<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1997
REGISTRATION NO. 333-39503
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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:
ROBINSON-HUMPHREY ANNUAL THEMES
SERIES 1998
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 will become effective
immediately upon filing pursuant to Rule 487.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ROBINSON-HUMPHREY
ANNUAL THEMES SERIES 1998
A Unit Investment Trust
The Robinson-Humphrey Annual Themes Series
1998 is a unit investment trust that offers
investors the opportunity to purchase Units
representing proportionate interests in a
portfolio of 28 equity securities purchased
by the Trust based upon the recommendations
of The Robinson-Humphrey Company, LLC
("Robinson-Humphrey"). The Trust is
concentrated in stocks which have been ranked
High Risk by Robinson-Humphrey and therefore
may have a high degree of price volatility
over the life of the Trust. The value of the
Units will fluctuate with the value of the
underlying securities and the Trust is not
appropriate for investors requiring high
current income or conservation of capital.
The minimum purchase is $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.
THE ROBINSON-HUMPHREY COMPANY, LLC
----------------------------------
A subsidiary of Smith Barney Inc.
Prospectus dated December 15, 1997
Read and retain this Prospectus for future reference
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++.......................................... 1,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT.... 1/1,000,000
PUBLIC OFFERING PRICE (per 1,000 Units)
Aggregate value of Securities in Trust............................ $ 971,256
===========
Divided by 1,000,000 Units (times 1,000).......................... $ 971.26
Plus sales charge of 3.00% of Public Offering Price (3.093% of the
net amount invested in Securities)*.............................. $ 30.04
-----------
Public Offering Price per 1,000 Units............................. $ 1,001.30
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)........................................... $ 1,001.30
===========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE PER 1,000 UNITS
(based on value of underlying securities)........................ $ 971.26
</TABLE>
DISTRIBUTIONS
Distributions of income, if any, will be made on October 25th, to Holders of
record on October 10th, of each year 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 LOSS ON DEPOSIT.......... $3,372
TRUSTEE'S ANNUAL FEE
$.82 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
October 10th of each year.
DISTRIBUTION DAY
</TABLE>
October 25th of each year, and upon termination and liquidation of the Trust.
EVALUATION TIME
4:00 P.M. New York time (or earlier close of the New York Stock Exchange).
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 the Trust is less than $5,000,000 See
Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
December 31, 1999 (the "Mandatory Termination Date"), or at any earlier time
by the Sponsor with the consent of Holders of 51% of the Units then outstand-
ing.
- ------------
+ The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on December 12, 1997. Valuation of Securities is based on the
market value per share as of December 12, 1997, as more fully explained in the
footnotes to the Portfolio of the Robinson-Humphrey Annual Themes Series 1998.
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.
++ The Sponsor may create additional Units during the offering period of the
Trust.
* The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
2
<PAGE>
INVESTORS GUIDE TO ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
For more than a decade, the Equity Research Department of Robinson-Humphrey
has used this time of year to focus on key investing trends in the stock
market. Some of these trends, or "themes," highlight positive changes in a
specific industry sector. Others take a more "macro approach,"--such as the
direction of economic growth, shifting demographic trends or a changing
regulatory environment that could affect a particular industry. Once Robinson-
Humphrey has identified these themes, their 28 industry analysts review the
companies they follow, and recommend a list of potential beneficiaries. As a
final step, their Investment Ideas Group selects a portfolio of stocks that
will comprise the Robinson-Humphrey Annual Themes list.
Listed below are the Robinson-Humphrey Themes for 1998:
THE TELECOMMUNICATIONS REVOLUTION TAKES A NEW TURN
Most observers agree that the Telecommunications Act of 1996 marked a turning
point for wireless communications, telecommunications and long distance
carriers. But even though the effects of deregulation have unleashed
widespread competitive forces, no clear direction has emerged for this
industry as a whole. Robinson-Humphrey analysts believe that 1998 will bring a
higher degree of clarity, and with it opportunities for the growth-oriented
investor.
COMPETITIVE PRESSURES INTENSIFY
After three record years of growth profit margins could slow in the coming
year, however, opportunities may also arise as competitive pressures mount.
Such opportunities could be among consolidation candidates--not just those
companies seeking acquisitions, but also those who are acquisition targets. In
addition, companies that specialize in "outsourcing," such as temporary
staffing needs and computer consulting, could also benefit.
"PRICING POWER" AND COST CONTROLS DOMINATE
While moderating inflation is a benefit in many ways, it can inhibit the
ability of a company to raise prices, whether its products target the consumer
or the producer of consumer goods. However, some business niches will continue
to hold "pricing power"--the ability to raise prices or to hold prices
steady--despite this environment. Other companies dominate their niches by
keeping costs under strict control, which allows them to maintain earnings
growth under low inflation.
TECHNOLOGY IN TURMOIL
Within the technology industry, questions abound about the strength and
longevity of capital spending, the consistency of consumer demand and the
potential effects of government regulation. But within this sector, Robinson-
Humphrey analysts have also targeted companies with the expectation of
consistent earnings growth. As an example, a company with longer-term
contracts to produce goods or services could benefit from a high degree of
recurring revenue.
SLOWING ECONOMY PUTS FOCUS ON VISIBLE GROWTH
Outside of the technology sector, some industries will continue to exhibit
strong growth, even if the new year brings a period of slower overall earnings
growth. For example, many insurance and other financial companies may continue
to benefit from a moderate interest rate environment. Real Estate Investment
Trusts may also benefit, especially those with properties subject to longer-
term leases.
DEMOGRAPHIC SHIFTS COULD DRIVE CONSUMER NICHES
Demographic trends are changing. The most pronounced of these changes is the
aging of the American population, as "baby boomers" become retirement savers
and consumers. However, there are other trends as well, such as the fresh
niche of consumers created by a growing teenage "bubble," and there are
industries that could benefit from these trends, like financial companies that
sell savings-oriented products, entertainment and leisure groups or
healthcare-related companies.
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997 (CONTINUED)
OBJECTIVE OF THE TRUST -- The objective of the 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 the
common stocks (the "Securities") selected by the Sponsor for the 1998 Trust
portfolio (the "Portfolio"). The Sponsor, based upon the recommendations of The
Robinson-Humphrey Company LLC ("Robinson-Humphrey") has selected for the
Portfolio stocks which it considers to have the best possibility for capital
appreciation and current dividend income over a period of one year relative to
risks and opportunities. Current income will be secondary to the objective of
capital growth. Achievement 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. The Trust is concentrated* in stocks which
have been ranked High Risk by Robinson-Humphrey and therefore may have a high
degree of price volatility over the life of the Trust. 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 Trust may not
realize as high a total return as the theoretical performance of the underlying
stocks in the Portfolio.
PORTFOLIO -- The Portfolio contains common stocks issued by companies engaged
primarily in the following industries: Apparel Retailers, 1; Banking, 2;
Communication and Network Equipment, 2; Computer Sales and Distribution, 2;
Electronic Commerce, 1; Food and Beverage, 2; Insurance/Asset Accumulation, 1;
Leisure, 1; Life and Health Insurance, 1; Long Term Care, 1; Midsize Oilfield
Services, 2; Mobile Systems/Auto ID, 1; Regional Airlines, 1; REITs/Retail, 1;
Rent-to-Own, 1; Specialty Managed Care/HMOs, 1; Staffing and Outsourcing
Services, 2; Super Regional Banks, 1; Telecommunication/Service, 2; Textiles,
1; and Wireless Communication, 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 28 stocks from 21 different industry groups. (See Risk
Factors.)
