<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1996
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
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:
SMITH BARNEY UNIT TRUSTS
EQUITY FOCUS TRUSTS
THEME INVESTING PORTFOLIO
B. NAME OF DEPOSITOR:
SMITH BARNEY INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE:
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY TO:
LAURIE A. HESSLEIN PIERRE DE ST. PHALLE, ESQ.
SMITH BARNEY INC. DAVIS POLK & WARDWELL
388 GREENWICH STREET 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10013 NEW YORK, NEW YORK 10017
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, PROSPECTUS DATED MARCH 22, 1996
EQUITY FOCUS
TRUSTS
---------------------------------
THEME INVESTING PORTFOLIO
A SMITH BARNEY UNIT INVESTMENT
TRUST
The Equity Focus Trusts--Theme
Investing Portfolio is a unit
investment trust that offers
investors the opportunity to purchase
Units representing proportionate
interests in a portfolio of equity
securities of companies which have
been given the highest investment
rating by Smith Barney and which have
a stated commitment to repurchase
shares of their own common stock or
are likely to expand their programs
to buy back shares in the future. All
of the equity securities held by the
Trust are rated by Smith Barney's
Equity Research Division in the
highest investment ranking category.
The value of the Units will fluctuate
with the value of the underlying
securities and the Trust is not
appropriate for investors requiring
high current income or conservation
of capital. The minimum purchase is
$1,000 for individual purchases, and
$250 for purchases by Individual
Retirement Accounts, Keogh Plans,
pension funds and other tax-deferred
retirement plans.
LOGO
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 dated , 1996
Read and retain this Prospectus for future reference
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
<PAGE>
EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF , 1996+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++..........................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT.... 1/1
PUBLIC OFFERING PRICE (per 1,000 Units)............................
Aggregate value of Securities in Trust............................ $
===========
Divided by 1,000,000 Units
(times 1,000).................................................... $
Plus sales charge of 4.00% of Public Offering Price (4.167% of the
net amount invested in Securities)*.............................. $
-----------
Public Offering Price per 1,000 Units............................. $
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income)........................... $ -0-
-----------
Total (per 1,000 Units)........................................... $
===========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS
(based on value of underlying securities)........................ $
</TABLE>
DISTRIBUTIONS
Distributions of income, if any, will be made annually on , to Holders
of record on and will be automatically reinvested in additional Units
of this Trust at no extra charge unless the Holder elects to receive his
distribution in cash. A Final Distribution will be made upon termination of
the Trust.
<TABLE>
<S> <C>
SPONSOR'S PROFIT OR (LOSS) ON DEPOSIT................................... $
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
DISTRIBUTION DAY
</TABLE>
, and upon termination and liquidation of the Trust.
EVALUATION TIME
4:00 P.M New York time.
TRUSTEE AND DISTRIBUTION AGENT
The Chase Manhattan Bank, N.A.
MINIMUM VALUE OF TRUST
The trust indenture between the Sponsor and the Trustee (the "Indenture") may
be terminated if the net asset value of the Trust is less than $5,000,000.
See Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
, 1999 (the "Mandatory Termination Date"), or at any earlier time by the
Sponsor with the consent of Holders of 51% of the Units then outstanding.
- -----------
+ The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on , 1996. Valuation of Securities is based on the market
value per share as of , 1996, as more fully explained in footnote 4 to
Portfolio on page 9. After the Initial Date of Deposit, Securities quoted on a
national securities exchange or the Nasdaq National Market, or a foreign
securities exchange, are valued at the closing sale price or, if no price
exists, at the mean between the closing bid and offer prices. Securities not so
quoted are valued at the mean between bid and offer prices.
++ The Sponsor may create additional Units during the offering period of the
Trust.
* The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
** All redemptions of 250,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
2
<PAGE>
EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF , 1996 (CONTINUED)
OBJECTIVE OF THE TRUST -- The objective of the Trust is to provide investors
with the possibility of capital appreciation through a convenient and cost-
effective investment in a fixed portfolio consisting of shares of common stocks
and any similar securities (the "Securities") selected by the Sponsor for the
Trust portfolio (the "Portfolio"). The Sponsor has selected for the Portfolio
stocks of companies which have a stated commitment to repurchase shares of
their own common stock or which are likely to expand their existing programs to
buy back shares in the future. All of these Securities are rated by Smith
Barney in the highest investment ranking category. These Securities are
considered to have potential for capital appreciation over a period of three
years relative to the risks and opportunities. The payment of dividends is a
secondary objective of the Trust. Achievement of the Trust's objective is
dependent upon several factors including the financial condition of the issuers
of the Securities and any appreciation of the Securities. Furthermore, because
of Trust sales charges and expenses, unequal weightings of securities,
brokerage costs and possible delays in purchasing securities with cash
deposited and other factors, investors in the Trust may not realize as high a
total return as the theoretical performance of the underlying securities in the
Portfolio.
PORTFOLIO -- The Portfolio contains common stocks issued by companies
engaged primarily in the following industries: oil/natural gas, ; technology,
; restaurant chains, ; telecommunications, ; semiconductors, ;
banks/financial institutions, ; brewery, ; engineering, ; auto parts, ;
metals & mining, ; food retailer, ; office equipment, ; insurance, ;
building products, ; retailing, ; lodging, ; publishing, ; tobacco, ; auto
salvage, ; healthcare, . The issue is a foreign issue. Although there
are certain risks of price volatility associated with investment in common
stocks (particularly with an investment in one or two common stocks), your risk
is reduced because your capital is divided among securities from different
industry groups. (See Risk Factors.)
With the initial deposit of Securities the Sponsor established a
proportionate relationship among the number of shares of each stock deposited
in the Portfolio. Following the Initial Date of Deposit, the Sponsor may create
additional Units by depositing cash (or a bank letter of credit in lieu of
cash) with instructions to purchase Securities, additional Securities or
contracts to purchase additional Securities maintaining to the extent
practicable the original proportionate relationship among the number of shares
of each stock and similar interests in the Portfolio. Replacement Securities
may be acquired under specified conditions. 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 price or the unavailability of Securities. The Sponsor
may cease creating Units (temporarily or permanently) at any time. (See
Administration of the Trust -- Trust Supervision.)
RISK FACTORS -- Investment in the Trust should be made with an understanding
that the value of the underlying Securities, and therefore the value of the
Units, will fluctuate, depending on the full range of economic and market
influences which may affect the market value of the Securities, including the
profitability and financial condition of issuers, conditions in a given
issuer's industry, market conditions and values of common stocks generally, the
impact of the Sponsor's buying and selling Securities, especially during the
initial offering of Units of the Trust or to satisfy redemptions of Units, and
other factors.
The Trust is not appropriate for investors requiring high current income or
conservation of capital. Securities representing approximately % of the value
of the Portfolio have been ranked Low Risk by the Sponsor's Research
Department, described as "highly predictable earnings/dividends; low price
volatility"; Securities representing approximately % of the value of the
Portfolio have been ranked Moderate Risk, described as "moderately predictable
earnings/dividends; moderate price volatility"; Securities representing
approximately % of the value of the Portfolio have been ranked High Risk by
the Sponsor's Research Department, described as "low predictability of
earnings/dividends; high price volatility"; Securities representing
approximately % of the value of the Portfolio have been ranked Speculative,
described as "exceptionally low predictability of earnings/dividends; highest
risk of price volatility."
If cash (or a letter of credit in lieu of cash) is deposited with
instructions to purchase Securities in connection with the issuance of
additional Units during the Public Offering Period, there is the risk that the
price of a Security will increase between the time of the deposit and the time
the Security is purchased resulting in a reduction in the number of shares or
similar interests purchased for the Portfolio. Price fluctuations during the
period from the time of deposit of cash to the time the Securities are
purchased, and payment of brokerage fees, will affect the value of every
3
<PAGE>
Holder's Units, the number of shares or similar interests of each Security
represented by each Unit and the income per Unit received by the Trust. Some of
the Securities may have limited trading volume, and, while the Sponsor will
endeavor to purchase Securities with deposited cash as soon as practicable, it
reserves the right to purchase those Securities over the 20 following business
days in an effort to reduce the effect of these purchases on the market price
of those Securities. This could, however, result in the Trust's failure to
participate in any appreciation of those Securities before the cash is
invested. If any cash remains at the end of this period and cannot be invested
in
3--1
<PAGE>
EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF , 1996 (CONTINUED)
one or more Securities at what the Sponsor considers reasonable prices, it
intends to use that cash to purchase each of the other Securities in the
original proportionate relationship among those Securities. Similarly, at
termination of the Trust, the Sponsor reserves the right to sell Securities
over a period of up to 20 business days to lessen the impact of its sales on
the market price of the Securities. The proceeds received by Holders following
termination of the Trust will reflect the actual sales proceeds received on
the Securities, which will likely differ from the closing sale price on the
Mandatory Termination Date. (See Description of the Trust -- Risk Factors.)
