<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1997
REGISTRATION NO. 333-27791
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-6
----------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
----------------
A. EXACT NAME OF TRUST:
EQUITY FOCUS TRUSTS,
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
AND
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
B. NAME OF DEPOSITOR:
SMITH BARNEY INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE:
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY TO:
LAURIE A. HESSLEIN
SMITH BARNEY INC. MICHAEL R. ROSELLA, ESQ.
388 GREENWICH STREET BATTLE FOWLER LLP
NEW YORK, NEW YORK 10013 75 EAST 55TH STREET
NEW YORK, NEW YORK 10022
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of beneficial interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No filing fee required.
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
[_] Check box if it is proposed that this filing become effective immediately
upon filing pursuant to Rule 487.
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<PAGE>
The Equity Focus Trusts
Uncommon Values
Aggressive Growth Series, 1997
Growth & Income Series, 1997
Smith Barney Unit Investment Trusts
Uncommon Values Aggressive Growth
SMITH BARNEY Series, 1997 and Uncommon Values Growth
- --------------------------------- & Income Series, 1997 are two separate
A Member of TravelersGroup [LOGO] unit investment trusts that each offer
investors the opportunity to purchase
Units representing proportionate
interests in a portfolio of equity
securities selected by the Investment
Policy Committee, with the assistance of
the Research Department, of Smith Barney
Inc. as the Trust Portfolio. The value
of the Units of each Trust will
fluctuate with the value of the
underlying securities. The minimum
purchase is $250.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated July 15, 1997
Read and retain this Prospectus for future reference
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++.......................................... 2,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT.... 1/2,000,000
PUBLIC OFFERING PRICE (per 1,000 Units)
Aggregate value of Securities in Trust............................ $ 1,920,515
===========
Divided by 2,000,000 Units (times 1,000).......................... $ 960.26
Plus sales charge of 4.00% of Public Offering Price (4.167% of the
net amount invested in Securities)*.............................. $ 40.01
-----------
Public Offering Price per 1,000 Units............................. $ 1,000.27
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income)........................... $ -0-
-----------
Total (per 1,000 Units)........................................... $ 1,000.27
===========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS
(based on value of underlying securities)........................ $ 960.26
</TABLE>
DISTRIBUTIONS
Distributions of income, if any, will be made on the next to last business
day of each year, commencing December 30, 1997, to Holders of record on the
immediately prior business day of each year, commencing December 29, 1997 and
will be automatically reinvested in additional Units of this Trust at no
extra charge unless the Holder elects to receive his distribution in cash. A
Final Distribution will be made upon the termination of the Trust.
<TABLE>
<S> <C>
SPONSOR'S PROFIT ON DEPOSIT.......... $816
TRUSTEE'S ANNUAL FEE
$.76 per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
The business day immediately prior
to a Distribution Day.
DISTRIBUTION DAY
</TABLE>
On the next to last business day of each year, commencing December 30, 1997,
and upon termination and liquidation of the Trust.
EVALUATION TIME
4:00 P.M. New York time.
TRUSTEE AND DISTRIBUTION AGENT
The Chase Manhattan Bank
MINIMUM VALUE OF TRUST
The trust indenture between the Sponsor and the Trustee (the "Indenture") may
be terminated if the net asset value of this Trust is less than $500,000, un-
less the net asset value of the Trust deposits has exceeded $50,000,000. In
that case, the Indenture may be terminated if the net asset value of the
Trust is less than $20,000,000. See Risk Factors, page 5.
MANDATORY TERMINATION OF TRUST
July 31, 2000 (the "Mandatory Termination Date"), or at any earlier time by
the Sponsor with the consent of Holders of 51% of the Units then outstanding.
- ------------
+ The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on July 14, 1997. Valuation of Securities is based on the
market value per share as of July 14, 1997, as more fully explained in the
footnotes to the Portfolio of the Uncommon Values Aggressive Growth Series,
1997. After the Initial Date of Deposit, Securities quoted on a national
securities exchange or NASDAQ National Market System, or a foreign securities
exchange, are valued at the closing sale price or, if, no price exists, at the
mean between the closing bid and offer prices. Securities not so quoted are
valued at the mean between bid and offer prices.
++ The Sponsor may create additional Units during the offering period of the
Trust.
* The sales charge will be reduced on a graduated scale in the case of
quantity purchases. Additionally, sales charges will be reduced each quarter
during the first year of the Trust. Commencing October 1, 1997, the maximum
sales charge will be 3.00%; commencing January 2, 1998 the maximum sales charge
will be 2.00% and commencing April 1, 1998 the sales charge will be 1.00%. See
Public Sale of Units--Public Offering Price.
** All redemptions of 50,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
2
<PAGE>
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++.......................................... 2,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT.... 1/2,000,000
PUBLIC OFFERING PRICE (per 1,000 Units)
Aggregate value of Securities in Trust............................ $ 1,921,369
===========
Divided by 2,000,000 Units (times 1,000).......................... $ 960.68
Plus sales charge of 4.00% of Public Offering Price (4.167% of the
net amount invested in Securities)*.............................. $ 40.03
-----------
Public Offering Price per 1,000 Units............................. $ 1,000.71
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income)........................... $ -0-
-----------
Total (per 1,000 Units)........................................... $ 1,000.71
===========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS
(based on value of underlying securities)........................ $ 960.68
</TABLE>
DISTRIBUTIONS
Distributions of income will be distributed on each Distribution Day to
Holders as of the corresponding Record Day. These 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 the termination of the Trust.
<TABLE>
<S> <C>
SPONSOR'S LOSS ON DEPOSIT............ $419
TRUSTEE'S ANNUAL FEE
$.76 per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
The 10th day of September, December,
March and June Distribution Day.
DISTRIBUTION DAY
</TABLE>
The 25th day of September, December, March and June, and upon termination and
liquidation of the Trust.
EVALUATION TIME
4:00 P.M. New York time.
TRUSTEE AND DISTRIBUTION AGENT
The Chase Manhattan Bank
MINIMUM VALUE OF TRUST
The trust indenture between the Sponsor and the Trustee (the "Indenture") may
be terminated if the net asset value of this Trust is less than $500,000, un-
less the net asset value of the Trust deposits has exceeded $50,000,000. In
that case, the Indenture may be terminated if the net asset value of the
Trust is less than $20,000,000. See Risk Factors, page 5.
MANDATORY TERMINATION OF TRUST
July 31, 2000 (the "Mandatory Termination Date"), or at any earlier time by
the Sponsor with the consent of Holders of 51% of the Units then outstanding.
- ------------
+ The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on July 14, 1997. Valuation of Securities is based on the
market value per share as of July 14, 1997, as more fully explained in the
footnotes to the Portfolio of the Uncommon Values Growth & Income Series, 1997.
After the Initial Date of Deposit, Securities quoted on a national securities
exchange or NASDAQ National Market System, or a foreign securities exchange,
are valued at the closing sale price or, if, no price exists, at the mean
between the closing bid and offer prices. Securities not so quoted are valued
at the mean between bid and offer prices.
++ The Sponsor may create additional Units during the offering period of the
Trust.
* The sales charge will be reduced on a graduated scale in the case of
quantity purchases. Additionally, sales charges will be reduced each quarter
during the first year of the Trust. Commencing October 1, 1997, the maximum
sales charge will be 3.00%; commencing January 2, 1998 the maximum sales charge
will be 2.00% and commencing April 1, 1998 the sales charge will be 1.00%. See
Public Sale of Units--Public Offering Price.
** All redemptions of 50,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
3
<PAGE>
INTRODUCING THE EQUITY FOCUS TRUSTS UNCOMMON VALUES AGGRESSIVE GROWTH SERIES,
1997
Of more than 1,600 companies followed by Smith Barney, which will be market
leaders in the coming year? They could emerge from the aggressive growth stock
sector, and be among the 10-20 stocks of the Uncommon Values Trust Aggressive
Growth Series, 1997. Look for the announcement of these holdings in mid-July.
HOW WE WILL SELECT THE HOLDINGS
The process to select the Uncommon Values Trust Aggressive Growth Series, 1997
draws from Smith Barney's extensive capabilities in equity research.
1. As a first step, we ask our equity research team of more than 100 analysts
to select their "top picks" that fall into the aggressive growth stock
category.
2. Then, our Investment Policy Committee analyzes each candidate in view of
industry trends, overall market conditions and the economy in general.
3. Ultimately, their goal is to "handpick" the 10-20 stocks with exceptional
growth potential for the coming year.
WHERE DO WE FIND UNCOMMON VALUE IN THE AGGRESSIVE GROWTH STOCK MARKET?
Though diversified by industry, some of the companies will tie into common
"investing themes" identified by our research analysts. A key consideration is
a company's potential to generate exceptional earnings growth in the coming
year. And some could be positioned to benefit from activities that enhance
profitability--like restructured operations or the introduction of new
technologies, products or services.
<PAGE>
KEY INVESTING FEATURES
LOW MINIMUM INVESTMENT:
All you need is $250 to get started.
A CONVENIENT AND COST EFFECTIVE PACKAGE:
The upfront charge is less than many investors would pay to assemble a similar
portfolio on their own. And, you could invest in all of these recommendations
with one easy purchase.
LIQUIDITY:
Units can be sold at any time, with no sales charge or penalty. The price will
reflect the net asset value on the date of sale, which may be more or less than
the cost.
INVESTING MADE EASY
With one easy purchase, you can participate in 10-20 of Smith Barney's top
equity recommendations in aggressive growth stocks. This "portfolio approach"
could help reduce the risk of investing in an area of the market with above-
average volatility. If your objective is aggressive growth, the Uncommon Values
Trust Aggressive Growth Series, 1997 offers a unique package that may help you
achieve financial goals.
RISK FACTORS
As with any equity investment, prices will fluctuate and there is no assurance
that the portfolio will appreciate, or not depreciate, over the term of the
Trust. This Series of the Uncommon Values Trust is designed for investors whose
primary objective is aggressive growth. The investor should have the
willingness and ability to withstand price volatility for the potential of
greater rewards over time. For additional Risk Factors, see the Risk Factors
section of this prospectus.
<PAGE>
INTRODUCING
THE EQUITY FOCUS TRUSTS
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
Of more than 1,600 companies followed by Smith Barney, which will be market
leaders in the coming year? They could be among the 10-20 stocks selected for
the Uncommon Values Trust Growth & Income Series, 1997. Look for the
announcement of these holdings in mid-July.
HOW WE WILL SELECT THE PORTFOLIO
The process to select the Uncommon Values Portfolio Growth & Income Series,
1997 draws from our extensive capabilities in equity research.
1. As a first step, we ask our equity research team of more than 100 analysts
to select their "top picks" with the combination of exceptional growth and
income potential for the coming year.
2. Then, our Investment Policy Committee analyzes each candidate in view of
industry trends, overall market conditions and the economy in general.
3. Ultimately, their goal is to "handpick" a list of 10-20 companies--whose
stocks could add "uncommon value" to your portfolio in the coming months.
WHERE DO WE FIND UNCOMMON VALUE?
Though diversified by industry, some of the companies in the portfolio tie into
common "investing themes" identified by our research analysts. Many of the
selections are expected to pay attractive dividends, or could realize above-
average dividend growth in the coming year. Also important is the expectation
of consistent earnings growth, or a company's ability to effectively use its
capital base. Examples include companies that are enhancing shareholder value
through disciplined programs to repurchase stock or are using capital to
buy/expand business units with higher growth potential.
<PAGE>
KEY INVESTING FEATURES
LOW MINIMUM INVESTMENT
All you need is $250 to get started.
A CONVENIENT AND COST EFFECTIVE PACKAGE
The upfront charge is less than many investors would pay to assemble a similar
portfolio on their own. And, you could invest in all of these recommendations
with one easy purchase. Dividends will be automatically reinvested or can be
paid quarterly in one convenient check.
LIQUIDITY
Units can be sold at any time, with no sales charge or penalty. The price will
reflect the net asset value on the date of sale which may be more or less than
the cost.
INVESTING MADE EASY
Through the Uncommon Values Trust Growth & Income Series, 1997, you can take a
"portfolio approach" to investing in 10-20 stocks with one easy purchase. This
fixed portfolio of stocks will be held in a unit investment trust with a three
year life.
RISK FACTORS:
As with any equity investment, prices will fluctuate and there is no assurance
that the portfolio will appreciate, or not depreciate, over the term of the
Trust. This Series of the Uncommon Values Trust is designed for investors whose
primary objective is growth and income. The investor should have the
willingness and ability to withstand price volatility for the potential of
greater rewards over time. For additional Risk Factors, see the Risk Factors
section of this prospectus.
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997 (CONTINUED)
OBJECTIVE OF THE TRUSTS -- The objective of the Uncommon Values Aggressive
Growth Series, 1997 (the "Aggressive Growth 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 the 20 common
stocks (the "Securities") selected by the Sponsor for the 1997 Aggressive
Growth Trust portfolio (the "Aggressive Growth Portfolio"). The Sponsor has
selected for the Aggressive Growth Portfolio stocks which it considers to have
strong potential for capital appreciation over a period of one year relative to
risks and opportunities inherent in investing in aggressive growth stocks. The
payment of dividends is not a primary objective of the Trust. The objective of
the Uncommon Values Growth & Income Series, 1997 (the "Growth & Income Trust")
is to provide investors with the possibility of maximizing their total return
through a convenient and cost-effective investment in a fixed portfolio
consisting of shares of 14 Securities selected by the Sponsor for the 1997
Growth & Income Trust Portfolio (the "Growth & Income Portfolio"). The Sponsor
has selected for the Growth & Income Portfolio stocks which it considers to
have the strong potential for capital appreciation and current dividend income
over a period of one year relative to risks and opportunities inherent in
investing in growth and income stocks. The Aggressive Growth Trust and Growth &
Income Trust are collectively referred to herein as the "Trusts" and the
Aggressive Growth Portfolio and the Growth & Income Portfolio are collectively
referred to herein as the "Portfolios". Achievement of each of the Trust's
objectives is dependent upon several factors including the financial condition
of the issuers of the Securities and any appreciation of the Securities.
Furthermore, because of various factors, including without limitation, Trust
sales charges and expenses, unequal weightings of stocks, brokerage costs and
any delays in purchasing securities with cash deposited, investors in the
Trusts may not realize as high a total return as the theoretical performance of
the underlying stocks in their respective Portfolios.
PORTFOLIOS -- The Aggressive Growth Portfolio contains 20 common stocks
issued by companies engaged primarily in the following industries: consumer
cyclicals, 4; healthcare products and services, 4; communications equipment and
services, 2; computer hardware and software, 2; semiconductors, 2;
broadcasting, 1; building products, 1; computers/peripherals, 1;
electronics/toys, 1; engineering and construction, 1; financials, 1. The
building products and electronics/toys issues are foreign issues. 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 20 stocks from 11
different industry groups. (See Risk Factors.)
The Growth & Income Portfolio contains 14 common stocks issued by companies
engaged primarily in the following industries: real estate, 3; communication
equipment and services, 2; energy, 2; financials, 2; consumer staples, 2;
conglomerates, 1; retailing, 1; utilities, 1. 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 14 stocks from 8 different industry groups. (See
Risk Factors.)
The initial purchase of Securities for the Trusts will not necessarily
represent equal dollar amounts of each of the Securities; however, with the
initial deposit of Securities, the Sponsor established a proportionate
relationship among the number of shares of each stock deposited in the
Portfolio of a Trust. During the 90-day period following the Initial Date of
Deposit, the Sponsor may create additional Units of each of the Trusts by
depositing cash (or a bank letter of credit in lieu of cash) with instructions
to purchase Securities, additional
4
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997 (CONTINUED)
Securities or contracts to purchase additional Securities maintaining to the
extent practicable the original proportionate relationship among the number of
shares of each stock in the Portfolio of a Trust. Replacement Securities may be
acquired under specified conditions. It may not be possible to maintain the
exact original proportionate relationship among the Securities deposited in the
Trusts on the Initial Date of Deposit because of, among other reasons, purchase
requirements, changes in price or the unavailability of Securities. Any
deposits of Securities in a Trust after the 90-day period must replicate
exactly the proportionate relationship among the number of shares comprising
that Portfolio at the end of the initial 90-day period, subject to certain
events discussed under Administration of the Trusts--Trust Supervision. The
Sponsor may cease creating Units (temporarily or permanently) at any time. (See
Administration of the Trusts -- Trust Supervision.)
RISK FACTORS -- Investment in the Trusts 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, and
other factors.
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trusts or to satisfy redemptions of Units, may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trusts may also
cause increased buying activity in certain of the stocks comprising each of the
Portfolios. After such announcement, investment advisory and brokerage clients
of the Sponsor and its affiliates may purchase individual Securities appearing
on the list during the course of the initial offering period. Such buying
activity in the stock of these companies prior to the purchase of the
Securities by a Trust may cause the Trust to purchase stocks at a higher price
than those buyers who effect purchases prior to purchases by the Trust.
The Trusts are not appropriate for investors requiring high current income or
conservation of capital. Securities representing approximately 70.25% and 7.78%
of the value of the Aggressive Growth Portfolio and the Growth & Income
Portfolio, respectively, have been ranked High Risk by the Sponsor's Research
Department, described as "low predictability of earnings/dividends; high price
volatility".
The Portfolio of each of the Trusts may contain Securities of issuers engaged
in the technology, technology-related and science industries. Such industries
may be subject to greater governmental regulation and companies in these
industries may be subject to risks of developing technologies and competitive
pressures, all of which may have a material adverse effect on these industries.
(See Description of the Trusts--Risk Factors--The Technology and Science
Industries.)
The Portfolio of each of the Trusts may contain Securities of issuers with
market capitalizations of $1 billion or less. Investing in such small
capitalization stocks may involve greater risks than investing in medium ($1
billion to $5 billion) or large (over $5 billion) capitalization stocks, since
they can be subject to more abrupt or erratic price movements. Investors should
note that definitions of what constitutes small, medium or large capitalization
stocks vary and, therefore, characterizations of these companies by persons
utilizing other definitions of these categories may be different than those
applied by the Trusts. (See Description of the Trusts--Risk Factors--Small
Capitalization Stock.)
5
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 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
purchased for a 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 of each Security represented by each Unit and the income per Unit
received by each of the Trusts. Some of the Securities may have limited trading
volume. The Trustee with directions from the Sponsor will endeavor to purchase
Securities with deposited cash as soon as practicable reserving the right to
purchase those Securities over the 20 business days following each deposit in
an effort to reduce the effect of these purchases on the market price of those
stocks. This could, however, result in the Trusts' failure to participate in
any appreciation of those stocks before the cash is invested. If any cash
remains at the end of this period and cannot be invested in one or more stocks
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 each of the
Trusts, 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 each
of the Trusts 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 Trusts -- 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 Portfolios are 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 a 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 Trusts and that each of the Trusts 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
of each of the Trusts 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 either Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. As a result, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of a Trust. 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 the Portfolios on
pages 11 and 12). These rankings are subject to change. Securities will not
necessarily be sold by a Trust based on a change in rankings, although the
Sponsor intends to review the
6
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997 (CONTINUED)
desirability of holding any Security if its ranking is reduced below 3. The
prices of single shares of each of the Securities in the Trusts vary widely,
and the effect of a dollar of fluctuation, either higher or lower, in stock
prices will be much greater as a percentage of the lower-price stocks' purchase
price than as a percentage of the higher-price stocks' purchase price.
Investors should note that should the size of a Trust be reduced below the
Minimum Value of Trust stated on pages 2 and 3 for the Aggressive Growth Trust
and Growth & Income Trust, respectively, that Trust may be terminated at that
time by the Sponsor, well before the Mandatory Termination Date of such Trust.
Any difference between the aggregate prices the Sponsor paid to acquire the
Securities and the aggregate prices at which Securities were initially
deposited in the Aggressive Growth Trust and the Growth & Income Trust is noted
on pages 2 and 3, respectively, under Sponsor's Profit/Loss on Deposit. The
Sponsor's profit or loss on the deposit of Securities largely depends on
whether the Securities' prices rise in response to the Sponsor's purchases of
possibly large volumes of the Securities for initial and subsequent deposits in
each of the Trusts. The effect of the Sponsor's purchases of Securities on the
prices of the Securities is unpredictable.
