<PAGE>
As filed with the Securities and Exchange Commission on January 26, 1999
Registration No. 333-70093
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
----------------
A.EXACT NAME OF TRUST:
Equity Securities Trust, Series 21, Signature Series, Gabelli Entertainment
& Media Trust II
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 21,
Signature Series, Gabelli Entertainment & Media Trust II 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.
[X] Check if it is proposed that this filing will become effective
immediately upon filing on January 26, 1999 pursuant to Rule 487.
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<PAGE>
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EST Signature Series
- --------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 21
SIGNATURE SERIES, GABELLI ENTERTAINMENT & MEDIA TRUST II
The Trust is a unit investment trust designated Equity Securities Trust,
Series 21, Signature Series, Gabelli Entertainment & Media Trust II. The
Sponsor is Reich & Tang Distributors, Inc. The Trust consists of a fixed,
diversified portfolio of publicly traded equity securities of
entertainment and media companies in the United States and throughout the
world. The portfolio will be purchased by the Trust based upon the
recommendations of the portfolio consultant, Gabelli Funds, Inc. The
Trust seeks to provide capital appreciation. Current income 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 general information about the Trust. Part A may
not be distributed unless accompanied by Part B. Please read and retain
both parts of this Prospectus for future reference.
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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 JANUARY 26, 1999
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
As of January 25, 1999:*
Initial Date of Deposit: January 26, 1999
<TABLE>
<S> <C>
Aggregate Value of Securities: $ 150,268
Number of Units: 15,666
Fractional Undivided Interest In Trust: 1/15,666
Public Offering Price Per 100 Units:
Aggregate Value of Securities in Trust.............................. $ 150,268
Divided By 15,666 Units (times 100)................................. $ 959.20
Plus Sales Charge of 3.95% of Public Offering Price................. $ 39.50
Plus Estimated Organization Costs**................................. $ 1.30
Public Offering Price+.............................................. $1,000.00
Sponsor's Repurchase Price and Redemption Price Per 100 Units++: $ 960.50
</TABLE>
Evaluation Time: 4:00 p.m. New York Time.
Minimum Income or Principal Distribution: $1.00 per 100 Units
Percentage of Foreign Securities, American Depository Receipts and Global
Depository Receipts: 24.05%
Liquidation Period: Beginning 7 days prior to the Mandatory Termination Date.
Rollover Notification Date: January 19, 2002 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 February 1, 2002 or the disposition
of the last Security in the Trust.
Cusip Numbers: Cash: 294762 43 0
Reinvestment: 294762 44 8
Trustee: The Chase Manhattan Bank
Trustee's Fee: $.86 per 100 Units outstanding
Other Fees and Expenses: $.13 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 Consultant: Gabelli Funds, Inc.
Expected Settlement Date***: January 29, 1999
Record Dates: Fifteenth day of June and December
Distribution Dates: Last business day of June and December
- --------
* 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>
OBJECTIVES. The Trust seeks to provide investors with capital appreciation.
Current income 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
primarily in a portfolio of the equity securities of entertainment and media
companies based both in the United States and throughout the world. These
equity securities include the common stocks of both domestic and foreign
companies and foreign equity securities in the form of American Depository
Receipts (ADRs) or Global Depository Receipts (GDRs). As used herein, the term
"Securities" means the equity securities of the companies initially deposited
in the Trust and contracts and funds for the purchase of such companies, and
any additional securities acquired and held by the Trust pursuant to the
provisions of the Indenture.
DESCRIPTION OF PORTFOLIO. The Portfolio contains 26 issues of common stock (of
which 23 are of domestic issuers), 5 ADRs and 1 GDR. The percentages of the
Portfolio by country of organization or principal place of business of the
issuers are as follows: Brazil 5.04%, Canada 11.00%, Italy 1.98%, Japan 2.00%,
Mexico 2.00%, Spain 2.03% and United States 75.95%. 100% of the issues are
represented by the Sponsor's contracts to purchase. 63.07% of the Portfolio is
listed on the New York Stock Exchange, 10.98% on the American Stock Exchange
and 25.95% on the Nasdaq.
The Trust is concentrated in the entertainment and media industries and the
communications industry. A trust is considered to be "concentrated" in a
particular category or industry when the securities in that category or that
industry constitute 25% or more of the total assets of the portfolio.
RISK CONSIDERATIONS. Unitholders can lose money by investing in this Trust. The
value of the units and the Securities can each decline in value. An investment
in Units of the Trust should be made with an understanding of the following
risks:
. For common stocks, the risk that the financial condition of the issuers
of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may contribute directly to a
decrease in the value of the Securities and thus in the value of the
Units).
. For ADRs, the additional risks associated with government, economic,
monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic or
banking crises.
. Since the portfolio of the Trust is fixed and "not managed", in general
the Sponsor can only sell securities under certain extraordinary
circumstances, 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 the
value of the Units.
A-3
<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 3.95% (4.112% 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 $50,000 will be entitled to a volume discount from the Public Offering
Price. The Public Offering Price per Unit will vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying
Securities and each investors purchase price will be computed as of the date
the units are purchased.
ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
unitholders per 100 units (based on the most recent quarterly or semi-annual
ordinary dividend declared with respect to the Securities) was $5.86. 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,
semi-annually. The first dividend distribution will be made on June 30, 1999 to
all Unitholders of record on June 15, 1999 and thereafter distributions will be
made on the last business day of every June and December. 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 at any time, without fee or penalty. 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 three 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.
A-4
<PAGE>
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust at a reduced sales
charge of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll
in the Reinvestment Plan.
UNDERWRITING. Reich & Tang Distributors, Inc., with principal offices at 600
Fifth Avenue, New York, New York 10020, will act as Underwriter for all the
Units of the Trust.
A-5
<PAGE>
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
STATEMENT OF FINANCIAL CONDITION AS OF OPENING OF BUSINESS, JANUARY 26, 1999
ASSETS
<TABLE>
<S> <C>
Investment in Securities -- Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $150,268)
(Note 1)............................................................. $150,268
--------
Total................................................................. $150,268
========
LIABILITIES AND INTEREST OF UNITHOLDERS
Reimbursement to Sponsor for Organization Costs (Note 2).............. $ 204
Interest of Unitholders -- Units of Fractional
Undivided Interest Outstanding (15,666 Units)........................ 150,268
Less: Reimbursement to Sponsor for Organization Costs (Note 2)....... (204)
--------
Total................................................................. $150,268
========
Net Asset Value per Unit.............................................. $ 9.59
========
</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
capital appreciation. Current income is a secondary objective of the Trust. On
January 26, 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 15,666 units of the Trust. An
irrevocable letter of credit issued by 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 January 25, 1999. The Trust will terminate on February 1, 2002, 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-6
<PAGE>
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, JANUARY 26, 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> <C> <S> <C> <C> <C> <C>
Broadcasting: 3.98%
1 128 Grupo Televisa S.A.--GDR TV 2.00% $23.5000 $3,008
2 345 Paxson Communications Corp. PAX 1.98 8.6250 2,976
------
5,984
Cable: 12.98%
3 46 Cablevision Systems CVC 1.99 65.0000 2,990
Corp.--Class A
4 56 NTL Inc. NTLI 2.97 79.7500 4,466
5 472 Rogers Communications, RG 4.00 12.7500 6,018
Inc.