Common stocks may be 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. Investors should be aware
that there can be no assurance that the value of the underlying Securities
will increase or that the issuers of the Securities will pay dividends on
outstanding shares. Any distributions of income to Holders will generally
depend upon the declaration of dividends by the issuers of the Securities and
the declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer will not necessarily require the sale of Securities from the Portfolio
or mean that the Sponsor will not continue to purchase the Security in order
to create additional Units. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth above under
Objective of the Trust and that the Trust may continue to purchase or hold
Securities originally selected through this process even though the evaluation
of the attractiveness of the Securities may have changed. In the event a
public tender offer is made for a Security or a merger or acquisition is
announced affecting a Security, the Sponsor may instruct the Trustee to tender
or sell the Security on the open market when, in its opinion, it is in the
best interest of the holders of the Units to do so. Although the Portfolio is
regularly reviewed and evaluated and the Sponsor may instruct the Trustee to
sell Securities under certain limited circumstances, Securities will not be
sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. The Sponsor has currently assigned certain
rankings to the issuers of Securities based on stock performance expectations
and level of risk (see footnote 2 to Portfolio on page 9). These rankings are
subject to change. Securities will not necessarily be sold by the Trust based
on a change in rankings, although the Sponsor intends to review the
desirability of holding any Security if its ranking is reduced below 3. The
prices of single shares of each of the Securities in the Trust vary widely,
and the effect of a dollar of fluctuation, either higher or lower, in security
prices will be much greater as a percentage of the lower-price securities'
purchase price than as a percentage of the higher-price securities' purchase
price.
Investors should note that should the size of the Trust be reduced below the
Minimum Value of Trust stated on page 2 the Trust may be terminated at that
time by the Sponsor, well before the Mandatory Termination Date of the Trust.
Any difference between the aggregate prices the Sponsor paid to acquire the
Securities and the aggregate prices at which Securities were initially
deposited in the Trust is noted on page 2 under Sponsor's Profit or (Loss) on
Deposit. The Sponsor's profit or loss on the deposit of Securities largely
depends on whether the prices of the Securities rise in response to the
Sponsor's purchases of possibly large volumes of the Securities for initial
and subsequent deposits in the Trust. The effect of the Sponsor's purchases of
Securities on the prices of the Securities is unpredictable.
FOREIGN SECURITIES AND AMERICAN DEPOSITARY RECEIPTS -- The Trust may contain
Securities of foreign issuers or American Depositary Receipts ("ADRs") for
securities that have been issued by non-United States issuers. These
instruments are subject to special considerations in addition to those
affecting common stocks of United States issuers. For a discussion of special
considerations relating to foreign securities and ADRs, see Description of the
Trust -- Risk Factors; Taxes.
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in the Trust
consists of privately-placed common stocks. Except as indicated under
Portfolio, the Sponsor has not participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which any of the
Securities in the Trust were acquired.
4
<PAGE>
EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF , 1996 (CONTINUED)
PUBLIC OFFERING PRICE -- The Public Offering Price per 1,000 Units is equal
to the aggregate value of the underlying Securities and any cash held to
purchase Securities, divided by the number of Units outstanding times 1,000,
plus a sales charge of 4.00%* of the Public Offering Price; this results in a
sales charge of 4.167%* of the net amount invested in underlying Securities.
Units are offered at the Public Offering Price plus the net amount per Unit in
the Income Account (see Public Sale of Units). The minimum purchase is $1,000
(or $250 in the case of purchases by Individual Retirement Accounts, Keogh
plans, pension funds and other tax-deferred retirement plans). Investors should
note that the Public Offering Price of Units varies each business day with the
value of the underlying Securities. There is no "par value" for Units.
INCOME DISTRIBUTIONS -- Distributions of dividends (net of expenses) and any
principal received by the Trust will be automatically reinvested in additional
Units of the Trust at no extra charge and each Holder of Units will participate
unless the Holder elects to receive distributions of dividends or principal, or
both, in cash. Holders who reinvest their distributions will receive additional
Units and will therefore own a greater percentage of the Trust than Holders who
receive cash distributions (see Reinvestment Plan). Distribution and Record
Days are shown on page 2. As soon as practicable after termination of the Trust
(generally after seven days), the Trustee will distribute to each Unitholder
his pro rata share of the amount realized on disposition of the Securities
remaining in the Trust plus any other assets then in the Trust, less expenses
of the Trust. The other assets of the Trust will include any dividends,
interest income and net realized capital gains which have not been distributed.
The total distribution may be less than the amount paid for Units.
MARKET FOR UNITS -- The Sponsor, though not obligated to do so, intends from
the commencement of the Trust to maintain a market for Units and continually to
offer to purchase Units from Holders desiring to sell them at a price based on
the aggregate value of the underlying Securities (see Market for Units).
Whenever a market is not maintained, a Holder may be able to dispose of his
Units only through redemption (see Redemption).
- -------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units -- Public Offering Price.
5
<PAGE>
EQUITY FOCUS TRUSTS: THEME INVESTING PORTFOLIO
OUR PORTFOLIO THEME:
A trend observed among some companies
recommended by Smith Barney's research
analysts has suggested a timely theme for
today's stock market . . . . that is, to
invest in highly rated companies with
disciplined programs to purchase shares
of their own common stock.
THE
EQUITY
FOCUS
TRUSTS:
The Equity Focus Trusts are a series of unit investment trusts, designed to
capitalize on an industry trend or research investing theme identified by Smith
Barney's research analysts. The process to select these portfolios draws from
our extensive resources in equity research, through an analysis of each company
and its industry group. Also considered is the potential for the holdings to
perform, given our outlook for the economic and market environment.
AN INVESTING THEME FOR TODAY'S STOCK MARKET:
Smith Barney's Investment Policy Committee has observed a common trend among
some of the companies recommended by our research analysts. Many are industry
leaders, yet the basis of this trend is not an industry group in common. In
fact, they represent a broad spectrum of industry sectors--from retailing to
hotel management to computer manufacturing.
What they do have in common is either balance sheet strength derived from a
strong equity capital base, or significant amounts of free cash flow derived
from their business operations. Yet it is not this factor alone that defines
our investing theme . . . it is their use of this cash or capital capacity that
creates the common link of our TIP selections:
THEME INVESTING PORTFOLIO
The companies in the Theme Investing
Portfolio are using free cash flow or
their equity capital base for the benefit
of shareholders--by purchasing shares of
their own common stock.
WHY DO COMPANIES INVEST IN THEIR OWN COMMON STOCK?
A disciplined share repurchase program can suggest that a company considers
its stock to be a good investment, and can imply management confidence in the
company's prospects for the future. Moreover, share buybacks reduce the amount
of a company's common stock outstanding. So, in a declining market environment,
a company's significant ownership of its common stock could provide some
insulation from falling stock prices.
<PAGE>
HOW WE SELECTED THE PORTFOLIO
First: Our analysts screened more than 1,200 companies to identify
those recommendations ranked "1" on Smith Barney's investment
ranking system, as outlined under Portfolio.
Second: Then, we selected companies with a commitment to repurchase
shares of their own common stock. Also included were companies
that, in the opinion of our research analysts, are likely to
expand their programs to buyback shares in the future.
Some are purchasing these shares with existing levels of free
cash flow. For others, the repurchase programs can represent
an effective use of their excess capital capacity that can
also benefit shareholders.
THE THEME INVESTING SERIES:
HOW TO INVEST
Through the Theme Investing Series, you can take a "portfolio approach" and
invest in companies with one easy purchase. This fixed portfolio will be
held in a unit investment trust with a three-year life. The primary investment
objective is capital appreciation; however, many of the companies also pay
attractive dividends.
RISK FACTORS:
The Trust is designed for investors
who can assume the risks associated with
equity investments and is not
appropriate for investors requiring
conservation of capital or high current
income. Unit prices will fluctuate with
the value of the underlying stock, and
there is no assurance that the price
will appreciate, or not depreciate, over
the term of the Trust. Because of the
Trust's sales charges and expenses,
unequal weightings of stocks, brokerage
costs and other factors, Trust investors
may not achieve the aggregate price
performance of equal amounts of the
underlying stocks. See the prospectus
for more information.
Consider the advantages: The Trust
offers a unique package for purchasing a
broad spectrum of Smith Barney's stock
recommendations, that may help you
achieve your investment goals. Call your
Financial Consultant, who can answer
your questions.
THEME INVESTING PORTFOLIO
KEY FEATURES AT A GLANCE
Professional Selection & Supervision
The holdings of the port-
folio were identified by
Smith Barney Equity Re-
search Division, com-
prised of analysts who
follow industries or
stock areas of the mar-
ket.
A Convenient and Cost
Effective Package
You can invest for as
little as $1,000 or $250
in an Individual Retire-
ment Account or another
tax-deferred retirement
plan. Dividends can be
automatically reinvested,
or you can receive dis-
tributions in a conve-
nient annual check.
Liquidity
Your units can be sold at
any time, with no charge
or penalty. Prices will
reflect net asset value
on the date of sale,
which may be more or less
than your cost.
