As filed with the Securities and Exchange Commission on April 29, 1997
Registration No. 33-53688
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT No. 4
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: EQUITY SECURITIES TRUST, SERIES 2, SIGNATURE SERIES,
REICH & TANG GROWTH AND VALUE TRUST
B. Name of depositor: REICH & TANG DISTRIBUTORS L.P.
C. Complete address of depositor's principal executive offices:
REICH & TANG DISTRIBUTORS L.P.
600 Fifth Avenue
New York, New York 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 L.P. 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, 1997 pursuant to paragraph ( )
/ / 60 days after filing pursuant to paragraph (a)
/ / on ( date ) pursuant to paragraph (a) of Rule 485
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The Registrant dec ares that an indefinite number of its units are
being registered by this Registration Statement pursuant to Section
24(f) under the Investment Company Act of 1940, as amended, and Rule
24f-2 thereunder, and the Registrant filed a Rule 24f-2 Notice for its
fiscal year ended December 31, 1996 on February 28, 1997.
175585.1
<PAGE>
Note: Part A of this Prospectus May Not Be
Distributed Unless Accompanied by Part B.
EQUITY SECURITIES TRUST
SERIES 2
SIGNATURE SERIES, REICH & TANG GROWTH AND VALUE TRUST
- -------------------------------------------------------------------------------
The Trust is a unit investment trust designated Equity
Securities Trust, Series 2, Signature Series, Reich & Tang Growth and Value
Trust ("Value Trust" or "Trust"). The Sponsor is Reich & Tang Distributors L.P.
The objective of the Value Trust is to seek growth of capital by investing in
securities based upon their potential for capital growth as determined by the
Portfolio Consultant. Current income will be secondary to the objective of
capital growth. Neither the Sponsor nor the Portfolio Consultant can give
assurance that the Trust's objectives can be achieved. The Trust contains an
underlying portfolio of common stocks (collectively, the "Securities"), which
have been purchased by the Trust based upon the recommendations of the Portfolio
Consultant, Reich & Tang Asset Management, L.P. (the "Portfolio Consultant").
There are certain risks inherent in an investment in common stocks. See "Risk
Considerations" in Part A and Part B of this Prospectus.
Minimum Purchase: 100 Units
This Prospectus consists of two parts. Part A contains the Summary of
Essential Information as of December 31, 1996 (the "Evaluation Date") including
descriptive material relating to the Trust, and audited financial statements of
the Trust, including the Portfolio as of the Evaluation Date. Part B contains
general information about the Trust. Part A may not be distributed unless
accompanied by Part B.
Investors should read and retain both parts of this Prospectus for
future reference.
===============================================================================
===============================================================================
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 REPRESEN-
TATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED APRIL 30, 1997
75962.1
<PAGE>
THE TRUST
The Trust is a unit investment trust designated Equity Securities
Trust, Series 2, Signature Series, Reich & Tang Growth and Value Trust ("Value
Trust" or "Trust"). The Sponsor is Reich & Tang Distributors L.P. The objective
of the Value Trust is to seek growth of capital by investing in stocks based
upon their potential for capital appreciation as determined by the portfolio
consultant, Reich & Tang Asset Management, L.P. (formerly New England Investment
Companies, L.P.) (the "Portfolio Consultant"). Current income will be secondary
to the objective of capital growth. Neither the Sponsor nor the Portfolio
Consultant can give assurance that the Trust's objectives can be achieved. The
Trust contains an underlying portfolio of common stock (collectively, the
"Securities"), which have been purchased by the Trust based upon the
recommendations of the Portfolio Consultant. In selecting the Securities for the
Trust, the Portfolio Consultant normally will consider the following factors,
among others (1) values of individual securities relative to other investment
alternatives; (2) trends in the determinants of corporate profits, corporate
cash flow, balance sheet changes, management capability and practices and (3)
economic and political outlook. See "The Trust--The Securities" in Part B. The
Trust will terminate on the earlier of March 18, 1998 (the "Mandatory
Termination Date") or the disposition of the last security in the Trust. Upon
termination, Certificateholders may elect to receive their terminating
distributions in cash, in the form of in-kind distributions of the Trust's
Securities, if they own units in aggregate value of at least $25,000, or may
utilize their terminating distributions to purchase units of a future series of
the Trust at a reduced sales charge. See "Termination" in this Part A and "Trust
Administration--Trust Termination" in Part B.
The Portfolio Consultant is not a Sponsor of the Trust. The Portfolio
Consultant has been retained by the Sponsor, at its expense, to utilize its
equity expertise in selecting the Securities deposited in the Trust. The
Portfolio Consultant's only responsibilities with respect to the Trust, in
addition to its role in portfolio selection, is to monitor the Securities in the
Portfolio and make recommendations to the Sponsor in certain circumstances
regarding the disposition of the Securities held by the Trust. The Sponsor is
not obligated to adhere to the recommendations of the Portfolio Consultant
regarding the disposition of Securities. The Sponsor has the sole authority to
direct the Trustee to dispose of Securities under the Trust Agreement. See
"Trust Administration--The Portfolio Consultant" in Part B for a description of
the Portfolio Consultant's responsibilities.
With the deposit of the Securities in the Trust on the initial Date of
Deposit, the Sponsor established a proportionate relationship among the
aggregate value of the specified Securities in the Trust. During the 90 days
subsequent to the initial Date of Deposit, the Sponsor may, but is not obligated
to, deposit from time to time additional Securities in the Trust ("Additional
Securities") or contracts to purchase Additional Securities, maintaining to the
extent practicable the original proportionate relationship of the number of
shares of each Security in the Trust portfolio immediately prior to such
deposit, thereby creating additional Units which will be offered to the public
by means of this Prospectus. These additional Units will each represent, to the
extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the number of shares of Securities in the Trust
portfolio on the initial Date of Deposit with the deposit of Additional
Securities because of, among other reasons, purchase requirements, changes in
prices, or the unavailability of Securities. Deposits of Additional Securities
in the Trust subsequent to the initial Date of Deposit must replicate exactly
the proportionate relationship among the shares of each Security in the Trust
portfolio at the end of the initial 90-day period. The number and identity of
Securities in the Trust will be adjusted to reflect the disposition of
Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to such Securities or the reinvestment of the proceeds
distributed to Certificateholders. The portfolio of the Trust may change
slightly based on such disposition and reinvestment. Securities received in
exchange for shares will be similarly treated. Substitute Securities may be
acquired under specified conditions when Securities originally deposited in the
Trust are unavailable (see "The Trust-- Substitution of Securities" in Part B).
As additional Units are issued by the Trust as a result of the deposit of
A-2
175962.1
<PAGE>
Additional Securities by the Sponsor, the aggregate value of the Securities in
the Trust will be increased and the fractional undivided interest in the Trust
represented by each unit will be decreased.
Units in the Trust represent a 1/227259th undivided interest in the
principal and net income of the Trust (see "The Trust--Organization" in Part B).
The Units being offered hereby include issued and outstanding Units which have
been purchased by the Sponsor in the secondary market maintained by the Sponsor.
The Sponsor does not act as an underwriter, manager or co-manager of a public
offering of the securities of any of the issuers in the Trust Portfolio, nor did
it do so at the Date of Deposit.
The Sponsor makes a primary over-the-counter market in shares of
Portfolio Nos. 18, 24 and 30. The Sponsor does not act as an underwriter,
manager or co-manager of a public offering of the securities of any of the
issuers in the Trust portfolio.
Risk Considerations
Since the Trust may contain common stocks of domestic issuers, an
investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks including the risk that the
financial condition of the issuers of the Securities may become impaired or that
the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). (See "Risk Considerations" in Part B of this Prospectus.)
The portfolio of the Trust is fixed and not "managed" by the Sponsor or the
Portfolio Consultant. All the Securities in the Trust will be liquidated during
a 60 day period prior to the Mandatory Termination Date of the Trust. Since the
Trust will not sell Securities in response to ordinary market fluctuation, but
only at the Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust.
Public Offering Price
The Public Offering Price per 100 Units of the Trust is equal to the
aggregate value of the underlying Securities (the price at which they could be
directly purchased by the public assuming they were available) in the Trust
divided by the number of Units outstanding times 100 plus a sales charge of
2.95% of the Public Offering Price per 100 Units or 3.04% of the net amount
invested in Securities per 100 Units. (See "Summary of Essential Information.")
In addition, the net amount invested in Securities will involve a proportionate
share of amounts in the Income Account and Principal Account, if any. For
additional information regarding the Public Offering Price, the descriptions of
dividend and principal distributions, repurchase and redemption of Units and
other essential information regarding the Trust, see the Summary of Essential
Information for the Trust. During the initial offering period orders involving
at least 10,000 Units will be entitled to a volume discount from the Public
Offering Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying
Securities. (See "Public Offering" in Part B.) The figures above assume a
purchase of 100 Units. The price of a single Unit, or any multiple thereof, is
calculated by dividing the Public Offering Price per 100 Units by 100 and
multiplying by the number of Units. If the Securities appreciate in value,
purchasers of Units after the occurrence of such appreciation will acquire their
Units subject to a contingent liability for the income tax inherent in the
appreciated Securities. (See "Tax Status" in Part B.)
Distributions
Distributions of dividends received, less expenses, will be made by
the Trust monthly on the 15th day of each month (the "Monthly Distribution
Date"). Distributions of capital gains realized, if any, will be made shortly
after the Monthly Distribution Date to Certificateholders of record on the
record date immediately preceding such Monthly Distribution Date. (See "Rights
of Certificate-holders--Distributions" in Part B.
A-3
175962.1
<PAGE>
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 of the Trust.
The secondary market repurchase price will be based on the market value of the
Securities in the Trust portfolio. (See "Liquidity--Sponsor Repurchase" for a
description on how the secondary market repurchase price will be determined.) If
a market is not maintained a Certificateholder will be able to redeem his Units
with the Trustee. (See "Liquidity--Trustee Redemption" in Part B.) The principal
trading market for certain Securities may be in the over-the-counter market. As
a result, the existence of a liquid trading market for these Securities may
depend on whether dealers will make a market in these Securities. There can be
no assurance of the making or the maintaining of a market for any of the
Securities contained in the Trust portfolio or of the liquidity of the
Securities in any markets made. In addition, the Trust may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Units will be adversely affected if trading markets for the Securities are
limited or absent.
Total Reinvestment Plan
Distributions from the Trust are made to Certificateholders monthly.
The Certificateholder has the option, however, of either receiving his dividend
check, together with any principal payments, from the Trustee or participating
in a reinvestment program offered by the Sponsor in shares of Short Term Income
Fund, Inc., U.S. Government Portfolio (the "Fund"). Reich & Tang Asset
Management, L.P. serves as the investment manager of the Fund and Reich & Tang
Distributors L.P. serves as distributor for the Fund. Participation in the
reinvestment option is conditioned on the Fund's lawful qualification for sale
in the state in which the Certificateholder is a resident. The Plan is not
designed to be a complete investment program. See "Total Reinvestment Plan" in
Part B for details on how to enroll in the Total Reinvestment Plan and how to
obtain a Fund prospectus.
Termination
During the 60 day period prior to the Mandatory Termination Date (five
years after the initial Date of Deposit) (the "Liquidation Period"), Securities
will begin to be sold in connection with the termination of the Trust and all
Securities will be sold by the Mandatory Termination Date.
The Sponsor will attempt to sell the Securities as quickly as it can
during the Liquidation Period without, in their judgment, materially adversely
affecting the market price of the Securities, but all of the Securities will in
any event be disposed of by the end of the Liquidation Period. The Sponsor does
not anticipate that the period will be longer than 60 days, and it could be as
short as one day, depending on the liquidity of the Securities being sold. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
Certificateholders may elect one of the three options in receiving
their terminating distributions. Certificateholders may elect: (1) to receive
their pro rata share of the underlying Securities in kind, if they own units in
aggregate value of at least $25,000, (2) to receive cash upon the liquidation of
their pro rata share of the underlying Securities or (3) subject to the receipt
by the Trust of an appropriate exemptive order from the Securities and Exchange
Commission, to invest the amount of cash they would have received upon the
liquidation of their pro rata share of the underlying Securities in units of a
future series of the Trust (if one is offered) at a reduced sales charge. See
"Trust Administration--Trust Termination" in Part B for a description of how to
select a termination distribution option. During the Liquidation Period,
Certificateholders who have not chosen to receive distributions-in-kind will be
at risk to the extent that Securities are not sold; for this reason the Sponsor
will be inclined to sell the Securities in as short a period as they can without
materially adversely affecting the price of the Securities.
A-4
175962.1
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES TRUST, SERIES 2
SIGNATURE SERIES, REICH & TANG GROWTH AND VALUE TRUST
SUMMARY OF ESSENTIAL INFORMATION AS OF DECEMBER 31, 1996
<S> <C> <C>
Date of Deposit:* March 18, 1993 Liquidation Period: Beginning
Number of Units.......................... 227,259 60 days prior to the Mandatory
Fractional Undivided Inter- Termination Date.
est in Trust........................... 1/227259 Minimum Value of Trust: The
Secondary Market Trust may be terminated if the Trust is less
Public Offering Price*** than 40% of the aggregate value of the
Aggregate Value........................ $3,881,539 Securities at the completion of the Deposit
Divided by # of Units Period.
(times 100).......................... $1,707.98 Mandatory Termination Date:
Plus Sales Charge of 2.95% The earlier of March 18, 1998 or the
of Public Offering Price............. $52.05 disposition of the last Security in the Trust.
Public Offering Price Trustee:**** The Chase Manhattan Bank.
per 100 Units***..................... $1,760.03 Trustee's Annual Fee: $.90 per 100 Units
Redemption & Sponsor's outstanding.
Repurchase Price Other Annual Fees and Expenses:
per 100 Units.......................... $1,707.98 $.45 per 100 Units outstanding.
Excess of Secondary Market Portfolio Consultant: Reich & Tang Asset
Public Offering Price Management, L.P.
over Redemption & Sponsor's Sponsor: Reich & Tang Distributors L.P.
