NASDAQ 100 TRUST SERIES 1, S-6/A, 2000-03-10

NASDAQ 100 TRUST SERIES 1
S-6/A, 2000-03-10

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<PAGE>
FILE NO. 333-61001

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2

A. Exact name of Trust:

NASDAQ-100 TRUST, SERIES l
(formerly known as the Nasdaq GOLD Trust, Series 1)

B. Name of Depositor (Sponsor):

NASDAQ INVESTMENT PRODUCT SERVICES, INC.
(formerly known as Nasdaq-Amex Investment Product Services, Inc.)

C. Complete address of Sponsor's principal executive offices:

NASDAQ INVESTMENT PRODUCT SERVICES, INC.
c/o THE NASDAQ STOCK MARKET, INC.
1735 K Street, N.W.
Washington, D.C. 20006

D. Name and complete address of agent for service:

John L. Jacobs
NASDAQ INVESTMENT PRODUCT SERVICES, INC.
c/o THE NASDAQ STOCK MARKET, INC.
1735 K Street, N.W.
Washington, D.C. 20006

Copy to:
David M. Mahle
JONES, DAY, REAVIS & POGUE
599 Lexington Avenue, 32nd Floor
New York, New York 10022

E. Title and amount of securities being registered:

An indefinite number of units of beneficial interest pursuant to Rule 24f-2
under the Investment Company Act of 1940.

F. Approximate date of proposed sale to public:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT.

/ / Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NASDAQ-100 TRUST, SERIES 1

CROSS REFERENCE SHEET

PURSUANT TO REGULATION C
UNDER THE SECURITIES ACT OF 1933, AS AMENDED

(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION 1
AS TO PROSPECTUS IN FORM S-6)

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
I. Organization and General Information

l. (a) Name of Trust.......................................... Prospectus Front Cover

(b) Title of securities issued............................. Prospectus Front Cover

2. Name, address and Internal Revenue Service Employer
Identification Number of sponsor............................ Sponsor

3. Name, address and Internal Revenue Service Employer
Identification Number of trustee............................ Trustee

4. Name, address and Internal Revenue Service Employer
Identification Number of principal underwriter.............. Prospectus Summary -
Underwriting

5. State of organization of Trust.............................. Prospectus Summary - The Trust

6. (a) Dates of execution and termination of Trust
Agreement.............................................. Prospectus Summary - The Trust;
Prospectus Summary -
Termination; The Trust;
Administration of the Trust -
Termination

(b) Dates of execution and termination of Trust
Agreement.............................................. Same as set forth in 6(a)

7. Changes of name............................................. *

8. Fiscal Year................................................. *

9. Material Litigation......................................... *

II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer securities........................ The Trust - Book-Entry-Only
System
(b) Cumulative or distributive............................. Prospectus Summary -
Distributions
(c) Rights of holders as to withdrawal or redemption....... Prospectus Summary -
Redemption; Redemption of
Nasdaq-100 Shares;
Administration of the Trust -
Rights of Beneficial Owners
</TABLE>

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

* Not applicable, answer negative or not required.

i
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
(d) Rights of holders as to conversion, transfer, etc...... Prospectus Summary -
Redemption; Administration of
the Trust - Register of
Ownership and Transfer; -
Rights of Beneficial Owners;
Redemption of Nasdaq-100 Shares
(e) Lapses or defaults in principal payments with respect
to periodic payment plan certificates.................. *
(f) Voting rights.......................................... Administration of the Trust -
Voting
(g) Notice to holders as to change in:
(l) Composition of Trust assets........................ *
(2) Terms and conditions of Trust's securities......... Administration of the Trust -
Amendment
(3) Provisions of Trust Agreement...................... Same as set forth in 10(g) (2)
(4) Identity of sponsor and trustee.................... Resignation, Removal and
Liability - The Trustee; - The
Sponsor
(h) Consent of holders required to change:
(1) Composition of Trust assets........................ *
(2) Terms and conditions of Trust's securities......... Administration of the Trust -
Amendment
(3) Provisions of Trust Agreement...................... Same as set forth in 10(h) (2)

(4) Identity of sponsor and trustee.................... Resignation, Removal and
Liability - The Sponsor; - The
Trustee

(i) Other principal features of the securities............. Prospectus Summary

11. Type of securities comprising units......................... The Prospectus - Front Cover;
Prospectus Summary - The Trust;
The Portfolio; The Index

12. Certain information regarding securities comprising periodic
payment certificates........................................ *
13. (a) Certain information regarding loads, fees, expenses and
charges................................................ Expenses of the Trust;
Redemption of Nasdaq-100 Shares
-Procedure for Redemption of
Nasdaq-100 Shares
</TABLE>

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

* Not applicable, answer negative or not required.

ii
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
(c) Certain percentages.................................... Expenses of the Trust; The
Trust - Creation of Creation
Units; Redemption of Nasdaq-100
Shares - Procedure for
Redemption of Nasdaq-100 Shares
(d) Reasons for certain differences in price............... *
(e) Certain other loads, fees or charges payable by
holders................................................ Prospectus Summary -
Transaction Fee; The Trust -
Creation of Creation Units;
Redemption of Nasdaq-100 Shares
-Procedure for Redemptions of
Nasdaq-100 Shares
(f) Certain profits receivable by sponsor, principal
underwriters, custodian, trustee or affiliated
persons................................................ Same as set forth in 13(a) and
also The Portfolio -
Adjustments to the Portfolio;
License Agreement
(g) Ratio of annual charges and deductions to income....... *
14. Issuance of Trust's securities.............................. The Trust - Creation of
Creation Units; - Book-
Entry-Only System
15. Receipt and handling of payments from purchasers............ The Trust

16. Acquisition and disposition of underlying securities........ The Trust - Creation of
Creation Units; The Portfolio;
Administration of the Trust;
Redemption of Nasdaq-100 Shares
-Procedure for Redemption of
Nasdaq-100 Shares

17. (a) Withdrawal or redemption by holders.................... Administration of the Trust -
Register of Ownership and
Transfer; - Rights of
Beneficial Owners; Redemption
of Nasdaq-100 Shares

(b) Persons entitled or required to redeem or repurchase
securities............................................. Same as set forth in 17(a)

(c) Cancellation or resale of repurchased or redeemed
securities............................................. Same as set forth in 17(a)

18. (a) Receipt, custody and disposition of income............. Administration of the Trust -
Distributions to Beneficial
Owners
</TABLE>

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

* Not applicable, answer negative or not required.

iii
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
(b) Reinvestment of distributions.......................... Dividend Reinvestment Service

(d) Schedule of distributions.............................. *

19. Records, accounts and reports............................... Administration of the Trust -
Records; - Distributions to
Beneficial Owners; - Statements
to Beneficial Owners; -
Register of Ownership and
Transfer

20. Certain miscellaneous provisions of Trust Agreement

(a) Amendments............................................. Administration of the Trust -
Amendment

(b) Extension or termination............................... Administration of the Trust -
Amendment; - Termination

(d) Successor trustee...................................... Same as set forth in 20(c)

(e) Removal or resignation of sponsor...................... Resignation, Removal and
Liability - The Sponsor

(f) Successor sponsor...................................... Same as set forth in 20(c) and
20(e)

21. Loans to security holders................................... *

22. Limitations on liabilities.................................. Resignation, Removal and
Liability - The Trustee; - The
Sponsor

23. Bonding arrangements........................................ *

24. Other material provisions of Trust Agreement................ *

III. Organization, Personnel and Affiliated Persons of Sponsor

25. Organization of sponsor..................................... Sponsor

26. Fees received by sponsor.................................... License Agreement

27. Business of sponsor......................................... Sponsor

28. Certain information as to officials and affiliated persons Sponsor
of sponsor..................................................

29. Ownership of voting securities of sponsor................... Sponsor

30. Persons controlling sponsor................................. *

31. Remuneration of officers of sponsor to Trust................ *

32. Remuneration of directors of sponsor........................ *

33. Remuneration of employees of sponsor for certain services
rendered to Trust........................................... *
</TABLE>

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

* Not applicable, answer negative or not required.

iv
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
34. Compensation of other persons for certain services rendered
to Trust.................................................... *

IV. Distribution and Redemption of Securities

35. Distribution of Trust's securities in states................ Distribution of Nasdaq-100
Shares; Continuous Offering of
Nasdaq-100 Shares

36. Suspension of sales of Trust's securities................... *

37. Denial or revocation of authority to distribute............. *

38. (a) Method of distribution................................. Prospectus Summary -
Underwriting; The Trust;
Marketplace Listing; Continuous
Offering of Nasdaq-100 Shares

(b) Underwriting agreements................................ Prospectus Summary -
Underwriting; - Distribution;
Continuous Offering of
Nasdaq-100 Shares; The Trust -
Placement of Creation Orders
using the Nasdaq-100 Clearing
Process

39. (a) Organization of principal underwriter.................. Prospectus Summary -
Underwriting

(b) NASD membership of principal underwriter............... Prospectus Summary -
Underwriting

40. Certain fees received by principal underwriters............. *

41. (a) Business of principal underwriters..................... Prospectus Summary -
Underwriting

(b) Branch offices of principal underwriters............... *

42. Ownership of Trust's securities by certain persons.......... *

43. Certain brokerage commissions received by principal *
underwriters................................................
44. (a) Method of valuation for determining offering price..... The Portfolio; Valuation
(b) Schedule as to components of offering price............ *
(c) Variation in offering price to certain persons......... *
45. Suspension of redemption rights............................. *
46. (a) Certain information regarding redemption or withdrawal
valuation.............................................. Valuation; Redemption of
Nasdaq-100 Shares
(b) Schedule as to components of redemption price.......... *
</TABLE>

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

* Not applicable, answer negative or not required.

v
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
47. Maintenance of position in underlying securities............ The Trust; The Portfolio;
Valuation; Administration of
the Trust - Distributions to
Beneficial Owners; Redemption
of Nasdaq-100 Shares;
Continuous Offering of
Nasdaq-100 Shares

V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee...................... Trustee
49. Fees and expenses of trustee................................ Prospectus Summary -
Transaction Fee; Expenses of
the Trust
50. Trustee's lien.............................................. Expenses of the Trust;
Redemption of Nasdaq-100 Shares

VI. Information Concerning Insurance of Holders of Securities
51. (a) Name and address of insurance company.................. *
(b) Types of policies...................................... *
(c) Types of risks insured and excluded.................... *
(d) Coverage............................................... *
(e) Beneficiaries.......................................... *
(f) Terms and manner of cancellation....................... *
(g) Method of determining premiums......................... *
(h) Aggregate premiums paid................................ *
(i) Recipients of premiums................................. *
(j) Other material provisions of Trust Agreement relating
to insurance........................................... *

VII. Policy of Registrant
52. (a) Method of selecting and eliminating securities from the
Trust.................................................. The Trust - Creation of
Creation Units; The Portfolio;
Administration of the Trust;
Redemption of Nasdaq-100 Shares
-Procedure for Redemption of
Nasdaq-100 Shares

(b) Elimination of securities from the Trust............... *

(c) Policy of Trust regarding substitution and elimination
of securities.......................................... Same as set forth in 52(a)

(d) Description of any other fundamental policy of the
Trust.................................................. *

53. (a) Taxable status of the Trust............................ Tax Status of the Trust
</TABLE>

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

* Not applicable, answer negative or not required.

vi
<PAGE>

<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
- ----------- -------------------------------
<S> <C> <C> <C>
(b) Qualification of the Trust as a regulated investment
company................................................ Same as set forth in 53(a)

VIII. Financial and Statistical Information

54. Information regarding the Trust's last ten fiscal years..... *

55. Certain information regarding periodic payment plan *
certificates................................................

56. Certain information regarding periodic payment plan *
certificates................................................

57. Certain information regarding periodic payment plan *
certificates................................................

58. Certain information regarding periodic payment plan *
certificates................................................

59. Financial statements (Instruction 1(c) to Form S-6)......... *
</TABLE>

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

* Not applicable, answer negative or not required.

vii
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 10, 2000

THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN IS SUBJECT TO CHANGE,
COMPLETION AND AMENDMENT WITHOUT NOTICE. NASDAQ-100 SHARES MAY NOT BE SOLD NOR
MAY AN OFFER TO BUY BE ACCEPTED PRIOR TO THE TIME THE PROSPECTUS IS DELIVERED IN
FINAL FORM. UNDER NO CIRCUMSTANCES SHALL THIS PROSPECTUS CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF
NASDAQ-100 SHARES, IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH JURISDICTION.
<PAGE>
PRELIMINARY PROSPECTUS

NASDAQ-100 TRUST(SM), SERIES 1

A UNIT INVESTMENT TRUST
------------------

<TABLE>
<S> <C>
THE NASDAQ-100 THE NASDAQ-100 TRUST(SM),
INDEX-REGISTERED TRADEMARK-: SERIES 1:

- -measures the average performance -is a unit investment trust
of a broadly diversified group designed to closely track the
of stocks traded on the Nasdaq price and yield performance of
Stock Market. the Nasdaq-100
Index-Registered Trademark-.

- -includes the stocks of 100 of the -holds all of the stocks in The
largest and most actively traded Nasdaq-100 Index.
non-financial companies listed
on the Nasdaq Stock Market.

- -is a modified capitalization -issues and redeems shares of
weighted index (which promotes Nasdaq-100 Index Tracking
portfolio weight Stock(SM)in multiples of 50,000
diversification). in exchange for the stocks in
the Nasdaq-100 Index and cash.

NASDAQ-100 INDEX TRACKING
STOCK(SM):

-represents undivided ownership
interests in the Nasdaq-100
Trust, Series 1.
-trades on the American Stock
Exchange under the symbol "QQQ."
-minimum trading unit: 1 Share of
Nasdaq-100 Index Tracking Stock.
</TABLE>

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

SPONSOR: NASDAQ INVESTMENT PRODUCT SERVICES, INC.
(which is owned by The Nasdaq Stock Market, Inc.)

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

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
CONTRARY REPRESENTATION IS A CRIMINAL OFFENSE.

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

This Prospectus consists of two parts: Part A and Part B.

PROSPECTUS PART A DATED MARCH , 2000

COPYRIGHT -C- 2000 by Nasdaq Investment Product Services, Inc., all rights
reserved
<PAGE>
THE NASDAQ-100 TRUST(SM), SERIES 1

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

NASDAQ-100 INDEX TRACKING STOCK(SM)

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
FRONT COVER PAGE

NASDAQ-100 INDEX TRACKING STOCK PROSPECTUS PART A--
HIGHLIGHTS
Nasdaq-100 Shares are Ownership Interests in the Nasdaq-100
Trust..................................................... A-1
Nasdaq-100 Shares Trade on the American Stock Exchange...... A-1
The Nasdaq-100 Trust Issues and Redeems Nasdaq-100 Shares in
Multiples of 50,000 Shares called "Creation Units"........ A-1
Nasdaq-100 Shares Should Closely Track the Value of the
Underlying Nasdaq-100 Index Stocks........................ A-2
Expenses of the Trust....................................... A-2
The Trustee Votes the Underlying Shares..................... A-3
Termination of the Nasdaq-100 Trust......................... A-3
Risk Factors................................................ A-4
NASDAQ-100 INDEX TRACKING STOCK PROSPECTUS PART B
Essential Information....................................... B-2
Report of Ernst & Young LLP, Independent Auditors........... B-4
Statement of Assets and Liabilities......................... B-5
Statement of Operations..................................... B-6
Statement of Changes in Net Assets.......................... B-7
Financial Highlights........................................ B-8
Schedule of Investments..................................... B-13
Prospectus Summary.......................................... B-16
Special Considerations and Risk Factors..................... B-28
The Trust................................................... B-36
The Portfolio............................................... B-48
The Index................................................... B-57
License Agreement........................................... B-62
Marketplace Listing......................................... B-63
Tax Status of the Trust..................................... B-64
Continuous Offering of Nasdaq-100 Shares.................... B-67
Expenses of the Trust....................................... B-69
Redemption of Nasdaq-100 Shares............................. B-72
Valuation................................................... B-79
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Administration of the Trust................................. B-80
Resignation, Removal, and Liability......................... B-88
Sponsor..................................................... B-91
Trustee..................................................... B-91
Depository.................................................. B-91
Legal Opinion............................................... B-91
Independent Auditors and Financial Statements............... B-91
Information and Comparison Relating to Trust, Secondary
Market Trading, Net Asset Size, Performance, and Tax
Treatment................................................. B-92
Dividend Reinvestment Service............................... B-100
Additional Information...................................... B-100
Glossary of Defined Terms................................... B-102
</TABLE>
<PAGE>
NASDAQ-100 INDEX TRACKING STOCK
PROSPECTUS PART A--HIGHLIGHTS

NASDAQ-100 SHARES ARE OWNERSHIP INTERESTS IN THE NASDAQ-100 TRUST

The Nasdaq-100 Trust, Series 1 (the "Trust") is a unit investment trust that
issues securities called Nasdaq-100 Index Tracking Stock (also referred to in
this Prospectus as "Nasdaq-100 Shares"). Nasdaq-100 Index Tracking Stock
represents undivided ownership interests in the portfolio of stocks held by the
Trust. The Trust holds all of the common stocks of the Nasdaq-100
Index-Registered Trademark- (the "Index") and is intended to provide investment
results that, before expenses, generally correspond to the price and yield
performance of the Index.

NASDAQ-100 SHARES TRADE ON THE AMERICAN STOCK EXCHANGE

Nasdaq-100 Shares are listed for trading on the American Stock Exchange (the
"Amex"). Nasdaq-100 Shares are bought and sold in the secondary market like
ordinary shares of stock at any time during the trading day. Nasdaq-100 Shares
generally trade in round lots of 100 shares, but can be traded in odd lots of as
little as one share. Trading of Nasdaq-100 Shares on the Amex may be halted
under the circumstances described in the paragraphs below relating to the risks
of investing in Nasdaq-100 Shares.

THE NASDAQ-100 TRUST ISSUES AND REDEEMS NASDAQ-100 SHARES IN MULTIPLES OF 50,000
SHARES CALLED "CREATION UNITS"

The Trust issues Nasdaq-100 Shares only in blocks of 50,000 or multiples of
50,000, which are referred to as "Creation Units." Most investors, however,
purchase and sell Nasdaq-100 Shares in the secondary trading market on the Amex,
in lots of any size.

Creation Units are issued by the Trust to anyone who, after placing a
creation order with the Distributor, deposits with The Bank of New York, the
"Trustee" of the Trust, a specified portfolio of Nasdaq-100 Index securities, as
well as a cash payment, if any, generally equal to accumulated dividends of the
securities (net of expenses) up to the time of deposit.

Nasdaq-100 Shares are not individually redeemable, except upon termination
of the Trust. Nasdaq-100 Shares can be redeemed only by tendering to the Trust
50,000 Nasdaq-100 Shares or multiples thereof. Upon redemption, the redeeming
holder will receive a portfolio of Nasdaq-100 Index securities based on the net
asset value of the Trust plus, in some cases, a cash payment. The cash payment
amount is generally equal to the cash amount determined for creations of
Nasdaq-100 Shares and, likewise, may be paid by either the redeeming holder

A-1
<PAGE>
or the Trust, depending on the values of the dividends received, Trust expenses
and the adjustment amount.

Procedures to be followed when engaging in creation and redemption
transactions are set forth in Part B of this Prospectus.

A person placing a creation order or requesting a redemption must pay a
$1,000 to $4,000 order fee to the Trustee, depending on the method chosen. No
fee is payable for secondary market purchases or sales of Nasdaq-100 Shares, but
secondary market transactions are subject to ordinary brokerage commissions.

NASDAQ-100 SHARES SHOULD CLOSELY TRACK THE VALUE OF THE UNDERLYING NASDAQ-100
INDEX STOCKS

To maintain the correspondence between the composition and weights of
securities held by the Trust (the "Securities") and the stocks in the Nasdaq-100
Index, the Securities will be adjusted by the Trustee from time to time to
conform to periodic changes in the identity and/or relative weights of
Nasdaq-100 Index stocks. The agreement governing the Trust contains directions
to the Trustee as to how changes to the Nasdaq-100 Index are to be replicated by
the Trust.

The value of the Nasdaq-100 Shares will fluctuate in relation to changes in
the value of the Trust's portfolio of securities. However, at any point in time,
the market price of each individual Nasdaq-100 Share may not be identical to the
net asset value of such share. Historically, these two valuations have been very
close. See Part B of this Prospectus for comparisons of market price and net
asset value. Of course, these comparisons only reflect past performance and no
guarantee can be made of future performance.

The current value of the Nasdaq-100 Index will ordinarily continue to be
reported even when trading is interrupted in its component stocks. In that
event, the reported Index level will be based on the current market price of
those stocks still being traded (if any) and the last reported prices for those
stocks that are not currently trading. As a result, reported Index levels may at
times be based on non-current price information with respect to some or even all
of the stocks in the Nasdaq-100 Index.

EXPENSES OF THE TRUST

Fees and expenses to be charged to the Trust are described in Part B of this
Prospectus and include, among other costs, the Trustee's fees, Nasdaq licensing
fees, federal registration fees and expenses of the Sponsor relating to the
printing and distribution of marketing materials. The expenses of the Trust will
be accrued daily and reflected in the net asset value of the Trust. The Sponsor
has undertaken that, through September 30, 2000, the ordinary operating expenses
of the

A-2
<PAGE>
Trust will not exceed 0.18% per annum of the daily net asset value of the Trust,
and the Sponsor will reimburse the Trust for expenses incurred by it in excess
of such amount. Estimated Trust Annual Ordinary Operating Expenses

<TABLE>
<CAPTION>
AMOUNT
AS A % OF AVERAGE PER
NET ASSETS SHARE(1)
----------------- --------
<S> <C> <C>
Trustee's Fee................................. 0.07%(2) $0.13
License Fee................................... 0.04% $0.07
Estimated Other Operating Expenses............ 0.07% $0.13
------ -----
Total Expenses................................ 0.18% $0.33
====== =====
</TABLE>

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

(1) Based on the net asset value of the Trust of $185.22 per Share on
December 31, 1999.

(2) The Trustee's annual fee ranges from 0.06% to 0.10%, based on the net asset
value of the Trust.

Future accruals will depend primarily on the level of the Trust's net assets
and the level of expenses. There is no guarantee that after September 30, 2000
the Trust's ordinary operating expenses will not exceed 0.18% of the Trust's
daily net asset value. The Sponsor reserves the right to discontinue its
reimbursement policy in the future.

THE TRUSTEE VOTES THE UNDERLYING SHARES

The Trustee will vote any voting stocks held by the Trust in the same
proportion as all other voting shares of such stocks are voted. Consequently,
holders of Nasdaq-100 Shares will not be able to vote the shares of the stocks
underlying the Nasdaq-100 Shares.

TERMINATION OF THE NASDAQ-100 TRUST

The Trust has a specified lifetime term. The Trust is scheduled to terminate
no later than March 4, 2124, but it may terminate earlier under circumstances
described in Part B of this Prospectus.

Trading of Nasdaq-100 Shares cannot occur after the underlying Trust is
terminated. Upon termination, the Trust may be liquidated and holders of
Nasdaq-100 Shares at that time will receive a distribution of their pro rata
share of the assets of the Trust, net of certain fees and expenses.

A-3
<PAGE>
RISK FACTORS

Investors can lose money by investing in Nasdaq-100 Shares. Investors should
carefully consider the risk factors described below together with all of the
other information included in Part B of this Prospectus before deciding to
invest in Nasdaq-100 Shares.

- Nasdaq-100 Shares are subject to the risks of any investment in a broadly
based portfolio of common stocks, including the risk that the general
level of stock prices may decline. A significant decline in the value of
the Trust's portfolio can be expected to result in a similar decline in
value of the corresponding Nasdaq-100 Shares. Therefore, the amount an
investor receives from the sale of Nasdaq-100 Shares may be less than the
investor's original purchase price.

- The Trust may never be able to replicate exactly the performance of the
Nasdaq-100 Index because of the operational fees and expenses incurred by
the Trust or because of the temporary unavailability of certain Nasdaq-100
Index securities.

- Investors cannot be assured that the issuers of securities held by the
Trust will pay dividends. Distributions on such securities will generally
depend upon the declaration of dividends by the securities' issuers.

- The market price that an investor pays for Nasdaq-100 Shares on the Amex
may differ from the net asset value of those Nasdaq-100 Shares. This
difference in price may be due to the fact that the supply and demand in
the market for Nasdaq-100 Shares at any point in time is not always
identical to the supply and demand in the market for the underlying basket
of Nasdaq-100 Index securities.

- Investors will not be able to sell Nasdaq-100 Shares during any period
that the Amex halts trading in the Nasdaq-100 Shares. The Amex may halt
the trading of Nasdaq-100 Shares under circumstances described in Part B
of this Prospectus (for example, as a result of the activation of
market-wide "circuit breakers," or whenever Amex officials determine that
a halt is appropriate in the interest of a fair and orderly market or to
protect investors).

- The Amex maintains certain requirements to list securities, including the
Nasdaq-100 Shares, on the Amex. Investors cannot be assured that the Trust
will continue to meet the requirements necessary to maintain the listing
of the Nasdaq-100 Shares on the Amex or that the Amex will not change its
listing requirements. The Trust may be terminated if the Nasdaq-100 Shares
are delisted from the Amex.

A-4
<PAGE>
- The Sponsor of the Trust has been granted a license to use the Nasdaq-100
Index as a basis for determining the composition of the Trust and to use
certain trade names and trademarks of Nasdaq. The Trust may be terminated
if the license agreement is terminated.

- The Trust may also be terminated if during the Trust's first three years
the net asset value of the entire Trust falls below $150,000,000 or, after
the first three-year period, falls below $350,000,000.

- Nasdaq-100 Shares are subject to the risk that extraordinary events may
cause one or more of the providers of services to the Trust, such as the
Trustee or the Sponsor, to close or otherwise fail to perform its
obligations to the Trust. In the event of such a failure, if no suitable
successor is available or willing to assume the obligations of its
predecessor, the Trust will be terminated.

A-5
<PAGE>
NASDAQ-100 TRUST(SM), SERIES 1

A UNIT INVESTMENT TRUST
------------------

The Nasdaq-100 Trust, Series 1 was formed by Nasdaq Investment Product
Services, Inc. (formerly Nasdaq-Amex Investment Product Services, Inc.), a
Delaware corporation (the "Sponsor") and a wholly owned subsidiary of The Nasdaq
Stock Market, Inc. ("Nasdaq"), to provide investors with the opportunity to
purchase units of beneficial interest in the Trust representing proportionate
undivided interests in the portfolio of Securities held by the Trust, which
consist of substantially all of the securities, in substantially the same
weighting, as the component securities of the Nasdaq-100
Index-Registered Trademark-.* While the investment objective of the Trust is to
provide investment results that generally correspond to the price and yield
performance of the Index, there is no assurance that this investment objective
can be fully achieved. The units of fractional undivided interest in the Trust
are called "Nasdaq-100 Index Tracking Stock(SM)" and for convenience are
referred to in this prospectus as "Nasdaq-100 Shares(SM)".* The value of the
Securities and, consequently, the value of Nasdaq-100 Shares, will fluctuate.
The minimum number of Nasdaq-100 Shares that may be created or redeemed at any
one time as described below is 50,000, which aggregation is referred to herein
as a "Creation Unit."

Nasdaq-100 Shares are listed on the American Stock Exchange. The market
symbol for Nasdaq-100 Shares is "QQQ".
--------------------------

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
CONTRARY REPRESENTATION IS A CRIMINAL OFFENSE.

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

This Prospectus consists of two parts: Part A and Part B.

PROSPECTUS PART B DATED MARCH , 2000

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

NASDAQ-100 INDEX TRACKING STOCK(SM)
----------------

Investors are advised to read and retain this Prospectus for future
reference.

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

* The "Nasdaq-100 Index-Registered Trademark-",
"Nasdaq-100-Registered Trademark-", "Nasdaq-Registered Trademark-", "The
Nasdaq Stock Market-Registered Trademark-", "Nasdaq-100 Shares(SM)",
"Nasdaq-100 Index Tracking Stock(SM)", and "Nasdaq-100 Trust(SM)" are
trademarks and service marks of Nasdaq and have been licensed for use for
certain purposes by Nasdaq Investment Product Services, Inc. pursuant to a
License Agreement with Nasdaq.

COPYRIGHT -C- 2000 by Nasdaq Investment Product Services, Inc., all rights
reserved
<PAGE>
ESSENTIAL INFORMATION AS OF DECEMBER 31, 1999(1)

<TABLE>
<S> <C> <C> <C>
Number of Nasdaq-100 Shares(2): 32,000,000

Fractional Undivided Interest in the Trust
Represented by each Nasdaq-100 Share: 1/32,000,000

Net Asset Value per Nasdaq-100 Share (based on the
value of the Securities, other net assets of the
Trust, and the number of Nasdaq-100 Shares
outstanding)(2): $185.22

Annual Trust Ordinary Operating Expenses: 0.18% of the Trust's average
net assets.
</TABLE>

<TABLE>
<S> <C>
Dividend Payment Dates: Quarterly, on the last Business Day of April,
July, October, and January. Distributions (if
any) will be of the dividends accumulated in
respect of the Securities held by the Trust net
of Trust fees and expenses. Based on historical
rates of dividend payments of the portfolio of
securities comprising the Index and estimated
ordinary operating expenses of the Trust, little
or no net dividend distributions to Beneficial
Owners of Nasdaq-100 Shares are expected to be
made.(3)

Record Dates: Quarterly, on the second Business Day following
the third Friday in each of March, June,
September, and December.(3)

Evaluation Time: Closing time of the regular trading session on
the Nasdaq Stock Market (ordinarily 4:00 p.m.
New York time).

Licensor: The Nasdaq Stock Market, Inc.
</TABLE>

B-2
<PAGE>
<TABLE>
<S> <C>
Mandatory
Termination Date: The first to occur of (i) March 4, 2124 or
(ii) the date 20 years after the death of the
last survivor of fifteen persons named in the
Trust Agreement, the oldest of whom was born in
1986 and the youngest of whom was born in 1996.

Discretionary
Termination: The Trust may be terminated if at any time prior
to March 4, 2002 the value of the Securities
held by the Trust is less than $150,000,000 or
if at any time on or after March 4, 2002 the
value of the Securities held by the Trust is
less than $350,000,000, as such amount is
adjusted for inflation.(4)

Minimum and
Maximum
Transaction Fee: A transaction fee is payable to the Trustee in
connection with each creation and each
redemption of Nasdaq-100 Shares. The minimum
transaction fee payable for the creation or
redemption of Creation Unit size aggregations of
Nasdaq-100 Shares is $1,000, and the maximum
transaction fee payable for the creation or
redemption of Creation Unit size aggregations of
Nasdaq-100 Shares is $4,000.(5)
</TABLE>

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

(1) The Trust Agreement became effective and the initial deposit was made
on March 4, 1999 (the "Initial Date of Deposit").

(2) Does not reflect a 2-for-1 split of the Nasdaq-100 Shares, the record
date for which was February 28, 2000 and the payment date for which
will be March 17, 2000.

(3) See "Administration of the Trust--Distributions to Beneficial Owners"
and "Special Considerations and Risk Factors--Little or No Expected
Net Dividend Distributions to Beneficial Owners."

(4) The Trust may also be terminated under other circumstances. See
"Administration of the Trust--Termination."

(5) See "Prospectus Summary--Transaction Fee."

B-3
<PAGE>
NASDAQ-100 TRUST, SERIES 1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

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

TO THE SPONSOR, TRUSTEE AND THE UNITHOLDERS OF THE NASDAQ-100 TRUST, SERIES 1:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Nasdaq-100 Trust, Series 1 (the
"Trust") as of September 30, 1999, and the related statements of operations,
changes in net assets and the financial highlights for the period of March 5,
1999 to September 30, 1999. These financial statements and financial highlights
are the responsibility of the Trust's Sponsor, Nasdaq Investment Product
Services, Inc. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.

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

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Nasdaq-100 Trust, Series 1 at September 30, 1999, the results of operations,
changes in its net assets and its financial highlights for the period from
March 5, 1999 to September 30, 1999, in conformity with accounting principles
generally accepted in the United States.

/s/ Ernst & Young LLP

Washington, DC
December 6, 1999, except for the
matters discussed in Note 6,
as to which the date is March 8, 2000

B-4
<PAGE>
NASDAQ-100 TRUST, SERIES 1
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999

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

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in Securities, at market value (cost
$2,192,615,555) (Note 1)......................... $2,141,776,310
Cash............................................... 580,532
Receivable for securities sold..................... 116,789
Dividends receivable............................... 18,683
Receivable for units redeemed...................... 5,723
Receivable for units created....................... 916
--------------

TOTAL ASSETS................................... 2,142,498,953
--------------

LIABILITIES
Payable for units created.......................... 1,684
Payable for units redeemed......................... 3,364
Payable to Sponsor................................. 215,437
Accrued liabilities................................ 705,681
--------------

TOTAL LIABILITIES.............................. 926,166
--------------

TOTAL NET ASSETS....................................... $2,141,572,787
==============

NET ASSETS REPRESENTED BY:
Paid in surplus relating to 356 units of fractional
undivided interest (17,800,000 Nasdaq-100 Shares)
outstanding; unlimited units authorized.......... $2,211,531,213
Undistributed net investment loss.................. (1,082,827)
Accumulated net realized loss on investments....... (18,036,354)
Net unrealized depreciation on investments......... (50,839,245)
--------------
Net assets......................................... $2,141,527,787
==============

NET ASSET VALUE PER NASDAQ-100 SHARE................... $ 120.32
==============
(comprised of $2,141,572,787/17,800,000 Nasdaq-100
Shares outstanding)
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-5
<PAGE>
NASDAQ-100 TRUST, SERIES 1
STATEMENT OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
MARCH 5,
1999 TO
SEPTEMBER 30,
1999
-------------
<S> <C>
INVESTMENT INCOME
Dividend income...................................... $ 485,649

EXPENSES
Marketing expenses................................... 1,856,534
Trustee fees......................................... 751,671
Consulting fees...................................... 634,631
SEC filing fees...................................... 512,002
Licensing fee........................................ 353,391
Legal and audit fees................................. 292,885
Fees and expenses reimbursable to Sponsor............ 215,437
Other fees and expenses.............................. 44,323
------------
Total expenses....................................... 4,307,483
Less: expenses assumed by the Sponsor................ 3,092,398
------------
Net expenses......................................... 1,568,476
------------
Net investment loss...................................... (1,082,827)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on sale of investments............. (18,036,354)
Net realized gain on in-kind redemptions............. 370,653,973
Net change in unrealized depreciation of
investments........................................ (50,839,245)
------------
Net realized and unrealized gain on investments...... 301,778,374
------------
Net increase in net assets resulting from
operations......................................... $300,695,547
============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-6
<PAGE>
NASDAQ-100 TRUST, SERIES 1
STATEMENT OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
MARCH 5,
1999 TO
SEPTEMBER 30,
1999
---------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss............................... $ (1,082,827)
Net realized gain on investment transactions...... 352,617,619
Net unrealized depreciation on investments........ (50,839,245)
---------------
Net increase in net assets resulting from
operations...................................... 300,695,547
---------------

Unitholder Transactions:
Proceeds from subscriptions of Nasdaq-100 units... 5,260,674,390
Less: Redemptions of Nasdaq-100 units............. (3,434,294,920)
---------------
Increase in net assets due to unitholder
transactions.................................... 1,826,379,470
---------------
Total increase........................................ 2,127,075,017

Net Assets:
Beginning of period............................... 14,497,770
---------------
End of period..................................... $ 2,141,572,787
===============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

B-7
<PAGE>
NASDAQ-100 TRUST, SERIES 1
FINANCIAL HIGHLIGHTS
SEPTEMBER 30, 1999

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

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
MARCH 5,
1999 TO
SEPTEMBER 30,
1999
-------------
<S> <C>
Net Asset Value, Beginning of Period...................... $ 96.65
Investment Operations:
Net investment loss................................... (0.08)
Net realized and unrealized gains on investments...... 23.75
----------
Total from Investment Operations.......................... 23.67
----------
Net Asset Value, End of Period............................ $ 120.32
==========
Total Investment Return................................... 24.18%*

RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's)......................... $2,141,573
Ratio of expenses to average net assets (1)............... 0.18%**
Ratio of net investment loss to average net assets (1).... 0.12%**
Portfolio turnover rate (2)............................... 13.60%*

The financial highlights summarize the impact of net investment income,
gains and losses and distributions on a single unit of the Trust for the
period. Additionally, important relationships between certain financial
statement items are expressed in ratio form.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>

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

* Not annualized

** Annualized

(1) Net of expenses assumed by the Sponsor. If the Trust had borne all expenses,
the net investment loss and expenses to average net assets ratios would have
been 0.47% and 0.53% for the period from March 5, 1999 to September 30,
1999.

