Rule 497(b)
Registration No. 333-56917
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INSERT LOGO
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EQUITY SECURITIES TRUST,
SIGNATURE SERIES,
REICH & TANG GROWTH AND VALUE TRUST II
The Trust is a unit investment trust designated Equity Securities Trust,
Signature Series, Reich & Tang Growth and Value Trust II (the "Value Trust" or
"Trust"). The Sponsor is Reich & Tang Distributors, Inc. The objectives of the
Value Trust are to seek to achieve capital appreciation and growth of income.
The Value Trust seeks to achieve its objectives by selecting common stocks of
established small and mid-sized companies. The Sponsor can not give any
assurance that the Trust's objectives will be achieved. 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 five years after the Initial Date of
Deposit. The minimum purchase is 100 Units for individual purchasers.
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 are 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.
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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 SEPTEMBER 29, 1998
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SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 28, 1998:*
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INITIAL DATE OF DEPOSIT: September 29, 1998 MANDATORY TERMINATION DATE: The
AGGREGATE VALUE OF earlier of October 6, 2003 or the disposition of
SECURITIES.................................. $ 150,704 the last Security in the Trust.
NUMBER OF UNITS................................ 15,780 CUSIP NUMBERS: Cash: 294762372
FRACTIONAL UNDIVIDED INTEREST IN Reinvestment: 294762380
TRUST....................................... 1/15,780 TRUSTEE: The Chase Manhattan Bank
PUBLIC OFFERING PRICE PER 100 UNITS TRUSTEE'S FEE: $.86 per 100 Units outstanding
Aggregate Value of Securities in ESTIMATED OFFERING COSTS**: $1.30 per
Trust.................................... $ 150,704 100 Units
Divided By 15,780 Units (times 100)......... $ 955.00 OTHER FEES AND EXPENSES: $.15 per 100
Plus Sales Charge of 4.50% of Public Units outstanding
Offering Price........................... $ 45.00 SPONSOR: Reich & Tang Distributors, Inc.
Public Offering Price+...................... $1,000.00 SPONSOR'S SUPERVISORY FEE: Maximum of
SPONSOR'S REPURCHASE PRICE AND $.25 per 100 Units outstanding (see "Trust
REDEMPTION PRICE PER Expenses and Charges" in Part B)..
100 UNITS++................................. $ 955.00 EXPECTED SETTLEMENT DATE***:
EVALUATION TIME: 4:00 p.m. New York Time. October 2, 1998
MINIMUM INCOME OR PRINCIPAL RECORD DATE: December 15 and June 15
DISTRIBUTION: $1.00 per 100 Units DISTRIBUTION DATE: December 31 and June
LIQUIDATION PERIOD: Beginning 7 days prior to the 30
Mandatory Termination Date. ROLLOVER NOTIFICATION DATE****:
MINIMUM VALUE OF TRUST: The Trust may be September 9, 2003 or another date as determined
terminated if the value of the Trust is less than 40% of the by the Sponsor.
aggregate value of the Securities at the completion of the REINVESTMENT SALES CHARGE: 1.00%
Deposit Period.
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* 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 offering costs. 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 1,500,000 Units as estimated by the Sponsor; offering costs
will vary with the actual size of the Trust.
*** The business day on which contracts to purchase securities in the
Trust are expected to settle.
**** If a Unitholder ("Rollover Unitholder") so specifies on or prior to the
Rollover Notification Date, the Rollover Unitholder's terminating distribution
will be reinvested as received in an available series of the Equity Securities
Trust, if offered (see "Trust Administration - Trust
Termination").
+ 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.
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OBJECTIVE. The objectives of the Value Trust are to seek to achieve capital
appreciation and growth of income. The Value Trust seeks to achieve its
objectives by selecting common stocks of established small and mid-sized
companies. The Sponsor can not give any assurance that the Trust's objectives
will be achieved. 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 securities acquired and held by the Trust pursuant to the provisions
of the Indenture. Further, the Securities, and therefore the Units, 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 objectives of the Trust
will be achieved.
PORTFOLIO. The Value Trust contains 46 issues of common stock. 100% of the
issues are represented by the Sponsor's contracts to purchase. Based upon the
principal business of each issuer, the following industries are represented in
the Portfolio*: Aerospace/Defense, 1; Auto Parts and Equipment, 3; Business
Equipment, 1; Chemicals Specialty, 1; Communications Equipment, 3; Computer
Software/Services, 1; Consumer (Jewelry /Novelties), 1; Containers, 2; Electric
Equipment, 1; Electronics, 2; Fluid Handling & Control Prod., 1; Foods, 1;
Footwear, 1; Grocery, 1; Health Care, 2; Household Products (Non-durable), 1;
Indust. Prod., 2; Insurance-Property Casualty, 1; Machinery, 2;
Manufacturing-Div., 2; Office Equipment and Supplies, 2; Oil and Gas
(Exploration Prod.), 1; Paper and Forest Products, 1; Personal Care, 1;
Photography/Imaging, 1; Precision Instrument, 2; Publishing, 1; Services
(Employment), 1; Specialty Printing, 1; Steel, 2; and Textiles, 3. The Trust is
not concentrated in a particular 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 4.50% of the Public Offering Price per 100 Units or 4.712% 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
5,000 Units will be entitled to a volume discount from the Public Offering
Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and the price to be paid by each investor will be computed as of the date the
Units are purchased. (See "Public Offering" in Part B.)
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
Unitholders (based on the most recent quarterly or semi-annual ordinary dividend
distributed with respect to the Securities) as of the business day prior to the
Initial Date of Deposit per 100 Units was $17.10 for the Value Trust. This
estimate will vary with changes in a 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.