<PAGE>
EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF , 1996 (CONTINUED)
FEE TABLE
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THIS FEE TABLE IS INTENDED TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. SEE PUBLIC SALE OF UNITS AND
EXPENSES AND CHARGES. ALTHOUGH THE TRUST IS A UNIT INVESTMENT TRUST RATHER THAN
A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage of offering
price)................................................................. 4.00%
====
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Trustee's Fee........................................................... %
Maximum Portfolio Supervision, Bookkeeping and Administrative Fees...... %
Organizational Expenses................................................. %
Other Operating Expenses................................................ %
----
Total................................................................ %
====
</TABLE>
The Trust (and therefore the Holders) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the indenture and other closing documents, registering units with the SEC and
the states and the initial audit of the Portfolio--as is common for mutual
funds. Historically, the sponsors of unit investment trusts have paid all the
costs of establishing those trusts. Advertising and selling expenses will be
paid by the Underwriters at no cost to the Trust.
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts, Theme Investing
Portfolio:
We have audited the accompanying statement of financial condition, including
the portfolio, of Equity Focus Trusts, Theme Investing Portfolio, as of ,
1996. This financial statement is the responsibility of the Trustee (see note
5 to the statement of financial condition). Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of financial condition
is free of material misstatement. An audit of a statement of financial
condition includes examining, on a test basis, evidence supporting the amounts
and disclosures in that statement of financial condition. Our procedures
included confirmation with the Trustee of an irrevocable letter of credit
deposited on , 1996, for the purchase of securities, as shown in the
statement of financial condition and portfolio of securities. An audit of a
statement of financial condition also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall statement of financial condition presentation. We
believe that our audit of the statement of financial condition provides a
reasonable basis for our opinion.
In our opinion, the statement of financial condition referred to above
presents fairly, in all material respects, the financial position of Equity
Focus Trusts, Theme Investing Portfolio, as of , 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
, 1996
EQUITY FOCUS TRUSTS
THEME INVESTING PORTFOLIO
STATEMENT OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, , 1996
<TABLE>
<S> <C>
TRUST PROPERTY
Investment in Securities:
Contracts to purchase Securities(1).................................... $
Organizational costs(2)................................................
-----
Total................................................................
=====
LIABILITIES
Accrued Expenses(2).....................................................
-----
INTEREST OF UNITHOLDERS
Units of fractional undivided interest outstanding:
Cost to investors(3)................................................... $
Less: Gross underwriting commissions(4)................................
-----
Net amount applicable to investors.....................................
-----
Total................................................................ $
=====
</TABLE>
- -----------
(1) Aggregate cost to the Trust of the Securities listed under Portfolio on
the Initial Date of Deposit is determined by the Trustee on the basis set
forth in footnote 4 to the Portfolio on page 8. See also the columns
headed Cost of Securities to Trust. An irrevocable letter of credit in the
amount of $ has been deposited with the Trustee for the purchase
of Securities. The letter of credit was issued by .
(2) Organizational costs to be paid by the Trust have been deferred and will
be amortized over the life of the Trust. Organizational costs have been
estimated based on projected total assets of $ million. To the extent
the Trust is larger or smaller, the amount paid may vary.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes a sales charge of 4.00% of Public Offering Price computed on the
basis set forth under Public Sale of Units--Public Offering Price.
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statements other than estimates of
organizational costs, for which the Sponsor is responsible.
7
<PAGE>
PORTFOLIO OF EQUITY FOCUS TRUSTS--THEME INVESTING PORTFOLIO ON THE INITIAL
DATE OF DEPOSIT, , 1996
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
----- -----
% $
===== =====
</TABLE>
8
<PAGE>
- -----------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1996. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Smith Barney has assigned these rankings according to the following
system, which uses two codes: a letter for the level of risk (L,M,H,S or
V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Smith Barney research analysts
and are, of course, subject to change; no assurance can be given that the
stocks will perform as expected. These rankings have not been audited by KPMG
Peat Marwick LLP.
(3) Per 1,000,000 Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1996. Subsequent to the Initial
Date of Deposit, valuation of Securities is based, for Securities quoted
on a national securities exchange or Nasdaq National Market, or a foreign
securities exchange, on the closing sale prices, or if no price exists, at
the mean between the closing bid and offer prices, or for Securities not
so quoted, at the mean between bid and offer prices on the over-the-
counter market. See Redemption--Computation of Redemption Price Per Unit.
---------------
* Smith Barney usually maintains a market in the securities of this company.
# Within the last three years, Smith Barney or one of its affiliates was the
manager (co-manager) of a public offering of the securities of this company
or an affiliate.
9
<PAGE>
DESCRIPTION OF THE TRUST
STRUCTURE AND OFFERING
This Series of Equity Focus Trusts (the "Trust") is a "unit investment
trust" created under New York law by a Trust Indenture (the "Indenture")*
between the Sponsor and the Trustee. On the date of this Prospectus, each unit
of the Trust (a "Unit") represented a fractional undivided interest in the
securities listed under Portfolio (the "Securities") set forth under
Investment Summary. Additional Units of the Trust will be issued in the amount
required to satisfy purchase orders by depositing in the Trust cash (or a bank
letter of credit in lieu of cash) with instructions to purchase Securities,
contracts to purchase Securities together with irrevocable letters of credit,
or additional Securities. On each settlement date (estimated to be three
business days after the applicable date on which Securities were deposited in
the Trust), the Units will be released for delivery to investors and the
deposited Securities will be delivered to the Trustee. As additional Units are
issued by the Trust as a result of the deposit of cash (or a letter of credit
in lieu of cash) with instructions to purchase 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. There is no limit on the time period during which the Sponsor may
continue to make additional deposits of Securities into the Trust.
Additional deposits of cash or Securities in connection with the issuance
and sale of additional Units will maintain to the extent practicable the
original proportionate relationship among the number of shares of and other
interests representing each Security. The proportionate relationship among the
Securities in the Trust will be adjusted to reflect the occurrence of a stock
dividend, a stock split or a similar event which affects the capital structure
of the issuer of a Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. 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, brokerage commissions or unavailability of Securities. Replacement
Securities may be acquired under specified conditions when Securities
originally deposited are unavailable (see Administration of the Trust --Trust
Supervision). Units may be continuously offered to the public by means of this
Prospectus (see Public Sale of Units -- Public Distribution) resulting in a
potential increase in the number of Units outstanding.
The Public Offering Price of Units prior to the Evaluation Time specified on
page 2 on any day will be based on the aggregate value of the Securities in
the Trust on that day at the Evaluation Time, plus a sales charge. The Public
Offering Price will thus vary in the future from that specified on page 2 of
this Prospectus. See Public Sale of Units -- Public Offering Price for a
complete description of the pricing of Units.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units. The Sponsor reserves
the right to accept or reject any purchase order in whole or in part.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trust
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received. The Sponsor may accept or
reject any purchase order in whole or in part.
The holders ("Holders") of Units will have the right to have their Units
redeemed for the Securities underlying the Units (see Redemption). If any
Units are redeemed, the aggregate value of Securities in the Trust will be
reduced and the fractional undivided interest in the Trust represented by each
remaining Unit will be increased. Units will remain outstanding until redeemed
upon request to the Trustee by any Holder (which may include the Sponsor), or
termination of the Indenture (see Administration of the Trust -- Amendment and
Termination).
THE PORTFOLIO
Smith Barney's Equity Focus Trusts are each based on a specific research
investing theme or industry trend identified by Smith Barney Equity Research
analysts, based on an analysis of each company and the industry group as a
whole. The Securities in the Portfolio were identified by Smith Barney's
Equity Research Division, which is staffed by 98 investment
- -------
* To the extent references in this Prospectus are to articles and sections of
the Indenture, which is incorporated by reference into this Prospectus, the
statements made herein are qualified in their entirety by such reference.
10
<PAGE>
analysts, who currently follow equities issued by more than 1,200 companies
(both domestic and foreign) in 95 industry groups or stock areas of the
market. The Securities included in the Portfolio were issued by companies
selected by the Sponsor as having authorized programs to repurchase shares of
their own common stock or as likely to expand their existing programs to buy
back shares in the future. All of the equity securities held by the Trust are
rated by Smith Barney's Equity Research Division in the highest investment
ranking category. According to Ibbotson Associates, during the period 1926
through 1995, the total return on small company stocks averaged 12.5% and on
large company stocks averaged 10.5%, as contrasted to 5.2% for long-term
corporate and government bonds and 5.3% for intermediate-term government
bonds, and 3.7% for inflation. Of course, past performance is no guarantee of
future results, and results for short-term periods have varied considerably.
In addition, the investment return offered by stocks will vary, while
government bonds, if held to maturity, offer both a fixed rate of return and
return of principal, backed by the full faith and credit of the U.S.
government.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trust for various reasons, including sales
charges and expenses of the Trust, because the Portfolio may not be fully
invested at all times, the stocks are normally purchased or sold at prices
different from the closing price used to determine the Trust's net asset
value, and not all stocks may be weighted in the initial proportions at all
times. Additionally, results of ownership to different Holders will vary
depending on the net asset value of the underlying Securities on the days
Holders bought and sold their Units. Of course, any purchaser of securities,
including Units, will have to pay sales charges or commissions, which will
reduce his total return.
