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As filed with the Securities and Exchange Commission on October 8, 1999
REGISTRATION NO. 333-73277
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
REGISTRATION STATEMENT
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: HBI EQUITY TRUST, SERIES 6
B. Name of Depositor: HOWE BARNES INVESTMENTS, INC.
C. Complete address of Depositor's principal executive offices:
Howe Barnes Investments, Inc.
135 South LaSalle Street
Suite 1500
Chicago, Illinois 60603
D. Name and complete address of agents for service:
HOWE BARNES INVESTMENTS, INC. CHAPMAN AND CUTLER
135 South LaSalle Street Attention: Matthew C. Boba
Suite 1500 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603
E. Title of securities being registered: Units of fractional undivided
interests
F. Approximate date of proposed public offering:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT
Check box if it is proposed that this filing will become effective on
_________, 1999 2:00 p.m. pursuant to Rule 487
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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The information in this prospectus is not complete and may be changed. No one
may sell units of the trust until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell units and is not soliciting an offer to buy units in any state
where the offer or sale is not permitted.
Preliminary Prospectus Dated October 8, 1999
Subject to Completion
HBI
EQUITY TRUST, SERIES 6
A Unit Investment Trust
A Portfolio of Midwest Bank and Thrift Stocks
- --------------------------------------------------------------------------------
The investment objective of this trust is to increase the value of your
investment over time. The trust primarily invests in common stocks of banks and
thrifts incorporated or headquartered in the midwestern United States.
- --------------------------------------------------------------------------------
Howe Barnes Investments, Inc.
Read and retain this prospectus for future reference. October , 1999
The Securities and Exchange Commission has not
approved or disapproved of the units of this trust
or passed on the adequacy or accuracy of this
prospectus. Any contrary representation is a
criminal offense.
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ESSENTIAL INFORMATION REGARDING THE TRUST
As of October , 1999
Sponsor: Howe Barnes Investments, Inc.
Trustee: The Bank of New York
Initial Date of Deposit................................... October , 1999
<TABLE>
<S> <C>
Aggregate Value of Stocks in Trust (2)...............................
Number of Units......................................................
Fractional Undivided Interest in the Trust Represented by Each Unit..
Calculation of Public Offering Price per Unit (3)
Aggregate Value of Stocks in Trust (2)..............................
Divided by Units............................................ $ 14.475
Plus Sales Charge of 3.500% of Public Offering Price (3.627% of net
amount invested)................................................... $ .525
Public Offering Price per Unit...................................... $ 15.000
Redemption Price per Unit (3)........................................
Excess of Public Offering Price per Unit over Redemption Price per
Unit................................................................
</TABLE>
Evaluation Time.......................................... 3:00 p.m. Chicago time
Income and Capital Account Distribution Dates...... , 1999 and quarterly
thereafter
Record Dates............................ , 1999 and quarterly thereafter
Mandatory Termination Date................................ , 2002
Discretionary Liquidation Amount....... 40% of the aggregate market value of the
stocks
Trustee's Annual Fee.................................................... $
Estimated Annual Sponsor's Supervisory Fee....................... $ per unit
Estimated Annual Miscellaneous Expenses.......................... $ per unit
- --------
(1) Represents value of the stocks in the portfolio based on the closing prices
at the offer side of the market on October , 1999. After the initial
offering, net asset value of the trust is calculated based on the closing
prices at the bid side of the market of the stocks. The aggregate value of
the stocks based on the closing bid prices on October , 1999 is
$ .
(2) The initial public offering price per unit on the initial date of deposit
is based on the pro rata share of the aggregate value of the stocks in the
trust, valued at the offer side of the market, plus the applicable sales
charge. Thereafter, the public offering price during the initial public
offering period will be based upon the net asset value of the trust based
on valuation at the offer side of the market as described in "Valuation of
Units" plus the applicable sales charge. The redemption price per unit will
be calculated based on the net asset value of the stocks based on the bid
side of the market as described in "Redemption of Units."
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HBI EQUITY TRUST, SERIES 6
SCHEDULE OF INVESTMENTS
At the opening of business on October , 1999.
<TABLE>
<CAPTION>
Cost of
Name of Stocks to
Ticker Issuers Number Trust
Symbol (Location) of Shares (1)(2)
------ ---------- --------- ----------
<C> <S> <C> <C>
$
----------
TOTAL
INVESTMENTS... $
==========
</TABLE>
- ---------------------
(1) Represents the aggregate value of the stocks based on the closing prices on
October , 1999, at the offer side of the market.
(2) The aggregate cost of the stocks to the Sponsor, including brokerage
commissions, was $ and the profit to the Sponsor at the opening of
business on the initial date of deposit was $ .
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REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSOR AND TRUSTEE
HBI EQUITY TRUST, SERIES 6
We have audited the accompanying statement of net assets, including the
schedule of investments, of HBI Equity Trust, Series 6, as of the opening of
business on October , 1999. This statement of net assets is the
responsibility of the trust's sponsor. Our responsibility is to express an
opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of net assets is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of net assets. Our
procedures included confirmation of the letter of credit held by the trustee
and deposited in the trust on October , 1999. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall presentation of the statement of net
assets. We believe that our audit of the statement of net assets provides a
reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of HBI Equity Trust,
Series 6 at the opening of business on October , 1999 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
October , 1999
STATEMENT OF NET ASSETS
At the opening of business on October , 1999.
NET ASSETS
<TABLE>
<S> <C>
Investments (1)(2)............................................. $
==========
Units outstanding..............................................
==========
ANALYSIS OF NET ASSETS
Cost to investors (3).......................................... $
Less sales charge (3)..........................................
----------
Net proceeds to the trust, equal to net assets................. $
==========
</TABLE>
- ---------------------
(1) Aggregate cost to the trust of the stocks listed in the schedule of
investments is based on the closing prices at the offer side of the market
on October , 1999, as determined by the Trustee in its capacity as
evaluator.
(2) Investments consist of $ aggregate value of stocks represented by
sponsor's contracts to purchase the stocks for which an irrevocable letter
of credit from Harris Trust and Savings Bank totaling $ has been
deposited with the trustee.
(3) The aggregate cost to investors includes a sales charge computed at the
rate of 3.500% of the initial public offering price (equivalent to 3.627%
of the net amount invested) and assumes no reduction in sales charges for
purchases by employees and affiliates of the sponsor and certain of their
relatives or for quantity purchases.
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THE TRUST
HBI Equity Trust, Series 6. The trust seeks to increase the value of your
investment over its life. The trust invests primarily in common stocks of banks
and thrifts incorporated or headquartered in the midwestern United States. Howe
Barnes Investments, Inc., as Sponsor, selected the stocks for the portfolio.
The Sponsor believes that the portfolio has the potential to outperform broad-
based stock indices and bank and thrift stocks generally over the trust's life.
The Sponsor considered a variety of factors in selecting the stocks, including:
. financial criteria of the company (or its banking or thrift subsidiary);
. regulatory capital levels;
. net interest margins;
. return on average assets;
. return on average equity;
. adequacy of loan loss reserve;
. level of non-performing and non-accrual loans; and
. loan charge-off history.