6 96 Time Warner Inc. TWX 4.02 62.9375 6,042
------
19,516
Communication Equipment: 14.91%
7 43 Cisco Systems, Inc. CSCO 2.96 103.4375 4,448
8 134 General Instrument Corp. GIC 2.93 32.8750 4,405
9 35 Intel Corp. INTC 3.04 130.6250 4,572
10 44 Lucent Technologies Inc. LU 2.99 102.0000 4,488
11 81 Northern Telecom Ltd. NT 2.99 55.4375 4,490
------
22,403
Software: 6.97%
12 42 At Home Corp. ATHM 2.94 105.0625 4,413
13 18 Intuit Inc. INTU 1.00 83.1250 1,496
14 45 Sun Microsystems, Inc. SUNW 3.03 101.0625 4,548
------
10,457
Entertainment: 20.05%
15 173 The Walt Disney Co. DIS 4.02 34.9375 6,044
16 133 The Seagram Company Ltd. VO 4.01 45.3125 6,027
17 121 Tele-Communications, Inc.--
Liberty Media Group LBTYA 4.00 49.6875 6,012
18 188 USA Networks, Inc. USAI 4.02 32.1250 6,039
19 73 Viacom Inc.--Class A VIA 4.00 82.2500 6,004
------
30,126
Publishing: 6.99%
20 60 Harcourt General, Inc. H 2.01 50.2500 3,015
21 92 The New York Times Co. NYT 1.98 32.3750 2,979
22 71 Tribune Co. TRB 3.00 63.5625 4,513
------
10,507
Satellite: 9.00%
23 135 Comsat Corp. CQ 2.99 33.3125 4,497
24 93 General Motors Corp.-- GMH 3.00 48.5000 4,511
Class H
25 228 Loral Space & LOR 3.01 19.8125 4,517
Communications Ltd. ------
13,525
</TABLE>
A-7
<PAGE>
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
PORTFOLIO
AS OF OPENING OF BUSINESS, JANUARY 26, 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> <C> <S> <C> <C> <C> <C>
Telecommunications: 21.13%
26 52 AT&T Corp. T 3.11% $89.7500 $ 4,667
27 82 Bell Atlantic Corp. BEL 2.97 54.4375 4,464
28 585 Citizens Utilities Co. CZN 2.99 7.6875 4,497
29 76 Nippon Telegraph & NTT 2.00 39.6250 3,012
Telephone Corp.--ADR
30 32 Telecom Italia SpA--ADR TI 1.98 92.9375 2,974
31 22 Telefonica S.A.--ADR TEF 2.03 138.3750 3,044
32 265 Telesp Participacoes S.A.--ADR TSP 3.04 17.2500 4,571
33 89 Telephone and Data Systems, Inc. TDS 3.01 50.8750 4,528
--------
31,757
Wireless Communications: 3.99%
34 176 Telesp Cellular TCP 2.00 17.0625 3,003
Participacoes S.A.--ADR
35 111 Western Wireless Corp. WWCA 1.99 26.9375 2,990
--------
5,993
--------
$150,268
=== ========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on January 25,
1999. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be January 29, 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 $150,457. The Sponsor's loss
on the Initial Date of Deposit is $189.
A-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEE AND UNITHOLDERS,
EQUITY SECURITIES TRUST, SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
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 21, Signature Series, Gabelli
Entertainment & Media Trust II (the "Trust") at opening of business, January
26, 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, January 26, 1999, by
correspondence with the Sponsor, provides a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, MA
January 26, 1999
A-9
<PAGE>
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EST Signature Series
- -------------------------------------------------------------------------------
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. Equity Securities Trust, Series 21, Signature Series, Gabelli
Entertainment & Media Trust II 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. 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 achieve capital
appreciation. Current income is a secondary objective of the Trust. The Trust
seeks to achieve its objectives by investing primarily in a portfolio of the
equity securities of entertainment and media companies based both in the United
States and throughout the world. These equity securities include the common
stocks of both domestic and foreign companies stock and foreign equity
securities in the form of American Depository Receipts (ADRs) or Global
Depository Receipts (GDRs) (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 three years, at which time
investors may choose to either receive the distributions in kind (if they own
at least 2,500 Units), in cash or reinvest in a subsequent series of Equity
Securities Trust (if offered) at a reduced sales charge. Since the Sponsor may
deposit additional Securities in connection with the sale of additional Units,
the dividend 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. Investors should carefully review the objectives of the Trust
and consider their ability to assume the risks involved before making an
investment in the Trust.
THE SECURITIES. In selecting Securities for the Trust, the Portfolio
Consultant normally will consider the following factors, among others: (1) the
Portfolio Consultant's own evaluations of the private market value of the
underlying assets and business of the issuers of the Securities; (2) the
potential for capital
B-2
<PAGE>
appreciation for the Securities; (3) the prices of the Securities relative to
other comparable securities; (4) the interest or dividend income generated by
the Securities; (5) the management quality of the issuers of the Securities;
(6) the diversification of the Trust's portfolio as to issuers product type and
geographic focus; and (7) whether the Securities are entitled to the benefits
of other protective conditions. The Portfolio Consultant's investment
philosophy hinges on identifying assets that are selling in the public market
at a discount to the private market value, which the Portfolio Consultant
defines as the value informed purchasers are willing to pay to acquire assets
with similar characteristics. The Portfolio Consultant also evaluates the
issuers' free cash flow and long-term earnings trends. Finally, the Portfolio
Consultant looks for a catalyst; something in the company's industry or
indigenous to the company itself that will surface value.
Some of the Securities in the Trust may be in the form of ADRs or GDRs. ADRs
evidence American Depositary Receipts and GDRs evidence Global Depository
Receipts which both, in turn, represent common stock of non-U.S. issuers
deposited with a custodian in a depository. In selecting depository receipts
for deposit into the Trust portfolio, in addition to the factors associated
with the selection of Securities of any issuer, the Portfolio Consultant
considers the following factors, among others: (1) the location of the issuer
of the Securities underlying the depository receipts; (2) the likelihood of
favorable market and political conditions in the country in which such issuer
is located; (3) the amount of publicly available information available from
such issuer; and (4) historical and recent fluctuations in the exchange rate of
the currency of such issuer relative to the United States dollar.
The Trust will be concentrated in the equity securities of entertainment and
media companies. Equity securities will consist of common stock, ADRs and GDRs.
