As filed with the Securities and Exchange Commission on October 30, 1995
Registration No. 33-53445
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT No. 1
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
A. Exact name of trust: EQUITY SECURITIES TRUST, SERIES 5
B. Name of depositor: REICH & TANG DISTRIBUTORS L.P.
C. Complete address of depositor's principal executive offices:
600 Fifth Avenue
New York, New York 10020
D. Name and complete address of agent for service:
Copy of comments to:
PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
Executive Senior Battle Fowler LLP
Vice President 75 East 55th Street
Reich & Tang Distributors L.P. New York, New York 10022
600 Fifth Avenue (212) 856-6858
New York, New York 10020
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/x/ on October 31, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on ( date ) pursuant to paragraph (a) of Rule 485
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 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 June 30, 1995 on August 25, 1995.
309606.1
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EQUITY SECURITIES TRUST
SERIES 5
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust...................Front Cover of Prospectus
(b) Title of securities issued...... "
2. Name and address of each depositor..The Sponsor
3. Name and address of trustee.........The Trustee
4. Name and address of principal
underwriters.....................Distribution of Units
5. State of organization of trust......Organization
6. Execution and termination of
trust agreement...................Trust Agreement, Amendment and
Termination
7. Changes of name.....................Not Applicable
8. Fiscal year......................... "
9. Litigation..........................None
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer
securities......................Certificates
(b) Cumulative or distributive
securities......................Interest and Principal Distributions
(c) Redemption......................Trustee Redemption
(d) Conversion, transfer, etc.......Certificates, Sponsor Repurchase,
Trustee Redemption
(e) Periodic payment plan...........Not Applicable
(f) Voting rights...................Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders....Records, Portfolio, Substitution of
Securities, Trust Agreement,
Amendment and Termination, The
Sponsor, The Trustee
(h) Consents required...............Trust Agreement, Amendment and
Termination
(i) Other provisions................Tax Status
11. Type of securities
comprising units..................Objectives, Portfolio,
Portfolio Summary
12. Certain information regarding
periodic payment certificates.....Not Applicable
13. (a) Load, fees, expenses, etc....... Summary of Essential Information,
Public Offering Price, Market for
Units, Volume and Other Discounts,
Sponsor's Profits, Trust Expenses
and Charges
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
(b) Certain information regarding
periodic payment certificates...Not Applicable
(c) Certain percentages.............Summary of Essential Information,
Public Offering Price, Market for
Units, Volume and Other Discounts
(d) Price differences...............Volume and Other Discounts,
Distributions of Units
(e) Other loads, fees, expenses.....Certificates
(f) Certain profits receivable
by depositors, principal
underwriters, trustee or
affiliated persons..............Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges
to income.......................Not Applicable
14. Issuance of trust's securities.......Organization, Certificates
15. Receipt and handling of payments
from purchasers...................Organization
16. Acquisition and disposition of
underlying securities.............Organization, Objectives, Portfolio,
Portfolio Supervision
17. Withdrawal or redemption.............Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption
18. (a) Receipt, custody and
disposition of income...........Distributions, Dividend and
Principal Distributions, Portfolio
Supervision
(b) Reinvestment of distributions...Not Applicable
(c) Reserves or special funds.......Dividend and Principal Distributions
(d) Schedule of distributions.......Not Applicable
19. Records, accounts and reports........Records
20. Certain miscellaneous provisions
of trust agreement
(a) Amendment.......................Trust Agreement, Amendment and
Termination
(b) Termination..................... "
(c) and (d) Trustee, removal and
successor.......................The Trustee
(e) and (f) Depositor, removal
and successor...................The Sponsor
21. Loans to security holders............Not Applicable
22. Limitations on liability.............The Sponsor, The Trustee,
The Evaluator
23. Bonding arrangements.................Part II--Item A
24. Other material provisions
of trust agreement................Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor...........The Sponsor
26. Fees received by depositor..........Not Applicable
27. Business of depositor...............The Sponsor
28. Certain information as to
officials and affiliated
persons of depositor..............Not Applicable
29. Voting securities of depositor...... "
30. Persons controlling depositor....... "
31. Payments by depositor for certain
services rendered to trust........ "
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
32. Payment by depositor for certain
other services rendered to trust.. "
33. Remuneration of employees of
depositor for certain services
rendered to trust................... "
34. Remuneration of other persons for
certain services rendered to trust.. "
IV. Distribution and Redemption of Securities
35. Distribution of trust's
securities by states..............Distribution of Units
36. Suspension of sales of
trust's securities................Not Applicable
37. Revocation of authority
to distribute.....................None
38. (a) Method of distribution...........Distribution of Units
(b) Underwriting agreements......... "
(c) Selling agreements.............. "
39. (a) Organization of principal
underwriters....................The Sponsor
(b) N.A.S.D.membership of
principal underwriters.......... "
40. Certain fees received by
principal underwriters............ "
41. (a) Business of principal
underwriters.................... "
(b) Branch offices of principal
underwriters.................... "
(c) Salesmen of principal
underwriters.................... "
42. Ownership of trust's
securities by certain persons.....Not Applicable
43. Certain brokerage commissions
received by principal
underwriters...................... "
44. (a) Method of valuation.............Summary of Essential Information,
Market for Units, Offering Price,
Accrued Interest, Volume and Other
Discounts, Distribution of Units,
Comparison of Public Offering
Price, Sponsor's Repurchase Price
and Redemption Price, Sponsor's
Repurchase, Trustee Redemption
(b) Schedule as to offering price...Summary of Essential Information
(c) Variation in offering price
to certain persons..............Distribution of Units,
Volume and Other Discounts
45. Suspension of redemption rights......Not Applicable
46. (a) Redemption valuation.............Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Trustee
Redemption
(b) Schedule as to
redemption price................Summary of Essential Information
47. Maintenance of position in
underlying securities.............Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor's
Repurchase, Trustee Redemption
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
V. Information Concerning the Trustee or Custodian
48. Organization and regulation
of trustee........................The Trustee
49. Fees and expenses of trustee.........Trust Expenses and Charges
50. Trustee's lien...................... "
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of
trust's securities................None
VII. Policy of Registrant
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities......................Objectives, Portfolio, Portfolio
Supervision, Substitution of
Securities
(b) Transactions involving
elimination of underlying
securities......................Not Applicable
(c) Policy regarding substitution
or elimination of underlying
securities......................Substitution of Securities
(d) Fundamental policy not
otherwise covered...............Not Applicable
53. Tax status of trust..................Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during
last ten years....................Not Applicable
55. Hypothetical account for issuers
of periodic payment plans......... "
56. Certain information regarding
periodic payment certificates..... "
57. Certain information regarding
periodic payment plans............ "
58. Certain other information
regarding periodic payment plans.. "
59. Financial Statements
(Instruction 1(c) to Form S-6)......Statement of Financial Condition
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NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
EQUITY SECURITIES TRUST
SERIES 5
The Trust is a unit investment trust designated Equity Securities
Trust, Series 5 ("Trust"). The objectives of the Trust are to seek to achieve
capital appreciation together with a high level of current income. The Trust
contains an underlying portfolio of common stocks issued by domestic real
estate investment trusts ("REITs") and contracts and funds for the purchase of
such securities (collectively, the "Securities"). The Sponsor is Reich & Tang
Distributors L.P. (successor Sponsor to Bear, Stearns & Co. Inc.). The Sponsor
cannot give assurance that the Trust's objectives can be achieved. There are
certain risks inherent in an investment in REITs. See "Risk Considerations" in
Part A and Part B of this Prospectus. The Trust will terminate approximately
three years after the initial Date of Deposit. The value of the Units of the
Trust will fluctuate with the value of the underlying securities. Minimum
purchase: 100 Units.
This Prospectus consists of two parts. Part A contains the Summary
of Essential Information as of June 30, 1995 (the "Evaluation Date"), a
summary of certain specific information regarding the Trust and audited
financial statements of the Trust, including the related portfolio, as of the
Evaluation Date. Part B of this Prospectus contains a general summary of the
Trust.