FOREIGN SECURITIES AND AMERICAN DEPOSITARY RECEIPTS -- The Trusts 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
Trusts -- Risk Factors; Taxes.
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in either of the
Trusts consists of privately-placed common stocks. Except as indicated under
Portfolios, the Sponsor has not participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which any of the
Securities in the Trusts were acquired.
PUBLIC OFFERING PRICE -- The Public Offering Price per 1,000 Units of a Trust
is equal to the aggregate value of the underlying Securities in the Trust and
any cash held to purchase Securities, divided by the number of Units of the
Trust outstanding times 1,000, plus a sales charge of 4.00%* of the Public
Offering Price; this results in a sales charge of 4.167%* of the net amount
invested in underlying Securities. Units are offered at the Public Offering
Price plus the net amount per Unit in the Income Account (see Public Sale of
Units). The minimum purchase is $250. Investors should note that the Public
Offering Price of Units of each Trust 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 each of the Trusts will be automatically reinvested in
additional Units of the respective 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 a Trust than Holders who receive cash distributions (see
Reinvestment Plan). Distributions
- ------------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases. Additionally, sales charges will also be reduced each
succeeding quarter during the first year of each of the Trusts, commencing
October 1, 1997. See Public Sale of Units -- Public Offering Price.
7
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997 (CONTINUED)
are expected to be made for the Aggressive Growth Trust and the Growth & Income
Trust on each Distribution Day to Holders of record on the immediately prior
Record Day, as stated on pages 2 and 3, respectively. As soon as practicable
after termination of a Trust (generally after seven days), the Trustee will
distribute to each Holder his pro rata share of the amount realized on
disposition of the Securities remaining in that Trust plus any other assets
then in the Trust, less expenses of the Trust. The other assets of the Trusts
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 each of the Trusts 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).
FEE TABLE
- --------------------------------------------------------------------------------
THIS FEE TABLE IS INTENDED TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. SEE PUBLIC SALE OF UNITS AND
EXPENSES AND CHARGES. ALTHOUGH THE TRUSTS ARE UNIT INVESTMENT TRUSTS RATHER
THAN MUTUAL FUNDS, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF
FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH &
GROWTH INCOME
TRUST TRUST
---------- --------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage
of offering price)....................................... 4.00% 4.00%
==== ====
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Trustee's Fee............................................. .079% .079%
Maximum Portfolio Supervision, Bookkeeping and Administra-
tive Fees................................................ .026% .026%
Organizational Expenses................................... .122% .122%
Other Operating Expenses.................................. .015% .015%
---- ----
Total.................................................. .242% .242%
==== ====
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
CUMULATIVE
EXPENSES PAID
FOR PERIOD:
----------------
1 2 3
YEAR YEARS YEARS
---- ----- -----
<S> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming a Trust's estimated operating expense
ratio of .242% in the first year and .120% in succeeding
years and a 5% annual return on the investment throughout
the periods................................................ $42 $44 $45
</TABLE>
8
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
INVESTMENT SUMMARY AS OF JULY 14, 1997 (CONTINUED)
The Example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The Example should not be
considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the Example.
The Trusts (and therefore the Holders) will bear all or a portion of its
organizational costs--including costs of preparing the registration statement,
the indenture and other closing documents, registering units with the SEC and
the states and the initial audit of each of the Portfolios--as is common for
mutual funds. Historically, the sponsors of unit investment trusts have paid
all the costs of establishing those trusts. Advertising and selling expenses
will be paid by the Underwriters at no cost to either of the Trusts.
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Uncommon Values Aggressive Growth
Series, 1997 and Uncommon Values Growth & Income Series, 1997:
We have audited the accompanying statements of financial condition, including
the portfolios of Uncommon Values Aggressive Growth Series, 1997 and Uncommon
Values Growth & Income Series, 1997, as of July 14, 1997. These financial
statements are the responsibility of the Trustee (see note 5 to the statement
of financial condition). 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 audits to
obtain reasonable assurance about whether the statements of financial condition
are free of material misstatement. An audit of a statement of financial
condition includes examining, on a test basis, evidence supporting the amounts
and disclosures in that statement of financial condition. Our procedures
included confirmation with the Trustee of an irrevocable letter of credit
deposited on July 14, 1997, for the purchase of securities, as shown in the
statements of financial condition and portfolios of securities. An audit of a
statement of financial condition also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall statement of financial condition presentation. We
believe that our audits of the statements of financial condition provide a
reasonable basis for our opinion.
In our opinion, the statements of financial condition referred to above
present fairly, in all material respects, the financial position of Uncommon
Values Aggressive Growth Series, 1997 and Uncommon Values Growth & Income
Series, 1997 as of July 14, 1997, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
July 14, 1997
9
<PAGE>
UNCOMMON VALUES AGGRESSIVE GROWTH SERIES, 1997
UNCOMMON VALUES GROWTH & INCOME SERIES, 1997
STATEMENTS OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, JULY 14, 1997
<TABLE>
<S> <C> <C>
AGGRESSIVE GROWTH
GROWTH & INCOME
TRUST PROPERTY TRUST TRUST
---------- ----------
Investment in Securities:
Contracts to purchase Securities(1).................... $1,920,515 $1,921,369
Organizational costs(2)................................. 117,163 117,163
---------- ----------
Total................................................ 2,037,678 2,038,532
========== ==========
LIABILITIES
Accrued Expenses(2).................................... 117,163 117,163
---------- ----------
INTEREST OF UNITHOLDERS
2,000,000 Units and 2,000,000 Units, respectively, of
fractional undivided
interest outstanding:
Cost to investors(3)................................... $2,000,536 $2,001,426
Less: Gross underwriting commissions(4)................ 80,021 80,057
---------- ----------
Net amount applicable to investors..................... 1,920,515 1,921,369
---------- ----------
Total.................................................. $2,037,678 $2,038,532
========== ==========
</TABLE>
- ------------
(1) Aggregate cost to each Trust of the Securities listed under Portfolio of
such Trust, on the Initial Date of Deposit is determined by the Trustee on
the basis set forth in footnote 4 to the Portfolio of such Trust. See also
the columns headed Cost of Securities to Trust. Irrevocable letters of
credit in the amount of $2,000,000 for each Trust have been deposited with
the Trustee for the purchase of Securities. The letters of credit were
issued by Svenska Handelsbanken.
(2) Organizational costs to be paid by the Trusts have been deferred and will
be amortized over the first year of each of the Trusts. Organizational
costs have been estimated based on projected total assets of $96 million
and $96 million, respectively. To the extent a Trust is larger or smaller,
the amount paid may vary.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes a sales charge of 4.00% of Public Offering Price computed on the
basis set forth under Public Sale of Units--Public Offering Price.
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each of
the Trusts and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each of the Trusts. The Trustee is also responsible for all estimates and
accruals reflected in each of the Trusts' financial statements other than
estimates of organizational costs, for which the Sponsor is responsible.
10
<PAGE>
PORTFOLIO OF UNCOMMON VALUES AGGRESSIVE GROWTH SERIES,1997 ON THE INITIAL
DATE OF DEPOSIT, JULY 14, 1997
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Altera Corp*# ALTR 1-H 1,700 5.10% $ 97,962
Amgen Inc* AMGN 1-H 1,700 4.90 94,138
Apasco, SA* AASGF 1-H 12,600 5.00 96,088
Apollo Group "A'*# APOL 1-M 2,600 5.03 96,525
Black & Decker Corp BDK 1-H 2,300 4.93 94,588
Cisco Systems* CSCO 1-M 1,250 4.98 95,703
Comcast CI "A' Spl CMCSK 1-H 4,800 5.00 96,000
EMC Corp # EMC 1-M 2,100 4.94 94,894
FIRSTPLUS Finl Grp* FPFG 1-H 2,700 5.10 97,875
HBO & Co*# HBOC 1-H 1,250 5.03 96,641
Intel Corp* INTC 1-H 1,200 4.92 94,500
Jacobs Engr Group JEC 1-H 3,600 5.00 96,075
Lilly (Eli) LLY 1-M 800 4.84 92,900
Mirage Resorts# MIR 1-H 3,900 5.05 97,012
Motorola, Inc MOT 1-M 1,100 4.88 93,775
Nintendo Co. Ltd.* NTDOF 1-H 1,100 5.18 99,389
Oracle Corp* ORCL 1-H 1,800 5.04 96,750
St. Jude Medical STJ 1-M 2,500 5.08 97,500
Staples Inc* SPLS 1-H 4,000 4.99 95,750
Sun Microsystems* SUNW 1-H 2,400 5.01 96,450
------ ----------
100.00% $1,920,515
====== ==========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor from July 11 to
July 14, 1997. All contracts for domestic Securities are expected to be
settled by the initial settlement date for the purchase of Units.
(2) Smith Barney has assigned these rankings according to the following
system, which uses two codes: a letter for the level of risk (L,M,H,S or
V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Smith Barney research analysts
and are, of course, subject to change; no assurance can be given that the
stocks will perform as expected. These rankings have not been audited by KPMG
Peat Marwick LLP.
(3) Per 2,000,000 Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on July 14, 1997. The values of Apasco, SA
and Nintendo Co. Ltd. are the market values as of the close on the Mexican
Stock Exchange and the Osaka Securities Exchange, respectively, on July
14, 1997. Subsequent to the Initial Date of Deposit, valuation of
Securities is based, for Securities quoted on a national securities
exchange or NASDAQ National Market System, 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.
----------------
The following information is unaudited:
*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.
11
<PAGE>
PORTFOLIO OF UNCOMMON VALUES GROWTH & INCOME SERIES, 1997 ON THE INITIAL
DATE OF DEPOSIT, JULY 14, 1997
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
American Stores ASC 1-M 2,800 7.72% $ 148,400
Avon Products AVP 1-M 2,000 7.79 149,750
BellSouth Corp. BLS 1-M 3,200 7.66 147,200
Chase Manhattan Corp.# CMB 1-M 1,450 7.69 147,809
Crescent Real Estate
Eq.# CEI 1-M 4,500 7.32 140,625
Crescent Operating Inc. COPI NR 450 0.34 6,525
Dresser Industries DI 1-M 3,700 7.59 145,919
Duke Energy Corp.# DUK 1-M 3,000 7.60 146,063
Equity Residential
Prop.# EQR 1-M 3,000 7.80 149,813
First Bank System FBS 1-M 1,650 7.66 147,159
GenCorp GY 1-M 5,400 7.73 148,500
Philip Morris Cos. Inc. MO 1-H 3,500 7.78 149,406
SBC Communications Inc. SBC 1-L 2,500 7.70 147,969
Williams Cos., Inc. WMB 1-M 3,300 7.62 146,231
------ ----------
100.00% $1,921,369
====== ==========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on July 14, 1997. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Smith Barney has assigned these rankings according to the following
system, which uses two codes: a letter for the level of risk (L,M,H,S or
V) and a number for performance expectation (1-5). NR indicates that the
stock is not currently rated.
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Smith Barney research analysts
and are, of course, subject to change; no assurance can be given that the
stocks will perform as expected. These rankings have not been audited by KPMG
Peat Marwick LLP.
(3) Per 2,000,000 Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on July 14, 1997. Subsequent to the
Initial Date of Deposit, valuation of Securities is based, for Securities
quoted on a national securities exchange or NASDAQ National Market System,
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.
----------------
The following information is unaudited:
*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.
12
<PAGE>
DESCRIPTION OF THE TRUSTS
STRUCTURE AND OFFERING
This Series of the Equity Focus Trusts consists of two "unit investment
trusts" designated as Uncommon Values Aggressive Growth Series, 1997 and
Uncommon Values Growth & Income Series, 1997 (the "Trusts"). Each Trust was
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 a Trust
(a "Unit") represented a fractional undivided interest in the securities
listed under Portfolios (the "Securities") set forth under Investment Summary.
Additional Units of a Trust will be issued in the amount required to satisfy
purchase orders by depositing in such 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 a 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 Trusts 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 each of the Trusts will be increased and the fractional
undivided interest in the Trusts 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 Trusts.
During the 90-day period following the Initial Date of Deposit 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 each Security in the
Portfolios of each of the Trusts. The proportionate relationship among the
Securities in each of the Trusts 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 a Trust but which does not affect
that 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 Trusts --
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. Deposits of
Additional Securities subsequent to the 90-day period following the Initial
Date of Deposit must replicate exactly the proportionate relationship among
the number of shares of each of the Securities comprising the Portfolios of
each of the Trusts at the end of the initial 90-day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
pages 2 and 3 on any day will be based on the aggregate value of the
Securities in a Trust on that day at the Evaluation Time, plus a sales charge.
The Public Offering Price for each of the Trusts will thus vary in the future
from that specified on pages 2 and 3 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 Trusts
- ------------
* 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.
13
<PAGE>
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received and except further that
orders from such indications of interest that are made pursuant to the
exchange privilege (see Exchange and Rollover Privileges herein) will be
accepted before any other orders for Units. The Sponsor may accept or reject
any purchase order in whole or in part.
The holders ("Holders") of Units of either of the Trusts 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 a
Trust will be reduced and the fractional undivided interest in such Trust
represented by each remaining Unit will be increased. Units of each of the
Trusts 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 Trusts -- Amendment and Termination).
THE PORTFOLIOS
The Securities in each of the Portfolios have been selected by the
Investment Policy Committee of the Sponsor, comprised of senior investment
analysts, with the assistance of the Research Department. The Sponsor's
Research Department is staffed by over 100 investment analysts, who currently
follow equities issued by more than 1,600 companies (both domestic and
foreign) in 85 industry groups or stock areas of the market. The Securities
included in the Aggressive Growth Portfolio were selected by the Sponsor as
undervalued stocks deemed to have above average appreciation potential over
the 12 months following the selection of the Portfolio. Many of the Securities
included in the Growth & Income Portfolio either have paid above-average
dividends or were selected by the Sponsor because they could realize above-
average dividend growth and have the potential for capital appreciation over
the 12 months following the selection of the Portfolio. In arriving at each
Trust's portfolio, the Committee evaluated each analyst's top selections based
on the Committee's analysis of industry trends, overall market conditions and
the current economic environment. The selection is not limited to small, high-
growth companies. The investment rankings by Smith Barney normally pertain to
an outlook for a 12-18 month period (see footnote 2 to the Portfolios on pages
11 and 12). In selecting Securities for each of the Trusts, the Sponsor has
not expressed any belief as to the potential of these Securities for capital
appreciation over a period longer than one year. There is, of course, no
assurance that any of the Securities in the Trust will appreciate in value,
and indeed any or all of the Securities may depreciate in value at any time in
the future. See Description of the Trusts -- Risk Factors. According to
Ibbotson Associates, during the period 1925 through 1996, the total return on
common stocks averaged over 10.7% a year, as contrasted to 5.1% and 3.7% for
long-term and short-term U.S. Treasury securities, respectively, and 3.1% for
inflation. Of course, past performance is no guaranty 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. Each January for the last
14 years, Smith Barney has published a list of the top pick of each of its
equity research analysts. The selection for the Trusts differs both in that it
is made in the middle of the year and in that the analysts' selections were
screened by the Investment Policy Committee, as described, to arrive at a list
of the Portfolios stocks.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trusts for various reasons, including
sales charges and expenses of the Trusts, because the Portfolios 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 each 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.
14
<PAGE>
Total returns and/or average annualized returns for various periods of
previous series of The Uncommon Values Trust and the Trusts may be included
from time to time in advertisements and sales literature. Trust performance
may be compared to performance of the S&P 500 Composite Stock Index. As with
other performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
Advertising and sales literature for the Trusts may also include excerpts from
the Sponsor's research reports on one or more of the stocks in the Trusts,
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 each of the Trusts 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.
Each of the Trusts consists of such Securities as may continue to be held
from time to time in that Trust and any additional and replacement Securities
and any money market instruments acquired and held by such Trust pursuant to
the provisions of the Indenture (including the provisions with respect to the
deposit into the Trusts 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 Trusts -- 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 a 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 the Portfolio for the
relevant Trust, unless substantially all of the monies held in such Trust to
cover the purchase are reinvested in replacement Securities in accordance with
the Indenture (see Administration of the Trusts -- 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 either of the Trusts will retain for any length of
time its present size (see Redemption; Administration of the Trusts --
Amendment and Termination). For Holders who do not redeem their Units,
investments in Units of a 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 a Trust falls below that specified
under Investment Summary -- Minimum Value of Trust (see Risk Factors).
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
15
<PAGE>
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 Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trusts or to satisfy redemptions of Units may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trusts may also
cause increased buying activity in certain of the stocks comprising the
Portfolio. After such announcement, investment advisory and brokerage clients
of the Sponsor and its affiliates may purchase individual Securities appearing
on the list during the course of the initial offering period. Such buying
activity in the stock of these companies prior to the purchase of the
Securities by the Trusts may cause the Trusts to purchase stocks at a higher
price than those buyers who effect purchases prior to purchases by a Trust.
The Trusts are not appropriate for investors requiring conservation of
capital or high current income. Securities representing approximately 70.25%
and 7.78% of the value of the Aggressive Growth Portfolio and the Growth &
Income Portfolio, respectively, have been ranked High Risk by the Sponsor's
Research Department, described as "low predictability of earnings/dividends;
high price volatility."
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 Trusts 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 Portfolios may be expected to fluctuate over the life of the
Trusts 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 a
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.
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<PAGE>
Holders will be unable to dispose of any of the Securities in the
Portfolios, 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 each of the Trusts 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 50,000 Units (see Redemption).
Investors should be aware that the Trusts are not "managed" trusts and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the Portfolios of either of the Trusts
except under extraordinary circumstances. Investors should note in particular
that the Securities were selected on the basis of the criteria set forth under
Objective of the Trusts in the Investment Summary and that the Trusts 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. A number of the Securities in the Trust may also be owned by
other clients of the Sponsor. However, because these clients may have
differing investment objectives, the Sponsor may sell certain Securities from
those accounts in instances where a sale by a Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. (See
Administration of the Trusts -- Trust Supervision.) 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 each 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 Trusts to take advantage of market fluctuations or changes in
anticipated rates of appreciation. As a result, the amount realized upon the
sale of the Securities may not be the highest price attained by an individual
Security during the life of the Trusts. 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 the Portfolios on pages 11
and 12). These rankings are subject to change. Securities will not necessarily
be sold by a 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 Trusts
vary widely, and the effect of a dollar of fluctuation, either higher or
lower, in stock prices will be much greater as a percentage of the lower-price
stocks' purchase price than as a percentage of the higher-price stocks'
purchase price.
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 a 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 such 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 Trusts. 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 each of the Trusts.
Finally, pursuant to the terms of the Indenture, subsequent deposits to create
additional Units may not always be secured by the deposit of cash (or a letter
of credit in lieu of cash) at the time contracts are entered into to purchase
additional Securities. In such circumstances should the Sponsor not deliver
cash in consideration for the additional Units delivered, the Trust may be
unable to satisfy its contracts to purchase the additional Securities. The
failure of the Sponsor to deliver cash to a Trust, or any delays in a Trust
receiving such cash, may have significant adverse consequences for that Trust.
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<PAGE>
A Trust may be terminated at any time and all outstanding Units liquidated
if the net asset value of the Trust falls below $500,000 and deposits of
Securities in the Trust have not exceeded $50,000,000 at that time. At any
time after deposits in a Trust have exceeded $50,000,000, the Trust may be so
terminated if the net asset value of the Trust falls below $20,000,000.
Investors should note that if the net asset value of a 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.
The Technology and Science Industries. Companies in the rapidly changing
fields of science and technology face special risks. For example, their
products or services may not prove commercially successful or may become
obsolete quickly. The value of the Trusts' Units may be susceptible to factors
affecting the technology, technology-related and science industries and to
greater risk and market fluctuation than an investment in a trust that invests
in a broader range of portfolio securities not concentrated in any particular
industry. As such, the Trusts may not be an appropriate investment for
individuals who are not long-term investors and who, as their primary
objective, require safety of principal or stable income from their
investments. The technology, technology-related and science industries may be
subject to greater governmental regulation than many other industries and
changes in governmental policies and the need for regulatory approvals may
have a material adverse effect on these industries. Additionally, companies in
these industries may be subject to risks of developing technologies,
competitive pressures and other factors and are dependent upon consumer and
business acceptance as new technologies evolve.
