As filed with the Securities and Exchange Commission on February 25, 1999
Registration No. 333-69255
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-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:
Equity Securities Trust, Series 22, High Yield Symphony Series
B. NAME OF DEPOSITOR:
Reich & Tang Distributors, Inc.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Reich & Tang Distributors, Inc. Battle Fowler LLP
600 Fifth Avenue 75 East 55th Street
New York, New York 10020 New York, New York 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Equity Securities Trust, Series 22,
High Yield Symphony Series is being registered under the Securities
Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No Filing Fee Required
H. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
The registrant hereby amends the registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
789557.1
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 1999
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EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
The Trust is a unit investment trust designated Equity Securities Trust, Series
22, High Yield Symphony Series. The Sponsor is Reich & Tang Distributors, Inc.
The Trust consists of a fixed, diversified portfolio of publicly traded common
stock of closed-end investment companies, whose portfolios consist primarily of
high-yielding corporate bonds, debentures and notes. These high yield funds and
their weightings in the Trust portfolio will be selected based upon the
recommendations of the portfolio consultants. The term "high yield" refers to
high yield-high risk securities which are securities rated below investment
grade by recognized rating agencies or are unrated securities of comparable
quality. The Trust seeks to provide high current income. Capital appreciation is
a secondary objective of the Trust. The Sponsor cannot assure that the Trust
will achieve these objectives. The minimum purchase is 100 Units.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including summary material relating to the Trust, the Portfolio and
the Statement of Financial Condition of the Trust. Part B contains more detailed
information about the Trust. Part A may not be distributed unless accompanied by
Part B. Please read and retain both parts of this Prospectus for future
reference.
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The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
PROSPECTUS DATED MARCH __, 1999
A-1
764183.2
<PAGE>
<TABLE>
<CAPTION>
Summary of Essential Information as of , 1999:*
<S> <C>
Initial Date of Deposit: Minimum Value of Trust: The Trust may be terminated
, 1999 if the value of the Trust is less than 40% of the
Aggregate Value of Securities.......................... $ aggregate value of the Securities at the completion of
Number of Units........................................ $ the Deposit Period.
Fractional Undivided Interest in Trust................. 1/ Mandatory Termination Date: The earlier of ,
Public Offering Price per 100 Units 2006 or the disposition of the last Security in the Trust.
Aggregate Value of Securities in CUSIP Numbers: Cash:
Trust........................................... $ Reinvestment:
Divided By _ Units (times 100)............... $ Trustee: The Chase Manhattan Bank
Plus Sales Charge of 4.50% of Public Trustee's Fee: $. per 100 Units outstanding
Offering Price.................................. $ Other Fees and Expenses: $ per 100 Units outstanding
Plus Estimated Organization Costs**................. $_______ Sponsor: Reich & Tang Distributors, Inc.
Public Offering Price+.............................. $1,000.00 Sponsor's Supervisory Fee: Maximum of $.25 per 100
Sponsor's Repurchase Price And Redemption Units outstanding (see "Trust Expenses and Charges"
Price Per 100 Units++............................... $_______ in Part B).
Evaluation Time: 4:00 p.m. New York Time. Portfolio Consultants:
Minimum Income or Principal Thomas J. Herzfeld Advisors
Distribution: $1.00 per 100 Units Riccardi Group LLC
Percentage of Foreign Securities And American Expected Settlement Date***: , 1998
Depository Receipts And/or Shares: % Record Dates: Fifteenth day of each month
Liquidation Period: Beginning 7 days prior to the Distribution Dates: Last business day of each month
Mandatory Termination Date.
Rollover Notification Date: _____________, 2006 or
another date as determined by the Sponsor.
- ------------------
* The business day prior to the Initial Date of Deposit. The Initial Date
of Deposit is the date on which the Trust Agreement was signed and the deposit
of securities with the Trustee made.
** This amount per 100 Units will be invested in Securities during, and
sold at the end of, the initial offering period, to reimburse the Sponsor for
the payment of all or a portion of the estimated costs incurred in organizing
the Trust. See "Risk Considerations" for a discussion of the impact of a
decrease in value of the Securities purchased with the Public Offering Price
proceeds intended to be used to reimburse the Sponsor.
*** The business day on which contracts to purchase securities in the
Trust are expected to settle.
+ On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have included
in the Public Offering Price a pro rata share of any cash in such Accounts.
++ As of the close of the initial offering period, the Sponsor's
Repurchase Price and Redemption Price per 100 Units for the Trust will be
reduced to reflect the payment of the organization costs to the Sponsor.
</TABLE>
A-2
764183.2
<PAGE>
FEE TABLE
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This Fee Table is intended to help you to understand the costs and expenses that
you will bear directly or indirectly. See "Public Offering and Trust Expenses
and Charges." Although the Trust is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees.
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Unitholder Transaction Expenses
(fees paid directly from your investment)
<TABLE>
<CAPTION>
As a % of Amount
Initial per
Offering Price 100 Units
-------------- ---------
<S> <C> <C>
Maximum Sales Charges Imposed on Purchase....................................... 4.50% $45.00
Maximum Sales Charge Imposed Per Year on Reinvested Dividends................... 1.00% $10.00
Reimbursement to Sponsor for Estimated Organization Expenses.................... ----% $-----
Estimated Annual Fund Operating Expenses
(Expenses that are deducted from Trust assets)
As a % of Amount
Initial per
Net Assets 100 Units
------------- ---------
Trustee's Fee................................................................... .____% $_____
Other Operating Expenses........................................................ .____% $_____
Portfolio Supervision, Bookkeeping and Administrative Fees............... .____% $_____
Total........................................................................... .____% $_____
</TABLE>
Example
This Example is intended to help you compare the cost of investing in the Trust
with the cost of investing in other unit trusts.
1 year 3 years 5 years
This Example assumes that you invest $1,000 in the Trust for the time periods
indicated, assuming the Trust's estimated operating expense ratio of ___% and a
5% return on the investment throughout the period. Although your actual costs
may be higher or lower, based on these assumptions, your costs would
be:.............................................................................
The Example does not reflect sales charges on reinvested dividends. The
Example assumes reinvestment of all dividends and distributions and utilizes a
5% annual rate of return as mandated by Securities and Exchange Commission
regulations applicable to mutual funds. The Example should not be considered a
representation of past or future expenses or a annual rate of return; the actual
expenses and annual rate of return may be more or less than those assumed for
purposes of the Example.
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A-3
764183.2
<PAGE>
OBJECTIVES. The Trust seeks to provide investors with high current income.
Capital appreciation is a secondary objective of the Trust. There is no
guarantee that the objectives of the Trust will be achieved.
PORTFOLIO SELECTION. The Trust seeks to achieve its objectives by investing in a
portfolio of the common stock of closed-end investment companies, the portfolios
of which consist primarily of high-yielding corporate bonds, debentures and
notes. As used herein, the term "Securities" means the common stocks of the high
yield funds initially deposited in the Trust and contracts and funds for the
purchase of such high yield funds, and any additional securities acquired and
held by the Trust pursuant to the provisions of the Indenture.
DESCRIPTION OF PORTFOLIO. The Portfolio contains issues of domestic common
stock. 100% of the issues are represented by the Sponsor's contracts to
purchase. % of the Portfolio is listed on the New York Stock Exchange.
RISK CONSIDERATIONS. Unitholders can lose money by investing in this Trust. The
value of the units, the Securities and the bonds held by the high yield funds
included in the portfolio can each decline in value. An investment in Units of
the Trust should be made with an understanding of the following risks:
o The high yield funds which comprise the Securities invest primarily in
high-yielding corporate debt instruments generally rated in the lower rating
categories of nationally recognized rating agencies or in unrated securities of
comparable value. While these lower rated securities offer a higher return
potential than higher rated securities, they also involve greater price
volatility and greater risk of loss of income and principal.
o The high yield funds will receive early returns of principal when bonds
are called or sold before they mature. The funds may not be able to reinvest the
money they receive at as high a yield or as long a maturity.
o Unitholders will pay both Trust expenses and a share of each high yield
fund's expenses.
o The Securities are shares of closed-end funds which frequently trade at
a discount from their net asset value in the secondary market. The amount of
such discount is subject to change from time to time in response to various
factors.
o Since the portfolio of the Trust is fixed and "not managed", in general
the Sponsor can only sell securities at the Trust's termination or in order to
meet redemptions. As a result, the price at which each security is sold may not
be the highest price it attained during the life of the Trust.
o When cash or a letter of credit is deposited with instructions to
purchase securities in order to create additional units, an increase in the
price of a particular security between the time of deposit and the time that
securities are purchased will cause the units to be comprised of less of that
security and more of the remaining securities. In addition, brokerage fees
incurred in purchasing the Securities will be an expense of the Trust.
o A decline in the value of the Securities during the initial offering
period may require additional Securities to be sold in order to reimburse the
Sponsor for organization costs. This would result in a decline in value of the
Units.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 units of the
Trust is calculated by:
o dividing the aggregate value of the underlying securities and cash held
in the Trust by the number of units outstanding;
o adding a sales charge of 4.50% (4.712% of the net amount invested); and
o multiplying the result by 100.
A-4
764183.2
<PAGE>
In addition, during the initial offering period, an amount sufficient to
reimburse the Sponsor for the payment of all or a portion of the estimated
organization costs of the Trust will be added to the Public Offering Price per
100 units. The price of a single unit, or any multiple thereof, is calculated by
dividing the Public Offering Price per 100 units by 100 and multiplying by the
number of units. During the initial offering period, orders involving at least
$__________ will be entitled to a volume discount from the Public Offering
Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and each investors purchase price will be computed as of the date the units are
purchased.
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
unitholders per 100 units (based on the most recent quarterly or semi-annual
ordinary dividend declared with respect to the Securities) was $ . This estimate
will vary with changes in the Trust's fees and expenses, actual dividends
received, and with the sale of Securities. In addition, because the issuers of
common stock are not obligated to pay dividends, there is no assurance that the
estimated net annual dividend distributions will be realized in the future.
DISTRIBUTIONS. The Trust will distribute dividends received, less
expenses, every month. The first dividend distribution will be made on ,
1999 to all Unitholders of record on __________ 15, 1999 and thereafter
distributions will be made on the last business day of every month. The final
distribution will be made within a reasonable period of time after the Trust
terminates.
MARKET FOR UNITS. Unitholders may sell their units to the Sponsor or the Trustee
any time, without fee or penalty. However, the Sponsor intends to repurchase
units from unitholders throughout the life of the Trust at prices based upon the
market value of the underlying Securities. However, the Sponsor is not obligated
to maintain a market and may stop doing so without prior notice for any business
reason. If a market is not maintained a Unitholder will be able to redeem his
Units with the Trustee at the same price. The existence of a liquid trading
market for these Securities may depend on whether dealers will make a market in
these Securities. There can be no assurance of the making or the maintenance of
a market for any of the Securities contained in the portfolio of the Trust or of
the liquidity of the Securities in any markets made. The price at which the
Securities may be sold to meet redemptions and the value of the Units will be
adversely affected if trading markets for the Securities are limited or absent.
TERMINATION. The Trust will terminate in approximately seven years. At that time
investors may choose one of the following three options with respect to their
terminating distribution:
o receive the distribution in-kind if they own at least 2,500 Units;
o receive cash upon the liquidation of their pro rata share of the
Securities; or
o reinvest in a subsequent series of the Equity Securities Trust (if one
is offered) at a reduced sales charge.
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust at a reduced sales
charge of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll
in the Reinvestment Plan.
