As filed with the Securities and Exchange Commission on March 4, 1998
Registration No. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
---------------------
A. EXACT NAME OF TRUST:
Equity Securities Trust, Signature Series, AEW REIT Trust
B. NAME OF DEPOSITOR:
Reich & Tang Distributors, Inc.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Reich & Tang Distributors, Inc. Battle Fowler LLP
600 Fifth Avenue 75 East 55th Street
New York, New York 10020 New York, New York 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Equity Securities Trust, Signature
Series, AEW REIT Trust is being registered under the Securities Act of
1933 pursuant to Section 24(f) of the Investment Company Act of 1940,
as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE
SECURITIES BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No Filing Fee Required
H. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the
Registration Statement.
|_| Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
The registrant hereby amends the registration statement on such date or dates as
may be necessary to dela its effective dat until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
690733.1
<PAGE>
SUBJECT TO COMPLETION DATED MARCH 4, 1998
- --------------------------------------------------------------------------------
INSERT LOGO
- --------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SIGNATURE SERIES, AEW REIT TRUST
The Trust is a unit investment trust designated Equity Securities Trust,
Signature Series, AEW REIT Trust (the "Trust"). The Sponsor is Reich & Tang
Distributors, Inc. The objective of the Trust is to seek to achieve capital
appreciation. Current income will be secondary to the objective of capital
growth. The Sponsor can not give any assurance that the Trust's objective can be
achieved. The Trust contains an underlying portfolio consisting of common stock
issued by domestic real estate investment trusts ("REITS"), and contracts and
funds for the purchase of such securities (collectively, the "Securities"),
which have been purchased by the Trust based upon the recommendations of the
portfolio consultant, AEW Capital Management, L.P. ("AEW" or "Portfolio
Consultant"). The value of the Units of the Trust will fluctuate with
fluctuations in the value of the underlying Securities in the Trust. Therefore,
Unitholders who sell their Units prior to termination of the Trust may receive
more or less than their original purchase price upon sale. No assurance can be
given that dividends will be paid or that the Units will appreciate in value.
The Trust will terminate approximately two years after the Initial Date of
Deposit. Minimum Purchase: 100 Units.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive material relating to the Trust and the
Statement of Financial Condition of the Trust. Part B contains general
information about the Trust. Part A may not be distributed unless accompanied by
Part B. Please read and retain both parts of this Prospectus for future
reference.
The Securities and Exchange Commission ("SEC") maintains a website that contains
reports, proxy and information statements and other information regarding the
Trust which is filed electronically with the SEC. The SEC's Internet address is
http:www.sec.gov. Offering materials for the sale of these Units available
through the Internet are not being offered directly or indirectly to residents
of a particular state nor is an offer of these Units through the Internet
specifically directed to any person in a state by, or on behalf of, the issuer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED ___________ __, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
A-1
625311.2
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION AS OF ____________ __, 1998:*
<TABLE>
<S> <C>
DATE OF DEPOSIT: _________ __, 1998 MANDATORY TERMINATION DATE: The earlier of
AGGREGATE VALUE OF , 2000 or the disposition of the last Security in the
SECURITIES.................................. $ Trust.
AGGREGATE VALUE OF SECURITIES CUSIP NUMBERS: Cash:
PER 100 UNITS............................... $ Reinvestment:
NUMBER OF UNITS................................ TRUSTEE: The Chase Manhattan Bank
FRACTIONAL UNDIVIDED INTEREST IN TRUSTEE'S FEE: $. per 100 Units outstanding
TRUST....................................... 1/ ESTIMATED ORGANIZATIONAL EXPENSES**:
PUBLIC OFFERING PRICE $. per 100 Units
Aggregate Value of Securities in ESTIMATED OFFERING COSTS**: $. per 100 Units
Trust.................................... $ OTHER FEES AND EXPENSES: $. per 100 Units
Divided By Units (times 100)......... $ outstanding
Public Offering Price per 100 Units+........ $1,000.00 SPONSOR: Reich & Tang Distributors, Inc.
SPONSOR'S REPURCHASE PRICE AND SPONSOR'S SUPERVISORY FEE: Maximum of $.25
REDEMPTION PRICE PER per 100 Units outstanding (see "Trust Expenses and
100 UNITS++................................. $ Charges" in Part B).
EVALUATION TIME: 4:00 p.m. New York Time. PORTFOLIO CONSULTANT: AEW Capital
MINIMUM INCOME OR PRINCIPAL Management, L.P.
DISTRIBUTION: $1.00 per 100 Units EXPECTED SETTLEMENT DATE***: , 1998
LIQUIDATION PERIOD: Beginning days prior to the RECORD DATE: December 15 and June 15
Mandatory Termination Date. DISTRIBUTION DATE: December 31 and June 30
MINIMUM VALUE OF TRUST: The Trust may be ROLLOVER NOTIFICATION DATE****: ,
terminated if the value of the Trust is less than 40% of [2000] or another date as determined by the Sponsor.
the aggregate value of the Securities at the completion
of the Deposit Period.
</TABLE>
- ------------------
* The business day prior to the Initial Date of Deposit. The Initial Date
of Deposit is the date on which the Trust Agreement was signed and the deposit
of Securities with the Trustee made.
** The Trust (and therefore the Unitholders) will bear all or a portion of
its organizational costs, which costs include: the cost of preparing and
printing the registration statement, the trust indenture and the closing
documents; registering units with the SEC and the states; and the initial audit
of the Trust. Total organizational expenses will be amortized over the life of
the Trust. See "Trust Expenses" in Part B. These figures are based upon the
assumption that the Trust will reach a size of Units as estimated by the
Sponsor; organizational expenses per 100 Units will vary with the actual size of
the Trust. If the Trust does not reach this Unit level, the Estimated
Organizational Expenses and Offering Costs per 100 Units will be higher.
*** The business day on which contracts to purchase securities in the
Trust are expected to settle.
**** If a Unitholder ("Rollover Unitholder") so specifies on or prior to
the Rollover Notification Date, the Rollover Unitholder's terminating
distribution will be reinvested as received in an available series of the Equity
Securities Trust, if offered (see "Trust Administration - Trust Termination").
+ Subsequent to the initial offering period (which is expected to be only
the date of this prospectus) the maximum sales charge will be 3.9%, subject to
reduction on a graduated scale in the case of quantity purchases. Additionally,
commencing _________, 1999 the maximum sales charge will be 2.9%. See "Public
Offering--Volume and Other Discounts" in Part B. On the Initial Date of Deposit
there will be no cash in the Income or Principal Accounts. Anyone purchasing
Units after such date will have included in the Public Offering Price a pro rata
share of any cash in such Accounts.
++ Any redemptions of over 2,500 Units may, upon request by a redeeming
Unitholder, be made in kind. The Trustee will forward the distributed securities
to the Unitholder's bank or broker-dealer account at The Depository Trust
Company in book-entry form. See "Liquidity--Trustee Redemption" in Part B.
A-2
625311.2
<PAGE>
DESCRIPTION OF PORTFOLIO:
<TABLE>
<S> <C>
Number of Issues: __ (__ issuers) Issues by Property Type:
Equity REITs: __ (100% of the initial aggregate value of Diversified Properties.......................... %
securities)
Factory Outlet Centers.......................... %
(NYSE ____%; AMEX ___%)
Manufactured Homes.............................. %
Multi-Family Housing............................ %
Office/Industrial.............................. %
Regional Malls................................ %
Shopping Centers............................ %
100.00%
</TABLE>
OBJECTIVE. The objective of the Trust is to seek to achieve capital
appreciation. Current income will be secondary to the objective of capital
growth. The Trust seeks to achieve its objective by investing in a fixed,
diversified portfolio of REITs. The Trust's Securities will be issued by a
geographically diverse number of issuers and, in the opinion of the Portfolio
Consultant, will offer an opportunity for the Trust to achieve its objectives
during the life of the Trust. The Sponsor cannot give assurance that the Trust's
objectives can be achieved. A REIT is a creation of the federal income tax law
and, therefore, its structure and operation must conform to certain requirements
of the Internal Revenue Code. In general, a REIT must hold at least 75% of its
total assets in real estate assets and distribute at least 95% of its taxable
income (without regard to any net capital gains) on an annual basis. There are
two principal types of REITs: those which hold 75% of their invested assets in
the ownership of real estate and benefit from the underlying net rental income
generated from the properties ("Equity REITs") and those which hold 75% of their
invested assets in mortgages which are secured by real estate assets and benefit
predominantly from the difference between the interest income on the mortgage
loans and the interest expense on the capital used to finance the loans
("Mortgage REITs"). A third type combines the investment strategies of the
Equity REITs and the Mortgage REITs ("Hybrid REITs"). There are certain risks
inherent in an investment in a portfolio of REITs. See "Risk Considerations" in
this Part A and in Part B. The Trust will terminate three years after the
initial Date of Deposit (see "The Trust--The Securities" in Part B). As used
herein, the term "Securities" means the common stocks initially deposited in the
Trust and described in "Portfolio" in Part A and any additional common stocks
acquired and held by the Trust pursuant to the provisions of the Indenture.
Further, the Securities may appreciate or depreciate in value, dependent upon
the full range of economic and market influences affecting corporate
profitability, the financial condition of issuers and the price of equity
securities in general and the Securities in particular. Therefore, there is no
guarantee that the objective of the Trust will be achieved.
PORTFOLIO ACQUISITION. On the Initial Date of Deposit all of the Securities
deposited in the Trust were effected by the Sponsor in open market purchases on
the American and New York Stock Exchanges. Subsequent to the Initial Date of
Deposit, it is expected that all of the Securities in the Trust will be
purchased by the Sponsor in transactions directly from the issuers or the
underwriter to the issuers of the Securities. These transactions will be
effected to the Sponsor at prices below the current market value of the
Securities due to various factors, including size of the purchase, expectation
of holding period and cost of issuance. All of the Securities will be deposited
in the Trust based upon their market value as of the Dates of Deposit. As
A-3
625311.2
<PAGE>
a result of the Sponsor's ability to purchase these Securities below market
value, the Sponsor will offer Units of the Trust with no sales charge during the
initial offering period By virtue of buying stock at below market prices, the
Sponsor will realize a profit on the deposit of the Securities to the Trust in
an amount of up to % of the market value of these Securities. Notwithstanding
the preceding, the Sponsor may create additional Units by depositing Securities
acquired on the applicable national stock exchanges.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 Units of the Trust is
equal to the aggregate value of the underlying Securities (the price at which
they could be directly purchased by the public assuming they were available) in
the Trust divided by the number of Units outstanding times 100, with no sales
charge added during the initial offering period (which is expected to be only
the date of this prospectus). Thereafter, Units are offered at the Public
Offering Price, plus the net amount per Unit in the Income Account, plus a sales
charge of 3.9% of the Public Offering Price per 100 Units or 4.058% of the net
amount invested in Securities per 100 Units. The price of a single Unit, or any
multiple thereof, is calculated by dividing the Public Offering Price per 100
Units by 100 and multiplying by the number of Units. Any cash held by the Trust
will be added to the Public Offering Price. For additional information regarding
the Public Offering Price, repurchase and redemption of Units and other
essential information regarding the Trust, see the "Summary of Essential
Information." During the initial offering period orders involving at least
10,000 Units will be entitled to a volume discount from the Public Offering
Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and the price to be paid by each investor will be computed as of the date the
Units are purchased.
