As filed with the Securities and Exchange Commission on April 1, 1998
Registration No. 333-47603
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
Amendment No. 1 to
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, Series 17, 1998 Triple Strategy Trust I
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, Series 17,
1998 Triple Strategy Trust I, 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.
|X| Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
================================================================================
636009.2
<PAGE>
- --------------------------------------------------------------------------------
INSERT LOGO
- --------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 17
1998 TRIPLE STRATEGY TRUST I
The Trust is a unit investment trust designated Equity Securities Trust, Series
17, 1998 Triple Strategy Trust I (the "Trust"). The Sponsor is Reich & Tang
Distributors, Inc. The objective of the Trust is to maximize total return
through a combination of capital appreciation and current dividend income. The
Sponsor can not give any assurance that the Trust's objective can be achieved.
The Trust seeks to achieve its objective by attempting to outperform the Dow
Jones Industrial Average ("DJIA") by creating a portfolio that combines the
following three investment strategies: (1) investing in the DJIA's ten highest
dividend yielding common stocks ("Top Ten"), (2) investing in the five lowest
priced stocks of the Top Ten ("Focus Five") and (3) investing in a single stock
which is the second-lowest priced of the Focus Five ("Penultimate Pick"); each
determined as of two business days prior to the Initial Date of Deposit. The
name "Dow Jones Industrial Average" is the property of Dow Jones & Company,
Inc., which is not affiliated with the Sponsor and has not participated in any
way in the creation of the Trust or in the selection of the stocks included in
the Trust and has not reviewed or approved any information included in this
Prospectus. Dow Jones & Company, Inc. has not granted to the Trust or the
Sponsor a license to use the Dow Jones Industrial Average. The value of the
Units of the Trust will fluctuate with fluctuations in the value of the
underlying Securities in the Trust. Therefore, Unitholders who sell their Units
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 fourteen months
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 SEC
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 APRIL 1, 1998
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695951.3
<PAGE>
<TABLE>
SUMMARY OF ESSENTIAL INFORMATION AS OF MARCH 31, 1998:*
<S> <C>
DATE OF DEPOSIT: April 1, 1998 MANDATORY TERMINATION DATE: The earlier of
AGGREGATE VALUE OF SECURITIES.................. $149,677 July 10, 1999 or the disposition of the last Security in
AGGREGATE VALUE OF SECURITIES the Trust.
PER 100 UNITS............................... $ 970.50 CUSIP NUMBERS: Cash: 294762265
NUMBER OF UNITS................................ 15,422 Reinvestment: 294762273
FRACTIONAL UNDIVIDED INTEREST IN TRUSTEE: The Chase Manhattan Bank
TRUST....................................... 1/15,422 TRUSTEE'S FEE: $.86 per 100 Units outstanding
PUBLIC OFFERING PRICE PER 100 UNITS ESTIMATED ORGANIZATIONAL EXPENSES**:
Aggregate Value of Securities in $.57 per 100 Units
Trust.................................... $ 149,677 ESTIMATED OFFERING COSTS**: $.73 per 100
Divided By 15,422 Units (times 100)......... $ 970.50 Units
Plus Sales Charge of 2.95% of Public OTHER FEES AND EXPENSES: $.23 per 100 Units
Offering Price........................... $ 29.50 outstanding
Public Offering Price+...................... $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++................................. $970.50 Charges" in Part B).
EVALUATION TIME: 4:00 p.m. New York Time. EXPECTED SETTLEMENT DATEo: April 6, 1998
MINIMUM INCOME OR PRINCIPAL RECORD DATE: June 15 and December 15
DISTRIBUTION: $1.00 per 100 Units DISTRIBUTION DATE: June 30 and December 31
MINIMUM VALUE OF TRUST: The Trust may be ROLLOVER NOTIFICATION DATE***:
terminated if the value of the Trust is less than 40% of May 15, 1999 or another date as determined by the
the aggregate value of the Securities at the completion Sponsor.
of the Deposit Period. LIQUIDATION PERIOD: Beginning 5 days prior to the
Mandatory Termination Date.
</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 include: the cost of preparing and
printing the registration statement, the trust indenture and the closing
documents; and the initial audit of the Trust. Total organizational expenses
will be amortized over the life of the Trust. Offering costs, including the
costs of registering securities with the SEC and the states, will be amortized
over the term of the initial offering period, which may be between 30 and 90
days. See "Trust Expenses" in Part B. These figures are based upon the
assumption that the Trust will reach a size of 1,000,000 Units as estimated by
the Sponsor; organizational expenses and offering costs per 100 Units will vary
with the actual size of the Trust. If the Trust does not reach this Unit level,
the Estimated Organizational Expenses and Offering Costs per 100 Units will be
higher.
*** If a Unitholder ("Rollover Unitholder") so specifies 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").
+ 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.
o The business day on which all contracts to purchase securities in
the Trust are expected to settle.
A-2
695951.3
<PAGE>
OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsor) by creating a portfolio that combines
the following three investment strategies: (1) investing in the DJIA's ten (10)
common stocks having the highest dividend yield (the "Top Ten"), (2) investing
in the DJIA's five (5) common stocks having the lowest per share stock price of
the Top Ten (the "Focus Five") and (3) investing in a single stock which is the
DJIA's second-lowest priced of the Focus Five (the "Penultimate Pick"); each
determined as of two business days prior to the Initial Date of Deposit. The
combination of the three investment strategies is hereinafter referred to as the
"Triple Strategy". The Trust's portfolio will be comprised of ten (10) stocks.
Approximately 20% of the Trust's assets will be allocated to the Top Ten,
approximately 60% will be allocated to the Focus Five and approximately 20% will
be allocated to the Penultimate Pick. Within these three categories, stocks will
be purchased in approximately equal dollar amounts. Due to the fact that all of
the Focus Five are also represented in the Top Ten, and that the Penultimate
Pick appears in both the Focus Five and Top Ten, overlap will result in a
difference in the actual weighting of the stocks in the portfolio as well as the
actual weighting of the three strategies relative to each other in the portfolio
on the Initial Date of Deposit. For the actual percentage of each stock in the
portfolio, see "Portfolio" herein. (Also, see "The Trust - Objective" and "The
Trust - The Securities" in Part B.) As used herein, the term "highest dividend
yield" means the yield for each Security calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed on that Security and
dividing the result by the market value of that Security as of two business days
prior to the Initial Date of Deposit. This rate is historical, and there is no
assurance that any dividends will be declared or paid in the future on the
Securities in the Trust. The Trust may not exceed the DJIA in any one year;
however, historically, long term cumulative returns from these strategies has
outperformed the DJIA. As used herein, the term "Securities" means the common
stocks initially deposited in the Trust and described in "Portfolio" in Part A
and any additional common stocks acquired and held by the Trust pursuant to the
provisions of the Indenture. Further, the Securities may appreciate or
depreciate in value, dependent upon the full range of economic and market
influences affecting corporate profitability, the financial condition of issuers
and the price of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objective of the Trust will be
achieved.
PORTFOLIO. The Portfolio contains 10 issues. 100% of the issues are represented
by the Sponsor's contracts to purchase. Based upon the principal business of
each issuer and current market values, the following industries are represented
in the Portfolio*: Auto Manufacturing 1.99%, Banking and Finance 1.97%, Chemical
2.00%, Consumer Products 14.01%, Manufacturing 1.95%, Oil 15.99%, Paper and
Forest Products 34.06%, Photography 14.00%, and Telecommunications 14.03%. The
Focus Five stocks are AT&T Corporation, Eastman Kodak Company, Exxon
Corporation, International Paper Company and Philip Morris Companies, Inc. and
the Penultimate Pick is International Paper Company, a paper company with a
significant concentration in the paper and forest product industry.
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 plus a sales
charge of 2.95% of the Public Offering Price per 100 Units or 3.04% 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.)
- ------------------
* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or that industry constitute
25% or more of the aggregate face amount of the portfolio.
