligations pledged in respect of Cash Delivery Obligations to have a market
value at such time of at least 105% of such Cash Delivery Obligations, if such
failure shall not be cured within one business day after notice thereof is
delivered to the Seller.

The occurrence of a Collateral Event of Default under the Collateral
Agreement, or the bankruptcy or insolvency of the Seller, will cause an
automatic acceleration of the Seller's
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<PAGE> 19

obligations under the Contract. In any such event, the Seller will become
obligated to deliver the initial number of shares of Common Stock (or, after a
Reorganization Event, the Marketable Securities or cash or a combination thereof
deliverable in respect thereof) subject to the Contract, or any U.S. Government
obligations then pledged in respect thereof.

Upon any acceleration under the Collateral Agreement, (i) the Collateral
Agent will distribute to the Trust, for distribution pro rata to the Holders,
the shares of Common Stock then pledged by the Defaulting Seller, or cash
generated from the liquidation of U.S. Government obligations then pledged by
the Defaulting Seller, or a combination thereof (or, after a Reorganization
Event, the Marketable Securities then pledged by the Defaulting Seller, cash
generated from the liquidation of U.S. Government obligations then pledged by
the Defaulting Seller, or a combination thereof) and (ii) the Custodian will
liquidate a proportionate amount of the U.S. Treasury securities acquired by the
Trust at closing and then held by the Trust and distribute the proceeds pro rata
to the Holders. Following any distributions upon acceleration and liquidation in
accordance with the foregoing sentence, the number of shares of Common Stock or
Marketable Securities, as applicable, deliverable to Holders on the Exchange
Date will be proportionately reduced. In addition, in the event that by the
Exchange Date any substitute collateral has not been replaced by Common Stock
(or, after a Reorganization Event, cash or Marketable Securities) sufficient to
meet the obligations under the Contract, the Collateral Agent will distribute to
the Trust for distribution pro rata to the Holders the market value of the
Common Stock required to be delivered thereunder, in the form of any shares of
Common Stock then pledged by the Seller plus cash generated from the liquidation
of U.S. Government obligations then pledged by the Seller (or, after a
Reorganization Event, the market value of the alternative consideration required
to be delivered thereunder, in the form of any Marketable Securities then
pledged, plus any cash then pledged, plus cash generated from the liquidation of
U.S. Government obligations then pledged). See "-- Trust Termination".

DESCRIPTION OF THE SELLER. The Seller is Eugene Applebaum Revocable Living
Trust. Reference is made to the caption "Selling Stockholder" in the Company's
prospectus for information about the Seller.

THE U.S. TREASURY SECURITIES

The Trust will purchase and hold a series of zero-coupon ("stripped") U.S.
Treasury securities with face amounts and maturities corresponding to the
distributions payable with respect to the Securities and the payment dates
thereof. Up to 30% of the Trust's total assets may be invested in these U.S.
Treasury securities. Additional U.S. Treasury securities may be transferred to
the Trust in connection with an extension of the Exchange Date to August 15,
2001. In the event that the Contract is accelerated, then a proportionate amount
of such U.S. Treasury securities then held in the Trust shall be liquidated by
the Administrator and the proceeds thereof distributed pro rata to the Holders,
together with the amounts distributed upon acceleration. See "-- Collateral
Arrangements; Acceleration" and "-- Trust Termination".

TEMPORARY INVESTMENTS

For cash management purposes, the Trust may invest the proceeds of the U.S.
Treasury securities and any other cash held by the Trust in short-term
obligations of the U.S. Government maturing no later than the business day
preceding the next following distribution date. Not more than 5% of the Trust's
total assets will be invested in such short-term obligations or held in cash at
any one time.

INVESTMENT RESTRICTIONS

As a matter of fundamental policy, the Trust may not purchase any
securities or instruments other than the U.S. Treasury securities, the Contract
and the Common Stock or other assets received pursuant to the Contract and, for
cash management purposes, short-term obligations of

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<PAGE> 20

the U.S. Government; issue any securities or instruments except for the
Securities; make short sales or purchase securities on margin; write put or call
options; borrow money; underwrite securities; purchase or sell real estate,
commodities or commodities contracts, including futures contracts; or make loans
(other than the purchase of stripped U.S. Treasury securities as described in
this Prospectus). The Trust also has adopted a fundamental policy that the
Contract may not be disposed of during the term of the Trust and that the U.S.
Treasury securities held by the Trust may not be disposed of prior to the
earlier of their respective maturities and the termination of the Trust.

Because of the foregoing limitations, the Trust's investments will be
concentrated in the chain drugstore industry, which is the industry in which the
Company operates. The Trust is not permitted to purchase restricted securities.

TRUST TERMINATION

The Trust will terminate automatically on or shortly after the Exchange
Date. Alternatively, in the event that the Contract is accelerated, then any
U.S. Treasury securities then held in the Trust shall be liquidated by the
Administrator and the proceeds distributed pro rata to the Holders, together
with the amounts distributed upon acceleration, and the Trust shall be
terminated. See "-- Collateral Arrangements; Acceleration" and "-- The U.S.
Treasury Securities".