(2) Portfolio turnover excludes securities received or delivered from processing
creations or redemptions of Nasdaq-100 units.

B-8
<PAGE>
NASDAQ-100 TRUST, SERIES 1
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999

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

NOTE 1-ORGANIZATION

Nasdaq-100 Trust, Series 1 (the "Trust") is a unit investment trust created
under the laws of the state of New York and registered under the Investment
Company Act of 1940. The Trust was created to provide investors with the
opportunity to purchase units of beneficial interest in the Trust representing
proportionate undivided interests in the portfolio of securities held by the
Trust consisting of substantially all of the securities, in substantially the
same weighting, as the component securities of the Nasdaq-100 Index.

The Trust commenced operations on March 5, 1999 upon the initial issuance of
150,000 Nasdaq-100 Shares (equivalent to three Creation Units) in exchange for a
portfolio of securities assembled to reflect the intended portfolio composition
of the Trust.

NOTE 2-SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies followed by the Trust.

SECURITY VALUATION

Portfolio securities are valued based on the closing sale price on The
Nasdaq Stock Market which is deemed to be the principal market for the security.
If no closing sale price is available for a security for any trading day, then
the security is valued based on the closing sale price on the Nasdaq Stock
Market on the last day that the security traded. If there are no closing bid and
offer prices available, valuation will be determined by the Trustee in good
faith based on available information.

INVESTMENT TRANSACTIONS

Investment transactions are recorded on the trade date. Realized gains and
losses from the sale or disposition of securities are recorded on a specific
identification basis. Dividend income is recorded on the ex-dividend date.

B-9
<PAGE>
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISTRIBUTIONS TO UNITHOLDERS

The Trust will declare and distribute dividends, if any, from net investment
income quarterly. The Trust will distribute net realized capital gains, if any,
at least annually. Distributions would only occur in the event that dividends
accumulated and other income received by the Trust, exceed Trust fees and
expenses during such period.

FEDERAL INCOME TAX

The Trust has qualified and intends to continue to qualify for and elect
treatment as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying the Trust will not be subject
to federal income taxes to the extent it distributes its taxable income,
including any net realized capital gains, for each fiscal year. In addition, by
distributing during each calendar year substantially all of its net investment
income and capital gains, if any, the Trust will not be subject to federal
excise tax. Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatment for
in-kind transactions and losses deferred due to wash sales. During 1999, the
Trust reclassified $370,653,973 of non-taxable security gains realized in the
in-kind redemption of Creation Units as an increase to paid in surplus in the
Statement of Assets and Liabilities. The Trust incurred net capital losses of
$18,036,354 for the period ended September 30, 1999. These losses may be
utilized to offset any net realized capital gains through September 30, 2007.

NOTE 3-TRANSACTIONS WITH THE TRUSTEE AND SPONSOR

The Trust pays the expenses of its operation, including the fees of its
Trustee and reimbursement to Nasdaq Investment Product Services, Inc. (the
"Sponsor") for payments to The Nasdaq Stock Market, Inc. ("Nasdaq") for a
license to use the Nasdaq-100 Index as a basis for determining the composition
and weighting of securities held by the Trust. Nasdaq paid the fees and expenses
incurred in connection with the organization of the Trust and its registration
as an investment company, and such expenses were not borne by the Trust. Nasdaq
agreed not to seek payment from the Sponsor for licensing fees for the use of
the Nasdaq-100 Index for the period of March 5, 1999 to September 30, 1999.

In accordance with the Trust Agreement, The Bank of New York (the "Trustee")
maintains the Trust's accounting records, acts as custodian and

B-10
<PAGE>
NOTE 3-TRANSACTIONS WITH THE TRUSTEE AND SPONSOR (CONTINUED)
transfer agent to the Trust, and provides administrative services, including
filing of all required regulatory reports. The Trustee is also responsible for
determining the composition of the portfolio of securities which must be
delivered in exchange for the issuance of Creation Units of the Trust, and for
adjusting the composition of the Trust's portfolio from time to time to conform
to changes in the composition and/or weighting structure of the Nasdaq-100
Index. For these services, the Trustee receives a fee at the following annual
rates:

<TABLE>
<CAPTION>
NET ASSET VALUE FEE AS A PERCENTAGE OF NET
OF THE TRUST ASSET VALUE OF THE TRUST
- -------------------------- --------------------------
<S> <C>
$0-$499,999,999* 10/100 of 1% per annum

$500,000,000-$2,499,999,999* 8/100 of 1% per annum

$2,500,000,000 and above* 6/100 of 1% per annum
</TABLE>

* The fee indicated applies to that portion of the net asset value of the
Trust which falls in the size category indicated.

The minimum annual fee which shall be paid to the Trustee is $180,000. Any
shortfall between the Trustee fee computed per the above table and the minimum
annual fee will be paid by the Sponsor. For the fiscal year ending
September 30, 1999, trustee fees were approximately $752,000.

The Sponsor has undertaken that on each day during each fiscal year up to
and including the fiscal year ending September 30, 2000, the ordinary operating
expenses of the Trust as calculated by the Trustee will not be permitted to
exceed an amount which is 18/100 of one percent (0.18%) per annum of the daily
net asset value of the Trust. To the extent during such period that ordinary
operating expenses of the Trust do exceed such 0.18% amount, the Sponsor will
reimburse the Trust or assume invoices on behalf of the Trust for such excess
ordinary operating expenses. The Sponsor retains the ability to be repaid by the
Trust for expenses so reimbursed or assumed to the extent that subsequently
during the fiscal year expenses fall below the 0.18% per annum level on any
given day. For the period from March 5, 1999 to September 30, 1999, ordinary
operating expenses incurred by the Trust exceeded the 0.18% per annum level.
During the year the Sponsor assumed $3.09 million of expenses incurred by the
Trust. Approximately $215,000 of expenses assumed by the Sponsor on behalf of
the Trust during the period will be repaid to the Sponsor.

B-11
<PAGE>
NOTE 4-TRUST TRANSACTIONS IN SHARES OF THE NASDAQ-100 INDEX TRACKING STOCK

Transactions in shares of the Nasdaq-100 Index Tracking Stock ("Nasdaq-100
Shares") were as follows:

<TABLE>
<CAPTION>
FOR THE PERIOD FROM
MARCH 5, 1999 THROUGH
SEPTEMBER 30, 1999
----------------------------
NASDAQ-100
SHARES AMOUNT
----------- --------------
<S> <C> <C>
Nasdaq-100 Shares sold..................... 49,350,000 $5,260,674,390
Nasdaq-100 Shares redeemed................. (31,700,000) 3,434,294,920
----------- --------------
Net increase............................... 17,650,000 $1,826,379,470
=========== ==============
</TABLE>

Nasdaq-100 Shares are issued and redeemed by the Trust only in Creation Unit
size aggregations of 50,000 Nasdaq-100 Shares. Such transactions are only
permitted on an in-kind basis, with a separate cash payment which is equivalent
to the undistributed net investment income per Nasdaq-100 Share and a balancing
cash component to equate the transaction to the net asset value per unit of the
Trust on the transaction date. Transaction fees for creations and redemptions
are $1,000 per participant party per day and are charged to those persons
creating or redeeming Nasdaq-100 Units. Transaction fees are received by the
Trustee and used to offset the expense of processing orders. During the period
from March 5, 1999 through September 30, 1999, the Trustee earned $100,000 in
transaction fees. The Trustee, in its sole discretion, may voluntarily reduce or
waive its fee, or modify its transaction fee schedule, subject to certain
limitations. There were no such reductions or waivers for the period from
March 5, 1999 through September 30, 1999.

NOTE 5-INVESTMENT TRANSACTIONS

For the period from March 5, 1999 through September 30, 1999, the Trust had
purchases and sales of investment securities of $177,012,487 and $177,955,723,
respectively. At September 30, 1999, the cost of investments for federal income
tax purposes was substantially the same as the cost for financial reporting
purposes. Accordingly, gross unrealized appreciation was $88,541,500 and gross
unrealized depreciation was $139,380,745, resulting in net unrealized
depreciation of $50,839,245.

NOTE 6-SUBSEQUENT EVENT

On February 14, 2000, the Board of Directors of the Sponsor approved a
two-for-one stock split of the Nasdaq-100 Shares payable to stockholders of
record on February 28, 2000. The payment date for the stock split will be
March 17, 2000.

B-12
<PAGE>
Nasdaq-100 Trust, Series 1
Schedule of Investments
September 30, 1999
- ---------------------------------------------------------------------

<TABLE>
<CAPTION>
NAME OF ISSUER SHARES VALUE
- -------------- --------- ------------
<S> <C> <C>
Microsoft Corporation*........................ 3,347,177 $303,128,717
Intel Corporation............................. 2,231,651 165,839,565
Cisco Systems, Inc.*.......................... 2,228,508 152,792,080
MCI WorldCom, Inc.*........................... 1,283,954 92,284,194
Dell Computer Corporation*.................... 1,781,207 74,476,718
QUALCOMM Incorporated*........................ 368,970 69,804,512
Sun Microsystems, Inc.*....................... 641,303 59,641,179
Nextel Communications, Inc.*.................. 770,019 52,216,913
Oracle Corporation*........................... 1,126,276 51,245,558
Yahoo! Inc.*.................................. 237,245 42,585,477
Amgen Inc.*................................... 452,923 36,913,225
Amazon.com, Inc.*............................. 427,567 34,178,637
Applied Materials, Inc.*...................... 369,979 28,742,744
JDS Uniphase Corporation*..................... 248,181 28,246,100
Biogen, Inc.*................................. 351,942 27,737,429
Apple Computer, Inc.*......................... 427,589 27,071,729
Comcast Corporation*.......................... 662,348 26,411,126
Xilinx, Inc.*................................. 399,557 26,183,470
VERITAS Software Corporation*................. 330,190 25,073,803
BMC Software, Inc.*........................... 347,143 24,842,421
CMGI, Inc.*................................... 237,829 24,377,472
Tellabs, Inc.*................................ 426,037 24,257,482
Level 3 Communications, Inc.*................. 449,863 23,491,284
Altera Corporation*........................... 533,008 23,119,222
Linear Technology Corporation................. 389,788 22,912,226
Maxim Integrated Products, Inc.*.............. 360,199 22,726,306
Global Crossings Ltd.*........................ 851,311 22,559,741
Qwest Communications International Inc.*...... 744,339 22,004,522
At Home Corporation*.......................... 500,909 20,756,417
Immunex Corporation*.......................... 427,714 18,552,095
Costco Companies, Inc*........................ 221,631 15,957,432
Novell, Inc.*................................. 765,332 15,832,806
NTL Incorporated*............................. 161,104 15,481,087
Paychex, Inc.................................. 445,734 15,210,673
Conexant Systems, Inc.*....................... 205,069 14,899,545
</TABLE>

B-13
<PAGE>
NASDAQ-100 TRUST, SERIES 1
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1999 (CONTINUED)
- ---------------------------------------------------------------------

<TABLE>
<CAPTION>
NAME OF ISSUER SHARES VALUE
- -------------- --------- --------------
<S> <C> <C>
LM Ericsson Telephone Company*............... 471,237 $ 14,726,156
Cintas Corporation*.......................... 253,898 14,678,478
PanAmSat Corporation*........................ 383,329 13,847,760
Siebel Systems, Inc.*........................ 206,710 13,772,054
Vitesse Semiconductor Corporation*........... 158,635 13,543,463
ADC Telecommunications, Inc.*................ 322,331 13,517,756
Chiron Corporation*.......................... 482,314 13,354,069
KLA-Tencor Corporation*...................... 204,785 13,311,025
Intuit Inc.*................................. 150,606 13,201,557
Comverse Technology, Inc.*................... 139,917 13,195,922
Adobe Systems Incorporated................... 115,505 13,109,818
Staples, Inc.*............................... 594,957 12,977,500
Bed Bath & Beyond Inc.*...................... 357,933 12,505,284
Citrix Systems, Inc.*........................ 198,841 12,315,714
Starbucks Corporation*....................... 482,698 11,961,860
USA Networks, Inc.*.......................... 296,529 11,490,499
CIENA Corporation*........................... 310,753 11,342,484
Lycos, Inc.*................................. 221,644 11,109,905
PeopleSoft, Inc.*............................ 654,929 11,092,860
VISX, Incorporated*.......................... 139,323 11,019,579
Compuware Corporation*....................... 419,727 10,939,135
McLeodUSA Incorporated*...................... 231,847 9,867,988
3Com Corporation* 340,502 9,789,432
Fiserv, Inc.*................................ 294,504 9,571,380
Parametric Technology Corporation*........... 697,033 9,409,945
Sanmina Corporation*......................... 118,656 9,181,008
American Power Conversion Corporation*....... 481,394 9,146,486
Concord EFS, Inc.*........................... 439,585 9,066,441
Genzyme General*............................. 199,145 8,973,972
CNET, Inc.*.................................. 157,682 8,830,192
Synopsys, Inc.*.............................. 156,438 8,784,971
Smurfit-Stone Container Corporation*......... 405,539 8,769,781
Electronic Arts Inc.*........................ 119,711 8,664,084
PACCAR Inc................................... 167,235 8,508,081
Centocor, Inc.*.............................. 131,599 7,706,766
Biomet, Inc.*................................ 289,283 7,611,759
</TABLE>

B-14
<PAGE>
NASDAQ-100 TRUST, SERIES 1
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1999 (CONTINUED)
- ---------------------------------------------------------------------

<TABLE>
<CAPTION>
NAME OF ISSUER SHARES VALUE
- -------------- --------- --------------
<S> <C> <C>
Adaptec, Inc.*............................... 162,161 $ 6,435,765
Sigma-Aldrich Corporation.................... 202,187 6,419,437
Quintiles Transnational Corp.*............... 306,694 5,836,770
Network Associates, Inc.*.................... 274,895 5,257,367
Molex Incorporated........................... 142,521 5,184,201
Atmel Corporation*........................... 143,226 4,842,829
Dollar Tree Stores, Inc.*.................... 107,631 4,298,513
Electronics for Imaging, Inc.*............... 82,215 4,226,365
Microchip Technology Incorporated*........... 80,554 4,138,462
PacifiCare Health Systems, Inc.*............. 80,042 3,461,816
Northwest Airlines Corporation*.............. 132,487 3,378,418
Reuters Group PLC............................ 43,983 3,029,329
Miller Herman, Inc........................... 121,597 2,906,928
Apollo Group, Inc.*.......................... 137,594 2,906,673
Ross Stores, Inc............................. 134,373 2,704,257
Fastenal Company*............................ 53,886 2,539,378
Comair Holdings, Inc......................... 150,012 2,503,325
Lincare Holdings Inc.*....................... 92,960 2,477,965
Autodesk, Inc................................ 94,368 2,064,300
Andrew Corporation*.......................... 118,476 2,058,521
Worthington Industries, Inc.................. 117,977 2,005,609
Tech Data Corporation*....................... 84,480 1,966,800
Micron Electronics, Inc.*.................... 150,015 1,575,157
First Health Group Corp.*.................... 63,353 1,421,483
CBRL Group, Inc.............................. 81,665 1,265,807
Cambridge Technology Partners, Inc.*......... 83,258 1,207,241
Corporate Express, Inc.*..................... 122,755 1,154,664
Stewart Enterprises, Inc..................... 176,094 1,067,570
Rexall Sundown, Inc.*........................ 80,592 992,289
--------------
Total Investments--(Cost $2,192,615,555)..... $2,141,776,310
==============
</TABLE>

* Designates a security on which no dividends were declared during the
period from March 5, 1999 through September 30, 1999.

B-15
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS.

OBJECTIVES

The Sponsor formed the Trust to provide investors with the opportunity to
purchase units of beneficial interest in the Trust representing proportionate
undivided interests in the Securities, which consist of substantially all of the
securities, in substantially the same weighting, as the component securities of
the Nasdaq-100 Index-Registered Trademark- in the form of a security that
closely tracks the Index and that may be traded as a share of common stock. The
investment objective of the Trust is to provide investment results that
generally correspond to the price and yield performance of the component
securities of the Index (the component securities of the Index are sometimes
referred to herein as "Index Securities"). There can be no assurance that this
investment objective will be met fully. For example, it may not be possible for
the Trust to replicate and maintain exactly the composition of the Index
Securities. It is also possible that, from time to time, the Trust will be
unable to purchase all of the Index Securities. In certain circumstances, the
Trust may also be required to make distributions in excess of the yield
performance of the Index Securities (see "Tax Status of the Trust"). The value
of the Securities and, consequently, the value of Nasdaq-100 Shares, are subject
to changes in the value of common stocks generally and to other factors.
Further, the payment, if any, of dividends (net of Trust fees and expenses) and
the maintenance of capital are subject to a number of conditions, including the
financial condition of the issuers of the Securities (see "Special
Considerations and Risk Factors").

THE TRUST

The Trust is a unit investment trust organized under the laws of the State
of New York. The Trust is governed by a trust agreement (the "Trust Agreement")
between The Bank of New York, a corporation organized under the laws of the
State of New York with trust powers (the "Trustee"), and the Sponsor dated and
executed as of March 4, 1999.

DISTRIBUTOR

The Distributor for Nasdaq-100 Shares is ALPS Mutual Funds Services, Inc., a
registered broker-dealer and a member of the National Association of Securities
Dealers, Inc. (see "Underwriting").

B-16
<PAGE>
PORTFOLIO DEPOSITS

All orders to create Nasdaq-100 Shares in Creation Unit size aggregations
must be placed with the Distributor (see "Underwriting" and "The Trust--
Procedures for Creation of Creation Units"). To be eligible to place orders with
the Distributor to create Creation Unit size aggregations of Nasdaq-100 Shares,
an entity or person either must be (1) a "Participating Party", as hereinafter
defined or (2) a Depository Trust Company Participant (see "Book Entry Ownership
of Nasdaq-100 Shares"), and in each case must have executed a Nasdaq-100
Participant Agreement, as hereinafter defined (see "The Trust--Procedures for
Creation of Creation Units" and "The Trust--Placement of Creation Orders Using
the Nasdaq-100 Clearing Process"). As used herein, the term "Participating
Party" means a broker-dealer or other participant in the Nasdaq-100 Clearing
Process, as hereinafter defined, through the Continuous Net Settlement ("CNS")
System of the National Securities Clearing Corporation ("NSCC"), a clearing
agency that is registered with the Securities and Exchange Commission (the
"Commission").(*) Upon acceptance of an order to create Nasdaq-100 Shares, the
Distributor will transmit such order to the Trustee and instruct the Trustee to
initiate the book entry movement of the appropriate number of Nasdaq-100 Shares
to the account of the entity placing the order. Payment for orders to create
Nasdaq-100 Shares will be made by deposits with the Trustee of a portfolio of
securities that is substantially similar in composition and weighting to the
Index Securities (see "The Trust--Creation of Nasdaq-100 Shares"), together, in
certain cases, with a cash payment in an amount which shall be equal to the
Income Net of Expense Amount (as hereinafter defined), plus or minus, as the
case may be, the Balancing Amount (as hereinafter defined). The "Income Net of
Expense Amount" is an amount equal, on a per Creation Unit basis, to the
dividends on all the Securities with ex-dividend dates within the period
beginning on the most recent ex-dividend date for Nasdaq-100 Shares (generally,
the third Friday in each of March, June, September, and December, see
"Distributions") through and including the current Business Day (the
"Accumulation Period") as if all of the Securities had been held for such
period, net of accrued expenses and liabilities for such period not previously
deducted (including, without limitation, (x) taxes or

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

* As of February 18, 2000, the National Association of Securities Dealers,
Inc. (the "NASD") beneficially owned (including shares owned directly by the
Amex) approximately 9.0% of the issued and outstanding shares of common
stock of The Depository Trust & Clearing Corporation ("DTCC"), the parent
company of NSCC and the Depository, and the NASD owned 10,000 shares of
preferred stock of DTCC, which entitles the NASD to elect one director of
DTCC. The NASD is also the parent company of Nasdaq.

B-17
<PAGE>
other governmental charges against the Trust not previously deducted, if any,
and (y) accrued fees of the Trustee and other expenses of the Trust (including
legal and auditing expenses) and other expenses not previously deducted (see
"Expenses of the Trust")). The "Balancing Amount" serves the function of
compensating for any differences between (1) the value of the portfolio of
securities deposited with the Trustee in connection with a creation of
Nasdaq-100 Shares, together with the Income Net of Expense Amount, and (2) the
net asset value of the Trust on a per Creation Unit basis (see "The
Portfolio--Adjustments to the Portfolio Deposit" for a further description
thereof).

The Income Net of Expense Amount and the Balancing Amount are collectively
referred to herein as the "Cash Component" and the deposit of such a portfolio
of securities and the Cash Component are collectively referred to herein as a
"Portfolio Deposit." In connection with an order to create Nasdaq-100 Shares on
any given day, the Cash Component of the Portfolio Deposit may be payable either
by the Trustee on behalf of the Trust to the creator of Nasdaq-100 Shares or by
the creator of Nasdaq-100 Shares to the Trustee on behalf of the Trust,
depending upon the respective amounts of the Income Net of Expense Amount and
the Balancing Amount. For example, if the sum of dividends on all Securities
with ex-dividend dates within the Accumulation Period, plus or minus the
Balancing Amount, exceeds the accrued expenses and liabilities of the Trust for
such period (I.E., the Cash Component has a positive value), then the creator of
Nasdaq-100 Shares will be obligated to pay such amount to the Trustee on behalf
of the Trust in connection with an order to create Nasdaq-100 Shares.
Conversely, if the sum of dividends on all Securities with ex-dividend dates
within the Accumulation Period, plus or minus the Balancing Amount, is less than
the accrued expenses and liabilities of the Trust for such period (I.E., the
Cash Component has a negative value), then the Trustee on behalf of the Trust
will pay such Cash Component to the entity placing an order to create Nasdaq-100
Shares.

All matters as to the number of shares of each of the Index Securities and
the amount of the Cash Component comprising the Portfolio Deposit shall be
determined by the Trustee in its discretion, whose determination shall be final
and binding. In certain instances, the securities portion of the Portfolio
Deposit may differ in composition and weighting relative to the composition and
weighting of the securities in the Index. For example, in connection with the
creation of Nasdaq-100 Shares, in the event that the Trustee determines, in its
discretion, that one or more Index Securities are likely to be unavailable for
delivery or available in insufficient quantity for delivery to the Trust upon
the creation of Nasdaq-100 Shares in Creation Unit size aggregations, then the
Trustee shall have the right in its discretion to permit the cash equivalent
value

B-18
<PAGE>
of such Index Security or Index Securities to be included in the Portfolio
Deposit in the calculation of the Cash Component in lieu of the inclusion of
such Index Security or Index Securities in the securities portion of the
Portfolio Deposit (see "The Portfolio--Adjustments to the Portfolio Deposit").

Similarly, in connection with the creation of Nasdaq-100 Shares, if a
creator is restricted by regulation or otherwise from investing or engaging in a
transaction in one or more Index Securities, the Trustee shall have the right,
in its discretion, to permit the cash equivalent value of such Index Security or
Index Securities to be included in the Portfolio Deposit, based on the market
value of such Index Security or Index Securities as of the Evaluation Time on
the date such creation order is deemed received by the Distributor, in the
calculation of the Cash Component in lieu of the inclusion of such Index
Security or Index Securities in the securities portion of the Portfolio Deposit.
In such case the creator will pay the Trustee the standard Transaction Fee
described below, plus an additional amount not to exceed three (3) times the
Transaction Fee applicable for one Creation Unit.

An entity or person placing creation orders with the Distributor must either
(i) initiate instructions pertaining to Portfolio Deposits through the CNS
clearing processes of NSCC, as such processes have been enhanced to effect
creations and redemptions of Creation Unit size aggregations of Nasdaq-100
Shares, such processes being referred to herein as the "Nasdaq-100 Clearing
Process", or (ii) deposit Portfolio Deposits with the Trustee outside the
Nasdaq-100 Clearing Process (I.E., through the facilities of The Depository
Trust Company).

TRANSACTION FEE

A transaction fee is payable to the Trustee in connection with each creation
and each redemption made through the Nasdaq-100 Clearing Process of Creation
Unit size aggregations of Nasdaq-100 Shares (the "Transaction Fee"), subject to
the changes, modifications or waivers, if any, described below. Such Transaction
Fee is non-refundable, regardless of the net asset value of the Trust.

Until further notice is given as described below, the Transaction Fee
charged in connection with each creation of Creation Units through the
Nasdaq-100 Clearing Process (see "The Trust--Procedures for Creation of Creation
Units") is $1,000 per Participating Party per day, regardless of the number of
Creation Units created on such day by such Participating Party. Likewise, until
further notice is given as described below, the Transaction Fee charged in
connection with the redemption of Creation Units through the

B-19
<PAGE>
Nasdaq-100 Clearing Process is $1,000 per Participating Party per day,
regardless of the number of Creation Units redeemed on such day by such
Participating Party. This Transaction Fee may subsequently be changed by the
Trustee, upon the consent of the Sponsor, but will not in any event exceed
10/100 of one percent (10 basis points) of the value of a Creation Unit at the
time of creation or redemption as the case may be (the "10 Basis Point Limit").
No modifications to, or reductions, discounts or waivers of, the Transaction Fee
charged in connection with the creation of Creation Units are scheduled or
currently contemplated by the Sponsor or the Trustee.

If Creation Units are created or redeemed outside the Nasdaq-100 Clearing
Process, an additional amount not to exceed three (3) times the applicable
Transaction Fee will be charged to the creator or redeemer. Under the current
schedule, therefore, the total fee charged in connection with the creation or
redemption of Creation Units outside the Nasdaq-100 Clearing Process would be
$1,000 (the Transaction Fee for the creation or redemption of a Creation Unit)
plus an additional amount not to exceed $3,000 (3 times $1,000) for a total of
$4,000.

From time to time, and for such periods as the Sponsor and the Trustee
together may determine, the Transaction Fee (as well as any additional amounts
charged in connection with creations and/or redemptions outside the Nasdaq-100
Clearing Process) may be increased, decreased, or otherwise modified or waived
in its entirety for certain numbers of Creation Units of Nasdaq-100 Shares
created or redeemed, or for creations and/or redemptions made under certain
specified circumstances, in each case without the consent of Beneficial Owners,
subject to certain conditions (see "The Trust--Creation of Creation Units" and
"The Trust--Procedures for Redemption of Nasdaq-100 Shares"). The Sponsor also
reserves the right, from time to time, to vary the number of Nasdaq-100 Shares
per Creation Unit (currently 50,000 shares) and such change may or may not be
made in conjunction with a change to the Transaction Fee. Any change to the
Transaction Fee so made will not cause the amount of the Transaction Fee to
exceed the 10 Basis Point Limit at the time of a creation or redemption, as the
case may be. Such changes or variations will be effected by an amendment to the
current Trust prospectus. The amount of the Transaction Fee in effect at any
given time will be available from the Trustee.

SIZE OF CREATION UNIT AGGREGATIONS OF NASDAQ-100 SHARES

Nasdaq-100 Shares may be created or redeemed only in Creation Unit size
aggregations of 50,000 shares, or in multiples thereof (E.G., 100,000, 150,000
Nasdaq-100 Shares), and in no event will fractional Creation Units be created or
redeemed. The Sponsor reserves the right to direct the Trustee to

B-20
<PAGE>
declare a split or reverse split in the number of Nasdaq-100 Shares outstanding
in the event that the per Nasdaq-100 Share price in the secondary market changes
to an amount that the Sponsor believes falls outside a desirable retail range.
The Sponsor also reserves the right to make a corresponding change in the number
of Nasdaq-100 Shares constituting a Creation Unit. For example, if a 2-for-1
split were declared and the Sponsor also determined to make a corresponding
change in the number of Nasdaq-100 Shares per Creation Unit, the number of
Nasdaq-100 Shares in a Creation Unit size aggregation of Nasdaq-100 Shares would
double (E.G., from 50,000 to 100,000 Nasdaq-100 Shares). The Sponsor has
determined not to make a corresponding change in the number of Nasdaq-100 Shares
constituting a Creation Unit in connection with the 2-for-1 stock split to be
effected March 17, 2000.

PORTFOLIO ADJUSTMENTS

To maintain the correspondence between the composition and weighting of
Securities held in the Trust and that of the Index Securities, the composition
and weighting of the Securities are adjusted from time to time to conform to
periodic changes in the composition and weighting of the Index Securities made
by Nasdaq. The Trustee aggregates certain of these adjustments and makes
conforming changes to the Trust's portfolio at least monthly; adjustments are
made more frequently, however, in the case of changes to the Index that are
significant (see "The Portfolio--Adjustments to the Portfolio"). The composition
and weighting of the securities portion of a Portfolio Deposit are also adjusted
to conform to changes in the Index. Any change in the identity or weighting of
an Index Security will result in a corresponding adjustment to the prescribed
Portfolio Deposit generally effective on the Business Day (a "Business Day"
being any day that the Nasdaq Stock Market is open for business) on which the
change to the Index takes effect or shortly thereafter. Changes to the Index are
made after the close of the market (see "The Portfolio--Adjustments to the
Portfolio Deposit").

BOOK-ENTRY OWNERSHIP OF NASDAQ-100 SHARES

The Depository Trust Company, New York, New York, a limited purpose trust
company organized under the laws of the State of New York (referred to herein as
"DTC" or the "Depository") or its nominee will be the record or registered owner
of all outstanding Nasdaq-100 Shares. Beneficial ownership of Nasdaq-100 Shares
will be shown on the records of the Depository or its participants. Certificates
will not be issued for Nasdaq-100 Shares, whether in Creation Unit size
aggregations or otherwise (see "The Trust--Book-Entry-Only System").

B-21
<PAGE>
EXPENSES

The Trustee's fees and other expenses of the Trust are described more fully
below in "Expenses of the Trust." If the income received by the Trust in the
form of dividends and other distributions on the Securities is insufficient to
cover Trust fees and expenses (which is currently the case), then the Trustee
will be required to sell Securities in an amount sufficient to pay the
shortfall. Such a sale of Securities will ordinarily be required to occur
whenever the Trustee determines that projected annualized fees and expenses
accrued on a daily basis exceed projected annualized dividends and other Trust
income accrued on a daily basis by more than 1/100 of one percent (0.01%) of the
net asset value of the Trust and will ordinarily be made no later than the next
occurring adjustment to the Securities held in the Trust to conform to changes
in the composition and weighting of the Index Securities (see "Expenses of the
Trust" and "The Portfolio--Adjustments to the Portfolio").

FEDERAL INCOME TAX CONSIDERATIONS

The Trust's fiscal year ends on September 30 of each year. The Trust has
elected tax treatment as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), and distributes
annually its entire investment company taxable income and capital gain.
Distributions that are taxable as ordinary income to Beneficial Owners generally
are expected to constitute dividend income for federal income tax purposes and
to be eligible for the dividends-received deduction available to many
corporations to the extent of qualifying dividend income received by the Trust
(see "Tax Status of the Trust"). The quarterly distributions, if any, made by
the Trust will be based on the dividend performance of the Securities held
during such quarterly distribution period, net of Trust fees and expenses,
rather than the actual taxable income of the Trust. (See "Administration of the
Trust--Distributions to Beneficial Owners.") As a result, a portion of any such
distributions of the Trust may be treated as a return of capital or a capital
gain dividend for federal income tax purposes or the Trust may be required to
make additional distributions to maintain its status as a regulated investment
company or to avoid imposition of income or excise taxes on undistributed income
(see "Tax Status of the Trust" and "Administration of the Trust--Distributions
to Beneficial Owners").

ERISA CONSIDERATIONS

In considering the advisability of an investment in Nasdaq-100 Shares,
fiduciaries of pension, profit sharing, or other tax-qualified retirement plans
(including Keogh Plans) and welfare plans (collectively, "Plans") subject to the
fiduciary responsibility requirements of the Employee Retirement Income

B-22
<PAGE>
Security Act of 1974, as amended ("ERISA"), should consider whether an
investment in Nasdaq-100 Shares is permitted by the documents and instruments
governing the Plan and whether the investment satisfies the exclusive benefit,
prudence, and diversification requirements of ERISA. Individual retirement
account ("IRA") investors should consider that an IRA may make only such
investments as are authorized by its governing instruments.

The fiduciary standards and prohibited transactions rules of ERISA and
Section 4975 of the Code will not apply to transactions involving the Trust's
assets while Nasdaq-100 Shares are held by a Plan or IRA. Unlike many other
investment vehicles offered to Plans and IRAs, the Trust's assets will not be
treated as "plan assets" of the Plans or IRAs which acquire or purchase
Nasdaq-100 Shares. Although ERISA imposes certain duties on Plan fiduciaries and
ERISA and/or Section 4975 of the Code prohibit certain transactions involving
"plan assets" between Plans or IRAs and their fiduciaries or certain related
persons, those rules will not apply to transactions involving the Trust's assets
because Nasdaq-100 Shares represent an interest in the Trust, and the Trust is
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). ERISA, the Code, and U.S. Department of Labor
regulations contain unconditional language exempting the assets of registered
investment companies from treatment as "plan assets" in applying the fiduciary
and prohibited transaction provisions of ERISA and the Code.

RESTRICTIONS ON PURCHASES BY INVESTMENT COMPANIES

The acquisition of Nasdaq-100 Shares by registered investment companies is
subject to the restrictions set forth in section 12(d)(l) of the 1940 Act.

INVESTMENT MANAGEMENT

The Trust holds the Securities and cash and is not actively "managed" by
traditional methods, which typically involve effecting changes in the Securities
on the basis of judgments made relating to economic, financial, and market
considerations. The composition of the Securities is adjusted, however, to
conform to changes in the composition of the Index Securities in the manner set
forth in the Trust Agreement as described herein (see "The
Portfolio--Adjustments to the Portfolio").

DISTRIBUTIONS

Distributions by the Trust are made quarterly to the extent that dividends
accumulated in respect of the Securities and other income, if any, received by
the Trust exceed Trust fees and expenses accrued during the quarterly
Accumulation Period which ends on the Business Day preceding each ex-dividend
date

B-23
<PAGE>
for Nasdaq-100 Shares. The regular quarterly ex-dividend date with respect to
net dividends, if any, for Nasdaq-100 Shares is the third Friday in each of
March, June, September, and December, unless such day is not a Business Day, in
which case the ex-dividend date is the immediately preceding Business Day (the
"Ex-Dividend Date"). However, no net dividend distribution will be made in any
given quarter, and any net dividend amounts will be rolled into the next
Accumulation Period, if the aggregate net dividend distribution would be in an
amount less than 5/100 of one percent (0.05%) of the net asset value of the
Trust, unless the Trustee determines that such distribution is required to be
made in order to maintain the Trust's status as a regulated investment company
or to avoid the imposition of income or excise taxes on undistributed income.
(See "Administration of the Trust--Distributions to Beneficial Owners.")

At present, and possibly for extended periods of time during the life of the
Trust, the expenses of the Trust may be as great as or in excess of the dividend
and other income to be received by the Trust during any quarter and, under such
circumstances, no quarterly net dividend distributions would be made (see
"Special Consideration and Risk Factors--Little or No Expected Net Dividend
Distributions to Beneficial Owners"). Distributions (if any) will be made on
Dividend Payment Dates to Beneficial Owners via the Depository and its
participants (see "The Trust--Book-Entry-Only System"). For federal income tax
purposes, a portion of any net dividend distributions may result in a return of
capital to Beneficial Owners of Nasdaq-100 Shares (see "Tax Status of the
Trust").

Any net capital gains recognized by the Trust in any taxable year is to be
distributed at least annually. The Trust may make additional distributions after
the end of the year in order to satisfy certain distribution requirements
imposed by the Code (see "Tax Status of the Trust" and "Administration of the
Trust--Distributions to Beneficial Owners"). Although income distributions, if
any, are currently made on a quarterly basis, the Trustee reserves the right to
vary the frequency of distributions (see "Administration of the
Trust--Distributions to Beneficial Owners").