The initial purchase of Securities 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. During the 90-day
period following the Initial Date of Deposit, the Sponsor may create additional
Units by depositing cash (or a bank letter of credit in lieu of cash) with
instructions to purchase Securities, additional Securities or contracts to
purchase additional Securities maintaining to the extent practicable the
original proportionate relationship among the number of shares of each stock in
the Portfolio. Replacement Securities may be acquired under specified
conditions. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the Initial Date of Deposit
because of, among other reasons, purchase requirements, changes in price or the
unavailability of Securities. Any deposits of Securities after the 90-day
period must replicate exactly the proportionate relationship among the number
of shares comprising the Portfolio at the end of the initial 90-day period,
subject to certain events discussed under Administration of the Trust -- Trust
Supervision. The Sponsor may cease creating Units (temporarily or permanently)
at any time. (See Administration of the Trust -- Trust Supervision.)
RISK FACTORS -- Investment in the Trust should be made with an understanding
that the value of the underlying Securities, and therefore the value of the
Units, will fluctuate, depending on the full range of economic and market
influences which may affect the market value of the Securities, including the
profitability and financial condition of issuers, conditions in a given
issuer's industry, market conditions and values of common stocks generally, and
other factors.
- ------------
* A Trust is considered to be "concentrated" in a particular category when the
Securities in that category constitute 25% or more of the net assets in the
Trust.
3
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997 (CONTINUED)
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trust 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 Trust 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
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 Trust is not appropriate for investors requiring high current income or
conservation of capital. Securities representing approximately 43% of the value
of the Portfolio have been ranked High Risk and 7% of the value of the
Portfolio have been ranked Speculative by Robinson-Humphrey.
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 the Portfolio. Price fluctuations during the period from the time
of deposit of cash to the time the Securities are purchased, and payment of
brokerage fees, will affect the value of every Holder's Units, the number of
shares of each Security represented by each Unit and the income per Unit
received by the Trust. Some of the Securities may have limited trading volume.
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 Trust's 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 the Trust,
the Sponsor reserves the right to sell Securities over a period of up to 20
business days to lessen the impact of its sales on the market price of the
Securities. The proceeds received by Holders following termination of the Trust
will reflect the actual sales proceeds received on the Securities, which will
likely differ from the closing sale price on the Mandatory Termination Date.
(See Description of the Trust -- Risk Factors.)
Common stocks may be especially susceptible to general stock market movements
and to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. Investors should be aware that there can be
no assurance that the value of the underlying Securities will increase or that
the issuers of the Securities will pay dividends on outstanding shares. Any
distributions of income to Holders will generally depend upon the declaration
of dividends by the issuers of the Securities and the declaration of any
dividends depends upon several factors including the financial condition of the
issuers and general economic conditions.
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer will not necessarily require the sale of Securities from the Portfolio
or mean that the Sponsor will not continue to purchase the Security in order to
create additional Units. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth above under
Objective of the Trust and that the Trust may continue to purchase or hold
Securities originally selected
4
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997 (CONTINUED)
through this process even though the evaluation of the attractiveness of the
Securities may have changed. In the event a public tender offer is made for a
Security or a merger or acquisition is announced affecting a Security, the
Sponsor may instruct the Trustee to tender or sell the Security on the open
market when, in its opinion, it is in the best interest of the holders of the
Units to do so. Although the Portfolio is regularly reviewed and evaluated and
the Sponsor may instruct the Trustee to sell Securities under certain limited
circumstances, Securities will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation. 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 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 Portfolio on page 10). These rankings are subject to change.
Securities will not necessarily be sold by the Trust based on a change in
ratings, although the Sponsor intends to review the desirability of holding any
Security if its fundamental rating is reduced below 2/2. The prices of single
shares of each of the Securities in the Trust vary widely, and the effect of a
dollar of fluctuation, either higher or lower, in 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 the Trust be reduced below the
Minimum Value of Trust stated on page 2 the Trust may be terminated at that
time by the Sponsor, well before the Mandatory Termination Date of the Trust.
Any difference between the aggregate prices the Sponsor paid to acquire the
Securities and the aggregate prices at which Securities were initially
deposited in the Trust is noted on page 2 under Sponsor's 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
the Trust. The effect of the Sponsor's purchases of Securities on the prices of
the Securities is unpredictable.
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in the Trust
consists of privately-placed common stocks. Except as indicated under
Portfolio, the Sponsor has not participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which any of the
Securities in the Trust were acquired.
PUBLIC OFFERING PRICE -- The Public Offering Price per 1,000 Units is equal
to the aggregate value of the underlying Securities and any cash held to
purchase Securities, divided by the number of Units outstanding times 1,000,
plus a sales charge of 3.00%* of the Public Offering Price; this results in a
sales charge of 3.093%* of the net amount invested in underlying Securities.
Units are offered at the Public Offering Price plus the net amount per Unit in
the Income Account (see Public Sale of Units). The minimum purchase is $250.
Investors
- ------------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units -- Public Offering Price.
5
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997 (CONTINUED)
should note that the Public Offering Price of Units varies each business day
with the value of the underlying Securities. There is no "par value" for Units.
INCOME DISTRIBUTIONS -- Distributions of dividends (net of expenses) and any
principal received by the Trust will be automatically reinvested in additional
Units of the Trust at no extra charge (at net asset value) and each Holder of
Units will participate unless the Holder elects to receive distributions of
dividends or principal, or both, in cash. Holders who reinvest their
distributions will receive additional Units and will therefore own a greater
percentage of the Trust than Holders who receive cash distributions (see
Reinvestment Plan). Distribution and Record Days are shown on page 2. As soon
as practicable after termination of the Trust (generally after seven days), the
Trustee will distribute to each Unitholder his pro rata share of the amount
realized on disposition of the Securities remaining in the Trust plus any other
assets then in the Trust, less expenses of the Trust. The other assets of the
Trust will include any dividends, interest income and net realized capital
gains which have not been distributed. The total distribution may be less than
the amount paid for Units.
MARKET FOR UNITS -- The Sponsor, though not obligated to do so, intends from
the commencement of the Trust to maintain a market for Units and continually to
offer to purchase Units from Holders desiring to sell them at a price based on
the aggregate value of the underlying Securities (see Market for Units).
Whenever a market is not maintained, a Holder may be able to dispose of his
Units only through redemption (see Redemption).
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 TRUST IS A UNIT INVESTMENT TRUST RATHER THAN
A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchase (as a percentage of offering
price)................................................................. 3.00%
====
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Trustee's Fee........................................................... .085%
Maximum Portfolio Supervision, Bookkeeping and Administrative Fees...... .026%
Organizational Expenses................................................. .198%
Other Operating Expenses................................................ .020%
----
Total................................................................ .329%
====
</TABLE>
6
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
INVESTMENT SUMMARY AS OF DECEMBER 12, 1997 (CONTINUED)
EXAMPLE
<TABLE>
<CAPTION>
CUMULATIVE
EXPENSES
PAID FOR
PERIOD:
----------
1 2
YEAR YEARS
---- -----
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming the Trust's estimated operating expense ratio
of .329% in the first year and .131% in the second year and a 5%
annual return on the investment throughout the periods............ $33 $35
</TABLE>
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 Trust (and therefore the Holders) will bear all or a portion of its
organizational costs -- including costs of preparing the registration
statement, the indenture and other closing documents, registering units with
the SEC and the states and the initial audit of the Portfolio -- as is common
for mutual funds. Historically, the sponsors of unit investment trusts have
paid all the costs of establishing those trusts. Advertising and selling
expenses will be paid by the Underwriters at no cost to the Trust.