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<PAGE> 21

RISK FACTORS

INTERNAL MANAGEMENT; NO PORTFOLIO MANAGEMENT

The Trust will be internally managed by its Trustees and will not have any
separate investment adviser. It is a fundamental policy of the Trust that the
Contract may not be disposed of during the term of the Trust and that the U.S.
Treasury securities held by the Trust may not be disposed of prior to the
earlier of their respective maturities and the termination of the Trust. As a
result, the Trust will continue to hold the Contract despite significant
declines in the market price of the Common Stock or adverse changes in the
financial condition of the Company (or, after a Reorganization Event, comparable
developments affecting any Marketable Securities or the issuer thereof). The
Trust will not be managed like a typical closed-end investment company.

LIMITED APPRECIATION POTENTIAL; COMMON STOCK DEPRECIATION RISK

The Trust anticipates that on the Exchange Date, it will receive the Common
Stock deliverable pursuant to the Contract, which it will then distribute to
Holders. Although Holders will initially receive distributions at a higher
annual rate than the current annual dividends paid on the Common Stock, there is
no assurance that this relative relationship will prevail over the term of the
Trust. In addition, because the Contract call for the Seller to deliver less
than the full number of shares of Common Stock subject to the Contract where the
Average Market Price exceeds the Initial Price (and therefore less than one full
share of Common Stock for each outstanding Security), the Securities have more
limited appreciation potential than the Common Stock. Therefore, the Securities
may trade below the value of the Common Stock if the Common Stock appreciates in
value. The value of the Common Stock to be received by Holders on the Exchange
Date (and any cash received in lieu thereof) may be less than the amount paid
for the Securities. Holders of Securities will realize the entire decline in
value if the Average Market Price is less than the price to public per Security
shown on the cover page hereof.

DILUTION ADJUSTMENTS; SHAREHOLDER RIGHTS

The number of shares of Common Stock that Holders are entitled to receive
at the termination of the Trust is subject to adjustment for certain events
arising from stock splits and combinations, stock dividends and certain other
actions of the Company that modify its capital structure. See "Investment
Objective and Policies -- The Contract -- Dilution Adjustments". The number of
shares to be received by Holders may not be adjusted for other events, such as
offerings of Common Stock for cash or in connection with acquisitions, that may
adversely affect the price of the Common Stock and, because of the relationship
of the amount to be received pursuant to the Contract to the price of the Common
Stock, such other events may adversely affect the trading price of the
Securities. There can be no assurance that the Company will not take any of the
foregoing actions, or that it will not make offerings of, or that major
shareholders will not sell any, Common Stock in the future, or as to the amount
of any such offerings or sales. In addition, until the receipt of the Common
Stock by Holders as a result of the exchange of the Securities for the Common
Stock, Holders will not be entitled to any rights with respect to the Common
Stock (including without limitation voting rights and the rights to receive any
dividends or other distributions in respect thereof).

TRADING VALUE; LISTING

The Trust is a newly organized closed-end investment company with no
previous operating history and the Securities are innovative securities. It is
not possible to predict how the Securities will trade in the secondary market.
The trading price of the Securities may vary considerably prior to the Exchange
Date due to, among other things, fluctuations in the price of the Common Stock
(which may occur due to changes in the Company's financial condition, results of
operations or prospects, or because of complex and interrelated political,
economic, financial and other factors
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<PAGE> 22

that can affect the capital markets generally, the stock exchanges or quotation
systems on which the Common Stock is traded and the market segment of which the
Company is a part) and fluctuations in interest rates and other factors that are
difficult to predict and beyond the Trust's control. The Trust believes,
however, that because of the yield on the Securities and the formula for
determining the number of shares of Common Stock to be delivered on the Exchange
Date, the Securities will tend to trade at a premium to the market value of the
Common Stock to the extent the Common Stock price falls and at a discount to the
market value of the Common Stock to the extent the Common Stock price rises.
There can, however, be no assurance that the Securities will trade at a premium
to the market value of the Common Stock.

Shares of closed-end investment companies frequently trade at a discount
from net asset value. This characteristic of investments in a closed-end
investment company is a risk separate and distinct from the risk that the
Trust's net asset value will decrease. The Trust cannot predict whether its
shares will trade at, below or above net asset value. The risk of purchasing
investments in a closed-end investment company that might trade at a discount
may be greater for investors who wish to sell their investments soon after
completion of an initial public offering because for those investors,
realization of a gain or loss on their investments is likely to be more
dependent upon the existence of a premium or discount than upon portfolio
performance.