UNDERWRITING. The names and addresses of the Underwriters of the units of the
Trust are as follows:
Name Address
---- -------
Reich & Tang Distributors, Inc.......600 Fifth Avenue, New York, New York 10020
A-5
764183.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, , 1999
ASSETS
<TABLE>
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $ )(Note 1).. $
-----------------------
Total........................................................................... $
=======================
</TABLE>
LIABILITIES AND INTEREST OF UNITHOLDERS
<TABLE>
<S> <C>
Reimbursement to Sponsor for Organization Costs (Note 2)........................ $
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (Units)...................................
Less: Reimbursement to Sponsor for Organization Costs (Note 2)..........
Total........................................................................... $
-----------------------
Net Asset Value per Unit........................................................ $
=======================
</TABLE>
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Notes to Statement:
(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, sponsored by Reich & Tang Distributors, Inc. (the "Sponsor"), seeks to
provide high current income. Capital appreciation is a secondary objective of
the Trust. On ______________, 1999 (the "Date of Deposit"), Portfolio deposits
were received by The Chase Manhattan Bank, the Trust's Trustee, in the form of
executed securities transactions, in exchange for _____ units of the Trust. An
irrevocable letter of credit issued by the _______ in an amount of $_________
has been deposited with the Trustee for the benefit of the Trust to cover the
purchases of such Securities as well as any outstanding purchases of
previously-sponsored unit investment trusts of the Sponsor. Aggregate cost to
the Trust of the Securities listed in the Portfolio is determined by the Trustee
on the basis set forth under "Public Offering--Offering Price" as of 4:00 p.m.
on __________, 1999. The Trust will terminate on __________, 2006, or earlier
under certain circumstances as further described in the Prospectus.
(2) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trust. These costs have been estimated at $.__ per 100 Units. A
payment will be made as of the close of the initial public offering period to an
account maintained by the Trustee from which the obligation of the investors to
the Sponsor will be satisfied. To the extent that actual organization costs are
greater than the estimated amount, only the estimated organization costs
included in the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
A-6
764183.2
<PAGE>
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
PORTFOLIO
AS OF OPENING OF BUSINESS, __________, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Market Value of
Stocks as a
Portfolio Number of Ticker Percentage Market Value Per Cost of Securities
No. Shares Name of Issuer (1) Symbol of the Trust(2) Share to the Trust(3)
----- -------- ------------------- ------ --------------- ------ ---------------
-------- --------
% $
-------- --------
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on _________,
1999. All such contracts are expected to be settled on or about the
First Settlement Date of the Trust which is expected to be ______, 1999.
(2) Based on the cost of the Securities to the Trust.
(3) Evaluation of Securities by the Trustee was made on the basis of
closing sales prices at the Evaluation Time on the day prior to the
Initial Date of Deposit. The Sponsor's Purchase Price is $_____. The
Sponsor's loss on the Initial Date of Deposit is $______.
A-7
764183.2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Unitholders,
Equity Securities Trust, Series 22, High Yield Symphony Series
In our opinion, the accompanying Statement of Financial Condition,
including the Portfolio, presents fairly, in all material respects, the
financial position of Equity Securities Trust, Series 22, High Yield Symphony
Series (the "Trust") at opening of business, ________, 1999, in conformity with
generally accepted accounting principles. This financial statement is the
responsibility of the Trust's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit, which
included confirmation of the contracts for the securities at opening of
business, __________, 1999, by correspondence with the Sponsor, provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, MA
, 1999
A-8
764183.2
<PAGE>
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EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 22, High Yield Symphony
Series is a "unit investment trust". The Trust was created under the laws of the
State of New York pursuant to a Trust Indenture and Agreement (the "Trust
Agreement"), dated the Initial Date of Deposit, between Reich & Tang
Distributors, Inc., as Sponsor, and The Chase Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsor deposited securities, with
the Trustee including common stock and funds and delivery statements relating to
contracts for the purchase of certain such securities (collectively, the
"Securities") with an aggregate value as set forth in Part A and cash or an
irrevocable letter of credit issued by a major commercial bank in the amount
required for such purchases. Thereafter the Trustee, in exchange for the
Securities so deposited, has registered on the registration books of the Trust
evidence of the Sponsor's ownership of all Units of the Trust. The Sponsor has a
limited right to substitute other securities in the Trust portfolio in the event
of a failed contract. See "The Trust--Substitution of Securities." The Sponsor
may also, in certain circumstances, direct the Trustee to dispose of certain
Securities if the Sponsor believes that, because of market or credit conditions,
or for certain other reasons, retention of the Security would be detrimental to
Unitholders. See "Trust Administration Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities and cash of the Trust in the ratio
of one hundred Units for the indicated amount of the aggregate market value of
the Securities initially deposited in the Trust as is set forth in the "Summary
of Essential Information." As additional Units are issued by the Trust as a
result of the deposit of Additional Securities, as described below, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest or pro rata share in such Trust represented by
each unredeemed Unit will increase, although the actual interest in such Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsor, or until the termination of the Trust Agreement.
764183.2
B-1
<PAGE>
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsor established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"), the Sponsor may deposit additional Securities in
the Trust that are substantially similar to the Securities already deposited in
the Trust ("Additional Securities"), contracts to purchase Additional Securities
or cash with instructions to purchase Additional Securities, in order to create
additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of Deposit. These additional Units, which will
result in an increase in the number of Units outstanding, will each represent,
to the extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
Initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date of
Deposit because of, among other reasons, purchase requirements, changes in
prices, unavailability of Securities [or the fact that the Trust is prohibited
from acquiring more than 3% of the outstanding voting stock of any High Yield
Fund]. The composition of the Trust portfolio may change slightly based on
certain adjustments made to reflect the disposition of Securities and/or the
receipt of a stock dividend, a stock split or other distribution with respect to
such Securities, including Securities received in exchange for shares or the
reinvestment of the proceeds distributed to Unitholders. Deposits of Additional
Securities in the Trust subsequent to the Deposit Period must replicate exactly
the existing proportionate relationship among the number of shares of Securities
in the Trust portfolio. Substitute Securities may be acquired under specified
conditions when Securities originally deposited in the Trust are unavailable
(see "The Trust--Substitution of Securities" below).
OBJECTIVES. The primary objective of the Trust is to seek to provide
high current income. Capital appreciation is a secondary objective of the Trust.
The Trust seeks to achieve its objectives by investing in a portfolio of the
common stock of closed-end investment companies, the portfolios of which (under
normal market conditions) have at least 65% of their assets in high-yielding
corporate bonds, debentures and notes. In addition, a portion of the remaining
percentage of some of the investment companies' portfolios may be invested in
common stock or other equity related securities, including convertible
securities, preferred stock, warrants and rights funds (see "The Trust--The
Securities" below). As used herein, the term "Securities" means the stocks
initially deposited in the Trust and described in "Portfolio" in Part A and any
additional stocks acquired and held by the Trust pursuant to the provisions of
the Indenture. All of the Securities in the Trust are listed on the New York
Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers Automated Quotations ("NASDAQ") National Quotation Market
System.
The Trust will terminate in approximately seven years, at which time
investors may choose to either receive the distributions in kind (if they own at
least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if offered) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the yields on these Securities may change subsequent to the Initial Date of
Deposit. Further, the Securities may appreciate or depreciate in value,
dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers (including non-U.S.
issuers) and the prices of equity securities in general and the Securities in
particular. Therefore, there is no guarantee that the objectives of the Trust
will be achieved.
THE SECURITIES. Each of the Securities in the Portfolio of the Trust is
a closed-end mutual fund (the "High Yield Funds") that invests primarily in
high-yielding corporate bonds, debentures and notes. Each High Yield Fund is
analyzed by the Portfolio Consultants based on the underlying characteristics of
its individual holdings. Diligent research is vital to the success of any mutual
fund. Careful attention has been paid to the individual investments that each
High Yield Fund has under management in order to reduce the Trust's exposure to
early bond calls and under-performing securities that would have the effect of
diluting the Trust's current income. Each security within a potential fund
purchase is evaluated by the Portfolio Consultants for its credit quality and
call risk probability. In addition, all potential
764183.2
B-2
<PAGE>
investments are evaluated based upon the experience of each funds' portfolio
manager in various economic and interest rate cycles.
Out of the universe of 34 national closed-end funds, the selection
process narrows the field to a group of 20 to 24 funds that meet the criteria of
stable performance, and are consistent with the Trust's objectives. By employing
an investment strategy that will require the Trust to invest in a series of
funds, investors will be diversified across a wide spectrum of debt and equity
issues, thereby reducing the exposure to any single issuer of corporate debt
and/or equity, or any single portfolio manager.
The Trustee has not participated and will not participate in the
selection of Securities for the Trust, and neither the Sponsor, the Portfolio
Consultants nor the Trustee will be liable in any way for any default, failure
or defect in any Securities.
The contracts to purchase Securities deposited initially in the Trust
are expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust.
The Substitute Securities must be purchased within 20 days after the
delivery of the notice of the failed contract. Where the Sponsor purchases
Substitute Securities in order to replace Failed Securities, the purchase price
may not exceed the purchase price of the Failed Securities and the Substitute
Securities must be substantially similar to the Securities originally contracted
for and not delivered.
Whenever a Substitute Security has been acquired for the Trust, the
Trustee shall, within five days thereafter, notify all Unitholders of the Trust
of the acquisition of the Substitute Security and the Trustee shall, on the next
Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security plus accrued interest, if
any.
In the event no substitution is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders--Distributions." In addition, if the right of substitution shall not
be utilized to acquire Substitute Securities in the event of a failed contract,
the Sponsor will cause to be refunded the sales charge attributable to such
Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date.
RISK CONSIDERATIONS
CLOSED-END FUNDS. The value of your units may increase or decrease
depending on the value of the underlying shares of the High Yield Funds in the
Trust's portfolio. The High Yield Funds are closed-end investment companies with
managed portfolios. Shares of closed-end funds frequently trade at a discount
from net asset value. As of the initial date of deposit, ____________ of the
High Yield Funds included in the Trust's portfolio were trading at a premium.
However, a fund's articles of incorporation may contain certain anti-takeover
provisions that may have the effect of inhibiting the fund's possible conversion
to open-end status and limiting the ability of other persons to acquire control
of the fund. In certain circumstances, these provisions might also inhibit the
ability of stockholders (including the Trust) to sell their shares at a premium
over prevailing market prices. This characteristic is a risk separate and
distinct from the risk that the fund's net asset value will decrease. In
particular, this characteristic would increase the loss or
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764183.2
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reduce the return on the sale of those High Yield Funds whose shares were
purchased by the Trust at a premium. Should any of the High Yield Funds convert
to open-end status, the Trust will retain such shares unless a determination is
made that the retention of such shares would be detrimental to the Trust. In the
unlikely event that a Fund converts to open-end status at a time when its shares
are trading at a premium there would be an immediate loss in value to the Trust
since shares of open-end funds trade at net asset value. In addition, to the
extent that the converted Fund creates additional shares when interest rates
have declined and invests in lower yielding securities, the Trust may experience
a reduction of the average yield of its retained shares in that Fund caused by
the acquisition of lower coupon investments. Certain of the High Yield Funds may
have in place or may put in place in the future plans pursuant to which the Fund
may repurchase its own shares in the market place. Typically, these plans are
put in place in an attempt by the Fund's board to reduce a discount on its share
price. To the extent such a plan was implemented and shares owned by the Trust
are mandatorily repurchased by the Fund, the Trust position in that Fund would
be reduced and the cash would be deposited in the Trust's Principal Account and
distributed to Unitholders at the next applicable Distribution Date. Similarly,
in the event that the Trust does not retain shares of a Fund which converted to
open-end status, the Trust position in that Fund would be eliminated and the
cash distributed to Unitholders
Shares of many High Yield Funds are thinly traded, and therefore may be
more volatile and subject to greater price fluctuations because of the Sponsor's
buying and selling securities than shares with greater liquidity. Investors
should be aware that there can be no assurance that the value of the Securities
in the Trust's Portfolio will increase or that the issuers of those Securities
will pay dividends on outstanding shares. Any distributions of income to
Unitholders will generally depend on the declaration of dividends by the issuers
of the underlying stocks, and the declaration of dividends depends on several
factors including the financial condition of the issuers of those Securities and
general economic conditions.
