<PAGE>
As filed with the Securities and Exchange Commission on March 11, 1999
Registration No. 333-69255
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
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.
[_]Check if it is proposed that this filing will become effective immediately
upon filing pursuant to Rule 487.
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<PAGE>
[LOGO]
EST
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 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 11, 1999
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
As of March 10, 1999:*
Initial Date of Deposit: March 11, 1999
<TABLE>
<S> <C>
Aggregate Value of Securities $ 149,219
Number of Units 15,646
Fractional Undivided Interest in Trust 1/ 15,646
Public Offering Price per 100 Units
Aggregate Value of Securities in
Trust............................................................... $ 149,219
Divided By 15,646 Units (times 100) ................................. $ 953.70
Plus Sales Charge of 4.50% of Public
Offering Price...................................................... $ 45.00
Plus Estimated Organization Costs**.................................. $ 1.30
Public Offering Price+............................................... $1,000.00
Sponsor's Repurchase Price And Redemption Price Per 100 Units++...... $955.00
</TABLE>
Evaluation Time: 4:00 p.m. New York Time.
Minimum Income or Principal Distribution: $1.00 per 100 Units
Liquidation Period: Beginning five days prior to the Mandatory Termination
Date.
Rollover Notification Date: March 1, 2006 or another date as determined by the
Sponsor.
Minimum Value of Trust: The Trust may be terminated if the value of the Trust
is less than 40% of the aggregate value of the Securities at the completion of
the Deposit Period.
Mandatory Termination Date: The earlier of March 11, 2006 or the disposition of
the last Security in the Trust.
CUSIP Numbers: Cash: 294762 45 5
Reinvestment: 294762 46 3
Trustee: The Chase Manhattan Bank
Trustee's Fee: $.74 per 100 Units outstanding
Other Fees and Expenses: $.06 per 100 Units outstanding
Sponsor: Reich & Tang Distributors, Inc.
Sponsor's Supervisory Fee: Maximum of $.30 per 100 Units outstanding (see
"Trust Expenses and Charges" in Part B).
Portfolio Consultants: Thomas J. Herzfeld Advisors, Inc.
Riccardi Group LLC
Expected Settlement Date***: March 16, 1999
Record Dates: Fifteenth day of each month
Distribution Dates: Last business day of each month
- --------
* 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.
A-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.
- --------------------------------------------------------------------------------
Unitholder Transaction Expenses
(fees paid directly from your investment)
<TABLE>
<CAPTION>
As a % of Amount
Initial per
Offering Price 100 Units
-------------- ---------
<S> <C> <C> <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.................. .130% $ 1.30
Estimated Annual Fund Operating Expenses
(Expenses that are deducted from Trust assets)
<CAPTION>
As a % of Amount
Initial per
Net Assets 100 Units
-------------- ---------
<S> <C> <C> <C> <C>
Trustee's Fee........................... .074% $ .74
Other Operating Expenses................ .036% $ .36
Portfolio Supervision, Bookkeeping
and Administrative Fees.............. .030% $.30
---- ------
Total................................... .110% $ 1.10
==== ======
</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.
<TABLE>
<CAPTION>
1 3 5
year years years
<S> <C> <C> <C>
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 .110% 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:.............................................. $47 $50 $52
</TABLE>
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.
A-3
<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. 98.50% of the Portfolio is listed on the New York Stock Exchange and
1.50% is listed on the American 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:
. The high yield funds which comprise the Securities invest primarily in
high-yielding corporate debt instruments generally rated in the lower
rating categories by nationally recognized rating agencies or in unrated
securities of comparable value. While these lower rated securities
generally offer a higher return potential than higher rated securities,
they also involve greater price volatility and greater risk of loss of
income and principal.
. 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.
. Unitholders will pay both Trust expenses and a share of each high yield
fund's expenses.
. 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.
. A significant number of the high yield funds utilize substantial
leveraging in their portfolios. This leveraging will cause increased
price volatility for those fund's shares, and as a result, increased
volatility for the price of the units of the Trust.
. 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.
. 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.
. 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.
A-4
<PAGE>
PUBLIC OFFERING PRICE. The Public Offering Price per 100 units of the Trust is
calculated by:
. dividing the aggregate value of the underlying securities and cash held
in the Trust by the number of units outstanding;
. adding a sales charge of 4.50% (4.712% of the net amount invested); and
. multiplying the result by 100.
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 10,000 units will be entitled to a volume discount from the Public
Offering Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying
Securities and 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 monthly ordinary dividend
declared with respect to the Securities) was $102.19. 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 April 30, 1999 to
all Unitholders of record on April 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:
. receive the distribution in-kind if they own at least 2,500 Units;
. receive cash upon the liquidation of their pro rata share of the
Securities; or
. 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.