Small Capitalization Stock. Investing in small capitalization stocks may
involve greater risk than investing in medium and large capitalization stocks,
since the can be subject to more abrupt or erratic price movements. Small
market capitalization companies ("Small-Cap Companies") are those with market
capitalizations of $1 billion or less at the time of the Trusts' investment.
Many Small-Cap Companies will have had their securities publicly traded, if at
all, for only a short period of time and will not have had the opportunity to
establish a reliable trading pattern through economic cycles. The price
volatility of Small-Cap Companies is relatively higher than larger, older and
more mature companies. The greater price volatility of Small-Cap Companies may
result from the fact that there may be less market liquidity, less information
publicly available or fewer investors who monitor the activities of these
companies. In addition, the market prices of these securities may exhibit more
sensitivity to changes in industry or general economic conditions. Some Small-
Cap Companies will not have been in existence long enough to experience
economic cycles or to demonstrate whether they are sufficiently well managed
to survive downturns or inflationary periods. Further, a variety of factors
may affect the success of a company's business beyond the ability of its
management to prepare or compensate for them, including domestic and
international political developments, government trade and fiscal policies,
patterns of trade and war or other military conflict which may affect
industries or markets or the economy generally.
Foreign Securities. The Trusts may hold Securities of non-U.S. issuers
directly 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 Trusts, including the withholding of
dividends. Foreign securities may be subject to foreign government
taxes that could reduce the yield on such securities. Since the Trusts may
invest in securities quoted in currencies
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<PAGE>
other than the United States dollar, changes in foreign currency exchange
rates may adversely affect the value of foreign securities in the Portfolios
and the net asset value of Units of the Trusts. 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 each
Portfolio as set forth in Administration of the Trusts -- 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 Trusts 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 Trusts, 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 Trusts.
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 Portfolios and on the ability of each of the
Trusts to satisfy their 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 Trusts,
including those underlying any ADRs held by a Trust, would be payable in the
currency of the country of their issuance. However, the Trusts will compute
their income in United States dollars, and the computation of income will be
made on the date of its receipt by the Trusts 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 its
conversion to United States dollars, 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.
INCOME
The estimated net annual income per Unit is determined by subtracting from
the estimated annual dividend income of the Securities in a Portfolio the
estimated annual expenses (total estimated annual Trustee's, Sponsor's and
administrative fees and expenses) and dividing by the number of Units
outstanding. The actual net annual income per Unit will vary from estimates as
the issuers of the Securities change their dividend rates or as the expenses
of a Trust change.
There is no assurance that any dividends will be declared or paid in the
future on the Securities.
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<PAGE>
Record Days and Distribution Days are set forth under Investment Summary.
Income Distributions, if any, will be automatically reinvested in additional
Units of a Trust at no extra charge unless a Holder elects to receive his
distributions in cash (see Reinvestment Plan). Because dividends on the
Securities are not received by the Trusts at a constant rate throughout the
year and because the issuers of the Securities may change the schedules or
amounts of dividend payments, any distributions, whether reinvested or paid in
cash, may be more or less than the amount of dividend income actually received
by a Trust and credited to the income account established under the Indenture
(the "Income Account") as of the Record Day.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequences of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Battle Fowler LLP, special counsel for the Sponsor, under
existing law:
Each Trust is not an association taxable as a corporation for Federal income
tax purposes, and income received by a Trust will be treated as income of the
Holders in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of each
Security in a Trust under the grantor trust rules of Sections 671-679 of the
Internal Revenue Code of 1986, as amended (the "Code"). A Holder should
determine his tax cost for each Security represented by his Units by
allocating the total cost for his Units, including the sales charge, among
each Security in a Trust represented by his Units (in proportion to the fair
market values thereof on the date the Holder purchases his Units). In order
for a Holder who purchases Units on the Initial Date of Deposit to determine
the fair market value of his pro rata portion of each Security on such date,
see Cost of Securities to Trust under Portfolios.
A Holder will be considered to have received all of the dividends paid on
his pro rata portion of each Security when such dividends are received by a
Trust even if the Holder does not actually receive such distributions but
rather reinvests his dividend distributions pursuant to the Reinvestment Plan.
An individual Holder who itemizes deductions will be entitled to deduct his
pro rata share of fees and expenses paid by a Trust only to the extent that
this amount together with the Holder's other miscellaneous deductions exceeds
2% of his adjusted gross income.
Distributions which are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes but 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)
only to the extent of dividends received from domestic corporations by a
Trust.
The dividends-received deduction is currently 70%. However, Congress from
time to time considers proposals to reduce the rate, and enactment of such a
proposal would adversely affect the after-tax return to investors who can take
advantage of the deduction. Holders are urged to consult their own tax
advisers.
Section 246 and 246A of the Code contain limitations on the eligibility of
dividends for the corporate dividends-received deduction (in addition to the
limitation discussed above). Depending upon the corporate Holder's
circumstances (including whether he has a 45-day holding period for his Units
and whether his Units are debt financed), these limitations may be applicable
to dividends received by a Holder from a 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
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corporation's "adjusted current earnings" for purposes of the adjustment to
alternative minimum taxable income required by Section 56(g) of the Code.
A distribution of Securities by the Trustee to a Holder (or to his agent,
including the Distribution Agent) upon redemption of Units (or an exchange of
Units for Securities by the Holder with the Sponsor) will not be a taxable
event to the Holder or to other Holders. The redeeming or exchanging Holder's
basis for such Securities will be equal to his basis for the same Securities
(previously represented by his Units) prior to such redemption or exchange,
and his holding period for such Securities will include the period during
which he held his Units. However, a Holder will have a taxable gain or loss,
which will be a capital gain or loss except in the case of a dealer, when the
Holder (or his agent, including the Distribution Agent) sells the Securities
so received in redemption, when a redeeming or exchanging Holder receives cash
in lieu of fractional shares, when the Holder sells his Units or when the
Trustee sells the Securities from a Trust. Capital gains are generally 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. The deduction of capital losses is subject to
limitations.
The Trusts may hold Securities or ADRs of foreign corporations. For United
States income tax purposes, a holder of ADRs is treated as though he were
holding directly the shares of the foreign corporation represented by the
ADRs. Dividends paid by foreign issuers generally will be subject to
withholding tax.
Under the income tax laws of the State and City of New York, each Trust is
not an association taxable as a corporation and the income of a Trust will be
treated as the income of the Holders in the same manner as for Federal income
tax purposes.
The foregoing discussion relates only to the tax treatment of U.S. Holders
with regard to Federal and certain aspects of New York State and City income
taxes. Holders that are not U.S. citizens or residents ("Foreign Holders")
should be aware that dividend distributions from a Trust will be subject to a
withholding tax of 30%, or a lower treaty rate. Holders may be subject to
taxation in New York or in other jurisdictions (including a Foreign Holder's
country of residence) and should consult their own tax advisers in this
regard.
* * *
After the end of each fiscal year for each of the Trusts, the Trustee will
furnish to each Holder of that Trust an annual statement containing
information relating to the dividends received by the Trust on the Securities,
the gross proceeds received by the Trust from the disposition of any Security
(resulting from redemption or the sale by the Trust of any Security), and the
fees and expenses paid by the Trust. The Trustee will also furnish annual
information returns to each Holder and to the Internal Revenue Service.
RETIREMENT PLANS
These Trusts 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. Five year averaging will not apply to
distributions after December 31, 1999. Ten year averaging has been preserved
in very limited circumstances. 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
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<PAGE>
the establishment and maintenance of any such plan. Such plans are offered by
brokerage firms, including the Sponsor of these Trusts, and other financial
institutions. Fees and charges with respect to such plans may vary.
Before investing in a Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in a Trust; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of a Trust are deemed "plan assets" under ERISA and the Department
of Labor regulations regarding the definition of "plan assets."
Retirement Plans for the Self-Employed -- Keogh Plans. Units of the Trusts
may be purchased by retirement plans established for self-employed
individuals, partnerships or unincorporated companies ("Keogh plans").
Qualified individuals may generally make annual tax-deductible contributions
up to the lesser of 25% of annual compensation or $30,000 in a Keogh plan. The
assets of the plan must be held in a qualified trust or other arrangement
which meets the requirements of the Code. Generally there are penalties for
premature distributions from a plan before attainment of age 59 1/2, except in
the case of a participant's death or disability and certain other limited
circumstances. Keogh plan participants may also establish separate IRAs (see
below) to which they may contribute up to an additional $2,000 per year.
Individual Retirement Account -- IRA. Any individual (including one covered
by employer 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 a
Trust. Any individual can make a cash contribution to an IRA equal to the
lesser of $2,000 or 100% of earned income. A non-working spouse may also
establish an IRA and contribute up to $2,000 in cash provided the combined
income of both spouses is at least equal to the amount contributed by both
spouses to IRAs. However, the deductible amount an individual may contribute
will be reduced if the individual or the individual's spouse (in the case of a
married individual) participates in a qualified retirement plan and the
individual's adjusted gross income exceeds $25,000 (in the case of a single
individual) or $40,000 (in the case of married individuals filing a joint
return). Special rules apply in the case of married individuals living
together who file separate returns. Generally, there are penalties for
premature distributions from an IRA before the attainment of age 59 1/2,
except in the case of the participant's death or disability and certain other
circumstances.
SIMPLE Plans. Certain employers that employ not more than 100 employees may
establish a savings incentive match plan (a "SIMPLE PLAN"). Participants in a
SIMPLE Plan are permitted to contribute up to $6,000 to the Plan on a pre-tax
basis and the employer makes either matching contributions not in excess of 3
percent of compensation or non-elective contributions equal to 2 percent of
compensation. SIMPLE Plans are subject to distribution rules similar to IRAs,
except there is a 25 percent early withdrawal penalty for withdrawals made
during the first 2 years of participation. Units of the Trusts may be
purchased by SIMPLE Plans.
Corporate Pension and Profit-Sharing Plans. A pension or profit-sharing plan
established for employees of a corporation may purchase Units of a Trust.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units for each of the Trusts is computed by
adding to the aggregate value of the Securities in a Trust (as determined by
the Trustee) and any cash held to purchase Securities, divided by the number
of Units of the Trust outstanding, a sales charge of 4.167% thereof. This
sales charge is equal to a gross underwriting profit of 4.00% of the Public
Offering Price and is subject to change by the Sponsor at any time. For most
investors the commissions to purchase and sell the stocks directly would
exceed the Trust's 4.00%
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sales charge and expenses. Purchasers on July 15, 1997 (the first day Units
will be available to the public) will be made at $1.00 per Unit (including the
sales charge). To allow Units to be priced at $1.00, the Units outstanding as
of the Evaluation Time on July 15 (all of which are held by the Sponsor) will
be split (or split in reverse). The Public Offering Price on any subsequent
date will vary from the Public Offering Price on the date of the initial
Prospectus (set forth under Investment Summary) in accordance with
fluctuations in the aggregate value of the underlying Securities. Units will
be sold to investors at the Public Offering Price next determined after
receipt of the investor's purchase order. A proportionate share of the amount
in the Income Account (described under Administration of the Trusts--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
(until October 1, 1997) are as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED
- ---------------- ---------- ----------
<S> <C> <C>
Fewer than 50,000......................................... 4.000% 4.167%
50,000 but less than 100,000.............................. 3.500 3.627
100,000 but less than 250,000............................. 3.000 3.093
250,000 but less than 500,000............................. 2.500 2.564
500,000 but less than 1,000,000........................... 2.000 2.041
1,000,000 or more......................................... 1.500 1.523
</TABLE>
Commencing October 1, 1997 the sales charge will be reduced as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED
- ---------------- ---------- ----------
<S> <C> <C>
Fewer than 50,000......................................... 3.000% 3.093%
50,000 but less than 100,000.............................. 2.625 2.696
100,000 but less than 250,000............................. 2.250 2.302
250,000 but less than 500,000............................. 1.875 1.911
500,000 but less than 1,000,000........................... 1.500 1.523
1,000,000 or more......................................... 1.125 1.138
Commencing January 2, 1998, the sales charge will be reduced as follows:
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED
- ---------------- ---------- ----------
<S> <C> <C>
Fewer than 50,000......................................... 2.000% 2.041%
50,000 but less than 100,000.............................. 1.750 1.781
100,000 but less than 250,000............................. 1.500 1.523
250,000 but less than 500,000............................. 1.250 1.266
500,000 but less than 1,000,000........................... 1.000 1.010
1,000,000 or more......................................... 0.750 0.756
</TABLE>
Commencing April 1, 1998, the sales charge will be 1.00% of the Public
Offering Price for purchases of up to 1 million Units (1.010% of the net
amount invested) and will be 0.750% of Public Offering Price for purchases of
1 million Units or more (0.756% of the net amount invested), regardless of the
number of Units purchased.
- ------------
* The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $1 per Unit and will be applied
on whichever basis is more favorable to the investor.
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<PAGE>
The holders of units of Uncommon Values, 1996 Series or 1995 Series (the
"Prior Series") may exchange units of the Prior Series for Units of either of
the Trusts at their relative net asset values, subject to a reduced sales
charge of 3.0%. An exchange of units of a Prior Series for Units of a Trust
will generally be a taxable event. The exchange option described above will
also be available to investors in the Prior Series who elect to purchase Units
of a Trust within 60 days of their liquidation of units in the Prior Series
(see Exchange and Rollover Privileges). The sales charge applicable to such
exchanges will be reduced on a graduated scale, for exchanges of at least
50,000 Units of a Prior Series, as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED
- ---------------- ---------- ----------
<S> <C> <C>
Fewer than 50,000......................................... 3.000% 3.093%
50,000 but less than 100,000.............................. 2.625 2.696
100,000 but less than 250,000............................. 2.250 2.302
250,000 but less than 500,000............................. 1.875 1.911
500,000 but less than 1,000,000........................... 1.500 1.523
1,000,000 or more......................................... 1.125 1.138
</TABLE>
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units of one, or both of the Trusts on an aggregated
basis, in the amounts stated. 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 System 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 a 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 Trusts, and may also be distributed
through dealers.
The Sponsor intends to qualify Units of each of the Trusts for sale in all
states of the United States where qualification is deemed necessary through
the Sponsor and dealers who are members of the National Association of
Securities Dealers, Inc. Sales to dealers, if any, will initially be made at
prices which represent a concession from the Public Offering Price per Unit to
be established at the time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 4.00% of the Public Offering Price (subject to
reduction on a graduated scale basis in the case of volume purchases, and
subject to reduction for purchasers in each succeeding quarter during the
first year of the Trusts, as referred to above).
- ------------
* The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $1 per Unit and will be applied
on whichever basis is more favorable to the investor.
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<PAGE>
On the Initial Date of Deposit, the Sponsor also realized a profit or loss
on deposit of the Securities into each of the Trusts in the amount set forth
under Investment Summary, which equals the difference between the cost of the
Securities to a Trust (which is based on the aggregate value of the Securities
on the Date of Deposit) and the purchase price of such Securities to the
Sponsor. In the event that subsequent deposits are effected by the Sponsor
with the deposit of Securities (as opposed to cash or a letter of credit) 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 each of the Trusts (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 Portfolios on
the Initial Date of Deposit were acquired, except as indicated under
Portfolios.
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 a Trust, (2)
amounts in a Trust including dividends receivable on stocks trading ex-
dividend and (3) all other assets in a Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against a Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to a 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
Portfolios 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 a
Trust on the date on which the Units of such Trust 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.
25
<PAGE>
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 Trusts --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 a 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 50,000 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 a 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 50,000 Units will be
held by The Chase Manhattan Bank, 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
26
<PAGE>
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 Trusts--
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
that 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 each 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 a 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 a Trust; deducting
therefrom the sum of (a) taxes or other governmental charges against a Trust
not previously deducted, (b) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Sponsor and counsel to a 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 System, 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.
27
<PAGE>
EXPENSES AND CHARGES
Initial Expenses -- All or some portion of the expenses incurred in
establishing each of the Trusts, 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 Trusts and amortized over one year. Any balance of the expenses
incurred in establishing the Trusts, as well as advertising and selling
expenses, will be paid by the Underwriters at no cost to the Trusts.
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 Trusts,
including certain mailing and printing expenses, are borne by the Trusts. 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 these Trusts,
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 Trusts 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
Trusts (including legal and auditing expenses) and expenses of counsel
designated by the Sponsor, (3) various governmental charges and fees and
expenses for maintaining the Trusts' 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
Trusts and the rights and interests of Holders (for example, expenses in
exercising a 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 each Trust. The amounts of these charges and fees are
secured by a lien on the Trusts.
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
Capital Accounts (see below); (2) to the extent the Capital Account funds are
insufficient, by distribution from the Income Accounts (see below) (which will
reduce income distributions from the Accounts); (3) to the extent the Income
and Capital Accounts are insufficient, by selling Securities from the
Portfolios 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
Trusts -- Risk Factors), the Sponsor cannot provide any assurance that
dividends will be sufficient to meet any or all expenses of the Trusts. 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 Trusts -- Taxes.
28
<PAGE>
ADMINISTRATION OF THE TRUSTS
RECORDS
The Trustee keeps records of the transactions of each of the Trusts at its
corporate trust office including names, addresses and holdings of all Holders
of record, 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 a 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. No
distribution need be made from the Capital Account if the balance therein is
less than an amount sufficient to distribute $5.00 per 1,000 Units. 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 Trusts. 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 Trusts
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 a 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 Trusts 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
Each of Trust is a unit investment trust which normally follows a buy and
hold investment strategy and is not actively managed. However, each 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 each of the Trust, however, will not be actively
managed and therefore the adverse financial condition of an issuer will not
necessarily require
29
<PAGE>
the sale of its Securities from such Portfolio. However, while it is the
intention of the Sponsor to continue a 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, or a substantial decline in
price or the occurrence of materially adverse credit factors that, in the
opinion of the Sponsor, would make the retention of the Securities detrimental
to the interests of the Holders. The Sponsor intends to review the
desirability of retaining in a Portfolio any Security if its Investment Rating
is reduced below 3 by the Sponsor's Research Department. The Sponsor is
authorized under the Indenture to direct the Trustee to invest the proceeds of
any sale of Securities not required for redemption of Units in eligible money
market instruments selected by the Sponsor which will include only the
following instruments:
(i) negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which have,
together with their branches or subsidiaries, more than $2 billion in total
assets, except that certificates of deposit or time deposits of smaller
domestic banks may be held provided the deposit does not exceed the insurance
coverage on the instrument (which currently is $100,000), and provided further
that a Trust's aggregate holding of certificates of deposit or time deposits
issued by the Trustee may not exceed the insurance coverage of such
obligations and (ii) U.S. Treasury notes or bills.
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 is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the
Trustee to accept or reject such an offer to take any other action with
respect thereto as the Sponsor may deem proper if (1) the issuer failed to
declare or pay anticipated dividends with respect to such Securities or (2) in
the written opinion of the Sponsor the issuer will probably fail to declare or
pay anticipated dividends with respect to such Securities in the reasonably
foreseeable future. Any Securities so received in exchange or substitution
shall be sold unless the Sponsor directs that they 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 a
Portfolio and no replacement security is acquired, the Trustee shall within a
reasonable period of time thereafter notify Holders of that Trust of the sale
of the Security. Except as stated in this and the following paragraphs, the
Trusts may not acquire any securities other than (1) the Securities and (2)
securities resulting from stock dividends, stock splits and other capital
changes of the issuers of the 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. Replacement Securities that are replacing Failed Securities will
be deposited into a Trust within 110 days of the date of deposit of the
contracts that have failed at a purchase price that does not exceed the amount
of funds reserved for the purchase of Failed Securities. 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; 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 a 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
30
<PAGE>
Securities Act of 1933 or result in a 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 that Trust as to be acceptable
for acquisition by such Trust. Whenever a Security has been eliminated by a
Trust and a Replacement Security is deposited, the Trustee shall within five
days after the deposit of the Replacement Security notify all Holders of that
Trust of the sale of the Security eliminated and the acquisition of the
Replacement Security. Whenever a Replacement Security has been acquired for a
Trust, the Trustee shall, on the next Distribution Day that is more than 30
days thereafter, make a pro rata distribution of the amount, if any, by which
the cost to that Trust of the Failed Security exceeded the cost of the
Replacement Security. If Replacement Securities are not acquired, the Sponsor
will, 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 Portfolios plus income attributable to the Failed Security.
