<PAGE>
Registration No. 333-01901
S E C U R I T I E S A N D E X C H A N G E C O M M I
S S I O
N
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
to
F O R M 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
(A UNIT INVESTMENT TRUST)
B.
Names of Depositors:
SMITH BARNEY INC.
<TABLE>
<S> <C>
C. Complete address of depositor's principal executive
office:
388 Greenwich St.
New York, New York 10013
D. Names and complete address of agent for service:
LAURIE A. HESSLEIN
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
It is proposed that this filing will become effective April
10,1997
<PAGE>
</TABLE>
EQUITY FOCUS TRUSTS
Theme Investing Portfolio
CROSS-REFERENCE SHEET
Pursuant to Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction
as to the Prospectus in Form S-6)
<TABLE>
Form N-89B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
<C> <S> <C>
1. . . . . . . . . (a) Name of trust Prospectus front cover
(b) Title of securities issued . .
2.Name and address of each depositor Sponsors:
Prospectus back
cover
3. . . . Name and address of trustee Trustee
4.Name and address of each principal
underwriterSponsors:
Prospectus back cover
5. . .State of organization of trust Tax Exempt Securities
Trust
6.Execution and termination of trust agreementTax
Exempt
Securities Trust - The
Trust:
Amendment and Termination
of the Trust Agreement 7. .
. . . . . . . . Changes of name *
8. . . . . . . . . . . . Fiscal year *
9. . . . . . . . . . . . .Litigation *
II. General Description of the Trust and
Securities of the Trust
10.(a) Registered or bearer securities Rights of Unit
Holders
(b) Cumulative or distributive securities
(c) Redemption . . . . . . . . . .
(d) Conversion, transfer, etc. . .
(e) Periodic payment plan. . . . . *
(f) Voting rights. . . . . . . . .
(g) Notice to certificate holders Rights of Unit Holders -
Reports and Records:
Sponsors -
Responsibility: Trustee -
Resignation: Amendment
and Termination of the
Trust Agreement -
Amendment
(h) Consents required. . . . . . . Sponsors - Responsibility:
Amendment and Termination
of the Trust Agreement (i) Other
provisions . . . . . . . Tax Exempt Securities Trust - Tax
Status
11.Type of securities comprising units Prospectus front
cover:
Tax Exempt Securities
Trust - Portfolio
12.Certain information regarding periodic
payment certificates. . . . . . . *
13.. .(a) Load, fees, expenses, etc. Prospectus front
cover:
Summary of Essential
Information; Public
Offering - Offering
Price; Public Offering -
Sponsors' and
Underwriters' Profits:
Tax Exempt Securities
Trust - Expenses and
Charges
<PAGE>
Form N-89B-2 Form S-6
Item Number Heading in Prospectus
II. General Description of the Trust and
Securities of the Trust
<C> <S> <C>
(b) Certain information regarding periodic
payment certificates . . . . *
(c) Certain percentages. . . . . . Public Offering - Offering
Price
(d) Certain other fees, etc, payable by holders
Rights of Unit Holders - Certificates
(e) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons . . . . . . Public Offering - Sponsors'
and Underwriters' Profits:
Rights of Unit Holders -
Redemption of Units -
Purchase by the Sponsors of
Units Tendered for
Redemption
(f) Ratio of annual charges to income*
14.. .Issuance of trust's securities Tax Exempt Securities
Trust - The Trust: Rights
of Unit Holders -
Certificates
15.Receipt and handling of payments from purchasers*
16.Acquisition and disposition of underlying
securities . . . . . . . . . . . . Tax Exempt Securities Trust
- Portfolio: Sponsors -
Responsibility
17.. . . . .Withdrawal or redemption Rights of Unit
Holders -
Redemption of Units
18.(a) Receipt, custody and disposition of incomeRights of
Units
Holders - Distribution of
Interest and Principal:
Rights of Unit Holders -
Reports and Records
(b) Reinvestment of distributions *
(c) Reserves or special funds. . . Rights of Unit Holders -
Distribution of Interest
and Principal: Tax Exempt
Securities Trust - Expenses
and Charges - Other Charges (d) Schedule
of
distributions. . . *
19.. . Records, accounts and reports Rights of Unit
Holders -
Reports and Records:
Rights of Unit Holders -
Distribution of Interest
and Principal
20.Certain miscellaneous provisions of trust
agreementAmendment
and Termination of the Trust
(a) Amendment. . . . . . . . . . . Agreement: Trustee -
Resignation: Trustee -
(b) Termination . . . . . . . . . Resignation: Trustee -
Limitations on Liability:
(c) and (d) Trustee, removal and successorSponsors -
Responsibility: Sponsors - Resignation
(e) and (f) Depositors, removal and successor
21.. . . . Loans to security holders *
22.. . . . .Limitations on liability Sponsors - Limitations on
Liability: Trustee -
Limitations on Liability:
Tax Exempt Securities
Trust - Portfolio
23.. . . . . . .Bonding arrangements *
24.Other material provisions of trust agreement*
______
* Inapplicable, answer negative or not required.