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Robinson-Humphrey Annual Themes Series
1998:
We have audited the accompanying statement of financial condition, including
the portfolio, of Robinson-Humphrey Annual Themes Series 1998, as of December
12, 1997. This financial statement is the responsibility of the Trustee (see
note 5 to the statement of financial condition). Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of financial condition is free
of material misstatement. An audit of a statement of financial condition
includes examining, on a test basis, evidence supporting the amounts and
disclosures in that statement of financial condition. Our procedures included
confirmation with the Trustee of an irrevocable letter of credit deposited on
December 12, 1997, for the purchase of securities, as shown in the statement of
financial condition and portfolio. An audit of a statement of financial
condition also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
statement of financial condition presentation. We believe that our audit of the
statement of financial condition provides a reasonable basis for our opinion.
In our opinion, the statement of financial condition referred to above
presents fairly, in all material respects, the financial position of the
Robinson-Humphrey Annual Themes Series 1998 as of December 12, 1997, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 12, 1997
7
<PAGE>
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
STATEMENT OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, DECEMBER 12,
1997
<TABLE>
<S> <C>
TRUST PROPERTY
Investment in Securities:
Contracts to purchase Securities(1)............................... $ 971,256
Organizational costs(2)............................................ 95,926
----------
Total........................................................... 1,067,182
==========
LIABILITIES
Accrued Expenses(2)............................................... 95,926
----------
INTEREST OF UNITHOLDERS
1,000,000 Units of fractional undivided interest outstanding:
Cost to investors(3).............................................. $1,001,295
Less: Gross underwriting commissions(4)........................... 30,039
----------
Net amount applicable to investors................................ 971,256
----------
Total............................................................. $1,067,182
==========
</TABLE>
- ------------
(1) Aggregate cost to the Trust of the Securities listed under Portfolio of
the Robinson-Humphrey Annual Themes Series 1998, on the Initial Date of
Deposit is determined by the Trustee on the basis set forth in footnote 4
to the Portfolio of the Robinson-Humphrey Annual Themes Series 1998. See
also the columns headed Cost of Securities to Trust. An irrevocable letter
of credit in the amount of $2,000,000 has been deposited with the Trustee
for the purchase of Securities. The letter of credit was issued by Svenska
Handelsbanken.
(2) Organizational costs to be paid by the Trust have been deferred and will
be amortized over the first year of the Trust. Organizational costs have
been estimated based on projected total assets of $48.5 million. To the
extent the Trust is larger or smaller, the amount paid may vary.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes a sales charge of 3.00% of Public Offering Price computed on the
basis set forth under Public Sale of Units--Public Offering Price.
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statements other than estimates of
organizational costs, for which the Sponsor is responsible.
8
<PAGE>
PORTFOLIO OF ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998 ON THE INITIAL
DATE OF DEPOSIT, DECEMBER 12, 1997
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL INDUSTRY GROUP RATING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
------------- ------ -------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
THE TELECOMMUNICATION
REVOLUTION TAKES A NEW
TURN THEME (A)
ADC Telecommunications** ADCT Communication and Network Equipment 1/1-H-2/2 1,000 3.72% $ 36,000
AirTouch Communications* ATI Wireless Communication 1/1-M-1/NR 900 3.65 35,494
Premiere Technologies** PTEK Telecommunication/Service 1/1-S-2NR 1,400 3.51 34,125
World Access**## WAXS Communication and Network Equipment 1/1-H-1/1 1,700 3.63 35,275
------
14.51%
------
COMPETITIVE PRESSURES
INTENSIFY THEME (B)
I) CONSOLIDATION
CCB Financial CCB Banking 1/1-M-2/2 350 3.54% 34,300
Crestar Financial CF Banking 1/1-M-1/1 600 3.43 33,337
Rent-Way**## RWAY Rent-to-own 1/1-H-2/NR 1,900 3.63 35,269
Suiza Foods SZA Food and Beverage 1/1-H-1/NR 600 3.58 34,800
------
14.18%
------
II) OUTSOURCING
AccuStaff Inc## ASI Staffing and Outsourcing Services 1/1-H-2/NR 1,300 3.64% 35,344
Concentra Managed
Care*## CCMC Specialty Managed Care/HMOs 1/1-M-1/NR 1,100 3.60 34,925
COREStaff Inc**## CSTF Staffing and Outsourcing Services 1/1-H-2/NR 1,300 3.67 35,669
Dycom Industries## DY Telecommunication/Service 1/1-H-2/1 1,600 3.54 34,400
------
14.45%
------
PRICING POWER AND COST CONTROL
DOMINATE THEME (C)
Atlantic Coast
Airlines**## ACAI Regional Airlines 1/1-H-1/NR 1,300 3.58% 34,775
Nabors Industries NBR Midsize Oilfield Services 1/1-M-2/1 1,000 3.46 33,625
Nat'l-Oilwell Inc NOI Midsize Oilfield Services 1/1-M-2/NR 1,100 3.49 33,894
Westpoint Stevens**## WPSN Textiles 1/1-M-1/NR 800 3.56 34,600
------
14.09%
------
TECHNOLOGY IN TURMOIL THEME (D)
Compucom Systems**## CMPC Computer Sales and Distribution 1/1-H-1/2 3,800 3.57% 34,675
Harbinger Corp**## HRBC Electronic Commerce 1/1-H-2/NR 1,600 3.56 34,600
Tech Data Corp**## TECD Computer Sales and Distribution 1/1-M-2/1 800 3.39 32,900
Zebra Technologies
"A'**## ZBRA Mobile Systems/Auto ID 1/1-M-1/NR 1,100 3.73 36,231
------
14.25%
------
SLOWING ECONOMY PUTS FOCUS
ON VISIBLE GROWTH THEME (E)
First Union Corp# FTU Super Regional Banks 1/1-L-1/1 700 3.62% 35,087
Interstate Bakeries IBC Food and Beverage 1/1-M-1/1 1,000 3.49 33,938
JDN Realty## JDN REITs/Retail 1/1-M-2/NR 1,100 3.43 33,344
Provident Companies PVT Life & Health Insurance 1/1-M-1/1 1,000 3.66 35,562
------
14.20%
------
DEMOGRAPHIC SHIFTS COULD DRIVE
CONSUMER NICHES THEME (F)
Family Golf Centers** FGCI Leisure 1/1-S-2/NR 1,200 3.49% 33,900
Pacific Sunwear of
Calif**## PSUN Apparel Retailers 1/1-H-2/2 1,100 3.57 34,650
ReliaStar Financial## RLR Insurance/Asset Accumulation 1/1-L-2/1 900 3.58 34,762
Sun Healthcare Group# SHG Long Term Care 1/1-H-2/1 1,800 3.68 35,775
------
14.32%
------ --------
100.00% $971,256
====== ========
</TABLE>
9
<PAGE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on December 12, 1997.
All contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
The securities are organized by investment theme which have been chosen by
Robinson-Humphrey.
(A) Companies expected to benefit from the Telecommunications Act of
1996.
(B) Companies expected to benefit from industry consolidation, either
as an acquiror or acquiree.
(C) Companies expected to maintain earnings growth in a low inflation
environment by either maintaining or raising prices or with strict
cost control.
(D) Companies expected to have consistent earnings growth in the
technology sector.
(E) Companies, outside of the technology sector, expected to have
strong earnings growth even in periods of slow economic growth.
(F) Companies expected to benefit from the change in demographic
trends.
See Investors Guide for an additional description of each Theme.
(2) Robinson-Humphrey has assigned these ratings according to the following
system, which uses two codes: a letter for the level of risk (L, M, H or
S) and a number for performance expectation (1-3).
RISK assesses predictability of earnings/dividends and stock price volatility:
L = Low, M = Moderate, H = High, S = Speculative.
