XYZ EXCHANGEABLE PREFERRED TRUST, N-2, 1998-08-05

XYZ EXCHANGEABLE PREFERRED TRUST
N-2, 1998-08-05

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1998
SECURITIES ACT FILE NO. 333-_____
INVESTMENT COMPANY ACT FILE NO. 811-____
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------

FORM N-2

|X| Registration Statement Under The Securities Act of 1933
|_| Pre-Effective Amendment No.
|_| Post-Effective Amendment No.
and/or
|X| Registration Statement Under The Investment Company Act of 1940
|_| Amendment No.
(check appropriate box or boxes)

XYZ EXCHANGEABLE PREFERRED TRUST
(Exact Name of Registrant as Specified in Charter)

C/O PUGLISI & ASSOCIATES
850 LIBRARY AVENUE
SUITE 204
NEWARK, DELAWARE 19715
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (302) 738-6680

RL&F SERVICE CORP.
ONE RODNEY SQUARE
10TH FLOOR
10TH AND KING STREETS
WILMINGTON, DELAWARE 19801
(Name and Address of Agent for Service)

COPY TO:

CRAIG E. CHAPMAN, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable
after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, as amended, other than securities offered in connection with a dividend
reinvestment plan, check the following box. |_|

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

====================================================================================================================
<S> <C> <C> <C> <C>
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
Being Registered Being Offering Price Aggregate Offering Registration
Registered Per Share(1) Price(1) Fee(2)
- --------------------------- -------------------- ---------------------- ---------------------- ---------------------
Trust Securities
representing shares of
beneficial interest.... 40,000 Shares $25.00 $1,000,000 $295.00
====================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Transmitted to the designated lockbox at Mellon Bank in Pittsburgh, PA.
</TABLE>

The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE>

<TABLE>
<CAPTION>
CROSS-REFERENCE SHEET*

Item Number in Form N-2 Caption in Prospectus
----------------------- ---------------------

PART A--INFORMATION REQUIRED IN A PROSPECTUS

<S> <C> <C>
1. Outside Front Cover........................... Front Cover Page
2. Inside Front and Outside Back Cover Page...... Front Cover Page; Inside Front Cover Page; Underwriting
3. Fee Table and Synopsis........................ Prospectus Summary; Fee Table
4. Financial Highlights.......................... Not Applicable
5. Plan of Distribution.......................... Front Cover Page; Prospectus Summary; Net Asset Value; Underwriting
6. Selling Shareholders.......................... Not Applicable
7. Use of Proceeds............................... Use of Proceeds and Collateral Arrangements; Investment Objective
and Policies
8. General Description of the Registrant......... Front Cover Page; Prospectus Summary; The Trust; Investment
Objective and Policies; Investment Restrictions; Risk Factors;
Dividends and Distributions; Additional Information
9. Management.................................... Trustees; Management Arrangements
10. Capital Stock, Long-Term Debt and Other
Securities.................................... Description of the Trust Securities
11. Defaults and Arrears on Senior Securities..... Not Applicable
12. Legal Proceedings............................. Not Applicable
13. Table of Contents of the Statement of
Additional Information........................ Not Applicable

PART B--INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

14. Cover Page.................................... Not Applicable
15. Table of Contents............................. Not Applicable
16. General Information and History............... Not Applicable
17. Investment Objective and Policies............. Prospectus Summary; Investment Objective and Policies; Investment
Restrictions
18. Management.................................... Trustees; Management Arrangements
19. Control Persons and Principal Holders of
Securities ................................... Management Arrangements; Underwriting
20. Investment Advisory and Other Services........ Management Arrangements
21. Brokerage Allocation and Other Practices...... Investment Objective and Policies
22. Tax Status.................................... Certain United States Federal Income Tax Considerations
23. Financial Statements.......................... Experts; Independent Auditors' Report; Statement of Assets,
Liabilities and Capital
</TABLE>

PART C--OTHER INFORMATION

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

- ----------
* Pursuant to the General Instructions to Form N-2, all information required
to be set forth in Part B: Statement of Additional Information has been
included in Part A: The Prospectus.

<PAGE>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus, one to be
used in connection with an underwritten offering in the United States and Canada
(the "U.S. Prospectus"), and one to be used in connection with a concurrent
international underwritten offering outside the United States and Canada (the
"International Prospectus" and, together with the U.S. Prospectus, the
"Prospectuses"). The Prospectuses will be identical in all respects except for
the front cover page, the section entitled "Underwriting" and the outside back
cover page.

The form of the U.S. Prospectus is included herein and the form of the
front cover page, "Underwriting" section and outside back cover page of the
International Prospectus are included following the back cover page of the U.S.
Prospectus as pages X-1 through X-5.

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

PROSPECTUS
- ----------

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 5, 1998

________ TRUST SECURITIES
XYZ EXCHANGEABLE PREFERRED TRUST

-------------
Of the total of ______ Trust Securities Exchangeable for Preference
Shares (the "Trust Securities") of XYZ Exchangeable Preferred Trust (the
"Trust") being offered, ______ Trust Securities initially are being offered in
the United States and Canada by the U.S. Underwriters (the "U.S. Offering") and
_______ Trust Securities initially are being offered in a concurrent
international offering outside the United States and Canada by the International
Managers (the "International Offering" and, together with the U.S. Offering, the
"Offerings"). The public offering price and the underwriting discount per Trust
Security are identical for both of the Offerings. See "Underwriting."

Each of the Trust Securities offered hereby will represent a
proportionate share of a beneficial ownership interest in the Trust and will be
sold at an initial public offering price of US$25. Except as described herein,
holders of the Trust Securities will receive non-cumulative dividend
distributions in an amount equal to US$ __ per Trust Security per annum, payable
quarterly in arrears in an amount equal to US$___ per Trust Security on each
_____, _____ , _____ , and _____ of each year (each, a "Dividend Payment Date"),
to holders of record as of the immediately preceding _____, ______ , ______ and
______, respectively (each, a "Record Date"). The first distribution in respect
of the period from and including the original issue date (the "Issue Date") to
but excluding ______, 1998 will equal US$_____ per Trust Security.

The Trust is a newly-created Delaware business trust established for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in and holding ___% Mandatorily Redeemable Debt Securities due 2047 (the
"Debt Securities") issued by [NAME], a special purpose unlimited company
incorporated under the laws of, and domiciled in, the United Kingdom (the "U.K.
Company"), with an aggregate principal amount equal to such proceeds. The
Trust's investment objective is to distribute to the holders of Trust Securities
(a) pro rata based on the number of Trust Securities outstanding the interest
the Trust receives on the Debt Securities from time to time and (b) upon the
occurrence of an Exchange Event (as defined herein), the proceeds from the
redemption of the Debt Securities, which proceeds will consist of American
Depositary Receipts ("ADRs") evidencing, for each Trust Security, one American
Depositary Share ("ADS") representing two fully paid non-cumulative preference
shares, liquidation preference US$12.50 per share (the "XYZ Preference Shares"),
issued by [NAME] ("XYZ"), provided that, if the Exchange Event is the redemption
of the XYZ Preference Shares for cash, holders of Trust Securities will be
entitled to receive US$25 per Trust Security and not ADRs. The XYZ Preference
Shares initially represented by the ADSs will not accrue or pay dividends. If
and when an Exchange Event occurs (unless such Exchange Event is the redemption
of the XYZ Preference Shares for cash), each such initial XYZ Preference Share
will automatically convert into a dividend-paying XYZ Preference Share which
will accrue non-cumulative dividends at the rate of US$___ per share per annum,
payable quarterly in arrears in an amount equal to US$___ per share on each
Dividend Payment Date to holders of record as of the immediately preceding
Record Date. See "Investment Objective and Policies."

(continued on following page)

SEE "RISK FACTORS," BEGINNING ON PAGE 15 OF THIS PROSPECTUS, FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE TRUST SECURITIES.

-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY ORADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

================================================================================
PRICE TO SALES PROCEEDS TO
PUBLIC LOAD(1) TRUST(2)(3)
- --------------------------------------------------------------------------------
Per Trust Security.......... $ (3) $
================================================================================
Total(4).................... $ (3) $
================================================================================
(1) In view of the fact that the proceeds of the sale of the Trust Securities
will ultimately be invested in the XYZ Preference Shares, the Trust and XYZ
have agreed to indemnify the several U.S. Underwriters and the
International Managers (together, the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting estimated expenses of $____________ payable by the Trust.

(3) In view of the fact that the proceeds of the sale of the Trust Securities
will ultimately be invested in the XYZ Preference Shares, the Trust and XYZ
have agreed to pay the Underwriters, as compensation, $___ per Trust
Security (or $___ in the aggregate if the Underwriters' over-allotment
options are exercised in full). See "Underwriting."

(4) The Trust has granted the U.S. Underwriters and the International Managers
options, exercisable for 30 days from the date hereof, to purchase up to
_______ and _______ additional Trust Securities, respectively (subject to
decrease pro rata as a result of the issuance and sale of Trust Securities
in connection with the formation of the Trust), solely to cover
over-allotments, if any. If all such Trust Securities are purchased, the
total Price to Public and Proceeds to Trust will be $_______ and $______,
respectively. See "Underwriting."

-------------
The Trust Securities are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Trust Securities will be made through the facilities of The
Depository Trust Company on or about , 1998.

-------------
MERRILL LYNCH & CO. [CO-MANAGERS]

-------------
The date of this Prospectus is , 1998.

<PAGE>

(continued from cover page)

The Trust will not be managed like a typical closed-end investment
company. The Trust has adopted a fundamental policy that 100% of its portfolio
will be invested in the Debt Securities and that the Debt Securities may not be
disposed of during the term of the Trust other than in connection with an
Exchange Event. For information concerning the ADSs that may be received by the
holders of Trust Securities upon the occurrence of an Exchange Event and the XYZ
Preference Shares represented thereby, see the accompanying prospectus of XYZ.
The Trust Securities are a suitable investment only for investors who are able
to understand the unique nature of the Trust and the economic characteristics of
the Debt Securities, and the ADSs and the XYZ Preference Shares that may be
issued upon an Exchange Event. See "Investment Objective and Policies."

The Trust will be treated as a grantor trust for U.S. Federal income
tax purposes. In general, for U.S. Federal income tax purposes no gain or loss
should be recognized by U.S. holders of the Trust Securities upon receipt of the
ADSs upon an exchange or dissolution of the Trust. However, U.S. holders will
recognize taxable gain or loss upon receipt of cash, if any, upon an exchange or
dissolution of the Trust. See "Certain United States Federal Income Tax
Considerations."

Application will be made to list the Trust Securities on the New York
Stock Exchange (the "NYSE"). Prior to the Offerings there has been no public
market for the Trust Securities. Shares of closed-end investment companies have
in the past frequently traded at a discount from their net asset values and
initial public offering prices. The risk of loss associated with this
characteristic of closed-end investment companies may be greater for investors
expecting to sell shares of a closed-end investment company soon after the
completion of an initial public offering.

This Prospectus sets forth concisely information about the Trust that a
prospective investor should know before investing and should be read and
retained for future reference.

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE TRUST
SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

<PAGE>

PROSPECTUS SUMMARY

The following summary should be read in conjunction with the more
detailed information appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information contained in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised.

THE TRUST

XYZ Exchangeable Preferred Trust is a newly-created Delaware business
trust that will be registered as a non-diversified closed-end management
investment company under the U.S. Investment Company Act of 1940, as amended
(the "Investment Company Act"). The term of the Trust will expire on or shortly
after the occurrence of an Exchange Event. The Trust will be treated as a
grantor trust for United States Federal income tax purposes.

THE OFFERING

The Trust is offering ___________ Trust Securities, each representing a
proportionate share of beneficial interest in the Trust, at an initial public
offering price of US$25 per Trust Security. The Underwriters have been granted
an option, exercisable for 30 days from the date of this Prospectus, to purchase
up to an aggregate of _________ additional Trust Securities (subject to decrease
pro rata as a result of the issuance and sale of Trust Securities in connection
with the formation of the Trust) solely to cover over-allotments, if any. See
"Underwriting."

USE OF PROCEEDS AND COLLATERAL ARRANGEMENTS

The following transactions will take place on the Issue Date. The Trust
will use the proceeds from the sale of the Trust Securities in the Offerings to
subscribe for and purchase from the U.K. Company Debt Securities with an
aggregate principal amount equal to such proceeds. The Trust, as the holder of
the Debt Securities, will be entitled to receive interest due thereon quarterly
in arrears on each Dividend Payment Date (each, an "Interest Payment Date"), at
the rate per annum of __ %. The Debt Securities will be issued only in bearer
form and will be denominated and pay interest in U.S. dollars. The Debt
Securities will be listed on the Luxembourg Stock Exchange and, unless redeemed
earlier, will be redeemed on ______, 2047. The U.K. Company will use the
proceeds from the sale of the Debt Securities to purchase at a price equal to
their liquidation preference fully paid, non-dividend paying preference shares,
liquidation preference US$25 per share (the "Jersey Preference Shares"), issued
by [NAME], a company incorporated with limited liability under the laws of, and
domiciled in, Jersey, the Channel Islands (the "Jersey Subsidiary"). The Jersey
Subsidiary will use the proceeds from the sale of the Jersey Preference Shares
to purchase the ADSs from XYZ at a price per ADS equal to the aggregate
liquidation preference of the _____ XYZ Preference Shares represented thereby.
Pursuant to a security and pledge agreement (the "Security and Pledge
Agreement") to be entered into among the Trust, the U.K. Company, the Jersey
Subsidiary and The Bank of New York , as collateral agent (the "Collateral
Agent"), the Jersey Preference Shares and the ADSs will be irrevocably deposited
with the Collateral Agent and pledged to secure the obligations of the U.K.
Company under the Debt Securities and the Jersey Subsidiary under the Jersey
Preference Shares, respectively. Prior to the occurrence of an Exchange Event,
ownership of the Jersey Preference Shares and the ADSs will remain with the U.K.
Company and the Jersey Subsidiary, respectively, although pursuant to the
Security and Pledge Agreement, the Jersey Subsidiary will agree to vote, or to
cause the Collateral Agent and the ADR depositary to vote, the ADSs and the XYZ
Preference Shares represented by the ADSs as directed by the holders of the
Trust Securities.

