As filed with the Securities and Exchange Commission on April 28, 1999
Registration No. 2-62505*
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT
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: NEW YORK MUNICIPAL TRUST, SERIES 1
and SERIES 6
B. Name of depositor: REICH & TANG DISTRIBUTORS, INC.
C. Complete address of depositor's principal executive office:
600 Fifth Avenue
New York, NY 10020
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Executive Vice President MICHAEL R. ROSELLA, ESQ.
Reich & Tang Distributors, Inc. Battle Fowler LLP
600 Fifth Avenue 75 East 55th Street
New York, NY 10020 New York, NY 10022
(212) 856-6858
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/x/ on April 30, 1999 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on ( date ) pursuant to paragraph (a) of Rule 485
================================================================================
* The Prospectus included in this Registration Statement constitutes a
Combined Prospectus as permitted by the provisions of Rule 429 of The
General Rules and Regulations under the Securities Act of 1933 (the "Act").
Said Prospectus covers units of undivided interest in New York Municipal
Trust, Series 1 and Series 6 heretofore filed as part of separate
registration statements on Form S-6 (Registration Nos. 2-62505 and 2-64913,
respectively) under the Act. This filing constitutes Post-Effective
Amendment No. 22 for Series 1 and Post-Effective Amendment No. 21 for Series
6.
Each of the Registrants filed a Rule 24f-2 Notice for its fiscal year ended
December 31, 1998 on or about March 31, 1999.
1656.1
<PAGE>
Prospectus Part A Dated April 30, 1999
NEW YORK MUNICIPAL TRUST
SERIES 1
- --------------------------------------------------------------------------------
The Trust is a unit investment trust with an underlying portfolio of
long-term tax-exempt bonds and was formed to preserve capital and to provide
interest income which, in the opinions of bond counsel to the respective
issuers, is, with certain exceptions, currently exempt from regular federal
income tax and New York State and New York City income taxes under existing law
but may be subject to state and local taxes in other jurisdictions. There can be
no assurance that the Trust's investment objectives will be achieved. Although
the Supreme Court has determined that Congress has the authority to subject
interest on bonds such as the Bonds in the Trust to federal income taxation,
existing law excludes such interest from regular federal income tax. Such
interest income may, however, be subject to federal individual and corporate
alternative minimum tax and to state and local taxes in other jurisdictions.
(See "Description of Portfolio" in this Part A for a list of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) (See "Tax Status" in Part B of this Prospectus.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolios"
in Part B of this Prospectus.) The Sponsor is Reich & Tang Distributors, Inc.
The value of the Units of the Trust will fluctuate with the value of the
underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1998 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term bonds (the
"Bonds") issued by or on behalf of the State of New York and its political
subdivisions, municipalities and public authorities and by the Commonwealth of
Puerto Rico and its public authorities. All of the Bonds in the Trust were rated
"A" or better by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, or Moody's Investors Service, Inc. at the time
109802.1
<PAGE>
originally deposited in the Trust. For a discussion of the significance of such
ratings, see "Description of Bond Ratings" in Part B of this Prospectus. For a
list of ratings on the Evaluation Date, see "Portfolio".
Some of the Bonds in the Trust have been issued with optional
refunding or refinancing provisions ("Refunded Bonds") whereby the issuer of the
Bond has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre-Refunded Bonds") whereby the proceeds
from the issue of the Refunding Bonds are typically invested in government
securities in escrow for the benefit of the holders of the Pre-Refunded Bonds
until the refunding call date. Usually, Pre-Refunded Bonds will bear a triple-A
rating because of this escrow. The issuers of Pre-Refunded Bonds must call such
Bonds on their refunding call date. Therefore, as of such date, the Trust will
receive the call price for such bonds but will cease receiving interest income
with respect to them. For a list of those Bonds which are Pre-Refunded Bonds as
of the Evaluation Date, if any, see "Notes to Financial Statements" in this
Part A. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. The payment of interest and preservation of capital
are, of course, dependent upon the continuing ability of the issuers of the
Bonds to meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates. A Trust designated as a long-term trust must have a
dollar-weighted average portfolio maturity of more than ten years.
Each Unit in the Trust represents a 1/4560th undivided interest in the
principal and net income of the Trust. The principal amount of Bonds deposited
in the Trust per Unit is reflected in the Summary of Essential Information. (See
"The Trust--Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the Sponsor
in the secondary market.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 4.4% of the Public
Offering Price, or 4.603% of the net amount invested in Bonds per Unit. In
addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $441.99 plus accrued interest of
$14.16 under the monthly distribution plan and $16.17 under the semi-annual
distribution plan for a total of $456.15 and $458.16, respectively. The Public
Offering Price per Unit can vary on a daily basis in accordance with
fluctuations in the aggregate bid prices of the Bonds. (See "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering -- Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
A-2
109802.1
<PAGE>
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any;
(2) calculating the average of the yields for the Bonds in the Trust's portfolio
by weighing each Bond's yield by the market value of the Bond and by the amount
of time remaining to the date to which the Bond is priced (thus creating an
average yield for the portfolio of the Trust); and (3) reducing the average
yield for the portfolio of the Trust in order to reflect estimated fees and
expenses of the Trust and the maximum sales charge paid by investors. The
resulting Estimated Long Term Return represents a measure of the return to
investors earned over the estimated life of the Trust. (For the Estimated Long
Term Return to Certificateholders under the monthly and semi-annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly and semi-annual distribution plans, see "Summary of Essential
Information". See "Estimated Long Term Return and Estimated Current Return" in
Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors
upon request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly or semi-annually depending upon the plan of
distribution applicable to the Unit purchased. A purchaser of a Unit in the
secondary market will initially receive distributions in accordance with the
plan selected by the prior owner of such Unit and may thereafter change the plan
as provided under "Interest and Principal Distributions" in Part B of this
Prospectus. Distributions of principal, if any, will be made semi-annually on
June 15 and December 15 of each year. For estimated monthly and semi-annual
interest distributions, see "Summary of Essential Information".
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
presently maintains and intends to continue to maintain a secondary market for
the Units at prices based upon the aggregate bid price of the Bonds in the Trust
portfolio. The reoffer price will be based on the aggregate bid price of the
Bonds plus a sales charge of 4.4% (4.603% of the net amount invested), plus net
accrued interest. If a market is not maintained a Certificateholder will be able
to redeem his or her Units with the Trustee at a price also based upon the
aggregate bid price of the Bonds. (See "Sponsor Repurchase" and "Offering Price"
in Part B of this Prospectus.)
A-3
109802.1
<PAGE>
<TABLE>
<CAPTION>
NEW YORK MUNICIPAL TRUST
SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998
--------------------------------------------------------
<S> <C> <C>
Date of Deposit*: November 21, 1978 Evaluation Time: 4:00 p.m.
Principal Amount of Bonds ... $1,845,000 New York Time.
Number of Units ............. 4,560 Minimum Principal Distribution:
Fractional Undivided Inter- $1.00 per Unit.
est in Trust per Unit ..... 1/4560 Weighted Average Life to
Principal Amount of Maturity: 12.1 Years.
Bonds per Unit ............ $404.61 Minimum Value of Trust:
Secondary Market Public Trust may be terminated if
Offering Price** value of Trust is less than
Aggregate Bid Price $2,400,000 in principal amount
of Bonds in Trust ....... $1,930,412+++ of Bonds.
Divided by 4,560 Units .... $423.34 Mandatory Termination Date:
Plus Sales Charge of 4.4% The earlier of December 31,
of Public Offering Price $18.65 2027 or the disposition of the
Public Offering Price last Bond in the Trust.
per Unit ................ $441.99+ Trustee***: The Bank of New
Redemption and Sponsor'ss York.
Repurchase Price Trustee's Annual Fee: Monthly
per Unit .................. $423.34+ plan $1.08 per $1,000; and
+++ semi-annual plan $.60 per
++++ $1,000.
Escess of Secondary Market Evaluator: Kenny S&P Evaluation
Public Offering Price Services.
over Redemption and Evaluator's Fee for Each
Sponsor's Repurchase Evaluation: Minimum of $35
Price per Unit ............ $18.65++++ plus $.25 per each issue of
Difference between Public Bonds in excess of 50 issues
Offering Price per Unit (treating separate maturities
and Principal Amount per as separate issues).
Unit Premium/(Discount) ... $37.38 Sponsor: Reich & Tang
Distributors, Inc.
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
Monthly Semi-Annual
Option Option
------- -----------
Gross annual interest income# ......... $26.88 $26.88
Less estimated annual fees and
expenses ............................ 1.88 1.54
Estimated net annual interest
------ ------
income (cash)# ...................... $25.00 $25.34
Estimated interest distribution# ...... 2.08 12.67
Estimated daily interest accrual# ..... .0694 .0704
Estimated current return#++ ........... 5.66% 5.73%
Estimated long term return++ .......... 2.95% 3.03%
Record dates .......................... 1st of Dec. 1 and
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and
each month June 15
A-4
109802.1
<PAGE>
Footnotes to Summary of Essential Information
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1998, may be
reported in the Summary of Essential Information as if they had been
distributed at year-end.
*** The Trustee maintains its corporate trust office at 101 Barclay
Street, New York, New York 10286 (tel. no.: 1-212-495-1784). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $14.16 monthly and $16.17
semi-annually.
++ The estimated current return and estimated long term returns are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual option due to lower Trustee's fees and expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash in the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include accrual from original issue discount bonds, if any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Period
standing Per Unit Option Option (Per Unit)
---------- ---------- ------- ------ ----------
Period Ended
- ------------
<S> <C> <C> <C> <C> <C>
December 31, 1996 4,731 $515.14 $30.33 $30.72 $ 3.82
December 31, 1997 4,606 500.09 30.47 30.90 15.97
December 31, 1998 4,560 434.11 29.04 29.50 68.62
</TABLE>
- -----------------------
* Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
A-5
109802.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1998
DESCRIPTION OF PORTFOLIO*
- ------------------------
Each Unit in the Trust consists of a 1/4560th fractional undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $404.61 principal amount of the Bonds currently held in the Trust. The
Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Trust consists
of 9 issues representing obligations of 4 issuers located in New York State.
Five issues representing $1,410,000 of the principal amount of the Bonds in the
Trust are "moral obligation" bonds. All of the Bonds in the Trust are subject to
redemption prior to their stated maturity dates pursuant to sinking fund or
optional call provisions. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of excess or
unanticipated revenues). Two issues representing $325,000 of the principal
amount of the Bonds are general obligation bonds. All seven of the remaining
issues representing $1,520,000 of the principal amount of the Bonds are payable
from the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Hospital and Nursing 2, Housing 3, University Construction 1, and Water
and Power 1. For an explanation of the significance of these factors see "The
Trust--Portfolio" and "Special Factors Concerning the Portfolio" in Part B of
this Prospectus. See "Tax Status" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- --------------------------
* Changes in the Trust Portfolio: From January 1, 1999 to March 19, 1999,
$10,000 of the principal amount of Portfolio No. 8 was called and is no
longer contained in the Trust.
A-6
109802.1
<PAGE>
Report of Independent Accountants
To the Sponsor, Trustee and Certificateholders of
New York Municipal Trust, Series 1
In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of New York Municipal Trust, Series 1
(the "Trust") at December 31, 1998, the results of its operations, the changes
in its net assets and the financial highlights for the three years then ended,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999
<PAGE>
<TABLE>
New York Municipal Trust, Series 1
Portfolio
December 31, 1998
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
Aggregate Coupon Rate/
Portfolio Principal Name of Issuer and Ratings Date(s) of
No. Amount Title of Bonds (1) Maturity (2)
<S> <C> <C> <C> <C>
1 $ 100,000 State of New York General Obligation, A2* 3.200%
Low Cost Housing Bonds, Series 1963 6/01/2003
2 225,000 State of New York General Obligation, A2* 5.250
Housing Middle Income, Series 1971 5/01/2013
3 440,000 New York Housing Finance Agency AAA 6.375
Facilities Bonds, 1972 Series A 5/01/2001
4 40,000 New York State Housing Finance Agency, A* 5.500
Hospital and Nursing Project Bonds, 11/01/2013
1972 Series A
5 90,000 New York State Housing Finance Agency, A* 7.000
Hospital and Nursing Project Bonds, 11/01/2017
1977 Series A
6 235,000 New York State Housing Finance Agency, AAA 6.500
State University Construction Bonds, 11/01/2006
1977 Series B
7 605,000 New York State Housing Finance Agency, NR 8.000
Towpath Towers Housing 5/01/2019
Project Bonds
8 10,000 Power Authority of the State of New York, AAA 9.500
General Purpose Bonds, Series C 1/01/2001
9 100,000 St. Casimir's Elderly Housing NR 7.375
Corporation (New York) First Lien 9/01/2010
Revenue Bonds (Series 1978--Section 8
Assisted Project)
------------
$ 1,845,000 Total Investments (Cost $1,689,693)
============
</TABLE>
Redemption
Feature (2)(4)
Portfolio S.F.-Sinking Fund Market
No. Ref.-Refunding Value (3)
1 No Sinking Fund $ 97,675
6/01/99 @ 100 Ref.
2 No Sinking Fund 230,888
5/01/99 @ 102 Ref.
3 No Sinking Fund 467,443
None
4 No Sinking Fund 40,940
1/31/99 @ 102 Ref.
5 11/01/99 @ 100 S.F. 109,159
1/31/99 @ 101 Ref.
6 No Sinking Fund 257,591
None
7 Currently @ 100 S.F. 613,524
5/01/99 @ 101 Ref.
8 Currently @ 100 S.F. 10,000
None
9 9/01/00 @ 100 S.F. 103,159
3/01/99 @ 103.5 Ref.
-----------
$ 1,930,379
===========
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
New York Municipal Trust, Series 1
Footnotes to Portfolio
- --------------------------------------------------------------------------------
1. All ratings are by Kenny S&P Evaluation Services, a business unit of
J.J. Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies,
Inc., except for those identified by an asterisk (*) which are by
Moody's Investors Service, Inc. A brief description of the ratings
symbols and their meaning is set forth under "Description of Bond
Ratings" in Part B of the Prospectus.
2. See "The Trust - Portfolio" in Part B of the Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of the
Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.