Entertainment and media companies in which the Trust may invest are engaged in
providing the following products or services: regular telephone service
throughout the world; equipment and services for data, video and voice
transmission, including computer equipment; electronic commerce; television and
radio broadcasting via VHF, UHF, satellite and microwave transmission and cable
television; programming (including theatrical broadcast); cable networks and
interactive entertainment; filmed entertainment; emerging technologies
combining TV, telephone and computer systems; wireless communications services
and equipment, including cellular telephone, microwave and satellite
communications, paging and other emerging wireless technologies; electronic
components and communications equipment; video conferencing; electronic mail;
internet services; local and wide area networking, and linkage of data and word
processing systems; publishing and information systems; and video text and
teletext. (See "Risk Considerations--Entertainment and Media Issuers.")
The Trust will also concentrate in the equity securities of communications
companies. Due to the overlap in the business lines of companies in the media,
entertainment and communications industries, these industries are generally
considered to be related. A communications company is a company which derives
at least 50% of either of its revenues or earnings from communications
activities, or which devotes at least 50% of its assets to such activities,
based on the company's most recent fiscal year for which audited financial
information is available. The communications industry is comprised of a variety
of sectors, ranging from companies concentrating in established technologies to
those primarily engaged in emerging or developing technologies. Examples of
communications companies include, but are not limited to, those engaged in
providing the following products or services which converge with the
entertainment and media industry: regular telephone service throughout the
world; wireless communications services and equipment, including cellular
telephone, microwave and satellite communications, paging, and other emerging
wireless technologies; equipment and services for both data and voice
transmission, including computer equipment; electronic components and
communications equipment; video conferencing; electronic mail; internet
services; local and wide area networking, and linkage of data and word
processing systems; publishing and information systems; video text and
teletext; emerging technologies combining television, telephone and computer
systems; broadcasting,
B-3
<PAGE>
including television and radio via VHF, UHF, satellite and microwave
transmission, and cable television. (See "Risk Considerations -- Communications
Issuers.")
Communications is an expanding global industry. The Portfolio Consultant
believes that at the present time a portfolio of the securities of
communications companies located throughout the world presents greater
potential for achieving capital appreciation and earning higher income than a
portfolio comprised solely of U.S. communications issuers. While the Portfolio
Consultant expects that a substantial portion of the Trust portfolio's assets
may be invested in the securities of domestic entertainment and media
companies, a significant portion of the Trust portfolio may also be comprised
of the securities of entertainment and media issuers headquartered outside the
United States.
PORTFOLIO. The Trust consists of the Securities (or contracts to purchase
such Securities together with an irrevocable letter or letters of credit for
the purchase of such contracts) and Additional Securities deposited upon the
creation of additional Units as set forth above and Substitute Securities
acquired by the Trust as long as such Securities may continue to be held from
time to time in the Trust together with uninvested cash realized from the
disposition of Securities. Because certain of the Securities from time to time
may be sold under certain circumstances, as described herein (see "Trust
Administration"), no assurance can be given that the Trust will retain for any
length of time its present size and composition. The Trustee has not
participated and will not participate in the selection of Securities for the
Trust, and neither the Sponsor, the Portfolio Consultant nor the Trustee will
be liable in any way for any default, failure or defect in any Securities.
Some of the Securities are publicly traded either on a stock exchange or in
the over-the-counter market. 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. When 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.
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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RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated or distributed during the Liquidation Period. Since the
Trust will not sell Securities in response to ordinary market fluctuation, and
only at the Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust.
Some of the Securities in the Trust may also be owned by other clients of the
Sponsor and their affiliates. However, because these clients may have differing
investment objectives, the Sponsor may sell certain Securities from those
accounts in instances where a sale by the Trust would be impermissible, such as
to maximize return by taking advantage of market fluctuations. Investors should
consult with their own financial advisers prior to investing in the Trust to
determine its suitability. (See "Trust Administration -- Portfolio Supervision"
below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with the
creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsor may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. Subject to regulatory approval, to the extent the price
of a Security increases or decreases between the time cash is deposited with
instructions to purchase the Security and the time the cash is actually 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 common stocks of both domestic and
foreign issuers, an investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks
including the risk that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the stock
market may worsen.
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<PAGE>
Additional risks include those associated with the right to receive payments
from the issuer which is generally inferior to the rights of creditors of, or
holders of debt obligations or preferred stock issued by the issuer. Holders of
common stocks have a right to receive dividends only when, if, and in the
amounts declared by the issuer's board of directors and to participate in
amounts available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of preferred
stocks usually have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis.
Dividends on cumulative preferred stock must be paid before any dividends are
paid on common stock and any cumulative preferred stock dividend which has been
omitted is added to future dividends payable to the holders of such cumulative
preferred stock. Preferred stocks are also usually entitled to rights on
liquidation which are senior to those of common stocks. For these reasons,
preferred stocks generally entail less risk than common stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even
preferred stock by an issuer will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and inclination
of the issuer to declare or pay dividends on its common stock or the economic
interest of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (which value will be subject to
market fluctuations prior thereto), common stocks have neither fixed principal
amount nor a maturity and have values which are subject to market fluctuations
for as long as the common stocks remain outstanding. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases in value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Trust thus may be expected to fluctuate over the life of the Trust to
values higher or lower than those prevailing on the Initial Date of Deposit.
ENTERTAINMENT AND MEDIA ISSUERS. The risks of investing in the entertainment
and media industry are largely the same as investing in the communications
industry (see below), except that such industries are subject to less federal
and state regulation. Additional risks particular to the entertainment and
media industry involve a greater price volatility for the overall market, rapid
obsolescence of entertainment products and services resulting from changing
consumer tastes, intense competition and strong market reactions to
technological developments throughout the industry.
Various types of ownership restrictions are imposed by the Federal
Communications Commission ("FCC") on investments both in mass media companies,
such as broadcasters and cable operators, as well as in common carrier
companies, such as the providers of local telephone service and cellular radio.
For example, the FCC's broadcast multiple ownership rules, which apply to the
radio and television industries, provide that investment advisers are deemed to
have an "attributable" interest whenever the adviser has the right to determine
how more than five percent of the issued and outstanding voting stock of a
broadcast company may be voted. These same broadcast rules prohibit the holding
of an attributable interest in AM and FM radio broadcast stations and
television stations nationally. Similar types of restrictions apply in the mass
media and common carrier industries.
COMMUNICATIONS ISSUERS. The Trust may also invest its assets in the
communications industry and, as a result, the value of the Units of the Trust
may be susceptible to factors affecting the communications
B-6
<PAGE>
industry. The communications industry is subject to governmental regulation and
the products and services of communications companies may be subject to rapid
obsolescence. Telephone companies in the United States, for example, are
subject to both state and federal regulations affecting permitted rates of
returns and the kinds of services that may be offered. In addition, federal
communications laws regarding the cable television industry have recently been
amended to eliminate government regulation of cable television rates where
competition is present and allow rates to be dictated by market conditions. In
the absence of competition, however, rates shall be regulated by federal and
state governments to protect the interest of subscribers.