PERFORMANCE ratings indicate the expected total return (capital gain or loss
plus dividends) over the next 6-18 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>
MODERATE
LOW RISK(L) RISK(M) HIGH RISK(H) SPECULATIVE(S)
------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
1-Buy Over 10% Over 15% Over 20% Over 25%
2-Market Performer -5% to +10% -5% to +15% -10% to +20% -10% to +25%
3-Sell -5% or worse -5% or worse -10% or worse -10% or worse
</TABLE>
The rating system used in Robinson-Humphrey research reports assigns these
number codes to the short-term (up to six months) and long-term (up to 18
months) fundamental ratings and also the technical ratings which are provided
by their technical analyst. BUY rating indicates the stock is expected to
achieve the stated target price over the appropriate time frame, MARKET
PERFORMER rating indicates the stock is expected to perform generally in line
with the market over the appropriate time frame; SELL rating indicates the
stock is expected to significantly underperform over the appropriate time
frame. All references to the ratings will appear in the following order:
short-term/long-term fundamental-risk-short-term/long-term technical. For
example, an investment rating of "1/1-H-2/2" indicates: (a) a "Buy" short-term
and long-term fundamental rating ("1/1"); (b) a "High" risk assessment ("H");
and (c) a "market performer" short-term and long-term technical rating
("2/2").
These rankings represent the current opinions of Robinson-Humphrey 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
KMPG Peat Marwick LLP.
(3) Per 1,000,000 Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on December 12, 1997. Subsequent to the
Initial Date of Deposit, Securities are valued, for Securities quoted on a
national securities exchange, the NASDAQ National Market System, or a
foreign securities exchange, at the closing sale prices, or if no price
exists, at the mean between the closing bid and offer prices, and 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.
**Robinson-Humphrey 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.
## Within the last three years, Robinson-Humphrey was a manager (co-manager)
of a public offering of the securities of this company or an affiliate.
10
<PAGE>
DESCRIPTION OF THE TRUST
STRUCTURE AND OFFERING
This Series of the Robinson-Humphrey Annual Themes Trust (the "Trust") is a
"unit investment trust" created under New York law by a Trust Indenture (the
"Indenture")* between the Sponsor and the Trustee. On the date of this
Prospectus, each unit of the Trust (a "Unit") represented a fractional
undivided interest in the securities listed under Portfolio (the "Securities")
set forth under Investment Summary. Additional Units of the Trust will be
issued in the amount required to satisfy purchase orders by depositing in the
Trust cash (or a bank letter of credit in lieu of cash) with instructions to
purchase Securities, contracts to purchase Securities together with
irrevocable letters of credit, or additional Securities. On each settlement
date (estimated to be three business days after the applicable date on which
Securities were deposited in the Trust), the Units will be released for
delivery to investors and the deposited Securities will be delivered to the
Trustee. As additional Units are issued by the Trust as a result of the
deposit of cash (or a letter of credit in lieu of cash) with instructions to
purchase additional Securities, the aggregate value of the Securities in the
Trust will be increased and the fractional undivided interest in the Trust
represented by each Unit will be decreased. There is no limit on the time
period during which the Sponsor may continue to make additional deposits of
Securities into the Trust.
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. The
proportionate relationship among the Securities in the Trust will be adjusted
to reflect the occurrence of a stock dividend, a stock split or a similar
event which affects the capital structure of the issuer of a Security in the
Trust but which does not affect the Trust's percentage ownership of the common
stock equity of such issuer at the time of such event. It may not be possible
to maintain the exact original proportionate relationship among the Securities
deposited on the Initial Date of Deposit because of, among other reasons,
purchase requirements, changes in prices, brokerage commissions or
unavailability of Securities. Replacement Securities may be acquired under
specified conditions when Securities originally deposited are unavailable (see
Administration of the Trust -- Trust Supervision). Units may be continuously
offered to the public by means of this Prospectus (see Public Sale of Units --
Public Distribution) resulting in a potential increase in the number of Units
outstanding. 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 Portfolio at the end of the initial 90-day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
page 2 on any day will be based on the aggregate value of the Securities in
the Trust on that day at the Evaluation Time, plus a sales charge. The Public
Offering Price will thus vary in the future from that specified on page 2 of
this Prospectus. See Public Sale of Units -- Public Offering Price for a
complete description of the pricing of Units.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units. The Sponsor reserves
the right to accept or reject any purchase order in whole or in part.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trust
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received 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.
- ------------
* 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.
11
<PAGE>
The holders ("Holders") of Units will have the right to have their Units
redeemed for the Securities underlying the Units (see Redemption). If any
Units are redeemed, the aggregate value of Securities in the Trust will be
reduced and the fractional undivided interest in the Trust represented by each
remaining Unit will be increased. Units will remain outstanding until redeemed
upon request to the Trustee by any Holder (which may include the Sponsor), or
termination of the Indenture (see Administration of the Trust -- Amendment and
Termination).
THE PORTFOLIO
The Securities in the Portfolio have been purchased by the Trust based upon
the recommendations of Robinson-Humphrey. For many years, Robinson-Humphrey
has released a list of themes that it believes should be a focus for investors
in the year ahead. The themes chosen are based on the trends Robinson-Humphrey
believes will be important in the upcoming year. Robinson-Humphrey then
selects stocks under each theme based on earnings growth and valuation against
the S&P 500 and/or comparable companies.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trust for various reasons, including sales
charges and expenses of the Trust, because the Portfolio may not be fully
invested at all times, the stocks are normally purchased or sold at prices
different from the closing price used to determine the Trust's net asset
value, and not all stocks may be weighted in the initial proportions at all
times. Additionally, results of ownership to different Holders will vary
depending on the net asset value of the underlying Securities on the days
Holders bought and sold their Units. Of course, any purchaser of securities,
including Units, will have to pay sales charges or commissions, which will
reduce his total return.
Total returns and/or average annualized returns for various periods of the
Trust 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 Trust may also
include excerpts from the Sponsor's research reports on one or more of the
stocks in the Trust, including a brief description of its businesses and
market sector, and the basis on which the stock was selected.
All of the domestic Securities are publicly traded either on a stock
exchange or in the over-the-counter market. Most of the contracts to purchase
Securities deposited initially in the Trust are expected to settle in three
business days, in the ordinary manner for such Securities. Any foreign
Securities are publicly traded on a variety of foreign stock exchanges.
Settlement of contracts for foreign Securities varies by country and may take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
The Trust consists of such Securities as may continue to be held from time
to time in the Trust and any additional and replacement Securities and any
money market instruments acquired and held by the Trust pursuant to the
provisions of the Indenture (including the provisions with respect to the
deposit into the Trust of Securities in connection with the sale of additional
Units to the public) together with undistributed income therefrom and
undistributed and uninvested cash realized from the disposition of Securities
(see Administration of the Trust -- Accounts and Distributions; -- Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the
redemption of Units. Any money market instruments acquired by the Trust must
be held until maturity and must mature no later than the next Distribution Day
and the proceeds distributed to Holders at that time. If sufficient Securities
are not available at what the Sponsor considers a reasonable price, excess
cash received on the creation of Units may be held in an interest-bearing
account with the Trustee until that cash can be invested in Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. However, should any
contract deposited hereunder (or to be
12
<PAGE>
deposited in connection with the sale of additional Units) fail, the Sponsor
shall, on or before the next following Distribution Day, cause to be refunded
the attributable sales charge, plus the attributable Cost of Securities to
Trust listed under Portfolio, unless substantially all of the monies held in
the Trust to cover the purchase are reinvested in replacement Securities in
accordance with the Indenture (see Administration of the Trust --Portfolio
Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, or because Securities may be distributed in redemption of Units, no
assurance can be given that the Trust will retain for any length of time its
present size (see Redemption; Administration of the Trust -- Amendment and
Termination). For Holders who do not redeem their Units, investments in Units
of the Trust will be liquidated on the fixed date specified under Investment
Summary --Mandatory Termination of Trust, and may be liquidated sooner if the
net asset value of the Trust falls below that specified under Investment
Summary -- Minimum Value of Trust (see Risk Factors).