Repurchase Price per 100 Units......... $52.05 Sponsor's Annual Supervisory Fee:
Maximum of $.25 per 100 Units outstanding
(see "Trust Expense and Charges" in
Part B).
Record date: First of each month.
Dividend distribution date: Fifteen of each
month.
</TABLE>
- -------------------------
* The Date of Deposit is the date on which the Trust Agreement was signed
and contracts to purchase Securities were initially deposited with the
Trustee.
** Includes accrued income receivable.
*** For information regarding the offering price per unit and applicable
sales charge under the Total Reinvestment Plan, see "Total Reinvestment
Plan" in Part B of this Prospectus.
**** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment trust office
at 4 New York Plaza, New York, NY 10004 (Tel. No. 1-800-882-9898). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
A-5
175962.1
<PAGE>
INFORMATION REGARDING THE TRUST AS OF DECEMBER 31, 1996
Description of Portfolio
For Changes in the Trust Portfolio from January 1, 1997 to March 21, 1997 see
Schedule A on pages A-8 - A-9.
Number of Issues: 40 (40 issuers)
(NYSE 72.365%; AMEX 9.896%;
Over the Counter 17.739%)
Number of Issues by Industry:
Aerospace, 1 (1.845%);
Agribusiness, 2 (1.950%);
Automotive, 1 (1.077%);
Chemical--Specialty, 3 (7.963%);
Converted Paper Products, 2 (4.509%);
Energy, 3 (9.508%);
Financial, 2 (4.746%);
Food, 3 (8.451%);
Industrial Products, 9 (19.775%);
Industrial Services, 2 (5.426%);
Insurance, 3 (10.260%);
Media, 3 (7.718%);
Medical Supplies, 2 (6.605%);
Office Equipment & Supplies, 2 (4.726%);
Retailing, 1 (2.185%); and Toy, 1 (3.256%)
A-6
175962.1
<PAGE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit of the Trust outstanding for the periods listed
below:
<TABLE>
<CAPTION>
Distributions of Distributions of
Net Asset* Interest During Principal During
Units Value the Period the Period
Period Ended Outstanding per 100 Units (per 100 Units) (per 100 Units)
- ------------ ----------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
December 31, 1994 348,795 $1,054.02 $18.88 $1.79
December 31, 1995 269,225 1,422.00 15.02 -0-
December 31, 1996 277,259 1,705.22 21.73 -0-
- --------
* Net Asset Value per 100 Units 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
New Assets.
</TABLE>
A-7
175962.1
<PAGE>
SCHEDULE A
Changes in the Trust Portfolio:
On January 23, 1997, 140 shares ($3,141.49) of Albany International Corp. held
by the Trust (Portfolio no. 1) were sold.
On January 23, 1997, 95 shares ($3,286.14) of Allergan Inc. held by the Trust
(Portfolio no. 2) were sold.
On January 23, 1997, 47 shares ($3,351.26) of Allied-Signal held by the Trust
(Portfolio no. 3) were sold.
On January 23, 1997, 57 shares ($3,775.37) of AMBAC Inc. held by the Trust
(Portfolio no. 4) were sold.
On January 23, 1997, 159 shares ($5,654.65) of Avery Dennison Corp. held by the
Trust (Portfolio no. 5) were sold.
On January 23, 1997, 292 shares ($12,166.87) of Becton, Dickinson & Co. held by
the Trust (Portfolio no. 6) were sold.
On January 23, 1997, 63 shares ($2,292.30) of Corning Inc. held by the Trust
(Portfolio no. 7) were sold.
On January 23, 1997, 90 shares ($2,471.16) of C.R. Bard Inc. held by the Trust
(Portfolio no. 8) were sold.
On January 23, 1997, 105 shares ($6,293.49) of DEKALB Genetics Corp. held by the
Trust (Portfolio no. 9) were sold.
On January 23, 1997, 83 shares ($2,599.41) of Dexter Corp. held by the Trust
(Portfolio no. 10) were sold.
On January 23, 1997, 65 shares ($3,234.89) of Dover Corp. held by the Trust
(Portfolio no. 11) were sold.
On January 23, 1997, 43 shares ($1,377.08) of Echlin, Inc. held by the Trust
(Portfolio no. 12) were sold.
On January 23, 1997, 211 shares ($6,712.74) of Equifax Inc. held by the Trust
(Portfolio no. 13) were sold.
On January 23, 1997, 84 shares ($2,420.91) of Equitable Resources Inc. held by
the Trust (Portfolio no. 14) were sold.
On January 23, 1997, 169 shares ($3,496.49) of Flowers Industries Inc. held by
the Trust (Portfolio no. 15) were sold.
On January 23, 1997, 100 shares ($3,906.37) of Hasbro Inc. held by the Trust
(Portfolio no. 16) were sold.
On January 23, 1997, 172 shares ($7,965.91) of Hercules Inc. held by the Trust
(Portfolio no. 17) were sold.
On January 23, 1997, 102 shares ($5,858.68) of Herman Miller Inc. held by the
Trust (Portfolio no. 18) were sold.
On January 23, 1997, 232 shares ($5,524.89) of IBP Inc. held by the Trust
(Portfolio no. 19) were sold.
On January 23, 1997, 67 shares ($4,900.96) of Kerr-McGee Corp. held by the Trust
(Portfolio no. 20) were sold.
A-8
175962.1
<PAGE>
On January 23, 1997, 139 shares ($3,188.55) of Lee Enterprises Inc. held by the
Trust (Portfolio no. 21) were sold.
On January 23, 1997, 36 shares ($1,249.45) of Lubrizol Corp. held by the Trust
(Portfolio no. 22) were sold.
On January 23, 1997, 173 shares ($5,417.32) of Marshall Industries Inc. held by
the Trust (Portfolio no. 23) were sold.
On January 23, 1997, 72 shares ($2,558.91) of Marshall & Isley Corp. held by the
Trust (Portfolio no. 24) were sold.
On January 23, 1997, 168 shares ($6,751.69) of Minerals Technologies Inc. held
by the Trust (Portfolio no. 25) were sold.
On January 23, 1997, 97 shares ($4,155.86) of Morton International Inc. held by
the Trust (Portfolio no. 26) were sold.
On January 23, 1997, 107 shares ($4,233.31) of The New York Times Inc. held by
the Trust (Portfolio no. 27) were sold.
On January 23, 1997, 110 shares ($5,823.20) of Precision Castparts Corp. held by
the Trust (Portfolio no. 29) were sold.
On January 23, 1997, 104 shares ($3,880.64) of SAFECO Corp. held by the Trust
(Portfolio no. 30) were sold.
On January 23, 1997, 100 shares ($3,681.37) of Snap-on Tools Corp. held by the
Trust (Portfolio no. 31) were sold.
On January 23, 1997, 98 shares ($2,655.41) of Sonoco Products Co. held by the
Trust (Portfolio no. 32) were sold.
On January 23, 1997, 173 shares ($1,633.03) of TAB Products Co. held by the
Trust (Portfolio no. 33) were sold.
On January 23, 1997, 34 shares ($1,719.00) of Teleflex Inc. held by the Trust
(Portfolio no. 34) were sold.
On January 23, 1997, 183 shares ($9,207.34) of Travelers Inc. held by the Trust
(Portfolio no. 35) were sold.
On January 23, 1997, 114 shares ($2,615.07) of Union Texas Petroleum Holdings
Inc. held by the Trust (Portfolio no. 36) were sold.
On January 23, 1997, 130 shares ($4,818.29) of Universal Foods Corp. held by the
Trust (Portfolio no. 37) were sold.
On January 23, 1997, 76 shares ($5,684.81) of UNUM Corp. held by the Trust
(Portfolio no. 38) were sold.
On January 23, 1997, 93 shares ($4,925.46) of Varian Associates Inc. held by the
Trust (Portfolio no. 39) were sold.
On January 23, 1997, 71 shares ($1,493.70) of Woolworth Corp. held by the Trust
(Portfolio no. 40) were sold.
From January 1, 1997 to March 21, 1997, 9,672 Units were redeemed from the
Trust.
A-9
175962.1
<PAGE>
Report of Independent Accountants
To the Sponsor, Trustee and Certificateholders of
Equity Securities Trust Series 2, Signature Series,
Reich & Tang Growth and Value Trust
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 Equity Securities Trust Series 2,
Signature Series, Reich & Tang Growth and Value Trust (the "Trust") at December
31, 1996, the results of its operations, the changes in its net assets and the
financial highlights for the year 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 audit. We conducted our audit
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
audit, which included confirmation of securities at December 31, 1996 by
correspondence with the Trustee, provides a reasonable basis for the opinion
expressed above. The financial statements for the prior periods presented were
audited by other independent accountants whose report dated March 31, 1996
expressed an unqualified opinion on those financial statements.
PRICE WATERHOUSE LLP
160 Federal Street
Boston, MA 02110
March 28, 1997
<PAGE>
<TABLE>
<CAPTION>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Portfolio
December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio No. of Percentage of Cost of Market
No. Shares Name of Issuer Trust (1) Securities (2) Value (3)
<S> <C> <C> <C> <C> <C>
1 3,293 Albany International Corp. 2.282% $ 52,791 $ 76,150
2 2,254 Allergan Inc. 2.260 52,294 80,299
3 1,115 Allied Signal 1.625 37,605 74,705
4 1,344 AMBAC Inc. 2.649 61,283 89,208
5 3,752 Avery Dennison Corp. 2.290 52,996 132,727
6 6,178 Becton Dickinson & Co. 4.414 102,136 267,971
7 1,483 Corning Inc. 2.199 50,887 68,589
8 2,116 C.R. Bard Inc. 2.191 50,685 59,248
9 2,475 Dekalb Genetics 0.838 19,382 126,225
10 1,951 Dexter Corp. 2.134 49,367 62,188
11 1,546 Dover Corp. 1.524 35,273 77,880
12 1,014 Echlin, Inc. 1.077 24,918 32,068
13 4,961 Equifax Inc. 2.135 49,393 151,931
14 1,976 Equitable Resources Inc. 3.342 77,331 58,786
15 3,988 Flowers Industries 2.102 48,643 85,742
16 2,368 Hasbro Inc. 3.256 75,346 92,056
17 4,063 Hercules Inc. 3.965 91,739 175,725
18 2,405 Herman Miller Inc. 2.486 57,530 136,183
19 5,468 IBP, Inc. 1.775 41,073 132,599
20 1,597 Kerr-McGee Corp. 3.371 77,999 114,984
21 3,268 Lee Enterprises Inc. 2.159 49,947 75,981
22 864 Lubrizol Corp. 1.140 26,383 26,784
23 4,075 Marshall Industries Inc. 3.291 76,147 124,797
24 1,711 Marshall & Ilsley Corp. 1.758 40,671 59,243
25 3,962 Minerals Technologies Inc. 4.456 103,090 162,442
26 2,281 Morton International Inc. 2.858 66,139 92,951
27 2,519 The New York Times Co. 3.299 76,337 95,722
28 964 Pioneer Hi-Bred International Inc. 1.112 25,725 67,480
29 2,593 Precision Castparts Corp. 1.845 42,686 128,677
30 2,459 Safeco Corp. 3.337 77,205 96,977
31 2,355 Snap-On Tools Corp. 2.174 50,290 83,897
32 2,312 Sonoco Products Co. 2.219 51,339 59,823
33 4,087 Tab Products Co. 2.240 51,838 36,272
34 799 Teleflex Inc. 1.101 25,463 41,648
35 4,320 Travelers Inc. 2.988 69,136 196,020
36 2,697 Union Texas Petroleum Holdings Inc. 2.795 64,673 60,345
37 3,063 Universal Foods Corp. 4.574 105,833 107,971
38 1,798 Unum Corp. 4.274 98,886 129,905
39 2,202 Varian Associates Inc. 2.185 50,563 112,027
40 1,691 Woolworth Corp. 2.280 52,744 37,202
------- ---------- ----------
100.00% $2,313,766 $3,891,428
======= ========== ==========
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Footnotes to Portfolio
- -------------------------------------------------------------------------------
1. Based on the cost of the securities to the Trust.
2. See "Tax Status" in Part B of this Prospectus for a statement of the
Federal tax consequences to a Certificateholder upon the sale, redemption
or maturity of a security.
3. At December 31, 1996, the net unrealized appreciation of all the securities
was comprised of the following:
Gross unrealized appreciation $ 1,631,643
Gross unrealized depreciation (53,981)
-----------
Net unrealized appreciation $ 1,577,662
===========
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Statement of Net Assets
December 31, 1996
Investments in Securities,
at Market Value (Cost $2,313,766) $ 3,891,428
--------------
Liabilities
Accrued Expenses 673
Advance from Trustee 15,487
--------------
Total Liabilities 16,160
--------------
Net Assets (227,259 Units of Fractional Undivided
Interest Outstanding, $17.05 per Unit) $ 3,875,268
==============
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Statement of Operations
For the Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Investment Income
Dividends $ 62,082 $ 65,875 $ 99,079
------------ ------------ ------------
Expenses
Trustee's Fees 5,561 6,730 8,503
Sponser's Advisory Fee 673 ---- ----
------------ ------------ ------------
Total Expenses 6,234 6,730 8,503
------------ ------------ ------------
Net Investment Income 55,848 59,145 90,576
------------ ------------ ------------
Realized and Unrealized Gain (Loss)
Realized Gain on
Investments 170,334 397,886 158,978
Change in Unrealized Appreciation
(Depreciation) on Investments 537,934 712,990 (105,986)
------------ ------------ ------------
Net Gain on Investments 708,268 1,110,876 52,992
------------ ------------ ------------
Net Increase in Net Assets
Resulting From Operations $ 764,116 $1,170,021 $ 143,568
============ ============ ============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Statement of Changes in Net Assets
For the Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Operations
Net Investment Income $ 55,848 $ 59,145 $ 90,576
Realized Gain
on Investments 170,334 397,886 158,978
Change in Unrealized Appreciation
(Depreciation) on Investments 537,934 712,990 (105,986)
------------ -------------- --------------
Net Increase in Net Assets
Resulting From Operations 764,116 1,170,021 143,568
------------ -------------- --------------
Distributions to Certificateholders
Investment Income 55,356 59,135 87,038
Principal ---- ---- 9,695
Redemptions
Investment Income 132 129 4,105
Principal 660,793 959,684 1,983,744
------------ -------------- --------------
Total Distributions
and Redemptions 716,281 1,018,948 2,084,582
------------ -------------- --------------
Total Increase (Decrease) 47,835 151,073 (1,941,014)
Net Assets
Beginning of Year 3,827,433 3,676,360 5,617,374
------------ -------------- --------------
End of Year (Including
Undistributed Net Investment
Income of ($4,190), ($4,550)
and ($4,431), Respectively) $ 3,875,268 $ 3,827,433 $ 3,676,360
============ ============== ==============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Equity Securities Trust Series 2, Signature Series,
Reich and Tang Growth and Value Trust
Notes to Financial Statements
1. Organization
Equity Securities Trust Series 2, Signature Series,Reich and Tang Growth
and Value Trust (the "Trust") was organized on March 18, 1993 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 objective of the Trust is to seek to achieve capital
appreciation.