3. At December 31, 1998, the net unrealized appreciation of all the bonds
was comprised of the following:
Gross unrealized appreciation $ 255,031
Gross unrealized depreciation (14,345)
---------------
Net unrealized appreciation $ 240,686
===============
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 1
Statement of Net Assets
December 31, 1998
- --------------------------------------------------------------------------------
Investments in Securities,
at Market Value (Cost $1,689,693) $ 1,930,379
--------------
Other Assets
Accrued Interest 21,873
Cash 27,284
--------------
Total Other Assets 49,157
Net Assets (4,560 Units of Fractional Undivided --------------
Interest Outstanding, $434.11 per Unit) $ 1,979,536
==============
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 1
Statement of Operations
- --------------------------------------------------------------------------------
For the Years Ended December 31,
1998 1997 1996
Investment Income
Interest $ 140,432 $ 150,513 $ 159,572
----------- ----------- -----------
Expenses
Trustee's Fees 7,936 7,551 6,769
Evaluator's Fee 3,273 3,273 3,286
----------- ----------- -----------
Total Expenses 11,209 10,824 10,055
----------- ----------- -----------
Net Investment Income 129,223 139,689 149,517
----------- ----------- -----------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 37,793 16,771 41,192
Unrealized (Depreciation)
on Investments (21,100) (9,328) (55,552)
----------- ----------- -----------
Net Gain (Loss) on Investments 16,693 7,443 (14,360)
----------- ----------- -----------
Net Increase
in Net Assets
Resulting From Operations $ 145,916 $ 147,132 $ 135,157
=========== =========== ===========
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
New York Municipal Trust, Series 1
Statement of Changes in Net Assets
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Operations
Net Investment Income $ 129,223 $ 139,689 $ 149,517
Realized Gain
on Investments 37,793 16,771 41,192
Unrealized (Depreciation)
on Investments (21,100) (9,328) (55,552)
------------ ------------ -------------
Net Increase in
Net Assets Resulting
From Operations 145,916 147,132 135,157
------------ ------------ -------------
Distributions to Certificateholders
Investment Income 133,724 142,555 149,839
Principal 312,907 73,700 18,126
Redemptions
Interest 734 2,025 5,447
Principal 22,418 62,558 149,737
------------ ------------ ------------
Total Distributions
and Redemptions 469,783 280,838 323,149
------------ ------------ ------------
Total (Decrease) (323,867) (133,706) (187,992)
Net Assets
Beginning of Year 2,303,403 2,437,109 2,625,101
------------ ------------ ------------
End of Year (Including
Undistributed Net Investment
Income of $49,122, $54,357
and $59,248, Respectively) $ 1,979,536 $ 2,303,403 $ 2,437,109
============ ============ ============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
New York Municipal Trust, Series 1
Financial Highlights
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
Selected data for a unit of the Trust outstanding: *
For the years ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 500.09 $ 515.14 $ 521.99
---------- ---------- ----------
Interest Income 30.64 32.24 32.70
Expenses (2.45) (2.32) (2.06)
---------- ---------- ----------
Net Investment Income 28.19 29.92 30.64
---------- ---------- ----------
Net Gain or Loss on Investments(1) 3.45 1.77 (1.96)
---------- ---------- ----------
Total from Investment Operations 31.64 31.69 28.68
---------- ---------- ----------
Less Distributions
to Certificateholders
Income 29.18 30.53 30.70
Principal 68.28 15.78 3.71
for Redemptions
Interest .16 .43 1.12
---------- ---------- ----------
Total Distributions 97.62 46.74 35.53
---------- ---------- ----------
Net Asset Value, End of Year** $ 434.11 $ 500.09 $ 515.14
========== ========== ==========
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1998, 1997 and 1996, respectively, and the dates of net
gain and loss on investments.
- --------
* Unless otherwise stated, based upon average units outstanding during
the year of 4,583 ([4,560 + 4,606]/2) for 1998, 4,669 ([4,606 +
4,731]/2) for 1997 and of 4,880 ([4,731 + 5,029]/2) for 1996.
** Based upon actual units outstanding
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 1
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization
New York Municipal Trust, Series 1 (the "Trust") was organized on
November 21, 1978 by Bear, Stearns & Co. Inc. under the laws of the
State of New York by a Trust Indenture and Agreement, and is
registered under the Investment Company Act of 1940. The Trust was
formed to preserve capital and to provide interest income.
Effective September 28, 1995, Reich & Tang Distributors, Inc. ("Reich
& Tang") has become the successor sponsor (the "Sponsor") to certain
of the unit investment trusts previously sponsored by Bear, Stearns &
Co. Inc. As successor Sponsor, Reich & Tang has assumed all of the
obligations and rights of Bear, Stearns & Co. Inc., the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies
consistently followed by the Trust in preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ
from those estimates. Interest income is recorded on the accrual
basis.
Security Valuation
Investments are carried at market value which is determined by Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc.,
a subsidiary of The McGraw-Hill Companies, Inc. The market value of
the portfolio is based upon the bid prices for the bonds at the end
of the year, which approximates the fair value of the security at
that date, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost and market
value is reflected as unrealized appreciation (depreciation) of
investments. Securities transactions are recorded on the trade date.
Realized gains (losses) from securities transactions are determined
on the basis of average cost of the securities sold or redeemed.
<PAGE>
New York Municipal Trust, Series 1
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. Income Taxes
No provision for federal income taxes has been made in the
accompanying financial statements because the Trust intends to
continue to qualify for the tax treatment applicable to Grantor
Trusts under the Internal Revenue Code. Under existing law, if the
Trust so qualifies, it will not be subject to federal income tax on
net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Bank of New York (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of
the Trust and is responsible for establishing and maintaining a
system of internal control related thereto. The Trustee is also
responsible for all estimates of expenses and accruals reflected in
the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected by
the Certificateholders).
The Trust Indenture and Agreement further requires that principal
received from the disposition of bonds, other than those bonds sold
in connection with the redemption of units, be distributed to
Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1998, 1997 and 1996,
46, 125 and 298 units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.60 to $1.08 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $35.00 is paid to
a service bureau for each portfolio valuation. For the years ended
December 31, 1998, 1997 and 1996, the "Trustee's Fees" are comprised
of Trustee fees of $1,861, $1,974 and $2,167 and other expenses of
$6,075, $5,577 and $4,602, respectively. The other expenses include
professional, printing and miscellaneous fees.
<PAGE>
New York Municipal Trust, Series 1
Notes to Financial Statements
- ------------------------------------------------------------------------------
5. Net Assets
At December 31, 1998, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 6,058,946
Less Initial Gross Underwriting Commission 272,640
----------------
5,786,306
Accumulated Cost of Securities Sold,
Matured or Called (4,096,613)
Net Unrealized Appreciation 240,686
Undistributed Net Investment Income 49,122
Undistributed Proceeds From Investments 35
----------------
Total $ 1,979,536
================
The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 6,000 units of
fractional undivided interest of the Trust as of the date of deposit.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds,
it may be affected by economic and political developments in the
municipalities. Certain debt obligations held by the Trust may be
entitled to the benefit of insurance, standby letters of credit or
other guarantees of banks or other financial institutions.
<PAGE>
Prospectus Part A Dated April 30, 1999
NEW YORK MUNICIPAL TRUST
SERIES 6
- --------------------------------------------------------------------------------
The Trust is a unit investment trust with an underlying portfolio of
long-term tax-exempt bonds and was formed to preserve capital and to provide
interest income which, in the opinions of bond counsel to the respective
issuers, is, with certain exceptions, currently exempt from regular federal
income tax and New York State and New York City income taxes under existing law
but may be subject to state and local taxes in other jurisdictions. There can be
no assurance that the Trust's investment objectives will be achieved. Although
the Supreme Court has determined that Congress has the authority to subject
interest on bonds such as the Bonds in the Trust to federal income taxation,
existing law excludes such interest from regular federal income tax. Such
interest income may, however, be subject to federal individual and corporate
alternative minimum tax and to state and local taxes in other jurisdictions.
(See "Description of Portfolio" in this Part A for a list of those Bonds, if
any, which pay interest income subject to the federal individual alternative
minimum tax.) (See "Tax Status" in Part B of this Prospectus.) In addition,
capital gains are subject to tax. (See "Tax Status" and "The Trust--Portfolios"
in Part B of this Prospectus.) The Sponsor is Reich & Tang Distributors, Inc.
The value of the Units of the Trust will fluctuate with the value of the
underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1998 (the "Evaluation Date"), a summary
of certain specific information regarding the Trust and audited financial
statements of the Trust, including the related portfolio, as of the Evaluation
Date. Part B of this Prospectus contains a general summary of the Trust. Part A
of this Prospectus may not be distributed unless accompanied by Part B.
Investors should retain both parts of this Prospectus for future reference. 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST. The Trust seeks to achieve its investment objectives
through investment in a fixed, diversified portfolio of long-term bonds (the
"Bonds") issued by or on behalf of the State of New York and its political
subdivisions, municipalities and public authorities and by the Commonwealth of
Puerto Rico and its public authorities. All of the Bonds in the Trust were rated
"A" or better by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, or Moody's Investors Service, Inc. at the time
111218.1
<PAGE>
originally deposited in the Trust. For a discussion of the significance of such
ratings, see "Description of Bond Ratings" in Part B of this Prospectus. For a
list of ratings on the Evaluation Date, see "Portfolio".
Some of the Bonds in the Trust have been issued with optional
refunding or refinancing provisions ("Refunded Bonds") whereby the issuer of the
Bond has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates in
the marketplace. Some of these Refunded Bonds may be called for redemption
pursuant to pre-refunding provisions ("Pre-Refunded Bonds") whereby the proceeds
from the issue of the Refunding Bonds are typically invested in government
securities in escrow for the benefit of the holders of the Pre-Refunded Bonds
until the refunding call date. Usually, Pre-Refunded Bonds will bear a triple-A
rating because of this escrow. The issuers of Pre-Refunded Bonds must call such
Bonds on their refunding call date. Therefore, as of such date, the Trust will
receive the call price for such bonds but will cease receiving interest income
with respect to them. For a list of those Bonds which are Pre-Refunded Bonds as
of the Evaluation Date, if any, see "Notes to Financial Statements" in this Part
A. Some of the Bonds in the portfolio may have been purchased at an aggregate
premium over par. The payment of interest and preservation of capital are, of
course, dependent upon the continuing ability of the issuers of the Bonds to
meet their obligations.
Investment in the Trust should be made with an understanding of the
risks which an investment in long-term fixed rate debt obligations may entail,
including the risk that the value of the underlying portfolio will decline with
increases in interest rates. A Trust designated as a long-term trust must have a
dollar-weighted average portfolio maturity of more than ten years.
Each Unit in the Trust represents a 1/11419th undivided interest in
the principal and net income of the Trust. The principal amount of Bonds
deposited in the Trust per Unit is reflected in the Summary of Essential
Information. (See "The Trust--Organization" in Part B of this Prospectus.) The
Units being offered hereby are issued and outstanding Units which have been
purchased by the Sponsor in the secondary market.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of
each Unit is equal to the aggregate bid price of the Bonds in the Trust divided
by the number of Units outstanding, plus a sales charge of 4.7% of the Public
Offering Price, or 4.932% of the net amount invested in Bonds per Unit. In
addition, accrued interest to the expected date of settlement is added to the
Public Offering Price. If Units had been purchased on the Evaluation Date, the
Public Offering Price per Unit would have been $437.83 plus accrued interest of
$14.19 under the monthly distribution plan, $13.61 under the semi-annual
distribution plan and $13.65 under the annual distribution plan for a total of
$452.02, $451.44 and $451.48, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate bid
prices of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of each
Trust are offered to investors on a "dollar price" basis (using the computation
method described under "Public Offering -- Offering Price" in Part B) as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis, the
rate of return on an investment in Units of each Trust is measured in terms of
"Estimated Current Return" and "Estimated Long Term Return".
A-2
111218.1
<PAGE>
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in the Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by investors. The resulting
Estimated Long Term Return represents a measure of the return to investors
earned over the estimated life of the Trust. (For the Estimated Long Term Return
to Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on newly
issued bonds of a similar type with comparable rating, the Estimated Current
Return per Unit may be affected adversely if such Bonds are redeemed prior to
their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future. (For the Estimated Current Return to Certificateholders
under the monthly, semi-annual and annual distribution plans, see "Summary of
Essential Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsors
upon request.
DISTRIBUTIONS. Distributions of interest income, less expenses, will
be made by the Trust either monthly, semi-annually or annually depending upon
the plan of distribution applicable to the Unit purchased. A purchaser of a Unit
in the secondary market will initially receive distributions in accordance with
the plan selected by the prior owner of such Unit and may thereafter change the
plan as provided under "Interest and Principal Distributions" in Part B of this
Prospectus. Distributions of principal, if any, will be made semi-annually on
June 15 and December 15 of each year. For estimated monthly, semi-annual and
annual interest distributions, see "Summary of Essential Information".
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
presently maintains and intends to continue to maintain a secondary market for
the Units at prices based upon the aggregate bid price of the Bonds in the Trust
portfolio. The reoffer price will be based on the aggregate bid price of the
Bonds plus a sales charge of 4.7% (4.932% of the net amount invested), plus net
accrued interest. If a market is not maintained a Certificateholder will be able
to redeem his or her Units with the Trustee at a price also based upon the
aggregate bid price of the Bonds. (See "Sponsor Repurchase" and "Offering Price"
in Part B of this Prospectus.)
A-3
111218.1
<PAGE>
NEW YORK MUNICIPAL TRUST
SERIES 6
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Date of Deposit*: July 24, 1979 Minimum Principal Distribution:
Principal Amount of Bonds ... $4,675,000 $1.00 per Unit.
Number of Units ............. 11,419 Weighted Average Life to
Fractional Undivided Inter- Maturity: 12.0 Years.
est in Trust per Unit ..... 1/11419 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $409.41 value of Trust is less than
Secondary Market Public $5,200,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust ....... $4,775,604+++ The earlier of December 31,
Divided by 11,419 Units ... $418.22 2028 or the disposition of the
Plus Sales Charge of 4.7% last Bond in the Trust.
of Public Offering Price. $19.61 Trustee***: The Bank of New
Public Offering Price York.
per Unit ................ $437.83+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.08 per $1,000; semi-
Repurchase Price annual plan $.60 per $1,000;
per Unit .................. $418.22+ and annual plan is $.40 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $35
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............ $19.61++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $28.42 Distributors, Inc.
Evaluation Time: 4:00 p.m.
New York Time.
</TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
------------------------------------------------------------------
<TABLE>
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
------- ----------- ------
<S> <C> <C> <C>
Gross annual interest income# ......... $26.31 $26.31 $26.31
Less estimated annual fees and
expenses ............................ 1.20 .83 .74
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $25.11 $25.48 $25.57
Estimated interest distribution# ...... 2.09 12.74 25.57
Estimated daily interest accrual# ..... .0698 .0708 .0710
Estimated current return#++ ........... 5.74% 5.82% 5.84%
Estimated long term return++ .......... 3.69% 3.77% 3.80%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
</TABLE>
A-4
111218.1
<PAGE>
Footnotes to Summary of Essential Information
---------------------------------------------
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.
** Certain amounts distributable as of December 31, 1998, may be
reported in the Summary of Essential Information as if they had been
distributed at year-end.
*** The Trustee maintains its corporate trust office at 101 Barclay
Street, New York, New York 10286 (tel. no.: 1-212-495-1784). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
three business days after purchase) of $14.19 monthly, $13.61
semi-annually and $13.65 annually.
++ The estimated current return and estimated long term returns are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash in the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include accrual from original issue discount bonds, if any.
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<TABLE>
<CAPTION>
Distribu-
Distributions of Interest tions of
During the Period (per Unit) Principal
---------------------------- During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 11,732 $671.63 $44.54 $45.06 $45.20 $ 24.89
December 31, 1997 11,606 614.72 41.90 42.40 42.54 61.36
December 31, 1998 11,419 428.89 36.98 37.47 37.60 188.95
</TABLE>
- ----------------
* Net Asset Value per Unit is calculated by dividing net assets as disclosed
in the "Statement of Net Assets" by the number of Units outstanding as of
the date of the Statement of Net Assets. See Note 5 of Notes to Financial
Statements for a description of the components of Net Assets.
A-5
111218.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF DECEMBER 31, 1998
DESCRIPTION OF PORTFOLIO*
- ------------------------
Each Unit in the Trust consists of a 1/11419th fractional undivided
interest in the principal and net income of the Trust in the ratio of one Unit
for each $409.41 principal amount of the Bonds currently held in the Trust. The
Sponsor has not participated as a sole underwriter or manager, co-manager or
member of an underwriting syndicate from which any of the initial aggregate
principal amount of the Bonds were acquired. The portfolio of the Trust consists
of 13 issues representing obligations of 8 issuers located in New York State and
1 in Puerto Rico. All of the Bonds in the Trust are subject to redemption prior
to their stated maturity dates pursuant to sinking fund or optional call
provisions. The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or unanticipated
revenues). Four issues representing $1,200,000 of the principal amount of the
Bonds are general obligation bonds. All nine of the remaining issues
representing $3,475,000 of the principal amount of the Bonds are payable from
the income of a specific project or authority and are not supported by the
issuer's power to levy taxes. The portfolio is divided for purpose of issue as
follows: Health Facilities 2, Hospital and Nursing Projects 4, Housing 1, Port
Authority 1 and Power 1. For an explanation of the significance of these factors
see "The Trust--Portfolio" and "Special Factors Concerning the Portfolio" in
Part B of this Prospectus. See "Tax Status" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax Status" in
Part B of this Prospectus.