A-3
695951.3
<PAGE>
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 $21.88. 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 semi-annually 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. 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 5-day period prior to the Mandatory Termination Date
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the Trust and all Securities will be sold or distributed by
the Mandatory Termination Date. The Trustee may utilize the services of the
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 five 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 the market value of the Securities may decline prior to their being
sold during the Liquidation Period; 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 rollover 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 and the proceeds will be reinvested in units of the next
available series of Equity Security Trust. An election to rollover terminating
distributions will generally be a taxable event. See "Trust
Administration--Trust Termination" in Part B for details to make this election.
A-4
695951.3
<PAGE>
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). Further, the
nature of the combination of the three investment strategies in the portfolio
causes the Trust to be concentrated in the Penultimate Pick. The Penultimate
Pick is a company deriving a substantial portion of its income from the paper
and forest product industry, the risk of investment in which may include timber
and waste fiber supply worldwide, environmental concerns and new capacity.
Investors should consider the greater risk of the Trust's concentration and the
effect on their investment versus a more diversified portfolio and should
compare returns available on less concentrated portfolios before making an
investment decision. The portfolio of the Trust is fixed and not "managed" by
the 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.
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 reduced sales
charge of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll
in the Reinvestment Plan.
UNDERWRITING. Reich & Tang Distributors, Inc., 600 Fifth Avenue, New York, New
York 10020, will act as Underwriter for all of the Units of Equity Securities
Trust, Series 17, 1998 Triple Strategy Trust I. 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-5
695951.3
<PAGE>
EQUITY SECURITIES TRUST
SERIES 17
1998 TRIPLE STRATEGY TRUST I
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, APRIL 1, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $149,677)(Note 1).......................... $149,677
Organizational Costs (Note 2)........................................................................... 5,665
Offering Costs (Note 3)................................................................................. 7,335
--------
Total................................................................................................... $162,677
========
LIABILITIES AND INTEREST OF UNITHOLDERS
Accrued Liabilities (Notes 2 and 3)..................................................................... $ 13,000
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (Series 17: 15,422 Units).......................................... 149,677
--------
Total................................................................................................... $162,677
========
Net Asset Value per Unit................................................................................ $9.71
========
</TABLE>
- -------------------------
Notes to Statement:
(1) Equity Securities Trust, Series 17, 1998 Triple Strategy Trust I (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 April 1, 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 BankBoston in an amount of $200,000 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 March 31, 1998. The Trust will
terminate on July 10, 1999 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-6
695951.3
<PAGE>
EQUITY SECURITIES TRUST
SERIES 17
1998 TRIPLE STRATEGY TRUST I
PORTFOLIO
AS OF OPENING OF BUSINESS, APRIL 1, 1998
<TABLE>
<CAPTION>
Market
Value of Cost of
Stocks as a Securities
Number Percentage Current Market to the
Portfolio of Name of Issuer Ticker of the Dividend Value Per Trust
No. Shares (1) Symbol Trust (2) Yield(3) Share (4)
----- -------- --------------- ------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1. 320 AT&T Corporation T 14.030% 2.01% $ 65.6250 $21,000
2. 37 Chevron Corporation CHV 1.985 2.89 80.3125 2,971
3. 44 E.I. du Pont de Nemours & DD 1.999 1.85 68.0000 2,992
Company
4. 323 Eastman Kodak Company EK 14.000 2.71 64.8750 20,954
5. 310 Exxon Corporation XON 14.006 2.43 67.6250 20,964
6. 44 General Motors Corporation GM 1.992 2.95 67.7500 2,981
7. 1,089 International Paper Company IP 34.059 2.14 46.8125 50,979
8. 22 J.P. Morgan & Company JPM 1.974 2.83 134.3125 2,955
9. 32 Minnesota, Mining & MMM 1.946 2.42 91.0000 2,912
Manufacturing Co.
10. 503 Philip Morris Companies, Inc. MO 14.009 3.84 41.6875 20,969
Total Investment in Securities 100% $149,677
======== ========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on March 31, 1998.
All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be April 6, 1998.
(2) Based on the cost of the Securities to the Trust.
(3) Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend received on the security
and dividing the result by its market value as of the close of trading on
March 31, 1998.
(4) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsor's Purchase Price is $149,944. The Sponsor's Loss
on the Initial Date of Deposit is $267.
The accompanying notes form an integral part of the Financial Statements.
A-7
695951.3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders,
Equity Securities Trust, Series 17,
1998 Triple Strategy Trust I
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, Series 17, 1998 Triple Strategy
Trust I (the "Trust") at opening of business, April 1, 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, April 1, 1998, by correspondence with the Sponsor, provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, Massachusetts 02110
April 1, 1998
695951.3
<PAGE>
NOW YOU CAN TAKE ADVANTAGE OF THREE "WINNING" STRATEGIES
THE TRUST
Investing in the stock market has proven year after year to be a good way
to beat inflation. The Dow Jones Industrial Average (DJIA)* is a leading stock
market indicator that provides the data for this fact. This average is a
sampling of thirty stocks that represent some of the largest and strongest
companies in the world. Their long record of steady earnings, financial
resources and economic power have earned them the investor confidence that has
given them the nickname "blue chip" stocks.
THE STRATEGY
Now you have the opportunity to invest in three strategies simultaneously
that have been proven to "beat" the DJIA without having to spend the time,
effort and money to buy each stock individually. The Triple Strategy Trust is a
unit investment trust portfolio designed to take advantage of three winning
strategies. Historically, these three strategies have each individually beaten
the returns of the DJIA over the past twenty-five years. The first strategy is
to pick the Top Ten highest yielding stocks of the thirty stocks that are
contained in the DJIA. The second strategy is to choose the five lowest priced
stocks of the Top Ten. These are called the Focus Five. The last strategy is to
choose the second lowest priced stock of the Focus Five. This is called the
Penultimate Pick. These three strategies are then combined to produce a
portfolio of ten stocks with the weighting among the strategies selected by the
Sponsor. Each stock's concentration will reflect the individual weightings of
the three strategies. Both Chart A and Chart B show the effect these strategies
may have on your investment. For example, if you had invested $10,000 in 1973 in
the DJIA, your investment would be worth approximately $213,856 today. But if,
hypothetically, you had invested the same $10,000 applying the Triple Strategy,
your investment would be worth approximately $1,527,400 today. These
hypothetical returns do not include sales charge, commissions, or reflect the
effect of market fluctuations if a stock in the portfolio of one of the
strategies was sold at any point in time. There can be no assurance that these
results will be achieved as past performance is no guarantee of future results.
Chart A Chart B
- ---------------------
* The DJIA is the property of Dow Jones & Company, Inc. and the company is
not affiliated with the Sponsor and has not participated in any way in the
creation of the trust or in the portfolio and has not approved any
information included herein.
695951.3
<PAGE>
THE TRUST'S CONCEPT
The Trust's concept is a simple one: To create a portfolio which combines
these three "winning" strategies. The diversification of the Top Ten stocks
combined with a concentration of the higher yielding Penultimate Pick and the
Focus Five stocks gives the Trust the opportunity to produce above average
returns. The portfolio is held for approximately 15 months and then it is
liquidated. (For more information see "Options at termination" below.)
TRIPLE STRATEGY TRUST INVESTING:
Time Invested vs. Investment Timing - This Trust is based on the theory that you
are rolling over your portfolio at termination. The Trust may not exceed the
DJIA in any one year or consecutive rollover periods, if available; however,
historically, long term cumulative returns from this philosophy beat the DJIA.
It's not the timing of the purchase that counts, it's the length of time that
you are invested.
Contrarian Reasoning - Buy what others are selling.
Dividends Count - Dividends contribute greatly to your total return.
Layered Strategies Work - Look at the charts and notice how the DJIA has been
beaten by these three strategies. It is our opinion that if one strategy works
well then three strategies may work better.