A-5
<PAGE>
UNDERWRITING. The names and addresses of the Underwriters of the units of the
Trust are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Reich & Tang
Distributors, Inc...... 600 Fifth Avenue, New York, New York 10020
McLaughlin, Piven, Vogel
Securities, Inc. ...... 30 Wall Street, New York, New York 10005
Gibraltar Securities
Co. ................... 25 Hanover Road, Florham Park, New Jersey 07932
Miller, Johnson & Kuehn,
Inc. .................. 5500 Wayzata Boulevard, Minneapolis, Minnesota 55116
Nori, Hennion, Walsh,
Inc. .................. 3799 Route 46, Hilltop Plaza, Parsippany, New Jersey 07054
Oppenheimer & Co.,
Inc. .................. Oppenheimer Tower, World Financial Center, New York, New York 10281
M.L. Stern & Co.,
Inc. .................. 8350 Wilshire Boulevard, Beverly Hills, California 90211
Advest, Inc. ........... 90 State House Square, Hartford, Connecticut 06103
Bear, Stearns & Co.
Inc. .................. 245 Park Avenue, New York, New York 10167
Dain Bosworth
Incorporated........... Dain Bosworth Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402
Everen Securities,
Inc. .................. 77 West Wacker Drive, Chicago, Illinois 60601
Fahnestock & Company
Inc. .................. 125 Broad Street, New York, New York 10004
Gruntal & Co., LLC...... One Liberty Plaza, New York, New York 10006
Rickel & Associates
Inc. .................. 45 Essex Street, Millburn, New Jersey 07041
Shochet Securities,
Inc. .................. 2351 East Hallandale Beach Boulevard, Hallandale, Florida 33009
Tucker, Anthony, Inc. .. One Beacon Street, Boston, Massachusetts 02108
</TABLE>
A-6
<PAGE>
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, MARCH 11, 1999
ASSETS
<TABLE>
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost
$149,219)(Note 1)................................................. $149,219
--------
Total................................................................ $149,219
========
</TABLE>
LIABILITIES AND INTEREST OF UNITHOLDERS
<TABLE>
<S> <C>
Reimbursement to Sponsor for Organization Costs (Note 2) ............ $ 203
Interest of Unitholders--Units of Fractional Undivided Interest
Outstanding (15,646 Units).......................................... 149,219
Less: Reimbursement to Sponsor for Organization Costs (Note 2)..... (203)
--------
Total................................................................ $149,219
========
Net Asset Value per Unit............................................. $ 9.54
========
</TABLE>
- --------
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 March 11, 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 15,646 units of the Trust. An
irrevocable letter of credit issued by the BankBoston, N.A. in an amount of
$200,000 has been deposited with the Trustee for the benefit of the Trust to
cover the purchases of such Securities as well as any outstanding purchases of
previously-sponsored unit investment trusts of the Sponsor. Aggregate cost to
the Trust of the Securities listed in the Portfolio is determined by the
Trustee on the basis set forth under "Public Offering--Offering Price" as of
4:00 p.m. on March 10, 1999. The Trust will terminate on March 11, 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 $1.30 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-7
<PAGE>
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
PORTFOLIO
AS OF OPENING OF BUSINESS, MARCH 11, 1999
<TABLE>
<CAPTION>
Market
Value of
Stocks as a
Number Percentage Market Cost of
Portfolio of Ticker of the Value Per Securities to
No. Shares Name of Issuer (1) Symbol Trust(2) Share the Trust(3)
--------- ------ ------------------ ------ ----------- --------- -------------
<C> <C> <S> <C> <C> <C> <C>
1 1,361 Cigna High Income Share HIS 6.73% $ 7.3750 $ 10,037
2 339 Colonial Intermediate CIF 1.49 6.5625 2,225
High Income Fund
3 138 Conseco Strategic Income CFD 1.25 13.5625 1,872
Fund
4 536 Corporate High Yield COY 4.24 11.8125 6,332
Fund
5 204 Corporate High Yield KYT 1.50 11.0000 2,244
Fund II
6 185 Corporate High Yield CYE 1.50 12.0625 2,232
Fund III
7 677 Debt Strategies Fund DBS 3.46 7.6250 5,162
8 1,476 Debt Strategies Fund II DSU 7.91 8.0000 11,808
Inc.
9 208 Debt Strategies Fund III DBU 1.25 9.0000 1,872
Inc.
10 1,468 Dreyfus High Yield DHF 11.68 11.8750 17,433
Strategies Fund
11 452 Franklin Universal Trust FT 2.73 9.0000 4,068
12 1,652 High Income Opportunity HIO 11.76 10.6250 17,552
Fund
13 315 The High Yield Plus Fund HYP 1.49 7.0625 2,225
14 473 Kemper High Income Trust KHI 2.99 9.4375 4,464
15 660 Managed High Yield Plus HYF 5.56 12.5625 8,291
Fund
16 648 Morgan Stanley Dean YLD 1.98 4.5625 2,956
Witter High Income
Advantage Trust
17 769 Morgan Stanley Dean YLT 2.51 4.8750 3,749
Witter High Income
Advantage Trust II
18 173 Morgan Stanley High MSY 1.75 15.0625 2,606
Yield Fund
19 152 Pacholder Fund PHF 1.50 14.7500 2,232
20 541 Prospect Street High PHY 3.26 9.0000 4,869
Income Portfolio
21 162 Putnam Managed High PTM 1.51 13.8750 2,248
Yield Fund
22 1,391 Salomon Brothers High HIX 11.95 12.8125 17,822
Income Fund II
23 1,236 Senior High Income ARK 6.73 8.1250 10,042
Portfolio
24 403 Van Kampen High Income VIT 1.76 6.5000 2,619
Trust
25 260 Van Kampen High Income VLT 1.51 8.6875 2,259
Trust II
------ --------
100.00% $149,219
====== ========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on March 10, 1999.