- ------------------
* Changes in the Trust Portfolio: From January 1, 1999 to March 19, 1999,
$70,000 of the principal amount of the Bond in portfolio no. 12 has been
called and is no longer contained in the Trust. 11 Units were redeemed from
the Trust.
A-6
111218.1
<PAGE>
Report of Independent Accountants
To the Sponsor, Trustee and Certificateholders of
New York Municipal Trust, Series 6
In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of New York Municipal Trust, Series 6
(the "Trust") at December 31, 1998, the results of its operations, the changes
in its net assets and the financial highlights for the three years then ended,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the Trustee, provide a reasonable basis
for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, MA
March 19, 1999
<PAGE>
<TABLE>
<CAPTION>
New York Municipal Trust, Series 6
Portfolio
December 31, 1998
- --------------------------------------------------------------------------------------------------------
Aggregate Coupon Rate/
Portfolio Principal Name of Issuer and Ratings Date(s) of
No. Amount Title of Bonds (1) Maturity (2)
<S> <C> <C> <C> <C>
1 $ 200,000 State of New York, General Obligation A* 3.750%
12/01/2011
2 300,000 State of New York, General Obligation A* 3.750
12/01/2012
3 200,000 State of New York, General Obligation A* 3.750
12/01/2014
4 500,000 State of New York, General Obligation A* 3.750
12/01/2016
5 25,000 New York State Housing Finance Agency, AAA 5.600
Health Facilities Bonds, 1973 Series A 11/01/2002
5a 50,000 New York State Housing Finance Agency, AAA 5.600
Health Facilities Bonds, 1973 Series A 5/01/2003
5b 100,000 New York State Housing Finance Agency, AAA 5.600
Health Facilities Bonds, 1973 Series A 11/01/2004
6 840,000 New York State Housing Finance Agency, AAA 7.600
Health Facilities Bonds, 1979 Series A 11/01/2004
7 10,000 New York State Housing Finance Agency, A* 6.875
Hospital and Nursing Home Project Bonds, 11/01/2010
1970 Series A
8 30,000 New York State Housing Finance Agency, A* 5.900
Hospital and Nursing Home Project Bonds, 11/01/2003
1974 Series A
9 150,000 New York State Housing Finance Agency, A* 6.875
Hospital and Nursing Home Project Bonds, 11/01/2007
1977 Series A
9a 5,000 New York State Housing Finance Agency, A* 7.000
Hospital and Nursing Home Project Bonds, 11/01/2017
1977 Series A
10 815,000 New York State Medical Care Facilities A* 7.400
Finance Agency, Hospital and Nursing 11/01/2016
Home Project Bonds, 1979 Series A
11 150,000 The Port Authority of New York and AA- 4.000
New Jersey Consolidated Bonds, 3/01/2002
Thirty-First Series
12 1,200,000 Tonawanda Senior Citizen Housing NR 7.875
Corporation, Section 8 Assisted 2/01/2011
Mortgage Revenue Bonds (Westchester
Park Apartment Project)
13 100,000 Puerto Rico Water Resources Authority, A 5.500
------------ Electric Revenue Bonds 7/01/2003
$ 4,675,000 Total Investments (Cost $4,182,452)
============
</TABLE>
Redemption
Feature (2)(4)
Portfolio S.F.-Sinking Fund Market
No. Ref.-Refunding Value (3)
1 No Sinking Fund $186,378
6/01/99 @ 101 Ref.
2 No Sinking Fund 275,484
6/01/99 @ 101 Ref.
3 No Sinking Fund 178,274
6/01/99 @ 101 Ref.
4 No Sinking Fund 434,710
6/01/99 @ 101 Ref.
5 No Sinking Fund 26,697
None
5a No Sinking Fund 53,611
None
5b No Sinking Fund 108,966
None
6 Currently @ 100 S.F. 931,081
None
7 No Sinking Fund 10,135
None
8 No Sinking Fund 32,573
None
9 No Sinking Fund 163,704
None
9a No Sinking Fund 6,052
None
10 11/01/04 @ 100 S.F. 834,022
2/04/99 @ 102 S.F.
11 Currently @ 100 S.F. 150,083
3/01/99 @ 100 Ref.
12 Currently @ 100 S.F. 1,242,575
2/01/99 @ 103 Ref.
13 Currently @ 100 S.F. 106,546
1/01/03 @ 100 Ref. ----------
$4,740,891
==========
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
New York Municipal Trust, Series 6
Footnotes to Portfolio
- ------------------------------------------------------------------------------
1. All ratings are by Kenny S&P Evaluation Services, a business unit of
J.J. Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies,
Inc., except for those identified by an asterisk (*) which are by
Moody's Investors Service, Inc. A brief description of the ratings
symbols and their meaning is set forth under "Description of Bond
Ratings" in Part B of the Prospectus.
2. See "The Trust - Portfolio" in Part B of the Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of the
Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.
3. At December 31, 1998, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 558,439
Gross unrealized depreciation -
---------------
Net unrealized appreciation $ 558,439
===============
4. The Bonds may also be subject to other calls, which may be permitted or
required by events which cannot be predicted (such as destruction,
condemnation, termination of a contract, or receipt of excess or
unanticipated revenues).
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 6
Statement of Net Assets
December 31, 1998
- --------------------------------------------------------------------------------
Investments in Securities,
at Market Value (Cost $4,182,452) $ 4,740,891
--------------
Other Assets
Accrued Interest 72,388
Cash 84,200
--------------
Total Other Assets 156,588
--------------
Net Assets (11,419 Units of Fractional Undivided
Interest Outstanding, $428.89 per Unit) $ 4,897,479
==============
The accompanying notes form an integral part of he financial statements.
<PAGE>
New York Municipal Trust, Series 6
Statement of Operations
- -------------------------------------------------------------------------------
For the Years Ended December 31,
1998 1997 1996
Investment Income
Interest $427,585 $501,625 $ 543,960
-------- -------- ---------
Expenses
Trustee's Fees 17,978 18,201 13,563
Evaluator's Fee 3,273 3,273 3,286
-------- -------- ---------
Total Expenses 21,251 21,474 16,849
-------- -------- ---------
Net Investment Income 406,334 480,151 527,111
-------- -------- ---------
Realized and Unrealized Gain (Loss)
Realized Gain
on Investments 26,094 12,792 6,136
Unrealized Appreciation
(Depreciation) on Investments 30,776 49,852 (86,443)
-------- -------- ---------
Net Gain (Loss) on Investments 56,870 62,644 (80,307)
-------- -------- ---------
Net Increase in Net Assets
Resulting From Operations $463,204 $542,795 $ 446,804
======== ======== =========
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 6
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
1998 1997 1996
Operations
<S> <C> <C> <C>
Net Investment Income $ 406,334 $ 480,151 $ 527,111
Realized Gain
on Investments 26,094 12,792 6,136
Unrealized Appreciation
(Depreciation) on Investments 30,776 12,792 6,136
---------- ----------- ----------
Net Increase in Net Assets
Resulting From Operations 463,204 542,795 446,804
---------- ----------- ----------
Distributions to Certificateholders
Investment Income 426,237 489,930 527,905
Principal 2,161,507 713,304 294,191
Redemptions
Interest 3,408 2,832 5,778
Principal 109,020 81,889 162,018
---------- ----------- ----------
Total Distributions
and Redemptions 2,700,172 1,287,955 989,892
---------- ----------- ----------
Total (Decrease) (2,236,968) (745,160) (543,088)
Net Assets
Beginning of Year 7,134,447 7,879,607 8,422,695
---------- ----------- ----------
End of Year (Including
Undistributed Net Investment
Income of $121,583, $144,894,
and $157,505 Respectively) $ 4,897,479 $ 7,134,447 $ 7,879,607
=========== =========== ===========
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 6
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a unit of the Trust outstanding: *
<TABLE>
<CAPTION>
For the years ended December 31,
1998 1997 1996
<S> <C> <C> <C>
Net Asset Value, Beginning of Year** $ 614.72 $ 671.63 $ 703.47
----------- ----------- -----------
Interest Income 37.14 42.99 45.89
Expenses (1.85) (1.84) (1.42)
----------- ----------- -----------
Net Investment Income 35.29 41.15 44.47
----------- ----------- -----------
Net Gain or Loss on Investments(1) 3.94 5.30 (6.46)
----------- ----------- -----------
Total from Investment Operations 39.23 46.45 38.01
----------- ----------- -----------
Less Distributions
to Certificateholders
Income 37.02 41.99 44.54
Principal 187.74 61.13 24.82
for Redemptions
Interest .30 .24 .49
----------- ----------- -----------
Total Distributions 225.06 103.36 69.85
----------- ----------- -----------
Net Asset Value, End of Year** $ 428.89 $ 614.72 $ 671.63
=========== =========== ===========
</TABLE>
(1) Net gain or loss on investments is a result of changes in outstanding
units since January 1, 1998, 1997 and 1996, respectively, and the dates of
net gain and loss on investments.
- ----------------------
* Unless otherwise stated, based upon average units outstanding during
the year of 11,513 ([11,419 + 11,606]/2) for 1998, 11,669 ([11,606 +
11,732]/2) for 1997 and of 11,853 ([11,732 + 11,973]/2) for 1996.
** Based upon actual units outstanding
The accompanying notes form an integral part of the financial statements.
<PAGE>
New York Municipal Trust, Series 6
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization
New York Municipal Trust, Series 6 (the "Trust") was organized on
July 24, 1979 by Bear, Stearns & Co. Inc. under the laws of the State
of New York by a Trust Indenture and Agreement, and is registered
under the Investment Company Act of 1940. The Trust was formed to
preserve capital and to provide interest income.
Effective September 28, 1995, Reich & Tang Distributors, Inc. ("Reich
& Tang") has become the successor sponsor (the "Sponsor") to certain
of the unit investment trusts previously sponsored by Bear, Stearns &
Co. Inc. As successor Sponsor, Reich & Tang has assumed all of the
obligations and rights of Bear, Stearns & Co. Inc., the previous
sponsor.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies
consistently followed by the Trust in preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ
from those estimates. Interest income is recorded on the accrual
basis.
Security Valuation
Investments are carried at market value which is determined by Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc.,
a subsidiary of The McGraw-Hill Companies, Inc. The market value of
the portfolio is based upon the bid prices for the bonds at the end
of the year, which approximates the fair value of the security at
that date, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investments at that date. The difference between cost and market
value is reflected as unrealized appreciation (depreciation) of
investments. Securities transactions are recorded on the trade date.
Realized gains (losses) from securities transactions are determined
on the basis of average cost of the securities sold or redeemed.
<PAGE>
New York Municipal Trust, Series 6
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. Income Taxes
No provision for federal income taxes has been made in the
accompanying financial statements because the Trust intends to
continue to qualify for the tax treatment applicable to Grantor
Trusts under the Internal Revenue Code. Under existing law, if the
Trust so qualifies, it will not be subject to federal income tax on
net income and capital gains that are distributed to unitholders.
4. Trust Administration
The Bank of New York (the "Trustee") has custody of assets and
responsibility for the accounting records and financial statements of
the Trust and is responsible for establishing and maintaining a
system of internal control related thereto. The Trustee is also
responsible for all estimates of expenses and accruals reflected in
the Trust's financial statements.
The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected by
the Certificateholders).
The Trust Indenture and Agreement further requires that principal
received from the disposition of bonds, other than those bonds sold
in connection with the redemption of units, be distributed to
Certificateholders.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. For the years ended December 31, 1998, 1997 and 1996,
187, 126, and 241 units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.40 to $1.08 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $35.00 is paid to
a service bureau for each portfolio valuation. For the years ended
December 31, 1998, 1997 and 1996, the "Trustee's Fees" are comprised
of Trustee fees of $6,385, $7,092 and $7,386 and other expenses of
$11,593, $11,109 and $6,177, respectively. The other expenses include
professional, printing and miscellaneous fees.
<PAGE>
New York Municipal Trust, Series 6
Notes to Financial Statements
- --------------------------------------------------------------------------------
5. Net Assets
At December 31, 1998, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 13,354,711
Less Initial Gross Underwriting Commission 600,990
------------
12,753,721
Accumulated Cost of Securities Sold,
Matured or Called (8,571,269)
Net Unrealized Appreciation 558,439
Undistributed Net Investment Income 121,583
Undistributed Proceeds From Investments 35,005
------------
Total $ 4,897,479
============
The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 13,000 units of
fractional undivided interest of the Trust as of the date of deposit.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds,
it may be affected by economic and political developments in the
municipalities. Certain debt obligations held by the Trust may be
entitled to the benefit of insurance, standby letters of credit or
other guarantees of banks or other financial institutions.
<PAGE>
Note: Part B of This Prospectus May Not be Distributed
Unless Accompanied by Part A.
Please Read And Retain Both Parts of This
Prospectus For Future Reference.
NEW YORK MUNICIPAL TRUST
Prospectus Part B
Dated: April 30, 1999
THE TRUST
ORGANIZATION. "New York Municipal Trust" is a unit investment trust
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement* (the "Trust Agreement"), dated the Date of Deposit, among Reich &
Tang Distributors, Inc. as Sponsor, The Bank of New York as Trustee, and Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc., a
subsidiary of The McGraw-Hill Companies, as Evaluator.
On the Date of Deposit the Sponsor deposited with the Trustee
long-term bonds, and/or delivery statements relating to contracts for the
purchase of certain such bonds (the "Bonds") 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 Bonds so deposited,
delivered to the Sponsor the Certificates evidencing the ownership of all Units
of the Trusts.
The Trust consists of the interest-bearing bonds described under "The
Trust" in Part A of this Prospectus, the interest (including, where applicable,
earned original issue discount) on which is, in the opinions of bond counsel to
the respective issuers given at the time of original delivery of the Bonds,
exempt from regular federal income tax under existing law and from New York
State and New York City income taxes under existing law.
Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of the Trust
in the ratio of one Unit to the principal amount of Bonds initially deposited in
the Trust as set forth in Part A of this Prospectus. To the extent that any
Units are redeemed by the Trustee, the fractional undivided interest or pro rata
share in the Trusts represented by each unredeemed Unit will increase, although
the actual interest in the Trusts represented by such fraction will remain
unchanged. Units will remain outstanding until redeemed upon tender to the
Trustee by Certificateholders, which may include the Sponsor, or until the
termination of the Trust Agreements.
OBJECTIVES. The Trust offers investors the opportunity to participate
in a portfolio of long-term tax-exempt bonds with a greater diversification than
they might be able to acquire themselves. The objectives
- -------------------
* References in this Prospectus to the Trust Agreement are qualified in their
entirety by the Trust Indenture and Agreement which is incorporated herein by
reference.
1653.5
<PAGE>
of the Trust are to preserve capital and to provide interest income (including,
where applicable, earned original issue discount) which is, in the opinions of
bond counsel to the respective issuers given at the time of original delivery of
the Bonds, exempt from regular federal income tax and from New York State and
New York City income taxes under existing law. Such interest income may,
however, be subject to the federal alternative minimum tax and to state and
local taxes in other jurisdictions. Investors should be aware that there is no
assurance the Trusts' objectives will be achieved as these objectives are
dependent on the continuing ability of the issuers of the Bonds to meet their
interest and principal payment requirements, on the continuing satisfaction of
the conditions required for the exemption of interest thereon from regular
federal income tax and on the market value of the Bonds, which can be affected
by fluctuations in interest rates and other factors.