Advertising and sales literature for the Trust may include excerpts from the
Sponsor's research reports on one or more of the stocks in the Trust,
including a brief description of its businesses and market sector, and the
basis on which the stock was selected. In selecting Securities for the Trust,
the Sponsor has not expressed any belief as to the potential of these
Securities for capital appreciation over a period longer than one year. There
is, of course, no assurance that any of the Securities in the Trust will
appreciate in value, and indeed any or all of the Securities may depreciate in
value at any time in the future. See Description of the Trust -- Risk Factors.
All of the domestic Securities are publicly traded either on a stock
exchange or in the over-the-counter market. Most of the contracts to purchase
Securities deposited initially in the Trust are expected to settle in three
business days, in the ordinary manner for such Securities. Any foreign
Securities are publicly traded on a variety of foreign stock exchanges.
Settlement of contracts for foreign Securities varies by country and may take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
The Trust consists of such Securities as may continue to be held from time
to time in the Trust and any additional and replacement Securities and any
money market instruments acquired and held by the Trust pursuant to the
provisions of the Indenture (including the provisions with respect to the
deposit into the Trust of Securities in connection with the sale of additional
Units to the public) together with undistributed income therefrom and
undistributed and uninvested cash realized from the disposition of Securities
(see Administration of the Trust -- Accounts and Distributions; -- Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the
redemption of Units. Any money market instruments acquired by the Trust must
be held until maturity and must mature no later than the next Distribution Day
and the proceeds distributed to Holders at that time. If sufficient Securities
are not available at what the Sponsor considers a reasonable price, excess
cash received on the creation of Units may be held in an interest-bearing
account with the Trustee until that cash can be invested in Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. However, should any
contract deposited hereunder (or to be deposited in connection with the sale
of additional Units) fail, the Sponsor shall, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under Portfolio, unless
substantially all of the monies held in the Trust to cover the purchase are
reinvested in replacement Securities in accordance with the Indenture (see
Administration of the Trust -- Portfolio Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, or because Securities may be distributed in redemption of Units, no
assurance can be given that the Trust will retain for any length of time its
present size (see Redemption; Administration of the Trust -- Amendment and
Termination). For Holders who do not redeem their Units, investments in Units
of the Trust will be liquidated on the fixed date specified under Investment
Summary -- Mandatory Termination of Trust, and may be liquidated sooner if the
net asset value of the Trust falls below that specified under Investment
Summary -- Minimum Value of Trust (see Risk Factors).
INCOME
There is no assurance that any dividends will be declared or paid in the
future on the Securities.
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<PAGE>
Record and Distribution Days are set forth under Investment Summary. Income
Distributions, if any, will be automatically reinvested in additional Units of
the Trust at no extra charge unless a Holder elects to receive his
distributions in cash (see Reinvestment Plan).
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that the
financial condition of the issuers of the Securities or the general condition
of the common stock market may worsen and the value of the Securities and
therefore the value of the Units may decline. 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 Trust is not appropriate
for investors requiring conservation of capital or high current income.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right 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 preference
stocks 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,
but generally do not participate in other amounts available for distribution
by the issuing corporation. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stocks are also entitled to rights on liquidation
which are senior to those of 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 same degree of protection of capital as do
debt securities. The issuance of additional debt securities or preferred stock
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 rights of holders of
common stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of common stocks are subject to market fluctuations for
as long as the common stocks remain outstanding, and thus the value of the
Securities in the Portfolio 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.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of the
Trust. If dividends are insufficient to cover expenses, it is likely that
Securities will have to be sold to meet Trust expenses. See Expenses and
Charges -- Payment of Expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
Holders will be unable to dispose of any of the Securities in the Portfolio,
as such, and will not be able to vote the Securities. As the holder of the
Securities, the Trustee will have the right to vote all of the voting stocks
in the Trust and will vote in accordance with the instructions of the Sponsor.
Holders will, however, be able upon request to receive an "in kind"
distribution of the Securities evidenced by their Units if they tender a
minimum of 250,000 Units (see Redemption).
Investors should be aware that the Trust is not a "managed" trust and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the portfolio of the Trust (the
"Portfolio") except under extraordinary circumstances (see Administration of
the Trust -- Trust Supervision).
Investors should note that in connection with the issuance of additional
Units during the Public Offering Period set forth in the Investment Summary,
the Sponsor may deposit cash (or a letter of credit in lieu of cash) with
instructions to purchase Securities, additional Securities or contracts to
purchase Securities, in each instance maintaining the original percentage
relationship, subject to adjustment under certain circumstances, among the
number of shares of each Security in the Trust. To the extent the price of a
Security increases or decreases between the time cash is deposited with
instructions to purchase the Security at the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or
less of the other Securities in the Trust. In addition, brokerage fees (if
any) incurred in purchasing Securities with cash deposited with instructions
to purchase the Securities will be an expense of the Trust. Price fluctuations
between
12
<PAGE>
the time of deposit and the time the Securities are purchased, and payment of
brokerage fees, will affect the value of every Holder's Units and the Income
per Unit received by the Trust.
The Trust may be terminated at any time and all outstanding Units liquidated
if the net asset value of the Trust falls below $5,000,000. Investors should
note that if the net asset value of the Trust should fall below the applicable
minimum value, the Sponsor may then in its sole discretion terminate the Trust
before the Mandatory Termination Date specified under Investment Summary.
Foreign Securities. The Trust may hold Securities of non-U.S. issuers or
through ADRs. There are certain risks involved in investing in securities of
foreign companies, which are in addition to the usual risks inherent in United
States investments. These risks include those resulting from fluctuations in
currency exchange rates, revaluation of currencies, future adverse political
and economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers and the lack of uniform
accounting, auditing and financial reporting standards or of other regulatory
practices and requirements comparable to those applicable to domestic
companies. Moreover, securities of many foreign companies may be less liquid
and their prices more volatile than those of securities of comparable domestic
companies. In addition, with respect to certain foreign countries, there is
the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Trust,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that could reduce the yield on such securities. Since
the Trust may invest in securities quoted in currencies other than the United
States dollar, changes in foreign currency exchange rates may adversely affect
the value of foreign securities in the Portfolio and the net asset value of
Units of the Trust. Investment in foreign securities may also result in higher
expenses due to the cost of converting foreign currency to United States
dollars, the payment of fixed brokerage commissions on certain foreign
exchanges, which generally are higher than commissions on domestic exchanges,
and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. However, the Sponsor anticipates that
adequate information will be available to allow the Sponsor to supervise the
Portfolio as set forth in Administration of the Trust -- Portfolio
Supervision.
On the basis of the best information available to the Sponsor at the present
time none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this
type or because the issues qualify for an exemption, or the Trust, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trust.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
international securities in the Portfolio and on the ability of the Trust to
satisfy its obligation to redeem Units tendered to the Trustee for redemption
(see Redemption).
Exchange Rate Fluctuation. In recent years, foreign exchange rates have
fluctuated sharply. Income from foreign equity securities held by the Trust,
including those underlying any ADRs held by the Trust, would be payable in the
currency of the country of their issuance. However, the Trust will compute its
income in United States dollars, and the computation of income will be made on
the date of its receipt by the Trust at the foreign exchange rate in effect on
that date. Therefore, if the value of the foreign currency falls relative to
the United States dollar between receipt of the income and the making of Trust
distributions, the risk of such decline will be borne by Holders. In addition,
the cost of converting such foreign currency to United States dollars would
also reduce the return to the Holder.
American Depositary Shares and Receipts. American Depositary Shares
("ADSs"), and receipts therefor ("ADRs"), are issued by an American bank or
trust company to evidence ownership of underlying securities issued by a
foreign corporation. These instruments may not necessarily be denominated in
the same currency as the securities into which they may be converted.
Generally, ADSs and ADRs are designed for use in the United States securities
markets. For purposes of this Prospectus, the term ADR generally includes
ADSs.
13
<PAGE>
TAXES
TAXATION OF THE TRUST
The Trust intends to qualify for and elect the special tax treatment
applicable to "regulated investment companies" under Section 851-855 of the
Internal Revenue Code of 1986, as amended (the "Code"). Qualification and
election as a "regulated investment company" involve no supervision of
investment policy or management by any government agency. If the Trust
qualifies as a "regulated investment company" and distributes to Holders 90%
or more of its taxable income without regard to its net capital gain (i.e.,
the excess of its net long-term capital gain over its net short-term capital
loss), it will not be subject to Federal income tax on any portion of its
taxable income (including any net capital gain) distributed to Holders in a
timely manner. In addition, the Trust will not be subject to the 4% excise tax
on certain undistributed income of "regulated investment companies" to the
extent it distributes to Holders in a timely manner at least 98% of its
taxable income (including any net capital gain). It is anticipated that the
Trust will not be subject to Federal income tax or the excise tax because the
Indenture requires the distribution of the Trust's taxable income (including
any net capital gain) in a timely manner. Although all or a portion of the
Trust's taxable income (including any net capital gain) for a taxable year may
be distributed shortly after the end of the calendar year, such a distribution
will be treated for Federal income tax purposes as having been received by
Holders during the calendar year.