Effective September 28, 1995, Reich & Tang Distributors L.P. ("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. Effective
September 2, 1995, United States Trust Company of New York was merged into
The Chase Manhattan Bank (the "Trustee"). Accordingly, Chase is the
successor trustee of the Trust.
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. Dividend income is recognized as
of the ex-dividend date.
Security Valuation
Investments are carried at market value which is determined by the Trustee
based upon the closing bid prices for the securities at the end of the
year, which approximates the fair value of the securities 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>
Equity Securities Trust Series 2, Signature Series
Reich & Tang Growth and Value Trust
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 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 income 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 securities, other than those securities 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, 1996, 1995 and 1994, 41,966,
79,570 and 192,849 units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the Trustee
of $.90 per 100 units outstanding. A maximum fee of $.25 per 100 units
outstanding is paid to the Sponsor. For the year ended December 31, 1996,
the "Trustee's Fees" are comprised of Trustee fees of $2,324 and other
expenses of $3,237. The other expenses include professional, printing and
miscellaneous fees.
<PAGE>
Equity Securities Trust Series 2, Signature Series
Reich & Tang Growth and Value Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
5. Net Assets
At December 31, 1996, the net assets of the Trust represented the interest
of Certificateholders as follows:
Original cost to Certificateholders $ 210,440
Less Initial Gross Underwriting Commission 10,312
Transaction Fees 127
----------------
200,001
----------------
Cost of Additional Units Acquired during the
Offering Period to Certificateholders 5,251,192
Less Gross Underwriting Commission 257,153
Transaction Fees 3,176
----------------
4,990,863
----------------
Accumulated Cost of Securities Sold (2,877,098)
Net Unrealized Appreciation 1,577,662
Undistributed Net Investment Income (4,190)
Undistributed Proceeds From Investments (11,970)
----------------
Total $ 3,875,268
================
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 541,644 units of fractional
undivided interest of the Trust as of May 24, 1993 (end of the offering
period).
<PAGE>
Equity Securities Trust Series 2, Signature Series
Reich & Tang Growth and Value Trust
Notes to Financial Statements
- --------------------------------------------------------------------------------
6. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding for the year ended
December 31, 1996:
Net Asset Value, Beginning of Year** $ 14.22
----------------
Dividend Income .25
Expenses (.03)
----------------
Net Investment Income .22
----------------
Net Gain or Loss on Investments(1) 2.83
----------------
Total from Investment Operations 3.05
----------------
Less Distributions
to Certificateholders
Income .22
for Redemptions
Interest .00
----------------
Total Distributions .22
----------------
Net Asset Value, End of Year** $ 17.05
================
See "Financial and Statistical Information" in Part A of this Prospectus
for amounts of per unit distributions during the years ended December 31,
1996, 1995 and 1994 based on actual units.
(1) Net gain or loss on investments is a result of changes in outstanding units
since January 1, 1996 and the dates of net gain and loss on investments.
* Unless otherwise stated, based upon average units outstanding during
the year of 248,242 ([227,259 + 269,225]/2).
** Based upon actual units outstanding.
<PAGE>
EQUITY SECURITIES TRUST
SERIES 2
SIGNATURE SERIES
REICH & TANG GROWTH AND VALUE TRUST
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
DATED: APRIL 30, 1997
THE TRUST
ORGANIZATION. "Equity Securities Trust, Series 2, Signature
Series, Reich & Tang Growth And Value Trust" consists of a "unit investment
trust" designated as set forth in Part A. The Trust was created under the laws
of the State of New York pursuant to a Trust Indenture and Agreement* (the
"Trust Agreement"), dated the initial Date of Deposit, between Reich & Tang
Distributors L.P., as Sponsor, and The Chase Manhattan Bank, as Trustee.
On the initial Date of Deposit, the Sponsor deposited with the
Trustee common stock including funds and delivery statements relating to
contracts for the purchase of certain such securities (collectively, the
"Securities") with an aggregate value as set forth in Part A and cash or an
irrevocable letter of credit issued by a major commercial bank in the amount
required for such purchases. Thereafter the Trustee, in exchange for the
Securities so deposited, delivered to the Sponsor the Certificates evidencing
the ownership of all Units of the Trust. The Sponsor has a limited right to
substitute other securities in the Trust portfolio in the event of a failed
contract. See "The Trust--Substitution of Securities". The Sponsor may also, in
certain circumstances, direct the Trustee to dispose of certain Securities if
the Sponsor believes that, because of market or credit conditions, or for
certain other reasons, retention of the Security would be detrimental to
Certificateholders.
(See "Trust Administration--Portfolio Supervision.")
Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the Securities of the Trust in the ratio
of one hundred Units for the indicated amount of the aggregate market value of
the Securities set forth in the "Summary of Essential Information". To the
extent that any Units are redeemed by the Trustee, the fractional undivided
interest or pro rata share in such Trust represented by each unredeemed Unit
will increase, although the actual interest in such Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Certificateholders, which may include the Sponsor
or the Underwriters, or until the termination of the Trust Agreement.
With the deposit of the Securities in the Trust on the initial
Date of Deposit, the Sponsor established a proportionate relationship among the
initial aggregate value of specified Securities in the Trust. During the 90 days
subsequent to the initial Date of Deposit, the Sponsor may deposit additional
Securities in the Trust that are substantially similar to the Securities already
deposited in the Trust ("Additional Securities") or contracts to purchase
Additional Securities, in order to create additional Units, maintaining to the
extent practicable the original proportionate relationship of the number of
shares of each Security in the Trust portfolio on the initial Date of Deposit.
(Securities and Additional Securities collectively may be hereinafter referred
to as "Securities".) These additional Units will each represent, to the extent
practicable, an undivided interest in the same number and type of securities of
identical issuers as are represented by Units issued on the initial Date of
Deposit. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices, or
unavailability of Securities. Deposits of Additional Securities in the Trust
subsequent to the 90-day period following the initial Date of Deposit must
replicate exactly the proportionate relationship among the shares of each
Security in the Trust portfolio at the end of the initial 90-day period. The
number and identity of
- --------
* References in this Prospectus to the Trust Agreement are qualified in
their entirety by the respective Trust Indentures and Agreements which
are incorporated by reference herein.
176822.3
<PAGE>
Securities in the Trust will be adjusted to reflect the disposition of
Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to shares or the reinvestment of the proceeds
distributed to Certificateholders. The portfolio of the Trust may change
slightly based on such disposition and reinvestment. Securities received in
exchange for shares will be similarly treated. Substitute Securities may be
acquired under specified conditions when Securities originally deposited in the
Trust are unavailable (see "The Trust--Substitution of Securities" below). Units
may be continuously offered to the public by means of this Prospectus (see
"Public Offering--Distribution of Units") resulting in a potential increase in
the number of Units outstanding. As additional Units are issued by the Trust as
a result of the deposit of Additional Securities, the aggregate value of the
Securities in the Trust will be increased and the fractional undivided interest
in the Trust represented by each Unit will be decreased.
OBJECTIVE. The objective of the Trust is to seek growth of
capital by investing in securities based upon their potential for capital
appreciation as determined by the Portfolio Consultant. In addition, current
income will be secondary to the objective of capital growth. The Trust seeks to
achieve its objective by investing in a portfolio of common stocks, securities
convertible into common stocks, debt securities and preferred stock of domestic
issuers which are selected by the Trust's Portfolio Consultant and which the
Portfolio Consultant believes will enable the Trust to achieve its objective.
All of the Securities in the Trust, except convertible securities, are listed on
the New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers Automated Quotations ("NASDAQ") National
Market System and are generally followed by independent investment research
firms. There is no minimum capitalization or market trading activity requirement
for the selection of Securities for the Trust's portfolio. There can be no
assurance that the Trust's investment objectives can be achieved.
LIQUIDITY. The existence of a liquid trading market for
Securities in the Trust portfolio, may depend on whether dealers will make a
market in these Securities. There can be no assurance that a market will be made
for any of the Securities, that any market for the Securities will be maintained
or of the liquidity of the Securities in any markets made. In addition, the
Trust may be restricted under the Investment Company Act of 1940 from selling
Securities to the Sponsor. The price at which the Securities may be sold to meet
redemptions and the value of the Units will be adversely affected if trading
markets for the Securities are limited or absent.
The Trust may purchase securities that are not registered
("Restricted Securities") under the Securities Act, but can be offered and sold
to "qualified institutional buyers" under Rule 144A under the Securities Act.
Since it is not possible to predict with assurance exactly how this market for
Restricted Securities sold and offered under Rule 144A will develop, the Sponsor
will carefully monitor the Trust's investments in these securities, focusing on
such factors, among others, as valuation, liquidity and availability of
information. This investment could have the effect of increasing the level of
illiquidity in the Trust to the extent that qualified institutional buyers
become for a time uninterested in purchasing these Restricted Securities. See
"Summary of Essential Information" for the percentage of Restricted Securities
held in the Trust portfolio.
There is no assurance that any dividends will be declared or
paid in the future on the Securities. Investors should be aware that there is no
assurance that the Trust's objectives will be achieved.
PORTFOLIO. The Trust consists of the Securities (or contracts
to purchase such Securities together with an irrevocable letter or letters of
credit for the purchase of such contracts) and Additional Securities deposited
upon the creation of additional Units as set forth above and Substitute
Securities acquired by the Trust as long as such Securities may continue to be
held from time to time in the Trust together with uninvested cash realized from
the disposition of Securities. Because certain of the Securities and Additional
Securities from time to time may be sold under certain circumstances, as
described herein, no assurance can be given that the Trust will retain for any
length of time its present size and composition. The Trustee has not
participated and will not participate in the selection of Securities for the
Trust, and neither the Sponsor, the Portfolio Consultant nor the Trustee will be
liable in any way for any default, failure or defect in any Securities.
Some of the Securities are publicly traded either on a stock
exchange or in the over-the-counter market. The contracts to purchase Securities
deposited in the Trust are expected to settle in five business days, in the
ordinary manner for such Securities.
-2-
176822.3
<PAGE>
SUBSTITUTION OF SECURITIES. Neither the Sponsor, the Portfolio
Consultant nor the Trustee shall be liable in any way for any default, failure
or defect in any of the Securities. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsor is authorized under the Trust Agreement to direct the
Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust.
The Substitute Securities must be purchased within 20 days
after the sale of the portfolio Security or delivery of the notice of the failed
contract. Where the Sponsors purchase Substitute Securities in order to replace
Failed Securities, (i) the purchase price may not exceed the purchase price of
the Failed Securities and (ii) the Substitute Securities must be substantially
similar to the Securities originally contracted for and not delivered. Where the
Sponsor purchases Substitute Securities in order to replace Securities they
sold, the Sponsor will endeavor to select Securities which are securities that
possess characteristics that are consistent with the objectives of the Trust as
set forth above. Such selection may include or be limited to Securities
previously included in the portfolio of the Trust.
Whenever a Substitute Security has been acquired for the
Trust, the Trustee shall, within five days thereafter, notify all
Certificateholders of the Trust of the acquisition of the Substitute Security
and the Trustee shall, on the next Monthly Distribution Date which is more than
30 days thereafter, make a pro rata distribution of the amount, if any, by which
the cost to the Trust of the Failed Security exceeded the cost of the Substitute
Security plus accrued interest, if any.
In the event no reinvestment is made, the proceeds of the sale
of Securities will be distributed to Certificateholders as set forth under
"Rights of Certificateholders--Distributions." In addition, if the right of
substitution shall not be utilized to acquire Substitute Securities in the event
of a failed contract, the Sponsor will cause to be refunded the sales charge
attributable to such Failed Securities to all Certificateholders of the Trust,
and distribute the principal and accrued interest attributable to such Failed
Securities on the next Monthly Distribution Date.
Because certain of the Securities and Additional Securities
from time to time may be substituted (see "Trust Administration--Portfolio
Supervision") 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 Security or the exercise of any
redemption or call provision will be distributed to Certificateholders except to
the extent such proceeds are applied to meet redemptions of Units. (See
"Liquidity--Trustee Redemption.")
THE SECURITIES. In identifying Securities for the Trust, the
Portfolio Consultant considers the following factors, among others: (1) values
of individual securities relative to other investment alternatives; (2) trends
in the determinants of corporate profits, corporate cash flow, balance sheet
changes, management capability and practices and (3) the economic and political
outlook. The Portfolio Consultant's investment philosophy hinges on analyzing
and understanding individual businesses in order to assess their long-term
potential. The Portfolio Consultant seeks to discover well-positioned, evolving
companies with substantial growth prospects which are typically unnoticed in the
marketplace. This enables the Portfolio Consultant to commit its funds and build
up its stake at relatively low prices.