Since disposition of Units prior to final liquidation of the Trust may
result in an investor receiving less than the amount paid for such Units (see
"Comparison of Public Offering Price, Sponsor's Repurchase Price and Redemption
Price"), the purchase of a Unit should be looked upon as a long-term investment.
Neither the Trusts nor the Total Reinvestment Plan is designed to be a complete
investment program.
PORTFOLIOS
All of the Bonds in the Trust were rated "A" or better by Standard
& Poor's Ratings Services, a division of The McGraw-Hill Companies ("Standard &
Poor's") or Moody's Investors Service, Inc. ("Moody's") at the time originally
deposited in the Trust. For a list of the ratings of each Bond on the Evaluation
Date, see "Portfolio" in Part A of this Prospectus.
For information regarding (i) the number of issues in the Trust, (ii)
the range of fixed maturities of the Bonds, (iii) the number of issues payable
from the income of a specific project or authority and (iv) the number of issues
constituting general obligations of a government entity, see "Description of
Portfolio" in Part A.
When selecting Bonds for the Trust, the following factors, among
others, were considered by the Sponsor on the Date of Deposit: (a) the quality
of the Bonds and whether such Bonds were rated "A" or better by either Standard
& Poor's or Moody's, (b) the yield and price of the Bonds relative to other New
York and Puerto Rico debt securities of comparable quality and maturity, (c)
income to the Certificateholders of the Trusts and (d) the diversification of
the Trust portfolio, as to purpose of issue and location of issuer, taking into
account the availability in the market of issues which meet such Trust's
quality, rating, yield and price criteria. Subsequent to the Evaluation Date, a
Bond may cease to be rated or its rating may be reduced below that specified
above. Neither event requires an elimination of such Bond from the Trust but may
be considered in the Sponsor's determination to direct the Trustee to dispose of
the Bond. See "Portfolio Supervision." For an interpretation of the bond ratings
see "Description of Bond Ratings."
Housing Bonds: Some of the aggregate principal amount of the Bonds may
consist of obligations of state and local housing authorities whose revenues are
primarily derived from mortgage loans to rental housing projects for low to
moderate income families. Since such obligations are usually not
1653.5
-2-
<PAGE>
general obligations of a particular state or municipality and are generally
payable primarily or solely from rents and other fees, adverse economic
developments including failure or inability to increase rentals, fluctuations of
interest rates and increasing construction and operating costs may reduce
revenues available to pay existing obligations. See "Description of Portfolio"
in Part A for the amount of rental housing bonds contained therein.
Hospital Revenue Bonds: Some of the aggregate principal amount of the
Bonds may consist of hospital revenue bonds. Ratings of hospital bonds are often
initially based on feasibility studies which contain projections of occupancy
levels, revenues and expenses. Actual experience may vary considerably from such
projections. A hospital's gross receipts and net income will be affected by
future events and conditions including, among other things, demand for hospital
services and the ability of the hospital to provide them, physicians' confidence
in hospital management capability, economic developments in the service area,
competition, actions by insurers and governmental agencies and the increased
cost and possible unavailability of malpractice insurance. Additionally, a major
portion of hospital revenue typically is derived from third-party payors and
government programs such as Medicare and Medicaid. Both private third-party
payors and government programs have undertaken cost containment measures
designed to limit payments. Furthermore, government programs are subject to
statutory and regulatory changes, retroactive rate adjustments, administrative
rulings and government funding restrictions, all of which may materially
decrease the rate of program payments for health care facilities. There can be
no assurance that payments under governmental programs will remain at levels
comparable to present levels or will, in the future, be sufficient to cover the
costs allocable to patients participating in such programs. In addition, there
can be no assurance that a particular hospital or other health care facility
will continue to meet the requirements for participation in such programs.
The health care delivery system is undergoing considerable alteration
and consolidation. Consistent with that trend, the ownership or management of a
hospital or health care facility may change, which could result in (i) an early
redemption of bonds, (ii) alteration of the facilities financed by the Bonds or
which secure the Bonds, (iii) a change in the tax exempt status of the Bonds or
(iv) an inability to produce revenues sufficient to make timely payment of debt
service on the Bonds. Future legislation or changes in the areas noted above,
among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse change in these areas may affect the ability of such
issuers to make payment of principal and interest on such bonds. See
"Description of Portfolio" in Part A for the amount of hospital revenue bonds
contained therein.
Nuclear Power Facility Bonds: Certain Bonds may have been issued in
connection with the financing of nuclear generating facilities. Electric
utilities which own or operate nuclear power plants are exposed to risks
inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state regulatory oversight,
public controversy, decommissioning costs, and spent fuel and radioactive waste
disposal issues. While nuclear power construction risks are no longer of
paramount concern, the emerging issue is radioactive waste disposal. In
addition, nuclear plants typically require substantial capital additions and
modifications throughout their operating lives to meet safety, environmental,
operational and regulatory requirements and to replace and upgrade various plant
systems. The high degree of regulatory monitoring and controls imposed on
nuclear plants could cause a plant to be out of service or on limited
1653.5
-3-
<PAGE>
service for long periods. When a nuclear facility owned by an investor-owned
utility or a state or local municipality is out of service or operating on a
limited service basis, the utility operator or its owners may be liable for the
recovery of replacement power costs. Risks of substantial liability also arise
from the operation of nuclear facilities and from the use, handling, and
possible radioactive emissions associated with nuclear fuel. Insurance may not
cover all types or amounts of loss which may be experienced in connection with
the ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. The Nuclear Regulatory
Commission has promulgated regulations mandating the establishment of funded
reserves to assure financial capability for the eventual decommissioning of
licensed nuclear facilities. These funds are to be accrued from revenues in
amounts currently estimated to be sufficient to pay for decommissioning costs.
The Sponsor is unable to predict whether any such actions or whether any such
proposals or litigation, if enacted or instituted, will have an adverse impact
on the revenues available to pay the debt service on the Bonds in the portfolio
issued to finance such nuclear projects. See "Description of Portfolio" in Part
A for the amount of bonds issued to finance nuclear generating facilities
contained therein.
Mortgage Subsidy Bonds: Certain Bonds may be "mortgage subsidy bonds"
which are obligations of which all or a significant portion of the proceeds are
to be used directly or indirectly for mortgages on owner-occupied residences.
Section 103A of the Internal Revenue Code of 1954, provided as a general rule
that interest on "mortgage subsidy bonds" will not be exempt from Federal income
tax. An exception is provided for certain "qualified mortgage bonds." Qualified
mortgage bonds are bonds that are used to finance owner-occupied residences and
that meet numerous statutory requirements. These requirements include certain
residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions and (for bonds
issued after December 31, 1984) certain information reporting, certification,
public hearing and policy statement requirements. In the opinions of bond
counsel to the issuing governmental authorities, interest on all the Bonds in a
Trust that might be deemed "mortgage subsidy bonds" will be exempt from Federal
income tax when issued. See "Description of Portfolio" in Part A for the amount
of mortgage subsidy Bonds contained therein.
Mortgage Revenue Bonds: Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1986, as amended (the "Code") (and
under similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to residency,
ownership, purchase price and target area requirements, ceiling amounts for
state and local issuers, arbitrage restrictions, and certain information
reporting certification, and public hearing requirements. There can be no
assurance that additional federal legislation will not be introduced or that
existing legislation will not be further amended, revised, or enacted after
delivery of these Bonds or that certain required future actions will be taken by
the issuing governmental authorities, which action or failure to act could cause
interest on the Bonds to be subject to federal income tax. If any portion of the
Bonds proceeds are not committed for the purpose of the issue, Bonds in such
amount could be subject to earlier mandatory redemption at par, including issues
of Zero Coupon Bonds (see "Discount and Zero Coupon Bonds"). See "Description of
Portfolio" in Part A for the amount of mortgage revenue bonds contained therein.
1653.5
-4-
<PAGE>
Private Activity Bonds: The portfolio of the Trust may contain other
Bonds which are "private activity bonds" (often called Industrial Revenue Bonds
("IRBs") if issued prior to 1987) which would be primarily of two types: (1)
Bonds for a publicly owned facility which a private entity may have a right to
use or manage to some degree, such as an airport, seaport facility or water
system and (2) facilities deemed owned or beneficially owned by a private entity
but which were financed with tax-exempt bonds of a public issuer, such as a
manufacturing facility or a pollution control facility. In the case of the first
type, bonds are generally payable from a designated source of revenues derived
from the facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions. In
most cases of project financing of the first type, receipts or revenues of the
Issuer are derived from the project or the operator or from the unexpended
proceeds of the bonds. Such revenues include user fees, service charges, rental
and lease payments, and mortgage and other loan payments.
The second type of issue will generally finance projects which are
owned by or for the benefit of, and are operated by, corporate entities.
Ordinarily, such private activity bonds are not general obligations of
governmental entities and are not backed by the taxing power of such entities,
and are solely dependent upon the creditworthiness of the corporate user of the
project or corporate guarantor.
The private activity bonds in the Trust have generally been issued
under bond resolutions, agreements or trust indentures pursuant to which the
revenues and receipts payable under the issuer's arrangements with the users or
the corporate operator of a particular project have been assigned and pledged to
the holders of the private activity bonds. In certain cases a mortgage on the
underlying project has been assigned to the holders of the private activity
bonds or a trustee as additional security. In addition, private activity bonds
are frequently directly guaranteed by the corporate operator of the project or
by another affiliated company. See "Description of Portfolio" in Part A for the
amount of private activity bonds contained therein.
Litigation: Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been reached
holding such school financing in violation of state constitutions. In addition,
legislation to effect changes in public school financing has been introduced in
a number of states. The Sponsor is unable to predict the outcome of the pending
litigation and legislation in this area and what effect, if any, resulting
changes in the sources of funds, including proceeds from property taxes applied
to the support of public schools, may have on the school bonds in the Trusts.
See "Description of Portfolio" for the amount of school bonds contained therein.
Legal Proceedings Involving the Trust: As of the date of this
Prospectus, the Sponsor has not been notified or made aware of any litigation
pending with respect to any Bonds which might reasonably be expected to have a
material adverse effect on the Trust. Such litigation, as, for example, suits
challenging the issuance of pollution control revenue bonds under recently
enacted environmental protection statutes, may affect the validity of such Bonds
or the tax-free nature of the interest thereon. At any time after the date of
this Prospectus, litigation may be instituted on a variety of grounds with
respect to the Bonds in the Trust. The Sponsor is unable to predict
1653.5
-5-
<PAGE>
whether any such litigation may be instituted or, if instituted, whether it
might have a material adverse effect on the Trust.
Other Factors: The Bonds in the Trust, despite their optional
redemption provisions which generally do not take effect until 10 years after
the original issuance dates of such bonds (often referred to as "ten year call
protection"), do contain provisions which require the issuer to redeem such
obligations at par from unused proceeds of the issue within a stated period. In
recent periods of declining interest rates there have been increased redemptions
of bonds, particularly housing bonds, pursuant to such redemption provisions. In
addition, the Bonds in the Trusts are also subject to mandatory redemption in
whole or in part at par at any time that voluntary or involuntary prepayments of
principal on the underlying collateral are made to the trustee for such bonds or
that the collateral is sold by the bond issuer. Prepayments of principal tend to
be greater in periods of declining interest rates; it is possible that such
prepayments could be sufficient to cause a bond to be redeemed substantially
prior to its stated maturity date, earliest call date or sinking fund redemption
date.
The Bonds may also be subject to other calls, which may be permitted
or required by events which cannot be predicted (such as destruction,
condemnation, or termination of a contract).
In 1976 the federal bankruptcy laws were amended so that an authorized
municipal debtor could more easily seek federal court protection to assist in
reorganizing its debts so long as certain requirements were met. Historically,
very few financially troubled municipalities have sought court assistance for
reorganizing their debts; notwithstanding, the Sponsors are unable to predict to
what extent financially troubled municipalities may seek court assistance in
reorganizing their debts in the future and, therefore, what effect, if any, the
applicable federal bankruptcy law provisions will have on the Trusts.
The Trust may also include "moral obligation" bonds issued by agencies
and authorities of New York State. Under statutes applicable to such bonds, if
an issuer is unable to meet its obligations, the repayment of such bonds becomes
a moral commitment but not a legal obligation of the state or municipality in
question. See "Portfolio" for each Trust in Part A of this Prospectus for the
amount of moral obligation bonds contained in each State Trust's portfolio.
Certain of the Bonds in the Trust are subject to redemption prior to
their stated maturity dates pursuant to sinking fund or call provisions. A
sinking fund is a reserve fund appropriated specifically toward the retirement
of a debt. A callable bond is one which is subject to redemption or refunding
prior to maturity at the option of the issuer. A refunding is a method by which
a bond is redeemed at or before maturity from the proceeds of a new issue of
bonds. In general, call provisions are more likely to be exercised when the
offering side evaluation of a bond is at a premium over par than when it is at a
discount from par. A listing of the sinking fund and call provisions, if any,
with respect to each of the Bonds is contained under "Portfolio" in Part A of
this Prospectus. Certificateholders will realize a gain or loss on the early
redemption of such Bonds, depending upon whether the price of such Bonds is at a
discount from or at a premium over par at the time the Certificateholders
purchase their Units.
1653.5
-6-
<PAGE>
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Bonds. Because certain of the Bonds
from time to time may be redeemed or will mature in accordance with their terms
or may be sold under certain circumstances, no assurance can be given that the
Trust will retain its present size and composition for any length of time. The
proceeds from the sale of a Bond or the exercise of any redemption or call
provision will be distributed to Certificateholders on the next distribution
date except to the extent such proceeds are applied to meet redemptions of
Units. See "Trustee Redemption."
Puerto Rico Bonds: Certain of the Bonds in the Trust may be general
obligations and/or revenue bonds of issuers located in Puerto Rico. Such bonds
will be affected by general economic conditions in Puerto Rico. The economy of
Puerto Rico is fully integrated with that of the mainland United States. During
fiscal year 1998, approximately 90% of Puerto Rico's exports were to the United
States mainland, which was also the source of 61% of Puerto Rico's imports. In
fiscal 1998, Puerto Rico experienced a $8.5 billion positive adjusted
merchandise trade balance. The dominant sectors of the Puerto Rico economy are
manufacturing and services. Gross product in fiscal 1993 was $25.1 billion
($24.5 billion in 1992 prices) and gross product in fiscal 1997 was $32.1
billion ($27.7 billion in 1992 prices). This represents an increase in gross
product of 27.7% from fiscal 1993 to 1997 (13.0% in 1992 prices). According to
the Labor Department's Household Employment Survey, during fiscal 1998, total
employment increased 0.8% over fiscal 1997. The preliminary figures of gross
product for fiscal 1998, released in November 1998, was $34.7 billion ($28.5
billion in 1992 prices). This represents an increase of 8.1% (3.1% in 1992
prices) over fiscal 1997. This preliminary growth rate is 0.1% above the
original base line forecast for fiscal 1998. The Planning Board's gross product
forecast for fiscal 1999, made in February 1998, projected an increase of 2.7%
over fiscal 1998. According to the Labor Department's Household Employment
Survey, during the first five months of fiscal 1999, total employment decreased
1.2% over the same period for fiscal 1998. Total monthly employment averaged
1,124,800 during the first five months of fiscal 1999, compared to 1,138,400
over the same period in fiscal 1998. The seasonally adjusted unemployment rate
for November 1998 was 13.3%.