Certain types of companies represented in the Trust portfolio are engaged in
fierce competition for a share of the market of their products. As a result,
competitive pressures are intense and the stocks are subject to rapid price
volatility. While the Trust portfolio will concentrate on the securities of
established suppliers of traditional communication products and services, the
Trust may invest in smaller communications companies which may benefit from the
development of new products and services. These smaller companies may present
greater opportunities for capital appreciation, and may also involve greater
risk than large, established issuers. Such smaller companies may have limited
product lines, market or financial resources, and their securities may trade
less frequently and in a limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
DEPOSITORY RECEIPTS AND FOREIGN INVESTMENTS. An investment in Units of the
Trust should be made with an understanding of the risks inherent in foreign
equity investments in the form of American Depositary Receipts or Global
Depository Receipts, including risks associated with government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
American Depository Receipts (ADRs) are receipts, issued by a U.S. bank, that
represent an interest in shares of a foreign-based corporation. Global
Depository Receipts (GDRs) are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation.
The characteristics and rights and privileges of equity securities vary from
country to country, and governments may impose restrictions on foreign
ownership of certain classes of equity securities unless a non-national
purchaser acquires a license or unless the particular issuer receives
permission for ownership by non-nationals. The Trust has not obtained any of
these licenses nor does the Sponsor anticipate the need to obtain them.
In general, foreign ownership restrictions are more likely to be imposed on
voting shares than non-voting shares. Equity securities, in general, trade on
the market at a multiple of their issuers' earnings, which multiple varies by
country, industry and company and may fluctuate over time based on general
perceptions of the marketplace even if such perceptions are not related to
specific actions or performance results of a particular issuer. This multiple
for any particular issuer may not be uniform for all classes of the issuer's
equity securities.
In addition, for foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less publicly
available information than is available for a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements like those applicable
to domestic issuers. However, the Sponsor anticipates that adequate information
will be available to allow the Sponsor and Portfolio Consultant to supervise
and/or monitor the Trust portfolio.
B-7
<PAGE>
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.
The depository receipts in the Portfolio have been issued by non-U.S. issuers
whose earnings are stated in foreign currencies. Further, depository receipts
in the Trust portfolio may pay dividends in foreign currencies, and the
securities underlying the depository receipts are principally traded in foreign
currencies. Most foreign currencies have fluctuated widely in value against the
United States dollar for many reasons, including supply and demand of the
respective currency, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries. Therefore, for those Securities of issuers whose earnings are stated
in foreign currencies, or which pay dividends in foreign currencies, or which
are traded in foreign currencies, there is a likelihood that their United
States dollar value will vary to some degree with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies. Moreover,
depository receipt currency fluctuations will affect the U.S. dollar equivalent
of the local currency price of the underlying domestic share and, as a result,
are likely to affect the value of the depository receipts and consequently the
value of the Securities. In addition, the rights of holders of depository
receipts may be different than those of holders of the underlying shares, and
the market for depository receipts may be less liquid than that for the
underlying shares.
Depository receipts may be sponsored or unsponsored. In an unsponsored
facility, the depositary initiates and arranges the facility at the request of
market markers and acts as agent for the depository receipt holder, while the
company itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain administrative
and shareholder-related expenses. Sponsored facilities use a single depositary
and entail a contractual relationship among the issuer, the shareholder and the
depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. ADRs or GDRs designed for use in the
United States securities markets may be registered securities pursuant to the
Securities Act of 1933 and/or subject to the reporting requirements of the
Securities Exchange Act of 1934. Dividends attributable to ADRs or GDRs may be
subject to foreign withholding tax.
LIQUIDITY. Some of the Securities in the Trust portfolio have been purchased
in ADR or GDR form in United States dollars. However, ADRs or GDRs are not
necessarily listed on a national securities exchange. Even when ADRs or GDRs or
other Securities are listed, the principal trading market for such Securities
may be in the over-the-counter market. As a result, the existence of a liquid
trading market for Securities in the Trust portfolio may depend on whether
dealers will make a market in these Securities. There can be no assurance that
a market will be made for any of the Securities, that any market for the
Securities will be maintained or of the liquidity of the Securities in any
markets made. In addition, the Trust may be restricted under the Investment
Company Act of 1940 from selling Securities to the Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of the Units will
be adversely affected if trading markets for the Securities are limited or
absent.
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
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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.
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.
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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
Number of Units Sales Charge
--------------- ------------
<S> <C>
5,000 but less than 10,000................................... 3.70%
10,000 but less than 25,000.................................. 3.45%
25,000 but less than 50,000.................................. 2.95%
50,000 but less than 100,000................................. 2.45%
</TABLE>
For transactions of at least 100,000 Units or more, the Sponsor intends to
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser. The Sponsor reserves the right to change the discounts from
time to time.
These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number
of Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
The holders of units of prior series of Equity Securities Trusts (the "Prior
Series") may "rollover" into this Trust by exchanging units of the Prior Series
for Units of the Trust at their relative net asset values, subject to a reduced
sales charge of 2.95%. 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"). For transaction of at least 10,000 Units or more,
rollover investors will also be eligible for an additional reduction of their
sales charge based upon the same proportionate volume discounts set forth
above.
Employees (and their immediate families) of Reich & Tang Distributors, Inc.
(and its affiliates), the Portfolio Consultants and of the special counsel to
the Sponsor, may, pursuant to employee benefit arrangements, purchase Units of
the Trust at a price equal to the aggregate value of the underlying securities
in the Trust during the initial offering period, divided by the number of Units
outstanding without a sales charge. Such arrangements result in less selling
effort and selling expenses than sales to employee groups of other companies.
Resales or transfers of Units purchased under the employee benefit arrangements
may only be made through the Sponsor's secondary market, so long as it is being
maintained, and not through other broker-dealers.
Investors in any open-end management investment company or unit investment
trust that have purchased their investment within a five-year period prior to
the date of this Prospectus can purchase Units of the Trust in an amount not
greater in value than the amount of said investment made during this five-year
period at a reduced sales charge of 2.95% of the public offering price.
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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 3.00% per Unit, subject to the Sponsor's right to change
the dealers' concession from time to time. Such Units may then be distributed
to the public by the dealers at the Public Offering Price then in effect. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
Broker-dealers of the Trust, banks and/or others are eligible to participate
in a program in which such firms receive from the Sponsor a nominal award for
each of their registered representatives who have sold a minimum number of
units of unit investment trusts created by the Sponsor during a specified time
period. In addition, at various times the Sponsor may implement other programs
under which the sales forces of brokers, dealers, banks and/or others may be
eligible to win other nominal awards for certain sales efforts or under which
the Sponsor will allow to any such brokers, dealers, banks and/or others that
sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor, or participate in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of their own assets and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold.
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SPONSOR'S PROFITS. The Sponsor will receive a combined gross underwriting
commission equal to up to 3.95% of the Public Offering Price per 100 Units
(equivalent to 4.112% 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 of the Units among
DTC participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchases and sale from the broker-
dealer or bank from whom their purchase was made. Units are transferable by
making a written request property accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the Unit Holder. Holders must sign such written request
exactly as their names appear on the records of the Trust. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee to
an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
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Distributions to each Unitholder from the Income Account are computed as of
the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from
the Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date,
and will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Distribution
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the next Distribution Date. Persons who
purchase Units between a Record Date and a Distribution Date will receive their
first distribution on the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and
Charges"). The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The dividend distribution per 100 Units, if any, cannot be anticipated and
may be paid as Securities are redeemed, exchanged or sold, or as expenses of
the Trust fluctuate. No distribution need be made from the Income Account or
the Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions
of Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each
100 Units outstanding on the last business day of such calendar year; (c) a
list of the Securities held, a list of Securities purchased, sold or otherwise
disposed of during the calendar year and the number of Units outstanding on the
last business day of such calendar year; (d) the Redemption Price per 100 Units
based upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately 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.