The Underwriters currently intend, but are not obligated, to make a market
in the Securities. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide the Holders
with liquidity of investment or that it will continue for the life of the
Securities. The Underwriters may cease to make a market in the Securities at any
time without notice. The Securities have been authorized for listing on the New
York Stock Exchange. There can be no assurance that the Securities will not
later be delisted or that trading in the Securities on the New York Stock
Exchange will not be suspended. In the event of a delisting or suspension of
trading on such exchange, the Trust will apply for listing of the Securities on
another national securities exchange or for quotation on another trading market.
If the Securities are not listed or traded on any securities exchange or trading
market, or if trading of the Securities is suspended, pricing information for
the Securities may be more difficult to obtain, and the price and liquidity of
the Securities may be adversely affected.

NON-DIVERSIFIED STATUS

The Trust is considered non-diversified under the Investment Company Act,
which means that the Trust is not limited in the proportion of its assets that
may be invested in the obligations of a single issuer. Since the only assets
held or received by the Trust will be U.S. Treasury securities and the Contract
or other assets consistent with the terms of the Contract, the Trust will be
subject to greater risk than would be the case for an investment company with
diversified investments.

DESCRIPTION OF THE SECURITIES

Each Security represents an equal proportional interest in the Trust, and a
total of 3,162,405 Securities will be issued (assuming no exercise of the
Underwriters' over-allotment option). Upon liquidation of the Trust, Holders are
entitled to share pro rata in the net assets of the Trust available for
distribution. The Securities have no preemptive, redemption or conversion
rights. Securities are fully paid and nonassessable by the Trust. The only
securities that the Trust is authorized to issue are the Securities offered
hereby and those sold to the initial Holder referred to below. See
"Underwriting".

Holders are entitled to a full vote for each Security held on all matters
to be voted on by Holders and are not able to cumulate their votes in the
election of Trustees. The Trustees of the Trust have been selected initially by
Goldman Sachs, as the initial Holder of Securities of the Trust. The Trust
intends to hold annual meetings as required by the rules of the New York Stock
Exchange. The Trustees may call special meetings of Holders for action by Holder
vote as may be required by either
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<PAGE> 23

the Investment Company Act or the Amended and Restated Trust Agreement. The
Holders have the right, upon the declaration in writing or vote of more than
two-thirds of the outstanding Securities, to remove a Trustee. The Trustees will
call a meeting of Holders to vote on the removal of a Trustee upon the written
request of the Holders of record of 10% of the Securities or to vote on other
matters upon the written request of the Holders of record of 51% of the
Securities (unless substantially the same matter was voted on during the
preceding 12 months). The Trustees shall establish, and notify the Holders in
writing of, the record date for each such meeting which shall be not less than
10 nor more than 50 days before the meeting date. Holders at the close of
business on the record date will be entitled to vote at the meeting. The Trust
will also assist in communications with other Holders as required by the
Investment Company Act.

In calculating the net asset value of the Trust as required by the
Investment Company Act, the Amended and Restated Trust Agreement provides that
(i) the Treasury securities will be valued at the mean between the last current
bid and asked prices or, if quotations are not available, as determined in good
faith by the Trustees, (ii) short-term investments having a maturity of 60 days
or less will be valued at cost with accrued interest or discount earned included
in interest receivable and (iii) the Contract will be valued on the basis of the
bid price received by the Trust in respect of the Contract, or any portion
thereof covering not less than 1,000 shares, from an independent broker-dealer
firm unaffiliated with the Trust to be named by the Trustees who is in the
business of making bids on financial instruments similar to the Contract and
with terms comparable thereto, or if such a bid quotation is not available, as
determined in good faith by the Trustee.

BOOK-ENTRY-ONLY ISSUANCE

The Depository Trust Company ("DTC") will act as securities depository for
the Securities. The information in this section concerning DTC and DTC's
book-entry system is based upon information obtained from DTC. The Securities
offered hereby will be issued only as fully-registered securities registered in
the name of Cede & Co. (as nominee for DTC). One or more fully-registered global
Security certificates will be issued, representing in the aggregate the total
number of Securities, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
Access to the DTC system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants").

Purchases of Securities within the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of a Security
("Beneficial Owner") is in turn to be recorded on the Direct or Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Securities. Transfers of ownership
interests in Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Securities,
except upon a resignation of DTC.
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<PAGE> 24

DTC has no knowledge of the actual Beneficial Owners of the Securities;
DTC's records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.

Payments on the Securities will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participant and not
of DTC or the Trust, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of dividends to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.

Except as provided herein, a Beneficial Owner of an interest in a global
Security will not be entitled to receive physical delivery of Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Securities.

DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depository is
not obtained, certificates representing the Securities will be printed and
delivered.

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<PAGE> 25

MANAGEMENT AND ADMINISTRATION OF THE TRUST

TRUSTEES

The Trust will be internally managed by three Trustees, none of which is an
"interested person" of the Trust as defined in the Investment Company Act. Under
the provisions of the Code applicable to grantor trusts, the Trustees will not
have the power to vary the investments held by the Trust. It is a fundamental
policy of the Trust that the Contract may not be disposed of during the term of
the Trust and that the U.S. Treasury securities held by the Trust may not be
disposed of prior to the earlier of their respective maturities and termination
of the Trust.