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that the
financial condition of the issuers of the Securities or the general condition
of the common stock market may worsen and the value of the Securities and
therefore the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises.
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trust 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 Trust 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 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 Trust is not appropriate for investors requiring conservation of capital
or high current income. Securities representing approximately 43% of the value
of the Portfolio have been ranked High Risk and 7% of the value of the
Portfolio have been ranked Speculative by Robinson-Humphrey.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of preference
stocks have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis,
but generally do not participate in other amounts available for distribution
by the issuing corporation. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stocks are also entitled to rights on liquidation
which are senior to those of common stocks. Moreover, common stocks do not
represent an obligation
13
<PAGE>
of the issuer and, therefore, do not offer any assurance of income or provide
the same degree of protection of capital as do debt securities. The issuance
of additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its
common stock or the rights of holders of common stock with respect to assets
of the issuer upon liquidation or bankruptcy. The value of common stocks are
subject to market fluctuations for as long as the common stocks remain
outstanding, and thus the value of the Securities in the Portfolio may be
expected to fluctuate over the life of the Trust to values higher or lower
than those prevailing on the Initial Date of Deposit.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of the
Trust. If dividends are insufficient to cover expenses, it is likely that
Securities will have to be sold to meet Trust expenses. See Expenses and
Charges -- Payment of Expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
Holders will be unable to dispose of any of the Securities in the Portfolio,
as such, and will not be able to vote the Securities. As the holder of the
Securities, the Trustee will have the right to vote all of the voting stocks
in the Trust and will vote in accordance with the instructions of the Sponsor.
Investors should be aware that the Trust is not a "managed" trust and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the Portfolio of the Trust 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 Trust in the Investment Summary and that the Trust may
continue to purchase or hold Securities originally selected through this
process even though the evaluation of the attractiveness of the Securities may
have changed. 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 the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. (See
Administration of the Trust -- 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 the Portfolio is
regularly reviewed and evaluated and the Sponsor may instruct the Trustee to
sell Securities under certain limited circumstances, Securities will not be
sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. 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 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 Portfolio on page 10).
These rankings are subject to change. Securities will not necessarily be sold
by the Trust based on a change in rankings, although the Sponsor intends to
review the desirability of holding any Security if its fundamental ranking is
reduced below 2/2. The prices of single shares of each of the Securities in
the Trust vary widely, and the effect of a dollar of fluctuation, either
higher or lower, in 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 the Trust. To the extent the price of a
Security increases or decreases
14
<PAGE>
between the time cash is deposited with instructions to purchase the Security
at the time the cash is used to purchase the Security, Units may represent
less or more of that Security and more or less of the other Securities in the
Trust. In addition, brokerage fees (if any) incurred in purchasing Securities
with cash deposited with instructions to purchase the Securities will be an
expense of the Trust. Price fluctuations between the time of deposit and the
time the Securities are purchased, and payment of brokerage fees, will affect
the value of every Holder's Units and the Income per Unit received by the
Trust. Finally, pursuant to the terms of the Indenture, subsequent deposits to
create additional Units may not be covered by the deposit of cash (or a letter
of credit in lieu of cash). 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 the Trust, or any delays in the
Trust receiving such cash, may have significant adverse consequences for the
Trust.
The Trust may be terminated at any time and all outstanding Units liquidated
if the net asset value of the Trust falls below $5,000,000. Investors should
note that if the net asset value of the Trust should fall below the applicable
minimum value, the Sponsor may then in its sole discretion terminate the Trust
before the Mandatory Termination Date specified under Investment Summary.
Foreign Securities. The Trust may hold Securities of non-U.S. issuers or
through ADRs. There are certain risks involved in investing in securities of
foreign companies, which are in addition to the usual risks inherent in United
States investments. These risks include those resulting from fluctuations in
currency exchange rates, revaluation of currencies, future adverse political
and economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers and the lack of uniform
accounting, auditing and financial reporting standards or of other regulatory
practices and requirements comparable to those applicable to domestic
companies. Moreover, securities of many foreign companies may be less liquid
and their prices more volatile than those of securities of comparable domestic
companies. In addition, with respect to certain foreign countries, there is
the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Trust,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that could reduce the yield on such securities. Since
the Trust may invest in securities quoted in currencies other than the United
States dollar, changes in foreign currency exchange rates may adversely affect
the value of foreign securities in the Portfolio and the net asset value of
Units of the Trust. Investment in foreign securities may also result in higher
expenses due to the cost of converting foreign currency to United States
dollars, the payment of fixed brokerage commissions on certain foreign
exchanges, which generally are higher than commissions on domestic exchanges,
and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. However, the Sponsor anticipates that
adequate information will be available to allow the Sponsor to supervise the
Portfolio as set forth in Administration of the Trust -- Portfolio
Supervision.
On the basis of the best information available to the Sponsor at the present
time none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this
type or because the issues qualify for an exemption, or the Trust, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trust.
15
<PAGE>
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
international securities in the Portfolio and on the ability of the Trust to
satisfy its obligation to redeem Units tendered to the Trustee for redemption
(see Redemption).
Exchange Rate Fluctuation. In recent years, foreign exchange rates have
fluctuated sharply. Income from foreign equity securities held by the Trust,
including those underlying any ADRs held by the Trust, would be payable in the
currency of the country of their issuance. However, the Trust will compute its
income in United States dollars, and the computation of income will be made on
the date of its receipt by the Trust at the foreign exchange rate in effect on
that date. Therefore, if the value of the foreign currency falls relative to
the United States dollar between receipt of the income and the making of Trust
distributions, the risk of such decline will be borne by Holders. In addition,
the cost of converting such foreign currency to United States dollars would
also reduce the return to the Holder.
American Depositary Shares and Receipts. American Depositary Shares
("ADSs"), and receipts therefor ("ADRs"), are issued by an American bank or
trust company to evidence ownership of underlying securities issued by a
foreign corporation. These instruments may not necessarily be denominated in
the same currency as the securities into which they may be converted.
Generally, ADSs and ADRs are designed for use in the United States securities
markets. For purposes of this Prospectus, the term ADR generally includes
ADSs.
INCOME
The estimated net annual income per Unit is determined by subtracting from
the estimated annual dividend income of the Securities in the 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 the Trust change.
There is no assurance that any dividends will be declared or paid in the
future on the Securities.
Record Days and Distribution Days are set forth under Investment Summary.
Income Distributions, if any, will be automatically reinvested in additional
Units of the Trust at no extra charge unless a Holder elects to receive his
distributions in cash (see Reinvestment Plan). Because dividends on the
Securities are not received by the Trust 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 the 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:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Trust will be treated as
income of the Holders in the manner set forth below.
2. Each Holder will be considered the owner of a pro rata portion of each
Security in the 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
16
<PAGE>
his Units, including the sales charge, among each Security in the 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 Portfolio.
3. 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 the
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 the Trust only to the extent that
this amount together with the Holder's other miscellaneous deductions exceeds
2% of his adjusted gross income.
Distributions that 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 the 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 generally whether it held its Units for at least 45
days during the 90 day period beginning on the date that is 45 days before the
date on which the shares with respect to which the dividend is paid becomes
ex-dividend with respect to such dividend and whether his Units are debt
financed), these limitations may be applicable to dividends received by a
Holder from the Trust which would otherwise qualify for the dividends-received
deduction under the principles discussed above. Accordingly, Holders should
consult their own tax advisers in this regard. A corporate Holder should be
aware that the receipt of dividend income for which the dividends received
deduction is available may give rise to an alternative minimum tax liability
(or increase an existing liability) because the dividend income will be
included in the corporation's "adjusted current earnings" for purposes of the
adjustment to alternative minimum taxable income required by Section 56(g) of
the Code.