Also on the Issue Date, XYZ will use the proceeds from the issue of the
XYZ Preference Shares to make a capital contribution to a business trust
established under the laws of the State of Delaware (the "Distribution Trust").
The Distribution Trust will use XYZ's capital contribution to make a loan (the
"Distribution Loan") to a Delaware limited liability company that is a
wholly-owned subsidiary of XYZ (the "USLLC"). The USLLC will use the proceeds of
the Distribution Loan to make a loan (the "XYZ Loan") to XYZ or a subsidiary or
branch of XYZ (the "XYZ Subsidiary", and together with XYZ as borrower of the
XYZ Loan, each, the "XYZ Borrower").

Reference is made to page 9 for a diagram of the foregoing
transactions.

XYZ

Reference is made to the accompanying prospectus of XYZ with respect to
the ADSs that may be received by a holder of Trust Securities upon the
occurrence of an Exchange Event and the XYZ Preference Shares represented
thereby. THE PROSPECTUS OF XYZ IS BEING ATTACHED HERETO AND DELIVERED TO
PROSPECTIVE PURCHASERS OF TRUST SECURITIES TOGETHER WITH THIS PROSPECTUS FOR
CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF XYZ DOES NOT CONSTITUTE A PART
OF THIS PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE HEREIN.

INVESTMENT OBJECTIVE AND POLICIES; DIVIDENDS AND DISTRIBUTIONS

The Trust's investment objective is to distribute to the holders of
Trust Securities (a) pro rata based on the number of Trust Securities
outstanding the interest the Trust receives on the Debt Securities from time to
time and (b) upon the occurrence of an Exchange Event, the proceeds from the
redemption of the Debt Securities, which proceeds will consist of ADRs
evidencing, for each Trust Security, one ADS, provided that, if the Exchange
Event is the redemption of the XYZ Preference Shares for cash, holders of Trust
Securities will be entitled to receive US$25 per Trust Security and not ADRs.
See "Investment Objective and Policies."

Except as described herein, holders of Trust Securities will receive
non-cumulative dividend distributions in an amount equal to US$___ per Trust
Security per annum, payable quarterly in arrears in an amount equal to US$___
per Trust Security on each Dividend Payment Date to holders of record on the
immediately preceding Record Date. The first distribution in respect of the
period from and including the Issue Date to but excluding ________, 1998 will
equal US$___ per Trust Security. See "Investment Objective and Policies--Trust
Assets."

Dividend payments on the Trust Securities will be made from the
interest payments received by the Trust on the Debt Securities. Interest
payments on the Debt Securities will be made from distributions received by the
U.K. Company as income beneficiary entitling it to income payments (the "Income
Entitlements") from the Distribution Trust. The U.K. Company's right to receive
Income Entitlements will not represent an absolute ownership interest in the
Distribution Trust or the income thereof, but rather an entitlement to receive
interest payments on the Distribution Loan only to the extent actually
distributed to the U.K. Company by the Distribution Trust; if any Income
Entitlement payable on any Interest Payment Date is not paid to the U.K. Company
or at its direction on such date for any reason, the Distribution Trust will
have no further obligation to pay such Income Entitlement to the U.K. Company.
XYZ will have a reversionary income interest in the Distribution Trust after any
Exchange Event.

On each Interest Payment Date, (i) if no Payment Prohibition exists,
the XYZ Borrower will make an interest payment on the XYZ Loan to the USLLC;
(ii) out of such payment, the USLLC will make an interest payment on the
Distribution Loan to the Distribution Trust; (iii) out of such payment, the
Distribution Trust will distribute the Income Entitlements to the U.K. Company;
and (iv) out of such distribution, if any, the U.K. Company will pay (a)
interest on the Debt Securities to the Trust, (b) ongoing costs and expenses of
the U.K. Company and the Jersey Subsidiary, (c) quarterly dividend payments on
the U.K. Company's voting shares to the Jersey Holding Company (as defined
herein), which will be used to pay ongoing expenses of the Jersey Holding
Company and the Trust (pursuant to contractual arrangements between the Jersey
Holding Company and the Trust) and (d) an indemnity fee to the XYZ Affiliate (as
defined herein). On such Interest Payment Date (which will also be a Dividend
Payment Date), The Bank of New York, as Administrator, will use all the interest
received by the Trust on the Debt Securities to pay dividends on the Trust
Securities.

Under the terms of the XYZ Loan, no interest payment due thereunder
shall be paid or payable by the XYZ Borrower on any Interest Payment Date if (i)
an Exchange Event has occurred or will occur prior to such date, (ii) the amount
of interest payable on such date, together with the aggregate amount of
dividends paid on or before such date during the then current fiscal year of XYZ
on any preference shares or ordinary shares of XYZ, would exceed XYZ's
distributable profits or (iii) such payment would be prohibited or limited by
applicable law or regulation or by any instruments or agreements to which XYZ is
subject (collectively, the "Payment Prohibitions"). In the event a Payment
Prohibition exists or will exist on any Interest Payment Date, XYZ will notify
the Administrator no later than the third Business Day prior to such date.

TRUST ASSETS

The Trust's assets will consist of US$_______ aggregate principal
amount of Debt Securities (US$________ aggregate principal amount of Debt
Securities if the Underwriters' over-allotment option is exercised in full), and
any distributions thereon.

EXCHANGE EVENT

Upon the occurrence of any of the following events (each, an "Exchange
Event"), each Trust Security will be mandatorily exchanged for one ADS or a cash
redemption amount, as applicable, from the proceeds of the sequential redemption
of the XYZ Preference Shares (in the case of the redemption thereof for cash)
and (in all cases) the Jersey Preference Shares and the Debt Securities: (i)
______, 2047 or the date of any earlier cash redemption of the XYZ Preference
Shares; (ii) any date selected by XYZ in its absolute discretion; (iii) the
failure of the Trust to receive for any reason on or within three Business Days
after an Interest Payment Date the interest then due on the Debt Securities in
full without deduction or withholding for any taxes, duties or other charges; in
which case the Exchange Event will be the fourth Business Day following such
Interest Payment Date, (iv) on any date, the total capital ratio or the Tier 1
capital ratio of XYZ (either as reported by XYZ to the [applicable regulatory
agency] on a quarterly basis or as determined at any time by the [applicable
regulatory agency] in its sole discretion) falls below 8% or 4%, respectively
(or, in each case, such lesser percentage (the "Required Percentage"), as may
apply at the time), and such ratio is not increased to at least 8% or 4%,
respectively (or such lesser Required Percentage), within 90 days after the date
on which XYZ makes such quarterly report or receives notice of such
determination by the [applicable regulatory agency], as applicable; (v) any
change in the ownership of the securities issued by, or the business purpose (as
specified in the constituent documents of the relevant entities) of, the U.K.
Company, the Jersey Holding Company, the Jersey Charitable Trust, the Jersey
Subsidiary or the Distribution Trust or any failure by XYZ to own, directly or
indirectly, all of the equity of the XYZ Subsidiary (including any successor
borrower hereinafter referred to) or the USLLC; provided that, the XYZ Borrower,
with the consent of the USLLC, may assign the XYZ Loan or the USLLC may replace
the XYZ Loan with another loan, in each case, to XYZ or another subsidiary or
branch office of XYZ with prospective payment terms identical to, and other
terms substantially the same as, those of the XYZ Loan, in which case XYZ or
such other subsidiary or branch office and loan shall be deemed to be the XYZ
Borrower and the XYZ Loan, respectively, and any such action shall not
constitute an Exchange Event; and (vi) any application is made by (A) XYZ, the
U.K. Company, the Jersey Holding Company, the Jersey Charitable Trust, the
Jersey Subsidiary, the USLLC, the Distribution Trust or the XYZ Subsidiary
(each, a "Relevant Entity") to a court for an order that the Relevant Entity be
wound up or (B) any other entity to a court for an order appointing a
liquidator, provisional liquidator, administrator or controller in respect of
any Relevant Entity, or any one of the same is appointed, whether or not under
an order, unless, [in each case,] the application is withdrawn or the order is
stayed, or the liquidator, provisional liquidator, administrator or controller
is removed, within 21 days of the date on which the application or appointment
is made, as applicable.

If the Exchange Event is anything other than a redemption of the XYZ
Preference Shares for cash, then each Jersey Preference Share and Debt Security
will be redeemed, automatically and sequentially, for one ADS. If a redemption
of the XYZ Preference Shares for cash occurs, then the Jersey Preference Shares
and Debt Securities will be redeemed, automatically and sequentially, for cash.
After any such redemption of the Debt Securities, the Collateral Agent will
deliver the ADSs or the cash for which the Debt Securities are redeemed, as the
case may be, to the Administrator, and the Administrator, on behalf of the
Trust, will on the Exchange Date (i) in the case of a redemption for cash,
distribute the proceeds to the holders of Trust Securities at the rate of US$25
per Trust Security then outstanding together with accrued interest thereon from
and including the last Interest Payment Date to which interest has been paid or
provided for in full, or (ii) in all other cases, distribute the proceeds to the
holders of Trust Securities at the rate of one ADS per Trust Security then
outstanding. The distribution described in the preceding sentence will be made
to holders of record as of the close of business on the Business Day immediately
preceding the date of such distribution. [The holders of the Trust Securities
will thereafter have no further claims against the Trust and the Administrator
will wind up the Trust.]

Upon the occurrence of an Exchange Event, ADRs or cash, as the case may
be, will be delivered in exchange for Trust Securities upon or as soon as
possible after the date on which such event occurs (after taking into account
any cure period provided therefor).

TERM OF THE TRUST

The Trust will dissolve as soon as possible after the exchange of the
Trust Securities for ADRs or cash, as the case may be, upon the occurrence of an
Exchange Event. See "Investment Objective and Policies" and "Risk
Factors--Limited Term."

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The Trust will be classified a grantor trust for United States Federal
income tax purposes and the Debt Securities held by the Trust will be treated as
equity in XYZ. Accordingly, each holder will be treated for United States
Federal income tax purposes as owning equity of XYZ and will be required to
include in income, as dividends, the holder's pro rata share of the gross amount
of the interest paid on the Debt Securities to the extent of the current and
accumulated earnings and profits (as determined for United States Federal income
tax purposes) of XYZ.

A holder's exchange of Trust Securities for ADSs upon the occurrence of
an Exchange Event generally will not constitute a taxable event for United
States Federal income tax purposes. However, the receipt of cash upon exchange
of the Trust Securities in connection with the redemption of the XYZ Preference
Shares for cash would constitute a taxable event for United States Federal
income tax purposes, and a holder of Trust Securities generally would be
required to recognize gain or loss in respect of Trust Securities redeemed for
cash. See "Certain United States Federal Income Tax Considerations."

MANAGEMENT ARRANGEMENTS

The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will consist only of US$________ aggregate
principal amount of Debt Securities (US$________ aggregate principal amount of
Debt Securities if the Underwriters' over-allotment options are exercised in
full), and any distributions thereon, and will not be actively managed. The
activities of the Trust will be limited so as to ensure that the Trust will
qualify as a grantor trust for United States Federal income tax purposes. The
administration of the Trust will be overseen by the trustees (the "Trustees")
thereof. The day-to-day administration of the Trust will be carried out by The
Bank of New York (or its successor), as the Administrator. The Bank of New York
(or its successor) will also act as custodian (the "Custodian") for the Trust's
assets and as paying agent, transfer agent and registrar (the "Paying Agent")
with respect to the Trust Securities. Except as aforesaid, and except for The
Bank of New York's role as Collateral Agent under the Security and Pledge
Agreement and as depositary for the ADRs, The Bank of New York will have no
other affiliation with, and will not be engaged in any other transaction with,
the Trust. For their services, the fees of the Administrator, the Custodian, the
Trustees and the Paying Agent will be deducted from the interest payments on the
Debt Securities. See "Management Arrangements."

RISK FACTORS

The Trust has adopted a fundamental policy that 100% of its portfolio
be invested in the Debt Securities, and the distributions thereon, and that the
Debt Securities may not be disposed of during the term of the Trust except upon
the occurrence of an Exchange Event. The Trust will not be managed like a
typical closed-end investment company.

The Trust is classified as a "non-diversified" investment company under
the Investment Company Act. Consequently, the Trust is not limited by the
Investment Company Act in the proportion of its assets that may be invested in
the securities of a single issuer. Since the only securities held by the Trust
will be the Debt Securities, the Trust may be subject to greater risk than would
be the case for an investment company with more diversified investments.

The Trust Securities have no trading history and it is not possible to
predict how they will trade in the secondary market. The Underwriters currently
intend, but are not obligated, to make a market in the Trust Securities. There
can be no assurance that a secondary market will develop or, if a secondary
market does develop, that it will provide the holders of the Trust Securities
with liquidity of investment or that it will continue for the life of the Trust
Securities.

Except as described below, holders of the Trust Securities will not be
entitled to any rights with respect to the XYZ Preference Shares (including,
without limitation, rights to receive any dividends or other distributions in
respect thereof) until such time, if any, as the Trust shall have delivered ADSs
representing the XYZ Preference Shares in exchange for Trust Securities upon the
occurrence of an Exchange Event (which will not occur if the Exchange Event is
the redemption of the XYZ Preference Shares for cash). Each Trust Security will
entitle the holder thereof to direct the exercise of the voting rights attaching
to two XYZ Preference Shares represented by one ADS. The holders of ADSs will be
entitled to vote the XYZ Preference Shares represented thereby together with the
holders of ordinary shares of XYZ on the basis of one vote per share on any poll
(a) in all cases with respect to certain matters specified herein and (b) after
XYZ fails to pay (i) in full on any Dividend Payment Date the accrued dividends
in respect of the quarterly dividend period then ended or (ii) if an Exchange
Event occurs due to the failure of the Trust to receive for any reason on or
within three Business Days after an Interest Payment Date the interest then due
on the Debt Securities in full without deduction or withholding for any taxes,
duties or other charges, in full an optional dividend on the XYZ Preference
Shares in an aggregate amount equal to the amount of interest not so received
(an "Optional Dividend") within three Business Days after the date on which such
Exchange Event occurred and until the earlier of (x) the first Dividend Payment
Date thereafter as of which XYZ has paid in full four consecutive quarterly
dividends on the XYZ Preference Shares and (y) the date as of which XYZ has paid
a special dividend on the XYZ Preference Shares in an amount equal to four
quarterly dividend payments, with respect to all matters on which the holders of
the ordinary shares of XYZ are entitled to vote. In addition, the holders of
ADSs will have the right to vote separately as a class in certain circumstances
involving a variation of the rights of holders of the ADSs or the XYZ Preference
Shares. As long as the ADSs are owned by the Jersey Subsidiary, the Jersey
Subsidiary will, or will direct the Collateral Agent and the ADR depositary to,
vote the ADSs and the XYZ Preference Shares as directed by the holders of Trust
Securities. See "Risk Factors."