The names of the persons who have been elected by Goldman Sachs, the
initial Holder of the Trust, and who will serve as the Trustees are set forth
below. The positions and the principal occupations of the individual Trustees
during the past five years are also set forth below.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TITLE DURING PAST FIVE YEARS
--------------------- ----- ----------------------
<S> <C> <C>
Donald J. Puglisi, 52.......................... Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham III, 53...................... Trustee Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 58........................... Trustee Professor of Economics
Center for Education & Entrepreneurship University of Delaware
University of Delaware
Newark, DE 19716
</TABLE>

Each Trustee who is not a director, officer or employee of any Underwriter
or the Administrator, or of any affiliate thereof, will be paid by the Seller,
on behalf of the Trust, in respect of its annual fee and anticipated
out-of-pocket expenses, a one-time, up-front fee of $10,800. The Trust's
Managing Trustee will also receive an additional up-front fee of $3,600 for
serving in that capacity. The Trustees will not receive, either directly or
indirectly, any other compensation, including any pension or retirement
benefits, from the Trust. None of the Trustees receives any compensation for
serving as a trustee or director of any other affiliated investment company.

ADMINISTRATOR

The day-to-day affairs of the Trust will be managed by The Chase Manhattan
Bank as Trust Administrator pursuant to an Administration Agreement. Under the
Administration Agreement, the Trustees have delegated most of their operational
duties to the Administrator, including without limitation, the duties to: (i)
receive invoices for expenses incurred by the Trust; (ii) with the approval of
the Trustees, engage legal and other professional advisors (other than the
independent public accountants for the Trust); (iii) instruct the Paying Agent
to pay distributions on Securities as described herein; (iv) prepare and mail,
file or publish all notices, proxies, reports, tax returns and other
communications and documents, and keep all books and records, for the Trust; (v)
at the direction of the Trustees, institute and prosecute legal and other
appropriate proceedings to enforce the rights and remedies of the Trust; and
(vi) make all necessary arrangements with respect to meetings of Trustees and
any meetings of Holders. The Administrator, however, will not select the
independent public accountants for the Trust or sell or otherwise dispose of the
Trust assets (except in connection with an acceleration of the Contract or the
settlement of the Contract and upon termination of the Trust), subject to the
Seller's right to repurchase U.S. Treasury securities transferred to the Trust
in connection with an extension of the Exchange Date.

25
<PAGE> 26

The Administration Agreement may be terminated by either the Trust or the
Administrator upon 60 days' prior written notice, except that no termination
shall become effective until a successor Administrator has been chosen and has
accepted the duties of the Administrator.

The address of the Administrator is 450 West 33rd Street, New York, New
York 10001.

CUSTODIAN

The Trust's custodian (the "Custodian") is The Chase Manahattan Bank
pursuant to a custodian agreement (the "Custodian Agreement"). In the event of
any termination of the Custodian Agreement by the Trust or the resignation of
the Custodian, the Trust must engage a new Custodian to carry out the duties of
the Custodian as set forth in the Custodian Agreement. Pursuant to the Custodian
Agreement, all net cash received by the Trust will be invested by the Custodian
in short-term U.S. Treasury securities maturing on or shortly before the next
quarterly distribution date. The Custodian will also act as collateral agent
under the Collateral Agreement and will hold a perfected security interest in
the Common Stock and U.S. Government obligations or other assets consistent with
the terms of the Contract.

PAYING AGENT

The transfer agent, registrar and paying agent (the "Paying Agent") for the
Securities is ChaseMellon Shareholder Services, L.L.C. pursuant to a paying
agent agreement (the "Paying Agent Agreement"). In the event of any termination
of the Paying Agent Agreement by the Trust or the resignation of the Paying
Agent, the Trust will use its best efforts to engage a new Paying Agent to carry
out the duties of the Paying Agent.

Except for their roles as Administrator, Custodian, Paying Agent, registrar
and transfer agent for the Trust, The Chase Manahattan Bank and ChaseMellon
Shareholder Services, L.L.C. have no other affiliation with, and are not engaged
in any other transactions with, the Trust.

INDEMNIFICATION

The Trust will indemnify each Trustee, the Paying Agent, the Administrator
and the Custodian with respect to any claim, liability, loss or expense
(including the costs and expenses of the defense against any claim or liability)
that it may incur in acting as Trustee, Paying Agent, Administrator or
Custodian, as the case may be, except in the case of willful misfeasance, bad
faith, gross negligence or reckless disregard of their respective duties or
where applicable law prohibits such indemnification. Goldman Sachs has agreed to
reimburse the Trust for any amounts it may be required to pay as indemnification
to any Trustee, the Administrator, the Custodian or the Paying Agent.