ONE PORTFOLIO, THREE STRATEGIES
IF YOU ARE LOOKING FOR A GOOD OPPORTUNITY TO INVEST WITH A STRATEGY THAT HAS
CONSISTENTLY OUTPERFORMED THE MOST POPULAR STOCK MARKET INDICATOR, THEN THIS
MAY BE THE INVESTMENT FOR YOU.
FEATURES and BENEFITS
o Convenience - Ownership of ten blue chip stocks with the ease of a
single purchase.
o Liquidity - You may sell your units on any business day at the then
current net asset value. However, since market values fluctuate, your
units may be worth more or less than your original investment.
o Low minimum investment - May be as low as $1,000.
o Options at termination - You may receive cash, stock-in-kind
(Unitholders owning 2,500 units or more) or roll your proceeds into
the new Triple Strategy Trust, if available, at a reduced sales
charge. Unitholders may be subject to tax liability at Trust
termination.
o No management fees - This is an unmanaged portfolio and therefore no
additional management fees are charged.
Risk Considerations - An investment in Units of the Trust should be made with an
understanding of the risks associated with investments in common stocks, which
include the risk that the financial condition of the issuers may become impaired
or that the general condition of the stock market may worsen. In addition,
because the Trust may be considered to be "concentrated" in stocks of companies
deriving a substantial portion of their income from a singular industry, and
that the combination of the three investment strategies causes the Trust to be
"concentrated" in the Penultimate Pick, investors should consider the greater
risk of such concentrations and the effect on their investment versus a more
diversified portfolio and compare those returns before making an investment
decision. Units of the Trust are not deposits or obligations of, or guaranteed
by, any bank and Units are not federally insured or otherwise protected by the
Federal Deposit Insurance Corporation and involve investment risk including loss
of principal.
695951.3
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EQUITY SECURITIES TRUST
SERIES 17
1998 TRIPLE STRATEGY TRUST I
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 17, 1998 Triple Strategy
Trust I consists of a "unit investment trust" designated as set forth in Part A.
The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement (the "Trust Agreement"), dated the Initial Date of
Deposit, among 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, 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,
has registered on the registration books of the Trust evidence of the Sponsor's
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
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Trust. During the 90 days subsequent to the Initial Date of Deposit (the
"Deposit Period"), the Sponsor may deposit additional Securities in the Trust
that are substantially similar to the Securities already deposited in the Trust
("Additional Securities"), contracts to purchase Additional Securities or cash
with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of Deposit. These additional Units, which will
result in an increase in the number of Units outstanding, will each represent,
to the extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
Initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date of
Deposit because of, among other reasons, purchase requirements, changes in
prices, or unavailability of Securities. The composition of the Trust portfolio
may change slightly based on certain adjustments made to reflect the disposition
of Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to such Securities, including Securities received in
exchange for shares or the reinvestment of the proceeds distributed to
Unitholders. Deposits of Additional Securities in the Trust subsequent to the
Deposit Period must replicate exactly the existing proportionate relationship
among the number of shares of Securities in the Trust portfolio. Substitute
Securities may be acquired under specified conditions when Securities originally
deposited in the Trust are unavailable (see "The Trust--Substitution of
Securities" below).
OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsor) by creating a portfolio that combines
the following three investment strategies: (1) investing in the DJIA's ten (10)
common stocks having the highest dividend yield (the "Top Ten"), (2) investing
in the DJIA's five (5) common stocks having the lowest per share stock price of
the Top Ten (the "Focus Five") and (3) investing in a single stock which is the
DJIA's second-lowest priced of the Focus Five (the "Penultimate Pick"); each
determined as of two business days prior to the Initial Date of Deposit. The
combination of the three investment strategies is hereinafter referred to as the
"Triple Strategy".The Trust's portfolio will be comprised of ten (10) stocks.
Approximately 20% of the Trust's assets will be comprised of the Top Ten,
approximately 60% will be comprised of the Focus Five and approximately 20% will
be comprised of the Penultimate Pick. Within these three categories, stocks will
be purchased in approximately equal dollar amounts. Due to the fact that all of
the Focus Five are also represented in the Top Ten, and that the Penultimate
Pick appears in both the Focus Five and Top Ten, overlap will result in a
difference in the actual weighting of the stocks in the portfolio as well as the
actual weighting of the three strategies relative to each other in the portfolio
on the Initial Date of Deposit. For the actual percentage of each stock in the
portfolio, see "Portfolio" in Part A. (Also see "The Trust - Objective" and "The
Trust - The Securities" in Part B.) As used herein, the term "highest dividend
yield" means the yield for each Security calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed on that Security and
dividing the result by the market value of that Security as of two business days
prior to the Initial Date of Deposit. This rate is historical, and there is no
assurance that any dividends will be declared or paid in the future on the
Securities in the Trust. As used herein, the term "Securities" means the common
stocks initially deposited in the Trust and described in "Portfolio" in Part A
and any additional common stocks acquired and held by the Trust pursuant to the
provisions of the Indenture.
Investing in DJIA stocks with the highest dividend yields may be effective
in achieving the Trust's investment objective because regular dividends are
common for established companies and dividends have accounted for a substantial
portion of the total return on DJIA stocks as a group. There can be no assurance
that the dividend rates will be maintained. Reduction or elimination of a
dividend could adversely affect the stock price as well. Purchasing a portfolio
of these stocks as opposed to one or two stocks can achieve a more diversified
holding. There is only one investment decision instead of ten. An investment in
the Trust can be cost-efficient, avoiding the odd-lot costs of buying small
quantities of securities directly. An investment in a number of companies with
high dividends relative to their stock prices is designed to increase the
Trust's potential for higher returns. The Trust's return will consist of a
combination of capital appreciation and current dividend income. The Trust will
terminate in approximately fourteen months, at which time investors may choose
to either receive the distributions in kind
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(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. Further,
the Securities may appreciate or depreciate in value, dependent upon the full
range of economic and market influences affecting corporate profitability, the
financial condition of issuers and the prices of equity securities in general
and the Securities in particular. Investors should note that the Trust's
selection criteria was applied to the Securities two business days prior to the
Initial Date of Deposit. 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. Therefore, there is no
guarantee that the objective of the Trust will be achieved.
THE SECURITIES. Each of the Securities has been taken from the Dow Jones
Industrial Average ("DJIA"). The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the broad market and of
American industry. The companies are major factors in their industries and their
stocks are widely held by individuals and institutional investors. Changes in
the components of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely. Most
substitutions have been the result of mergers, but from time to time, changes
may be made to achieve a better representation. The components of the DJIA may
be changed at any time for any reason. Any changes in the components of the DJIA
after the date of this Prospectus will not cause a change in the identity of the
common stocks included in the Trust's portfolio, including any Additional
Securities deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. Taking into account a number of name changes, 6 of the original
companies are still in the DJIA today. For two periods of 17 consecutive years
each, there were no changes to the list: March 1939 - July 1956 and June 1959 -
August 1976. The DJIA last changed on March 17, 1997.
<TABLE>
<S> <C>
Stocks Currently Comprising the DJIA
AT&T Corporation International Business Machines Corporation
Allied Signal International Paper Company
Aluminum Company of America Johnson & Johnson
American Express Company J.P. Morgan & Company
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing Company
Coca-Cola Company Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Company Proctor & Gamble Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Corp. Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
Hewlett-Packard Co. Walt Disney Company
</TABLE>
The yield for each Security was calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed and dividing the result
by the market value of the Security as of two business days prior to the Initial
Date of Deposit. This formula (an objective determination) served as the basis
for the Sponsor's selection of the Top Ten. The companies represented in the
Trust are some of the most well-known and highly capitalized companies in
America. The Securities were selected irrespective of any research
recommendation by the Sponsor. Investing in the stocks of the DJIA may be
effective as well as
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conservative because regular dividends are common for established companies and
dividends have accounted for a substantial portion of the total return on stocks
of the DJIA as a group.