Investors should 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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Part A Dated October 31, 1995
309107.1
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THE TRUST
The Trust is a unit investment trust designated Equity Securities
Trust, Series 5 (the "Trust"). The Trust contains an underlying portfolio of
common stocks issued by domestic real estate investment trusts ("REITs") and
contracts and funds for the purchase of such securities (collectively, the
"Securities"). The objectives of the Trust are to seek to achieve capital
appreciation together with a high level of current income. The Trust seeks to
achieve its objectives by investing in a fixed, diversified portfolio of
REITs. The Trust's Securities are issued by a geographically diverse number of
issuers and, in the opinion of the Sponsor, offer an opportunity for the Trust
to achieve its objectives during the life of the Trust. The Sponsor cannot
give assurance that the Trust's objectives can be achieved. A REIT is a
creation of the federal income tax law and, therefore, its structure and
operation must conform to certain requirements of the Internal Revenue Code.
In general, a REIT must hold at least 75% of its total assets in real estate
assets and distribute at least 95% of its taxable income (without regard to
any net capital gains) on an annual basis. There are two principal types of
REITs: those which hold 75% of their invested assets in the ownership of real
estate and benefit from the underlying net rental income generated from the
properties ("Equity REITs") and those which hold 75% of their invested assets
in mortgages which are secured by real estate assets and benefit predominantly
from the difference between the interest income on the mortgage loans and the
interest expense on the capital used to finance the loans ("Mortgage REITs").
A third type combines the investment strategies of the Equity REITs and the
Mortgage REITs ("Hybrid REITs"). In selecting Securities for the Trust, the
Sponsor considers the following factors, among others: (1) the Sponsor's own
evaluations of the market value of the underlying assets and business of the
issuers of the Securities; (2) the dividend income generated by the
Securities; (3) the potential for capital appreciation for the Securities; (4)
the prices of the Securities relative to other comparable securities; (5)
whether the Securities are entitled to the benefits of protective conditions;
(6) the cash flow quality and growth potential of the Securities; (7) the
management quality of the issuers of the Securities; and (8) the
diversification of the Trust's portfolio as to issuers, product type and
geographic focus. There are certain risks inherent in an investment in a
portfolio of REITs. (See "Risk Considerations" in this Part A and in Part B.)
The Trust will terminate three years after the initial Date of Deposit. Upon
termination, Certificateholders may elect to receive their terminating
distributions in cash, in the form of in-kind distributions of the Trust's
Securities 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.)
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 have, but is
not obligated to have, deposited 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 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
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Additional Securities in the Trust subsequent to the 90-day period following
the initial Date of Deposit (the "Deposit Period") must replicate exactly the
proportionate relationship among the number of shares of Securities 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 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. As of the Date of Deposit, Units in the Trust represent an
undivided interest in the principal and net income of the Trust in the ratio
of one hundred Units for the indicated initial aggregate value of Securities
in the Trust on the initial Date of Deposit as is set forth in the Summary of
Essential Information (see "The Trust-- Organization" in Part B). (For the
specific number of Units in the Trust as of the initial Date of Deposit, see
"Summary of Essential Information" in this Part A.)
The Sponsor was a manager or co-manager of a public offering of
the Securities of issuers in Portfolio Nos. 3, 5, 6, 19, 23 and 32.
RISK CONSIDERATIONS
An investment in Units of the Trust should be made with an
understanding of the risks inherent in any investment in common stocks, the
risk that the financial condition of the issuers of the Securities may become
impaired or that the general condition of the stock market may worsen (both of
which may contribute directly to a decrease in the value of the Securities and
thus in the value of the Units).
The portfolio of the Trust is fixed and not "managed" by the
Sponsor. All the Securities in the Trust are liquidated during a 60-day period
at the termination of the 3-year life of the Trust. Since the Trust will not
sell Securities in response to ordinary market fluctuation, but only at the
Trust's termination or upon the occurrence of certain events, 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. In addition, since the
Trust will consist entirely of shares issued by REITs, a domestic corporation
or business trust which invests primarily in income producing real estate or
real estate related loans or mortgages, an investment in the Trust will be
subject to risks similar to those associated with the direct ownership of real
estate (in addition to securities markets risks) because of its policy of
concentration in the securities of companies in the real estate industry.
These include declines in the value of real estate, illiquidity of real
property investments, risks related to general and local economic conditions,
dependency on management skill, heavy cash flow dependency, possible lack of
availability of mortgage funds, overbuilding, extended vacancies of
properties, increased competition, increases in property taxes and operating
expenses, changes in zoning laws, losses due to costs resulting from the
clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
economic or regulatory impediments to raising rents, changes in neighborhood
values and the appeal of properties to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be more likely to be affected by
changes in the value of the underlying property owned by the trusts, while
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Mortgage REITs may be more likely to be affected by the quality of any credit
extended. Further, Equity and Mortgage REITs are dependent upon the management
skills of the issuers and generally may not be diversified. Equity and
Mortgage REITs are also subject to heavy cash flow dependency, defaults by
borrowers and self-liquidation. In addition, Equity and Mortgage REITs could
possibly fail to qualify for tax free pass-through of income under the
Internal Revenue Code of 1986, as amended (the "Code"), or to maintain their
exemptions from registration under the Investment Company Act of 1940 (the
"1940 Act"). The above factors may also adversely affect a borrower's or a
lessee's ability to meet its obligations to the REIT. In the event of a
default by a borrower or lessee, the REIT may experience delays in enforcing
its rights as a mortgagee or lessor and may incur substantial costs associated
with protecting its investments.
The mandatory termination date of the Trust is approximately three
years from the initial Date of Deposit. It is the present intention of the
Sponsor to select Securities for the Trust that will achieve a high current
income and growth of capital during the life of the Trust. The Sponsor cannot
give any assurance that the business and investment objectives of the issuers
of the Securities will correspond with or in any way meet the limited term
objectives of the Trust. (See "Risk Considerations" in Part B.)
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 3.9% of the Public Offering Price per 100 Units or 4.058% 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.
DISTRIBUTIONS
Distributions of dividends received, less expenses, will be made
by the Trust monthly. The first dividend distribution will be made on the
First Payment Date to all Certificateholders of record on the First Record
Date and thereafter distributions will be made monthly on the 15th day of
every 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 Certificateholders--Distributions"
in Part B. For the specific dates representing the First Payment Date and the
First Record Date, see "Summary of Essential Information").
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MARKET FOR UNITS
The Sponsor, although not obligated to do so, intends to maintain
a secondary market for the Units of the Trust after the initial public
offering has been completed. 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.) There can be no assurance of the
making or the maintenance of a market for any of the Securities contained in
the Trust portfolio or of the liquidity of the Securities in any markets made.
Notwithstanding the foregoing, the Sponsor undertakes to maintain the
secondary market during the initial public offering period. In addition, the
Trust may be restricted under the 1940 Act 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
GOC Fund, Inc., U.S. Treasury Money Market Portfolio (the "Fund").
Gabelli-O'Connor Fixed Income Mutual Funds Management Co. serves as the
investment adviser of the Fund and GOC Fund Distributors, Inc. 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
(approximately three 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 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. The Sponsor will determine the manner, timing
and execution of the sales of the underlying Securities. 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 at least 2,500 Units,
(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).
The Sponsor will attempt to sell the Securities as quickly as it
can during the Liquidation Period without, in its judgment, materially
adversely affecting the market price of the Securities, but all of the
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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.
It is expected (but not required) that the Sponsor will generally
follow the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsors will generally sell Securities on the first day of
the Liquidation Period; for less liquid Securities, on each of the first two
days of the Liquidation Period, the Sponsor will generally sell any amount of
any underlying Securities at a price no less than 1/2 of one point under the
last closing sale price of those Securities. On each of the following two
days, the price limit will increase to one point under the last closing sale
price. After four days, the Sponsor intends to sell at least a fraction of the
remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that
day) in the Liquidation Period, without any price restrictions.
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. However, Certificateholders who have
chosen to receive distributions-in-kind upon liquidation of the Trust should
be aware that this will be a taxable event to such Certificateholder, and that
the Certificateholder will recognize taxable gain (equal to the difference
between such Certificateholder's tax basis in his Units and the fair market
value of Securities received upon liquidation), which will be a capital gain
or loss except in the case of a dealer in securities. (See "Tax Status" in
this Part B.) Certificateholders should consult their own tax advisers in this
regard.