DISTRIBUTIONS. Dividend distributions, if any, will be made on the Distribution
Dates to all Unitholders of record on the Record Date. For the specific dates
representing the Distribution Dates and Record Dates for the Trust, 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, if any, in shares of the Trust. See "Reinvestment Plan"
in Parts A and B.
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* 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 value of the total assets of the portfolio.
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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 period. 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 its 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 7-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 seven days, and it could be as
short as one day, depending on the liquidity of the Securities being sold.
Unitholders may elect one of the three options in receiving their terminating
distributions: (1) to receive their pro rata share of the underlying Securities
in-kind, if they own at least 2,500 units, (2) to receive cash upon the
liquidation of their pro rata share of the underlying Securities or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of
Equity Securities Trust (if one is offered) at a reduced sales charge (see
"Rollover Option"). See "Trust Administration--Trust Termination" in Part B for
a description of how to select a termination distribution option. Unitholders
who have not chosen to receive distributions-in-kind will be at risk to the
extent that Securities are not sold; for this reason the Sponsor will be
inclined to sell the Securities without materially adversely affecting the price
of the Securities. Unitholders should consult their own tax advisor in this
regard.
ROLLOVER OPTION. Unitholders may elect to roll their terminating distributions
into the next available series of Equity Securities Trust at a reduced sales
charge. Rollover Unitholders must make this election on or prior to the Rollover
Notification Date. Upon making this election, a Unitholder's Units will be
redeemed when the last of the underlying Securities are sold and the proceeds
will be reinvested in units of the next available series of Equity Security
Trust. 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.
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). For a
discussion of risk considerations, see "Risk Considerations" in Part B of this
Prospectus. 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
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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, Signature Series, Reich & Tang Growth and Value Trust II. The Underwriter
will distribute Units through various broker-dealers, banks and/or other
eligible participants (see "Public Offering- -Distribution of Units" in Part B).
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EQUITY SECURITIES TRUST,
SIGNATURE SERIES,
REICH & TANG GROWTH AND VALUE TRUST II
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, SEPTEMBER 29, 1998
ASSETS
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Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $150,704)
(Note 1)....................................................................... $ 150,704
$ 19,500
Offering Costs (Note 2).............................................................. -----------------
$ 170,204
Total................................................................................ ==================
LIABILITIES AND INTEREST OF UNITHOLDERS
Accrued Liabilities (Note 2)......................................................... $ 19,500
Interest of Unitholders - Units of Fractional
$ 150,704
Undivided Interest Outstanding (Value Trust: 15,780 Units)....................... -----------------
$ 170,204
Total................................................................................ =================
Net Asset Value per Unit............................................................. $ 9.55
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Notes to Statement:
(1) Equity Securities Trust, Signature Series, Reich & Tang Growth and Value
Trust II (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
objectives of the Trust, sponsored by Reich & Tang Distributors, Inc. (the
"Sponsor"), are to seek to achieve capital appreciation and growth of income. On
September 29, 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 15,780 units of the Trust. An
irrevocable letter of credit issued by the BankBoston, N.A. in an amount of
$400,000 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 September 28, 1998. The Trust will terminate on October 6, 2003, or earlier
under certain circumstances as further described in the Prospectus.
(2) Offering costs incurred by the Trust will be amortized over the term of
the initial offering period.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
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EQUITY SECURITIES TRUST,
SIGNATURE SERIES,
REICH & TANG GROWTH AND VALUE TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, SEPTEMBER 29, 1998
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Market
Value of
Stocks as a
Number Percentage Market
Portfolio of Ticker of the Value Per Cost of Securities
No. Shares Name of Issuer (1) Symbol Trust(2) Share to the Trust(3)
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1. 78 Albany International Corp. AIN 0.98% $19.0000 $1,482
2. 142 Alberto-Culver Co. ACV/A 1.99 21.1250 3,000
3. 200 Allegheny Teledyne Inc. ALT 2.49 18.7500 3,750
4. 24 Allergan, Inc. AGN 0.99 61.9375 1,487
5. 169 Ball Corp. BLL 3.95 35.1875 5,947
6. 475 BMC Industries, Inc. BMC 2.05 6.5000 3,088
7. 259 Burlington Industries, Inc. BUR 1.50 8.7500 2,266
8. 264 Commscope, Inc. CTV 1.98 11.3125 2,987
9. 99 Deluxe Corp. DLX 1.98 30.1875 2,989
10. 61 Dexter Corp. DEX 1.00 24.8125 1,514
11. 63 Diebold, Inc. DBD 1.02 24.5000 1,543
12. 57 Federal-Mogul Corp. FMO 1.99 52.6875 3,003
13. 138 First Brands Corp. FBR 2.01 22.0000 3,036
14. 153 Food Lion, Inc. (Class B) FDLNB 0.92 9.0625 1,387
15. 248 Fruit of the Loom, Inc. FTL 2.61 15.8750 3,937
16. 66 General Instrument Corp. GIC 1.00 22.8125 1,506
17. 577 General Semiconductor, Inc. SEM 2.51 6.5625 3,787
18. 222 Harsco Corp. HSC 4.04 27.4375 6,091
19. 48 Houghton-Mifflin Co. HTN 0.99 31.0000 1,488
20. 97 Kerr-McGee Corp. KMG 2.98 46.3750 4,498
21. 100 Lancaster Colony Corp. LANC 2.05 30.8750 3,087
22. 373 MagneTek, Inc. MAG 2.57 10.3750 3,870
23. 137 Manpower Inc. MAN 1.98 21.7500 2,980
24. 78 Millipore Corp. MIL 0.99 19.1875 1,497
25. 318 Nine West Group NIN 1.98 9.3750 2,981
26. 293 OEA, Inc. OEA 1.94 10.0000 2,930
27. 206 Polaroid Corp. PRD 3.51 25.6875 5,292