DISTRIBUTIONS
Distribution to Holders of the Trust's dividend income and net short-term
capital gain in any year will be taxable as ordinary income to Holders to the
extent of the Trust's taxable income (without regard to its net capital gain)
for that year. Any excess will be treated as a return of capital and will
reduce the Holder's basis in his Units and, to the extent that such
distributions exceed his basis, will be treated as a gain from the sale of his
Units as discussed below. It is anticipated that substantially all of the
distributions of the Trust's dividend income and net short-term capital gain
will be taxable as ordinary income to Holders.
Distribution of the Trust's net capital gain (designated as capital gain
dividends by the Trust) will be taxable to Holders as long-term capital gain,
regardless of the length of time the Units have been held by a Holder. A
Holder will recognize a taxable gain or loss if the Holder sells or redeems
his Units. Any gain or loss arising from (or treated as arising from) the sale
or redemption of Units will be a capital gain or loss, except in the case of a
dealer in securities. Capital gains are currently taxed at the same rate as
ordinary income, however, the excess of net long-term capital gains over net
short-term capital losses may be taxed at a lower rate than ordinary income
for certain noncorporate taxpayers. A capital gain or loss is long-term if the
asset is held for more than one year and short-term if held for one year or
less. However, any capital loss on the sale or redemption of a Unit that a
Holder has held for six months or less will be a long-term capital loss to the
extent of any capital gain dividends previously distributed to the Holder by
the Trust. The deduction of capital losses is subject to limitations.
A distribution of Securities to a Holder upon redemption of his Units will
be a taxable event to such Holder, and that Holder will recognize taxable gain
or loss (equal to the difference between such Holder's tax basis in his Units
and the fair market value of Securities received in redemption), which will be
capital gain or loss upon such distribution, except in the case of a dealer in
securities. Holders should consult their own tax advisers in this regard.
Distributions that are taxable as ordinary income to Holders will constitute
dividends for Federal income tax purposes. To the extent that distributions
are appropriately designated by the Trust and are attributable to dividends
received by the Trust from domestic issuers with respect to whose Securities
the Trust satisfies the requirements for the dividends-received deduction,
such distributions will be eligible for the dividends-received deduction for
corporations (other than corporations such as "S" corporations which are not
eligible for such deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding company tax). The dividends-received deduction generally
is currently 70%. However, Congress from time to time considers proposals that
would adversely affect the after-tax return to investors who can take
advantage of the deduction. For example, on December 7, 1995, the Clinton
Administration proposed reducing the dividends received deduction to 50% for
dividends paid or accrued after January 31, 1996. Holders are urged to
consult their own tax advisers.
Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the corporate dividends-received deduction.
Depending upon the corporate Holder's circumstances (including whether it has
a 45-day holding period for its Units and whether its Units are debt
financed), these limitations may be applicable to dividends received by a
Holder from the Trust which would otherwise qualify for the dividends-received
deduction under the principles
14
<PAGE>
discussed above. Accordingly, Holders should consult their own tax advisers in
this regard. A corporate Holder should be aware that the receipt of dividend
income for which the dividends-received deduction is available may give rise
to an alternative minimum tax liability (or increase an existing liability)
because the dividend income will be included in the corporation's "adjusted
current earnings" for purposes of the adjustment to alternative minimum
taxable income required by Section 56(g) of the Code.
Holders will be taxed in the manner described above regardless of whether
distributions from the Trust are actually received by the Holder or are
reinvested pursuant to the Reinvestment Plan.
The Federal tax status of each year's distributions will be reported to
Holders and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Trust and to the tax treatment of
distributions by the Trust to U.S. Holders. Holders that are not United States
citizens or residents should be aware that distributions from the Trust will
generally be subject to a withholding tax of 30%, or a lower treaty rate, and
should consult their own tax advisers to determine whether investment in the
Trust is appropriate. Distributions may also be subject to state and local
taxation and Holders should consult their own tax advisers in this regard.
RETIREMENT PLANS
This Trust may be well suited for purchase by Individual Retirement Accounts
("IRAs"), Keogh plans, pension funds and other qualified retirement plans,
certain of which are briefly described below. Generally, capital gains and
income received in each of the foregoing plans are exempt from Federal
taxation. All distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special 5 or 10 year averaging
or tax-deferred rollover treatment. Holders of Units in IRAs, Keogh plans and
other tax-deferred retirement plans should consult their plan custodian as to
the appropriate disposition of distributions. Investors considering
participation in any such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any such plan. Such plans are offered by
brokerage firms, including the Sponsor of this Trust, and other financial
institutions. Fees and charges with respect to such plans may vary.
Retirement Plans for the Self-Employed -- Keogh Plans. Units of the Trust
may be purchased by retirement plans established pursuant to the Self-Employed
Individuals Tax Retirement Act of 1962 ("Keogh plans") for self-employed
individuals, partnerships or unincorporated companies. Qualified individuals
may generally make annual tax-deductible contributions up to the lesser of 20%
of annual compensation or $30,000 in a Keogh plan. The assets of the plan must
be held in a qualified trust or other arrangement which meets the requirements
of the Code. Generally there are penalties for premature distributions from a
plan before attainment of age 59 1/2, except in the case of a participant's
death or disability and certain other limited circumstances. Keogh plan
participants may also establish separate IRAs (see below) to which they may
contribute up to an additional $2,000 per year ($2,250 if a spousal account is
also established).
Individual Retirement Account -- IRA. Any individual (including one covered
by a qualified private or government retirement plan) can establish an IRA or
make use of a qualified IRA arrangement set up by an employer or union for the
purchase of Units of the Fund. Any individual can make a contribution to an
IRA equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of
earned income; such investment must be made in cash. However, the deductible
amount an individual may contribute will be reduced if the individual's
adjusted gross income exceeds $25,000 (in the case of a single individual),
$40,000 (in the case of married individuals filing a joint return) or $200 (in
the case of a married individual filing a separate return). A married
individual filing a separate return will not be entitled to any deduction if
the individual is covered by an employer-maintained retirement plan without
regard to whether the individual's spouse is an active participant in an
employer retirement plan. Unless nondeductible contributions were made in 1987
or a later year, all distributions from an IRA will be treated as ordinary
income but generally are eligible for tax-deferred rollover treatment. It
should be noted that certain transactions which are prohibited under Section
408 of the Code will cause all or a position of the amount in an IRA to be
deemed to be distributed and subject to tax at that time. A participant's
entire interest in an IRA must be, or commence to be, distributed to the
participant not later than the April 1 following the taxable year during which
the participant attains age 70 1/2. Taxable distributions made before
attainment of age 59 1/2, except in the case of a participant's death or
disability, or where the amount distributed is part of a series of
substantially equal periodic (at least annual) payments that are to be made
over the life expectancies of the participant and his or her beneficiary, are
generally subject to a surtax in an amount equal to 10% of the distribution.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing plan
established for employees of a corporation may purchase Units of the Trusts.
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PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is computed by adding to the
aggregate value of the Securities in the Trust (as determined by the Trustee)
and any cash held to purchase Securities, divided by the number of Units
outstanding, a sales charge of 4.167% thereof. This sales charge is equal to a
gross underwriting profit of 4.00% of the Public Offering Price and is subject
to change by the Sponsor at any time. For most investors the commissions to
purchase and sell the stocks directly would exceed the Trust's 4.00% sales
charge and expenses. Purchasers on the first business day after the Initial
Date of Deposit (the first day Units will be available to the public) will be
able to purchase Units at $1.00 each (including the sales charge). To allow
Units to be priced at $1.00, the Units outstanding as of the Evaluation Time
on the Initial Date of Deposit (all of which are held by the Sponsor) will be
split (or split in reverse). The Public Offering Price on any subsequent date
will vary from the Public Offering Price on the date of the initial Prospectus
(set forth under Investment Summary) in accordance with fluctuations in the
aggregate value of the underlying Securities. Units will be sold to investors
at the Public Offering Price next determined after receipt of the investor's
purchase order. A proportionate share of the amount in the Income Account
(described under Administration of the Trust -- Accounts and Distributions) on
the date of delivery of the Units to the purchaser is added to the Public
Offering Price.
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least 50,000 Units. Sales charges are
as follows:
<TABLE>
<CAPTION>
DEALER
PERCENT OF PERCENT OF CONCESSION
OFFERING NET AMOUNT AS PERCENT OF
NUMBER OF UNITS PRICE INVESTED OFFERING PRICE
- --------------- ---------- ---------- --------------
<S> <C> <C> <C>
Fewer than 50,000.......................... 4.00% 4.167% 3.00%
50,000 but less than 100,000............... 3.50 3.627 2.63
100,000 but less than 250,000.............. 3.00 3.093 2.25
250,000 but less than 500,000.............. 2.50 2.564 1.88
500,000 but less than 1,000,000............ 2.00 2.041 1.50
1,000,000 or more.......................... 1.50 1.523 1.13
</TABLE>
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units in the amounts stated. Purchases of Units will
not be aggregated with purchases of units of any other series of Equity Focus
Trusts. 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 to be registered
in the name of the purchaser for purposes of calculating the applicable sales
charge. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.
Valuation of Securities by the Trustee is made as of the close of business
on the New York Stock Exchange on each business day. Securities quoted on a
national stock exchange or Nasdaq National Market are valued at the closing
sales price, or, if no closing sales price exists, at the mean between the
closing bid and offer prices. Securities not so quoted are valued at the mean
between bid and offer prices.