Any property received by the Trustee after the Initial Date of Deposit as a
distribution on any of the Securities in a form other than cash or additional
shares of the Securities received in a non-taxable stock dividend or stock
split, shall be retained or disposed of by the Trustee as provided in the
Indenture. The proceeds of any disposition shall be credited to the Income or
Capital Account of a Trust.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trusts 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 during the 90-day period subsequent
to the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on the
Initial Date of Deposit (the "Original Proportionate Relationship") is
maintained to the extent practicable. Deposits of Additional Securities
subsequent to the 90-day period following the Initial Date of Deposit must
replicate exactly the original proportionate relationship among the number of
shares of each Security comprising a Portfolio at the end of the initial 90-
day period.
With respect to deposits of cash (or a letter of credit) with instructions
to purchase Additional Securities), Additional Securities or contracts to
purchase Additional Securities, in connection with creating additional Units
of a Trust during the 90-day period 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 Trusts or the
Sponsor, the Sponsor may (1) deposit cash or a letter of credit with
instructions to purchase the Security when practicable (provided that it
becomes available within 110 days after the Initial Date of Deposit) 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. Any funds held to acquire Additional or Replacement Securities which
have not been used to purchase Securities at the end of the 90-day period
beginning with the Initial Date of Deposit, shall be used to purchase
Securities as described above or shall be distributed to Holders together with
the attributable sales charge.
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. Within a
reasonable period of time after the end of June in each year (normally within
20 to 60 days), the Trustee will
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<PAGE>
furnish to each person who at any time during the preceding period from July 1
through June 30 (a "Trust Year") was a Holder of record a 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 such Trust 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 such Trust Year; (3) a list of the Securities held and the
number of Units outstanding on the last business day of such Trust Year; (4)
the Redemption Price per Unit based upon the computation thereof made on the
thirtieth day of June (or the last business day prior thereto) of such Trust
Year; and (5) amounts actually distributed during such Trust Year 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.
BOOK-ENTRY UNITS
Ownership of Units of a Trust will not be evidenced by certificates. All
evidence of ownership of the Units will be recorded in book-entry form either
at Depository Trust Company ("DTC") through an investor's broker's account or
through registration of the Units on the books of the Trustee. Units held
through DTC will be deposited by the Sponsor with DTC in the Sponsor's DTC
account and registered in the nominee name CEDE & CO. Individual purchases of
beneficial ownership interest in a Trust will be made in book-entry form
through DTC or the Trustee. Ownership and transfer of Units will be evidenced
and accomplished directly and indirectly by book-entries made by DTC and its
participants if the Units are evidenced at DTC, or otherwise will be evidenced
and accomplished by book-entries made by the Trustee. DTC will record
ownership and transfer of the Units among DTC participants and forward all
notices and credit all payments received in respect of the Units held by the
DTC participants. Beneficial owners of Units will receive written confirmation
of their purchases and sale from the broker-dealer or bank from whom their
purchase was made. Units are transferable by making a written request properly
accompanied by a written instrument or instruments of transfer which should be
sent registered or certified mail for the protection of the Unit Holder.
Holders must sign such written request exactly as their names appear on the
records of the Trusts. Such signatures must be guaranteed by a commercial bank
or trust company, savings and loan association or by a member firm of a
national securities exchange.
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 a Trust of any
Holder
32
<PAGE>
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 Trusts -- 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 of record 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 nominee Holder appearing on the record books of the Trustee.
EXCHANGE AND ROLLOVER PRIVILEGES
Holders may exchange their Units of a Trust into units of any then
outstanding series of Uncommon Values (an "Exchange Series") at their relative
net asset values, subject only to a reduced sales load (as disclosed in the
prospectus for the Exchange Series). The exchange option described above will
also be available to investors in the Trusts who elect to purchase units of an
Exchange Series within 60 days of their liquidation of Units in a Trust.
Holders who retain their Units until the termination of a Trust, may
reinvest their terminating distributions into units of a subsequent series of
Uncommon Values (the "New Series") provided one is offered. Such purchaser may
be entitled to a reduced sales load (as disclosed in the prospectus for the
New Series) upon the purchase of units of the New Series.
Under the exchange and rollover privilege, the Sponsor's repurchase price
would be based upon the market value of the Securities in a Trust portfolio
and units in the Exchange Series or New Series will be sold to the Holder at a
price based on the aggregate market price of the securities in the portfolio
of the Exchange Series or New Series. Exercise of the exchange or rollover
privilege by Holders is subject to the following conditions: (i) the Sponsor
must have units available of an Exchange Series or New Series during initial
public offering or, if such period is completed, must be maintaining a
secondary market in the units of the available Exchange Series or New Series
and such units must be available in the Sponsor's secondary market account at
the time of the Holder's elections; and (ii) exchange will be effected only in
whole units. Holders will not be permitted to advance any funds in excess of
their redemption in order to complete the exchange. Any excess proceeds
received from the Holder for exchange will be remitted to such Holder.
It is expected that the terms of the Exchange Series or New Series will be
substantially the same as the terms of the Trusts described in this
Prospectus, and that similar reinvestment programs will be offered with
respect to all subsequent series of the Trusts. The availability of these
options do not constitute a solicitation of an offer to purchase units of an
Exchange Series or a New Series or any other security. A Holder's election to
participate in either of these options will be treated as an indication of
interest only. Holders should contact their financial professionals to find
out what suitable Exchange or New Series is available and to obtain a
prospectus. Holders may acquire units of those Series which are lawfully for
sale in states where they reside and only those Exchange Series in which the
Sponsor is maintaining a secondary market. At any time prior to the exchange
by the Holder of units of an Exchange Series, or the purchase by a Holder of
units of a New Series, such Holder may change his investment strategy and
receive his terminating distribution. An election of either of these options
will not prevent the Holder from recognizing taxable gain or loss (except in
the case of loss, if and to the extent
33
<PAGE>
the Exchange or New Series, as the case may be, is treated as substantially
identical to a Trust) as a result of the liquidation, even though no cash will
be distributed to pay any taxes. Holders should consult their own tax advisers
in this regard. The Sponsor reserves the right to modify, suspend or terminate
either or both of these reinvestment privileges at any time.
REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Smith Barney Inc. or directly in the name of the Holder, unless
the Holder notifies his financial consultant at Smith Barney Inc. or the
Trustee, respectively, to the contrary, will be reinvested automatically in
additional Units of the Trust in which the Holder is making such reinvestment
at no extra charge pursuant to the Trust's "Reinvestment Plan". If the Holder
does not wish to participate in the Reinvestment Plan, the Holder must notify
his financial consultant at Smith Barney Inc. or the Trustee at least ten
business days prior to the Distribution Day to which that election is to
apply. The election may be modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of that 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
Trusts -- 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 either of the Trusts. 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
of a Trust 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
34
<PAGE>
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 Indentures and
liquidate the Trusts or (3) continue to act as Trustee without terminating the
Indenture.
The Sponsor shall be under no liability to the Trusts 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 Stocks deposited in the Trusts, the Trustee
may use the services of The Depository Trust Company. These services may
include safekeeping of the Stocks, 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 Battle Fowler LLP, 75 East
55th Street, New York, New York 10022, as special counsel for the Sponsor.
AUDITORS
The Statements of Financial Condition and the Portfolios included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors,
as indicated in their report with respect thereto, and is so included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
SPONSOR
Smith Barney Inc. ("Smith Barney"), was incorporated in Delaware in 1960 and
traces its history through predecessor partnerships to 1873. Smith Barney, an
investment banking and securities broker-dealer firm, is a member of the New
York Stock Exchange, Inc. and other major securities and commodities
exchanges, the National Association of Securities Dealers, Inc. and the
Securities Industry Association. Smith Barney is an indirect wholly-owned
subsidiary of The Travelers Inc. The Sponsor or an affiliate is investment
adviser, principal underwriter or distributor of more than 60 open-end
investment companies and investment manager of 12 closed-end investment
companies. Smith Barney also sponsors all Series of Corporate Securities
Trust, Government Securities Trust, Harris, Upham Tax-Exempt Fund and Tax
Exempt Securities Trust, and acts as co-sponsor of most Series of Defined
Asset Funds.
35
<PAGE>
The Equity Focus Trusts
Uncommon Values
Aggressive Growth Series, 1997
Growth & Income Series, 1997
Smith Barney Unit Investment Trusts
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
INDEX
<TABLE>
<S> <C>
Investment Summary 2
Independent Auditors' Report 9
Statements of Financial Condition 10
Portfolios 11
Description of the Trusts 13
Taxes 20
Public Sale of Units 22
Market for Units 25
Redemption 26
Expenses and Charges 28
Administration of the Trusts 29
Exchange and Rollover Privileges 33
Reinvestment Plan 34
Resignation, Removal and Limitations on Liability 34
Miscellaneous 35
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPONSOR: TRUSTEE: INDEPENDENT ACCOUNTANTS:
<S> <C> <C>
Smith Barney Inc. The Chase Manhattan Bank KPMG Peat Marwick LLP
388 Greenwich Street 4 New York Plaza 345 Park Avenue
23rd Floor New York, New York 10004 New York, New York 10154
New York, New York 10013 (800) 354-6565
(212) 816-4000
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY
---------------------------------
a Member of TravelersGroup [LOGO]
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THE TRUSTS, NOT CONTAINED IN THIS PROSPECTUS; AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
UT 6373F7
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositor is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
<TABLE>
<CAPTION>
SEC FILE OR
IDENTIFICATION NUMBER
---------------------
<C> <S> <C>
I. Bonding Arrangements and Date of Organization of
the Depositor filed pursuant to Items A and B of
Part II of the Registration Statement on Form S-6
under the Securities Act of 1933: 2-67446
II. Information as to Officers and Directors of the
Depositor filed pursuant to Schedules A and D of
Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934: 8-12324
III. Charter documents of the Depositor filed as
Exhibits to the Registration Statement on Form S-
6 under the Securities Act of 1933 (Charter, By-
Laws): 2-52898
B. The Internal Revenue Service Employer Identification Numbers of the
Sponsor and Trustee are as follows:
Smith Barney Inc. 13-1912900
The Chase Manhattan Bank, Trustee 13-4994650
</TABLE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
THE REGISTRATION STATEMENT ON FORM S-6 IS COMPRISED OF THE FOLLOWING PAPERS
AND DOCUMENTS:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of The Uncommon Values
Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The undertaking to file reports.
The signatures.
Written Consents of the following persons:
KPMG Peat Marwick LLP (included in Exhibit 5.1)
Battle Fowler LLP (included in Exhibit 3.1)
The following exhibits:
<TABLE>
<C> <S>
*1.1 -- Form of Reference Trust Indentures.
2.1 -- Form of Standard Terms and Conditions of Trust (incorporated by
reference to Exhibit 2.1 to the Registration Statement of The
Uncommon Values Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
*3.1 -- Opinion of counsel as to the legality of securities being issued
including their consent to the use of their name under the headings
"Taxes" and "Miscellaneous --Legal Opinion" in the Prospectus.
*5.1 -- Consent of KPMG Peat Marwick LLP to the use of their name under the
heading "Miscellaneous --Auditors" in the Prospectus.
</TABLE>
- ------------
* Filed herewith.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned thereunto duly authorized in the City of New
York and State of New York on the 15th day of July 1997.
SIGNATURES APPEAR ON PAGE II-4
A majority of the members of the Board of Directors of Smith Barney Inc. has
signed this Amendment to the Registration Statement pursuant to Powers of
Attorney authorizing the person signing this Amendment to the Registration
Statement to do so on behalf of such members.
II-3
<PAGE>
SMITH BARNEY UNIT TRUSTS (REGISTRANT)
SMITH BARNEY INC.
(DEPOSITOR)
By the following persons* who constitute a majority of the Board of Directors
of Smith Barney Inc.:
Steven D. Black
James S. Boshart III
Robert A. Case
James Dimon
Robert Druskin
Robert H. Lessin
William J. Mills, II
Michael B. Panitch
Paul Underwood
/s/ Kevin Kopczynski
By___________________________________
Kevin Kopczynski (As authorized
signatory for Smith Barney Inc.
and Attorney-in-fact for the
persons listed above)
- ------------
* Pursuant to Powers of Attorney filed under the 1933 Act file Numbers 33-
56722, 33-51999 and 333-21047.
II-4
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER PAGE
------ ----
1.1 --Form of Reference Trust Indentures.
3.1 --Opinion of counsel as to the legality of securities
being issued including their consent to the use of
their name under the headings "Taxes" and "Miscellaneous
--Legal Opinion" in the Prospectus.
5.1 --Consent of KPMG Peat Marwick LLP to the use of their name
under the heading "Auditors" in the Prospectus.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Statements
of Financial Conditions and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> AGGRESSIVE GROWTH
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-14-1997
<PERIOD-END> JUL-14-1997
<INVESTMENTS-AT-COST> 1,920,515
<INVESTMENTS-AT-VALUE> 1,920,515
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 117,163
<TOTAL-ASSETS> 2,037,678
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 117,163
<TOTAL-LIABILITIES> 117,163
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,037,678
<SHARES-COMMON-STOCK> 2,000,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,920,515
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,920,515
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from Statements
of Financial Conditions and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> GROWTH & INCOME
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-14-1997
<PERIOD-END> JUL-14-1997
<INVESTMENTS-AT-COST> 1,921,369
<INVESTMENTS-AT-VALUE> 1,921,369
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 117,163
<TOTAL-ASSETS> 2,038,532
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 117,163
<TOTAL-LIABILITIES> 117,163
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,038,532
<SHARES-COMMON-STOCK> 2,000,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,038,532
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,000,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,038,532
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 1.1
EQUITY FOCUS TRUSTS, UNCOMMON VALUES AGGRESSIVE GROWTH
SERIES, 1997
REFERENCE TRUST INDENTURE
Dated as of July 14, 1997
This Trust Indenture between Smith Barney Inc., as Sponsor, and The
Chase Manhattan Bank, as Trustee (the "Indenture") sets forth certain provisions
in full and incorporates other provisions by reference to the document entitled
"The Uncommon Values Unit Trust, Standard Terms and Conditions of Trust for
Series formed on or subsequent to July 2, 1985" as amended as of June 27, 1994
(the "Standard Terms and Conditions of Trust") and such provisions as are set
forth in full herein and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and Sections
are to Articles and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument, except that all references to "Shearson
Lehman Brothers, Inc." shall be deleted and replaced by "Smith Barney Inc." and
further, that The Chase Manhattan Bank shall, by executing this Trust Indenture,
be deemed to be the Trustee and a party to said Standard Terms and Conditions of
Trust for all purposes of this Trust.
<PAGE>
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to Equity Focus Trusts, Uncommon Values Growth & Income
Series, 1997 shall be shares of common stock, which securities have been
deposited with (or assigned to) the Trustee under this Indenture. Subject to the
provisions contained in the Standard Terms and Conditions of Trust, any new
Securities deposited in the Trust Fund pursuant to Section 3.06 will be those
which, assuming consummation of the particular transaction, will maintain the
same proportionate relationship among the number of shares of each of the
various Securities in the Trust Fund as exists among the Securities in the Trust
Fund immediately preceding any such deposit or distribution, subject, however,
to any change in such proportionate relationship in accordance with Sections
3.05, 3.08, 3.11, 3.12 or 5.02.
(b) In all places in the Standard Terms and Conditions of Trust where
the words "Monthly Income Distribution" appear, these words shall be deleted and
replaced by "Income Distribution".
(c) The definition of "Distribution Agency Agreement" and all
references thereto shall be deleted.
(d) The definition of "Distribution Day" shall be deleted and replaced
by the following:
"The day designated as such in the Prospectus under the heading
'Investment Summary'."
(e) In the definition of Evaluation Time, the words "Part II of the
Reference Trust Indenture" shall be changed to read: "the Prospectus."
(f) Section 2.02 is hereby amended by adding the following sentence as
the second sentence of Section 2.02: "Effective as of the Evaluation Time on
July 15, 1997, in the event that the aggregate value of Securities in the Trust
has increased since the evaluation on July 14, 1997, the Trustee shall issue
such number of additional Units to the Holder of outstanding Units as of the
close of business on July 14, 1997, that the price per Unit computed as of the
Evaluation Time on July 15, 1997, plus the maximum applicable sales charge shall
equal $1 per Unit (based on the number of Units outstanding as of said
Evaluation Time, including the additional Units issued pursuant to this
sentence); in the event that the
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<PAGE>
aggregate value of Securities in the Trust Fund has decreased since the
evaluation on July 14, 1997, there will be a reverse split of the outstanding
Units, and said Holder will surrender to the Trustee for cancellation such
number of Units, that the price per Unit computed as of the Evaluation Time on
July 15, 1997 plus the maximum applicable sales charge shall equal $1 per Unit
(based on the number of Units outstanding as of said Evaluation Time, reflecting
cancellation of Units pursuant to this sentence)."
(g) The third and fourth paragraphs of Section 3.04 shall be deleted and
replaced by the following four paragraphs:
"The Income Distribution shall be calculated as follows: The Trustee
shall as of each Record Day compute the amount distributable to Holders on
the next Distribution Day (the "Income Distribution"), which amount,
subject to the limitations on the Trustee's advances set forth in Section
3.01(b), shall be equal to the cash balance of the Income Account plus any
amount receivable on obligations purchased pursuant to Section 3.06(j) on
or before the following Distribution Day less accrued and unpaid expenses
of the Trust fund and any amounts payable from the Income Account in
respect of Units tendered for redemption prior to such Record Day divided
by the number of Units outstanding on such Record Day; provided, however,
that as of the Record Date occurring in the month of December of each
calendar year, the Trustee shall advance to the Income Account, and shall
include in the cash balance thereof, the amount of any dividends not
received as of such Record Date which are payable to the Trust Fund prior
to the end of the calendar year, and provided further that the Trustee may
increase or decrease the amount of the resulting calculation in order to
reflect the differences in Income actually received or fees, expenses,
losses, liabilities or advances actually incurred or made in any prior
period from the amounts estimated therefor. The Trustee shall be entitled
to be reimbursed, without interest, for any and all amounts advanced by it
pursuant to the preceding sentence, or otherwise hereunder, from funds
subsequently received by the Trust Fund as income on any of the Securities.
The Trustee shall be deemed to be the beneficial owner of the income of the
Trust Fund to the extent such income is required to reimburse the Trustee
for amounts advanced by it pursuant to this Section and to such extent
shall have a lien on the assets of the Trust Fund prior to the interest of
the Holders.
"Subject to the provisions of the succeeding two paragraphs,
distributions shall be made as follows: on or shortly after each
Distribution Day the Trustee shall distribute by check mailed to each
Holder of record at the close of business on the preceding Record Day, at
the post
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<PAGE>
office address of the Holder appearing on the record books of the Trustee
or by any other means mutually agreed upon by the Holder and the Trustee,
an amount substantially equal to the Income Distribution in respect of such
Distribution Day, plus the Holder's pro rata share of the cash balance of
the Capital Account (but not including cash required to purchase Contract
Securities or held for reinvestment in Substitute Securities pursuant to
Section 3.11) computed as of the close of business on the preceding Record
Day; provided, however, that the Trustee in its discretion may on any
-----------------
Distribution Day determine that the amount of the Income Distribution per
Unit because of any unusual or extraordinary increase or decrease in the
expenses incurred or expected to be incurred by the Trust Fund. In making
the computation of such Holder's interest in the balance of the Income
Capital Accounts, fractions of less than one cent per unit may be omitted.
"In the event that the Sponsor adopts a Reinvestment Plan the cash
distributions to Holders shall be automatically reinvested by the Sponsor
in additional Units of the Trust. Units of the Trust purchased under the
Reinvestment Plan shall be purchased at the Sponsor's Repurchase Price (the
net asset value per Unit without a sales charge) in effect at the close of
business on the Distribution Day. The Units purchased may be either
previously issued Units repurchased by the Sponsor or newly created Units
created upon the deposit of additional Securities in the Trust. The cost
of the Reinvestment Plan will be borne by the Sponsor, at no additional
cost to the Trust or individual Holders. Holders will receive an account
statement reflecting any purchase of Units under the Reinvestment Plan.
The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
"A Holder may elect not to participate in the Reinvestment Plan by
notifying his financial consultant at Smith Barney Inc. or by notifying the
Trustee in writing by ten days prior to the Distribution Day, which
election may be modified or terminated by similar notice. The Sponsor
shall promptly inform the Trustee of any election or modification or
termination thereof received by it from a Holder and the Trustee shall be
authorized conclusively to rely on any notice so received from the Sponsor.