Some of the Securities in the Trust may be convertible
securities. A convertible security is a bond, debenture, corporate note,
preferred stock or other similar security that may be converted into or
exchanged for a prescribed amount of common stock or other equity security of
the same or a different issuer within a particular period of time at a specified
price or formula. Before conversion, convertible securities have characteristics
similar to nonconvertible debt securities in that they ordinarily provide a
stream of income with generally higher yields than those of common stock of the
same or similar issuers. Convertible securities are senior in rank to common
stock in a corporation's capital structure and, therefore, generally entail less
risk than the corporation's common stock.
In identifying convertible securities for the Trust, in
addition to the factors associated with the selection of Securities of any
issuer, the price of the convertible securities relative to the underlying
common stock and the potential for capital appreciation of the underlying common
stock, will be considered by the
-3-
176822.3
<PAGE>
Portfolio Consultant. The Trust may convert a convertible security which it
holds only in certain limited circumstances. (See "Risk Considerations--
Convertible Securities.")
RISK CONSIDERATIONS
Fixed Portfolio: The value of the Units will fluctuate
depending on all the factors that have an impact on the economy and the equity
markets. These factors similarly impact on the ability of an issuer to
distribute dividends. The Trust is not a "managed registered investment company"
and Securities will not be sold by the Trustee as a result of ordinary market
fluctuations. Unlike a managed investment company in which there may be frequent
changes in the portfolio of securities based upon economic, financial and market
analyses, securities of a unit investment trust, such as the Trust, are not
subject to such frequent changes based upon continuous analysis. However, the
Sponsor may direct the disposition by the Trustee of Securities upon the
occurrence of certain events. (See "Trust Administration--Portfolio Supervision"
below.) Potential investors also should be aware that the Portfolio Consultant
may change its views as to the investment merits of any of the Securities during
the life of the Trust and therefore should consult their own financial advisers
with regard to a purchase of Units. In addition, investors should be aware that
the Portfolio Consultant, and its affiliates, currently act and will continue to
act as investment adviser for managed investment companies and managed private
accounts that may have similar or different investment objectives from the
Trust. Some of the Securities in the Trust may also be owned by these other
clients of the Portfolio Consultant and its affiliates. However, because these
clients have "managed" portfolios and may have differing investment objectives,
the Portfolio Consultant may sell certain Securities from those accounts in
instances where a sale by the Trust would be impermissible, such as to maximize
return by taking advantage of market fluctuation. Investors should consult with
their own financial advisers prior to investing in the Trust to determine its
suitability. (See "Trust Administration--Portfolio Supervision.") All the
Securities in the Trust are liquidated during a 60 day period prior to the
mandatory termination of the Trust on March 18, 1998. Since the Trust will not
sell Securities in response to ordinary market fluctuation, but only at the
Trust's termination, the amount realized upon the sale of the Securities may not
be the highest price attained by an individual Security during the life of the
Trust.
Common Stock: Since the Trust may contain common stocks of
domestic issuers, an investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks including
the risk that the financial condition of the issuers of the Securities may
become impaired or that the general condition of the stock market may worsen
(both of which may contribute directly to a decrease in the value of the
Securities and thus in the value of the Units). Additional risks include risks
associated with the right to receive payments from the issuer which is generally
inferior to the rights of creditors of, or holders of debt obligations or
preferred stock issued by, the issuer. Holders of common stocks have a right to
receive dividends only when, if, and in the amounts declared by the issuer's
board of directors and to participate in amounts available for distribution by
the issuer only after all other claims on the issuer have been paid or provided
for. By contrast, holders of preferred stocks usually have the right to receive
dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis. Dividends on cumulative preferred
stock must be paid before any dividends are paid on common stock and any
cumulative preferred stock dividend which has been omitted is added to future
dividends payable to the holders of such cumulative preferred stock. Preferred
stocks are also usually entitled to rights on liquidation which are senior to
those of common stocks. For these reasons, preferred stocks generally entail
less risk than common stocks.
Moreover, common stocks do not represent an obligation of the
issuer and therefore do not offer any assurance of income or provide the degree
of protection of debt securities. The issuance of debt securities or even
preferred stock by an issuer will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and inclination
of the issuer to declare or pay dividends on its common stock or the economic
interest of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (which value will be subject to
market fluctuations prior thereto), common stocks have neither fixed principal
amount nor a maturity and have values which are subject to market fluctuations
for as long as the common stocks remain outstanding. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases in value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or
-4-
176822.3
<PAGE>
contraction, and global or regional political, economic or banking crises. The
value of the common stocks in the Trust thus may be expected to fluctuate over
the life of the Trust to values higher or lower than those prevailing on the
initial Date of Deposit. (See "Risk Considerations" for a discussion of the
types of risks that affect holders of common stock.)
The Trust may purchase Securities that are not registered
("Restricted Securities") under the Securities Act of 1933 (the "Securities
Act"), but can be offered and sold to "qualified institutional buyers" as that
term is defined in the Securities Act. See "Liquidity" below for the risks
inherent in the purchase of Restricted Securities.
Convertible Securities: The Portfolio Consultant believes that
the characteristics of convertible securities make them appropriate investments
for an investment company seeking to achieve capital appreciation together with
a high level of current income. These characteristics include the potential for
capital appreciation if the value of the underlying common stock increases or
interest rates decrease, the relatively high yield received from dividend or
interest payments as compared to common stock dividends and decreased risks of
decline in value relative to the underlying common stock due to their fixed
income nature. As a result of the conversion feature, however, the interest rate
or dividend preference on a convertible security is generally less than would be
the case if the securities were not convertible. During periods of rising
interest rates, it is possible that the potential for capital gain on a
convertible security may be less than that of a common stock equivalent if the
yield on the convertible security is at a level which would cause it to sell at
a discount.
The Trust may convert a convertible security only (i) when
necessary to permit orderly disposition of the investment when it approaches
maturity or has been called for redemption, or (ii) to facilitate its sale after
the Sponsor determines that such sale is appropriate in accordance with the
guidelines set forth under "Trust Administration-- Portfolio Supervision." Since
the Trust is not a "managed" investment company, the Trust will not be able to
exercise its conversion rights for any other reason. Investors should be aware
that the inability of the Trust to otherwise exercise its conversion rights will
prevent the Trust from taking advantage of market conditions that may make
conversion attractive to other holders of these convertible securities.
Convertible securities are generally not investment grade,
that is, not rated within the four highest categories by Standard & Poor's
Corporation ("S&P") and Moody's Investor Service ("Moody's"). To the extent that
such convertible securities are rated lower than investment grade (i.e., "high
yield" or "junk bond" status) or are not rated, there is a greater risk as to
the timely repayment of the principal of, and timely payment of interest or
dividends on, those securities. Such securities are considered by the rating
agencies to be predominantly speculative and involve major risk exposures such
as increased sensitivity to interest rate and economic changes and limited
liquidity resulting in the possibility that prices realized upon the sale of
such securities will be less than the prices used in calculating the Trust's net
asset value. Additionally, certain recently enacted Federal legislation could
limit the availability of such securities and the tax advantages to issuers of
the securities.
In the absence of adequate anti-dilution provisions in a
convertible security, dilution in the value of the Trust's holdings may occur in
the event the underlying stock is subdivided, additional securities are issued,
a stock dividend is declared, or the issuer enters into another type of
corporate transaction which increases its outstanding equity securities. Every
convertible security may be valued, on a theoretical basis, as if it did not
have a conversion privilege. This theoretical value is determined by the yield
it provides in comparison with the yields of other securities of comparable
character and quality which do not have a conversion privilege. This theoretical
value, which will change with prevailing interest rates, the credit standing of
the issuer and other pertinent factors, is often referred to as the "investment
value", and represents the security's theoretical price support level.
"Conversion value" is the amount a convertible security would
be worth in market value if it were to be exchanged for the underlying equity
security pursuant to its conversion privilege. Conversion value fluctuates
directly with the price of the underlying equity security, usually common stock.
If, because of low prices for the common stock, the conversion value is
substantially below the investment value, the price of the convertible security
is governed principally by the factors described in the preceding paragraph. If
the conversion value rises near or above its investment value, the price of the
convertible security generally will rise above its investment value and, in
addition, will sell at some premium over its conversion value. This premium
represents the price investors are willing to pay for the privilege of
purchasing a fixed-income security with a
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possibility of capital appreciation due to the conversion privilege. If this
appreciation potential is not realized, this premium may not be recovered. In
its selection of convertible securities for the Trust, the Portfolio Consultant
will not emphasize either investment value or conversion value, but will
consider both in light of the Trust's overall investment objectives.
Some of the convertible securities in the Trust portfolio may
be "Pay-In-Kind" securities. During a designated period from original issuance,
the issuer of such security may pay dividends or interest to the holder by
issuing additional fully paid and nonassessable shares or units of the same
security.
The Trust may purchase convertible securities that are
Restricted Securities and, therefore, can be offered and sold only to "qualified
institutional buyers" as defined in the Securities Act. See "Liquidity" below
for the risks inherent in the purchase of Restricted Securities.
PUBLIC OFFERING
OFFERING PRICE. The Public Offering Price per 100 Units of the
Trust is equal to the aggregate value of the underlying Securities (the price at
which they could be directly purchased by the public assuming they were
available) in the Trust divided by the number of Units outstanding times 100
plus a sales charge of 4.9% of the Public Offering Price per 100 Units or 5.152%
of the net amount invested in Securities per 100 Units. (See "Summary of
Essential Information.") In addition, the net amount invested in Securities will
involve a proportionate share of amounts in the Income Account and Principal
Account, if any. The Public Offering Price can vary on a daily basis from the
amount stated on the cover of this Prospectus in accordance with fluctuations in
the market value of the Securities and the price to be paid by each investor
will be computed as of the date the Units are purchased.
The aggregate value of the Securities is determined in good
faith by the Trustee on each "Business Day" as defined in the Indenture in the
following manner: if the Securities are listed on a national securities exchange
or on the NASDAQ National Market System, this evaluation is generally based on
the closing sale prices on that exchange as of the Evaluation Time (unless the
Trustee deems these prices inappropriate as a basis for valuation). If the
Securities are not so listed or, if so listed and the principal market therefor
is other than on the exchange, the evaluation generally shall be based on the
closing purchase price in the over-the-counter market (unless the Trustee deems
these prices inappropriate as a basis for evaluation) or if there is no such
closing purchase price, then the Trustee may utilize, at the Trust's expense, an
independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices for comparable securities, (b) by appraising the value of
the Securities on the bid side of the market or by such other appraisal deemed
appropriate by the Trustee or (c) by any combination of the above, each as of
the Evaluation Time.
The method used for computing the sales charge for secondary
market purchases shall be based upon the number of years remaining to the
Trust's Termination Date (as defined in the Prospectus).
The table below sets forth the various sales charges for
secondary market purchases based on the number of years remaining to the Trust's
Termination Date.
As Percent of Public
Years to Termination Offering Price
less than 6 months 0%
6 months to 1 year 2.95%
over 1 yr. to 2 yrs. 3.45%
over 2 yrs. to 3 yrs. 3.90%
over 3 yrs. to 4 yrs. 4.50%
over 4 yrs. 4.90%
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VOLUME AND OTHER DISCOUNTS. Units of the Trust are available
at a volume discount from the Public Offering Price during the initial public
offering. This volume discount results in a reduction of the sales charge
applicable to such purchases. The amount of the approximate reduced sales charge
on the Public Offering Price applicable to such purchases is as follows:
Number of Units Approximate Reduced Sales Charge
5,000 but less than 10,000 2.70%
10,000 but less than 25,000 2.45%
25,000 but less than 50,000 2.20%
50,000 but less than 100,000 2.00%
100,000 or more 1.75%
These discounts apply to all purchases of Units by the same
purchaser during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
Employees (and their immediate families) of Reich & Tang
Distributors L.P. (and its affiliates), the Portfolio Consultant, and of any
underwriter of the Trust may, pursuant to employee benefit arrangements,
purchase Units of the Trust at a price equal to the then market value of the
underlying securities in the Trust during the initial offering period, divided
by the number of Units outstanding plus a reduced sales charge of 1.5% 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. During the initial offering period and
thereafter to the extent additional Units continue to be offered by means of
this Prospectus, Units are distributed by the Sponsor, the Underwriters and
dealers at the Public Offering Price. The initial offering period is thirty days
after each deposit of Securities in the Trust and, unless all Units are sold
prior thereto, the Sponsor may extend the initial offering period up to four
additional successive thirty day periods. Certain banks and thrifts will make
Units of the Trust available to their customers on an agency basis. A portion of
the sales charge paid by their customers is retained by or remitted to the
banks. Under the Glass-Steagall Act, banks are prohibited from underwriting
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law.
The Sponsor presently maintains and intends to continue to
qualify the Units for sale in substantially all States through the Underwriters
and through dealers who are members of the National Association of Securities
Dealers, Inc. Units may be sold to dealers at prices which represent a
concession of up to 3% per Unit, subject to the Sponsor's right to change the
dealers' concession from time to time. Such Units may then be distributed to the
public by the dealers at the Public Offering Price then in effect. In addition,
any dealer, underwriter or firm who purchases Units on the initial Date of
Deposit will be paid an additional concession of $1.00 per 100 Units purchased
that day. 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
discounts from time to time.
FREQUENT BUYER PROGRAM. Any dealer, underwriter, or firm whose
total combined purchases of the Trust and other unit investment trusts sponsored
by Reich & Tang Distributors L.P. ("MST/EST Units") from Reich & Tang
Distributors L.P. in a single calendar month fall in any of the levels listed
below, is paid an additional concession.