All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be March 16, 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 $150,714. The Sponsor's loss on
the Initial Date of Deposit is $1,495.
A-8
<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, March 11, 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, March
11, 1999, by correspondence with the Sponsor, provides a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, MA
March 11, 1999
A-9
<PAGE>
[LOGO]
EST
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.
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 (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. The Trust is intended
to be an investment which should be held by investors for the full term of the
Trust and not be used as a trading vehicle. 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
B-2
<PAGE>
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 investments are evaluated based upon
the experience of each funds' portfolio manager in various economic and
interest rate cycles.
Out of the universe of 35 high-yield, closed-end funds, the selection process
narrows the field to a group of 25 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.
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<PAGE>
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. 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 reduce the return on the sale of those High Yield Funds
whose shares were purchased by the Trust at a premium. As of the business day
prior to the initial date of deposit, 40.25% of the High Yield Funds included
in the Trust's portfolio were trading 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 marketplace. 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
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 included in
the portfolios 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
B-4
<PAGE>
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.
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 its 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 expenses 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.
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<PAGE>
DISTRESSED SECURITIES. The High Yield Funds may invest a portion of their
total assets in "Distressed Securities" which are securities that are:
. the subject of bankruptcy proceedings or otherwise in default as to the
repayment of principal and/or payment of interest at the time of
acquisition
. rated in the lower rating categories (Ca or lower by Moody's and CC or
lower by S&P), or
. 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
subscription price per share is 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, 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 borrowing 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.
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<PAGE>
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:
. fluctuations in foreign exchange rates
. future foreign political and economic developments, and
. 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.
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.
B-7
<PAGE>
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.
B-8
<PAGE>
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 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 $1.30
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.
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<PAGE>
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:
<TABLE>
<CAPTION>
APPROXIMATE
REDUCED
SALES
NUMBER OF UNITS CHARGE
--------------- -----------
<S> <C>
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%
</TABLE>
For transactions of 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
B-10
<PAGE>
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 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
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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 its 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 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 Units among DTC
participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants.
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Beneficial owners of Units will receive written confirmation of their purchases
and sales 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 Unitholder. Holders must sign such
written request exactly as their names appear on the records of the Trust. Such
signatures must be guaranteed by a commercial bank or trust company, savings
and loan association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee to
an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
Distributions to each Unitholder from the Income Account are computed as of
the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from
the Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date,
and will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Distribution
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the next Distribution Date. Persons who
purchase Units between a Record Date and a Distribution Date will receive their
first distribution on the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and
Charges"). The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
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
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Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each
100 Units outstanding on the last business day of such calendar year; (c) a
list of the Securities held, a list of Securities purchased, sold or otherwise
disposed of during the calendar year and the number of Units outstanding on the
last business day of such calendar year; (d) the Redemption Price per 100 Units
based upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately stated, of the Trust, expressed both
as total dollar amounts and as dollar amounts representing the pro rata share
of each 100 Units outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of
its transactions as Trustee, including records of the names and addresses of
Unitholders, a current list of Securities in the portfolio and a copy of the
Trust Agreement.
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
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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 shares of each Security. 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
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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 Securities
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee and the Sponsor are not
liable to any person or in any way for any loss or damage which may result from
any such suspension or postponement.
A Unitholder who wishes to dispose of his Units should inquire of his bank or
broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio. 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.
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(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.
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
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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).
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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 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
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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.
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
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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., a Florida corporation 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,
President 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.
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 changes 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.
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Each of the Portfolio Consultants may resign or may be removed by the Sponsor
at any time on sixty days' prior written notice. The Sponsor shall use its best
efforts to appoint a satisfactory successor in the event that either Portfolio
Consultant resigns or is 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. Thomas J.
Herzfeld Advisors, Inc. may execute principal transactions with the Trust and
may also act as a broker in effecting transactions for the Trust.
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
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."
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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
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Trusts") at the Public Offering Price for units of the Conversion Trust subject
to a reduced sales charge as set forth in the prospectus of the Conversion
Trust (the "Conversion Offer"). Under the Exchange Privilege, the Sponsor's
repurchase price during the initial offering period of the Units being
surrendered will be based on the market value of the Securities in the Trust
portfolio or on the aggregate offer price of the Bonds in the other Trust
Portfolios; and, after the initial offering period has been completed, will be
based on the aggregate bid price of the securities in the particular Trust
portfolio. Under the Conversion Offer, units of the Redemption Trust must be
tendered to the trustee of such trust for redemption at the redemption price
determined as set forth in the relevant Redemption Trust's prospectus. Units in
an Exchange or Conversion Trust will be sold to the Unitholder at a price based
on the aggregate offer price of the securities in the Exchange or Conversion
Trust portfolio (or for units of Equity Securities Trust, based on the market
value of the underlying securities in the trust portfolio) during the initial
public offering period of the Exchange or Conversion Trust; and after the
initial public offering period has been completed, based on the aggregate bid
price of the securities in the Exchange or Conversion Trust Portfolio if its
initial offering has been completed plus accrued interest (or for units of
Equity Securities Trust, based on the market value of the underlying securities
in the trust portfolio) and a reduced sales charge.