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EQUITY SECURITIES TRUST, SERIES 5, REIT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
DATE OF DEPOSIT*: JULY 21, 1994 MINIMUM PRINCIPAL DISTRIBUTION:
AGGREGATE VALUE OF $1.00 per 100 Units.
SECURITIES.............. $3,133,291 LIQUIDATION PERIOD: Beginning 60
AGGREGATE VALUE OF days prior to the Mandatory
SECURITIES PER 100 Termination Date.
UNITS................... $928.00 MINIMUM VALUE OF TRUST: The Trust
NUMBER OF UNITS............ 337,471 may be terminated if the value of
FRACTIONAL UNDIVIDED the Trust is less than 40% of the
INTEREST IN aggregate value of the Securities
TRUST................... 1/337471 at the completion of the Deposit
SECONDARY MARKET PUBLIC Period.
OFFERING PRICE** MANDATORY TERMINATION DATE: The
Aggregate Value of earlier of September 21, 1997 or
Securities in Trust..$3,099,856 the disposition of the last
Divided By 337,471 Security in the Trust.
Units (times 100).......$919.00 TRUSTEE***: Chase Manhattan Bank, N.A.
Plus Sales Charge of TRUSTEE'S ANNUAL FEE: $.90 per 100
4.058% of Public Units outstanding.
Offering Price per OTHER ANNUAL FEES AND EXPENSES: $.35
100 Units............$37.00 per 100 Units outstanding.
Public Offering Price SPONSOR: Reich & Tang Distributors
per 100 Units.......$956.00 L.P.
SPONSOR'S REPURCHASE PRICE SPONSOR'S ANNUAL FEE: Maximum of
AND REDEMPTION PRICE $.25 per 100 Units outstanding (see
PER 100 UNITS........... $919.00 "Trust Expenses and Charges" in
EXCESS OF SECONDARY Part B).
MARKET PUBLIC OFFERING RECORD DATE: First of each month.
PRICE OVER REDEMPTION DIVIDEND DISTRIBUTION DATE:
PRICE PER 100 UNITS..... $37.00 Fifteenth of each month.
EVALUATION TIME: 4:00 p.m.
New York Time.
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* The Date of Deposit is the date on which the Trust Agreement was signed
and the initial deposit of Securities with the Trustee was made.
** For information regarding offering price per unit and applicable sales
charges under the Total Reinvestment Plan, see "Total Reinvestment Plan"
in Part B of this Prospectus.
*** The Trustee maintains its corporate trust office at 770 Broadway, New
York, NY 10003 (Tel. No. 1-800-882-9898). For information regarding
redemption by the Trustee, see "Trustee Redemption" in Part B of this
Prospectus.
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INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
Number of Issues: 38 (38 issuers)
Equity REITs: 38 (100% of the initial aggregate value of Securities)
(NYSE 98.48%; AMEX 1.52%)
Issues by Property Type:
Diversified Properties................................ 9.21%
Factory Outlet Centers................................ 5.19%
Manufactured Homes.................................... 4.67%
Multi-Family Housing.................................. 29.81%
Office/Industrial..................................... 20.19%
Regional Malls........................................ 19.03%
Shopping Centers...................................... 11.90%
______
100%
A-8
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FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
Distribu-
tions of
Principal
During
Net Asset* the
Units Out- Value Distributions of Income Period
Period Ended standing Per Unit During the Period (per Unit) (Per Unit)
June 30, 1995 337,471 $9.24 $582.80 -0-
- --------
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See Note 5 of
Notes to Financial Statements for a description of the components of Net
Assets.
A-9
309107.1
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Independent Auditors' Report
The Sponsor, Trustee and Certificateholders
Equity Securities Trust Series 5, REIT Series
We have audited the accompanying statement of net assets, including the
portfolio, of Equity Securities Trust Series 5, REIT Series as of June 30,
1995, and the related statement of operations, and changes in net assets for
the period from July 21, 1994 (date of initial deposit) to June 30, 1995.
These financial statements are the responsibility of the Trustee (see note 2).
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our
procedures included confirmation of securities owned as of June 30, 1995, by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Securities Trust
Series 5, REIT Series as of June 30, 1995, and the results of its operations
and the changes in its net assets for the period from July 21, 1994 to June
30, 1995 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
September 15, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
EQUITY SECURITIES TRUST, SERIES 5
REIT Series
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cost $3,133,291) $ 3,099,856
Excess of other assets over total liabilities 19,524
----------
Net assets 337,471 units of fractional undivided
interest outstanding, $9.24 per unit) $ 3,119,380
==========
See accompanying notes to financial statements.
<PAGE>
EQUITY SECURITIES TRUST, SERIES 5
REIT Series
Statement of Operations
For the Period July 21, 1994 (date of deposit)
to June 30, 1995
Investment income $ 183,141
----------
Expenses:
Trustee's fees 5,594
Evaluator's fees 4,955
Sponsor's advisory fee -
----------
Total expenses 10,549
----------
Net investment income 172,592
----------
Unrealized loss
on investments:
Unrealized depreciation (33,435)
----------
Net loss on investments (33,435)
----------
Net increase in net
assets resulting
from operations $ 139,157
==========
See accompanying notes to financial statements.
<PAGE>
EQUITY SECURITIES TRUST, SERIES 5
REIT Series
Statement of Changes in Net Assets
For the Period July 21, 1994 (date of deposit)
to June 30, 1995
Operations:
Net investment income $ 172,592
Unrealized depreciation
for the period (33,435)
----------
Net increase in net
assets resulting
from operations 139,157
----------
Distributions:
To Certificateholders:
Investment income 153,068
----------
Total distributions 153,068
----------
Total decrease (13,911)
Net assets at date of deposit 3,133,291
----------
Net assets at end of period (including
undistributed net investment
income of $19,524) $ 3,119,380
==========
See accompanying notes to financial statements.
<PAGE>
EQUITY SECURITIES TRUST SERIES 5, REIT SERIES
Notes to Financial Statements
June 30, 1995
(1) Organization
Equity Securities Trust Series 5, REIT Series (Trust) was organized on July
21, 1994 by Bear, Stearns & Co. Inc. (Sponsor) 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. On July 21, 1994 (date of initial deposit) the
Trust had 16,462 units outstanding. During the period July 21, 1994 to June
30,1995 (the offering period) the Trust issued an additional 321,009 units
bringing the total number of units issued to 337,471.
(2) Summary of Significant Accounting Policies
United States Trust Company of New York (Trustee) has custody of 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 accompanying financial
statements have been adjusted to record the unrealized appreciation
(depreciation) of investments and to record interest income and expenses on
the accrual basis.
Investments are carried at market value which is determined by United States
Trust Company of New York (Evaluator) based upon the closing bid prices of the
securities at the end of the period, 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.
(3) Income Taxes
No provision for federal income taxes has been made in the accompanying
financial statements because the Trust intends to qualify for and elect the
tax treatment applicable to regulated investment companies 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 unit holders.
(Continued)
<PAGE>
EQUITY SECURITIES TRUST SERIES 5, REIT SERIES
Notes to Financial Statements
(4) Trust Administration
The fees and expenses of the Trust are incurred and paid on the basis set
forth under "Trust Expenses and Charges" in Part B of this Prospectus. 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, be distributed to Certificateholders.
See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the period ended June 30, 1995.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. No units were redeemed since the inception of the Trust.
(5) Net Assets
At June 30, 1995, the net assets of the Trust represented the interest of
Certificateholders as follows:
Original cost to Certificateholders $ 164,620
Less initial gross underwriting commission (6,420)
158,200
Cost of additional units acquired
during the offering
period to Certificateholders 3,095,820
Less gross underwriting commission (120,729)
3,133,291
Net unrealized depreciation (33,435)
Undistributed net investment income 19,524
Total $ 3,119,380
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 337,471 units of fractional undivided interest of
the Trust as of June 30, 1995 (end of the offering period).
<PAGE>
EQUITY SECURITIES TRUST SERIES 5, REIT SERIES
Notes to Financial Statements
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York was
merged into Chase Manhatten Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich & Tang")
has become the successor sponsor ("the Sponsor") to certain of the unit
investments 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.