REDEMPTION

Nasdaq-100 Shares in Creation Unit size aggregations are ordinarily
redeemable in kind only and are not redeemable for cash except under certain
circumstances (see "Redemption of Nasdaq-100 Shares"). Nasdaq-100 Shares can be
redeemed only in Creation Unit size aggregations effected by a Participating
Party (with respect to redemptions through the Nasdaq-100 Clearing Process) or a
DTC Participant (with respect to redemptions outside the Nasdaq-100 Clearing
Process), in either case which has executed a Nasdaq-100

B-24
<PAGE>
Participant Agreement (see "Redemption of Nasdaq-100 Shares--Procedure for
Redemption of Nasdaq-100 Shares"). Individual Nasdaq-100 Shares are not
redeemable, but entitle the owners thereof to certain payments upon termination
of the Trust (see "Administration of the Trust--Termination"). Prior to
termination, Nasdaq-100 Share owners may aggregate individual Nasdaq-100 Shares
to Creation Unit size or multiples thereof (E.G., 50,000, 100,000 shares, etc.)
and request that the Trustee redeem the Nasdaq-100 Shares so aggregated. There
can be no assurance, however, that there will always be sufficient depth and
liquidity in the public trading market to complete all such transactions (see
"Special Considerations and Risk Factors"). Owners of Nasdaq-100 Shares in less
than Creation Unit size aggregations may have to pay brokerage fees and
commissions to acquire sufficient Nasdaq-100 Shares (I.E., 50,000 shares) to
constitute a Creation Unit. Persons redeeming Nasdaq-100 Shares in Creation Unit
size aggregations may also be entitled to receive, or be required to pay, a Cash
Redemption Amount (as hereinafter defined, see "Redemption of Nasdaq-100
Shares--Procedure for Redemption of Nasdaq-100 Shares"). On any given Business
Day, the Cash Redemption Amount will be an amount typically identical to the
Cash Component of a Portfolio Deposit.

In the event that the Trustee determines in its discretion that an Index
Security is likely to be unavailable for delivery or available in insufficient
quantity for delivery by the Trust upon the redemption of Nasdaq-100 Shares in
Creation Unit size aggregations, then the Trustee shall have the right in its
discretion to include the cash equivalent value of such Index Security or Index
Securities, based on the market value of such Index Security or Index Securities
as of the Evaluation Time on the date such redemption order is deemed received
by the Trustee (see "Redemption of Nasdaq-100 Shares"), in the calculation of
the Cash Redemption Amount in lieu of delivering the Index Security or Index
Securities to the redeeming investor.

Similarly, in connection with the redemption of Nasdaq-100 Shares, if a
redeeming investor requests redemption in cash, rather than in kind, with
respect to one or more Index Securities (for example, because a redeeming
investor is restricted by regulation or otherwise from investing or engaging in
a transaction in one or more Index Securities), the Trustee shall have the right
in its discretion to include the cash equivalent value of such Index Security or
Index Securities, based on the market value of such Index Security or Index
Securities as of the Evaluation Time on the date such redemption order is deemed
received by the Trustee, in the calculation of the Cash Redemption Amount in
lieu of delivering such Index Security or Index Securities to the redeeming
investor. In all such cases, such investor will pay the Trustee the standard
Transaction Fee, plus an additional amount not to exceed three (3) times the
Transaction Fee applicable for a Creation Unit.

B-25
<PAGE>
Furthermore, the Trustee, in its discretion, upon the request of a redeeming
investor, may redeem Creation Units in whole or in part by providing such
redeeming investor with a Portfolio Deposit differing in composition, but not
differing in net asset value, from the then-current Portfolio Deposit. Such a
redemption is likely to be made only if it were determined to be appropriate in
order to maintain the Trust portfolio's correspondence to the composition and
weighting of the Index when a change to the composition and/or weighting of the
Index Securities occurs (see "The Portfolio", "The Index", and "The
Index--Rebalancing of the Index").

The Transaction Fee will be charged in connection with the redemption of
Creation Unit size aggregations of Nasdaq-100 Shares. If a request for
redemption is made directly to the Trustee outside the Nasdaq-100 Clearing
Process, an additional amount not to exceed three (3) times the Transaction Fee
applicable for a Creation Unit will be charged to the redeemer due to the
increased expense associated with delivery outside the Nasdaq-100 Clearing
Process (see "Transaction Fee").

TERMINATION

The Trust will terminate by its terms on the first to occur of: (i) the date
one hundred twenty-five (125) years from the Initial Date of Deposit (I.E.,
March 4, 2124) or (ii) the date twenty (20) years after the death of the last
survivor of fifteen persons named in the Trust Agreement, the oldest of whom was
born in 1986 and the youngest of whom was born in 1996 (the "Mandatory
Termination Date"). The Trust may also be terminated earlier upon the agreement
of the Beneficial Owners of 66 2/3% of the then outstanding Nasdaq-100 Shares.
The Sponsor will also have the discretionary right to direct the Trustee to
terminate the Trust if at anytime prior to March 4, 2002 the net asset value of
the Trust falls below $150,000,000 or if on or after March 4, 2002 the net asset
value of the Trust is less than $350,000,000, as such dollar amount shall be
adjusted for inflation in accordance with the National Consumer Price Index for
All Urban Consumers (the "CPI-U")(*) as published by the United States
Department of Labor, such adjustment to take effect December 31, 2003 and at the
end of each year thereafter and to be made so as to reflect the percentage
increase in consumer prices as set forth in the CPI-U for the twelve month
period ending in the month preceding the month in which such adjustment is made.
The Trustee shall have the right to terminate the Trust in the event that
(a) the Sponsor resigns or becomes incapable of discharging its duties and a
successor is not appointed; (b) the Depository is unable or unwilling to
continue to perform its functions as set forth under the

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

* The CPI-U measures the inflation rate of specified commodities deemed
representative of the purchases of all urban consumers.

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<PAGE>
Trust Agreement and a suitable replacement is unavailable; (c) NSCC no longer
provides clearance services with respect to Nasdaq-100 Shares and a suitable
replacement is unavailable, or if the Trustee is no longer a member of NSCC or
any successor to NSCC providing clearance services; (d) Nasdaq ceases publishing
the Index; (e) Nasdaq-100 Shares are delisted from the Amex and are not
subsequently relisted on a national securities exchange or a quotation medium
operated by a national securities association (see "Marketplace Listing"); or
(f) the License Agreement (as hereinafter defined) is terminated. The License
Agreement currently is scheduled to terminate March 10, 2004, subject to a
five-year renewal period following such date (see "License Agreement"). The
Trust shall also terminate if the Trustee resigns or becomes incapable of
discharging its duties and a successor is not appointed (see "Administration of
the Trust--Termination").

UNDERWRITING

ALPS Mutual Funds Services, Inc. (the "Distributor") acts as underwriter of
Nasdaq-100 Shares on an agency basis. All orders to create Nasdaq-100 Shares in
Creation Unit size aggregations must be placed with the Distributor, and it is
the responsibility of the Distributor to transmit such orders to the Trustee.
The Distributor will furnish to those placing such orders confirmation that the
orders have been accepted, but the Distributor will reject any order which is
not submitted in proper form. Upon acceptance of an order to create Nasdaq-100
Shares, the Distributor will instruct the Trustee to initiate the book-entry
movement of the appropriate number of Nasdaq-100 Shares to the account of the
entity placing the order. The Distributor is also responsible for delivering a
prospectus to those persons creating Nasdaq-100 Shares. The Distributor also
maintains records of both the orders placed with it for the creation of
Nasdaq-100 Shares and the confirmations of acceptance issued by it. In addition,
the Distributor maintains a record of the instructions given to implement
delivery of Nasdaq-100 Shares in response to orders placed with it. The
Distributor may also provide certain other administrative services, such as
those related to state securities law compliance. The Distributor is a
corporation organized under the laws of the State of Colorado and is located at
370 17th Street, Suite 3100, Denver, CO 80202. The Distributor is a registered
broker-dealer and a member of the National Association of Securities
Dealers, Inc. The Sponsor pays the Distributor for its services a flat annual
fee. The Sponsor will not seek reimbursement for such payment from the Trust
without obtaining prior exemptive relief from the Commission.

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<PAGE>
SPECIAL CONSIDERATIONS AND RISK FACTORS

GENERAL

Investment in the Trust should be made with an understanding that the value
of the Securities may fluctuate in accordance with changes in the financial
condition of the issuers of the Securities, the value of common stocks
generally, and other factors. The composition and weighting of the Index
Securities and hence the composition and weighting of the Securities held in the
Trust also change from time to time (see "The Portfolio--Adjustments to the
Portfolio", "The Portfolio--Selection and Acquisition of Securities", and "The
Index--Rebalancing of the Index"). There can be no assurance that the issuers of
the Securities will pay dividends on outstanding shares of common stock.
Distributions on the Securities will generally depend upon the declaration of
dividends by the issuers of the Securities; the declaration of such dividends
generally depends upon various factors, including the financial condition of the
issuers and general economic conditions. As discussed above, the Trust, unlike a
managed investment company, will not be actively "managed" by traditional
methods, and therefore the adverse financial condition of an issuer will not
result in the elimination of its securities from the Securities held by the
Trust unless the Securities of such issuer are removed from the Index (see "The
Portfolio--Adjustments to the Portfolio").

An investment in the Trust should also be made with an understanding of the
risks inherent in an investment in equity securities, including the risk that
the financial condition of the issuers of the Securities may become impaired or
that the general condition of the stock market may deteriorate (either of which
may cause a decrease in the value of the Securities and thus in the value of
Nasdaq-100 Shares). Common stocks are susceptible to general stock market
fluctuations and to volatile increases and decreases in value as market
confidence in and perceptions of their issuers change. These investor
perceptions are based on various and unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic, and banking crises. As discussed above, the Trust
will not be actively "managed" and therefore securities held by the Trust will
not be disposed of as a result of or in anticipation of normal fluctuations in
the market.

Holders of common stocks of any given issuer incur more risk than holders of
preferred stocks and debt obligations of such issuer because common
stockholders, as owners of such issuer, have generally inferior rights to
receive payments from such issuer in comparison with the rights of creditors of,
or holders of debt obligations or preferred stocks issued by, such issuer.
Further, unlike debt securities which typically have a stated principal amount
payable at

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<PAGE>
maturity (whose value, however, will be subject to market fluctuations prior
thereto), or preferred stocks which typically have a liquidation preference and
which may have stated optional or mandatory redemption provisions, common stocks
have neither a fixed principal amount nor a maturity. Common stock values are
subject to market fluctuations as long as the common stock remains outstanding.
The value of the Securities may therefore be expected to fluctuate over the
entire life of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit (see "Market Risks").

All of the Securities are currently listed on the Nasdaq National Market.
The existence of a liquid trading market for certain Securities may depend on
whether dealers will make a market in such Securities. There can be no assurance
that a market will be made for any of the Securities, that any market for the
Securities will be maintained, or that any such market will be or remain liquid.
The price at which the Securities may be sold and the value of the Trust will be
adversely affected if trading markets for the Securities are limited or absent.

An investment in the Trust should also be made with an understanding that
the Trust will not be able to replicate exactly the performance of the Index
because the total return generated by the Securities will be reduced by
transaction costs incurred in adjusting the actual balance of the Securities and
other Trust expenses, whereas such transaction costs and expenses are not
included in the calculation of the Index. It is also possible that for short
periods of time, the Trust may not fully replicate the performance of the Index
due to the temporary unavailability of certain Index Securities in the secondary
market or due to other extraordinary circumstances. Such events are unlikely to
continue for an extended period of time because the Trustee is required to
correct such imbalances by means of adjusting the composition of the Securities
(see "The Portfolio--Adjustments to the Portfolio"). It is also possible that
the composition of the Trust may not exactly replicate the composition of the
Index if the Trust has to adjust its portfolio holdings in order to continue to
qualify as a "regulated investment company" under the Code (see "Tax Status of
the Trust").

Neither the Depository nor Beneficial Owners of Nasdaq-100 Shares are
entitled either to dispose of any of the Securities in the Trust, as such, or to
vote the Securities. As the beneficial owner of the Securities, the Trustee has
the right to vote all of the voting Securities (see "Administration of the
Trust--Voting").

Except as otherwise specifically noted, the time frames for delivery of
Securities, cash, or Nasdaq-100 Shares in connection with creation and
redemption activity within the Nasdaq-100 Clearing Process as set forth herein

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<PAGE>
are based on NSCC's current "regular way" settlement period of three (3) days
during which NSCC is open for business (each such day an "NSCC Business Day").
NSCC may, in the future, reduce or increase such "regular way" settlement
period, in which case it is anticipated that there would be a corresponding
reduction or increase in settlement periods applicable to Nasdaq-100 Share
creations and redemptions. Investors should note that NSCC Business Days do not
always coincide with the days during which the Trustee is open for business.

LITTLE OR NO EXPECTED NET DIVIDEND DISTRIBUTIONS TO BENEFICIAL OWNERS

The Trust Agreement provides for quarterly distributions to Beneficial
Owners via the Depository and its participants (see "The Trust--Book-Entry-Only
System") on Dividend Payment Dates in the event that dividends accumulated in
respect of the Securities and other income, if any, received by the Trust exceed
Trust fees and expenses accrued during the quarterly Accumulation Period which
ends on the Business Day preceding each Ex-Dividend Date; subject, however, to
such amount falling below a floor for de-minimus distributions, in which event a
net dividend distribution may not be paid and such amount will be rolled into
the next Accumulation Period (see "Administration of the Trust--Distributions to
Beneficial Owners"). Historically, the portfolio of securities comprising the
Index has paid relatively low dividends when compared to the securities
comprising other broad-based stock indices. For example, for the 1997, 1998 and
1999 calendar years, the ratio of the aggregate dividends paid to total
capitalization for the securities comprising the Index in those periods was
0.13%, 0.07% and 0.03%, respectively. In comparison, the comparable dividend
ratio for the securities comprising the Standard & Poor's 500
Index-Registered Trademark- in those periods was 1.60%, 1.68% and 1.14%
respectively. (See "The Index" for the historical aggregate dividend yields of
the securities comprising the Index.)

The Sponsor has undertaken that on each day up to and including
September 30, 2000, the ordinary operating expenses of the Trust will not be
permitted to exceed an amount which is 18/100 of one percent (0.18%) per annum
of the daily net asset value of the Trust (see "Expenses of the Trust").
Notwithstanding such limitation on Trust expenses, the fees and expenses of the
Trust may exceed the dividend and other income on the Securities received by the
Trust during each quarter. In such event, no net dividend distributions would be
made by the Trust. Based on the 1999 dividend yield noted above of the
securities comprising the Index in that year, no net dividend distributions were
made by the Trust.

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<PAGE>
After September 30, 2000, the Sponsor may, in its sole discretion,
discontinue its undertaking to limit ordinary operating expenses of the Trust,
or may renew this undertaking for an additional period of time but at a
different level which may be higher than 0.18%. In such event, the likelihood
may increase that expenses of the Trust would exceed the dividend and other
income received by the Trust during each quarter. The Trust will pay any such
excess expenses with the proceeds realized from the sale of Securities effected
ordinarily whenever the Trustee determines that projected annualized fees and
expenses accrued on a daily basis exceed projected annualized dividends and
other Trust income accrued on a daily basis by more than 1/100 of one percent
(0.01%) of the net asset value of the Trust (see "Expenses of the Trust"). Such
a sale of Securities will ordinarily be required to occur no later than the next
occurring adjustment to the Securities held in the Trust to conform to changes
in the composition and weighting of the Index Securities (see "The Portfolio--
Adjustments to the Portfolio").

Dividend payment rates of the securities comprising the Index may change
based on numerous factors, including the financial condition of the issuers and
general economic conditions, as well as from changes to the price level of Index
Securities, and from changes to the composition of Index Securities (I.E., the
substitution of one security in the Index with another paying higher or lower
dividends than the security being replaced). (See "The Index" for a discussion
of the selection criteria for determining the Index Securities.) In addition,
the Trust has no operating history by which to measure Trust expenses and
although the amounts of certain ordinary Trust expenses can be estimated, the
growth rate of the Trust, which cannot be anticipated, will directly affect the
level of Trust expenses as a percentage of the Trust's net asset value (I.E., as
the Trust grows in net asset value, certain relatively fixed Trust expenses will
be borne by a greater number of holders of Nasdaq-100 Shares). Accordingly, no
assurances can be given as to the actual level of dividends payable by the
issuers of the Securities or the actual level of Trust expenses, and no
representations are being made as to the level of net dividend distributions, if
any, that may be payable by the Trust.

NET ASSET VALUE AND MARKET PRICES

The Trust's assets consist primarily of the Securities. Therefore, the net
asset value of Nasdaq-100 Shares in Creation Unit size aggregations and,
proportionately, the net asset value per Nasdaq-100 Share changes as
fluctuations occur in the market value of the Securities. Investors should also
be aware that the aggregate public trading market price of 50,000 Nasdaq-100
Shares may be different from the net asset value of a Creation Unit size
aggregation of Nasdaq-100 Shares (I.E., 50,000 Nasdaq-100 Shares may trade at a
premium

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<PAGE>
over or at a discount to the net asset value of a Creation Unit) and similarly
the public trading market price per Nasdaq-100 Share may be different from the
net asset value of a Creation Unit on a per Nasdaq-100 Share basis (see
"--Market Risks"). This price difference may be due, in large part, to the fact
that supply and demand forces at work in the secondary trading market for
Nasdaq-100 Shares will be closely related to, but not identical to, the same
forces influencing the prices of the Index component securities trading
individually or in the aggregate at any point in time. The expenses of the Trust
are reflected in the net asset value of Nasdaq-100 Shares in Creation Unit size
aggregations and the expenses of the Trust are accrued daily (see "Expenses of
the Trust").

TRADING CONSIDERATIONS

The Sponsor does not maintain a secondary market in Nasdaq-100 Shares.
Nasdaq-100 Shares are listed for trading on the Amex. The market symbol for
Nasdaq-100 Shares is "QQQ". Trading in Nasdaq-100 Shares on the Amex may be
halted due to market conditions or, in light of Amex rules and procedures, for
reasons that, in the view of the Amex, make trading in Nasdaq-100 Shares
inadvisable. In addition, trading in Nasdaq-100 Shares on the Amex is subject to
trading halts caused by extraordinary market volatility pursuant to Amex
"circuit breaker" rules that require trading in securities on the Amex to be
halted for a specified time period based on a specified market decline. There
can be no assurance that the requirements of the Amex necessary to maintain the
listing of Nasdaq-100 Shares will continue to be met or will remain unchanged.
The Trust will be terminated in the event Nasdaq-100 Shares are delisted from
the Amex and are not subsequently relisted on a national securities exchange or
a quotation medium operated by a national securities association. (For a
description of the conditions for the listing of Nasdaq-100 Shares and the
circumstances under which the Amex would consider the suspension of trading in
or the delisting of Nasdaq-100 Shares, see "Marketplace Listing.") Further, the
Trust may be terminated, among other reasons, in the event that the net asset
value of the Trust falls below a specified level (see "Administration of the
Trust--Termination").

MARKET RISKS

Nasdaq-100 Shares are subject to the risks of an investment in a broad
market portfolio of equity securities, including the risk that the general level
of stock prices may decline, thereby adversely affecting the value of such
investment. Nasdaq-100 Shares are also subject to the risk of an investment in a
portfolio of equity securities in economic sectors in which the Index may be
highly concentrated (E.G., technology, see "The Index") as well as to the risks

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<PAGE>
specific to the performance of a few individual component securities which
currently represent a highly concentrated weighting in the Index (E.G.,
Microsoft Corporation and Intel Corporation, see "The Index"). These include the
risks that the level of stock prices in these sectors or the stock prices of
these specific companies may decline, thereby adversely affecting the value of
Nasdaq-100 Shares. In addition, because it is the policy of the Trust to invest
in the securities that comprise the Index, if the Index is concentrated in an
industry or group of industries, the portfolio of Securities also will be
concentrated in that industry or group of industries. Furthermore, investors
should be aware that in the event that one or more stocks which currently have a
highly concentrated weighting in the Index were to leave the Nasdaq Stock
Market, if a company with a large market capitalization were to list its shares
on the Nasdaq Stock Market, or if there were a significant rebalancing of the
Index (see "The Index--Rebalancing of the Index"), then the composition and
weighting of the Index, and hence the composition and weighting of the
Securities in the Trust, would change significantly and the performance of
Nasdaq-100 Shares would reflect the performance of the new Index as reconfigured
(see "The Portfolio--Adjustments to the Portfolio").

Furthermore, due to the concentration of the Index in sectors characterized
by relatively higher volatility in price performance when compared to other
economic sectors, the performance of the Index may be more volatile when
compared to other broad based stock indices. For example, the annual volatility
of the Index for the 1999 calendar year was 33.34%, while the annual volatility
of the Standard & Poor's 100 Index-Registered Trademark- and the Standard &
Poor's 500 Index-Registered Trademark- for the same period was 19.04% and
18.07%, respectively. For this reason, it is anticipated that the price
volatility of Nasdaq-100 Shares may be greater than the price volatility of
other market-traded securities which are issued by investment companies based
upon indices other than the Index.

Nasdaq-100 Shares are also subject to risks other than those associated with
an investment in a broad market portfolio of equity securities in that the
selection of the securities included in the Trust's portfolio, the expenses
associated with the Trust, or other factors distinguishing an ownership interest
in a trust from the direct ownership of a portfolio of securities may affect
trading in Nasdaq-100 Shares as compared with trading in a broad market
portfolio of equity securities. Nasdaq-100 Shares are further subject to the
risk that extraordinary events may cause any of the parties providing services
to the Trust, such as the Trustee, the Sponsor, the Distributor, the Depository,
NSCC, or Nasdaq (as the licensor of the Index and the Index calculator) to be
closed or otherwise unable to perform such party's obligations as set forth
herein and in the agreements between and among such parties. According to the
terms of the Trust Agreement, if any of the above named entities fails or is
otherwise

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<PAGE>
unable to perform adequately its duties, a successor entity may be named or
appointed to assume all duties and obligations of its predecessor. If, however,
no suitable successor is available or willing to undertake all such duties and
obligations, under the Trust Agreement the Trust will then be terminated (see
"Administration of the Trust--Termination").

The Trustee will ordinarily deliver a portfolio of Securities for each
Creation Unit size aggregation of Nasdaq-100 Shares delivered for redemption,
identical in composition to the Securities portion of a Portfolio Deposit as in
effect on the date a request for redemption is deemed received by the Trustee
(see "Redemption of Nasdaq-100 Shares"). If a redemption is processed through
the Nasdaq-100 Clearing Process, to the extent that the Securities to be
delivered on settlement date are not delivered, they will be covered by NSCC's
guarantee of the completion of such delivery. Any Securities not received on
settlement date will be marked to the market on a daily basis until delivery is
completed. The Trust, to the extent it has not already done so, remains
obligated to deliver such Securities to NSCC, and the market risk of any
increase in the value of such Securities until delivery is made by the Trust to
NSCC could adversely affect the net asset value of the Trust. Investors should
note that the Securities to be delivered to a redeemer submitting a redemption
request outside of the Nasdaq-100 Clearing Process that are not delivered to
such redeemer are not covered by NSCC's guarantee of completion of such
delivery.

Investors should also note that the size of the Trust in terms of total
assets held may change substantially over time and from time to time as
Nasdaq-100 Shares in Creation Unit size aggregations are created and redeemed.
Such fluctuations in Trust size should not adversely impact the net asset value
per Nasdaq-100 Share at any time because the amount of the Cash Component or the
Cash Redemption Amount upon creations or redemptions, respectively, of
Nasdaq-100 Shares in Creation Unit size aggregations is determined each day to
equate the value of the Portfolio Deposit to the net asset value of the Trust,
on a per Creation Unit basis, at the close of business on the day such request
is deemed received by the Trustee (see "The Portfolio--Adjustments to the
Portfolio Deposit").

Investors in the Trust should also be aware that there are tax consequences
associated with the ownership of Nasdaq-100 Shares resulting from the
distribution, if any, of Trust net dividends and sales of Nasdaq-100 Shares, as
well as the sale of underlying Securities held by the Trust in connection with
redemptions or changes in the Index under certain circumstances (see "Tax Status
of the Trust--Tax Consequences to Beneficial Owners").

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<PAGE>
AFFILIATED RELATIONSHIPS AND TRANSACTIONS

Investors in the Trust should be aware that the Sponsor of the Trust is a
wholly owned subsidiary of Nasdaq. Nasdaq is the proprietor of the Index as well
as the operator of the Nasdaq Stock Market, the marketplace where the Index
Securities trade. Nasdaq and the Amex, the exchange on which Nasdaq-100 Shares
are listed, operate as separate subsidiaries of The Nasdaq-Amex Market Group, a
subsidiary of The National Association of Securities Dealers, Inc.

Under the terms of a license agreement with Nasdaq, the Sponsor has been
granted a license to use the Index as a basis for determining the composition of
the Trust and to use certain service marks and trademarks of Nasdaq in
connection with the Trust (see "License Agreement"). Under the terms of the
license agreement, the Sponsor pays to Nasdaq an annual licensing fee for use of
the Index. The Sponsor ordinarily will seek reimbursement from the Trust for the
amount of licensing fees (see "Expenses of the Trust").

The Index is determined, composed, and calculated by Nasdaq without regard
to the Sponsor, the Trust, or the Beneficial Owners of Nasdaq-100 Shares. Nasdaq
has complete control and sole discretion in determining, composing, or
calculating the Index or in modifying in any way its method for determining,
composing, or calculating the Index in the future.

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<PAGE>
THE TRUST

The Trust is a unit investment trust created under the laws of the State of
New York pursuant to the Trust Agreement.* The Securities held by the Trust
consist of a portfolio of equity securities or, in the case of securities not
yet delivered in connection with purchases made by the Trust or Portfolio
Deposits, confirmations of contracts to purchase such securities (collectively,
the "Portfolio").

CREATION OF CREATION UNITS

Portfolio Deposits may be deposited with the Trustee via instructions
submitted through the clearing processes of NSCC, following placement with the
Distributor of orders to create Nasdaq-100 Shares. The Distributor shall reject
any order that is not submitted in proper form. Investors may deposit Portfolio
Deposits through the Nasdaq-100 Clearing Process or directly with the Trustee
outside the Nasdaq-100 Clearing Process. The Transaction Fee will be charged at
the time of creation of a Creation Unit size aggregation of Nasdaq-100 Shares.
An additional amount not to exceed three (3) times the Transaction Fee
applicable for a Creation Unit will be charged to a creator creating outside the
Nasdaq-100 Clearing Process (I.E., depositing Portfolio Deposits directly with
the Trustee through DTC), in part due to the increased expense associated with
settlement outside the Nasdaq-100 Clearing Process. See "Prospectus
Summary--Transaction Fee" for a detailed description of the amount of the
Transaction Fee and the additional amounts and reductions, limitations, and
waivers applicable thereto, if any. The shares of the Index Securities in a
Portfolio Deposit on December 31, 1999 had an aggregate market value of
$9,262,054.61.

The Trustee and the Sponsor, from time to time and for such periods as they
may determine, together may increase** or reduce the amount and/or waive the
imposition altogether of the Transaction Fee (and/or the additional amounts
charged in connection with creations and/or redemptions outside the Nasdaq-100
Clearing Process) for certain numbers of Creation Units of Nasdaq-100 Shares
created or redeemed, whether applied solely to creations

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

* Reference is hereby made to the Trust Agreement (a copy of which is
available to prospective purchasers of Nasdaq-100 Shares at the corporate
trust office of the Trustee at 101 Barclay Street, New York, New York 10286
during normal business hours), and any statements contained herein are
qualified in their entirety by the provisions of the Trust Agreement.

** Such increase is subject to the 10 Basis Point Limit discussed above under
"Prospectus Summary--Transaction Fee."

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<PAGE>
and/or redemptions made through the Nasdaq-100 Clearing Process (see "Procedures
for Creation of Creation Units"), solely to creations and/or redemptions made
outside the Nasdaq-100 Clearing Process, or to both methods of creation and/or
redemption. The Sponsor also reserves the right, from time to time, to vary the
number of Nasdaq-100 Shares per Creation Unit (currently 50,000 shares) and such
change may or may not be made in conjunction with a change to the Transaction
Fee. The occurrence of any increase, reduction, or waiver of the Transaction Fee
(as well as any additional amounts, if applicable) and the number of Creation
Units created or redeemed to which such increase, reduction, or waiver applies
shall be disclosed in the current Nasdaq-100 Share Prospectus (see "Prospectus
Summary--Transaction Fee"). As of the date hereof, the Sponsor and the Trustee
do not contemplate the increase, reduction, variation by lot-size, or waiver of
Transaction Fees in connection with the creation or redemption of Nasdaq-100
Shares or of the additional amounts charged in connection with the creation or
redemption of Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process beyond
that which is discussed herein under the caption "Prospectus
Summary--Transaction Fee."

The shares of equity securities comprising the securities portion of a
Portfolio Deposit on any date of deposit will reflect the composition and
weighting of the component securities of the Index on such day. The portfolio of
Index Securities that is the basis for a Portfolio Deposit varies as changes are
made in the composition and weighting of the Index Securities (see "The
Portfolio--Adjustments to the Portfolio Deposit"). The Trustee will make
available to NSCC prior to the commencement of trading on each Business Day a
list of the names and required number of shares of each of the Index Securities
in the current Portfolio Deposit as well as the amount of the Income Net of
Expense Amount for the previous Business Day. Under certain extraordinary
circumstances which may make it impossible for the Trustee to provide such
information to NSCC on a given Business Day, NSCC shall use the information
regarding the identity and share amounts of the Index Securities of the
Portfolio Deposit on the previous Business Day.

The Sponsor makes available on each Business Day a list of the names and the
required number of shares for each of the securities in the current Portfolio
Deposit as well as the Income Net of Expense Amount effective through and
including the previous Business Day per outstanding Nasdaq-100 Share. The
Sponsor may choose within its discretion to make available, frequently
throughout each Business Day, a number representing, on a per Nasdaq-100 Share
basis, the sum of the Income Net of Expense Amount effective through and
including the previous Business Day plus the current value of the securities
portion of a Portfolio Deposit as in effect on such day (which value will
occasionally include a cash-in-lieu amount to compensate for the

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<PAGE>
omission of a particular Index Security from such Portfolio Deposit, see "The
Portfolio--Adjustments to the Portfolio Deposit"). If the Sponsor elects to make
such information available, it would be calculated based upon the best
information available to the Sponsor and may be calculated by other persons
designated to do so by the Sponsor. If the Sponsor elects to make such
information available, the inability of the Sponsor or its designee to provide
such information for any period of time will not in itself result in a halt in
the trading of Nasdaq-100 Shares on the Amex. If such information is made
available, investors interested in creating Nasdaq-100 Shares or purchasing
Nasdaq-100 Shares in the secondary market should not rely solely on such
information in making investment decisions but should also consider other market
information and relevant economic and other factors (including, without
limitation, information regarding the Index, the Index Securities, and financial
instruments based on the Index).

Upon receipt of a Portfolio Deposit or Deposits following placement with the
Distributor of an order to create Nasdaq-100 Shares, the Trustee will register
the ownership of the Nasdaq-100 Shares in Creation Unit size aggregations in the
name of the Depository or its nominee. In turn, the Nasdaq-100 Share position
will be removed from the Trustee's account at the Depository and will be
allocated to the account of the DTC Participant acting on behalf of the
depositor creating Creation Unit(s) (see "Procedures for Creation of Creation
Units" and "Book-Entry-Only System"). Each Nasdaq-100 Share represents a
fractional undivided interest in the Trust in an amount equal to one
(1) divided by the total number of Nasdaq-100 Shares outstanding. The Trustee
may reject a request to create Creation Units made by any depositor or group of
depositors if such depositor(s), upon the acceptance by the Trustee of such
request and the issuance to such depositor(s) of Nasdaq-100 Shares, would own
eighty percent (80%) or more of the outstanding Nasdaq-100 Shares (see "Tax
Status of the Trust"). The Trustee also may reject any Portfolio Deposit or any
component thereof under certain other circumstances (see "Procedures for
Creation of Creation Units").

Additional Nasdaq-100 Shares in Creation Unit size aggregations will be
created upon receipt of the appropriate Portfolio Deposits from creators. As
additional Nasdaq-100 Shares in Creation Unit size aggregations are created, the
aggregate value of the Portfolio will be increased and the fractional undivided
interest in the Trust represented by each Nasdaq-100 Share will be decreased. As
discussed above, under certain circumstances (1) a portion of the securities
portion of a Portfolio Deposit may consist of contracts to purchase certain
Index Securities that are expected to be delivered in a "regular way" manner
through NSCC or (2) a portion of the Cash Component may consist of cash in an
amount sufficient to enable the Trustee to purchase such

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<PAGE>
Index Securities (E.G., in the event that the Trustee determines that one or
more Index Securities are likely to be unavailable or available in insufficient
quantity, or if an entity placing an order to create Nasdaq-100 Shares is
restricted by regulation or otherwise from engaging in a transaction in an Index
Security, see "The Portfolio--Adjustments to the Portfolio Deposit"). In the
event there is a failure to deliver the Index Securities which are the subject
of such contracts to purchase or the Cash Component includes cash in lieu of the
delivery of one or more Index Securities, the Trustee will be instructed
pursuant to the Trust Agreement to acquire such Index Securities in an
expeditious manner. To the extent the price of any such Index Security increases
or decreases between the time of creation and the time any such Index Security
is purchased and delivered, Nasdaq-100 Shares will represent fewer or more
shares of such Index Security and more or fewer of the other Index Securities in
the Trust. Hence, price fluctuations during the period from the time the cash is
received by the Trustee to the time the requisite Index Securities are purchased
and delivered will affect the value of all Nasdaq-100 Shares.

The identity and appropriate number of shares of the Index Securities
required for a Portfolio Deposit are determined in the manner described herein.
Due to changes in the composition and weighting of the Index Securities, the
composition and weighting of the Securities and the prescribed Portfolio Deposit
will also change from time to time (see "The Portfolio--Adjustments to the
Portfolio" and "The Portfolio--Adjustments to the Portfolio Deposit"). The
composition and weighting of the Index Securities to be delivered as part of a
Portfolio Deposit are determined daily and reflect the composition of the Index
and, together with the Cash Component, have a value equal to the net asset value
of the Trust on a per Creation Unit basis at the close of business on the day of
request for creation. The composition of the Portfolio is also adjusted from
time to time to conform to changes to the Index as described herein and as set
forth in the Trust Agreement. As the composition and weighting of the Index
Securities change, substantially identical changes to the composition and
weighting of the securities portion of the required Portfolio Deposit are made
contemporaneously. Corresponding adjustments to the composition and weighting of
the Portfolio, however, are not necessarily made contemporaneously with
adjustments to the required Portfolio Deposit, but in all cases will be made in
accordance with the specifications set forth in the Trust Agreement and
described herein (see "The Portfolio--Adjustments to the Portfolio"). Although
the composition and weighting of the securities portion of a Portfolio Deposit
change from time to time, the interests of Beneficial Owners will not be
adversely affected because the composition of such securities and the aggregate
value thereof together with the Cash Component (which may itself have a positive
or negative value, as the

B-39
<PAGE>
case may be), will be calculated based upon the proportionate net asset value of
the Trust (see "The Portfolio--Adjustments to the Portfolio").

PROCEDURES FOR CREATION OF CREATION UNITS

To be eligible to place orders with the Distributor to create Nasdaq-100
Shares in Creation Unit size aggregations, an entity or person must be (1) a
Participating Party, with respect to creations through the Nasdaq-100 Clearing
Process or (2) a DTC Participant with respect to creations/redemptions outside
the Nasdaq-100 Clearing Process, and in either case must have executed a
Nasdaq-100 Participant Agreement with the Distributor and the Trustee. All
Nasdaq-100 Shares, however created, will be entered on the records of the
Depository in the name of Cede & Co. for the account of a DTC Participant (see
"The Trust--Book-Entry-Only System").

All orders to create Nasdaq-100 Shares must be placed in multiples of 50,000
Nasdaq-100 Shares (Creation Unit size). All orders to create Nasdaq-100 Shares,
whether through the Nasdaq-100 Clearing Process or outside the Nasdaq-100
Clearing Process, must be received by the Distributor by no later than the
closing time of the regular trading session on the Nasdaq Stock Market ("Closing
Time") (ordinarily 4:00 p.m. New York time) in each case on the date such order
is placed in order for creation of Nasdaq-100 Shares to be effected based on the
net asset value of the Trust as determined on such date. The date on which a
creation order (or order to redeem as discussed below) is placed is herein
referred to as the "Transmittal Date." Orders must be transmitted by telephone
or other transmission method acceptable to the Distributor and Trustee, pursuant
to procedures set forth in the Nasdaq-100 Participant Agreement, as described
below (see "Placement of Creation Orders Using the Nasdaq-100 Clearing Process"
and "Placement of Creation Orders Outside the Nasdaq-100 Clearing Process").
Severe economic or market changes or disruptions, or telephone or other
communication failure, may impede the ability to reach the Trustee, the
Distributor, a Participating Party, or a DTC Participant.