LOWER GRADE SECURITIES. The High Yield Funds in the Trust portfolio may
invest primarily in lower grade securities. There are certain risks associated
with the High Yield Funds' investments in such securities that could cause the
value of these funds to decrease. This, in turn, could cause the value of your
Units to decrease. The risks are outlined below.
Lower grade securities are regarded as being predominately speculative
as to the issuer's ability to make payments of principal and interest.
Investment in such securities involves substantial risk. Lower grade securities
are commonly referred to as "junk bonds." Issuers of lower grade securities may
be highly leveraged and may not have available to them more traditional methods
of financing. Therefore, the risks associated with acquiring the securities of
such issuers generally are greater than is the case with higher-rated
securities. For example, during an economic downturn or a sustained period of
rising interest rates, issuers of lower grade securities may be more likely to
experience financial stress, especially if such issuers are highly leveraged.
During periods of economic downturn, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
make payments on its debt obligations also may be adversely affected by specific
issuer developments, the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. Therefore, there can be
no assurance that in the future there will not exist a higher default rate
relative to the rates currently existing in the market for lower grade
securities.
The risk of loss due to default by the issuer is significantly greater
for the holders of lower grade securities because such securities may be
unsecured and may be subordinate to other creditors of the issuer. Other than
with respect to distressed securities, discussed below, the lower grade
securities in which the High Yield Funds may invest do not include instruments
which, at the time of investment, are in default or the issuers of which are in
bankruptcy. However, there can be no assurance that such events will not occur
after a High Yield Fund purchases a particular security, in which case the High
Yield Fund and the Trust may experience losses and incur costs.
Lower grade securities frequently have call or redemption features that
would permit an issuer to repurchase the security from one of the High Yield
Funds which holds it. If a call were exercised by the issuer during a period of
declining interest rates, the particular High Yield Fund is likely to have to
replace such called security with a lower yielding security, thus decreasing the
net investment income to the High Yield Fund and the Trust and dividends to
Unitholders.
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Lower grade securities tend to be more volatile than higher-rated
fixed-income securities, so that adverse economic events may have a greater
impact on the prices of lower grade securities than on higher-rated fixed-income
securities. Factors adversely affecting the market value of such securities are
likely to adversely affect a High Yield Fund's net asset value which, in turn,
may adversely affect the value of your Units. Recently, demand for lower grade
securities has increased significantly and the difference between the yields
paid by lower grade securities and investment grade bonds (i.e., the "spread")
has narrowed. To the extent this differential increases, the value of lower
grade securities in a High Yield Fund's portfolio could be adversely affected
along with the value of your Units.
Like higher-rated fixed-income securities, lower grade securities
generally are purchased and sold through dealers who make a market in such
securities for their own accounts. However, there are fewer dealers in the lower
grade securities market, which market may be less liquid than the market for
higher-rated fixed-income securities, even under normal economic conditions.
Also, there may be significant disparities in the prices quoted for lower grade
securities by various dealers. As a result, during periods of high demand in the
lower grade securities market, it may be difficult to acquire lower grade
securities appropriate for investment by the High Yield Funds. Adverse economic
conditions and investor perceptions thereof (whether or not based on economic
reality) may impair liquidity in the lower grade securities market and may cause
the prices a High Yield Fund receives for its lower grade securities to be
reduced. In addition, a High Yield Fund may experience difficulty in liquidating
a portion of its portfolio when necessary to meet a High Yield Fund's liquidity
needs or in response to a specific economic event such as deterioration in the
creditworthiness of the issuers. Under such conditions, judgment may play a
greater role in valuing certain of a High Yield Fund's portfolio instruments
than in the case of instruments trading in a more liquid market. Moreover, a
High Yield Fund may incur additional expense to the extent that it is required
to seek recovery upon a default on a portfolio holding or to participate in the
restructuring of the obligation.
DISTRESSED SECURITIES. The High Yield Funds may invest a portion of
their total assets in "Distressed Securities" which are securities that are:
o the subject of bankruptcy proceedings or otherwise in default as to the
repayment of principal and/or payment of interest of the time of
acquisition
o rated in the lower rating categories (Ca or lower by Moody's and CC or
lower by S&P), or
o if unrated, are in the opinion of the High Yield Fund's investment
advisor of equivalent quality.
An investment in Distressed Securities is speculative and involves significant
risk. Distressed Securities frequently do not produce income while they are
outstanding and may require the Fund to bear certain extraordinary expenses in
order to protect and recover its investment. Therefore, to the extent the Trust
pursues its secondary objective of capital growth through a High Yield Fund's
investment in Distressed Securities, the Trust's ability to achieve current
income for you may be diminished.
DILUTION. The Trust is prohibited from subscribing to a rights offering
for shares of any of the High Yield Funds. In the event of a rights offering for
additional shares of a High Yield Fund, Unitholders should expect that the Trust
will, at the completion of the offer, own a smaller proportional interest in
such Fund that would otherwise be the case. It is not possible to determine the
extent of this dilution in share ownership without knowing what proportion of
the shares in a rights offering will be subscribed.
This may be particularly serious when the subscription price per share
for the offer is less than the High Yield Fund's net asset value per share.
Assuming that all rights are exercised and there is no change in the net asset
value per share, the aggregate net asset value of each shareholder's shares of
common stock should decrease as a result of the offer. If a High Yield Fund's
net asset value should decrease to a point where the subscription price per
share is at or below that Fund's net asset value per share at the expiration of
the offer, shareholders would experience an immediate dilution of the aggregate
net asset value of their shares of common stock as a result of the offer, which
could be substantial.
[The Trust may transfer or sell its rights to purchase additional shares
of a High Yield Fund to the extent permitted by the terms of that Fund's rights
offering. The cash the Trust receives from transferring your rights might serve
as partial compensation for any possible dilution of the Trust's interest in the
Fund. There can be no assurance, however,
764183.2
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that the rights will be transferable or that a market for the rights will
develop or the value, if any, that such rights will have.]
LEVERAGE. The use of leverage by the High Yield Funds creates an
opportunity for increased net income and capital growth for their shares, but,
also, creates special risks. There can be no assurance that a leveraging
strategy will be successful during any period in which it is employed. The High
Yield Funds may use leverage to provide their shareholders with a potentially
higher return. Leverage creates risks for shareholders including the likelihood
of greater volatility of net asset value and market price of the shares and the
risk that fluctuations in interest rates on borrows and debt or in the dividend
rates on any preferred shares may affect the return to shareholders.
To the extent the income or capital growth derived from securities
purchased with funds received from leverage exceeds the cost of leverage, a High
Yield Fund's return will be greater than if leverage had not been used.
Conversely, if the income or capital growth from the securities purchased with
such funds is not sufficient to cover the cost of leverage, the return to a High
Yield Fund will be less than if leverage had not been used, and therefore the
amount available for distribution to shareholders as dividends and other
distributions will be reduced. This would, in turn, reduce the amount available
for distribution to you as a Unitholder.
FOREIGN SECURITIES. Certain High Yield Funds may invest all or a portion
of their assets in securities of issuers domiciled outside of the United States
or that are denominated in various foreign currencies and multinational foreign
currency units. Investing in securities of foreign entities and securities
denominated in foreign currencies involves certain risks not involved in
domestic investments, including, but not limited to:
o fluctuations in foreign exchange rates
o future foreign political and economic developments, and
o different legal systems and possible imposition of exchange
controls or other foreign government laws or restrictions.
Securities prices in different countries are subject to different economic,
financial, political and social factors. Since the High Yield Funds may invest
in securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates may affect the value of securities in
the High Yield Funds and the unrealized appreciation or depreciation of
investments. Currencies of certain countries may be volatile and therefore may
affect the value of securities denominated in such currencies. In addition, with
respect to certain foreign countries, there is the possibility of expropriation
of assets, confiscatory taxation, difficulty in obtaining or enforcing a court
judgment, economic, political or social instability or diplomatic developments
that could affect investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rates of inflation, capital
reinvestment, resources, self-sufficiency and balance of payments position.
Certain foreign investments also may be subject to foreign withholding taxes.
These risks often are heightened for investments in smaller, emerging capital
markets. Finally, accounting, auditing and financial reporting standards in
foreign countries are not necessarily equivalent to U.S. standards and therefore
disclosure of certain material information may not be made.
Beginning on January 1, 1999, the Euro was introduced as the new, single
European currency by eleven European Monetary Union member countries. These
countries are Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. The Euro may result in
uncertainties and disruptions for securities of European companies and European
financial markets which could adversely affect the Trust. At this time, the
Sponsor cannot predict what impact the Euro will have.
VOTING. In regard to the voting of all proxies with respect to a High
Yield Fund, the Sponsor has instructed the Trustee to vote the shares held by
the Trust in the same proportion as the vote of all other holders of the shares
of such High Yield Fund. With respect to rights offering, as described in the
"Dilution" section above, the Trust may not accept any additional securities of
the High Yield Funds.
764183.2
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FIXED PORTFOLIO. The value of the Units will fluctuate depending on all
of the factors that have an impact on the economy and the [equity] markets.
These factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated or distributed during the Liquidation Period. Since the
Trust will not sell Securities in response to ordinary market fluctuation, and
only at the Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust. Some of the Securities in the Trust may also be
owned by other clients of the Sponsor and their affiliates. However, because
these clients may have differing investment objectives, the Sponsor may sell
certain Securities from those accounts in instances where a sale by the Trust
would be impermissible, such as to maximize return by taking advantage of market
fluctuations. Investors should consult with their own financial advisers prior
to investing in the Trust to determine its suitability. (See "Trust
Administration--Portfolio Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection
with the creation of additional Units subsequent to the Initial Date of Deposit,
the Sponsor may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. Subject to regulatory approval, to the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or less
of the other Securities in the Trust. In addition, brokerage fees (if any)
incurred in purchasing Securities with cash deposited with instructions to
purchase the Securities will be an expense of the Trust.
Price fluctuations between the time of deposit and the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Unitholder's Units and the Income per Unit received by the Trust. In
particular, Unitholders who purchase Units during the initial offering period
would experience a dilution of their investment as a result of any brokerage
fees paid by the Trust during subsequent deposits of Additional Securities
purchased with cash deposited. In order to minimize these effects, the Trust
will try to purchase Securities as near as possible to the Evaluation Time or at
prices as close as possible to the prices used to evaluate Trust Units at the
Evaluation Time.
In addition, subsequent deposits to create such additional Units will
not be covered by the deposit of a bank letter of credit. In the event that the
Sponsor does not deliver cash in consideration for the additional Units
delivered, the Trust may be unable to satisfy its contracts to purchase the
Additional Securities without the Trustee selling underlying Securities.
Therefore, to the extent that the subsequent deposits are not covered by a bank
letter of credit, the failure of the Sponsor to deliver cash to the Trust, or
any delays in the Trust receiving such cash, would have significant adverse
consequences for the Trust.