A distribution of Securities by the Trustee to a Holder (or to his agent,
including the Distribution Agent) upon redemption of Units 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 the 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 18 months, mid-term if held for more than one year but not
more than 18 months and short-term if held for one year or less. Individuals
17
<PAGE>
who realize mid-term capital gains may be subject to a reduced tax rate of 28%
on such gains rather than the "regular" maximum tax rate of 39.6%. A reduced
tax rate of 20% for capital gains may be realized by individual investors who
have held assets for more than 18 months. The deduction of capital losses is
subject to limitations.
The Trust 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, the Trust is
not an association taxable as a corporation and the income of the 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 the Trust will be subject to
a withholding tax of 30%, or a lower treaty rate, and under certain
circumstances gain from the disposition of Securities or Units may also be
subject to Federal income tax. 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, the Trustee will furnish to each Holder
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
This Trust may be well suited for purchase by Individual Retirement Accounts
("IRAs"), Keogh plans, pension funds and other qualified retirement plans.
Generally, capital gains and income received in each of the foregoing plans
are exempt from Federal taxation. Except with respect to certain IRAs known as
Roth IRAs, 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 the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms,
including the Sponsor of this Trust, and other financial institutions. Fees
and charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in the Trust; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of the Trust are deemed "plan assets" under ERISA and the
Department of Labor regulations regarding the definition of "plan assets."
18
<PAGE>
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is computed by adding to the
aggregate value of the Securities in the Trust (as determined by the Trustee)
and any cash held to purchase Securities, divided by the number of Units
outstanding, a sales charge of 3.093% thereof. This sales charge is equal to a
gross underwriting profit of 3.00% of the Public Offering Price and is subject
to change by the Sponsor at any time. For most investors the commissions to
purchase and sell the stocks directly would exceed the Trust's 3.00% sales
charge and expenses. Orders for Units received by the Sponsor on December 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 December 15 (all of
which are held by the Sponsor) will be split (or split in reverse). The Public
Offering Price subsequent to December 15, 1997 and on any subsequent date will
vary from the Public Offering Price on the date of the initial Prospectus (set
forth under Investment Summary) in accordance with fluctuations in the
aggregate value of the underlying Securities. Units will be sold to investors
at the Public Offering Price next determined after receipt of the investor's
purchase order. A proportionate share of the amount in the Income Account
(described under Administration of the Trust-- Accounts and Distributions) on
the date of delivery of the Units to the purchaser is added to the Public
Offering Price.
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least 50,000 Units. Sales charges are
as follows:
<TABLE>
<CAPTION>
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 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.
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units in the amounts stated. Purchases of Units will
not be aggregated with purchases of units of any series of a unit investment
trust sponsored by Smith Barney. 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 the Trust divided by
the number of Units outstanding plus a reduced sales charge of .5%. Sales to
these plans involve less selling effort and expense than sales to employee
groups of other companies.
19
<PAGE>
PUBLIC DISTRIBUTION
Units will be distributed to the public at the Public Offering Price through
the Sponsor, as sole underwriter of the Trust, and may also be distributed
through dealers.
The Sponsor intends to qualify Units for sale in all states of the United
States where qualification is deemed necessary through the Sponsor and dealers
who are members of the National Association of Securities Dealers, Inc. Sales
to dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price per Unit to be established at the
time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 3.00% 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 as described under Public Offering Price
above).
On the Initial Date of Deposit, the Sponsor also realized a profit or loss
on deposit of the Securities into the Trust in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to the Trust (which is based on the aggregate value of the
Securities on the 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 the Trust (see Expenses and Charges -- Fees). The Sponsor has not
participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolio on the Initial
Date of Deposit were acquired, except as indicated under Portfolio.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or the prices at which the Securities are sold after it redeems
such Units, as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial
Date of Deposit at prices, subject to change at any time, which will be
computed by adding (1) the aggregate value of Securities in the Trust, (2)
amounts in the Trust including dividends receivable on stocks trading ex-
dividend and (3) all other assets in the Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against the Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to the Trust and certain
20
<PAGE>
other expenses and (c) amounts for distribution to Holders of record as of a
date prior to the evaluation; and dividing the result of such computation by
the number of Units outstanding as of the date of computation. The Sponsor may
discontinue purchases of Units if the supply of Units exceeds demand or for
any other business reason. The Sponsor, of course, does not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. On any given day, however, the price offered by the
Sponsor for the purchase of Units shall be an amount not less than the
Redemption Price per Unit, based on the aggregate value of Securities in the
Trust on the date on which the Units are tendered for redemption (see
Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of
all series of unit trusts which it has in its inventory, the salability of
such units and its estimate of the time required to sell such units and
general market conditions. For a description of certain consequences of such
redemption for the remaining Holders, see Redemption.
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest,
American or Pacific Stock Exchanges, or in such other manner as may be
acceptable to the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or
certificates of corporate authority.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trust -- Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for the Trust. While these minimum amounts may vary
from time to time in accordance with market conditions, the Sponsor believes
that the minimum amounts which would be specified would be a sufficient number
of shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Martin Luther King, Jr.
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,
21
<PAGE>
by adding (1) the aggregate value of the Securities determined by the Trustee,
(2) amounts in the Trust including dividends receivable on stocks trading ex-
dividend (with appropriate adjustments to reflect monthly distributions made
to Holders) and (3) all other assets in the Trust; deducting therefrom the sum
of (a) taxes or other governmental charges against the Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to the Trust and certain other
expenses and (c) amounts for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result of such computation by the
number of Units outstanding as of the date thereof.
The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: if the Securities are listed on a national
securities exchange or NASDAQ National Market 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.
EXPENSES AND CHARGES
Initial Expenses -- All or some portion of the expenses incurred in
establishing the Trust, including the cost of the initial preparation,
printing and execution of the registration statement and the indenture,
Federal and State registration fees, the initial fees and expenses of the
Trustee, legal expenses and any other out-of-pocket expenses, will be paid by
the Trust and amortized over one year. Any balance of the expenses incurred in
establishing the Trust, as well as advertising and selling expenses, will be
paid by the Underwriters at no cost to the Trust.
Fees -- The Trustee's and Sponsor's fees are set forth under Investment
Summary. The Trustee receives for its services as Trustee and Distribution
Agent payable in monthly installments, the amount set forth under Investment
Summary. The Trustee's fee (in respect of services as Trustee), payable
monthly, is based on the largest number of Units outstanding during the
preceding month. Certain regular and recurring expenses of the Trust,
including certain mailing and printing expenses, are borne by the Trust. The
Trustee receives benefits to the extent that it holds funds on deposit in the
various non-interest bearing accounts created under the Indenture. The
Sponsor's fee, which is earned for trust supervisory services, is based on the
largest number of Units outstanding during the year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under Investment Summary, may
exceed the actual costs of providing supervisory services for this Trust, but
at no time will the total amount the Sponsor receives for trust supervisory
services rendered to all series of Smith Barney Unit Trusts in any calendar
year exceed the aggregate cost to it of supplying these services in that year.
In addition, the Sponsor may also be reimbursed for bookkeeping or other
administrative services provided to the Trust in amounts not exceeding its
cost of providing those services. The fees of the Trustee and Sponsor may be
increased without approval of Holders in proportion to increases under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the Trust
(including legal and auditing expenses) and expenses of counsel designated by
the Sponsor, (3) various
22
<PAGE>
governmental charges and fees and expenses for maintaining the Trust's
registration statement current with Federal and State authorities, (4)
expenses and costs of action taken by the Sponsor, in its discretion, or the
Trustee, in its discretion, to protect the Trust and the rights and interests
of Holders (for example, expenses in exercising the Trust's rights under the
underlying Securities), (5) indemnification of the Trustee for any losses,
liabilities and expenses incurred without gross negligence, bad faith or
wilful misconduct on its part, (6) indemnification of the Sponsor for any
losses, liabilities and expenses incurred without gross negligence, bad faith,
wilful misconduct or reckless disregard of their duties and (7) expenditures
incurred in contacting Holders upon termination of the Trust. The amounts of
these charges and fees are secured by a lien on the Trust.