<PAGE>
<PAGE> Form N-89B-2 Form S-6
Item Number Heading in Prospectus
III. Organization, Personnel and
Affiliated Persons of Depositor
<C> <S> <C>
25.. . . .Organization of depositors Sponsors
26.. . . Fees received by depositors *
27.. . . . . .Business of depositors Sponsors
28.Certain information as to officials and
affiliated persons of depositors [Contents of
Registration
Statement]
29.. Voting securities of depositors *
30.. .Persons controlling depositors *
31.Payments by depositor for certain services
rendered to trust . . . . . . . . *
32.Payments by depositors for certain other services
rendered to trust . . . . . . . . *
33.Remuneration of employees of depositors for
certain services rendered to trust *
34.Remuneration of other persons for certain services
rendered to trust . . . . . . . . *
IV. General Description of the Trust and
Securities of the Trust
35.Distribution of trust's securities by statesPublic
Offering -
Distribution of Units
36.Suspension of sales of trust's securities*
37.Revocation of authority to distribute*
38.. . . .(a) Method of distribution Public Offering -
Distribution of Units
(b) Underwriting agreements. . . .
(c) Selling agreements . . . . . .
39.(a) Organization of principal underwritersSponsors
(b) N.A.S.D. membership of principal underwriters
40.Certain fees received by principal underwriters*
41.(a) Business of principal underwritersSponsors
(b) Branch offices of principal underwriters*
(c) Salesmen of principal underwriters*
42.Ownership of trust's securities by certain persons*
43.Certain brokerage commissions received by principal
underwriters. . . . . . . . . . . *
44.. . . . . (a) Method of valuation Prospectus front
cover:
Public Offering -
Offering Price: Public
Offering - Distribution
of Units
(b) Schedule as to offering price *
(c) Variation in offering price to certain personsPublic
Offering - Distribution of Units
45.. Suspension of redemption rights *
46.. . . . .(a) Redemption Valuation Rights of Unit Holders
- -
Redemption of Units -
Computation of Redemption
Price per Unit
(b) Schedule as to redemption price *
47.Maintenance of position in underlying securities
Public Offering - Market for Units: Rights of Unit Holders
- -
Redemption of Units - Purchase by the Sponsors of Units
tendered for Redemption; Rights of Unit Holders -
Redemption
of Units - Computation of Redemption Price per Unit
______
* Inapplicable, answer negative or not required.<PAGE>
<PAGE> Form N-89B-2 Form S-6
Item Number Heading in Prospectus
V. Information Concerning the Trustee
or Custodian
<C> <S> <C>
48.Organization and regulation of trusteeTrustee
49.. . .Fees and expenses of trustee Tax Exempt
Securities
Trust - Expenses and
Charges
50.. . . . . . . . . .Trustee's lien Tax Exempt Securities
Trust - Expenses and
Charges - Other Charges
VI. Information Concerning Insurance of
Holders of Securities
51.Insurance of holders of trust's securities*
VI. Policy of Registrant
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying
securitiesProspectus
front cover: Sponsors-Responsibility
(b)Transactions involving elimination of
underlying securities . . . . . *
(c)Policy regarding substitution or elimination
of underlying securities. . . . Sponsors - Responsibility
(d)Fundamental policy not otherwise covered*
53. Tax status of trust . . . . . . Prospectus front cover:
Tax
Exempt Securities Trust -
Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during last ten years*
55. . . . . . . . . . . . . . . . . *
56. Certain information regarding periodic payment
securities . . . . . . . . . . . . *
57. . . . . . . . . . . . . . . . . *
58. . . . . . . . . . . . . . . . . *
59. Financial statements (Instruction 1(c) to form S-6)
Statement of Financial Condition of The Tax Exempt
Securities
Trust
______
* Inapplicable, answer negative or not required.