While many of the stocks pay dividends, the Sponsor did not specifically
consider dividend payments in selecting the stocks.
The Sponsor believes that changes in banking laws and continuing bank and
thrift consolidation may create attractive investment opportunities among
midwestern bank and thrift stocks. The Sponsor feels that the stocks in the
portfolio have the potential to increase in value over time primarily due to
strong or improving fundamental characteristics such as:
. management strength and depth;
. strategic banking locations in stable or growing market areas;
. high asset quality; and
. potential earnings growth.
As with any investment, no one can guarantee that the trust will achieve its
objective. The value of your units may fall below your original purchase price.
You should read the "Risk Factors" section before you invest.
General. HBI Equity Trust, Series 6, is one of a series of similar but
separate unit investment trusts created under New York law under a trust
agreement, between the Sponsor and the Trustee, The Bank of New York. Reference
is made to the trust agreement and any statements contained herein are
qualified in their entirety by the provisions of the trust agreement.
The portfolio of the trust primarily consists of common stock of issuers
selected by the Sponsor, including, in the case of securities not delivered on
the initial date of deposit, confirmations of contracts to purchase such
securities, and any additional stocks acquired and held in the trust.
Portfolios of additional series may include shares of preferred stock or other
equity securities convertible into common stock.
On the initial date of deposit, the Sponsor deposited the stocks with the
Trustee together with cash or an irrevocable letter or letters of credit of a
commercial bank or banks in an amount at least equal to the aggregate purchase
price of any of the stocks represented by confirmation of contracts to purchase
such securities. The value of the stocks on the initial date of deposit was
determined on the basis of the closing prices at the offer side of the market
on the
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business day prior to the initial date of deposit. In exchange for the deposit
of the stocks, including any contracts to purchase stocks, the Trustee
delivered to the Sponsor a receipt for units representing the entire ownership
of the trust.
On the initial date of deposit, each unit represented that fractional
undivided interest in each of the stocks as set forth under "Essential
Information Regarding the Trust." If any units are redeemed, the aggregate
value of stocks in the trust will be reduced, and the fractional undivided
interest represented by each remaining unit will be increased proportionately.
Units will remain outstanding until redeemed upon tender to the Trustee by any
unitholder or until the termination of the trust.
In the event a contract to purchase a stock which is deposited on the initial
date of deposit fails, funds attributable to such failed contract may be
reinvested in such other substantially similar stock or stocks, if any, which
have been identified as substitute stocks by the Sponsor as of the initial date
of deposit or, if not so reinvested within 40 days after the initial date of
deposit, distributed to unitholders of record on the last day of the month
during which the end of this purchase period occurred. The distribution will be
made within 20 days following such record date and, in the event of such a
distribution, the Sponsor will refund to each unitholder the portion of the
sales charge attributable to such failed contract.
Additional units of the trust may be issued at any time by depositing in the
trust additional stocks or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional units are issued by the
trust as a result of the deposit of additional stocks by the Sponsor, the
aggregate value of the stocks in the trust will be increased and the fractional
undivided interest in the trust represented by each unit will be decreased. The
Sponsor may continue to make additional deposits of stocks into the trust
following the initial date of deposit, provided that such additional deposits
will be in amounts which will maintain, as nearly as practicable, the original
proportionate relationship and not the actual proportionate relationship on the
subsequent date of deposit, since the actual proportionate relationship may be
different than the original proportionate relationship. Any difference may be
due to the sale, redemption or liquidation of any of the stocks deposited in
the trust on any date of deposit.
Each unit initially offered represents an undivided interest in the trust. To
the extent any units are redeemed by the Trustee or additional units are issued
as a result of additional stocks being deposited by the Sponsor, the fractional
undivided interest in the trust represented by each unredeemed unit will
increase or decrease accordingly, although the actual interest in the trust
represented by such fraction will remain unchanged. You should note that the
stocks were selected for inclusion in the trust as of the initial date of
deposit. The trust may continue to purchase or hold stocks originally selected
through this process even though the evaluation of the attractiveness of the
stocks may have changed and, if the evaluation were performed again at that
time, the stocks would not be selected for the trust.
Because the trust is organized as a unit investment trust, rather than as a
management investment company, the Trustee and the Sponsor do not have
authority to manage the trust's assets in an attempt to take advantage of
various market conditions to improve the trust's net asset value, but rather
may dispose of stocks only under limited circumstances. The original
proportionate relationship among the stocks is only subject to adjustment (1)
to reflect the occurrence of a stock split, stock dividend or a similar event
which affects the capital structure of the issuer of a stock but which does not
affect the trust's percentage ownership of the common stock equity of such
issuer at the time of such event, (2) to reflect a sale of a stock, (3) to
reflect the acquisition (and subsequent disposition upon maturity) of treasury
obligations or (4) to reflect a merger or reorganization by an issuer of a
stock. See "Administration of the Trust--Portfolio Supervision" and
"Administration of the Trust--Reinvestment."
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The stocks are common stocks which have been selected by the Sponsor as
having, as of the initial date of deposit, an above-average capital
appreciation potential over the life of the trust. Stocks contained in the
trust will not be sold to take advantage of market fluctuations nor will they
be sold solely because the Sponsor no longer considers them to have
appreciation potential. Proceeds from any sale of stocks and any dividends and
distributions received will be held by the Trustee in non-interest bearing
accounts until used to pay expenses or distributed to unitholders on the next
following distribution date. See "Administration of the Trust--Reinvestment."
To the extent that funds are held in such non-interest bearing accounts, such
funds will benefit the Trustee.
RISK FACTORS
Price Volatility. The trust invests in common stocks. The value of units will
fluctuate with the value of these stocks and may be more or less than the price
you originally paid for your units. The market value of common stocks sometimes
moves up or down rapidly and unpredictably. Because the trust is unmanaged, the
Trustee will not sell stocks in response to market fluctuations as is common in
managed investments. As with any investment, we cannot guarantee that the
performance of the trust will be positive over any period of time.
Dividends. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right
to receive dividends only after the issuer has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board
of directors and the amount of any dividend may vary over time.
Banks and Thrifts. The trust primarily invests in banks, thrifts and their
holding companies. Any negative impact on the this industry will have a greater
impact on the value of units than on a portfolio diversified over several
industries. You should understand the risks of these industries before you
invest. These issuers face risks related to general economic conditions,
volatile interest rates, economic recession, competition from other financial
services companies, government regulation and portfolio concentrations in
geographic markets and in commercial and residential real estate loans. Changes
in interest rates can significantly impact the operating results of financial
institutions. Increased interest rates may increase a bank's interest income
but may also increase the interest the bank pays on depository accounts and may
lead to a decreased demand for loans. Lower interest rates may lead to
increased prepayments on loans. If a loan is paid off early, the lending bank
is subject to reinvestment risk to the extent that it is unable to reinvest the
prepayments at rates which are comparable to the rates on the prepaid loans.
Economic conditions in real estate markets can also significantly impact banks
because they often invest substantial assets in loans secured by real estate.