Payment of Expenses -- Funds necessary for the payment of the above fees
will be obtained in the following manner: (1) first, by deductions from the
Income Account (see below) (which will reduce income distributions from the
Account); (2) to the extent the Income Account funds are insufficient, by
distribution from the Capital Account (see below); (3) to the extent the
Income and Capital Accounts are insufficient, by selling Securities from the
Portfolio and using the proceeds to pay the expenses (thereby reducing the net
asset value of the Units).
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable (see Description of the Trust --
Risk Factors), the Sponsor cannot provide any assurance that dividends will
be sufficient to meet any or all expenses of the Trust. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
ADMINISTRATION OF THE TRUST
RECORDS
The Trustee keeps records of the transactions of the Trust at its corporate
trust office including names, addresses and holdings of all Holders 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 the Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive his distribution
in cash, any income distribution for the Holder as of each Record Day will be
made on the following Distribution Day or shortly thereafter and shall consist
of an amount equal to the Holder's pro rata share of the distributable balance
in the Income Account as of such Record Day, after deducting estimated
expenses. The first distribution for persons who purchase Units between a
Record Day and a Distribution Day will be made on the second Distribution Day
following their purchase of Units. In addition, amounts from the Capital
Account may be distributed from time to time to Holders of record. The Trustee
may withdraw from the Income Account, from time to time, such amounts as it
deems requisite to establish a reserve for any taxes or other governmental
charges that may be payable out of the Trust. Funds held by the Trustee in the
various accounts created under the Indenture do not bear interest.
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market
value. Subject to any applicable regulations and plan restrictions, the
Sponsor intends to direct the Trustee to participate in any such plans to the
greatest extent possible taking into account the Securities held by the Trust
23
<PAGE>
in the issuers offering such plans. In such event, the Indenture requires that
the Trustee forthwith distribute in kind to the Distribution Agent the
Securities received upon any such reinvestment to be held for the accounts of
the Holders in proportion to their respective interests in the Trust. It is
anticipated that Securities so distributed shall immediately be sold.
Therefore, the cash received upon such sale, after deducting sales commissions
and transfer taxes, if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trust are
generally made in brokerage transactions as distinguished from principal
transactions. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
The Trust is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. However, the Portfolio is
regularly reviewed. Traditional methods of investment management for a managed
fund (such as a mutual fund) typically involve frequent changes in a portfolio
of securities on the basis of economic, financial and market analyses. The
Portfolio of the Trust, however, will not be actively managed and therefore
the adverse financial condition of an issuer will not necessarily require the
sale of its Securities from the Portfolio. However, while it is the intention
of the Sponsor to continue the Trust's investment in the Securities in the
original proportions, it has the power but not the obligation to direct the
disposition of the Securities upon institution of certain legal proceedings,
default under certain documents adversely affecting future declaration or
payment of anticipated dividends, 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 the Portfolio any Security if its fundamental rating is reduced
below 2/2 by Robinson-Humphrey'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 the 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
24
<PAGE>
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 the Portfolio and no
replacement security is acquired, the Trustee shall within a reasonable period
of time thereafter notify Holders of the sale of the Security. Except as
stated in this and the following paragraphs, the Trust 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 the 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 the Trust consisting of securities
of a single issuer (or of two or more issuers which are Affiliated Persons as
this term is defined in the Investment Company Act of 1940) which are not
registered and are not being registered under the Securities Act of 1933 or
result in the Trust owning more than 50% of any single issue which has been
registered under the Securities Act of 1933; and shall have, in the opinion of
the Sponsor, characteristics sufficiently similar to the characteristics of
the other Securities in the Trust as to be acceptable for acquisition by the
Trust. Whenever a Security has been eliminated by the Trust and a Replacement
Security is deposited, the Trustee shall within five days after the deposit of
the Replacement Security notify all Holders of the sale of the Security
eliminated and the acquisition of the Replacement Security. Whenever a
Replacement Security has been acquired for the 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 the 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 Portfolio 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 the Trust.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trust by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase
Additional Securities or, Additional Securities in exchange for the
corresponding number of additional Units 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 the Portfolio at the end of the initial 90-
day period.
25
<PAGE>
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 the 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 Trust 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 furnish to each person who at any time during
the preceding period from January 1 through December 31 (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 the 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
26
<PAGE>
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 the 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 the Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders. The Indenture will terminate upon the earlier of the disposition of
the last Security held thereunder or the Mandatory Termination Date specified
under Investment Summary. The Indenture may also be terminated by the Sponsor
if the value of the Trust is less than the minimum value set forth under
Investment Summary (as described under Description of the Trust -- Risk
Factors) and may be terminated at any time by written instrument executed by
the Sponsor and consented to by Holders of 51% of the Units. The Trustee shall
deliver written notice of any termination to each Holder 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 this Trust into units of any then
outstanding series of the Robinson-Humphrey Annual Themes Series (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 Trust who
elect to purchase units of an Exchange Series within 60 days of their
liquidation of Units in the Trust.
Holders who retain their Units until the termination of the Trust, may
reinvest their terminating distributions into units of a subsequent series of
the Robinson-Humphrey Annual Themes Series (the "New Series") provided
27
<PAGE>
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 the 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 Trust described in this Prospectus,
and that similar reinvestment programs will be offered with respect to all
subsequent series of the Trust. 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 the Exchange or New Series, as the case may be, is treated
as substantially identical to the 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., Robinson-Humphrey or directly in the name of
the Holder, unless the Holder notifies his financial consultant at Smith
Barney Inc., Robinson-Humphrey or the Trustee, respectively, to the contrary,
will be reinvested automatically in additional Units of the Trust at no extra
charge pursuant to the Trust's "Reinvestment Plan". If the Holder does not
wish to participate in the Reinvestment Plan, the Holder must notify his
financial consultant at Smith Barney Inc., Robinson-Humphrey or the Trustee at
least ten business days prior to the Distribution Day to which that election
is to apply. The election may be modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of the Trust at the Sponsor's Repurchase Price (the
net asset value per Unit without any sales charge) in effect at the close of
business on the Distribution Day. These may be either previously issued Units
repurchased by the Sponsor or newly issued Units created upon the deposit of
additional Securities in the Trust (see Description of the Trust -- Structure
and Offering). Each participant will receive an account statement reflecting
any purchase or sale of Units under the Reinvestment Plan.
28
<PAGE>
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to the Trust. The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units
at any time, or by the Sponsor without the consent of any of the Holders if
the Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor. In case of such
resignation or removal the Sponsor is to use its best efforts to appoint a
successor promptly and if upon resignation of the Trustee no successor has
accepted appointment within thirty days after notification, the Trustee may
apply to a court of competent jurisdiction for the appointment of a successor.
The Trustee shall be under no liability for any action taken in good faith in
reliance on prima facie properly executed documents or for the disposition of
monies or Securities, nor shall it be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Security. This
provision, however, shall not protect the Trustee in cases of wilful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
SPONSOR
The Sponsor may resign at any time if a successor Sponsor is appointed by
the Trustee in accordance with the Indenture. Any new Sponsor must have a
minimum net worth of $2,000,000 and must serve at rates of compensation deemed
by the Trustee to be reasonable and as may not exceed amounts prescribed by
the SEC. If the Sponsor fails to perform its duties or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may (1) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and as may not exceed
amounts prescribed by the SEC, (2) terminate the Indenture and liquidate the
Trust or (3) continue to act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trust or to the Holders for
taking any action or for refraining from taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Sponsor may transfer all or substantially
all of its assets to a corporation or partnership which carries on its
business and duly assumes all of its obligations under the Indenture and in
such event it shall be relieved of all further liability under the Indenture.