LISTING

Application will be made to list the Trust Securities on the NYSE.

RATINGS

The Trust Securities will be rated ___ by Moody's Investors Service,
Inc. and ___ by Standard & Poor's Ratings Service. A security rating is not a
recommendation to buy, sell or hold securities, is subject to revision or
withdrawal at any time by the assigning rating organization, and should be
evaluated independently of any other rating.

<PAGE>

FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load (as a percentage of offering price)..... % (a)
Automatic Dividend Reinvestment Plan Fees.................. Not Applicable

ANNUAL EXPENSES (as a percentage of net assets)
Management Fees(b)......................................... %
Other Expenses(c).......................................... %
==============
TOTAL ANNUAL EXPENSES(C)................................... %
==============

1 year 3 years
------ -------
Example
- -------

An investor would pay the following expenses on a $1,000
investment, including the maximum sales load of $ and
assuming (1) no annual expenses and (2) a 5% annual return $ $
throughout the periods.

- ----------
(a) See the cover page of this Prospectus and "Underwriting."

(b) See "Management Arrangements." The Trust will be internally managed;
consequently there will be no separate investment advisory fee paid by
the Trust. The Bank of New York will act as the Administrator of the
Trust.

(c) The organization costs of the Trust in the amount of $_____ and the
costs associated with the initial registration and the Offerings,
estimated to be approximately $_____, will be paid by [Merrill Lynch &
Co., Inc.] which will be reimbursed (x) in part by the U.K. Company
from the facility fee to be paid to the U.K. Company by the
Distribution Trust as an Income Entitlement and (y) in part by the
Trust from the facility fee to be paid to the Trust by the U.K. Company
in connection with the investment by the Trust in the Debt Securities.
The anticipated ongoing administrative and other expenses of the Trust
will be paid by the Jersey Holding Company. Any unanticipated operating
expenses of the Trust may be paid by the XYZ Affiliate. See "Management
Arrangements--Estimated Expenses." Absent such arrangements, the
Trust's "Other Expenses" and "Total Annual Expenses" would be
approximately _____% of the Trust's net assets.

The foregoing Fee Table is intended to assist investors in
understanding the costs and expenses that a holder of Trust Securities will bear
directly or indirectly. The Example set forth above utilizes a 5% annual rate of
return as mandated by Securities and Exchange Commission regulations. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES OR ANNUAL
RATES OF RETURN, AND ACTUAL EXPENSES OR ANNUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE ASSUMED FOR PURPOSES OF THE EXAMPLE.

<PAGE>
STRUCTURAL DIAGRAM

[Diagram of Transaction Structure] Diagram illustrating transaction
parties, intervening vehicles and investment and payment directions.

<PAGE>

THE TRUST

XYZ Exchangeable Preferred Trust (the "Trust") is a newly-created
Delaware business trust and will be registered as a closed-end management
investment company under the U.S. Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Trust was formed on July 28, 1998 pursuant
to a Certificate of Trust as filed with the Secretary of State of the State of
Delaware on July 29, 1998 and a Trust Agreement dated as of such date, which was
amended and restated as of _____________, 1998 (as so amended and restated, the
"Declaration of Trust"). The term of the Trust will expire as soon as possible
after the exchange of the Trust Securities for ADRs or cash, as the case may be,
upon the occurrence of an Exchange Event. The Trust will be treated as a grantor
trust for United States Federal income tax purposes. The Trust's principal
office is located at 850 Library Avenue, Suite 204, Newark, Delaware 19715, and
its telephone number is (302) 738-6680.

USE OF PROCEEDS AND COLLATERAL ARRANGEMENTS

The proceeds of the Offerings (without giving effect to the expenses of
the Offerings payable by the Trust) will be $________ (or $_________ if the
Underwriters' over-allotment options are exercised in full). On the Issue Date
(as defined herein), the proceeds of the Offerings will be used to purchase
US$________ aggregate principal amount (or US$________ aggregate principal
amount if the Underwriters' over-allotment options are exercised in full) of
___% Mandatorily Redeemable Debt Securities due 2047 (the "Debt Securities")
from [NAME], a special purpose unlimited company incorporated under the laws of,
and domiciled in, the United Kingdom (the "U.K. Company"). The Trust, as the
holder of the Debt Securities, will be entitled to receive interest thereon at
the rate per annum of ___%, payable quarterly in arrears on each Dividend
Payment Date (each, an "Interest Payment Date"). The Debt Securities will be
listed on the Luxembourg Stock Exchange and, unless redeemed earlier due to an
Exchange Event (as defined herein), will be redeemed on _______, 2047. The Debt
Securities will be issued only in bearer form and will be denominated and pay
interest in U.S. dollars.

The following transactions will take place on the Issue Date. Reference
is made to page 9 for a diagram of the transactions.

The U.K. Company will use the proceeds from the sale of the Debt
Securities to purchase at a price equal to their liquidation preference fully
paid, non-dividend paying preference shares, liquidation preference US$25 per
share (the "Jersey Preference Shares"), issued by [NAME], a company incorporated
with limited liability under the laws of, and domiciled in, Jersey, the Channel
Islands (the "Jersey Subsidiary"). The Jersey Subsidiary will use the proceeds
from the sale of the Jersey Preference Shares to purchase from [NAME] ("XYZ")
_______ American Depositary Shares ("ADSs"), each representing two fully paid
non-cumulative preference shares, liquidation preference US$12.50 per share (the
"XYZ Preference Shares"), of XYZ at a price per ADS equal to the aggregate
liquidation preference of the two XYZ Preference Shares represented thereby. The
XYZ Preference Shares initially represented by the ADSs will not accrue or pay
dividends. If and when an Exchange Event occurs (unless such Exchange Event is
the redemption of the XYZ Preference Shares for cash), each such initial XYZ
Preference Share will automatically convert into a dividend-paying XYZ
Preference Share which will accrue non-cumulative dividends at the rate of
US$___ per share per annum, payable quarterly in arrears in an amount equal to
US$___ per share on each Dividend Payment Date to holders of record as of the
immediately preceding Record Date.

XYZ will use the proceeds from the issue of the XYZ Preference Shares
to make a capital contribution to a business trust established under the laws of
the State of Delaware (the "Distribution Trust"). The Distribution Trust will
use XYZ's capital contribution to make a loan (the "Distribution Loan") to a
Delaware limited liability company that is a wholly-owned subsidiary of XYZ (the
"USLLC"). The USLLC will use the proceeds of the Distribution Loan to make a
loan (the "XYZ Loan") to XYZ or a subsidiary or branch of XYZ (the "XYZ
Subsidiary" and together with XYZ as borrower of the XYZ Loan, each, the "XYZ
Borrower").

The ADSs and the Jersey Preference Shares will be deposited with The
Bank of New York, as the collateral agent (the "Collateral Agent"), pursuant to
the security and pledge agreement (the "Security and Pledge Agreement") to be
entered into among the Trust, the U.K. Company, the Jersey Subsidiary and the
Collateral Agent. Pursuant to the terms of the Security and Pledge Agreement,
the U.K. Company and the Jersey Subsidiary will deposit the ADSs and the Jersey
Preference Shares with the Collateral Agent and irrevocably and unconditionally
(i) pledge the ADSs and the Jersey Preference Shares to secure the obligations
of the U.K. Company under the Debt Securities and the Jersey Subsidiary under
the Jersey Preference Shares, respectively, and (ii) direct the Collateral
Agent, upon the occurrence of an Exchange Event, to transfer the ADSs to the
Trust. Prior to the occurrence of an Exchange Event, ownership of the Jersey
Preference Shares and the ADSs will remain with the U.K. Company and the Jersey
Subsidiary, respectively, although pursuant to the Security and Pledge
Agreement, the Jersey Subsidiary will agree to vote, or cause the Collateral
Agent and the ADR depositary to vote, the ADSs and the XYZ Preference Shares
represented by the ADSs as directed by the holders of the Trust Securities. Each
Trust Security will entitle the holder to direct the exercise of the voting
rights attaching to one ADS and two XYZ Preference Shares.

The Debt Securities will be held by the Custodian for the Trust.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

The Trust will invest the proceeds of the Offerings in the Debt
Securities issued by the U.K. Company. The Trust's investment objective is to
distribute to the holders of Trust Securities (a) pro rata based on the number
of Trust Securities outstanding the interest the Trust receives on the Debt
Securities from time to time and (b) upon the occurrence of an Exchange Event,
the proceeds of the redemption of the Debt Securities, which will be American
Depositary Receipts ("ADRs") evidencing, for each Trust Security, one ADS
representing two XYZ Preference Shares, provided that if the Exchange Event is
the redemption of the XYZ Preference Shares for cash, holders of Trust
Securities will be entitled to receive US$25 per Trust Security and not ADRs.
The XYZ Preference Shares will accrue non-cumulative dividends at the rate of US
$___ per share per annum, payable quarterly in arrears in an amount equal to
US$___ per share on each Dividend Payment Date (as defined herein) to holders of
record as of the immediately preceding Record Date (as defined herein). Upon the
occurrence of an Exchange Event, holders of Trust Securities shall receive one
ADS or US$25 in cash plus accrued interest thereon from and including the last
Interest Payment Date to which interest has been paid or provided in full, as
the case may be, per Trust Security. Upon the occurrence of an Exchange Event,
the Administrator will notify The Depository Trust Company (the "Depository")
and publish a notice in The Wall Street Journal or another daily newspaper of
national circulation stating whether ADRs or cash will be delivered in exchange
for the Trust Securities.

The Trust has adopted a fundamental policy as required by the
Declaration of Trust to invest 100% of its portfolio in the Debt Securities, and
any distributions thereon, and not to dispose of the Debt Securities during the
term of the Trust except upon the occurrence of an Exchange Event. The foregoing
fundamental policy of the Trust may not be changed without the vote of 100% of
the holders of the Trust Securities.

TRUST ASSETS

The Trust's assets will consist of US$________ aggregate principal
amount of Debt Securities (US$________ aggregate principal amount of Debt
Securities if the Underwriters' over-allotment options are exercised in full),
and any distributions thereon. Except as described herein, holders of the Trust
Securities will receive non-cumulative dividend distributions in an amount equal
to US$_____ per Trust Security per annum, payable quarterly in arrears in an
amount equal to US$___ per Trust Security on each ______, ______, ______, and
______ of each year (each, a "Dividend Payment Date"), to holders of record as
of the immediately preceding ______, ______, ______ and ______ (each, a "Record
Date"), respectively. The first distribution in respect of the period from and
including the original issue date (the "Issue Date") to but excluding ________,
1998 will equal US$___ per Trust Security. See "Dividends and Distributions."

In the event that any Dividend Payment Date for the Trust Securities or
Interest Payment Date for the Debt Securities is not a Business Day, then the
dividend or interest payable on such date need not be made on such Dividend
Payment Date or Interest Payment Date, as applicable, but instead may be made on
the next succeeding Business Day with the same force and effect as if made on
such Dividend Payment Date or Interest Payment Date, as the case may be. As used
herein, "Business Day" means a day other than a day on which banking
institutions in Melbourne, Australia, [the United Kingdom] or New York, New York
are authorized or required by law or executive order to remain closed.

XYZ

THIS PROSPECTUS RELATES ONLY TO THE TRUST SECURITIES OFFERED HEREBY AND
DOES NOT RELATE TO XYZ, THE ADSs OR THE XYZ PREFERENCE SHARES. XYZ HAS FILED A
REGISTRATION STATEMENT ON FORM F-3 WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") WITH RESPECT TO THE ADSs AND THE XYZ PREFERENCE SHARES THAT
MAY BE RECEIVED BY A HOLDER OF TRUST SECURITIES UPON THE OCCURRENCE OF AN
EXCHANGE EVENT. THE PROSPECTUS OF XYZ CONSTITUTING A PART OF SUCH REGISTRATION
STATEMENT INCLUDES INFORMATION RELATING TO XYZ, THE ADSs AND THE XYZ PREFERENCE
SHARES. THE PROSPECTUS OF XYZ IS BEING ATTACHED HERETO AND DELIVERED TO
PROSPECTIVE PURCHASERS OF TRUST SECURITIES TOGETHER WITH THIS PROSPECTUS FOR
CONVENIENCE OF REFERENCE ONLY. THE PROSPECTUS OF XYZ DOES NOT CONSTITUTE A PART
OF THIS PROSPECTUS, NOR IS IT INCORPORATED BY REFERENCE HEREIN.

EXCHANGE EVENT

Upon the occurrence of any of the following events (each, an "Exchange
Event"), each Trust Security will be mandatorily exchanged for one ADS or a cash
redemption amount, as applicable, from the proceeds of the sequential redemption
of the XYZ Preference Shares (in the case of the redemption thereof for cash)
and (in all cases) the Jersey Preference Shares and the Debt Securities: (i)
________, 2047 or the date of any earlier cash redemption of the XYZ Preference
Shares; (ii) any date selected by XYZ in its absolute discretion; (iii) the
failure of the Trust to receive for any reason on or within three Business Days
after an Interest Payment Date the interest then due on the Debt Securities in
full without deduction or withholding for any taxes, duties or other charges, in
which case the Exchange Event will be the fourth Business Day following such
Interest Payment Date; (iv) on any date, the total capital ratio or the Tier 1
capital ratio of XYZ (either as reported by XYZ to the [applicable regulatory
agency] on a quarterly basis or as determined at any time by the [applicable
regulatory agency] in its sole discretion) falls below 8% or 4%, respectively
(or, in each case, such lesser percentage (the "Required Percentage"), as may
apply at the time) and such ratio is not increased to at least 8% or 4%,
respectively (or such lesser Required Percentage), within 90 days after the date
on which XYZ makes such quarterly report or receives notice of such
determination by the [applicable regulatory agency], as applicable; (v) any
change in the ownership of the securities issued by, or the business purpose (as
specified in the constituent documents of the relevant entities) of, the U.K.
Company, the Jersey Holding Company (as defined herein), the Jersey Charitable
Trust (as defined herein), the Jersey Subsidiary or the Distribution Trust or
any failure by XYZ to own, directly or indirectly, all of the equity of the XYZ
Subsidiary (including any successor borrower hereinafter referred to) or the
USLLC; provided that, the XYZ Borrower, with the consent of the USLLC, may
assign the XYZ Loan or the USLLC may replace the XYZ Loan with another loan, in
each case, XYZ or to another subsidiary or branch office of XYZ with prospective
payment terms identical to, and other terms substantially the same as, those of
the XYZ Loan, in which case XYZ or such other subsidiary or branch office and
loan shall be deemed to be the XYZ Borrower and the XYZ Loan, respectively, and
any such action shall not constitute an Exchange Event; and (vi) any application
is made by (A) XYZ, the U.K. Company, the Jersey Holding Company, the Jersey
Charitable Trust, the Jersey Subsidiary, the USLLC, the Distribution Trust or
the XYZ Subsidiary (each, a "Relevant Entity") to a court for an order that the
Relevant Entity be wound up or (B) any other entity to a court for an order
appointing a liquidator, provisional liquidator, administrator or controller in
respect of any Relevant Entity, or any one of the same is appointed, whether or
not under an order, unless, [in each case,] the application is withdrawn or the
order is stayed, or the liquidator, provisional liquidator, administrator or
controller is removed, within 21 days of the date on which the application or
appointment is made, as applicable.