(See "Public Offering" in Part B.)
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
Unitholders (based on the most recent quarterly or semi-annual ordinary dividend
distributed with respect to the Securities) as of the business day prior to the
Initial Date of Deposit per 100 Units was $ . This estimate will vary with
changes in the Trust's fees and expenses, actual dividends received, and with
the sale of Securities. In addition, because the issuers of common stock are not
obligated to pay dividends, there is no assurance that the estimated net annual
dividend distributions will be realized in the future.
DISTRIBUTIONS. Dividend distributions, if any, will be made on the Distribution
Dates to all Unitholders of record on the Record Date. For the specific dates
representing the Distribution Dates and Record Dates, see "Summary of Essential
Information" in Part A. The final distribution will be made within a reasonable
period of time after the termination of the Trust. (See "Rights of
Unitholders--Distributions" in Part B.) Unitholders may elect to automatically
reinvest distributions (other than the final distribution in connection with the
termination of the Trust), into additional Units of the Trust, which are subject
to a reduced sales charge. See "Reinvestment Plan" in Part B.
MARKET FOR UNITS. The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units and to continuously offer to
repurchase the Units of the Trust both during and after the initial public
offering. The secondary market repurchase price will be based on the market
value of the Securities in the Trust portfolio and will be the same as the
redemption price. (See "Liquidity--Sponsor Repurchase" for a description of how
the secondary market repurchase price will be determined.) If a market is not
maintained a Unitholder will be able to redeem his Units with the Trustee (see
"Liquidity-Trustee Redemption" in Part B). As a result, the existence of a
liquid trading market for these Securities may depend on whether dealers will
make a market in these Securities. There can be no assurance of the making or
the maintenance of a market for any of the Securities contained in the portfolio
of the Trust or of the liquidity of the Securities in any markets made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Securities to the Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Units will be adversely affected
if trading markets for the Securities are limited or absent.
TERMINATION. During the -day period prior to the Mandatory Termination Date (the
"Liquidation Period"), Securities will begin to be sold in connection with the
termination of the Trust and all Securities will be sold or distributed by the
A-4
625311.2
<PAGE>
Mandatory Termination Date. The Trustee may utilize the services of the Sponsor
for the sale of all or a portion of the Securities in the Trust. Any brokerage
commissions received by the Sponsor from the Trust in connection with such sales
will be in accordance with applicable law. The Sponsor will determine the
manner, timing and execution of the sales of the underlying Securities. The
Sponsor will attempt to sell the Securities as quickly as it can during the
Liquidation Period without, in its judgment, materially adversely affecting the
market price of the Securities, but all of the Securities will in any event be
disposed of by the end of the Liquidation Period. The Sponsor does not
anticipate that the period will be longer than 30 days, and it could be as short
as one day, depending on the liquidity of the Securities being sold.
Unitholders may elect one of the three options in receiving their terminating
distributions: (1) to receive their pro rata share of the underlying Securities
in-kind, if they own at least 2,500 units, (2) to receive cash upon the
liquidation of their pro rata share of the underlying Securities or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of
Equity Securities Trust (if one is offered) at a reduced sales charge (see
"Rollover Option"). See "Trust Administration--Trust Termination" in Part B for
a description of how to select a termination distribution option. Unitholders
who have not chosen to receive distributions-in-kind will be at risk to the
extent that Securities are not sold; for this reason the Sponsor will be
inclined to sell the Securities in as short a period as it can without
materially adversely affecting the price of the Securities. Unitholders should
consult their own tax advisers in this regard.
ROLLOVER OPTION. Unitholders may elect to roll their terminating distributions
into the next available series of Equity Securities Trust at a reduced sales
charge. Rollover Unitholders must make this election on or prior to the Rollover
Notification Date. Upon making this election, a Unitholder's Units will be
redeemed when the last of the underlying Securities are sold and the proceeds
will be reinvested in units of the next available series of Equity Security
Trust. See "Trust Administration--Trust Termination" in Part B for details to
make this election.
RISK CONSIDERATIONS. An investment in Units of the Trust should be made with an
understanding of the risks inherent in an investment in any of the Securities
including for common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may contribute directly to a decrease
in the value of the Securities and thus in the value of the Units). The
portfolio of the Trust is fixed and not "managed" by the Sponsor. Since the
Trust will not sell Securities in response to ordinary market fluctuation, but
only (except for certain extraordinary circumstances) at the Trust's termination
or to meet redemptions, the amount realized upon the sale of the Securities may
not be the highest price attained by an individual Security during the life of
the Trust. In connection with the deposit of Additional Securities subsequent to
the Initial Date of Deposit, if cash (or a letter of credit in lieu of cash) is
deposited with instructions to purchase Securities, to the extent the price of a
Security increases or decreases between the deposit and the time the Security is
purchased, Units may represent less or more of that Security and more or less of
the other Securities in the Trust. In addition, brokerage fees incurred in
purchasing Securities with cash deposited with instructions to purchase the
Securities will be an expense of the Trust. Price fluctuations during the period
from the time of deposit to the time the Securities are purchased, and payment
of brokerage fees, will affect the value of every Unitholder's Units and the
income per Unit received by the Trust.
In addition, since the Trust will consist entirely of shares issued by REITs, a
domestic corporation or business trust which invests primarily in income
producing real estate or real estate related loans or mortgages, an investment
in the Trust will be subject to risks similar to those associated with the
direct ownership of real estate (in addition to securities markets risks)
because of its policy of concentration in the securities of companies in the
real estate industry. These include declines in the value of real estate,
illiquidity of real property investments, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from
A-5
625311.2
<PAGE>
environmental problems, casualty or condemnation losses, economic or regulatory
impediments to raising rents, changes in neighborhood values and the appeal of
properties to tenants and changes in interest rates. In addition to these risks,
Equity REITs may be more likely to be affected by changes in the value of the
underlying property owned by the trusts, while Mortgage REITs may be more likely
to be affected by the quality of any credit extended. Further, Equity and
Mortgage REITs are dependent upon the management skills of the issuers and
generally may not be diversified. Equity and Mortgage REITs are also subject to
heavy cash flow dependency, defaults by borrowers and self-liquidation. In
addition, Equity and Mortgage REITs could possibly fail to qualify for tax free
pass-through of income under the Internal Revenue Code of 1986, as amended (the
"Code"), or to maintain their exemptions from registration under the Investment
Company Act of 1940 (the "1940 Act"). The above factors may also adversely
affect a borrower's or a lessee's ability to meet its obligations to the REIT.
In the event of a default by a borrower or lessee, the REIT may experience
delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting its investments.
The mandatory termination date of the Trust is approximately two years from the
initial Date of Deposit. It is the present intention of the Sponsor to select
Securities for the Trust that will achieve a high current income and growth of
capital during the life of the Trust. The Sponsor cannot give any assurance that
the business and investment objectives of the issuers of the Securities will
correspond with or in any way meet the limited term objective of the Trust. (See
"Risk Considerations" in Part B of this Prospectus.)
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust at a sales charge
of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll in the
Reinvestment Plan.
UNDERWRITING. ____________________________ will act as Underwriter for all of
the Units of Equity Securities Trust, Signature Series, AEW REIT Trust. The
Underwriter will distribute Units through various broker-dealers, banks and/or
other eligible participants (see "Public Offering--Distribution of Units" in
Part B).
A-6
625311.2
<PAGE>
FEE TABLE
- --------------------------------------------------------------------------------
This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See Public Sale of Units and Expenses and
Charges. Although the Trust is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees.
- --------------------------------------------------------------------------------
<TABLE>
Unitholder Transaction Expenses
<S> <C>
Sales Charge Imposed on Purchase During the Initial Offering Period.................................... 0%*
========
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's Fee.......................................................................................... %
Maximum Portfolio Supervision, Bookkeeping and Administrative Fees..................................... %
Organizational Expenses................................................................................ %
Other Operating Expenses............................................................................... %
---------
Total............................................................................................. %
=========
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses
Paid for Period:
-----------------------------
1 2 3
year years years
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming the Trust's $ $ $
estimated operating expense ratio of ___% in the first year and ____% in succeeding
years and a 5% annual return on the investment throughout the periods......................
</TABLE>
The Example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Example should not be
considered a representation of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than those
assumed for purposes of the Example.
The Trust (and therefore the Holders) will bear all or a portion of its
organizational costs - including costs of preparing the registration statement,
the indenture and other closing documents, registering units with the SEC and
the states and the initial audit of the Portfolio - as is common for mutual
funds. Historically, the sponsors of unit investment trusts have paid all the
costs of establishing those trusts. Advertising and selling expenses will be
paid by the Sponsor at no cost to the Trust.
- -------------
* Subsequent to the initial offering period purchases will be subject to a
sales charge (see Public Sale of Units--Public Offering Price).
A-7
625311.2
<PAGE>
EQUITY SECURITIES TRUST
SIGNATURE SERIES, AEW REIT TRUST
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, _________ __, 1998
ASSETS
<TABLE>
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $ ) (Note 1)......................... $
Organizational Costs (Note 2)...........................................................................
Offering Costs (Note 3).................................................................................
-----------------
Total................................................................................................... $
==================
</TABLE>
LIABILITIES AND INTEREST OF UNITHOLDERS
<TABLE>
<S> <C>
Accrued Liabilities (Notes 2 and 3)..................................................................... $
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (AEW REIT Trust: ______ Units)....................................
--------------------
Total................................................................................................... $
====================
Net Asset Value per Unit................................................................................ $
====================
</TABLE>
- -------------------------
Notes to Statement:
(1) Equity Securities Trust, Signature Series, AEW REIT Trust (the
"Trust") is a unit investment trust created under the laws of the State of New
York and registered under the Investment Company Act of 1940. The objective of
the Trust, sponsored by Reich & Tang Distributors, Inc. (the "Sponsor") is to
maximize total return through capital appreciation and current dividend income.
On _______ __, 1998, the "Date of Deposit", Portfolio Deposits were received by
The Chase Manhattan Bank, the Trust's Trustee, in the form of executed
securities transactions, in exchange for units of the Trust. An irrevocable
letter of credit issued by _____________ in an amount of $ has been deposited
with the Trustee for the benefit of the Trust to cover the purchases of such
Securities as well as any outstanding purchases of previously-sponsored unit
investment trusts of the Sponsor. Aggregate cost to the Trust of the Securities
listed in the Portfolio is determined by the Trustee on the basis set forth
under "Public Offering--Offering Price" as of 4:00 p.m. on _______ __, 1998. The
Trust will terminate on ______ __, 2000 or earlier under certain circumstances
as further described in the Prospectus.