COMMON STOCK. Since the Trust contains primarily common stocks of
domestic issuers, an investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks including
the risk that the financial condition of the issuers of the Securities may
become impaired. Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
YEAR 2000 ISSUE. Many existing computer programs use only two digits to
identify a year in the date field and were designed and developed without
considering the impact of the upcoming change in the century. Therefore, for
example, the year "2000" would be incorrectly identified as the year "1900". If
not corrected, many computer
764183.2
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<PAGE>
applications could fail or create erroneous results by or at the Year 2000,
requiring substantial resources to remedy. The Sponsor and Trustee believe that
the "Year 2000" problem is material to their business and operations and could
have a material adverse effect on the Sponsor's and the Trustee's results of
operations and, in turn, cash available for distribution by the Trustee.
Although the Sponsor and the Trustee are addressing the problem with respect to
their business operations, there can be no assurance that the "Year 2000"
problem will be properly or timely resolved. The "Year 2000" problem may also
adversely affect issuers of the Securities contained in the Trust to varying
degrees based upon various factors. The Sponsor is unable to predict what
effect, if any, the "Year 2000" problem will have on such issuers.
LEGISLATION. At any time after the Initial Date of Deposit, legislation
may be enacted, affecting the Securities in the Trust or the issuers of the
Securities. Changing approaches to regulation, particularly with respect to the
environment or with respect to the petroleum industry, may have a negative
impact on certain companies represented in the Trust. There can be no assurance
that future legislation, regulation or deregulation will not have a material
adverse effect on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
ORGANIZATION COSTS. The Securities purchased with the portion of the
Public Offering Price intended to be used to reimburse the Sponsor for the
Trust's organization costs will be purchased in the same proportionate
relationship as all the Securities contained in the Trust. Securities will be
sold to reimburse the Sponsor for the Trust's organization costs at the
completion of the initial offering period, which is expected to be 90 days from
the Initial Date of Deposit (a significantly shorter time period than the life
of the Trust). During the initial offering period, there may be a decrease in
the value of the Trust Securities. To the extent the proceeds from the sale of
these Securities are insufficient to repay the Sponsor for the Trust
organization costs, the Trustee will sell additional Securities to allow the
Trust to fully reimburse the Sponsor. In that event, the net asset value per
Unit will be reduced by the amount of additional Securities sold. Although the
dollar amount of the reimbursement due to the Sponsor will remain fixed and will
never exceed $___ per 100 Units, this will also result in a greater effective
cost per Unit to Unitholders for the reimbursement to the Sponsor. When
Securities are sold to reimburse the Sponsor for organization costs, the Trustee
will sell such Securities to an extent which will maintain the same
proportionate relationship among the Securities contained in the Trust as
existed prior to such sale.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities is determined in good faith by the Trustee on each
"Business Day" as defined in the Indenture in the following manner: because the
Securities are listed on a national securities exchange, this evaluation is
based on the closing sale prices on that exchange as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation).
If the Trustee deems these prices inappropriate as a basis for evaluation, then
the Trustee may utilize, at the Trust's expense, an independent evaluation
service or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee
or (c) by any combination of the above, each as of the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount
from the Public Offering Price during the initial public offering based upon the
number of Units purchased. This volume discount will result in a reduction of
the sales charge applicable to such purchases. The approximate reduced sales
charge on the Public Offering Price applicable to such purchases is as follows:
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NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
10,000 but less than 25,000 4.25%
25,000 but less than 50,000 4.00%
50,000 but less than 75,000 3.50%
75,000 but less than 100,000 3.00%
For transactions of at least 100,000 Units or more, the Sponsor intends
to negotiate the applicable sales charge and such charge will be disclosed to
any such purchaser. The Sponsor reserves the right to change the discounts from
time to time.
These discounts will apply to all purchases of Units by the same
purchaser during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
The holders of units of prior series of Equity Securities Trusts (the
"Prior Series") may "rollover" into this Trust by exchanging units of the Prior
Series for Units of the Trust at their relative net asset values, subject to a
reduced sales charge of 3.50%. An exchange of a Prior Series for Units of the
Trust will generally be a taxable event. The rollover option described herein
will also be available to investors in the Prior Series who elect to purchase
Units of the Trust within 60 days of their liquidation of units in the Prior
Series (see "Trust Termination").
Employees (and their immediate families) of Reich & Tang Distributors,
Inc. (and its affiliates), the Portfolio Consultants and of the special counsel
to the Sponsor, may, pursuant to employee benefit arrangements, purchase Units
of the Trust at a price equal to the aggregate value of the underlying
securities in the Trust during the initial offering period, divided by the
number of Units outstanding (without a sales charge). Such arrangements result
in less selling effort and selling expenses than sales to employee groups of
other companies. Resales or transfers of Units purchased under the employee
benefit arrangements may only be made through the Sponsor's secondary market, so
long as it is being maintained, and not through other broker-dealers.
Investors in any open-end management investment company or unit
investment trust that have purchased their investment within a five-year period
prior to the date of this Prospectus can purchase Units of the Trust in an
amount not greater in value than the amount of said investment made during this
five-year period at a reduced sales charge of 3.50% of the public offering
price.
Units may be purchased in the primary or secondary market (including
purchases by Rollover Unitholders) at the Public Offering Price (for purchases
which do not qualify for a volume discount) less the concession the Sponsor
typically allows to brokers and dealers for purchases (see "Public
Offering--Distribution of Units") by (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, (2) bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, (3) any person who, for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their immediate family members (as described above) and (4) officers and
directors of bank holding companies that make Units available directly or
through subsidiaries or bank affiliates. Notwithstanding anything to the
contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive the volume discount.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsor and dealers at the Public
764183.2
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Offering Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsor may extend the initial offering period
for successive thirty day periods. Certain banks and thrifts will make Units of
the Trust available to their customers on an agency basis. A portion of the
sales charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass- Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
The Sponsor intends to qualify the Units for sale in substantially all
States through dealers who are members of the National Association of Securities
Dealers, Inc. Units may be sold to dealers at prices which represent a
concession of up to 4.0% per Unit, subject to the Sponsor's right to change the
dealers' concession from time to time. Such Units may then be distributed to the
public by the dealers at the Public Offering Price then in effect. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units.
Broker-dealers of the Trust, banks and/or others are eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their registered representatives who have sold a minimum
number of units of unit investment trusts created by the Sponsor during a
specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of brokers, dealers, banks and/or
others may be eligible to win other nominal awards for certain sales efforts or
under which the Sponsor will allow to any such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate in sales programs sponsored
by the Sponsor, an amount not exceeding the total applicable sales charges on
the sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of their own assets and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold.
SPONSOR'S PROFITS. The Sponsor will receive a combined gross
underwriting commission equal to up to 4.50% of the Public Offering Price per
100 Units (equivalent to 4.712% of the net amount invested in the Securities).
Additionally, the Sponsor may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsor and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsor may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
they were a member. All or a portion of the Securities initially deposited in
the Trust may have been acquired through the Sponsor.
During the initial offering period and thereafter to the extent
additional Units continue to be offered by means of this Prospectus, the
Underwriter may also realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the aggregate value of the
Securities and hence in the Public Offering Price received by the Sponsor for
the Units. Cash, if any, made available to the Sponsor prior to settlement date
for the purchase of Units may be used in the Sponsor's business subject to the
limitations of 17 CFR 240.15c3-3 under the Securities Exchange Act of 1934 and
may be of benefit to the Sponsor.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsor for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsor may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsor Repurchase") the
Sponsor will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be
evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form at the Depository Trust Company ("DTC") through an
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investor's brokerage account. Units held through DTC will be deposited by the
Sponsor with DTC in the Sponsor's DTC account and registered in the nominee name
CEDE & COMPANY. Individual purchases of beneficial ownership interest in the
Trust may be made in book-entry form through DTC. Ownership and transfer of
Units will be evidenced and accomplished directly and indirectly by book-entries
made by DTC and its participants. DTC will record ownership and transfer of the
Units among DTC participants and forward all notices and credit all payments
received in respect of the Units held by the DTC participants. Beneficial owners
of Units will receive written confirmation of their purchases and sale from the
broker-dealer or bank from whom their purchase was made. Units are transferable
by making a written request property accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the Unit Holder. Holders must sign such written request
exactly as their names appear on the records of the Trust. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the
Trustee to an Income Account for the Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for the
Trust.
Distributions to each Unitholder from the Income Account are computed as
of the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account
of the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and Charges").
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any applicable taxes or other
governmental charges that may be payable out of the Trust. Amounts so withdrawn
shall not be considered a part of such Trust's assets until such time as the
Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The dividend distribution per 100 Units, if any, cannot be anticipated
and may be paid as Securities are redeemed, exchanged or sold, or as expenses of
the Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately
764183.2
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<PAGE>
stated, of the Trust, expressed both as total dollar amounts and as dollar
amounts representing the pro rata share of each 100 Units outstanding on the
last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, a current list of Securities in the portfolio and a copy of the
Trust Agreement.
LIQUIDITY
SPONSOR REPURCHASE. Unitholders who wish to dispose of their Units
should inquire of the Sponsor as to current market prices prior to making a
tender for redemption. The aggregate value of the Securities will be determined
by the Trustee on a daily basis and computed on the basis set forth under
"Trustee Redemption." The Sponsor does not guarantee the enforceability,
marketability or price of any Securities in the Portfolio or of the Units. The
Sponsor may discontinue the repurchase of Units if the supply of Units exceeds
demand, or for other business reasons. The date of repurchase is deemed to be
the date on which redemption requests are received in proper form by Reich &
Tang Distributors, Inc., 600 Fifth Avenue, New York, New York 10020. Redemption
requests received after 4 P.M., New York Time, will be deemed to have been
repurchased on the next business day. In the event a market is not maintained
for the Units, a Unitholder may be able to dispose of Units only by tendering
them to the Trustee for redemption.
Units purchased by the Sponsor in the secondary market may be reoffered
for sale by the Sponsor at a price based on the aggregate value of the
Securities in the Trust plus a 4.50% sales charge (or 4.712% of the net amount
invested) plus a pro rata portion of amounts, if any, in the Income Account. Any
Units that are purchased by the Sponsor in the secondary market also may be
redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service to
Unitholders, elect to purchase any Units tendered to the Trustee for redemption
(see "Trustee Redemption"). Factors which the Sponsor will consider in making a
determination will include the number of Units of all Trusts which it has in
inventory, its estimate of the salability and the time required to sell such
Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (three calendar days after
tender), the Sponsor may elect to purchase such Units. Such purchase shall be
made by payment to the Unitholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.
TRUSTEE REDEMPTION. At any time prior to the Evaluation Time on the
business day preceding the commencement of the Liquidation Period (approximately
seven years from the Initial Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsor, broker, dealer or financial institution holding such Units in street
name. In certain instances, additional documents may be required, such as trust
instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian. At the present time there
are no specific taxes related to the redemption of Units. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
canceled.
Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time on the date of
tender. The "date of tender" is deemed to be the date on which Units are
received by the Trustee, except that with respect to Units received after the
close of trading on the New York Stock Exchange (4:00 p.m. Eastern Time), the
date of tender is the next day on which such Exchange is open for trading, and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the Redemption Price computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts
paid on redemption shall be withdrawn from the Income Account, or, if the
balance therein is insufficient, from the Principal Account. All other amounts
paid on redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of
B-12
764183.2
shares of each Stock. Provision is made in the Indenture under which the Sponsor
may, but need not, specify minimum amounts in which blocks of Securities are to
be sold in order to obtain the best price for the Trust. While these minimum
amounts may vary from time to time in accordance with market conditions, the
Sponsor believes that the minimum amounts which would be specified would be
approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
As of the close of the initial offering period the Redemption Price per 100
Units will be reduced to reflect the payment of the per 100 Unit organization
costs to the Sponsor. Therefore, the amount of the Redemption Price per 100
Units received by a Unitholder will include the portion representing
organization costs only when such Units are tendered for redemption prior to the
close of the initial offering period. Because the Securities are listed on a
national securities exchange, the Trustee may determine the value of the
Securities in the Trust based on the closing sale prices on that exchange.