Federal and state laws regulate financial institutions extensively. Any
increase or change in regulations could adversely affect banks and thrifts. In
recent years, however, federal legislation has reduced certain barriers to
interstate banking and branching by financial institutions. In addition, the
Federal Reserve Board has liberalized regulations that limit the ability of
nonbank subsidiaries of banks to engage in securities-related businesses. This
and any future liberalization of banking regulations could result in increased
competition which could negatively impact some companies. Banks also face
significant competition from other financial companies that offer a broader
array of products such as securities and brokerage companies, credit unions,
mortgage banking companies and insurance companies.
Year 2000 Readiness Disclosure. If computer systems used by the Sponsor,
Trustee or other service providers to the trust do not properly process date-
related information after December 31, 1999, the resulting difficulties could
adversely impact the trust. This is commonly known as
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the "Year 2000 Problem." The Sponsor and Trustee are taking steps to address
this problem and to obtain reasonable assurances that other service providers
to the trust are taking comparable steps. We cannot guarantee that these steps
will be sufficient to avoid any adverse impact on the trust. This problem may
impact corporations to varying degrees based on factors such as industry sector
and degree of technological sophistication. We cannot predict what impact, if
any, this problem will have on the issuers of the stocks.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental effect on the markets for
the stocks. Improperly functioning trading systems may result in settlement
problems and liquidity issuers. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual
issuers. These costs could be substantial. Issuers may report these costs
inconsistently in U.S. and foreign financial markets. All of these issues could
adversely affect the stocks and the trust.
TAX CONSIDERATIONS
The following is a general discussion of material 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" of
property held for investment within the meaning of section 1221 of the Internal
Revenue Code of 1986, as amended. Unitholders should consult their tax advisers
in determining the federal, state, local and any other tax consequences of the
purchase, ownership and disposition of units in the trust. For purposes of the
following discussion and opinions, it is assumed that each stock is equity for
federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The trust is not an association taxable as a corporation for federal
income tax purposes; each unitholder will be treated as the owner of a pro
rata portion of each of the assets of the trust under the Code; and the
income of the trust will be treated as income of the unitholders thereof
under the Code. Each unitholder will be considered to have received his pro
rata share of income derived from each stock when such income is considered
to be received by the trust.
2. Each unitholder will be considered to have received all of the
dividends paid on his pro rata portion of each stock when such dividends
are received by the trust. Unitholders will be taxed in this manner
regardless of whether distributions from the trust are actually received by
the unitholder.
3. Each unitholder will have a taxable event when the trust disposes of a
stock whether by sale, taxable exchange, liquidation, redemption or
otherwise or upon the sale of redemption of units by such unitholder unless
the unitholder receives an "in kind" distribution as described below. The
price a unitholder pays for his units, generally including sales charges,
is allocated among his pro rata portion of each of the stocks held by the
trust in order to determine his initial tax basis for his pro rata portion
of each of the stocks held by the trust. The allocation is in proportion to
the fair market values thereof on the valuation date closest to the date
the unitholder purchases his units. Unitholders should consult their own
tax advisers with regard to calculation of basis. For federal income tax
purposes, a unitholder's pro rata portion of dividends, as defined by
section 316 of the Code, paid by a corporation with respect to a stock held
by the trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A
unitholder's pro rata portion of dividends paid on such stock which exceeds
such current and accumulated earnings and profits will first reduce a
unitholder's tax basis in such stock, and, to the extent that such
dividends also exceed a unitholder's tax basis in such stock,
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shall generally be treated as capital gain. In general, the holding period
for such capital gain will be determined by the period of time a unitholder
has held his units.
4. A unitholder's portion of gain, if any, upon the sale or redemption of
units or the disposition of any of the stocks held by the trust will
generally be considered a capital gain. A unitholder's portion of loss, if
any, upon the sale or redemption of units or the disposition of any of the
stocks held by the trust will generally be considered a capital loss. The
preceding provisions do not apply in the case of a dealer or a financial
institution. Unitholders should consult their tax advisers regarding the
recognition of such capital gains and losses for federal income tax
purposes.
Dividends Received Deduction. A corporation that owns units will generally be
entitled to a 70% dividends received deduction with respect to such
unitholder's pro rata portion of dividends received by the trust, to the extent
the dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations, in the same manner as if such
corporation directly owned the stocks paying such dividends. Provided, however,
that corporate unitholders, such as "S" corporations are not eligible for the
deduction because of their special characteristics and other than for purposes
of special taxes such as the accumulated earnings tax and the personal holding
corporation 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 unit, must
generally be held at least 46 days as determined under section 246(c) of the
Code. Final regulations have been issued which address special rules that must
be considered in determining whether the 46-day holding period requirement is
met. 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.
Various legislative proposals that would affect the dividends received
deduction have been introduced. You should consult your tax advisers with
respect to the limitations on and possible modifications to the dividends
received deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
unitholder's pro rata share of each expense paid by the trust is deductible by
the unitholder to the same extent as though the expense had been paid directly
by such unitholder. It should be noted that as a result of the Tax Reform Act
of 1986, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses will be
deductible by an individual only to the extent they exceed 2% of such
individual's adjusted gross income. You may be required to treat some or all of
the expenses of the trust as miscellaneous itemized deductions subject to this
limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Stocks or Disposition
of Units. As discussed above, you may recognize taxable gain (or loss) when any
of the stocks are disposed of by the trust or if the unitholder disposes of a
unit. The Internal Revenue Service Restructuring and Reform Act of 1998
provides that for taxpayers other than corporations, net capital gain realized
from property is subject to a maximum marginal stated tax rate of 20% or 10% in
the case of certain taxpayers in the lowest tax bracket. Net capital gain is
defined as net long-term capital gain over net short-term capital loss for the
taxable year. Capital gain or loss is long-term if the holding period for the
asset is more than one year, and is short-term if the holding period for the
asset is one year or less. The date on which a unit is acquired is excluded for
purposes for determining the holding period of the unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for
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transactions entered into after April 30, 1993. You should consult with your
tax advisers regarding the potential effect of this provision on your
investment in units.
If you dispose of a unit, you deemed thereby to have disposed of your entire
pro rata interest in all assets of the trust including his pro rata portion of
all the stocks represented by the unit.
The Taxpayer Relief Act of 1997 includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and opportunities for
gain as constructive sales for purposes of recognition of gain, but not loss,
and for purposes of determining the holding period. Examples of these
transactions include short sales, offsetting notional principal contracts,
futures or forward contracts and similar transactions. You should consult your
tax adviser with regard to any such constructive sale rules.
"In Kind" Distributions. A unitholder may request an "in kind" distribution
upon the termination of the trust. In addition, with respect to redemption
requests during the term of the trust of $100,000 or more, a unitholder may be
required to take an "in kind" distribution if the Sponsor, in its sole
discretion, directs the Trustee to redeem units "in kind." Treasury obligations
held by the trust will not be distributed to a unitholder as part of an "in
kind" distribution. As previously discussed, prior to the redemption of units
or the termination of the trust, a unitholder is considered to own a pro rata
portion of each of the trust assets for federal income tax purposes. The
receipt of an "in kind" distribution will result in a unitholder receiving an
undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an "in kind" distribution
will depend on whether or not a unitholder receives cash in addition to stock.