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Aggregate Monthly Amount of MST/EST Additional Concession
Units Sold at Public Offering Price (Per $1,000,000) Sold
$1,000,000 but less than $2,000,000................... $0.50
$2,000,000 but less than $4,500,000................... $1.00
$4,500,000 but less than $7,000,000................... $1.50
$7,000,000 or more.................................... $2.00
SPONSOR'S AND UNDERWRITERS' PROFITS. The Sponsor and the
Underwriters receive a gross underwriting commission equal to 4.9% of the Public
Offering Price per 100 Units (equivalent to 5.152% of the net amount invested in
the Securities). Additionally, the Sponsor may realize a profit on the deposit
of the Securities in the Trust representing the difference between the cost of
the Securities to the Sponsor and the cost of the Securities to the Trust (See
"Portfolio.") The Sponsor or any Underwriter may realize profits or sustain
losses with respect to Securities deposited in the Trust which were acquired
from underwriting syndicates of which they were a member.
The Sponsor may have participated as an underwriter or
manager, co-manager or member of underwriting syndicates from which some of the
aggregate principal amount of the Securities were acquired for the Trust in the
amounts set forth in "The Trust" in Part A.
All or a portion of the Securities deposited in the Trust may
have been acquired through the Sponsor. The Sponsor received brokerage
commissions from the Certificateholders in connection with such purchases, but
such fees will not exceed that amount indicated in footnote (+++) to the
"Summary of Essential Information."
During the initial offering period and thereafter to the
extent additional Units continue to be offered by means of this Prospectus, the
underwriting syndicate may also realize profits or sustain losses as a result of
fluctuations after the initial Date of Deposit in the aggregate value of the
Securities and hence in the Public Offering Price received by the Sponsor and
the Underwriters for the Units. Cash, if any, made available to the Sponsor
prior to settlement date for the purchase of Units may be used in the Sponsor's
business subject to the limitations of 17 CFR 240.15c3-3 under the Securities
Exchange Act of 1934 and may be of benefit to the Sponsor.
Upon termination of the Trust, the Trustee may utilize the
services of the Sponsor for the sale of all or a portion of the Securities in
the Trust. The Sponsor will receive brokerage commissions from the Trust in
connection with such sales in accordance with applicable law.
In maintaining a market for the Units (see "Sponsor
Repurchase") the Sponsor will realize profits or sustain losses in the amount of
any difference between the price at which they buy Units and the price at which
they resell such Units.
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 hundred or more Units. 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.
DISTRIBUTIONS. Dividends and interest received by the Trust
are credited by the Trustee to an Income Account for the Trust. Other receipts,
including the proceeds of Securities disposed of, are credited to a Principal
Account for the Trust.
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Distributions to each Certificateholder from the Income
Account are computed as of the close of business on each Record Date for the
following Distribution Date. Distributions from the Principal Account of the
Trust (other than amounts representing failed contracts, as previously
discussed) will be computed as of each Record Date, and will be made to the
Certificateholders of the Trust on or shortly after the next Monthly
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the second succeeding Monthly Distribution Date. No
distributions will be made to Certificateholders electing to participate in the
Total Reinvestment Plan. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the second Monthly
Distribution Date after such purchase.
As of the first day of each month, the Trustee will deduct
from the Income Account of the Trust, and, to the extent funds are not
sufficient therein, from the Principal Account of the Trust, amounts necessary
to pay the expenses of the Trust (as determined on the basis set forth under
"Trust Expenses and Charges"). The Trustee also may withdraw from said accounts
such amounts, if any, as it deems necessary to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trust. Amounts so withdrawn shall not be considered a part of such Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw from
the Income and Principal Accounts such amounts as may be necessary to cover
redemptions of Units by the Trustee.
The monthly dividend distribution per 100 Units cannot be
estimated and will change and may be reduced as Securities 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 $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Certificateholders in
connection with each distribution a statement of the amount of dividends and
interest, if any, and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per 100 Units. Within a
reasonable time after the end of each calendar year the Trustee will furnish to
each person who at any time during the calendar year was a Certificateholder of
record, a statement showing (a) as to the Income Account: dividends, interest
and other cash amounts received, amounts paid for purchases of Substitute
Securities and redemptions of Units, if any, deductions for applicable taxes and
fees and expenses of the Trust, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each 100 Units outstanding on
the last business day of such calendar year; (b) as to the Principal Account:
the dates of disposition of any Securities and the net proceeds received
therefrom, deductions for payments of applicable taxes and fees and expenses of
the Trust, amounts paid for purchases of Substitute Securities and redemptions
of Units, if any, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each 100 Units outstanding on the last
business day of such calendar year; (c) a list of the Securities held, a list of
Securities purchased, sold or otherwise disposed of during the calendar year and
the number of Units outstanding on the last business day of such calendar year;
(d) the Redemption Price per 100 Units based upon the last computation thereof
made during such calendar year; and (e) amounts actually distributed to
Certificateholders during such calendar year from the Income and Principal
Accounts, separately stated, of the Trust, expressed both as total dollar
amounts and as dollar amounts representing the pro rata share of each 100 Units
outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by
Certificateholders 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 Securities in the portfolio and a copy of the Trust Agreement.
TAX STATUS
The following is a general discussion of certain of the
Federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary is limited to investors who hold the Units as
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"capital assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
Certificateholders should consult their tax advisers in determining the Federal,
state, local and any other tax consequences of the purchase, ownership and
disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP
has examined the Agreement, the final form of Prospectus dated the date hereof
(the "Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein.
In the opinion of Battle Fowler LLP, special counsel for the
Sponsor, under existing law:
1. The Trust will be classified as a grantor trust for Federal
income tax purposes and not as a partnership or association taxable as a
corporation. Classification of the Trust as a grantor trust will cause the Trust
not to be subject to Federal income tax, and will cause the Certificateholders
of the Trust to be treated for Federal income tax purposes as the owners of a
pro rata portion of the assets of the Trust. All income received by the Trust
will be treated as income of the Certificateholders in the manner set forth
below.
2. The Trust is not subject to the New York Franchise Tax on
Business Corporations or the New York City General Corporation Tax. For a
Certificateholder who is a New York resident, however, a pro rata portion of all
or part of the income of the Trust will be treated as the income of the
Certificateholder under the income tax laws of the State and City of New York.
Similar treatment may apply in other states.
3. During the 90-day period subsequent to the initial issuance
date, the Sponsor reserves the right to deposit additional Securities that are
substantially similar to those establishing the Trust. This retained right falls
within the guidelines promulgated by the Internal Revenue Service ("IRS") and
should not affect the taxable status of the Trust.
A taxable event will generally occur with respect to each
Certificateholder when the Trust disposes of a Security (whether by sale,
exchange or redemption) or upon the sale, exchange or redemption of Units by
such Certificateholder. The price a Certificateholder pays for his Units,
including sales charges, is allocated among his pro rata portion of each
Security held by the Trust (in proportion to the fair market values thereof on
the date the Certificateholder purchases his Units) in order to determine his
initial cost for his pro rata portion of each Security held by the Trust.
For Federal income tax purposes, a Certificateholder's pro
rata portion of dividends paid with respect to a Security held by a Trust are
taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits" as defined by Section 316 of the Code. A
Certificateholder's pro rata portion of dividends paid on such Security that
exceed such current and accumulated earnings and profits will first reduce a
Certificateholder's tax basis in such Security, and to the extent that such
dividends exceed a Certificateholder's tax basis in such Security will generally
be treated as capital gain.
A Certificateholder's portion of gain, if any, upon the sale,
exchange or redemption of Units or the disposition of Securities held by the
Trust will generally be considered a capital gain and will be long-term if the
Certificateholder has held his Units for more than one year. Long-term capital
gains are generally taxed at the same rates applicable to ordinary income,
although individuals who realize long-term capital gains will be subject to a
maximum tax rate of 28% on such gains. Tax rates may increase prior to the time
when Certificateholders may realize gains from the sale, exchange or redemption
of Units or Securities.
A Certificateholder's portion of loss, if any, upon the sale
or redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss and will be long-term if the
Certificateholder has held his Units for more than one year. Capital losses are
deductible to the extent of capital gains; in addition, up to $3,000 of capital
losses of non-corporate Certificateholders may be deducted against ordinary
income.
Under Section 67 of the Code and the accompanying Regulations,
a Certificateholder who itemizes his deductions may also deduct his pro rata
share of the fees and expenses of the Trust, but only to the extent that such
amounts, together with the Certificateholder's other miscellaneous deductions,
exceed 2% of his
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adjusted gross income. The deduction of fees and expenses may also be limited by
Section 68 of the Code, which reduces the amount of itemized deductions that are
allowed for individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish
to each Certificateholder an annual statement containing information relating to
the dividends received by the Trust on the Securities, the gross proceeds
received by the Trust from the disposition of any Security, and the fees and
expenses paid by the Trust. The Trustee will also furnish annual information
returns to each Certificateholder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a
70% dividends received deduction with respect to such Certificateholder's pro
rata portion of dividends received by the Trust from a domestic corporation
under Section 243 of the Code or from a qualifying foreign corporation under
Section 245 of the Code (to the extent the dividends are taxable as ordinary
income, as discussed above) in the same manner as if such corporation directly
owned the Securities paying such dividends. However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. These limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Moreover, the allowable percentage of the deduction will be
reduced from 70% if a corporate Certificateholder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by such
corporation. Accordingly, Certificateholders should consult their tax adviser in
this regard.
As discussed in the Section "Termination", each
Certificateholder will have three options in receiving their termination
distributions, which are (i) to receive their pro rata share of the underlying
Securities in kind, (ii) to receive cash upon liquidation of their pro rata
share of the underlying Securities, or (iii) to invest the amount of cash they
would receive upon the liquidation of their pro rata share of the underlying
Securities in units of a future series of the Trust (if one is offered).
There are special tax consequences should a Certificateholder
choose option (i), the exchange of the Certificateholder's pro rata portion of
each of the shares of stock and other assets held by the Trust for shares of
stock plus, possibly, cash. Treasury Regulations provide that gain or loss is
recognized when there is a conversion of property into property that is
materially different in kind or extent. In this instance, the Certificateholder
may be considered the owner of an undivided interest in all of the Trust's
assets. By accepting the proportionate number of shares of the individual
Securities representing the assets of the Trust, in exchange for his Unit, the
Certificateholder should be treated as merely exchanging his undivided pro rata
ownership of all of the assets of the Trust into sole ownership of a
proportionate share of Trust assets. As such, there should be no material
difference in the Certificateholder's ownership, and therefore the transaction
should be tax free to the extent Securities are received. Alternatively, the
transaction may be treated as an exchange that would qualify for nonrecognition
treatment to the extent the Certificateholder is exchanging his undivided
interest in all of the Trust's Securities for his proportionate number of shares
of the underlying Securities. In either instance, the transaction should result
in a non-taxable event for the Certificateholder to the extent Securities are
received. However, there is no specific authority addressing the income tax
consequences of an in kind distribution from a grantor trust, and investors are
urged to consult their tax advisers in this regard.
Entities that generally qualify for an exemption from Federal
income tax, such as many pension trusts, are nevertheless taxed under Section
511 of the Code on "unrelated business taxable income." Unrelated business
taxable income is income from a trade or business regularly carried on by the
tax-exempt entity that is unrelated to the entity's exempt purpose. Unrelated
business taxable income generally does not include dividend or interest income
or gain from the sale of investment property, unless such income is derived from
property that is debt-financed or is dealer property. A tax-exempt entity's
dividend income from the Trust and gain from the sale of Units in the Trust or
the Trust's sale of Securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Unit
itself is debt-financed or constitutes dealer property in the hands of the
tax-exempt entity.
Before investing in the Trust, the trustee or investment
manager of an employee benefit plan (e.g., a pension or profit sharing
retirement plan) should consider among other things (a) whether the investment
is prudent under the Employee Retirement Income Security Act of 1974 ("ERISA"),
taking into account the needs of the plan and all of the facts and circumstances
of the investment in the Trust; (b) whether
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the investment satisfies the diversification requirement of Section 404(a)(1)(C)
of ERISA; and (c) whether the assets of the Trust are deemed "plan assets" under
ERISA and the Department of Labor regulations regarding the definition of "plan
assets."
Prospective tax-exempt investors are urged to consult their
own tax advisers prior to investing in the Trust.
LIQUIDITY
SPONSOR REPURCHASE. The Sponsor, although not obligated to do
so, presently maintains and intends to continue to maintain a secondary market
for the Units and continuously to offer to repurchase the Units. The Sponsor's
secondary market repurchase price will be based on the aggregate value of the
Securities in the Trust portfolio and will be the same as the redemption price.
The aggregate value of the Securities will be determined by the Trustee on a
daily basis and computed on the basis set forth under "Trustee Redemption." The
Sponsor does not guarantee the enforceability, marketability or price of any
Securities in the Portfolio or of the Units. Certificateholders who wish to
dispose of their Units should inquire of the Sponsor as to current market prices
prior to making a tender for redemption. The Sponsor may discontinue repurchase
of Units if the supply of Units exceeds demand, or for other business reasons.
The date of repurchase is deemed to be the date on which Certificates
representing Units are physically received in proper form, i.e., properly
endorsed, by Reich & Tang Distributors L.P., 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.
Units purchased by the Sponsor in the secondary market may be
reoffered for sale by the Sponsor at a price based on the aggregate value of the
Securities in the Trust plus a 4.9% sales charge (of 5.152% of the net amount
invested) plus a pro rata portion of amounts, if any, in the Income Account. Any
Units that are purchased by the Sponsor in the secondary market also may be
redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption (see "Trustee Redemption"). Factors which the Sponsor will consider
in making a determination will include the number of Units of all Trusts which
it has in inventory, its estimate of the salability and the time required to
sell such Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (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 may also be tendered to the Trustee
for redemption at its corporate trust office at 4 New York Plaza, New York, New
York 10004, 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 cancelled.
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 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 an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the
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Evaluation Time set forth under "Summary of Essential Information" in Part A on
the date of tender. The "date of tender" is deemed to be the date on which Units
are received by the Trustee, except that with respect to Units received after
the close of trading on the New York Stock Exchange (4:00 p.m. Eastern Time),
the date of tender is the next day on which such Exchange is open for trading,
and such Units will be deemed to have been tendered to the Trustee on such day
for redemption at the Redemption Price computed on that day.