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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 3.95% sales charge (or 4.112% 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 three
years from the Initial Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsor, broker, dealer or financial institution holding such Units in street
name. In certain instances, additional documents may be required, such as trust
instrument, certificate of corporate authority, certificate of death or
appointment as executor, administrator or guardian. At the present time there
are no specific taxes related to the redemption of Units. No redemption fee
will be charged by the Sponsor or the Trustee. Units redeemed by the Trustee
will be canceled.
Within three business days following a tender for redemption, the Unitholder
will be entitled to receive an amount for each Unit tendered equal to the
Redemption Price per Unit computed as of the Evaluation Time on the date of
tender. The "date of tender" is deemed to be the date on which Units are
received by the Trustee, except that with respect to Units received after the
close of trading on the New York Stock Exchange (4:00
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p.m. Eastern Time), the date of tender is the next day on which such Exchange
is open for trading, and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the Redemption Price computed on that
day.
A Unitholder will receive his redemption proceeds in cash and amounts paid on
redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Stock. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance
with market conditions, the Sponsor believes that the minimum amounts which
would be specified would be approximately 100 shares for readily marketable
Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the Trust
determined by the Trustee on the basis of (i) the cash on hand in the Trust or
moneys in the process of being collected, (ii) the value of the Securities in
the Trust as determined by the Trustee, less (a) amounts representing taxes or
other governmental charges payable out of the Trust, (b) the accrued expenses
of the Trust and (c) cash allocated for the distribution to Unitholders of
record as of the business day prior to the evaluation being made. As of the
close of the initial offering period the Redemption Price per 100 Units will be
reduced to reflect the payment of the per 100 Unit organization costs to the
Sponsor. Therefore, the amount of the Redemption Price per 100 Units received
by a Unitholder will include the portion representing organization costs only
when such Units are tendered for redemption prior to the close of the initial
offering period. Because the Securities are listed on a national securities
exchange, the Trustee may determine the value of the Securities in the Trust
based on the closing sale prices on that exchange. Unless the Trustee deems
these prices inappropriate as a basis for evaluation or if there is no such
closing purchase price, then the Trustee may utilize, at the Trust's expense,
an independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices for comparable securities, (b) by appraising the value of
the Securities on the bid side of the market or (c) by any combination of the
above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption may
request by written notice submitted at the time of tender from the Trustee in
lieu of a cash redemption a distribution of shares of Securities and cash in an
amount and value equal to the Redemption Price Per Unit as determined as of the
evaluation next following tender. To the extent possible, in kind distributions
("In Kind Distributions") shall be made by the Trustee through the distribution
of each of the Securities in book-entry form to the account of the Unitholder's
bank or broker-dealer at The Depository Trust Company. An In Kind Distribution
will be reduced by customary transfer and registration charges. The tendering
Unitholder will receive his pro rata number of whole shares of each of the
Securities comprising the Trust portfolio and cash from the Principal Accounts
equal to the balance of the Redemption Price to which the tendering Unitholder
is entitled. If funds in the Principal Account are insufficient to cover the
required cash distribution to the tendering Unitholder, the Trustee may sell
Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsor does
not elect to purchase a Unit tendered for redemption or if the Sponsor tenders
a Unit for redemption, in lieu of redeeming such Unit, to sell
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such Unit in the over-the-counter market for the account of the tendering
Unitholder at prices which will return to the Unitholder an amount in cash, net
after deducting brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Price for such Unit. The Trustee will pay the
net proceeds of any such sale to the Unitholder on the day he would otherwise
be entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or trading on that Exchange is restricted or
during which (as determined by the Securities and Exchange Commission) an
emergency exists as a result of which disposal or evaluation of the Bonds is
not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee and the Sponsor are not
liable to any person or in any way for any loss or damage which may result from
any such suspension or postponement.
A Unitholder who wishes to dispose of his Units should inquire of his bank or
broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio. It
is unlikely that the Trust will sell any of the Securities other than to
satisfy redemptions of Units, or to cease buying Additional Securities in
connection with the issuance of additional Units. However, the Trust Agreement
provides that the Sponsor may direct the disposition of Securities upon the
occurrence of certain events including: (1) default in payment of amounts due
on any of the Securities; (2) institution of certain legal proceedings; (3)
default under certain documents materially and adversely affecting future
declaration or payment of amounts due or expected; (4) determination of the
Sponsor that the tax treatment of the Trust as a grantor trust would otherwise
be jeopardized; or (5) decline in price as a direct result of serious adverse
credit factors affecting the issuer of a Security which, in the opinion of the
Sponsor, would make the retention of the Security detrimental to the Trust or
the Unitholders.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsor fails to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsor, shall sell the Security.
(b) It is the responsibility of the Sponsor to instruct the Trustee to
reject any offer made by an issuer of any of the Securities to issue new
securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization. If any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsor directs that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, shall be promptly sold unless
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<PAGE>
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 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
B-17
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prior to the commencement of the Liquidation Period) (see Part A -- "Summary of
Essential Information" for the date of the commencement of the Liquidation
Period):
1. A Unitholder who owns at least 2,500 Units and whose interest in the
Trust would entitle it to receive at least one share of each underlying
Security will have its Units redeemed on commencement of the Liquidation
Period by distribution of the Unitholder's pro rata share of the net asset
value of the Trust on such date distributed in kind to the extent
represented by whole shares of underlying Securities and the balance in
cash within three business days next following the commencement of the
Liquidation Period. Unitholders subsequently selling such distributed
Securities will incur brokerage costs when disposing of such Securities.
Unitholders should consult their own tax adviser in this regard;
2. to receive in cash such Unitholder's pro rata share of the net asset
value of the Trust derived from the sale by the Sponsor as the agent of the
Trustee of the underlying Securities during the Liquidation Period. The
Unitholder's pro rata share of its net assets of the Trust will be
distributed to such Unitholder within three days of the settlement of the
trade of the last Security to be sold; or
3. to invest such Unitholder's pro rata share of the net assets of the
Trust derived from the sale by the Sponsor as agent of the Trustee of the
underlying Securities during the Liquidation Period, in units of a
subsequent series of Equity Securities Trust (the "New Series"), provided
one is offered. It is expected that a special redemption and liquidation
will be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust in Part A. The Units of a New Series will be
purchased by the Unitholder within three business days of the settlement of
the trade for the last Security to be sold. Such purchaser will be entitled
to a reduced sales charge upon the purchase of units of the New Series. It
is expected that the terms of the New Series will be substantially the same
as the terms of the Trust described in this Prospectus, and that similar
options with respect to the termination of such New Series will be
available. The availability of this option does not constitute a
solicitation of an offer to purchase Units of a New Series or any other
security. A Unitholder's election to participate in this option will be
treated as an indication of interest only. At any time prior to the
purchase by the Unitholder of units of a New Series such Unitholder may
change his investment strategy and receive, in cash, the proceeds of the
sale of the Securities. An election of this option will not prevent the
Unitholder from recognizing taxable gain or loss (except in the case of a
loss, if and to the extent the New Series is treated as substantially
identical to the Trust) as a result of the liquidation, even though no cash
will be distributed to pay any taxes. Unitholders should consult their own
tax advisers in this regard.
Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsor has agreed that to the extent they effect the sales of underlying
securities for the Trustee in the case of the second and third options during
the Liquidation Period such sales will be free of brokerage commissions. The
Sponsor, on behalf of the Trustee, will sell, unless prevented by unusual and
unforeseen circumstances, such as, among other reasons, a suspension in trading
of a Security, the close of a stock exchange, outbreak of hostilities and
collapse of 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
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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 seven
days if, in the Sponsor's judgment, such sales are in the best interest of
Unitholders. The Sponsor, in implementing such sales of securities on behalf of
the Trustee, will seek to maximize the sales proceeds and will act in the best
interests of the Unitholders. There can be no assurance, however, that any
adverse price consequences of heavy trading will be mitigated.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
any subsequent series of the Trust, without penalty or incurring liability to
any Unitholder. If the Sponsor so decides, the Sponsor will notify the Trustee
of that decision, and the Trustee will notify the Unitholders. All Unitholders
will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into the New Series, the Unitholder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created following termination of the Trust; the Sponsor expects,
however, that a similar rollover program will be offered with respect to all
subsequent series of the Trust, thus giving Unitholders an opportunity to elect
to roll their terminating distributions into a New Series. The availability of
the rollover privilege does not constitute a solicitation of offers to purchase
units of a New Series or any other security. A Unitholder's election to
participate in the rollover program will be treated as an indication of
interest only. The Sponsor intends to coordinate the date of deposit of a
future series so that the terminating trust will terminate contemporaneously
with the creation of a New Series. The Sponsor reserves the right to modify,
suspend or terminate the rollover privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors, Inc., a Delaware
corporation, is engaged in the brokerage business and is a member of the
National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment advisor. Reich & Tang maintains its principal business
offices at 600 Fifth Avenue, New York, New York 10020. The sole shareholder of
the Sponsor, Reich & Tang Asset Management, Inc. ("RTAM Inc.") is wholly owned
by NEIC Holdings, Inc. which, effective December 29, 1997, was wholly owned by
NEIC Operating Partnership, L.P. ("NEICOP"). Subsequently, on March 31, 1998,
NEICOP changed its name to Nvest Companies, L.P. ("Nvest"). The general
partners of Nvest are Nvest Corporation and Nvest L.P. As of March 31, 1998,
Metropolitan Life Insurance Company ("MetLife") owned approximately 47% of the
partnership interests of Nvest. Nvest, with a principal place of business at
399 Boylston Street, Boston, MA 02116, is a holding company of firms engaged in
the securities and investment advisory business. These affiliates in the
aggregate are investment advisors or managers to over 80 registered investment
companies. Reich & Tang is Sponsor (and Co-Sponsor, as the case may be) 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.
B-19
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MetLife is a mutual life insurance company with assets of $330.6 billion at
December 31, 1997. MetLife provides a wide range of insurance and investment
products and services to individuals and groups and is the leader among United
States life insurance companies in terms of total life insurance in force,
which totaled $1.7 trillion at December 31, 1997 for MetLife and its insurance
affiliates.
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 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
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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 CONSULTANT. The Portfolio Consultant is Gabelli Funds Inc., a
New York corporation, with offices at One Corporate Center, Rye, New York
10580-1430. The Portfolio Consultant is a registered investment advisor, and
with its affiliate, GAMCO Investors, Inc., acts as an investment manager,
administrator or advisor for assets of mutual funds and private managed
accounts aggregating in excess of $16.3 billion as of December 31, 1998.
The Portfolio Consultant is not a sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense to utilize its
equity expertise in selecting the securities deposited in the Trust. The
Portfolio Consultant's only responsibility with respect to the Trust, in
addition to its 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 Consultant's 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 Consultant by the Sponsor, the Portfolio Consultant 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 Consultant 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 Consultant has no other responsibilities or
obligations to the Trust or the Unitholders.
Investors should be aware that the Portfolio Consultant, with its affiliates,
is an investment adviser for managed investment companies and managed private
accounts that may have similar or different investment objectives than the
Trust. Some of the Securities in the Trust may also be owned by these other
clients of the Portfolio Consultant and its affiliates. However, because these
clients have "managed" portfolios and may have differing investment objectives,
the Portfolio Consultant may sell certain Securities for those accounts in
instances where a sale by the Trust would be impermissible, such as to maximize
return by taking advantage of market fluctuations.
The Portfolio Consultant may resign or may be removed by the Sponsor at any
time on sixty days' prior notice. The Sponsor shall use its best efforts to
appoint a satisfactory successor in the event that the Portfolio Consultant
resigns or is removed. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Portfolio Consultant. If upon
resignation of the Portfolio Consultant no successor has accepted appointment
within sixty days after notice of resignation, the Sponsor has agreed to
perform this function.
EVALUATION OF THE TRUST. The value of the Securities in the Trust portfolio
is determined in good faith by the Trustee on the basis set forth under "Public
Offering -- Offering Price." The Sponsor and
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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."
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
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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 1.0%. Investors
should inform their broker, dealer or financial institution when purchasing
their Units if they wish to participate in the reinvestment plan. Thereafter,
Unitholders should contact their broker, dealer or financial institution if
they wish to modify or terminate their election to participate in the
reinvestment plan. In order to enable a Unitholder to participate in the
reinvestment plan with respect to a particular distribution on their Units,
such notice must be made at least three business days prior to the Record Day
for such distribution. Each subsequent distribution of income or principal on
the participant's Units will be automatically applied by the Trustee to
purchase additional Units of the Trust. The Sponsor reserves the right to
demand, modify or terminate the reinvestment plan at any time without prior
notice. The reinvestment plan for the Trust may not be available in all states.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Unitholders will be able to elect to exchange any or all of their Units of
this Trust for Units of one or more of any available series of Equity
Securities Trust, Insured Municipal Securities Trust, Municipal Securities
Trust, New York Municipal Trust or Mortgage Securities Trust (the "Exchange
Trusts") subject to a reduced sales charge as set forth in the prospectus of
the Exchange Trust (the "Exchange Privilege"). Unit owners of any registered
unit investment trust for which there is no active secondary market in the
units of such trust (a "Redemption Trust") will be able to elect to redeem such
units and apply the proceeds of the redemption to the purchase of available
Units of one or more series of an Exchange Trust (the "Conversion Trusts") at
the Public Offering Price for units of the Conversion Trust subject to a
reduced sales charge as set forth in the prospectus of the Conversion Trust
(the "Conversion Offer"). Under the Exchange Privilege, the Sponsor's
repurchase price during the initial offering period of the Units being
surrendered will be based on the market value of the Securities in the Trust
portfolio or on the aggregate offer price of the Bonds in the other Trust
Portfolios; and, after the initial offering period has been completed, will be
based on the aggregate bid price of the securities in the particular Trust
portfolio. Under the Conversion Offer, units of the Redemption Trust must be
tendered to the trustee of such trust for redemption at the redemption price
determined as set
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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 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.