<PAGE>
</TABLE>
EQUITY FOCUS
TRUSTS
T h e m e I n v e s t i n g P o r t f o l i o
A Smith Barney Unit Investment Trust
SMITH BARNEY
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 29 equity securities of companies which have been
given the highest investment rating by Smith Barney's Equity
Research Division and which have authorized programs to
repurchase shares of their own common stock or are likely to
expand their programs to buy back shares in the future. 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.
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.
Inquiries should be directed to the Sponsor at (212) 816-4000.
Prospectus dated April 10, 1997
Read and retain this Prospectus for future reference
<PAGE>
<PAGE>
<TABLE>
SMITH BARNEY INC. UNIT TRUSTS,
EQUITY FOCUS TRUSTS--THEME INVESTING
PORTFOLIO
INVESTMENT SUMMARY AS OF APRIL 8,
1997+ (the Evaluation Date)
<S><C>
SPONSOR
Smith Barney Inc.
NUMBER OF UNITS -22,941,000
FRACTIONAL UNDIVIDED
INTEREST IN TRUST
REPRESENTED BY EACH UNIT -1/22,941,000th
PUBLIC OFFERING PRICE
(per 1,000 Units)
Aggregate value of Securities in
Trust$1,113.35
Divided by 1,000,000 Units
(times 1,000)$1,113.35
Plus sales charge of 3.00% of
Public Offering Price
(3.093% of the net amount
invested in Securities)* 34.43
Public Offering Price per
1,000 Units$1,147.78
Plus the amount per 1,000 Units
in the Income and Capital
Accounts (see Description of
the Trust - Income) 4.78
Total (per 1,000 Units)$1,152.56
SPONSOR'S REPURCHASE PRICE
and REDEMPTION PRICE per 1,000
UNITS** (based on underlying
Securities)$1,118.13
MONTHLY INCOME DISTRIBUTIONS
If the balance in the Capital Account (excluding)
amounts reserved to purchase Securities) on any
Record Day exceeds $5.00 per 1,000 Units, a
distribution of net income and the balance in the
Capital Account will be made on the Distribution
Day to Holders of record on that Record Day.
Otherwise net income will only be distributed
annually on November 25th to Holders of record
on November 10th. In addition, in order to meet
certain tax requirements, a special distribution
of income, including capital gains, may be paid to
Holders of record as of a date in December. All
distributions 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.
TRUSTEE'S ANNUAL FEE
$.80 per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAYS
The 10th of each month
DISTRIBUTION DAYS
The 25th day of each month and upon termination and
liquidation of the Trust. (See Distributions).
EVALUATION TIME
The close of trading on the New York Stock Exchange (currently
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
April 30, 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.
________
+Valuation of Securities is based on the market value per share as
of April 8, 1997, as more fully explained in the Notes to Portfolio.
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 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 at least 250,000 Units 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.
</TABLE>
2<PAGE>
<PAGE>
EQUITY FOCUS TRUSTS-THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF APRIL 8, 1997
(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 authorized programs 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. Some of the companies also pay attractive dividends.
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 29 common stocks issued by
companies engaged primarily in the following industries: banks/
financial institutions, 7; insurance, 4; conglomerates, 3; metals, 3;
computers, 2; pharmaceuticals, 2; airlines, 1; automobiles, 1;
chemicals, 1; imaging technology, 1; machinery/equipment, 1; oil,
1; pollution control, 1; restaurants, 1. Partner Re Ltd. is a non-U.S.
issuer. 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.