Except for Unitholders who wish to exercise the Exchange Privilege or
Conversion Offer within the first five months of their purchase of Units of the
Exchange or Redemption Trust, any purchaser who purchases Units under the
Exchange Privilege or Conversion Offer will pay a lower sales charge than that
which would be paid for the Units by a new investor. For Unitholders who wish
to exercise the Exchange Privilege or Conversion Offer within the first five
months of their purchase of Units of the Exchange or Redemption Trust, the
sales charge applicable to the purchase of units of an Exchange or Conversion
Trust shall be the greater of (i) the reduced sales charge or (ii) an amount
which when coupled with the sales charge paid by the Unitholder upon his
original purchase of Units of the Exchange or Redemption Trust would equal the
sales charge applicable in the direct purchase of units of an Exchange 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
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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.
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.
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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. A Unitholder will be taxed on its distributions
from the Trust whether it receives them in cash or reinvests them in additional
Units through the Reinvestment Plan.
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.
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,
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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.
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.
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.
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TAXATION OF THE TRUST AS A SHAREHOLDER OF THE HIGH YIELD FUNDS. Dividends
from the High Yield Funds' investment company taxable income 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, 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 Funds'
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 as long-term or
short-term, depending on the Unitholder's and the Trust's holding period,
capital gains (assuming the High Yield Funds' shares are held as a capital
asset) to any Unitholder 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.
B-28
<PAGE>
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.
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
B-29
<PAGE>
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.
TAX-EXEMPT ENTITIES. 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 from 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."
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.
B-30
<PAGE>
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.
B-31
<PAGE>
No person is authorized to give any information or to make any
representations with respect to this Trust not 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
1940. Such registration does not imply that the Trust or any of its Units have
been guaranteed, sponsored, recommended or approved by the United States or
any state or any agency or officer thereof.
---------------
This Prospectus does not constitute an offer to sell, or a 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.
Table of Contents
<TABLE>
<CAPTION>
Title Page
- ----- ----
<S> <C>
PART A
Summary of Essential Information........................................... A-2
Fee Table.................................................................. A-3
Statement of Financial Condition........................................... A-7
Portfolio.................................................................. A-8
Report of Independent Accountants.......................................... A-9
PART B
The Trust.................................................................. B-1
Risk Considerations........................................................ B-4
Public Offering............................................................ B-10
Rights of Unitholders...................................................... B-12
Liquidity.................................................................. B-14
Trust Administration....................................................... B-16
Trust Expenses and Charges................................................. B-22
Reinvestment Plan.......................................................... B-23
Exchange Privilege and Conversion Offer.................................... B-23
Tax Status................................................................. B-25
Other Matters.............................................................. B-31
</TABLE>
[LOGO]
EST
EQUITY SECURITIES TRUST
SERIES 22
HIGH YIELD SYMPHONY SERIES
(A UNIT INVESTMENT TRUST)
PROSPECTUS
DATED: MARCH 11, 1999
SPONSOR:
REICH & TANG DISTRIBUTORS, INC.
600 Fifth Avenue
New York, New York 10020
212-830-5400
TRUSTEE:
THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
This Prospectus does not contain all of the information with respect to the
Trust set forth in its registration statements filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 (file
no. 333-69255) and the Investment Company Act of 1940 (file no. 811-2868), and
to which reference is hereby made. Copies may be reviewed at the Commission or
on the internet, or obtained from the Commission at prescribed rates by:
.calling: 1-800-SEC-0330
. visiting the SEC internet address: http://www.sec.gov
. writing: Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549-6009
<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 Consultants
The following exhibits:
<TABLE>
<CAPTION>
<C> <C> <S>
*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).
</TABLE>
- --------
* Filed herewith.
II-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 11th day of March, 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.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<C> <S> <C>
Richard E. Smith, III President and Director
Peter S. Voss Director March 11, 1999
G. Neal Ryland Director
Steven W. Duff Director
/s/ Peter J. DeMarco
Peter J. DeMarco Executive Vice PresidentBy _____________________
Richard I. Weiner Vice President Peter J. DeMarco
Bernadette N. Finn Vice President Attorney-In-Fact*
Lorraine C. Hysler Secretary
Richard De Sanctis Treasurer
Edward N. Wadsworth Executive Officer
</TABLE>
- --------
* 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
<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 March 11, 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
Boston, MA
March 11, 1999
II-3
<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
March 11, 1999
II-4
<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
March 11, 1999
II-5
<PAGE>
EXHIBIT 99.1.1
EQUITY SECURITIES TRUST,
SERIES 22, HIGH YIELD SYMPHONY SERIES
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated March 11, 1999
between Reich & Tang Distributors, Inc., as Depositor and The Chase Manhattan
Bank, as Trustee, sets forth certain provisions in full and incorporates other
provisions by reference to the document entitled "Equity Securities Trust,
Series 6, Signature Series, Gabelli Entertainment and Media Trust, and
Subsequent Series, Trust Indenture and Agreement" dated November 16, 1995 and as
amended in part by this Agreement (collectively, such documents hereinafter
called the "Indenture and Agreement"). This Agreement and the Indenture, as
incorporated by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Section 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof pursuant
to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth in full in this
instrument except that the following sections of the Indenture hereby are
amended as follows:
(a) All references to "The Chase Manhattan Bank (National
Association)" are replaced with "The Chase Manhattan Bank".