A "stock" for this purposes is a particular class of stock issued by a
particular corporation. A unitholder will not recognize gain or loss if a
unitholder only receives stock in exchange for his or her pro rata portion in
the stock held by the trust. However, if a unitholder also receives cash in
exchange for a fractional share of a stock held by the trust, such unitholder
will generally recognize gain or loss based upon the difference between the
amount of cash received by the unitholder and his tax basis in such fractional
share of a stock held by the trust.
Because the trust will own several stocks, a unitholder who receives an "in
kind" distribution will have to analyze the tax consequences with respect to
each stock owned by the trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss)
recognized under the rules described above by such unitholder with respect to
each stock owned by the trust. If you request or receive "in kind"
distributions you are advised to consult your tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a unitholder's tax
basis in his units will generally equal the price paid by such unitholder for
his units. The cost of the units is allocated among the stocks held in the
trust in accordance with the proportion of the fair market values of such
stocks on the valuation date nearest to the date the units are purchased in
order to determine such unitholder's tax basis for his pro rata portion of each
stock.
A unitholder's tax basis in his units and his pro rata portion of a stock
held by the trust will be reduced to the extent dividends paid with respect to
such stock are received by the trust which are not taxable as ordinary income
as described above.
General. You will be requested to provide your taxpayer identification number
to the Trustee and to certify that you have not been notified that payments to
you are subject to back-up withholding. If the proper taxpayer identification
number and appropriate certification are not provided when requested,
distributions by the trust to you, including amounts received upon the
redemption of units, will be subject to back-up withholding. Distributions by
the trust will
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generally be subject to United States income taxation and withholding in the
case of units held by non-resident alien individuals, foreign corporations or
other non-United States persons. Such persons should consult their tax
advisers.
You will be notified annually of the amounts of dividend income includable in
your gross income and the amount of trust expenses which may be claimed as
itemized deductions.
The foregoing discussion relates only to the tax treatment of U.S.
unitholders with regard to federal income tax. Unitholders may be subject to
state taxation and should consult their own tax advisors in this regard. As
used in this prospectus, the term "U.S. unitholder" means an owner of a unit in
the trust that (a) is (1) for United States federal income tax purposes a
citizen or resident of the United States, (2) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (3) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. unitholder in paragraph (a) but whose
income from a unit is effectively connected with such unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the units will be taxable.
PUBLIC OFFERING OF UNITS
Public Offering Price. The initial public offering price per unit on the
initial date of deposit is based on the pro rata share of the aggregate value
of the stocks in the trust based on the closing prices at the offer side of the
market on the business day prior to the initial date of deposit, plus the sales
charge of 3.500% (3.627% of the net amount invested). Thereafter, during the
initial public offering period, the public offering price per unit is the net
asset value per unit, which is based on the aggregate market value of the
stocks valued at the closing prices at the offer side of the market, plus the
3.500% sales charge. See "Valuation of Units." During the secondary market the
public offering price per unit is the net asset value per unit, which is based
on the aggregate market value of the stocks valued at the closing prices at the
bid side of the market, plus the 3.500% sales charge.
The Sponsor intends to permit a reduced sales charge with respect to units
purchased by its employees and affiliates of the Sponsor and certain of their
relatives who may purchase units of the trust at a reduced sales charge of
0.515% (0.518% of the net amount invested). In addition, the Sponsor will
permit a reduced sales charge of 2.500% of the public offering price (2.591% of
the net amount invested) with respect to units purchased by any person in the
amount of $500,000 or more.
Distribution of Units. The minimum purchase is 100 units, or approximately
$1,500. Only whole units may be purchased.
The Sponsor will be the sole underwriter of units. Sales may, however, be
made to dealers who are members of the National Association of Securities
Dealers, Inc. at prices which include a concession of 3.000% of the public
offering price per unit at the highest sales charge, subject to change from
time to time. The difference between the sales charge and the dealer concession
will be retained by the Sponsor.
The Sponsor reserves the right to reject, in whole or in part, any order for
the purchase of units. The Sponsor intends to qualify the units for sale in the
State of Illinois as well as in selected other states. Units will be sold only
to individuals and other investors resident in such states and to institutional
and other investors in other states to the extent there are available
exemptions from applicable state securities registration requirements.
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The net asset value per unit at the time of sale or transfer or upon
redemption may be less than the price at which the unit was purchased.
Profits to the Sponsor. In addition to the applicable sales charges, the
Sponsor realizes a profit or sustains a loss in the amount of any difference
between the cost of the stocks to the Sponsor and the price at which it
deposits the stocks in the trust in exchange for units. For purposes of any
deposit, the stocks will be valued at the closing prices at the offer side of
the market on the business day prior to the related date of deposit. The spread
between the cost of the stocks to the Sponsor and the price at which the stocks
were deposited in the trust on the initial date of deposit is set forth in
footnote (2) to the "Schedule of Investments." The cost of stocks to the
Sponsor includes the amount paid by the Sponsor, if any, for brokerage
commissions. These amounts are not an expense of the trust.
Cash, if any, received from unitholders prior to the settlement date for the
purchase of units or prior to the payment for stocks upon their delivery may be
used in the Sponsor's business subject to the limitations of rule 15c3-3 under
the Securities Exchange Act of 1934, as amended, and may be of benefit to the
Sponsor.
In selling units in the initial or secondary public offering, the Sponsor may
realize profits or sustain losses to the extent there are any fluctuations in
the public offering price of the units after a date of deposit before
completion of the sale of the units in the initial public offering.
Maintenance of a Secondary Market. Although the Sponsor is not obligated to
maintain a secondary market for the units, the Sponsor currently intends to do
so. The secondary market may be discontinued at any time. If a secondary market
is not maintained, you may dispose of your units through redemption. With
respect to redemption requests of $100,000 or more, the Sponsor may, in its
sole discretion, direct the Trustee to redeem units "in kind" by distributing
stocks to the redeeming unitholder. See "Redemption of Units." The public
offering price per unit in the secondary market will be the net asset value per
unit, which will be based on the aggregate market value of the stocks valued at
the closing prices at the bid side of the market, plus the 3.500% sales charge.
See "Valuation of Units."
REDEMPTION OF UNITS
Units held in uncertificated form may be redeemed by delivering a written
request for redemption to the Trustee at its office. Units held in certificated
form may be tendered to the Trustee at its office which is currently located at
the address indicated on the back cover, must be properly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee, and must be executed by the unitholder or his authorized attorney. In
either case the unitholder must pay any transfer or similar tax which must be
paid to effect redemption and, unitholders of uncertificated units must sign
such written request and unitholders of certificated units must sign such
certificate transfer instrument, exactly as their name appears on the records
of the Trustee and on any certificate representing the units to be redeemed.