Employees of the Sponsor and its subsidiaries, affiliates and employee-
related accounts may purchase Units pursuant to employee benefit plans, at a
price equal to the aggregate value of the Securities in the Trust divided by
the number of Units outstanding plus a reduced sales charge of .5%. Sales to
these plans involve less selling effort and expense than sales to employee
groups of other companies.
PUBLIC DISTRIBUTION
Units will be distributed to the public at the Public Offering Price through
the Sponsor, as sole underwriter of the Trust, and may also be distributed
through dealers.
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The Sponsor intends to qualify Units for sale in all states of the United
States where qualification is deemed necessary through the Sponsor and dealers
who are members of the National Association of Securities Dealers, Inc. Sales
to dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price per Unit to be established at the
time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 4.00% of the Public Offering Price (subject to
reduction on a graduated scale basis in the case of volume purchases).
On the Initial Date of Deposit, the Sponsor also realized a profit or loss
on deposit of the Securities into the Trust in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to the Trust (which is based on the aggregate value of the
Securities on the Initial Date of Deposit) and the purchase price of such
Securities to the Sponsor. On each subsequent deposit of Securities with
respect to the sale of additional Units to the public, the Sponsor similarly
may realize a profit or loss. The Sponsor also may 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 of the Public Offering Price
received by the Sponsor for Units. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement dates for purchase of Units may
be used in the Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25 per
1,000 Units for the administrative and other services which it provides during
the life of the Trust (see Expenses and Charges -- Fees). The Sponsor has not
participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolio on the Initial
Date of Deposit were acquired, except as indicated under Portfolio.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or the prices at which the Securities are sold after it redeems
such Units, as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial
Date of Deposit at prices, subject to change at any time, which will be
computed by adding (1) the aggregate value of Securities in the Trust, (2)
amounts in the Trust including dividends receivable on stocks trading ex-
dividend and (3) all other assets in the Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against the Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to the Trust and certain other
expenses and (c) amounts for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result of such computation by the
number of Units outstanding as of the date of computation. The Sponsor may
discontinue purchases of Units if the supply of Units exceeds demand or for
any other business reason. The Sponsor, of course, does not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. On any given day, however, the price offered by the
Sponsor for the purchase of Units shall be an amount not less than the
Redemption Price per Unit, based on the aggregate value of Securities in the
Trust on the date on which the Units are tendered for redemption (see
Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of
all series of unit trusts which it has in its inventory, the salability of
such units and its estimate of the time required to sell such units and
general market conditions. For a description of certain consequences of such
redemption for the remaining Holders, see Redemption.
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest
or Pacific Stock Exchanges, or in such other manner as may be acceptable to
the Trustee. 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.
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The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trust --Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for the Trust. While these minimum amounts may vary
from time to time in accordance with market conditions, the Sponsor believes
that the minimum amounts which would be specified would be a sufficient number
of shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
The Trustee will redeem Units "in kind" upon request of a redeeming Holder
if the Holder tenders at least 250,000 Units. Thus, a Holder will be able
(except during a period described in the last paragraph under this heading),
not later than the seventh calendar day following such tender (or if the
seventh calendar day is not a business day on the first business day prior
thereto), to receive in kind an amount per Unit equal to the Redemption Price
per Unit (computed as described in Redemption -- Computation of Redemption
Price per Unit) as determined as of the day of tender. The Redemption Price
per Unit for in kind distributions (the "In Kind Distribution") will take the
form of the distribution of whole and fractional shares of each of the
Securities in the amounts and the appropriate proportions represented by the
fractional undivided interest in the Trust of the Units tendered for
redemption (based upon the Redemption Price per Unit), except that with
respect to any foreign Security not held in ADR form, the value of that
Security will be distributed in cash.
In Kind Distributions on redemption of a minimum of 250,000 Units will be
held by the Trustee, as Distribution Agent, for the account, and for
disposition in accordance with the instructions of, the tendering Holder as
follows:
(a) If the tendering Holder requests cash payment, the Distribution Agent
shall sell the In Kind Distribution as of the close of business on the date of
tender and remit to the Holder not later than seven calendar days thereafter
the net proceeds of sale, after deducting brokerage commissions and transfer
taxes, if any, on the sale. The Distribution Agent may sell the Securities
through the Sponsor, and the Sponsor may charge brokerage commissions on those
sales. Since these proceeds will be net of brokerage commissions, Holders who
wish to receive cash for their Units should always offer them for sale to the
Sponsor in the secondary market before seeking redemption by the Trustee. The
Trustee may offer Units tendered for redemption and cash liquidation to it to
the Sponsor on behalf of any Holder to obtain this more favorable price for
the Holder.
(b) If the tendering Holder requests distribution in kind, the Distribution
Agent (or the Sponsor acting on behalf of the Distribution Agent) shall sell
any portion of the In Kind Distribution represented by fractional interests in
accordance with the foregoing and distribute net cash proceeds to the
tendering Holder together with certificates representing whole shares of each
of the Securities that comprise the In Kind Distribution. (The Trustee may,
however, offer the Sponsor the opportunity to purchase the tendered Units in
exchange for the numbers of shares of each Security and cash, if any, which
the Holder is entitled to receive. The tax consequences to the Holder would be
identical in either case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available (an
explanation of such Account is set forth under Administration of the Trust --
Accounts and Distributions). In addition, in implementing the redemption
procedures described above, the Trustee and the Distribution Agent shall make
any adjustments necessary to reflect differences between the Redemption Price
of the Units and the value of the In Kind Distribution as of the date of
tender. To the extent that Securities are distributed in kind, the size of the
Trust will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Washington's Birthday, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving or
Christmas. The right of redemption may be suspended and payment postponed for
any period, determined by the Securities and Exchange Commission ("SEC"), (1)
during which the New York Stock Exchange, Inc. is closed other than for
customary weekend and holiday closings, (2) during which the trading on that
Exchange is restricted or an emergency exists as a result of which disposal or
evaluation of the Securities is not reasonably practicable or (3) for such
periods as the SEC may by order permit.
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee as of the Evaluation
Time on June 30 and December 31 (or the last business day prior thereto), as
of the Evaluation Time next following the tender of any Unit for redemption on
any
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<PAGE>
Tender Day, and on any other business day desired by the Trustee or the
Sponsor, by adding (1) the aggregate value of the Securities determined by the
Trustee, (2) amounts in the Trust including dividends receivable on stocks
trading ex-dividend (with appropriate adjustments to reflect monthly
distributions made to Holders) and (3) all other assets in the Trust;
deducting therefrom the sum of (a) taxes or other governmental charges against
the Trust not previously deducted, (b) accrued fees and expenses of the
Trustee (including legal and auditing expenses), the Sponsor and counsel to
the Trust and certain other expenses and (c) amounts for distribution to
Holders of record as of a date prior to the evaluation; and dividing the
result of such computation by the number of Units outstanding as of the date
thereof.
The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: if the Securities are listed on a national
securities exchange or Nasdaq National Market, or a foreign securities
exchange, such evaluation shall generally be based on the closing sale price
on such exchange (unless the Trustee deems such price inappropriate as a basis
for evaluation) or, if there is no closing sale price on such exchange, at the
mean between the closing offering and bid side evaluation. If the Securities
are not so listed or, if so listed and the principal market therefor is other
than on such exchange, such evaluation shall generally be made by the Trustee
in good faith based at the mean between current bid and offer prices on the
over-the-counter market (unless the Trustee deems such mean inappropriate as a
basis for evaluation) or, if bid and offer prices are not available, (1) on
the basis of the mean between current bid and offer prices for comparable
securities, (2) by the Trustee's appraising the value of the Securities in
good faith at the mean between the bid side and the offer side of the market
or (3) by any combination thereof.
EXPENSES AND CHARGES
Initial Expenses -- All or some portion of the expenses incurred in
establishing the Trust, including the cost of the initial preparation,
printing and execution of the registration statement and the indenture,
Federal and State registration fees, the initial fees and expenses of the
Trustee, legal expenses and any other out-of-pocket expenses, will be paid by
the Trust and amortized over one year. Any balance of the expenses incurred in
establishing the Trust, as well as advertising and selling expenses, will be
paid by the Underwriters at no cost to the trust.
Fees -- The Trustee's and Sponsor's fees are set forth under Investment
Summary. The Trustee receives for its services as Trustee and Distribution
Agent payable in monthly installments, the amount set forth under Investment
Summary. The Trustee's fee (in respect of services as Trustee), payable
monthly, is based on the largest number of Units outstanding during the
preceding month. Certain regular and recurring expenses of the Trust,
including certain mailing and printing expenses, are borne by the Trust. The
Trustee receives benefits to the extent that it holds funds on deposit in the
various non-interest bearing accounts created under the Indenture. The
Sponsor's fee, which is earned for trust supervisory services, is based on the
largest number of Units outstanding during the year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under Investment Summary, may
exceed the actual costs of providing supervisory services for this Trust, but
at no time will the total amount the Sponsor receives for trust supervisory
services rendered to all series of Smith Barney Unit Trusts in any calendar
year exceed the aggregate cost to it of supplying these services in that year.