<PAGE>
(b) Notwithstanding any provision of the Indenture to the contrary,
ownership of Units of this series of Equity Securities Trust shall not be
certificated and shall be evidenced solely by registration on the transfer books
of the Trustee, and the registered holder of uncertificated Units shall have all
of the rights and obligations (excluding the right to the issuance of a
Certificate) specified for a registered Certificateholder under the Indenture.
The Depositor and the Trustee shall cause all Units of the Trust issued to the
Depositor (upon both the initial deposit and any deposits of Additional
Securities pursuant to Section 2.6) to be deposited at The Depository Trust
Company ("DTC") and to be credited there to the account of the Depositor. On
and after such deposit, for all purposes under the Indenture and Agreement, the
sole registered holder of Units of the Trust shall be DTC, or its nominee,
unless and until DTC has notified the Trustee and the Depositor that it is no
longer willing to act as depository with respect to the Units. Accordingly, so
long as DTC, or its nominee, is the registered owner of the Trust Units,
beneficial ownership of Units may only be maintained by or through a participant
in DTC and shall be subject to the rules and operating procedures of DTC as in
effect from time to time. The Trustee shall not be liable for any loss or
liability resulting from the actions of DTC as registered holder and depository
of the Units.
(c) Sections 1.2 and 2.4 and any reference herein to the issuance of
Certificates shall be deleted.
(d) Section 2.3 shall be amended by adding after the words "has
registered on the registration books of the Trust the ownership by" the words
"the Depositor of such Units or, if requested by the Depositor, the ownership
by."
(e) Paragraph (a) of Section 2.6 shall be amended to read in its
entirety as follows:
"Section 2.6 Deposit of Additional Securities. (a) Subject to
--------------------------------
the requirements set forth below in this Section, the Depositor
may, on any Business Day (the "Trade Date"), subscribe for
Additional Units as follows:
(1) Prior to the Evaluation Time on the Trade Date, the
Depositor shall provide notice (the "Subscription Notice") to the
Trustee, by telecopy or by written communication, of the
Depositor's intention to subscribe for Additional Units. The
Subscription Notice shall identify the Additional Securities to
be acquired (unless such Additional Securities are a precise
replication of the then existing portfolio) and shall either (i)
specify the quantity of Additional Securities to be deposited by
the Depositor on the settlement date for such subscription or
(ii) instruct the Trustee to purchase Additional Securities with
an aggregate value as specified in the Subscription Notice.
-2-
<PAGE>
(2) Promptly following the Evaluation Time on such Business Day,
the Depositor shall verify with the Trustee, by telecopy, the
number of Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units
created thereby (which time shall not be later than the time by
which the Trustee is required to settle any contracts for the
purchase of Additional Securities entered into by the Trustee
pursuant to the instruction of the Depositor referred to in
subparagraph (1) above), the Depositor shall deposit with the
Trustee (i) any Additional Securities specified in the
Subscription Notice (or contracts to purchase such Additional
Securities together with cash or a letter of credit in the amount
necessary to settle such contracts) or (ii) cash or a letter of
credit in the amount equal to the aggregate value of the
Additional Securities specified in the Subscription Notice,
together with, in each case, Cash as defined below. "Cash"
means, as to the Principal Account, cash or other property (other
than Securities) on hand in the Principal Account or receivable
and to be credited to the Principal Account as of the Evaluation
Time on the Business Day preceding the Trade Date (other than
amounts to be distributed solely to persons other than persons
receiving the distribution from the Principal Account as holders
of Additional Units created by the deposit), and, as to the
Income Account, cash or other property (other than Securities)
received by the Trust as of the Evaluation Time on the Business
Day preceding the Trade Date or receivable by the Trust in
respect of dividends or other distributions declared but not
received as of the Evaluation Time on the Business Day preceding
the Trade Date, reduced by the amount of any cash or other
property received or receivable on any Security allocable (in
accordance with the Trustee's calculation of the monthly
distribution from the Income Account pursuant to Section 3.5) to
a distribution made or to be made in respect of a Record Date
occurring prior to the Trade Date. Each deposit made during the
90 days following the deposit made pursuant to Section 2.1 hereof
shall replicate, to the extent practicable, as specified in
subparagraph (b), the Original Proportionate Relationship. Each
deposit made after the 90 days following the deposit made
pursuant to Section 2.1 hereof (except for deposits made to
replace Failed Securities if such deposits occur within 20 days
from the date of a failure occurring within such initial 90 day
period) shall maintain exactly the proportionate relationship
existing among the Securities as of the expiration of such 90 day
period. Each such deposit shall exactly replicate Cash.