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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 (although any loss may not
be deductible to the extent that the Securities represented by the Units
received in the exchange are substantially identical to securities represented
by units surrendered in the exchange) 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
The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code").
In rendering the opinion set forth below, Battle Fowler LLP has examined the
Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein. In the Opinion of Battle Fowler LLP, special
counsel for the Sponsor, under existing law:
1. The Trust will be classified as a grantor trust for Federal income tax
purposes and not as a partnership or association taxable as a corporation.
Classification of the Trust as a grantor trust will cause the Trust not to
be subject to Federal income tax, and will cause the Unitholders of the
Trust to be treated for Federal income tax purposes as the owners of a pro
rata portion of the assets of the Trust. All income received by the Trust
will be treated as income of the Unitholders in the manner set forth below.
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2. The Trust is not subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. For a Unitholder
who is a New York resident, however, a pro rata portion of all or part of
the income of the Trust will be treated as income of the Unitholder under
the income tax laws of the State and City of New York. Similar treatment
may apply in other states.
3. During the 90-day period subsequent to the initial issuance date, the
Sponsor reserves the right to deposit Additional Securities that are
substantially similar to those deposited in initially establishing the
Trust. This retained right falls within the guidelines promulgated by the
Internal Revenue Service ("IRS") and should not affect the taxable status
of the Trust.
A taxable event will generally occur with respect to each Unitholder when the
Trust disposes of a Security (whether by sale, exchange or redemption) or upon
the sale, exchange or redemption of Units by such Unitholder. The price a
Unitholder pays for its Units, including sales charges, is allocated among its
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases its Units) in order
to determine its initial cost for its pro rata portion of each Security held by
the Trust.
A Holder will be considered to have received all of the dividends paid on its
pro rata portion of each Security and any gain or loss resulting from the
conversion of foreign currency into U.S. dollars when such dividends are
received or amounts are converted by the Trust, even if the Holder does not
actually receive such distributions because all or a portion of them are
subject to withholding taxes, used to pay a portion of the Trust's expenses, or
reinvested pursuant to the Reinvestment Plan. For Federal income tax purposes,
a Unitholder's pro rata portion of dividends paid with respect to a Security
held by a Trust is taxable as ordinary income to the extent of such
corporation's current or accumulated "earnings and profits" as defined by
Section 316 of the Code. A Unitholder's pro rata portion of dividends paid on
such Security that exceed such current and accumulated earnings and profits
will first reduce a Unitholder's tax basis in such Security, and to the extent
that such dividends exceed a Unitholder's tax basis in such Security will
generally be treated as capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital gain and will be long-term if the Unitholder has held its
Units (and the Trust has held the Securities) for more than one year. Capital
gains are generally taxed at the same rates applicable to ordinary income,
although non-corporate Unitholders who realize long-term capital gains may be
subject to a reduced tax rate of 20% on such gains, rather than the "regular"
maximum tax rate of 39.6%. Tax rates may increase prior to the time when
Unitholders may realize gains from the sale, exchange or redemption of the
Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of Units
or the disposition of Securities held by the Trust will generally be considered
a capital loss and will be long-term if the Unitholder has held its Units for
more than one year. Capital losses are deductible to the extent of capital
gains; in addition, up to $3,000 of capital losses ($1,500 in the case of
married individuals filing separately) recognized by non-corporate Unitholders
may be deducted against ordinary income.
Under Section 67 of the Code and the accompany Regulations, a Unitholder who
itemizes its deductions may also deduct its pro rata share of the fees and
expenses of the Trust, but only to the extent that such amounts, together with
the Unitholder's other miscellaneous deductions, exceed 2% of its adjusted
gross
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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.
A corporation that owns Units will generally be entitled to a 70% dividends
received deduction with respect to its pro rata portion of dividends taxable as
ordinary income received by the Trust from a domestic corporation under Section
243 of the Code or from a qualifying foreign corporation in the same manner as
if such corporate unitholder corporation directly owned the Securities paying
such dividends. That deduction is available to corporations (other than "S"
corporations and certain other corporations that are not eligible for such
deduction) and is not available for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax. However, a
corporation owning Units should be aware that Sections 246 and 246A of the Code
impose additional limitations on the eligibility of dividends for the 70%
dividends received deduction. These limitations include a requirement that
stock (and therefore Units) must generally be held at least 46 days (as
determined under Section 246(c) of the Code) during the 90-day period beginning
on the date that is 45 days before the date on which the stock becomes "ex-
dividend." Moreover, the allowable percentage of the deduction will be reduced
from 70% if a corporate Unitholder owns certain stock (or Units) the financing
of which is directly attributable to indebtedness incurred by such corporation.
The dividends-received deduction is currently 70%. Congress from time to time
considers proposals to reduce this percentage.
The Trust may hold Securities, ADRs or GDRs of foreign corporations. For
United States income tax purposes, a holder of ADRs or GDRs is treated as
though it were holding directly the shares of the foreign corporation
represented by the ADRs or GDRs. Dividends paid by foreign issuers generally
will be subject to foreign withholding tax, which may entitle Holders to a
foreign tax credit (or deduction) against their U.S. income tax liability,
subject to the limitations applicable to the use of the foreign tax credit.
Amounts withheld on payments to the Trust may be greater than the amounts that
would be withheld if the shares were held directly by a U.S. Holder. The trust
will report as gross income earned by U.S. Holders their pro rata shares of
such dividends, including their pro rata shares of any corresponding amounts of
foreign tax withheld and their pro rata shares of any income or loss resulting
from currency conversion transactions. Capital gains attributable to the Units
or the underlying securities may also be subject to taxes by certain of those
jurisdictions.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
As discussed in the section "Termination", each Unitholder may have three
options in receiving his termination distributions, namely (i) to receive its
pro rata share of the underlying Securities in kind, (ii) to receive cash upon
liquidation of its pro rata share of the underlying Securities, or (iii) to
invest the amount of cash it would receive upon the liquidation of its pro rata
share of the underlying Securities in units of a future series of the Trust (if
one is offered). There are special tax consequences should a Unitholder choose
option (i), the exchange of the Unitholder's Units for a pro rata portion of
each of the Securities held by the Trust plus cash. Treasury Regulations
provide that gain or loss is recognized when there is a conversion of property
into property that is materially different in kind or extent. In this instance,
the Unitholder may be considered the owner of any undivided interest in all of
the Trust's assets. By accepting the proportionate number of Securities of the
Trust, in partial exchange for its Units, the Unitholder should be treated as
merely exchanging its undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such,
there should be no material difference in the Unitholder's ownership, and
therefore the transaction should be tax free to the extent the Securities are
received. Alternatively, the transaction may be
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treated as an exchange that would qualify for nonrecognition treatment to the
extent the Unitholder is exchanging its undivided interest in all of the
Trust's Securities for its proportionate number of shares of the underlying
Securities. In either instance, the transaction should result in a non-taxable
event for the Unitholder to the extent Securities are received. However, there
is no specific authority addressing the income tax consequences of an in-kind
distribution from a grantor trust.