(2) Organizational costs incurred by the Trust have been deferred and will
be amortized on a straight line basis over the life of the Trust. The Trust will
reimburse the Sponsor for actual organizational costs incurred.
(3) Offering costs incurred by the Trust will be amortized over the term
of the initial offering period.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
A-8
625311.2
<PAGE>
EQUITY SECURITIES TRUST
SIGNATURE SERIES, AEW REIT TRUST
PORTFOLIO
AS OF OPENING OF BUSINESS, ____________ __, 1998
<TABLE>
<CAPTION>
Market Value Market
of Stocks as a Value Cost of
Portfolio Number of Ticker Percentage Per Securities to
No. Shares Name of Issuer (1) Symbol of the Trust(2) Share the Trust(3)
----- -------- ------------------- ------ --------------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
------- -----------
Total Investment in Securities 100.00%
======= ===========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on __________ __,
1998. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be __________ __, 1998.
(2) Based on the cost of the Securities to the Trust.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsor's Purchase Price is $ . The Sponsor's Loss on the
Initial Date of Deposit is $ .
The accompanying notes form an integral part of the Financial Statements.
A-9
625311.2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders,
Equity Securities Trust, Signature Series,
AEW REIT Trust
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, presents fairly, in all material respects, the
financial position of Equity Securities Trust, Signature Series, AEW REIT Trust
(the "Trust") at opening of business, ____________ __, 1998, in conformity with
generally accepted accounting principles. This financial statement is the
responsibility of the Trust's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit, which
included confirmation of the contracts for the securities at opening of
business, ___________ __, 1998, by correspondence with the Sponsor, provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
_________ __, 1998
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EQUITY SECURITIES TRUST
SIGNATURE SERIES, AEW REIT TRUST
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Signature Series, AEW REIT Trust
consists of a "unit investment trust" designated as set forth in Part A. The
Trust was created under the laws of the State of New York pursuant to a Trust
Indenture and Agreement (the "Trust Agreement"), dated the Initial Date of
Deposit, between Reich & Tang Distributors, Inc., as Sponsor, and The Chase
Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
common stock issued by domestic real estate investment trusts ("REITs"),
including funds and delivery statements relating to contracts for the purchase
of certain such securities (collectively, the "Securities") with an aggregate
value as set forth in Part A and cash or an irrevocable letter of credit issued
by a major commercial bank in the amount required for such purchases. Thereafter
the Trustee, in exchange for the Securities so deposited, delivered to the
Sponsor the Certificates evidencing the ownership of all Units of the Trust. The
Sponsor has a limited right to substitute other securities in the Trust
portfolio in the event of a failed contract. See "The Trust-Substitution of
Securities." The Sponsor may also, in certain circumstances, direct the Trustee
to dispose of certain Securities if the Sponsor believes that, because of market
or credit conditions, or for certain other reasons, retention of the Security
would be detrimental to Unitholders. See "Trust Administration
Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities of the Trust in the ratio of one
hundred Units for the indicated amount of the aggregate market value of the
Securities initially deposited in the Trust as is set forth in the "Summary of
Essential Information." As additional Units are issued by the Trust as a result
of the deposit of Additional Securities, as described below, the aggregate value
of the Securities in the Trust will be increased and the fractional undivided
interest in the Trust represented by each Unit will be decreased. To the extent
that any Units are redeemed by the Trustee, the fractional undivided interest or
pro rata share in such Trust represented by each unredeemed Unit will increase,
although the actual interest in such Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsor established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"), the Sponsor may deposit additional
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Securities in the Trust that are substantially similar to the Securities already
deposited in the Trust ("Additional Securities"), contracts to purchase
Additional Securities or cash with instructions to purchase Additional
Securities, in order to create additional Units, maintaining to the extent
practicable the original proportionate relationship of the number of shares of
each Security in the Trust portfolio on the Initial Date of Deposit. These
additional Units, which will result in an increase in the number of Units
outstanding, will each represent, to the extent practicable, an undivided
interest in the same number and type of securities of identical issuers as are
represented by Units issued on the Initial Date of Deposit. It may not be
possible to maintain the exact original proportionate relationship among the
Securities deposited on the Initial Date of Deposit because of, among other
reasons, purchase requirements, changes in prices, or unavailability of
Securities. The composition of the Trust portfolio may change slightly based on
certain adjustments made to reflect the disposition of Securities and/or the
receipt of a stock dividend, a stock split or other distribution with respect to
such Securities, including Securities received in exchange for shares or the
reinvestment of the proceeds distributed to Unitholders. Deposits of Additional
Securities in the Trust subsequent to the Deposit Period must replicate exactly
the existing proportionate relationship among the number of shares of Securities
in the Trust portfolio. Substitute Securities may be acquired under specified
conditions when Securities originally deposited in the Trust are unavailable
(see "The Trust--Substitution of Securities" below).
OBJECTIVE. The objective of the Trust is to seek to achieve capital
appreciation. Current income will be secondary to the objective of capital
growth. The Trust seeks to achieve its objective by investing in a portfolio of
common stocks issued by domestic REITs, and contracts to purchase such
Securities. All of the Securities in the Trust, except for Restricted Securities
held by the Trust, if any, are listed on the New York Stock Exchange, the
American Stock Exchange or the National Association of Securities Dealers
Automated Quotations ("NASDQ") National market System and are generally followed
by independent investment research firms. There is no minimum capitalization or
market trading activity requirement for the selection of Securities for the
Trust's portfolio. There can be no assurance that the Trust's investment
objectives can be achieved.
The Trust will terminate in approximately two years, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if available) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the yields on these Securities may change subsequent to the Initial Date of
Deposit. Further, the Securities may appreciate or depreciate in value,
dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the prices of
equity securities in general and the Securities in particular. Therefore, there
is no guarantee that the objective of the Trust will be achieved.
THE SECURITIES. In selecting Securities for the Trust, the Sponsor
normally will consider, as appropriate under the circumstances, the following
factors, among others: (1) the Sponsor's own evaluations of the market value of
the underlying assets and business of the issuers of the Securities; (2) the
dividend income generated by the Securities; (3) the potential for capital
appreciation for the Securities; (4) the prices of the Securities relative to
other comparable securities; (5) whether the Securities are entitled to the
benefits of protective conditions; (6) the cash flow quality and growth
potential of the Securities; (7) the management quality of the issuers of the
Securities; and (8) the diversification of the Trust's portfolio as to issuers,
product type and geographic focus.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from corporate
income taxes provided the REIT satisfies the requirements of Sections 856
through 860 of the Internal Revenue Code. The major tests for tax-qualified
status are that the REIT (i) be managed by one or more trustees or directors,
(ii) issue shares of transferable interest to its owners, (iii) have at least
100 shareholders, (iv) have no more than 50% of the shares held by five or fewer
individuals, (v) invest substantially all of its capital in real estate related
assets and derive
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substantially all of its gross income from real estate related assets and (vi)
distribute at least 95% of its taxable income to its shareholders each year.
The Securities deposited in the Trust on the initial date of deposit
consist entirely of interests in REITs. There are two principal types of REITs:
Equity REITs which typically hold 75% of their invested assets in the ownership
of real estate and benefit from the underlying net rental income generated from
the properties, and Mortgage REITs, which typically hold 75% of their invested
assets in mortgages which are secured by real estate assets and benefit
predominantly from the difference between the interest income on the mortgage
loans and the interest expense on the capital used to finance the loans. A third
type, Hybrid REITs, combines the investment strategies of the Equity REITs and
the Mortgage REITs.
In addition to being classified according to investment type, REITs may be
categorized further in terms of their specialization by property type (e.g.,
retail, multifamily, healthcare, office, etc.,) or geographic focus (nationwide,
regional or metropolitan area). Additional stratification is then possible
within certain product types (e.g., factory outlets, community centers, and
regional malls are all categories within the retail sector).
The Trustee has not participated and will not participate in the selection
of Securities for the Trust, and neither the Sponsor, AEW nor the Trustee will
be liable in any way for any default, failure or defect in any Securities.
The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
PORTFOLIO ACQUISITION. On the Initial Date of Deposit all of the
Securities deposited in the Trust were acquired by the Sponsor in open market
purchases on the American and New York Stock Exchanges. Subsequent to the
Initial Date of Deposit, it is expected that all of the Securities in the Trust
will be purchased by the Sponsor in transactions directly from the issuers or
the underwriter to the issuers of the Securities. These transactions will be
effected to the Sponsor at prices below the current market value of the
Securities due to various factors, including the size of the purchase,
expectation of holding period and cost of issuance. All of the Securities will
be deposited in the Trust based upon their market value as of the Dates of
Deposit. As a result of the Sponsor's ability to purchase these Securities below
market value, the Sponsor will offer Units of the Trust with no sales charge
during the initial offering period. By virtue of buying stocks at below market
prices, the Sponsor will realize a profit on the deposit of the Securities to
the Trust in an amount of up to % of the market value of these Securities.
Notwithstanding the preceding, the Sponsor may create additional Units by
depositing Securities acquired on the applicable national stock exchanges.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust. In addition, the Sponsor, at its option, is
authorized under the Trust Agreement to direct the Trustee to reinvest in
Substitute Securities the proceeds of the sale of any of the Securities only if
such sale was due to unusual circumstances as set forth under "Trust
Administration-Portfolio Supervision."
The Substitute Securities must be purchased within 20 days after the sale
of the portfolio Security or delivery of the notice of the failed contract.
Where the Sponsor purchases Substitute Securities in order to replace Failed
Securities, (i) the purchase price may not exceed the purchase price of the
Failed Securities and (ii) the Substitute Securities must be substantially
similar to the Failed Securities. Where the Sponsor purchases Substitute
Securities in order to replace Securities it sold, the Sponsor will endeavor to
select Securities which are equity securities that possess characteristics that
are consistent with the objective
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of the Trust as set forth above. Such selection may include or be limited to
Securities previously included in the portfolio of the Trust. No assurance can
be given that the Trust will retain its present size and composition for any
length of time.
The Trustee shall notify all Unitholders of the acquisition of the
Substitute Security, within five days thereafter, and the Trustee shall, on the
next Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security plus accrued interest, if
any. In the event no reinvestment is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders--Distributions." In addition, if the right of substitution shall not
be utilized to acquire Substitute Securities in the event of a failed contract,
the Sponsor will cause to be refunded the sales charge attributable to such
Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date. The proceeds from the sale of a Security or the exercise of
any redemption or call provision will be distributed to Unitholders except to
the extent such proceeds are applied to meet redemptions of Units. (See
"Liquidity--Trustee Redemption.")
RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated or distributed during a 30-day period at the termination of
the approximately [eighteen-month] life of the Trust. Since the Trust will not
sell Securities in response to ordinary market fluctuation, but only at the
Trust's termination, the amount realized upon the sale of the Securities may not
be the highest price attained by an individual Security during the life of the
Trust. However, the Sponsor may direct the disposition by the Trustee of
Securities upon the occurrence of certain events. Some of the Securities in the
Trust may also be owned by other clients of the Sponsor and their affiliates.
However, because these clients may have differing investment objectives, the
Sponsor may sell certain Securities from those accounts in instances where a
sale by the Trust would be impermissible, such as to maximize return by taking
advantage of market fluctuations. Investors should consult with their own
financial advisers prior to investing in the Trust to determine its suitability.
(See "Trust Administration--Portfolio Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with
the creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsor may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. To the extent the price of a Security increases or
decreases between the time cash is deposited with instructions to purchase the
Security and the time the cash is used to purchase the Security, Units may
represent less or more of that Security and more or less of the other Securities
in the Trust. In addition, brokerage fees (if any) incurred in purchasing
Securities with cash deposited with instructions to purchase the Securities will
be an expense of the Trust. Price fluctuations between the time of deposit and
the time the Securities are purchased, and payment of brokerage fees, will
affect the value of every Unitholder's Units and the Income per Unit received by
the Trust. In particular, Unitholders who purchase Units during the initial
offering period would experience a dilution of their investment as a result of
any brokerage fees paid by the Trust during subsequent deposits of Additional
Securities purchased with cash deposited. In order to minimize these effects,
the Trust will try to purchase Securities as near as possible to the Evaluation
Time or at prices as close as possible to the prices used to evaluate Trust
Units at the Evaluation Time. In addition, subsequent deposits to create such
additional Units will not be covered by the deposit of a bank letter of credit.
In the event that the Sponsor does not deliver cash in consideration for the
additional Units
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delivered, the Trust may be unable to satisfy its contracts to purchase the
Additional Securities. The failure of the Sponsor to deliver cash to the Trust,
or any delays in the Trust receiving such cash, may have significant adverse
consequences for the Trust.
COMMON STOCK. Since the Trust contains common stocks of domestic issuers,
an investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks including the risk that the
financial condition of the issuers of the Securities may become impaired or that
the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Trust thus may be expected to fluctuate over the life of the Trust to
values higher or lower than those prevailing on the Initial Date of Deposit.
(See "Risk Considerations--General" for a discussion of the types of risks that
affect holders of common stock of issuers of REITs.)
The Trust may purchase Securities that are not registered ("Restricted
Securities") under the Securities Act of 1933 (the "Securities Act"), but can be
offered and sold to "qualified institutional buyers" as that term is defined in
the Securities Act.
See "Liquidity" below for the risks inherent in the purchase of Restricted
Securities.
LIQUIDITY. Although all the Securities in the Trust, except for Restricted
Securities held by the Trust, if any, are listed on a national securities
exchange or the NASDAQ National Market System, the principal trading market for
the securities may be in the over-the-counter market. As a result, the existence
of a liquid trading market for the Securities may depend on whether dealers will
make a market in the Securities. There can be no assurance that a market will be
made for any of the Securities, that any market for the Securities will be
maintained or of the liquidity of the Securities in any market made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Securities to the Sponsor. The price at which the Securities may be
sold to meet redemptions and the value of the Units will be adversely affected
if trading markets for the Securities are limited or absent.
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Some of the Securities in the Trust may represent common stock issued by
REITs that were initially offered to the public within the 12 months preceding
the Date of Deposit, meaning that prior to the REITs initial offering, there had
been no public market for the REITs common stock. The initial public offering
price for such Securities may not be indicative of the market price for the
stock after the initial offering, and there can be no assurance that an active
public market for such Securities will develop or continue after the initial
offering; therefore, these Securities involve risks in addition to the general
risks of investing in common stock issued by REITs.
The Trust may purchase securities that are not registered ("Restricted
Securities") under the Securities Act, but can be offered and sold to "qualified
institutional buyers" under Rule 144A under the Securities Act. Since it is not
possible to predict with assurance exactly how this market for Restricted
Securities sold and offered under Rule 144A will develop, the Sponsor will
carefully monitor the Trust's investments in these securities, focusing on such
factors, among others, as valuation, liquidity and availability of information.
This investment could have the effect of increasing the level of illiquidity in
the Trust to the extent that qualified institutional buyers become for a time
uninterested in purchasing these Restricted Securities.
There is no assurance that any dividends will be declared or paid in the
future on the Securities. Investors should be aware that there is no assurance
that the Trust's objectives will be achieved.
LEGISLATION. From time to time Congress considers proposals to reduce the
rate of the dividends-received deduction which is available to certain
corporations. Enactment into law of a proposal to reduce the rate would
adversely affect the after-tax return to investors who can take advantage of the
deduction. Investors are urged to consult their own tax advisers. Further, at
any time after the Initial Date of Deposit, legislation may be enacted, with
respect to the Securities in the Trust or the issuers of the Securities.
Changing approaches to regulation, particularly with respect to the real estate
industry, may have a negative impact on certain companies represented in the
Trust. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on the Trust or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
REAL ESTATE INVESTMENT TRUSTS. General. Since the Trust will consist
entirely of shares issued by REITs, an investment in the Trust will be subject
to varying degrees of risk generally incident to the ownership of real property
(in addition to securities market risks) and will involve more risk than a
portfolio of common stocks that is not concentrated in a particular industry or
a group of industries.* The underlying value of the Trust's Securities and the
Trust's ability to make distributions to its Certificateholders may be adversely
affected by adverse changes in national economic conditions, adverse changes in
local market conditions due to changes in general or local economic conditions
and neighborhood characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental legislation and
compliance with environmental laws, the ongoing need for capital improvements,
particularly in older properties, changes in real estate tax rates and other
operating expenses,
- --------
* A Trust is considered to be "concentrated" in a particular industry when the
Securities in that industry constitute 25% or more of the total asset value of
the portfolio.
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regulatory and economic impediments to raising rents, adverse changes in
governmental rules and fiscal policies, dependency on management skills, civil
unrest, acts of God, including earthquakes and other natural disasters (which
may result in uninsured losses), acts of war, adverse changes in zoning laws,
and other factors which are beyond the control of the issuers of the REITs in
the Trust.
REITs have been compared to bond equivalents (paying to the REIT holder
their pro rata share of the REIT's annual taxable income). In general, the value
of bond equivalents change as the general levels of interest rates fluctuate.
When interest rates decline, the value of a bond equivalent portfolio invested
at higher yields can be expected to rise. Conversely, when interest rates rise,
the value of a bond equivalent portfolio invested at lower yields can be
expected to decline. Consequently, the value of the REITs may at times be
particularly sensitive to devaluation in the event of rising interest rates.
Equity REITs are less likely to be affected by interest rate fluctuations than
Mortgage REITs and the nature of the underlying assets of an Equity REIT, i.e.,
investments in real property, may be considered more tangible than that of a
Mortgage REIT. Equity REITs are more likely to be adversely affected by changes
in the value of the underlying property it owns than Mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential complexes,
and office buildings; the impact of economic conditions on REITs can also be
expected to vary with geographic location and property type. Investors should be
aware that REITs may not be diversified and are subject to the risks of
financing projects. REITs are also subject to defaults by borrowers,
self-liquidation, the market's perception of the REIT industry generally, and
the possibility of failing to qualify for tax-free pass-through of income under
the Internal Revenue Code, and to maintain exemption from the Investment Company
Act of 1940. A default by a borrower or lessee may cause the REIT to experience
delays in enforcing its rights as mortgagee or lessor and to incur significant
costs related to protecting its investments.
Uninsured Losses. The issuer of REITs generally maintain comprehensive
insurance on presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, there are certain
types of losses, generally of a catastrophic nature, such as earthquakes and
floods, that may be uninsurable or not economically insurable, or with respect
to which the REIT chooses to self-insure, as to which the REITs properties are
at risk in their particular locales. The management of REIT issuers use their
discretion in determining amounts, coverage limits and deductibility provisions
of insurance, with a view to requiring appropriate insurance on their
investments at a reasonable cost and on suitable terms. This may result in
insurance coverage that in the event of a substantial loss would not be
sufficient to pay the full current market value or current replacement cost of
the lost investment. Inflation, changes in building codes and ordinances,
environmental considerations, and other factors also might make it infeasible to
use insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by REITs
might not be adequate to restore its economic position with respect to such
property.
Environmental Liability. Under various federal, state, and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real property may be liable for the costs of removal or remediation
of hazardous or toxic substances on, under or in such property. Such laws often
impose liability whether or not the owner or operator caused or knew of the
presence of such hazardous or toxic substances and whether or not the storage of
such substances was in violation of a tenant's lease. In addition, the presence
of hazardous or toxic substances, or the failure to remediate such property
properly, may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of the REITs
in the Trust may not be presently liable or potentially liable for any such
costs in connection with real estate assets they presently own or subsequently
acquire while such REITs are held in the Trust.
Americans with Disabilities Act. Under the Americans with Disabilities Act
of 1990 (the "ADA"), all public accommodations are required to meet certain
federal requirements related to physical access and use by disabled persons. In
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the event that any of the REITs in the Trust invest in or hold mortgages in real
estate properties subject to ADA, a determination that any such properties are
not in compliance with the ADA could result in imposition of fines or an award
of damages to private litigants. If any of the REITs in the Trust were required
to make modifications to comply with the ADA, the REITs ability to make expected
distributions to the Trust, could be adversely affected; thus, adversely
affecting the ability of the Trust to make distributions to Unitholders.
Property Taxes. Real estate generally is subject to real property taxes.
The real property taxes on the properties underlying the REITs in the Trust may
increase or decrease as property tax rates change and as the properties are
assessed or reassessed by taxing authorities.
Liquidity. Although the Securities in the Trust are listed on a national
securities exchange or NASDAQ National Market System, real estate investments,
the primary holdings of each of the Securities in the Trust, are relatively
illiquid. Therefore, the ability of the issuers of the Securities in the Trust
to vary their portfolios in response to changes in economic and other conditions
will be limited and, hence, may adversely affect the value of the Units. There
can be no assurance that any issuer of a Security will be able to dispose of its
underlying real estate assets when they find disposition advantageous or
necessary or that the sale price of any disposition will recoup or exceed the
amount of their investment.