Although the Equity Securities Trust, 1998 Triple Strategy Trust I was not
available until this year, during the last 25 years, the strategy of investing
in approximately equal values of the ten highest yielding stocks each year
generally would have yielded a higher total return than an investment in all 30
stocks which make up the DJIA. The following table shows the hypothetical
performance of investing approximately equal amounts in each of the Top Ten,
Focus Five, Penultimate Pick and the combined Triple Strategy at the beginning
of each year and rolling over the proceeds. The total returns do not reflect
sales charges, commissions or taxes. These results represent past performance of
the Top Ten, Focus Five, Penultimate Pick and Triple Strategy, and should not be
considered indicative of future results of the Trust. The Trust's annual total
return may not exceed the DJIA in any one year; however, historically, long term
cumulative total returns from these strategies has outperformed the cumulative
returns of the DJIA. The Top Ten, Focus Five, Penultimate Pick and Triple
Strategy each underperformed the DJIA in certain years. Also, investors in the
Trust may not realize as high a total return as on a direct investment in each
of the Top Ten, Focus Five, Penultimate Pick or Triple Strategy since the Trust
has sales charges and expenses and may not be fully invested at all times. Unit
prices fluctuate with the value of the underlying stocks, and there is no
assurance that dividends on these stocks will be paid or that the Units will
appreciate in value.
The following table compares the actual performance of the DJIA and
approximately equal values of each of the Top Ten, Focus Five, Penultimate Pick
or Triple Strategy in each of the past 25 years, as of December 31 in each of
these years:
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<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)
Dow Jones
Industrial
Penultimate Triple Average
Year Ended Top Ten(2) Focus Five(2) Pick(2) Strategy(3) (DJIA)
---------- ---------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1973 3.90% 19.60% 73.40% 27.22% -13.10%
1974 -1.30 -3.80 -41.70 -10.88 -23.10
1975 55.90 70.10 157.20 84.68 44.40
1976 34.80 40.80 55.10 42.46 22.70
1977 0.90 4.50 4.30 3.74 -12.70
1978 0.10 1.70 1.00 1.20 2.70
1979 12.40 9.90 -10.10 6.40 10.50
1980 27.20 40.50 50.60 39.86 21.50
1981 5.00 0.00 27.30 6.46 -3.40
1982 23.60 37.40 95.30 46.22 25.80
1983 38.70 36.10 36.10 36.62 25.70
1984 -7.60 12.60 -2.80 8.52 1.10
1985 29.50 37.80 26.40 33.86 32.80
1986 32.10 27.90 29.60 29.08 26.90
1987 6.10 11.10 3.30 8.54 6.00
1988 22.90 18.40 19.50 19.52 16.00
1989 26.50 10.50 12.90 14.18 31.70
1990 -7.60 -15.20 -17.40 -14.12 -0.40
1991 39.30 61.90 185.60 82.12 23.90
1992 7.90 23.10 69.10 29.26 7.40
1993 27.30 34.30 39.10 33.86 16.80
1994 4.10 8.60 -37.40 -1.50 4.90
1995 36.70 30.50 21.70 29.98 36.40
1996 27.90 26.00 28.10 26.80 28.90
1997 21.60 20.00 49.90 26.30 24.70
</TABLE>
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(1) Total Return represents the sum of Appreciation and Actual Dividend Yield.
(i) Appreciation for the Top Ten, Focus Five and Penultimate Pick is
calculated by subtracting the market value of these stocks as of the first
trading day on the New York Stock Exchange in a given year from the market
value of those stocks as of the last trading day in that year, and dividing
the result by the market value of the stocks as of the first trading day in
that year. Appreciation for the DJIA is calculated by subtracting the
opening value of the DJIA as of the first trading day in each year from the
closing value of the DJIA as of the last trading day in that year, and
dividing the result by the opening value of the DJIA as of the first trading
day in that year. (ii) Actual Dividend Yield for the Top Ten, Focus Five and
Penultimate Pick is calculated by adding the total dividends received on the
stocks in the year and dividing the result by the market value of the stocks
as of the first trading day in that year. Actual Dividend Yield for the DJIA
is calculated by taking the total dividends credited to the DJIA and
dividing the result by the opening value of the DJIA as of the first trading
day in that year. Total return does not take into consideration any sales
charges, commissions, expenses or taxes.
(2) The Top Ten, Focus Five and Penultimate Pick in any given year were selected
by ranking the dividend yields for each of the stocks in the DJIA as of the
beginning of that year, based upon an annualization of the last quarterly or
semi-annual regular dividend distribution (which would have been declared in
the preceding year) divided by that stock's market value on the first
trading day on the New York Stock Exchange in that year.
(3) The Triple Strategy combines the Total Return of the three investment
strategies, the Top Ten, Focus Five and Penultimate Pick, in any given year
based upon the same weighted average which the Trust will be employing: 20%
comprised of the Top Ten, 60% of the Focus Five and 20% of the Penultimate
Pick.
These results represent past performance and should not be considered
indicative of future results of the Trust. Unit prices may fluctuate with
the value of the underlying stocks, and there is no assurance that dividends
on these stock will be paid or that the Units will appreciate in value.
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The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the 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, the purchase price may not exceed the purchase price of the Failed
Securities and the Substitute Securities must be substantially similar to the
Securities originally contracted for.
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 the Liquidation Period. Since the
Trust will not sell Securities in response to ordinary market fluctuation, but
only at the Trust's termination or upon the occurrence of certain events, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trust. Some of the
Securities in the Trust may also be owned by other clients of the 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
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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 delivered, the Trust may be unable to satisfy its contracts
to purchase the Additional Securities without the Trustee selling underlying
Securities. Therefore, to the extent that the subsequent deposits are not
covered by a bank letter of credit, 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.
PENULTIMATE PICK. The Trust may be considered to be "concentrated" in common
stock of a particular issuer. Information regarding such company is available by
inspecting or copying certain reports, proxies and informational statements and
other information filed by such company in accordance with the Securities
Exchange Act of 1934 at the public reference facilities maintained at the
Securities and Exchange Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies can be obtained from the Public Reference Section
of the Securities and Exchange Commission at the same address at prescribed
rates.
PAPER AND FOREST PRODUCT COMPANIES. The Trust may be considered to be
concentrated in the common stock of a company engaged in the production and
distribution of paper and forest products. Worldwide availability of
high-quality timber will likely be a major factor affecting the future of this
industry. Environmental pressures as well as overcutting have led to a reduction
in timber available in the Pacific Northwest area of the United States and
Canada. Timber supplies in the U.S. Pacific Northwest have been in steady
decline. Old-growth timber available from both state and federal sources dropped
80% in the last five years. The primary cause is the Endangered Species Act,
which protects both threatened and endangered species such as the northern
spotted owl. The U.S. West Coast shortage is also causing rising
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timber prices throughout the U.S. South. The British Columbia government has
enacted laws to lower the annual cut from its lands and has recently pulled
money from its timber reforestation fund. Lack of timber is a major element in
the high cost of mills in the U.S. West. In contrast, the low-cost wood in
Indonesia and Brazil gives producers in those countries a distinct advantage.
There is a major controversy within the paper industry over the direction and
magnitude of recycled waste fiber prices. Prices shot up significantly in the
1994 to mid-1995 period, but have retrenched back to previous lows. Many within
the industry believe these prices will rise substantially again as worldwide
demand surges in an economic recovery. Demand from the non-Japan Asia region is
an additional element that could help this price surge.
The industry is improving its environmental standards worldwide. There is
increased concern for a cleaner environment resulting in more stringent
worldwide requirements for paper and board mills. If fact, the World Bank
requires full compliance to world standards before approving loans for new
facilities. In the United States, the Environmental Protection Agency ("EPA") is
currently redefining and tightening its air and water (or "cluster") rules.
Capacity changes will play a large factor in determining the global outlook
for the industry. Significant projects are being announced in Asia to help
capture some of the tonnage now imported, as well as to supply the anticipated
above-average growth. In North America, capacity additions appear excessive in
containerboard (unbleached kraft linerboard, semi-chemical plus recycled
equivalents), where new capacity could grow at least 4% annually through 1997.