DISTRIBUTIONS

The Trust intends to distribute to Holders on a quarterly basis an amount
equal to $1.0575 per Security (which amount equals the pro rata portion of the
fixed quarterly cash distributions from the proceeds of the maturing U.S.
Treasury securities held by the Trust). The first distribution, reflecting the
Trust's operations from the date of this offering, will be made on August 15,
1998 to Holders of record as of August 1, 1998. Thereafter, distributions will
be made on February 15, May 15, August 15 and November 15, of each year to
Holders of record as of each February 1, May 1, August 1 and November 1,
respectively. A portion of each such distribution should be treated as a
tax-free return of the Holder's investment. See "Investment Objective and
Policies -- Tax Treatment of Distributions" and "Certain Federal Income Tax
Considerations -- Recognition of Original Issue Discount on the U.S. Treasury
Securities".

Upon termination of the Trust, as described under the caption "Investment
Objective and Policies -- Trust Termination", each Holder will receive any
remaining net assets of the Trust,

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<PAGE> 27

subject to the Seller's right to repurchase U.S. Treasury securities transferred
to the Trust in connection with an extension of the Exchange Date.

The Trust does not permit the reinvestment of distributions.

ESTIMATED EXPENSES

At the closing of this offering Goldman Sachs will pay to each of the
Administrator, the Custodian and the Paying Agent, and to each Trustee, a
one-time, up-front amount in respect of its fee and, in the case of the
Administrator, anticipated expenses of the Trust over the term of the Trust. The
anticipated Trust expenses to be borne by the Administrator include, among other
things, expenses for legal and independent accountants' services, costs of
printing proxies, Securities certificates and Holder reports, expenses of the
Trustees, fidelity bond coverage, stock exchange listing fees and expenses of
qualifying the Securities for sale in the various states. Organization costs of
the Trust in the amount of $10,000 and estimated costs of the Trust in
connection with the initial registration and public offering of the Securities
in the amount of $432,000 will be paid by Goldman Sachs.

The amount payable to the Administrator in respect of ongoing expenses of
the Trust was determined based on estimates made in good faith on the basis of
information currently available to the Trust, including estimates furnished by
the Trust's agents. There cannot, however, be any assurance that actual
operating expenses of the Trust will not be substantially more than this amount.
Any excess expenses will be paid by Goldman Sachs or, in the event of failure by
Goldman Sachs to pay such amounts, the Trust, which will reduce the amount
available to distribute to Holders.

27
<PAGE> 28

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion of the principal United States federal income tax
consequences of ownership of Securities represents the opinion of Sullivan &
Cromwell, counsel to the Trust. It deals only with Securities held as capital
assets by a Holder who acquires its Securities at the issue price from an
Underwriter pursuant to the original offering, and not with special classes of
Holders, such as dealers in securities or currencies, banks, life insurance
companies, persons who are not United States Holders (as defined below), persons
that hold Securities that are part of a hedging transaction, straddle or
conversion transaction, or persons whose functional currency is not the U.S.
dollar. The summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change or different interpretation at any time, perhaps with
retroactive effect. It should be noted that the Trust has not sought a ruling
from the Internal Revenue Service with respect to the federal income tax
consequences of ownership of Securities, and the opinion of counsel of Sullivan
& Cromwell is not binding on the Internal Revenue Service.

Prospective purchasers of Securities should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the Code
and the laws of any state, local or other taxing jurisdiction, of ownership of
Securities.

A United States Holder is a beneficial owner of Securities who or that is
(i) a citizen or resident of the United States, (ii) a domestic corporation or
(iii) otherwise subject to United States federal income taxation on a net income
basis in respect of Securities.

Holders should also be aware that there are alternative characterizations
of the assets of the Trust which could result in different federal income tax
consequences. See "-- Alternative Characterizations" below. While Sullivan &
Cromwell does not believe these alternative characterizations should apply for
federal income tax purposes, there can be no assurance in this regard, and
Holders should consult their tax advisors concerning the risks associated with
alternative characterizations. The following discussion assumes that no such
alternative characterizations will apply.

TAX STATUS OF THE TRUST. The Trust will be treated as a grantor trust for
federal income tax purposes, and each Holder will be considered the owner of its
pro rata portions of the stripped U.S. Treasury securities and the Contract in
the Trust under the grantor trust rules of the Code. Income received by the
Trust will be treated as income of the Holders in the manner set forth below.

RECOGNITION OF ORIGINAL ISSUE DISCOUNT ON THE U.S. TREASURY
SECURITIES. The U.S. Treasury securities in the Trust will consist of stripped
U.S. Treasury securities. A Holder will be required to treat its pro rata
portion of each U.S. Treasury security initially acquired by the Trust with the
proceeds from the sale of the Securities to Holders as a bond that was
originally issued on the date the Trust acquired the relevant U.S. Treasury
securities and will include original issue discount in income over the life of
the U.S. Treasury securities in an amount equal to the Holder's pro rata portion
of the excess of the amounts payable on such U.S. Treasury securities over the
price of the U.S. Treasury securities at the time the Trust acquires them. The
amount of such excess will constitute only a portion of the total amounts
payable in respect of U.S. Treasury securities held by the Trust, however.
Consequently, a substantial portion of each quarterly cash distribution to the
Holders will be treated as a tax-free return of the Holders' investment in the
U.S. Treasury securities and will not be considered current income for federal
income tax purposes. See "Investment Objective and Policies -- Tax Treatment of
Distributions".