Unless the Trustee deems these prices inappropriate as a basis for evaluation or
if there is no such closing purchase price, then the Trustee may utilize, at the
Trust's expense, an independent evaluation service or services to ascertain the
values of the Securities. The independent evaluation service shall use any of
the following methods, or a combination thereof, which it deems appropriate: (a)
on the basis of current bid prices for comparable securities, (b) by appraising
the value of the Securities on the bid side of the market or (c) by any
combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption
may request by written notice submitted at the time of tender from the Trustee
in lieu of a cash redemption a distribution of shares of Securities and cash in
an amount and value equal to the Redemption Price Per Unit as determined as of
the evaluation next following tender. To the extent possible, in kind
distributions ("In Kind Distributions") shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to the account of the
Unitholder's bank or broker-dealer at The Depository Trust Company. An In Kind
Distribution will be reduced by customary transfer and registration charges. The
tendering Unitholder will receive his pro rata number of whole shares of each of
the Securities comprising the Trust portfolio and cash from the Principal
Accounts equal to the balance of the Redemption Price to which the tendering
Unitholder is entitled. If funds in the Principal Account are insufficient to
cover the required cash distribution to the tendering Unitholder, the Trustee
may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor
does not elect to purchase a Unit tendered for redemption or if the Sponsor
tenders a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unitholder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsor are not liable to any person or
in any way for any loss or damage which may result from any such suspension or
postponement.
A Unitholder who wishes to dispose of his Units should inquire of his
bank or broker in order to determine if there is a current secondary market
price in excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on
764183.2
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<PAGE>
the basis of economic, financial and market analyses. The Portfolio of the
Trust, however, will not be managed and therefore the adverse financial
condition of an issuer will not necessarily require the sale of its Securities
from the portfolio. It is unlikely that the Trust will sell any of the
Securities other than to satisfy redemptions of Units, or to cease buying
Additional Securities in connection with the issuance of additional Units.
However, the Trust Agreement provides that the Sponsor may direct the
disposition of Securities upon the occurrence of certain events including: (1)
default in payment of amounts due on any of the Securities; (2) institution of
certain legal proceedings; (3) default under certain documents materially and
adversely affecting future declaration or payment of amounts due or expected;
(4) determination of the Sponsor that the tax treatment of the Trust as a
grantor trust would otherwise be jeopardized; or (5) decline in price as a
direct result of serious adverse credit factors affecting the issuer of a
Security which, in the opinion of the Sponsor, would make the retention of the
Security detrimental to the Trust or the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsor fails to give
immediate instructions to sell or hold that Security, the Trustee, within
30 days of that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the Trustee
to reject any offer made by an issuer of any of the Securities to issue
new securities in exchange and substitution for any Security pursuant to
a recapitalization or reorganization. If any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsor directs that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, shall be promptly sold
unless the Sponsor directs that it be retained by the Trustee. The
proceeds of any disposition shall be credited to the Income or Principal
Account of the Trust.
(d) The Sponsor is authorized to increase the size and number of
Units of the Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units from time to time subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on
the Initial Date of Deposit is maintained to the extent practicable. The
Sponsor may specify the minimum numbers in which Additional Securities
will be deposited or purchased. If a deposit is not sufficient to acquire
minimum amounts of each Security, Additional Securities may be acquired
in the order of the Security most under-represented immediately before
the deposit when compared to the original proportionate relationship. If
Securities of an issue originally deposited are unavailable at the time
of the subsequent deposit, the Sponsor may (i) deposit cash or a letter
of credit with instructions to purchase the Security when it becomes
available, or (ii) deposit (or instruct the Trustee to purchase) either
Securities of one or more other issues originally deposited or a
Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such other provisions in regard to matters arising thereunder as shall
not adversely affect the interests of the Unitholders.
The Trust Agreement may also be amended in any respect, or performance
of any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
764183.2
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<PAGE>
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate as of the Evaluation Time on the business day preceding the
Liquidation Period or upon the earlier maturity, redemption or other
disposition, as the case may be, of the last of the Securities held in such
Trust and in no event is it to continue beyond the Mandatory Termination Date.
If the value of the Trust shall be less than the minimum amount set forth under
"Summary of Essential Information" in Part A, the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the Trust. The
Trust may also be terminated at any time with the consent of the investors
holding 100% of the Units then outstanding. The Trustee may utilize the services
of the Sponsor for the sale of all or a portion of the Securities in the Trust,
and in so doing, the Sponsor will determine the manner, timing and execution of
the sales of the underlying Securities. Any brokerage commissions received by
the Sponsor from the Trust in connection with such sales will be in accordance
with applicable law. In the event of termination, written notice thereof will be
sent by the Trustee to all Unitholders. Such notice will provide Unitholders
with the following three options by which to receive their pro rata share of the
net asset value of the Trust and requires their election of one of the three
options by notifying the Trustee by returning a properly completed election
request (to be supplied to Unitholders of at least 2,500 Units prior to the
commencement of the Liquidation Period) (see Part A--"Summary of Essential
Information" for the date of the commencement of the Liquidation Period):
1. A Unitholder who owns at least 2,500 Units and whose interest in
the Trust would entitle it to receive at least one share of each
underlying Security will have its Units redeemed on commencement of the
Liquidation Period by distribution of the Unitholder's pro rata share of
the net asset value of the Trust on such date distributed in kind to the
extent represented by whole shares of underlying Securities and the
balance in cash within three business days next following the
commencement of the Liquidation Period. Unitholders subsequently selling
such distributed Securities will incur brokerage costs when disposing of
such Securities. Unitholders should consult their own tax adviser in this
regard;
2. to receive in cash such Unitholder's pro rata share of the net
asset value of the Trust derived from the sale by the Sponsor as the
agent of the Trustee of the underlying Securities during the Liquidation
Period. The Unitholder's pro rata share of its net assets of the Trust
will be distributed to such Unitholder within three days of the
settlement of the trade of the last Security to be sold; or
3. to invest such Unitholder's pro rata share of the net assets of
the Trust derived from the sale by the Sponsor as agent of the Trustee of
the underlying Securities during the Liquidation Period, in units of a
subsequent series of Equity Securities Trust (the "New Series"), provided
one is offered. It is expected that a special redemption and liquidation
will be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust in Part A. The Units of a New Series will be
purchased by the Unitholder within three business days of the settlement
of the trade for the last Security to be sold. Such purchaser will be
entitled to a reduced sales charge upon the purchase of units of the New
Series. It is expected that the terms of the New Series will be
substantially the same as the terms of the Trust described in this
Prospectus, and that similar options with respect to the termination of
such New Series will be available. The availability of this option does
not constitute a solicitation of an offer to purchase Units of a New
Series or any other security. A Unitholder's election to participate in
this option will be treated as an indication of interest only. At any
time prior to the purchase by the Unitholder of units of a New Series
such Unitholder may change his investment strategy and receive, in cash,
the proceeds of the sale of the Securities. An election of this option
will not prevent the Unitholder from recognizing taxable gain or loss
(except in the case of a loss, if and to the extent the New Series is
treated as substantially identical to the Trust) as a result of the
liquidation, even though no cash will be distributed to pay any taxes.
Unitholders should consult their own tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected
to receive the termination distribution in cash (option number 2).
The Sponsor has agreed that to the extent they effect the sales of
underlying securities for the Trustee in the case of the second and third
options during the Liquidation Period such sales will be free of brokerage
commissions. The Sponsor, on behalf of the Trustee, will sell, unless prevented
by unusual and unforeseen circumstances, such as, among other reasons, a
suspension in trading of a Security, the close of a stock exchange, outbreak of
hostilities and collapse of
764183.2
B-15
<PAGE>
the economy, by the last business day of the Liquidation Period. The Redemption
Price per 100 Units, upon the settlement of the last sale of Securities during
the Liquidation Period, will be distributed to Unitholders in redemption of such
Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsor believes that the sale of
underlying Securities over the Liquidation Period as described above is in the
best interest of a Unitholder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than five days if, in the Sponsor's judgment,
such sales are in the best interest of Unitholders. The Sponsor, in implementing
such sales of securities on behalf of the Trustee, will seek to maximize the
sales proceeds and will act in the best interests of the Unitholders. There can
be no assurance, however, that any adverse price consequences of heavy trading
will be mitigated.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unitholders. All
Unitholders will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into the New Series, the Unitholder indicates
his interest in having his terminating distribution from the Trust invested only
in the New Series created following termination of the Trust; the Sponsor
expects, however, that a similar rollover program will be offered with respect
to all subsequent series of the Trust, thus giving Unitholders an opportunity to
elect to roll their terminating distributions into a New Series. The
availability of the rollover privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the rollover program will be treated as an indication
of interest only. The Sponsor intends to coordinate the date of deposit of a
future series so that the terminating trust will terminate contemporaneously
with the creation of a New Series. The Sponsor reserves the right to modify,
suspend or terminate the rollover privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors, Inc., a Delaware
corporation, is engaged in the brokerage business and is a member of the
National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment advisor. Reich & Tang maintains its principal business
offices at 600 Fifth Avenue, New York, New York 10020. The sole shareholder of
the Sponsor, Reich & Tang Asset Management, Inc. ("RTAM Inc.") is wholly owned
by NEIC Holdings, Inc. which, effective December 29, 1997, was wholly owned by
NEIC Operating Partnership, L.P. ("NEICOP"). Subsequently, on March 31, 1998,
NEICOP changed its name to Nvest Companies, L.P. ("Nvest"). The general partners
of Nvest are Nvest Corporation and Nvest L.P. As of March 31, 1998, Metropolitan
Life Insurance Company ("MetLife") owned approximately 47% of the partnership
interests of Nvest. Nvest, with a principal place of business at 399 Boylston
Street, Boston, MA 02116, is a holding company of firms engaged in the
securities and investment advisory business. These affiliates in the aggregate
are investment advisors or managers to over 80 registered investment companies.
Reich & Tang is Sponsor for numerous series of unit investment trusts, including
New York High Yield Trust, Series 1 (and Subsequent Series), High Yield
Securities Trust, Series 1 (and Subsequent Series), 1st Discount Series (and
Subsequent Series), Multi-State Series 1 (and Subsequent Series), Mortgage
Securities Trust, Series 1 (and Subsequent Series), Insured High Yield
Securities Trust, Series 1 (and Subsequent Series) and 5th Discount Series (and
Subsequent Series), Equity Securities Trust, Series 1, Signature Series, Gabelli
Communications Income Trust (and Subsequent Series) and Schwab Trusts.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations. The Sponsor will be under no liability to
Unitholders for taking any action, or refraining from taking any action, in good
faith pursuant to the Trust Agreement, or for errors in judgment except in cases
of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
764183.2
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<PAGE>
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor. If at any time the Sponsor
shall resign or fail to perform any of its duties under the Trust Agreement or
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, then the Trustee may either (a) appoint a successor Sponsor;
(b) terminate the Trust Agreement and liquidate the Trust; or (c) continue to
act as Trustee without terminating the Trust Agreement. Any successor Sponsor
appointed by the Trustee shall be satisfactory to the Trustee and, at the time
of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at Four New York Plaza, New York,
New York 10004. The Trustee is subject to supervision by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Units in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it. In addition, the Trustee shall
not be liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unitholders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsor is obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsor may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
THE PORTFOLIO CONSULTANTS. The Portfolio Consultants are Thomas J.