<PAGE>
EQUITY SECURITIES TRUST, SERIES 5
REIT SERIES
Portfolio
June 30, 1995
<TABLE>
<CAPTION>
Port- Number of Market
folio Securities Value Market
No. (Shares) Name of Issuer Per Share Value(3)
-- ------- ---------------------- ------- ------
<S> <C> <C> <C> <C>
1 2,050 BRE Properties $ 31.000 $ 63,550
2 5,125 Burnham Pacific 13.500 69,188
Properties
3 4,100 Colonial Properties 23.000 94,300
Trust
4 6,150 Sizeler Property 9.500 58,425
Investors
5 3,075 Chelsea GCA Realty 27.000 83,025
6 3,075 Tanger Factory Outlet 25.375 78,028
Centers
7 3,075 ROC Communities 22.125 68,034
8 3,075 Sun Communities 25.000 76,875
9 3,075 Associated Estates 21.125 64,959
Realty
10 3,075 Avalon Properties 19.875 61,116
11 3,075 Bay Apartment 19.500 59,963
Communities Inc.
12 4,100 Charles E. Smith 23.750 97,375
Residential Realty Inc.
13 2,050 Equity Residential 27.875 57,144
Properties
14 4,100 Gables Residential Trust 20.500 84,050
15 6,150 Irvine Apartment 17.250 106,088
Communities
16 3,075 Merry Land & Investment 20.375 62,652
17 2,050 Post Properties 30.250 62,013
18 4,100 Summit Properties Trust 17.250 70,725
19 3,075 Town and Country Trust 14.375 44,203
20 4,100 United Dominion Trust 14.750 60,475
21 4,100 Wellsford Residential 22.750 93,275
Property
22 5,125 Carr Realty 17.250 88,406
23 4,100 Crescent Real Estate 31.875 130,688
Equities, Inc.
24 3,075 Duke Realty Investments 28.250 86,868
25 4,100 Highwoods Properties 25.500 104,550
Inc.
26 5,125 Liberty Property Trust 19.625 100,578
27 5,125 Spieker Properties 22.375 114,672
28 5,125 CBL & Associates 19.875 101,858
Properties
29 11,275 De Bartolo Realty 14.625 164,897
Corporation
30 4,100 General Growth 20.375 83,538
Properties
31 4,100 Glimcher Realty Trust 20.750 85,075
32 6,150 Simon Property Group 25.125 154,519
33 4,100 Alexander Hagen 11.500 47,150
Properties
34 2,050 Developers Diversified 28.750 58,938
Realty
35 2,050 Federal Realty 21.625 44,330
Investment
36 3,075 JP Realty, Inc. 20.500 63,038
37 2,050 Kimco Realty 38.000 77,900
38 2,050 Weingarten Realty 37.750 77,388
Investors
------------ -----------
148,625 $ 3,099,856
============ ===========
</TABLE>
See accompanying footnotes portfolio and note to financial statements .
<PAGE>
Note: Part B of This Prospectus
May Not Be Distributed unless
Accompanied by Part A
Please Read and Retain Both Parts of This
Prospectus for Future Reference.
EQUITY SECURITIES TRUST
SERIES 5
Prospectus Part B
Dated: October 31, 1995
THE TRUST
Organization
"Equity Securities Trust, Series 5" (the "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 the Trust
Indenture and Agreement (the "Trust Agreement"), dated the Date of Deposit,
among Reich & Tang Distributors L.P. (successor Sponsor to Bear, Stearns & Co.
Inc.), as Sponsor (the "Sponsor") and Chase Manhattan Bank, N.A., as Trustee.
On the initial Date of Deposit, the Sponsor deposited with the Trustee
common stocks issued by domestic real estate investment trusts ("REITs")
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.")
As of the day prior to the initial Date of Deposit, a "Unit" represents
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 initially deposited in the Trust as is 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
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<PAGE>
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. 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 number of shares of Securities 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 shares or the reinvestment of the proceeds
distributed to Certificateholders. The Portfolio of the Trust may change
slightly based on such disposition and reinvestment. 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.
Objectives
The Trust seeks to achieve capital appreciation together with a high
level of current income by investing in a portfolio of common stocks issued by
domestic REITs, and contracts to purchase such Securities. All of the
Securities in the Trust, except for Restricted Securities held by the Trust,
if any, 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.
The Securities
In selecting Securities for the Trust, the Sponsor normally considers
the following factors, among others: (1) the Sponsor's own evaluations of the
market value of the underlying assets and business of the issuers of the
Securities; (2) the dividend income generated by the Securities; (3) the
potential for capital appreciation for the Securities; (4) the prices of the
Securities relative to other comparable securities; (5) whether the Securities
are entitled to the benefits of protective conditions; (6) the cash flow
quality and growth potential of the Securities; (7) the management quality of
the issuers of the Securities; and (8) the diversification of the Trust's
portfolio as to issuers, product type and geographic focus.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from corporate
income taxes provided the REIT satisfies the requirements of Sections 856
through 860 of the Internal Revenue Code. The major tests for tax-qualified
status are that the REIT (i) be managed by one or more trustees or directors,
-2-
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<PAGE>
(ii) issue shares of transferable interest to its owners, (iii) have at least
100 shareholders, (iv) have no more than 50% of the shares held by five or
fewer individuals, (v) invest substantially all of its capital in real estate
related assets and derive substantially all of its gross income from real
estate related assets and (vi) distribute at least 95% of its taxable income
to its shareholders each year.
The Securities deposited in the Trust on the initial date of deposit
consist entirely of interests in REITs. There are two principal types of
REITs: Equity REITs which typically hold 75% of their invested assets in the
ownership of real estate and benefit from the underlying net rental income
generated from the properties, and Mortgage REITs, which typically hold 75% of
their invested assets in mortgages which are secured by real estate assets and
benefit predominantly from the difference between the interest income on the
mortgage loans and the interest expense on the capital used to finance the
loans. A third type, Hybrid REITs, combines the investment strategies of the
Equity REITs and the Mortgage REITs.
In addition to being classified according to investment type, REITs may
be categorized further in terms of their specialization by property type
(e.g., retail, multifamily, healthcare, office, etc.,) or geographic focus
(nationwide, regional or metropolitan area). Additional stratification is
then possible within certain product types (e.g., factory outlets, community
centers, and regional malls are all categories within the retail sector.)
Lastly, REITs that are created to exist for an indefinite period of time are
known as perpetual life REITs while finite life REITs (or FREITs) have a
specified length of time before liquidating their underlying assets.
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) described in the "Portfolios" in Part A, and
Additional Securities deposited upon the creation of additional Units as set
forth above and Substitute Securities acquired by the Trust as long as such
Securities may continue to be held from time to time in the Trust together
with uninvested cash realized from the disposition of Securities. Because
certain of the Securities from time to time may be sold under certain
circumstances, as described herein (see "Trust Administration"), no assurance
can be given that the Trust will retain for any length of time its present
size and composition. The Trustee has not participated and will not
participate in the selection of Securities for the Trust, and neither the
Sponsor nor the Trustee will be liable in any way for any default, failure or
defect in any Securities.
Some of the Securities are publicly traded either on a stock exchange or
in the over-the-counter market. The contracts to purchase Securities
deposited initially in the Trust are expected to settle in five business days,
in the ordinary manner for such Securities. Settlement of the contracts for
Securities is thus expected to take place prior to the settlement of purchase
of Units on the initial Date of Deposit.
Substitution Of Securities
Neither the Sponsor 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. In addition, the
Sponsor, at its option, is authorized under the Trust Agreement to direct the
Trustee to reinvest in Substitute Securities the proceeds of the sale of any
-3-
309760.1
<PAGE>
of the Securities only if such sale was due to unusual circumstances as set
forth under "Trust Administration--Portfolio Supervision.'
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 Sponsor purchases 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 Failed Securities. Where the Sponsor purchases
Substitute Securities in order to replace Securities it sold, the Sponsor will
endeavor to select Securities which are equity 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 Payment 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 Payment Date.
Because certain of the 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".)