However, the Trust may be considered to be concentrated in stocks
of banks, other financial institutions and insurance companies. (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 15% 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 47% of the value of the
Portfolio have been ranked Moderate Risk, described as "moderately
predictable earnings/dividends; moderate price volatility"; Securities
representing approximately 30% 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 8% of the value of
the Portfolio have been ranked Speculative, described as
"exceptionally low predictability of earnings/dividends; highest risk
of price volatility."<PAGE>
<PAGE>
EQUITY FOCUS TRUSTS-THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF APRIL 8, 1997
(CONTINUED)
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 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 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. <PAGE>
<PAGE>
EQUITY FOCUS TRUSTS-THEME INVESTING PORTFOLIO
INVESTMENT SUMMARY AS OF APRIL 8, 1997
(CONTINUED)
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.
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 3.00%* of the Public
Offering Price; this results in a sales charge of 3.093%* 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.
<PAGE>
<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 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 this trend is not
based upon an industry group in common. In fact, the companies
represent a broad spectrum of industry sectors-from banking to
pharmaceuticals to equipment manufacturing.
What they do have in common is surplus cash flow derived from
their business operations or a strong equity capital base. Yet it is not
these factors alone that define our investing theme. The common
link of our Theme Investing Portfolio ("TIP") selections is a
company's use of this cash or capital capacity:
Theme Investing Portfolio
The companies in the Theme Investing Portfolio are using free cash
flow or their equity capital base to purchase significant amounts 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 number of a company's
common stock outstanding. When combined with growth in net
income, a reduction in the number of shares outstanding can enhance
a company's earnings per share. In this way, share repurchase
programs can add value to a company's stock.
<PAGE>
<PAGE>
How We Selected the Portfolio (in April 1996)
First: Our analysts screened the 1,400+ companies we follow to
identify those recommendations ranked "1" on Smith Barney's
investment ranking system, as outlined under Portfolio.
Second:Then, we identified companies that have implemented
programs to repurchase shares of their own common stock.
Our selections for "TIP" are limited to companies whose shares
purchased to date, plus those authorized for future purchase, are
projected to total more than 5% of common shares outstanding.
The Theme Investing Series:
How to Invest
Through this Series, you can take a "portfolio approach" and invest
in 29 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, some 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. Moreover, the Trust's concentration in the
stocks of financial institutions could involve certain
risks.
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. <PAGE>
Theme Investing Portfolio
Key Features at a Glance
Professional Selection & Supervision
The holdings of the portfolio were identified by Smith
Barney Equity Research Division, comprised of 98
analysts who follow 95 industries or stock areas of the
market.
A Convenient and Cost Effective Package
You can invest for as little as $1,000 or $250 in an
Individual Retirement Account or another tax-deferred
retirement plan. Dividends are automatically
reinvested, or you can receive distributions in a
convenient 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>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Unit Holders, Sponsor and Trustee of
Smith Barney Unit Trusts, Equity Focus Trusts
Theme Investing Portfolio:
We have audited the accompanying balance sheet of Smith Barney
Unit Trusts, Equity Focus Trusts Theme Investing Portfolio including
the portfolio of securities, as of February 28, 1997, and the related
statements of operations and changes in net assets and the
supplemental per-unit data for the period April 9, 1996 (date of
deposit) to February 28, 1997. These financial statements and per-
unit data are the responsibility of the Trustee (see Note 6). Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of February 28, 1997 by
correspondence with the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Smith Barney
Unit Trusts, Equity Focus Trusts Bank & Thrift Series: as of
September 30, 1996, and the results of its operations and changes in
its net assets and the supplemental per-unit data for the period April
9, 1996 (date of deposit) to February 28, 1997, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
New York, New York
April 7, 1997
<PAGE>
TABLE
<PAGE>
SMITH BARNEY UNIT TRUSTS,
EQUITY FOCUS TRUST
THEME INVESTING PORTFOLIO
Statement of Assets and Liabilities
February 28, 1997
<S><C>
Assets:
Investments in securities, at value (cost $23,216,414)
(see accopanying schedule of portfolio investments)$28,377,314
Dividends receivable81,092
Organizational costs 102,641
Total assets28,561,047
Liabilities:
Accrued fees and expenses91,621
Cash overdraft 40,849
Total liabilities 132,470
Net assets at February 28, 1997 equivalent
to $1,153.94 per 1,000 units on 24,636,000
units of fractional undivided interest
outstanding$28,428,577
Net assets consist of:
Cost of 26,640,000 units at date of deposit25,064,867
Sales charge 40,189
25,024,678
Accumulated cost of equity securities sold(1,808,264)
Net unrealized appreciation5,160,900
Distributions in excess of net investment income 39,292
Undistributed proceeds for equity securities sold 11,971
Net assets$28,428,577
See accompanying notes to financial statements.