Such signature(s) must be guaranteed by a participant in the Securities
Transfer Agents Medallion Program or such other signature guarantee program
accepted by the Trustee. A unitholder may tender his units for redemption at
any time after the settlement date or purchase. The unitholder upon redemption
will receive the net asset value per unit determined as of the close of
business on the day of tender. There is no sales charge incurred when a
unitholder tenders his units to the Trustee for redemption unless the
redemption is an amount less than 7,500 units in which case a fee of $150 will
be charged. The amount received by a unitholder upon redemption may be more or
less than the amount paid by the unitholder depending on the value of the
stocks in the portfolio at the time of redemption. The redemption price per
unit on the initial date of deposit will be less than the initial public
offering price per unit both because the
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sales charge in included in the offering price and because the redemption price
is based on valuations of the stocks at the bid side of the market rather than
the closing prices at the offer side of the market. See "Essential Information
Regarding the Trust." Prior to redeeming such units from the trust, the Trustee
shall offer such units for sale to the Sponsor at the net asset value per unit.
Subject to payment of applicable tax or governmental charges, if any, the net
asset value of units tendered for redemption will be paid to the redeeming
unitholder no later than the seventh calendar day following the day of tender.
See "Valuation of Units."
With respect to cash redemptions, amounts representing income received will
be withdrawn from the income account, and, to the extent the income account is
insufficient and for remaining amounts, from the capital account. The Trustee
is empowered to sell stocks to meet redemptions. Any Treasury obligations held
by the trust must be held to maturity and cannot be disposed of by the Trustee.
The Trustee will sell stocks in such manner as is directed by the Sponsor. With
respect to redemption requests of $100,000 or more, the Sponsor may, in its
sole discretion, direct the Trustee to redeem units "in kind" by distributing
stocks to the redeeming unitholder. When stocks are distributed, the unitholder
will receive that number of whole shares of each stock representing the
aggregate of his interest in each of the stocks, plus cash in lieu of
fractional shares. Stocks will be valued for this purpose as set forth under
"Valuation of Units." If you receive a redemption "in kind" you may incur
brokerage or other transaction costs in converting the stocks distributed into
cash. For information on the tax effects of receiving a redemption "in kind,"
see "Tax Considerations."
To the extent that shares of stocks are distributed pursuant to redemption
"in kind" or sold, the size of the trust will, and the diversity of the trust
may, be reduced. Sales may be required at a time when stocks would not
otherwise be sold and may result in lower proceeds than might otherwise be
realized. In addition, because of the minimum amounts in which stocks are
required to be sold, the proceeds of sale may exceed the amount required at the
time to redeem units; these excess proceeds will be distributed to the
remaining unitholders on the next distribution date.
The Trustee may, in its discretion, and will, when so directed by the
Sponsor, suspend the right of redemption, or postpone the date of payment for
units tendered for redemption to a date more than seven calendar days following
the day of tender:
(1) for any period during which the New York Stock Exchange is closed
other than for weekend and holiday closings;
(2) for any period during which the Securities and Exchange Commission
determines that trading on the New York Stock Exchange is restricted;
(3) for any period during which an emergency exists as a result of which
disposal or evaluation of the stocks is not reasonably practicable; or
(4) for such other period as the Securities and Exchange Commission may
by order permit for the protection of unitholders.
The Trustee is not liable to any person in any way for any loss or damages
which may result from any such suspension or postponement, or any failure to
suspend or postpone, when done in the Trustee's discretion.
On the business day prior to the initial date of deposit, the initial public
offering price per unit (which figure includes the sales charge) exceeds the
net asset value per unit. See "Essential Information Regarding the Trust." The
initial public offering price per unit is determined by dividing the aggregate
value of the stocks based on the closing prices at the offer side of the market
on the business day prior to the initial date of deposit, by the number of
units being sold, plus the applicable sales charge. The prices of the stocks
will generally vary. For these
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reasons and others, including the fact that the public offering price includes
the sales charge, the amount realized by a unitholder upon redemption of units
may be less than the price paid by the unitholder for such units.
VALUATION OF UNITS
The Trustee will calculate the trust's net asset value at the evaluation time
set forth under "Essential Information Regarding the Trust" (1) on each trust
business day until completion of the initial public offering, (2) on the trust
business day on which any unit is tendered for redemption, (3) on any other day
desired by the Sponsor or the Trustee and (4) upon termination, by adding:
(a) The aggregate value of stocks in the trust including the value of
stocks subject to purchase contracts, if any, deposited with the Trustee on
the deposit date, as determined by the Trustee in its capacity as evaluator
of the trust; and
(b) The sum of (1) cash on hand in the trust other than cash deposited to
purchase stocks or cash credited to any reserve account established under
the trust agreement and (2) dividends receivable on stocks trading ex-
dividend.
The Trustee will deduct from the resulting figure: amounts representing any
applicable taxes or governmental charges payable by the trust for the purpose
of making an addition to any reserve account established under the trust
agreement; amounts representing estimated accrued fees and expenses of the
trust, including amounts representing unpaid fees of the Trustee and the
Sponsor; and cash or stocks held to redeem tendered units and for distribution
to unitholders of record as of a trust business day prior to the evaluation
being made on the days or dates set forth above.
For the purpose of the redemption of units, the net asset value per unit is
computed by the Trustee by dividing the result of the above computation by the
total number of units outstanding on the date of such evaluation. A trust
business day is a day on which the New York Stock Exchange is open, other than
federal or New York state bank holidays.
For the purpose of the redemption of units and the secondary market public
offering price, the value of stocks shall be determined in good faith by the
Trustee acting in its capacity as evaluator of the trust in the following
manner:
(1) if the stocks are listed on one or more national securities exchanges
such evaluation shall be based on the closing sale price on that day on the
exchange which is the principal market thereof;
(2) if the stocks are listed but there is no such appropriate closing
sales price on such exchange, and for stocks that are not so listed but are
quoted on the Nasdaq National Market, at the closing bid prices on such
exchange or system;
(3) if the stocks are not listed or quoted or, if so listed or quoted and
the principal market therefor is other than on such exchange or system or
there are no such appropriate closing bid prices available, such evaluation
shall be made by the Sponsor in good faith based on the closing sales price
in the over-the-counter market; or
(4) if there is no such appropriate closing price, then (a) on the basis
of current bid prices obtained from dealers or brokers, (b) if bid prices
are not available, on the basis of current bid prices for comparable
securities, (c) by the Sponsor's appraising the value of the stocks in good
faith on the bid side of the market or (d) by any combination of the above.
The Treasury obligations, if any, are valued on the basis of bid prices. The
aggregate bid prices of the Treasury obligations are the prices obtained from
dealers or brokers (which may
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include the Sponsor) who customarily deal in Treasury obligations; or, if there
is no market for the Treasury obligations, and bid prices are not available, on
the basis of current bid prices for comparable securities; or by appraisal; or
by any combination of the above. The Sponsor may deem any of the stock or
Treasury obligation prices inappropriate as a basis for evaluation.
EXPENSES OF THE TRUST
The Sponsor will receive a fee, which is earned for portfolio supervisory
services, based upon the largest number of units outstanding during the
calendar year. The portfolio supervisory services include providing certain
bookkeeping and other administrative services to the trust, monitoring the
market prices of portfolio securities to confirm net asset value calculations
of the evaluator and handling unitholder inquiries and services. The Sponsor's
fee is that amount set forth under "Essential Information Regarding the Trust."