Few announcements have been made in bleached products, since the EPA is in the
process of developing its cluster rules on air and water pollution, which focus
on the bleaching process and dioxin transfer from the chlorine bleaching agent.
The Sponsor believes that the information summarized above for the Paper and
Forest Product Companies describes some of the more significant aspects relating
to the risks associated with investing in the Trust which may have a
"concentration" in this industry. The sources of such information are obtained
from research reports as well as other publicly available documents. While the
Sponsor has not independently verified this information, it has no reason to
believe that such information is not correct in all material respects.
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. Although recent legislation has established a reduced tax rate of 20%
for capital gains realized by individual investors who have held assets for more
than 18 months, this rate will generally not be available for Unitholders who
are not eligible, or do not elect, to receive their pro rata share of the
Securities in-kind because the term of the Trust is approximately fourteen
months. Investors are urged to consult their own tax advisers. Further, at any
time after the Initial Date of Deposit, legislation may be enacted, with respect
to the Securities in the Trust or the issuers of the Securities. Changing
approaches to regulation, particularly with respect to the environment or with
respect to the petroleum 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.
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.
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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 during the initial public offering 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 2.45%
25,000 but less than 50,000 2.20%
50,000 but less than 100,000 2.00%
100,000 or more 1.75%
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.
These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during 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.
The holders of units prior series of Equity Securities Trusts (the "Prior
Series") may exchange units of the Prior Series for Units of the Trust at their
relative net asset values, subject to a reduced sales charge of 1.95%. An
exchange of a Prior Series for Units of the Trust will generally be a taxable
event. The exchange option described above will also be available to investors
in the Prior Series who elect to purchase Units of the Trust within 60 days of
their liquidation of units in the Prior Series (see Exchange and Rollover
Privileges).
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 during 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 1.95% of the public offering price.
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Units may be purchased in the primary or secondary market (including
purchases by Rollover Unitholders) 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 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 2.25% 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 will receive a combined gross underwriting
commission equal to up to 2.95% of the Public Offering Price per 100 Units
(equivalent to 3.04% of the net amount invested in the Securities).
Additionally, 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. All or a portion of the Securities initially deposited in
the Trust may have been acquired through the Sponsor.
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<PAGE>
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.
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 not be evidenced by
certificates. All evidence of ownership of the Units will be recorded in
book-entry form at Depository Trust Company ("DTC") through an investor's
brokerage account. 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 will be made
in book-entry form through DTC. Ownership and transfer of Units will be
evidenced and accomplished directly and indirectly by book-entries made by DTC
and its participants. DTC will record ownership and transfer of the Units among
DTC participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchases and sale from the
broker-dealer or bank from whom their purchase was made. Units are transferable
by making a written request properly accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the Unitholder. 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, 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").
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.
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.
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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 its Units, including sales charges, is allocated among its
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases its Units) in order
to determine its initial cost for its 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 the issuing corporation's current and accumulated
"earnings and profits" as provided in Section 316 of the Code. A Unitholder's
pro rata portion of dividends paid on such Security that exceed such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis in
such Security, and to the extent that such dividends exceed a Unitholder's tax
basis in such Security will generally be treated as capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be mid-term if the Unitholder
has held his Units for more than one year but not more than 18 months. Capital
gains are generally taxed at the same rates applicable to ordinary income,
although non-corporate Unitholders who realize mid-term capital gains may be
subject to a reduced tax rate of 28% on such gains, rather than the "regular"
maximum tax rate of 39.6%. Although recent legislation has established a reduced
tax rate of 20% for capital gains realized by non-corporate investors who have
held assets for more than 18 months, this rate will generally not be available
for Unitholders who are not eligible, or do not elect, to receive their pro rata
share of the Securities in-kind because the term of the Trust is approximately
fourteen months. 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 ($1,500 in the case of
married individuals filing separately) recognized by non-corporate Unitholders
may be deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a Unitholder
who itemizes his deductions may also deduct his pro rata share of the fees and
expenses of the Trust, but only to the extent that such amounts, together with
the Unitholder's other miscellaneous deductions, exceed 2% of his adjusted gross
income. The deduction of fees and expenses may also be limited by Section 68 of
the Code, which reduces the amount of itemized deductions that are allowed for
individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a 70% dividends
received deduction with respect to such Unitholder's pro rata portion of
dividends 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) during the 90-day period beginning on the date that is 45 days before the
date on which the stock becomes "ex-dividend." 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.
As discussed in the section "Termination", each Unitholder may have three
options in receiving its termination distributions, which are (i) to receive its
pro rata share of the underlying Securities in kind, (ii) to receive cash upon
liquidation of its pro rata share of the underlying Securities, or (iii) to
invest the amount of cash it would receive upon the liquidation of its pro rata
share of the underlying Securities in units
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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 pro rata share of the Securities of the Trust, in partial exchange for its
Units, the Unitholder should be treated as merely exchanging its 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.
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.
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
concerning the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units 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, Inc., 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 2.95% sales charge (or 3.04% 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
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which it has in inventory, its estimate of the salability 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 Evaluation Time on the business
day preceding the commencement of the Liquidation Period (approximately one year
from the Date of Deposit), Units may also be tendered to the Trustee for
redemption upon payment of any relevant tax by contacting the Sponsor, broker,
dealer or financial institution holding such Units in street name. In certain
instances, additional documents may be required, such as trust instrument,
certificate of corporate authority, certificate of death or appointment as
executor, administrator or guardian. At the present time there are no specific
taxes related to the redemption of Units. No redemption fee will be charged by
the Sponsor or the Trustee. Units redeemed by the Trustee will be canceled.
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
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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 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.
A Unitholder who wishes to dispose of his Units should inquire of his bank
or broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio.
Although the portfolio of the Trust is regularly reviewed, because of the
formula employed in selecting the Top Ten, Focus Five and Penultimate Pick, 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.
Furthermore, the Trust will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the Top Ten,
Focus Five and Penultimate Pick, or even its deletion from the DJIA.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the 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.
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(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, 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 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 any of the Unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency; or (3) to make such other provisions in regard to matters arising
thereunder as shall not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate as of the Evaluation Time on the business day preceding the
Liquidation Period or upon the earlier maturity, redemption or other
disposition, as the case may be, of the last of the Securities held in such
Trust and 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 investors
holding 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 by returning a properly completed election
request (to be supplied to Unitholders at least 20 days prior to such date):
1. A Unitholder who owns at least 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;
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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 rata share of its net assets of the Trust will be
distributed to such Unitholder within three days of the settlement of the
trade of the last Security to be sold; and/or
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, Triple Strategy 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 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 five 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.
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 the remaining underlying Securities without any
price restrictions.
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Section 17(a) of the Investment Company Act of 1940, as amended, generally
prohibits principal transactions between registered investment companies and
their affiliates. Pursuant to an exemptive order issued by the SEC, each
terminating Triple Strategy Trust can sell underlying Securities directly to a
New Series. The exemption will enable the Trust to eliminate commission costs on
these transactions. The price for those securities transferred will be the
closing sale price on the sale date on the national securities exchange where
the securities are principally traded, as certified and confirmed by the
Trustee.
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 an opportunity to elect
to "rollover" their terminating distributions into a New Series. The
availability of the reinvestment privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the reinvestment program will be treated as an
indication of interest only. The 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. 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 Reich & Tang, Reich & Tang Asset
Management, Inc. ("RTAM Inc."), is wholly owned by NEIC Holdings, Inc. which,
effective December 29, 1997, was wholly owned by NEIC Operating Partnership,
L.P. ("NEICOP"). Subsequently, on March 31, 1998, NEICOP changed its name to
Nvest Companies, L.P. ("Nvest"). The general partners of Nvest are Nvest
Corporation and Nvest L.P. Nvest L.P. is owned approximately 99% by public
Unitholders and its general partner is Nvest Corporation. Nvest 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 successor Sponsor to Bear
Stearns for numerous series of unit investment trusts, including New York
Municipal Trust, Series 1 (and Subsequent Series), Municipal Securities Trust,
Series 1 (and Subsequent Series), 1st Discount Series (and Subsequent Series),
Multi-State Series 1 (and Subsequent Series), Mortgage Securities Trust, Series
1 (and Subsequent Series), Insured Municipal Securities Trust, Series 1 (and
Subsequent Series) and 5th Discount Series (and Subsequent Series) and Equity
Securities Trust, Series 1, Signature Series, Gabelli Communications Income
Trust (and Subsequent Series).