In addition, the Sponsor may also be reimbursed for bookkeeping or other
administrative services provided to the Trust in amounts not exceeding its
cost of providing those services. The fees of the Trustee and Sponsor may be
increased without approval of Holders in proportion to increases under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the Trust
(including legal and auditing expenses) and expenses of counsel designated by
the Sponsor, (3) various governmental charges and fees and expenses for
maintaining the Trust's registration statement current with Federal and State
authorities, (4) expenses and costs of action taken by the Sponsor, in its
discretion, or the Trustee, in its discretion, to protect the Trust and the
rights and interests of Holders (for example, expenses in exercising the
Trust's rights under the underlying Securities), (5) indemnification of the
Trustee for any losses, liabilities and expenses incurred without gross
negligence, bad faith or wilful misconduct on its part, (6) indemnification of
the Sponsor for any losses, liabilities and expenses incurred without gross
negligence, bad faith, wilful misconduct or reckless disregard of their duties
and (7) expenditures incurred in contacting Holders upon termination of the
Trust. The amounts of these charges and fees are secured by a lien on the
Trust.
Payment of Expenses -- Funds necessary for the payment of the above fees
will be obtained in the following manner: (1) first, by deductions from the
Income Account (see below) (which will reduce income distributions from the
Account); (2) to the extent the Income Account funds are insufficient, by
distribution from the Capital Account (see below); (3) to the
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<PAGE>
extent the Income and Capital Accounts are insufficient, by selling Securities
from the Portfolio and using the proceeds to pay the expenses (thereby
reducing the net asset value of the Units).
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable (see Description of the Trust --
Risk Factors), the Sponsor cannot provide any assurance that dividends will
be sufficient to meet any or all expenses of the Trust. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
ADMINISTRATION OF THE TRUST
RECORDS
The Trustee keeps records of the transactions of the Trust at its corporate
trust office including names, addresses and holdings of all Holders, a current
list of the Securities and a copy of the Indenture. Such records are available
to Holders for inspection at reasonable times during business hours.
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to the Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive his distribution
in cash, any income distribution for the Holder as of each Record Day will be
made on the following Distribution Day or shortly thereafter and shall consist
of an amount equal to the Holder's pro rata share of the distributable balance
in the Income Account as of such Record Day, after deducting estimated
expenses. The first distribution for persons who purchase Units between a
Record Day and a Distribution Day will be made on the second Distribution Day
following their purchase of Units. In addition, amounts from the Capital
Account may be distributed from time to time to Holders of record. The Trustee
may withdraw from the Income Account, from time to time, such amounts as it
deems requisite to establish a reserve for any taxes or other governmental
charges that may be payable out of the Trust. Funds held by the Trustee in the
various accounts created under the Indenture do not bear interest.
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market
value. Subject to any applicable regulations and plan restrictions, the
Sponsor intends to direct the Trustee to participate in any such plans to the
greatest extent possible taking into account the Securities held by the Trust
in the issuers offering such plans. In such event, the Indenture requires that
the Trustee forthwith distribute in kind to the Distribution Agent the
Securities received upon any such reinvestment to be held for the accounts of
the Holders in proportion to their respective interests in the Trust. It is
anticipated that Securities so distributed shall immediately be sold.
Therefore, the cash received upon such sale, after deducting sales commissions
and transfer taxes, if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trust are
generally made in brokerage transactions (as distinguished from principal
transactions) and the Sponsor or any of its affiliates may act as brokers
therein if the Trustee expects thereby to obtain the most favorable prices and
execution. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
The Trust is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. However, the Portfolio is
regularly reviewed. Traditional methods of investment management for a managed
fund (such as a mutual fund) typically involve frequent changes in a portfolio
of securities on the basis of economic, financial and market analyses. The
Portfolio of the Trust, however, will not be actively managed and therefore
the adverse financial condition of an issuer will not necessarily require the
sale of its Securities from the Portfolio. However, while it is the intention
of the Sponsor to continue the Trust's investment in the Securities in the
original proportions, it has the power but not the obligation to direct the
disposition of the Securities upon institution of certain legal proceedings,
default under certain documents adversely affecting future declaration or
payment of anticipated dividends, a substantial decline in price or the
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<PAGE>
occurrence of other materially adverse market or credit factors that, in the
opinion of the Sponsor, would make the retention of the Securities detrimental
to the interests of the Holders or if the Sponsor determines that the
Securities no longer meet the Trust's selection criteria (as described under
Description of the Trust--the Portfolio). The Sponsor is authorized under the
Indenture to direct the Trustee to reinvest the proceeds of any sale of
Securities not required for redemption of Units in additional Securities,
except that proceeds from sale of Securities no longer meeting the Trust's
selection criteria will be distributed to Holders.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion
it is in the best interest of the Holders of the Units to do so. In addition,
the Sponsor may instruct the Trustee to accept or reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities. Any Securities so received in exchange or
substitution will be held by the Trustee subject to the terms and conditions
of the Indenture to the same extent as Securities originally deposited
thereunder. If a Security is eliminated from the Portfolio the Sponsor is
authorized to reinvest the proceeds in Additional Securities.
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with
the deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. The Replacement Securities shall satisfy certain conditions
specified in the Indenture including, among other conditions, requirements
that the Replacement Securities shall be publicly-traded common stocks of
companies selected according to the same criteria as the stocks initially
selected and of the same quality; shall be issued by an issuer subject to or
exempt from the reporting requirements under Section 13 or 15(d) of the
Securities Exchange Act of 1934 (or similar provisions of law); shall not
result in more than 10% of the Trust consisting of securities of a single
issuer (or of two or more issuers which are Affiliated Persons as this term is
defined in the Investment Company Act of 1940) which are not registered and
are not being registered under the Securities Act of 1933 or result in the
Trust owning more than 50% of any single issue which has been registered under
the Securities Act of 1933; and shall have, in the opinion of the Sponsor,
characteristics sufficiently similar to the characteristics of the other
Securities in the Trust as to be acceptable for acquisition by the Trust.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trust by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase
Additional Securities or, Additional Securities in exchange for the
corresponding number of additional Units, provided that the original
proportionate relationship among the number of shares of each Security
established on the Initial Date of Deposit (the "Original Proportionate
Relationship") is maintained to the extent practicable.
With respect to deposits of Additional Securities or contracts to purchase
Additional Securities or cash (or a letter of credit) with instructions to
purchase Additional Securities in connection with creating additional Units of
the Trust following the Initial Date of Deposit, the Sponsor may specify
minimum amounts of additional Securities to 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 subsequent deposit or cannot be purchased at
reasonable prices or their purchase is prohibited or restricted by law,
regulation or policies applicable to the Trust or the Sponsor, the Sponsor may
(1) deposit cash or a letter of credit with instructions to purchase the
Security when practicable or (2) deposit (or instruct the Trustee to purchase)
Securities of one or more other issues originally deposited or (3) deposit (or
instruct the Trustee to purchase) a Replacement Security that will meet the
conditions described above.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. The Trustee
will also furnish to each person who at any time during the preceding year was
a Holder of record of Trust Units an annual statement (1) as to the Income
Account: income received; deductions for applicable taxes and for fees and
expenses of the Trustee and counsel, and certain other expenses; amounts paid
in connection with redemptions of Units and the balance remaining after such
distributions and deductions, expressed in each case both as a total dollar
amount and as a dollar amount per Unit outstanding on the last business day of
the year; (2) as to the Capital Account: the disposition of any Securities
(other than pursuant to In Kind Distributions) and the net proceeds received
therefrom; the results of In Kind Distributions in connection
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<PAGE>
with redemption of Units; deductions for payment of applicable taxes and for
fees and expenses of the Trustee and counsel and certain other expenses, to
the extent that the Income Account is insufficient, and the balance remaining
after such distribution and deductions, expressed both as a total dollar
amount and as a dollar amount per Unit outstanding on the last business day of
the year; (3) a list of the Securities held and the number of Units
outstanding on the last business day of the year; (4) the Redemption Price per
Unit based upon the computation thereof made on the last business day of the
year and (5) amounts actually distributed from the Income Account expressed
both as total dollar amounts and as dollar amounts per Unit outstanding on the
record dates for such distributions.
In order to enable them to comply with federal and state tax reporting
requirements, Holders will be furnished with evaluations of Securities upon
request to the Trustee.
EVIDENCE OF OWNERSHIP
If a purchaser of Units holds his Units through an account for his benefit
at the Sponsor, that purchaser will be the beneficial owner of the Units but
the Sponsor will be the record Holder. Units held in such an account with the
Sponsor are transferable by the beneficial owner to another account with the
Sponsor by notice to the Sponsor, payment of any sums required for taxes or
other governmental charges and compliance with any formalities required by the
Sponsor.
All record Holders of Units (including the Sponsor for any Units held by it
in accounts for the benefit of others) are required to hold their Units in
uncertificated form. The Trustee will credit a record Holder's account with
the number of Units held by the Holder. If any Units are not held in an
account with the Sponsor, or if Units so held are to be transferred outside
such an account, such Units are transferable by the Trustee, with a payment of
any sums payable for taxes or other governmental charges imposed upon these
transactions and compliance with the formalities necessary to redeem Units.