A Certificateholder will receive his redemption proceeds in
cash and amounts paid on redemption shall be withdrawn from the Income Account,
or, if the balance therein is insufficient, from the Principal Account. All
other amounts paid on redemption shall be withdrawn from the Principal Account.
The Trustee is empowered to sell Securities in order to make funds available for
redemptions. Such sales, if required, could result in a sale of Securities by
the Trustee at a loss. To the extent Securities are sold, the size and diversity
of the Trust will be reduced. The Securities to be sold will be selected by the
Trustee in order to maintain, to the extent practicable, the proportionate
relationship among the number of shares of each Stock. Provision is made in the
Indenture under which the Sponsor may, but need not, specify minimum amounts in
which blocks of Securities are to be sold in order to obtain the best price for
the Fund. While these minimum amounts may vary from time to time in accordance
with market conditions, the Sponsor believes that the minimum amounts which
would be specified would be approximately 100 shares for readily marketable
Securities.
The Redemption Price per Unit is the pro rata share of the
Unit in the Trust determined by the Trustee on the basis of (i) the cash on hand
in the Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Certificateholders of record as of the business day prior to the evaluation
being made. The Trustee may determine the value of the Securities in the Trust
in the following manner: if the Securities are listed on a national securities
exchange or the NASDAQ national market system, this evaluation is generally
based on the closing sale prices on that exchange or that system (unless the
Trustee deems these prices inappropriate as a basis for valuation). If the
Securities are not so listed or, if so listed and the principal market therefor
is other than on the exchange, the evaluation shall generally be based on the
closing purchase price in the over-the-counter market (unless the Trustee deems
these prices inappropriate as a basis for evaluation) or if there is no such
closing purchase price, then the Trustee may utilize, at the Trust's expense, an
independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices for comparable securities, (b) by appraising the value of
the Securities on the bid side of the market or (c) by any combination of the
above.
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
Certificateholder 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
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.
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TOTAL REINVESTMENT PLAN
Distributions of dividend income and capital gain, if any,
from the Trust are made to Certificateholders monthly. The Certificateholder has
the option, however, of either receiving his dividend check, together with any
other payments, from the Trustee or participating in a reinvestment program
offered by the Sponsor in shares of Short Term Income Fund, Inc., U.S.
Government Portfolio (the "Fund"). Participation in the reinvestment option is
conditioned on the Fund's lawful qualification for sale in the state in which
the Certificateholder is a resident.
Upon enrollment in the reinvestment option, the Trustee will
direct dividend and/or other distributions, if any, to the Fund. The Fund seeks
to maximize current income and to maintain liquidity and a stable net asset
value by investing in securities issued or guaranteed by the United States
government which have effective maturities of 397 days or less and repurchase
agreements with maturities of 397 days or less covering securities issued or
guaranteed by the United States government. For more complete information
concerning the Fund, including charges and expenses, the Certificateholder
should fill out and mail the card attached to the inside back cover of the
Prospectus. The prospectus for the Fund will be sent to Certificateholders. The
Certificateholder should read the prospectus for the Fund carefully before
deciding to participate.
TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust
and is not a managed fund. Traditional methods of investment management for a
managed fund typically involve frequent changes in a portfolio of securities on
the basis of economic, financial and market analyses. The Portfolio of the
Trust, however, is not managed and therefore the adverse financial condition of
an issuer will not necessarily require the sale of its Securities from the
Portfolio. However, the Sponsor may direct the disposition of Securities upon
the occurrence of certain events including: (1) default in payment of amounts
due on any of the Securities; (2) institution of certain legal proceedings; (3)
default under certain documents materially and adversely affecting future
declaration or payment of amounts due or expected; or (4) decline in price as a
direct result of serious adverse credit factors affecting the issuer of a
Security which, in the opinion of the Sponsor, would make the retention of the
Security detrimental to the Trust or the Certificateholders.
If a default in the payment of amounts due on any Security
occurs and if the Sponsor fails to give immediate instructions to sell or hold
that Security, the Trust Agreement provides that the Trustee, within 30 days of
that failure by the Sponsor, may sell the Security.
The Trust Agreement provides that it is the responsibility of
the Sponsor to instruct the Trustee to reject any offer made by an issuer of any
of the Securities to issue new securities in exchange and substitution for any
Security pursuant to a recapitalization or reorganization, except that the
Sponsor may instruct the Trustee to accept such an offer or to take any other
action with respect thereto as the Sponsor may deem proper if the issuer failed
to declare or pay, amounts owed with respect thereto.
The Trust Agreement also authorizes the Sponsor to increase
the size and number of Units of the Trust by the deposit of Additional
Securities, contracts to purchase Additional Securities or cash or a letter of
credit with instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units within 90 days subsequent to the
initial Date of Deposit, provided that the original proportionate relationship
among the number of shares of each Security established on the Initial Date of
Deposit is maintained to the extent practicable. Deposits of Additional
Securities in the Trust subsequent to the 90-day period following the initial
Date of Deposit must replicate exactly the proportionate relationship among the
shares of each Security in the Trust portfolio at the end of the initial 90-day
period.
With respect to deposits of Additional Securities (or cash or
a letter of credit with instructions to purchase Additional Securities), in
connection with creating additional Units of the Trust, the Sponsor may specify
the minimum numbers in which Additional Securities will be deposited or
purchased. If a deposit is not sufficient to acquire minimum amounts of each
Security, Additional Securities may be acquired in the order of the Security
most under-represented immediately before the deposit when compared to the
original proportionate
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relationship. If Securities of an issue originally deposited are unavailable at
the time of the subsequent deposit, the Sponsor may (1) deposit cash or a letter
of credit with instructions to purchase the Security when it becomes available,
or (2) deposit (or instruct the Trustee to purchase) either Securities of one or
more other issues originally deposited or a Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be
amended by the Trustee and the Sponsor without the consent of 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 the Trust
without his consent or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of the holders of all Certificates.
The Trust Agreement may not be amended, without the consent of the holders of
all Certificates in the Trust then outstanding, to increase the number of Units
issuable or to permit the acquisition of any Securities in addition to or in
substitution for those initially deposited in such Trust, except in accordance
with the provisions of the Trust Agreement. The Trustee shall promptly notify
Certificateholders, in writing, of the substance of any such amendment.
TRUST TERMINATION. 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 Securities held in such Trust but in no event is it
to continue beyond the Mandatory Termination Date. If the value of the Trust
shall be less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate the Trust. The Trust may also be terminated
at any time with the consent of the holders of Certificates representing 100% of
the Units then outstanding. The Trustee may utilize the services of the Sponsor
for the sale of all or a portion of the Securities in the Trust. The Sponsor
will receive brokerage commissions from the Trust in connection with such sales
in accordance with applicable law. In the event of termination, written notice
thereof will be sent by the Trustee to all Certificateholders. Such notice will
provide Certificateholders with three options by which to receive their pro rata
share of the net asset value of the Trust.
1. A Certificateholder who owns units in the aggregate of at
least $25,000 in value and who so elects by notifying the Trustee prior to the
commencement of the Liquidation Period by returning a properly completed
election request (to be supplied to Certificateholders at least 20 days prior to
such date) (see Part A--"Summary of Essential Information" for the date of the
commencement of the Liquidation Period) and whose interest in the Trust entitles
him to receive at least one share of each underlying Security will have his
Units redeemed on commencement of the Liquidation Period by distribution of the
Certificateholder's pro rata share of the net asset value of the Trust on such
date distributed in kind to the extent represented by whole shares of underlying
Securities and the balance in cash within three business days next following the
commencement of the Liquidation Period. Certificateholders subsequently selling
such distributed Securities will incur brokerage costs when disposing of such
Securities.
A Certificateholder may also elect prior to the Mandatory
Termination Date by so specifying in a properly completed election request, the
following two options with regard to the termination distribution of such
Certificateholder's interest in the Trust as set forth below:
2. to receive in cash such Certificateholder's pro rata share
of the net asset value of the Trust derived from the sale by the Sponsor as the
agent of the Trustee of the underlying Securities over a period not to exceed 60
business days immediately following the commencement of the Liquidation Period.
The Certificateholder's Redemption Price per Unit on the settlement date of the
last trade of a Security in the Trust will be distributed to such
Certificateholder within three days of the settlement of the trade of the last
Security to be sold; and/or
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<PAGE>
3. to invest such Certificateholder's pro rata share of the
net asset value of the Trust derived from the sale by the Sponsor as agent of
the Trustee of the underlying Securities over a period not to exceed 60 business
days immediately following the commencement of the Liquidation Period, in units
of any available series of Equity Securities Trust, Signature Series (the "New
Series"). The Units of a New Series will be purchased by the Certificateholder
within three days of the settlement of the trade for the last Security to be
sold. Such purchaser will be entitled to a reduced sales load of 2.5% of the
Public Offering Price upon the purchase of units of the New Series. It is
expected that the terms of the New Series will be substantially the same as the
terms of the Trust described in this Prospectus, and that similar options with
respect to the termination of such New Series will be available. The
availability of this option does not constitute a solicitation of an offer to
purchase Units of a New Series or any other security. A Certificateholder's
election to participate in this option will be treated as an indication of
interest only. At any time prior to the purchase by the Certificateholder of
units of a New Series such Certificateholder may change his investment strategy
and receive, in cash, the proceeds of the sale of the Securities.
The Sponsor has agreed to effect the sales of underlying
securities for the Trustee in the case of the second and third options over a
period not to exceed 60 business days immediately following the commencement of
the Liquidation Period free of brokerage commissions. The Sponsor, on behalf of
the Trustee, will sell, unless prevented by unusual and unforeseen
circumstances, such as, among other reasons, a suspension in trading of a
Security, the close of a stock exchange, outbreak of hostilities and collapse of
the economy, on each business day during the 60 business day period at least a
number of shares of each Security which then remains in the portfolio (based on
the number of shares of each issue in the portfolio) multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 60 business day sales period. The Redemption Price Per Unit
upon the settlement of the last sale of Securities during the 60 business day
period will be distributed to Certificateholders in redemption of such
Certificateholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of
the New Series and the amount of other orders for Units in the New Series, the
Sponsor may purchase a large amount of securities for the New Series in a short
period of time. The Sponsor's buying of securities may tend to raise the market
prices of these securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 60
business day period immediately following the commencement of the Liquidation
Period; depending on the number of sales required, the prices of and demand for
Securities, such sales may tend to depress the market prices and thus reduce the
proceeds of such sales. The Sponsor believes that the sale of underlying
Securities over a 60 business day period as described above is in the best
interest of a Certificateholder and may mitigate the negative market price
consequences stemming from the trading of large amounts of Securities. The
Securities may be sold in fewer than 60 days if, in the Sponsor's judgment, such
sales are in the best interest of Certificateholders. The Sponsor, in
implementing such sales of securities on behalf of the Trustee, will seek to
maximize the sales proceeds and will act in the best interests of the
Certificateholders. There can be no assurance, however, that any adverse price
consequences of heavy trading will be mitigated.
Certificateholders who do not make any election will be deemed
to have elected to receive the Redemption Price per Unit in cash (option number
2).
It should also be noted that Certificateholders will realize
taxable capital gains or losses on the liquidation of the Securities
representing their Units for cash or a New Series, but, due to the procedures
for investing in the New Series, no cash would be distributed at that time to
pay any taxes.
The Sponsor may for any reason, in its sole discretion, decide
not to sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Certificateholder. If the Sponsor so decides, the Sponsor will
notify the Trustee of that decision, and the Trustee will notify the
Certificateholders before the Termination Date. All Certificateholders will then
elect either option 1 or option 2.
By electing to reinvest in the New Series, the
Certificateholder indicates his interest in having his terminating distribution
from the Trust invested only in the New Series created following termination of
the Trust; the Sponsor expects, however, that a similar reinvestment program
will be offered with respect to all subsequent series of the Trust, thus giving
Certificateholders a yearly opportunity to elect to "rollover" their
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<PAGE>
terminating distributions into a New Series. The availability of the
reinvestment privilege does not constitute a solicitation of offers to purchase
units of a New Series or any other security. A Certificateholder's election to
participate in the reinvestment program will be treated as an indication of
interest only. The Sponsor intends to coordinate the date of deposit of a future
series so that the terminating trust will terminate contemporaneously with the
creating of a New Series.
The Sponsors reserve the right to modify, suspend or terminate
the reinvestment privilege at any time.
THE SPONSOR. The Sponsor, Reich & Tang Distributors L.P.
("Reich & Tang"), 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. Reich & Tang Asset
Management L.P. ("RTAM LP"), a registered investment adviser, having its
principal place of business at 399 Boylston Street, Boston, MA 02116, is the 99%
limited partner of the Sponsor. RTAM LP is 99.5% owned by New England Investment
Companies, LP ("NEIC LP") and Reich & Tang Asset Management, Inc., a wholly
owned subsidiary of NEIC LP, owns the remaining .5% interest of RTAM LP and is
its general partner. NEIC LP's general partner is New England Investment
Companies, Inc. ("NEIC"), a holding company offering a broad array of investment
styles across a wide range of asset categories through eleven subsidiaries,
divisions and affiliates offering a wide array of investment styles and products
to institutional clients. These affiliates in the aggregate are investment
advisers or managers to over 54 registered investment companies. Reich & Tang is
the successor sponsor 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); Mortgage Securities Trust, Series 1 (and Subsequent Series), Insured
Municipal Securities Trust, Series 1 (and Subsequent Series), 5th Discount
Series (and Subsequent Series); and Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust (and Subsequent Series). The
information included herein is only for the purpose of informing investors as to
the financial responsibility of the Sponsor and its ability to carry out its
contractual obligations.