28. 369 The Reynolds & Reynolds Co. REY 3.92 16.0000 5,904
29. 134 Roper Industries, Inc. ROP 1.49 16.7500 2,244
30. 142 Scientific-Atlanta, Inc. SFA 2.01 21.3125 3,026
31. 552 Scott Technologies Inc. SCTTA 4.03 11.0000 6,072
32. 86 Shaw Industries, Inc. SHX 1.00 17.5000 1,505
33. 197 Snap-On, Inc. SNA 4.00 30.6250 6,033
34. 124 Sonoco Products Co. SON 2.01 24.4375 3,030
35. 189 St. Jude Medical, Inc. STJ 3.00 23.9375 4,524
36. 67 Sunstrand Corp. SNS 2.03 45.5625 3,053
37. 89 Teleflex Inc. TFX 2.02 34.1250 3,037
38. 53 Trenwick Group, Inc. TREN 0.99 28.2500 1,497
39. 566 Unisource Worldwide, Inc. UWW 2.46 6.5625 3,714
40. 70 Universal Foods Corp. UFC 1.00 21.5625 1,509
41. 188 Unova Inc. UNA 1.99 15.8750 2,984
42. 166 Varian Associates, Inc. VAR 4.10 37.2500 6,183
43. 242 Walter Industries, Inc. WLT 1.98 12.2500 2,964
44. 159 Wang Laboratories, Inc. WANG 1.92 18.1250 2,882
45. 213 Wausau-Mosinee Paper Corp. WMO 2.06 14.5625 3,102
46. 177 York International Corp. YRK 3.99 34.0000 6,018
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100.00% $150,704
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FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on September 28,
1998. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be October 2, 1998.
(2) Based on the cost of the Securities to the Trust.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsor's Purchase Price is $151,345. The Sponsor's loss
on the Initial Date of Deposit is $641.
The accompanying notes form an integral part of the Financial Statements.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders of
Equity Securities Trust,
Signature Series, Reich & Tang Growth and Value Trust II
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, present fairly, in all material respects, the financial
position of Equity Securities Trust, Signature Series, Reich & Tang Growth and
Value Trust II (the "Trust") at opening of business, September 29, 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, September 29, 1998, by correspondence with the Sponsor,
provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, MA
September 29, 1998
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REICH & TANG GROWTH AND VALUE TRUST
THE TRUST'S INVESTMENT OBJECTIVES
The objectives of the Reich & Tang Growth and Value Trust II are to achieve
capital appreciation and growing income over the five-year life of the Trust
from a portfolio of established small and medium capitalization companies.
INVESTING IN SMALL AND MEDIUM CAPITALIZATION STOCKS
Reich & Tang believes investing is the process of identifying undervalued
companies. The small and medium capitalization universe offers investors
substantial opportunities.
o This sector is often ignored by other investors, leading to inefficient
pricing. Frequently, Wall Street analysts do not cover them in the same
depth and detail as large companies.
o Most small companies are focused on a niche business. They offer higher
potential growth rates than most larger companies.
o Company management has greater influence over the success of a company.
Reich & Tang believes there are exciting opportunities in this sector of the
market. Intensive company specific research is critical to uncovering these
situations. It is the early recognition of these opportunities that may produce
superior returns.
Within the universe of small to medium capitalization stocks, Reich & Tang
focuses on established, evolving companies that exhibit such characteristics as:
o Strong Balance Sheets
o Dynamic Management
o Dominant Market Share
o Low Cost Producer Status
o Price-To-Earnings and Price-To-Book Ratios at a Discount to the Broader
Stock Market.
THE TRUST'S THEME
The Companies
Reich & Tang's investment strategy focuses on undervalued common stocks of
established small and mid-sized companies with strong business franchises,
strong management and high or improving returns on investment. Reich & Tang
expects the compelling value which its research discovers in stocks selected for
the Trust to become reflected in market prices during the five-year life of the
Trust. Small to medium capitalization companies are generally considered to be
those companies which have a market capitalization of up to $5 billion.
RISK CONSIDERATIONS
An investment in Units of the Trust should be made with an understanding of the
risks associated with an investment 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, the Trust is a "fixed portfolio" and not managed. Therefore, the
amount realized upon the sale of a security at termination may not be the
highest price attained by an individual security during the life of the Trust.
The common stocks of small and medium capitalization companies may experience
greater price volatility and market fluctuation than the equity securities of
more highly capitalized companies.
The value of your units, when redeemed, may be worth more or less than your
original investment.
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Reich & Tang's Investment Philosophy
Research Seeks to Minimize Risk
Reich & Tang's investment philosophy is founded upon direct, fundamental
research. "Hands-on" original research emphasizing company visits and management
interviews are used to identify attractive businesses that offer the potential
for above average growth with limited downside risk. In making individual stock
selections, their research team evaluates each company as if it were buying the
entire business.
Whereas most of the marketplace devotes its energies to identifying near-term
earnings surprises and current stock price momentum, primarily of stocks given
wide coverage by the research community, Reich & Tang spends a great deal of
time analyzing and understanding the individual businesses in order to assess
their long-term potential. The result is a concentrated portfolio of companies
whose management shares an emphasis on balance sheet integrity, positive cash
flow, high or improving return on investment and the potential to grow. The firm
insists on both compelling value and above average growth potential in selecting
individual stocks. The investment orientation is buy and hold, and it is
consistent with the five-year term of the Trust.
Minimization of risk is an important consideration when selecting a stock. Risk
parameters are assessed in terms of the quality of the business franchise and
price risk in the company's stock. Reich & Tang's investment approach is aimed
at discovering well positioned evolving companies with significant growth
prospects before other investors notice them. These situations are most often
found in small to medium capitalization companies, which are the investment
focus of Reich & Tang.