AMENDMENT AND TERMINATION
The Sponsor may amend the Indenture, with the consent of the Trustee but
without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the
SEC or any successor governmental agency and (3) to make such other provisions
as shall not materially adversely affect the interest of the Holders (as
determined in good faith by the Sponsor). The Indenture may also be amended in
any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the Holders of 51% of the Units, provided
that no such amendment or waiver will reduce the interest in the Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders. The Indenture will terminate upon the earlier of the disposition of
the last Security held thereunder or the Mandatory Termination Date specified
under Investment Summary. The Indenture may also be terminated by the Sponsor
if the value of the Trust is less than the minimum value set forth under
Investment Summary (as described under Description of the Trust -- Risk
Factors) and may be terminated at any time by written instrument executed by
the Sponsor and consented to by Holders of 51% of the Units. The Trustee shall
deliver written notice of any termination to each Holder within a reasonable
period of time prior to the termination. Within a reasonable period of time
after such termination, the Trustee must sell all of the Securities then held
and distribute to each Holder, after deductions of accrued and unpaid fees,
taxes and governmental and other charges, such Holder's interest in the Income
and Capital Accounts. Such distribution will normally be made by mailing a
check in the amount of each Holder's interest in such accounts to the address
of such Holder appearing on the record books of the Trustee.
REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Smith Barney Inc. or directly in the name of the Holder, unless
the Holder notifies his financial consultant at Smith Barney Inc. or the
Trustee, respectively, to the contrary, will be reinvested automatically in
additional Units of the Trust at no extra charge pursuant to the Trust's
"Reinvestment Plan". If the Holder does not wish to participate in the
Reinvestment Plan, the Holder must notify his financial consultant at Smith
Barney Inc. or the Trustee at least ten business days prior to the
Distribution Day to which that election is to apply. The election may be
modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of the Trust at the Sponsor's Repurchase Price (the
net asset value per Unit without any sales charge) in effect at the close of
business on the Distribution Day. These may be either previously issued Units
repurchased by the Sponsor or newly issued Units created upon the deposit of
additional Securities in the Trust (see Description of the Trust -- Structure
and Offering). Each participant will receive an account statement reflecting
any purchase or sale of Units under the Reinvestment Plan.
22
<PAGE>
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to the Trust. The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units
at any time, or by the Sponsor without the consent of any of the Holders if
the Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor. In case of such
resignation or removal the Sponsor is to use its best efforts to appoint a
successor promptly and if upon resignation of the Trustee no successor has
accepted appointment within thirty days after notification, the Trustee may
apply to a court of competent jurisdiction for the appointment of a successor.
The Trustee shall be under no liability for any action taken in good faith in
reliance on prima facie properly executed documents or for the disposition of
monies or Securities, nor shall it be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Security. This
provision, however, shall not protect the Trustee in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
SPONSOR
The Sponsor may resign at any time if a successor Sponsor is appointed by
the Trustee in accordance with the Indenture. Any new Sponsor must have a
minimum net worth of $2,000,000 and must serve at rates of compensation deemed
by the Trustee to be reasonable and as may not exceed amounts prescribed by
the SEC. If the Sponsor fails to perform its duties or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may (1) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and as may not exceed
amounts prescribed by the SEC, (2) terminate the Indenture and liquidate the
Trust or (3) continue to act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trust or to the Holders for
taking any action or for refraining from taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Sponsor may transfer all or substantially
all of its assets to a corporation or partnership which carries on its
business and duly assumes all of its obligations under the Indenture and in
such event it shall be relieved of all further liability under the Indenture.
MISCELLANEOUS
TRUSTEE
The name and address of the Trustee are shown on the back cover of this
prospectus. The Trustee is subject to supervision and examination by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System. In connection with the
storage and handling of certain Securities deposited in the Trust, the Trustee
may use the services of The Depository Trust Company. These services may
include safekeeping of the Securities, computer book-entry transfer and
institutional delivery services. The Depository Trust Company is a limited
purpose trust company organized under the Banking Law of the State of New
York, a member of the Federal Reserve System and a clearing agency registered
under the Securities Exchange Act of 1934.
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsor.
23
<PAGE>
AUDITORS
The Statement of Financial Condition and the Portfolio included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors,
as indicated in their report with respect thereto, and is so included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
SPONSOR
Smith Barney Inc. ("Smith Barney"), was incorporated in Delaware in 1960 and
traces its history through predecessor partnerships to 1873. Smith Barney, an
investment banking and securities broker-dealer firm, is a member of the New
York Stock Exchange, Inc. and other major securities and commodities
exchanges, the National Association of Securities Dealers, Inc. and the
Securities Industry Association. Smith Barney is an indirect wholly-owned
subsidiary of The Travelers Inc. The Sponsor or an affiliate is investment
adviser, principal underwriter or distributor of more than 60 open-end
investment companies and investment manager of 12 closed-end investment
companies. Smith Barney also sponsors all Series of Corporate Securities
Trust, Government Securities Trust, Harris, Upham Tax-Exempt Fund and Tax
Exempt Securities Trust, and acts as co-sponsor of most Series of Defined
Asset Funds.
24
<PAGE>
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<PAGE>
EQUITY FOCUS
TRUSTS
-------------------------------------------
A SMITH BARNEY UNIT TRUST
THEME INVESTING PORTFOLIO
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
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INDEX
<TABLE>
<S> <C>
Investment Summary 2
Report of Independent Auditors 7
Statement of Financial Condition 7
Portfolio 8
Description of the Trust 10
Risk Factors 12
Taxes 14
Public Sale of Units 16
Market for Units 17
Redemption 17
Expenses and Charges 19
Administration of the Trust 20
Reinvestment Plan 22
Resignation, Removal and Limitations on Liability 23
Miscellaneous 23
</TABLE>
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<TABLE>
<CAPTION>
SPONSOR: TRUSTEE: INDEPENDENT AUDITORS:
<S> <C> <C>
Smith Barney Inc. The Chase Manhattan Bank, N.A. KPMG Peat Marwick LLP
388 Greenwich Street (A National Banking Association) 345 Park Avenue
23rd Floor Customer Service Retail Department New York, New York 10154
New York, New York 10013 770 Broadway--7th Floor
(800) 223-2532 New York, New York 10003-9598
(800) 323-1508
</TABLE>
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SMITH BARNEY
-------------------------------
A Member of TravelersGroup [ART]
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THIS INVESTMENT COMPANY NOT CONTAINED IN THIS PROSPECTUS; AND
ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
UT6239
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositor is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
<TABLE>
<CAPTION>
SEC FILE OR
IDENTIFICATION NUMBER
---------------------
<C> <S> <C>
I. Bonding Arrangements and Date of Organization of
the Depositor filed pursuant to Items A and B of
Part II of the Registration Statement on Form S-6
under the Securities Act of 1933: 2-67446
II. Information as to Officers and Directors of the
Depositor filed pursuant to Schedules A and D of
Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934: 8-12324
III. Charter documents of the Depositor filed as
Exhibits to the Registration Statement on Form S-
6 under the Securities Act of 1933 (Charter, By-
Laws): 2-52898
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsor and Trustee are as follows:
Smith Barney Inc. 13-2518466
The Chase Manhattan Bank, N.A., Trustee 13-2633612
</TABLE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
THE REGISTRATION STATEMENT ON FORM S-6 IS COMPRISED OF THE FOLLOWING PAPERS
AND DOCUMENTS:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of The Uncommon Values
Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The undertaking to file reports.
The signatures.
Written Consents of the following persons:
KPMG Peat Marwick LLP (included in Exhibit 5.1)
Davis Polk & Wardwell (included in Exhibit 3.1)
The following exhibits:
<TABLE>
<C> <S>
*1.1 -- Form of Reference Trust Indenture.
2.1 -- Form of Standard Terms and Conditions of Trust (incorporated by
reference to Exhibit 2.1 to the Registration Statement of The
Uncommon Values Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
*3.1 -- Opinion of counsel as to the legality of securities being issued
including their consent to the use of their name under the heading
"Miscellaneous --Legal Opinion" in the Prospectus.
*5.1 -- Consent of KPMG Peat Marwick LLP to the use of their name under the
heading "Miscellaneous --Auditors" in the Prospectus.
</TABLE>
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* To be filed by amendment.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of New York and State of New
York on the 22nd day of March 1996.
A majority of the Board of Directors of Smith Barney Inc. has signed this
Registration Statement pursuant to Powers of Attorney authorizing the person
signing this Registration Statement to do so on behalf of such members.
SMITH BARNEY UNIT TRUSTS (REGISTRANT)
SMITH BARNEY INC.
(DEPOSITOR)
By the following persons* who constitute a majority of the Board of
Directors of Smith Barney Inc.:
Steven D. Black
James S. Boshart III
Robert A. Case
James Dimon
Robert Druskin
Jeffrey B. Lane
Robert H. Lessin
/s/ Kevin Kopczynski
By__________________________________________
Kevin Kopczynski
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
- --------
* Pursuant to Powers of Attorney filed under the 1933 Act file Numbers
33-56722 and 33-51999.
II-3