<PAGE>
9<PAGE>
SMITH BARNEY UNIT TRUSTS,
EQUITY FOCUS TRUST
THEME INVESTING PORTFOLIO
Statement of Operations
Period from April 9, 1996 (Date of Deposit)
to February 28, 1997
<S><C>
Income:
Dividend income$ 452,057
Total income452,057
Total expenses (note 3) 47,650
Investment income - net 404,407
Realized and unrealized gain on investments:
Net realized gain 38,134
Increase (decrease) in unrealized appreciation
of investments - net5,160,900
Net gain on investments5,199,034
Net increase in net assets resulting
from operations$5,603,441
See accompanying notes to financial statements.
<PAGE>
10<PAGE>
SMITH BARNEY UNIT TRUSTS,
EQUITY FOCUS TRUST
THEME INVESTING PORTFOLIO
Statement of Changes in Net Assets
Period from April 9, 1996 (Date of Deposit)
to February 28, 1997
Operations:
Investment income - net$404,407
Net realized gain 38,134
Increase in unrealized appreciation of
investments - net 5,160,900
Net increase in net assets resulting
from operations 5,603,441
Initial deposits:
Principal24,060,215
Income 24,060,215
Distributions to Unitholders (note 2):
Investment income - net 360,068
Total distributions 360,068
Redemptions of units (note 2):
Principal 1,834,427
Investment income - net 5,047
Total redemptions 1,839,474
Increase in net assets 27,464,114
Net assets:
Beginning of period 964,463
End of period$28,428,577
Other information:
Distribution in excess of net investment
income, end of period$39,292
Units redeemed2,004,000 units
See accompanying notes to financial statements.
<PAGE>
11<PAGE>
PORTFOLIO OF SMITH BARNEY INC. UNIT
TRUSTS,
EQUITY FOCUS TRUSTS - THEME
INVESTING PORTFOLIO
AS OF FEBRUARY 28, 1997
<S> <C><C>
StockNumberMarket
SecuritiesSymbolof Shares(1)Value
1.Ahmanson (HF) & Co.#AHM22,005$ 904,955.62
2.AK Steel HoldingAKS24,450880,200.00
3.Aluminum Company of AmericaAA14,6701,045,237.50
4.Amgen, Inc.*AMGN17,1151,046,154.37
5.BankAmerica Corp.#BAC7,335834,356.25
6.Bank of BostonBKB9,780737,167.50
7.Caterpillar Inc.CAT14,6701,149,761.25
8.Chase Manhattan Corp.#CMB7,335734,416.87
9.Chrysler Corporation#C34,2301,159,541.25
10.Cytec IndustriesCYT36,6751,453,246.88
11.Dresser IndustriesDI31,785965,469.38
12.Eastman KodakEK14,6701,314,798.75
13.EMC Corp.#EMC44,0101,584,360.00
14.General ElectricGE12,2251,257,646.87
15.General Re Corp.GRN3,674623,202.25
16.IBM Corporation#IBM7,3351,054,406.25
17.McDonald's Corp.MCD19,560845,970.00
18.Merck & Co.MRK17,1151,574,580.00
19.Mesa Air Group*#MESA85,575545,540.63
20.Morgan Stanley Group#MS12,225771,703.13
21.Morton InternationalMII26,8951,109,418.75
22.National City Corp.#NCC14,670740,835.00
23.Nationsbank#NB14,670878,366.25
24.PartnerRe Ltd.#PTREF17,115564,795.00
25.Phelps DodgePD14,6701,048,905.00
26.Philip Morris Cos.MO9,7801,321,522.50
27.St. Paul Cos.SPC9,780660,150.00
28.Transamerica Corp.TA7,335642,729.38
29.WMX TechnologiesWMX 29,340 927,877.50
TOTALS580,694$28,377,314.13
(1)Per 1,000,000 Units.
(2)Valuation of Securities by the Trustee 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.