Orders to create Creation Unit size aggregations of Nasdaq-100 Shares shall
be placed with a Participating Party or DTC Participant, as applicable, in the
form required by such Participating Party or DTC Participant. Investors should
be aware that their particular broker may not have executed a Nasdaq-100
Participant Agreement, and that, therefore, orders to create Creation Unit size
aggregations of Nasdaq-100 Shares may have to be placed by the investor's broker
through a Participating Party or a DTC Participant who has executed a Nasdaq-100
Participant Agreement. At any given time there may be

B-40
<PAGE>
only a limited number of broker-dealers that have executed a Nasdaq-100
Participant Agreement. Those placing orders to create Nasdaq-100 Shares through
the Nasdaq-100 Clearing Process should afford sufficient time to permit proper
submission of the order to the Distributor prior to the Closing Time on the
Transmittal Date.

Orders for creation that are effected outside the Nasdaq-100 Clearing
Process are likely to require transmittal by the DTC Participant earlier on the
Transmittal Date than orders effected using the Nasdaq-100 Clearing Process.
Those persons placing orders outside the Nasdaq-100 Clearing Process should
ascertain the deadlines applicable to DTC and the Federal Reserve Bank wire
system by contacting the operations department of the broker or depository
institution effectuating such transfer of securities and the Cash Component (if
required). The DTC Participant notified of an order to create Nasdaq-100 Shares
outside the Nasdaq-100 Clearing Process shall be required to effect a transfer
of (1) the requisite Index Securities through DTC by 11:00 a.m. on the next
Business Day immediately following the Transmittal Date in such a way as to
replicate the Portfolio Deposit established on the Transmittal Date by the
Trustee in calculating the net asset value of the Trust and (2) the Cash
Component (if required) through the Federal Reserve Bank wire system so as to be
received by the Trustee by 1:00 p.m. on the next Business Day immediately
following the Transmittal Date. If the Trustee does not receive both the Index
Securities by 11:00 a.m. and the Cash Component (if required) by 1:00 p.m. on
the Business Day immediately following the Transmittal Date, such order shall be
canceled. Upon written notice to the Distributor, such canceled order may be
resubmitted the following Business Day using a Portfolio Deposit as newly
constituted to reflect the current net asset value of the Trust. If the Cash
Component has a negative value, requiring payment of such amount by the Trustee
on behalf of the Trust to the creator of Nasdaq-100 Shares outside the
Nasdaq-100 Clearing Process (I.E., if the sum of dividends on all Securities
with ex-dividend dates within the Accumulation Period, plus or minus the
Balancing Amount, is less than the accrued expenses and liabilities of the Trust
for such period) then payment of such amount by the Trustee to the creator of
Nasdaq-100 Shares via the Depository and the DTC Participants is required to be
made no later than 1:00 p.m. on the third (3rd) Business Day immediately
following the Transmittal Date.

All questions as to the number of shares of each of the Index Securities,
the amount and identity of the payor of the Cash Component (I.E., the Trustee on
behalf of the Trust or the Nasdaq-100 Share creator), and the validity, form,
eligibility (including time of receipt), and acceptance for deposit of any Index
Securities to be delivered shall be determined by the Trustee, whose
determination shall be final and binding. The Trustee reserves the absolute

B-41
<PAGE>
right to reject a creation order transmitted to it by the Distributor in respect
of any Portfolio Deposit or any component thereof if (a) the depositor or group
of depositors, upon obtaining the Nasdaq-100 Shares ordered, would own 80% or
more of the current outstanding Nasdaq-100 Shares (see "Tax Status of the
Trust"); (b) the Portfolio Deposit is not in proper form; (c) acceptance of the
Portfolio Deposit would have certain adverse tax consequences (see "Tax Status
of the Trust"); (d) the acceptance of the Portfolio Deposit would, in the
opinion of counsel, be unlawful; (e) the acceptance of the Portfolio Deposit
would otherwise, in the discretion of the Trustee, have an adverse effect on the
Trust or the rights of Beneficial Owners; or (f) in the event that circumstances
outside the control of the Trustee make it for all practical purposes impossible
to process creations of Nasdaq-100 Shares. The Trustee will provide notice of
its reasons for rejection of a creation order in respect of a Portfolio Deposit
or any component thereof. The Trustee and the Sponsor shall not incur any
liability in connection with any notification of defects or irregularities in
the delivery of Portfolio Deposits or any component thereof or in connection
with the rejection of a creation order.

A list of the Participating Parties or DTC Participants that have executed a
Nasdaq-100 Participant Agreement (as hereinafter defined) is available at the
office of the Trustee at 101 Barclay Street, New York, New York 10286 and the
office of the Distributor at 370 17th Street, Suite 3100, Denver, CO 80202
during normal business hours.

PLACEMENT OF CREATION ORDERS USING THE NASDAQ-100 CLEARING PROCESS

Portfolio Deposits created through the Nasdaq-100 Clearing Process must be
delivered through a Participating Party (see "Prospectus Summary--Portfolio
Deposits") that has executed a participant agreement with the Distributor and
with the Trustee (as the same may be from time to time amended in accordance
with its terms, the "Nasdaq-100 Participant Agreement"). The Nasdaq-100
Participant Agreement authorizes the Trustee to transmit to NSCC on behalf of
the Participating Party such trade instructions as are necessary to effect the
Participating Party's creation order. Pursuant to such trade instructions from
the Trustee to NSCC, the Participating Party agrees to transfer the requisite
Index Securities (or contracts to purchase such Index Securities that are
expected to be delivered in a "regular way" manner through NSCC by the third
(3rd) NSCC Business Day) and the Cash Component (if required) to the Trustee,
together with such additional information as may be required by the Trustee. An
order to create Nasdaq-100 Shares through the Nasdaq-100 Clearing Process is
deemed received by the Distributor on the Transmittal Date if (i) such order is
received by the Distributor not later than the Closing Time on

B-42
<PAGE>
such Transmittal Date and (ii) all other procedures set forth in the Nasdaq-100
Participant Agreement are properly followed.

Nasdaq-100 Shares may also be created in advance of the receipt by the
Trustee of all or a portion of the securities portion of the Portfolio Deposit
relating to such Nasdaq-100 Shares, but only through the Nasdaq-100 Clearing
Process. In such cases, the Participating Party intending to utilize this
procedure will be required to post collateral with the Trustee outside of NSCC
consisting of cash at least equal to 115% of the closing value, on the day the
order is deemed received, of the portion of the Portfolio Deposit not expected
to be available in the account of the Participating Party for delivery to the
Trust on the third NSCC Business Day following placement of such order, as such
amount is marked-to-the market daily by the Trustee only for increases in such
value. This cash collateral will be required to be posted with the Trustee by
11:00 a.m. on the morning of the NSCC Business Day following the day such order
is deemed received by the Distributor, or else the order to create Nasdaq-100
Shares will be canceled. The Trustee will hold such collateral in an account
separate and apart from the Trust. Under NSCC rules, by midnight of the day
following the receipt by NSCC of such order, NSCC will guarantee to the Trustee
the delivery of the securities portion of the Portfolio Deposit on the third
NSCC Business Day following receipt of such order or on a later date. Provided
that the NSCC guarantee is established, the Trustee will issue the Nasdaq-100
Shares (in Creation Unit size aggregations) so ordered on such third NSCC
Business Day, relying on the NSCC guarantee to make good on the delivery of the
Portfolio Deposit. In the event that the required securities are not delivered
on such third NSCC Business Day, the Trustee will take steps to "buy-in" the
missing portion of the Portfolio Deposit in accordance with NSCC rules. The 115%
cash collateral received from the creator will be returned net of commissions
and other buy-in expenses incurred by the Trustee, if any, promptly upon
settlement of delivery of all of the securities portion of the Portfolio
Deposit, or buy-in of all missing securities, or cancellation of the order to
create Nasdaq-100 Shares. Information concerning the procedures for such cash
collateralization is available from the Distributor.

The requirement to post collateral will not apply in instances where the
Trustee, in its discretion, has included in the Cash Component of a Portfolio
Deposit the cash equivalent value of one or more Index Securities either because
the Trustee determines that one or more Index Securities are likely to be
unavailable or available in insufficient quantity, or if the entity placing an
order to create Nasdaq-100 Shares is restricted by regulation or otherwise from
engaging in a transaction in an Index Security (see "The Portfolio--Adjustments
to the Portfolio Deposit").

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<PAGE>
PLACEMENT OF CREATION ORDERS OUTSIDE THE NASDAQ-100 CLEARING PROCESS

Portfolio Deposits created outside the Nasdaq-100 Clearing Process must be
delivered through a DTC Participant that has executed a Nasdaq-100 Participant
Agreement with the Distributor and with the Trustee. A DTC Participant who
wishes to place an order creating Nasdaq-100 Shares to be effected outside the
Nasdaq-100 Clearing Process need not be a Participating Party, but such orders
must state that the DTC Participant is not using the Nasdaq-100 Clearing Process
and that the creation of Nasdaq-100 Shares will instead be effected through a
transfer of securities and cash. The Portfolio Deposit transfer must be ordered
by the DTC Participant in a timely fashion so as to ensure the delivery of the
requisite number of Index Securities through DTC to the account of the Trustee
by no later than 11:00 a.m. on the next Business Day immediately following the
Transmittal Date. All questions as to the number of Index Securities to be
delivered, and the validity, form, and eligibility (including time of receipt)
for the deposit of any tendered securities will be determined by the Trustee,
whose determination shall be final and binding. On days when the Cash Component
is an amount payable to the Trustee (I.E., when the Cash Component has a
positive value), the cash equal to the Cash Component must be transferred
directly to the Trustee through the Federal Reserve Bank wire system in a timely
manner so as to be received by the Trustee no later than 1:00 p.m. on the next
Business Day immediately following the Transmittal Date. An order to create
Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process is deemed received by
the Distributor on the Transmittal Date if (i) such order is received by the
Distributor not later than the Closing Time on such Transmittal Date and
(ii) all other procedures set forth in the Nasdaq-100 Participant Agreement are
properly followed. However, if the Trustee does not receive both the requisite
Index Securities and the Cash Component (if required) in a timely fashion on the
next Business Day immediately following the Transmittal Date, such order will be
canceled. Upon written notice to the Distributor, such canceled order may be
resubmitted the following Business Day using a Portfolio Deposit as newly
constituted to reflect the current net asset value of the Trust. The delivery of
Nasdaq-100 Shares so created will occur no later than the third (3rd) Business
Day following the day on which the creation order is deemed received by the
Distributor. The payment of the Cash Component (at times when such amount is to
be paid to the creator of Nasdaq-100 Shares from the Trustee) is required to be
made through the Federal Reserve Bank wire system no later than the third (3rd)
Business Day immediately following the Transmittal Date. Under the current
schedule, the total fee charged in connection with the creation of one Creation
Unit outside the Nasdaq-100 Clearing Process would be an amount not to exceed
$4,000 (see "Prospectus Summary--Transaction Fee").

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<PAGE>
BOOK-ENTRY-ONLY SYSTEM

The Depository acts as securities depository for Nasdaq-100 Shares. Cede &
Co., as nominee for the Depository, is registered as the record owner of all
Nasdaq-100 Shares on the books of the Trustee. Certificates will not be issued
for Nasdaq-100 Shares.

The Depository has advised the Sponsor and the Trustee 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 the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository was created to hold
securities of its participants (the "DTC Participants") and to facilitate the
clearance and settlement of securities transactions among the DTC Participants
in such securities through electronic book-entry changes in accounts of the DTC
Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own DTCC, the parent company of the
Depository and NSCC.* Access to the Depository system is also available to
others such as banks, brokers, dealers, and trust companies that maintain a
custodial relationship with a DTC Participant, either directly or indirectly
(the "Indirect Participants"). The Depository agrees with and represents to its
participants that it will administer its book-entry system in accordance with
its rules and by-laws and requirements of law.

Upon the settlement date of any creation, transfer, or redemption of
Nasdaq-100 Shares, the Depository will credit or debit, on its book-entry
registration and transfer system, the number of Nasdaq-100 Shares so created,
transferred, or redeemed to the accounts of the appropriate DTC Participants.
The accounts to be credited and charged shall be designated by the Trustee to
NSCC, in the case of a creation or redemption through the Nasdaq-100 Clearing
Process, or by the Trustee and the DTC Participant, in the case of a creation or
redemption transacted outside of the Nasdaq-100 Clearing Process

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

* As of February 18, 2000, the NASD beneficially owned (including shares owned
directly by the Amex) approximately 9.0% of the issued and outstanding
shares of common stock of DTCC, and the NASD owned 10,000 shares of
preferred stock of DTCC, which entitles the NASD to elect one director of
DTCC. Also as of such date, the Trustee and its affiliates together owned
approximately 5.5% of the issued and outstanding shares of the common stock
of DTCC.

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<PAGE>
(see "The Trust--Procedures for Creation of Creation Units" and "Redemption of
Nasdaq-100 Shares"). Beneficial ownership of Nasdaq-100 Shares is limited to DTC
Participants, Indirect Participants, and persons holding interests through DTC
Participants and Indirect Participants. Ownership of beneficial interests in
Nasdaq-100 Shares (owners of such beneficial interests are referred to herein as
"Beneficial Owners") will be shown on, and the transfer of ownership will be
effected only through, records maintained by the Depository (with respect to DTC
Participants) and on the records of DTC Participants (with respect to Indirect
Participants and Beneficial Owners that are not DTC Participants). Beneficial
Owners are expected to receive from or through the DTC Participant a written
confirmation relating to their purchase of Nasdaq-100 Shares. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
of certain investors to acquire beneficial interests in Nasdaq-100 Shares.

So long as Cede & Co., as nominee of the Depository, is the registered owner
of Nasdaq-100 Shares, references herein to the registered or record owners of
Nasdaq-100 Shares shall mean Cede & Co. and shall not mean the Beneficial Owners
of Nasdaq-100 Shares. Beneficial Owners of Nasdaq-100 Shares will not be
entitled to have Nasdaq-100 Shares registered in their names, will not receive
or be entitled to receive physical delivery of certificates in definitive form,
and will not be considered the record or registered holder thereof under the
Trust Agreement. Accordingly, each Beneficial Owner must rely on the procedures
of the Depository, the DTC Participant, and any Indirect Participant through
which such Beneficial Owner holds its interests, to exercise any rights of a
holder of Nasdaq-100 Shares under the Trust Agreement. The Trustee and the
Sponsor understand that under existing industry practice, in the event the
Trustee requests any action of Nasdaq-100 Share holders, or a Beneficial Owner
desires to take any action that the Depository, as the record owner of all
outstanding Nasdaq-100 Shares, is entitled to take, the Depository would
authorize the DTC Participants to take such action and that the DTC Participants
would authorize the Indirect Participants and Beneficial Owners acting through
such DTC Participants to take such action or would otherwise act upon the
instructions of Beneficial Owners owning through them.

As described above, the Trustee recognizes the Depository or its nominee as
the owner of all Nasdaq-100 Shares for all purposes except as expressly set
forth in the Trust Agreement. Conveyance of all notices, statements, and other
communications to Beneficial Owners is effected as follows. Pursuant to the
agreement between the Trustee and the Depository (as the same may be from

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<PAGE>
time to time amended in accordance with its terms, the "Depository Agreement"),
the Depository is required to make available to the Trustee upon request and for
a fee to be charged to the Trust a listing of the Nasdaq-100 Share holdings of
each DTC Participant. The Trustee shall inquire of each such DTC Participant as
to the number of Beneficial Owners holding Nasdaq-100 Shares, directly or
indirectly, through such DTC Participant. The Trustee shall provide each such
DTC Participant with copies of such notice, statement, or other communication,
in such form, number, and at such place as such DTC Participant may reasonably
request, in order that such notice, statement, or communication may be
transmitted by such DTC Participant, directly or indirectly, to such Beneficial
Owners. In addition, the Trustee on behalf of the Trust shall pay to each such
DTC Participant a fair and reasonable amount as reimbursement for the expenses
attendant to such transmittal, all subject to applicable statutory and
regulatory requirements.

Nasdaq-100 Share distributions shall be made to the Depository or its
nominee, Cede & Co., as the registered owner of all Nasdaq-100 Shares. The
Trustee and the Sponsor expect that the Depository or its nominee, upon receipt
of any payment of distributions in respect of Nasdaq-100 Shares, shall credit
immediately DTC Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in Nasdaq-100 Shares as shown on the
records of the Depository or its nominee. The Trustee and the Sponsor also
expect that payments by DTC Participants to Indirect Participants and Beneficial
Owners of Nasdaq-100 Shares held through such DTC Participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in a
"street name," and will be the responsibility of such DTC Participants. Neither
the Trustee nor the Sponsor has or will have any responsibility or liability for
any aspect of the records relating to or notices to Beneficial Owners, or
payments made on account of beneficial ownership interests in Nasdaq-100 Shares,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests or for any other aspect of the relationship
between the Depository and the DTC Participants or the relationship between such
DTC Participants and the Indirect Participants and Beneficial Owners owning
through such DTC Participants.

The Depository may determine to discontinue providing its service with
respect to Nasdaq-100 Shares at any time by giving notice to the Trustee and the
Sponsor and discharging its responsibilities with respect thereto under
applicable law. Under such circumstances, the Trustee and the Sponsor shall take
action either to find a replacement for the Depository to perform its functions
at a comparable cost or, if such a replacement is unavailable, to terminate the
Trust (see "Administration of the Trust--Termination").

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<PAGE>
THE PORTFOLIO

Because the objective of the Trust is to provide investment results that
correspond substantially to the price and yield performance of the Index, the
Portfolio will at any time consist of as many of the Index Securities as is
practicable and under most circumstances, all of the Index Securities. It is
anticipated that cash or cash items normally would not be a substantial part of
the Trust's net assets. Although the Trust may at any time fail to own certain
of the Index Securities, the Trust will be substantially invested in Index
Securities and the Sponsor believes that such investment should result in a
close correspondence between the investment performance of the Index and that
derived from ownership of Nasdaq-100 Shares.

ADJUSTMENTS TO THE PORTFOLIO

The Index is a modified capitalization-weighted index of 100 of the largest
non-financial companies listed on the Nasdaq National Market tier of the Nasdaq
Stock Market (see "The Index"). At any moment in time, the value of the Index
equals the aggregate value of the then-current Index share weights of each of
the component 100 Index Securities multiplied by each such security's respective
last sale price on the Nasdaq Stock Market, and divided by a scaling factor (the
"divisor") which becomes the basis for the reported Index value. The divisor
serves the purpose of scaling such aggregate value (otherwise in the trillions)
to a lower order of magnitude which is more desirable for Index reporting
purposes.*

Periodically (typically, several times per quarter), Nasdaq may determine
that total shares outstanding have changed in one or more Index Securities due
to secondary offerings, repurchases, conversions, or other corporate actions.
Under such circumstances, in accordance with Nasdaq policies and procedures for
making adjustments to the Index, the Index share weights would be adjusted by
the same percentage amounts by which the total shares outstanding have changed
in such Index Securities. Additionally, Nasdaq may periodically (ordinarily,
several times per quarter) replace one or more component securities in the Index
due to mergers, acquisitions, bankruptcies, or other market conditions, or due
to delistings if an issuer chooses to list its securities on another
marketplace, or if the issuers of such component securities fail to meet the
criteria for continued inclusion in the Index (see "The Index"). For

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

* For example, on December 31, 1999 the aggregate value of the then-current
Index share weights of each of the Index Securities multiplied by their
respective last sale price on the Nasdaq Stock Market was $3,614,195,622,
the divisor was 121,843,468, and the reported Index value was 3,707.83.

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<PAGE>
example, for the 1998 and 1999 calendar years, there were 6 and 15 company
changes, respectively, made during those years due to corporate actions (E.G.,
mergers, acquisitions, bankruptcies) and 9 and 15 other company changes,
respectively, made at year-end in connection with Nasdaq's annual evaluation
process for determining the securities comprising the Index for the upcoming
year (see "The Index--Index Security Eligibility Criteria and Annual Ranking
Review"). The ratio of the market capitalization of the securities replaced in
the Index in 1998 and 1999 to the total market capitalization of the securities
comprising the Index at year-end was 3.1% and 5.3% (7.2% giving effect to the
rebalancing of the Index on December 18, 1998 to cause it to be a modified
capitalization-weighted index), respectively.

The Index share weights, which are based upon the total shares outstanding
in each of the 100 Index Securities, are additionally subject, in certain cases,
to a rebalancing (see "The Index--Rebalancing of the Index"). Ordinarily,
whenever there is a change in Index share weights or a change in a component
security included in the Index, Nasdaq adjusts the divisor to assure that there
is no discontinuity in the value of the Index which might otherwise be caused by
any such change.

Because the investment objective of the Trust is to provide investment
results that generally correspond to the price and yield performance of the
Index, composition and weighting changes, and associated divisor changes to the
Index, create the need for the Trustee to make corresponding adjustments to the
Securities held in the Trust as described below.

The Trustee adjusts the composition of the Portfolio from time to time to
conform to changes in the composition and/or weighting of the Index Securities.
The Trustee aggregates certain of these adjustments and makes conforming changes
to the Trust's Portfolio at least monthly; however, adjustments are made more
frequently in the case of changes to the Index that are significant.
Specifically, the Trustee is required to adjust the composition of the Portfolio
at any time that there is a change in the identity of any Index Security (I.E.,
a substitution of one security in replacement of another), which adjustment is
to be made within three (3) Business Days before or after the day on which the
change in the identity of such Index Security is scheduled to take effect at the
close of the market. Although the investment objective of the Trust is to
provide investment results which resemble the performance of the Index, it is
not always efficient to replicate identically the share composition of the Index
if the transaction costs incurred by the Trust in so adjusting the Portfolio
would exceed the expected misweighting that would ensue by failing to replicate
identically minor and insignificant share changes to the Index. Accordingly, to
further the investment objective of the Trust, minor misweightings are generally
permitted within the guidelines set forth below. The Trustee

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<PAGE>
is required to adjust the composition of the Portfolio at any time that the
weighting of any Security varies in excess of one hundred and fifty percent
(150%) of a specified percentage (a "Misweighting Amount"), from the weighting
of such Security in the Index (a "Misweighting"). The Misweighting Amounts vary
depending on the net asset value of the Trust and are set forth in the table
below:

<TABLE>
<CAPTION>
NET ASSET VALUE MISWEIGHTING
OF THE TRUST AMOUNT
- --------------- ------------
<S> <C>
Less than $25,000,000..................... 0.25%
$25,000,000--$99,999,999.................. 0.20%
$100,000,000--$499,999,999................ 0.10%
$500,000,000--$999,999,999................ 0.05%
$1,000,000,000 and over................... 0.02%
</TABLE>

The Trustee shall examine each Security in the Portfolio on each Business
Day, comparing the weighting of each such Security in the Portfolio to the
weighting of the corresponding Index Security in the Index, based on prices at
the close of the market on the preceding Business Day (a "Weighting Analysis").
In the event that there is a Misweighting in any Security in excess of one
hundred and fifty percent (150%) of the applicable Misweighting Amount, the
Trustee shall calculate an adjustment to the Portfolio in order to bring the
Misweighting of such Security within the Misweighting Amount, based on prices at
the close of the market on the day on which such Misweighting occurs. Also, on a
monthly basis, the Trustee shall perform a Weighting Analysis for each Security
in the Portfolio, and in any case in which there exists a Misweighting exceeding
one hundred percent (100%) of the applicable Misweighting Amount, the Trustee
shall calculate an adjustment to the Portfolio in order to bring the
Misweighting of such Security within the applicable Misweighting Amount, based
on prices at the close of the market on the day on which such Misweighting
occurs. In the case of any adjustment to the Portfolio due to a Misweighting as
described herein, the purchase or sale of securities necessitated by such
adjustment shall be made within three (3) Business Days of the day on which such
Misweighting is determined. In addition to the foregoing adjustments, the
Trustee reserves the right to make additional adjustments periodically to
Securities that may be misweighted by an amount within the applicable
Misweighting Amount in order to reduce the overall Misweighting of the
Portfolio.

The foregoing guidelines with respect to Misweightings shall also apply to
any Index Security that (1) is likely to be unavailable for delivery or
available in insufficient quantity for delivery or (2) cannot be delivered to
the Trustee due to restrictions prohibiting a creator from engaging in a
transaction involving such Index Security. Upon receipt of an order for a
Creation Unit that will

B-50
<PAGE>
involve such an Index Security, the Trustee shall determine whether the
substitution of cash for such Index Security will cause a Misweighting in the
Trust's Portfolio with respect to such Index Security. If a Misweighting
results, the Trustee shall purchase the required number of shares of such Index
Security on the opening of the market on the following Business Day. If a
Misweighting does not result and the Trustee would not hold cash in excess of
the permitted amounts described below, the Trustee may hold such cash or, if
such an excess would result, make the required adjustments to the Portfolio in
accordance with the procedures described herein.

Pursuant to these guidelines the Trustee shall calculate the required
adjustments and shall purchase and sell the appropriate securities. As a result
of the purchase and sale of securities in accordance with these requirements, or
the creation of Creation Units, the Trust may hold some amount of residual cash
(other than cash held temporarily due to timing differences between the sale and
purchase of securities or cash delivered in lieu of Index Securities or
undistributed income or undistributed capital gains) as a result of such
transactions, which amount shall not exceed for more than five (5) consecutive
Business Days 5/10th of 1 percent of the aggregate value of the Securities. In
the event that the Trustee has made all required adjustments and is left with
cash in excess of 5/10th of 1 percent of the aggregate value of the Securities,
the Trustee shall use such cash to purchase additional Index Securities that are
under-weighted in the Portfolio as compared to their relative weighting in the
Index, although the Misweighting of such Index Securities may not be in excess
of the applicable Misweighting Amount.

In addition to adjustments to the Portfolio from time to time to conform to
changes in the composition or weighting of the Index Securities, the Trustee is
also ordinarily required to sell Securities to obtain sufficient cash proceeds
for the payment of Trust fees and expenses at any time that projected annualized
fees and expenses accrued on a daily basis exceed projected annualized dividends
and other Trust income accrued on a daily basis by more than 1/100 of one
percent (0.01%) of the net asset value of the Trust (see "Expenses of the
Trust"). Whenever the 0.01% threshold is exceeded, the Trustee will sell
sufficient Securities to cover such excess no later than the next occasion it is
required to make adjustments to the Portfolio due to a Misweighting, unless the
Trustee determines, in its discretion, that such a sale is unnecessary because
the cash to be generated is not needed by the Trust at that time for the payment
of expenses then due or because the Trustee otherwise determines that such a
sale is not warranted or advisable. At the time of the sale, the Trustee shall
first sell Securities that are over-weighted in the Portfolio as compared to
their relative weighting in the Index.

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<PAGE>
All adjustments to the Portfolio held by the Trustee shall be made by the
Trustee pursuant to the foregoing specifications and as set forth in the Trust
Agreement and shall be non-discretionary. All portfolio adjustments will be made
as described herein unless such adjustments would cause the Trust to lose its
status as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. Additionally, the Trustee is required to adjust the composition of
the Portfolio at any time if it is necessary to ensure the continued
qualification of the Trust as a regulated investment company (see "Tax Status of
the Trust"). The adjustments provided herein are intended to conform the
composition and weighting of the Portfolio, to the extent practicable, to the
composition and weighting of the Index Securities. Such adjustments are based
upon the Index as it is currently determined by Nasdaq. To the extent that the
method of determining the Index is changed by Nasdaq in a manner that would
affect the adjustments provided for herein, the Trustee and the Sponsor shall
have the right to amend the Trust Agreement, without the consent of the
Depository or Beneficial Owners, to conform the adjustments provided herein and
in the Trust Agreement to such changes so that the objective of tracking the
Index is maintained.

In making the adjustments described herein, the Trustee shall rely on
information made publicly available by Nasdaq as to the composition and
weighting of the Index Securities. If the Trustee becomes incapable of obtaining
or processing such information or NSCC is unable to receive such information
from the Trustee on any Business Day, then the Trustee shall use the composition
and weighting of the Index Securities for the most recently effective Portfolio
Deposit for the purposes of all adjustments and determinations described herein
(including, without limitation, determination of the securities portion of the
Portfolio Deposit) until the earlier of (a) such time as current information
with respect to the Index Securities is available or (b) three (3) consecutive
Business Days have elapsed. If such current information is not available and
three (3) consecutive Business Days have elapsed, the composition and weighting
of the Securities (as opposed to the Index Securities) shall be used for the
purposes of all adjustments and determinations herein (including, without
limitation, determination of the securities portion of the Portfolio Deposit)
until current information with respect to the Index Securities is available.

At such time as the Trustee gives written notice of the termination of the
Trust (see "Administration of the Trust--Termination"), from and after the date
of such notice the Trustee shall use the composition and weighting of the
Securities held in the Trust as of such notice date (as opposed to the
composition and weighting of the Index Securities) for the purpose and
determination

B-52
<PAGE>
of all redemptions or other required uses of the securities portion of the
Portfolio Deposit.

From time to time Nasdaq may make adjustments to the composition of the
Index as a result of a merger or acquisition involving one or more of the Index
Securities. In such cases, the Trust, as shareholder of securities of an issuer
that is the object of such merger or acquisition activity, may receive various
offers from would-be acquirors of the issuer. The Trustee is not permitted to
accept any such offers until such time as it has been determined that the
securities of the issuer will be removed from the Index. In selling the
securities of such issuer after it has been determined that the security will be
removed from the Index, the Trust may receive, to the extent that market prices
do not provide a more attractive alternative, whatever consideration is being
offered to the shareholders of such issuer that have not tendered their shares
prior to such time. Any cash received in such transactions will be reinvested in
Index Securities in accordance with the criteria set forth above. Any securities
received as a part of the consideration that are not Index Securities will be
sold as soon as practicable and the cash proceeds of such sale will be
reinvested in accordance with the criteria set forth above.

Purchases and sales of Securities resulting from the adjustments described
above will be made in the share amounts dictated by the foregoing
specifications, whether round lot or odd lot. Certain Index Securities, however,
may at times not be available in the quantities that the foregoing calculations
require. For this and other reasons, precise duplication of the proportionate
relationship between the Portfolio and the Index Securities may not ever be
attained but nevertheless will continue to be the objective of the Trust in
connection with all acquisitions and dispositions of Securities.

The Trust is a unit investment trust registered under the 1940 Act and is
not a managed fund. Traditional methods of investment management for a managed
fund typically involve frequent changes to a portfolio of securities on the
basis of economic, financial, and market analyses. The Portfolio held by the
Trust, however, is not managed. Instead, the only purchases and sales that are
made with respect to the Portfolio will be those necessary to create, to the
extent feasible, a portfolio that is designed to replicate the Index to the
extent practicable, taking into consideration the adjustments referred to above.
Since no attempt is made to "manage" the Trust in the traditional sense, the
adverse financial condition of an issuer will not be the basis for the sale of
its securities from the Portfolio unless the issuer is removed from the Index.

The Trust will be liquidated on the fixed Mandatory Termination Date unless
terminated earlier under certain circumstances (see "Administration of the
Trust--Termination"). In addition, Beneficial Owners of Nasdaq-100 Shares

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<PAGE>
in Creation Unit size aggregations have the right to redeem in kind (see
"Redemption of Nasdaq-100 Shares").

ADJUSTMENTS TO THE PORTFOLIO DEPOSIT

On each Business Day (each such day, an "Adjustment Day"), the number of
shares and/or identity of each of the Index Securities in a Portfolio Deposit is
adjusted in accordance with the following procedure. Generally, as of the 4:00
p.m. market close on each Adjustment Day, the Trustee calculates the net asset
value of the Trust (see "Valuation"). The net asset value is divided by the
number of all outstanding Nasdaq-100 Shares multiplied by 50,000 shares in one
Creation Unit aggregation resulting in a net asset value per Creation Unit (the
"NAV Amount"). The Trustee then calculates the number of shares (without
rounding) of each of the component securities of the Index in a Portfolio
Deposit for the following Business Day ("Request Day"), such that (1) the market
value at the close of the market on Adjustment Day of the securities to be
included in the Portfolio Deposit on Request Day, together with the Income Net
of Expense Amount effective for requests to create or redeem on Adjustment Day,
equals the NAV Amount and (2) the identity and weighting of each of the
securities in a Portfolio Deposit mirrors proportionately the identity and
weighting of the securities in the Index, each as in effect on Request Day. For
each security, the number resulting from such calculation is rounded to the
nearest whole share, with a fraction of 0.50 being rounded up. The identities
and number of shares of the securities so calculated constitute the securities
portion of the Portfolio Deposit effective on Request Day and thereafter until
the next subsequent Adjustment Day, as well as the Securities ordinarily to be
delivered by the Trustee in the event of a request for redemption of Nasdaq-100
Shares in Creation Unit size aggregations on Request Day and thereafter until
the following Adjustment Day (see "Redemption of Nasdaq-100 Shares"). In
addition to the foregoing adjustments, in the event that there shall occur a
stock split, stock dividend, or reverse split with respect to any Index
Security, the Portfolio Deposit shall be adjusted to take account of such stock
split, stock dividend, or reverse split by applying the stock split, stock
dividend, or reverse stock split multiple (E.G., in the event of a two-for-one
stock split of an Index Security, by doubling the number of shares of such Index
Security in the prescribed Portfolio Deposit), in each case rounded to the
nearest whole share, with a fraction of 0.50 being rounded up.

On Request Day and on each day that a request for the creation or redemption
of Nasdaq-100 Shares in Creation Unit size aggregations is deemed received, the
Trustee calculates the market value of the securities portion of the Portfolio
Deposit as in effect on Request Day as of the close of the market and adds to
that amount the Income Net of Expense Amount effective for requests to create or
redeem on Request Day (such market value

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<PAGE>
and Income Net of Expense Amount are collectively referred to herein as the
"Portfolio Deposit Amount"). The Trustee then calculates the NAV Amount, based
on the close of the market on Request Day. The difference between the NAV Amount
so calculated and the Portfolio Deposit Amount is the "Balancing Amount." The
Balancing Amount serves the function of compensating for any differences between
the value of the Portfolio Deposit Amount and the NAV Amount at the close of
trading on Request Day due to, for example, (1) differences in the market value
of the securities in the Portfolio Deposit and the market value of the
Securities on Request Day and (2) any variances from the proper composition of
the Portfolio Deposit.

Notwithstanding the foregoing, on any Adjustment Day on which (a) no change
in the identity and/or share weighting of any Index Security is scheduled to
take effect that would cause the Index divisor to be adjusted after the close of
the market on such Business Day,* and (b) no stock split, stock dividend, or
reverse stock split with respect to any Index Security has been declared to take
effect on the corresponding Request Day, the Trustee reserves the right to
forego making any adjustment to the securities portion of the Portfolio Deposit
and to use the composition and weighting of the Index Securities for the most
recently effective Portfolio Deposit for the Request Day following such
Adjustment Day. In addition, the Trustee further reserves the right to calculate
the adjustment to the number of shares and/or identity of the Index Securities
in a Portfolio Deposit as described above except that such calculation would be
employed two (2) Business Days rather than one (1) Business Day prior to Request
Day.

As previously discussed, the sum of the Income Net of Expense Amount and the
Balancing Amount in effect at the close of business on Request Day are
collectively referred to as the Cash Component (with respect to creations of
Nasdaq-100 Shares) or the Cash Redemption Amount (with respect to redemptions of
Nasdaq-100 Shares) (see "Prospectus Summary--Portfolio Deposits" and "Prospectus
Summary--Redemption"). If the resulting Cash Component has a positive value,
then the creator of Nasdaq-100 Shares will be obligated to pay such cash to the
Trustee in connection with orders to create Nasdaq-100 Shares; if the resulting
Cash Component has a negative value, then such cash shall be paid by the Trustee
on behalf of the Trust to the creator of Nasdaq-100 Shares. Similarly, if the
resulting Cash Redemption Amount has a positive value, then such cash shall be
transferred to a redeemer by the Trustee on behalf of the Trust in connection
with orders to redeem Nasdaq-100 Shares; if the resulting Cash Redemption Amount
has a negative

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

* Nasdaq normally publicly announces changes in the identity and/or weighting
of the Index Securities in advance of the actual changes.

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<PAGE>
value, then such cash shall be paid by the redeemer of Nasdaq-100 Shares to the
Trustee on behalf of the Trust.

In the event that the Trustee has included the cash equivalent value of one
or more Index Securities in the Portfolio Deposit because the Trustee has
determined that such Index Securities are likely to be unavailable or available
in insufficient quantity for delivery, the Portfolio Deposit so constituted
shall dictate the Index Securities to be delivered in connection with the
creation of Nasdaq-100 Shares in Creation Unit size aggregations and upon the
redemption of Nasdaq-100 Shares in Creation Unit size aggregations for all
purposes hereunder until such time as the securities portion of the Portfolio
Deposit is subsequently adjusted. Brokerage commissions incurred by the Trustee
in connection with the acquisition of any such Index Securities will be at the
expense of the Trust and will affect the value of all Nasdaq-100 Shares.