Such fee may exceed the actual costs of providing portfolio supervisory
services for this particular series of the trust, but at no time will the total
amount the Sponsor receives for such services rendered to all series of the
trust in any calendar year exceed the aggregate cost to it of supplying such
services in such year. The Sponsor will not profit from fees received from the
trust for portfolio supervisory services.
For its services as Trustee and evaluator, the Trustee will be paid that
amount set forth under "Essential Information Regarding the Trust." The Trustee
will also benefit to the extent that it holds funds in non-interest bearing
accounts. In addition, the regular and recurring annual expenses of the trust,
including without limitation certain mailing, printing, and other miscellaneous
expenses, are currently estimated to be that amount set forth under "Essential
Information Regarding the Trust." Actual miscellaneous expenses payable by the
trust may be more or less than this estimate.
If units are redeemed, per unit annual expenses of the trust will increase.
The Trustee's fee and the Sponsor's supervisory fee are payable monthly. Either
of such fees may be increased without approval of the unitholders by an amount
not exceeding a proportionate increase in the category entitled "All Services
Less Rent" in the Consumer Price Index published by the United States
Department of Labor.
The cost of the preparation and printing of the trust agreement and this
prospectus, the initial fees and expenses of the Trustee, advertising expenses
and expenses incurred in establishing the trust, including legal and auditing
fees, are paid by the Sponsor and not by the trust.
In addition to the above, the following charges are or may be incurred by the
trust and paid from the income account, or, to the extent funds are not
available in such account, from the capital account:
(1) fees for the Trustee for extraordinary services;
(2) reimbursable expenses of the Trustee, including legal and auditing
expenses, but not including any fees and expenses charged by any agent for
custody and safekeeping of stocks;
(3) various governmental charges;
(4) expenses and costs of any action taken by the Trustee to protect the
trust and the rights and interests of the unitholders;
(5) indemnification of the Trustee for any loss, liabilities or expenses
(including reasonable attorneys' fees) incurred by it in the administration
of the trust without gross negligence, bad faith or willful misconduct on
its part;
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(6) indemnification of the Sponsor for any loss, liability or expenses
incurred in acting in such capacity other than by reason of its own gross
negligence, bad faith or willful misconduct;
(7) brokerage commissions in connection with the sale of stocks; and
(8) expenses incurred upon termination of the trust.
The fees and expenses set forth above are payable out of the trust and when
unpaid will be secured by a lien on the trust. To the extent that dividends
paid with respect to the stocks are not sufficient to meet the expenses of the
trust, the Trustee is authorized to sell stocks to meet the expenses of the
trust.
RIGHTS OF UNITHOLDERS
Each unit represents a pro rata fractional undivided interest in each of the
stocks and other assets held in the trust.
Your ownership of units is evidenced by recordation on the books of the
Trustee. In order to avoid additional operating costs and for investor
convenience, certificates will not be issued unless a request, in writing with
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program or such other signature guarantee program accepted by the
Trustee, is delivered by the unitholder to the Sponsor. Issued certificates are
transferable by presentation and surrender to the Trustee at its office
(currently located at the address on the back cover) properly endorsed or
accompanied by a written instrument or instruments of transfer. Uncertificated
units are transferable by presentation to the Trustee of a written instrument
of transfer.
Certificates may be issued in denominations of one unit or any integral
multiple thereof as deemed appropriate by the Trustee. You may be required to
pay a reasonable fee, currently $25.00 per certificate, for each certificate
issued, reissued or transferred, and will be required to pay any governmental
charge that may be imposed in connection with each such transfer or
interchange. For new certificates to be issued to replace destroyed, mutilated,
stolen or lost certificates, you must furnish indemnity satisfactory to the
Trustee and must pay such expenses as the Trustee may incur. Mutilated
certificates must be surrendered to the Trustee for replacement.
You will have no voting rights, except in the unlikely event of resignation
or removal of the Sponsor as provided under "Termination of the Trust" and in
the event of an amendment to the trust agreement as provided under "Amendment
of the Trust Agreement." As the holder of the stocks, the Trustee will have the
right to vote all of the voting stocks in the trust and will vote such stocks
in accordance with the instructions of the Sponsor. Your distribution rights
from the income and capital accounts are set forth below under "Distributions
to Unitholders."
DISTRIBUTIONS TO UNITHOLDERS
The Trustee will make distributions from the income account, if any, on the
quarterly distribution date to unitholders of record on the preceding record
date. Distributions from the capital account will be made on each quarterly
distribution date to unitholders of record on the preceding record date. See
"Essential Information Regarding the Trust." Whenever required for regulatory
or tax purposes, the Trustee will make special distributions on special
distribution dates to unitholders of record on special record dates when and as
declared by the Trustee.
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Upon termination of the trust, each unitholder of record on such date will
receive his pro rata share of the amounts realized upon disposition of the
stocks plus any other assets of the trust, less liabilities of the trust. See
"Termination of the Trust."
ADMINISTRATION OF THE TRUST
Accounts. All dividends received on stocks, proceeds from the sale of stocks
or other moneys received by the Trustee on behalf of the trust will be held in
trust in non-interest bearing accounts except that proceeds of sale may be
reinvested in Treasury obligations until required to be disbursed. See
"Administration of the Trust--Reinvestment."
The Trustee will credit on its books to an income account dividends and
interest, if any, on stocks in the trust. All other receipts, whether a return
of principal or capital gains, are credited on its books to a capital account.
The pro rata share of the income account and the pro rata share of the capital
account represented by each unit will be computed by the Trustee as set forth
under "Valuation of Units."
The Trustee will deduct from the income account and, to the extent funds are
not sufficient therein, from the capital account, amounts necessary to pay
expenses incurred by the trust. See "Expenses of the Trust." In addition, the
Trustee may withdraw from the income account and the capital account such
amounts as may be necessary to cover redemption of units by the Trustee. See
"Redemption of Units."
The Trustee may establish a reserve account within the trust for state and
local taxes, if any, and any other governmental charges payable out of the
trust.
Reports and Records. With any distributions from the trust, the Trustee will
furnish you a statement setting forth the amount being distributed from each
account. In addition, the Trustee shall notify you within five days of
substitute stocks, if any, which are acquired for the portfolio. See "The
Trust."
The Trustee keeps records and accounts of the trust at its office, currently
located at the address on the back cover, including records of the names and
addresses of unitholders, a current list of underlying stocks in the portfolio
and a copy of the trust agreement. Records pertaining to a unitholder or to the
trust are available to that unitholder for inspection at reasonable times
during business hours.
Within a reasonable period of time after the end of each calendar year, the
Trustee will furnish each person who was a unitholder at any time during the
calendar year a report containing the following information, expressed in
reasonable detail both as a dollar amount and as a dollar amount per unit:
(1) a summary of transactions for the trust in the income and capital
accounts and any reserve account;
(2) stocks sold or purchased, if any;
(3) the net asset value per unit, based upon the last computation thereof
made during the year; and
(4) amounts distributed to unitholders during the year.