Discount and Zero Coupon Bonds: Some of the Bonds in the Trust may be
original issue discount bonds. The original issue discount, which is the
difference between the initial purchase price of the Bonds and the face value,
is deemed to accrue on a daily basis and the accrued portion will be treated as
tax-exempt interest income for regular federal income tax purposes. Upon sale or
redemption, any gain realized that is in excess of the earned portion of
original issue discount will be taxable as capital gain. (See "Tax Status.") The
current value of an original issue discount bond reflects the present value of
its face amount at maturity. The market value tends to increase more slowly in
early years and in greater increments as the Bonds approach maturity. Of these
original issue discount bonds, a portion of the aggregate principal amount of
the Bonds in each Trust is Zero Coupon Bonds. See "Description of Portfolio" in
Part A. Zero Coupon Bonds do not provide for the payment of any current interest
and provide for payment at maturity at par value unless sooner sold or redeemed.
The market value of Zero Coupon Bonds is subject to greater fluctuation than
coupon bonds in response to changes in interest rates. Zero Coupon Bonds
generally are subject to redemption at compound accreted value based on par
value at maturity. Because the issuer is not obligated to make current interest
payments, Zero Coupon
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Bonds may be less likely to be redeemed than coupon bonds issued at a similar
interest rate.
Some of the Bonds in the Trust may have been purchased at deep
"market" discount from par value at maturity. This is because the coupon
interest rates on the discount bonds at the time they were purchased and
deposited in the Trust were lower than the current market interest rates for
newly issued bonds of comparable rating and type. At the time of issuance the
discount Bonds were for the most part issued at then current coupon interest
rates. The current yields (coupon interest income as a percentage of market
price) of discount bonds will be lower than the current yields of comparably
rated bonds of similar type newly issued at current interest rates because
discount bonds tend to increase in market value as they approach maturity and
the full principal amount becomes payable. A discount bond held to maturity will
have a larger portion of its total return in the form of capital gain and less
in the form of tax-exempt interest income than a comparable bond newly issued at
current market rates. Under the provisions of the Internal Revenue Code in
effect on the date of this Prospectus, any income attributable to market
discount will be taxable but will not be realized until maturity, redemption or
sale of the Bonds or Units. However, the Administration's 1999 Budget proposals
would require accrual basis taxpayers to accrue market discount income with
respect to obligations acquired after the date that the proposal is enacted.
Gain on the disposition of a Bond purchased at a market discount generally will
be treated as ordinary income, rather than capital gain, to the extent of
accrued market discount. Discount bonds with a longer term to maturity tend to
have a higher current yield and a lower current market value than otherwise
comparable bonds with a shorter term to maturity. If interest rates rise, the
value of discount bonds will decrease; and if interest rates decline, the value
of discount bonds will increase. The discount does not necessarily indicate a
lack of market confidence in the issuer.
Year 2000 Issue: The Trust, like other business entities, could be
adversely affected if the computer systems used by the Sponsor and Trustee or
other service providers to the Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor and Trustee are taking
steps that they believe are reasonably designed to address the Year 2000 Problem
with respect to computer systems that they use and to obtain reasonable
assurances that comparable steps are being taken by the Trusts' other service
providers. However, there can be no assurance that the Year 200 Problem will be
properly or timely resolved so to avoid any adverse impact to the Trust. At this
time, it is generally believed that municipal issuers may be more vulnerable to
Year 2000 issues or problems than will other issuers.
SPECIAL FACTORS AFFECTING NEW YORK
The information set forth below is derived from the official
statements and/or preliminary drafts of official statements prepared in
connection with the issuance of State and City municipal bonds. The Fund has not
independently verified this information.
Economic Trends. Over the long term, the State of New York (the
"State") and the City of New York (the "City") face serious economic problems.
The City accounts for approximately 41% of the State's population and personal
income, and the City's financial health affects the State in numerous ways.
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The State historically has been one of the wealthiest states in the nation. For
decades, however, the State has grown more slowly than the nation as a whole,
gradually eroding its relative economic affluence. Statewide, urban centers have
experienced significant changes involving migration of the more affluent to the
suburbs and an influx of generally less affluent residents. Regionally, the
older Northeast cities have suffered because of the relative success that the
South and the West have had in attracting people and business. The City has also
had to face greater competition as other major cities have developed financial
and business capabilities which make them less dependent on the specialized
services traditionally available almost exclusively in the City.
The State has for many years had a very high State and local tax
burden relative to other states. The State and its localities have used these
taxes to develop and maintain their transportation networks, public schools and
colleges, public health systems, other social services and recreational
facilities. Despite these benefits, the burden of State and local taxation, in
combination with the many other causes of regional economic dislocation, has
contributed to the decisions of some businesses and individuals to relocate
outside, or not locate within, the State.
Notwithstanding the numerous initiatives that the State and its
localities may take to encourage economic growth and achieve balanced budgets,
reductions in Federal spending could materially and adversely affect the
financial condition and budget projections of the State and its localities.
New York City. The City, with a population of approximately 7.4
million, is an international center of business and culture. Its
non-manufacturing economy is broadly based, with the banking and securities,
life insurance, communications, publishing, fashion design, retailing and
construction industries accounting for a significant portion of the City's total
employment earnings. Additionally, the City is the nation's leading tourist
destination. The City's manufacturing activity is conducted primarily in apparel
and printing.
For each of the 1981 through 1998 fiscal years, the City had an
operating surplus, before discretionary transfers, and achieved balanced
operating results as reported in accordance with then applicable generally
accepted accounting principles ("GAAP"), after discretionary transfers. The City
has been required to close substantial gaps between forecast revenues and
forecast expenditures in order to maintain balanced operating results. There can
be no assurance that the City will continue to maintain balanced operating
results as required by State law without tax or other revenue increases or
reductions in City services or entitlement programs, which could adversely
affect the City's economic base.
As required by law, the City prepares a four-year annual financial
plan, which is reviewed and revised on a quarterly basis and which includes the
City's capital, revenue and expense projections and outlines proposed
gap-closing programs for years with projected budget gaps. The City's current
financial plan projects a surplus in the 1999 fiscal year, before discre tionary
transfers, and budget gaps for each of the 2000, 2001 and 2002 fiscal years.
This pattern of current year surplus operating results and projected subsequent
year budget gaps has been consistent through the entire period since 1982,
during which the City has achieved surplus operating results, before
discretionary transfers, for each fiscal year.
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The City depends on aid from the State both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected; that State budgets will be adopted by the April 1 statutory
deadline, or interim appropriations enacted; or that any such reductions or
delays will not have adverse effects on the City's cash flow or expenditures. In
addition, the Federal budget negotiation process could result in a reduction in
or a delay in the receipt of Federal grants which could have additional adverse
effects on the City's cash flow or revenues.
The Mayor is responsible for preparing the City's financial plan,
including the City's current financial plan for the 1999 through 2002 fiscal
years (the "1999-2002 Financial Plan" or "Financial Plan"). The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Such
assumptions and contingencies include the condition of the regional and local
economies, the provision of State and Federal aid and the impact on City
revenues and expenditures of any future Federal or State policies affecting the
City.
Implementation of the Financial Plan is dependent upon the City's
ability to market its securities successfully. The City's financing program for
fiscal years 1999 through 2002 contemplates the issuance of $5.2 billion of
general obligation bonds and $5.4 billion of bonds to be issued by the New York
City Transitional Finance Authority (the "Finance Authority") to finance City
capital projects. The Finance Authority was created as part of the City's effort
to assist in keeping the City's indebtedness within the forecast level of the
constitutional restrictions on the amount of debt the City is authorized to
incur. In addition, the City issues re5venue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City bonds and notes, New York City Municipal Water Finance
Authority ("Water Authority") bonds and Finance Authority bonds will be subject
to prevailing market conditions. The City's planned capital and operating
expenditures are dependent upon the sale of its general obligation bonds and
notes, and the Water Authority and Finance Authority bonds. Future developments
concerning the City and public discussion of such developments, as well as
prevailing market conditions, may affect the market for outstanding City general
obligation bonds and notes.
For the 1998 fiscal year, the City had an operating surplus,
before discretionary and other transfers, and achieved balanced operating
results, after discretionary and other transfers, in accordance with GAAP. The
1998 fiscal year is the eighteenth year that the City has achieved an operating
surplus, before discretionary and other transfers, and balanced operating
results, after discretionary and other transfers.
On November 18, 1998, the City released the Financial Plan for the
1999 through 2002 fiscal years, which relates to the City and certain entities
which receive funds from the City. The Financial Plan is a modification to the
financial plan submitted to the Control Board on June 26, 1998 (the "June
Financial Plan"). The Financial Plan projects revenues and expenditures for the
1999 fiscal year balanced in accordance with GAAP, and projects gaps of $2.2
billion, $2.9 billion and $2.4 billion for the 2000 through 2002 fiscal years,
respectively, after implementation of a gap closing program to reduce agency
expenditures by $200 million in the 1999 fiscal year and approximately $80
million in each of fiscal years 2000 through 2002.
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Changes since the June Financial Plan include: (i) an increase in
projected tax revenues of $288 million and $8 million in fiscal years 1999 and
2000, respectively, and a decrease in projected tax revenues of $23 million and
$66 million in fiscal years 2001 and 2002, respectively; (ii) an increase in
planned expenditures for health insurance of approximately $60 million in each
of fiscal years 1999 through 2002; (iii) a decrease in projected pension
expenditures due to higher than planned increases in the value of the assets of
the retirement systems of $67 million, $171 million, $264 million and $372
million in the fiscal years 1999 through 2002, respectively; (iv) other agency
spending increases of $76 million, $101 million, $78 million, and $70 million in
fiscal years 1999 through 2002, respectively; and (v) an increase in agency
expenditures of $227 million, $295 million, $295 million and $294 million in
fiscal years 1999 through 2002, respectively, due to a reduction in the agency
gap closing program.
The 1999-2002 Financial Plan includes a proposed discretionary
transfer in the 1999 fiscal year of $465 million to pay debt service due in
fiscal year 2000. In addition, the Financial Plan reflects enacted and proposed
tax reduction programs totaling $429 million, $604 million and $606 million in
fiscal years 2000 through 2002, respectively, including the elimination of the
City sales tax on all clothing as of December 1, 1999, the extension of current
tax reductions for owners of cooperative and condominium apartments starting in
fiscal year 2000 and a personal income tax credit for child care and for
resident holders of Subchapter S corporations starting in fiscal year 2000,
which are subject to State legislative approval, and reduction of the commercial
rent tax commencing in fiscal year 2000.
The Financial Plan assumes (i) approval by the Governor and the State
Legislature of the extension of the 14% personal income tax surcharge, which is
scheduled to expire on December 31, 1999, and which is projected to provide
revenue of $183 million, $524 million and $544 million in the 2000, 2001 and
2002 fiscal years, respectively; and (ii) collection of the projected rent
payments for the City's airports, totaling $6 million, $365 million, $155
million and $185 million in the 1999 through 2002 fiscal years, respectively, a
substantial portion of which may depend on the successful completion of
negotiations with The Port Authority of New York and New Jersey (the "Port
Authority") or the enforcement of the City's rights under the existing leases
through pending legal actions. The Financial Plan provides no additional wage
increases for City employees after their contracts expire in fiscal years 2000
and 2001. In addition, the economic and financial condition of the City may be
affected by various financial, social, economic and political factors which
could have a material effect on the City.
In January, the Mayor is expected to publish a Modification (the
"January Modification") to the Financial Plan for the City's 1999 through 2003
fiscal years and a preliminary budget for the City's fiscal year 2000. The
January Modification will include changes since the Financial Plan and the
City's program to address the currently forecast $2.2 billion gap in fiscal year
2000. As in prior years, the City's gap-closing program could include a program
to substantially reduce projected agency spending and City proposals for
increased Federal and State aid and other non-tax revenues.
The 1998 modification of the City's financial plan and the
1999-2002 Financial Plan include a proposed discretionary transfer in the 1998
fiscal year of approximately $2.0 billion to pay debt service due in the 1999
fiscal year, and a proposed discretionary transfer in the 1999 fiscal year of
$416 million to pay debt service due in fiscal year 2000, included in the
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Budget Stabilization Accounts for the 1998 and 1999 fiscal years, respectively.
In addition, the Financial Plan reflects proposed tax reduction programs
totaling $237 million, $537 million, $657 million and $666 million in fiscal
years 1999 through 2002, respectively, including the elimination of the City
sales tax on all clothing as of December 1, 1999, a City-funded acceleration of
the State funded personal income tax reduction for the 1999 through 2001 fiscal
years, the extension of current tax reductions for owners of cooperative and
condominium apartments starting in fiscal year 2000 and a personal income tax
credit for child care and for resident holders of Subchapter S corporations,
which are subject to State legislative approval, and reduction of the commercial
rent tax commencing in fiscal year 2000.
On June 5, 1998, the City Council adopted a budget which re-allocated
expenditures from those provided in the Executive Budget in the amount of $409
million. The re-allocated expenditures, which include $116 million from the
Budget Stabilization Account, $82 million from debt service, $45 million from
pension contributions, $54 million from social services spending and $112
million from other spending, were re-allocated to uses set forth in the City
Council's adopted budget. Such uses include a revised tax reduction program at a
revenue cost in the 1999 fiscal year of $45 million, additional expenditures for
various programs of $199 million and provision of $165 million to retire high
interest debt. The revised tax reduction program in the City Council's adopted
budget assumes the expiration of the 12.5% personal income tax surcharge, rather
than the implementation of the personal income tax reduction program proposed in
the Executive budget. The changes reflected in the City Council's adopted budget
would increase the gaps forecast between revenues and expenditures in the future
years of the Financial Plan.
On June 5, 1998, in accordance with the City Charter, the Mayor
certified to the City Council revised estimates of the City's revenues (other
than property tax) for fiscal year 1999. Consistent with this certification, the
property tax levy was estimated by the Mayor to require an increase to realize
sufficient revenue from this source to produce a balanced budget within
generally accepted accounting principles. On June 8, 1998, the City Council
adopted a property tax levy that was $237.7 million lower than the levy
estimated to be required by the Mayor. The City Council, however, maintained
that the revenue to be derived from the levy it adopted would be sufficient to
achieve a balanced budget because the property tax reserve for uncollectibles
could be reduced. Property tax bills for fiscal year 1999 are expected to be
mailed in the near future by the City's Department of Finance at the rates
adopted by the City Council for fiscal year 1998, subject to later adjustment.
On July 16, 1998, Standard & Poor's revised its rating of City bonds
upward from BBB+ to A-. Moody's rating of City bonds was revised in February
1998 to A3 from Baa1. Moody's, Standard & Poor's and Fitch currently rate the
City's outstanding general obligations bonds A3, A- and A-, respectively.
New York State and its Authorities. The State Financial Plan for the
1998-1999 fiscal year projects balance on a cash basis for the 1998-1999 fiscal
year, as modified on July 30, 1998, with a closing balance in the General Fund
of $1.67 billion. The State Financial Plan contains projections of a potential
imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming implementation
of unspecified efficiency actions, the receipt of funds from the tobacco
settlement and the application of certain reserves
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established in the 1998-1999 State Financial Plan. The Executive Budget
submitted in February 1998 contained projections at that time of a potential
imbalance in the 2000-2001 fiscal year of $3.72 billion, assuming implementation
of unspecified efficiency initiatives and other actions in the 2000-2001 fiscal
year.