In connection with the creation or redemption of Nasdaq-100 Shares, if an
investor is restricted by regulation or otherwise from investing or engaging in
a transaction in one or more Index Securities, the Trustee, in its discretion,
shall have the right to include the cash equivalent value of such Index
Securities in the Portfolio Deposit in the calculation of the Cash Component (or
the Cash Redemption Amount as the case may be) in lieu of the inclusion of such
Index Securities in the securities portion of the Portfolio Deposit for the
particular affected investor. The amount of such cash equivalent payment shall
be used by the Trustee in accordance with the guidelines regarding allowable
Misweightings and permitted amounts of cash (see "Adjustments to the Portfolio")
which may require the Trustee to purchase the appropriate number of shares of
the Index Security that such investor was unable to purchase. In any such case,
such investor shall pay the Trustee the standard Transaction Fee, plus an
additional amount not to exceed (3) times the Transaction Fee applicable for a
Creation Unit.

The Trustee, in its discretion, upon the request of the redeeming investor,
may redeem Creation Units in whole or in part by providing such redeemer with a
portfolio of Securities differing in exact composition from the Index Securities
but not differing in net asset value from the then-current Portfolio Deposit.
Such a redemption is likely to be made only if it were to be determined that
this composition would be appropriate in order to maintain the Portfolio of the
Trust in correlation to the modified capitalization-weighted composition of the
Index, for instance, in connection with a replacement of one of the Index
Securities (E.G., due to a merger, acquisition, or bankruptcy).

SELECTION AND ACQUISITION OF SECURITIES

In prescribing the method described above for selecting the Index Securities
that constitute the prescribed Portfolio Deposit from time to time, the

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<PAGE>
Sponsor intends to replicate, to the extent practicable, the composition and
weighting of the Index Securities as of the relevant date.

Because certain of the Securities from time to time may be sold or their
relative percentages changed under certain circumstances as described herein, no
assurance can be given that the Trust will retain for any length of time its
size and composition (see "Adjustments to the Portfolio"). Also, the deposit of
additional Portfolio Deposits and the redemption of Nasdaq-100 Shares in
Creation Unit size aggregations will affect the size and composition of the
Trust. Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure, or defect in any of the Securities.

THE INDEX

The Sponsor selected the Nasdaq-100 Index(-Registered Trademark-) as the
basis for the selection of the Securities to be held by the Trust because, in
the opinion of the Sponsor, the Index constitutes a broadly diversified segment
of the largest and most actively traded securities listed on the Nasdaq Stock
Market. Additionally, the Index has achieved wide acceptance by both investors
and market professionals. Specifically, the Index is composed of 100 of the
largest and most actively traded non-financial companies listed on the Nasdaq
National Market tier of the Nasdaq Stock Market.

The Index was first published in January 1985, and includes companies across
a variety of major industry groups. As of December 31, 1999, the major industry
groups covered in the Index (listed according to their respective capitalization
in the Index) were as follows: computer and office equipment (31.6%), computer
software/services (31.1%), telecommunications (24.3%), biotechnology (5.0%),
services (3.4%), retail/wholesale trade (3.0%), health care (0.8%),
manufacturing (0.7%) and transportation (0.1%). The identity and capitalization
weightings of the five largest companies represented in the Index as of
December 31, 1999 were as follows: Microsoft Corporation (10.8%), QUALCOMM
Incorporated (7.3%), Cisco Systems, Inc. (6.6%), Intel Corporation (5.0%), and
Oracle Corporation (3.5%). Current information regarding the market value of the
Index is available from Nasdaq as well as numerous market information services.
The Index is determined, comprised, and calculated by Nasdaq without regard to
the Trust.

The Sponsor, which is wholly-owned by Nasdaq, has been granted a license to
use the Index as a basis for determining the composition of the Trust and to use
certain service marks and trademarks of Nasdaq in connection with the Trust (see
"License Agreement"). Nasdaq is not responsible for and shall not participate in
the creation or sale of Nasdaq-100 Shares or in the determination of the timing
of, prices at, or quantities and proportions in which purchases or sales of
Index Securities or Securities shall be made.

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<PAGE>
The Index share weights of the component securities of the Index at any time
are based upon the total shares outstanding in each of the 100 Index Securities
and are additionally subject, in certain cases, to rebalancing (see "Rebalancing
of the Index"). Accordingly, each Index Security's influence on the value of the
Index is directly proportional to the value of its Index share weight. The
percentage of the Trust's assets invested in each of the Index Securities is
intended to approximate the percentage each Index Security represents in the
Index.

The following table shows the actual performance of the Index for the years
1985 through 1999. Stock prices fluctuated widely during this period and were
higher at the end than at the beginning. The results shown should not be
considered as a representation of the income yield or capital gain or loss that
may be generated by the Index in the future, nor should the results be
considered as a representation of the performance of the Trust.

<TABLE>
<CAPTION>
CALENDAR YEAR-
END INDEX
VALUE* POINT CHANGE IN CALENDAR YEAR-
(JANUARY 31, INDEX FOR YEAR % CHANGE END DIVIDEND
YEAR 1985 = 125.00) CALENDAR YEAR* IN INDEX* YIELD**
- ---- -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
1985***.............. 132.29 7.29 5.83% N/A
1986................. 141.41 9.12 6.89% 0.33%
1987................. 156.25 14.84 10.49% 0.41%
1988................. 177.41 21.16 13.54% 0.47%
1989................. 223.84 46.43 26.17% 0.91%
1990................. 200.53 -23.31 -10.41% 1.07%
1991................. 330.86 130.33 64.99% 0.53%
1992................. 360.19 29.33 8.86% 0.55%
1993................. 398.28 38.09 10.57% 0.52%
1994................. 404.27 5.99 1.50% 0.46%
1995 ................ 576.23 171.96 42.54% 0.26%
1996................. 821.36 245.13 42.54% 0.11%
1997................. 990.80 169.44 20.63% 0.13%
1998................. 1836.01 845.21 85.31% 0.07%
1999................. 3707.83 1871.81 101.95% 0.03%
</TABLE>

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

* Source: Nasdaq. Year-end index values shown do not reflect reinvestment of
dividends or costs, such as brokerage charges and transaction costs.

** Source: Nasdaq. Dividend yields are obtained by dividing the aggregate cash
dividends for the year by the aggregate market value of the component
securities in the Index at year-end.

*** 1985 data is for the eleven month period from January 31, 1985 through
December 31, 1985.

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<PAGE>
INDEX SECURITY ELIGIBILITY CRITERIA AND RANKING REVIEW

To be eligible for inclusion in the Index, a security must be traded on the
Nasdaq National Market tier of the Nasdaq Stock Market and meet the following
criteria:

- the security must be of a non-financial company;

- only one class of security per issuer is allowed;

- the security may not be issued by an issuer currently in bankruptcy
proceedings;

- the security must have average daily trading volume of at least 100,000
shares per day;

- the security must have "seasoned" on the Nasdaq Stock Market or another
recognized market (generally, a company is considered to be seasoned by
Nasdaq if it has been listed on a market for at least two years; in the
case of spin-offs, the operating history of the spin-off will be
considered);

- if a security would otherwise qualify to be in the top 25% of the issuers
included in the Index by market capitalization, then a one year
"seasoning" criteria would apply;

- if the security is of a foreign issuer, the company must have a worldwide
market value of at least $10 billion, a U.S. market value of at least
$4 billion, and average trading volume on the Nasdaq Stock Market of at
least 200,000 shares per day; in addition, foreign securities must be
eligible for listed options trading; and

- the issuer of the security may not have entered into a definitive
agreement or other arrangement which would result in the security no
longer being listed on the Nasdaq Stock Market within the next six months.

These Index eligibility criteria may be revised from time to time by the
National Association of Securities Dealers, Inc. without regard to the Trust.

The Index Securities are evaluated on an annual basis, except under
extraordinary circumstances which may result in an interim evaluation, as
follows (such evaluation is referred to herein as the "Ranking Review").
Securities listed on the Nasdaq Stock Market which meet the above eligibility
criteria are ranked by market value. Index-eligible securities which are already
in the Index and which are in the top 150 eligible securities (based on market
value) are retained in the Index provided that such security was ranked in the
top 100 eligible securities as of the previous ranking review. Securities not
meeting such criteria are replaced. The replacement securities chosen are those
Index-eligible securities not currently in the Index which have the largest
market

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<PAGE>
capitalization. Generally, the list of annual additions and deletions is
publicly announced via a press release in the early part of December and
replacements are made effective after the close of trading on the third Friday
in December. Moreover, if at any time during the year an Index Security is no
longer traded on the Nasdaq Stock Market, or is otherwise determined by Nasdaq
to become ineligible for continued inclusion in the Index, the security will be
replaced with the largest market capitalization security not currently in the
Index and meeting the Index eligibility criteria listed above.

In addition to the Ranking Review, the securities in the Index are monitored
every day by Nasdaq with respect to changes in total shares outstanding arising
from secondary offerings, stock repurchases, conversions, or other corporate
actions. Nasdaq has adopted the following quarterly scheduled weight adjustment
procedures with respect to such changes. If the change in total shares
outstanding arising from such corporate action is greater than or equal to 5.0%,
such change is made to the Index on the evening prior to the effective date of
such corporate action or as soon as practical thereafter. Otherwise, if the
change in total shares outstanding is less than 5%, then all such changes are
accumulated and made effective at one time on a quarterly basis after the close
of trading on the third Friday in each of March, June, September, and December.
In either case, the Index share weights for such Index Securities are adjusted
by the same percentage amount by which the total shares outstanding have changed
in such Index Securities. Ordinarily, whenever there is a change in Index share
weights or a change in a component security included in the Index, Nasdaq
adjusts the divisor to assure that there is no discontinuity in the value of the
Index which might otherwise be caused by any such change.

CALCULATION OF THE INDEX

The Index is calculated under a "modified capitalization-weighted"
methodology, which is a hybrid between equal weighting and conventional
capitalization weighting. This methodology is expected to: (1) retain in general
the economic attributes of capitalization weighting; (2) promote portfolio
weight diversification (thereby limiting domination of the Index by a few large
stocks); (3) reduce Index performance distortion by preserving the
capitalization ranking of companies; and (4) reduce market impact on the
smallest Index Securities from necessary weight rebalancings.

Under the methodology employed, on a quarterly basis coinciding with
Nasdaq's quarterly scheduled weight adjustment procedures, the Index Securities
are categorized as either "Large Stocks" or "Small Stocks" depending on whether
their current percentage weights (after taking into account such scheduled
weight adjustments due to stock repurchases, secondary offerings, or other
corporate actions) are greater than, or less than or equal to, the average

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<PAGE>
percentage weight in the Index (i.e., as a 100-stock index, the average
percentage weight in the Index is 1.0%).

Such quarterly examination will result in an Index rebalancing if either one
or both of the following two weight distribution requirements are not met:
(1) the current weight of the single largest market capitalization Index
Security must be less than or equal to 24.0% and (2) the "collective weight" of
those Index Securities whose individual current weights are in excess of 4.5%,
when added together, must be less than or equal to 48.0%. In addition, Nasdaq
may conduct a special rebalancing if it is determined necessary to maintain the
integrity of the Index.

If either one or both of these weight distribution requirements are not met
upon quarterly review or Nasdaq determines that a special rebalancing is
required, a weight rebalancing will be performed. First, relating to weight
distribution requirement (1) above, if the current weight of the single largest
Index Security exceeds 24.0%, then the weights of all Large Stocks will be
scaled down proportionately towards 1.0% by enough for the adjusted weight of
the single largest Index Security to be set to 20.0%. Second, relating to weight
distribution requirement (2) above, for those Index Securities whose individual
current weights or adjusted weights in accordance with the preceding step are in
excess of 4.5%, if their "collective weight" exceeds 48.0%, then the weights of
all Large Stocks will be scaled down proportionately towards 1.0% by just enough
for the "collective weight," so adjusted, to be set to 40.0%.

The aggregate weight reduction among the Large Stocks resulting from either
or both of the above rescalings will then be redistributed to the Small Stocks
in the following iterative manner. In the first iteration, the weight of the
largest Small Stock will be scaled upwards by a factor which sets it equal to
the average Index weight of 1.0%. The weights of each of the smaller remaining
Small Stocks will be scaled up by the same factor reduced in relation to each
stock's relative ranking among the Small Stocks such that the smaller the Index
Security in the ranking, the less the scale-up of its weight. This is intended
to reduce the market impact of the weight rebalancing on the smallest component
securities in the Index.

In the second iteration, the weight of the second largest Small Stock,
already adjusted in the first iteration, will be scaled upwards by a factor
which sets it equal to the average index weight of 1.0%. The weights of each of
the smaller remaining Small Stocks will be scaled up by this same factor reduced
in relation to each stock's relative ranking among the Small Stocks such that,
once again, the smaller the stock in the ranking, the less the scale-up of its
weight.

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Additional iterations will be performed until the accumulated increase in
weight among the Small Stocks exactly equals the aggregate weight reduction
among the Large Stocks from rebalancing in accordance with weight distribution
requirement (1) and/or weight distribution requirement (2).

Then, to complete the rebalancing procedure, once the final percent weights
of each Index Security are set, the Index share weights will be determined anew
based upon the last sale prices and aggregate capitalization of the Index at the
close of trading on the Thursday in the week immediately preceding the week of
the third Friday in March, June, September, and December. Changes to the Index
share weights will be made effective after the close of trading on the third
Friday in March, June, September, and December and an adjustment to the Index
divisor will be made to ensure continuity of the Index.

Ordinarily, new rebalanced weights will be determined by applying the above
procedures to the current Index share weights. However, Nasdaq may from time to
time determine rebalanced weights, if necessary, by instead applying the above
procedure to the actual current market capitalization of the Index components.
In such instances, Nasdaq would announce the different basis for rebalancing
prior to its implementation.

LICENSE AGREEMENT

Under the terms of a license agreement with Nasdaq (the "License
Agreement"), the Sponsor has been granted a license to use the Index as a basis
for determining the composition of the Trust and to use certain trade names,
trademarks, and service marks of Nasdaq in connection with the Trust. The
License Agreement may be amended by the parties thereto without the consent of
any of the Beneficial Owners of Nasdaq-100 Shares. Currently, the License
Agreement is scheduled to expire on March 10, 2004 in accordance with its terms
and is subject to a five year renewal period following such date. The parties
thereto may extend the term of the License Agreement beyond such date without
the consent of any of the Beneficial Owners of Nasdaq-100 Shares.

Under the terms of the License Agreement, the Sponsor pays to Nasdaq an
annual licensing fee for use of the Index. The Sponsor ordinarily will seek
reimbursement from the Trust for the amount of licensing fees (see "Expenses of
the Trust").

None of the Trust, the Trustee, the Distributor, the Depository, or any
Beneficial Owner of Nasdaq-100 Shares is entitled to any rights whatsoever under
the foregoing licensing arrangements or to use the trademarks and service marks
"Nasdaq-100 Index(-Registered Trademark-)",
"Nasdaq-100(-Registered Trademark-)", "Nasdaq(-Registered Trademark-)", "The
Nasdaq Stock Market(-Registered Trademark-)", "Nasdaq-100 Index Tracking
Stock(SM)", "Nasdaq-100

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Shares(SM)", or "Nasdaq-100 Trust(SM)" or to use the Index except as
specifically described herein or as may be specified in the Trust Agreement.

The Index is determined, composed, and calculated by Nasdaq without regard
to the Sponsor, the Trust, or the Beneficial Owners of Nasdaq-100 Shares. Nasdaq
has complete control and sole discretion in determining, comprising, or
calculating the Index or in modifying in any way its method for determining,
comprising, or calculating the Index in the future.

NASDAQ AND ITS AFFILIATES DO NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE INDEX OR ANY DATA USED TO CALCULATE THE INDEX OR DETERMINE
THE INDEX COMPONENTS. NASDAQ AND ITS AFFILIATES DO NOT GUARANTEE THE
UNINTERRUPTED OR UN-DELAYED CALCULATION OR DISSEMINATION OF THE INDEX. NASDAQ
AND ITS AFFILIATES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. NASDAQ AND ITS AFFILIATES DO NOT GUARANTEE THAT THE INDEX
ACCURATELY REFLECTS PAST, PRESENT, OR FUTURE MARKET PERFORMANCE. NASDAQ AND ITS
AFFILIATES MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
THE SPONSOR, THE TRUST, BENEFICIAL OWNERS OF NASDAQ-100 SHARES, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. NASDAQ
AND ITS AFFILIATES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE,
WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. NASDAQ AND ITS
AFFILIATES, OTHER THAN THE SPONSOR, MAKE NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AND BEAR NO LIABILITY WITH RESPECT TO NASDAQ-100 SHARES. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL NASDAQ OR ITS AFFILIATES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.

MARKETPLACE LISTING

Nasdaq-100 Shares are listed on the Amex. Transactions involving Nasdaq-100
Shares in the public trading market are subject to customary brokerage charges
and commissions.

The Sponsor's aim in designing Nasdaq-100 Shares was to provide investors
with a security whose initial market value would approximate one-twentieth
(1/20th) the value of the Index. Thus, for example, if the Index were at 1600,
investors might expect a Nasdaq-100 Share to trade initially at approximately
$80. Note, however, that the market price of a Nasdaq-100 Share may be affected
by supply and demand, market volatility, sentiment, and other factors (see
"Special Considerations and Risk Factors"). Note also, that due to these factors
as well as other factors including required distributions for tax purposes (see
"Tax Status of the Trust") or the sale of Securities to meet Trust expenses in
excess of the dividends received on the Securities (see

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"Expenses of the Trust"), the one-twentieth (1/20th) relationship between the
initial value of a Nasdaq-100 Share and the value of the Index is not expected
to persist indefinitely.

There can be no assurance that Nasdaq-100 Shares will always be listed on
the Amex. The Amex will consider the suspension of trading in or removal from
listing of Nasdaq-100 Shares:

(a) if the Trust has more than 60 days remaining until termination and there
are fewer than 50 record and/or beneficial holders of Nasdaq-100 Shares
for 30 or more consecutive trading days;

(b) if the Index is no longer calculated or available; or

(c) if such other event shall occur or condition exists which, in the
opinion of the Amex, makes further dealings on the Amex inadvisable.

The Trust will be terminated in the event that Nasdaq-100 Shares are
delisted from the Amex and are not subsequently relisted on a national
securities exchange or a quotation medium operated by a national securities
association (see "Administration of the Trust--Termination").

TAX STATUS OF THE TRUST

For the fiscal year ended September 30, 1999, the Trust qualified for tax
treatment as a "regulated investment company" under Subchapter M of the Code.
The Trust intends to continue to so qualify. To qualify as a regulated
investment company, the Trust must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest, gains
from the sale or other disposition of stock, securities or foreign currencies,
or certain other sources, (b) meet certain diversification tests, and
(c) distribute in each year at least 90% of its investment company taxable
income. If the Trust qualifies as a regulated investment company, subject to
certain conditions and requirements, the Trust will not be subject to federal
income tax to the extent its income is distributed in a timely manner. Any
undistributed income may be subject to tax, including a four percent (4%) excise
tax imposed by section 4982 of the Code on certain undistributed income of a
regulated investment company that does not distribute to shareholders in a
timely manner at least ninety-eight percent (98%) of its taxable income
(including capital gains).

TAX CONSEQUENCES TO BENEFICIAL OWNERS

Any net dividends paid by the Trust from its investment company taxable
income (which includes dividends, interest, and the excess of net short-term
capital gains over net long-term capital losses) will be taxable to Beneficial
Owners as ordinary income. A net dividend, if any, paid in January will be

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considered for federal income tax purposes to have been paid by the Trust and
received by Beneficial Owners on the preceding December 31 if the net dividend
was declared in the preceding October, November, or December to Beneficial
Owners of record shown on the records of the Depository and the DTC Participants
(see "The Trust--Book-Entry-Only System") on a date in one of those months.

Distributions paid by the Trust from the excess of net long-term capital
gains over net short-term capital losses ("net capital gain") are taxable as
long-term capital gain, regardless of the length of time an investor has owned
Nasdaq-100 Shares. Any loss on the sale or exchange of a Nasdaq-100 Share held
for six months or less may be treated as a long-term capital loss to the extent
of any capital gain dividends received by the Beneficial Owner. For corporate
investors, net dividends from net investment income (but not return of capital
distributions or capital gain dividends) generally will qualify for the
corporate dividends-received deduction to the extent of qualifying dividend
income received by the Trust, subject to the limitations contained in the Code.
Investors should note that the quarterly net dividends paid by the Trust, if
any, will not be based on the Trust's investment company taxable income and net
capital gain, but rather will be based on the dividends paid with respect to the
Securities net of accrued expenses and liabilities of the Trust. As a result, a
portion of the distributions of the Trust may be treated as a return of capital
or a capital gain dividend for federal income tax purposes or the Trust may make
additional distributions in excess of the yield performance of the Securities in
order to distribute all of its investment company taxable income and net capital
gain.

Distributions in excess of the Trust's current or accumulated earnings and
profits (as specially computed) generally will be treated as a return of capital
for federal income tax purposes and will reduce a Beneficial Owner's tax basis
in Nasdaq-100 Shares. Return of capital distributions may result, for example,
if a portion of the net dividends, if any, declared represents cash amounts
deposited in connection with Portfolio Deposits rather than dividends actually
received by the Trust. Under certain circumstances, a significant portion of any
quarterly net dividends of the Trust could be treated as return of capital
distributions. Such circumstances may be more likely to occur in periods during
which the number of outstanding Nasdaq-100 Shares fluctuates significantly, as
may occur during the initial years of the Trust. Beneficial Owners will receive
annually notification from the Trustee through the DTC Participants as to the
tax status of the Trust's distributions (see "The Trust--Book-Entry-Only
System"). A distribution, if any, paid shortly after a purchase or creation of
Nasdaq-100 Shares may be taxable even though in effect it may represent a return
of capital.

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The sale of Nasdaq-100 Shares by a Beneficial Owner is a taxable event, and
may result in a gain or loss, which generally should be a capital gain or loss
for Beneficial Owners that are not dealers in securities.

Under the Code, an in-kind redemption of Nasdaq-100 Shares will not result
in the recognition of taxable gain or loss by the Trust but generally will
constitute a taxable event for the redeeming shareholder. Upon redemption, a
Beneficial Owner generally will recognize gain or loss measured by the
difference on the date of redemption between the aggregate value of the cash and
securities received and its tax basis in the Nasdaq-100 Shares redeemed.
Securities received upon redemption (which will be comprised of the securities
portion of the Portfolio Deposit in effect on the date of redemption) generally
will have an initial tax basis equal to their respective market values on the
date of redemption. The U.S. Internal Revenue Service ("IRS") may assert that
any resulting loss may not be deducted by a Beneficial Owner on the basis that
there has been no material change in such Beneficial Owner's economic position
or that the transaction has no significant economic or business utility apart
from the anticipated tax consequences. Beneficial Owners of Nasdaq-100 Shares in
Creation Unit size aggregations should consult their own tax advisors as to the
consequences to them of the redemption of Nasdaq-100 Shares.

Net dividend distributions, capital gains distributions, and capital gains
from sales or redemptions may also be subject to state, local and foreign taxes.

Deposit of a Portfolio Deposit with the Trustee in exchange for Nasdaq-100
Shares in Creation Unit size aggregations will not result in the recognition of
taxable gain or loss by the Trust but generally will constitute a taxable event
to the depositor under the Code, and a depositor generally will recognize gain
or loss with respect to each security deposited equal to the difference between
the amount realized in respect of the security and the depositor's tax basis
therein. The amount realized with respect to a security deposited should be
determined by allocating the value on the date of deposit of the Nasdaq-100
Shares received (less any cash paid to the Trust, or plus any cash received from
the Trust, in connection with the deposit) among the securities deposited on the
basis of their respective fair market values at that time. The IRS may assert
that any resulting losses may not be deducted by a depositor on the basis that
there has been no material change in the depositor's economic position or that
the transaction has no significant economic or business utility or purpose apart
from the anticipated tax consequences. Depositors should consult their own tax
advisors as to the tax consequences to them of a deposit to the Trust.

The Trustee has the right to reject the order to create Creation Units
transmitted to it by the Distributor if the depositor or group of depositors,
upon obtaining the Nasdaq-100 Shares ordered, would own eighty percent

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(80%) or more of the outstanding Nasdaq-100 Shares, and if pursuant to
section 351 of the Code such a circumstance would result in the Trust having a
basis in the securities deposited different from the market value of such
securities on the date of deposit. The Trustee has the right to require
information regarding Nasdaq-100 Share ownership pursuant to the Nasdaq-100
Participant Agreement and from the Depository and to rely thereon to the extent
necessary to make the foregoing determination as a condition to the acceptance
of a Portfolio Deposit.

Ordinary income dividends received via the Depository by Beneficial Owners
who are non-resident aliens will be subject to a thirty percent (30%) United
States withholding tax unless a reduced rate of withholding or a withholding
exemption is provided under applicable tax treaties. Non-resident shareholders
are urged to consult their own tax advisors concerning the applicability of
United States withholding tax.

Backup withholding at a rate of 31% will apply to dividends, capital gain
distributions, redemptions and sales of Nasdaq-100 Shares unless (a) the
Beneficial Owner is a corporation or comes within certain other exempt
categories and, when required, demonstrates this fact, or (b) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. The amount of any backup withholding from a payment to a
Beneficial Owner will be allowed as a credit against the holder's U.S. federal
income tax liability and may entitle such holder to a refund from the IRS,
provided that the required information is furnished to the IRS.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN
THE TRUST, INCLUDING THE EFFECT OF POSSIBLE LEGISLATIVE CHANGES.

CONTINUOUS OFFERING OF NASDAQ-100 SHARES

Nasdaq-100 Shares in Creation Unit size aggregations are offered
continuously to the public by the Trust through the Distributor and are
delivered upon the deposit of a Portfolio Deposit (see "The Trust--Procedures
for Creation of Creation Units"). A list of the identity and number of shares of
each of the Index Securities in the current Portfolio Deposit and the amount of
the Income Net of Expense Amount effective through and including the previous
Business Day is made available by the Trustee to NSCC on each Business Day.
Under certain extraordinary circumstances which may make it impossible for the
Trustee to provide such information to NSCC on a given Business Day, NSCC shall
use the composition and weighting of the Index Securities of the Portfolio
Deposit on the previous Business Day. The minimum number of

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Nasdaq-100 Shares that may be created as described herein is 50,000 or one
Creation Unit. Persons making Portfolio Deposits and creating Creation Unit size
aggregations of Nasdaq-100 Shares will receive no fees, commissions, or other
form of compensation or inducement of any kind from the Sponsor or the
Distributor, nor will any such person have any obligation or responsibility to
the Sponsor or Distributor to effect any sale or resale of Nasdaq-100 Shares.
Notwithstanding the above, the Sponsor reserves the right, in its sole
discretion, to periodically reimburse in whole or in part the Transaction Fees
paid by eligible entities in connection with the creation or redemption of
certain lot-sizes of Nasdaq-100 Shares.

Because new Nasdaq-100 Shares can be created and issued on an ongoing basis,
at any point during the life of the Trust a "distribution", as such term is used
in the Securities Act of 1933, as amended (the "Securities Act"), may be
occurring. Broker-dealers and other persons are cautioned that some activities
on their part may, depending on the circumstances, result in their being deemed
participants in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus-delivery and liability
provisions of the Securities Act. For example, a broker-dealer firm or its
client may be deemed a statutory underwriter if it takes Creation Units after
placing a creation order with the Distributor, breaks them down into the
constituent Nasdaq-100 Shares, and sells the Nasdaq-100 Shares directly to its
customers, or if it chooses to couple the creation of a supply of new Nasdaq-100
Shares with an active selling effort involving solicitation of secondary market
demand for Nasdaq-100 Shares. A determination of whether one is an underwriter
must take into account all the facts and circumstances pertaining to the
activities of the broker-dealer or its client in the particular case, and the
examples mentioned above should not be considered a complete description of all
the activities that could lead to categorization as an underwriter.

Dealers who are not "underwriters" but are participating in a distribution
(as contrasted to ordinary secondary trading transactions), and thus dealing
with Nasdaq-100 Shares that are part of an "unsold allotment" within the meaning
of Section 4(3)(C) of the Securities Act, would be unable to take advantage of
the prospectus-delivery exemption provided by Section 4(3) of the Securities
Act. Firms that do incur a prospectus delivery obligation with respect to
Nasdaq-100 Shares are reminded that under Securities Act Rule 153, a
prospectus-delivery obligation under Section 5(b)(2) of the Securities Act owed
to an Amex member in connection with a sale on the Amex is satisfied by the fact
that Nasdaq-100 Share prospectuses will be available at the Amex upon request.
Of course, the prospectus-delivery mechanism provided in Rule 153 is only
available with respect to transactions on an exchange.

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The Sponsor intends to market Nasdaq-100 Shares through broker-dealers who
are members of the National Association of Securities Dealers, Inc. Investors
intending to create or redeem Creation Unit size aggregations of Nasdaq-100
Shares in transactions not involving a broker-dealer registered in such
investor's state of domicile or residence should consult counsel regarding
applicable broker-dealer or securities regulatory requirements under such state
securities laws prior to such creation or redemption.

EXPENSES OF THE TRUST

Until further notice, the Sponsor has undertaken that on each day up to and
including September 30, 2000, the ordinary operating expenses of the Trust as
calculated by the Trustee will not be permitted to exceed an amount which is
18/100 of one percent (0.18%) per annum of the daily net asset value of the
Trust. To the extent during such period the ordinary operating expenses of the
Trust do exceed such 0.18% level, the Sponsor will reimburse the Trust or assume
invoices on behalf of the Trust for such excess ordinary operating expenses. The
Sponsor retains the ability to be repaid by the Trust for expenses so reimbursed
or assumed to the extent that subsequently during the fiscal year expenses fall
below the 0.18% per annum level on any given day. For purposes of this
undertaking by the Sponsor, ordinary operating expenses of the Trust shall not
include taxes, brokerage commissions, and such extraordinary non-recurring
expenses as may arise, including without limitation the cost of any litigation
to which the Trust or Trustee may be a party. After September 30, 2000, the
Sponsor may discontinue its undertaking to limit ordinary operating expenses of
the Trust or renew this undertaking for an additional period of time, or may
choose to reimburse or assume certain Trust expenses in later periods in order
to keep Trust expenses at a level lower than what would reflect ordinary
operating expenses of the Trust, but is not obligated to do so. In any event, it
is possible that, on any day and during any period over the life of the Trust,
total fees and expenses of the Trust may exceed 0.18% per annum.

Subject to any applicable cap, the Sponsor reserves the right to charge the
Trust a special sponsor fee from time to time in reimbursement for certain
services it may provide to the Trust which would otherwise be provided by the
Trustee in an amount not to exceed the actual cost of providing such services.
The Sponsor or the Trustee from time to time may voluntarily assume some
expenses or reimburse the Trust so that total expenses of the Trust are reduced,
although neither the Sponsor nor the Trustee is obligated to do so and either
one or both parties may discontinue such voluntary assumption of expenses or
reimbursement at any time without notice.

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The following charges are or may be accrued and paid by the Trust: (a) the
Trustee's fee as discussed more fully below; (b) fees payable to transfer agents
for the provision of transfer agency services; (c) fees of the Trustee for
extraordinary services performed under the Trust Agreement; (d) various
governmental charges; (e) any taxes, fees, and charges payable by the Trustee
with respect to Nasdaq-100 Shares (whether in Creation Unit size aggregations or
otherwise); (f) expenses and costs of any action taken by the Trustee or the
Sponsor to protect the Trust and the rights and interests of Beneficial Owners
of Nasdaq-100 Shares (whether in Creation Unit size aggregations or otherwise);
(g) indemnification of the Trustee or the Sponsor for any losses, liabilities or
expenses incurred by them in the administration of the Trust without gross
negligence, bad faith, wilful misconduct, or wilful malfeasance on their part or
reckless disregard of their obligations and duties; (h) expenses incurred in
contacting Beneficial Owners of Nasdaq-100 Shares during the life of the Trust
and upon termination of the Trust; (i) brokerage commissions incurred by the
Trustee when acquiring or selling Index Securities pursuant to the provisions of
the Trust Agreement; and (j) other out-of-pocket expenses of the Trust incurred
pursuant to actions permitted or required under the Trust Agreement.

In addition to the specific expenses discussed in the previous paragraph,
the following expenses are or may be charged to the Trust: (a) reimbursement to
the Sponsor of amounts paid by it to Nasdaq in respect of annual licensing fees
pursuant to the License Agreement, (b) federal and state annual registration
fees for the issuance of Nasdaq-100 Shares, and (c) expenses of the Sponsor
relating to the printing and distribution of marketing materials describing
Nasdaq-100 Shares and the Trust (including, but not limited to, associated
legal, consulting, advertising, and marketing costs and other out-of-pocket
expenses such as printing). Pursuant to the provisions of an exemptive order,
the expenses set forth in this paragraph may be charged to the Trust by the
Trustee in an amount equal to the actual costs incurred, but in no case shall
such charges exceed 20/100 of 1% (0.20%) per annum of the daily net asset value
of the Trust.

If income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to cover Trust fees and expenses
(see "Special Considerations and Risk Factors--Little or No Expected Net
Dividend Distributions to Beneficial Owners"), the Trustee will sell Securities
in an amount sufficient to pay the excess of accrued fees and expenses over the
dividends and other Trust accrued income. Specifically, the Trustee will
ordinarily be required to sell Securities whenever the Trustee determines that
projected annualized fees and expenses accrued on a daily basis exceed projected
annualized dividends and other Trust income accrued on a daily basis by more

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than 1/100 of one percent (0.01%) of the net asset value of the Trust. Whenever
the 0.01% threshold is exceeded, the Trustee will sell sufficient Securities to
cover such excess no later than the next occasion it is required to make
adjustments to the Portfolio due to a Misweighting (see "The Portfolio--
Adjustments to the Portfolio"), unless the Trustee determines, in its
discretion, that such a sale is unnecessary because the cash to be generated is
not needed by the Trust at that time for the payment of expenses then due or
because the Trustee otherwise determines that such sale is not warranted or
advisable. At the time of the sale, the Trustee shall first sell Securities that
are over-weighted in the Portfolio as compared to their relative weighting in
the Index.

The Trustee may also make advances to the Trust to cover expenses. The
Trustee may reimburse itself in the amount of any such advance, plus any amounts
required by the Federal Reserve Board which are related to such advances,
together with interest thereon at a percentage rate equal to the then-current
overnight federal funds rate, by deducting such amounts from (1) dividend
payments or other income of the Trust when such payments or other income is
received, (2) the amounts earned or benefits derived by the Trustee on cash held
by the Trustee for the benefit of the Trust, and (3) the sale of Securities.
Notwithstanding the foregoing, in the event that any advance remains outstanding
for more than forty-five (45) Business Days, the Trustee shall ordinarily sell
Securities to reimburse itself for the amount of such advance and any accrued
interest thereon. Such advances, as well as rights of the Trustee to the payment
of its fee, reimbursement of expenses and other claims, will be secured by a
lien upon and a security interest in the assets of the Trust in favor of the
Trustee. The expenses of the Trust are reflected in the net asset value of the
Trust (see "Valuation").

For services performed under the Trust Agreement, the Trustee is paid by the
Trust a fee at an annual rate of 6/100 of 1% to 10/100 of 1% of the net asset
value of the Trust, as shown below, such percentage amount to vary depending on
the net asset value of the Trust. Such compensation is computed on each Business
Day on the basis of the net asset value of the Trust on such day, and the amount
thereof is accrued daily and paid monthly. The Trustee, in its discretion, may
waive all or a portion of such fee. Notwithstanding the fee schedule set forth
in the table below, the Trustee shall be paid a minimum annual fee of $180,000
per annum. To the extent that the amount of the Trustee's compensation is less
than such minimum annual fee, the Sponsor has agreed to pay the amount of any
such shortfall.

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TRUSTEE FEE SCALE

<TABLE>
<CAPTION>
NET ASSET VALUE FEE AS A PERCENTAGE OF NET
OF THE TRUST ASSET VALUE OF THE TRUST
- --------------- --------------------------
<S> <C>
$0-$499,999,999.............................. 10/100 of 1% per annum*
$500,000,000-$2,499,999,999.................. 8/100 of 1% per annum*
$2,500,000,000 and above..................... 6/100 of 1% per annum*
</TABLE>

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

* The fee indicated applies to that portion of the net asset value of the
Trust which falls in the size category indicated.