On August 30, 1996, New England Mutual Life Insurance Company
("The New England") and Metropolitan Life Insurance Company ("MetLife") merged,
with MetLife being the continuing company. RTAM L.P. remains a wholly-owned
subsidiary of NEIC LP, but RTAM Inc., its sole general partner, is now an
indirect subsidiary of MetLife. Also, Metlife New England Holdings, Inc., a
wholly-owned subsidiary of MetLife, owns 55% of the outstanding limited
partnership interest of NEIC L.P., also indirectly owns a majority of the
outstanding limited partnership interest of NEIC LP.
MetLife is a mutual life insurance company with assets of
$142.2 billion at March 31, 1996. It is the second largest life insurance
company in the United States in terms of total assets. MetLife provides a wide
range of insurance and investment products and services to individuals and
groups and is the leader among United States life insurance companies in terms
of total life insurance in force, which exceeded $1.2 trillion at March 31, 1996
for MetLife and its insurance affiliates. MetLife and its affiliates provide
insurance or other financial services to approximately 36 million people
worldwide.
The information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations.
The Sponsor will be under no liability to 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.
If at any time the Sponsor shall resign or fail to perform any
of its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may either (a) appoint a successor Sponsor; (b) terminate the Trust
Agreement and liquidate the Trust; or (c) continue to act as Trustee without
terminating the Trust Agreement. Any successor
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Sponsor appointed by the Trustee shall be satisfactory to the Trustee and, at
the time of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank, a
national banking association with its principal executive office located at 1
Chase Manhattan Plaza, New York, New York 10081 and its unit investment trust
office at 770 Broadway, New York, New York 10003 (800) 882-9898. The Trustee is
subject to the supervision by the Comptroller of the Currency, the Federal
Deposit Insurance Corporation and the Board of Governors of the Federal Reserve
System.
The Trustee shall not be liable or responsible in any way for
taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for any
disposition of any moneys, Securities or 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 any independent evaluation service employed by it. In
addition, the Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or the Trust which it may
be required to pay under current or future law of the United States or any other
taxing authority having jurisdiction. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of the
Securities pursuant to the Trust Agreement.
For further information relating to the responsibilities of
the Trustee under the Trust Agreement, reference is made to the material set
forth under "Rights of 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 Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
THE PORTFOLIO CONSULTANT. The Portfolio Consultant is Reich &
Tang Asset Management L.P., a Delaware limited partnership with its principal
office at 600 Fifth Avenue, New York, New York 10020. The Portfolio Consultant
acts as manager or administrator of eighteen registered investment companies and
also advises pension trusts, profit-sharing trusts and endowments.
The Portfolio Consultant is not a Sponsor of the Trust. The
Portfolio Consultant has been retained by the Sponsor, at its expense, to
utilize its equity expertise in selecting the Securities deposited in the Trust.
The Portfolio Consultant's only responsibility with respect to the Trust, in
addition to its role in Portfolio selection, is to monitor the Securities of the
Portfolio and make recommendations to the Sponsors regarding the disposition of
the Securities held by the Trust. The responsibility of monitoring the
Securities of the Portfolio means that if the Portfolio Consultant's views
materially change regarding the appropriateness of an investment in any Security
then held in the Trust based upon the investment objectives, guidelines, term,
parameters, policies and restrictions supplied to the Portfolio Consultant by
the Sponsor, the Portfolio Consultant will notify the Sponsor of such change to
the extent consistent with applicable legal requirements. The Sponsor is not
obligated to adhere to the recommendations of the Portfolio Consultant regarding
the
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disposition of Securities. The Sponsor has the sole authority to direct the
Trustee to dispose of Securities under the Trust Agreement. The Portfolio
Consultant has no other responsibilities or obligations to the Trust or the
Certificateholders. Investors should be aware that the Portfolio Consultant,
with its affiliates, is an investment adviser for managed investment companies
and managed private accounts that may have similar or different investment
objectives than the Trust. Some of the Securities in the Trust may also be owned
by these other clients of the Portfolio Consultant and its affiliates. However,
because these clients have "managed" portfolios and may have differing
investment objectives, the Portfolio Consultant may sell certain Securities for
those accounts in instances where a sale of the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations.
The Portfolio Consultant may resign or may be removed by the
Sponsor at any time on sixty days' prior notice. The Sponsor shall use its best
efforts to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor Portfolio
Consultant. If upon resignation of the Portfolio Consultant no successor has
accepted appointment within sixty days after notice of resignation, the Sponsor
has agreed to perform this function.
EVALUATION OF THE TRUST. The value of the Securities in the
Trust portfolio is determined in good faith by the Trustee on the basis set
forth under "Public Offering--Offering Price." The Sponsor and the
Certificateholders may rely on any evaluation furnished by the Trustee and shall
have no responsibility for the accuracy thereof. Determinations by the Trustee
under the Trust Agreement shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Trustee shall be under
no liability to the Sponsor or 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 Trustee, the Sponsor and the
Certificateholders may rely on any evaluation furnished to the Trustee by an
independent evaluation service and shall have no responsibility for the accuracy
thereof.
TRUST EXPENSES AND CHARGES
At no cost to the Trust, the Sponsor has borne all 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, the initial preparation and printing of the Certificates, legal expenses,
advertising and selling expenses, expenses of the Trustee, initial fees and
other out-of-pocket expenses.
The Sponsor will not charge the Trust a fee for their services
as such. (See "Sponsor's and Underwriters" Profits.")
The Sponsor will receive for portfolio supervisory services to
the Trust an Annual Fee in the amount set forth under "Summary of Essential
Information" in Part A. The Sponsor's fee may exceed the actual cost of
providing portfolio supervisory services for the Trust, but at no time will the
total amount received for portfolio supervisory services rendered to all series
of the Equity Securities Trust in any calendar year exceed the aggregate cost to
the Sponsor of supplying such services in such year. (See "Portfolio
Supervision.")
The Trustee will receive, for its ordinary recurring services
to the Trust an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Certificateholders".
The Trustee's fees applicable to a Trust are payable monthly
as of the Record Date from the Income Account of the Trust to the extent funds
are available and then from the Principal Account. Both fees may be increased
without approval of the 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."
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The following additional charges are or may be incurred by the
Trust: all expenses (including counsel fees) of the Trustee incurred and
advances made in connection with its activities under the Trust Agreement,
including the expenses and costs of any action undertaken by the Trustee to
protect the Trust and the rights and interests of the Certificateholders; fees
of the Trustee for any extraordinary services performed under the Trust
Agreement; indemnification of the Trustee for any loss or liability accruing to
it without gross negligence, bad faith or willful misconduct on its part,
arising out of or in connection with its acceptance or administration of the
Trust; indemnification of the Sponsor for any losses, liabilities and expenses
incurred in acting as sponsors of the Trust without gross negligence, bad faith
or willful misconduct on its part; and all taxes and other governmental charges
imposed upon the Securities or any part of the Trust (no such taxes or charges
are being levied, made or, to the knowledge of the Sponsor, contemplated). The
above expenses, including the Trustee's fees, when paid by or owing to the
Trustee are secured by a first lien on the Trust to which such expenses are
charged. In addition, the Trustee is empowered to sell the Securities in order
to make funds available to pay all expenses.
Unless the Sponsor otherwise directs, the accounts of the
Trust shall be audited not less than annually by independent public accountants
selected by the Sponsor. The expenses of the audit shall be an expense of the
Trust. So long as the Sponsor maintains a secondary market, the Sponsor will
bear any audit expense which exceeds $.50 Cents per Unit. Certificateholders
covered by the audit during the year may receive a copy of the audited
financials upon request.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
EXCHANGE PRIVILEGE. 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") at a reduced sales charge as set forth
below. Under the Exchange Privilege, the Sponsor's repurchase price during the
initial offering period of the Units being surrendered will be based on the
market value of the Securities in the Trust portfolio or on the aggregate offer
price of the Bonds in the other Trust Portfolios; and, after the initial
offering period has been completed, will be based on the aggregate bid price of
the Bonds in the particular Trust portfolio. Units in an Exchange Trust then
will be sold to the Certificateholder at a price based on the aggregate offer
price of the Bonds in the Exchange 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
Trust; and after the initial public offering period has been completed, based on
the aggregate bid price of the Bonds in the Exchange 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 as set forth below.
Except for Certificateholders who wish to exercise the
Exchange Privilege within the first five months of their purchase of Units of
the Trust, any purchaser who purchases Units under the Exchange Privilege 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
within the first five months of their purchase of Units of the Trust, the sales
charge applicable to the purchase of units of an Exchange 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 Trust would equal the sales charge applicable in the direct
purchase of units of an Exchange Trust.
Exercise of the Exchange Privilege by Certificateholders is
subject to the following conditions (i) the Sponsor must be maintaining a
secondary market in the units of the available Exchange Trust, (ii) at the time
of the Certificateholder's election to participate in the Exchange Privilege,
there must be units of the Exchange Trust available for sale, either under the
initial primary distribution or in the Sponsor's secondary market, (iii)
exchanges will be effected in whole units only, (iv) Units of the Mortgage
Securities Trust may only be acquired in blocks of 1,000 Units and (v) Units of
the Equity Securities Trust may only be acquired in blocks of 100 Units.
Certificateholders 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 will be remitted to such Certificateholder.
-20-
176822.3
<PAGE>
The Sponsor reserves the right to suspend, modify or terminate
the Exchange Privilege. The Sponsor will provide Certificateholders of the Trust
with 60 days' prior written notice of any termination or material amendment to
the Exchange Privilege, provided that, no notice need be given if (i) the only
material effect of an amendment is to reduce or eliminate the sales charge
payable at the time of the exchange, to add one or more series of the Trust
eligible for the Exchange Privilege or to delete a series which has been
terminated from eligibility for the Exchange Privilege, (ii) there is a
suspension of the redemption of units of an Exchange 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. If Units of
a designated, outstanding series of an Exchange 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 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 OFFER. 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 Municipal Securities Trust, Insured Municipal Securities
Trust, Mortgage Securities Trust, New York Municipal Trust or Equity Securities
Trust (the "Conversion Trusts") at the Public Offering Price for units of the
Conversion Trust based on a reduced sales charge as set forth below. 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. The purchase price of the units will
be based on the aggregate offer price of the in the Conversion Trust's portfolio
securities during its initial offering period; or, at a price based on the
aggregate bid price of the underlying bonds if the initial public offering of
the Conversion Trust has been completed, plus accrued interest and a sales
charge as set forth below. If the participant elects to purchase units of the
Equity Securities Trust under the Conversion Offer, the purchase price of the
units will be based, at all times, on the market value of the underlying
securities in the Trust portfolio plus a sales charge.
Except for Certificateholders who wish to exercise the
Conversion Offer within the first five months of their purchase of units of a
Redemption Trust, any Certificateholder who purchases Units under the 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 Conversion
Offer within the first five months of their purchase of units of Redemption
Trust, the sales charge applicable to the purchase of Units of a 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 Redemption Trust would equal the sales charge
applicable in the direct purchase of Units of a Conversion Trust.
The exercise of the Conversion Offer is subject to the
following limitations: (i) the Conversion Offer is limited only to unit owners
of any Redemption Trust, (ii) at the time of the unit owner's election to
participate in the Conversion Offer, there also must be available units of a
Conversion Trust, either under a primary distribution or in the Sponsor's
secondary market, (iii) exchanges under the Conversion Offer will be effected in
whole units only, (iv) units of the Mortgage Securities Trust may only be
acquired in blocks of 1,000 units, (v) units of the Equity Securities Trust may
only be acquired in blocks of 100 Units. Unit owners will not be permitted to
advance any new funds in order to complete an exchange under the Conversion
Offer. Any excess proceeds from units being redeemed will be returned to the
unit owner.
The Sponsor reserves the right to modify, suspend or terminate
the Conversion Offer. The Sponsor will provide Certificateholders with 60 days
prior written notice of any termination or material
-21-
176822.3
<PAGE>
amendment to 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
Trusts eligible for 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 Conversion Offer, (ii) there is a suspension of the
redemption of units of a Conversion Trust under Section 22(e) of the Act, or
(iii) a Conversion 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.
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 a
Conversion Trust are at that time available for sale and if such Units may
lawfully be sold in the state in which the unit owner is a resident, the unit
owner will be provided with a current prospectus or prospectuses relating to
each Conversion Trust in which he indicates an interest. He then may select the
Trust or Trusts into which he decides to invest the proceeds from the sale of
his Units. The 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.
DESCRIPTION OF THE EXCHANGE TRUSTS AND THE CONVERSION TRUSTS.
Municipal Securities Trust and New York Municipal Trust may be appropriate
investment vehicles for an investor who is more interested in tax-exempt income.
The interest income from New York Municipal Trust is, in general, also exempt
from New York State and local New York income taxes, while the interest income
from Municipal Securities Trust is subject to applicable New York State and
local New York taxes, except for that portion of the income which is
attributable to New York obligations in the Trust portfolio, if any. The
interest income from each State Trust of the Municipal Securities Trust,
Multi-State Series is, in general, exempt from state and local taxes when held
by residents of the state where the issuers of bonds in such State Trusts are
located. The Insured Municipal Securities Trust combines the advantages of
providing interest income free from regular federal income tax under existing
law with the added safety of irrevocable insurance. Insured Navigator Series
further combines the advantages of providing interest income free from regular
federal income tax and state and local taxes when held by residents of the state
where issuers of bonds in such State Trusts are located with the added safety of
irrevocable insurance. Mortgage Securities Trust offers an investment vehicle
for investors who are interested in obtaining safety of capital and a high level
of current distribution of interest income through investment in a fixed
portfolio of collateralized mortgage obligations. Equity Securities Trust offers
investors an opportunity to achieve capital appreciation together with a high
level of current income.
TAX CONSEQUENCES OF THE EXCHANGE PRIVILEGE AND THE CONVERSION
OFFER. A surrender of units pursuant to the Exchange Privilege or the Conversion
Offer will constitute a "taxable event" to the Certificateholder under the
Internal Revenue Code. The Certificateholder will realize a tax gain or loss
that will be of a long-or short-term capital or ordinary income nature depending
on the length of time the units have been held and other factors. (See "Tax
Status".) A 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.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and
certain matters relating to federal tax law have been passed upon by Messrs.