The 1999-2002 Financial Plan is based on numerous assumptions,
including the condition of the City's and the region's economy and a modest
employment recovery and the concomitant receipt of economically sensitive tax
revenues in the amounts projected. The 1999-2002 Financial Plan is subject to
various other uncertainties and contingencies relating to, among other factors,
the extent, if any, to which wage increases for City employees exceed the annual
wage costs assumed for the 1999 through 2002 fiscal years; continuation of
projected interest earnings assumptions for pension fund assets and current
assumptions with respect to wages for City employees affecting the City's
required pension fund contributions; the willingness and ability of the State to
provide the aid contemplated by the Financial Plan and to take various other
actions to assist the City; the ability of State agencies to maintain balanced
budgets; the willingness of the Federal government to provide the amount of
Federal aid contemplated in the Financial Plan; the impact on City revenues and
expenditures of Federal and State welfare reform and any future legislation
affecting Medicare or other entitlement programs; adoption of the City's budgets
by the City Council in substantially the forms submitted by the Mayor; the
ability of the City to implement cost reduction initiatives, and the success
with which the City controls expenditures; the impact of conditions in the real
estate market on real estate tax revenues; the City's ability to market its
securities successfully in the public credit markets; and unanticipated
expenditures that may be incurred as a result of the need to maintain the City's
infrastructure. Certain of these assumptions have been questioned by the City
Comptroller and other public officials.
The Legislature passed a State budget for the 1998-1999 fiscal year on
April 18, 1998, and on April 26, 1998 the Governor vetoed certain of the
increased spending in the State budget passed by the Legislature. The
Legislature did not override any of the Governor's vetoes. The State Financial
Plan for the 1998-1999 fiscal year, as modified on July 30, 1998, projects
balance on a cash basis for the 1998-1999 fiscal year, with a closing balance in
the General Fund of $1.67 billion. The State Financial Plan contains projections
of a potential imbalance in the 1999-2000 fiscal year of $1.3 billion, assuming
implementation of $600 million of unspecified efficiency actions, the receipt of
$250 million in funds from the tobacco settlement and the application of certain
reserves established in the 1998-1999 State Financial Plan. The Executive Budget
submitted in February 1998 contained projections at that time of a potential
imbalance in the 2000-2001 fiscal year of $3.72 billion, assuming implementation
of $800 million of unspecified efficiency initiatives in the 2000-2001 fiscal
year and $250 million in funds from the tobacco settlement. The State Financial
Plan for the 1998-1999 fiscal year includes multi-year tax reductions and
significant increases in spending which will affect the 2000-2001 fiscal year.
The various elements of the State and local tax and assessment reductions
enacted during the last several fiscal years will reduce projected revenues by
more than $4 billion in the 2002-2003 fiscal year as measured from the current
1998-1999 base.
On July 23, 1998, the New York State Comptroller issued a report which
noted that a significant cause for concern is the budget gaps in the
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1999-2000 and 2000-2001 fiscal years, which the State Comptroller projected at
$1.8 billion and $5.5 billion, respectively, after excluding the uncertain
receipt by the State of $250 million of funds from the tobacco settlement
assumed for each of such fiscal years, as well as the unspecified actions
assumed in the State's projections. The State Comptroller also stated that if
the securities industry or economy slows, the size of the gaps would increase.
Standard & Poor's rates the State's general obligation bonds A, and
Moody's rates the State's general obligation bonds A2. On August 28, 1997,
Standard & Poor's revised its rating on the State's general obligation bonds
from A- to A.
Litigation. A number of court actions have been brought involving
State finances. The court actions in which the State is a defendant generally
involve State programs and miscellaneous tort, real property, and contract
claims. While the ultimate outcome and fiscal impact, if any, on the State of
those proceedings and claims are not currently predictable, adverse
determinations in certain of them might have a material adverse effect upon the
State's ability to carry out the 1999-2002 Financial Plan. The City has
estimated that its potential future liability on account of outstanding claims
against it as of June 30, 1998 amounted to approximately $3.5 billion.
PUBLIC OFFERING
OFFERING PRICE. The secondary market Public Offering Price per Unit is
computed by adding a sales charge to the aggregate bid price of the Bonds in the
Trust divided by the number of Units outstanding. The method used by the
Evaluator for computing the sales charge for secondary market purchases shall be
based upon the number of years remaining to maturity of each Bond. Bonds will be
deemed to mature on their stated maturity dates unless bonds have been called
for redemption, funds have been placed in escrow to redeem them on an earlier
call date or are subject to a "mandatory put," in which case the maturity will
be deemed to be such other date.
The table below sets forth the various sales charges based on the
length of maturity of each Bond:
As Percent of Public
Time to Maturity Offering Price
less than 6 months 0%
6 mos. to 1 year 1%
over 1 yr. to 2 yrs. 1 1/2%
over 2 yrs. to 4 yrs. 2 1/2%
over 4 yrs. to 8 yrs. 3 1/2%
over 8 yrs. to 15 yrs. 4 1/2%
over 15 years 5 1/2%
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A proportionate share of accrued interest on the Bonds to the expected
date of settlement for the Units is added to the Public Offering Price. Accrued
interest is the accumulated and unpaid interest on a Bond from the last day on
which interest was paid and is accounted for daily by a Trust at the initial
daily rate set forth under "Summary of Essential Information" in Part A. This
daily rate is net of estimated fees and expenses. The secondary market Public
Offering Price can vary on a daily basis from the amount stated on the cover of
Part A of this Prospectus in accordance with fluctuations in the prices of the
Bonds. The price to be paid by each investor will be computed on the basis of an
evaluation made as of the date the Units are purchased. The aggregate bid price
evaluation of the Bonds is determined in the manner set forth under "Trustee
Redemption".
The Evaluator may obtain current prices for the Bonds from investment
dealers or brokers (including the Sponsor) that customarily deal in tax-exempt
obligations or from any other reporting service or source of information which
the Evaluator deems appropriate.
ACCRUED INTEREST. An amount of accrued interest which represents
accumulated unpaid or uncollected interest on a Bond from the last day on which
interest was paid thereon will be added to the Public Offering Price. This daily
rate is net of estimated fees and expenses. Since a Trust normally receives the
interest on Bonds twice a year and the interest on the Bonds in such Trust is
accrued on a daily basis, the Trusts will always have an amount of interest
earned but uncollected by, or unpaid to, the Trustee. A Certifi cateholder will
not recover his proportionate share of accrued interest until the Units are sold
or redeemed, or the Trusts are terminated. At that time, the Certificateholder
will receive his proportionate share of the accrued interest computed to the
settlement date in the case of sale or termination and to the date of tender in
the case of redemption.
EMPLOYEE DISCOUNTS. Employees (and their immediate families) of Reich
& Tang Distributors, Inc. (and its affiliates) and of any underwriter of either
Trust, pursuant to employee benefit arrangements, may purchase Units of a Trust
at a price equal to the bid side evaluation of the underlying securities in such
Trust divided by the number of Units outstanding plus a reduced charge of $10.00
per Unit. 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.
DISTRIBUTION OF UNITS. 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 register the Units for sale in New York,
New Jersey, Connecticut, Florida and New Hampshire 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 (a) 4% of the
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Public Offering Price for the New York Municipal Trust Series or (b) $25.00 per
unit for the New York Municipal Trust, Discount and Zero Coupon Fund, subject to
the Sponsor's right to change the dealers' concession from time to time. In
addition, for transactions of 1,000,000 Units or more, the Sponsor intends to
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser. 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. The Sponsor
reserves the right to change the discount from time to time.
SPONSOR'S PROFITS. The Sponsor will receive a gross commission on all
Units sold in the secondary market equal to the applicable sales charge on each
(see "Offering Price.") In addition, in maintaining a market for 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.
Participants in the "Total Reinvestment Plan" can designate a broker
as the recipient of a dealer concession. See "Total Reinvestment Plan."
COMPARISON OF PUBLIC OFFERING PRICE, SPONSOR'S REPURCHASE PRICE AND
REDEMPTION PRICE. The secondary market Public Offering Price of Units of the
Trust will be determined on the basis of the current bid prices of the Bonds in
such Trust, plus the applicable sales charge. The value at which Units may be
resold in the secondary market or redeemed will be determined on the basis of
the current bid prices of such Bonds without any sales charge. On the Evaluation
Date, the Public Offering Price per Unit (based on the bid prices of the Bonds
in the Trust plus the sales charge) exceeded the Repurchase and Redemption Price
per Unit (based upon the bid prices of the Bonds in the Trust without the sales
charge) by the amount shown under "Summary of Essential Information" in Part A.
For this reason, among others (including fluctuations in the market prices of
Bonds and the fact that the Public Offering Price includes the applicable sales
charge), the amount realized by a Certificateholder upon any redemption of Units
may be less than the price paid for such Units.
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
The rate of return on an investment in Units of each Trust is measured
in terms of "Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in a Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in each Trust's portfolio by
weighing each Bond's yield by the market value of the Bond and by the amount of
time remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of each Trust); and (3) reducing the average yield for
the portfolio of each Trust in order to reflect estimated fees and expenses of
that Trust and the maximum sales charge paid by Unitholders. The resulting
Estimated Long Term Return represents a measure of
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the return to Unitholders earned over the estimated life of each Trust. The
Estimated Long Term Return as of the day prior to the Evaluation Date is stated
for each Trust under "Summary of Essential Information" in Part A.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Bonds in the portfolios of each Trust. Moreover, because interest
rates on Bonds purchased at a premium are generally higher than current interest
rates on newly issued bonds of a similar type with comparable rating, the
Estimated Current Return per Unit may be affected adversely if such Bonds are
redeemed prior to their maturity. On the day prior to the Evaluation Date, the
Estimated Net Annual Interest Income per Unit divided by the Public Offering
Price resulted in the Estimated Current Return stated for each Trust under
"Summary of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of each Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to each Trust and with the redemption, maturity, sale or other
disposition of the Bonds in each Trust. The Public Offering Price will vary with
changes in the bid prices of the Bonds. Therefore, there is no assurance that
the present Estimated Current Return or Estimated Long Term Return will be
realized in the future.
A schedule of cash flow projections is available from the Sponsor upon
request.
RIGHTS OF CERTIFICATEHOLDERS
CERTIFICATES. Ownership of Units of the Trust is evidenced by
registered Certificates executed by the Trustee and the Sponsor. Certificates
may be issued in denominations of one or more Units and will bear appropriate
notations on their faces indicating which plan of distribution has been selected
by the Certificateholder. Certificates are transferable by presentation and
surrender to the Trustee properly endorsed and/or accompanied by a written
instrument or instruments of transfer. Although no such charge is presently made
or contemplated, the Trustee may require a Certificateholder to pay $2.00 for
each Certificate reissued or transferred and any governmental charge that may be
imposed in connection with each such transfer or interchange. Mutilated,
destroyed, stolen or lost Certificates will be replaced upon delivery of
satisfactory indemnity and payment of expenses incurred.
INTEREST AND PRINCIPAL DISTRIBUTIONS. Interest received by the Trust
is credited by the Trustee to an Interest Account of such Trust and a deduction
is made to reimburse the Trustee without interest for any amounts previously
advanced. Proceeds representing principal received from the maturity,
redemption, sale or other disposition of the Bonds are credited to a Principal
Account of such Trust.
Distributions to each Certificateholder from the Interest Account are
computed as of the close of business of each Record Date for the following
Payment Date and consist of an amount substantially equal to one-twelfth,
one-half or all of each Certificateholder's pro rata share of the Estimated Net
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Annual Interest Income in the Interest Account, depending upon the applicable
plan of distribution. Distributions from the Principal Account will be computed
as of each semi-annual Record Date, and will be made to the Certifi cateholders
on or shortly after the next semi-annual Payment Date. Proceeds representing
principal received from the disposition of any of the Bonds between a Record
Date and a Payment Date which are not used for redemptions of Units will be held
in the Principal Account and not distributed until the second succeeding
semi-annual Payment Date. No distributions will be made to Certificateholders
electing to participate in the Total Reinvestment Plan, except as provided
thereunder. Persons who purchase Units between a Record Date and a Payment Date
will receive their first distribution on the second Payment Date after such
purchase.
Because interest payments are not received by the Trust at a constant
rate throughout the year, interest distributions may be more or less than the
amount credited to the Interest Account as of a given Record Date. For the
purpose of minimizing fluctuations in the distributions from the Interest
Account, the Trustee will advance sufficient funds as may be necessary to
provide interest distributions of approximately equal amounts. The Trustee shall
be reimbursed, without interest, for these advances to the Interest Account.
Funds which are available for future distributions, investment in the Total
Reinvestment Plan, payments of expenses and redemptions are in accounts which
are non-interest bearing to Certificate holders and are available for use by the
Trustee pursuant to normal banking procedures.
As of the first day of each month, the Trustee will deduct from the
Interest Account of the Trust and, to the extent funds are not sufficient
therein, from the Principal Account of such Trust, amounts necessary to pay the
expenses of such 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 such 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 Interest
and Principal Accounts such amounts as may be necessary to cover redemptions of
Units of such Trust by the Trustee.
The estimated monthly, semi-annual or annual interest distribution per
Unit will be in the amount shown under "Summary of Essential Information" in
Part A and will change and may be reduced as Bonds mature or are redeemed,
exchanged or sold, or as expenses of the Trust fluctuate. No distribution need
be made from the Principal Account until the balance therein is an amount
sufficient to distribute at least $1.00 per Unit.
DISTRIBUTION ELECTIONS. Interest is distributed monthly, semi-
annually or annually, depending upon the distribution plan applicable to the
Unit purchased. Record Dates are the first day of each month for monthly
distributions, the first day of each June and December for semi-annual
distributions and the first day of each December for annual distributions.
Payment Dates will be the fifteenth day of each month following the respective
Record Dates. Certificateholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the prior
owner. Every October each Certificateholder may change his distribution election
by notifying the Trustee in writing of such change between October 1 and
November 1 of each year. (Certificateholders deciding to change their
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election should contact the Trustee by calling the number listed on the back
cover hereof for information regarding the procedures that must be followed in
connection with this written notification of the change of election.) Failure to
notify the Trustee on or before November 1 of each year will result in a
continuation of the plan for the following 12 months.
RECORDS. The Trustee will furnish Certificateholders in connection
with each distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed in each
case as a dollar amount per Unit. Within a reasonable time after the end of each
calendar year (normally prior to January 31 of the succeeding year), the Trustee
will furnish to each person who at any time during the calendar year was a
Certificateholder of record of a Trust, a statement showing (a) as to the
Interest Account of such Trust: interest received (including amounts
representing interest received upon any disposition of Bonds and earned original
issue discount, if any), amounts paid for redemptions of Units, if any,
deductions for applicable taxes and fees and expenses of such 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 Unit outstanding on the last business day of such calendar year; (b) as to
the Principal Account of such Trust: the dates of disposition of any Bonds and
the net proceeds received therefrom (including any unearned original issue
discount but excluding any portion representing accrued interest), deductions
for payments of applicable taxes and fees and expenses of such Trust, amounts
paid for 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 Unit outstanding on the
last business day of such calendar year; (c) a list of the Bonds held in such
Trust and the number of Units outstanding on the last business day of such
calendar year; (d) the Redemption Price per Unit of such Trust based upon the
last computation thereof made during such calendar year; and (e) amounts
actually distributed to Certificateholders during such calendar year from the
Interest and Principal Accounts, separately stated, expressed both as total
dollar amounts and as dollar amounts representing the pro rata share of each
Unit outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Certificate holders
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
Certificateholders, Certificates issued or held, a current list of Bonds in the
portfolio and a copy of the Trust Agreement.