REDEMPTION OF NASDAQ-100 SHARES

Nasdaq-100 Shares in Creation Unit size aggregations are ordinarily
redeemable in kind only and are not redeemable for cash except under certain
circumstances. Nasdaq-100 Shares in Creation Unit size aggregations may be
redeemed by submitting a request for redemption, the requisite number of
Nasdaq-100 Shares, and the Cash Redemption Amount (as defined below), if
applicable, to the Trustee in the manner specified below. Beneficial Owners of
Nasdaq-100 Shares may sell Nasdaq-100 Shares in the secondary market, but must
accumulate enough Nasdaq-100 Shares to constitute a Creation Unit (I.E., 50,000
shares) in order to redeem through the Trust. Nasdaq-100 Shares can be redeemed
only when Creation Unit size aggregations are owned by a Beneficial Owner and
held in the account of a single Participating Party (with respect to redemptions
through the Nasdaq-100 Clearing Process) or a single DTC Participant (with
respect to redemptions outside the Nasdaq-100 Clearing Process). Nasdaq-100
Shares will remain outstanding until redeemed or until the termination of the
Trust.

PROCEDURE FOR REDEMPTION OF NASDAQ-100 SHARES

Requests for redemptions of Creation Units may be made on any Business Day
through the Nasdaq-100 Clearing Process to the Trustee at its trust office at
101 Barclay Street, New York, New York 10286, or at such other office as may be
designated by the Trustee. Requests for redemptions of Creation Units may also
be made directly to the Trustee outside the Nasdaq-100 Clearing Process.
Requests for redemptions shall not be made to the Distributor. In the case of
redemptions made through the Nasdaq-100 Clearing Process, the Transaction Fee
will be deducted from the amount delivered to the redeemer or added to the
amount owed by the redeemer to the Trustee, as applicable. In case of
redemptions tendered directly to the Trustee outside the Nasdaq-100 Clearing
Process, a total fee will be charged equal to the Transaction Fee plus

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an additional amount not to exceed three (3) times the Transaction Fee
applicable for a Creation Unit (due in part to the increased expense associated
with delivery outside the Nasdaq-100 Clearing Process), and such amount will be
deducted from the amount delivered to the redeemer or added to the amount owed
by the redeemer to the Trustee on behalf of the Trust, as applicable (see
"Prospectus Summary--Transaction Fee"). In all cases, the tender of Nasdaq-100
Shares for redemption and distributions to the redeemer (or payments to the
Trustee, as applicable) in respect of Nasdaq-100 Shares redeemed will be
effected through the Depository and the relevant DTC Participant(s) to the
Beneficial Owner thereof as recorded on the book entry system of the Depository
or the relevant DTC Participant, as the case may be (see "The
Trust--Book-Entry-Only System").

The Trustee will transfer to the redeeming Beneficial Owner via the
Depository and the relevant DTC Participant(s) a portfolio of Securities for
each Creation Unit size aggregation of Nasdaq-100 Shares delivered, typically
identical in composition and weighting to the securities portion of a Portfolio
Deposit as in effect (1) on the date a request for redemption is deemed received
by the Trustee as described below, in the case of redemptions made either
through the Nasdaq-100 Clearing Process or outside the Nasdaq-100 Clearing
Process or (2) on the date that notice of the termination of the Trust is given,
in the case of the termination of the Trust (see "Administration of the
Trust--Termination" and "The Portfolio--Adjustments to the Portfolio"). Each
redemption also includes a cash amount, the "Cash Redemption Amount," which will
either be paid to the Trustee on behalf of the Trust by the redeemer or paid to
the redeemer by the Trustee on behalf of the Trust as described below. On any
given Business Day, the Cash Redemption Amount is typically an amount identical
to the amount of the Cash Component and is equal to a proportional amount of the
following: dividends on all the Securities for the period through the date of
redemption, net of accrued expenses and liabilities for such period not
previously deducted (including, without limitation, (x) taxes or other
governmental charges against the Trust not previously deducted, if any, and
(y) accrued fees of the Trustee and other expenses of the Trust (including legal
and auditing expenses) and other expenses not previously deducted (see "Expenses
of the Trust")), plus or minus the Balancing Amount. To the extent the sum of
dividends on all Securities with ex-dividend dates within the Accumulation
Period, plus or minus the Balancing Amount, exceeds the accrued expenses and
liabilities of the Trust for such period (I.E., the Cash Redemption Amount has a
positive value), then the Trustee on behalf of the Trust will transfer payment
thereof via the relevant DTC Participant(s) to the redeeming Beneficial Owner.
Conversely, to the extent the sum of dividends on all Securities with
ex-dividend dates within the Accumulation Period, plus

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or minus the Balancing Amount, is less than the accrued expenses and liabilities
of the Trust for such period (I.E., the Cash Redemption Amount has a negative
value), then such Beneficial Owner shall be required to deliver payment thereof
via the relevant DTC Participant(s) to the Trustee on behalf of the Trust. In
the case of redemptions made through the Nasdaq-100 Clearing Process, the
Trustee on behalf of the Trust will effect a transfer of the Cash Redemption
Amount (if required) and the securities to the redeeming Beneficial Owner by the
third (3rd) NSCC Business Day following the date on which request for redemption
is deemed received. In the case of redemptions made outside the Nasdaq-100
Clearing Process, the Trustee on behalf of the Trust will transfer the Cash
Redemption Amount (if required) and the securities to the redeeming Beneficial
Owner by the third (3rd) Business Day following the date on which the request
for redemption is deemed received. In cases in which the Cash Redemption Amount
is payable by the redeemer to the Trustee, the redeeming Beneficial Owner (via
the Depository and the relevant DTC Participants(s)) is required to make payment
of such cash amount by the third (3rd) NSCC Business Day, for redemptions made
through the Nasdaq-100 Clearing Process, or the first (1st) Business Day, for
redemptions outside the Nasdaq-100 Clearing Process, following the date on which
the request for redemption is deemed received. The Trustee will cancel all
Nasdaq-100 Shares delivered upon redemption.

In the event that the Trustee determines in its discretion that an Index
Security is likely to be unavailable or available in insufficient quantity for
delivery by the Trust upon the redemption of Nasdaq-100 Shares in Creation Unit
size aggregations, the Trustee shall have the right in its discretion to include
the cash equivalent value of such Index Security or Index Securities, based on
the market value of such Index Security or Index Securities as of the Evaluation
Time on the date such redemption is deemed received by the Trustee, in the
calculation of the Cash Redemption Amount in lieu of delivering such Index
Security or Index Securities to the redeemer.

In connection with the redemption of Nasdaq-100 Shares, if a redeeming
investor requests redemption in cash, rather than in kind, with respect to one
or more Securities (for example, because such a redeemer is restricted by
regulation or otherwise from investing or engaging in a transaction in one or
more Index Securities), the Trustee shall have the right in its discretion to
include the cash equivalent value of such Index Security or Index Securities,
based on the market value of such Index Security or Index Securities as of the
Evaluation Time on the date such redemption order is deemed received by the
Trustee, in the calculation of the Cash Redemption Amount in lieu of delivering
such Index Security or Index Securities to the redeemer. In such case, such
investor will pay the Trustee the standard Transaction Fee, plus an additional

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amount not to exceed three (3) times the Transaction Fee applicable for a
Creation Unit (see "Prospectus Summary--Transaction Fee").

The Trustee, in its discretion, upon the request of a redeeming investor,
may redeem Creation Units in whole or in part by providing such redeemer with a
portfolio of Securities differing in exact composition from the Index Securities
but not differing in net asset value from the then-current Portfolio Deposit.
Such a redemption is likely to be made only if it were to be determined that
this composition would be appropriate in order to maintain the Portfolio's
correlation to the composition and weighting of the Index, for instance, in
connection with a replacement of one of the Index Securities (E.G., due to a
merger, acquisition or bankruptcy). (See "The Portfolio" and "The Index".)

The Trustee may sell Securities to obtain sufficient cash proceeds to
deliver to the redeeming Beneficial Owner. To the extent cash proceeds are
received by the Trustee in excess of the amount required to be provided to the
redeeming Beneficial Owner, such cash amounts shall be held by the Trustee and
shall be applied in accordance with the guidelines applicable to Misweightings
(see "The Portfolio--Adjustments to the Portfolio").

If the income received by the Trust in the form of dividends and other
distributions on the Securities is insufficient to allow distribution of the
Cash Redemption Amount to a redeemer of Nasdaq-100 Shares, the Trustee may
advance out of its own funds any amounts necessary in respect of redemptions of
Nasdaq-100 Shares; otherwise, the Trustee may sell Securities in an amount
sufficient to effect such redemptions. The Trustee may reimburse itself in the
amount of such advance, plus any amounts required by the Federal Reserve Board
which are related to such advance, together with interest thereon at a
percentage rate equal to the then current overnight federal funds rate, by
deducting such amounts from (1) dividend payments or other income of the Trust
when such payments or other income is received, (2) the amounts earned or
benefits derived by the Trustee on cash held by the Trustee for the benefit of
the Trust, and (3) the sale of Securities. Notwithstanding the foregoing, in the
event that any advance remains outstanding for more than forty-five
(45) Business Days, the Trustee shall ordinarily sell Securities to reimburse
itself for such advance and any accrued interest thereon. Such advances will be
secured by a lien upon and a security interest in the assets of the Trust in
favor of the Trustee.

The Trustee may, in its discretion, and will when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment of the
net asset value for more than five (5) Business Days following the date on which
the request for redemption is deemed received by the Trustee (1) for

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any period during which the New York Stock Exchange is closed; (2) for any
period during which an emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably practicable; or (3) for such
other period as the Commission may by order permit for the protection of
Beneficial Owners. Neither the Sponsor nor the Trustee is liable to any person
or in any way for any loss or damages which may result from any such suspension
or postponement.

To be eligible to place orders with the Trustee to redeem Nasdaq-100 Shares
in Creation Unit size aggregations, an entity or person must be (1) a
Participating Party, with respect to redemptions through the Nasdaq-100 Clearing
Process, or (2) a DTC Participant, with respect to redemptions outside the
Nasdaq-100 Clearing Process, and in either case must have executed a Nasdaq-100
Participant Agreement with the Distributor and the Trustee.

All orders to redeem Nasdaq-100 Shares must be placed in multiples of 50,000
shares (Creation Unit size). Orders must be transmitted to the Trustee by
telephone or other transmission method acceptable to the Trustee so as to be
received by the Trustee not later than the Closing Time on the Transmittal Date,
pursuant to procedures set forth in the Nasdaq-100 Participant Agreement. Severe
economic or market changes or disruptions, or telephone or other communication
failure, may impede the ability to reach the Trustee, a Participating Party, or
a DTC Participant.

Orders to redeem Creation Unit size aggregations of Nasdaq-100 Shares shall
be placed with a Participating Party or DTC Participant, as applicable, in the
form required by such Participating Party or DTC Participant. Investors should
be aware that their particular broker may not have executed a Nasdaq-100
Participant Agreement, and that, therefore, orders to redeem Creation Unit size
aggregations of Nasdaq-100 Shares may have to be placed by the investor's broker
through a Participating Party or a DTC Participant who has executed a Nasdaq-100
Participant Agreement. At any given time there may be only a limited number of
broker-dealers that have executed a Nasdaq-100 Participant Agreement. Those
placing orders to redeem Nasdaq-100 Shares should afford sufficient time to
permit (1) proper submission of the order by a Participating Party or DTC
Participant to the Trustee and (2) the receipt of the Nasdaq-100 Shares to be
redeemed and the Cash Redemption Amount, if any, by the Trustee in a timely
manner, as described below. Orders for redemption that are effected outside the
Nasdaq-100 Clearing Process are likely to require transmittal by the DTC
Participant earlier on the Transmittal Date than orders effected using the
Nasdaq-100 Clearing Process. Those persons placing orders outside the Nasdaq-100
Clearing Process should ascertain the deadlines applicable to DTC and the
Federal Reserve

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Bank wire system by contacting the operations department of the broker or
depository institution effectuating such transfer of Nasdaq-100 Shares and Cash
Redemption Amount. These deadlines will vary by institution. The Participant
notified of an order to redeem outside the Nasdaq-100 Clearing Process will be
required to transfer Nasdaq-100 Shares through DTC and the Cash Redemption
Amount, if any, through the Federal Reserve Bank wire system in a timely manner
(see "Placement of Redemption Orders Outside the Nasdaq-100 Clearing Process").
Information regarding the Cash Redemption Amount, number of outstanding
Nasdaq-100 Shares, and Transaction Fees may be obtained from the Trustee at the
toll-free number: (800) 545-5256.

PLACEMENT OF REDEMPTION ORDERS USING THE NASDAQ-100 CLEARING PROCESS

Orders to redeem Nasdaq-100 Shares in Creation Unit size aggregations
through the Nasdaq-100 Clearing Process must be delivered through a
Participating Party (see "Prospectus Summary--Portfolio Deposit") that has
executed the Nasdaq-100 Participant Agreement with the Distributor and with the
Trustee (as the same may be from time to time amended in accordance with its
terms). An order to redeem Nasdaq-100 Shares using the Nasdaq-100 Clearing
Process is deemed received by the Trustee on the Transmittal Date if (i) such
order is received by the Trustee not later than the Closing Time on such
Transmittal Date and (ii) all other procedures set forth in the Nasdaq-100
Participant Agreement are properly followed; such order will be effected based
on the net asset value of the Trust as determined as of the Evaluation Time on
the Transmittal Date. An order to redeem Nasdaq-100 Shares using the Nasdaq-100
Clearing Process made in proper form but received by the Trustee after the
Closing Time will be deemed received on the next Business Day immediately
following the Transmittal Date. The Nasdaq-100 Participant Agreement authorizes
the Trustee to transmit to NSCC on behalf of the Participating Party such trade
instructions as are necessary to effect the Participating Party's redemption
order. Pursuant to such trade instructions from the Trustee to NSCC, the Trustee
will transfer the requisite Securities (or contracts to purchase such Securities
which are expected to be delivered in a "regular way" manner through NSCC) by
the third (3rd) NSCC Business Day following the date on which such request for
redemption is deemed received, and the Cash Redemption Amount, if any. If the
Cash Redemption Amount is owed by the Beneficial Owner to the Trustee, such
amount must be delivered by the third (3rd) NSCC Business Day following the date
on which the redemption request is deemed received. The calculation of the value
of the Securities and the Cash Redemption Amount will be made according to the
procedures set forth under "Valuation," computed as of the Evaluation Time on
the Business Day on which a redemption order is deemed received by the Trustee.

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PLACEMENT OF REDEMPTION ORDERS OUTSIDE THE NASDAQ-100 CLEARING PROCESS

Orders to redeem Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process
must be delivered through a DTC Participant that has executed the Nasdaq-100
Participant Agreement with the Distributor and with the Trustee. A DTC
Participant who wishes to place an order for redemption of Nasdaq-100 Shares to
be effected outside the Nasdaq-100 Clearing Process need not be a Participating
Party, but such orders must state that the DTC Participant is not using the
Nasdaq-100 Clearing Process and that redemption of Nasdaq-100 Shares will
instead be effected through transfer of Nasdaq-100 Shares directly through DTC.
An order to redeem Nasdaq-100 Shares outside the Nasdaq-100 Clearing Process is
deemed received by the Trustee on the Transmittal Date if (i) such order is
received by the Trustee not later than the Closing Time on such Transmittal
Date, (ii) such order is preceded or accompanied by the requisite number of
Nasdaq-100 Shares specified in such order, which delivery must be made through
DTC to the Trustee no later than the Closing Time of the regular trading session
on the Nasdaq Stock Market on such Transmittal Date and (iii) all other
procedures set forth in the Nasdaq-100 Participant Agreement are properly
followed. The Cash Redemption Amount owed by the Beneficial Owner, if any, must
be delivered no later than 1:00 p.m. on the Business Day immediately following
the Transmittal Date.

After the Trustee has deemed an order for redemption outside the Nasdaq-100
Clearing Process received, the Trustee will initiate procedures to transfer the
requisite Securities (or contracts to purchase such Securities which are
expected to be delivered within three Business Days) and the Cash Redemption
Amount to the redeeming Beneficial Owner (where such amount is payable from the
Trustee to the Beneficial Owner) by the third (3rd) Business Day following the
Transmittal Date on which such redemption order is deemed received by the
Trustee.

The calculation of the value of the Securities and the Cash Redemption
Amount will be made by the Trustee according to the procedures set forth under
"Valuation," computed as of the Evaluation Time on the Business Day on which a
redemption order is deemed received by the Trustee. Therefore, if a redemption
order in proper form is submitted to the Trustee by a DTC Participant not later
than the Closing Time on the Transmittal Date, and the requisite Nasdaq-100
Shares are also delivered to the Trustee prior to the Closing Time on such
Transmittal Date, then the value of the Securities and the Cash Redemption
Amount will be determined by the Trustee as of the Evaluation Time on such
Transmittal Date. If, however, a redemption order is submitted to the Trustee by
a DTC Participant not later than the Closing Time

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on a Transmittal Date but either (1) the requisite Nasdaq-100 Shares are
NOT delivered by the Closing Time on such Transmittal Date or (2) the redemption
order is not submitted in proper form, then the redemption order will NOT be
deemed received as of such Transmittal Date. In such case, the value of the
Securities and the Cash Redemption Amount will be computed as of the Evaluation
Time on the Business Day that such order is deemed received by the Trustee,
I.E., the Business Day on which the Nasdaq-100 Shares are delivered through DTC
to the Trustee by the Closing Time on such Business Day pursuant to a properly
submitted redemption order.

VALUATION

The net asset value of the Trust is computed as of the Evaluation Time shown
under "Essential Information" on each Business Day. The net asset value of the
Trust on a per Nasdaq-100 Share basis is determined by subtracting all
liabilities (including accrued expenses and dividends payable) from the total
value of the Trust's investments and other assets and dividing the result by the
total number of outstanding Nasdaq-100 Shares.

The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner. The value of a Security shall generally be
based on the closing sale price for the Security on that day (unless the Trustee
deems such price inappropriate as a basis for evaluation) on the Nasdaq Stock
Market or, if there is no such appropriate closing sale price on the Nasdaq
Stock Market, at the closing bid price (unless the Trustee deems such price
inappropriate as a basis for evaluation). If a Security is not so quoted on the
Nasdaq Stock Market or, if so quoted and the principal market therefor is other
than on the Nasdaq Stock Market or there is no such closing bid price available,
such evaluation shall generally be made by the Trustee in good faith based
(a) on the closing price for the Security on another market on which the
Security is traded, if available, or otherwise based on the closing sale price
on the Nasdaq Stock Market on the last day that the security traded (unless the
Trustee deems such price inappropriate as a basis for evaluation) or if there is
no such appropriate closing price, at the closing bid price on such other
market, (b) on current bid prices on the Nasdaq Stock Market or such other
markets, (c) if bid prices are not available, on the basis of current bid prices
for comparable securities, (d) by the Trustee's appraising the value of the
Securities in good faith on the bid side of the market, or (e) by any
combination thereof.

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ADMINISTRATION OF THE TRUST

RECORDS

The Trustee maintains records of the transactions of the Trust, including a
current list of the identity and number of shares of each of the Securities in
the Portfolio. Records of the creation of Nasdaq-100 Shares in Creation Unit
size aggregations are also maintained by the Distributor. Record of ownership of
Nasdaq-100 Shares is maintained by the Depository and by DTC Participants as
described above (see "The Trust--Book-Entry-Only System").

A complete copy of the Trust Agreement is maintained by the Trustee. A copy
of the Trust Agreement is available to Beneficial Owners at the corporate trust
office of the Trustee at 101 Barclay Street, New York, New York 10286 during
normal business hours.

VOTING

The Trustee has the right to vote all of the voting securities in the Trust.
The Trustee votes the voting securities of each issuer in the same proportionate
relationship as all other shares of each such issuer are voted to the extent
permissible and, if not permitted, abstains from voting.

DISTRIBUTIONS TO BENEFICIAL OWNERS

Distributions by the Trust will be made quarterly in the event that
dividends accumulated in respect of the Securities and other income, if any,
received by the Trust, exceed Trust fees and expenses accrued during the
quarterly Accumulation Period which ends on the Business Day preceding each
Ex-Dividend Date. Based on historical dividend payment rates of the portfolio of
securities comprising the Index and estimated ordinary operating expenses of the
Trust, little or no such distributions are currently anticipated (see "Special
Considerations and Risk Factors--Little or No Expected Net Dividend
Distributions to Beneficial Owners").

The regular quarterly Ex-Dividend Date with respect to net dividends, if
any, for Nasdaq-100 Shares is the third Friday in each of March, June,
September, and December, unless such day is not a Business Day, in which case
the Ex-Dividend Date will be the immediately preceding Business Day. Beneficial
Owners as reflected on the records of the Depository and the DTC Participants on
the second Business Day following the Ex-Dividend Date (the "Record Date") are
entitled to receive an amount, if any, representing dividends accumulated on the
Securities through the quarterly Accumulation Period which ends on the Business
Day preceding such Ex-Dividend Date

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(including Securities with ex-dividend dates falling within such quarterly
dividend period) and other income, if any, received by the Trust, net of the
fees and expenses of the Trust, accrued daily for such period. For the purposes
of such distributions, dividends per Nasdaq-100 Share are calculated at least to
the nearest 1/100th of $0.01. However, there shall be no net dividend
distribution in any given quarter, and any net dividend amounts will be rolled
into the next Accumulation Period, if the aggregate net dividend distribution
would be in an amount less than 5/100 of one percent (0.05%) of the net asset
value of the Trust as of the Friday in the week immediately preceding the
Ex-Dividend Date, unless the Trustee determines that such net dividend
distribution is required to be made in order to maintain the Trust's status as a
regulated investment company or to avoid the imposition of income or excise
taxes on undistributed income (see "Tax Status of the Trust"). When net dividend
payments are to be made by the Trust, payment will be made on the last Business
Day in the calendar month following each Ex-Dividend Date (the "Dividend Payment
Date"). Dividend payments will be made through the Depository and the DTC
Participants to Beneficial Owners then of record with funds received from the
Trustee. Nasdaq-100 Shares are registered in book-entry only, which records are
kept by the Depository (see "The Trust--Book-Entry-Only System").

Dividends payable to the Trust in respect of the Securities are credited by
the Trustee to a non-interest bearing account as of the date on which the Trust
receives such dividends. Other moneys received by the Trustee in respect of the
Securities, including but not limited to the Cash Component, the Cash Redemption
Amount, all moneys realized by the Trustee from the sale of options, warrants,
or other similar rights received or distributed in respect of the Securities as
dividends or distributions and capital gains resulting from the sale of
Securities, are also credited by the Trustee to a non-interest bearing account.
All funds collected or received are held by the Trustee without interest until
distributed or otherwise utilized in accordance with the provisions of the Trust
Agreement. To the extent the amounts credited to such accounts generate interest
income or an equivalent benefit to the Trustee, such interest income or benefit
is used to reduce any charges made in connection with advances made by the
Trustee on behalf of the Trust to cover Trust expenses in those cases when the
Trust income is insufficient to pay such expenses when due (see "Expenses of the
Trust").

The Trust has qualified, and intends to continue to qualify, as a regulated
investment company for federal income tax purposes. A regulated investment
company is not subject to federal income tax on its net investment income and
capital gains that it distributes to shareholders, so long as it meets certain
overall distribution and diversification requirements and other conditions

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under Subchapter M of the Code. The Trust intends to satisfy these overall
distribution and diversification requirements and to otherwise satisfy any
required conditions. The Trustee intends to make additional distributions to the
minimum extent necessary (i) to distribute the entire annual investment company
taxable income of the Trust, plus any net capital gains (from sales of
securities in connection with adjustments to the Portfolio, payment of the
expenses of the Trust, or to generate cash for such distributions), and (ii) to
avoid imposition of the excise tax imposed by section 4982 of the Code (see "Tax
Status of the Trust"). The additional distributions, if needed, would consist of
(a) any amount by which estimated Trust investment company taxable income and
net capital gains for a fiscal year exceeds the amount of Trust taxable income
previously distributed with respect to such year or, if greater, the minimum
amount required to avoid imposition of such excise tax, and (b) a distribution
soon after the actual annual investment company taxable income and net capital
gains of the Trust have been computed of the amount, if any, by which such
actual income exceeds the distributions already made. The net asset value of the
Trust will be reduced by the amount of such additional distributions. The
magnitude of the additional distributions, if any, will depend upon a number of
factors, including the level of redemption activity experienced by the Trust.
Because substantially all proceeds from the sale of Securities in connection
with adjustments to the Portfolio will have been used to purchase shares of
Index Securities, the Trust may have no cash or insufficient cash with which to
pay any such additional distributions. In that case, the Trustee typically will
have to sell shares of the Securities sufficient to produce the cash required to
make such additional distributions. In selecting the Securities to be sold to
produce cash for such distributions, the Trustee will choose among the
Securities that are over-weighted in the Portfolio relative to their weighting
in the Index first and then from among all other Securities in a manner so as to
maintain the weighting of each of the Securities within the applicable
Misweighting Amount (see "The Portfolio--Adjustments to the Portfolio").

The Trustee further reserves the right to declare special dividends if, in
its reasonable discretion, such action is necessary or advisable to preserve the
status of the Trust as a regulated investment company or to avoid imposition of
income or excise taxes on undistributed income.

The Trustee further reserves the right to vary the frequency with which
periodic distributions, if any, are to be made from the Trust (E.G., from
quarterly to semi-annually) if it is determined by the Sponsor and the Trustee,
in their discretion, that such a variance would be advisable to facilitate
compliance with the rules and regulations applicable to regulated investment
companies or would otherwise be advantageous to the Trust. In addition, the
Trustee

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reserves the right to change the regular Ex-Dividend Date for Nasdaq-100 Shares
to another regular date if it is determined by the Sponsor and the Trustee, in
their discretion, that such a change would be advantageous to the Trust. Notice
of any such variance or change (which notice shall include changes to the Record
Date, the Ex-Dividend Date, the Dividend Payment Date, and the Accumulation
Period resulting from such variance) shall be provided to Beneficial Owners via
the Depository and the DTC Participants (see "The Trust--Book-Entry-Only
System").

The Trustee may, in its discretion, advance out of its own funds any amounts
necessary to permit distributions via the Depository to Beneficial Owners. The
Trustee may reimburse itself in the amount of such advance, together with
interest thereon at a percentage rate equal to then current overnight federal
funds rate, plus Federal Reserve Bank requirements, by deducting such amounts
from (1) dividend payments or other income of the Trust when such payments or
other income is received, (2) the amounts earned or benefits derived by the
Trustee on cash held by the Trustee for the benefit of the Trust, and (3) the
sale of Securities. Notwithstanding the foregoing, in the event that any advance
remains outstanding for more than forty-five (45) Business Days, the Trustee
shall ordinarily sell Securities to reimburse itself for such advance and any
accrued interest thereon. Such advances will be secured by a lien upon and a
security interest in the assets of the Trust in favor of the Trustee.

In addition, as soon as practicable after notice of termination of the
Trust, the Trustee will distribute via the Depository and the DTC Participants
to each Beneficial Owner redeeming Nasdaq-100 Shares in Creation Unit size
aggregations prior to the termination date specified in such notice, a portion
of the Securities and cash as described above (see "Redemption of Nasdaq-100
Shares" and "Administration of the Trust--Termination"). Otherwise, the Trustee
will distribute to each Beneficial Owner (whether in Creation Unit size
aggregations or otherwise), as soon as practical after termination of the Trust,
such Beneficial Owner's pro rata share in cash of the net asset value of the
Trust (see "Administration of the Trust--Termination").

All distributions are made by the Trustee through the Depository and the DTC
Participants to Beneficial Owners as recorded on the book entry system of the
Depository and the DTC Participants (see "The Trust--Book-Entry-Only System").

The settlement date for the creation of Nasdaq-100 Shares in Creation Unit
size aggregations or the purchase of Nasdaq-100 Shares in the secondary market
must occur on or prior to the Record Date in order for such creator or purchaser
to receive any distributions made by the Trust on the next Dividend

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Payment Date. If the settlement date for such creation or a secondary market
purchase occurs after the Record Date, the distribution will be made to the
prior security holder or Beneficial Owner as of such Record Date.

TRUST SUPERVISION

The Trust's Portfolio is not managed and therefore the adverse financial
condition of an issuer of securities in the Trust does not, in itself, require
the sale of Securities from the Portfolio. The Trustee shall, on a
non-discretionary basis, make changes to the Portfolio as described above (see
"The Portfolio--Adjustments to the Portfolio").

The Trustee will direct its securities transactions only to brokers or
dealers, which may include affiliates of the Trustee, from whom it expects to
obtain the most favorable prices for execution of orders.

STATEMENTS TO BENEFICIAL OWNERS

With each distribution, the Trustee will furnish for distribution to
Beneficial Owners (see "The Trust--Book-Entry-Only System") a statement setting
forth the amount being distributed expressed as a dollar amount per Nasdaq-100
Share.

Promptly after the end of each fiscal year, the Trustee will furnish to the
DTC Participants, for distribution to each person who was a Beneficial Owner of
Nasdaq-100 Shares at the end of such fiscal year, an annual report of the Trust
containing financial statements audited by independent accountants of nationally
recognized standing and such other information as may be required by applicable
laws, rules, and regulations.

The Trustee maintains a record of the creation and redemption of Nasdaq-100
Shares in Creation Unit size aggregations. The Depository maintains a record on
its book-entry system of the DTC Participant ownership of Nasdaq-100 Shares and
the number of Nasdaq-100 Shares owned (see "The Trust--Book-Entry-Only System").
Certificates are not issued for Nasdaq-100 Shares, whether in Creation Unit size
denominations or otherwise. Beneficial Owners have the rights accorded to
holders of "book-entry" securities under applicable law. Beneficial Owners may
transfer Nasdaq-100 Shares through the Depository by instructing the DTC
Participant(s) holding the Nasdaq-100 Shares for such Beneficial Owner in
accordance with standard securities industry procedures.

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RIGHTS OF BENEFICIAL OWNERS

Nasdaq-100 Shares in Creation Unit size aggregations (I.E., 50,000
Nasdaq-100 Shares) may be tendered to the Trustee for redemption (see
"Redemption of Nasdaq-100 Shares"). Beneficial Owners may sell Nasdaq-100 Shares
in the secondary market, but must accumulate enough Nasdaq-100 Shares (I.E.,
50,000 shares) to constitute a full Creation Unit in order to redeem through the
Trust. The death or incapacity of any Beneficial Owner will not operate to
terminate the Trust nor entitle such Beneficial Owner's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust. By its purchase of a Nasdaq-100
Share, each Beneficial Owner expressly waives any right he or she may have under
law to require the Trustee at any time to account, in any manner other than as
expressly provided in the Trust Agreement, for the Securities or moneys from
time to time received, held, and applied by the Trustee under the Trust.

Beneficial Owners shall not have the right to vote concerning the Trust,
except as described below with respect to termination and as otherwise expressly
set forth in the Trust Agreement or in any manner control the operation and
management of the Trust, nor shall any Beneficial Owner be liable to any other
person by reason of any action taken by the Sponsor or the Trustee.

AMENDMENT

The Trust Agreement may be amended from time to time by the Trustee and the
Sponsor without the consent of any Beneficial Owners (a) to cure any ambiguity
or to correct or supplement any provision thereof which may be defective or
inconsistent or to make such other provisions in regard to matters or questions
arising thereunder as will not adversely affect the interests of Beneficial
Owners; (b) to change any provision thereof as may be required by the
Commission; (c) to add or change any provision as may be necessary or advisable
for the continuing qualification of the Trust as a "regulated investment
company" under the Code; (d) to add or change any provision thereof as may be
necessary or advisable in the event that NSCC or the Depository is unable or
unwilling to continue to perform its functions as set forth therein; (e) to add
or change any provision thereof to conform the adjustments to the Portfolio and
the Portfolio Deposit to changes, if any, made by Nasdaq in its method of
determining the Index; (f) to add or change any provision thereof as may be
necessary to implement a dividend reinvestment plan or service; (g) to make
changes to the Transaction Fee and to other amounts charged in connection with
creations and redemptions of Nasdaq-100 Shares within the original parameters
set forth in the Trust Agreement; and (h) to make changes to the level of net
dividends below which a dividend distribution will not be

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paid in a given quarter and will instead be rolled into the next Accumulation
Period.

The Trust Agreement may also be amended from time to time by the Sponsor and
the Trustee with the consent of the Beneficial Owners of 51% of the outstanding
Nasdaq-100 Shares to add provisions to or change or eliminate any of the
provisions of the Trust Agreement or to modify the rights of Beneficial Owners;
provided, however, that the Trust Agreement may not be amended without the
consent of the Beneficial Owners of all outstanding Nasdaq-100 Shares if such
amendment would (1) permit, except in accordance with the terms and conditions
of the Trust Agreement, the acquisition of any securities other than those
acquired in accordance with the terms and conditions of the Trust Agreement;
(2) reduce the interest of any Beneficial Owner in the Trust; or (3) reduce the
percentage of Beneficial Owners required to consent to any such amendment.

Promptly after the execution of any such amendment, the Trustee shall
receive from the Depository, pursuant to the terms of the Depository Agreement,
a list of all DTC Participants holding Nasdaq-100 Shares. The Trustee shall
inquire of each such DTC Participant as to the number of Beneficial Owners for
whom such DTC Participant holds Nasdaq-100 Shares, and provide each such DTC
Participant with sufficient copies of a written notice of the substance of such
amendment for transmittal by each such DTC Participant to such Beneficial Owners
(see "The Trust--Book-Entry-Only System").

TERMINATION

The Trust Agreement provides that the Sponsor has the discretionary right to
direct the Trustee to terminate the Trust if at any time prior to March 4, 2002
the net asset value of the Trust falls below $150,000,000 or if at any time on
or after three years following the Initial Date of Deposit the net asset value
of the Trust is less than $350,000,000, as such dollar amount shall be adjusted
for inflation in accordance with the CPI-U, such adjustment to take effect at
the end of the fourth year following the Initial Date of Deposit and at the end
of each year thereafter and to be made so as to reflect the percentage increase
in consumer prices as set forth in the CPI-U for the twelve month period ending
in the last month of the preceding fiscal year.

The Trust will also terminate in the event that Nasdaq-100 Shares are
delisted from the Amex and are not subsequently relisted on a national
securities exchange or a quotation medium operated by a national securities
association. The Amex will consider the suspension of trading in or the
delisting of Nasdaq-100 Shares as discussed above (see "Marketplace Listing").

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The Trust may also be terminated (a) by the agreement of the Beneficial
Owners of 66 2/3% of outstanding Nasdaq-100 Shares; (b) if the Depository is
unable or unwilling to continue to perform its functions as set forth under the
Trust Agreement and a suitable replacement is unavailable; (c) if NSCC no longer
provides clearance services with respect to Nasdaq-100 Shares and a suitable
replacement is unavailable, or if the Trustee is no longer a participant in NSCC
or any successor to NSCC providing clearance services; (d) if Nasdaq ceases
publishing the Index; and (e) if the License Agreement is terminated. Currently,
the License Agreement is scheduled to expire on March 10, 2004 in accordance
with its terms and is subject to a five year renewal period following such date.
The Trust will also terminate by its terms on the Mandatory Termination Date.

If either the Sponsor or the Trustee shall resign or be removed and a
successor is not appointed, the Trust will terminate (see "Resignation, Removal
and Liability--The Trustee" and "Resignation, Removal and Liability--The
Sponsor"). The dissolution of the Sponsor or its ceasing to exist as a legal
entity for any cause whatsoever, however, will not cause the termination of the
Trust Agreement or the Trust unless the Trustee deems termination to be in the
best interests of Beneficial Owners.

Prior written notice of the termination of the Trust will be given at least
twenty (20) days prior to termination of the Trust to all Beneficial Owners in
the manner described above (see "The Trust--Book-Entry-Only System"). The notice
will set forth the date on which the Trust will be terminated (the "Termination
Date"), the period during which the assets of the Trust will be liquidated, the
date on which Beneficial Owners of Nasdaq-100 Shares (whether in Creation Unit
size aggregations or otherwise) will receive in cash the net asset value of the
Nasdaq-100 Shares held, and the date determined by the Trustee upon which the
books of the Trust shall be closed. Such notice shall further state that, as of
the date thereof and thereafter, neither requests to create additional Creation
Units nor Portfolio Deposits will be accepted, and that, as of the date thereof
and thereafter, the portfolio of Securities delivered upon redemption shall be
essentially identical in composition and weighting to the Securities held in the
Trust as of such date rather than the securities portion of the Portfolio
Deposit as in effect on the date the request for redemption is deemed received.
Beneficial Owners of Nasdaq-100 Shares in Creation Unit size aggregations may,
in advance of the Termination Date, redeem in kind directly from the Trust (see
"Redemption of Nasdaq-100 Shares").