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. Some of the Securities in the Trust may also be owned by other
clients of the Sponsor and its affiliates. However, because these clients may
have differing investment objectives, the Sponsor may sell certain Securities
from those accounts in instances where a sale by the Trust would be
impermissible, such as to maximize return by taking advantage of market
fluctuations. (See "Trust Administration--Portfolio Supervision" below.)
-4-
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<PAGE>
Investors should consult with their own financial advisers prior to investing
in the Trust to determine its suitability. All the Securities in the Trust
are liquidated during a 60-day period at the termination of the 3-year life of
the Trust. Since the Trust will not sell Securities in response to ordinary
market fluctuation, but only at the Trust's termination or upon the occurrence
of certain events, 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 contains 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 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--General" for a
discussion of the types of risks that affect holders of common stock of
issuers of REITs.)
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
-5-
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<PAGE>
defined in the Securities Act. See "Liquidity" below for the risks inherent
in the purchase of Restricted Securities.
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.)
Liquidity
Although all the Securities in the Trust, except for Restricted
Securities held by the Trust, if any, are listed on a national securities
exchange or the NASDAQ National Market System, the principal trading market
for the securities may be in the over-the-counter market. As a result, the
existence of a liquid trading market for the Securities may depend on whether
dealers will make a market in the 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
market 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.
Some of the Securities in the Trust may represent common stock issued by
REITs that were initially offered to the public within the 12 months preceding
the Date of Deposit, meaning that prior to the REITs initial offering, there
had been no public market for the REITs common stock. The initial public
offering price for such Securities may not be indicative of the market price
for the stock after the initial offering, and there can be no assurance that
an active public market for such Securities will develop or continue after the
initial offering; therefore, these Securities involve risks in addition to the
general risks of investing in common stock issued by REITs.
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.
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.
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Legal Proceedings and Legislation
At any time after the initial Date of Deposit, legal proceedings may be
initiated on various grounds, or legislation may be enacted, with respect to
the Securities in the Trust or to matters involving the business of the issuer
of the Securities. There can be no assurance that future legal proceedings or
legislation will not have a material adverse impact on the Trust or will not
impair the ability of the issuers of the Securities to achieve their business
and investment goals.
Real Estate Investment Trusts
General. Since the Trust will consist entirely of shares issued by
REITs, an investment in the Trust will be subject to varying degrees of risk
generally incident to the ownership of real property (in addition to
securities market risks) and will involve more risk than a portfolio of common
stocks that is not concentrated in a particular industry or a group of
industries.1 The underlying value of the Trust's Securities and the Trust's
ability to make distributions to its Certificateholders may be adversely
affected by adverse changes in national economic conditions, adverse changes
in local market conditions due to changes in general or local economic
conditions and neighborhood characteristics, increased competition from other
properties, obsolescence of property, changes in the availability, cost and
terms of mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real estate
tax rates and other operating expenses, regulatory and economic impediments to
raising rents, adverse changes in governmental rules and fiscal policies,
dependency on management skills, civil unrest, acts of God, including
earthquakes and other natural disasters (which may result in uninsured
losses), acts of war, adverse changes in zoning laws, and other factors which
are beyond the control of the issuers of the REITs in the Trust.
REITs have been compared to bond equivalents (paying to the REIT holder
their pro rata share of the REIT's annual taxable income). In general, the
value of bond equivalents change as the general levels of interest rates
fluctuate. When interest rates decline, the value of a bond equivalent
portfolio invested at higher yields can be expected to rise. Conversely, when
interest rates rise, the value of a bond equivalent portfolio invested at
lower yields can be expected to decline. Consequently, the value of the REITs
may at times be particularly sensitive to devaluation in the event of rising
interest rates. Equity REITs are less likely to be affected by interest rate
fluctuations than Mortgage REITs and the nature of the underlying assets of an
Equity REIT, i.e., investments in real property, may be considered more
tangible than that of a Mortgage REIT. Equity REITs are more likely to be
adversely affected by changes in the value of the underlying property it owns
than Mortgage REITs.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential complexes,
and office buildings; the impact of economic conditions on REITs can also be
expected to vary with geographic location and property type. Investors should
be aware that REITs may not be diversified and are subject to the risks of
financing projects. REITs are also subject to defaults by borrowers, self-
liquidation, the market's perception of the REIT industry generally, and the
possibility of failing to qualify for tax-free pass-through of income under
the Internal Revenue Code, and to maintain exemption from the Investment
- --------
1 A Trust is considered to be 'concentrated' in a particular industry when
the Securities in that industry constitute 25% or more of the total
asset value of the portfolio.
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Company Act of 1940. A default by a borrower or lessee may cause the REIT to
experience delays in enforcing its rights as mortgagee or lessor and to incur
significant costs related to protecting its investments.
Uninsured Losses. The issuer of REITs generally maintain comprehensive
insurance on presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, there are certain
types of losses, generally of a catastrophic nature, such as earthquakes and
floods, that may be uninsurable or not economically insurable, as to which the
REITs properties are at risk in their particular locales. The management of
REIT issuers use their discretion in determining amounts, coverage limits and
deductibility provisions of insurance, with a view to requiring appropriate
insurance on their investments at a reasonable cost and on suitable terms.
This may result in insurance coverage that in the event of a substantial loss
would not be sufficient to pay the full current market value or current
replacement cost of the lost investment. Inflation, changes in building codes
and ordinances, environmental considerations, and other factors also might
make it infeasible to use insurance proceeds to replace a facility after it
has been damaged or destroyed. Under such circumstances, the insurance
proceeds received by REITs might not be adequate to restore its economic
position with respect to such property.
Environmental Liability. Under various federal, state, and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such property.
Such laws often impose liability whether or not the owner or operator caused
or knew of the presence of such hazardous or toxic substances and whether or
not the storage of such substances was in violation of a tenant's lease. In
addition, the presence of hazardous or toxic substances, or the failure to
remediate such property properly, may adversely affect the owner's ability to
borrow using such real property as collateral. No assurance can be given that
one or more of the REITs in the Trust may not be presently liable or
potentially liable for any such costs in connection with real estate assets
they presently own or subsequently acquire while such REITs are held in the
Trust.
Americans with Disabilities Act. Under the Americans with Disabilities
Act of 1990 (the "ADA"), all public accommodations are required to meet
certain federal requirements related to physical access and use by disabled
persons. In the event that any of the REITs in the Trust invest in or hold
mortgages in real estate properties subject to ADA, a determination that any
such properties are not in compliance with the ADA could result in imposition
of fines or an award of damages to private litigants. If any of the REITs in
the Trust were required to make modifications to comply with the ADA, the
REITs ability to make expected distributions to the Trust, could be adversely
affected; thus, adversely affecting the ability of the Trust to make
distributions to Certificateholders.
Property Taxes. Real estate generally is subject to real property
taxes. The real property taxes on the properties underlying the REITs in the
Trust may increase or decrease as property tax rates change and as the
properties are assessed or reassessed by taxing authorities.
Liquidity. Although the Securities in the Trust are listed on a
national securities exchange or NASDAQ National Market System, real estate
investments, the primary holdings of each of the Securities in the Trust, are
relatively illiquid. Therefore, the ability of the issuers of the Securities
in the Trust to vary their portfolios in response to changes in economic and
other conditions will be limited and, hence, may adversely affect the value of
the Units. There can be no assurance that any issuer of a Security will be
able to dispose of its underlying real estate assets when they find
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disposition advantageous or necessary or that the sale price of any
disposition will recoup or exceed the amount of their investment.
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
3.9% of the Public Offering Price per 100 Units or 4.058% 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 in the Summary of Essential Information 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 or that system as of the Evaluation Time
(unless the Trustee deems these prices inappropriate as a basis for valuation)
or, if there is no closing sale price at that time on that exchange or that
system, at the mean between the closing bid and asked prices. 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.