TAX STATUS
All Bonds acquired by the Trust were accompanied by copies of opinions
of bond counsel to the issuing governmental authorities given at the time of
original delivery of the Bonds to the effect that the interest thereon is exempt
from regular federal income tax and from New York State and New York City income
taxes. Such interest may, however, be subject to federal alternative minimum tax
and to state or local taxes in other jurisdictions. None of the Bonds in the
Trust is subject to the federal individual alternative minimum tax under the Tax
Reform Act of 1986 (the "Act"). All Bonds were issued by or on behalf of the
State of New York, its political subdivisions or its public authorities or by
the Commonwealth of Puerto Rico
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or its public authorities. Neither the Sponsor nor the Trustee nor their
respective counsel have made any review of the proceedings relating to the
issuance of the Bonds or the bases for such opinions and express no opinion as
to these matters, and neither the Trustee nor the Sponsor nor their respective
counsel have made an independent examination or verification that the federal
income tax status of the Bonds has not been altered since the time of the
original delivery of those opinions.
In rendering the opinion set forth below, counsel has examined the
Agreement, the final form of Prospectus dated the date hereof 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, counsel for the Sponsor, under
existing law:
The Trust will be classified as a grantor trust for federal income tax
purposes and not an association taxable as a corporation for federal income
tax purposes under the Internal Revenue Code. Income received by the Trust
that consists of interest excludable from federal gross income under the
Code will be excludable from the federal gross income of the
Certificateholders of the Trust.
Each Certificateholder will be considered the owner of a pro rata
portion of the assets of the Trust. Thus, each Certificateholder will be
considered to have received its pro rata share of bond interest when it is
received by the Trust, and the net income distributable to Cer
tificateholders that is exempt from federal income tax when received by the
Trust will constitute tax-exempt income when received by the Cer
tificateholders.
Gain realized on a sale or redemption of the Bonds or on sale of a
Unit is, however, includable in gross income for federal income tax
purposes, generally as capital gain. Such gain does not include any amount
received in respect to accrued interest, earned original issue discount,
and accrued market discount. Gain on the disposition of a Bond or a Unit
purchased at a market discount generally will be treated as ordinary
income, rather than capital gain, to the extent of accrued market discount.
Capital gain may be long- or short-term gain depending on the holding
period of the Units. Capital losses are deductible to the extent of capital
gains; in addition, up to $3,000 of capital losses of non-corporate
Certificateholders ($1,500 in the case of married individuals filing
separate returns) may be deducted against ordinary income. Capital assets
must be held for more than one year to qualify for long-term capital gain
treatment. Individuals who realize long-term capital gains will be subject
to a reduced tax rate of 20% rather than the regular maximum tax rate of
39.6%.
Each Certificateholder will realize taxable gain or loss when the
Trust disposes of a Bond (whether by sale, exchange, redemption or payment
at maturity), as if the Certificateholder had directly disposed of his pro
rata share of such Bond. The gain or loss is measured by the difference
between (i) the tax cost of such pro rata share and (ii) the amount
received therefor. For this purpose, a Certificateholder's tax cost for
each Bond is determined by allocating the total tax cost of each Unit among
all of the Bonds held in the Trust (in accordance with
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the portion of such Trust comprised by each Bond). In order to determine
the amount of taxable gain or loss, the Certificateholder's amount received
is similarly allocated at that time. The Certificate holder may exclude
from the amount received any amounts that represent accrued interest or the
earned portion of any original issue discount but may not exclude amounts
attributable to market discount. Thus, when a Bond is disposed of by the
Trust at a gain, taxable gain will equal the difference between (i) the
amount received and (ii) the amount paid plus any original issue discount
(limited, in the case of Bonds issued after June 8, 1980, to the portion
earned from the date of acquisition to the date of disposition). Gain on
the disposition of a Bond purchased at a market discount generally will be
treated as ordinary income, rather than capital gain, to the extent of
accrued market discount. No deduction is allowed for the amortization of
bond premium on tax-exempt bonds such as the Bonds in computing regular
federal income tax.
Discount generally accrues based on the principle of compounding of
accrued interest, not on a straight-line or ratable method, with the result
that the amount of earned original issue discount is less in the earlier
years and more in the later years of a bond term. The tax basis of a
discount bond is increased by the amount of accrued, tax-exempt original
issue discount thus determined. This method of calculation will produce
higher capital gains (or lower losses) to a Certificate holder, as compared
to the results produced by the straight-line method of accounting for
original issue discount, upon an early disposition of a Bond by the Trust
or of a Unit by a Certificateholder.
A Certificateholder may also realize taxable income or loss when a
Unit of the Trust is sold or redeemed. The amount received is allocated
among all the Bonds in such Trust in the same manner as when the Trust
disposes of Bonds and the Certificateholder may exclude accrued interest
and the earned portion of any original issue discount (but not amounts
attributable to market discount). The return of a Certificateholder's tax
cost is otherwise a tax-free return of capital.
A portion of Social Security benefits is includable in gross income
for taxpayers whose modified adjusted gross income combined with a portion
of their Social Security benefits exceeds a base amount. The base amount is
$25,000 for an individual, $32,000 for a married couple filing a joint
return and zero for married persons filing separate returns. Interest on
tax-exempt bonds is to be added to adjusted gross income for purposes of
computing the amount of Social Security benefits that are includable in
gross income and determining whether an individual's income exceeds the
base amount above which a portion of the benefits would be subject to tax.
Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt
interest) of the corporation exceeds alternative minimum taxable income
(determined without regard to this item). In addition, in certain cases,
Subchapter S corporations with accumulated earnings and profits from
Subchapter C years will be subject to a minimum tax on excess passive
investment income which includes tax-exempt interest.
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Under federal law, interest on Trust-held Bonds issued by authority of
the Government of Puerto Rico is exempt from regular federal income tax,
and state and local income tax in the United States and Puerto Rico.
The Trust is not subject to the New York State Franchise Tax on
Business Corporations or the New York City General Corporation Tax. Under
the personal income tax laws of the State and City of New York, the income
of the Trust will be treated as the income of the Certifi cateholders.
Interest on the Bonds that is exempt from tax under the laws of the State
and City of New York when received by the Trust will retain its status as
tax-exempt interest to its Certificateholders. In addition, non-residents
of New York City will not be subject to the New York City personal income
tax on gains derived with respect to their Units. Non-residents of New York
State will not be subject to New York State personal income tax on such
gains unless the Units are employed in a business, trade or occupation
carried on in New York State. A New York State or New York City resident
should determine its basis and holding period for its Units in the same
manner for New York State and New York City tax purposes as for federal tax
purposes. For corporations doing business in New York State and New York
City, interest earned on state and municipal obligations that are exempt
from federal income tax, including obligations of New York State and New
York City, its political subdivisions and instrumentalities, must be
included in calculating New York State and New York City entire net income
for purposes of calculating New York State and New York City franchise
(income) tax. The laws of the several states and local taxing authorities
vary with respect to the taxation of such obligations and each
Certificateholder is advised to consult his own tax advisor as to the tax
consequences of his Certificates under state and local tax laws.
The exemption of interest on municipal obligations for federal income
tax purposes does not necessarily result in exemption under the income tax laws
of any state or local government. The laws of such states and local governments
vary with respect to the taxation of such obligations.
In the case of Bonds that are industrial revenue bonds ("IRBs") or
certain types of private activity bonds, the opinions of bond counsel to the
respective issuing authorities indicate that interest on such Bonds is exempt
from regular federal income tax. However, interest on such Bonds will not be
exempt from regular federal income tax for any period during which such Bonds
are held by a substantial user of the facilities financed by the proceeds of
such Bonds or by a related person. Therefore, interest on any such Bonds
allocable to a Certificateholder who is such a substantial user or related
person thereof will not be tax-exempt. Furthermore, in the case of IRBs that
qualify for the small issue exemption, the small issue exemption will not be
available or will be lost if, at any time during the three-year period beginning
on the later of the date the facilities are placed in service or the date of
issue, all outstanding tax-exempt IRBs, together with a proportionate share of
any present issue, of an owner or principal user (or related person) of the
facilities exceeds $40,000,000. In the case of IRBs issued under the $10,000,000
small issue exemption, interest on such IRBs will become taxable if the face
amount of such IRBs plus certain capital expenditures exceeds $10,000,000.
In addition, a Bond can lose its tax-exempt status as a result of
other subsequent but unforeseeable events such as prohibited arbitrage
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activities by the issuer of the Bond or the failure of the Bond to continue to
satisfy the conditions required for the exemption of interest thereon from
regular federal income tax. No investigation has been made as to the current or
future owners or users of the facilities financed by the Bonds, the amount of
such persons' outstanding tax-exempt IRBs, or the facilities themselves, and no
assurance can be given that future events will not affect the tax-exempt status
of the Bonds. Investors should consult their tax advisors for advice with
respect to the effect of these provisions on their particular tax situation.
Interest on indebtedness incurred or continued to purchase or carry
the Units is not deductible for regular federal income tax or New York State or
New York City income tax purposes. However, such interest is deductible for New
York State and New York City income tax purposes by corporations that are
required to include interest on the Bonds in New York State and New York City
entire net income for purposes of calculating New York State and New York City
franchise (income) taxes. In addition, under rules used by the Internal Revenue
Service for determining when borrowed funds are considered used for the purpose
of purchasing or carrying particular assets, the purchase of Units may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to the purchase of the Units. Similar rules are
applicable for New York State and New York City tax purposes. Also, in the case
of certain financial institutions that acquire Units, in general no deduction is
allowed for interest expense allocable to the Units.
From time to time proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on debt
obligations similar to the Bonds in the Trust, and it can be expected that
similar proposals may be introduced in the future.
In South Carolina v. Baker, the U.S. Supreme Court held that the
federal government may constitutionally require states to register bonds they
issue and subject the interest on such bonds to federal income tax if not
registered, and that there is no constitutional prohibition against the federal
government's taxing the interest earned on state or other municipal bonds. The
Supreme Court decision affirms the authority of the federal government to
regulate and control bonds such as the Bonds in the Trust and to tax interest on
such bonds in the future. The decision does not, however, affect the current
exemption from taxation of the interest earned on the Bonds in the Trust in
accordance with Section 103 of the Code.
The opinions of bond counsel or special tax counsel to the issuing
governmental authorities to the effect that interest on the Bonds is exempt from
regular federal income tax may be limited to law existing at the time the Bonds
were issued, and may not apply to the extent that future changes in law,
regulations or interpretations affect such Bonds. Investors are advised to
consult their own tax advisors for advice with respect to the effect of any
legislative changes.
LIQUIDITY
SPONSOR REPURCHASE. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units. The Sponsor's secondary
market repurchase price will be based on the aggregate bid price of the Bonds
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in the Trust portfolio and will be the same as the redemption price. The
aggregate bid price will be determined by the Evaluator on a daily basis set
forth under "Trustee Redemption." Certificateholders who wish to dispose of
their Units should inquire of the Sponsor prior to making a tender for
redemption. The Sponsor may discontinue repurchases of Units of the Trust if the
supply of Units exceeds demand, or for other business reasons. The date of
repurchase is deemed to be the date on which Certificates representing Units are
physically received in proper form by the Sponsor, Reich & Tang Distributors,
Inc., 600 Fifth Avenue, New York, New York 10020. Units 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 Certificateholder may
be able to dispose of Units only by tendering them to the Trustee for
redemption.
Prospectuses relating to certain other bond trusts indicate an
intention by the respective Sponsors, subject to change, to repurchase units on
the basis of a price higher than the bid prices of the Bonds in the Trusts.
Consequently, depending on the prices actually paid, the secondary market
repurchase price of other trusts may be computed on a somewhat more favorable
basis than the repurchase price offered by the Sponsor for units of these
Trusts, although in all bond trusts, the purchase price of a unit depends
primarily on the value of the bonds in the trust portfolio.
Units purchased by the Sponsor in the secondary market may be
reoffered for sale by the Sponsor at a price based on the aggregate bid price of
the Bonds in a Trust plus the applicable sales charge plus net accrued interest.
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 Cer
tificateholders, 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 sale ability 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 Bonds, and if such disposition
cannot be made by the redemption date (seven calendar days after tender), the
Sponsor may elect to purchase such Units. Such purchase shall be made by payment
to the Certificateholder 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. Units also may be tendered to the Trustee for
redemption at its corporate trust office as set forth in Part A of this
Prospectus, upon proper delivery of Certificates representing such Units and
payment of any relevant tax. 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.
Certificates representing Units to be redeemed must be delivered to
the Trustee and must be properly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in the case of lost, stolen or mutilated Certificates). Thus, redemptions of
Units cannot be effected until Certificates representing such Units have been
delivered by the person seeking redemption. (See "Certificates".)
Certificateholders must sign exactly as
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their names appear on the faces of their Certificates. In certain instances the
Trustee may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator or
certificates of corporate authority.
Within three business days following a tender for redemption, the
Certificateholder will be entitled to receive in cash 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, 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.
Accrued interest paid on redemption shall be withdrawn from the
Interest 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 bonds in order to make funds
available for redemptions. Such sales, if required, could result in a sale of
Bonds by the Trustee at a loss. To the extent Bonds in a Trust are sold, the
size and diversity of such Trust will be reduced.
The Redemption Price per Unit is the pro rata share of each Unit in a
Trust determined by the Trustee on the basis of (i) the cash on hand in such
Trust or moneys in the process of being collected, (ii) the value of the Bonds
in such Trust based on the bid prices of such Bonds and (iii) interest accrued
thereon, less (a) amounts representing taxes or other governmental charges
payable out of such Trust, (b) the accrued expenses of such Trust and (c) cash
allocated for distribution to Certificateholders of record of such Trust as of
the business day prior to the evaluation being made. The Evaluator may determine
the value of the Bonds in such Trust for purposes of redemption (1) on the basis
of current bid prices of the bonds obtained from dealers or brokers who
customarily deal in bonds comparable to those held by such Trust, (2) on the
basis of bid prices for bonds comparable to any Bonds for which bid prices are
not available, (3) by determining the value of the Bonds by appraisal, or (4) by
any combination of the above.
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to purchase a Unit tendered for redemption or if the
Sponsor tenders a Unit for redemption, in lieu of redeeming such Unit, to sell
such Unit in the over-the-counter market for the account of the tendering Cer
tificateholder at prices which will return to the Certificateholder 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 Certificateholder 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
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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 Certificateholder 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 Sponsor may direct the Trustee to dispose
of Bonds upon (i) default in payment of principal or interest on such Bonds,
(ii) institution of certain legal proceedings with respect to the issuers of
such Bonds, (iii) default under other documents adversely affecting debt service
on such Bonds, (iv) default in payment of principal or interest on other
obligations of the same issuer or guarantor, (v) with respect to revenue Bonds,
decline in revenues and income of any facility or project below the estimated
levels calculated by proper officials charged with the construction or operation
of such facility or project, or (vi) decline in price or the occurrence of other
market or credit factors which in the opinion of the Sponsor would make the
retention of such Bonds in a Trust detrimental to the interests of the
Certificateholders. If a default in the payment of principal or interest on any
of the Bonds occurs and if the Sponsor fails to instruct the Trustee to sell or
hold such Bonds, the Trust Agreement provides that the Trustee may sell such
Bonds.
The Sponsor is authorized by the Trust Agreement to direct the Trustee
to accept or reject certain plans for the refunding or refinancing of any of the
Bonds. Any bonds received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Agreement to the same extent
as the Bonds originally deposited. Within five days after such deposit, notice
of such exchange and deposit shall be given by the Trustee to each
Certificateholder registered on the books of the Trustee, including an
identification of the Bonds eliminated and the Bonds substituted therefor.
Except as stated, the acquisition by the Trusts of any securities other than the
bonds initially deposited is prohibited.
TRUST AGREEMENT, AMENDMENT AND TERMINATION. The Trust Agreement may be
amended by the Trustee, the Sponsor and the Evaluator without the consent of any
of the Certificateholders: (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 Certificateholders.