Within a reasonable period of time after the Termination Date the Trustee
shall, subject to any applicable provisions of law, use its best efforts to sell
all of the Securities not already distributed to redeeming Beneficial Owners of
Creation Units. The Trustee shall not be liable for or responsible in any way

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for depreciation or loss incurred by reason of any such sale or sales. The
Trustee may suspend such sales upon the occurrence of unusual or unforeseen
circumstances, including but not limited to a suspension in trading of a
Security, the closing or restriction of trading, the outbreak of hostilities, or
the collapse of the economy. Upon receipt of proceeds from the sale of the last
Security, the Trustee shall deduct therefrom its fees and all other expenses
(see "Expenses of the Trust"). The remaining amount shall be transmitted to the
Depository for distribution via the DTC Participants, together with a final
statement setting forth the computation of the gross amount distributed.
Nasdaq-100 Shares not redeemed prior to termination of the Trust will be
redeemed in cash at net asset value based on the proceeds of the sale of the
Securities. Such redemptions in cash at net asset value shall be available to
all Beneficial Owners, with no minimum aggregation of Nasdaq-100 Shares
required.

RESIGNATION, REMOVAL, AND LIABILITY

THE TRUSTEE

Under the Trust Agreement, the Trustee may resign and be discharged of the
Trust created by the Trust Agreement by executing a notice of resignation in
writing and filing such notice with the Sponsor and mailing a copy of the notice
of resignation to all DTC Participants that are reflected on the records of the
Depository as owning Nasdaq-100 Shares, for distribution to Beneficial Owners as
provided above (see "The Trust--Book-Entry-Only System") not less than sixty
(60) days before the date such resignation is to take effect. Such resignation
will become effective upon the appointment of and the acceptance of the Trust by
a successor Trustee or, if no successor is appointed within sixty (60) days
after the date such notice of resignation is given, the Trust shall terminate
(see "Administration of the Trust--Termination"). The Sponsor, upon receiving
notice of such resignation, is obligated to use its best efforts to appoint a
successor Trustee promptly.

In case the Trustee becomes incapable of acting as such or is adjudged a
bankrupt or is taken over by any public authority, the Sponsor may discharge the
Trustee and appoint a successor Trustee as provided in the Trust Agreement.
Notice of such discharge and appointment shall be mailed by the Sponsor to the
Depository and the DTC Participants for distribution to Beneficial Owners.

Upon a successor Trustee's execution of a written acceptance of an
appointment as Trustee for the Trust, such successor Trustee will become vested
with all the rights, powers, duties, and obligations of the original Trustee.

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A successor Trustee is required to be a bank, trust company, corporation, or
national banking association organized and doing business under the laws of the
United States or any state thereof, to be authorized under such laws to exercise
corporate trust powers, and to have at all times an aggregate capital, surplus,
and undivided profit of not less than $50,000,000.

Beneficial Owners of 51% of the then outstanding Nasdaq-100 Shares may at
any time remove the Trustee by written instrument(s) delivered to the Trustee
and the Sponsor. The Sponsor shall thereupon use its best efforts to appoint a
successor Trustee in the manner specified above and in the Trust Agreement.

The Trust Agreement provides that the Trustee is not liable for any action
taken in reasonable reliance on properly executed documents or for the
disposition of moneys or Securities or for the evaluations required to be made
thereunder, except by reason of its own gross negligence, bad faith, wilful
malfeasance, wilful misconduct, or reckless disregard of its duties and
obligations, nor is the Trustee liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities in the Trust. In the event of the failure of the Sponsor to act, the
Trustee may act and is not liable for any such action taken by it in good faith.
The Trustee is not personally liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee or upon or in respect of the Trust which the Trustee may be
required to pay under any present or future law of the United States of America
or of any other taxing authority having jurisdiction. In addition, the Trust
Agreement contains other customary provisions limiting the liability of the
Trustee. The Trustee and its directors, subsidiaries, shareholders, officers,
employees, and affiliates under common control with the Trustee (each a "Trustee
Indemnified Party") will be indemnified from the assets of the Trust and held
harmless against any loss, liability, or expense incurred without gross
negligence, bad faith, wilful misconduct, wilful malfeasance on the part of such
Trustee Indemnified Party, or reckless disregard of its duties and obligations,
arising out of, or in connection with its acceptance or administration of the
Trust, including the costs and expenses (including counsel fees) of defending
against any claim or liability.

THE SPONSOR

If at any time the Sponsor shall fail to undertake or perform or become
incapable of undertaking or performing any of the duties which by the terms of
the Trust Agreement are required of it to be undertaken or performed, or shall
resign, or shall become bankrupt or its affairs shall be taken over by public
authorities, the Trustee may appoint a successor Sponsor as shall be

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satisfactory to the Trustee, agree to act as Sponsor itself, or may terminate
the Trust Agreement and liquidate the Trust (see "Administration of the Trust--
Termination"). Notice of the resignation or removal of the Sponsor and the
appointment of a successor shall be mailed by the Trustee to the Depository and
the DTC Participants for distribution to Beneficial Owners (see "The
Trust--Book-Entry-Only System"). Upon a successor Sponsor's execution of a
written acceptance of such appointment as Sponsor of the Trust, such successor
Sponsor shall become vested with all of the rights, powers, duties, and
obligations of the original Sponsor. Any successor Sponsor may be compensated at
rates deemed by the Trustee to be reasonable.

The Sponsor may resign by executing and delivering to the Trustee an
instrument of resignation. Such resignation shall become effective upon the
appointment of a successor Sponsor and the acceptance of such appointment by the
successor Sponsor, unless the Trustee either agrees to act as Sponsor or
terminates the Trust Agreement and liquidates the Trust, which the Trustee shall
do if no successor Sponsor is appointed (see "Administration of the
Trust--Termination").

The dissolution of the Sponsor or its ceasing to exist as a legal entity for
any reason whatsoever will not cause the termination of the Trust Agreement or
the Trust unless the Trustee deems termination to be in the best interests of
the Beneficial Owners of Nasdaq-100 Shares.

The Trust Agreement provides that the Sponsor is not liable to the Trustee,
the Trust, or to the Beneficial Owners of Nasdaq-100 Shares for taking any
action or for refraining from taking any action made in good faith or for errors
in judgment, but is liable only for its own gross negligence, bad faith, wilful
misconduct, or wilful malfeasance in the performance of its duties or its
reckless disregard of its obligations and duties under the Trust Agreement. The
Sponsor is not liable or responsible in any way for depreciation or loss
incurred by the Trust by reason of the sale of any Securities of the Trust. The
Trust Agreement further provides that the Sponsor and its directors,
subsidiaries, shareholders, officers, employees, and affiliates under common
control with the Sponsor (each a "Sponsor Indemnified Party") shall be
indemnified from the assets of the Trust and held harmless against any loss,
liability, or expense incurred without gross negligence, bad faith, wilful
misconduct, or wilful malfeasance on the part of any Sponsor Indemnified Party
in the performance of its duties or reckless disregard of its obligations and
duties under the Trust Agreement, including the payment of the costs and
expenses (including counsel fees) of defending against any claim or liability.

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SPONSOR

The Sponsor of the Trust is Nasdaq Investment Product Services, Inc.
(formerly, Nasdaq-Amex Investment Product Services, Inc.), a Delaware
corporation incorporated on August 7, 1998 with offices c/o The Nasdaq Stock
Market, Inc., 1735 K Street NW, Washington, DC 20006-1500. The Sponsor's
Internal Revenue Service Employer Identification Number is 52-2115391. Nasdaq
owns all of the Sponsor's outstanding shares of common stock. Nasdaq is a
"control person" of the Sponsor as such term is defined in the Securities Act.

The Sponsor, at its own expense, may from time to time provide additional
promotional incentives to brokers who sell Nasdaq-100 Shares to the public. In
certain instances, these incentives may be provided only to those brokers who
meet certain threshold requirements for participation in a given incentive
program, such as selling a significant number of Nasdaq-100 Shares within a
specified time period.

TRUSTEE

The Trustee is The Bank of New York, a corporation organized under the laws
of the State of New York with trust powers. The Trustee has a trust office at
101 Barclay Street, New York, New York 10286 and its Internal Revenue Service
Employer Identification Number is 135-160382. The Trustee is subject to
supervision and examination by the Federal Reserve Bank of New York, the Federal
Deposit Insurance Corporation and the New York State Banking Department.

DEPOSITORY

The Depository Trust Company, New York, New York, a limited purpose trust
company and member of the Federal Reserve System, acts as Depository for
Nasdaq-100 Shares. The Depository receives customary fees for its services.

LEGAL OPINION

The legality of the Nasdaq-100 Shares offered hereby has been passed upon by
Jones, Day, Reavis & Pogue, New York, New York, as counsel for the Sponsor.
Winston & Strawn, New York, New York, has acted as counsel for the Trustee.

INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS

The statement of assets and liabilities, including the schedule of
investments of the Nasdaq-100 Trust, Series 1, as of September 30, 1999 and the
related statements of operations, changes in net assets and the financial
highlights for the period of March 5, 1999 to September 30, 1999 appearing in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

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INFORMATION AND COMPARISON RELATING TO TRUST,
SECONDARY MARKET TRADING, NET ASSET SIZE,
PERFORMANCE, AND TAX TREATMENT

Information regarding various aspects of the Trust, including the net asset
size thereof, as well as the secondary market trading, the performance, and the
tax treatment of Nasdaq-100 Shares, may be included from time to time in
advertisements, sales literature, and other communications as well as in reports
to current or prospective Beneficial Owners.

Information may be provided to prospective investors to help such investors
assess their specific investment goals and to aid in their understanding of
various financial strategies. Such information may present current economic and
political trends and conditions and may describe general principles of investing
such as asset allocation, diversification, and risk tolerance, as well as
specific investment techniques such as indexing and hedging. In addition,
information may be presented to prospective or current Beneficial Owners
regarding the purchase of Nasdaq-100 Shares in the secondary market, such as
margin requirements, types of orders that may be entered, and information
concerning short sales. Similarly, market data symbols, trading fractions, other
trading information, and the CUSIP number relating to Nasdaq-100 Shares may be
included in such information. Comparisons with other investment vehicles, such
as mutual funds, may be made with respect to the application of such
requirements, costs of fund management and administration, costs and advantages
of intraday trading, and rules applicable to short sales.

Information regarding the Trust's net asset size may be stated in
communications to prospective or current Beneficial Owners for one or more time
periods, including annual, year-to-date, or daily periods. Such information may
also be expressed in terms of the total number of Nasdaq-100 Shares outstanding
as of one or more time periods. Factors integral to the size of the Trust's net
assets, such as creation volume and activity, may also be discussed and may be
specified from time to time or with respect to various periods of time.
Comparisons of such information during various periods may also be made and may
be expressed by means of percentages.

Information may be provided to investors regarding the ability to engage in
short sales of Nasdaq-100 Shares, including reference to any applicable
exemption from the "tick test" provision of the Commission's "short sale rule"
(Rule 10a-1 under the Securities Exchange Act of 1934), to permit short sales on
"minus" or "zero-minus" ticks. Selling short refers to the sale of securities
which the seller does not own, but which the seller arranges to borrow prior to
effecting the sale. Institutional investors may be advised that lending their
Nasdaq-100 Shares to short sellers may generate stock loan credits which may
supplement the return they can earn from an investment in Nasdaq-100 Shares.
These stock loan credits may provide a useful source of additional income for
certain institutional investors who can arrange to lend Nasdaq-100

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Shares. Potential short sellers may be advised that a short rebate (functionally
equivalent to partial use of proceeds of the short sale) may reduce their cost
of selling short.

Information may be provided to investors regarding capital gains
distributions by the Trust, including historical information relating to such
distributions. Comparisons between the Trust and other investment vehicles such
as mutual funds may be made regarding such capital gains distributions, as well
as relative tax efficiencies between the Trust and such other investment
vehicles (E.G., realization of capital gains or losses to the Trust and to such
other investment vehicles in connection with redemption of their respective
securities). (See "Tax Status of the Trust" for discussion of tax consequences
to Beneficial Owners of Nasdaq-100 Shares in connection with the sale or
redemption of Nasdaq-100 Shares.) Based on projected differences between
Nasdaq-100 Shares and conventional mutual funds with regard to capital gains
distributions, projections may be made regarding comparative capital gains
distributions and tax rates for taxable investors holding Nasdaq-100 Shares over
a long period of time. Comparisons may also be provided regarding the probable
tax impact resulting from rebalancing of the Trust portfolio (see "The
Portfolio--Adjustments to the Portfolio") and adjustments to the portfolio of an
actively managed investment vehicle.

Specifically, information may be provided to prospective or current
investors comparing and contrasting the tax efficiencies of conventional mutual
funds with Nasdaq-100 Shares. Both conventional mutual funds and the Trust may
be required to recognize capital gains incurred as a result of adjustments to
the composition and weighting of the Index and therefore to their respective
portfolios. From a tax perspective, however, a significant difference between a
conventional mutual fund and the Trust is the process by which their shares are
redeemed. In cases where a conventional mutual fund experiences redemptions in
excess of subscriptions ("net redemptions") and has insufficient cash available
to fund such net redemptions, such fund may have to sell stocks held in its
portfolio to raise and pay cash to redeeming shareholders. A mutual fund will
generally experience a taxable gain or loss when it sells such portfolio stocks
in order to pay cash to redeeming fund shareholders. In contrast, the redemption
mechanism for Nasdaq-100 Shares does not ordinarily involve selling the
Securities held by the Trust in the event of a redemption. Instead, the Trust
delivers an actual portfolio of securities in an "in-kind" exchange to any
person redeeming Nasdaq-100 Shares in Creation Unit size aggregations (I.E.,
50,000 Nasdaq-100 Shares per Creation Unit). While this "in-kind" exchange is a
taxable transaction to the redeeming entity (usually a broker/dealer) making the
exchange, it generally does not constitute a taxable transaction at the Trust
level and, consequently, there is no realization of taxable gain or loss by the
Trust with respect to such "in-kind" exchanges. In a period of market
appreciation of the Index and, consequently, appreciation of

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Nasdaq-100 Shares, this "in-kind" redemption mechanism has the effect of
eliminating the recognition and distribution of those net unrealized gains at
the Trust level. Investors should note that although the same result would occur
for conventional mutual funds utilizing an "in-kind" redemption mechanism, the
opportunities to redeem fund shares by delivering portfolio stocks "in-kind" are
limited in most mutual funds.

Investors may be informed that, while no unequivocal statement can be made
as to the net tax impact on a conventional mutual fund resulting from the
purchases and sales of its portfolio stocks over a period of time, conventional
funds that have accumulated substantial unrealized capital gains, if they
experience net redemptions and do not have sufficient available cash, may be
required to make taxable capital gains distributions that are generated by
changes in such fund's portfolio. In contrast, the "in-kind" redemption
mechanism of Nasdaq-100 Shares may make them more tax efficient investments
under most circumstances than comparable conventional mutual fund shares. As
discussed above, the "in-kind" redemption feature of the Trust tends to lower
the amount of annual net capital gains distributions to Nasdaq-100 Share holders
as compared to their conventional mutual fund counterparts. Since shareholders
are generally required to pay income tax on capital gains distributions, the
smaller the amount of such distributions, the less taxes that are payable
currently. To the extent that the Trust is not required to recognize capital
gains, the Nasdaq-100 Share holder is able, in effect, to defer tax on such
gains until he sells or otherwise disposes of his shares, or the Trust
terminates. If such holder retains his shares until his death, under current law
the tax basis of such shares would be adjusted to their then fair market value.

Information regarding the secondary market trading activity of Nasdaq-100
Shares also may be presented over one or more stated time periods, such as for
daily, monthly, quarterly, or annual periods. Nasdaq-100 Share secondary market
trading volume information may be compared with similar information relating to
other issues trading on the Amex during the same reporting period. Average daily
secondary market trading volume of Nasdaq-100 Shares may also be reported from
time to time. Comparisons of such information during various periods may also be
made, and may be expressed by means of percentages.

Information may also be provided in communications to prospective investors
or current Beneficial Owners comparing and contrasting the relative advantages
of investing in Nasdaq-100 Shares as compared to other investment vehicles, such
as mutual funds, both on an individual and a group basis (E.G., stock index
mutual funds). Such information may include comparisons of costs and expense
ratios, expressed either in dollars or basis points, stock lending activities,
permitted investments and hedging activities (E.G., engaging in options or
futures transactions), and portfolio turnover data and analyses. In addition,
such information may quote, reprint, or include portions of financial,

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scholarly, or business publications or periodicals, including model allocation
schedules or portfolios, as the foregoing relate to the comparison of Nasdaq-100
Shares to other investment vehicles, current economic, financial and political
conditions, investment philosophy or techniques, or the desirability of owning
Nasdaq-100 Shares.

In addition, information on the performance of Nasdaq-100 Shares on the
basis of changes in price per Nasdaq-100 Share with or without reinvesting all
dividends, if any, and/or any distributions of capital in additional Nasdaq-100
Shares may be included from time to time in such information. Average annualized
performance may be stated for various periods. Total return figures may also be
stated for a period from the Initial Date of Deposit, a date at least twelve
months prior to the end of the reporting period or for annual periods for the
life of the Trust. Total return measures the percentage growth in the total
dollar value of an investment in Nasdaq-100 Shares (reflecting dividends, if
any, and capital appreciation but without provision for any income taxes
payable).

Information on the Index contained in this Prospectus, as updated from time
to time, may also be included from time to time in such material. The
performance of the Trust, of the Index (provided information is also given
reflecting the performance of the Trust in comparison to the Index) or both may
also be compared to the performance of money managers as reported in market
surveys such as SEI Fund Evaluation Survey (a leading database of tax-exempt
funds) or mutual funds such as those reported by Lipper Analytical
Services Inc., Money Magazine Fund Watch, Wiesenberger Investment Companies
Service, Morningstar Incorporated, and Value Line Investment Survey, each of
which measures performance following their own specific and well-defined
calculation measures, or of the New York Stock Exchange Composite Index, the
American Stock Exchange Composite Index, the Nasdaq Composite Index (indices of
stocks traded on the New York and American Stock Exchanges and the Nasdaq Stock
Market, respectively), the S&P 500 Index-Registered Trademark- (a broad-based
index of 500 publicly traded companies), the S&P MidCap 400 Index-TM- (a
broad-based index of 400 publicly traded middle capitalization companies), the
Dow Jones Industrial Average(SM) (an index currently comprising 30 publicly
traded large capitalization companies), or similar domestic or foreign
measurement standards during the same period of time. In addition to all other
sources of comparative information, comparative performance figures published by
other funds or money managers may be included from time to time. Information may
also be included regarding the aggregate amount of assets committed to index
investing generally by various types of investors, such as pension funds and
other institutional investors, which currently exceeds $300 billion.

Information on the relative price performance of Nasdaq-100 Shares in
relation to other securities and/or indices may be represented in the form of

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"correlation." Correlation is a standard measure of the degree of linear
association between two price series, and ranges from minus one hundred percent
(-100%) (I.E., perfect negative linear association) to positive one hundred
percent (100%) (I.E., perfect positive linear association).

One important difference between Nasdaq-100 Shares and conventional mutual
fund shares is that Nasdaq-100 Shares are available for purchase or sale on an
intraday basis on the Amex. An investor who buys shares in a conventional mutual
fund will usually buy or sell shares at a price at or related to the closing net
asset value per share, as determined by the fund. In contrast, Nasdaq-100 Shares
are not offered for purchase or redeemed for cash at a fixed relationship to
closing NAV. The tables below illustrate the distribution relationships of daily
pricing data for Nasdaq-100 Shares, NAV and the Nasdaq-100 Index for the period
March 10, 1999 (the date the Nasdaq-100 Shares began trading on the Amex)
through December 31, 1999. These tables may help investors compare the trading
costs and intraday trading risks of Nasdaq-100 Shares to funds sold and redeemed
at prices related to closing NAV.

Investors who purchase or sell Nasdaq-100 Shares may wish to evaluate the
volatility of the price of Nasdaq-100 Shares during the trading day. To assist
investors in making such an evaluation, the Daily Percentage Price Range table
illustrates the volatility of price movements for both Nasdaq-100 Shares and the
Nasdaq-100 Index on a daily basis. Investors who purchase or sell Nasdaq-100
Shares may also wish to evaluate the opportunity to buy or sell on an intraday
basis versus the assurance of a transaction at or related to closing NAV. To
assist investors in making this comparison, the High and Low Price versus
Closing Value table illustrates the possibility of buying or selling Nasdaq-100
Shares at prices less or more favorable than closing NAV.

Investors may wish to evaluate the potential of Nasdaq-100 Shares to
approximate the value of the assets in the Trust as a basis of valuation of the
shares. The Closing Price versus NAV table illustrates the closing value of
Nasdaq-100 Shares in relation to the underlying value of the assets in the Trust
on a daily basis. Additionally, the NAV versus Nasdaq-100 Index table shows the
difference between the underlying value of assets in the Trust and the
Nasdaq-100 Index based on month-end values.

Finally, investors may wish to consider the average bid/asked spread on
Nasdaq-100 Shares, as illustrated in the Bid/Ask Spread table, and add any
commissions charged by a broker to determine the direct costs of trading
Nasdaq-100 Shares.

The information provided in the following tables with respect to the
Nasdaq-100 Shares (including price ranges, relationship of prices to closing
NAV, and bid/asked spreads) may vary materially over time. There is some
evidence, for example, that the bid/asked spread will widen in more volatile
markets and narrow when markets are less volatile.

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DAILY PERCENTAGE PRICE RANGES:
FREQUENCY DISTRIBUTION FOR
NASDAQ-100 INDEX AND NASDAQ-100 TRUST, SERIES 1
(FROM MARCH 10, 1999 THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
NASDAQ-100 INDEX NASDAQ-100 TRUST
---------------------- ----------------------
RANGE FREQUENCY % OF TOTAL FREQUENCY % OF TOTAL
- ----- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
0-1.00%............................ 1 0.48% 0 0.00%
1.01-1.50%......................... 13 6.28% 13 6.28%
1.51-2.00%......................... 35 16.91% 31 14.98%
2.01-2.50%......................... 48 23.19% 51 24.64%
2.51-3.00%......................... 33 15.94% 41 19.81%
3.01-3.50%......................... 32 15.46% 29 14.01%
3.51-4.00%......................... 20 9.66% 13 6.28%
4.01-5.00%......................... 18 8.70% 17 8.21%
> 5.00%............................ 7 3.38% 12 5.80%
--- ------ --- ------
Total 207 100.00% 207 100.00%
</TABLE>

HIGH AND LOW PRICES V. CLOSING VALUE
FREQUENCY DISTRIBUTION FOR
NASDAQ-100 INDEX AND NASDAQ-100 TRUST, SERIES 1
(FROM MARCH 10, 1999 THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
NASDAQ-100 INDEX NASDAQ-100 TRUST
----------------------------------------------- -----------------------------------------------
INTRADAY HIGH INTRADAY LOW INTRADAY HIGH INTRADAY LOW
VALUE ABOVE VALUE BELOW VALUE ABOVE VALUE BELOW
CLOSING VALUE CLOSING VALUE CLOSING VALUE CLOSING VALUE
---------------------- ---------------------- ---------------------- ----------------------
RANGE FREQUENCY % OF TOTAL FREQUENCY % OF TOTAL FREQUENCY % OF TOTAL FREQUENCY % OF TOTAL
- ----- --------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.01-1.00%........... 1 0.51% 1 0.50% 0 0.00% 0 0.00%
1.01-1.50%........... 13 6.63% 12 5.97% 12 6.12% 13 6.47%
1.51-2.00%........... 35 17.86% 34 16.92% 31 15.82% 29 14.43%
2.01-2.50%........... 47 23.98% 46 22.89% 48 24.49% 50 24.88%
2.51-3.00%........... 30 15.31% 32 15.92% 37 18.88% 40 19.90%
3.01-3.50%........... 30 15.31% 32 15.92% 28 14.29% 29 14.43%
3.51-4.00%........... 18 9.18% 20 9.95% 12 6.12% 12 5.97%
4.01-5.00%........... 15 7.65% 18 8.96% 15 7.65% 17 8.46%
> 5.00%.............. 7 3.57% 6 2.99% 11 5.61% 12 5.97%
--- ------ --- ------ --- ------ --- ------
Total 196 100.00% 201 100.00% 194 100.00% 202 100.00%
</TABLE>

The frequency totals in the second table above are less than the frequency
totals in the prior table because there were occasions during the period when
the daily closing value was equal to the daily high or low value.

B-97
<PAGE>
CLOSING PRICES V. NET ASSET VALUE
FREQUENCY DISTRIBUTION FOR
NASDAQ-100 TRUST, SERIES 1 AND NET ASSET VALUE
(FROM MARCH 10, 1999 THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
CLOSING PRICE ON AMEX CLOSING PRICE ON AMEX
ABOVE TRUST NAV BELOW TRUST NAV
---------------------- ----------------------
RANGE FREQUENCY % OF TOTAL FREQUENCY % OF TOTAL
- ----- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
0-.25%............... 63 57.27 60 61.86
.251%-.50%........... 30 27.27 29 29.90
.501%-1.00%.......... 16 14.55 6 6.19
1.01%-1.50%.......... 0 0.00 2 2.06
1.51%-2.00%.......... 1 0.91 0 0.00
>2.00%...............
------ ------ ------ ------
Total.......... 110 100.00% 97 100.00%
</TABLE>

Closing prices in the above table are based on prices as of 4:15 p.m.,
Eastern time, whereas NAV is calculated as of 4:00 p.m., Eastern time. As a
result, differences in closing prices are in large part based on price
variations between 4:00 and 4:15 p.m.

NET ASSET VALUE V. NASDAQ-100 INDEX
(MONTHLY CLOSING VALUES FROM MARCH 10, 1999 THROUGH DECEMBER 31, 1999)

<TABLE>
<CAPTION>
NAV NASDAQ-100 PERCENTAGE
MONTH EQUIVALENT INDEX VALUE DIFFERENCE
- ----- ---------- ----------- --------------
<S> <C> <C> <C>
March 1999.............................. 2106.37 2106.39 -0.0010%
April 1999.............................. 2136.16 2136.39 -0.0108%
May 1999................................ 2089.48 2089.70 -0.0105%
June 1999............................... 2296.00 2296.77 -0.0336%
July 1999............................... 2269.89 2270.93 -0.0460%
Aug. 1999............................... 2395.59 2396.87 -0.0533%
Sept. 1999.............................. 2406.26 2407.90 -0.0681%
Oct. 1999............................... 2635.27 2637.44 -0.0825%
Nov. 1999............................... 2963.94 2966.71 -0.0935%
Dec. 1999............................... 3704.34 3707.83 -0.0941%

Source: The Bank of New York.
</TABLE>

NAV equivalent amounts in the above table reflect sales by the Trustee of
Securities to pay Trust fees and expenses in excess of dividends and other
accrued income received by the Trust. The percentage difference between the NAV
equivalent and Nasdaq-100 Index value at December 31, 1999, without giving
effect to such sales, was -0.0192%.

B-98
<PAGE>
BID/ASKED SPREAD DISTRIBUTION
FREQUENCY DISTRIBUTION FOR
BID/ASKED SPREAD OF THE NASDAQ-100 TRUST, SERIES 1

<TABLE>
<CAPTION>
RANGE % OF TOTAL
- ----- ----------
<S> <C>
Locked or crossed............................ 3.11%
1/64-1/16.................................... 15.80%
5/64-1/8..................................... 28.19%
9/64-3/16.................................... 26.80%
13/64-1/4.................................... 22.32%
17/64-5/16................................... 2.21%
21/64-3/8.................................... 1.04%
29/64-1/2.................................... 0.17%
>1/2......................................... 0.15%
------
Total.................................. 100.00%
</TABLE>

The price range of Nasdaq-100 Shares for the period from March 10, 1999 to
December 31, 1999 was from $97.00 to $187.50; consequently, a spread of 1/8
represents from 0.13% to 0.07% of the share price.

Information relating to the relative price performance of Nasdaq-100 Shares
may be compared against a wide variety of investment categories and asset
classes, including common stocks, small capitalization stocks, long and
intermediate term corporate and government bonds, Treasury bills, the rate of
inflation in the United States (based on the Consumer Price Index ("CPI")) and
combinations of various capital markets. Historical returns of these and other
capital markets in the United States may be provided by independent statistical
studies and sources, such as those provided by Ibbotson Associates of Chicago,
Illinois. The performance of these capital markets is based on the returns of
different indices. Information may be presented using the performance of these
and other capital markets to demonstrate general investment strategies. For
example, the performance of Nasdaq-100 Shares may be compared to the performance
of selected asset classes such as short-term U.S. Treasury bills, long-term U.S.
Treasury bonds, long-term corporate bonds, mid-capitalization stocks, foreign
stocks, and small capitalization stocks and may also be measured against the
rate of inflation as set forth in well-known indices (such as the CPI).
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. Performance of Nasdaq-100 Shares may also be
compared to that of other indices or compilations that may be developed and made
available to the investing public in the future. Of course, such comparisons
will only reflect past performance of

B-99
<PAGE>
Nasdaq-100 Shares and the investment categories, indices, or compilations
chosen, and no guarantees can be made of future results regarding the
performance of either Nasdaq-100 Shares or the asset classes chosen for such
comparisons.

DIVIDEND REINVESTMENT SERVICE

The Sponsor reserves the right in the future to make the DTC book-entry
Dividend Reinvestment Service (the "Service") available for use by Beneficial
Owners through DTC Participants for reinvestment of their cash proceeds, if any.
The Sponsor may choose to make the Service available within its discretion and
without the consent of Beneficial Owners. Some or all DTC Participants may not
elect to utilize the Service; therefore, if the Service is made available for
Nasdaq-100 Shares, an interested Nasdaq-100 Share investor may wish to contact
his or her broker to ascertain the availability of the Service through such
broker at such time. Interested Beneficial Owners should also note that each
broker may require investors to adhere to specific procedures and timetables in
order to participate in the Service and investors should ascertain from their
broker such necessary details at the time when the Service is made available for
Nasdaq-100 Shares.

If and when the Service is utilized, the Trustee may use the cash proceeds
of dividends received from all Beneficial Owners participating in reinvestment
through the Service to obtain Index Securities necessary to create the requisite
number of Nasdaq-100 Shares at the close of business on each Nasdaq-100 Share
distribution date. Alternatively, the Trustee may choose to implement the
reinvestment of dividends through other means (E.G., through trade executions
for Nasdaq-100 Shares on the open market). Any cash balance remaining after the
requisite number of Nasdaq-100 Shares have been created or otherwise acquired
will be distributed, on a pro rata basis, to all Beneficial Owners who
participated in the Service. Brokerage commissions, if any, incurred in
obtaining the Index Securities necessary to create additional Nasdaq-100 Shares
with the cash from the distributions, or in purchasing Nasdaq-100 Shares on the
open market, will be an expense of the Trust.

Nasdaq-100 Shares acquired pursuant to the Service will be held by the
Beneficial Owners in the same manner, and subject to the same terms and
conditions, as original ownership of Nasdaq-100 Shares. Distributions reinvested
in additional Nasdaq-100 Shares through the Service will nevertheless be taxable
dividends to Beneficial Owners to the same extent as if received in cash.

B-100
<PAGE>
ADDITIONAL INFORMATION

A Registration Statement on Form S-6, including amendments thereto, relating
to the Trust, of which this Prospectus forms a part, has been filed with the
Commission. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits thereto. Statements contained in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Trust, reference is made
to such Registration Statement and the exhibits thereto. A copy of the
Registration Statement may be inspected by anyone without charge at the
Commission's principal office located at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, the Northeast Regional Office located at 7 World
Trade Center, 13th Floor, New York, New York 10048, and the Midwest Regional
Office located at Citicorp Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661-2511, and copies of all or any part thereof may be obtained from
the Public Reference Branch of the Commission upon the payment of certain fees
prescribed by the Commission. In addition, the Registration Statement may be
accessed electronically at the Commission's site on the World Wide Web located
at http://www.sec.gov. Such information is also available from Nasdaq by
calling: 1-800-843-2639.

B-101
<PAGE>
GLOSSARY OF DEFINED TERMS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
"10 Basis Point Limit"...................................... B-20
"1940 Act".................................................. B-23
"Accumulation Period"....................................... B-17
"Adjustment Day"............................................ B-54
"Balancing Amount".......................................... B-55
"Beneficial Owners"......................................... B-46
"Business Day".............................................. B-21
"Cash Component"............................................ B-18
"Cash Redemption Amount".................................... B-73
"Closing Time".............................................. B-40
"CNS"....................................................... B-17
"Code"...................................................... B-22
"Commission"................................................ B-17
"CPI"....................................................... B-99
"CPI-U"..................................................... B-26
"Creation Unit"............................................. B-1
"Depository Agreement"...................................... B-47
"Depository"................................................ B-21
"Distributor"............................................... B-27
"Dividend Payment Date"..................................... B-81
"divisor"................................................... B-48
"DTC"....................................................... B-21
"DTCC"...................................................... B-17
"DTC Participants".......................................... B-45
"ERISA"..................................................... B-22
"Ex-Dividend Date".......................................... B-23
"Income Net of Expense Amount".............................. B-17
"Index Securities".......................................... B-16
"Indirect Participants"..................................... B-45
"Initial Date of Deposit"................................... B-3
"IRA"....................................................... B-22
"IRS"....................................................... B-66
"Large Stocks".............................................. B-60
"License Agreement"......................................... B-62
"Mandatory Termination Date"................................ B-26
"Misweighting".............................................. B-50
"Misweighting Amount"....................................... B-50
"NASD"...................................................... B-17
"Nasdaq".................................................... B-1
"Nasdaq-100 Shares"......................................... B-1
</TABLE>

B-102
<PAGE>
GLOSSARY OF DEFINED TERMS (CONTINUED)

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
"Nasdaq-100 Clearing Process"............................... B-19
"Nasdaq-100 Participant Agreement".......................... B-42
"NAV Amount"................................................ B-54
"net capital gain".......................................... B-65
"net redemptions"........................................... B-93
"NSCC"...................................................... B-17
"NSCC Business Day"......................................... B-30
"Participating Party"....................................... B-17
"Plans"..................................................... B-22
"Portfolio"................................................. B-36
"Portfolio Deposit Amount".................................. B-55
"Portfolio Deposit"......................................... B-18
"Ranking Review"............................................ B-59
"Record Date"............................................... B-80
"Request Day"............................................... B-54
"Securities Act"............................................ B-68
"Service"................................................... B-100
"Small Stocks".............................................. B-60
"Sponsor"................................................... B-1
"Sponsor Indemnified Party"................................. B-90
"Termination Date".......................................... B-87
"Transaction Fee"........................................... B-19
"Transmittal Date".......................................... B-40
"Trust Agreement"........................................... B-16
"Trustee"................................................... B-16
"Trustee Indemnified Party"................................. B-89
"Weighting Analysis"........................................ B-50
</TABLE>

B-103
<PAGE>
NASDAQ-100 INDEX TRACKING STOCK
NASDAQ-100 TRUST(SM), SERIES 1

SPONSOR:
NASDAQ INVESTMENT PRODUCT SERVICES, INC.

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

This Prospectus does not include all of the information with respect to the
Nasdaq-100 Trust set forth in its Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the:

- Securities Act of 1933 (File No. 333-61001) and

- Investment Company Act of 1940 (File No. 811-8947).

TO OBTAIN COPIES FROM THE COMMISSION AT PRESCRIBED RATES--

<TABLE>
<S> <C>
WRITE: Public Reference Section of the Commission
450 Fifth Street, N.W., Washington, D.C. 20549
CALL: 1-800-SEC-0330
VISIT: http://www.sec.gov
</TABLE>

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

No person is authorized to give any information or make any representation about
the Nasdaq-100 Trust not contained in this Prospectus, and you should not rely
on any other information. Read and keep both parts of this Prospectus for future
reference.

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

PROSPECTUS DATED MARCH , 2000
<PAGE>
PART II - ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement on Form S-6 comprises the following papers and
documents:

The facing sheet.

The cross-reference sheet.

The prospectus.

The undertaking to file reports.

The signatures.

The following exhibits:

1. Ex. 23.1 - Consent of Ernst & Young LLP, Independent Auditors, relating
to the audited financial statements of the Trust.