</TABLE>
<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. <PAGE>
analysts, who currently
follow equities issued by more than 1,400 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 at least 5% of the outstanding shares of their own
common stock or as likely to expand their existing programs to buy
back shares in the future. Smith Barney's research analysts believe
that the presence of a disciplined share buyback program could
suggest a timely theme for equity investment. These programs
suggest management confidence in a company's prospects. In
reducing the number of shares outstanding, when combined with
growth in net income, a strong buyback program can enhance
earnings per share and add value to the stock. With Smith Barney's
top investment ranking, the selections are limited to companies
believed to be well-managed with prospects for capital
appreciation. All of the equity securities held by the Trust are rated
by Smith Barney's Equity Research Division in the highest
investment ranking category. These investment rankings normally
pertain to an outlook for a 12-18 month period. However, if as
Smith Barney analysts forecast, the companies in the portfolio
continue their share buyback programs, Smith Barney research
believes these companies have attractive potential for capital
appreciation over the life of the Trust. 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. According to Ibbotson Associates, during the period 1926
through 1995, the total annual 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.
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.
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 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.
Banks and Other Financial Institutions. The Trust may be
considered to be concentrated in Securities of banks and other
financial institutions, including insurance companies and, as a
result, the value of the Units of the Trust may be susceptible to the
risk of such concentration and to factors affecting this industry
("Banking Industry"). While the factors affecting this industry are
varied and complex, the risks of investment in the industry outlined
below should be noted.
The activities of U.S. banks and thrifts, and their holding
companies, are subject to comprehensive federal and state
regulation, which regulation is expected to continue to change over
the life of the Trust. The enactment of any new legislation or
regulations, or any change in interpretation or enforcement of
existing laws or regulations, may affect the profitability of
participants in the Banking Industry.
Significant developments in the 1980s included: dramatic increases
in unregulated interest rates, followed by the deregulation of
deposit interest rates, widespread insolvencies in the thrift industry,
the relaxation of thrift financial reporting requirements, and
expansion of the permissible activities of thrifts; regional bank
holding company expansion; the subsequent tightening of
regulations when the thrifts did not recover; extensive downgrades
of banks and bank holding companies due primarily to deterioration
in asset quality and the attendant impact on earnings and capital;
and finally the enactment of significant federal legislation to
strengthen regulation of banks, savings banks and thrifts, to
recapitalize the insolvent Savings Association Insurance Fund
(SAIF, formerly, the Federal Savings and Loan Insurance
Corporation) and the weakened Bank Insurance Fund (BIF,
formerly the Permanent Insurance Fund of the Federal Deposit
Insurance Corporation) and to restructure the Banking Industry.
This legislation resulted in the seizure of many failed thrifts (and a
significant shrinkage of the thrift industry in the early 1990s).
Simultaneously, annual failures of federally insured banks peaked,
according to the Federal Deposit Insurance Corporation, at 168 in
1990 (the total assets of such failed banks peaked in 1991 at $64.3
billion). Additional federal legislation in 1991 mandated early and
aggressive regulatory intervention for problem institutions and
tightened the regulation of foreign banks. Thereafter the number of
insured bank failures diminished to a 1995 total of 6 (with total
assets of less than $0.9 billion), the lowest level in 14 years and a
very low number for the period following the deregulation of
interest rates. It is impossible to predict whether, or if so when and
how severely, this trend will reverse.
The Banking Industry is particularly susceptible to certain
economic factors, such as interest rate changes, economic
conditions both nationally and in particular regions or industries
serviced by these institutions, adverse developments in markets in
which particular banks or thrifts have concentrations of exposure,
or volatility in political conditions, or the fiscal or monetary
policies of governmental entities.
The operations of banks and other financial institutions are highly
interest rate sensitive. Loose or tight credit policies (potentially
leading to inflationary or deflationary economies, respectively)
imposed by the Federal Reserve could adversely affect the industry.
Investors should note that monetary policies of the Federal Reserve
are subject to significant fluctuations. Banks may be at
disproportionately high risk in a protracted recession.
Certain financial institutions the securities of which may be
included in the Portfolio may have loan portfolios concentrated in
highly leveraged transactions, real estate loans, agricultural loans,
or loans to less developed countries, which transactions and loans
bank regulators consider risky.