In the event the Holder elects not to participate in the Reinvestment Plan,
or in the event that the Sponsor does not adopt or terminates a
Reinvestment Plan, the Trustee shall distribute the amount described above
by check mailed to each Holder of record at the close of business on the
preceding Record Day, at the post office address of the Holder appearing on
the record books of the Trustee or by
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<PAGE>
any other means mutually agreed upon by the Holder and the Trustee."
(h) Section 3.06 is amended to read as follows:
"SECTION 3.06. Deposit of Additional Securities. (a) Subject to the
--------------------------------
requirements set forth below in this Section, the Sponsor may, on any
Business Day (the "Trade Date"), subscribe for Additional Units as follows:
(1) Prior to the Evaluation Time on the Trade Date, the Sponsor
shall provide notice (the "Subscription Notice") to the Trustee, by
telecopy or by written communication, of the Depositor's intention to
subscribe for Additional Units. The Subscription Notice shall
identify the additional Securities to be acquired ("Additional
Securities") (unless such Additional Securities are a precise
replication of the then existing portfolio) and shall either (i)
specify the quantity of Additional Securities to be deposited by the
Sponsor on the settlement date for such subscription or (ii)
instruct the Trustee to purchase Additional Securities with an
aggregate value as specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such Business Day, the
Sponsor shall verify with the Trustee, by telecopy, the number of
Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units
created thereby (which time shall not be later than the time by which
the Trustee is required to settle any contracts for the purchase of
Additional Securities entered into by the Trustee pursuant to the
instruction of the Sponsor referred to in subparagraphs (1) above),
the Sponsor shall deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or contracts to
purchase such Additional Securities together with cash or a letter of
credit in the amount necessary to settle such contracts) or (ii) cash
or a letter of credit in the amount equal to the aggregate value of
the Additional Securities specified in the Subscription Notice,
together with, in each case, cash equal to a pro rata portion of the
Trust Fund Cash Evaluation (as defined in Section 5.01(b) bearing the
same ratio to the Units created by the deposit as the Trust Fund Cash
Evaluation bears to the Units outstanding immediately prior to the
deposit. Each deposit made during the 90 days following the deposit
made pursuant to this
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<PAGE>
Section 3.06 hereof shall replicate, to the extent practicable, the
original proportionate relationship among the number of shares of
each Security in the Trust Fund established on the Initial Date of
Deposit (the "Original Proportionate Relationship"), adjusted, if
appropriate, to reflect (1) the deposit of Substitute Securities
pursuant to Section 3.11, (2) sale of securities pursuant to Section
3.08, 3.12 or 5.02 and (3) the occurrence of any stock dividends,
stock splits, redemptions, acquisition of shares through dividend
reinvestment plans or similar events. Each deposit made after the 90
days following the deposit made pursuant to this Section 3.06 hereof
(except for deposits made to replace Failed Securities if such
deposits occur within 20 days from the date of a failure occurring
within such initial 90 day period) shall maintain exactly the
proportionate relationship existing among the Securities as of the
expiration of such 90 day period adjusted as provided in the
preceding sentence.
(4) On the settlement date for a subscription, the Trustee shall, in
exchange for the Securities and cash or letter of credit described
above, issue and deliver to or on the order of the Sponsor the
number of Units verified by the Sponsor with the Trustee.
(5) Each deposit of Additional Securities, shall be listed in a
Deposit Certificate delivered by the Sponsor stating the date of such
deposit and the number of Additional Units being issued therefor. The
Trustee shall acknowledge in such Deposit Certificate the receipt of
the deposit and the number of Additional Units issued in respect
thereof. The Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the
Securities.
(6) Additional Securities deposited or purchased with cash or a
letter of credit deposited may be purchased in round lots, and if the
amount of the deposit is insufficient to acquire round lots of each
Security to be acquired, Additional Securities may be deposited (or
acquired with cash or a letter of credit deposited) in the order of
the Security in the Trust Fund most under-represented immediately
before the deposit with respect to the Original Proportionate
Relationship.
(7) All instructions to purchase Additional Securities pursuant to
this Section shall be in writing and shall direct the Trustee to
perform contracts to purchase
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<PAGE>
Additional Securities which the Sponsor shall have entered into and
assigned to the Trustee.
(8) Notwithstanding the preceding, in the event that the Sponsor's
Subscription Notice shall instruct the Trustee to purchase Additional
Securities in an amount which, when added to the purchase amount of
all other unsettled contracts entered into by the Trustee, exceeds
50% of the value of the Securities then held (taking into account the
value of contracts to purchase Securities only to the extent that
there has been deposited with the Trustee cash or an irrevocable
letter of credit in an amount sufficient to settle their purchase),
the Sponsor shall deposit with the Trustee concurrently with the
Subscription Notice cash or an irrevocable letter of credit in an
amount such that, when added to 50% of the value of the Securities
then held (determined as above) the aggregate value shall be not less
than the purchase amount of the Securities to be purchased pursuant
to such Subscription Notice.
"(b) If Securities of an issue of Securities originally deposited (an
'Original Issue') are unavailable or cannot be purchased at reasonable
prices or their purchase is prohibited or restricted by law, regulation or
policies applicable to the Trust Fund or the Sponsor at the time of a
subsequent deposit under Subsection 3.06(a), in lieu of the portion of the
deposit that would otherwise be represented by those Securities, the
Sponsor may (1) deposit (or instruct the Trustee to purchase) (i)
Securities of another Original Issue or (ii) 'Replacement Securities'
complying with the conditions of paragraphs (c) and (d) of this Section, or
(2) deposit cash or a letter of credit with instructions to acquire the
Securities of the Original Issue when practicable. Any cash or letter of
credit deposited under this Subsection 3.06(b) to acquire Securities of an
Original Issue or Replacement Securities which at the end of the 90 day
period following the Date of Deposit has not been used to purchase
Securities shall be used to purchase Securities in accordance with this
Subsection 3.06(b), provided that if an instruction to purchase an
Additional Security or a Replacement Security has not been given and such
cash or letter of credit remain in the Trust Fund after 110 days from the
Date of Deposit, the amount thereof shall be distributed, together with the
attributable sales charge, at the time and in the manner specified in
Section 3.11 regarding failed contracts.
"(c) Replacement Securities shall meet all the conditions applicable
to Substitute Securities in Section 3.11.
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<PAGE>
"(d) In addition to the requirements specified in paragraph (c), a
Replacement Security must:
"(i) be publicly-traded common stock;
"(ii) 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 provision of law); and
"(iii) have characteristics sufficiently similar to the
characteristics of the other Securities in the Trust Fund as to be
acceptable for acquisition by the Trust Fund.
"(e) The Sponsor may, simultaneously with the Subscription Notice
provided in Section 3.06(a), deliver to the Trustee the Additional
Securities or cash or letter of credit in the aggregate value of the
Additional Securities to be purchased pursuant to the Sponsor's
instruction, as specified in the Subscription Notice, together with cash
equal to the pro rata portion of the Trust Fund Cash Evaluation allocable
to the Additional Units to be created, all in the amounts and in the manner
provided by the preceding paragraphs of this Section, and the Trustee
shall, promptly following the Evaluation Time on such day, deliver to the
Sponsor the Additional Units created in respect of such deposit.
"(f) Execution of a Deposit Certificate shall be deemed a
certification by the Sponsor that the purchase of the Securities specified
in such Deposit Certificate complies with the conditions specified in this
section, as applicable. The Deposit Certificate shall be deemed to restate
the representations, agreements and certifications of the Sponsor made in
Sections 6-8, inclusive, of the Memorandum of Closing for the Trust Fund to
which the deposit relates as though the representations, agreements and
certifications were made with respect to the Deposit Certificate and the
deposit of Securities with the Trustee. The Deposit Certificate shall also
be deemed to constitute, for value received, the sale, assignment and
transfer to the Trustee of all right, title and interest in and to the
Additional Securities identified in the Deposit Certificate and to
irrevocably constitute and appoint the Trustee the Sponsor's attorney in
all matters respecting such Securities with full power of substitution in
the premises. The Deposit Certificate shall include an acknowledgment by
the Trustee that it has delivered to the Sponsor the number of Units
specified in the Deposit Certificate. Any Additional Securities received
by the Trustee shall be deposited in the Trust Fund and shall be subject to
the terms and conditions
-8-
<PAGE>
of this Indenture to the same extent as the securities originally deposited
hereunder. Any contract to purchase Additional Securities pursuant to this
Section 3.06 that is declared by the Sponsor to have failed due to reasons
beyond the control of the Sponsor or the Trustee, shall be immediately
replaced by the Sponsor with a contract to purchase Substitute Securities
pursuant to Section 3.11.
"(g) The Trustee shall cause to be delivered to the Sponsor within a
reasonable period of time after the end of each calendar year a certificate
of the Trustee as to the Additional Securities received by the Trustee for
deposit in the Trust Fund and the number of Units issued in exchange
therefor, during the calendar year. Within a reasonable time after receipt
of such certificate, the Sponsor shall acknowledge in writing the receipt
of such certificate and shall certify it as complete and correct or shall
indicate to the Trustee in writing any differences between the Sponsor's
records of the Securities transactions and the issuance of Units and
Trustee's certificate.
"(h) The Trustee shall have no responsibility or liability for any
loss or depreciation resulting from any purchase made pursuant to the
Sponsor's instructions and in the absence thereof shall have no duty to
purchase any securities. The Trustee shall have no responsibility or
liability for maintaining the composition of the Trust Fund.
"(i) Cash delivered to the Trustee for purchase of Securities pursuant
to this section shall be on deposit with the Trustee or any Custodian or
sub-custodian specified in Section 8.01(a) and shall bear interest for the
benefit of the Trust Fund at the Federal Funds rate adjusted daily as
reported in the New York Times under the caption 'Key Rates'.
--------------
"(j) The Sponsor may direct the Trustee, with part or all of the
proceeds from the sale of Securities, to the extent not required for
redemption of Units, to purchase one or more debt obligations for deposit
in the Trust, provided that each such debt obligation (1) is an "Eligible
Security" as defined in paragraph (a)(5) of Rule 2a-7 pursuant to the
Investment Company Act of 1940 or in the opinion of the Sponsor has
comparable credit characteristics, and (2) has a fixed final maturity date
no later than the next Distribution Day. The proceeds from the maturity of
any said debt obligation shall be distributed to Holders on said
Distribution Day."
(i) Section 3.09 shall be amended in its entirety to read as follows:
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<PAGE>
"Section 3.09. Reorganization or Similar Event. In the event that an
-------------------------------
offer by the issuer of any of the Securities or any other party shall be
made to issue new Securities in exchange or substitution for any
Securities, the Trustee shall reject such offer, except that if (1) the
issuer failed to declare or pay anticipated dividends with respect to such
Securities or (2) in the opinion of the Sponsor, given in writing to the
Trustee, the issuer will probably fail to declare or pay anticipated
dividends with respect to such Securities in the reasonably foreseeable
future, the Sponsor shall instruct the Trustee in writing to accept or
reject such offer and to take any other action with respect thereto as the
Sponsor may deem proper. However, should any exchange or substitution be
affected notwithstanding such rejection or without an initial offer,
any Securities, cash and/or property received in exchange shall be
deposited hereunder and shall be sold, if securities or property, by the
Trustee pursuant to the Sponsor's direction, unless the Sponsor advises the
Trustee to retain such securities or property. The cash then remaining
shall be distributed to Holders on the next Distribution Day not fewer than
31 days from the date the exchange consideration was received and otherwise
in the manner set forth in Section 3.04 regarding distributions from the
Capital Account. This section shall apply, but its application shall not be
limited, to public tender offers, mergers, acquisitions, reorganizations
and recapitalization. Neither the Sponsor nor the Trustee shall be liable
to any person for action or failure to take action pursuant to the terms of
this Section 3.09."
(j) For purposes of Section 3.11(b), the term "25%" shall be replaced by
"10%".
(k) Section 3.11(d) shall be deleted and replaced by the following
paragraph:
"(d) The Replacement Securities must be deposited into the Trust Fund
within 110 days of the date of deposit of the Failed Contract Securities."
(l) Article THREE shall be amended to add a new Section 3.16 as follows:
"SECTION 3.16. Foreign Exchange Transactions. The Sponsor shall
-----------------------------
direct the Trustee with respect to the circumstances under which foreign
exchange transactions are to be entered into and with respect to the method
whereby calculation of U.S. dollar equivalents for purpose of net asset
value computations or otherwise are to be made, in order to convert amounts
receivable in respect of Securities in foreign currencies into U.S.
dollars."
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<PAGE>
(m) Article THREE shall be amended to add a new Section 3.17 as follows:
"SECTION 3.17 Extraordinary Distributions. Any property received by
---------------------------
the Trustees after July 1, 1996 in a form other than cash or additional
shares of the Securities or of a Substitute Security received in a non-
taxable stock split or stock dividend, which shall be retained by the
Trust, shall be dealt with in the manner described in Section 3.09 and
shall be retained or disposed by the Trustee according to those provisions,
provided, however, that no property shall be retained which the Trustee
determines shall adversely affect its duties hereunder. The proceeds of any
disposition shall be credited to the Income or Capital Account of the
Trust, as the Sponsor may direct.
"The Trust is intended to be treated as a fixed investment (i.e.,
grantor) trust for income tax purposes, and its powers shall be limited in
accordance with the restrictions imposed on such trusts by Treas. Reg.
Section 301.7701-4."
(n) Section 5.02 shall be amended in its entirety to read as follows:
"SECTION 5.02. Redemption of Units. (a) 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 Day or Christmas;
provided that any tender received after the Evaluation Time or received on
--------
a day which is not a Tender Day shall be deemed to be made as of the next
succeeding Tender Day. Any Unit tendered by a Holder or his duly
authorized attorney for redemption at the Trustee's Office (effected by
tender of such documents as the Trustee shall reasonably require and, in
the case of certificated Units, by the related Certificate) shall be
redeemed and canceled by the Trustee on the third Business Day following
the Tender Day (the "Redemption Date").
---------------
"(b) Subject to deduction of any tax or other governmental charges due
thereon, redemption is to be made by payment of cash equal to the Unit
Value as of the Evaluation Time next following the tender plus any Accrued
Income per Unit from, and including, the day next following such Evaluation
Time to, but not including, the day of payment to the redeeming Holder,
multiplied by the number of Units being redeemed (the "Redemption Price").
----------------
The portion of the Redemption Price representing the pro rata share of the
cash on hand in the Income Account and such Accrued Income shall be
withdrawn from the Income Account to the
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<PAGE>
extent funds are available for such purpose. The balance of the Redemption
Price, including Accrued Income to the extent unavailable in the Income
Account, shall be withdrawn from the Capital Account to the extent that
funds are available for such purpose; if the available balance in the
Capital Account shall be insufficient, the Trustee shall sell Securities
from among those designated for such purpose by the Sponsors on the current
list as provided in subsection (d) below, in such amounts as shall be
necessary for the purposes of such redemption; provided, however, that no
-------- -------
amount in the Capital Account may be used for any redemption unless the
Sponsor so directs in writing. Instead, Units shall be redeemed by the
Trustee's segregating on the books of the Trust those Securities selected
from among those designated on such current list by the Sponsor for the
account of the Holder (to the extent the value thereof is equal to the
Redemption Price (less any cash distributed from the Income and Capital
Accounts as directed by the Sponsor)). The Trustee shall sell the
Securities, any portion of which have been segregated as provided below, or
collect the redemption proceeds thereof and distribute such sale or
redemption proceeds (1) to the Holder, to the extent described in the
immediately preceding sentence, and (2) to the Capital Account, to the
extent of any balance of the sale or redemption proceeds; provided that if
--------
the Sponsor contemplates any further deposit of Additional Securities into
the Trust in accordance with Section 3.06, the Securities to be segregated
shall be selected by the Sponsor so as to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
each Security then existing. In the event that funds are withdrawn from the
Capital Account or Securities are sold for payment of any portion of the
Redemption Price representing Accrued Income, the Capital Account shall be
reimbursed when sufficient funds are available in the Income Account. As
used in this Section 5.02, "Accrued Income" shall mean net accrued but
unpaid interest on Securities or interest earned on Funds deposited for
purchase of Securities as provided in Section 3.06(i) and with respect to
Common Stocks and Preferred Stocks, net dividends declared but unpaid but,
except as otherwise instructed by the Sponsors, only for the period
commencing three Business Days prior to the record date therefor and ending
on the date received by the Trustee.
"(c) If the Prospectus for the Trust provides for in-kind redemption,
a Holder who satisfies any requirements specified in such Prospectus for
in-kind redemption may, in lieu of redeeming Units in the manner provided
in subsection (b) above, redeem Units and request that a distribution in
kind be made by the Trustee to the Distribution Agent of (1) Securities
(the "Securities Distribution") equal to the fractional undivided interest
-----------------------
represented by each Unit in all Securities in the Trust to the extent of
the Unit Value of the Units redeemed plus (2) an amount in cash (the "Cash
----
Distribution") equal to the
------------
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<PAGE>
Unit Value less the value of the Securities Distribution, determined as of
the Evaluation Time next following the tender, multiplied by the number of
Units being redeemed (such Securities Distribution and Cash Distribution in
the aggregate being referred to herein as the "Redemption Distribution").
-----------------------
In making a Cash Distribution to the Distribution Agent the Trustee shall
withdraw the Holder's pro rata share of the cash in the Income Account and
Capital Account from such accounts to the extent that funds are available
for such purpose.
"Upon receipt of a Redemption Distribution the Distribution Agent shall
hold such distribution for the account of the tendering Holder. Securities
shall be held in the name of the Distribution Agent or its nominee and cash
shall be held in a non-interest bearing account. Upon receipt of proper
instructions from the tendering Holder, the Distribution Agent shall
deliver the Redemption Distribution pursuant to such directions (except
that if any securities received are available only in book entry form,
unless the tendering Holder designates an agent to hold such securities in
its name which agent is, or clears through, a member of the depository for
those securities, the Distribution Agent shall sell those securities and
distribute the cash proceeds, net of transaction costs, if any) as soon as
practical, as directed by such tendering Holder upon payment of such
reasonable fees set by the Trustee or the Distribution Agent to cover the
cost of delivery, including costs for shipping, handling and insurance.
"Notwithstanding anything herein to the contrary, in the event that
any such tender of Units pursuant to this Section 5.02(c) would result in
the disposition, by the Trustee or the Distribution Agent, of less than a
whole Security, the Trustee or Distribution Agent shall distribute cash in
lieu thereof and sell such Securities as directed by the Sponsor as
required to make such cash available.
"(d) From time to time or at the request of the Trustee, the Sponsor
shall deliver to the Trustee and maintain a current list of Securities to
be sold upon the redemption of Units. Once Units have been tendered for
redemption, the Sponsor shall designate which of such Securities are to be
sold. In connection therewith, the Sponsor may specify the minimum number
of shares of any Securities to be sold at any one time and the date and
manner in which such sale is to be made by the Trustee. If the Sponsor
fails to deliver such a list or designate
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<PAGE>
Securities to be sold, the Trustee, in its sole discretion, may, or may
hire an agent to, establish a current list of Securities for such purposes
and designate which Securities are to be sold. In connection with any sale
of Securities pursuant to this Section 5.02, the Sponsor shall furnish the
Trustee with any documents necessary for the transfer of such Securities or
compliance with transfer restrictions, if any, on such Securities.
"(e) The Trustee shall, when selling Securities, use its reasonable
best efforts to secure the best price obtainable for the Trust taking into
account any minimum number of shares or value limitations on sales that
have been specified by the Sponsor. The Trustee shall place orders with
brokers (which may include the Sponsor and its affiliates) or dealers with
which it may reasonably expect to obtain the most favorable price and
execution of orders.