Entities that generally qualify for an exemption from Federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on "unrelated business taxable income." Unrelated business taxable income
is income from a trade or business regularly carried on by the tax-exempt
entity that is unrelated to the entity's exempt purpose. Unrelated business
taxable income generally does not include dividend or interest income or gain
from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from the Trust and gain from the sale of Units in the Trust or
the Trust's sale of Securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Unit
itself is debt-financed or constitutes dealer property in the hands of the tax-
exempt entity.
Prospective tax-exempt investors are urged to consult their own tax advisors
concerning the Federal, state, local and any other tax consequences of the
purchase, ownership and disposition of Units prior to investing in the trust.
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 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.
SEC WEBSITE. The Securities and Exchange Commission ("SEC") maintains a
website that contains reports, proxy and information statements and other
information regarding the Trust which is filed electronically with the SEC. The
SEC's Internet address is http:www.sec.gov. Offering materials for the sale of
these Units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these Units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.
B-28
<PAGE>
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee or the Sponsor. The Trust is
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
Statement of Financial Condition........................................... A-6
Portfolio.................................................................. A-7
Report of Independent Accountants.......................................... A-9
PART B
The Trust.................................................................. B-1
Risk Considerations........................................................ B-5
Public Offering............................................................ B-9
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-28
</TABLE>
Parts A and B of this Prospectus do not contain all of the information set
forth in the registration statement and exhibits relating thereto, filed with
the Securities and Exchange Commission, Washington, D.C., under the Securities
Act of 1933, and the Investment Company Act of 1940, and to which reference is
hereby made.
EST Signature Series
EQUITY SECURITIES TRUST
SERIES 21, SIGNATURE SERIES
GABELLI ENTERTAINMENT & MEDIA TRUST II
(A UNIT INVESTMENT TRUST)
PROSPECTUS
DATED: JANUARY 26, 1998
SPONSOR:
REICH & TANG DISTRIBUTORS, INC.
600 Fifth Avenue
New York, New York 10020
212-830-5400
PORTFOLIO CONSULTANT:
GABELLI FUNDS, INC.
One Corporate Center
Rye, New York 10580-1430
TRUSTEE:
THE CHASE MANHATTAN BANK
4 New York Plaza
New York, New York 10004
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors, Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of Equity Securities
Trust, Series 12, 1997 Triple Strategy Trust II).
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
PricewaterhouseCoopers LLP
Portfolio Consultant
The following exhibits:
<TABLE>
<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.
</TABLE>
- --------
* Filed herewith.
II-1
<PAGE>
<TABLE>
<C> <S>
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>
II-2
<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
The Registrant hereby identifies Equity Securities Trust, Series 6, Signature
Series, Gabelli Entertainment and Media Trust for the purposes of the
representations required by Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as to the
securities of which this registration statement is being filed do not
differ materially in type or quality from those deposited in such
previous series;
2) That, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information
for, the Series with respect to the securities of which this
registration statement is being filed, this registration statement does
not contain disclosures that differ in any material respect from those
contained in the registration statements for such previous Series as to
which the effective date was determined by the commission or the staff;
and
3) That it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Equity Securities Trust, Series 21, Signature Series, Gabelli Entertainment &
Media Trust II, 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 26th day of January, 1999.
EQUITY SECURITIES TRUST, SERIES 21,
GABELLI ENTERTAINMENT & MEDIA TRUST II
(Registrant)
REICH & TANG DISTRIBUTORS, INC.
(Depositor)
/s/ Peter J. DeMarco
By ___________________________________________
Peter J. DeMarco
(Authorized Signator)
II-3
<PAGE>
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
G. Neal Ryland Director January 26, 1999
Steven W. Duff Director
/s/ Peter J. DeMarco
Peter J. DeMarco Executive Vice President By _____________________
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-4
<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 January 26, 1999, relating to the Statement of Financial Condition,
including the Portfolio, of Equity Securities Trust, Series 21, Signature
Series, Gabelli Entertainment & Media Trust II which appears in such
Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
160 Federal Street
Boston, MA 02110
January 26, 1999
II-5
<PAGE>
CONSENT OF PORTFOLIO CONSULTANT
THE SPONSOR, TRUSTEE AND UNITHOLDERS
EQUITY SECURITIES TRUST, SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
We hereby consent to the use of the name "Gabelli Funds, Inc." included
herein and to the reference to our firm in the Prospectus.
GABELLI FUNDS, INC.
New York, New York
January 26, 1999
II-6
<PAGE>
EXHIBIT 1.1
EQUITY SECURITIES TRUST,
SERIES 21, SIGNATURE SERIES,
GABELLI ENTERTAINMENT & MEDIA TRUST II
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated January 26, 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".
(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
<PAGE>
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) 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
-2-
<PAGE>
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
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.
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
-3-
<PAGE>
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."
(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
-4-
<PAGE>
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."
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 January 26, 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 15,666.
(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
1/15,666 of the date hereof.
(d) The term Record Date shall mean the fifteenth day of June and December
commencing on June 15, 1999.
(e) The term Distribution Date shall mean the last business day of June and
December commencing on June 30, 1999.
-5-
<PAGE>
(f) The First Settlement Date shall mean January 29, 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 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:
<TABLE>
<CAPTION>
rate
per
100 number of Units
units outstanding
<S> <C>
$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
</TABLE>
(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 February 1, 2002 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]
-6-
<PAGE>
REICH & TANG DISTRIBUTORS, INC.
Depositor
/s/ Peter J. DeMarco
By: ______________________________________
Executive Vice President
STATE OF NEW YORK)
: ss:
COUNTY OF NEW YORK)
On this 26th day of January, 1999, before me personally appeared Peter J.
DeMarco, to me known, who being by me duly sworn, said that he is the 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
Theresa 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
/s/ Rosalia A. Raviele
By: ______________________________________
Vice President
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
On this 26th day of January, 1999, before me personally appeared Rosalia A.
Raviele, 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 3.1
Battle Fowler LLP
PARK AVENUE TOWER
75 EAST 55TH STREET
NEW YORK, N.Y. 10022-3205
(212) 856-7000
(212)856-7816
January 26, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Re: Equity Securities Trust, Series 21, Signature Series,
Gabelli Entertainment & Media Trust II
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 21, Signature Series, Gabelli Entertainment &
Media Trust II (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. 333-70093) 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 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
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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.
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