Some large banks have developed substantial off-balance sheet
positions that may significantly affect earnings. For example, some
banks create, market and act as the counterparty to derivative
contracts that enable other banks (which also may be included in
the Portfolio) and corporate customers to isolate and manage
various forms of financial risk, e.g., interest-rate risk through swap
contracts. Although regulators address such exposures through
various capital, reporting, disclosure and internal risk-control
requirements, in an electronic banking environment these risk
controls can fail and result in substantial losses that are incurred
too quickly for effective remedy short of receivership.
Federal regulators require banks and thrifts to maintain minimum
capital requirements. To the extent additional equity is issued to
meet those requirements, outstanding equity holdings will be
diluted. No assurance can be given that any bank or other financial
institution will maintain access to the public credit markets on
affordable terms to meet its capital or short term cash needs. The
Trust may invest in banks and thrifts that are not members of the
Federal Reserve System or whose deposits are not insured by the
FDIC. Units of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank or other insured depository
institution and are not insured by the FDIC, the Federal Reserve
Board or any other governmental agency.
Banks and other financial institutions are subject to substantial
competition from other financial service institutions for deposits,
nondeposit funding, corporate customers and retail customers. The
latter competitors, which are subject to less government regulation
than banks and thrifts, provide a broad range of financial products,
and include foreign banks, insurance companies, brokerage and
securities firms, mutual funds, investment banks and diversified
financial service companies. As a result of such competition
worldwide, depository flows have become highly liquid, and
subject to dramatic shifts among different forms of financial
instruments.
Congress has been considering legislation that would equalize the
deposit insurance assessments to support the BIF and SAIF, which
have become widely disparate recently to the competitive
disadvantage on SAIF-insured entities. Such legislation might
eventually lead to a merger of the two funds. No assurance can be
given as to what form such legislation would take, if enacted, or
what effects any new legislation or regulation would have on the
Banking Industry.
To the extent banks and thrifts are unable to pass deposit insurance
premiums on to customers because of competitive pressures (e.g.,
from money market mutual funds), such premiums must be
absorbed. Any premium increase may lead to insolvency of some
problem banks and thrifts. No assurance can be given that statutory
provisions for insuring all deposits up to $100,000 (which may
apply to multiple accounts held by the same depositor in certain
different rights and capacities, including through pension plans and
similar entities) will not be further restricted. Such restrictions
could adversely affect depositor confidence generally, which could
lead to deposit runs. Investors should note that deposit insurance
does not cover equity issued by banks and thrifts and therefore is
no guarantee of the market value of the Securities in the Portfolio.
A substantial consolidation is underway in the banking industry.
Congress has enacted legislation permitting nationwide bank
holding company expansion starting in 1995 and nationwide bank
branching starting in 1997, and federal thrifts have been free to
branch nationwide since 1992. Banks and thrifts that seek
economies of scale and risk diversification through geographic
growth may encounter increased risks from increased costs and
breakdown of internal controls. The Sponsor is unable to predict
the impact or the likelihood of any consolidation with respect to the
particular Securities in the Portfolio.
Congress has been considering legislation to repeal the Glass-
Steagall Act and replace it with legislation under which bank
holding companies could significantly expand their securities
activities. If enacted, such laws could lead to more failures as a
result of increased competition and risk, and could come at the cost
of new limitations on the insurance activities of banks, which might
deprive them of earning opportunities. Failure to enact such
legislation, on the other hand, may lead to declining earnings and
an inability to compete with unregulated financial institutions,
while permitting expansion into the insurance business with its
attendant risks.
Insurance Companies. Insurance companies are subject to
regulation and supervision in the jurisdictions in which they do
business under statutes which delegate regulatory, supervisory and
administrative powers to state insurance commissioners. This
regulation, supervision and administration relate, among other
things, to: the standards of solvency which must be met and
maintained; the licensing of insurers and their agents; the nature of
and limitations on investments; deposits of securities for the benefit
of policyholders; approval of policy forms and premium rates;
periodic examinations of the affairs of insurance companies; annual
and other reports required to be filed on the financial condition of
insurers or for other purposes; and requirements regarding reserves
for unearned premiums, losses and other matters. Regulatory
agencies require that premium rates not be excessive, inadequate or
unfairly discriminatory. Insurance regulation in many states also
includes "assigned risk" plans, reinsurance facilities, and joint
underwriting associations, under which all insurers writing
particular lines of insurance within the jurisdiction must accept, for
one or more of those lines, risks that are otherwise uninsurable. A
significant portion of the assets of insurance companies is required
by law to be held in reserve against potential claims on policies and
is not available to general creditors.