GENERALLY. There is no assurance that any dividends will be declared or
paid in the future on the Securities. Investors should be aware that there is no
assurance that the Trust's objective will be achieved.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities is determined in good faith by the Trustee on each
"Business Day" as defined in the Indenture in the following manner: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount from
the Public Offering Price after the initial public offering (which is expected
to be only the date of this prospectus) based upon the number of Units
purchased. This volume discount will result in a reduction of the sales charge
applicable to such purchases. The amount of the volume discount and the
approximate reduced sales charge on the Public Offering Price applicable to such
purchases are as follows:
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
10,000 but less than 25,000 %
25,000 but less than 50,000 %
50,000 but less than 75,000 %
75,000 but less than 100,000 %
100,000 or more %
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Commencing ________ 1, 1999 the sales charge will be reduced as follows:
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
10,000 but less than 25,000 %
25,000 but less than 50,000 %
50,000 but less than 75,000 %
75,000 but less than 100,000 %
100,000 or more %
These discounts will apply to all purchases of Units by the same purchaser
after the initial public offering period. Units purchased by the same purchasers
in separate transactions after the initial public offering period will be
aggregated for purposes of determining if such purchaser is entitled to a
discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
Employees (and their immediate families) of Reich & Tang Distributors,
Inc. (and its affiliates) and of the special counsel to the Sponsor, may,
pursuant to employee benefit arrangements, purchase Units of the Trust at a
price equal to the aggregate value of the underlying securities in the Trust
after the initial offering period, divided by the number of Units outstanding at
no sales charge. Such arrangements result in less selling effort and selling
expenses than sales to employee groups of other companies. Resales or transfers
of Units purchased under the employee benefit arrangements may only be made
through the Sponsor's secondary market, so long as it is being maintained.
Investors in any open-end management investment company or unit investment
trust that have purchased their investment within a five-year period prior to
the date of this Prospectus can purchase Units of the Trust in an amount not
greater in value than the amount of said investment made during this five-year
period at a reduced sales charge of % of the public offering price.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a volume discount) less
the concession the Sponsor typically allows to brokers and dealers for purchases
(see "Public Offering--Distribution of Units") by (1) investors who purchase
Units through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
financial planning, investment advisory or asset management service, or provide
such services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, (3) any person who, for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their immediate family members (as described above) and (4) officers and
directors of bank holding companies that make Units available directly or
through subsidiaries or bank affiliates. Notwithstanding anything to the
contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive the volume discount.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsor and dealers at the Public
Offering Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsor may extend the initial
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offering period for successive thirty day periods. Certain banks and thrifts
will make Units of the Trust available to their customers on an agency basis. A
portion of the sales charge paid by their customers is retained by or remitted
to the banks. Under the Glass-Steagall Act, banks are prohibited from
underwriting Units; however, the Glass-Steagall Act does permit certain agency
transactions and the banking regulators have indicated that these particular
agency transactions are permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law expressed
herein and banks and financial institutions may be required to register as
dealers pursuant to state law.
The Sponsor intends to qualify the Units for sale in substantially all
States through dealers who are members of the National Association of Securities
Dealers, Inc. Units may be sold to dealers at prices which represent a
concession of up to 2.0% per Unit, subject to the Sponsor's right to change the
dealers' concession from time to time. In addition, for transactions of at least
100,000 Units or more, the Sponsor intends to negotiate the applicable sales
charge and such charge will be disclosed to any such purchaser. Such Units may
then be distributed to the public by the dealers at the Public Offering Price
then in effect. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. The Sponsor reserves the right to change
the discounts from time to time.
Broker-dealers of the Trust, banks and/or others are eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their registered representatives who have sold a minimum
number of units of unit investment trusts created by the Sponsor during a
specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of brokers, dealers, banks and/or
others may be eligible to win other nominal awards for certain sales efforts or
under which the Sponsor will reallow to any such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales charges on
the sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of their own assets and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold.
SPONSOR'S PROFITS. The Sponsor may realize a profit on the deposit of the
Securities in the Trust representing the difference between the cost of the
Securities to the Sponsor and the cost of the Securities to the Trust (See
"Portfolio"). The Sponsor may realize profits or sustain losses with respect to
Securities deposited in the Trust which were acquired from underwriting
syndicates of which they were a member. The Sponsor will also realize a profit
in an amount of up to ___% of the market value by virtue of buying such
Securities in underwritten transactions at prices below their market value (see
"The Trust - Portfolio Acquisition").
During the initial offering period and thereafter to the extent additional
Units continue to be offered by means of this Prospectus, the Underwriter may
also realize profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the aggregate value of the Securities and hence in
the Public Offering Price received by the Sponsor for the Units. Cash, if any,
made available to the Sponsor prior to settlement date for the purchase of Units
may be used in the Sponsor's business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsor.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
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In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will either be
evidenced by registered Certificates executed by the Trustee and the Sponsor or
will be recorded in book-entry form at Depository Trust Company ("DTC") through
an investor's broker's account. Units may be purchased and Certificates may be
issued in denominations of one hundred or more Units.
Any Certificates issued are transferable by presentation and surrender to
the Trustee properly endorsed and/or accompanied by a written instrument or
instruments of transfer. Although no such charge is presently made or
contemplated, the Trustee may require a Unitholder to pay $2.00 for each
Certificate reissued or transferred and any governmental charge that may be
imposed in connection with each such transfer or interchange. Mutilated,
destroyed, stolen or lost Certificates will be replaced upon delivery of
satisfactory indemnity and payment of expenses incurred.
Units held through DTC will be deposited by the Sponsor with DTC in the
Sponsor's DTC account and registered in the nominee name CEDE & CO. Individual
purchases of beneficial ownership interest in the Trust may be made in
book-entry form through DTC. Ownership and transfer of Units will be evidenced
and accomplished directly and indirectly by bookentries made by DTC and its
participants. DTC will record ownership and transfer of the Units among DTC
participants and forward all notices and credit all payments received in respect
of the Units held by the DTC participants. Beneficial owners of Units will
receive written confirmation of their purchases and sale from the broker-dealer
or bank from whom their purchase was made. Units are transferable by making a
written request property accompanied by a written instrument or instruments of
transfer which should be sent registered or certified mail for the protection of
the Unit Holder. Holders must sign such written request exactly as their names
appear on the records of the Trust. Such signatures must be guaranteed by a
commercial bank or trust company, savings and loan association or by a member
firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee
to an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
Distributions to each Unitholder from the Income Account are computed as
of the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
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The dividend distribution per 100 Units, if any, cannot be anticipated and
may be paid as Securities are redeemed, exchanged or sold, or as expenses of the
Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately stated, of the Trust, expressed both
as total dollar amounts and as dollar amounts representing the pro rata share of
each 100 Units outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, Certificates issued or held, a current list of Securities in the
portfolio and a copy of the Trust Agreement.
TAX STATUS
The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the Federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein. In the Opinion of Battle Fowler LLP, special
counsel for the Sponsor, under existing law:
1. The Trust will be classified as a grantor trust for Federal income
tax purposes and not as a partnership or association taxable as a
corporation. Classification of the Trust as a grantor trust will cause the
Trust not to be subject to Federal income tax, and will cause the
Unitholders of the Trust to be treated for Federal income tax purposes as
the owners of a pro rata portion of the assets of the Trust. All income
received by the Trust will be treated as income of the Unitholders in the
manner set forth below.
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2. The Trust is not subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. For a
Unitholder who is a New York resident, however, a pro rata portion of all
or part of the income of the Trust will be treated as income of the
Unitholder under the income tax laws of the State and City of New York.
Similar treatment may apply in other states.
3. During the 90-day period subsequent to the initial issuance date,
the Sponsor reserves the right to deposit Additional Securities that are
substantially similar to those establishing the Trust. This retained right
falls within the guidelines promulgated by the Internal Revenue Service
("IRS") and should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each Unitholder when
the Trust disposes of a Security (whether by sale, exchange or redemption) or
upon the sale, exchange or redemption of Units by such Unitholder. The price a
Unitholder pays for his Units, including sales charges, is allocated among his
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases his Units) in order
to determine his initial cost for his pro rata portion of each Security held by
the Trust.
For Federal income tax purposes, a Unitholder's pro rata portion of
dividends paid with respect to a Security held by a Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits" as defined by Section 316 of the Code. A Unitholder's pro rata portion
of dividends paid on such Security that exceed such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security will generally be treated as capital gain.
The Trust will own shares in REITs, entities that have elected and
qualified for the special tax treatment applicable to "regulated investment
companies." A number of complex requirements must be satisfied in order for REIT
status to be maintained. If the REIT distributes 95% or more of its real estate
investment trust taxable income, subject to certain adjustments, to its
shareholders, it will not be subject to Federal income tax on the amounts so
distributed. Moreover, if the REIT distributes at least 85% of its ordinary
income and 95% of its capital gain net income it will not be subject to the 4%
excise tax on certain undistributed income of REITs. Distributions by the REIT
from its earnings and profits to its shareholders will be taxable as ordinary
income to such shareholders. Distributions of the REIT's net capital gain, which
are designated as capital gain dividends by the REIT, will be taxable to its
shareholders as long-term capital gain, regardless of the length of time the
shareholders have held their investment in the REIT.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has held his Units for more than one year. Long-term capital gains are generally
taxed at the same rates applicable to ordinary income, although individuals who
realize long-term capital gains may be subject to a reduced tax rate on such
gains, rather than the "regular" maximum tax rate of 39.6%. Tax rates may
increase prior to the time when Unitholders may realize gains from the sale,
exchange or redemption of the Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital loss and will be long-term if the Unitholder has held his
Units for more than one year. Capital losses are deductible to the extent of
capital gains; in addition, up to $3,000 of capital losses recognized by
non-corporate Unitholders may be deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a
Unitholder who itemizes his deductions may also deduct his pro rata share of the
fees and expenses of the Trust, but only to the extent that such amounts,
together with the Unitholder's other miscellaneous deductions, exceed 2% of his
adjusted gross income. The deduction of fees and expenses
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may also be limited by Section 68 of the Code, which reduces the amount of
itemized deductions that are allowed for individuals with incomes in excess of
certain thresholds.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to such Unitholder's pro rata portion
of dividends that are taxable as ordinary income to Unitholders which are
received by the Trust from a domestic corporation under Section 243 of the Code
or from a qualifying foreign corporation under Section 245 of the Code (to the
extent the dividends are taxable as ordinary income, as discussed above) in the
same manner as if such corporation directly owned the Securities paying such
dividends. However, a corporation owning Units should be aware that Sections 246
and 246A of the Code impose additional limitations on the eligibility of
dividends for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Accordingly, corporate Unitholders
should consult their tax adviser in this regard.
As discussed in the section "Termination", each Unitholder may have three
options in receiving his termination distributions, which are (i) to receive his
pro rata share of the underlying Securities in kind, (ii) to receive cash upon
liquidation of his pro rata share of the underlying Securities, or (iii) to
invest the amount of cash he would receive upon the liquidation of his pro rata
share of the underlying Securities in units of a future series of the Trust (if
one is offered). There are special tax consequences should a Unitholder choose
option (i), the exchange of the Unitholder's Units for a pro rata portion of
each of the Securities held by the Trust plus cash. Treasury Regulations provide
that gain or loss is recognized when there is a conversion of property into
property that is materially different in kind or extent. In this instance, the
Unitholder may be considered the owner of an undivided interest in all of the
Trust's assets. By accepting the proportionate number of Securities of the
Trust, in partial exchange for his Units, the Unitholder should be treated as
merely exchanging his undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such, there
should be no material difference in the Unitholder's ownership, and therefore
the transaction should be tax free to the extent the Securities are received.