If the Exchange Event is anything other than a redemption of the XYZ
Preference Shares for cash, then each Jersey Preference Share and Debt Security
will be redeemed, automatically and sequentially, for one ADS. If a redemption
of the XYZ Preference Shares for cash occurs, then the Jersey Preference Shares
and Debt Securities will be redeemed automatically and sequentially, for cash.
After any such redemption of the Debt Securities, the Collateral Agent will
deliver the ADSs or the cash for which the Debt Securities are redeemed, as the
case may be, to the Administrator and the Administrator, on behalf of the Trust,
will (i) in the case of a redemption for cash, distribute the proceeds to the
holders of Trust Securities at the rate of US$25 per Trust Security then
outstanding together with accrued interest thereon from and including the last
Interest Payment Date to which interest has been paid or provided for in full,
or (ii) in all other cases, distribute the proceeds to the holders of Trust
Securities at the rate of one ADS per Trust Security then outstanding. The
distribution described in the preceding sentence will be made to holders of
record as of the close of business on the Business Day immediately preceding the
date of such distribution. [The holders of the Trust Securities will thereafter
have no further claims against the Trust and the Administrator will wind up the
Trust.]

Upon the occurrence of an Exchange Event, the ADRs or cash, as the case
may be, will be delivered in exchange for the Trust Securities upon or as soon
as possible after the date on which such event occurs (after taking into account
any cure period provided therefor).

Upon the occurrence of an Exchange Event, dividends on the Trust
Securities will cease to accrue and dividends on the XYZ Preference Shares will
begin to accrue from and including the last Interest Payment Date on the Debt
Securities in respect of which interest thereon has been paid or provided for in
full.

INTERVENING VEHICLES

The U.K. Company. The U.K. Company is a special purpose unlimited
company incorporated under the laws of, and domiciled in, the United Kingdom.
The U.K. Company is wholly-owned by an exempt company established under the laws
of, and domiciled in, Jersey, the Channel Islands (the "Jersey Holding
Company"), which holds all of the U.K. Company's ordinary shares. These ordinary
shares will be the only capital stock of the U.K. Company. The ordinary shares
of the Jersey Holding Company will be the only capital stock of the Jersey
Holding Company and are held by a charitable trust established under the laws
of, and domiciled in, Jersey, the Channel Islands (the "Jersey Charitable
Trust").

The U.K. Company was established for the purpose of, among other
things, owning all of the ordinary shares of the Jersey Subsidiary, issuing the
Debt Securities to the Trust and investing the proceeds thereof in the Jersey
Preference Shares. The U.K. Company will elect to be treated as a partnership
for United States Federal income tax purposes under U.S.
Treasury Regulations Sections 301.7701-1 through -3.

The U.K. Company will have at least two directors and an independent
auditor. The Memorandum and Articles of Association of the U.K. Company will
prohibit it from taking any action that would have a material adverse effect on
the holders of the Trust Securities. There will be no annual shareholder
meetings. There will be not less than one directors' meeting each year at which
the director(s) will nominate directors, if necessary, and approve the annual
accounts. The U.K. Company will also appoint a paying agent located in The City
of New York to receive Income Entitlements from the Distribution Trust and make
payments on the Debt Securities to the Trust.

The Jersey Subsidiary. The Jersey Subsidiary is a company incorporated
with limited liability under the laws of, and domiciled in, Jersey, Channel
Islands. The U.K. Company will own all the ordinary shares of the Jersey
Subsidiary. The Jersey Subsidiary was established for the purpose of, among
other things, issuing the Jersey Preference Shares to the U.K. Company and
investing the proceeds thereof in the ADSs. The Jersey Subsidiary will elect to
be disregarded as an entity that is separate from its owner (i.e., the U.K.
Company) for United States Federal income tax purposes under U.S. Treasury
Regulations Sections 301.7701-1 through -3.

The Jersey Subsidiary will be managed by a Board of Directors and have
an independent auditor. The Memorandum and the Articles of Association of the
Jersey Subsidiary will prohibit the Board of Directors from taking any action
that would have a material adverse effect on the holders of the Trust
Securities. There will be no annual shareholder meetings. There will be one
directors' meeting each year at which the director(s) will nominate directors,
if necessary, and approve the annual accounts.

The Distribution Trust. The Distribution Trust is a business trust
established under the laws of the State of Delaware. The Distribution Trust will
operate in accordance with the distribution trust agreement that establishes its
terms; the U.K. Company will have no right to cause any variation of such terms.
The Distribution Trust will elect to be disregarded as an entity that is
separate from its owner (i.e., XYZ) for United States Federal income tax
purposes under U.S. Treasury Regulations Sections 301.7701-1 through -3.

The administration of the Distribution Trust will be overseen by the
trustees thereof.

On the Issue Date, XYZ will use the proceeds from the issuance of the
XYZ Preference Shares to make a capital contribution of US$________ (or
US$________ if the Underwriters exercise their over-allotment options in full)
to the Distribution Trust and the Distribution Trust will use XYZ's capital
contribution to make the Distribution Loan to the USLLC. The Distribution Loan
will mature five years after the maturity date of the Debt Securities on
________, 2052. The Distribution Loan will be the only asset, and interest
thereon will be the only source of revenue, of the Distribution Trust. Interest
on the Distribution Loan will accrue from the Issue Date and be due and payable
on each Interest Payment Date at the rate of ___% per annum. The interest paid
on the Distribution Loan will be used by the Distribution Trust to pay the
Income Entitlements to the U.K. Company. The interest rate represents the sum of
___% (the interest rate on the Debt Securities, which equals the dividend rate
on the Trust Securities) and a spread of 0.25%. The spread is designed to enable
the U.K. Company to pay (a) its ongoing costs and expenses and those of the
Jersey Subsidiary, (b) dividends to the Jersey Holding Company in an amount
sufficient to enable it to pay its expenses and those of the Trust, and (c) the
indemnity fee payable to the XYZ Affiliate. XYZ will have a reversionary income
interest in the Distribution Trust after the occurrence of any Exchange Event.

The USLLC. The USLLC is a Delaware limited liability company that is a
wholly-owned subsidiary of XYZ. The USLLC will elect to be disregarded as an
entity that is separate from its owner (i.e., XYZ) for United States Federal
income tax purposes under U.S. Treasury Regulations Sections 301.7701-1 through
- -3. The USLLC will be managed by a Board of Directors pursuant to a limited
liability company agreement. XYZ will have the right to appoint, remove or
replace any director and to increase or decrease the number of directors
provided that the number of directors shall be at least two.

Upon receiving the proceeds of the Distribution Loan, the USLLC will
make the XYZ Loan to the XYZ Borrower. The XYZ Loan will be the only asset, and
interest thereon will be the only source of revenue, of the USLLC. The XYZ Loan
will mature five years after the maturity date of the Debt Securities on
________, 2052. Interest on the XYZ Loan will accrue from the Issue Date and be
due and payable on each Interest Payment Date at a per annum rate determined as
of ________ of each year by the Board of Directors of the USLLC (each such rate
shall equal the sum of the interest rate on the Distribution Loan plus a spread
designed to enable the USLLC to pay the interest on the Distribution Loan due on
such date, net of any deduction or withholding for any taxes, duties or other
charges).

On each Interest Payment Date, (i) if no Payment Prohibition exists,
the XYZ Borrower will make an interest payment on the XYZ Loan to the USLLC;
(ii) out of such payment, the USLLC will make an interest payment on the
Distribution Loan to the Distribution Trust; (iii) out of such payment, the
Distribution Trust will distribute the Income Entitlements to the U.K. Company;
and (iv) out of such distribution, if any, the U.K. Company will pay (a)
interest on the Debt Securities to the Trust, (b) ongoing costs and expenses of
the U.K. Company and the Jersey Subsidiary and (c) quarterly dividend payments
on the U.K. Company's voting shares to the Jersey Holding Company which will be
used to pay ongoing expenses of the Jersey Holding Company and the Trust
(pursuant to contractual arrangements between the Jersey Holding Company and the
Trust) and (d) an indemnity fee to the XYZ Affiliate. On such Interest Payment
Date (which will also be a Dividend Payment Date), The Bank of New York, as
Administrator, will use all the interest received by the Trust on the Debt
Securities to pay dividends on the Trust Securities.

TRUST DISSOLUTION

The Trust will dissolve as soon as possible after the exchange of the
Trust Securities for ADRs or cash, as the case may be, upon the occurrence of an
Exchange Event.

INVESTMENT RESTRICTIONS

The Trust has adopted a fundamental policy that the Trust may not
purchase any securities or instruments other than the Debt Securities and any
distributions thereon; issue any securities or instruments except for the Trust
Securities; make short sales or purchase securities on margin; write put or call
options; borrow money; underwrite securities; purchase or sell real estate,
commodities or commodities contracts; or make loans. The Trust has adopted a
fundamental policy that 100% of its portfolio be invested in Debt Securities and
any distributions thereon, and not to dispose of the Debt Securities during the
term of the Trust, except upon the occurrence of an Exchange Event.

<PAGE>

RISK FACTORS

NO ACTIVE PORTFOLIO MANAGEMENT

It is a fundamental policy of the Trust that 100% of its portfolio be
invested in the Debt Securities and any distributions thereon, and not to
dispose of the Debt Securities during the term of the Trust, except upon the
occurrence of an Exchange Event. The Trust will not be managed like a typical
closed-end investment company.

ABSENCE OF TRADING HISTORY; MARKETABILITY; POSSIBILITY OF THE TRUST SECURITIES
TRADING AT A DISCOUNT FROM NET ASSET VALUE

The Trust Securities have no trading history and it is not possible to
predict how they will trade in the secondary market. The trading price of the
Trust Securities may vary considerably prior to an Exchange Event due to, among
other things, complex and interrelated political, economic, financial and other
factors that can affect the capital markets generally, the stock exchanges or
quotation systems on which XYZ's shares are traded and the market segment of
which XYZ is a part and fluctuations in interest rates and rates of exchange
between the [CURRENCY OF THE COUNTRY] and the U.S. dollar and other factors that
are difficult to predict and beyond the Trust's control. Reference is made to
the accompanying prospectus of XYZ.

The Trust Securities are a new issue of securities and, accordingly,
have no established trading market. The Underwriters currently intend, but are
not obligated, to make a market in the Trust Securities. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the holders of the Trust Securities with liquidity
of investment or that it will continue for the life of the Trust Securities.
Application will be made to list the Trust Securities on the NYSE. There can be
no assurance that such application will be accepted or that, if accepted, the
Trust Securities will not later be delisted or that trading in the Trust
Securities on the NYSE will not be suspended. In the event of a delisting or
suspension of trading on such exchange, the Trust will apply for listing of the
Trust Securities on another national securities exchange or for quotation on
another trading market. If the Trust Securities are not listed or traded on any
securities exchange or trading market, or if trading of the Trust Securities is
suspended, pricing information for the Trust Securities may be more difficult to
obtain, and the price and liquidity of the Trust Securities may be adversely
affected.

The Trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies frequently
trade at a discount from their net asset value, which is a risk separate and
distinct from the risk that the Trust's net asset value will decrease. The Trust
cannot predict whether the Trust Securities will trade at, below or above their
net asset value. The risk of purchasing investments that might trade at a
discount is more pronounced for investors who wish to sell their investments in
a relatively short period of time after completion of the Trust's initial public
offering because for those investors realization of a gain or loss on their
investments is likely to be more dependent upon the existence of a premium or
discount than upon portfolio performance.
Trust Securities are not subject to redemption.

LIMITED TERM

The term of the Trust will expire as soon as possible after the
exchange of the Trust Securities for ADRs or cash, as the case may be, upon the
occurrence of an Exchange Event.

NON-DIVERSIFIED PORTFOLIO

The Trust's assets will consist entirely of the Debt Securities and
distributions thereon. As a result, investments in the Trust may be subject to
greater risk than would be the case for a company with a more diversified
portfolio of investments.

LIMITED STOCKHOLDER RIGHTS

Except as described below, holders of the Trust Securities will not be
entitled to any rights with respect to the ADSs or the XYZ Preference Shares
(including, without limitation, rights to receive any dividends or other
distributions in respect thereof) until such time, if any, as the Trust shall
have delivered the ADSs in exchange for Trust Securities upon the occurrence of
an Exchange Event (unless the Exchange Event is the redemption of the XYZ
Preference Shares for cash). In addition, the Trust as the holder of the Debt
Securities, has no voting rights in relation to the U.K. Company.

Each Trust Security will entitle the holder thereof to direct the
exercise of the voting rights attaching to one ADS and two XYZ Preference Shares
represented by one ADS. The holders of ADSs will be entitled to vote the XYZ
Preference Shares represented thereby together with the holders of ordinary
shares of XYZ, on the basis of one vote per share on any poll, (a) in all cases,
with respect to certain matters described below and (b) after XYZ fails to pay
(i) in full on any Dividend Payment Date the accrued dividends in respect of the
quarterly dividend period then ended or (ii) in full an optional dividend on the
XYZ Preference Shares in an aggregate amount equal to the amount of interest not
so received (an "Optional Dividend") within three Business Days after the date
on which such Exchange Event occurred and until the earlier of (x) the first
Dividend Payment Date thereafter as of which XYZ has paid in full four
consecutive quarterly dividends on the XYZ Preference Shares and (y) the date as
of which XYZ has paid a special dividend on the XYZ Preference Shares in an
amount equal to four quarterly dividend payments, with respect to all matters on
which the holders of the ordinary shares of XYZ are entitled to vote. In
addition, the holders of ADSs will have the right to vote separately as a class
in certain circumstances involving a variation of the rights of holders of the
ADSs or the XYZ Preference Shares. As long as the ADSs are owned by the Jersey
Subsidiary, the Jersey Subsidiary will, or will direct the Collateral Agent to,
vote the XYZ Preference Shares as directed by the holders of the Trust
Securities.