A Holder (whether on the cash or accrual method of tax accounting) will be
required to include original issue discount (other than original issue discount
on short-term U.S. Treasury securities as defined below) in income for federal
income tax purposes as it accrues on a constant yield basis. The Trust expects
that more than 20% of the Holders will be accrual basis taxpayers, in which case
original issue discount on any short-term U.S. Treasury security (i.e., any U.S.
Treasury security

28
<PAGE> 29

with a maturity of one year or less from the date it is purchased) held by the
Trust also will be required to be included in income by the Holders as it is
accrued. Unless a Holder elects to accrue the original issue discount on a
short-term U.S. Treasury security according to a constant yield method based on
daily compounding, such original issue discount will be accrued on a
straight-line basis.

EXTENSION OF THE EXCHANGE DATE. Holders should not be required to include
any amounts in income upon the Trust's receipt of additional U.S. Treasury
securities as a result of the extension of the Exchange Date by the Seller and
should not be required to include any original issue discount in respect of such
U.S. Treasury securities.

Although there is no direct authority for the treatment of the cash
distribution paid on the Securities on the extended Exchange Date, it is likely
that such distribution should not be considered income to a Holder upon receipt,
but instead should be considered to reduce a Holder's basis with respect to such
Holder's pro rata portion of the Contract held by the Trust, by analogy to the
treatment of rebates or option premiums. If such treatment is respected, receipt
of the cash distribution on the extended Exchange Date will increase the amount
of gain (or decrease the amount of loss) recognized by a Holder on a subsequent
sale or other disposition of the Contract or the Common Stock (including a
disposition pursuant to cash settlement of the Contract). Because there can be
no assurance that the Internal Revenue Service will agree with this
characterization of the cash distribution paid on the extended Exchange Date,
Holders are urged to consult their tax advisors concerning the tax consequences
of receiving such payment.

TAX BASIS OF THE U.S. TREASURY SECURITIES AND THE CONTRACT. A Holder's
initial tax basis in the Contract and the U.S. Treasury securities,
respectively, will equal its pro rata portion of the amounts paid for them by
the Trust. It is currently anticipated that 16.32% and 83.68% of the net
proceeds of the offering will be used by the Trust to purchase the U.S. Treasury
securities and as payments for the Contract, respectively. A Holder's tax basis
in the U.S. Treasury securities will be increased by the amounts of original
issue discount included in income in respect of U.S. Treasury securities and
decreased by each amount of cash received in respect of U.S. Treasury
securities. A Holder's tax basis in the Contract will be reduced by the receipt
of any cash distributions paid by the Seller as a result of an extension of the
Exchange Date (See "-- Extension of the Exchange Date" above).

TREATMENT OF THE CONTRACT. Each Holder will be treated as having entered
into a pro rata portion of the Contract and, at the Exchange Date, as having
received a pro rata portion of the Common Stock or cash, Marketable Securities
or a combination thereof delivered to the Trust.

DISTRIBUTION OF THE COMMON STOCK. The delivery of Common Stock to the
Trust pursuant to the Contract and the Trust's distribution of Common Stock to
the Holders will not be taxable to the Holders. Each Holder's basis in its
Common Stock will be equal to its basis in its pro rata portion of the Contract
less the portion of such basis allocable to any fractional shares of Common
Stock for which cash is received. A Holder will recognize short-term capital
gain or loss upon receipt by the Trust of cash in lieu of fractional shares of
Common Stock equal to the difference between the Holder's allocable portion of
the amount of cash received and the Holder's basis in such fractional shares.
The holding period for the Common Stock will begin on the day after it is
acquired by the Trust.

DISTRIBUTION OF CASH. If the Trust receives cash upon settlement of the
Contract, a Holder will recognize capital gain or loss equal to the difference
between the Holder's allocable portion of the amount of cash received and the
Holder's basis of the Contract settled therefor. Any gain or loss will be
capital gain or loss which is taxable to Holders as described below under
"-- Sale of Securities".

SALE OF SECURITIES. A Holder who sells Securities will be treated as
having sold its pro rata portions of the U.S. Treasury securities and the
Contract underlying the Securities. The Holder will therefore recognize capital
gain or loss equal to the difference between the amount realized and the
Holder's aggregate tax bases in its pro rata portions of the U.S. Treasury
securities and the

29
<PAGE> 30

Contract. Any gain or loss will be long-term capital gain or loss if the Trust
has held the relevant property for more than one year. Long-term capital gain of
an individual Holder will be subject to a maximum tax rate of 28% in respect of
property held for more than one year. The maximum rate is reduced to 20% in
respect of property held in excess of 18 months.

ALTERNATIVE CHARACTERIZATIONS. Sullivan & Cromwell believes the Contract
should be treated for federal income tax purposes as prepaid forward contracts
for the purchase of a variable number of shares of Common Stock.