MISCELLANEOUS
TRUSTEE
The name and address of the Trustee are shown on the back cover of this
prospectus. The Trustee is subject to supervision and examination by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation
29
<PAGE>
and the Board of Governors of the Federal Reserve System. In connection with
the storage and handling of certain Stocks deposited in the Trust, 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 Statement of Financial Condition and the Portfolio included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors,
as indicated in their report with respect thereto, and is so included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
SPONSOR
Smith Barney Inc. ("Smith Barney"), was incorporated in Delaware in 1960 and
traces its history through predecessor partnerships to 1873. Smith Barney, an
investment banking and securities broker-dealer firm, is a member of the New
York Stock Exchange, Inc. and other major securities and commodities
exchanges, the National Association of Securities Dealers, Inc. and the
Securities Industry Association. Smith Barney is an indirect wholly-owned
subsidiary of The Travelers Inc. The Sponsor or an affiliate is investment
adviser, principal underwriter or distributor of more than 60 open-end
investment companies and investment manager of 12 closed-end investment
companies. Smith Barney also sponsors all Series of Corporate Securities
Trust, Government Securities Trust, Harris, Upham Tax-Exempt Fund and Tax
Exempt Securities Trust, and acts as co-sponsor of most Series of Defined
Asset Funds.
ROBINSON-HUMPHREY
The Robinson-Humphrey Company, LLC ("Robinson-Humphrey"), an investment
banking and investment services firm headquartered in Atlanta, Georgia, is a
subsidiary of Smith Barney. Robinson-Humphrey is a member of the New York
Stock Exchange and other principal United States securities exchanges, as well
as the National Association of Securities Dealers, Inc. and the National
Futures Association.
30
<PAGE>
ROBINSON-HUMPHREY
ANNUAL THEMES SERIES 1998
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 7
Robinson-Humphrey Annual Themes Series 1998 8
Portfolio of Robinson-Humphrey Annual Themes Series
1998 9
Description of the Trust 11
Taxes 16
Public Sale of Units 19
Market for Units 20
Redemption 21
Expenses and Charges 22
Administration of the Trust 23
Exchange and Rollover Privileges 27
Reinvestment Plan 28
Resignation, Removal and Limitations on Liability 29
Miscellaneous 29
</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>
- --------------------------------------------------------------------------------
THE ROBINSON-HUMPHREY COMPANY, LLC
----------------------------------
A subsidiary of Smith Barney Inc.
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998 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 6418 12/97
<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 Indenture.
2.1 -- Form of Standard Terms and Conditions of Trust (incorporated by
reference to Exhibit 2.1 to the Registration Statement of The
Uncommon Values Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
*3.1 -- Opinion of counsel as to the legality of securities being issued
including their consent to the use of their name under the 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 Registration Statement or Amendment thereto 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 December 1997.
SIGNATURES APPEAR ON PAGE II-4
A majority of the members of the Board of Directors of Smith Barney Inc. has
signed this Registration Statement or Amendment thereto pursuant to Powers of
Attorney authorizing the person signing this Registration Statement or
Amendment thereto 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
<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>
<CIK> 0001048983
<NAME> ROBINSON-HUMPHREY SERIES
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-12-1997
<PERIOD-END> DEC-12-1997
<INVESTMENTS-AT-COST> 971256
<INVESTMENTS-AT-VALUE> 971256
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 95926
<TOTAL-ASSETS> 1067182
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95926
<TOTAL-LIABILITIES> 95926
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 971256
<SHARES-COMMON-STOCK> 1000000
<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> 971256
<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> 1000000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 971256
<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
ROBINSON-HUMPHREY ANNUAL THEMES SERIES 1998
REFERENCE TRUST INDENTURE
Dated as of December 12, 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 the Trust 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
December 15, 1997, in the event that the aggregate value of Securities in the
Trust has increased since the evaluation on December 12, 1997, the Trustee shall
issue such number of additional Units to the Holder of outstanding Units as of
the close of business on December 12, 1997, that the price per Unit computed as
of the Evaluation Time on December 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 aggregate value of Securities in the Trust Fund
has decreased since the
-2-
<PAGE>
evaluation on December 12, 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 December 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, 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 office address of the Holder appearing on the record books of the
Trustee or by any other means mutually agreed upon by
-3-
<PAGE>
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 any other means
mutually agreed upon by the Holder and the Trustee."
-4-
<PAGE>
(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 Sponsor'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
subparagagraphs (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
Section 3.06 hereof shall replicate, to the extent practicable, the
original proportionate relationship among the number of shares of
each Security in the
-5-
<PAGE>
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 to 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 underrepresented 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 Additional Securities which the
Sponsor shall have entered into and assigned to the Trustee.
-6-
<PAGE>
(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 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.
"(d) In addition to the requirements specified in paragraph (c),
Replacement Security must:
-7-
<PAGE>
"(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 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
-8-
<PAGE>
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:
"Section 3.09. Reorganization or Similar Event. In
-------------------------------
the event that an offer by the issuer of any of the
-9-
<PAGE>
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."
-10-
<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
-11-
<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
-----------------------
-12-
<PAGE>
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 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 Distribu tion 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 Distri bution 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
-13-
<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
-15-
<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.
-16-
<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
-17-
<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.
-18-
<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 para graph:
"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 $5,000,000."
(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 Sponsor, and the Trustee may otherwise
deal with the Sponsor
-19-
<PAGE>
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 accrued as of such
Record Date as provided in the following
-20-
<PAGE>
sentence (less prior payments on account of such advances, if any), and
the provisions of Section 8.05 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.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to
be duly executed
SMITH BARNEY INC.
Sponsor
By: /s/ Kevin Kopczynski
-------------------------
First Vice President
THE CHASE MANHATTAN BANK, TRUSTEE
By: /s/ Thomas Porazzo
----------------------------
Vice President
(SEAL)
ATTEST:
By: /s/ Rachelle Cohen
----------------------------
-21-
<PAGE>
EXHIBIT 3.1
[LETTERHEAD OF BATTLE FOWLER LLP]
December 12, 1997
Smith Barney Inc.
Unit Trust Department
388 Greenwich Street, 23rd Floor
New York, New York 10013
Re: Robinson-Humphrey Annual Themes Series 1998
-------------------------------------------
Dear Sirs:
We have acted as special counsel for Smith Barney Inc. as Depositor,
Sponsor and Principal Underwriter (the "Depositor") of Robinson-Humphrey Annual
Themes Series 1998 (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
<PAGE>
BATTLE FOWLER LLP 2
Smith Barney Inc.
December 12, 1997
"1940 Act"); (d) the Registration Statement on Form S-6 (Registration No.
333-39503) 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 December 15, 1997; (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
<PAGE>
BATTLE FOWLER LLP 3
Smith Barney Inc.
December 12, 1997
bankruptcy, reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors' rights,
and (ii) to limitations under equitable principles governing the availability of
equitable remedies.
We are not admitted to the practice of law in any jurisdiction but
the State of New York and we do not hold ourselves out as experts in or express
any opinion as to the laws of other states or jurisdictions except as to matters
of Federal and Delaware corporate law. 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 99.5.1
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee and Unit Holders of
Robinson-Humphrey Annual Themes Series 1998
We consent to the use of our report dated December 12, 1997 included
herein and to the reference to our firm under the heading "Auditors" in the
Prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
December 12, 1997