YEAR 2000 NONCOMPLIANCE

Many computer systems were designed using only two digits to designate
years. These systems may not be able to distinguish the Year 2000 from the Year
1900 (commonly known as the "Year 2000 Problem"). Like other investment
companies and financial and business organizations, the Trust could be adversely
affected if the computer systems used by the Trust's service providers do not
properly address this problem prior to January 1, 2000. The Trust has sought
assurances from its service providers that they are taking all necessary steps
to ensure that their computer systems will accurately reflect the Year 2000, and
the Trust will continue to monitor the situation. At this time, however, no
assurance can be given that the Trust's service providers have anticipated every
step necessary to avoid any adverse effect on the Trust attributable to the Year
2000 Problem.

DESCRIPTION OF THE TRUST SECURITIES

Each Trust Security represents a proportionate share of beneficial
interest in the Trust, and a total of _________ Trust Securities will be issued
in the Offerings, assuming no exercise of the Underwriters' over-allotment
options. Upon liquidation of the Trust, holders of Trust Securities are entitled
to share pro rata based on the number of Trust Securities outstanding in the net
assets of the Trust available for distribution. Holders of Trust Securities have
no preemptive, redemption or conversion rights. The Trust Securities, when
issued and outstanding, will be fully paid and nonassessable.

VOTING RIGHTS

Holders are entitled to one vote for each Trust Security on all matters
to be voted on by holders and are not able to cumulate their votes in the
election of Trustees. The Trust intends to hold annual meetings as required by
the rules of the NYSE. The holders have the right, upon the declaration in
writing or vote of more than two-thirds of the outstanding Trust Securities, to
remove a Trustee. The Trustees will call a meeting of holders to vote on the
removal of a Trustee upon the written request of the record holders of 10% of
the Trust Securities or to vote on other matters upon the written request of the
record holders of more than 50% of the Trust Securities (unless substantially
the same matter was voted on during the preceding 12 months).

Each Trust Security will entitle the holder thereof to direct the
exercise of the voting rights attaching to one ADS and two XYZ Preference
Shares. The holders of ADSs will be entitled to vote together with the holders
of ordinary shares of XYZ, on the basis of one vote per share on any poll, (a)
in all cases, with respect to certain matters specified below and (b) after XYZ
fails to pay (i) in full on any Dividend Payment Date the accrued dividends in
respect of the quarterly dividend period then ended or (ii) if an Exchange Event
occurs due to the failure of the Trust to receive for any reason on or within
three Business Days after an Interest Payment Date the interest then due on the
Debt Securities in full without deduction or withholding for any taxes, duties
or other charges, in full an Optional Dividend on the XYZ Preference Shares
within three Business Days after the date on which such Exchange Event occurred
and until the earlier of (x) the first Dividend Payment Date thereafter as of
which XYZ has paid in full four consecutive quarterly dividends on the XYZ
Preference Shares and (y) the date as of which XYZ has paid a special dividend
on the XYZ Preference Shares in an amount equal to four quarterly dividend
payments, with respect to all matters on which the holders of the ordinary
shares of XYZ are entitled to vote. The matters referred to in clause (a) of the
preceding sentence upon which the holders of XYZ Preference Shares will have a
right to vote, together with the holders of ordinary shares of XYZ, are: any
proposal to reduce the share capital of XYZ; any resolution to approve the terms
of a share buy-back arrangement; any proposal that affects the rights attached
to the XYZ Preference Shares; any proposal to wind up XYZ; any proposal for the
disposal of the whole of the property, business and undertaking of XYZ; and any
matter during the winding up of XYZ. In addition, the holders of ADSs will have
the right to vote separately as a class in certain circumstances involving a
variation of the rights of holders of the ADSs or the XYZ Preference Shares. As
long as the ADSs are held by the Jersey Subsidiary, the Jersey Subsidiary will,
or will direct the Collateral Agent and the ADR depositary to, vote the XYZ
Preference Shares as directed by the holders of the Trust Securities.

Modifications and amendments of the terms of the Trust Securities, the
Debt Securities and the Jersey Preference Shares may be made with the consent of
not less than a majority of the holders of the Trust Securities; provided that,
no such modification or amendment may, without the consent of 100% of the
holders of the Trust Securities, change the amount or timing of any dividend on
the Trust Securities, the amount or timing of interest payments on the Debt
Securities, the liquidation preference of the Jersey Preference Shares, the
redemption amount of the Debt Securities and the Jersey Preference Shares or
otherwise adversely affect the foregoing terms. Modifications and amendments may
be made without the consent of any holder of the Trust Securities to cure any
ambiguity, defect or inconsistency in the Declaration of Trust or any instrument
defining the terms of the Trust Securities, the Debt Securities and the Jersey
Preference Shares, provided that, such action will not adversely affect in any
material respect the interests of the holders of the Trust Securities.

RESTRICTIONS ON OWNERSHIP AND TRANSFER

Generally, under the [COUNTRY] Corporations Law, the concept of voting
share does not include certain types of preference shares with limited voting
rights. Because holders of the XYZ Preference Shares have been conferred a right
to vote following a missed dividend, the XYZ Preference Shares will be treated
as voting shares for relevant purposes. Therefore, a person with an entitlement
to XYZ Preference Shares, including holders of Trust Securities, should consider
this entitlement with any entitlement to other voting shares in XYZ in the
context of the regulatory thresholds summarized below and seek appropriate legal
advice.

In summary, under the [COUNTRY] Corporations Law, a person or group of
persons cannot acquire voting shares in a public company if that person or group
of persons or another person would then be "entitled" (which is defined very
broadly) to more than 20% of the voting shares in XYZ unless those shares are
acquired in a manner specifically permitted by law. This restriction also limits
the options available to a shareholder wanting to sell a shareholding of more
than 20% in an [COUNTRY] public company. The [COUNTRY] Corporations Law also
imposes certain substantial shareholding disclosure obligations on persons who
are or become "entitled" to 5% or more of the voting shares in a company listed
on the [COUNTRY] Stock Exchange, such as XYZ.

BOOK-ENTRY SYSTEM

The Trust Securities will be issued in the form of one or more global
securities (the "Global Securities") deposited with the Depository and
registered in the name of a nominee of the Depository.

The Depository has advised the Trust and the Underwriters as follows:
The Depository is a limited-purpose trust company organized under the laws of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Securities Exchange
Act of 1934, as amended. The Depository was created to hold securities of
persons who have accounts with the Depository ("participants") and to facilitate
the clearance and settlement of securities transactions among its participants
in such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of
certificates. Such participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.

Upon the issuance of a Global Security, the Depository or its nominee
will credit the respective Trust Securities represented by such Global Security
to the accounts of participants. The accounts to be credited shall be designated
by the Underwriters. Ownership of beneficial interests in such Global Securities
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Securities will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by the Depository or its nominee
for such Global Securities. Ownership of beneficial interests in such Global
Securities by persons that hold through participants will be shown on, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.

So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Trust
Securities. Except as set forth below, owners of beneficial interests in such
Global Securities will not be entitled to have the Trust Securities registered
in their names and will not receive or be entitled to receive physical delivery
of the Trust Securities in definitive form and will not be considered the owners
or holders thereof.

Delivery of ADSs or payment of amounts or delivery of other
consideration deliverable on exchange of, and any quarterly distributions on,
Trust Securities registered in the name of or held by the Depository or its
nominee will be made to the Depository or its nominee, as the case may be, as
the registered owner or the holder of the Global Security. None of the Trust,
any Trustee, the Administrator, the Paying Agent or the Custodian for the Trust
Securities will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

The Trust expects that the Depository, upon receipt of any payment in
respect of a Global Security, will credit immediately participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in such Global Security as shown on the records of the Depository. The Trust
also expects that payments by participants to owners of beneficial interests in
such Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the
responsibility of such participants.

A Global Security may not be transferred except as a whole by the
Depository to a nominee or a successor of the Depository. If the Depository is
at any time unwilling or unable to continue as depository and a successor
depository is not appointed by the Trust within ninety days, the Trust will
issue Trust Securities in definitive registered form in exchange for the Global
Security representing such Trust Securities. In addition, the Trust may at any
time and in its sole discretion determine not to have any Trust Securities
represented by one or more Global Securities and, in such extent, will issue
Trust Securities in definitive form in exchange for all of the Global Securities
representing the Trust Securities. Further, if the Trust so specifies with
respect to the Trust Securities, an owner of a beneficial interest in a Global
Security representing Trust Securities may, on terms acceptable to the Trust and
the Depository for such Global Security, receive Trust Securities in definitive
form. In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery in definitive form of Trust
Securities represented by such Global Security equal in number to that
represented by such beneficial interest and to have such Trust Securities
registered in its name.

TRUSTEES

The Trustees of the Trust consist of three individuals, none of whom is
an "interested person" of the Trust as defined in the Investment Company Act.
The Trustees of the Trust are responsible for the overall supervision of the
operations of the Trust and perform the various duties imposed on the trustees
of management investment companies by the Investment Company Act.

The Trustees of the Trust are:

PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TITLE DURING PAST FIVE YEARS
- --------------------- ----- ----------------------

Donald J. Puglisi, 52............ Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716

William R. Latham III, 53........ Trustee Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716

James B. O'Neill, 58............. Trustee Professor of Economics
Center for Economic University of Delaware
Education & Entrepreneurship
University of Delaware
Newark, DE 19716

COMPENSATION OF TRUSTEES

The annual fees and anticipated out-of-pocket expenses of each
unaffiliated Trustee and any additional fees of the Trust's Managing Trustee
will be paid by the Jersey Holding Company (pursuant to a contractual
arrangement between it and the Trust). The Trustees will not receive, either
directly or indirectly, any compensation, including any pension or retirement
benefits, from the Trust. None of the Trustees receives any compensation for
serving as a trustee or director of any other affiliated investment company.

MANAGEMENT ARRANGEMENTS

PORTFOLIO MANAGEMENT AND ADMINISTRATION

The Trust will be internally managed and will not have an investment
adviser. The Trust's portfolio will consist only of US$______ aggregate
principal amount of Debt Securities (US$________ aggregate principal amount of
Debt Securities if the Underwriters' over-allotment options are exercised in
full), and any distributions thereon, and will not be actively managed. The
Trustees of the Trust will authorize the purchase of the Debt Securities as
directed by the Declaration of Trust. It is a fundamental policy of the Trust
that the Debt Securities may not be disposed of during the term of the Trust,
except upon the occurrence of an Exchange Event.

[Merrill Lynch & Co., Inc.] will pay all expenses incurred in the
Trust's formation and other initial expenses and expenses relating to the
Offerings and will be reimbursed (x) in part by the U.K. Company from the
facility fee to be paid to the U.K. Company by the Distribution Trust as an
Income Entitlement and (y) in part by the Trust from the facility fee to be paid
to the Trust by the U.K. Company in connection with the investment by the Trust
in the Debt Securities. Anticipated ongoing expenses of the Trust such as
accounting services, expenses for legal and auditing services, taxes, costs of
printing proxies, listing fees, if any, stock certificates and shareholder
reports, charges of the Administrator, the Custodian and the Paying Agent,
expenses of registering the Trust Securities under Federal and state securities
laws, Commission fees, fees and expenses of Trustees, accounting costs,
brokerage costs, litigation, mailing and other expenses properly payable by the
Trust will be paid by the Jersey Holding Company pursuant to a contractual
arrangement between them. Any unanticipated operating expenses of the Trust may
be paid by the XYZ Affiliate. See "--Estimated Expenses."

Administrator. The day-to-day affairs of the Trust will be managed by
The Bank of New York, as the Administrator pursuant to an administration
agreement (the "Administration Agreement"). Under the Administration Agreement,
the Trustees have delegated most of their operational duties to the
Administrator, including without limitation, the duties to: (i) pay, or cause to
be paid, all expenses incurred by the Trust; (ii) with the approval of the
Trustees, engage legal and other professional advisors (other than the
independent public accountants for the Trust); (iii) instruct the Paying Agent
to pay distributions on Trust Securities as described herein; (iv) cause the
legal and other professional advisors engaged by it to prepare and mail, file or
publish all notices, proxies, reports, tax returns and other communications and
documents for the Trust, and keep all books and records for the Trust; (v) at
the direction of the Trustees, and upon being furnished with reasonable security
and indemnity as the Administrator may require, institute and prosecute legal
and other appropriate proceedings to enforce the rights and remedies of the
Trust; and (vi) make, or cause to be made, all necessary arrangements with
respect to meetings of Trustees and any meetings of holders of Trust Securities.
The Administrator will not, however, select the independent public accountants
for the Trust or sell or otherwise dispose of the Trust assets (except in
connection with the occurrence of an Exchange Event).

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

Except for its roles as Administrator, Custodian and Paying Agent of
the Trust, and except for its role as Collateral Agent under the Security and
Pledge Agreement and as depositary for the ADRs, The Bank of New York has no
other affiliation with, and is not engaged in any other transactions with, the
Trust.

The address of the Administrator is 101 Barclay Street, New York, New
York 10286.

CUSTODIAN

The Trust's custodian (the "Custodian") is The Bank of New York
pursuant to a custodian agreement (the "Custodian Agreement"). In the event of
any termination of the Custodian Agreement by the Trust or the resignation of
the Custodian, the Trust must engage a new Custodian to carry out the duties of
the Custodian as set forth in the Custodian Agreement. The Custodian will also
act as Collateral Agent under the Security and Pledge Agreement, under which it
will hold a perfected security interest in the ADSs, the Jersey Preference
Shares or other assets consistent with the terms of the securities pledged
thereunder, and as depositary for the ADRs.