Herzfeld Advisors, Inc., with offices at P.O. Box 161465, Miami, Florida 33116,
and Riccardi Group LLC, a Delaware limited liability corporation with offices at
161 Maiden Lane, New York, New York 10038. Thomas Herzfeld, CEO of Thomas J.
Herzfeld Advisors, Inc., will be primarily responsible for the recommendation of
the closed-end funds to the Sponsor. Mr. Herzfeld is considered to be a foremost
expert on closed-end funds. Mr. Herzfeld publishes an "Encyclopedia of Closed
End Funds" and has written books and numerous articles on investing in
closed-end funds. "Barrons" uses the "Herzfeld Closed End Average" as the
standard for tracking the performance of closed end funds.
Cynthia M. Brown, an officer and director of Riccardi Group LLC in
conjunction with Thomas Ryan, a director of Riccardi Group LLC will be
responsible for analyzing the credit quality and income sustainability of the
closed-end funds selected by Mr. Herzfeld and recommended to the Sponsor. Ms.
Brown is a former Senior Vice President and portfolio manager at Massachusetts
Financial Services. She was responsible for a number of portfolios totaling over
$2 billion which were comprised of primarily non-rated as well as investment
grade tax-exempt securities. Mr. Ryan is CEO of Riverside Capital Advisors of
Miami, Florida, and has 25 years experience as a high yield analyst and
portfolio manager. Mr. Ryan works in conjunction with Thomas P. Krasner CFA, a
senior portfolio manager of Riverside Capital Advisors
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and President of the Miami Society of Financial Analysts with 13 years of
analytical and portfolio management experience.
Neither Portfolio Consultant is a sponsor of the Trust. The Portfolio
Consultants have been retained by the Sponsor, at its expense. The Portfolio
Consultants' only responsibility with respect to the Trust, in addition to their
role in Portfolio selection, is to monitor the Securities of the Portfolio and
make recommendations to the Sponsor regarding the disposition of the Securities
held by the Trust. The responsibility of monitoring the Securities of the
Portfolio means that if the Portfolio Consultants' view materially change
regarding the appropriateness of an investment in any Security then held in the
Trust based upon the investment objectives, guidelines, terms, parameters,
policies and restrictions supplied to the Portfolio Consultants by the Sponsor,
the Portfolio Consultants will notify the Sponsor of such change to the extent
consistent with applicable legal requirements. The Sponsor is not obligated to
adhere to the recommendations of the Portfolio Consultants regarding the
disposition of Securities. The Sponsor has the sole authority to direct the
Trust to dispose of Securities under the Trust Agreement. The Portfolio
Consultants have no other responsibilities or obligations to the Trust or the
Unitholders.
Each of the Portfolio Consultants may resign or may be removed by the
Sponsor at any time on sixty days' prior written notice. In the event that one
of the Portfolio Consultants resigns or is removed, the remaining Portfolio
Consultant will perform as sole Portfolio Consultant. The Sponsor shall use its
best efforts to appoint a satisfactory successor in the event that both
Portfolio Consultants resign or are removed. Such resignations or removals shall
become effective upon the acceptance of appointment by the successor Portfolio
Consultant. If upon resignation of both of the Portfolio Consultants no
successor has accepted appointment within sixty days after notice of
resignation, the Sponsor has agreed to perform this function.
EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering--Offering Price." The Sponsor and the Unitholders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. Determinations by the Trustee under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Trustee shall be under no liability
to the Sponsor or Unitholders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Trustee, the Sponsor and the Unitholders may rely on
any evaluation furnished to the Trustee by an independent evaluation service and
shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
Investors will reimburse the Sponsor on a per 100 Units basis, for all
or a portion of the estimated costs incurred in organizing the Trust, including
the cost of the initial preparation, printing and execution of the registration
statement and the indenture, Federal and State registration fees, the initial
fees and expenses of the Trustee, legal expenses and any other out-of-pocket
costs. The estimated organization costs will be paid from the assets of the
Trust as of the close of the initial public offering period. To the extent that
actual organization costs are less than the estimated amount, only the actual
organization costs will be deducted form the assets of the Trust. To the extent
that actual organization costs are greater than the estimated amount, only the
estimated organization costs included in the Public Offering Price will be
reimbursed to the Sponsor. Any balance of the costs incurred in establishing the
Trust, as well as advertising and selling costs, will be paid by the Sponsor at
no cost to the Trust.
The Sponsor will receive for portfolio supervisory services to the Trust
an Annual Fee in the amount set forth under "Summary of Essential Information"
in Part A. The Sponsor's fee may exceed the actual cost of providing portfolio
supervisory services for the Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the Equity
Securities Trust in any calendar year exceed the aggregate cost to the Sponsor
of supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both fees may be increased without approval of
the
764183.2
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Unitholders by amounts not exceeding proportionate increases in consumer prices
for services as measured by the United States Department of Labor's Consumer
Price Index entitled "All Services Less Rent."
The following additional charges are or may be incurred by the Trust:
all expenses (including counsel fees) of the Trustee incurred and advances made
in connection with its activities under the Trust Agreement, including the
expenses and costs of any action undertaken by the Trustee to protect the Trust
and the rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsor for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsor, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsor otherwise directs, the accounts of the Trust shall be
audited not less than annually by independent public accountants selected by the
Sponsor. The expenses of the audit shall be an expense of the Trust. So long as
the Sponsor maintains a secondary market, the Sponsor will bear any audit
expense which exceeds $.50 Cents per 100 Units. Unitholders covered by the audit
during the year may receive a copy of the audited financial statements upon
request.
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's reinvestment plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsor or new Units created by the Sponsor's deposit of Additional Securities
as described in "The Trust-Organization" in this Part B. Units acquired by
reinvestment will be subject to a reduced sales charge of 1.00%. Investors
should inform their broker, dealer or financial institution when purchasing
their Units if they wish to participate in the reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer or financial institution if they
wish to modify or terminate their election to participate in the reinvestment
plan. In order to enable a Unitholder to participate in the reinvestment plan
with respect to a particular distribution on their Units, such notice must be
made at least three business days prior to the Record Day for such distribution.
Each subsequent distribution of income or principal on the participant's Units
will be automatically applied by the Trustee to purchase additional Units of the
Trust. The Sponsor reserves the right to modify or terminate the reinvestment
plan at any time without prior notice. The reinvestment plan for the Trust may
not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders will be able to elect to exchange any or all of their Units
of this Trust for Units of one or more of any available series of Equity
Securities Trust, Insured Municipal Securities Trust, Municipal Securities
Trust, New York Municipal Trust or Mortgage Securities Trust (the "Exchange
Trusts") subject to a reduced sales charge as set forth in the prospectus of the
Exchange Trust (the "Exchange Privilege"). Unit owners of any registered unit
investment trust for which there is no active secondary market in the units of
such trust (a "Redemption Trust") will be able to elect to redeem such units and
apply the proceeds of the redemption to the purchase of available Units of one
or more series of an Exchange Trust (the "Conversion Trusts") at the Public
Offering Price for units of the Conversion Trust subject to a reduced sales
charge as set forth in the prospectus of the Conversion Trust (the "Conversion
Offer"). Under the Exchange Privilege, the Sponsor's repurchase price during the
initial offering period of the Units being surrendered will be based on the
market value of the Securities in the Trust portfolio or on the aggregate offer
price of the Bonds in the other Trust Portfolios; and, after the initial
offering period has been completed, will be based on the aggregate bid price of
the securities in the particular Trust portfolio. Under the Conversion Offer,
units of the Redemption Trust must be tendered to the trustee of such trust for
redemption at the redemption price determined as set forth in the relevant
Redemption Trust's prospectus. Units in an Exchange or Conversion Trust will be
sold to the Unitholder at a price based on the aggregate offer price of the
securities in the Exchange or Conversion Trust portfolio (or for units of Equity
Securities Trust, based on the market value of the underlying securities in the
trust portfolio) during the initial public offering period of the Exchange or
Conversion Trust; and after the initial public offering period has been
completed, based on the aggregate bid price of the securities in the Exchange or
Conversion Trust Portfolio if its initial offering has
764183.2
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been completed plus accrued interest (or for units of Equity Securities Trust,
based on the market value of the underlying securities in the trust portfolio)
and a reduced sales charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish to
exercise the Exchange Privilege or Conversion Offer within the first five months
of their purchase of Units of the Exchange or Redemption Trust, the sales charge
applicable to the purchase of units of an Exchange or Conversion Trust shall be
the greater of (i) the reduced sales charge or (ii) an amount which when coupled
with the sales charge paid by the Unitholder upon his original purchase of Units
of the Exchange or Redemption Trust would equal the sales charge applicable in
the direct purchase of units of an Exchange or Conversion Trust.
In order to exercise the Exchange Privilege the Sponsor must be
maintaining a secondary market in the units of the available Exchange Trust. The
Conversion Offer is limited only to unit owners of any Redemption Trust.
Exercise of the Exchange Privilege and the Conversion Offer by Unitholders is
subject to the following additional conditions (i) at the time of the
Unitholder's election to participate in the Exchange Privilege or the Conversion
Offer, there must be units of the Exchange or Conversion Trust available for
sale, either under the initial primary distribution or in the Sponsor's
secondary market, (iii) exchanges will be effected in whole units only, (iv)
Units of the Mortgage Securities Trust may only be acquired in blocks of 1,000
Units and (v) Units of the Equity Securities Trust may only be acquired in
blocks of 100 Units. Unitholders will not be permitted to advance any funds in
excess of their redemption in order to complete the exchange. Any excess
proceeds received from a Unitholder for exchange, or from units being redeemed
for conversion, will be remitted to such Unitholder.
The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Unitholders of the Trust with 60 days' prior written notice of any termination
or material amendment to the Exchange Privilege or the Conversion Offer,
provided that, no notice need be given if (i) the only material effect of an
amendment is to reduce or eliminate the sales charge payable at the time of the
exchange, to add one or more series of the Trust eligible for the Exchange
Privilege or the Conversion Offer, to add any new unit investment trust
sponsored by Reich & Tang or a sponsor controlled by or under common control
with Reich & Tang, or to delete a series which has been terminated from
eligibility for the Exchange Privilege or the Conversion Offer, (ii) there is a
suspension of the redemption of units of an Exchange or Conversion Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an Exchange Trust
temporarily delays or ceases the sale of its units because it is unable to
invest amounts effectively in accordance with its investment objectives,
policies and restrictions. During the 60-day notice period prior to the
termination or material amendment of the Exchange Privilege described above, the
Sponsor will continue to maintain a secondary market in the units of all
Exchange Trusts that could be acquired by the affected Unitholders. Unitholders
may, during this 60-day period, exercise the Exchange Privilege in accordance
with its terms then in effect.
To exercise the Exchange Privilege, a Unitholder should notify the
Sponsor of his desire to exercise his Exchange Privilege. To exercise the
Conversion Offer, a unit owner of a Redemption Trust should notify his retail
broker of his desire to redeem his Redemption Trust Units and use the proceeds
from the redemption to purchase Units of one or more of the Conversion Trusts.
If Units of a designated, outstanding series of an Exchange or Conversion Trust
are at the time available for sale and such Units may lawfully be sold in the
state in which the Unitholder is a resident, the Unitholder will be provided
with a current prospectus or prospectuses relating to each Exchange or
Conversion Trust in which he indicates an interest. He may then select the Trust
or Trusts into which he desires to invest the proceeds from his sale of Units.
The exchange transaction will operate in a manner essentially identical to a
secondary market transaction except that units may be purchased at a reduced
sales charge. The conversion transaction will be handled entirely through the
unit owner's retail broker. The retail broker must tender the units to the
trustee of the Redemption Trust for redemption and then apply the proceeds to
the redemption toward the purchase of units of a Conversion Trust at a price
based on the aggregate offer or bid side evaluation per Unit of the Conversion
Trust, depending on which price is applicable, plus accrued interest and the
applicable sales charge. The certificates must be surrendered to the broker at
the time the redemption order is placed and the broker must specify to the
Sponsor that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain a
portion of the sales charge.