Volume and Other Discounts
Units of the Trust are available at a volume discount from the Public
Offering Price during the initial public offering based upon the number of
Units purchased. This volume discount results in a reduction of the sales
charge applicable to such purchases. The approximate reduced sales charge
applicable to such purchases is as follows:
APPROXIMATE REDUCED
NUMBER OF UNITS SALES CHARGE
- -------------------------------------------------- --------------------
10,000 but less than 25,000........................... 3.7%
25,000 but less than 50,000........................... 3.5%
50,000 but less than 75,000........................... 3.2%
75,000 but less than 100,000.......................... 3.0%
100,000 or more....................................... 2.5%
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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. or its affiliates 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 charge of 1.75% per Unit (such amount may be reduced for employees of
certain underwriters depending on the amount of the underwriter concession
available with respect to that purchase). 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 for successive thirty day
periods. Certain banks and thrifts will make Units of the Trust available to
their customers on an agency basis. A portion of the sales charge paid by
their customers is retained by or remitted to the banks. Under the Glass-
Steagall Act, banks are prohibited from underwriting Units; however, the
Glass-Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue
may differ from the interpretations of federal law expressed herein and banks
and financial institutions may be required to register as dealers pursuant to
state law.
The Sponsor intends to qualify the Units for sale in substantially all
States through 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 2% per Unit, subject to the
Sponsor's right to change the dealers" concession from time to time. In
addition, for transactions of at least 100,000 Units, the Sponsor intends to
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser. Such Units may then be distributed to the public by the
dealers at the Public Offering Price then in effect. The Sponsor reserves the
right to reject, in whole or in part, any order for the purchase of Units. 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 change the discounts
from time to time.
Underwriters and broker-dealers of the Trust, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their registered representatives who have
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sold a minimum number of units of unit investment trusts created by the
Sponsor during a specified time period. In addition, at various times the
Sponsor may implement other programs under which the sales forces of
underwriters, brokers, dealers, banks and/or others may be eligible to win
other nominal awards for certain sales efforts, or under which the Sponsor
will reallow to any such underwriters, brokers, dealers, banks and/or others
that sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor, or participate in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such person at the pubic offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant
to objective criteria established by the Sponsor pay fees to qualifying
underwriters, brokers, dealers, banks and/or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsor out of its own assets and not
out of the assets of the Trust. These programs will not change the price
Certificateholders pay for their Units or the amount that the Trust will
receive from the Units sold.
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, are paid an additional
concession.
ADDITIONAL
CONCESSION
AGGREGATE MONTHLY AMOUNTS (PER 100 UNITS)
OF MST/EST UNITS SOLD
- ------------------------------------------------------- ----------------
100,000 but less than 200,000......................... $0.50
200,000 but less than 450,000......................... $1.00
450,000 but less than 700,000......................... $1.50
700,000 or more....................................... $2.00
Sponsor's and Underwriters' Profits
The Sponsor and the Underwriters receive a combined gross underwriting
commission equal to up to 3.9% of the Public Offering Price per 100 Units
(equivalent to 4.058% 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.
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
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<PAGE>
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 it buys Units and the price at which it resells
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.
Distributions to each Certificateholder from the Income Account are
computed as of the close of business on each Record Date for the following
Payment Date and consist of an amount substantially equal to such
Certificateholder's pro rata share of the income credited to the Income
Account, less estimated expenses. Distributions from the Principal Account of
the Trust (other than amounts representing failed contracts, as previously
discussed) are computed as of each Record Date, and are made to the
Certificateholders of the Trust on or shortly after the next Monthly Payment
Date. Proceeds representing principal received from the disposition of any of
the Securities between a Record Date and a Payment Date which are not used for
redemptions of Units will be held in the Principal Account and not distributed
until the second succeeding Monthly Payment 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 Payment Date
will receive their first distribution on the second Monthly Payment 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
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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 "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.
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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 rate
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. In instances where a Certificateholder
acquires his Units shortly before the Fund declares a dividend, such
Certificateholder may realize taxable income upon the receipt of the dividend,
even though the payment is, in effect, a return of capital.
The Trust will own shares in REITs, entities that have elected and
qualified for the special tax treatment applicable to "regulated investment
companies." If the REIT distributes 90% or more of its investment company
taxable income to its shareholders, it will not be subject to Federal income
tax on the amounts so distributed. Moreover, if the REIT distributes at least
98% of its investment company taxable income (including any net capital gain)
it will not be subject to the 4% excise tax on certain undistributed income of
"regulated investment companies." Distributions by the REIT of its taxable
income to its shareholders will be taxable as ordinary income to such
shareholders. Distributions of the REIT's net capital gain, which are
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designated as capital gain dividends by the REIT, will be taxable to its
shareholders as long-term capital gain, regardless of the length of time the
shareholders have held their investment in the REIT.
A Certificateholder's portion of gain, if any, upon the sale, exchange
or redemption of Units on 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, rather than the "regular"
maximum tax rate of 39.6%. Tax rates may increase prior to the time when
Certificateholders may realize gains from the sale, exchange or redemption of
the 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 recognized by 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 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 that are taxable as ordinary income to Certificateholders
which are 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 Section 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 or which is directly attributable to indebtedness incurred by such
corporation. Accordingly, corporate 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
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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 share of stock and other assets held by the Trust for shares of stock
plus cash. Treasury Regulations provide that gain or loss is recognized when
there is a conversion of property into property that is materially different
in kind or extent. In this instance, the Certificateholder may be considered
the owner of an undivided interest in all of the Trusts's assets. By
accepting the proportionate number of Fund Shares of the Trust, in partial
exchange for his Unit, the Certificateholder should be treated as merely
exchanging his undivided pro rata ownership of Fund Shares held by the Trust
into sole ownership of a proportionate share of Fund Shares. As such, there
should be no material difference in the Certificateholder's ownership, and
therefore the transaction should be tax free to the extent the Fund Shares 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 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, intends to maintain a
secondary market for the Units and continuously to offer to repurchase the
Units (notwithstanding the foregoing, the Sponsor undertakes to maintain the
secondary market during the initial public offering period). The Sponsor's
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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. Certificate-
holders 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 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 3.9% sales charge (4.038% 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 770 Broadway, New York, New York 10003, 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 seven calendar days following a tender for redemption, or, if
such seventh day is not a business day, on the first business day prior
thereto, the Certificateholder will be entitled to receive an amount for each
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Unit tendered equal to the Redemption Price per Unit computed as of the
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 Sponsors 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)
or, if there is no closing sale price on that exchange or system, at the mean
between the closing bid and asked prices. 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 Certificate-
holder on the day he would otherwise be entitled to receive payment of the
Redemption Price.
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The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or trading on that Exchange is restricted or
during which (as determined by the Securities and Exchange Commission) an
emergency exists as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit. The Trustee and the Sponsor are not
liable to any person or in any way for any loss or damage which may result
from any such suspension or postponement.
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 GOC Fund, Inc., U.S. Treasury Money Market
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 short term U.S. Treasury Obligations which have effective
maturities of 397 days or less. 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 Security 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;
4. the determination of the Sponsor that such sale is desirable
to maintain the qualification of the Trust as a "regulated
investment company" under the Internal Revenue Code;
5. if the disposition of these Securities is necessary in order
to enable the Trust to make distributions of the Trust's
capital gain net income; or
6. decline in price as a direct result of serious adverse
credit factors affecting the issuer of a Security which, in
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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, or the Sponsor anticipates such issuer will fail to
declare or pay, anticipated dividends 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 correspond-
ing number of additional Units from time to time subsequent to the initial
Date of Deposit, provided that the original proportionate relationship among
the number of shares of each Security established on the Initial Date of
Deposit is maintained to the extent practicable.
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 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,
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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 at least 2,500 Units 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 7 calendar days next following the commencement
of the Liquidation Period. Certificateholders subsequently selling such
distributed Securities will incur brokerage costs when disposing of such
Securities. An election of this option will not prevent the
Certificateholder from recognizing taxable gain as a result of the
liquidation, even though no cash will be distributed to pay any taxes.
Certificateholders should consult their own tax adviser in this regard.
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 7 days of the
settlement of the trade of the last Security to be sold; and/or
3. upon the receipt by the Trust of an appropriate exemptive
order from the Securities and Exchange Commission, 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
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units of a subsequent series of the Equity Trust (the "New Series"),
provided one is offered. The Units of a New Series will be purchased by
the Certificateholder within 7 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 approximately 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. An election of this
option will not prevent the Certificateholder from recognizing taxable
gain or loss as a result of the liquidation, even though no cash will be
distributed to pay any taxes. Certificateholders should consult their
own tax advisers in this regard.