Nvest 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 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.
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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 Units 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 always be a banking corporation organized under the laws of the United
States or any State and have at all times an aggregate capital, surplus and
undivided profits of not less than $2,500,000.
EVALUATION OF THE TRUST. The value of the Securities in the Trust portfolio
is determined in good faith by the Trustee on the basis set forth under "Public
Offering--Offering Price." The 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.
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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 and state registration fees, 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 SEC and the states, will be charged to capital over the term
of the initial offering period, which may be between 30 and 90 days. All
advertising and selling expenses, as well as any organizational expenses not
paid by the Trust, will be borne by the 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 financial statements 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 reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer
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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 to the
Record Day for such distribution. Each subsequent distribution of income or
principal on the participant's Units will be automatically applied by the
Trustee to purchase additional Units of the Trust. The 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 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 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, (ii) exchanges will
be effected in whole units only, (iii) Units of the Mortgage Securities Trust
may only be acquired in blocks of 1,000 Units and (iv) 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 per conversion, will be remitted to such
Unitholder.
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 and/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,
B-22
695951.3
<PAGE>
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 and/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 retail 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-,
mid- 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.
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 Top Ten, the Focus Five and the
Penultimate Pick, the related index and this Trust may be included from time to
time in advertisements, sales literature and reports to current or prospective
investors. Total return shows changes in Unit price during the period plus any
dividends and capital gains received, divided by the 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 Top
Ten, the Focus Five and the Penultimate Pick 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 applying the Top Ten, Focus Five and
Penultimate Pick investment strategies to other indexes. Returns may also be
shown on a combined basis. Trust performance may be compared to performance on a
total return basis of the
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695951.3
<PAGE>
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-24
695951.3
<PAGE>
[This page intentionally left blank]
B-25
695951.3
<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 ----------------------------------------------------
herein must not be relied upon as having been authorized by the THE TRIPLE STRATEGY TRUST
Trust, the Trustee or the Sponsor. The Trust is registered as ----------------------------------------------------
a unit investment trust under the Investment Company Act of
1940. Such registration does not imply that the Trust or any of EQUITY SECURITIES TRUST
its Units have been guaranteed, sponsored, recommended or SERIES 17
approved by the United States or any state or any agency or 1998 TRIPLE STRATEGY TRUST I
officer thereof.
(A UNIT INVESTMENT TRUST)
------------------
PROSPECTUS
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any DATED: APRIL 1, 1998
person to whom it is not lawful to make such offer in such
state.
SPONSOR:
Table of Contents
REICH & TANG DISTRIBUTORS, INC.
Title Page 600 Fifth Avenue
New York, New York 10020
PART A 212-830-5400
Summary of Essential Information............................A-2
Statement of Financial Condition............................A-6
Portfolio...................................................A-7
Report of Independent Accountants...........................A-8 TRUSTEE:
PART B THE CHASE MANHATTAN BANK
The Trust...................................................B-1 4 New York Plaza
Risk Considerations.........................................B-6 New York, New York 10004
Public Offering.............................................B-9
Rights of Unitholders......................................B-11
Tax Status.................................................B-12
Liquidity..................................................B-14
Trust Administration.......................................B-16
Trust Expenses and Charges.................................B-21
Reinvestment Plan..........................................B-21
Exchange Privilege and Conversion Offer....................B-22
Other Matters..............................................B-23
</TABLE>
Parts A and B of this Prospectus do not contain all of
the information set forth in the registration statement and
exhibits relating thereto, filed with the Securities and
Exchange Commission, Washington, D.C., under the Securities
Act of 1933, and the Investment Company Act of 1940, and to
which reference is made.
695951.3
<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 10, Triple Strategy Trust).
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 -- Form of Reference Trust Agreement including certain amendments to
the Trust Indenture and Agreement referred to under Exhibit
99.1.1.1 below.
9.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit 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).
9.1.3.5 -- Certificate of Incorporation of Reich & Tang Distributors, Inc.
(filed as Exhibit 99.1.3.5 to Form S-6 Registration Statement No.
333-44301 of Equity Securities Trust, Series 16, Signature Series,
Zacks All- Star Analysts Trust III on January 15, 1998 and
incorporated herein by reference).
9.1.3.6 -- By-Laws of Reich & Tang Distributors, Inc. (filed as Exhibit
99.1.3.6 to Form S-6 Registration Statement No. 333-44301 of Equity
Securities Trust, Series 16, Signature Series, Zacks All-Star
Analysts Trust III on January 15, 1998 and incorporated herein by
reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 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).
*99.3.1 -- 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
of Equity Securities Trust, Series 16, Signature Series, Zacks
All-Star Analysts Trust III on January 15, 1998 and incorporated
herein by reference).
*99.27 - Financial Data Schedule (for EDGAR filing only).
- --------
* Filed herewith.
636009.2
<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.
The Registrant hereby identifies Equity Securities Trust, Series 10,
Triple Strategy Trust for the purposes of the representations required by Rule
487 and represents the following:
1) That the portfolio securities deposited in the Series as to the
securities of which this registration statement is being filed do
not differ materially in type or quality from those deposited in
such previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential
financial information for, the Series with respect to the
securities of which this registration statement is being filed,
this registration statement does not contain disclosures that
differ in any material respect from those contained in the
registration statements for such previous Series as to which the
effective date was determined by the commission or the staff; and
3) That is has complied with Rule 460 under the Securities Act of
1933.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Equity Securities Trust, Series 17, 1998 Triple Strategy Trust I,
has duly caused this Amendment to the 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 1st day of April, 1998.
EQUITY SECURITIES TRUST, SERIES 17
1998 Triple Strategy Trust I
(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 Amendment to
the 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 L.P., 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 April 1, 1998
ROBERT F. HOERLE Managing Director
PETER J. DEMARCO Executive Vice President By /s/ PETER J. DEMARCO
Peter J. DeMarco
Executive Vice President and
Attorney-In-Fact*
RICHARD I. WEINER Vice President
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Treasurer
EDWARD N. WADSWORTH Executive Officer
*Executed copies of Powers of Attorney were filed as Exhibit 99. 6.0 to Registration Statement No. 333-44301 on January 15, 1998.
</TABLE>
636009.2
<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 April 1, 1998, relating to the Statement of Financial Condition, including
the Portfolio, of Equity Securities Trust, Series 17, 1998 Triple Strategy Trust
I 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, Massachusetts 02110
April 1, 1998
636009.2
EQUITY SECURITIES TRUST, SERIES 17,
1998 TRIPLE STRATEGY TRUST I
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated April 1, 1998
between Reich & Tang Distributors, Inc., as Depositor and The Chase Manhattan
Bank, as Trustee, sets forth certain provisions in full and incorporates other
provisions by reference to the document entitled "Equity Securities Trust,
Series 6, Signature Series, Gabelli Entertainment and Media Trust, and
Subsequent Series, Trust Indenture and Agreement" dated November 16, 1995 and as
amended in part by this Agreement (collectively, such documents hereinafter
called the "Indenture and Agreement"). This Agreement and the Indenture, as
incorporated by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Section 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof pursuant
to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth in full in this
instrument except that the following sections of the Indenture hereby are
amended as follows:
-1-
317036.1
<PAGE>
(a) All references to "The Chase Manhattan Bank (National
Association)" are replaced with "The Chase Manhattan Bank".
(b) Notwithstanding any provision of the Indenture to the contrary,
ownership of Units of this series of Equity Securities Trust shall not be
certificated and shall be evidenced solely by registration on the transfer books
of the Trustee, and the registered holder of uncertificated Units shall have all
of the rights and obligations (excluding the right to the issuance of a
Certificate) specified for a registered Certificateholder under the Indenture.