The Internal Revenue Service could conceivably seek to treat the Contract
differently. The Internal Revenue Service might, for example, seek to treat the
cash paid to the Seller pursuant to the Contract as loans to the Seller in
exchange for contingent debt obligations of the Seller. If the Internal Revenue
Service were to prevail in making such an assertion, a Holder might be required
to include original issue discount in income over the life of the Securities at
a market rate of interest for the Seller, taking account of all the relevant
facts and circumstances. In addition, a Holder would be required to include
interest (rather than capital gain) in income on the Exchange Date in an amount
equal to the excess, if any, of the value of the Common Stock received on the
Exchange Date (or the proceeds from cash settlement of the Contract) over the
aggregate of the basis of the Contract and any interest on the Contract
previously included in income (or might be entitled to an ordinary deduction to
the extent of interest previously included in income and not ultimately
received). The Internal Revenue Service could also conceivably take the view
that a Holder should include in income the amount of cash actually received each
year in respect of the Securities.

BACKUP WITHHOLDING AND INFORMATION REPORTING. The payments of principal
and original issue discount on the U.S. Treasury securities, and the proceeds
received from cash settlement of the Contract or the sale of Securities, may be
subject to U.S. backup withholding tax at the rate of 31% if the Holder thereof
fails to supply an accurate taxpayer identification number or otherwise to
comply with applicable U.S. information reporting or certification requirements.
Any amounts so withheld will be allowed as a credit against such Holder's U.S.
federal income tax liability and may entitle such Holder to a refund, provided
that the required information is furnished to the Internal Revenue Service.

After the end of each calendar year, the Trust will furnish to each record
Holder of Securities an annual statement containing information relating to the
payments on the U.S. Treasury securities received by the Trust. The Trust will
also furnish annual information returns to each record Holder of the Securities
and to the Internal Revenue Service.

30
<PAGE> 31

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Trust has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co. are acting as representatives,
has severally agreed to purchase from the Trust, the respective number of
Securities set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co. ....................................... 2,530,405
Donaldson, Lufkin & Jenrette Securities Corporation......... 158,000
A.G. Edwards & Sons, Inc. .................................. 158,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 158,000
Raymond James & Associates, Inc. ........................... 158,000
---------
Total.................................................. 3,162,405
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Securities offered
hereby, if any are taken.

The Underwriters propose to offer the Securities in part directly to the
public at the price to public set forth on the cover page of this Prospectus and
in part to certain securities dealers at such price less a concession of $1.27
per Security. The Underwriters may allow, and such dealers may re-allow, a
concession not in excess of $0.10 per Security to certain brokers and dealers.
After the Securities are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters. The
sales load of $2.12 per Security is equal to approximately 3% of the initial
public offering price. Investors must pay for any Securities purchased in the
initial public offering on or before May 27, 1998.

In connection with the offering, the Underwriters may purchase and sell the
Securities and the Common Stock in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases to cover
syndicate short positions created by the Underwriters in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the
Securities or the Common Stock; and syndicate short positions created by the
Underwriters involve the sale by the Underwriters of a greater number of
Securities than they are required to purchase from the Trust in the offering.
The Underwriters also may impose a penalty bid, whereby selling concessions
allowed to syndicate members or other broker-dealers in respect of the
Securities sold in the offering may be reclaimed by the syndicate if such
Securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Securities which may be higher than the price that might
otherwise prevail in the open market, and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on the New York
Stock Exchange, in the over-the-counter market or otherwise.

In light of the fact that proceeds from the sale of the Securities will be
used by the Trust to purchase the Contract from the Seller, the Underwriting
Agreement provides that the Seller will pay to the Underwriters the
Underwriters' Compensation of $2.12 per Security.

The Trust has granted the Underwriters an option exercisable for 30
calendar days after the date of this Prospectus to purchase up to an aggregate
of 474,360 additional Securities solely to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, they will receive the
Underwriters' Compensation referred to above for each Security so purchased.

The Seller, certain affiliated entities of the Seller and the Company have
agreed that, during the period beginning from the date of this Prospectus and
continuing to and including the date 90 days

31
<PAGE> 32

after the date of this Prospectus, they will not offer, sell, contract to sell
or otherwise dispose of any Common Stock or other securities of the Company
(other than pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus) which are substantially similar to the Common Stock
or which are convertible or exchangeable into Common Stock or other securities
which are substantially similar to the Common Stock, without the prior written
consent of Goldman Sachs, except for private sales by the Company so long as the
purchaser thereof enters into a corresponding agreement for the then-remaining
portion of the 90-day period.

The Securities will be a new issue of securities with no established
trading market. The Securities have been authorized for listing on the New York
Stock Exchange. The Underwriters have advised the Trust that they intend to make
a market in the Securities, but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Securities.

The Underwriters have informed the Trust that they do not expect sales to
accounts over which they exercise discretionary authority to exceed 5% of the
total number of Securities offered by them.

The Company and the Seller have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933. The Underwriters have agreed to pay certain expenses of the Trust and to
make a payment to the Seller in lieu of reimbursement for certain expenses
incurred in connection with the Offering.