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TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION OFFER. A
surrender of Units pursuant to the Exchange Privilege or the Conversion Offer
will constitute a "taxable event" to the Unitholder under the Internal Revenue
Code. The Unitholder will realize a tax gain or loss that will be of a long- or
short-term capital or ordinary income nature depending on the length of time the
units have been held and other factors. (See "Tax Status".) A Unitholder's tax
basis in the Units acquired pursuant to the Exchange Privilege or Conversion
Offer will be equal to the purchase price of such Units. Investors should
consult their own tax advisors as to the tax consequences to them of exchanging
or redeeming units and participating in the Exchange Privilege or Conversion
Offer.
TAX STATUS
This is a general discussion of some of the Federal income tax
consequences of ownership of Units in the Trust. It applies only to investors
who hold their Units as capital assets. It does not discuss special rules that
apply to investors subject to special treatment, such as securities dealers,
financial institutions and insurance companies.
OPINION OF COUNSEL. In the opinion of Battle Fowler LLP:
1. The IRS will classify the Trust as a grantor trust for Federal income
tax purposes. The Trust will not owe Federal income tax. Each Unitholder
will be treated as the owner of a pro rata portion of the assets of the
Trust. The income received by the Trust will be treated as
income of the Unitholders.
2. The Trust will not be subject to the New York Franchise Tax on
Business Corporations or the New York City General Corporation Tax.
However, Unitholders who are New York residents must treat their pro rata
portion of the income of the Trust as their income under New York State
and City income tax laws. Residents of other states may have to do the
same thing in their states.
3. The Sponsor has the right to create additional Units for 90 days after
the original issuance date by depositing Additional Securities in the
Trust. The Additional Securities must be substantially similar to the
securities initially deposited in the Trust. The IRS will treat the Trust
as a grantor trust even though the Sponsor has this power.
Battle Fowler LLP is special counsel to the Sponsor. Its opinion is based on
existing law. Battle Fowler LLP has relied on the validity of the Trust
Agreement and the Prospectus and on the accuracy and completeness of the facts
they contain.
TAXATION OF UNITHOLDERS. The IRS will tax each Unitholder the same way
it would if the Unitholder owned directly its pro rata share of the securities
held by the Trust. Each Unitholder will determine its tax cost for its share of
the securities held by the Trust by allocating its cost of the Units (including
sales charges) among its share of the securities held by the Trust in proportion
to the fair market values of those securities on the date the Unitholder
purchases its Units. See "Fractional Undivided Interest in Trust" in the
"Summary of Essential Information" in order to determine a Unitholder's share of
each security on the date of Deposit, and see "Cost of Securities to Trust"
under "Portfolio" in order to determine the fair market value of each security
on that date.
The Trust will own shares of regulated investment companies (referred to
herein as the "High Yield Funds") that own high-yield corporate debt
instruments. The IRS will treat each Unitholder as receiving its share of the
ordinary dividends and capital gain dividends on the shares of the High Yield
Funds held by Trust, when the Trust receives those items, unless the Unitholder
has an accounting method that requires an earlier accrual. A Unitholder may
treat its share of capital gains dividends received by the Trust as capital
gains dividends received by it.
Each Unitholder will generally have to calculate its gain or loss when
the Trust sells, exchanges or redeems shares in a High Yield Funds or when the
Unitholder sells, exchanges or redeems Units. Any gain will generally be a
capital gain and will be long-term if the Unitholder has held its Units for more
than one year and the Trust has held the shares in the High Yield Funds for more
than one year. A Unitholder's share of capital gains dividends received by the
Trust from the High Yield Funds will also be long-term capital gain, regardless
of the period of time for which the Unitholder has held its Units or the period
of time for which the Trust has held the shares in the High Yield Funds. Capital
gains are generally taxed at the same rates applicable to ordinary income,
although non-corporate Unitholders may be subject to a reduced tax rate of 20%
on long-term capital gains. Tax rates may increase before the Trust sells shares
in the High Yield Funds or the Unitholders sell Units.
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Any loss on the sale or redemption of Units or share in the High Yield
Funds will generally be a capital loss, and will be long-term for Unitholders
who have held their Units for more than one year if the Trust has also held the
shares in the High Yield Funds for more than one year and short-term capital
gain or loss if the Trust has held the shares, or the Unitholder has held the
Units for one year or less. Capital losses are deductible to the extent of
capital gains; in addition, Unitholders that are not corporations may deduct up
to $3,000 of capital losses (married individuals filing separately may only
deduct $1,500) against ordinary income. However, if the Trust buys shares and
sells them at a loss within six months (or if the Unitholder buys Units and
sells them at a loss within six months), the loss will be treated as long-term,
rather than short-term capital loss if (and to the extent that) the Trust
received any capital gains dividends with respect to those shares.
Unitholders will also not be able to deduct losses resulting from the
sale of shares or the sale of Units if (and to the extent that) the Unitholder
purchases other shares or other Units within 30 days before or after the sale.
This rule could also apply to a transaction in which a Unitholder sell Units or
the Trust sells shares of a High Yield Funds, and the Unitholder purchases
shares of that same High Yield Fund directly within the 60 days period. If this
disallowance rule applies, the basis of the newly purchased Units and shares
will be adjusted to reflect the disallowed loss.
Under Section 67 of the Code and the accompanying Regulations, a
Unitholder who itemizes its deductions may also deduct its pro rata share of the
fees and expenses of a Trust, but only to the extent that such amounts, together
with the Unitholder's other miscellaneous deductions, exceed 2% of its adjusted
gross income. The deduction of fees and expenses may also be limited by Section
68 of the Code, which reduces the amount of itemized deductions that are allowed
for individuals with incomes in excess of certain thresholds.
The Trustee will give each Unitholder an annual statement showing the
dividends and capital gains dividends received by the Trust, the gross proceeds
received by the Trust from the disposition of any shares in the High Yield
Funds, and any other income and fees and expenses of the Trust. The Trustee will
also give an annual information return to each Unitholder and send copies of
those returns to the Internal Revenue Service.
Each Unitholder may have three choices when the Trust terminates. First,
a Unitholder who owns at least 2,500 units may have the Trust distribute its
share of the shares of the High Yield Funds in kind (plus cash in lieu of
fractional shares). Second, a Unitholder can have the Trust sell its share of
the shares of the High Yield Funds and distribute the cash. Third, a Unitholder
can reinvest the cash it would have received in units of a future series of the
Trust (if one is offered). A Unitholder who asks the Trust to distribute its
share of the shares of the High Yield Funds (plus cash for fractional shares)
should not be taxed when the shares of the High Yield Funds are distributed to
it, although the cash should be taxable. However, there is no specific authority
covering this issue.
Entities that generally qualify for an exemption from Federal income
tax, such as many pension trusts, are nevertheless taxed under Section 511 of
the Code on "unrelated business taxable income." Unrelated business taxable
income is income from a trade or business regularly carried on by the tax-exempt
entity that is unrelated to the entity's exempt purpose. Unrelated business
taxable income generally does not include dividend or interest income or gain
from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from the Trust and gain from the sale of Units in the Trust or
the Trust's sale of Securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Unit
itself is debt-financed or constitutes dealer property in the hands of the
tax-exempt entity.
Prospective tax-exempt investors are urged to consult their own tax
advisers concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
Trust.
TAXATION OF THE HIGH YIELD FUNDS. The High Yield Funds intend to qualify
to be treated as regulated investment companies for Federal income tax purposes.
If they qualify, the High Yield Funds will not be subject to Federal income tax
on the income they distribute to their shareholders, including the Trust.
In order to qualify as a regulated investment company, a High Yield Fund
must distribute each year at least 90% of its net investment income (including,
generally, taxable interest, dividends, net short-term capital gains, and
certain other income, less certain expenses and must meet several additional
requirements. A High Yield Fund that does not qualify as a regulated investment
company will be taxed on its taxable income and capital gains; and all
distributions to its shareholders, including distributions of net long-term
capital gains, will be taxable as ordinary income.
764183.2
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The High Yield Funds may have to accrue and distribute income not yet
received if they invest in Bonds issued at a discount. The High Yield Funds may
be required to sell Bonds that they otherwise would have continued to hold in
order to generate sufficient cash to make this distribution.
The High Yield Funds intend to distribute enough of their income to
avoid the 4% excise tax imposed on regulated investment companies that do not
distribute at least 98% of their taxable income.
TAXATION OF THE TRUST AS A SHAREHOLDER OF THE HIGH YIELD FUNDS.
Dividends from the High Yield Funds' investment company taxable income (whether
received in cash or reinvested in additional shares) generally are taxable to
Unitholders as ordinary income to the extent of the High Yield Funds' earnings
and profits. Distributions of the High Yield Funds' net capital gain (whether
received in cash or reinvested in additional High Yield Funds' shares), when
designated as such, are taxable to Unitholders as long-term capital gain,
regardless of how long they have held their Units. Distributions by the High
Yield Funds to Unitholders in any year that exceed the High Yield Fund's
earnings and profits generally may be applied by each Unitholder against his or
her basis for the High Yield Funds' shares and will be taxable at capital gains
rates (assuming the High Yield Funds' shares are held as a capital asset) to any
Unitholder only to the extent the distributions to the Unitholder exceed the
Unitholder's basis for his or her shares. The High Yield Funds may retain for
investment their net capital gain. However, if a High Yield Fund does so, it
will be subject to a tax of 35% on the amount retained. In that event, the High
Yield Funds may designate the retained amount as undistributed capital gain in a
notice to their Unitholders, who (i) will be required to include in income for
tax purposes, as long-term capital gain, their proportionate shares of such
undistributed amount, (ii) will be entitled to credit their proportionate shares
of the 35% tax paid by the High Yield Fund against their federal income tax
liabilities, if any, and to claim refunds to the extent the credit exceeds those
liabilities, and (iii) will increase the tax basis of their shares by an amount
equal to 65% of the amount of undistributed capital gain included in their gross
income.
The High Yield Funds may acquire zero coupon or other securities issued
with original issue discount. As the holders of such securities, the High Yield
Funds must include in their gross income the original issue discount that
accrues on the securities during the taxable year, even if they receive no
corresponding payment on the securities during the year. The High Yield Funds
also must include in their gross income each year any "interest" distributed in
the form of additional securities on payment-in-kind securities. Because the
High Yield Funds annually must distribute substantially all of their investment
company taxable income, including any accrued original issue discount and other
non-cash income, to satisfy the distribution requirement and to avoid imposition
of the excise tax, the High Yield Funds may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of cash
they actually receive. Those distributions will be made from the High Yield
Funds' cash assets or from the proceeds of sales of portfolio securities, if
necessary. The High Yield Funds may recognize capital gains or losses from those
sales, which would increase or decrease their investment company taxable income
and/or net capital gain.
The use of certain derivatives, such as selling (writing) and purchasing
options and futures and entering into forward currency contracts, involves
complex rules that will determine for federal income tax purposes the amount,
character and timing of recognition of the gains and losses the High Yield Funds
realize in connection therewith. These rules also may require the High Yield
Funds to "mark to market" (that is, treat as sold for their fair market value)
at the end of each taxable year certain positions in their portfolios, which may
cause the High Yield Funds to recognize income or gain without receiving cash
with which to make distributions necessary to satisfy the distribution
requirement and to avoid imposition of the excise tax.