"In the event that it is necessary to sell any Securities other than
by the above means, and if the Sponsor shall so direct in writing
accompanied by any documents necessary to transfer such Securities or to
comply with transfer restrictions, if any, on such Security, the Trustee
shall transfer any such Securities to a participation trust with a trustee
selected by the Sponsor (which may include the Trustee, but the Trustee
shall have no obligation to act as such and may receive additional
compensation for so acting) to be governed by a trust indenture in exchange
for certificates of participation in such trust and shall then sell such
certificates of participation in the manner directed by the Sponsor. The
Trustee shall be entitled to receive such written notice and may act in
reliance thereon. In the event that the moneys received upon the sale of
such certificates exceeds the amount needed to pay the Redemption Price,
the Trustee shall credit such excess to the Capital Account or the Income
Account, as appropriate, in proportion to the amounts that represent the
principal and accrued interest on the Security transferred to such
participation trust. Sales of certificates of participation in any such
trust by the Trustee shall be made in such manner as the Sponsor shall
determine should realize the best price for the Trust.
"In the event that funds are withdrawn from the Capital Account or
Securities are sold for payment of any portion of the Redemption Price
representing Accrued Income, the Capital Account shall be reimbursed when
sufficient funds are available in the Income Account.
"(f) The Trustee may, in its discretion, and shall when so directed by
the Sponsor in writing, suspend the right of redemption or postpone the
date of payment of the Redemption
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<PAGE>
Price beyond the Redemption Date (1) for any period during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings; (2) for any period during which (as determined by the Securities
and Exchange Commission by rule, regulation or order) (A) trading on the
New York Stock Exchange is restricted or (B) an emergency exists as a
result of which disposal by the Trust of Securities is not reasonably
practicable or it is not reasonably practicable fairly to determine the
Trust Value; or (3) for such other periods as the Securities and Exchange
Commission may by order permit. Subject to Section 22 of the Investment
Company Act, the right of redemption shall terminate upon the earlier of
the Termination Date or the giving of notice of termination to Holders by
the Trustee pursuant to Section 9.01.
"(g) Not later than the close of business on the day of tender of a
Unit for redemption by a Holder other than the Sponsor, the Trustee shall
notify the Sponsors of such tender. The Sponsor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter but in no event subsequent to
(1) the close of business on the second Business Day after the day on which
such Unit was tendered for redemption or (2) in the case of a tender for
redemption by check, the Redemption Date. Such purchase shall be made by
payment for such Unit by the Sponsor (1) to the Trustee on behalf of the
Holder in the case of a tender for redemption other than by check, and (2)
to the Trustee in the case of a tender for redemption by check, in either
case not later than the close of business on the Redemption Date of an
amount not less than the Redemption Price which would otherwise be payable
by the Trustee to such Holder. So long as the Sponsor is maintaining a bid
in the secondary market at no less than the Redemption Price, the Sponsor
will repurchase any Unit so tendered to the Trustee for redemption. Any
Unit purchased by the Sponsor from the Trustee may at the option of the
Sponsor be tendered to the Trustee for redemption in the manner provided in
subsection (a) of this Section 5.02. The Trustee is hereby irrevocably
authorized in its discretion, but without obligation, in the event that the
Sponsor does not elect to purchase any Unit tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the Sponsor
for redemption, in lieu of redeeming such Unit, to sell such Unit in the
over-the-counter market for the account of the tendering Holder at a price
which will return to the Holder an amount in cash, net after deducting
brokerage commissions, transfer taxes and other charges, equal to or in
excess of the Redemption Price which such Holder would otherwise be
entitled to receive on redemption pursuant to this Section 5.02. The
Trustee shall pay to the Holder the net proceeds
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of any such sale no later than the day the Holder would otherwise be
entitled to receive payment of the Redemption Price hereunder.
"(h) Neither the Sponsors, the Trustee nor any Distribution Agent
shall be liable or responsible in any way for depreciation or loss incurred
by reason of any sale of Securities made pursuant to this Section 5.02."
(o) Section 4.01 shall be amended to read in its entirety as follows:
"Section 4.01 Evaluation of Securities. The Trustee shall determine
------------------------
separately and promptly furnish to the Sponsor upon request the value of
each issue of Securities as of the Evaluation Time on the basis set forth
in this Section on the days on which the Trust Fund Evaluation is required
by Section 5.01. If the Securities are listed on a national or foreign
securities exchange or NASDAQ National Market System, the evaluation shall
be determined on the basis of the last reported sales price on the
exchange, if any, where the Securities are principally traded (unless the
Trustee deems such price inappropriate as a basis for valuation) or, if
there is no sale price on such exchange, at the mean between the closing
bid and offering prices. If the Securities are not so listed or, if so
listed but the principal market therefor is not on any such exchange, the
evaluation shall be based on the last reported sale prices on the over-the-
counter market (unless the Trustee deems such prices inappropriate as a
basis for valuations) or, if no such sale prices are available, (1) on the
basis of the mean between current bid and offering prices for the
Securities, (2) if bid and offering prices are not available for any
Securities, on the basis of the mean between current bid and offering
prices for comparable securities, (3) by determining the value of the
Securities at the mean between the bid and offering sides of the market by
appraisal or (4) by any combination of the above. The Trustee may obtain
current bid and offering prices for the Securities from investment dealers
or brokers (including the Sponsor) that customarily deal in similar
securities or from any other reporting service or source of information
which the Trustee deems appropriate. With respect to any Security which is
not listed on a national exchange, the Sponsor and the Trustee shall, from
time to time, designate one or more reporting services or other sources of
information on which the Trustee shall be authorized to rely in evaluating
such Security, and the Trustee shall have no liability for any errors
contained in the information so received. The cost thereof shall be an
expense reimbursable to the Trustee from the Income and Capital Accounts.
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<PAGE>
"For each evaluation, the Trustee shall also determine and furnish to
the Sponsor the aggregate of (a) the value of all Securities on the basis
of such evaluation and (b) cash on hand in the Trust Fund (other than cash
held specially for the purpose of Contract Securities).
"Until the Sponsor notifies the Trustee that there will be no further
deposits of Additional Securities, in making the evaluations specified in
this Section 4.01 and in Section 5.01, the Trustee shall value purchase
contracts as the Securities to be acquired thereunder, and sale contracts
as the proceeds thereof (with corresponding deductions from cash and number
of shares of Securities, respectively), as of the day on which such
contracts are entered into. Following such notification, in making the
evaluations specified in this Section 4.01 and in Section 5.01, the Trustee
shall value all contracts for purchase or sale of Securities as Securities
or cash, respectively (with corresponding deductions from cash or number of
shares), as of the first business day following the day on which contracts
are entered into."
(p) Section 5.01(a) shall be amended to read as follows:
"(a) As of the Evaluation Time (x) on each December 31 and June 30
(or the last Business Day prior thereto) commencing with the first such day
which is more than six months after the date of the Reference Trust
Indenture, (y) on any business day as of the Evaluation Time next following
the tender of any Unit for redemption, and (z) on any other Business Day
desired by it or requested by the Sponsor, the Trustee shall:
"(1) Add
"(A) cash on hand in the Trust Fund, other than cash held
specially for the purchase of Contract Securities,
"(B) the aggregate value of each issue of Securities other
than Contract Securities, and
"(C) any interest and dividends receivable on stocks trading
ex dividend, and
"(D) amounts representing organizational expenses paid from
the Trust less amounts representing accrued organizational
expenses of the Trust, plus
"(E) all other assets of the Trust; and
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"(2) Deduct
"(A) amounts representing any applicable taxes or
governmental charges payable out of the Trust Fund and for which
no deductions shall have previously been made for the purpose of
addition to the Reserve Account,
"(B) amounts representing estimated accrued fees and
expenses of the Trust Fund including but not limited to unpaid
fees and expenses of the Trustee (including legal and auditing
expenses), the Sponsor and of counsel pursuant to Section 3.10,
and
"(C) cash allocated for distribution to Holders of record,
or redemption of Units, as of a date prior to the evaluation then
being made.
"The resulting figure is herein called a 'Trust Fund Evaluation'.
Until the Sponsor has informed the Trustee that there will be no further
deposits of Additional Securities pursuant to Section 3.06, the Sponsor
shall provide the Trustee estimates of (i) the total organizational
expenses to be borne by the Trust pursuant to Section 10.02, (ii) the total
number of Units to be issued in connection with the initial deposit and all
anticipated deposits of Additional Securities and (iii) the period or
periods over which such expenses are to be amortized, separately stated
with respect to each such amortization period. For purposes of calculating
the Trust Fund Evaluation and Unit Value, the Trustee shall treat all such
anticipated expenses as having been paid and all liabilities therefor as
having been incurred, and all units as having been issued, respectively, on
the date of the Reference Trust Agreement, and, in connection with each
such calculation, shall take into account a pro rata portion of such
--- ----
expenses (and of any liability for advances made by the Trustee for the
payment thereof) based on the actual number of Units issued as of the date
of such calculation. In the event the Trustee is informed by the Sponsor
of a revision in its estimate of total expenses, total Units or period of
amortization, and upon the conclusion of the deposit of Additional
Securities or initial offering period, the Trustee shall base calculations
made thereafter on such revised estimates or actual expenses or period or
amortization, respectively, but such adjustment shall not affect
calculations made prior thereto and no adjustment shall be made in respect
thereof."
(q) Section 5.03 and all references thereto are deleted.
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<PAGE>
(r) For purposes of Section 7.03 the amount per year as compensation for
the Sponsor is hereby specified as the amount set forth under Investment Summary
in the Prospectus as Sponsor's Annual Fee.
(s) Section 8.01(b) shall be amended by adding the following to the clause
ending prior to the proviso beginning in the seventh line:
"or in respect of any evaluation which it is required to make, or
required or permitted to have made by others under this Indenture, or
otherwise."
(t) Section 8.01 shall also be amended as follows:
In paragraph (e), the word "sub-custodians" shall be inserted
following the word "attorneys" each time it appears and the following
sentence is added at the end of such paragraph:
"The Trustee is specifically authorized to employ Citibank, N.A., as a sub-
custodian of the Trustee with respect to any non-U.S. Securities held in
the Trust Fund."
Paragraph (g)(2) shall be amended to read as follows:
"(2) The liquidation amount referred to in clause (1) shall be (i)
$500,000 unless and until deposits to the Trust Fund exceed $50,000,000 in
asset value, and (ii) thereafter $20,000,000."
(u) Section 8.01 shall be amended to add new paragraphs (j), (k) and (l) as
follows:
"(j) All provisions of paragraphs (b), (c), (d), (e) and (h) of this
Section 8.01 shall be deemed to apply to the Distribution Agent as fully
and to the same extent as the Trustee.
"(k) The Trustee in its individual or any other capacity may become
owner or pledgee or, or be an underwriter or dealer in respect of, stock,
bonds or other obligations issued by the same issuer (or affiliate of such
issuer) or any obligor of any Securities at any time held as part of the
Trust and may deal in any manner with the same or with the issuer (or an
affiliate of the issuer) with the same rights and powers as if it were not
the Trustee hereunder.
"(l) The Trust may include a letter or letters of credit for the
purchase of Contract Securities issued by the Trustee in its individual
capacity for the account of the
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Sponsor, and the Trustee may otherwise deal with the Sponsor with the same
rights and powers as if it were not the Trustee hereunder."
(v) Section 8.05(d) shall be amended to add the following sentence in lieu
of that added at the conclusion of such paragraph by the Amendment dated June
27, 1994:
The provisions of this paragraph shall be deemed to apply to the
Distribution Agent in respect of any loss, liability or expense arising out
of or in connection with such Agent's actions hereunder to the same extent
as such provisions apply to the Trustee with respect to its acceptance and
administration of the Trust.
(w) For purposes of Section 8.05, the amount per year specified as
compensation for the Trustee is hereby specified as the amount set forth under
Investment Summary in the Prospectus as Trustee's Annual Fee.
(x) For purposes of Section 9.01, the Termination Date shall be the dates
specified in the Prospectus under Mandatory Termination of Trust in the
Investment Summary.
(y) Section 10.02 shall be amended to read as follows:
"Section 10.02. Initial Cost. To the extent not borne by the
----------------------------
Sponsor, the expenses incurred in establishing a Trust, including the
cost of the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to a Trust, SEC and state blue sky
registration fees, the costs of the initial valuation of the portfolio and
audit of a Trust, the initial fees and expenses of the Trustee, and legal
and other out-of-pocket expenses related thereto, but not including the
expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling expenses,
shall be borne by the Trust. Such expenses shall be paid from the Income
Account or, to the extent funds are not available in such Account, from the
Capital Account. To the extent the funds in the Income and Capital
Accounts of the Trust shall be insufficient to pay the expenses borne by
the Trust specified in this Section 10.02, the Trustee shall advance out of
its own funds and cause to be deposited and credited to the Income Account
such amount as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record Date from funds
on hand in the Income Account or, to the extent funds are not available in
such Account, from the Capital Account in the amount deemed to have
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<PAGE>
accrued as of such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the provisions of
Section 8.04 with respect to the reimbursement of disbursements for Trust
expenses, including, without limitation, the lien in favor of the Trustee
therefor and the authority to sell Securities as needed to fund such
reimbursement, shall apply to the expenses paid and amounts advanced
pursuant to this Section. For the purposes of the preceding sentence and
the addition provided in clause (1)(D) of Section 5.01, the expenses borne
by the Trust pursuant to this Section shall be deemed to have been paid on
the date of the Reference Trust Agreement and to accrue at a daily rate
over the time period specified for their amortization by the Sponsor
pursuant to Section 5.01; provided, however, that nothing herein shall be
--------
deemed to prevent, and the Trustee shall be entitled to, full reimbursement
for any advances made pursuant to this Section no later than the
termination of the Trust. For purposes of this Section 10.02, the Trustee
may rely on the written estimates of such expenses provided by the Sponsor
pursuant to Section 5.01."
This Indenture shall be deemed effective when executed and delivered by the
Sponsor and the Trustee.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Indenture to be duly executed
SMITH BARNEY INC.
Sponsor
By: /s/ Kevin Kopczynski
---------------------
Vice President
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Thomas Porrazzo
------------------------------
Vice President
(SEAL)
ATTEST:
By: /s/ Robert Ionescu
----------------------------
<PAGE>
EQUITY FOCUS TRUSTS, UNCOMMON VALUES GROWTH & INCOME
SERIES, 1997
REFERENCE TRUST INDENTURE
Dated as of July 14, 1997
This Trust Indenture between Smith Barney Inc., as Sponsor, and The
Chase Manhattan Bank, as Trustee (the "Indenture") sets forth certain provisions
in full and incorporates other provisions by reference to the document entitled
"The Uncommon Values Unit Trust, Standard Terms and Conditions of Trust for
Series formed on or subsequent to July 2, 1985" as amended as of June 27, 1994
(the "Standard Terms and Conditions of Trust") and such provisions as are set
forth in full herein and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and Sections
are to Articles and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument, except that all references to "Shearson
Lehman Brothers, Inc." shall be deleted and replaced by "Smith Barney Inc." and
further, that The Chase Manhattan Bank shall, by executing this Trust Indenture,
be deemed to be the Trustee and a party to said Standard Terms and Conditions of
Trust for all purposes of this Trust.
<PAGE>
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities (including Contract Securities) listed in the
Prospectus relating to Equity Focus Trusts, Uncommon Values Growth & Income
Series, 1997 shall be shares of common stock, which securities have been
deposited with (or assigned to) the Trustee under this Indenture. Subject to the
provisions contained in the Standard Terms and Conditions of Trust, any new
Securities deposited in the Trust Fund pursuant to Section 3.06 will be those
which, assuming consummation of the particular transaction, will maintain the
same proportionate relationship among the number of shares of each of the
various Securities in the Trust Fund as exists among the Securities in the Trust
Fund immediately preceding any such deposit or distribution, subject, however,
to any change in such proportionate relationship in accordance with Sections
3.05, 3.08, 3.11, 3.12 or 5.02.
(b) In all places in the Standard Terms and Conditions of Trust where
the words "Monthly Income Distribution" appear, these words shall be deleted and
replaced by "Income Distribution".
(c) The definition of "Distribution Agency Agreement" and all
references thereto shall be deleted.
(d) The definition of "Distribution Day" shall be deleted and replaced
by the following:
"The day designated as such in the Prospectus under the heading
'Investment Summary'."
(e) In the definition of Evaluation Time, the words "Part II of the
Reference Trust Indenture" shall be changed to read: "the Prospectus."
(f) Section 2.02 is hereby amended by adding the following sentence as
the second sentence of Section 2.02: "Effective as of the Evaluation Time on
July 15, 1997, in the event that the aggregate value of Securities in the Trust
has increased since the evaluation on July 14, 1997, the Trustee shall issue
such number of additional Units to the Holder of outstanding Units as of the
close of business on July 14, 1997, that the price per Unit computed as of the
Evaluation Time on July 15, 1997, plus the maximum applicable sales charge shall
equal $1 per Unit (based on the number of Units outstanding as of said
Evaluation Time, including the additional Units issued pursuant to this
sentence); in the event that the
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<PAGE>
aggregate value of Securities in the Trust Fund has decreased since the
evaluation on July 14, 1997, there will be a reverse split of the outstanding
Units, and said Holder will surrender to the Trustee for cancellation such
number of Units, that the price per Unit computed as of the Evaluation Time on
July 15, 1997 plus the maximum applicable sales charge shall equal $1 per Unit
(based on the number of Units outstanding as of said Evaluation Time, reflecting
cancellation of Units pursuant to this sentence)."
(g) The third and fourth paragraphs of Section 3.04 shall be deleted and
replaced by the following four paragraphs:
"The Income Distribution shall be calculated as follows: The Trustee
shall as of each Record Day compute the amount distributable to Holders on
the next Distribution Day (the "Income Distribution"), which amount,
subject to the limitations on the Trustee's advances set forth in Section
3.01(b), shall be equal to the cash balance of the Income Account plus any
amount receivable on obligations purchased pursuant to Section 3.06(j) on
or before the following Distribution Day less accrued and unpaid expenses
of the Trust fund and any amounts payable from the Income Account in
respect of Units tendered for redemption prior to such Record Day divided
by the number of Units outstanding on such Record Day; provided, however,
that as of the Record Date occurring in the month of December of each
calendar year, the Trustee shall advance to the Income Account, and shall
include in the cash balance thereof, the amount of any dividends not
received as of such Record Date which are payable to the Trust Fund prior
to the end of the calendar year, and provided further that the Trustee may
increase or decrease the amount of the resulting calculation in order to
reflect the differences in Income actually received or fees, expenses,
losses, liabilities or advances actually incurred or made in any prior
period from the amounts estimated therefor. The Trustee shall be entitled
to be reimbursed, without interest, for any and all amounts advanced by it
pursuant to the preceding sentence, or otherwise hereunder, from funds
subsequently received by the Trust Fund as income on any of the Securities.
The Trustee shall be deemed to be the beneficial owner of the income of the
Trust Fund to the extent such income is required to reimburse the Trustee
for amounts advanced by it pursuant to this Section and to such extent
shall have a lien on the assets of the Trust Fund prior to the interest of
the Holders.
"Subject to the provisions of the succeeding two paragraphs,
distributions shall be made as follows: on or shortly after each
Distribution Day the Trustee shall distribute by check mailed to each
Holder of record at the close of business on the preceding Record Day, at
the post
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<PAGE>
office address of the Holder appearing on the record books of the Trustee
or by any other means mutually agreed upon by the Holder and the Trustee,
an amount substantially equal to the Income Distribution in respect of such
Distribution Day, plus the Holder's pro rata share of the cash balance of
the Capital Account (but not including cash required to purchase Contract
Securities or held for reinvestment in Substitute Securities pursuant to
Section 3.11) computed as of the close of business on the preceding Record
Day; provided, however, that the Trustee in its discretion may on any
-----------------
Distribution Day determine that the amount of the Income Distribution per
Unit because of any unusual or extraordinary increase or decrease in the
expenses incurred or expected to be incurred by the Trust Fund. In making
the computation of such Holder's interest in the balance of the Income
Capital Accounts, fractions of less than one cent per unit may be omitted.
"In the event that the Sponsor adopts a Reinvestment Plan the cash
distributions to Holders shall be automatically reinvested by the Sponsor
in additional Units of the Trust. Units of the Trust purchased under the
Reinvestment Plan shall be purchased at the Sponsor's Repurchase Price (the
net asset value per Unit without a sales charge) in effect at the close of
business on the Distribution Day. The Units purchased may be either
previously issued Units repurchased by the Sponsor or newly created Units
created upon the deposit of additional Securities in the Trust. The cost
of the Reinvestment Plan will be borne by the Sponsor, at no additional
cost to the Trust or individual Holders. Holders will receive an account
statement reflecting any purchase of Units under the Reinvestment Plan.