Battle Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel for
the Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York, New
York 10005 have acted as counsel for the Trustee.
-22-
176822.3
<PAGE>
INDEPENDENT ACCOUNTANTS. The financial statements of the
Trusts for the year ended December 31, 1996 included in Part A of this
Prospectus have been examined by Price Waterhouse 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. KPMG Peat
Marwick LLP has consented to the incorporation by reference of their report on
the statements of operations and changes in net assets for the Trusts included
in Part A of this Prospectus for the periods ended December 31, 1994 and
December 31, 1995, respectively. The Statement of Condition and Portfolio are
included herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
-23-
176822.3
<PAGE>
================================================================================
I am the owner of ___________ units of Equity Securities Trust, Series ____
Signature Series, Reich & Tang Growth and Value Trust. I would like to learn
more about Short Term Income Fund, Inc., U.S. Government Portfolio including
charges and expenses. I understand that my request for more information about
this fund in no way obligates me to participate in the reinvestment option, and
that this request form is not an offer to sell. Please send me more information,
including a copy of the current prospectus of Short Term Income Fund, Inc., U.S.
Government Portfolio.
Date _____________________, 199___
- -------------------------------------- --------------------------------------
Registered Holder (Print) Registered Holder (Print)
- -------------------------------------- --------------------------------------
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)
My Brokerage Firm's Name:
------------------------------------------------------
Street Address:
----------------------------------------------------------------
City, State & Zip
-------------------------------------------------------------
Broker's Name Broker's No.
--------------------------------- -------------------
================================================================================
MAIL TO
SHORT TERM INCOME FUND, INC.
600 Fifth Avenue
New York, New York 10020
-24-
176822.3
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C>
No person is authorized to give any information or to
make any representations not contained in Parts A and B of EST Signature Series
this Prospectus; and any information or representation not
contained herein must not be relied upon as having been _________________________________
authorized by the Trust, the Trustee or the Sponsors. The
Trust is registered as a unit investment Trust under the REICH & TANG GROWTH AND VALUE
Investment Company Act of 1940. Such registration does not TRUST
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.
EQUITY SECURITIES TRUST
_________________________ SERIES 2
SIGNATURE SERIES
This Prospectus does not constitute an offer to sell, or REICH & TANG GROWTH AND VALUE
a solicitation of an offer to buy, securities in any state to any TRUST
person to whom it is not lawful to make such offer in such
state. (Unit Investment Trust)
Table of Contents Prospectus
Title Page
PART A Dated: April 30, 1997
Summary of Essential Information.................................A-5 Sponsor:
Information Regarding the Trust..................................A-6
Financial and Statistical Information............................A-7
Reich & Tang Distributors L.P.
PART B 600 Fifth Avenue
New York, New York 10020
The Trust...................................................... 1 212-830-5200
Risk Considerations............................................ 4
Public Offering................................................ 6
Rights of Certificateholders................................... 8 Portfolio Consultant:
Tax Status...................................................... 9
Liquidity....................................................... 12 Reich & Tang Asset Management, L.P.
Total Reinvestment Plan......................................... 14 600 Fifth Avenue
Trust Administration............................................ 14 New York, NY 10020
Trust Expenses and Charges...................................... 19
Exchange Privilege and
Conversion Offer.............................................. 20 Trustee:
Other Matters................................................... 22
The Chase Manhattan Bank
Parts A and B of this Prospectus do not contain all of 4 New York Plaza
the information set forth in the registration statement and New York, NY 10004
exhibits relating thereto, filed with the Securities and Exchange Commission,
Washington, D.C., under the Securities Act of 1933, and the Investment Company
Act of 1940, and to which reference is made.
</TABLE>
176822.3
<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.
TheCross-Reference Sheet (incorporated by reference to the Post-Effective
Amendment to Form S-6 Registration Statement No. 33-53688, filed on April 29,
1996).
The Prospectus consisting of pages.
Signatures.
Consent of Independent Accountants.
Consent of Counsel (included in Exhibit 99.3.1).
Consent of New England Investment Companies, L.P. (filed with Amendment No. 1
to Form S-6 Registration Statement No. 33-53688 on March 18, 1993 and
incorporated herein by reference).
The following exhibits:
99.1.1 -- Form of Reference Trust Agreement (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 -- Form of Trust Indenture and Agreement for Equity Trust,
Series 1, Signature Series (and Subsequent Series) (filed
as Exhibit 99.1.1.1 to the Post-Effective Amendment to Form
S-6 Registration Statement No. 33-53688 on April 29, 1996
and incorporated herein by reference).
99.1.3.4 -- Certificate of Formation and Agreement among Limited Partners,
as amended, of Reich & Tang Distributors L.P. (filed as Exhibit
99.1.3.4 to Post-Effective Amendment No. 10 to Form S-6
Registration Statements Nos. 2-98914, 33-00376, 33-00856 and
33-01869 of Municipal Securities Trust, Series 28, 39th
Discount Series, Series 29 & 40th Discount Series and Series 30
& 41st Discount Series, respectively, on October 31, 1995 and
incorporated herein by reference).
99.2.1 -- Form of Certificate (filed as Exhibit 2.1 to Amendment
No. 1 to Form S-6 Registration Statement No. 33-62898 on
June 17, 1993 and incorporated herein by reference).
**99.3.1 -- Form of Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
filing of their opinion regarding tax status of the Trust
(filed as Exhibit 99.3.1 to Post-Effective Amendment No. 4 to
Form S-6 Registration Statement No. 33-53688 of Equity
Securities Trust, Series 2 on April 29, 1997 and incorporated
herein by reference).
- --------
** Filed herewith for the EDGAR filing only.
II-1
175585.1
<PAGE>
99.4.1 -- Form of Custody Agreement, dated January 18, 1990 (filed
as Exhibit 99.4.1 to Post-Effective Amendment No. 7 to Form
S-6 Registration Statement No. 33-31426 on April 25, 1997
and incorporated herein by reference).
99.4.2 -- Form of First Amendment to Custody Agreement, dated July 20,
1990 (filed as Exhibit 99.4.2 to Post-Effective Amendment No. 7
to Form S-6 Registration No. 33-31426 on April 25, 1997 and
incorporated herein by reference).
99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P., the
Depositor, by its officers and a majority of its Directors
(filed as Exhibit 99.6.0 to Amendment No. 1 to Form S-6
Registration Statement No. 33-62627 of Equity Securities Trust,
Series 6, Signature Series, Gabelli Entertainment and Media
Trust on November 16, 1995 and incorporated herein by
reference).
*27 -- Financial Data Schedule(s) (for EDGAR filing only).
- --------
* Being filed by this Amendment.
II-2
175585.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Equity Securities Trust, Series 2, Signature Series, Reich &
Tang Growth and Value Trust certifies that it has met all of the requirements
for effectiveness of this Post-Effective Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1993. The registrant has
duly caused this Post-Effective Amendment to the Registration Statement to be
signed on its behalf by the undersigned, hereunto duly authorized, in the City
of New York and State of New York on the 17th day of April, 1997.
EQUITY SECURITIES TRUST, SERIES 2, SIGNATURE SERIES, REICH & TANG
GROWTH AND VALUE TRUST
(Registrant)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.,
as general partner
By: /s/PETER J. DEMARCO
Peter J. DeMarco
(Authorized Signatory)
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement has been signed
below by the following persons who constitute the principal officers and a
majority of the directors of Reich & Tang Asset Management, Inc., the general
partner of Reich & Tang Distributors L.P., the Depositor, in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
PETER S. VOSS President, Chief Executive Officer )
and Director )
G. NEAL RYLAND Executive Vice President, Treasurer ) April 17, 1997
and Chief Financial Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director )By: /s/PETER J. DEMARCO
-------------------
STEVEN W. DUFF Director ) Peter J. DeMarco
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
</TABLE>
- ---------------
* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to
Amendment No. 1 to Registration Statement No. 33-62627 on November 16,
1995.
II-3
175585.1
<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 28, 1997, relating to the financial statements and financial
highlights for the year ended December 31, 1996 of the Equity Securities Trust
Series 2, Signature Series, Reich & Tang Growth and Value Trust, which appear in
such Prospectus. We also consent to the reference to us under the heading
"Independent Accountants" in the Prospectus.
PRICE WATERHOUSE LLP
Boston, MA 02110
April 25, 1997
<PAGE>
Independent Auditors' Consent
Re: Equity Securities Trust, Series 2
Equity Securities Trust, Signature Series
Equity Securities Trust, Reich and Tang Growth and Value Trust
We consent to the incorporation by reference of our report dated March
31, 1996, on the statements of operations and changes in net assets for the
subject trusts for each of the years in the two year period ended December 31,
1995, and to the reference to our firm under the heading "Independent
Accountants" in the prospectus.
KPMG Peat Marwick LLP
New York, New York
April 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial information
extracted from the financial statements and
supporting schedules as of the end of the most
current period and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000895271
<NAME> EQ-Series 2
<SERIES>
<NUMBER> 1
<NAME> EQ-Series 2
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2,313,766
<INVESTMENTS-AT-VALUE> 3,891,428
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,891,428
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16,160
<TOTAL-LIABILITIES> 16,160
<SENIOR-EQUITY> 3,875,268
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (4,190)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,970)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,577,662
<NET-ASSETS> 3,875,268
<DIVIDEND-INCOME> 62,082
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 6,234
<NET-INVESTMENT-INCOME> 55,848
<REALIZED-GAINS-CURRENT> 170,334
<APPREC-INCREASE-CURRENT> 537,934
<NET-CHANGE-FROM-OPS> 764,116
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 55,488
<DISTRIBUTIONS-OF-GAINS> 660,793
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 41,966
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 47,835
<ACCUMULATED-NII-PRIOR> (4,550)
<ACCUMULATED-GAINS-PRIOR> (2,565)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 14.22
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 2.83
<PER-SHARE-DIVIDEND> .22
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.05
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Exhibit 3.1
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
[Date]
[Addressed to Sponsor]
Re: [Name of Unit Investment Trust sponsored by Sponsor(s)]
Dear Sirs:
We have acted as special counsel for [Name of Sponsor], as
Depositor, Sponsor and Principal Underwriter (collectively, the "Depositor") of
[Name of Trust] (the "Trust") in connection with the issuance by the Trust of
units of fractional undivided interest (the "Units") in the Trust. Pursuant to
the Trust Agreements referred to below, the Depositor has transferred to the
Trust certain securities and contracts to purchase certain securities together
with an irrevocable letter of credit to be held by the Trustee upon the terms
and conditions set forth in the Trust Agreements. (All securities to be acquired
by the Trust are collectively referred to as the "Securities").
In connection with our representation, we have examined copies
of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (collectively the "Trust Agreements") among the Depositor, [Name of
Trustee], as Trustee and [Name of Evaluator], as Evaluator, if any; (b) the
Notification of Registration on Form N-8A and the Registration Statement on Form
N-8B-2, as amended, relating to the Trust, as
C/M: 11939.0001 481377.1
(Equity 11)
<PAGE>
2
filed with the Securities and Exchange Commission (the "Commission") pursuant to
the Investment Company Act of 1940 (the "1940 Act"); (c) the Registration
Statement on Form S-6 (Registration No. 333-_____) filed with the Commission
pursuant to the Securities Act of 1933 (the "1933 Act"), and all Amendments
thereto (said Registration Statement, as amended by said Amendment(s) being
herein called the "Registration Statement"); (d) the proposed form of final
Prospectus (the "Prospectus") relating to the Units, which is expected to be
filed with the Commission this day; (e) certified resolutions of the Board of
Directors of the general partner of the Depositor authorizing the execution and
delivery by the Depositor of the Trust Agreements and the consummation of the
transactions contemplated thereby; (f) the Certificate of formation and
Agreement Among Limited Partners of the Depositor; and (g) a certificate of an
authorized officer of the Depositor with respect to certain factual matters
contained therein.
We have examined the Application for Orders of Exemption from
certain provisions of Sections 14(a) and 22(d) of the 1940 Act and Rules 19b-1
and 22c-1 thereunder, and the First Amendment thereto. In addition, we have
examined the Order of Exemption from certain provisions of Sections 11(a) and
11(c) of the 1940 Act, filed on behalf of Reich & Tang Distributors L.P.; Equity
Securities Trust (Series 1, Signature Series and Subsequent Series), Mortgage
Securities Trust (CMO Series 1 and Subsequent Series), Municipal Securities
Trust, Series 1 (and Subsequent Series) (including Insured Municipal Securities
Trust, Series 1 (and Subsequent Series and 5th Discount Series and Subsequent
Series)); New York Municipal Trust (Series 1 and Subsequent Series); and A
Corporate Trust (Series 1 and Subsequent Series) granted on October 9, 1996.
We have not reviewed the financial statements, compilation of
the Securities held by the Trust, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you have
been furnished with the reports of the accountants appearing in the Registration
Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are
C/M: 11939.0001 481377.1
(Equity 11)
<PAGE>
3
subject: (i) to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general application
relating to or affecting the enforceability of creditors' rights, and (ii) to
limitations under equitable principles governing the availability of equitable
remedies.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as to
matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer of the Depositor and is a valid and binding
obligation of the Depositor in accordance with its terms.
(2) The execution and delivery of the Certificate evidencing
the Units has been duly authorized by the Depositor and such Certificate, when
executed by the Depositor and the Trustee in accordance with the provisions of
the Certificate and the respective Trust Agreements and issued for the
consideration contemplated therein, will constitute fractional undivided
interests in the Trust, will be entitled to the benefits of the Trust
Agreements, will conform in all material respects to the description thereof for
the Units as provided in the Trust Agreements and the Registration Statement,
and the Units will be fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee and
the Trustee may rely on this opinion as fully and to the same extent as if it
had been addressed to it.
C/M: 11939.0001 481377.1
(Equity 11)
<PAGE>
4
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
C/M: 11939.0001 481377.1
(Equity 11)
<PAGE>