2. Ex. 23.2 - Consent of Jones, Day, Reavis & Pogue.

3. Ex. 99.C - Code of Ethics applicable to the Registrant.

FINANCIAL STATEMENTS

1. Form of Statement of Assets and Liabilities and the related statements of
operations, changes in net assets and the financial highlights of the Trust
as shown in the current Prospectus for this series herewith.

2. Financial Statements of Nasdaq Investment Product Services, Inc., the
Sponsor, for the period from August 7, 1998 (inception) to December 31, 1998
(previously filed as part of Pre-Effective Amendment No. 3 to the
Registration Statement, filed March 9, 1999).

II-1
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Nasdaq-100 Trust, Series 1, has duly caused this Post-Effective Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, all in the District of Columbia, on the 10th day of
March, 2000.

<TABLE>
<S> <C> <C>
NASDAQ-100 TRUST, SERIES 1
---------------------------------------------
(Name of Registrant)

By: NASDAQ INVESTMENT PRODUCT SERVICES, INC.
---------------------------------------------
(Sponsor)

By: /s/ JOHN L. JACOBS
---------------------------------------------
John L. Jacobs
Executive Vice President
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed on
behalf of Nasdaq Investment Product Services, Inc., the Sponsor, by the
following persons who constitute a majority of its Board of Directors and by the
named persons who are in the following capacities on the date above indicated.

NASDAQ INVESTMENT PRODUCT SERVICES, INC.

<TABLE>
<C> <S>
J. PATRICK CAMPBELL*
------------------------------------------- Director, Chairman
J. Patrick Campbell

SALVATORE F. SODANO*
------------------------------------------- Director, Chief Operating Officer and Chief
Salvatore F. Sodano Financial Officer

L. BRIAN HOLLAND*
------------------------------------------- Director, President and Chief Executive
L. Brian Holland Officer

/s/ JOHN L. JACOBS
------------------------------------------- Director
John L. Jacobs

DOUGLAS A. PATTERSON*
------------------------------------------- Director
Douglas A. Patterson

JAMES R. ALLEN*
------------------------------------------- Director
James R. Allen
</TABLE>

* By his signature below, John L. Jacobs, pursuant to a duly executed Power of
Attorney filed with the Securities and Exchange Commission in connection with
the Registration Statement on August 7, 1998, has signed this Post-Effective
Amendment No. 1 to the Registration Statement on behalf of the persons whose
signatures are printed above, in the capacities set forth opposite their
respective names.

<TABLE>
<S> <C> <C>
By: /s/ JOHN L. JACOBS
-----------------------------------------
John L. Jacobs
Attorney-in-Fact
</TABLE>

II-2
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. TITLE OF DOCUMENT
- --------------------- -----------------
<S> <C>
1. Ex. 23.1 - Consent of Ernst & Young LLP, Independent
Auditors, relating to the audited financial statements of
the Trust.
2. Ex. 23.2 - Consent of Jones, Day, Reavis & Pogue.
3. Ex. 99.C - Code of Ethics applicable to the Registrant.
</TABLE>

<PAGE>
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS (NASDAQ-100 TRUST, SERIES 1)

We consent to the reference to our firm under the caption "Independent
Auditors and Financial Statements" and to the use of our report dated
December 6, 1999 (except for the matters discussed in Note 6, as to which the
date is March 8, 2000), relating to the statement of assets and liabilities,
including the schedule of investments, of the Nasdaq-100 Trust, Series 1, as
of September 30, 1999 and the related statements of operations, changes in
net assets and the financial highlights for the period of March 5, 1999 to
September 30, 1999, in Post-Effective Amendment No. 1 to the Registration
Statement (Form S-6 No. 333-61001) and related Prospectus of the Nasdaq-100
Trust, Series 1 dated March , 2000.

/s/ ERNST & YOUNG LLP

Washington, DC
March 8, 2000

<PAGE>

Exhibit 23.2

[LETTERHEAD OF JONES, DAY, REAVIS & POGUE]

March 10, 2000

We hereby consent to the reference to our firm under the caption "Legal
Opinion" in Post-Effective Amendment No. 1 to the Registration Statement of the
Nasdaq-100 Trust(sm), Series 1.

/s/ JONES, DAY, REAVIS & POGUE

Jones, Day, Reavis & Pogue

<PAGE>

Exhibit 99.c

NASD CODE OF CONDUCT

I. INTRODUCTION AND APPLICABILITY

The NASD -Registered Trademark- and Amex are self-regulatory organizations for
the securities industry and securities market operators. We expect NASD and Amex
members to adhere to a code of ethics and conduct in order to bring about a high
level of investor confidence in the securities industry. When NASD or Amex
members fail to follow ethical standards and violate industry rules, we take
appropriate disciplinary action.

Given our companies' roles as self-regulatory organizations and market
operators, our employees must conduct themselves in a manner that commands the
respect and confidence of both the securities industry and the public. Our
employees cannot merely refrain from improper activity; they must also be
careful to avoid situations that could create even an appearance that their
actions are not fully objective. To help ensure that our integrity, credibility,
and reputation for fair dealing are not compromised, we have adopted this Code
of Conduct to provide guidance to employees and to set standards for employee
conduct.

The Code of Conduct describes ethical standards to be observed by all NASD and
Amex employees. Although many areas of activity are treated specifically, the
Code of Conduct does not, and indeed cannot, cover all of the possible or
probable situations that may arise. A short rule that can be applied when
dealing with any questionable situation is: "WHEN IN DOUBT, DON'T." When
employees are confronted with a situation that is not addressed specifically in
the Code of Conduct, the NASD, Inc. Office of General Counsel should be
contacted to determine what effect the Code of Conduct may have on the
situation.

The Code of Conduct applies to all employees of the NASD and its subsidiary or
affiliated companies, which at this time include NASD Regulation, Inc., The
Nasdaq Stock Market, Inc., Nasdaq International, Ltd., Nasdaq International
Market Initiatives, Inc., and Amex. All NASD employees must comply with the
provisions of the Code of Conduct.

The Code of Conduct imposes standards that supplement - not supplant -
applicable legal requirements (E.G., the general prohibition against insider
trading, federal margin regulations). In addition, some employees are required
to comply with the ethical codes applicable to their professions (E.G.,
accountants, attorneys).

The Code of Conduct supersedes all previous guidelines and policies that may
have been issued by the NASD or Amex in the past, and any documents that may
have been issued by various departments to support or interpret such guidelines
or policies. Department-level management is prohibited from issuing any
documents to support, supplement, or interpret the Code of Conduct.

The text of the Code of Conduct is written in the masculine gender to facilitate
reading and understanding. Any reference to "he," "him," or "his" shall also
mean "she," "her," or "hers," as appropriate. All references herein to "NASD"
include the NASD and all of current and future subsidiary or affiliated
companies. All references herein to "employees" encompass all full-time and
temporary employees and officers of the NASD and all of its subsidiary and
affiliated companies.

<PAGE>
-2-

A complete list of definitions used in the Code of Conduct appears in Section
XIII, below.

<PAGE>
-3-

II. COMPLIANCE WITH THE CODE OF CONDUCT

All employees must become familiar with, and abide by, the Code of Conduct and
the interpretations and procedures issued thereunder. Failure to comply with one
or more of the provisions in the Code of Conduct may result in disciplinary
action against the employee, up to and including immediate termination of
employment. Disciplinary actions taken for violations of the Code of Conduct are
not subject to the Constructive Counseling Policy contained in the NASD Employee
Handbook.

When hired, each employee must certify, as a condition of employment, that he
has received, read, understands, and agrees to comply with the Code of Conduct.
Once every year, each employee must certify, as a condition of continued
employment, that he has complied with the Code of Conduct since the date of his
previous certification, and that he understands and agrees to continue complying
with the Code of Conduct until the date of his next certification. Failure to
provide a timely initial or annual certification constitutes a violation of the
Code of Conduct and can result in disciplinary action.

Certification is performed as specified in the "NASD Code of Conduct General
Procedures."

<PAGE>
-4-

III. WAIVER REQUESTS

If an employee believes that compliance with a specific provision of the Code of
Conduct will result in an undue hardship in his circumstances, the employee may
seek a waiver from his Executive Vice President.

All waiver requests must be in writing and approved by an Executive Vice
President (or the Senior Vice President and General Counsel of NASD, Inc. if the
waiver request is made by an employee who is an Executive Vice President or
higher). Waivers may be granted only if the application of a specific provision
of the Code of Conduct will, in fact, result in an undue hardship to the
employee making the waiver request. In determining whether an undue hardship
exists, the Executive Vice President will consider whether: 1) compliance with
the Code of Conduct is contrary to the best business interests of the NASD;
and/or 2) the burden on the employee and the NASD of complying with the Code of
Conduct outweighs the business needs of the NASD. A written response to the
waiver request must be provided and must clearly state whether the waiver is
denied, granted as requested, or granted with modifications or restrictions. If
a waiver is granted, the response must detail the nature of the undue hardship
present and reference specific sections of the Code of Conduct, as applicable.
If any restriction(s) or condition(s) are placed on the employee in granting the
waiver, the response must detail the restrictions. If denied, the response must
provide the reason(s) for the action taken and reference to the specific Code
sections, as applicable.

<PAGE>
-5-

IV. CONFLICTS OF INTEREST

A. General Provision

All employees should act in the best interests of the NASD and refrain from
any conduct that would be detrimental to the interests or the reputation of
the NASD. Employees should ensure they do not act on behalf of the NASD in
situations where there exists a personal, financial, or other conflict of
interest. The following guidance is provided to assist employees in
achieving this end.

B. Disclosure of Actual and Potential Conflicts

1. Employees must avoid acting in a manner that may be interpreted by
others as having been influenced by personal relationships or for
personal gain, and must avoid situations that appear improper or
diminish the NASD's reputation. To help ensure these situations
are avoided, every employee must disclose to his Department
Director (or next higher level officer) all situations and
relationships that could be perceived as raising an actual or
potential conflict of interest.
2. If the Department Director (or next higher level officer)
determines that an ACTUAL conflict of interest exists, the
employee cannot be assigned to work on NASD matters involving the
person or entity with which the employee has the conflict. If the
Department Director (or next high level officer) determines that a
POTENTIAL conflict of interest exists, the employee may not be
involved in any matter related to the area of potential conflict
without prior written approval from his Executive Vice President.
3. An employee who personally becomes the subject of an inquiry,
investigation, legal proceeding, or any other matter that may
affect NASD's interests must immediately disclose this fact to his
Department Director (or next higher level officer). For purposes
of the Code of Conduct, the NASD is presumed to be affected by any
occurrence that would require disclosure on a Form U-4 or U-5, if
an employee were employed by a broker/dealer.

Detailed procedures for reporting and addressing actual and potential
conflicts of interest are contained in the "NASD Code of Conduct General
Procedures." In addition, examples of conflicts of interest are discussed
in the "NASD Code of Conduct Interpretations."

C. Specific Prohibitions

Employees are specifically prohibited from:
1. Engaging in any criminal or dishonest acts in an attempt to
promote the interests of the NASD.
2. Engaging in any criminal, dishonest or other conduct prejudicial
to the interests of the NASD.
3. Engaging directly or indirectly in any personal business
transaction or private arrangement that accrues from or is based
on:
a. The employee's position authority with the NASD; or
b. Confidential or other information that is not available to
the public or that the employee gains by reason of his
position or authority with the NASD.
4. Acting in any manner in respect to the business of the NASD,
whether or not specifically prohibited, that might result in:

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a. Impeding the expeditious processing of NASD actions;
b. Losing independence, impartiality, or objectivity; or
c. Affecting adversely the confidence of members of the public
in the integrity credibility of the NASD or its procedures
and actions.

5. Absent prior written disclosure and approval from his Executive
Vice President, an employee also is prohibited from:
a. Acting in any NASD matter with anyone with whom the
employee has a current or past personal, business, or
financial interest. This includes but is not limited to
anyone who is a prospective or current issuer, vendor, NASD
member, arbitrator, or subscriber.
b. Engaging directly or indirectly in any personal, business, or
financial transaction with an NASD member, including any such
transaction that may have been initiated prior to starting
employment with the NASD. This prohibition does not apply to
securities transactions effected with an NASD member in the
normal course of business and reported as required by Section
VIII of the Code of Conduct.

D. The potential for a conflict of interest, if not an actual conflict of
interest, will be presumed to exist whenever a member of an employee's immediate
family:
1. Is employed by a broker/dealer, exchange that is not operated by
the NASD or Amex, alternative trading system, electronic
communications network, mutual fund, or investment adviser.
2. Is employed by a bank or insurance company in a capacity related
to the securities industry.
3. Is employed in a capacity directly or indirectly related to the
issuance, sale, or purchase of securities by an NASD member.
4. Is an owner, co-owner, officer, partner, or director of any entity
which, to the best of the employee's knowledge, is seeking to sell
goods or services to the NASD.
5. Has (or within the past three years has had) a professional,
personal, or financial relationship to any matter to which the
employee is to be assigned or otherwise may be asked to work.

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V. INFORMATION DISCLOSURE

A. General Provisions

The nature of our business often causes employees to receive or have access
to confidential, sensitive, or non-public information. Employees must act
to preserve the security and confidentiality of such information. Employees
must exercise special care if they need to discuss confidential or
sensitive information with another employee in a public place, such as a
restaurant, elevator, or airplane, to ensure such information is not
inadvertently overheard by others.

B. Specific Prohibitions

Employees are specifically prohibited from:

1. Disclosing to, or discussing with, any unauthorized person any
information not generally available to the public (unless prior
approval is obtained from his Executive Vice President). This
prohibition does not apply to information disclosed or discussed
by employees in fulfilling responsibilities or duties that are
within their job description. Some examples of non-public
information include, but are not limited to:
a. the NASD's strategic plans or initiatives;
b. advertising or marketing plans and strategies;
c. technological information regarding NASD systems or
technology strategies;
d. information provided by a broker/dealer regarding its
financial position, business, or trading strategies;
e. information related to regulatory investigations in progress;
f. questions, or answers to questions, contained in securities
licensing tests; or
g. non-public information concerning other corporate strategies,
examinations, disciplinary actions, arbitration proceedings,
settlements of lawsuits or administrative proceedings,
economic data, personnel information, or other information
regarding issuers, NASD members, NASD employees, or
arbitrators.
2. Responding to inquiries received from the news media. Any
inquiries received must be referred immediately to the Media
Relations Department or the designated spokesperson, as provided
for in the Media Relations Guidelines.
3. Transmitting confidential or sensitive information to other
employees within the NASD other than to fulfill the business needs
of the NASD. Employees are expected to comply with all corporate
policies relating to the handling of confidential or sensitive
information (E.G., Information Security Policy, E-Mail Policy, and
Internet Policy). An employee who receives a request for
information by persons who would appear to have no need for such
information in the daily performance of their jobs shall
immediately report the request to the employee's Department
Director (or next higher level officer).

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VI. LEGAL PROCEEDINGS

A. Responses to requests for information or testimony in legal proceedings
must be coordinated with the NASD, Inc. Office of General Counsel. In this
regard:
1. All matters involving potential litigation must be referred to and
discussed with the NASD, Inc. Office of the General Counsel, and
the Office of General Counsel of the affected NASD entity or
entities, at the earliest opportunity.
2. Any employee who is served with a subpoena, complaint, or other
legal pleading that relates to his employment with the NASD or
involves an NASD member, Amex member, regulated firm, or issuer
must immediately notify his Department Director (or next higher
level officer) and the NASD, Inc. Office of General Counsel. The
employee should then await instructions concerning compliance with
the subpoena or pleading from the NASD, Inc. Office of General
Counsel.
3. No employee shall testify in any proceeding in respect to
securities or any matter related to the NASD without prior
approval of the NASD, Inc. Office of General Counsel and
notification to his Executive Vice President. This provision does
not apply to proceedings initiated by the NASD (E.G., disciplinary
hearings).
4. No employee shall act as a witness, expert, consultant, or
adjudicator in any NASD-sponsored arbitration, mediation, early
neutral evaluation, hearing, or other proceeding, on behalf of any
party other than the NASD (except Hearing Officers, when carrying
out their responsibilities relating to disciplinary proceedings
under the applicable NASD rules).

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VII. OUTSIDE EMPLOYMENT AND OTHER ACTIVITIES

A. General Provision

Employees may not engage in any outside employment or other activity that
would create an actual or apparent conflict of interest with their concurrent
NASD employment.

B. Specific Prohibitions

Employees are specifically prohibited from:
1. Maintaining any securities or commodities licensing registrations.
2. Performing any work for any broker/dealer, person or entity
registered under the Commodity Exchange Act, exchange that is not
operated by the NASD, alternative trading system, electronic
communications network, mutual fund, or investment adviser.
3. Performing any securities-related work for any bank or insurance
company.
4. Performing any activity regarding securities matters involving any
issuer or subscriber.
5. Performing any non-NASD work for, or providing non-NASD
professional services to, anyone who participates in the
employee's NASD performance evaluations.
6. Using company stationery, logos, addresses, or telephone numbers
in any manner that could be construed as indicating an outside
activity is being performed on behalf of, or is sanctioned by, the
NASD.
7. Using NASD office facilities for conducting outside employment or
other non-work-related activities.
8. Conducting any securities-related teaching, lecturing, or writing
activities (other than those that may be part of an employee's
designated job responsibilities), unless all of the following
conditions are met.
a. the employee requests and receives prior written approval
from his Executive Vice President;
b. the activity does not involve an organization that provides
training designed to facilitate passing securities licensing
requirements;
c. the employee clearly discloses that the views expressed are
his own and not the views of the NASD;
d. compensation is not accepted from an NASD or Amex member; and
e. any activity for which compensation is to be received is
performed by the employee during personal time (E.G.,
vacation, leave without pay, after business hours).

C. Service as Officer or Director of a Publicly Traded Company; Holding
Public Office

1. An employee may not serve as an officer or director of a company
that is listed on The Nasdaq Stock Market or Amex, without the
prior approval of the NASD Audit Committee. An employee who wishes
to serve as the officer or director of a Nasdaq or Amex-listed
company must submit (through his Department Director and Executive
Vice President) a written request for approval to the NASD Chief
Executive Officer. The Chief Executive Officer will make a
recommendation to the NASD Audit Committee on whether the request
should be approved or denied. The decision of the Audit Committee
will be final.

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2. An employee may not serve as an officer or director of any other
publicly traded company without the prior approval of the NASD
Chief Executive Officer. An employee who wishes to serve as the
officer or director of a publicly traded company that is not
listed on Nasdaq or Amex must submit (through his Department
Director and Executive Vice President) a written request for
approval to the NASD Chief Executive Officer. The decision of the
Chief Executive Officer on the request will be final.
3. If an employee wishes to serve as an officer or director of a
company that is not publicly traded, the matter is handled in
conformity with Subsection D ("Advance Notification of Outside
Employment"), below.
4. An employee cannot hold elected or appointed political office
without the prior written approval of the NASD Chief Executive
Officer. An employee who wishes to hold political office must
submit (through his Department Director and Executive Vice
President) a written request for approval to the NASD Chief
Executive Officer. The decision of the Chief Executive Officer on
the request will be final.

D. Advance Notification of Outside Employment

1. For any outside employment not prohibited above, an employee must
provide advance written notification to his Department Director
(or next higher level officer) describing the nature of any
planned outside employment or similar activity, including any
compensation expected to be received. Proposed outside employment
disclosed pursuant to this section will be deemed permissible
unless the Department Director (or next higher level officer)
determines that the proposed employment will create a conflict of
interest and provides the employee with written notification of
this determination.
2. If the nature of an employee's previously disclosed outside
employment changes, the employee is required to give written
notice of this fact to his Department Director (or next higher
level officer).
3. Exempt from the above notification provision are:
a. professional services (E.G., preparation of a will or a tax
return) provided for no fee to family members, friends, or
charitable or civic organizations; and
b. other services provided to charitable or civic organizations
for which an employee will not be compensated (E.G., selling
Girl Scout cookies; serving as President of a homeowners'
association).

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VIII. SECURITY ACCOUNTS, POSITIONS, AND TRANSACTIONS

A. Relevant Definitions

Security account means any account maintained with a broker/dealer or
commodity futures merchant.

Security position means any debt or equity security, option, and other
derivative product.

Security transaction means: 1) any transaction in a security account; or 2)
the creation, modification, or termination of a security position.

B. General Provisions

As a self-regulatory organization and market operator, the interests of the
NASD require that employees' investment activities be free from any
appearance of having been based on non-public or other information gained
through employment with the NASD. Further, these interests require that
work performed for the NASD is neither influenced, nor perceived to be
influenced, by an employee's security positions or the location of his
accounts. It constitutes a conflict of interest for any employee to
participate in an examination, investigation, disciplinary action, listing
decision, or other regulatory matter (E.G., advertising reviews, trading
halts) related to the issuer of any security (including mutual funds) in
which he maintains an ownership interest, controls trading, or has a
financial interest.

C. Disclosure of Security Accounts, Positions, and Transactions

To help ensure the interests of NASD are not compromised, each employee is
required to disclose the security accounts, positions, and transactions
described below. Disclosure is to be made as specified by the "NASD Code of
Conduct General Procedures."
1. All security accounts established by the employee.
2. All security accounts in which an employee has a financial
interest, including but not limited to, investment clubs, joint
accounts, trusts, and private corporations controlled by the
employee. Employees are presumed to have a financial interest in
the accounts of a spouse who lives with the employee. This
presumption may be rebutted if the employee demonstrates the
contrary by clear and convincing evidence; the determination of
whether an employee has satisfied this burden will be made by the
Senior Vice President and General Counsel of the NASD, and will be
final and binding on the employee.
3. All security accounts in which an employee may effect transactions
either directly or indirectly, including transactions effected for
the accounts of other persons under a power of attorney or
otherwise. Employees are presumed to control trading in the
accounts of any child under the age of 18 who lives with the
employee. This presumption may be rebutted if the employee
demonstrates the contrary by clear and convincing evidence; the
determination of whether an employee has satisfied this burden
will be made by the Senior Vice President and General Counsel of
the NASD, and will be final and binding on the employee.
4. All security positions held outside a brokerage account that the
employee directly or indirectly controls or in which he has a
financial interest. Employees are presumed to control the
positions of any child under the age of 18 who lives with the
employee,

<PAGE>
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and to have a financial interest in the positions of a spouse who
lives with the employee. These presumptions may be rebutted if the
employee demonstrates the contrary by clear and convincing
evidence; the determination of whether an employee has satisfied
this burden will be made by the Senior Vice President and General
Counsel of the NASD, and will be final and binding on the
employee. Security positions held outside brokerage accounts
include securities held in certificate form, or securities
acquired through a dividend reinvestment plan and held in
book-entry form by the issuer.
5. All security transactions effected in any security accounts or
security positions that are required to be disclosed in Section
VIII C.1. through C.4., above.

D. The disclosures required by Subsection C are not required for:
1. Mutual fund accounts that are maintained directly with the fund
distributors.
2. Variable annuities sold directly by an insurance company.
3. Defined contribution savings plans (E.G., the NASD Savings Plus
Plan, and other 401(k) plans) for which the only investment
options are mutual funds or similar pooled funds whose investment
decisions the employee cannot control.
4. Accounts maintained by the U.S. Treasury to enable investors to
purchase U.S. Government securities directly from the issuing
agency (E.G., "Treasury Direct" accounts).

E. Trading Restrictions

It is impermissible for employees, either directly or through security
accounts or security positions in which they control trading or have a
financial interest, to:
1. Purchase, sell, or recommend the purchase or sale of any security
based on non-public information obtained through NASD employment.
2. Purchase or maintain any debt or equity interest in any
broker/dealer. If an ownership interest is acquired through a
spin-off, merger, other business reorganization, inheritance, or
marriage, the employee is required to dispose of the securities
acquired within 90 calendar days of the date on which the employee
becomes able to trade the securities.
3. Purchase or maintain any debt or equity interest in any entity
which derives more than 25% of its gross revenues (based upon the
most recent consolidated audited annual financial statements) from
the combined broker/dealer activities of all of its subsidiaries
and affiliates. If an ownership interest is acquired through a
spin-off, merger, other business reorganization, inheritance, or
marriage, the employee is required to dispose of the securities
acquired within 90 calendar days of the date on which the employee
becomes able to trade the securities.
4. Knowingly purchase or sell securities of any company with which
the NASD has a contract or business relationship that represents a
material contribution to the business of such company.
5. Enter into any security transaction that exceeds an employee's
ability to meet his payment or delivery obligations for the
initial purchase price, margin call, or other payment or
settlement obligation.
6. Knowingly purchase or sell a security at a price, commission, or
mark-up (down) that is more favorable than the price, commission,
or mark-up (down) afforded a similarly situated member of the
general public in the normal course of business.

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7. Purchase: a) any security during its initial public offering or
distribution; b) or a secondary offering of a security that is not
"actively traded;" or c) either a) or b) within 15 calendar days
of the offering date. This prohibition does not apply to:

a. offerings of open-end mutual funds, unit investment trusts,
U.S. government securities, municipal debt securities, or
variable contracts; and

b. rights offerings, or securities issued as a result of
spin-offs, mergers, and other business reorganizations if
both of the following conditions are met:
i. an interest in the issuing entity (or its
predecessor) was owned prior to the public
announcement of the offering or reorganization; and
ii. new securities are acquired in a percentage amount
that is equal to or less than the interest that
existed at the time the offering or distribution was
announced.

F. Additional Trading Restrictions Applicable to Certain Employees

All employees are subject to the federal securities laws, which prohibit
insider trading. It is thus unlawful for any employee to trade on material
non-public information. Employees who work in certain departments that
regularly receive market-sensitive information are subject to additional
trading restrictions. These additional restrictions apply to otherwise
lawful transactions.

Employees who work in specified departments (specified in the Code of
Conduct General Procedures, Section VIII) are required to hold securities
for 90 days. The holding period applies to employees' own security accounts
and positions, and to security accounts and positions in which they control
trading or have a financial interest. During the holding period, an
employee may not sell, purchase, exercise or otherwise dispose of his
interest in a security, whether directly or indirectly (E.G., through the
use of an offsetting derivative position).

Employees who work in specified departments (specified in the Code of
Conduct General Procedures, Section VIII) are prohibited from directly or
indirectly maintaining a net short position in certain securities that are
traded on markets operated by the NASD without the prior written approval
of his Executive Vice President. The net-short prohibition applies to
employees' own security accounts and positions, and to security accounts
and positions in which they control trading or have a financial interest.
This prohibition applies to Nasdaq and Amex-listed securities enumerated in
the Code of Conduct General Procedures, Section VIII, and to derivatives of
those securities.

G. Liquidation of Prohibited Investments

1. If an employee acquires, controls, or derives a financial benefit
from a security position that is prohibited by the Code of
Conduct, the NASD will require the security position to be
immediately liquidated. The employee will be responsible for any
losses that result from such disposition, and will be required to
forfeit any resulting profits to the corporate entity for which
the employee works. If warranted by the facts and circumstances
surrounding a violation, additional disciplinary actions may be
imposed against the employee, including immediate termination of
employment.

2. If at the time of hire an employee, or an account in which he
controls trading or has a financial interest, holds a security
that is prohibited by the Code of Conduct, it is the

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employee's responsibility to liquidate the holding immediately. If
a new employee believes that immediate liquidation would cause an
undue hardship under his circumstances, it is the employee's
responsibility to promptly seek a waiver from his Executive Vice
President.

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IX. BUSINESS GIFTS, GRATUITIES, AND COURTESIES

A. Relevant Definitions

Business courtesy means an item provided in conjunction with, and
incidental to, a meeting, seminar, or conference that an employee attends
for the purpose of conducting NASD business with the approval of his
Department Director (or next higher level officer).

Business gift means any item that is received from any NASD or Amex member,
Nasdaq or Amex issuer, or any person with whom the NASD transacts business.

Business gratuity means any favor or item received from any NASD or Amex
member, Nasdaq or Amex issuer, or any person with whom the NASD transacts
business in return for a specific service.

B. General Provisions

1. Unsolicited non-cash business gifts or courtesies may be accepted
only if the employee will not appear to be improperly influenced.
Business gifts received may not exceed $100 in aggregate value
from any person during a calendar year. Employees must report all
business gifts and courtesies they accept, regardless of value.
Reporting is performed as specified in the "NASD Code of Conduct
General Procedures."
2. When conducting NASD business, employees generally should pay for
incidental business expenses (E.G., meals) and obtain
reimbursement through the submission of a Travel and Entertainment
Form to the NASD Finance Department. In some situations, it may
not be possible or practical for an employee to pay for his own
expenses, and the person with whom the NASD is conducting business
may pay for these items. In such circumstances, the employee is
required to report the estimated value of the expenses paid by the
third party as a business courtesy. Reporting is performed as
specified in the "NASD Code of Conduct General Procedures." Any
business courtesies accepted must be in furtherance of NASD
business and, when reported, the business purpose must be
specified.

C. Specific Prohibitions

With respect to any NASD or Amex member, Nasdaq or Amex issuer, or any
person with whom the NASD transacts business, employees and members of
their immediate families are prohibited from directly or indirectly:
1. Soliciting any business gift, gratuity, or courtesy.
2. Accepting any business gratuity.
3. Accepting any business gift or courtesy consisting of cash, cash
equivalents (E.G., gift certificates), securities, or loans.
4. Accepting non-cash business gifts with an aggregate value in
excess of $100 from any person per calendar year.
5. Accepting any business gift of tickets to a concert, theatrical
performance, sporting event, or similar function.

<PAGE>
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6. Accepting any business gift or courtesy (E.G., lunch, dinner,
transportation, etc.) from any person or entity that is the
subject of an investigative, adjudicatory, or disciplinary
function in which the employee is involved.
7. Accepting any business gift or courtesy (E.G., lunch, dinner,
transportation, etc.) from an attorney or party to an arbitration,
mediation, or other dispute-resolution proceeding in which an
employee is involved.

D. The provisions of Subsections B and C, above, do not apply if:
1. Circumstances make it clear that a personal or family
relationship, rather than a business relationship, is the
motivating factor behind a gift to an employee or a member of an
employee's immediate family.
2. A business gift, gratuity, or courtesy was received by a member of
the employee's immediate family in connection with that family
member's employment or professional standing.
3. A discount or other promotional benefit is available to all
employees through an NASD-sanctioned arrangement.

E. Disposition of Impermissible Business Gifts, Gratuities, and Courtesies

If an employee or a member of his immediate family accepts a business gift,
courtesy, or gratuity that is prohibited by the Code of Conduct or which,
in fact or appearance, may improperly influence the employee in the
performance of his duties, the employee's Department Director (or next
higher level officer) may require the business gift, courtesy, or gratuity
to be returned (or otherwise disposed of), or require the employee to
reimburse the donor for the cost of the item. If warranted by the
circumstances, additional disciplinary actions may be imposed, up to or
including immediate termination of employment.

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X. CODE OF CONDUCT ENFORCEMENT AND DISCIPLINE

A. Investigations

Employees who are aware, or become aware, of unreported or undisclosed
suspected violations of the Code of Conduct by other employees are expected
to report such violations to the NASD, Inc. Office of General Counsel or to
the Internal Audit section of the Internal Review Department. Employees
reporting alleged violations of the Code of Conduct will be provided with
confidentiality to the extent possible. Failure to report violations may
subject the non-reporting employee to disciplinary action.

When suspected violations are reported or discovered, the NASD, Inc. Office
of General Counsel and the Internal Review Department will confer regarding
the extent of the investigation required. The Internal Review Department
generally will conduct any investigation determined necessary.

Employees are expected to cooperate fully with any investigation of
possible violations of the Code of Conduct. Failure to do so will be
considered a violation of the Code of Conduct and may subject the
non-cooperating employee to disciplinary action.

Investigative findings will be reported to appropriate management.

B. Discipline

In the event that an employee is found to have violated the Code of
Conduct, appropriate sanctions will be imposed by management. In assessing
sanctions, the NASD aims to treat all employees fairly and consistently. To
achieve these goals with respect to disciplinary actions imposed for Code
of Conduct violations, management must consult with the NASD, Inc. Office
of General Counsel whenever an employee has violated the Code of Conduct.
The NASD, Inc. Office of General Counsel will advise management regarding
past disciplinary actions that have been imposed under similar
circumstances. If management proposes an action that is inconsistent with
precedent or appears inappropriate, NASD, Inc. Office of General Counsel
may require that more senior management agree with the proposed action.

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XI. INTERPRETATIONS

The NASD, Inc. Office of General Counsel is responsible for providing
interpretations of the Code of Conduct. Employees may contact the Office of
General Counsel either directly, or through their Department Director (or next
higher level officer), as specified in the NASD Code of Conduct General
Procedures.

Interpretive advice will be provided either orally or in writing, as deemed
appropriate by the NASD, Inc. Office of General Counsel. The NASD, Inc. Office
of General Counsel may publish interpretations of general interest on OASIS, and
such published interpretations are binding upon employees in the same manner as
the Code of Conduct. Published interpretations become effective and binding upon
their posting on OASIS with notice to employees. The effective date will be
noted for interpretations posted after February 1, 1998; if no effective date is
indicated, an interpretation was effective February 1, 1998, when the NASD Code
of Conduct became effective.

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XII. AVAILABILITY

The NASD Code of Conduct, and interpretations and procedures issued thereunder
will be maintained in electronic form on OASIS. Amendments to these materials
will be posted from time to time as deemed necessary by the Senior Vice
President and General Counsel of NASD, Inc.

The NASD Code of Conduct will be maintained in printed form, with copies
available to employees through their local Human Resources Department. However,
Code of Conduct interpretations and procedures will not be maintained in printed
form by the Human Resources Department. Therefore, employees should use OASIS to
ensure they are referencing the most current version of the Code,
interpretations, and procedures.

<PAGE>

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XIII. DEFINITIONS

For purposes of the Code of Conduct the following terms shall have the following
meanings:

BROKER/DEALER means any entity or person registered as a "broker" or "dealer,"
as those terms are defined in the Securities Exchange Act of 1934.

BUSINESS COURTESY means an item provided in conjunction with, and incidental to,
a meeting, seminar or conference that an employee attends for the purpose of
conducting NASD business with the approval of his Department Director (or next
higher level officer).

BUSINESS GIFT means any item that is received from any NASD or Amex member,
Nasdaq or Amex issuer, or any person with whom the NASD transacts business.

BUSINESS GRATUITY means any favor or item that is received from any NASD or Amex
member, Nasdaq or Amex issuer, or any person with whom the NASD transacts
business in return for a specific service.

DEPARTMENT DIRECTOR means a person with direct responsibility for the overall
operation of a Department or District Office, regardless of the person's title.
Typically these persons will be a Director, Vice President, or Senior Vice
President.

DEPARTMENT DIRECTOR (OR NEXT HIGHER LEVEL OFFICER) means that an employee who is
a Department Director (or higher) must notify or get approval from the person to
whom he reports. Typically, this will require Department Directors to go to
their Vice President; Vice Presidents to go to their Senior Vice President; and
Senior Vice Presidents to go to their Executive Vice President. For employees at
or above the Executive Vice President level, disclosures must be made to (or
approvals received from) the Senior Vice President and General Counsel of NASD,
Inc.

EMPLOYEE means full-time, part-time, and temporary staff and officers of the
NASD. For purposes of the Code of Conduct, the following categories of persons
are not considered employees:

- - Chairmen, Vice-Chairmen and other members of NASD Boards and
Committees, unless they hold another elected, non-Board office with the
NASD or perform other duties for the NASD outside of their Board duties
(E.G., the President of The Nasdaq Stock Market or NASD Regulation,
Inc.);

- - Consultants or independent contractors working under contract for the
NASD; and

- - Temporary staff hired through an employment agency.

IMMEDIATE FAMILY means an employee's parents, siblings, spouse, children,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law or
daughter-in-law. The term also includes any other person who is supported,
directly or indirectly, to a material extent by the employee.

ISSUER means any company that is listed, or has applied for listing, on any
market or market system operated by the NASD. As used in the Code of Conduct,
the term shall also include any natural person employed by such a company.

<PAGE>

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NASD means the NASD, Inc., and all of its subsidiary or affiliated companies,
which at this time include: NASD Regulation, Inc., The Nasdaq Stock Market,
Nasdaq International, Ltd., Nasdaq International Market Initiatives, Inc., and
Amex.

NASD MEMBER means any broker/dealer that has been admitted to, or applied for,
membership in the NASD. As used in the Code of Conduct, the term shall also
include any natural person associated with such a company.

SECURITY ACCOUNT means any account maintained with a broker/dealer or commodity
futures merchant.

SECURITY POSITION means any debt or equity security, option, or other derivative
product.

SECURITY TRANSACTION means: 1) any transaction in a security account; or 2) the
creation, modification, or termination of a security position.

<PAGE>

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