REICH & TANG GROWTH AND VALUE TRUST
HIGHLIGHTS
Professional Selection
The portfolio's securities are selected by Reich & Tang Capital Management
Group, which has managed value oriented equity accounts for 28 years.
A Buy-and-Hold Strategy
The buy-and-hold, fixed portfolio eliminates management fees and reduces trading
expenses. The savings are passed through to investors. Investors purchasing
units will be charged a sales charge.
Monitored Portfolio
The stocks in your portfolio are continuously monitored, and under certain
limited circumstances, can be removed from the portfolio.
Daily Pricing/Daily Liquidity
You have the flexibility to redeem your units at the net asset value any day the
stock market is open. Keep in mind the daily price will fluctuate with the
underlying securities, and may be worth more or less than the original purchase
price at redemption.
Retirement Plan Qualified
The Reich & Tang Growth and Value Trust can be held in IRA or custodial accounts
in addition to your regular investment portfolio.
Compounded Returns
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You have the option to take advantage of the power of compounding by having any
distributions automatically reinvested into additional units at a reduced sales
charge.
Three Options at Termination
When the Trust terminates, you have three options, which may be subject to tax
liability. You may:
o receive your distribution in cash
o reinvest your proceeds into a new trust (if available) at a reduced sales
charge, or
o receive shares of the underlying stocks (minimums apply)
THE SPONSOR
Reich & Tang Distributors, Inc. is a registered investment advisor. The firm
provides equity and cash management investment services. Its primary business of
equity management focuses on the institutional market, and it manages assets for
corporate pension plans, endowments and foundations.
The Trust's securities portfolio will be selected by Reich & Tang Capital
Management Group. In total, Reich & Tang Capital Management Group manages over
$1.5 billion worth of discretionary equity portfolios, and its Mutual Funds
Group manages or administers $9.1 billion in money market funds. The firm's
primary objective is superior investment performance over a full investment
cycle, while achieving positive absolute returns.
Reich & Tang has a value approach to investing in the equity market and has used
this same methodology for the last 28 years. It also prides itself as an intense
research-oriented firm.
761786.1
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EQUITY SECURITIES TRUST,
SIGNATURE SERIES,
REICH & TANG GROWTH AND VALUE TRUST II
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Signature Series, Reich & Tang Growth
and Value Trust II consists of a "unit investment trust" designated as set forth
in Part A. The Trust was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the "Trust Agreement"), dated the
Initial Date of Deposit, between Reich & Tang Distributors, Inc., as Sponsor,
and The Chase Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
securities including common stock and 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 and cash of the Trust in the ratio of one
hundred Units for the indicated amount of the aggregate market value of the
Securities and cash 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 the Trust represented by each
unredeemed Unit will increase, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsor, or until the termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in the
Trust on the Initial Date of Deposit, the Sponsor established a proportionate
relationship among the initial aggregate value of specified Securities in the
Trust. During the 90 days subsequent to the Initial Date of Deposit (the
"Deposit Period"), the Sponsor may deposit additional 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
761786.1
<PAGE>
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 objectives of the Value Trust are to seek to achieve capital
appreciation and growth of income. The Value Trust seeks to achieve its
objectives by selecting common stocks of established small and mid-sized
companies. The Sponsor can not give any assurance that the Trust's objectives
will be achieved. 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 securities 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 objectives of the Trust will be achieved. All of the
Securities in the Trust are listed on a U.S. Stock exchange (or the over-the-
counter-exchange).
The Trust will terminate in approximately five years, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if available) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the yields on these Securities may change subsequent to the Initial Date of
Deposit.
THE SECURITIES. In selecting for the Trust, the Sponsor normally will
consider the following factors, among others: (1) values of individual
securities relative to other investment alternatives; (2) trends in the
determinants of corporate profits, corporate cash flow, balance sheet changes,
management capability and practices and (3) the economic and political outlook.
The Sponsor's investment strategy focuses on undervalued common stocks of
established small and mid-sized companies with strong business franchises,
strong management and high or improving returns on investment.
The Trustee has not participated and will not participate in the selection
of Securities for the Trust, and neither the Sponsor nor the Trustee will be
liable in any way for any default, failure or defect in any Securities.
The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
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.
The Substitute Securities must be purchased within 20 days after the
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 and not delivered.
761786.1
B-2
<PAGE>
Whenever a Substitute Security has been acquired for the Trust, the Trustee
shall, within five days thereafter, notify all Unitholders of the Trust of the
acquisition of the Substitute Security 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 substitution 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.
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 a Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust. Some of the Securities in the Trust may also be
owned by other clients of the Sponsor and their affiliates. However, because
these clients may have differing investment objectives, the Sponsor may sell
certain Securities from those accounts in instances where a sale by the Trust
would be impermissible, such as to maximize return by taking advantage of market
fluctuations. Investors should consult with their own financial advisers prior
to investing in the Trust to determine its suitability. (See "Trust
Administration--Portfolio Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with the
creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsor may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. To the extent the price of a Security increases or
decreases between the time cash is deposited with instructions to purchase the
Security and the time the cash is used to purchase the Security, Units may
represent less or more of that Security and more or less of the other Securities
in the Trust. In addition, brokerage fees (if any) incurred in purchasing
Securities, with cash deposited with instructions to purchase the Securities,
will be an expense of the Trust. Price fluctuations between the time of deposit
and the time the Securities are purchased, and payment of brokerage fees, will
affect the value of every Unitholder's Units and the Income per Unit received by
the Trust. In particular, Unitholders who purchase Units during the initial
offering period would experience a dilution of their investment as a result of
any brokerage fees paid by the Trust during subsequent deposits of Additional
Securities purchased with cash deposited. In order to minimize these effects,
the Trust will try to purchase Securities as near as possible to the Evaluation
Time or at prices as close as possible to the prices used to evaluate Trust
Units at the Evaluation Time. In addition, subsequent deposits to create such
additional Units will not be covered by the deposit of a bank letter of credit.