Alternatively, the transaction may be treated as an exchange that would qualify
for nonrecognition treatment to the extent the Unitholder is exchanging his
undivided interest in all of the Trust's Securities for his proportionate number
of shares of the underlying Securities. In either instance, the transaction
should result in a non-taxable event for the Unitholder to the extent Securities
are received. However, there is no specific authority addressing the income tax
consequences of an in-kind distribution from a grantor trust, and investors are
urged to consult their tax advisers in this regard.
Entities that generally qualify for an exemption from Federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on "unrelated business taxable income." Unrelated business taxable income
is income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include dividend or interest income or gain from the
sale of investment property, unless such income is derived from property that is
debt-financed or is dealer property. A tax-exempt entity's dividend income from
the Trust and gain from the sale of Units in the Trust or the Trust's sale of
Securities is not expected to constitute unrelated business taxable income to
such tax-exempt entity unless the acquisition of the Unit itself is
debt-financed or constitutes dealer property in the hands of the tax-exempt
entity.
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Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit-sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
Prospective tax-exempt investors are urged to consult their own tax
advisers prior to investing in the Trust.
LIQUIDITY
SPONSOR REPURCHASE. Unitholders who wish to dispose of their Units should
inquire of the Sponsor as to current market prices prior to making a tender for
redemption. The aggregate value of the Securities will be determined by the
Trustee on a daily basis and computed on the basis set forth under "Trustee
Redemption." The Sponsor does not guarantee the enforceability, marketability or
price of any Securities in the Portfolio or of the Units. The Sponsor may
discontinue the repurchase of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the date on
which Units are received in proper form (i.e., properly endorsed) by Reich &
Tang Distributors L.P., 600 Fifth Avenue, New York, New York 10020. Units
received after 4 P.M., New York Time, will be deemed to have been repurchased on
the next business day. In the event a market is not maintained for the Units, a
Unitholder may be able to dispose of Units only by tendering them to the Trustee
for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate value of the
Securities in the Trust plus a 3.9% sales charge (or 4.058% of the net amount
invested) plus a pro rata portion of amounts, if any, in the Income Account. Any
Units that are purchased by the Sponsor in the secondary market also may be
redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service to Unitholders,
elect to purchase any Units tendered to the Trustee for redemption (see "Trustee
Redemption"). Factors which the Sponsor will consider in making a determination
will include the number of Units of all Trusts which it has in inventory, its
estimate of the saleability and the time required to sell such Units and general
market conditions. For example, if in order to meet redemptions of Units the
Trustee must dispose of Securities, and if such disposition cannot be made by
the redemption date (three calendar days after tender), the Sponsor may elect to
purchase such Units. Such purchase shall be made by payment to the Unitholder
not later than the close of business on the redemption date of an amount equal
to the Redemption Price on the date of tender.
TRUSTEE REDEMPTION. At any time prior to the termination of the Trust
(approximately one year from the Initial Date of Deposit), Units may also be
tendered to the Trustee for redemption at its corporate trust office at 4 New
York Plaza, New York, New York 10004, upon proper delivery of such Units and
payment of any relevant tax. At the present time there are no specific taxes
related to the redemption of Units. No redemption fee will be charged by the
Sponsor or the Trustee. Units redeemed by the Trustee will be canceled. Any
Certificates representing Units to be redeemed must be delivered to the Trustee
and must be properly endorsed or accompanied by proper instruments of transfer
with signature guaranteed (or by providing satisfactory indemnity, as in the
case of lost, stolen or mutilated Certificates). Thus, redemptions of Units
cannot be effected until Certificates representing such Units have been
delivered by the person seeking redemption. (See "Ownership of Units.")
Unitholders must sign exactly as their names appear on the faces of their
Certificates. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
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Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time set forth under
"Summary of Essential Information" in Part A on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the close of trading on the New
York Stock Exchange (4:00 p.m. Eastern Time), the date of tender is the next day
on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts paid
on redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Stock. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance with
market conditions, the Sponsor believes that the minimum amounts which would be
specified would be approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
The Trustee may determine the value of the Securities in the Trust in the
following manner: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption
may request by written notice submitted at the time of tender from the Trustee
in lieu of a cash redemption a distribution of shares of Securities and cash in
an amount and value equal to the Redemption Price Per Unit as determined as of
the evaluation next following tender. To the extent possible, in kind
distributions ("In Kind Distributions") shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to the account of the
Unitholder's bank or broker-dealer at The Depository Trust Company. An In Kind
Distribution will be reduced by customary transfer and registration charges. The
tendering Unitholder will receive his pro rata number of whole shares of each of
the Securities comprising the Trust portfolio and cash from the Principal
Accounts equal to the balance of the Redemption Price to which the tendering
Unitholder is entitled. If funds in the Principal Account are insufficient to
cover the required cash distribution to the tendering Unitholder, the Trustee
may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price
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for such Unit. The Trustee will pay the net proceeds of any such sale to the
Unitholder on the day he would otherwise be entitled to receive payment of the
Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsor are not liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio. It
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. However, the Trust Agreement provides
that the Sponsor may direct the disposition of Securities upon the occurrence of
certain events including: (1) default in payment of amounts due on any of the
Securities; (2) institution of certain legal proceedings; (3) default under
certain documents materially and adversely affecting future declaration or
payment of amounts due or expected; (4) determination of the Sponsor that the
tax treatment of the Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price as a direct result of serious adverse credit factors
affecting the issuer of a Security which, in the opinion of the Sponsor, would
make the retention of the Security detrimental to the Trust or the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsor fails to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the Trustee
to reject any offer made by an issuer of any of the Securities to issue
new securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization, if any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsor directs that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, which shall be retained, or
shall be promptly sold unless the Sponsor directs that it be retained by
the Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsor is authorized to increase the size and number of
Units of the Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units from time to time subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on
the Initial Date of Deposit is maintained to the extent practicable. The
Sponsor may specify the minimum numbers
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in which Additional Securities will be deposited or purchased. If a
deposit is not sufficient to acquire minimum amounts of each Security,
Additional Securities may be acquired in the order of the Security most
under-represented immediately before the deposit when compared to the
original proportionate relationship. If Securities of an issue originally
deposited are unavailable at the time of the subsequent deposit, the
Sponsor may (i) deposit cash or a letter of credit with instructions to
purchase the Security when it becomes available, or (ii) deposit (or
instruct the Trustee to purchase) either Securities of one or more other
issues originally deposited or a Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of Unitholders
evidencing 66 2/3% of the Units then outstanding for the purpose of modifying
the rights of Unitholders; provided that no such amendment or waiver shall
reduce any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate upon the maturity, redemption or other disposition, as the case may
be, of the last of the Securities held in such Trust but in no event is it to
continue beyond the Mandatory Termination Date. If the value of the Trust shall
be less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate the Trust. The Trust may also be terminated
at any time with the consent of the Unitholders representing 100% of the Units
then outstanding. The Trustee may utilize the services of the Sponsor for the
sale of all or a portion of the Securities in the Trust, and in so doing, the
Sponsor will determine the manner, timing and execution of the sales of the
underlying Securities. Any brokerage commissions received by the Sponsor from
the Trust in connection with such sales will be in accordance with applicable
law. In the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders. Such notice will provide Unitholders with the
following three options by which to receive their pro rata share of the net
asset value of the Trust and requires their election of one of the three options
by notifying the Trustee prior to the commencement of the Liquidation Period by
returning a properly completed election request (to be supplied to Unitholders
at least 20 days prior to such date) (see Part A--"Summary of Essential
Information" for the date of the commencement of the Liquidation Period):
1. A Unitholder who owns at least 2,500 units and whose interest in
the Trust would entitle him to receive at least one share of each
underlying Security will have his Units redeemed on commencement of the
Liquidation Period by distribution of the Unitholder's pro rata share of
the net asset value of the Trust on such date distributed in kind to the
extent represented by whole shares of underlying Securities and the
balance in cash within three business days next following the commencement
of the Liquidation Period. Unitholders subsequently selling such
distributed Securities will incur brokerage costs when disposing of such
Securities. Unitholders should consult their own tax adviser in this
regard;
2. to receive in cash such Unitholder's pro rata share of the net
asset value of the Trust derived from the sale by the Sponsor as the agent
of the Trustee of the underlying Securities over the Liquidation Period.
The Unitholder's pro
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rata share of its net assets of the Trust will be distributed to such
Unitholder within three days of the settlement of the trade of the last
Security to be sold; or
3. to invest such Unitholder's pro rata share of the net assets of
the Trust derived from the sale by the Sponsor as agent of the Trustee of
the underlying Securities over the Liquidation Period, in units of a
subsequent series of Equity Securities Trust (the "New Series"), provided
one is offered. It is expected that a special redemption and liquidation
will be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust in Part A. The Units of a New Series will be
purchased by the Unitholder within three business days of the settlement
of the trade for the last Security to be sold. Such purchaser will be
entitled to a reduced sales load upon the purchase of units of the New
Series. It is expected that the terms of the New Series will be
substantially the same as the terms of the Trust described in this
Prospectus, and that similar options with respect to the termination of
such New Series will be available. The availability of this option does
not constitute a solicitation of an offer to purchase Units of a New
Series or any other security. A Unitholder's election to participate in
this option will be treated as an indication of interest only. At any time
prior to the purchase by the Unitholder of units of a New Series such
Unitholder may change his investment strategy and receive, in cash, the
proceeds of the sale of the Securities. An election of this option will
not prevent the Unitholder from recognizing taxable gain or loss (except
in the case of a loss, if and to the extent the New Series is treated as
substantially identical to the Trust) as a result of the liquidation, even
though no cash will be distributed to pay any taxes. Unitholders should
consult their own tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsor has agreed to effect the sales of underlying securities for
the Trustee in the case of the second and third options over a period not to
exceed days immediately following the commencement of the Liquidation Period
free of brokerage commissions. The Sponsor, on behalf of the Trustee, will sell,
unless prevented by unusual and unforeseen circumstances, such as, among other
reasons, a suspension in trading of a Security, the close of a stock exchange,
outbreak of hostilities and collapse of the economy, on each business day during
the Liquidation Period at least a number of shares of each Security which then
remains in the portfolio based on the number of shares of each issue in the
portfolio) multiplied by a fraction the numerator of which is one and the
denominator of which is the number of days remaining in the Liquidation Period.
The Redemption Price per 100 Units upon the settlement of the last sale of
Securities during the Liquidation Period will be distributed to Unitholders in
redemption of such Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsor believes that the sale of
underlying Securities over the Liquidation Period as described above is in the
best interest of a Unitholder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than days if, in the Sponsor's judgment, such
sales are in the best interest of Unitholders. The Sponsor, in implementing such
sales of securities on behalf of the Trustee, will seek to maximize the sales
proceeds and will act in the best interests of the Unitholders. There can be no
assurance, however, that any adverse price consequences of heavy trading will be
mitigated.