Foreign currency gains or losses from certain forward contracts not
traded in the interbank market as well as certain other gains or losses
attributable to currency exchange rate fluctuations are typically treated as
ordinary income or loss. Such income or loss may increase or decrease (or
possibly eliminate) the High Yield Funds' income available for distribution. If,
under the rules governing the tax treatment of foreign currency gain and losses,
the High Yield Funds' income available for distribution is decreased or
eliminated, all or a portion of the distributions by the High Yield Funds may be
treated for federal income tax purposes as a return of capital or, in some
circumstances, as capital gain.
Income received by the High Yield Funds from investments in foreign
securities may be subject to income, withholding or other taxes imposed by
foreign countries and U.S. possessions. Such taxes will not be deductible or
creditable by Shareholders. Tax conventions between certain countries and the
United States may reduce or eliminate those taxes.
764183.2
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If the High Yield Fund has an "appreciated financial position" --
generally, an interest (including an interest through an option, futures or
forward currency contract, or short sale) with respect to any stock, debt
instrument (other than "straight debt") or partnership interest the fair market
value of which exceeds its adjusted basis -- and enters into a "constructive
sale" of the same or substantially similar property, the High Yield Fund will be
treated as having made an actual sale thereof, with the result that gain will be
recognized at that time. A constructive sale generally consists of a short sale,
an offsetting notional principal contract or futures or forward currency
contract entered into by the High Yield Fund or a related person with respect to
the same or substantially similar property. In addition, if the appreciated
financial position is itself a short sale or such a contract, acquisition of the
underlying property or substantially similar property will be deemed a
constructive sale.
A Unitholder will generally have a taxable gain or loss when it sells
Units, when the Trust sells shares of the High Yield Funds, and when the High
Yield Funds sell Securities and distribute capital gains dividends. The gain or
loss will generally be capital gain or capital loss if the Units are capital
assets for the Unitholders. Unitholders will also generally have ordinary income
if the High Yield Funds sell or redeem Securities that were acquired at a market
discount, or sell Securities at a short term capital gain, and distribute
ordinary dividends. In general, the IRS will treat Securities as market discount
Securities when the cost of the Security, plus any original issue discount that
has not yet accrued, is less than the amount due to be paid at the maturity of
the Security. The IRS taxes all or a portion of the gain on the sale of a market
discount Security as ordinary income when the Security is sold, redeemed or
paid. The portion of the gain taxed by the IRS as ordinary income is equal to
the portion of the market discount that has accrued since the seller purchased
the Security.
Distributions made by the High Yield Funds will not qualify for the
corporate dividends-received deduction.
If the High Yield Funds declare dividends in October, November or
December that are payable to shareholders of record on a date during those
months, Unitholders must take the dividends into account for tax purposes in the
current year, if the dividend is paid either in the current year, or in January
or February of the following year.
Ordinary and capital gain dividends will be taxable as described above
whether received in cash or reinvested in additional Units under the
Reinvestment Plan. A Unitholder whose distributions are reinvested in additional
Units under the Reinvestment Plan will be treated as having received the amount
of cash allocated to the Unitholder for the purchase of those Units.
An investor should be aware that, if Units are purchased shortly before
the record date for any dividend or other distribution from a High Yield Fund,
the investor will pay full price for the Units and will receive some portion of
the purchase price back as a taxable distribution.
BACKUP WITHHOLDING. The Trust generally must withhold and pay over to
the U.S. Treasury 31% of the taxable dividends and other distributions paid to
any individual Unitholder who either does not supply its taxpayer identification
number, has not reported all of its dividends and interest income, or does not
certify to the Trust that he or she is not subject to withholding. The social
security number of an individual is its taxpayer identification number.
Entities that generally qualify for an exemption from Federal income
tax, such as many pension trusts, are nevertheless taxed under Section 511 of
the Code on "unrelated business taxable income." Unrelated business taxable
income is income from a trade or business regularly carried on by the tax-exempt
entity that is unrelated to the entity's exempt purpose. Unrelated business
taxable income generally does not include dividend or interest income or gain
from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from the Trust and gain from the sale of Units in the Trust or
the Trust's sale of Securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Unit
itself is debt-financed or constitutes dealer property in the hands of the
tax-exempt entity.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit-sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust, including the fact that the Trust is intended to generate tax
exempt income; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
764183.2
B-24
<PAGE>
Prospective tax-exempt investors are urged to consult their own tax
advisers concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
Trust.
STATE AND LOCAL TAXES. Unitholders may have to pay state and local tax
on their share of ordinary dividends and capital gain dividends paid by the High
Yield Funds.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsor.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
INDEPENDENT ACCOUNTANTS. The Statement of Financial Condition, including
the Portfolio, is included herein in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, and upon the authority of
said firm as experts in accounting and auditing.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the High Yield Funds and this Trust
may be included from time to time in advertisements, sales literature and
reports to current or prospective investors. Total return shows changes in Unit
price during the period plus reinvestment of dividends and capital gains,
divided by the maximum public offering price as of the date of calculation.
Average annualized returns show the average return for stated periods of longer
than a year. Figures for actual portfolios will reflect all applicable expenses
and, unless otherwise stated, the maximum sales charge. No provision is made for
any income taxes payable. Similar figures may be given for this Trust. Trust
performance may be compared to performance on a total return basis of the Dow
Jones Industrial Average, the S&P 500 Composite Price Stock Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York Times, U.S.
News and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
764183.2
B-25
<PAGE>
<TABLE>
<S> <C>
No person is authorized to give any information or to -----------------------------------------
make any representations with respect to this Trust not EQUITY SECURITIES TRUST
contained in Parts A and B of this Prospectus and you should -----------------------------------------
not rely on any other information. The Trust is registered as
a unit investment trust under the Investment Company Act of EQUITY SECURITIES TRUST
1940. Such registration does not imply that the Trust or any SERIES 22
of its Units have been guaranteed, sponsored, recommended HIGH YIELD SYMPHONY SERIES
or approved by the United States or any state or any agency or
officer thereof. (A UNIT INVESTMENT TRUST)
------------------ PROSPECTUS
This Prospectus does not constitute an offer to sell, or a DATED: ________ __, 1999
solicitation of an offer to buy, securities in any state to any
person to whom it is not lawful to make such offer in such
state. SPONSOR:
Table of Contents REICH & TANG DISTRIBUTORS, INC.
600 Fifth Avenue
Title Page New York, New York 10020
212-830-5400
PART A
Summary of Essential Information.................................. A-2
Statement of Financial Condition.................................. A-6
Portfolio......................................................... A-7 TRUSTEE:
Report of Independent Accountants................................. A-8
THE CHASE MANHATTAN BANK
PART B 4 New York Plaza
The Trust......................................................... B-1 New York, New York 10004
Risk Considerations............................................... B-3
Public Offering.................................................. B-8
Rights of Unitholders............................................. B-10 This Prospectus does not contain all of the
Liquidity......................................................... B-11 information withrespect to the Trust set forth in
Trust Administration.............................................. B-13 its registration statements filed with the Securities
Trust Expenses and Charges........................................ B-18 and Exchange Commission, Washington, D.C. under the
Reinvestment Plan................................................. B-19 Securities Act of 1933 (file no. 333-69255) and the
Exchange Privilege and Conversion Offer........................... B-19 Investment Company Act of 1940 (file no. 811-2868),
Tax Status........................................................ B-20 and to which reference is hereby made. Copies may
Other Matters..................................................... B-24 be reviewed at the Commission or on the internet,
or obtained from the Commission at prescribed rates
by:
o calling: 1-800-SEC-0330
Parts A and B of this Prospectus do not contain all of the
information set forth in the registration statement and exhibits o visiting the SEC internet address: http://www.sec.gov
relating thereto, filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of o writing: Public Reference Section of the Commission,
1933, and the Investment Company Act of 1940, and to which 450 Fifth Street, N.W., Washington, D.C. 20549-6009
reference is hereby made.
</TABLE>
<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors, Inc. are covered under
Brokers' Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the
Cross-Reference Sheet to the Registration Statement of Equity
Securities Trust, Series 12, 1997 Triple Strategy Trust II).
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
PricewaterhouseCoopers LLP
Portfolio Consultant
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain amendments to
the Trust Indenture and Agreement referred to under Exhibit
99.1.1.1 below.
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit
1.1.1 to Amendment No. 1 to Form S-6 Registration Statement
No. 33-62627 of Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust on November
16, 1995 and incorporate herein by reference).
99.1.3.5 -- Certificate of Incorporation of Reich & Tang Distributors,
Inc. (filed as Exhibit 99.1.3.5 to Form S-6 Registration
Statement No. 333-44301 on January 15, 1998 and incorporated
herein by reference).
99.1.3.6 -- By-Laws of Reich & Tang Distributors, Inc. (filed as Exhibit
99.1.3.6 to Form S-6 Registration Statement No. 333-44301 on
January 15, 1998 and incorporated herein by reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4
to Amendment No. 1 to Form S-6 Registration Statement No.
33-62627 of Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust on November
16, 1995 and incorporated herein by reference).
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the
headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion regarding tax
status of the Trust.
99.6.0 -- Power of Attorney of Reich & Tang Distributors, Inc., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Form S-6 Registration Statement
No. 333-44301 on January 15, 1998 and incorporated herein by
reference).
- --------
* To be filed by amendment.
II-1
789557.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Equity Securities Trust, Series 22, High Yield Symphony Series, has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of New York and
State of New York on the 25th day of February, 1999.
EQUITY SECURITIES TRUST, SERIES 22, HIGH YIELD
SYMPHONY SERIES
(Registrant)
REICH & TANG DISTRIBUTORS, INC.
(Depositor)
By /s/ PETER J. DEMARCO
Peter J. DeMarco
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons,
who constitute the principal officers and a majority of the directors of Reich &
Tang Distributors, Inc., the Depositor, in the capacities and on the dates
indicated.
Name Title Date
---- ----- ----
RICHARD E. SMITH, III President and Director
PETER S. VOSS Director
G. NEAL RYLAND Director
STEVEN W. DUFF Director February 25, 1999
ROBERT F. HOERLE Managing Director
PETER J. DEMARCO Executive Vice President By /s/ PETER J. DEMARCO
-----------------------
Peter J. DeMarco
RICHARD I. WEINER Vice President Attorney-In-Fact*
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Treasurer
EDWARD N. WADSWORTH Executive Officer
- ---------------------------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to
Form S-6 to Registration Statement No. 333-44301 on January 15, 1998.
II-2
789557.1
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
registration statement on Form S-6 (the "Registration Statement") of our report
dated , 1999, relating to the Statement of Financial
Condition, including the Portfolio, of Equity Securities Trust, Series 22,
High Yield Symphony Series which appears in such Prospectus. We also consent to
the reference to us under the heading "Independent Accountants" in such
Prospectus.
PRICEWATERHOUSECOOPERS LLP
160 Federal Street
Boston, MA 02110
, 1999
II-3
789557.1
<PAGE>
CONSENT OF PORTFOLIO CONSULTANTS
The Sponsor, Trustee and Unitholders
Equity Securities Trust, Series 22, High Yield Symphony Series
We hereby consent to the use of the name "Riccardi Group LLC" included
herein and to the reference to our firm in the Prospectus.
RICCARDI GROUP LLC
New York, New York
, 1999
II-4
789557.1
<PAGE>
The Sponsor, Trustee and Unitholders
Equity Securities Trust, Series 22, High Yield Symphony Series
We hereby consent to the use of the name "Thomas J. Herzfeld Advisors,
Inc." included herein and to the reference to our firm in the Prospectus.
THOMAS J. HERZFELD ADVISORS, INC.
New York, New York
, 1999
II-5
789557.1
<PAGE>