Portfolio Supervision. The portfolio of the trust is not "managed" by the
Sponsor or the Trustee; their activities described herein are governed solely
by the provisions of the trust agreement. Traditional methods of investment
management for a managed fund typically involve
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frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The trust, however, will not be managed. The
trust agreement provides that the Sponsor may direct the Trustee to dispose of
a stock in certain events such as the issuer having defaulted on the payment on
any of its outstanding obligations or the price of a stock has declined to such
an extent or other such credit factors exist so that in the opinion of the
Sponsor, the retention of such stocks would be detrimental to the trust.
Pursuant to the trust agreement and with limited exceptions, the Trustee may
sell any securities or other properties acquired in exchange for stocks such as
those acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject the
offer. However, in the event such securities or property are nonetheless
acquired by the trust, they may be accepted for deposit in the trust and either
sold by the Trustee or held in the trust pursuant to the direction of the
Sponsor. Therefore, except as stated under "The Trust" for failed securities,
as provided under "Administration of the Trust--Reinvestment" and as provided
in this paragraph, the acquisition by the trust of any securities other than
the stocks is prohibited. Proceeds from the sale of stocks or any securities or
other property received by the trust in exchange for stocks, unless held for
reinvestment as herein provided, are credited to the capital account for
distribution to unitholders, to meet redemptions or to pay charges and expenses
of the trust.
Stock may also be sold in the manner described under "The Trust." The Trustee
may dispose of stocks where necessary to pay trust expenses or to satisfy
redemption requests as directed by the Sponsor and the proceeds of such sale
may not be reinvested except as provided below.
Reinvestment. Cash received upon the sale of stocks may, if and to the extent
there is no legal impediment, be reinvested in Treasury obligations which
mature on or prior to the next scheduled distribution date. The Sponsor
anticipates that, where permitted, such proceeds will be reinvested in Treasury
obligations unless factors exist such that such reinvestment would not be in
the best interests of unitholders or would be impractical. Such factors may
include, among others, (1) short reinvestment periods which would make
reinvestment in Treasury obligations undesirable or infeasible and (2) amounts
not sufficiently large so as to make a reinvestment economical or feasible. Any
moneys held and not reinvested will be held in a non-interest bearing account
until distribution on the next distribution date to unitholders of record.
AMENDMENT OF THE TRUST AGREEMENT
The trust agreement may be amended by the Trustee and the Sponsor without the
consent of any of the unitholders to cure any ambiguity, to correct or
supplement any provision thereof which may be defective or inconsistent, or to
make such other provisions as will not materially adversely affect the interest
of the unitholders or as required by the Securities and Exchange Commission, so
long as the Trustee provides the unitholders with notice as required by the
trust agreement.
The trust agreement may be amended in any respect by the Sponsor and the
Trustee with the consent of the holders of 66 2/3% of the units then
outstanding; provided that no such amendment may (1) permit the acquisition of
any stocks other than those specified in the trust agreement or (2) reduce the
percentage of unitholders required to consent to any such amendment, without
the consent of all unitholders.
The Trustee will promptly notify unitholders of the substance of any
amendment affecting unitholders' rights or their interest in the trust.
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TERMINATION OF THE TRUST
The trust agreement provides that the trust will terminate upon the following
circumstances: (1) occurrence of the mandatory termination date (provided in
"Essential Information Regarding the Trust"); or (2) written consent to
termination by 66 2/3% of the units then outstanding. In addition, the trust
may terminate if the value of the trust as shown by any evaluation is less than
40% of the market value, based on closing bid prices, of the stocks at the time
they were deposited in the trust. In no event will the trust continue beyond
the mandatory termination date.
Unless advised to the contrary by the Sponsor, approximately 30 days prior to
the termination of the trust, the Trustee will begin to sell the stocks held in
the trust other than those stocks to be distributed "in kind" as discussed
below. Upon termination of the trust, the Trustee will sell any stocks then
remaining in the trust and will then, after deduction of any fees and expenses
of the trust and payment into the reserve account of any amount required for
taxes or other governmental charges that may be payable by the trust,
distribute to each unitholder, after due notice of such termination, such
unitholder's pro rata share in the income and capital accounts. Cash held upon
the sale of stocks may be held in non-interest bearing accounts created by the
trust agreement until distributed and will be of benefit to the Trustee. The
sale of stocks in the trust in the period prior to the termination and upon
termination may result in a lower amount than might otherwise be realized if
the sale were not required at that time due to impending or actual termination
of the trust. For this reason, among others, the amount realized by a
unitholder upon termination may be less than the amount paid by such
unitholder. The Sponsor reserves the right to direct the Trustee to make an "in
kind" distribution of the stocks to all unitholders upon termination in lieu of
a cash distribution described above.
Prior to termination of the trust, and in no event less than 75 days prior to
the mandatory termination date, the Trustee shall furnish to you written notice
of the date of termination and election forms pursuant to which unitholders
will be permitted to receive an "in kind" distribution upon termination in lieu
of cash in the event the Sponsor does not elect to direct the Trustee to
distribute all stocks "in kind" as described above. Any unitholders who make
appropriate elections no less than 30 days prior to the date of termination
shall be entitled to receive distribution "in kind" of all of their units. Upon
the distribution following termination of the trust, these unitholders will
receive that number of whole shares of each stock representing the aggregate of
their respective interests in each of the stocks, plus cash representing their
pro rata shares of other trust assets and cash in lieu of fractional shares, if
any. No partial "in kind" distributions will be made. See "Tax Considerations"
for information concerning the tax consequences to a unitholder of a
distribution "in kind."
SPONSOR
The Sponsor, Howe Barnes Investments, Inc., is an investment services firm
which since 1915 has served a wide range of institutional and individual
investors, corporations and fiduciaries, as well as other securities dealers.
The Sponsor, a Delaware corporation, is registered as a broker/dealer and
through its subsidiary, Marshall Capital Management, Inc., is registered as an
investment adviser with the Securities and Exchange Commission. The Sponsor is
also a member of the National Association of Securities Dealers, the New York
Stock Exchange and the Chicago Stock Exchange. Services offered by the Sponsor
include investment research and trade execution services for listed and over-
the-counter equity and fixed-income securities and options; execution and
clearing services for small brokers and dealers; investment banking services
for corporations; and underwriting services for the equity and fixed income
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markets, including municipal and corporate bonds. Among other specialities, the
Sponsor is recognized for its concentrated focus on research and securities
analysis with respect to midwestern regional and subregional banking
institutions and thrift institutions. The Sponsor may, but need not, make a
principal market as dealer in one or more of the stocks in the trust. In
addition, the Sponsor may act as an investment advisor for one or more of the
banking or thrift institutions with stocks in the trust.
The trust agreement provides that the Sponsor will not be liable to the
trust, the Trustee or to the unitholders for taking any action or for
refraining from taking any action made in good faith or for errors in judgment,
but will be liable only for its own gross negligence, bad faith or willful
malfeasance in the performance of its duties or by reason of its reckless
disregard of its obligation and duties. The Sponsor will not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any stocks in the trust.