(4) On the settlement date for a subscription, the Trustee
shall, in exchange for the Securities and cash or letter of
credit described above, issue and
-3-
<PAGE>
deliver to or on the order of the Depositor the number of Units
verified by the Depositor with the Trustee. No Unit to be issued
pursuant to this paragraph shall be issued or delivered unless
and until Securities, cash or a letter of credit is received in
exchange therefor and no person shall have any claim to any Unit
not so issued and delivered or any interest in the Trust in
respect thereof.
(5) Each deposit of Additional Securities, shall be listed in a
Supplementary Schedule to an Addendum to the Reference Trust
Agreement stating the date of such deposit and the number of
Additional Units being issued therefor. The Trustee shall
acknowledge in such Addendum the receipt of the Deposit and the
number of Additional Units issued in respect thereof. The
Additional Securities shall be held, administered and applied by
the Trustee in the same manner as herein provided for the
Securities.
(6) The acceptance of Additional Units by the Depositor in
accordance with the provisions of paragraph (a) of this Section
shall be deemed a certification by the Depositor that the deposit
or purchase of Additional Securities associated therewith
complies with the conditions of this Section 2.06.
(7) Notwithstanding the preceding, in the event that the
Sponsor's Subscription Notice shall instruct the Trustee to
purchase Additional Securities in an amount which, when added to
the purchase amount of all other unsettled contracts entered into
by the Trustee, exceeds 25% of the value of the Securities then
held (taking into account the value of contracts to purchase
Securities only to the extent that there has been deposited with
the Trustee cash or an irrevocable letter of credit in an amount
sufficient to settle their purchase), the Sponsor shall deposit
with the Trustee concurrently with the Subscription Notice such
that, when added to 25% of the value of the Securities then held
(determined as above) the aggregate value shall be not less than
the purchase amount of the securities to be purchased pursuant to
such Subscription Notice."
(f) Section 3.1 is hereby amended in its entirety to read as follows:
"Section 3.1. Initial Cost: The cost of the initial preparation,
----------- ------------
printing and execution of the Certificates and this Indenture, the
initial fees of the Trustee and its counsel, and the initial fees of
the Evaluator and other reasonable expenses in connection therewith,
shall be paid by the Depositor, provided, however, that the liability
on the part of the Depositor for such initial costs, fees and expenses
shall not include any fees, costs or other expenses incurred in
connection herewith after the execution of this Indenture and the
deposit referred to in Section 2.01.
-4-
<PAGE>
Upon notification from the Depositor that the primary offering period
is concluded, the Trustee shall withdraw from the Account or Accounts
specified in the Prospectus or, if no Account is therein specified,
from the Principal Account, and pay to the Depositor the Depositor's
reimbursable expenses of organizing the Trust and sale of the Trust
Units in an amount certified to the Trustee by the Depositor. If the
balance of the Principal Account is insufficient to make such
withdrawal, the Trustee shall, as directed by the Depositor, sell
Securities identified by the Depositor, or distribute to the Depositor
Securities having a value, as determined under Section 4.1 as of the
date of distribution, sufficient for such reimbursement. The
reimbursement provided for in this section shall be for the account of
the Unitholders of record at the conclusion of the primary offering
period and shall not be reflected in the computation of Unit Value
prior thereto. As used herein, the Depositor's reimbursable expenses
of organizing the Trust and sale of the Trust Units shall include the
cost of the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust, SEC and state
blue sky registration fees and expenses of the Trustee, and legal and
other out-of-pocket expenses related thereto but not including the
expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling
expenses. Any cash which the Depositor has identified as to be used
for reimbursement of expenses pursuant to this Section shall be
reserved by the Trustee for such purpose and shall not be subject to
distribution or, unless the Depositor otherwise directs, used for
payment of redemptions in excess of the per-Unit amount allocable to
Units tendered for redemption."
(g) Section 3.5 is hereby amended by inserting the phrase "or Income"
in the second sentence of the sixth paragraph after the words "The Trustee shall
not be required to make a distribution from the Principal..."
(h) Section 3.11 is hereby amended so that the first sentence of such
section reads as follows:
" In the event that an offer by the issuer of any of the
Securities or any other party shall be made to issue new
Securities, the Trustee shall reject such offer, except that if
(1) the issuer failed to declare or pay anticipated dividends
with respect to such Securities or (2) in the opinion of the
Sponsor, given in writing to the Trustee, the issuer will
probably fail to declare or pay anticipated dividends with
respect to such Securities in the reasonably foreseeable future,
the Sponsor shall instruct the Trustee in writing to accept or
reject such offer and to take any other action with respect
thereto as the Sponsor may deem proper."
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<PAGE>
(i) Section 3.14 is hereby amended by inserting the phrase "including,
but not limited to securities received as a result of a spin-off" in the first
sentence after the words "Any property received by the Trustee after the initial
date of Deposit in a form other than cash or additional shares of the Securities
listed on Schedule A..."
(j) Section 5.1 of the Agreement is amended by deleting clause (a)(4)
in the first paragraph and deleting clause (i) from the first sentence of the
second paragraph and renumbering the remaining clauses accordingly.
(k) Section 9.2 is hereby amended by replacing the phrase "60 business
days" with "7 days" in the first sentence of the sixth paragraph.