The Depositor and the Trustee shall cause all Units of the Trust issued to the
Depositor (upon both the initial deposit and any deposits of Additional
Securities pursuant to Section 2.6) to be deposited at The Depository Trust
Company ("DTC") and to be credited there to the account of the Depositor. On and
after such deposit, for all purposes under the Indenture and Agreement, the sole
registered holder of Units of the Trust shall be DTC, or its nominee, unless and
until DTC has notified the Trustee and the Depositor that it is no longer
willing to act as depository with respect to the Units. Accordingly, so long as
DTC, or its nominee, is the registered owner of the Trust Units, beneficial
ownership of Units may only be maintained by or through a participant in DTC and
shall be subject to the rules and operating procedures of DTC as in effect from
time to time. The Trustee shall not be liable for any loss or liability
resulting from the actions of DTC as registered holder and depository of the
Units.
(c) Sections 1.2 and 2.4 and any reference herein to the issuance of
Certificates shall be deleted.
(d) Section 2.3 shall be amended by adding after the words "has
registered on the registration books of the Trust the ownership by" the words
"the Depositor of such Units or, if requested by the Depositor, the ownership
by."
(e) Paragraph (a) of Section 2.6 shall be amended to read in its
entirety as follows:
"Section 2.6 Deposit of Additional Securities. (a) Subject to the
requirements set forth below in this Section, the Depositor may,
on any Business Day (the "Trade Date"), subscribe for Additional
Units as follows:
(1) Prior to the Evaluation Time on the Trade Date, the Depositor
shall provide notice (the "Subscription Notice") to the Trustee,
by telecopy or by written communication, of the Depositor's
intention to subscribe for Additional Units. The Subscription
Notice shall identify the Additional
-2-
317036.1
<PAGE>
Securities to be acquired (unless such Additional Securities are
a precise replication of the then existing portfolio) and shall
either (i) specify the quantity of Additional Securities to be
deposited by the Depositor on the settlement date for such
subscription or (ii) instruct the Trustee to purchase Additional
Securities with an aggregate value as specified in the
Subscription Notice.
(2) Promptly following the Evaluation Time on such Business Day,
the Depositor shall verify with the Trustee, by telecopy, the
number of Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units
created thereby (which time shall not be later than the time by
which the Trustee is required to settle any contracts for the
purchase of Additional Securities entered into by the Trustee
pursuant to the instruction of the Depositor referred to in
subparagraph (1) above), the Depositor shall deposit with the
Trustee (i) any Additional Securities specified in the
Subscription Notice (or contracts to purchase such Additional
Securities together with cash or a letter of credit in the amount
necessary to settle such contracts) or (ii) cash or a letter of
credit in the amount equal to the aggregate value of the
Additional Securities specified in the Subscription Notice,
together with, in each case, Cash as defined below. "Cash" means,
as to the Principal Account, cash or other property (other than
Securities) on hand in the Principal Account or receivable and to
be credited to the Principal Account as of the Evaluation Time on
the Business Day preceding the Trade Date (other than amounts to
be distributed solely to persons other than persons receiving the
distribution from the Principal Account as holders of Additional
Units created by the deposit), and, as to the Income Account,
cash or other property (other than Securities) received by the
Trust as of the Evaluation Time on the Business Day preceding the
Trade Date or receivable by the Trust in respect of dividends or
other distributions declared but not received as of the
Evaluation Time on the Business Day preceding the Trade Date,
reduced by the amount of any cash or other property received or
receivable on any Security allocable (in
-3-
317036.1
<PAGE>
accordance with the Trustee's calculation of the monthly
distribution from the Income Account pursuant to Section 3.5) to
a distribution made or to be made in respect of a Record Date
occurring prior to the Trade Date. Each deposit made during the
90 days following the deposit made pursuant to Section 2.1 hereof
shall replicate, to the extent practicable, as specified in
subparagraph (b), the Original Proportionate Relationship. Each
deposit made after the 90 days following the deposit made
pursuant to Section 2.1 hereof (except for deposits made to
replace Failed Securities if such deposits occur within 20 days
from the date of a failure occurring within such initial 90 day
period) shall maintain exactly the proportionate relationship
existing among the Securities as of the expiration of such 90 day
period. Each such deposit shall exactly replicate Cash.
(4) On the settlement date for a subscription, the Trustee shall,
in exchange for the Securities and cash or letter of credit
described above, issue and deliver to or on the order of the
Depositor the number of Units verified by the Depositor with the
Trustee. No Unit to be issued pursuant to this paragraph shall be
issued or delivered unless and until Securities, cash or a letter
of credit is received in exchange therefor and no person shall
have any claim to any Unit not so issued and delivered or any
interest in the Trust in respect thereof.
(5) Each deposit of Additional Securities, shall be listed in a
Supplementary Schedule to an Addendum to the Reference Trust
Agreement stating the date of such deposit and the number of
Additional Units being issued therefor. The Trustee shall
acknowledge in such Addendum the receipt of the Deposit and the
number of Additional Units issued in respect thereof. The
Additional Securities shall be held, administered and applied by
the Trustee in the same manner as herein provided for the
Securities.
(6) The acceptance of Additional Units by the Depositor in
accordance with the provisions of paragraph (a) of this Section
shall be deemed a certification by the Depositor that the deposit
or purchase of Additional Securities associated therewith
complies with the conditions of this Section 2.06.
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317036.1
<PAGE>
(7) Notwithstanding the preceding, in the event that the
Sponsor's Subscription Notice shall instruct the Trustee to
purchase Additional Securities in an amount which, when added to
the purchase amount of all other unsettled contracts entered into
by the Trustee, exceeds 25% of the value of the Securities then
held (taking into account the value of contracts to purchase
Securities only to the extent that there has been deposited with
the Trustee cash or an irrevocable letter of credit in an amount
sufficient to settle their purchase), the Sponsor shall deposit
with the Trustee concurrently with the Subscription Notice such
that, when added to 25% of the value of the Securities then held
(determined as above) the aggregate value shall be not less than
the purchase amount of the securities to be purchased pursuant to
such Subscription Notice."
(f) Section 3.1 is hereby amended by deleting the phrase provided,
however, the Trust shall not bear such expenses in excess of the amount shown in
the Statement of Condition included in the Prospectus, and any such excess shall
be borne by the Depositor".
(g) Section 3.5 is hereby amended by inserting the phrase "or Income"
in the second sentence of the sixth paragraph after the words "The Trustee shall
not be required to make a distribution from the Principal..."
(h) Section 3.14 is hereby amended by inserting the phrase "including,
but not limited to securities received as a result of a spin-off" in the first
sentence after the words "Any property received by the Trustee after the initial
date of Deposit in a form other than cash or additional shares of the Securities
listed on Schedule A..."
(i) Section 9.2 is hereby amended by replacing the phrase "60
business days" with "30 days" in the first sentence of the sixth paragraph.
(j) Section 9.2 of the Agreement is further amended by adding
the following paragraph after the sixth paragraph of such Section 9.2:
"In the event that the Depositor direct the Trustee that
certain Securities will be sold to a new series of the Trust (a
"New Series"), the Depositor
-5-
317036.1
<PAGE>
will certify to the Trustee, within five days of each sale from a
Trust to a New Series, (1) that the transaction is consistent
with the policy of both the Trust and the New Series, as recited
in their respective registration statements and reports filed
under the Act, (2) the date of such transaction and (3) the
closing sales price on the national securities exchange for the
sale date of the securities subject to such sale. The Trustee
will then countersign the certificate, unless the Trustee
disagrees with the closing sales price listed on the certificate,
whereupon the Trustee will promptly inform the Depositor orally
of any such disagreement and return the certificate within five
days to the Depositor with corrections duly noted. Upon the
Depositor's receipt of a corrected certificate, if the Depositor
can verify the corrected price by reference to an independently
published list of closing sales prices for the date of the
transactions, the Depositor will ensure that the price of Units
of the New Series, and distributions to holders of the Trust with
regard to redemption of their Units or termination of the Trust,
accurately reflect the corrected price. To the extent that the
Depositor disagree with the Trustee's corrected price, the
Depositor and the Trustee will jointly determine the correct
sales price by reference to a mutually agreeable, independently
published list of closing sales prices for the date of the
transaction. The Depositor and Trustee will periodically review
the procedures for sales and make such changes as they deem
necessary, consistent with Rule 17a-7(e)(2). Finally, records of
the procedures and of each transaction will be maintained as
provided in Rule 17a-7(f)."