In the event that the Sponsor does not deliver cash in consideration for the
additional Units 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, would have
significant adverse consequences for the Trust.
COMMON STOCK. Since the Trust contains primarily 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
761786.1
B-3
<PAGE>
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.
LIQUIDITY. The existence of a liquid trading market for Securities in the
Trust portfolio may depend on whether dealers will make a market in these
Securities. There can be no assurance that a market will be made for any of the
Securities, that any market for the Securities will be maintained or of the
liquidity of the Securities in any markets made. In addition, the Trust may be
restricted under the Investment Company Act of 1940 from selling Securities to
the Sponsor. The price at which the Securities may be sold to meet redemptions
and the value of the Units will be adversely affected if trading markets for the
Securities are limited or absent.
The Trust may purchase securities that are not registered ("Restricted
Securities") under the Securities Act, but can be offered and sold to "qualified
institutional buyers" under Rule 144A under the Securities Act. Since it is not
possible to predict with assurance exactly how this market for Restricted
Securities sold and offered under Rule 144A will develop, the Sponsor will
carefully monitor the Trust's investments in these securities, focusing on such
factors, among others, as valuation, liquidity and availability of information.
This investment could have the effect of increasing the level of illiquidity in
the Trust to the extent that qualified institutional buyers become for a time
uninterested in purchasing these Restricted Securities.
SMALL CAPITALIZATION STOCK. Investing in small capitalization stocks may
involve greater risk than investing in medium and large capitalization stocks,
since they can be subject to more abrupt or erratic price movements. Small
capitalization companies ("Small-Cap Companies") are generally those with market
capitalizations of $1 billion or less at the time of the Trust's investment.
Many Small-Cap Companies will have had their securities publicly traded, if at
all, for only a short period of time and will not have had the opportunity to
establish a reliable trading pattern through economic cycles. The price
volatility of Small-Cap Companies is relatively higher than larger, older and
more mature companies. The greater price volatility of Small-Cap Companies may
result from the fact that there may be less market liquidity, less information
publicly available or fewer investors who monitor the activities of these
companies. In addition, the market prices of these securities may exhibit more
sensitivity to changes in industry or general economic conditions. Some
Small-Cap Companies will not have been in existence long enough to experience
economic cycles or to demonstrate whether they are sufficiently well managed to
survive downturns or inflationary periods. Further, a variety of factors may
affect the success of a company's
761786.1
B-4
<PAGE>
business beyond the ability of its management to prepare or compensate for them,
including domestic and international political developments, government trade
and fiscal policies, patterns of trade and war or other military conflict which
may affect industries or markets or the economy generally.
YEAR 2000 ISSUE. Many existing computer programs use only two digits to
identify a year in the date field and were designed and developed without
considering the impact of the upcoming change in the century. Therefore, for
example, the year "2000" would be incorrectly identified as the year "1900". If
not corrected, many computers applications could fail or create erroneous
results by or at the Year 2000, requiring substantial resources to remedy. The
Sponsor and Trustee believe that the "Year 2000" problem is material to their
business and operations and could have a material adverse effect on the
Sponsor's and the Trustee's results of operations and, in turn, cash available
for distribution by the Trustee. Although the Sponsor and the Trustee are
addressing the problem with respect to their business operations, there can be
no assurance that the "Year 2000" problem will be properly or timely resolved.
The "Year 2000" problem may also adversely affect issuers of the Securities
contained in the Trust to varying degrees based upon various factors. The
Sponsor is unable to predict what effect, if any, the "Year 2000" problem will
have on such issuers.
LEGISLATION. From time to time Congress considers proposals to reduce the
rate of the dividends-received deduction 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. 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 objectives will be achieved.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities is determined in good faith by the Trustee on each
"Business Day" as defined in the Indenture in the following manner: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount from
the Public Offering Price 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 approximate reduced sales
charge on the Public Offering Price applicable to such purchases are as follows:
761786.1
B-5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
<S> <C>
5,000 but less than 10,000 4.25%
10,000 but less than 25,000 4.00%
25,000 but less than 50,000 3.50%
50,000 but less than 100,000 3.00%
</TABLE>
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. The Sponsor reserves the right to change the discounts from time
to time.
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 of prior series of Equity Securities Trusts (the "Prior
Series") may "rollover" into this Trust by exchanging units of the Prior Series
for Units of the Trust at their relative net asset values, subject to a reduced
sales charge of 3.50%. An exchange of a Prior Series for Units of the Trust will
generally be a taxable event. The rollover option described herein will also be
available to investors in the Prior Series who elect to purchase Units of the
Trust (see "Trust Termination").
During the initial offering period, 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 no sales charge at a price equal to the aggregate value of
the underlying securities in the Trust, divided by the number of Units
outstanding. Such arrangements result in less selling effort and selling
expenses than sales to employee groups of other companies.
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 3.50% of the public offering price.
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.
761786.1
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<PAGE>
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 3.50% 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 4.50% of the Public Offering Price per 100 Units
(equivalent to 4.712% 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.
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.