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It is expected (but not required) that the Sponsor will generally follow
the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsor will generally sell Securities on the first day of the
Liquidation Period; for less liquid Securities, on each of the first two days of
the Liquidation Period, the Sponsor will generally sell any amount of any
underlying Securities at a price no less than 1/2 of one point under the last
closing sale price of those Securities. On each of the following two days, the
price limit will increase to one point under the last closing sale price. After
four days, the Sponsor intends to sell at least a fraction of the remaining
underlying Securities, the numerator of which is one and the denominator of
which is the total number of days remaining (including that day) in the
Liquidation Period, without any price restrictions.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unitholders before
the commencement of the Liquidation Period. All Unitholders will then elect
either option 1, if eligible, or option 2.
By electing to "rollover" in the New Series, the Unitholder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created following termination of the Trust; the Sponsor expects,
however, that a similar reinvestment program will be offered with respect to all
subsequent series of the Trust, thus giving Unitholders a yearly opportunity to
elect to roll their terminating distributions into a New Series. The
availability of the reinvestment privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the reinvestment program will be treated as an
indication of interest only. The Sponsor intends to coordinate the date of
deposit of a future series so that the terminating trust will terminate
contemporaneously with the creation of a New Series. The Sponsor reserves the
right to modify, suspend or terminate the reinvestment privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors, Inc., a Delaware
corporation, is engaged in the brokerage business and is a member of the
National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment advisor. Reich & Tang maintains its principal business
offices at 600 Fifth Avenue, New York, New York 10020. The sole shareholder of
the Sponsor, Reich & Tang Asset Management, Inc. ("RTAM Inc."), is wholly owned
by NEIC Holdings, Inc. which, effective December 29, 1997, is wholly owned by
NEIC Operating Partnership, L.P. ("NEICOP"). The general partners of NEICOP are
New England Investment Companies, Inc. ("NEIC") and New England Investment
Companies, L.P. ("NEIC LP") which is owned approximately 99% by public
Unitholders and whose general partner is NEIC. NEICOP, with a principal place of
business at 399 Boyston Street, Boston, MA 02116, is a holding company of firms
engaged in the securities and investment advisory business. These affiliates in
the aggregate are investment advisors or managers to over 80 registered
investment companies. Reich & Tang is Sponsor (and Company-Sponsor, as the case
may be) for numerous series of unit investment trusts, including New York
Municipal Trust, Series 1 (and Subsequent Series), Municipal Securities Trust,
Series 1 (and Subsequent Series), 1st Discount Series (and Subsequent Series),
Multi-State Series 1 (and Subsequent Series), Mortgage Securities Trust, Series
1 (and Subsequent Series), Insured Municipal Securities Trust, Series 1 (and
Subsequent Series) and 5th Discount Series (and Subsequent Series), Equity
Securities Trust, Series 1, Signature Series, Gabelli Communications Income
Trust (and Subsequent Series) and Schwab Trusts.
NEIC is wholly owned by MetLife New England Holdings, Inc., a wholly-owned
subsidiary of Metropolitan Life Insurance Company ("MetLife"). Effective
December 30, 1997, MetLife owns approximately 47% of the limited partnership
interests of NEICOP.
MetLife is a mutual life insurance company with assets of $297.6 billion
at December 31, 1996. It is the second largest life insurance company in the
United States in terms of total assets. MetLife provides a wide range of
insurance and investment products and services to individuals and groups and is
the leader among United States life insurance companies in terms of total
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life insurance in force, which exceeded $1.6 trillion at December 31, 1996 for
MetLife and its insurance affiliates. MetLife and its affiliates provide
insurance or other financial services to approximately 36 million people
worldwide.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations. The Sponsor will be under no liability to
Unitholders for taking any action, or refraining from taking any action, in good
faith pursuant to the Trust Agreement, or for errors in judgment except in cases
of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may either (a) appoint a successor Sponsor;
(b) terminate the Trust Agreement and liquidate the Trust; or (c) continue to
act as Trustee without terminating the Trust Agreement. Any successor Sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at 4 New York Plaza, New York, New
York 10004. The Trustee is subject to supervision by the Superintendent of Banks
of the State of New York, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Certificates in accordance with the Trust Agreement,
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties; provided, however, that the
Trustee shall not in any event be liable or responsible for any evaluation made
by any independent evaluation service employed by it. In addition, the Trustee
shall not be liable for any taxes or other governmental charges imposed upon or
in respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unitholders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsor is obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsor may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must
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always be a banking corporation organized under the laws of the United States or
any State and have at all times an aggregate capital, surplus and undivided
profits of not less than $2,500,000.
THE PORTFOLIO CONSULTANT. The Portfolio Consultant is AEW Capital
Management, L.P., a registered investment advisor whose origins date back to
1981. AEW focuses exclusively on the management of investments in real estate on
behalf of corporate and public pension funds, university endowments and private
investors. The firm is a wholly owned subsidiary of NEICOP, an NYSE-listed firm
with approximately $118 billion in assets under management through its 14
subsidiaries, divisions and affiliates. As of the date of this prospectus, the
Portfolio Consultant managed over $5 billion of real estate equity and debt
investments on behalf of more than 200 institutional investors.
The Portfolio Consultant is not a Sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense, to utilize its
equity expertise in selecting the Securities deposited in the Trust. The
Portfolio Consultant's only responsibility with respect to the Trust, in
addition to its role in Portfolio selection, is to monitor the Securities of the
Portfolio and make recommendations to the Sponsor regarding the disposition of
the Securities held by the Trust. The responsibility of monitoring the
Securities of the Portfolio means that if the Portfolio Consultant's views
materially change regarding the appropriateness of an investment in any Security
then held in the Trust based upon the investment objectives, guidelines, terms,
parameters, policies and restrictions supplied to the Portfolio Consultant by
the Sponsor, the Portfolio Consultant will notify the Sponsor of such change to
the extent consistent with applicable legal requirements. The Sponsor is not
obligated to adhere to the recommendations of the Portfolio Consultant regarding
the disposition of Securities. The Sponsor has the sole authority to direct the
Trust to dispose of Securities under the Trust Agreement. The Portfolio
Consultant has no other responsibilities or obligations to the Trust or the
Unitholders.
The Portfolio Consultant may resign or may be removed by the Sponsor at
any time on sixty days' prior notice. The Sponsor shall use its best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Portfolio
Consultant. If upon resignation of the Portfolio Consultant no successor has
accepted appointment within sixty days after notice of resignation, the Sponsor
has agreed to perform this function.
EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering--Offering Price." The Sponsor and the Unitholders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. Determinations by the Trustee under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Trustee shall be under no liability
to the Sponsor or Unitholders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Trustee, the Sponsor and the Unitholders may rely on
any evaluation furnished to the Trustee by an independent evaluation service and
shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in creating and establishing the
Trust, including the cost of the initial preparation and execution of the Trust
Agreement, registration of the Trust and the Units under the Investment Company
Act of 1940 and the Securities Act of 1933, the initial fees and expenses of the
Trustee, legal expenses and other actual out-of-pocket expenses, will be paid by
the Trust and charged to capital over the life of the Trust. Offering costs,
including the costs of registering securities with the Securities and Exchange
Commission and the states, will be charged to capital over the term of the
initial
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offering period, which may be between 30 and 90 days. All advertising and
selling expenses, as well as any organizational expenses not paid by the Trust,
will be borne by the Sponsor at no cost to the Trust.
The Sponsor will receive for portfolio supervisory services to the Trust
an Annual Fee in the amount set forth under "Summary of Essential Information"
in Part A. The Sponsor's fee may exceed the actual cost of providing portfolio
supervisory services for the Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the Equity
Securities Trust in any calendar year exceed the aggregate cost to the Sponsor
of supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trust: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the expenses
and costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsor otherwise directs, the accounts of the Trust shall be
audited not less than annually by independent public accountants selected by the
Sponsor. The expenses of the audit shall be an expense of the Trust. So long as
the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds $.50 Cents per 100 Units. Unitholders covered by the audit
during the year may receive a copy of the audited financials upon request.
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of Additional Securities
as described in "The Trust-Organization" in this Part B. Units acquired by
reinvestment will be subject to a reduced sales charge of 1.00%. Investors
should inform their broker, dealer or financial institution when purchasing
their Units if they wish to participate in the reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer or financial institution if they
wish to modify or terminate their election to participate in the reinvestment
plan. In order to enable a Unitholder to participate in the reinvestment plan
with respect to a particular distribution on their Units, such notice must be
made at least three business days prior to the Record Day for such distribution.
Each subsequent distribution of income or principal on the
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participant's Units will be automatically applied by the Trustee to purchase
additional Units of the Trust. The Sponsor reserves the right to demand, modify
or terminate the reinvestment plan at any time without prior notice. The
reinvestment plan for the Trust may not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders will be able to elect to exchange any or all of their Units of
this Trust for Units of one or more of any available series of Equity Securities
Trust, Insured Municipal Securities Trust, Municipal Securities Trust, New York
Municipal Trust or Mortgage Securities Trust (the "Exchange Trusts") subject to
a reduced sales charge as set forth in the prospectus of the Exchange Trust (the
"Exchange Privilege"). Unit owners of any registered unit investment trust for
which there is no active secondary market in the units of such trust (a
"Redemption Trust") will be able to elect to redeem such units and apply the
proceeds of the redemption to the purchase of available Units of one or more
series of an Exchange Trust (the "Conversion Trusts") at the Public Offering
Price for units of the Conversion Trust subject to a reduced sales charge as set
forth in the prospectus of the Conversion Trust (the "Conversion Offer"). Under
the Exchange Privilege, the Sponsor's repurchase price during the initial
offering period of the Units being surrendered will be based on the market value
of the Securities in the Trust portfolio or on the aggregate offer price of the
Bonds in the other Trust Portfolios; and, after the initial offering period has
been completed, will be based on the aggregate bid price of the securities in
the particular Trust portfolio. Under the Conversion Offer, units of the
Redemption Trust must be tendered to the trustee of such trust for redemption at
the redemption price determined as set forth in the relevant Redemption Trust's
prospectus. Units in an Exchange or Conversion Trust will be sold to the
Unitholder at a price based on the aggregate offer price of the securities in
the Exchange or Conversion Trust portfolio (or for units of Equity Securities
Trust, based on the market value of the underlying securities in the trust
portfolio) during the initial public offering period of the Exchange or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
Conversion Trust Portfolio if its initial offering has been completed plus
accrued interest (or for units of Equity Securities Trust, based on the market
value of the underlying securities in the trust portfolio) and a reduced sales
charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or Conversion Trust shall be
the greater of (i) the reduced sales charge or (ii) an amount which when coupled
with the sales charge paid by the Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by Unitholders is
subject to the following additional conditions (i) at the time of the
Unitholder's election to participate in the Exchange Privilege or the Conversion
Offer, there must be units of the Exchange or Conversion Trust available for
sale, either under the initial primary distribution or in the Sponsor's
secondary market, (iii) exchanges will be effected in whole units only, (iv)
Units of the Mortgage Securities Trust may only be acquired in blocks of 1,000
Units and (v) Units of the Equity Securities Trust may only be acquired in
blocks of 100 Units. Unitholders will not be permitted to advance any funds in
excess of their redemption in order to complete the exchange. Any excess
proceeds received from a Unitholder for exchange, or from units being redeemed
for conversion, will be remitted to such Unitholder.