(k) All references to "Reich & Tang Distributors L.P.". are replaced
with "Reich & Tang Distributors, Inc."
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing the purchase of Additional Securities
which have been deposited to effect an increase over the number of Units
initially specified in Part II of this Reference Trust Agreement ("Additional
Closings"). The Depositor and Trustee hereby agree that their respective
representations, agreements and certifications contained in the Closing
Memorandum dated April 1, 1998, relating to the initial deposit of Securities
continue as if such representations, agreements and certifications were made on
the date of such Additional Closings and with respect to the deposits made
therewith, except as such representations, agreements and certifications relate
to their respective By-Laws and as to which they each represent that their has
been no
-6-
317036.1
<PAGE>
amendment affecting their respective abilities to perform their respective
obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to this series of Equity Securities Trust (the "Prospectus")
have been deposited in the Trust under this Agreement (see "Portfolio" in Part A
of the Prospectus which for purposes of this Indenture and Agreement is the
Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 15,422.
(c) For the purposes of the definition of Unit in item (22) of Section
1.1, the fractional undivided interest in and ownership of the Trust initially
is 1/15422 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of June and
December commencing on June 15, 1998.
(e) The term Distribution Date shall mean the last business day of
June and December commencing on June 30, 1998.
(f) The First Settlement Date shall mean April 6, 1998.
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities at the completion
of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following schedule, determined on the basis
of the number of Units outstanding as of the Record Date preceding the Record
Date on which the compensation is to be paid, provided, however, that with
respect to the period prior to the first Record Date, the Trustee's compensation
shall be computed at $.86 per 100 Units:
rate per 100 units number of Units outstanding
$0.86 5,000,000 or less
$0.80 5,000,001 - 10,000,000
$0.74 10,000,001 - 20,000,000
$0.60 20,000,001 or more
-7-
317036.1
<PAGE>
(i) For purposes of Section 7.4, the Depositor's maximum annual
supervisory fee is hereby specified to be $.25 per 100 Units outstanding.
(j) The Termination Date shall be July 10, 1999 or the earlier
disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on December 31 of each
year.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-8-
317036.1
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ JOHN FABRIZO
-------------------
Vice President
(SEAL)
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 26th day of March, 1998, before me personally appeared
John Fabrizio, to me known, who being by me duly sworn, said that (s)he is an
Authorized Signator of The Chase Manhattan Bank, one of the corporations
described in and which executed the foregoing instrument; that (s)he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation and that (s)he signed his/her name thereto by like authority.
/s/ ADA IRIS VEGA
-----------------------------------------
Notary Public
ADA IRIS VEGA
NOTARY PUBLIC, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6/30/98
315855.1
<PAGE>
REICH & TANG DISTRIBUTORS, INC.
Depositor
By: /s/ PETER J. DEMARCO
--------------------------------
Executive Vice President
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 31st day of March, 1998, before me personally appeared Peter
J. DeMarco, to me known, who being by me duly sworn, said that he is Executive
Vice President of the Depositor, one of the corporations described in and which
executed the foregoing instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
/s/ TERESA SCILLA
---------------------------------------
Notary Public
TERESA SCILLA
NOTARY PUBLIC, State of New York
No. 31-4752676
Qualified in the County of New York
Term Expires 8/31/98
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
April 1, 1998
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 17,
1998 Triple Strategy Trust I
------------------------------------
Dear Sirs:
We have acted as special counsel for Reich & Tang
Distributors, Inc., as Depositor, Sponsor and Principal Underwriter
(collectively, the "Depositor") of Equity Securities Trust, Series 17, 1998
Triple Strategy Trust I (the "Trust") in connection with the issuance by the
Trust of units of fractional undivided interest (the "Units") in the Trust.
Pursuant to the Trust Agreements referred to below, the Depositor has
transferred to the Trust certain securities and contracts to purchase certain
securities together with an irrevocable letter of credit to be held by the
Trustee upon the terms and conditions set forth in the Trust Agreements. (All
securities to be acquired by the Trust are collectively referred to as the
"Securities").
In connection with our representation, we have examined copies
of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (collectively the "Trust Agreements") among the Depositor and The Chase
Manhattan Bank, as Trustee; (b) the Notification of Registration on Form N-8A
and the Registration Statement on Form N-8B-2, as amended, relating to the
Trust, as filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940
317062.1
<PAGE>
Reich & Tang Distributors, Inc.
April 1, 1998
(the "1940 Act"); (c) the Registration Statement on Form S-6 (Registration No.
333-47603) filed with the Commission pursuant to the Securities Act of 1933 (the
"1933 Act"), and all Amendments thereto (said Registration Statement, as amended
by said Amendment(s) being herein called the "Registration Statement"); (d) the
proposed form of final Prospectus (the "Prospectus") relating to the Units,
which is expected to be filed with the Commission this day; (e) certified
resolutions of the Board of Directors of the Depositor authorizing the execution
and delivery by the Depositor of the Trust Agreements and the consummation of
the transactions contemplated thereby; (f) the Certificate of Incorporation of
the Depositor; and (g) a certificate of an authorized officer of the Depositor
with respect to certain factual matters contained therein.
We have examined the Application for Orders of Exemption from
certain provisions of Sections 14(a) and 22(d) of the 1940 Act and Rules 19b-1
and 22c-1 thereunder, and the First Amendment thereto. In addition, we have
examined the Order of Exemption from certain provisions of Sections 11(a) and
11(c) of the 1940 Act, filed on behalf of Reich & Tang Distributors L.P.; Equity
Securities Trust (Series 1, Signature Series and Subsequent Series), Mortgage
Securities Trust (CMO Series 1 and Subsequent Series), Municipal Securities
Trust, Series 1 (and Subsequent Series) (including Insured Municipal Securities
Trust, Series 1 (and Subsequent Series and 5th Discount Series and Subsequent
Series)); New York Municipal Trust (Series 1 and Subsequent Series); and A
Corporate Trust (Series 1 and Subsequent Series) granted on October 9, 1996.
We have not reviewed the financial statements, compilation of
the Securities held by the Trust, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you have
been furnished with the reports of the accountants appearing in the Registration
Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
317062.1
<PAGE>
Reich & Tang Distributors, Inc.
April 1, 1998
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as to
matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer of the Depositor and is a valid and binding
obligation of the Depositor in accordance with its terms.
(2) The registration of the Units on the registration books of
the Trust by the Trustee has been duly authorized by the Depositor and such
Certificate, when executed by the Depositor and the Trustee in accordance with
the provisions of the Certificate and the respective Trust Agreements and issued
for the consideration contemplated therein, will constitute fractional undivided
interests in the Trust, will be entitled to the benefits of the Trust
Agreements, will conform in all material respects to the description thereof for
the Units as provided in the Trust Agreements and the Registration Statement,
and the Units will be fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee and
the Trustee may rely on this opinion as fully and to the same extent as if it
had been addressed to it.
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
317062.1
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the statement of
financial condition as of opening of business on
date of deposit and is qualified in its entirety
by reference to such financial statement.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> APR-01-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 149,677
<INVESTMENTS-AT-VALUE> 149,677
<RECEIVABLES> 0
<ASSETS-OTHER> 13,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 162,677
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,000
<TOTAL-LIABILITIES> 13,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 15,422
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 149,677
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 149,677
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.71
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