The trust agreement further provides that the Sponsor will be indemnified by
the trust and held harmless from and against any loss, liability or expense
incurred in acting as Sponsor of the trust other than by reason of its own
gross negligence, bad faith or willful malfeasance in the performance of its
obligations or by reason of its own reckless disregard of its obligations and
duties.
The trust agreement is binding upon any successor to the business of the
Sponsor. The Sponsor may transfer all or substantially all of its assets to a
corporation which carries on the business of the Sponsor and duly assumes all
the obligations of the Sponsor under the trust agreement. In that event the
Sponsor will be relieved of all further liability under the trust agreement.
The trust agreement provides that the Sponsor may resign its position as
Sponsor by delivering to the Trustee an instrument of resignation. This
resignation will only be effective if the Trustee has either appointed a
successor Sponsor or agrees to act as Sponsor thereby succeeding to all the
rights and duties of the resigning Sponsor. The Trustee must notify the
unitholders of any such resignation or appointment of a successor Sponsor.
If the Sponsor fails to undertake any of its duties under the trust
agreement, becomes incapable of acting, becomes bankrupt, or has its affairs
taken over by public authorities, the Trustee may appoint a successor Sponsor
or Sponsors to serve at rates of compensation determined by the trust
agreement.
TRUSTEE
The Trustee is The Bank of New York, a trust company organized under the laws
of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286, telephone (800) 856-
8487. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The trust agreement provides that the Trustee shall be indemnified by the
trust and held harmless from and against any loss, liability or expense
incurred without gross negligence, bad faith or willful malfeasance in the
performance of its duties or by reason of its reckless disregard of the duties
of the Trustee arising out of or in connection with the administration of the
trust.
The Trustee may resign and be discharged of its duties with respect to the
trust pursuant to the trust agreement by delivering an instrument of
resignation to the Sponsor and mailing such
20
<PAGE>
instrument to the unitholders then of record not less than 60 days before the
resignation date. The Trustee shall not, however, resign until either the trust
has been completely liquidated and the proceeds distributed to the unitholders,
or a successor Trustee, having the qualifications prescribed in the governing
securities laws, has been designated and has accepted the duties as Trustee.
The Sponsor may remove the Trustee, upon the occurrence of certain events as
set forth in the trust agreement. In addition, the unitholders may remove the
Trustee upon the vote or written consent of 66 2/3% of the units then of
record. Upon the resignation or removal of the Trustee as set forth above and
in the trust agreement, the Sponsor shall use its best efforts promptly to
appoint a successor Trustee. The trust agreement is binding upon any successor
to the business of the Trustee. The Trustee may transfer all or substantially
all of its assets to a corporation which carries on the business of the Trustee
and duly assumes all the obligations of the Trustee under the trust agreement.
In such event the Trustee shall be relieved of all further liability under the
trust agreement.
LEGAL OPINIONS
The legality of the units offered by this prospectus has been passed upon by
Chapman and Cutler, Chicago, Illinois, as counsel for the Sponsor.
INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, have audited the trust's statement
of net assets, including the schedule of investments, at the opening of
business on the initial date of deposit, as set forth in their report. We have
included the trust's statement of net assets, including the schedule of
investments, in the prospectus and elsewhere in the registration statement in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
21
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Essential Information Regarding the Trust................................... 2
Schedule of Investments..................................................... 3
Report of Independent Auditors.............................................. 4
Statement of Net Assets..................................................... 4
The Trust................................................................... 5
Risk Factors................................................................ 7
Tax Considerations.......................................................... 8
Public Offering of Units.................................................... 11
Redemption of Units......................................................... 12
Valuation of Units.......................................................... 14
Expenses of the Trust....................................................... 15
Rights of Unitholders....................................................... 16
Distributions to Unitholders................................................ 16
Administration of the Trust................................................. 17
Amendment of the Trust Agreement............................................ 18
Termination of the Trust.................................................... 19
Sponsor..................................................................... 19
Trustee..................................................................... 20
Legal Opinions.............................................................. 21
Independent Auditors........................................................ 21
</TABLE>
HBI
EQUITY TRUST, SERIES 6
A Unit Investment Trust
A Portfolio of Midwest Bank and Thrift Stocks
Sponsor:
Howe Barnes Investments, Inc.
135 South LaSalle Street
Chicago, Illinois 60603
Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
<PAGE>
HBI Equity Trust,
Series 6
Part II
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.
Contents of Registration Statement
This Registration Statement comprises the following papers and documents:
The facing sheet
The Prospectus
The undertaking to file reports
The signatures
Written consents of the following persons:
<TABLE>
<CAPTION>
Chapman and Cutler Ernst & Young LLP
(included as Exhibit 3.1) (included as Exhibit 6.1)
The following exhibits:
<S> <C> <C>
*Exhibit 1.1 - Form of Trust Agreement between Howe Barnes
Investments, Inc., as Sponsor, and The Bank
of New York, as Trustee.
*Exhibit 3.1 - Opinion of Chapman and Cutler as to the
legality of securities being registered.
*Exhibit 3.2 - Opinion of Chapman and Cutler as to federal
income tax status of securities being
registered.
*Exhibit 6.1 - Consent of Ernst & Young LLP, Independent
Auditors.
</TABLE>
* To be filed by amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, HBI Equity Trust, Series 6, has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Chicago and State of Illinois, on the 8th day of
October, 1999.
HBI Equity Trust, Series 6
By Howe Barnes Investments, Inc., Depositor
By JOHN A. HAWKE
-----------------------------------------
John A. Hawke
President and Chief
Operating Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on October 8, 1999 by the following
persons in the capacities indicated.
SIGNATURE TITLE
JOHN A. HAWKE President and Chief Operating Officer
- ---------------------------
John A. Hawke
GEORGE H. SHELTON Director and Chief Executive Officer
- ---------------------------
George H. Shelton
PHILIP C. ALLEN Director
- ---------------------------
Philip C. Allen
THEODORE M. PERKOWSKI Director
- ---------------------------
Theodore M. Perkowski
RICHARD W. TERRELL Director
- ---------------------------
Richard W. Terrell
MICHAEL E. SAMMON Director
- ---------------------------
Michael E. Sammon
MICHAEL R. OCHOA Director
- ---------------------------
Michael R. Ochoa
DANIEL E. COUGHLIN Director
- ---------------------------
Daniel E. Coughlin
<PAGE>
SIGNATURE TITLE
MARIO G. BERNARDI Director
- ---------------------------
Mario G. Bernardi
CHARLES V. DOHERTY Director
- ---------------------------
Charles V. Doherty
BETTEANN KESLINKE Director
- ---------------------------
Betteann Keslinke
MICHAEL E.SAMMON
----------------------
Michael E. Sammon
(Attorney-in-fact*)
_______________
* An executed copy of each power of attorney was filed as Exhibit 6.2 to the
Registration Statements on Form S-6 for HBI Equity Trust, Series 4 (File
No. 333-34673) as filed on August 29, 1997 and for HBI Equity Trust, Series 6
(File No. 333-73277) as filed on March 3, 1999.