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).
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The Sponsor may for any reason, in their 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, if eligible, 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 next 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
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 creation of a New Series.
The Sponsor reserves the right to modify, suspend or terminate the
reinvestment privilege at any time.
The Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor 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.
Reich & Tang, a Delaware limited partnership, is engaged in the
brokerage business and is a member of the National Association of Securities
Dealers, Inc. 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, 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 ten investment advisory/management
affiliates and two distribution affiliates. These affiliates in the aggregate
are investment advisers or managers to over 57 registered investment
companies.
Reich & Tang is the sponsor for numerous series of unit investment
trusts, including, Equity Securities Trust, Series 1 (and Subsequent Series),
A Corporate Trust, Series 1 (and Subsequent Series), New York Municipal Trust,
Series 1 (and Subsequent Series), New York Discount and Zero Coupon Fund, 1st
Series (and Subsequent Series), Municipal Securities Trust, Series 1 (and
Subsequent Series), 1st Discount Series (and Subsequent Series), Multi-State
Series 1 (and Subsequent Series), High Income Series 1 (and Subsequent
Series), Mortgage Securities Trust, Series 1 (and Subsequent Series) and
Insured Municipal Securities Trust, Series 1 (and Subsequent Series) and 5th
Discount Series (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.
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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 of reckless disregard of its
obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsor.
If at any time the Sponsor shall resign or fail to perform any of its
duties under the Trust Agreement or becomes incapable of acting or becomes
bankrupt or its affairs are taken over by public authorities, then the Trustee
may either (a) appoint a successor Sponsor; (b) terminate the Trust Agreement
and liquidate the Trust; or (c) continue to act as Trustee without terminating
the Trust Agreement. Any successor Sponsor appointed by the Trustee shall be
satisfactory to the Trustee and, at the time of appointment, shall have a net
worth of at least $1,000,000.
The Trustee
The Trustee is The Chase Manhattan Bank (National Association), 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,
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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.
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 its 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 these Trusts, 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. Such 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".
-25-
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<PAGE>
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 sponsor 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.
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
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, Mortgage Securities Trust, Insured Municipal Securities
Trust, Municipal Securities Trust, New York Municipal Trust, Mortgage
Securities Trust or A Corporate 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 securities in the other Trust
Portfolios; and, after the initial offering period has been completed, will be
based on the aggregate bid price of the securities in the particular Trust
portfolio. Units in an Exchange Trust then will be sold to the
Certificateholder at a price based on the aggregate offer price of the
Securities in the Exchange Trust portfolio during the initial public offering
period of the Exchange Trust; or based on the aggregate bid price of the
securities in the Exchange Trust Portfolio if its initial offering has been
completed plus accrued interest and a reduced sales charge as set forth below.
Except for unitholders 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
approximately 1.5% of the price of each Exchange Trust unit (or 1,000 Units
for the Mortgage Securities Trust or 100 Units for the Equity Securities
Trust). For unitholders 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) approximately 1.5% of the price of each Exchange Trust unit (or
1,000 Units for the Mortgage Securities Trust or 100 Units for the Equity
Securities Trust), or (ii) an amount which when coupled with the sales charge
paid by the unitholder upon his original purchase of Units of the Trust at
least equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following
conditions:
-26-
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<PAGE>
1. The Sponsor must be maintaining a secondary market in both the
Units of the Trust held by the Certificateholder and the Units of the
available Exchange Trust. While the Sponsor has indicated its intention
to maintain a market in the Units of all Trusts sponsored by it, the
Sponsor is under no obligation to continue to maintain a secondary
market and therefore there is no assurance that the Exchange Privilege
will be available to a Certificateholder at any specific time in the
future. At the time of the Certificateholder's election to participate
in the Exchange Privilege, there also must be Units of the Exchange
Trust available for sale, either under the initial primary distribution
or in the Sponsor's secondary market.
2. Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and
the selling Certificateholder will not be permitted to advance any new
funds in order to complete an exchange. Units of the Mortgage
Securities Trust may only be acquired in blocks of 1,000 Units. Units
of the Equity Securities Trust may only be acquired in blocks of 100
Units.
3. The Sponsor reserves the right to suspend, modify or terminate
the Exchange Privilege. The Sponsor will provide unitholders 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,
(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 unitholders. Unitholders may, during
this 60 day period, exercise the Exchange Privilege in accordance with
its terms then in effect. In the event the Exchange Privilege is not
available to a Certificateholder at the time he wishes to exercise it,
the Certificateholder will immediately be notified and no action will be
taken with respect to his Units without further instructions from the
Certificateholder.
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.
EXAMPLE: Assume that after the initial public offering has been completed, a
Certificateholder has five units of a Trust with a current value of $700 per
unit which he has held for more than 5 months and the Certificateholder wishes
to exchange the proceeds for units of a secondary market Exchange Trust with a
current price of $725 per unit. The proceeds from the Certificateholder's
original units will aggregate $3,500. Since only whole units of an Exchange
Trust may be purchased under the Exchange Privilege, the Certificateholder
-27-
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<PAGE>
would be able to acquire four units (or 4,000 Units of the Mortgage Securities
Trust or 400 Units of the Equity Securities Trust) for a total cost of
$2,943.50 ($2,900 for units and $43.50 for the sales charge). The remaining
$556.50 would be remitted to the Certificateholder in cash. If the
Certificateholder acquired the same number of units at the same time in a
regular secondary market transaction, the price would have been $3,059.50
($2,900 for units and $159.50 for the sales charge, assuming a 5 1/2% sales
charge times the public offering price).
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
Mortgage Securities Trust, A Corporate Trust, 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, which is based upon the market value of the
underlying securities in the Trust portfolio or the aggregate bid side
evaluation of the underlying bonds in other Trust portfolios and is generally
about 1 1/2% to 2% lower than the offering price for such bonds. The purchase
price of the units will be based on the aggregate offer price of the
underlying bonds in the Conversion Trust portfolio 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.
Except for unitholders who wish to exercise the Conversion Offer within
the first five months of their purchase of units of a Redemption Trust, the
sales charge applicable to the purchase of Units of the Conversion Trust shall
be approximately 1.5% of the price of each Unit (or per 1,000 Units for the
Mortgage Securities Trust or 100 Units for the Equity Securities Trust). For
unitholders who wish to exercise the Conversion Offer within the first five
months of their purchase of units of a Redemption Trust, the sales charge
applicable to the purchase of Units of a Conversion Trust shall be the greater
of (i) approximately 1.5% of the price of each Unit (or per 1,000 Units for
the Mortgage Securities Trust or 100 Units for the Equity Securities Trust) or
(ii) an amount which when coupled with the sales charge paid by the unitholder
upon his original purchase of units of the Redemption Trust at least equals
the sales charge applicable in the direct purchase of Units of a Conversion
Trust. The Conversion Offer is subject to the following limitations:
1. The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there is
no active secondary market at the time the Certificateholder elects to
participate in the Conversion Offer. 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.
2. Exchanges under the Conversion Offer will be effected in whole
units only. 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.
Units of the Mortgage Securities Trust may only be acquired in blocks of
1,000 units. Units of the Equity Securities Trust may only be acquired
in blocks of 100 Units.
-28-
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<PAGE>
3. The Sponsor reserves the right to modify, suspend or terminate
the Conversion Offer at any time without notice to unit owners of
Redemption Trusts. In the event the Conversion Offer is not available
to a unit owner at the time he wishes to exercise it, the unit owner
will be notified immediately and no action will be taken with respect to
his units without further instruction from the unit owner. The Sponsor
also reserves the right to raise the sales charge based on actual
increases in the Sponsor's costs and expenses in connection with
administering the program, up to a maximum sales charge of 2% per unit
(or per 1,000 units for the Mortgage Securities Trust or 100 Units for
the Equity Securities Trust).
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 $5
of the applicable sales charge.