The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
"A Holder may elect not to participate in the Reinvestment Plan by
notifying his financial consultant at Smith Barney Inc. or by notifying the
Trustee in writing by ten days prior to the Distribution Day, which
election may be modified or terminated by similar notice. The Sponsor
shall promptly inform the Trustee of any election or modification or
termination thereof received by it from a Holder and the Trustee shall be
authorized conclusively to rely on any notice so received from the Sponsor.
In the event the Holder elects not to participate in the Reinvestment Plan,
or in the event that the Sponsor does not adopt or terminates a
Reinvestment Plan, the Trustee shall distribute the amount described above
by check mailed to each Holder of record at the close of business on the
preceding Record Day, at the post office address of the Holder appearing on
the record books of the Trustee or by
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<PAGE>
any other means mutually agreed upon by the Holder and the Trustee."
(h) Section 3.06 is amended to read as follows:
"SECTION 3.06. Deposit of Additional Securities. (a) Subject to the
--------------------------------
requirements set forth below in this Section, the Sponsor may, on any
Business Day (the "Trade Date"), subscribe for Additional Units as follows:
(1) Prior to the Evaluation Time on the Trade Date, the Sponsor
shall provide notice (the "Subscription Notice") to the Trustee, by
telecopy or by written communication, of the Depositor's intention to
subscribe for Additional Units. The Subscription Notice shall
identify the additional Securities to be acquired ("Additional
Securities") (unless such Additional Securities are a precise
replication of the then existing portfolio) and shall either (i)
specify the quantity of Additional Securities to be deposited by the
Sponsor on the settlement date for such subscription or (ii)
instruct the Trustee to purchase Additional Securities with an
aggregate value as specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such Business Day, the
Sponsor shall verify with the Trustee, by telecopy, the number of
Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units
created thereby (which time shall not be later than the time by which
the Trustee is required to settle any contracts for the purchase of
Additional Securities entered into by the Trustee pursuant to the
instruction of the Sponsor referred to in subparagraphs (1) above),
the Sponsor shall deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or contracts to
purchase such Additional Securities together with cash or a letter of
credit in the amount necessary to settle such contracts) or (ii) cash
or a letter of credit in the amount equal to the aggregate value of
the Additional Securities specified in the Subscription Notice,
together with, in each case, cash equal to a pro rata portion of the
Trust Fund Cash Evaluation (as defined in Section 5.01(b) bearing the
same ratio to the Units created by the deposit as the Trust Fund Cash
Evaluation bears to the Units outstanding immediately prior to the
deposit. Each deposit made during the 90 days following the deposit
made pursuant to this
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<PAGE>
Section 3.06 hereof shall replicate, to the extent practicable, the
original proportionate relationship among the number of shares of
each Security in the Trust Fund established on the Initial Date of
Deposit (the "Original Proportionate Relationship"), adjusted, if
appropriate, to reflect (1) the deposit of Substitute Securities
pursuant to Section 3.11, (2) sale of securities pursuant to Section
3.08, 3.12 or 5.02 and (3) the occurrence of any stock dividends,
stock splits, redemptions, acquisition of shares through dividend
reinvestment plans or similar events. Each deposit made after the 90
days following the deposit made pursuant to this Section 3.06 hereof
(except for deposits made to replace Failed Securities if such
deposits occur within 20 days from the date of a failure occurring
within such initial 90 day period) shall maintain exactly the
proportionate relationship existing among the Securities as of the
expiration of such 90 day period adjusted as provided in the
preceding sentence.
(4) On the settlement date for a subscription, the Trustee shall, in
exchange for the Securities and cash or letter of credit described
above, issue and deliver to or on the order of the Sponsor the
number of Units verified by the Sponsor with the Trustee.
(5) Each deposit of Additional Securities, shall be listed in a
Deposit Certificate delivered by the Sponsor stating the date of such
deposit and the number of Additional Units being issued therefor. The
Trustee shall acknowledge in such Deposit Certificate the receipt of
the deposit and the number of Additional Units issued in respect
thereof. The Additional Securities shall be held, administered and
applied by the Trustee in the same manner as herein provided for the
Securities.
(6) Additional Securities deposited or purchased with cash or a
letter of credit deposited may be purchased in round lots, and if the
amount of the deposit is insufficient to acquire round lots of each
Security to be acquired, Additional Securities may be deposited (or
acquired with cash or a letter of credit deposited) in the order of
the Security in the Trust Fund most under-represented immediately
before the deposit with respect to the Original Proportionate
Relationship.
(7) All instructions to purchase Additional Securities pursuant to
this Section shall be in writing and shall direct the Trustee to
perform contracts to purchase
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<PAGE>
Additional Securities which the Sponsor shall have entered into and
assigned to the Trustee.
(8) Notwithstanding the preceding, in the event that the Sponsor's
Subscription Notice shall instruct the Trustee to purchase Additional
Securities in an amount which, when added to the purchase amount of
all other unsettled contracts entered into by the Trustee, exceeds
50% of the value of the Securities then held (taking into account the
value of contracts to purchase Securities only to the extent that
there has been deposited with the Trustee cash or an irrevocable
letter of credit in an amount sufficient to settle their purchase),
the Sponsor shall deposit with the Trustee concurrently with the
Subscription Notice cash or an irrevocable letter of credit in an
amount such that, when added to 50% of the value of the Securities
then held (determined as above) the aggregate value shall be not less
than the purchase amount of the Securities to be purchased pursuant
to such Subscription Notice.
"(b) If Securities of an issue of Securities originally deposited (an
'Original Issue') are unavailable or cannot be purchased at reasonable
prices or their purchase is prohibited or restricted by law, regulation or
policies applicable to the Trust Fund or the Sponsor at the time of a
subsequent deposit under Subsection 3.06(a), in lieu of the portion of the
deposit that would otherwise be represented by those Securities, the
Sponsor may (1) deposit (or instruct the Trustee to purchase) (i)
Securities of another Original Issue or (ii) 'Replacement Securities'
complying with the conditions of paragraphs (c) and (d) of this Section, or
(2) deposit cash or a letter of credit with instructions to acquire the
Securities of the Original Issue when practicable. Any cash or letter of
credit deposited under this Subsection 3.06(b) to acquire Securities of an
Original Issue or Replacement Securities which at the end of the 90 day
period following the Date of Deposit has not been used to purchase
Securities shall be used to purchase Securities in accordance with this
Subsection 3.06(b), provided that if an instruction to purchase an
Additional Security or a Replacement Security has not been given and such
cash or letter of credit remain in the Trust Fund after 110 days from the
Date of Deposit, the amount thereof shall be distributed, together with the
attributable sales charge, at the time and in the manner specified in
Section 3.11 regarding failed contracts.
"(c) Replacement Securities shall meet all the conditions applicable
to Substitute Securities in Section 3.11.
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<PAGE>
"(d) In addition to the requirements specified in paragraph (c), a
Replacement Security must:
"(i) be publicly-traded common stock;
"(ii) 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 provision of law); and
"(iii) have characteristics sufficiently similar to the
characteristics of the other Securities in the Trust Fund as to be
acceptable for acquisition by the Trust Fund.
"(e) The Sponsor may, simultaneously with the Subscription Notice
provided in Section 3.06(a), deliver to the Trustee the Additional
Securities or cash or letter of credit in the aggregate value of the
Additional Securities to be purchased pursuant to the Sponsor's
instruction, as specified in the Subscription Notice, together with cash
equal to the pro rata portion of the Trust Fund Cash Evaluation allocable
to the Additional Units to be created, all in the amounts and in the manner
provided by the preceding paragraphs of this Section, and the Trustee
shall, promptly following the Evaluation Time on such day, deliver to the
Sponsor the Additional Units created in respect of such deposit.
"(f) Execution of a Deposit Certificate shall be deemed a
certification by the Sponsor that the purchase of the Securities specified
in such Deposit Certificate complies with the conditions specified in this
section, as applicable. The Deposit Certificate shall be deemed to restate
the representations, agreements and certifications of the Sponsor made in
Sections 6-8, inclusive, of the Memorandum of Closing for the Trust Fund to
which the deposit relates as though the representations, agreements and
certifications were made with respect to the Deposit Certificate and the
deposit of Securities with the Trustee. The Deposit Certificate shall also
be deemed to constitute, for value received, the sale, assignment and
transfer to the Trustee of all right, title and interest in and to the
Additional Securities identified in the Deposit Certificate and to
irrevocably constitute and appoint the Trustee the Sponsor's attorney in
all matters respecting such Securities with full power of substitution in
the premises. The Deposit Certificate shall include an acknowledgment by
the Trustee that it has delivered to the Sponsor the number of Units
specified in the Deposit Certificate. Any Additional Securities received
by the Trustee shall be deposited in the Trust Fund and shall be subject to
the terms and conditions
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<PAGE>
of this Indenture to the same extent as the securities originally deposited
hereunder. Any contract to purchase Additional Securities pursuant to this
Section 3.06 that is declared by the Sponsor to have failed due to reasons
beyond the control of the Sponsor or the Trustee, shall be immediately
replaced by the Sponsor with a contract to purchase Substitute Securities
pursuant to Section 3.11.
"(g) The Trustee shall cause to be delivered to the Sponsor within a
reasonable period of time after the end of each calendar year a certificate
of the Trustee as to the Additional Securities received by the Trustee for
deposit in the Trust Fund and the number of Units issued in exchange
therefor, during the calendar year. Within a reasonable time after receipt
of such certificate, the Sponsor shall acknowledge in writing the receipt
of such certificate and shall certify it as complete and correct or shall
indicate to the Trustee in writing any differences between the Sponsor's
records of the Securities transactions and the issuance of Units and
Trustee's certificate.
"(h) The Trustee shall have no responsibility or liability for any
loss or depreciation resulting from any purchase made pursuant to the
Sponsor's instructions and in the absence thereof shall have no duty to
purchase any securities. The Trustee shall have no responsibility or
liability for maintaining the composition of the Trust Fund.
"(i) Cash delivered to the Trustee for purchase of Securities pursuant
to this section shall be on deposit with the Trustee or any Custodian or
sub-custodian specified in Section 8.01(a) and shall bear interest for the
benefit of the Trust Fund at the Federal Funds rate adjusted daily as
reported in the New York Times under the caption 'Key Rates'.
--------------
"(j) The Sponsor may direct the Trustee, with part or all of the
proceeds from the sale of Securities, to the extent not required for
redemption of Units, to purchase one or more debt obligations for deposit
in the Trust, provided that each such debt obligation (1) is an "Eligible
Security" as defined in paragraph (a)(5) of Rule 2a-7 pursuant to the
Investment Company Act of 1940 or in the opinion of the Sponsor has
comparable credit characteristics, and (2) has a fixed final maturity date
no later than the next Distribution Day. The proceeds from the maturity of
any said debt obligation shall be distributed to Holders on said
Distribution Day."
(i) Section 3.09 shall be amended in its entirety to read as follows:
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<PAGE>
"Section 3.09. Reorganization or Similar Event. In the event that an
-------------------------------
offer by the issuer of any of the Securities or any other party shall be
made to issue new Securities in exchange or substitution for any
Securities, the Trustee shall reject such offer, except that if (1) the
issuer failed to declare or pay anticipated dividends with respect to such
Securities or (2) in the opinion of the Sponsor, given in writing to the
Trustee, the issuer will probably fail to declare or pay anticipated
dividends with respect to such Securities in the reasonably foreseeable
future, the Sponsor shall instruct the Trustee in writing to accept or
reject such offer and to take any other action with respect thereto as the
Sponsor may deem proper. However, should any exchange or substitution be
affected notwithstanding such rejection or without an initial offer,
any Securities, cash and/or property received in exchange shall be
deposited hereunder and shall be sold, if securities or property, by the
Trustee pursuant to the Sponsor's direction, unless the Sponsor advises the
Trustee to retain such securities or property. The cash then remaining
shall be distributed to Holders on the next Distribution Day not fewer than
31 days from the date the exchange consideration was received and otherwise
in the manner set forth in Section 3.04 regarding distributions from the
Capital Account. This section shall apply, but its application shall not be
limited, to public tender offers, mergers, acquisitions, reorganizations
and recapitalization. Neither the Sponsor nor the Trustee shall be liable
to any person for action or failure to take action pursuant to the terms of
this Section 3.09."
(j) For purposes of Section 3.11(b), the term "25%" shall be replaced by
"10%".
(k) Section 3.11(d) shall be deleted and replaced by the following
paragraph:
"(d) The Replacement Securities must be deposited into the Trust Fund
within 110 days of the date of deposit of the Failed Contract Securities."
(l) Article THREE shall be amended to add a new Section 3.16 as follows:
"SECTION 3.16. Foreign Exchange Transactions. The Sponsor shall
-----------------------------
direct the Trustee with respect to the circumstances under which foreign
exchange transactions are to be entered into and with respect to the method
whereby calculation of U.S. dollar equivalents for purpose of net asset
value computations or otherwise are to be made, in order to convert amounts
receivable in respect of Securities in foreign currencies into U.S.
dollars."
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<PAGE>
(m) Article THREE shall be amended to add a new Section 3.17 as follows:
"SECTION 3.17 Extraordinary Distributions. Any property received by
---------------------------
the Trustees after July 1, 1996 in a form other than cash or additional
shares of the Securities or of a Substitute Security received in a non-
taxable stock split or stock dividend, which shall be retained by the
Trust, shall be dealt with in the manner described in Section 3.09 and
shall be retained or disposed by the Trustee according to those provisions,
provided, however, that no property shall be retained which the Trustee
determines shall adversely affect its duties hereunder. The proceeds of any
disposition shall be credited to the Income or Capital Account of the
Trust, as the Sponsor may direct.
"The Trust is intended to be treated as a fixed investment (i.e.,
grantor) trust for income tax purposes, and its powers shall be limited in
accordance with the restrictions imposed on such trusts by Treas. Reg.
Section 301.7701-4."
(n) Section 5.02 shall be amended in its entirety to read as follows:
"SECTION 5.02. Redemption of Units. (a) 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 Day or Christmas;
provided that any tender received after the Evaluation Time or received on
--------
a day which is not a Tender Day shall be deemed to be made as of the next
succeeding Tender Day. Any Unit tendered by a Holder or his duly
authorized attorney for redemption at the Trustee's Office (effected by
tender of such documents as the Trustee shall reasonably require and, in
the case of certificated Units, by the related Certificate) shall be
redeemed and canceled by the Trustee on the third Business Day following
the Tender Day (the "Redemption Date").
---------------
"(b) Subject to deduction of any tax or other governmental charges due
thereon, redemption is to be made by payment of cash equal to the Unit
Value as of the Evaluation Time next following the tender plus any Accrued
Income per Unit from, and including, the day next following such Evaluation
Time to, but not including, the day of payment to the redeeming Holder,
multiplied by the number of Units being redeemed (the "Redemption Price").
----------------
The portion of the Redemption Price representing the pro rata share of the
cash on hand in the Income Account and such Accrued Income shall be
withdrawn from the Income Account to the
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<PAGE>
extent funds are available for such purpose. The balance of the Redemption
Price, including Accrued Income to the extent unavailable in the Income
Account, shall be withdrawn from the Capital Account to the extent that
funds are available for such purpose; if the available balance in the
Capital Account shall be insufficient, the Trustee shall sell Securities
from among those designated for such purpose by the Sponsors on the current
list as provided in subsection (d) below, in such amounts as shall be
necessary for the purposes of such redemption; provided, however, that no
-------- -------
amount in the Capital Account may be used for any redemption unless the
Sponsor so directs in writing. Instead, Units shall be redeemed by the
Trustee's segregating on the books of the Trust those Securities selected
from among those designated on such current list by the Sponsor for the
account of the Holder (to the extent the value thereof is equal to the
Redemption Price (less any cash distributed from the Income and Capital
Accounts as directed by the Sponsor)). The Trustee shall sell the
Securities, any portion of which have been segregated as provided below, or
collect the redemption proceeds thereof and distribute such sale or
redemption proceeds (1) to the Holder, to the extent described in the
immediately preceding sentence, and (2) to the Capital Account, to the
extent of any balance of the sale or redemption proceeds; provided that if
--------
the Sponsor contemplates any further deposit of Additional Securities into
the Trust in accordance with Section 3.06, the Securities to be segregated
shall be selected by the Sponsor so as to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
each Security then existing. In the event that funds are withdrawn from the
Capital Account or Securities are sold for payment of any portion of the
Redemption Price representing Accrued Income, the Capital Account shall be
reimbursed when sufficient funds are available in the Income Account. As
used in this Section 5.02, "Accrued Income" shall mean net accrued but
unpaid interest on Securities or interest earned on Funds deposited for
purchase of Securities as provided in Section 3.06(i) and with respect to
Common Stocks and Preferred Stocks, net dividends declared but unpaid but,
except as otherwise instructed by the Sponsors, only for the period
commencing three Business Days prior to the record date therefor and ending
on the date received by the Trustee.
"(c) If the Prospectus for the Trust provides for in-kind redemption,
a Holder who satisfies any requirements specified in such Prospectus for
in-kind redemption may, in lieu of redeeming Units in the manner provided
in subsection (b) above, redeem Units and request that a distribution in
kind be made by the Trustee to the Distribution Agent of (1) Securities
(the "Securities Distribution") equal to the fractional undivided interest
-----------------------
represented by each Unit in all Securities in the Trust to the extent of
the Unit Value of the Units redeemed plus (2) an amount in cash (the "Cash
----
Distribution") equal to the
------------
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<PAGE>
Unit Value less the value of the Securities Distribution, determined as of
the Evaluation Time next following the tender, multiplied by the number of
Units being redeemed (such Securities Distribution and Cash Distribution in
the aggregate being referred to herein as the "Redemption Distribution").
-----------------------
In making a Cash Distribution to the Distribution Agent the Trustee shall
withdraw the Holder's pro rata share of the cash in the Income Account and
Capital Account from such accounts to the extent that funds are available
for such purpose.
"Upon receipt of a Redemption Distribution the Distribution Agent shall
hold such distribution for the account of the tendering Holder. Securities
shall be held in the name of the Distribution Agent or its nominee and cash
shall be held in a non-interest bearing account. Upon receipt of proper
instructions from the tendering Holder, the Distribution Agent shall
deliver the Redemption Distribution pursuant to such directions (except
that if any securities received are available only in book entry form,
unless the tendering Holder designates an agent to hold such securities in
its name which agent is, or clears through, a member of the depository for
those securities, the Distribution Agent shall sell those securities and
distribute the cash proceeds, net of transaction costs, if any) as soon as
practical, as directed by such tendering Holder upon payment of such
reasonable fees set by the Trustee or the Distribution Agent to cover the
cost of delivery, including costs for shipping, handling and insurance.
"Notwithstanding anything herein to the contrary, in the event that
any such tender of Units pursuant to this Section 5.02(c) would result in
the disposition, by the Trustee or the Distribution Agent, of less than a
whole Security, the Trustee or Distribution Agent shall distribute cash in
lieu thereof and sell such Securities as directed by the Sponsor as
required to make such cash available.
"(d) From time to time or at the request of the Trustee, the Sponsor
shall deliver to the Trustee and maintain a current list of Securities to
be sold upon the redemption of Units. Once Units have been tendered for
redemption, the Sponsor shall designate which of such Securities are to be
sold. In connection therewith, the Sponsor may specify the minimum number
of shares of any Securities to be sold at any one time and the date and
manner in which such sale is to be made by the Trustee. If the Sponsor
fails to deliver such a list or designate
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<PAGE>
Securities to be sold, the Trustee, in its sole discretion, may, or may
hire an agent to, establish a current list of Securities for such purposes
and designate which Securities are to be sold. In connection with any sale
of Securities pursuant to this Section 5.02, the Sponsor shall furnish the
Trustee with any documents necessary for the transfer of such Securities or
compliance with transfer restrictions, if any, on such Securities.
"(e) The Trustee shall, when selling Securities, use its reasonable
best efforts to secure the best price obtainable for the Trust taking into
account any minimum number of shares or value limitations on sales that
have been specified by the Sponsor. The Trustee shall place orders with
brokers (which may include the Sponsor and its affiliates) or dealers with
which it may reasonably expect to obtain the most favorable price and
execution of orders.