B-24
625311.2
<PAGE>
The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Unitholders of the Trust with 60 days' prior written notice of any termination
or material amendment to the Exchange Privilege or the Conversion Offer,
provided that, no notice need be given if (i) the only material effect of an
amendment is to reduce or eliminate the sales charge payable at the time of the
exchange, to add one or more series of the Trust eligible for the Exchange
Privilege or the Conversion Offer, to add any new unit investment trust
sponsored by Reich & Tang or a sponsor controlled by or under common control
with Reich & Tang, or to delete a series which has been terminated from
eligibility for the Exchange Privilege or the Conversion Offer, (ii) there is a
suspension of the redemption of units of an Exchange or Conversion Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an Exchange Trust
temporarily delays or ceases the sale of its units because it is unable to
invest amounts effectively in accordance with its investment objectives,
policies and restrictions. During the 60-day notice period prior to the
termination or material amendment of the Exchange Privilege described above, the
Sponsor will continue to maintain a secondary market in the units of all
Exchange Trusts that could be acquired by the affected Unitholders. Unitholders
may, during this 60-day period, exercise the Exchange Privilege in accordance
with its terms then in effect.
To exercise the Exchange Privilege, a Unitholder should notify the Sponsor
of his desire to exercise his Exchange Privilege. To exercise the Conversion
Offer, a unit owner of a Redemption Trust should notify his retail broker of his
desire to redeem his Redemption Trust Units and use the proceeds from the
redemption to purchase Units of one or more of the Conversion Trusts. If Units
of a designated, outstanding series of an Exchange or Conversion Trust are at
the time available for sale and such Units may lawfully be sold in the state in
which the Unitholder is a resident, the Unitholder will be provided with a
current prospectus or prospectuses relating to each Exchange or Conversion Trust
in which he indicates an interest. He may then select the Trust or Trusts into
which he desires to invest the proceeds from his sale of Units. The exchange
transaction will operate in a manner essentially identical to a secondary market
transaction except that units may be purchased at a reduced sales charge. The
conversion transaction will be handled entirely through the unit owner's retail
broker. The retail broker must tender the units to the trustee of the Redemption
Trust for redemption and then apply the proceeds to the redemption toward the
purchase of units of a Conversion Trust at a price based on the aggregate offer
or bid side evaluation per Unit of the Conversion Trust, depending on which
price is applicable, plus accrued interest and the applicable sales charge. The
certificates must be surrendered to the broker at the time the redemption order
is placed and the broker must specify to the Sponsor that the purchase of
Conversion Trust Units is being made pursuant to the Conversion Offer. The unit
owner's broker will be entitled to retain a portion of the sales charge.
TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Unitholder under the Internal Revenue
Code. The Unitholder will realize a tax gain or loss that will be of a long- or
short-term capital or ordinary income nature depending on the length of time the
units have been held and other factors. (See "Tax Status".) A Unitholder's tax
basis in the Units acquired pursuant to the Exchange Privilege or Conversion
Offer will be equal to the purchase price of such Units. Investors should
consult their own tax advisors as to the tax consequences to them of exchanging
or redeeming units and participating in the Exchange Privilege or Conversion
Offer.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsor.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
B-25
625311.2
<PAGE>
INDEPENDENT ACCOUNTANTS. The Statement of Financial Condition, including
the Portfolio, is included herein in reliance upon the report of Price
Waterhouse LLP, independent accountants, and upon the authority of said firm as
experts in accounting and auditing.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the REITs and this Trust may be
included from time to time in advertisements, sales literature and reports to
current or prospective investors. Total return shows changes in Unit price
during the period plus reinvestment of dividends and capital gains, divided by
the maximum public offering price as of the date of calculation. Average
annualized returns show the average return for stated periods of longer than a
year. Sales material may also include an illustration of the cumulative results
of like annual investments in the REITs during an accumulation period and like
annual withdrawals during a distribution period. Figures for actual portfolios
will reflect all applicable expenses and, unless otherwise stated, the maximum
sales charge. No provision is made for any income taxes payable. Similar figures
may be given for this Trust. Trust performance may be compared to performance on
a total return basis of the Dow Jones Industrial Average, the S&P 500 Composite
Price Stock Index, or performance data from Lipper Analytical Services, Inc. and
Morningstar Publications, Inc. or from publications such as Money, The New York
Times, U.S. News and World Report, Business Week, Forbes or Fortune. As with
other performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
B-26
625311.2
<PAGE>
[This page intentionally left blank]
B-27
625311.2
<PAGE>
<TABLE>
<S> <C>
No person is authorized to give any information or to ----------------------------------------------------
make any representations not contained in Parts A and B of this EQUITY SECURITIES TRUST
Prospectus; and any information or representation not contained SIGNATURE SERIES
herein must not be relied upon as having been authorized by the ----------------------------------------------------
Trust, the Trustee or the Sponsor. The Trust is registered as AEW REIT TRUST
a unit investment trust under the Investment Company Act of ----------------------------------------------------
1940. Such registration does not imply that the Trust or any of
its Units have been guaranteed, sponsored, recommended or EQUITY SECURITIES TRUST
approved by the United States or any state or any agency or SIGNATURE SERIES
officer thereof. AEW REIT TRUST
------------------
(A UNIT INVESTMENT TRUST)
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any PROSPECTUS
person to whom it is not lawful to make such offer in such
state. DATED: _____________ __, 1998
Table of Contents
SPONSOR:
Title Page
REICH & TANG DISTRIBUTORS L.P.
PART A 600 Fifth Avenue
Summary of Essential Information...........................A-2 New York, New York 10020
Statement of Financial Condition...........................A-8 212-830-5400
Portfolio..................................................A-9
Report of Independent Accountants.........................A-10
PORTFOLIO CONSULTANT:
PART B
The Trust.................................................B-1 AEW CAPITAL MANAGEMENT
Risk Considerations.......................................B-4 225 Franklin Street
Public Offering...........................................B-8 Boston, Massachusetts 02110
Rights of Unitholders....................................B-11
Tax Status...............................................B-12
Liquidity................................................B-15 TRUSTEE:
Trust Administration.....................................B-17
Trust Expenses and Charges...............................B-23 THE CHASE MANHATTAN BANK
Reinvestment Plan........................................B-24 4 New York Plaza
Exchange Privilege and Conversion Offer..................B-24 New York, New York 10004
Other Matters............................................B-26
</TABLE>
Parts A and B of this Prospectus do not contain all of the information set
forth in the registration statement and exhibits relating thereto, filed with
the Securities and Exchange Commission, Washington, D.C., under the Securities
Act of 1933, and the Investment Company Act of 1940, and to which reference is
made.
625311.2
<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors, Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the
Cross-Reference Sheet to the Registration Statement of Equity
Securities Trust, Series 12, 1997 Triple Strategy Trust II).
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
Price Waterhouse LLP
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain amendments to the
Trust Indenture and Agreement referred to under Exhibit 99.1.1.1
below.
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit 99.1.1.1
to Amendment No. 1 to Form S-6 Registration Statement No.
33-62627 of Equity Securities Trust, Series 6, Signature Series,
Gabelli Entertainment and Media Trust on November 16, 1995 and
incorporate herein by reference).
99.1.3.5 -- Certificate of Incorporation of Reich & Tang Distributors, Inc.
(filed as Exhibit 99.1.3.5 to Form S-6 Registration Statement
No. 333-44301 on January 15, 1998 and incorporated herein by
reference).
99.1.3.6 -- By-Laws of Reich & Tang Distributors, Inc.(filed as Exhibit
99.1.3.6 to Form S-6 Registration Statement No. 333-44301 on
January 15, 1998 and incorporated herein by reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 99.1.4 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-62627
of Equity Securities Trust, Series 6, Signature Series, Gabelli
Entertainment and Media Trust on November 16, 1995 and
incorporated herein by reference).
99.2.1 -- Form of Certificate (filed as Exhibit 99.2.1 to Amendment No. 1
to Form S-6 Registration Statement No. 33- 62627 of Equity
Securities Trust, Series 6, Signature Series, Gabelli
Entertainment and Media Trust on November 16, 1995 and
incorporated herein by reference).
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of the Trust.
99.6.0 -- Power of Attorney of Reich & Tang Distributors, Inc., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Form S-6 Registration Statement No.
333-44301 on January 15, 1998 and incorporated herein by
reference). *99.27 - Financial Data Schedule (for EDGAR filing
only). --------
* To be filed by amendment
II-1
690733.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Equity Securities Trust, Signature Series, AEW REIT Trust has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 4th day of March, 1998.
EQUITY SECURITIES TRUST,
SIGNATURE SERIES,
AEW REIT TRUST
(Registrant)
REICH & TANG DISTRIBUTORS, INC.
(Depositor)
By /s/ PETER J. DEMARCO
Peter J. DeMarco
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of Reich &
Tang Distributors, Inc., the Depositor, in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
RICHARD E. SMITH, III President and Director
PETER S. VOSS Director
G. NEAL RYLAND Director
STEVEN W. DUFF Director
ROBERT F. HOERLE Managing Director March 4, 1998
PETER J. DEMARCO Executive Vice President
RICHARD I. WEINER Vice President
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Treasurer
EDWARD N. WADSWORTH Executive Officer
By /s/ PETER J. DEMARCO
Peter J. DeMarco
as Executive Vice President
and Attorney-In-Fact*
</TABLE>
- -----------------------------------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to
Form S-6 Registration Statement No. 333-44301 on January 15, 1998.
II-2
690733.1
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
registration statement on Form S-6 (the "Registration Statement") of our report
dated , 1998, relating to the Statement of Financial Condition, including the
Portfolio, of Equity Securities Trust, Signature Series, AEW REIT Trust which
appears in such Prospectus. We also consent to the reference to us under the
heading "Independent Accountants" in such Prospectus.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
, 1998
II-3
690733.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
The Sponsor, Trustee and Certificateholders
Equity Securities Trust, Signature Series,
AEW REIT Trust
We hereby consent to the use of the name "AEW" included herein and to the
reference to our Firm in the Prospectus.
AEW CAPITAL MANAGEMENT, L.P.
Boston, Massachusetts
, 1998
II-4
690733.1