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 the holders
of Certificates evidencing 66-2/3% of the Units then outstanding for the purpose
of modifying the rights of Certificateholders; provided that no such amendment
or waiver shall reduce any Certificateholder's interest in a 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 Certificates. The
Trust Agreement may not be amended, without the consent of the holders of all
Certificates in a Trust then outstanding, to increase the number of Units
issuable by such Trust or to permit the
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acquisition of any bonds 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 Certificateholders, in writing, of
the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
maturity, redemption or other disposition, as the case may be, of the last of
the Bonds held in such Trust but in no event is it to continue beyond the end of
the calendar year preceding the fiftieth anniversary of the execution of the
Trust Agreement. If the value of a Trust shall be less than the minimum amount
set forth under "Summary of Essential Information", the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate such Trust.
The Trust may also be terminated at any time with the consent of the holders of
Certificates representing 100% of the Units of such Trust then outstanding. In
the event of termination, written notice thereof will be sent by the Trustee to
all Certificateholders. Within a reasonable period after termination, the
Trustee must sell any Bonds remaining in the terminated Trust, and, after paying
all expenses and charges incurred by such Trust, distribute to each
Certificateholder, upon surrender for cancellation of his Certificate for Units
his pro rata share of the Interest and Principal Accounts of such Trust.
THE SPONSOR. The Sponsor, Reich & Tang Distributors, Inc. ("Reich
& Tang"), 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 adviser. 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. Nvest, L.P. is
owned approximately 99% by public unitholders and its general partner is Nvest
Corporation. 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 Municipal Trust, Series 1 (and Subsequent
Series), Municipal 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
Municipal Securities Trust, Series 1 (and Subsequent Series) and 5th Discount
Series (and Subsequent Series), Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust (and Subsequent Series) and Schwab
Trusts.
The Sponsor is liable for the performance of its obligations arising
from its responsibilities under the Trust Agreement, but will be under no
liability to Certificateholders 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.
1653.5
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<PAGE>
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 Trusts, 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 Bank of New York, a trust company
organized under the laws of New York, having its offices at 101 Barclay Street,
New York, New York 10286 (1-800-431-8002). 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 Trustee must be a banking corporation organized under the laws of
the United States or any state which is authorized under such laws to exercise
corporate trust powers and must have at all times an aggregate capital, surplus
and undivided profits of not less than $5,000,000. The duties of the Trustee are
primarily ministerial in nature. The Trustee did not participate in the
selection of Securities for the portfolio of the Trust.
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, Bonds or Certificates 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 the
Evaluator. In addition, the Trustee shall not be liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or the Trusts 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 Bonds pursuant to the Trust Agreement.
For further information relating to the responsibilities of the
Trustee under the Trust Agreement, see "Rights of Certificateholders."
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 Certificateholders. 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 Certificateholder by the Sponsor. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The resignation or
removal of the Trustee becomes effective only when the successor Trustee accepts
its appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor
1653.5
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<PAGE>
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 EVALUATOR. The Evaluator is Kenny S&P Evaluation Services, a
business unit of J.J. Kenny Company, Inc., a subsidiary of The McGraw-Hill
Companies, with main offices located at 65 Broadway, New York, New York 10006.
The Evaluator is a wholly-owned subsidiary of McGraw-Hill, Inc. The Evaluator is
a registered investment advisor and also provides financial information
services.
The Trustee, the Sponsor and Certificateholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it; provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsor, or Certificateholders 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 Evaluator may resign or may be removed by the Sponsor and the
Trustee, and the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Evaluator. If upon
resignation of the Evaluator no successor has accepted appointment within thirty
days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES
At no cost to the Trust, the Sponsor has borne the expenses of
creating and establishing the Trust, including the cost of initial preparation
and execution of the Trust Agreement, registration of the Trust and the Units
under the Investment Company Act of 1940 and the Securities Act of 1933,
preparation and printing of the Certificates, legal and auditing expenses,
advertising and selling expenses, initial fees and expenses of the Trustee and
other out-of-pocket expenses. The fees of the Evaluator, however, incurred
during the initial public offering period are paid directly by the Trust.
The Sponsor will not charge the Trust a fee for its services as such.
(See "Sponsor's Profits").
The Trustee will receive for its ordinary recurring services to
each 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 Certificateholders".
1653.5
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<PAGE>
The Evaluator will receive, for each daily evaluation of the Bonds in
the Trusts, a fee in the amount set forth under "Summary of Essential
Information" in Part A.
The Trustee's and Evaluator's fees are payable monthly as of the
Record Date from the Interest Account to the extent funds are available and then
from the Principal Account. Both fees may be increased without approval of the
Certificateholders 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 and auditing 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 a Trust and the rights and interests of the Certificate holders; 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 a Trust; indemnification
of the Sponsor for any loss, liabilities and expenses incurred in acting as
Sponsor of a Trust without gross negligence, bad faith or willful misconduct on
its part; and all taxes and other governmental charges imposed upon the Bonds or
any part of a 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 allowable. In addition, the Trustee is
empowered to sell Bonds of a Trust in order to make funds available to pay all
expenses of such Trust.
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 per 1,000 Units. Certificateholders covered by the
audit during the year may receive a copy of the audited financial statements
upon request.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Certificateholders 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
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<PAGE>
being surrendered will be based on the market value of the Securities in the
Trust portfolio or on the aggregate offer price of the Bonds in the other Trust
Portfolios; and, after the initial offering period has been completed, will be
based on the aggregate bid price of the securities in the particular Trust
portfolio. Under the Conversion Offer, units of the Redemption Trust must be
tendered to the trustee of such trust for redemption at the redemption price
determined as set forth in the relevant Redemption Trust's prospectus. Units in
an Exchange or Conversion Trust will be sold to the Certificateholder 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 Certificateholders 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
Certificateholders 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
Certificateholder 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 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
Certificateholders is subject to the following additional conditions: (i) at the
time of the Certificateholder's election to participate in the Exchange
Privilege or 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, (ii) exchanges will be effected in whole units
only, (iii) Units of the Mortgage Securities Trust may only be acquired in
blocks of 1,000 Units and (iv) Units of the Equity Securities Trust may only be
acquired in blocks of 100 Units. Certificate holders 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 Certificateholder for exchange or
from units being redeemed per conversion will be remitted to such
Certificateholder.
The Sponsor reserves the right to suspend, modify or terminate the
Exchange Privilege and/or the Conversion Offer. The Sponsor will provide
Certificateholders of the Trust with 60 days' prior written notice of any
termination or material amendment to the Exchange Privilege and/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
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<PAGE>
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 and/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
Certificateholders. Certificateholders may, during this 60-day period, exercise
the Exchange Privilege in accordance with its terms then in effect.
To exercise the Exchange Privilege, a Certificateholder 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 Certificateholder is a resident, the Certificateholder 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
normally will constitute a "taxable event" to the Certifi cateholder under the
Code. The Certificateholder will recognize a tax gain or loss that will be of a
long- or short-term capital or ordinary income nature depending on the length of
time the units have been held and other factors. A Certificateholder'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.
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<PAGE>
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units originally offered 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, or Berger Steingut
Tarnoff & Stern, 600 Madison Avenue, 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 Chase Manhattan Bank. On the initial date of
deposit, Booth & Baron acted as counsel for The Bank of New York.
INDEPENDENT ACCOUNTANTS. The financial statements of the Trusts for
the years ended December 31, 1998, 1997 and 1996 included in Part A of this
Prospectus have been examined by PricewaterhouseCoopers LLP, independent
accountants. The financial statements have been so included in reliance on their
report given upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF BOND RATINGS*
STANDARD & POOR'S. A brief description of the applicable Standard &
Poor's rating symbols and their meanings is as follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific debt
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended or withdrawn as a
result of changes in, or unavailability of, such information.
The ratings are based, in varying degrees, on the following
considerations:
(a) Likelihood of default--capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance
with the terms of the obligation.
(b) Nature of and provisions of the obligation.
(c) Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
- --------
* As described by the rating agencies.
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<PAGE>
AAA -- This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and they differ from AAA
issues only in small degrees.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AA" to "BB" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
Provisional Ratings -- (Prov.) following a rating indicates the rating
is provisional, which assumes the successful completion of the project being
financed by the issuance of the bonds being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion, makes no comment on the likelihood of,
or the risk of default upon failure of, such completion. Accordingly, the
investor should exercise his own judgment with respect to such likelihood and
risk.
MOODY'S. A brief description of the applicable Moody's rating symbols
and their meanings is as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
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<PAGE>
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Those bonds in the A and Baa group which Moody's believes possess the
strongest investment attributes are designated by the symbol A 1 and Baa 1.
Other A bonds comprise the balance of the group. These rankings (1) designate
the bonds which offer the maximum in security within their quality group, (2)
designate bonds which can be bought for possible upgrading in quality and (3)
additionally afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the market place.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Con-Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are debt
obligations secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Rating denotes probable credit stature upon completion of construction
or elimination of basis of condition.
NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that S&P does not rate a
particular type of obligation as a matter of policy.
1653.5
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<PAGE>
<TABLE>
<CAPTION>
INDEX
Title Page NEW YORK MUNICIPAL TRUST
<S> <C> <C>
Summary of Essential Information.......................................... A-4
Financial and Statistical Information..................................... A-5
Information Regarding the Trust........................................... A-6 (A Unit Investment Trust)
Audit and Financial Information........................................... F-1
The Trust................................................................. 1 Prospectus
Portfolios................................................................ 2
Special Factors Affecting New York........................................ 8 Dated: April 30, 1999
Public Offering........................................................... 14
Estimated Long Term Return and Estimated Sponsor:
Current Return.......................................................... 16
Rights of Certificateholders.............................................. 17 Reich & Tang Distributors, Inc.
Tax Status................................................................ 19 600 Fifth Avenue
Liquidity................................................................. 23 New York, NY 10020
Trust Administration...................................................... 26 212-830-5200
Trust Expenses and Charges................................................ 29
Exchange Privilege and Conversion Offer................................... 30
Other Matters............................................................. 33 Trustee:
Description of Bond Ratings............................................... 33
The Bank of New York
101 Barclay Street
Parts A and B of this Prospectus do not contain all of the information set New York, NY 10286
forth in the registration statement and exhibits relating thereto, filed with 1-800-431-8002
the Securities and Exchange Commission, Washington, D.C., under the Securities
Act of 1933, and to which reference is made. Evaluator:
Kenny S&P Evaluation Services
65 Broadway
New York, NY 10006
* * *
</TABLE>
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.
No person is authorized to give any information or to make any
representations not contained in Parts A and B in this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, 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.
1653.5
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<PAGE>
<PAGE>
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the 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 Post-Effective
Amendment to Form S-6 Registration Statement No. 2-62505, filed on April 25,
1996).
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants.
Consent of Counsel (included in Exhibits 99.3.1 and 99.3.1.1).
Consent of the Evaluator (included in Exhibit 99.5.1).
The following exhibits:
99.1.1 -- Form of Reference Trust Agreement, as amended (filed as
Exhibit 99.1.1 to Post-Effective Amendment No. 8 to Form
S-6 Registration Statement No. 33-26426 on April 25, 1997
and incorporated herein by reference).
99.1.1.1 -- Trust Indenture and Agreement for New York Municipal
Trust, Series 1 (and Subsequent Series) (filed as Exhibit
99.1.1.1 to the Post-Effective Amendment to Form S-6
Registration Statement No. 2-62505, on April 25, 1996 and
incorporated herein by reference).
99.1.3.4 -- 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).
99.1.3.5 -- 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).
99.2.1 -- Form of Certificate (filed as Exhibit 99.2.1 to
Post-Effective Amendment No. 8 to Form S-6 Registration
Statement No. 33-26426 on April 25, 1997 and incorporated
herein by reference).
99.3.1 -- Form of Opinion of Battle Fowler LLP (formerly Battle,
Fowler, Jaffin & Kheel) as to the legality of the
securities being registered, including their consent to
the delivery thereof and to the use of their name under
the headings "Tax Status" and "Legal Opinions" in the
Prospectus (filed as Exhibit 99.3.1 to Post-Effective
Amendment No. 8 to Form S-6 Registration Statement No.
2-26426 on April 25, 1997 and incorporated herein by
reference).
99.3.1.1 -- Form of Opinion of Battle Fowler LLP (formerly Battle,
Fowler, Jaffin & Kheel) as to tax status of Securities
being registered (filed as Exhibit 99.3.1.1 to
Post-Effective Amendment No. 20
II-1
1656.1
<PAGE>
to Form S-6 Registration Statement No. 2-62505 on April
25, 1997 and incorporated herein by reference).
*99.5.1 -- Consent of the Evaluator.
99.6.0 -- Powers of Attorney of Reich & Tang Distributors, Inc., 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).
- -------------
* Being filed by this Amendment.
II-2
1656.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrants, New York Municipal Trust, Series 1 and Series 6, certify that they
have met all of the requirements for effectiveness of this Post-Effective
Amendment to the Registration Statements pursuant to Rule 485(b) under the
Securities Act of 1933. The registrants have duly caused this Post-Effective
Amendment to the Registration Statements to be signed on their behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 19th day of April, 1999.
NEW YORK MUNICIPAL TRUST, SERIES 1 AND SERIES 6
(Registrants)
REICH & TANG DISTRIBUTORS, INC.
(Depositor)
By: /s/PETER J. DEMARCO
--------------------------
Peter J. DeMarco
(Executive Vice President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statements 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
- --------- ----------- ---------
<S> <C> <C>
RICHARD E. SMITH, III President and Director )
PETER S. VOSS Director )
G. NEAL RYLAND Director ) April 19, 1999
STEVEN W. DUFF Director )
PETER J. DEMARCO Executive Vice President )By: PETER J. DEMARCO
RICHARD I. WEINER Vice President ) ----------------
BERNADETTE N. FINN Vice President ) Peter J. DeMarco
LORRAINE C. HYSLER Secretary ) as Executive Vice
RICHARD DE SANCTIS Treasurer ) President and
EDWARD N. WADSWORTH Executive Officer ) Attorney-in-Fact*
- ---------------
</TABLE>
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to
Form S-6 Registration Statement No. 333-44301 on January 15, 1998.
II-3
1656.1
<PAGE>
Consent of Independent Accountants
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment to the registration statement on Form S-6 of our report
dated March 19, 1999, relating to the financial statements and financial
highlights for the three years ended December 31, 1998 of the New York Municipal
Trust, Series 1 and New York Municipal Trust, Series 6, which appear in such
Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in the Prospectus.
PricewaterhouseCoopers LLP
Boston, MA
April 26, 1999
II-4
1656.1
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Senior Vice President and
New York, NY 10006-2551 General Manager
Tel 212 770 4417 Office Evaluation Department
212 770 4422 Desk
Fax 212 797 8681
[email protected] Standard & Poor's
A Division of The McGraw-Hill Companies
April 30, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
Re: New York Municipal Trust,
Series 1
-------------------------
Gentlemen:
We have examined the post-effective Amendment to the Registration
Statement File No. 2-62505 for the above-captioned trust. We hereby acknowledge
that Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
/s/ Frank A. Ciccotto
-----------------------------
Frank A. Ciccotto
FAC/trh
<PAGE>
Standard & Poor's J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Senior Vice President and
New York, NY 10006-2551 General Manager
Tel 212 770 4417 Office Evaluation Department
212 770 4422 Desk
Fax 212 797 8681
[email protected] Standard & Poor's
A Division of The McGraw-Hill Companies
April 30, 1999
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, NY 10020
Re: New York Municipal Trust,
Series 6
-------------------------
Gentlemen:
We have examined the post-effective Amendment to the Registration
Statement File No. 2-64913 for the above-captioned trust. We hereby acknowledge
that Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc. is
currently acting as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services, a division of
J.J. Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
/s/ Frank A. Ciccotto
-----------------------------
Frank A. Ciccotto
FAC/trh