One Security has been subscribed for by Goldman Sachs at an aggregate
purchase price of $100.00. No Securities will be sold to the public until the
Securities subscribed for have been purchased and the purchase price thereof
paid in full to the Trust.

VALIDITY OF SECURITIES

The validity of the Securities will be passed upon for the Trust and the
Underwriters by their counsel, Sullivan & Cromwell, New York, New York.

EXPERTS

The financial statement included in this Prospectus has been audited by
Coopers & Lybrand L.L.P., independent accountants, as stated in their opinion
appearing herein, and has been so included in reliance upon such opinion given
upon the authority of that firm as experts in accounting and auditing.

FURTHER INFORMATION

The Trust has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement under the Securities Act of
1933, as amended, with respect to the Securities offered hereby. Further
information concerning the Securities and the Trust may be found in the
Registration Statement of which this Prospectus constitutes a part. The
Registration Statement may be inspected without charge at the Commission's
office in Washington, D.C., and copies of all or any part thereof may be
obtained from such office after payment of the fees prescribed by the
Commission. Such Registration Statement is also available on the Commission's
website (http://www.sec.gov).

32
<PAGE> 33

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees and Securityholders of
CVS Automatic Common Exchange Security Trust:

We have audited the accompanying statement of assets and liabilities of CVS
Automatic Common Exchange Security Trust as of May 19, 1998. This financial
statement is the responsibility of the Trust's management. Our responsibility is
to express an opinion on this financial statement based on our audit.

We conducted our audit 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 assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trust's management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of CVS Automatic Common
Exchange Security Trust as of May 19, 1998 in conformity with generally accepted
accounting principles.

Coopers & Lybrand L.L.P.

New York, New York
May 19, 1998

33
<PAGE> 34

CVS AUTOMATIC COMMON EXCHANGE SECURITY TRUST

STATEMENT OF ASSETS AND LIABILITIES
MAY 19, 1998

<TABLE>
<S> <C>
ASSETS
Cash........................................................ $100
----
Total assets................................................ $100
====
LIABILITIES
............................................................ $ 0
----
NET ASSETS
Balance applicable to 1 Security outstanding................ $100
----
Net asset value per Security................................ $100
====
</TABLE>

- ---------------
Notes to Financial Statement

(1) CVS Automatic Common Exchange Security Trust (the "Trust") was established
on December 5, 1997 and has had no operations to date other than matters
relating to its organization and registration as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940. Costs incurred in connection with the organization of the Trust will
be paid by the Underwriters.

(2) The Trust proposes to sell Trust Automatic Common Exchange Securities (the
"Securities") to the public pursuant to a Registration Statement on Form N-2
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended.

The Trust is a newly organized, finite-term trust established to purchase
and hold a portfolio of stripped U.S. Treasury securities and a forward
purchase contract with an existing stockholder of CVS Corporation relating
to the Common Stock, par value $.01 per share, of CVS Corporation. The Trust
will be internally managed and will not have an investment adviser. The
administration of the Trust, which will be overseen by the trustees, will be
carried out by The Chase Manhattan Bank as trust administrator. The Chase
Manhattan Bank will also serve as custodian for the Trust, and ChaseMellon
Shareholder Services, L.L.C. will act as paying agent, registrar and
transfer agent with respect to the Securities. Ongoing fees and anticipated
expenses for the term of the Trust will be paid for by Goldman Sachs.

(3) The Trust issued one Security on May 19, 1998 to Goldman Sachs in
consideration for the aggregate purchase price of $100.

The Amended and Restated Trust Agreement provides that prior to the
offering, the Trust will split the outstanding Security to be effected on
the date that the price and underwriting discount of the Securities being
offered to the public is determined, but prior to the sale of the Securities
to Goldman Sachs. The initial Security will be split into the smallest whole
number of Securities that would result in the per Security amount recorded
as shareholders' equity after effecting the split not exceeding the Public
Offering price per Security.

34
<PAGE> 35

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OF SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Prospectus Summary............... 3
The Trust........................ 9
Use of Proceeds.................. 9
Investment Objective and
Policies....................... 9
Risk Factors..................... 21
Description of the Securities.... 22
Management and Administration of
the Trust...................... 25
Certain Federal Income Tax
Considerations................. 28
Underwriting..................... 31
Validity of Securities........... 32
Experts.......................... 32
Further Information.............. 32
Report of Independent
Accountants.................... 33
Statement of Assets and
Liabilities.................... 34
CVS Common Stock
Prospectus..................... Appendix A
</TABLE>

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

UNTIL JUNE 15, 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

=======================================================
=======================================================
3,162,405 SHARES

CVS AUTOMATIC
COMMON EXCHANGE
SECURITY TRUST
$4.23 TRUST AUTOMATIC COMMON
EXCHANGE SECURITIES

(TRACES(TM)/SM)
------------------

PROSPECTUS
------------------
GOLDMAN, SACHS & CO.
=======================================================