(l) Section 9.2 of the Agreement is further amended by adding the
following paragraph after the sixth paragraph of such Section 9.2:
"In the event that the Depositor directs the Trustee that certain
Securities will be sold to a new series of the Trust (a "New Series"),
the Depositor will certify to the Trustee, within five days of each
sale from a Trust to a New Series, (1) that the transaction is
consistent with the policy of both the Trust and the New Series, as
recited in their respective registration statements and reports filed
under the Act, (2) the date of such transaction and (3) the closing
sales price on the national securities exchange for the sale date of
the securities subject to such sale. The Trustee will then
countersign the certificate, unless the Trustee disagrees with the
closing sales price listed on the certificate, whereupon the Trustee
will promptly inform the Depositor orally of any such disagreement and
return the certificate within five days to the Depositor with
corrections duly noted. Upon the Depositor's receipt of a corrected
certificate, if the Depositor can verify the corrected price by
reference to an independently published list of closing sales prices
for the date of the transactions, the Depositor will ensure that the
price of Units of the New Series, and distributions to holders of the
Trust with regard to redemption of their Units or termination of the
Trust, accurately reflect the corrected price. To the extent that the
Depositor disagree with the Trustee's corrected price, the Depositor
and the Trustee will jointly determine the correct sales price by
reference to a mutually agreeable, independently published list of
closing sales prices for the date of the transaction. The Depositor
and Trustee will periodically review the procedures for sales and make
such changes as they deem necessary, consistent with Rule 17a-7(e)(2).
Finally, records of the procedures and of each transaction will be
maintained as provided in Rule 17a-7(f)."
(m) All references to "Reich & Tang Distributors L.P.". are replaced
with "Reich & Tang Distributors, Inc."
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<PAGE>
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing the purchase of Additional Securities
which have been deposited to effect an increase over the number of Units
initially specified in Part II of this Reference Trust Agreement ("Additional
Closings"). The Depositor and Trustee hereby agree that their respective
representations, agreements and certifications contained in the Closing
Memorandum dated March 11, 1999, relating to the initial deposit of Securities
continue as if such representations, agreements and certifications were made on
the date of such Additional Closings and with respect to the deposits made
therewith, except as such representations, agreements and certifications relate
to their respective By-Laws and as to which they each represent that their has
been no amendment affecting their respective abilities to perform their
respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to this series of Equity Securities Trust (the "Prospectus")
have been deposited in the Trust under this Agreement (see "Portfolio" in Part A
of the Prospectus which for purposes of this Indenture and Agreement is the
Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 15,646.
(c) For the purposes of the definition of Unit in item (22) of Section
1.1, the fractional undivided interest in and ownership of the Trust initially
is 1/15,646 of the date hereof.
(d) The term Record Date shall mean the fifteenth day of each month
commencing on April 15, 1999.
(e) The term Distribution Date shall mean the last business day of
each month commencing on April 30, 1999.
(f) The First Settlement Date shall mean March 16, 1999
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities at the completion
of the Deposit Period.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following schedule, determined on the basis
of the number of Units outstanding as of the Record Date preceding the Record
Date on which the compensation is to be
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<PAGE>
paid, provided, however, that with respect to the period prior to the first
Record Date, the Trustee's compensation shall be computed at $.86 per 100 Units:
rate per 100 units number of Units outstanding
$0.86 5,000,000 or less
$0.80 5,000,001 - 10,000,000
$0.74 10,000,001 - 20,000,000
$0.62 20,000,001 or more
(i) For purposes of Section 7.4, the Depositor's maximum annual
supervisory fee is hereby specified to be $.30 per 100 Units outstanding.
(j) The Mandatory Termination Date shall be March 11, 2006 or the
earlier disposition of the last Security in the Trust.
(k) The fiscal year for the Trust shall end on December 31 of each
year.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
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<PAGE>
REICH & TANG DISTRIBUTORS, INC.
Depositor
By: /s/ Peter J. Demarco
------------------------
Executive Vice President
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 10th day of March, 1999, before me personally appeared Peter
J. DeMarco, to me known, who being by me duly sworn, said that he is Executive
Vice President of the Depositor, one of the corporations described in and which
executed the foregoing instrument, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
/s/ Teresa Scarfone
-------------------
Notary Public
TERESA SCARFONE
NOTARY PUBLIC, State of New York
No. 31-4752576
Qualified in New York County
Term Expires 8-31-00
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Robert S. Ionescu
---------------------
Vice President
(SEAL)
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 10th day of March, 1999, before me personally appeared
Robert S. Ionescu, to me known, who being by me duly sworn, said that (s)he is
an Authorized Signator of The Chase Manhattan Bank, one of the corporations
described in and which executed the foregoing instrument; that (s)he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation and that (s)he signed his/her name thereto by like authority.