PAYING AGENT

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

INDEMNIFICATION

The Trust will, to the fullest extent permitted by applicable law,
indemnify each Trustee, the Administrator, the Paying Agent and the Custodian
with respect to any claim, liability, loss which it may incur in acting as
Trustee, Administrator, Paying Agent or Custodian, as the case may be, and any
reasonable expense incurred in connection with any such claim, liability or loss
(including the reasonable costs and expenses of the defense against any claim or
liability) except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of their respective duties. Subject to the
satisfaction of certain conditions, the XYZ Affiliate will reimburse the Trust
for any amounts it may be required to pay as indemnification to any Trustee, the
Administrator, the Paying Agent or the Custodian.

ESTIMATED EXPENSES

Organization costs of the Trust in the amount of $________ and
estimated costs of the Trust in connection with the initial registration of the
Trust Securities and the Offerings in the amount of approximately $________ will
be paid by the Trust with the facility fee paid to the Trust by the U.K. Company
in connection with the investment by the Trust in the Debt Securities. Dividends
received by the Jersey Holding Company on the voting shares of the U.K. Company
will be used to pay, among other things, the anticipated ongoing expenses of the
Trust. Any unanticipated operating expenses of the Trust may be paid by the XYZ
Affiliate.

DIVIDENDS AND DISTRIBUTIONS

The Trust intends to distribute to holders dividend distributions in an
amount equal to US$___ per Trust Security per annum, payable quarterly in
arrears in an amount equal to US$___ per Trust Security on each Dividend Payment
Date to holders of record on the immediately preceding Record Date. The first
distribution in respect of the period from and including the Issue Date to but
excluding ________, 1998 will equal US$___ per Trust Security.

Dividend payments on the Trust Securities will be made from the
interest payments received by the Trust on the Debt Securities. Interest
payments on the Debt Securities will be made from distributions received by the
U.K. Company as income beneficiary entitled to Income Entitlements from the
Distribution Trust. The U.K. Company's right to receive Income Entitlements will
not represent an absolute ownership interest in the Distribution Trust or the
income thereof, but rather an entitlement to receive interest payments on the
Distribution Loan only to the extent actually distributed to the U.K. Company by
the Distribution Trust; if any Income Entitlement payable on any Interest
Payment Date is not paid to the U.K. Company or at its direction on such date
for any reason, the Distribution Trust will have no further obligation to pay
such Income Entitlement to the U.K. Company. See "Investment Objective and
Policies--Intervening Vehicles."

On each Interest Payment Date, (i) if no Payment Prohibition exists,
the XYZ Borrower will make an interest payment on the XYZ Loan to the USLLC;
(ii) out of such payment, the USLLC will make an interest payment on the
Distribution Loan to the Distribution Trust; (iii) out of such payment, the
Distribution Trust will distribute the Income Entitlements to the U.K. Company;
and (iv) out of such distribution, if any, the U.K. Company will pay (a)
interest on the Debt Securities to the Trust, (b) ongoing costs and expenses of
the U.K. Company and the Jersey Subsidiary, (c) quarterly dividend payments on
the U.K. Company's voting shares to the Jersey Holding Company, which will be
used to pay ongoing expenses of the Jersey Holding Company and the Trust
(pursuant to contractual arrangements between the Jersey Holding Company and the
Trust) and (d) an indemnity fee to the XYZ Affiliate. On such Interest Payment
Date (which will also be a Dividend Payment Date), the Administrator of the
Trust will use all the interest received by the Trust on the Debt Securities to
pay dividends on the Trust Securities.

NET ASSET VALUE

The net asset value of the Trust Securities will be calculated by the
Trust no less frequently than quarterly by dividing the value of the net assets
of the Trust (the value of its assets less its liabilities) by the total number
of Trust Securities outstanding. The Trust's net asset value will be published
semi-annually as part of the Trust's semi-annual report to holders and at such
other times as the Trustees may determine. The value of the Debt Securities held
by the Trust will be determined in good faith by the Board of Trustees pursuant
to procedures adopted by them.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of Trust Securities is
based upon the advice of Sullivan & Cromwell, counsel to XYZ. The summary
addresses only the tax consequences to persons that acquire Trust Securities in
connection with the Offerings and hold the Trust Securities as a capital asset.
It does not address all tax consequences of the ownership of Trust Securities
and does not take into account the specific circumstance of investors such as
tax-exempt entities, banks, certain insurance companies, broker dealers, traders
in securities that elect to mark to market, investors liable for the alternative
minimum tax, investors that hold Trust Securities as part of a straddle or
hedging or conversion transaction or investors whose functional currency is not
the U.S. dollar. The summary is based on the Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions as well as the income tax treaty between
the United States and [COUNTRY] (the "Treaty") all of which are subject to
change possibly with retroactive effect.

PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX
ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF TRUST SECURITIES, AS WELL AS THE EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

U.S. HOLDERS

A "U.S. Holder" is any beneficial owner of Trust Securities that is (i)
a citizen or resident of the United States, (ii) a domestic corporation, (iii)
an estate the income of which is subject to United States Federal income tax
without regard to its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over administration of the trust
and one or more United States persons having authority to control all
substantial decisions of the trust. A "Non-U.S. Holder" is any beneficial owner
that is not a United States person for United States Federal income tax
purposes.

CLASSIFICATION OF THE TRUST AND THE DEBT SECURITIES AND DISTRIBUTIONS
ON TRUST SECURITIES. For United States federal income tax purposes the Trust
will be classified as a grantor trust and not as an association taxable as a
corporation, and the Debt Securities held by the Trust will be treated as equity
in XYZ. Accordingly, for United States Federal income tax purposes, each U.S.
Holder generally will be treated as owning equity of XYZ and will be required to
include in income, as a dividend, the holder's share of the gross amount of the
interest paid to the Trust on the Debt Securities to the extent of the current
and accumulated earnings and profits (as determined for United States Federal
income tax purposes) of XYZ. For foreign tax credit limitation purposes the
payments will be income from sources without the United States, but generally
will be treated separately, together with the other items of "passive income"
(or in the case of certain holders, "financial services income").

SALE OF THE TRUST SECURITIES. Upon a sale or other disposition of the
Trust Securities (including generally the receipt of a distribution of cash in
redemption of all of a U.S. Holder's Trust Securities), a U.S. Holder will
recognize gain or loss in an amount equal to the difference between the amount
realized and the U.S. Holder's adjusted tax basis. Generally, such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if the
U.S. Holder's holding period exceeds one year. Any such gain will be income from
sources within the United States for foreign tax credit limitations purposes.
Long-term capital gain of a non-corporate U.S. Holder is generally subject to a
maximum tax rate of 28% in respect of property with a holding period of more
than one year and to a maximum tax rate of 20% in respect of property with a
holding period in excess of 18 months.

CONSEQUENCES OF AN EXCHANGE EVENT. As described above under "Investment
Objective and Policies--Exchange Event" upon the occurrence of an Exchange
Event, the Trust will distribute ADSs or, under certain circumstances, cash to
holders of Trust Securities in exchange for their Trust Securities and in
liquidation of the Trust. A U.S. Holder's exchange of Trust Securities for ADSs
generally will not be a taxable event for United States Federal income tax
purposes. A U.S. Holder's basis in the ADSs received upon exchange will
generally be the same as the U.S. Holder's basis in the property exchanged
therefor and such holder's holding period in the ADSs would include their
holding period in such property.

Upon the occurrence of certain Exchange Events, holders of the Trust
Securities may receive cash. For U.S. federal income tax purposes such receipt
of cash would constitute a taxable disposition of the Trust Securities and a
U.S. Holder would generally recognize gain or loss in the same manner if there
had been a sale or disposition as described under "--Sale of the Trust
Securities" above.

ADSS RECEIVED IN AN EXCHANGE EVENT

DISTRIBUTIONS ON THE ADSS. U.S. Holders will include in gross income
the gross amount of any dividend paid including Additional Amounts (as defined
and described in the accompanying prospectus of XYZ), if any, before reduction
for [COUNTRY] withholding taxes by XYZ, out of its current or accumulated
earnings and profits (as determined for U.S. federal income tax purposes) as
ordinary income when the dividend is actually or constructively received by the
U.S. Holder. The dividend will not be eligible for the dividends received
deduction generally allowed to United States corporations in respect of
dividends received from other United States corporations. The amount of the
dividend distribution includible in income of a U.S. Holder will be the U.S.
dollar value of the [CURRENCY OF THE COUNTRY] payments made, determined at the
spot [CURRENCY OF THE COUNTRY]/U.S. dollar rate on the date such dividend
distribution is includible in the income of the U.S. Holder, regardless of
whether the payment is in fact converted into U.S. Dollars. Generally, any gain
or loss resulting from currency exchange fluctuations during the period from the
date the dividend payment is includible in income to the date such payment is
converted into U.S. dollars will be treated as ordinary income or loss. Such
gain or loss will generally be income from sources within the United States for
foreign tax credit limitation purposes.

Subject to certain limitations, the [COUNTRY] tax withheld, if any, in
accordance with the Treaty and paid over to [COUNTRY] will be creditable against
the U.S. Holder's United States federal income tax liability. For foreign tax
credit limitation purposes, the dividend will be income from sources without the
United States, but generally will be treated separately, together with the other
items of "passive income" (or in the case of certain holders "financial services
income").

SALE OR OTHER DISPOSITION OF ADSS. A U.S. Holder will recognize gain or
loss for U.S. federal income tax purposes upon the sale or other disposition of
ADSs in an amount equal to the difference between the U.S. dollar value of the
amount realized and the U.S. Holder's adjusted tax basis (determined in U.S.
dollars) in the ADSs. Generally, such gain will be capital gain or loss, will be
long-term capital gain or loss if the U.S. Holder's holding period for the ADSs
exceeds one year and any such gain will be income from sources within the United
States for foreign tax credit limitations purposes. Long-term capital gain of a
non-corporate U.S. Holder is generally subject to a maximum tax rate of 28% in
respect of property with a holding period of more than one year and to a maximum
tax rate of 20% in respect of property with a holding period in excess of 18
months.

PFIC CONSIDERATIONS

XYZ does not believe that it will be treated as a passive foreign
investment company (a "PFIC") for United States Federal income tax purposes but
that is a factual determination made annually and therefore may be subject to
change. Because a U.S. Holder of Trust Securities will be treated as owning an
equity interest in XYZ for United States Federal income tax purposes, if XYZ
were a PFIC a U.S. Holder of Trust Securities as well as a holder of ADSs would
be subject to certain adverse tax consequences.

NON-U.S. HOLDERS

DISTRIBUTIONS ON THE TRUST SECURITIES AND ADSS. Distributions to a
Non-U.S. Holder will not be subject to United States Federal income tax unless
such distributions are effectively connected with the conduct of a trade or
business within the United States by such Non-U.S. Holder (and are attributable
to a permanent establishment maintained in the United States by such Non-U.S.
Holder, if an applicable income tax treaty so requires as a condition for such
Non-U.S. Holder to be subject to United States taxation on a net income basis in
respect of income from Trust Securities or ADSs), in which case such Non-U.S.
Holder generally will be subject to tax in respect of distributions in the same
manner as a U.S. Holder. Any such effectively connected distributions received
by a non-U.S. corporation may also, under certain circumstances, be subject to
an "additional branch profits" tax at a 30% rate of such lower rate as may be
specified by an applicable income tax treaty.

SALE OR DISPOSITION OF THE TRUST SECURITIES AND ADSS. A Non-U.S. Holder
will not be subject to United States Federal income tax in respect of gain
recognized on a sale or other disposition of Trust Securities or ADSs unless (i)
the gain is effectively connected with a trade or business of the Non-U.S.
Holder in the United States (and is attributable to a permanent establishment
maintained in the United States by such Non-U.S. Holder, if an applicable income
tax treaty so requires as a condition for such Non-U.S. Holder to be subject to
United States taxation on a net income basis in respect of gain from the sale or
other disposition of the Trust Securities or ADSs) or (ii) in the case of a
Non-U.S. Holder who is an individual, such holder is present in the United
States for 183 or more days in the taxable year of the sale and certain other
conditions apply. Effectively connected gains realized by a corporate Non-U.S.
Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX. In general,
information reporting requirements will apply to payments of dividends made
within the United States by the Trust or any of its paying agents on the Trust
Securities or, in the case of ADSs, by a U.S. paying agent or other U.S.
intermediary and "backup withholding" at a rate of 31% will apply to such
payments (other than dividends paid before December 31, 1999) made to a U.S.
Holder (other than a corporation or other exempt U.S. Holder) unless the U.S.
Holder furnishes its taxpayer identification number in the manner required by
United States law and applicable regulations, certifies that such number is
correct, certifies as to no loss or exemption from backup withholding and meets
certain other conditions. A Non-U.S. Holder will be exempt from back-up
withholding provided that certain certification requirements are satisfied.

Payment of the proceeds from the disposition of Trust Securities or
ADSs to or through the United States office of a broker is subject to both
information reporting and backup withholding unless the holder establishes an
exemption from information reporting and backup withholding. United States
information reporting and backup withholding generally will not apply to a
payment made outside the United States of the proceeds of a sale of Trust
Securities or ADSs through an office outside the United States of a non-United
States broker. However, United States information reporting will apply to a
payment made outside the United States of the proceeds of a sale of Trust
Securities or ADSs through an office outside the United States of a broker (i)
that is a United States person, (ii) that derives 50% or more of its gross
income for a specified three year period from the conduct of a trade or business
in the United States, (iii) that is a "controlled foreign corporation" as to the
United States, or (iv) with respect to payments made after December 31, 1999,
that is a foreign partnership if, at any time during its tax year, one or more
of its partners are U.S. persons (as defined in U.S. Treasury Regulations) who
in the aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, such foreign partnership is
engaged in a United States trade of business, unless the broker has documentary
evidence in its files that the holder or beneficial owner is not a United States
person or the holder or beneficial owner otherwise establishes an exemption.
Backup withholding will not apply to such payments unless the broker has actual
knowledge that the payee is a U.S. person.

Any amounts withheld from a holder under the backup withholding rules
will be allowed as a refund or a credit against such holder's United States
federal income tax liability, provided the required information is furnished to
the Internal Revenue Service.

<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement
(the "U.S. Purchase Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "U.S. Underwriters"), and each of the U.S.
Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and
_________________________ are acting as representatives (the "U.S.
Representatives"), has severally agreed to purchase, the aggregate number of
Trust Securities set forth opposite its name below:

NUMBER OF
U.S. UNDERWRITER TRUST SECURITIES
---------------- ----------------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................
--------------
Total..............................
==============

The Trust has also entered into a purchase agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with Merrill Lynch International and
_______________, acting as lead managers (the "Lead Managers"), and certain
other underwriters outside the United States and Canada (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters"). Subject
to the terms and conditions set forth in the International Purchase Agreement,
the Trust has agreed to sell to the International Managers, and the
International Managers have severally agreed to purchase, an aggregate of
___________ Trust Securities.