761786.1
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In maintaining a market for the Units (see "Sponsor Repurchase") the Sponsor
will realize profits or sustain losses in the amount of any difference between
the price at which it buys Units and the price at which it resells such Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be evidenced by
Certificates. All evidence of ownership of the Units will be recorded in
book-entry form at the 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 &
COMPANY. Individual purchases of beneficial ownership interest in the Trust may
be made in book-entry form through DTC. Ownership and transfer of Units will be
evidenced and accomplished directly and indirectly by 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 Unit Holder. Holders must sign such written request
exactly as their names appear on the records of the Trust. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee
to an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
Distributions to each Unitholder from the Income Account are computed as of
the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
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 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
761786.1
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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. Each 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 a 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. Each 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 a 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 deposited in initially establishing a Trust.
This retained right falls within the guidelines promulgated by the Internal
Revenue Service ("IRS") and should not affect the taxable status of a Trust.
A taxable event will generally occur with respect to each Unitholder when a
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 or accumulated
"earnings and profits"
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as provided in Section 316 of the Code. A Unitholder's pro rata portion of
dividends paid on such Security that exceed such current or 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 a Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has held its Units (and the Trust has held the Securities) for more than one
year. Capital gains realized by corporations are generally taxed at the same
rates applicable to ordinary income, although non-corporate taxpayers who
realize long-term capital gains with respect to Units held for more than one
year may be subject to a reduced tax rate of 20% on such gains, rather than the
"regular" maximum tax rate of 39.6%. Tax rates may increase prior to the time
when Unitholders may realize gains from the sale, exchange or redemption of the
Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of Units
or the disposition of Securities held by a Trust will generally be considered a
capital loss and will be long-term if the Unitholder has held its 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 for 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 its deductions may also deduct its pro rata share of the fees and
expenses of a Trust, but only to the extent that such amounts, together with the
Unitholder's other miscellaneous deductions, exceed 2% of its 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 a 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 its pro rata portion of dividends taxable as
ordinary income received by a Trust from a domestic corporation under Section
243 of the Code or from a qualifying foreign corporation under Section 245 of
the Code 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, namely (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 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 a
Trust's assets. By accepting the pro rata share of the number of 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 for 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
761786.1
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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 its undivided interest in all of the Trust's Securities
for its 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.
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 a 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 redemption requests are received in proper form by Reich & Tang
Distributors, Inc., 600 Fifth Avenue, New York, New York 10020. Units tendered
by redemption requests 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 4.50% sales charge (or 4.712% of the net amount invested) plus
a pro rata portion of amounts, if any, in the Income Account. Any Units that are
purchased by the Sponsor in the secondary market also may be redeemed by the
Sponsor if it determines such redemption to be in its best interest.
The Sponsor may, under certain circumstances, as a service to Unitholders,
elect to purchase any Units tendered to the Trustee for redemption (see "Trustee
Redemption"). Factors which the Sponsor will consider in making a determination
will include the number of Units of all Trusts which it has in inventory, its
estimate of the 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 five
years from the Initial 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.
761786.1
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Within three business days following a tender for redemption, the Unitholder
will be entitled to receive an amount for each Unit tendered equal to the
Redemption Price per Unit computed as of the Evaluation Time set forth under
"Summary of Essential Information" in Part A on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the close of trading on the New
York Stock Exchange (4:00 p.m. Eastern Time), the date of tender is the next day
on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts paid
on redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Stock. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance with
market conditions, the Sponsor believes that the minimum amounts which would be
specified would be approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the Trust
determined by the Trustee on the basis of (i) the cash on hand (during the
initial offering period a portion of the cash on hand includes an amount
sufficient to pay the per Unit portion of all or a part of the cost incurred in
organizing and offering the Trust, see "Trust Expenses and Charges") in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
The Trustee may determine the value of the Securities in the Trust in the
following manner: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption may
request by written notice submitted at the time of tender from the Trustee in
lieu of a cash redemption a distribution of shares of Securities and cash in an
amount and value equal to the Redemption Price Per Unit as determined as of the
evaluation next following tender. To the extent possible, in kind distributions
("In Kind Distributions") shall be made by the Trustee through the distribution
of each of the Securities in book-entry form to the account of the Unitholder's
bank or broker-dealer at The Depository Trust Company. An In Kind Distribution
will be reduced by customary transfer and registration charges. The tendering
Unitholder will receive his pro rata number of whole shares of each of the
Securities comprising the Trust portfolio and cash from the Principal Accounts
equal to the balance of the Redemption Price to which the tendering Unitholder
is entitled. If funds in the Principal Account are insufficient to cover the
required cash distribution to the tendering Unitholder, the Trustee may sell
Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor does
not elect to purchase a Unit tendered for redemption or if the Sponsor tenders a
Unit for redemption, in lieu of redeeming such Unit, to sell such Unit in the
over-the-counter market for the account of the tendering Unitholder at prices
which will return to the Unitholder an amount in cash, net after deducting
brokerage commissions, transfer taxes and other charges, equal to or in excess
of the Redemption Price 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.
761786.1
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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 SEC) 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 SEC 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. It
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. However, the Trust Agreement provides
that the Sponsor may direct the disposition of Securities upon the occurrence of
certain events including: (1) default in payment of amounts due on any of the
Securities; (2) institution of certain legal proceedings; (3) default under
certain documents materially and adversely affecting future declaration or
payment of amounts due or expected; (4) determination of the Sponsor that the
tax treatment of the Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price as a direct result of serious adverse credit factors
affecting the issuer of a Security which, in the opinion of the Sponsor, would
make the retention of the Security detrimental to the Trust or the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsor fails to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the Trustee to
reject any offer made by an issuer of any of the Securities to issue new
securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization. If any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsor directs that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than cash
or additional shares of the Securities, 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
761786.1
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to purchase the Security when it becomes available, or (ii) deposit (or
instruct the Trustee to purchase) either Securities of one or more other
issues originally deposited or a Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the SEC
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 the 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 prior to the commencement of the Liquidation
Period by returning a properly completed election request form (to be supplied
to Unitholders of at least 2,500 Units prior to such date) (see Part A--"Summary
of Essential Information" for the date of the commencement of the Liquidation
Period):
1. A Unitholder who owns at least 2,500 units and whose interest in the
Trust would entitle it to receive at least one share of each underlying
Security will have its Units redeemed on commencement of the Liquidation
Period by distribution of the Unitholder's pro rata share of the net asset
value of the Trust on such date distributed in kind to the extent
represented by whole shares of underlying Securities and the balance in cash
within three business days next following the commencement of the
Liquidation Period. Unitholders subsequently selling such distributed
Securities will incur brokerage costs when disposing of such Securities.