/s/ Ada Iris Vega
-----------------
Notary Public
ADA IRIS VEGA
NOTARY PUBLIC, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6-30-2000
<PAGE>
EXHIBIT 99.3.1
[LETTERHEAD OF BATTLE FOWLER LLP]
March 11, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 22,
High Yield Symphony Series
----------------------------------
Dear Sirs:
We have acted as special counsel for Reich & Tang Distributors, Inc., as
Depositor, Sponsor and Principal Underwriter (collectively, the "Depositor") of
Equity Securities Trust, Series 22, High Yield Symphony Series (the "Trust") in
connection with the issuance by the Trust of units of fractional undivided
interest (the "Units") in the Trust. Pursuant to the Trust Agreements referred
to below, the Depositor has transferred to the Trust certain securities and
contracts to purchase certain securities together with an irrevocable letter of
credit to be held by the Trustee upon the terms and conditions set forth in the
Trust Agreement. (All securities to be acquired by the Trust are collectively
referred to as the "Securities").
In connection with our representation, we have examined copies of the
following documents relating to the creation of the Trust and the issuance and
sale of the Units: (a) the Trust Indenture and Agreement and related Reference
Trust Agreement, each of even date herewith, relating to the Trust (collectively
the "Trust Agreements") among the Depositor and The Chase Manhattan Bank, as
Trustee; (b) the Notification of Registration on Form N-8A and the Registration
Statement on Form N-8B-2, as amended, relating to the Trust, as filed with the
Securities and Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "1940 Act"); (c) the Registration Statement on Form S-6
(Registration No. 333-69255) filed with the Commission pursuant to the
Securities Act of 1933 (the "1933 Act"), and all Amendments thereto (said
Registration Statement, as amended by said Amendment(s) being herein called the
"Registration Statement"); (d) the proposed form of final Prospectus (the
"Prospectus") relating to the Units, which
<PAGE>
Reich & Tang Distributors, Inc. 2
March 11, 1999
is expected to be filed with the Commission this day; (e) certified resolutions
of the Board of Directors of the Depositor authorizing the execution and
delivery by the Depositor of the Trust Agreement and the consummation of the
transactions contemplated thereby; (f) the Certificate of Incorporation of the
Depositor; and (g) a certificate of an authorized officer of the Depositor with
respect to certain factual matters contained therein.
We have examined the Order of Exemption from certain provisions of
Sections 11(a) and 11(c) of the 1940 Act, filed on behalf of Reich & Tang
Distributors L.P. (the predecessor to Reich & Tang Distributors, Inc.); Equity
Securities Trust (Series 1, Signature Series and Subsequent Series), Mortgage
Securities Trust (CMO Series 1 and Subsequent Series), Municipal Securities
Trust, Series 1 (and Subsequent Series) (including Insured Municipal Securities
Trust, Series 1 (and Subsequent Series and 5th Discount Series and Subsequent
Series)); New York Municipal Trust (Series 1 and Subsequent Series); and A
Corporate Trust (Series 1 and Subsequent Series) granted on October 9, 1996. In
addition, we have examined the Order of Exemption from certain provisions of
Sections 2(a)(32), 2(a)(35), 22(d) and 26(a)(2) of the 1940 Act and Rule 22c-1
thereunder, filed on behalf of Reich & Tang Distributors L.P.; Equity Securities
Trust; Mortgage Securities Trust; Municipal Securities Trust (including Insured
Municipal Securities Trust); New York Municipal Trust; A Corporate Trust; Schwab
Trusts; and all presently outstanding and subsequently issued series of these
trusts and all subsequently issued series of unit investment trusts sponsored by
Reich & Tang Distributors L.P. granted on October 29, 1997.
We have not reviewed the financial statements, compilation of the
Securities held by the Trust, or other financial or statistical data contained
in the Registration Statement and the Prospectus, as to which you have been
furnished with the reports of the accountants appearing in the Registration
Statement and the Prospectus.
In addition, we have assumed the genuineness of all agreements,
instruments and documents submitted to us as originals and the conformity to
originals of all copies thereof submitted to us. We have also assumed the
genuineness of all signatures and the legal capacity of all persons executing
agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction but the
State of New York and we do not hold ourselves out as experts in or express any
opinion as to the laws of other states or jurisdictions except as to matters of
Federal and Delaware corporate law.
<PAGE>
Reich & Tang Distributors, Inc. 3
March 11, 1999
Based exclusively on the foregoing, we are of the opinion that under
existing law:
(1) The Trust Agreements have been duly authorized and entered into by an
authorized officer of the Depositor and are valid and binding obligations of the
Depositor in accordance with their respective terms.
(2) The registration of the Units on the registration books of the Trust
by the Trustee has been duly authorized by the Depositor in accordance with the
provisions of the respective Trust Agreements and issued for the consideration
contemplated therein, will constitute fractional undivided interests in the
Trust, will be entitled to the benefits of the Trust Agreements, will conform in
all material respects to the description thereof for the Units as provided in
the Trust Agreement and the Registration Statement, and the Units will be fully
paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Registration Statement
and in the Prospectus under the headings "Tax Status" and "Legal Opinions". We
authorize you to deliver copies of this opinion to the Trustee and the Trustee
may rely on this opinion as fully and to the same extent as if it had been
addressed to it.
This opinion is intended solely for the benefit of the addressees and the
Trustee in connection with the issuance of the Units of the Trust and may not be
relied upon in any other manner or by any other person without our express
written consent.
Very truly yours,
/s/ Battle Fowler LLP
Battle Fowler LLP