EXAMPLE: Assume a unit owner has five units of a Redemption Trust which has
held for more than 5 months with a current redemption price of $675 per unit
based on the aggregate bid price of the underlying bonds and the unit owner
wishes to participate in the Conversion Offer and exchange the proceeds for
units of a secondary market Conversion Trust with a current price of $750 per
Unit. The proceeds for the unit owner's redemption of units will aggregate
$3,375. Since only whole units of a Redemption Trust may be purchased under
the Conversion Offer, the unit owner will be able to acquire four units of the
Conversion Trust (or 4,000 units of the Mortgage Securities Trust or 400 Units
of the Equity Securities Trust) for a total cost of $3,045 ($3,000 for units
and $45 for the sales charge). The remaining $330 would be remitted to the
unit owner in cash. If the unit owner acquired the same number of Conversion
Trust units at the same time in a regular secondary market transaction, the
price would have been $3,165 ($3,000 for units and $165 for the sales charge,
assuming a 5 1/2% sales charge times the public offering price).
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
advisers as to the tax consequences to them of exchanging or redeeming units
and participating in the Exchange Privilege or Conversion Offer.
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<PAGE>
OTHER MATTERS
Legal Opinions
The legality of the Units offered hereby and certain matters relating to
federal tax law have been passed upon by Battle Fowler LLP, 75 East 55th
Street, New York, New York 10036 as counsel for the Sponsor. Carter, Ledyard
& Milburn, Two Wall Street, New York, New York 10005, have acted as counsel
for the Trustee.
Independent Auditors
The Statement of Condition and Portfolio are included herein in reliance
upon the report of KPMG Peat Marwick LLP, independent auditors, and upon the
authority of said firm as experts in accounting and auditing.
-30-
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<PAGE>
===============================================================================
I am the owner of _______ units of Equity Securities Trust, Series 5.
I would like to learn more about GOC Fund, Inc., U.S. Treasury Money
Market 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 GOC Fund, Inc., U.S. Treasury Money Market Portfolio.
Date ______________________________
- -------------------------------- ------------------------------
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 and Zip Code ---------------------------------------------------
Broker's Name ____________________________ Broker's No. ____________________
===============================================================================
MAIL TO
GOC FUND, INC.
19 OLD KINGS HIGHWAY SOUTH
DARIEN, CT 06820
-31-
309760.1
<PAGE>
INDEX
Title Page EQUITY SECURITIES TRUST
SERIES 5
PART A
REIT SERIES
The Trust.......................................A-2 (A Unit Investment Trust)
Risk Considerations.............................A-3
Public Offering.................................A-4
Distributions...................................A-4 Prospectus
Market for Units................................A-5
Total Reinvestment Plan.........................A-5 Dated: October 31, 1995
Termination.....................................A-5
Summary of Essential Information................A-7
Information Regarding the Trust.................A-8
Financial and Statistical Information...........A-9 Sponsor:
PART B Reich & Tang
Distributors L.P.
The Trust...................................... 1 600 Fifth Avenue
Risk Considerations............................ 4 New York, N.Y. 10020
Public Offering................................ 9 212-830-5200
Rights of Certificateholders................... 12
Tax Status..................................... 13
Liquidity...................................... 16
Total Reinvestment Plan........................ 19 Trustee:
Trust Administration........................... 19
Trust Amendment and Agreement....................20 Chase Manhattan Bank N.A.
Trust Expenses and Charges..................... 25 770 Broadway
Exchange Privilege and Conversion Offer........ 26 New York, N.Y. 10003
Other Matters.................................. 30 1-800-882-9898
Parts A and B of this Prospectus do
not contain all of the information set forth in
the registration statement and exhibits relating
thereto, filed with the Securities and Exchange
Commission, Washington, D.C., under the
Securities Act of 1933, and to which reference is
made.
* * *
This Prospectus does not constitute an offer to sell, or a
solicitation of any offer to buy, securities in any state to any person to
whom it is not lawful to make such offer in such state.
* * *
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsor. The Trust is registered as a unit investment trust under the
Investment Company Act of 1940. Such registration does not imply that the
Trust or any of its Units have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer thereof.
309760.1
<PAGE>
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 99.3.1)
KPMG Peat Marwick LLP
The following exhibits:
99.1.1 -- Reference Trust Agreement including certain amendments to the
Trust Indenture and Agreement (filed as Exhibit 99.1.1 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-53445
of Equity Securities Trust, Series 5 on July 21, 1994 and
incorporated herein by reference).
99.1.1.1 -- Form of Trust Indenture and Agreement (filed as Exhibit 1.1.1
to Amendment No. 2 to Form S-6 Registration Statement
No. 33-45561 of Equity Securities Trust, Series 1, Signature
Series, Gabelli Communications Income Trust on June 3, 1992 and
incorporated herein by reference).
99.1.1.2 -- Amendment to Trust Indentures and Agreements (filed as Exhibit
99.1.1.2 to Amendment No. 1 to Form S-6 Registration Statement
No. 33-53445 of Equity Securities Trust, Series 5 on July 21,
1994 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).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-28384
of Insured Municipal Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 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. 33-53445 of Equity
Securities Trust, Series 5 on July 21, 1994 and incorporated
herein by reference).
99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to the
II-1
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<PAGE>
filing of their opinion regarding tax status of the Trust
(filed as Exhibit 3.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-53445 of Equity Securities Trust,
Series 5 on July 21, 1994 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 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).
*27 -- Financial Data Schedule(s) (for EDGAR filing only).
- --------
* Being filed by this Amendment.
II-2
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Equity Securities Trust, Series 5, 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 30th day of October, 1995.
EQUITY SECURITIES TRUST, SERIES 5
(Registrant)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.,
as general partner
By: /s/LORRAINE C. HYLSLER
Lorraine C. Hylsler
(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, ) October 30, 1995
Treasurer and Chief Financial )
Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director ) By: /s/LORRAINE C. HYLSLER
----------------------
STEVEN W. DUFF Director ) Lorraine C. Hylsler
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYLSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
</TABLE>
- ---------------
* An executed power of attorney was filed as Exhibit 99.6.0 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.
II-3
309606.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in these Post-Effective Amendments to the Registration
Statements of our reports on the financial statements of Equities Securities
Trust Series 5, REIT Series included herein and to the reference to our firm
under the heading "Independent Auditors" in the Prospectus which is part of
this Registration Statement.
KPMG Peat Marwick LLP
New York, New York
October 19, 1995
II-4
309606.1
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
99.1.1 Reference Trust Agreement including
certain amendments to the Trust Indenture
and Agreement (filed as Exhibit 99.1.1 to
Amendment No. 1 to Form S-6 Registration
Statement No. 33-53445 of Equity
Securities Trust, Series 5 on July 21,
1994 and incorporated herein by
reference).
99.1.1.1 Form of Trust Indenture and Agreement
(filed as Exhibit 1.1.1 to Amendment No. 2
to Form S-6 Registration Statement
No. 33-53445 of Equity Securities Trust,
Series 1, Signature Series, Gabelli
Communications Income Trust on June 3,
1992 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).
99.1.4 Form of Agreement Among Underwriters
(filed as Exhibit 1.4 to Amendment No. 1
to Form S-6 Registration Statement
No. 33-28384 of Insured Municipal
Securities Trust, 47th Discount Series and
Series 20 on June 16, 1989 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. 33-53445 of
Equity Securities Trust, Series 5 on
July 21, 1994 and incorporated herein by
reference).
-1-
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<PAGE>
Exhibit Description Page No.
99.3.1 Opinion of Battle Fowler LLP as to the
legality of the securities being
registered, including their consent to the
filing thereof and to the use of their
name under the headings "Tax Status" and
"Legal Opinions" in the Prospectus, and to
the filing of their opinion regarding tax
status of the Trust (filed as Exhibit 3.1
to Amendment No. 1 to Form S-6
Registration Statement No. 33-53445 of
Equity Securities Trust, Series 5 on July
21, 1994 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 Post-Effective
Amendment No. 9 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).
-2-
309606.1
<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> 0000922563
<NAME> EQUITY SECURITIES TRUST, SERIES 5
<SERIES>
<NUMBER> 1
<NAME> EQUITY SECURITIES TRUST, SERIES 5
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 3133291
<INVESTMENTS-AT-VALUE> 3099856
<RECEIVABLES> 22556
<ASSETS-OTHER> 594
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3123006
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
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