Unitholders should consult their own tax adviser in this regard;
2. to receive in cash such Unitholder's pro rata share of the net asset
value of the Trust derived from the sale by the Sponsor as the agent of the
Trustee of the underlying Securities during 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; 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 during the Liquidation Period, in units of a
subsequent series of Equity Securities Trust (the "New Series"), provided
one is offered. It is expected that a special redemption and liquidation
will be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust
761786.1
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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
charge upon the purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar options with respect to
the termination of such New Series will be available. The availability of
this option does not constitute a solicitation of an offer to purchase Units
of a New Series or any other security. A Unitholder's election to
participate in this option will be treated as an indication of interest
only. At any time prior to the purchase by the Unitholder of units of a New
Series such Unitholder may change his investment strategy and receive, in
cash, the proceeds of the sale of the Securities. An election of this option
will not prevent the Unitholder from recognizing taxable gain or loss
(except in the case of a loss, if and to the extent the New Series is
treated as substantially identical to the Trust) as a result of the
liquidation, even though no cash will be distributed to pay any taxes.
Unitholders should consult their own tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsor has agreed that to the extent they effect the sales of
underlying securities for the Trustee in the case of the second and third
options during the Liquidation Period such sales will be free of brokerage
commissions. The Sponsor, on behalf of the Trustee, may 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 the last business day of 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.
Section 17(a) of the 1940 Act generally prohibits principal transactions
between registered investment companies and their affiliates. Pursuant to an
exemptive order issued by the SEC, each terminating Growth and Value 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. All
Unitholders will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into 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 rollover program will be offered with respect to all
subsequent series of the Trust, thus giving Unitholders an opportunity to elect
to roll their terminating distributions into a New Series. The availability of
the rollover privilege does
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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 rollover 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 rollover 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 the Sponsor, 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. As of March 31, 1998, Metropolitan Life Insurance
Company ("Met Life") owned approximately 47% of the partnership interests of
Nvest. Nvest, with a principal place of business at 399 Boylston Street, Boston,
MA 02116, is a holding company of firms engaged in the securities and investment
advisory business. These affiliates in the aggregate are investment advisors or
managers to over 80 registered investment companies. Reich & Tang is Sponsor
(and Company- Sponsor, as the case may be) for numerous series of unit
investment trusts, including New York Municipal Trust, Series 1 (and Subsequent
Series), Municipal Securities Trust, Series 1 (and Subsequent Series), 1st
Discount Series (and Subsequent Series), Multi-State Series 1 (and Subsequent
Series), Mortgage Securities Trust, Series 1 (and Subsequent Series), Insured
Municipal Securities Trust, Series 1 (and Subsequent Series) and 5th Discount
Series (and Subsequent Series), Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust (and Subsequent Series) and Schwab
Trusts.
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.
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 Four 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
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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.
TRUST EXPENSES AND CHARGES
All or a portion of the expenses incurred in offering the Trust, including
the costs of registering securities with the Securities and Exchange Commission
and the states, will be amortized over the term of the initial offering period,
which may be between 30 and 90 days. All advertising and selling expenses, as
well as any organizational expenses 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."
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The Trustee's fees applicable to the 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. Such 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 in the reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer or financial institution if they
wish to modify or terminate their election to participate in the reinvestment
plan. In order to enable a Unitholder to participate in the reinvestment plan
with respect to a particular distribution on their Units, such notice must be
made at least three business days prior to the Record Day for such distribution.
Each subsequent distribution of income or principal on the 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
the 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
761786.1
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been completed, will be based on the aggregate bid price of the securities in
the particular Trust portfolio. Under the Conversion Offer, units of the
Redemption Trust must be tendered to the trustee of such trust for redemption at
the redemption price determined as set forth in the relevant Redemption Trust's
prospectus. Units in an Exchange or Conversion Trust will be sold to the
Unitholder at a price based on the aggregate offer price of the securities in
the Exchange or Conversion Trust portfolio (or for units of Equity Securities
Trust, based on the market value of the underlying securities in the trust
portfolio) during the initial public offering period of the Exchange or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
Conversion Trust Portfolio if its initial offering has been completed plus
accrued interest (or for units of Equity Securities Trust, based on the market
value of the underlying securities in the trust portfolio) and a reduced sales
charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or Conversion Trust shall be
the greater of (i) the reduced sales charge or (ii) an amount which when coupled
with the sales charge paid by the Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
In order to exercise the Exchange Privilege the Sponsor must be maintaining
a secondary market in the units of the available Exchange Trust. The Conversion
Offer is limited only to unit owners of any Redemption Trust. Exercise of the
Exchange Privilege and the Conversion Offer by Unitholders is subject to the
following additional conditions (i) at the time of the Unitholder's election to
participate in the Exchange Privilege or the Conversion Offer, there must be
units of the Exchange or Conversion Trust available for sale, either under the
initial primary distribution or in the Sponsor's secondary market, and (ii)
exchanges will be effected in whole units only. Unitholders will not be
permitted to advance any funds in excess of their redemption in order to
complete the exchange. Any excess proceeds received from a Unitholder for
exchange, or from units being redeemed for conversion, will be remitted to such
Unitholder.