In each Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth in such Purchase Agreement, to
purchase all of the Trust Securities being sold pursuant to such Purchase
Agreement if any of the Trust Securities being sold pursuant to such Purchase
Agreement are purchased. Under certain circumstances, under the Purchase
Agreements, the commitments of non-defaulting Underwriters may be increased.
Each Purchase Agreement provides that the Trust is not obligated to sell, and
the Underwriters named therein are not obligated to purchase, the Trust
Securities under the terms of the Purchase Agreement unless all of the Trust
Securities to be sold pursuant to the Purchase Agreements are contemporaneously
sold. In the event of a failure to close, any funds debited from any investor's
account maintained with an Underwriter will be credited to such account and any
funds received by such Underwriter by check or money order from any investor
will be returned to such investor by check.

The U.S. Representatives have advised the Trust that the U.S.
Underwriters propose to offer the Trust Securities offered hereby in the U.S.
Offering to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $________ per Trust Security. The U.S. Underwriters
may allow, and such dealers may reallow, a discount not in excess of $________
per Trust Security to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed. The sales
load of $________ per Trust Security is equal to ____% of the initial public
offering price. Investors must pay for any Trust Securities purchased in the
initial public offering on or before ___________________, 1998.

The initial public offering price per Trust Security and the
underwriting discount per Trust Security are identical for both Offerings.

The Trust has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional _____ and _____ Trust
Securities , respectively, (subject to decrease pro rata by the number of Trust
Securities resulting from the split of the initial Trust Securities described
below) at the initial public offering price, less the underwriting discount.
Such options, which will expire 30 days after the date of this Prospectus, may
be exercised solely to cover over-allotments. To the extent that the
Underwriters exercise such options, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase from the Trust
approximately the same percentage of the option shares that the number of shares
to be purchased initially by that Underwriter is of the __________ Trust
Securities initially purchased by the Underwriters.

In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in ADSs representing the XYZ Preference
Shares, each Purchase Agreement provides that the Trust and XYZ will pay, as
compensation to the Underwriters, an amount in immediately available funds $___
per Trust Security.

The Trust has been informed that the Underwriters have entered into an
agreement (the "Intersyndicate Agreement") providing for the coordination of
their activities. Pursuant to the Intersyndicate Agreement, the U.S.
Underwriters and the International Managers are permitted to sell Trust
Securities to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession.

The Trust has been informed that, under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and any dealer to whom they sell Trust
Securities will not offer to sell or resell Trust Securities to persons who are
non-U.S. or non-Canadian persons or to persons they believe intend to resell to
person who are non-U.S. or non-Canadian persons, and the International Managers
and any bank, broker or dealer to whom they sell Trust Securities will not offer
to sell or resell Trust Securities to U.S. persons or to Canadian persons or to
persons they believe intend to resell to U.S. persons or to Canadian persons,
except in the case of transactions pursuant to the Intersyndicate Agreement
which, among other things, permits the Underwriters to purchase from each other
and offer for resale such number of Trust Securities as the selling Underwriter
or Underwriters and the purchasing Underwriter or Underwriters may agree.

The Underwriters do not intend to confirm sales of Trust Securities
offered hereby to any accounts over which they exercise discretionary authority.

Prior to the Offerings, there has been no public market for the Trust
Securities. Application will be made to list the Trust Securities on the NYSE.
In connection with the listing, the Underwriters will undertake that sales of
Trust Securities will meet the NYSE's minimum distribution standards.

In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in ADSs representing the XYZ Preference
Shares, the Trust and XYZ have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Underwriters may be required to make in respect
thereof.

In connection with the formation of the Trust, ______________, an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, subscribed for
and purchased 4,000 Trust Securities for a purchase price of $100,000.

Until the distribution of the Trust Securities is completed, rules of
the Commission may limit the ability of the Underwriters and any selling group
members to bid for and purchase the Trust Securities. As an exception to these
rules, the U.S. Representatives are permitted to engage in certain transactions
that stabilize the price of the Trust Securities. Such transactions consist of
bids or purchases for the purpose of pegging, fixing or maintaining the price of
the Trust Securities.

If the Underwriters create a short position in the Trust Securities in
connection with the Offerings, i.e., if they sell more Trust Securities than are
set forth on the cover page of this Prospectus, the U.S. Representatives may
reduce that short position by purchasing Trust Securities in the open market.
The U.S. Representatives may also elect to reduce any short position by
exercising all or part of the over-allotment options described above.

The U.S. Representatives may also impose a penalty bid on certain
Underwriters and selling group members. This means that if the U.S.
Representatives purchase Trust Securities in the open market to reduce the
Underwriters' short position or to stabilize the price of the Trust Securities,
they may reclaim the amount of the selling concession from the Underwriters and
any selling group members who sold those Trust Securities as part of the
Offerings.

In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Trust nor any of the Underwriters makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Trust Securities. In
addition, neither the Trust nor any of the Underwriters makes any representation
that the U.S. Representatives will engage in such transactions or that such
transactions, once commenced, will not be discontinued without notice.

Certain of the Underwriters render investment banking and other
financial services to XYZ from time to time.

LEGAL MATTERS

Certain legal matters will be passed upon for the Trust and the
Underwriters by their counsel, Brown & Wood LLP, New York, New York. Certain
matters of Delaware law will be passed upon for the Trust by Richards, Layton &
Finger P.A., Wilmington, Delaware, special Delaware counsel to the Trust.

EXPERTS

The statement of assets, liabilities and capital included in this
Prospectus has been audited by _________________, independent auditors, as
stated in their opinion appearing herein, and has been included in reliance upon
such opinion given on the authority of said firm as experts in auditing and
accounting.

ADDITIONAL INFORMATION

The Trust has filed with the Commission, Washington, D.C. 20549, a
Registration Statement on Form N-2 under the Securities Act with respect to the
Trust Securities offered hereby. Further information concerning the Trust
Securities and the Trust may be found in the Registration Statement, of which
this Prospectus constitutes a part. The Registration Statement may be inspected
without charge at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all
or any part thereof may be obtained from such office after payment of the fees
prescribed by the Commission. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, such as the Trust, that file
electronically with the Commission.

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Trustees and Shareholder of XYZ Exchangeable Preferred
Trust:

We have audited the accompanying statement of assets, liabilities and
capital of XYZ Exchangeable Preferred Trust as of ____________, 1998. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets, liabilities and
capital is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by the Trust's management, as well as evaluating the
overall financial statement presentation. We believe that our audit of the
financial statement provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents
fairly, in all material respects, the financial position of XYZ Exchangeable
Preferred Trust, as of ____________, 1998 in conformity with generally accepted
accounting principles.

New York, New York
_________________, 1998

<PAGE>

XYZ EXCHANGEABLE PREFERRED TRUST
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
, 1998

ASSETS

Cash $100,000

Total Assets.................................................... $100,000
========
LIABILITIES

Total Liabilities.................................................. $ 0
========
NET ASSETS......................................................... $100,000
========
CAPITAL

____ Trust Securities, par value $.10 per Trust Security;
4,000 Trust Securities issued and outstanding (Note 3) $100,000
========

- ----------
(1) The Trust was created as a Delaware business trust on __________, 1998
and has had no operations other than matters relating to its
organization and registration as a non-diversified, closed-end
management investment company under the U.S. Investment Company Act of
1940, as amended. Costs incurred in connection with the organization of
the Trust will be paid by [Merrill Lynch & Co., Inc.] which will be
reimbursed by the Trust with amounts from the facility fee paid to the
Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities. The anticipated ongoing administrative
and other expenses of the Trust will be paid by the Jersey Holding
Company. Any unanticipated expenses of the Trust may be paid by the XYZ
Affiliate.

(2) Offering expenses will be payable upon completion of the Offerings and
will be paid by [Merrill Lynch & Co., Inc.] which will be reimbursed
(x) in part by the U.K. Company from the facility fee to be paid to the
U.K. Company by the Distribution Trust as an Income Entitlement and (y)
in part by the Trust from amounts from the facility fee to be paid to
the Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities.

(3) On __________, 1998, the Trust issued 4,000 Trust Securities to
____________________, an affiliate of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, in consideration for a purchase price of $100,000.

<PAGE>

- --------------------------------------------------------------------------------
THE FOLLOWING PROSPECTUS OF [NAME] IS ATTACHED AND DELIVERED FOR CONVENIENCE
OF REFERENCE ONLY. THE PROSPECTUS OF [NAME] DOES NOT CONSTITUTE A PART OF
THE FOREGOING PROSPECTUS OF XYZ EXCHANGEABLE PREFERRED TRUST, NOR IS IT
INCORPORATED BY REFERENCE THEREIN.

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

<PAGE>

[XYZ Prospectus]

[To be provided.]

<PAGE>

<TABLE>
<CAPTION>
====================================================================== ============================================================

<S> <C>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING TRUST SECURITIES
DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE TRUST OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE XYZ EXCHANGEABLE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY PREFERRED TRUST
SECURITIES OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY, OR OF ANY
SECURITIES OFFERED HEREBY, IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE TRUST SINCE THE DATE HEREOF
OR SINCE THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN. IN
THE EVENT THAT ANY SUCH CHANGE SHALL OCCUR DURING THE PERIOD IN
WHICH APPLICABLE LAW REQUIRES DELIVERY OF THIS PROSPECTUS, THIS
PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.

---------------- ________________

PROSPECTUS

TABLE OF CONTENTS ________________
PAGE
----

Prospectus Summary........................................... 3
Fee Table.................................................... 8
Structural Diagram........................................... 9
The Trust.................................................... 10
Use of Proceeds and Collateral Arrangements.................. 10
Investment Objective and Policies............................ 11
Investment Restrictions...................................... 14 MERRILL LYNCH & CO.
Risk Factors................................................. 15
Description of the Trust Securities.......................... 16 [CO-MANAGERS]
Trustees..................................................... 18
Management Arrangements...................................... 19
Dividends and Distributions.................................. 21
Net Asset Value.............................................. 21 , 1998
Certain United States Federal Income Tax
Considerations............................................ 21
Underwriting................................................. 25
Legal Matters................................................ 27
Experts...................................................... 27
Additional Information....................................... 27
Independent Auditors' Report................................. 28
Statement of Assets, Liabilities and Capital................. 29

Prospectus relating to Preference Shares
of [NAME]

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE TRUST
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
====================================================================== ============================================================
</TABLE>

<PAGE>

PROSPECTUS
- ----------

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 5, 1998
________ TRUST SECURITIES
XYZ EXCHANGEABLE PREFERRED TRUST

Of the total of ______ Trust Securities Exchangeable for Preference
Shares (the "Trust Securities") of XYZ Exchangeable Preferred Trust (the
"Trust") being offered, ______ Trust Securities initially are being offered in
the United States and Canada by the U.S. Underwriters (the "U.S. Offering") and
_______ Trust Securities initially are being offered in a concurrent
international offering outside the United States and Canada by the International
Managers (the "International Offering" and, together with the U.S. Offering, the
"Offerings"). The public offering price and the underwriting discount per Trust
Security are identical for both of the Offerings. See "Underwriting."

Each of the Trust Securities offered hereby will represent a
proportionate share of a beneficial ownership interest in the Trust and will be
sold at an initial public offering price of US$25. Except as described herein,
holders of the Trust Securities will receive non-cumulative dividend
distributions in an amount equal to US$___ per Trust Security per annum, payable
quarterly in arrears in an amount equal to US$___ per Trust Security on each
______, _______, ______, and ______ of each year (each, a "Dividend Payment
Date"), to holders of record as of the immediately preceding ______, ______,
______ and ______, respectively (each, a "Record Date"). The first distribution
in respect of the period from and including the original issue date (the "Issue
Date") to but excluding ________, 1998 will equal US$___ per Trust Security.

The Trust is a newly-created Delaware business trust established for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in and holding ___% Mandatorily Redeemable Debt Securities due 2047 (the
"Debt Securities") issued by [NAME], a special purpose unlimited company
incorporated under the laws of, and domiciled in, the United Kingdom (the "U.K.
Company"), with an aggregate principal amount equal to such proceeds. The
Trust's investment objective is to distribute to the holders of Trust Securities
(a) pro rata based on the number of Trust Securities outstanding the interest
the Trust receives on the Debt Securities from time to time and (b) upon the
occurrence of an Exchange Event (as defined herein), the proceeds of the
redemption of the Debt Securities, which will be American Depositary Receipts
("ADRs") evidencing, for each Trust Security, one American Depositary Share
("ADS") representing two fully paid non-cumulative preference shares,
liquidation preference US$12.50 per share (the "XYZ Preference Shares"), issued
by [NAME] ("XYZ"), provided that, if the Exchange Event is the redemption of the
XYZ Preference Shares for cash, holders of Trust Securities will be entitled to
receive US$25 per Trust Security and not ADRs. The XYZ Preference Shares
initially represented by the ADSs will not accrue or pay dividends. If and when
an Exchange Event occurs (unless such Exchange Event is the redemption of the
XYZ Preference Shares for cash), each such initial XYZ Preference Share will
automatically convert into a dividend-paying XYZ Preference Share which will
accrue non-cumulative dividends at the rate of US$___ per share per annum,
payable quarterly in arrears in an amount equal to US$___ per share on each
Dividend Payment Date to holders of record as of the immediately preceding
Record Date. See "Investment Objective and Policies."

(continued on following page)

SEE "RISK FACTORS," BEGINNING ON PAGE 15 OF THIS PROSPECTUS, FOR CERTAIN
CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE TRUST SECURITIES.
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

PRICE TO SALES PROCEEDS TO
PUBLIC LOAD(1) TRUST(2)(3)
- --------------------------------------------------------------------------------
Per Trust Security....... $ (3) $
- --------------------------------------------------------------------------------
Total(4) $ (3) $
================================================================================

(1) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the XYZ Preference Shares,
the Trust and XYZ have agreed to indemnify the several U.S.
Underwriters and the International Managers (together, the
"Underwriters") against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting estimated expenses of $____________ payable by the
Trust.