"In the event that it is necessary to sell any Securities other than
by the above means, and if the Sponsor shall so direct in writing
accompanied by any documents necessary to transfer such Securities or to
comply with transfer restrictions, if any, on such Security, the Trustee
shall transfer any such Securities to a participation trust with a trustee
selected by the Sponsor (which may include the Trustee, but the Trustee
shall have no obligation to act as such and may receive additional
compensation for so acting) to be governed by a trust indenture in exchange
for certificates of participation in such trust and shall then sell such
certificates of participation in the manner directed by the Sponsor. The
Trustee shall be entitled to receive such written notice and may act in
reliance thereon. In the event that the moneys received upon the sale of
such certificates exceeds the amount needed to pay the Redemption Price,
the Trustee shall credit such excess to the Capital Account or the Income
Account, as appropriate, in proportion to the amounts that represent the
principal and accrued interest on the Security transferred to such
participation trust. Sales of certificates of participation in any such
trust by the Trustee shall be made in such manner as the Sponsor shall
determine should realize the best price for the Trust.
"In the event that funds are withdrawn from the Capital Account or
Securities are sold for payment of any portion of the Redemption Price
representing Accrued Income, the Capital Account shall be reimbursed when
sufficient funds are available in the Income Account.
"(f) The Trustee may, in its discretion, and shall when so directed by
the Sponsor in writing, suspend the right of redemption or postpone the
date of payment of the Redemption
-14-
<PAGE>
Price beyond the Redemption Date (1) for any period during which the New
York Stock Exchange is closed other than customary weekend and holiday
closings; (2) for any period during which (as determined by the Securities
and Exchange Commission by rule, regulation or order) (A) trading on the
New York Stock Exchange is restricted or (B) an emergency exists as a
result of which disposal by the Trust of Securities is not reasonably
practicable or it is not reasonably practicable fairly to determine the
Trust Value; or (3) for such other periods as the Securities and Exchange
Commission may by order permit. Subject to Section 22 of the Investment
Company Act, the right of redemption shall terminate upon the earlier of
the Termination Date or the giving of notice of termination to Holders by
the Trustee pursuant to Section 9.01.
"(g) Not later than the close of business on the day of tender of a
Unit for redemption by a Holder other than the Sponsor, the Trustee shall
notify the Sponsors of such tender. The Sponsor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter but in no event subsequent to
(1) the close of business on the second Business Day after the day on which
such Unit was tendered for redemption or (2) in the case of a tender for
redemption by check, the Redemption Date. Such purchase shall be made by
payment for such Unit by the Sponsor (1) to the Trustee on behalf of the
Holder in the case of a tender for redemption other than by check, and (2)
to the Trustee in the case of a tender for redemption by check, in either
case not later than the close of business on the Redemption Date of an
amount not less than the Redemption Price which would otherwise be payable
by the Trustee to such Holder. So long as the Sponsor is maintaining a bid
in the secondary market at no less than the Redemption Price, the Sponsor
will repurchase any Unit so tendered to the Trustee for redemption. Any
Unit purchased by the Sponsor from the Trustee may at the option of the
Sponsor be tendered to the Trustee for redemption in the manner provided in
subsection (a) of this Section 5.02. The Trustee is hereby irrevocably
authorized in its discretion, but without obligation, in the event that the
Sponsor does not elect to purchase any Unit tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the Sponsor
for redemption, in lieu of redeeming such Unit, to sell such Unit in the
over-the-counter market for the account of the tendering Holder at a price
which will return to the Holder an amount in cash, net after deducting
brokerage commissions, transfer taxes and other charges, equal to or in
excess of the Redemption Price which such Holder would otherwise be
entitled to receive on redemption pursuant to this Section 5.02. The
Trustee shall pay to the Holder the net proceeds
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<PAGE>
of any such sale no later than the day the Holder would otherwise be
entitled to receive payment of the Redemption Price hereunder.
"(h) Neither the Sponsors, the Trustee nor any Distribution Agent
shall be liable or responsible in any way for depreciation or loss incurred
by reason of any sale of Securities made pursuant to this Section 5.02."
(o) Section 4.01 shall be amended to read in its entirety as follows:
"Section 4.01 Evaluation of Securities. The Trustee shall determine
------------------------
separately and promptly furnish to the Sponsor upon request the value of
each issue of Securities as of the Evaluation Time on the basis set forth
in this Section on the days on which the Trust Fund Evaluation is required
by Section 5.01. If the Securities are listed on a national or foreign
securities exchange or NASDAQ National Market System, the evaluation shall
be determined on the basis of the last reported sales price on the
exchange, if any, where the Securities are principally traded (unless the
Trustee deems such price inappropriate as a basis for valuation) or, if
there is no sale price on such exchange, at the mean between the closing
bid and offering prices. If the Securities are not so listed or, if so
listed but the principal market therefor is not on any such exchange, the
evaluation shall be based on the last reported sale prices on the over-the-
counter market (unless the Trustee deems such prices inappropriate as a
basis for valuations) or, if no such sale prices are available, (1) on the
basis of the mean between current bid and offering prices for the
Securities, (2) if bid and offering prices are not available for any
Securities, on the basis of the mean between current bid and offering
prices for comparable securities, (3) by determining the value of the
Securities at the mean between the bid and offering sides of the market by
appraisal or (4) by any combination of the above. The Trustee may obtain
current bid and offering prices for the Securities from investment dealers
or brokers (including the Sponsor) that customarily deal in similar
securities or from any other reporting service or source of information
which the Trustee deems appropriate. With respect to any Security which is
not listed on a national exchange, the Sponsor and the Trustee shall, from
time to time, designate one or more reporting services or other sources of
information on which the Trustee shall be authorized to rely in evaluating
such Security, and the Trustee shall have no liability for any errors
contained in the information so received. The cost thereof shall be an
expense reimbursable to the Trustee from the Income and Capital Accounts.
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<PAGE>
"For each evaluation, the Trustee shall also determine and furnish to
the Sponsor the aggregate of (a) the value of all Securities on the basis
of such evaluation and (b) cash on hand in the Trust Fund (other than cash
held specially for the purpose of Contract Securities).
"Until the Sponsor notifies the Trustee that there will be no further
deposits of Additional Securities, in making the evaluations specified in
this Section 4.01 and in Section 5.01, the Trustee shall value purchase
contracts as the Securities to be acquired thereunder, and sale contracts
as the proceeds thereof (with corresponding deductions from cash and number
of shares of Securities, respectively), as of the day on which such
contracts are entered into. Following such notification, in making the
evaluations specified in this Section 4.01 and in Section 5.01, the Trustee
shall value all contracts for purchase or sale of Securities as Securities
or cash, respectively (with corresponding deductions from cash or number of
shares), as of the first business day following the day on which contracts
are entered into."
(p) Section 5.01(a) shall be amended to read as follows:
"(a) As of the Evaluation Time (x) on each December 31 and June 30
(or the last Business Day prior thereto) commencing with the first such day
which is more than six months after the date of the Reference Trust
Indenture, (y) on any business day as of the Evaluation Time next following
the tender of any Unit for redemption, and (z) on any other Business Day
desired by it or requested by the Sponsor, the Trustee shall:
"(1) Add
"(A) cash on hand in the Trust Fund, other than cash held
specially for the purchase of Contract Securities,
"(B) the aggregate value of each issue of Securities other
than Contract Securities, and
"(C) any interest and dividends receivable on stocks trading
ex dividend, and
"(D) amounts representing organizational expenses paid from
the Trust less amounts representing accrued organizational
expenses of the Trust, plus
"(E) all other assets of the Trust; and
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<PAGE>
"(2) Deduct
"(A) amounts representing any applicable taxes or
governmental charges payable out of the Trust Fund and for which
no deductions shall have previously been made for the purpose of
addition to the Reserve Account,
"(B) amounts representing estimated accrued fees and
expenses of the Trust Fund including but not limited to unpaid
fees and expenses of the Trustee (including legal and auditing
expenses), the Sponsor and of counsel pursuant to Section 3.10,
and
"(C) cash allocated for distribution to Holders of record,
or redemption of Units, as of a date prior to the evaluation then
being made.
"The resulting figure is herein called a 'Trust Fund Evaluation'.
Until the Sponsor has informed the Trustee that there will be no further
deposits of Additional Securities pursuant to Section 3.06, the Sponsor
shall provide the Trustee estimates of (i) the total organizational
expenses to be borne by the Trust pursuant to Section 10.02, (ii) the total
number of Units to be issued in connection with the initial deposit and all
anticipated deposits of Additional Securities and (iii) the period or
periods over which such expenses are to be amortized, separately stated
with respect to each such amortization period. For purposes of calculating
the Trust Fund Evaluation and Unit Value, the Trustee shall treat all such
anticipated expenses as having been paid and all liabilities therefor as
having been incurred, and all units as having been issued, respectively, on
the date of the Reference Trust Agreement, and, in connection with each
such calculation, shall take into account a pro rata portion of such
--- ----
expenses (and of any liability for advances made by the Trustee for the
payment thereof) based on the actual number of Units issued as of the date
of such calculation. In the event the Trustee is informed by the Sponsor
of a revision in its estimate of total expenses, total Units or period of
amortization, and upon the conclusion of the deposit of Additional
Securities or initial offering period, the Trustee shall base calculations
made thereafter on such revised estimates or actual expenses or period or
amortization, respectively, but such adjustment shall not affect
calculations made prior thereto and no adjustment shall be made in respect
thereof."
(q) Section 5.03 and all references thereto are deleted.
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<PAGE>
(r) For purposes of Section 7.03 the amount per year as compensation for
the Sponsor is hereby specified as the amount set forth under Investment Summary
in the Prospectus as Sponsor's Annual Fee.
(s) Section 8.01(b) shall be amended by adding the following to the clause
ending prior to the proviso beginning in the seventh line:
"or in respect of any evaluation which it is required to make, or
required or permitted to have made by others under this Indenture, or
otherwise."
(t) Section 8.01 shall also be amended as follows:
In paragraph (e), the word "sub-custodians" shall be inserted
following the word "attorneys" each time it appears and the following
sentence is added at the end of such paragraph:
"The Trustee is specifically authorized to employ Citibank, N.A., as a sub-
custodian of the Trustee with respect to any non-U.S. Securities held in
the Trust Fund."
Paragraph (g)(2) shall be amended to read as follows:
"(2) The liquidation amount referred to in clause (1) shall be (i)
$500,000 unless and until deposits to the Trust Fund exceed $50,000,000 in
asset value, and (ii) thereafter $20,000,000."
(u) Section 8.01 shall be amended to add new paragraphs (j), (k) and (l) as
follows:
"(j) All provisions of paragraphs (b), (c), (d), (e) and (h) of this
Section 8.01 shall be deemed to apply to the Distribution Agent as fully
and to the same extent as the Trustee.
"(k) The Trustee in its individual or any other capacity may become
owner or pledgee or, or be an underwriter or dealer in respect of, stock,
bonds or other obligations issued by the same issuer (or affiliate of such
issuer) or any obligor of any Securities at any time held as part of the
Trust and may deal in any manner with the same or with the issuer (or an
affiliate of the issuer) with the same rights and powers as if it were not
the Trustee hereunder.
"(l) The Trust may include a letter or letters of credit for the
purchase of Contract Securities issued by the Trustee in its individual
capacity for the account of the
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<PAGE>
Sponsor, and the Trustee may otherwise deal with the Sponsor with the same
rights and powers as if it were not the Trustee hereunder."
(v) Section 8.05(d) shall be amended to add the following sentence in lieu
of that added at the conclusion of such paragraph by the Amendment dated June
27, 1994:
The provisions of this paragraph shall be deemed to apply to the
Distribution Agent in respect of any loss, liability or expense arising out
of or in connection with such Agent's actions hereunder to the same extent
as such provisions apply to the Trustee with respect to its acceptance and
administration of the Trust.
(w) For purposes of Section 8.05, the amount per year specified as
compensation for the Trustee is hereby specified as the amount set forth under
Investment Summary in the Prospectus as Trustee's Annual Fee.
(x) For purposes of Section 9.01, the Termination Date shall be the dates
specified in the Prospectus under Mandatory Termination of Trust in the
Investment Summary.
(y) Section 10.02 shall be amended to read as follows:
"Section 10.02. Initial Cost. To the extent not borne by the
----------------------------
Sponsor, the expenses incurred in establishing a Trust, including the
cost of the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to a Trust, SEC and state blue sky
registration fees, the costs of the initial valuation of the portfolio and
audit of a Trust, the initial fees and expenses of the Trustee, and legal
and other out-of-pocket expenses related thereto, but not including the
expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of
brochures and other advertising materials and any other selling expenses,
shall be borne by the Trust. Such expenses shall be paid from the Income
Account or, to the extent funds are not available in such Account, from the
Capital Account. To the extent the funds in the Income and Capital
Accounts of the Trust shall be insufficient to pay the expenses borne by
the Trust specified in this Section 10.02, the Trustee shall advance out of
its own funds and cause to be deposited and credited to the Income Account
such amount as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record Date from funds
on hand in the Income Account or, to the extent funds are not available in
such Account, from the Capital Account in the amount deemed to have
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<PAGE>
accrued as of such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the provisions of
Section 8.04 with respect to the reimbursement of disbursements for Trust
expenses, including, without limitation, the lien in favor of the Trustee
therefor and the authority to sell Securities as needed to fund such
reimbursement, shall apply to the expenses paid and amounts advanced
pursuant to this Section. For the purposes of the preceding sentence and
the addition provided in clause (1)(D) of Section 5.01, the expenses borne
by the Trust pursuant to this Section shall be deemed to have been paid on
the date of the Reference Trust Agreement and to accrue at a daily rate
over the time period specified for their amortization by the Sponsor
pursuant to Section 5.01; provided, however, that nothing herein shall be
--------
deemed to prevent, and the Trustee shall be entitled to, full reimbursement
for any advances made pursuant to this Section no later than the
termination of the Trust. For purposes of this Section 10.02, the Trustee
may rely on the written estimates of such expenses provided by the Sponsor
pursuant to Section 5.01."
This Indenture shall be deemed effective when executed and delivered by the
Sponsor and the Trustee.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Indenture to be duly executed
SMITH BARNEY INC.
Sponsor
By: /s/ Kevin Kopczynski
---------------------
Vice President
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Thomas Porrazzo
------------------------------
Vice President
(SEAL)
ATTEST:
By: /s/ Robert Ionescu
----------------------------
<PAGE>
Exhibit 3.1
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
(212) 856-7000
July 14, 1997
Smith Barney Inc.
Unit Trust Department
388 Greenwich Street, 23rd Floor
New York, New York 10013
Re: Equity Focus Trusts, Uncommon Values Aggressive Growth Series, 1997
and Uncommon Values Growth & Income Series, 1997
-------------------------------------------------------------------
Dear Sirs:
We have acted as special counsel for Smith Barney Inc. as Depositor,
Sponsor and Principal Underwriter (the "Depositor") of Equity Focus Trusts,
Uncommon Values Aggressive Growth Series, 1997 and Uncommon Values Growth &
Income Series, 1997 (the "Trust") in connection with the deposit of securities
(the "Securities") therein pursuant to the Trust Agreement referred to below, by
which the Trust was created and under which the units of fractional undivided
interest (the "Units") have been issued. Pursuant to the Trust Agreement the
Depositor has transferred to the Trust certain securities and contracts to
purchase certain securities together with irrevocable letters of credit to be
held by the Trustee upon the terms and conditions set forth in the Trust
Agreement. (All securities to be acquired by the Trust are collectively referred
to as the "Securities".)
In connection with our representation, we have examined the originals or
certified copies of the following documents relating to the creation of the
Trust, the deposit of the Securities and the issuance and sale of the Units: (a)
the Standard Terms and Condition of Trust dated July 2, 1985, as amended on June
27, 1994, and the Reference Trust Indenture of even date herewith relating to
the Trust (collectively, the "Trust Agreement") between the Depositor and The
Chase Manhattan Bank as Trustee; (b) the Closing Memorandum relating to the
deposit of the Securities in the Trust; (c) the Notification of Registration on
Form N-8A and the Registration Statement on Form N-8B-2, as amended, relating to
the Trust, as filed with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "1940 Act");
<PAGE>
2
Smith Barney Inc.
July 14, 1997
(d) the Registration Statement on Form S-6 (Registration No. 333-27419) filed
with the Commission pursuant to the Securities Act of 1933 (the "1933 Act"),
and Amendment No. 1 thereto (said Registration Statement, as amended by said
Amendment No. 1 being herein called the "Registration Statement"); (e) the
proposed form of final prospectus (the "Prospectus") relating to the Units,
which is expected to be filed with the Commission on or about July 15, 1996; (f)
resolutions of the Executive Committees of the Depositor authorizing the
execution and delivery by the Depositor of the Trust Agreement and the
consummation of the transactions contemplated thereby; (g) the Certificates of
Incorporation and By-laws of the Depositor, each certified to by an authorized
officer of the Depositor as of a recent date; (h) a certificate of an authorized
officer of the Depositor with respect to certain factual matters contained
therein ("Officers Certificate,,); and (i) certificates or telegrams of public
officials as to matters set forth upon therein.
We have assumed the genuineness of all agreements, instruments and
documents submitted to us as originals and the conformity to originals of all
copies thereof submitted to us. We have also assumed the genuineness of all
signatures and the legal capacity of all persons executing agreements,
instruments and documents examined or relied upon by us.
Where matters are stated to be "to the best of our knowledge" or "known
to us," our knowledge is limited to the actual knowledge of those attorneys in
our office who have performed services for the Trust, their review of documents
provided to us by the Depositor in connection with this engagement and inquiries
of officers of the Depositor, the results of which are reflected in the Officers
Certificate. We have not independently verified the accuracy of the matters
set forth in the written statements or certificates upon which we have relied.
we have not reviewed the financial statements, compilation of the Securities
held by the Trust, or other financial or statistical data contained in the
Registration Statement and the Prospectus, as to which we understand you have
been furnished with the reports of the accountants appearing in the Registration
Statement and the Prospectus. In addition, we have made no specific inquiry as
to whether any stop order or investigatory proceedings have been commenced with
respect to the Registration Statement or the Depositor nor have we reviewed
court or governmental agency dockets.
Statements in this opinion as to the validity, binding effect and
enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of
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3
Smith Barney Inc.
July 14, 1997
general application relating to or affecting the enforceability of creditors'
rights, and (ii) to limitations under equitable principles governing the
availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction but the
State of New York and we do not hold ourselves out as experts in or express any
opinion as to the laws of other states or jurisdictions except as to matters of
Federal and Delaware corporate law. No opinion is expressed as to the effect
that the law of any other jurisdiction might have upon the subject matter of the
opinions expressed herein under applicable conflicts of law principles, rules or
regulations or otherwise.
Based on and subject to the foregoing, we are of the opinion that:
(1) The Trust Agreement has been duly authorized and executed and
delivered by an authorized officer of the Depositor and is valid and binding
obligations of the Depositor in accordance with its terms.
(2) The execution and delivery of the Certificates evidencing the Units
has been duly authorized by the Depositor and such Certificates when executed by
the Depositor and the Trustee in accordance with the provisions of the
Certificates and the Trust Agreement and issued for the consideration
contemplated therein, will constitute fractional undivided interests in the
Trust, and will be entitled to the benefits of the Trust Agreement. Upon
payment of the consideration for the Units as provided in the Trust Agreement
and the Registration Statement, the Units will be fully paid and non-assessable
by the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Registration Statement
and in the Prospectus under the headings "Taxes" and "Legal opinion". This
opinion is intended solely for the benefit of the addressee in connection with
the issuance of the Units of the Trust and may not be relied upon in any other
manner or by any other person without our express written consent.
Very truly yours,
Battle Fowler LLP
<PAGE>
Exhibit 5.1
CONSENT OF INDEPENDENT AUDITORS
To the Sponsor, Trustee and Unit Holders of Equity Focus Trusts,
Uncommon Values Aggressive Growth Series, 1997 and Uncommon Values
Growth & Income Series, 1997:
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We consent to the use of our report dated July 14, 1997 included herein and to
the reference to our firm under the heading "Auditors" in the Prospectus.
KPMG PEAT MARWICK LLP
New York, New York
July 14, 1997