The Sponsor reserves the right to suspend, modify or terminate the Exchange
Privilege and/or the Conversion Offer. The Sponsor will provide Unitholders of
the Trust with 60 days' prior written notice of any termination or material
amendment to the Exchange Privilege or the Conversion Offer, provided that, no
notice need be given if (i) the only material effect of an amendment is to
reduce or eliminate the sales charge payable at the time of the exchange, to add
one or more series of the Trust eligible for the Exchange Privilege or the
Conversion Offer, to add any new unit investment trust sponsored by Reich & Tang
or a sponsor controlled by or under common control with Reich & Tang, or to
delete a series which has been terminated from eligibility for the Exchange
Privilege or the Conversion Offer, (ii) there is a suspension of the redemption
of units of an Exchange or Conversion Trust under Section 22(e) of the 1940 Act,
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
761786.1
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sales charge. The conversion transaction will be handled entirely through the
unit owner's retail broker. The retail broker must tender the units to the
trustee of the Redemption Trust for redemption and then apply the proceeds to
the redemption toward the purchase of units of a Conversion Trust at a price
based on the aggregate offer or bid side evaluation per Unit of the Conversion
Trust, depending on which price is applicable, plus accrued interest and the
applicable sales charge. The certificates must be surrendered to the broker at
the time the redemption order is placed and the broker must specify to the
Sponsor that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain a
portion of the sales charge.
TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will generally constitute a "taxable event" to the Unitholder under the Internal
Revenue Code. The Unitholder will realize a tax gain or loss that will be of a
long or short-term capital or ordinary income nature depending on the length of
time the units have been held and other factors. (See "Tax Status".) A
Unitholder's tax basis in the Units acquired pursuant to the Exchange Privilege
or Conversion Offer will be equal to the purchase price of such Units. Investors
should consult their own tax advisors as to the tax consequences to them of
exchanging or redeeming units and participating in the Exchange Privilege or
Conversion Offer.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain matters
relating to federal tax law have been passed upon by Battle Fowler LLP, 75 East
55th Street, New York, New York 10022 as counsel for the Sponsor. Carter,
Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted as
counsel for the Trustee.
INDEPENDENT ACCOUNTANTS. The Statement of Financial Condition, including the
Portfolio, is included herein in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, and upon the authority of
said firm as experts in accounting and auditing.
PERFORMANCE INFORMATION. Total returns, average annualized returns and/or
cumulative returns for various periods of the Trust may be included from time to
time in advertisements, sales literature and reports to current or prospective
investors. Total return shows changes in Unit price during the period plus
reinvestment of dividends and capital gains, divided by the public offering
price. Average annualized returns show the average return for stated periods of
longer than a year. Advertising and sales literature for the Trust may also
include excerpts from the Sponsor's research reports on one or more of the
stocks in the Trust, including a brief description of its businesses and market
sector, and the basis on which the stock was selected. Figures for actual
portfolios will reflect all applicable expenses and, unless otherwise stated,
the maximum sales charge. No provision is made for any income taxes payable.
Similar figures may be given for this Trust. Trust performance may be compared
to performance on a total return basis of the Dow Jones Industrial Average, the
S&P 500 Composite Price Stock Index, the Russell 2000(R) 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 the Trust's relative
performance for any future period.
Pending the approval of the SEC of the National Association of Securities
Dealers Regulation, the Sponsor may also include the performance of hypothetical
portfolios to which the Sponsor has applied the same investment objectives and
selection strategies as described in "The Trust--The Securities" and which the
Sponsor intends to apply to the selection of securities for the Trust. This
performance information is intended to illustrate the strategy and should not be
interpreted as indicative of the future performance of the Trust.
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<TABLE>
<CAPTION>
<S> <C>
No person is authorized to give any information or to make any ------------------------------
representations not contained in Parts A and B of this Prospectus; and any EQUITY SECURITIES TRUST
information or representation not contained herein must not be relied upon as ------------------------------
having been authorized by the Trust, the Trustee or the Sponsor. The Trust is SIGNATURE SERIES
registered as a unit investment trust under the Investment Company Act of 1940. ------------------------------
Such registration does not imply that the Trust or any of its Units have been
guaranteed, sponsored, recommended or approved by the United States or any state EQUITIES SECURITIES TRUST,
or any agency or officer thereof. SIGNATURE SERIES,
REICH & TANG GROWTH AND
VALUE TRUST II
------------------
This Prospectus does not constitute an offer to sell, or a solicitation of PROSPECTUS
an offer to buy, securities in any state to any person to whom it is not lawful
to make such offer in such state. DATED: SEPTEMBER 29, 1998
Table of Contents
SPONSOR:
Title Page
REICH & TANG DISTRIBUTORS, INC.
PART A 600 Fifth Avenue
Summary of Essential Information........................ A-2 New York, New York 10020
Statement of Financial Condition........................ A-6 212-830-5400
Portfolio............................................... A-7
Report of Independent Accountants....................... A-9
TRUSTEE:
PART B
The Trust............................................... B-1 THE CHASE MANHATTAN BANK
Risk Considerations..................................... B-3 Four New York Plaza
Public Offering......................................... B-5 New York, New York 10004
Rights of Unitholders................................... B-8
Tax Status.............................................. B-9
Liquidity.............................................. B-11
Trust Administration................................... B-13
Trust Expenses and Charges............................. B-17
Reinvestment Plan...................................... B-18
Exchange Privilege and Conversion Offer................ B-18
Other Matters.......................................... B-20
</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
hereby made.
761786.1