(3) In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the XYZ Preference Shares,
the Trust and XYZ have agreed to pay the Underwriters, as compensation,
$___ per Trust Security (or $___ in the aggregate if the Underwriters'
over-allotment options are exercised in full). See "Underwriting."

(4) The Trust has granted the U.S. Underwriters and the International
Managers options, exercisable for 30 days from the date hereof, to
purchase up to _______ and _______ additional Trust Securities,
respectively (subject to decrease pro rata as a result of the issuance
and sale of Trust Securities in connection with the formation of the
Trust), solely to cover over-allotments, if any. If all such Trust
Securities are purchased, the total Price to Public and Proceeds
to Trust will be $_______ and $______,
respectively. See "Underwriting."

__________
The Trust Securities are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them,
and subject to approval of certain legal matters by counsel for the
Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in
whole or in part. It is expected that delivery of the Trust Securities
will be made through the facilities of The Depository Trust Company on
or about __________, 1998.

__________

MERRILL LYNCH INTERNATIONAL [CO-MANAGERS]
__________

The date of this Prospectus is , 1998.

<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement
(the "U.S. Purchase Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "U.S. Underwriters"), and each of the U.S.
Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and
acting as representatives (the "U.S. Representatives"), has severally agreed to
purchase, the aggregate number of Trust Securities set forth opposite its name
below:

NUMBER OF
U.S. UNDERWRITER TRUST SECURITIES
---------------- ----------------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated
--------------
Total........................
==============

The Trust has also entered into a purchase agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with Merrill Lynch International and
acting as lead managers (the "Lead Managers"), and certain other underwriters
outside the United States and Canada (the "International Managers" and, together
with the U.S. Underwriters, the "Underwriters"). Subject to the terms and
conditions set forth in the International Purchase Agreement, the Trust has
agreed to sell to the International Managers, and the International Managers
have severally agreed to purchase, an aggregate of _____ Trust Securities.

The U.S. Representatives have advised the Trust that the U.S.
Underwriters propose to offer the Trust Securities offered hereby in the U.S.
Offering to the public initially at the public offering price set forth on the
cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $____ per Trust Security. The U.S. Underwriters may
allow, and such dealers may reallow, a discount not in excess of $____ per Trust
Security to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed. The sales load of $____
per Trust Security is equal to ____% of the initial public offering price.
Investors must pay for any Trust Securities purchased in the initial public
offering on or before ___________, 1998.

The initial public offering price per Trust Security and the
underwriting discount per Trust Security are identical for both Offerings.

The Trust has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional __________ and __________ Trust
Securities , respectively, (subject to decrease pro rata by the number of Trust
Securities resulting from the split of the initial Trust Securities described
below) at the initial public offering price, less the underwriting discount.
Such options, which will expire 30 days after the date of this Prospectus, may
be exercised solely to cover over-allotments. To the extent that the
Underwriters exercise such options, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase from the Trust
approximately the same percentage of the option shares that the number of shares
to be purchased initially by that Underwriter is of the __________ Trust
Securities initially purchased by the Underwriters.

In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ADSs representing the XYZ
Preference Shares, each Purchase Agreement provides that the Trust and XYZ will
pay, as compensation to the Underwriters, an amount in immediately available
funds $___ per Trust Security.

The Underwriters do not intend to confirm sales of Trust Securities
offered hereby to any accounts over which they exercise discretionary authority.

In view of the fact that the proceeds of the sale of the Trust
Securities will ultimately be invested in the ADSs representing the XYZ
Preference Shares, the Trust and XYZ have agreed to indemnify the Underwriters,
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments the Underwriters may be required to make in respect
thereof.

In connection with the formation of the Trust, ___________, an
affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, subscribed for
and purchased 4,000 Trust Securities for a purchase price of $100,000.

Each International Manager has agreed that: (i) it has not offered or
sold and prior to the date six months after the issue of the Trust Securities
will not offer or sell any Trust Securities to persons in the United Kingdom
prior to admission of the Trust Securities to listing in accordance with Part IV
of the Financial Services Act of 1986 (the "Act") except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the Act; (ii) it has complied and will
comply with all applicable provisions of the Act with respect to anything done
by it in relation to the Trust Securities in, from or otherwise involving the
United Kingdom; and (iii) it has only issued or passed on, and will only issue
or pass on, in the United Kingdom any document received by it in connection with
the issue of the Trust Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom the document may otherwise
lawfully be issued or passed on.

Certain of the Underwriters render investment banking and other
financial services to XYZ from time to time.

<PAGE>

<TABLE>
<CAPTION>
====================================================================== ==========================================================

PROSPECTUS
TABLE OF CONTENTS
PAGE ________________
----

Prospectus Summary........................................... 3
Fee Table.................................................... 8
Structural Diagram........................................... 9
The Trust.................................................... 10
Use of Proceeds and Collateral Arrangements.................. 10
Investment Objective and Policies............................ 11
Investment Restrictions...................................... 14
Risk Factors................................................. 15 MERRILL LYNCH INTERNATIONAL
Description of the Trust Securities.......................... 16
Trustees..................................................... 18 [CO-MANAGERS]
Management Arrangements...................................... 19
Dividends and Distributions.................................. 21
Net Asset Value.............................................. 21
Certain United States Federal Income Tax , 1998
Considerations............................................ 21
Underwriting................................................. 25
Legal Matters................................................ 27
Experts...................................................... 27
Additional Information....................................... 27
Independent Auditors' Report................................. 28
Statement of Assets, Liabilities and Capital................. 29

Prospectus relating to Preference Shares
of [NAME]

__________
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE TRUST
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
====================================================================== ==========================================================
</TABLE>

<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

1. FINANCIAL STATEMENTS
Independent Auditors' Report
Statement of Assets, Liabilities and Capital as of , 1998
2. EXHIBITS
(a)(1)Trust Agreement*
(2)Form of Amended and Restated Trust Agreement**
(3)Certificate of Trust*
(b) Not applicable
(c) Not applicable
(d)(1)Form of Specimen certificate for Trust Securities (included in Exhibit
2(a)(2))**
(2)Portions of the Amended and Restated Trust Agreement of the Registrant
defining the rights of Holders of Trust Securities**
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1)Form of U.S. Purchase Agreement**
(2)Form of International Purchase Agreement**
(i) Not applicable
(j) Form of Custodian Agreement**
(k)(1)Form of Administration Agreement**
(2)Form of Paying Agent Agreement**
(3)Form of Specimen for Debt Securities**
(4)Form of Security and Pledge Agreement**
(5)Form of Reimbursement Agreement**
(6)Form of Expense Agreement**
(7)Form of Indemnity Agreement**
(l) Opinion and Consent of Brown & Wood LLP, counsel to the Trust*
(m) Not applicable
(n)(1)Tax Opinion and Consent of Brown & Wood LLP, counsel to the Trust**
(2)Consent of , independent auditors for the Trust**
(o) Not applicable
(p) Form of Trust Subscription Agreement**
(q) Not applicable
(r) Not applicable
- ----------
* Filed herewith.
** To be filed by amendment.

ITEM 25. MARKETING ARRANGEMENTS

See Exhibits (h)(1) and (h)(2) to this Registration Statement.

ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses to be incurred in connection with the offering described
in this Registration Statement will be paid by the Trust with the facility fee
paid to the Trust by the U.K. Company in connection with the investment by the
Trust in the Debt Securities.

ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

The Trust will be internally managed and will not have an investment
adviser. The information in the Prospectus under the caption "Management
Arrangements" is incorporated herein by reference.

ITEM 28. NUMBER OF HOLDERS OF SECURITIES

There will be one record holder of the Trust Securities as of the
effective date of this Registration Statement.

ITEM 29. INDEMNIFICATION

Section 6.06 of the Amended and Restated Trust Agreement, Section 6 of
the U.S. Purchase Agreement and Section 6 of the International Purchase
Agreement provide for indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to trustees, officers
and controlling persons of the Registrant, pursuant to the foregoing provisions
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission (the "Commission") such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

The Trust is internally managed and does not have an investment
adviser.

ITEM 31. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder are maintained at the offices of the Registrant (850
Library Avenue, Suite 204, Newark, Delaware 19715), its custodian (101 Barclay
Street, New York, New York 10286) and its paying agent (101 Barclay Street, New
York, New York 10286).

ITEM 32. MANAGEMENT SERVICES

Not applicable.

ITEM 33. UNDERTAKINGS

(a) The Registrant hereby undertakes to suspend the offering of the
shares covered hereby until it amends its prospectuses contained herein if (1)
subsequent to the effective date of this Registration Statement, its net asset
value per share declines more than 10 percent from its net asset value per share
as of the effective date of the Registration Statement or (2) the net asset
value per share increases to an amount greater than its net proceeds as stated
in the prospectuses contained herein.

(b) The Registrant hereby undertakes that (i) for purpose of
determining any liability under the 1933 Act, the information omitted from the
form of prospectuses filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
under Rule 497(h) under the 1933 Act shall be deemed to be part of this
registration statement as of the time it was declared effective; (ii) for the
purpose of determining any liability under the 1933 Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newark, State of Delaware, on the 5th day of August,
1998.

XYZ Exchangeable Preferred Trust

By: /s/ Donald J. Puglisi
---------------------
Donald J. Puglisi
Managing Trustee

Each person whose signature appears below hereby authorizes Donald J.
Puglisi, William R. Latham III or James B. O'Neill, or any of them, as
attorney-in-fact, to sign on his behalf, individually and in each capacity
stated below, any amendment to this Registration Statement (including
post-effective amendments) and to file the same, with all exhibits thereto, with
the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities and on the date indicated.

NAME TITLE DATE
---- ----- ----

/s/ Donald J. Puglisi Managing Trustee August 5, 1998
- ------------------------------
Donald J. Puglisi

/s/ William R Latham III Trustee August 5, 1998
- ------------------------------
William R. Latham III

/s/ James B. O'Neill Trustee August 5, 1998
- ------------------------------
James B. O'Neill

<PAGE>

EXHIBIT INDEX

EXHIBIT DESCRIPTION PAGE

(a)(1) Trust Agreement*
(2) Form of Amended and Restated Trust Agreement**
(3) Certificate of Trust*
(b) Not applicable
(c) Not applicable
(d)(1) Form of Specimen certificate for Trust Securities
(included in Exhibit 2(a)(2))**
(2) Portions of the Declaration of Trust of the Registrant
defining the rights of Holders of Trust Securities **
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h)(1) Form of U.S. Purchase Agreement**
(2) Form of International Purchase Agreement**
(i) Not applicable
(j) Form of Custodian Agreement**
(k)(1) Form of Administration Agreement**
(2) Form of Paying Agent Agreement**
(3) Form of Specimen for Debt Securities**
(4) Form of Security and Pledge Agreement**
(5) Form of Reimbursement Agreement**
(6) Form of Expense Agreement**
(7) Form of Indemnity Agreement**
(l) Opinion and Consent of Brown & Wood LLP,
counsel to the Trust**
(m) Not applicable
(n)(1) Tax Opinion and Consent of Brown & Wood LLP,
counsel to the Trust**
(2) Consent of independent auditors for the Trust**
(o) Not applicable
(p) Form of Trust Subscription Agreement**
(q) Not applicable
(r) Not applicable
- ----------
* Filed herewith.
** To be filed by amendment.

Exhibit (a)(1)

TRUST AGREEMENT OF XYZ EXCHANGEABLE PREFERRED TRUST

TRUST AGREEMENT, dated as of July 28, 1998 among Samir A. Gandhi, as
Depositor, and Donald J. Puglisi, William R. Latham III and James B. O'Neill, as
Trustees. The Depositor and the Trustees hereby agree as follows:

1. The trust created hereby shall be known as "XYZ Exchangeable
Preferred Trust", in which name the Trustees may conduct the business of the
Trust, make and execute contracts, and sue and be sued.

2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $1. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. ss. 3801, et seq. and that this document
constitute the governing instrument of the Trust. The Trustees are hereby
authorized and directed to execute and file a certificate of trust with the
Delaware Secretary of State in the form attached hereto.

3. The Depositor and the Trustees will enter into an amended and
restated Trust Agreement, satisfactory to each such party, to provide for the
contemplated operation of the Trust created hereby. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustees shall not
have any duty or obligation hereunder or with respect to the trust estate,
except as otherwise required by applicable law or as may be necessary to obtain
prior to such execution and delivery any licenses, consents or approvals
required by applicable law or otherwise.

4. This Trust Agreement may be executed in one or more counterparts.

5. The Trustees may resign upon thirty days prior notice to the
Depositor.

IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.

DEPOSITOR:

/s/ Samir A. Gandhi
------------------------------
Samir A. Gandhi,
as Depositor

TRUSTEE:

/s/ Donald J. Puglisi
------------------------------
Donald J. Puglisi,
as Trustee

TRUSTEE:

/s/ William R. Latham III
------------------------------
William R. Latham III,
as Trustee

TRUSTEE:

/s/ James B. O'Neill
------------------------------
James B. O'Neill,
as Trustee

Exhibit (a)(3)

CERTIFICATE OF TRUST

XYZ EXCHANGEABLE PREFERRED TRUST

This Certificate of Trust of XYZ Exchangeable Preferred Trust (the
"Trust") is being duly executed and filed by the undersigned trustees of the
Trust, dated as of July 28, 1998, for the purposes of organizing a business
trust pursuant to the Delaware Business Trust Act, 12 Del. C. ss.ss. 3801 et
seq. (the "Act").

The undersigned hereby certify as follows:

1. Name. The name of the business trust is "XYZ Exchangeable Preferred
----
Trust".

2. Registered Office; Registered Agent. The business address of the
-----------------------------------
registered office of the Trust in the State of Delaware is One Rodney Square,
10th Floor, 10th and King Streets, in the City of Wilmington, County of New
Castle 19801. The name of the Trust's registered agent at such address is RL&F
Service Corp.

3. Effective Date. This Certificate of Trust shall be effective upon
--------------
filing in the Office of the Secretary of State of the State of Delaware.

4. Other Matters. The Trust will be a registered investment company
-------------
under the Investment Company Act of 1940, as amended.

IN WITNESS WHEREOF, the undersigned, being trustees of the Trust, have
duly executed this Certificate of Trust as of the day and year first above
written.

By: /s/ Donald J. Puglisi
____________________________________
Donald J. Puglisi, as Trustee

By: /s/ William R. Latham III
____________________________________
William R. Latham III, as Trustee

By: /s/ James B. O'Neill
____________________________________
James B. O'Neill, as\ Trustee