Although the Federal government does not regulate the business of
insurance, Federal initiatives can significantly impact the insurance
business. Current and proposed Federal measures which may
significantly affect the insurance business include pension
regulation (ERISA), controls on medical care costs, minimum
standards for no-fault automobile insurance, national health
insurance, personal privacy protection, tax law changes affecting
life insurance companies or the relative desirability of various
personal investment vehicles and repeal of the current antitrust
exemption for the insurance business. (If this exemption is
eliminated, it will substantially affect the way premium rates are set
by all property-liability insurers.) In addition, the Federal
government operates in some cases as a co-insurer with the private
sector insurance companies.
Insurance companies are also affected by a variety of state and
Federal regulatory measures and judicial decisions that define and
extend the risks and benefits for which insurance is sought and
provided. These include judicial redefinitions of risk exposure in
areas such as products liability and state and Federal extension and
protection of employee benefits, including pension, workers'
compensation, and disability benefits. These developments may
result in short-term adverse effects on the profitability of various
lines of insurance. Longer-term adverse effects can often be
minimized through prompt repricing of coverages and revision of
policy terms. In some instances these developments may create new
opportunities for business growth. All insurance companies write
policies and set premiums based on actuarial assumptions about
mortality, injury, the occurrence of accidents and other insured
events. These assumptions, while well supported by past
experience, necessarily do not take account of future events. The
occurrence in the future of unforeseen circumstances could affect
the financial condition of one or more insurance companies. The
insurance business is highly competitive and with the deregulation
of financial service businesses, it should become more competitive.
In addition, insurance companies may expand into non-traditional
lines of business which may involve different types of risks.
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.
<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 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
591/2, 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 701/2. Taxable
distributions made before attainment of age 591/2, 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.
<PAGE>
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 3.093% thereof.
This sales charge is equal to a gross underwriting profit of 3.00%
of the Public Offering Price and is subject to change by the
Sponsor at any time. This sales charge will be reduced to 2.00% on
April 15, 1998. For most investors the commissions to purchase
and sell the stocks directly would exceed the Trust's 3.00% sales
charge and expenses. The Public Offering Price will vary 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>
<S> <C>
Number of Units
Percent of
Offering
Price
Percent of
Net Amount
Invested Dealer
Concession
as Percent of
Offering Price
Fewer than 50,0003.0003.0932.25
50,000 but less than 100,0002.6252.6961.97
100,000 but less than 250,0002.2502.3021.69
250,000 but less than 500,0001.8751.9111.41
500,000 but less than 1,000,000 1.5001.5231.13
1,000,000 or more1.1251.138.84
</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.
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.
<PAGE>
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.
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 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 the life of
the Trust. 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 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.
<PAGE>
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 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 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.
<PAGE>
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 or directly in the name of the Holder, unless the Holder
notifies his financial consultant 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
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.
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.
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.
<PAGE>
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.
<PAGE>
<PAGE>
<TABLE>
EQUITY FOCUS
TRUSTS
_______________
A Smith Barney Unit Trust
Theme Investing Portfolio
PROSPECTUS
This Prospectus does not contain all of the information
set forth in the 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.
<S><C>
Index
Investment Summary2
Independent Auditors Report8
Financial Statements9
Portfolio12
Description of the Trust13
Risk Factors15
Taxes19
Public Sale of Units21
Market for Units22
Redemption22
Expenses and Charges24
Administration of the Trust25
Reinvestment Plan27
Resignation, Removal and Limitations on Liability27
Miscellaneous28
Sponsors:Trustee:Independent Accountants:
Smith Barney Inc.The Chase Manhattan Bank,
N.A.KPMG Peat Marwick LLP
388 Greenwich St., 23rd Fl.(A National Banking
Assoc.)345 Park Avenue
New York, New York 10013Unit Investment TrustNew
York, New York 10154
(212) 816-4000Box 2051
New York, New York 10081
SMITH BARNEY
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 representations 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.
</TABLE>
