<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1998
REGISTRATION NO. 333-49569
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-6
----------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
----------------
A. EXACT NAME OF TRUST:
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
B. NAME OF DEPOSITOR:
SMITH BARNEY INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
SMITH BARNEY INC.
388 GREENWICH STREET, 23RD FLOOR
NEW YORK, NEW YORK 10013
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS 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
(212) 856-6858
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 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 THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 12, 1998
EQUITY FOCUS TRUSTS
SECTOR SERIES, 1998-A
ENERGY PORTFOLIO
FINANCIALS PORTFOLIO
HEALTHCARE PORTFOLIO
TECHNOLOGY & TELECOMMUNICATIONS PORTFOLIO
UNIT INVESTMENT TRUSTS
SALOMON SMITH BARNEY The Equity Focus Trusts--Sector Series,
- ------------------------------- 1998-A consists of four separate unit
investment trusts designated as the
A Member of TravelersGroup LOGO Energy Portfolio, the Financials
Portfolio, the Healthcare Portfolio and
the Technology & Telecommunications
Portfolio (collectively, the "Trusts").
Each Trust offers investors the
opportunity to purchase Units
representing proportionate interests in
a portfolio of equity securities
selected by Salomon Smith Barney Equity
Research from the industry sector for
which the particular Trust is named. The
value of the Units of each Trust will
fluctuate with the value of the
underlying securities. The minimum
purchase is $250.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated May , 1998
Read and retain this Prospectus for future reference
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
ENERGY PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++.................................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT...........
PUBLIC OFFERING PRICE (per 1,000 Units)...................................
Aggregate value of Securities in Trust................................... $
====
Divided by Units (times 1,000)....................................... $
Plus initial sales charge of 1.50% of Public Offering Price (1.523% of
the net amount invested in Securities)*+++..............................
----
Public Offering Price per 1,000 Units.................................... $
Plus the amount per 1,000 Units in the Income and Capital Accounts (see
Description of the Trust--Income)....................................... $ 0
----
Total (per 1,000 Units).................................................. $
====
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS (based
on value of underlying securities)...................................... $
DISTRIBUTIONS
Distributions of income, if any, will be made on the day of of each
year commencing , 1998, to Holders of record on the day of each year
commencing , 1998, and will be automatically reinvested in additional
Units of this Trust unless the Holder elects to receive his distribution in
cash. A Final Distribution will be made upon termination of the Trust.
</TABLE>
<TABLE>
<S> <C>
SPONSOR'S PROFIT/LOSS ON DEPOSIT ......................................... $
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
of each year.
DISTRIBUTION DAY
</TABLE>
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,
unless the net asset value of Trust deposits has exceeded $50,000,000. In
that case, the Indenture may be terminated if the net asset value of the
Trust is less than $20,000,000. See Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
, 2000 (the "Mandatory Termination Date"), or at any earlier time by the
Sponsor with the consent of Holders of 51% of the Units then outstanding.
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing 1, 1998 through 1, 2000.
- ------------
+The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on , 1998. Valuation of Securities is based on the market
value per share as of , 1998, as more fully explained in footnote 4 to
Portfolio on page 14. After the Initial Date of Deposit, Securities quoted on a
national securities exchange or the Nasdaq National Market, or a foreign
securities exchange, are valued at the closing sale price or, if no price
exists, at the mean between the closing bid and offer prices. Securities not so
quoted are valued at the mean between bid and offer prices.
++The Sponsor may create additional Units during the offering period of the
Trust.
+++ The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
*The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge imposed prior to the Mandatory Termination Date ($30.00 per 1,000 Units)
from the aggregate sales charge (a maximum of 4.50% of the Public Offering
Price). On , 1998, the Initial Date of Deposit, the Initial Sales Charge
is $ per 1,000 Units (or 1.50% of the Public Offering Price). The Deferred
Sales Charge of the Trust is paid through a reduction of the net asset value of
the Trust by $1.25 per 1,000 Units on each Deferred Sales Charge Payment Date.
If a Holder sells or redeems Units before a Deferred Sales Charge Payment Date,
all future deductions of the Deferred Sales Charge will be waived; this will
have the effect of reducing the rate of sales charge for that Holder.
**All redemptions of 250,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
2
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
FINANCIALS PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS ++..............................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT......... 1/
PUBLIC OFFERING PRICE (per 1,000 Units).................................
Aggregate value of Securities in Trust................................. $
======
Divided by Units (times 1,000)..................................... $
Plus initial sales charge of 1.50% of Public Offering Price (1.523% of
the net amount invested in Securities)*+++............................
------
Public Offering Price per 1,000 Units.................................. $
Plus the amount per 1,000 Units in the Income and Capital Accounts (see
Description of the Trust--Income)..................................... $ 0
------
Total (per 1,000 Units)................................................ $
======
</TABLE>
<TABLE>
<S> <C>
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS (based on
value of underlying securities)........................................... $
</TABLE>
DISTRIBUTIONS
Distributions of income, if any, will be made on the day of each
year commencing , 1998, to Holders of record on the day of each
year commencing , 1998, and will be automatically reinvested in
additional Units of this Trust unless the Holder elects to receive his
distribution in cash. A Final Distribution will be made upon termination of
the Trust.
<TABLE>
<S> <C>
SPONSOR'S PROFIT/LOSS ON DEPOSIT.... $
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
of each year.
DISTRIBUTION DAY
</TABLE>
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,
unless the net asset value of Trust deposits has exceeded $50,000,000. In
that case, the Indenture may be terminated if the net asset value of the
Trust is less than $20,000,000. See Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
, 2000 (the "Mandatory Termination Date"), or at any earlier time by
the Sponsor with the consent of Holders of 51% of the Units then outstanding.
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing 1, 1998 through 1,
2000.
- ------------
+The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on , 1998. Valuation of Securities is based on the
market value per share as of , 1998, as more fully explained in
footnote 4 to Portfolio on page 15. After the Initial Date of Deposit,
Securities quoted on a national securities exchange or the Nasdaq National
Market, or a foreign securities exchange, are valued at the closing sale price
or, if no price exists, at the mean between the closing bid and offer prices.
Securities not so quoted are valued at the mean between bid and offer prices.
++ The Sponsor may create additional Units during the offering period of the
Trust.
+++ The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
* The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge imposed prior to the Mandatory Termination Date ($30.00 per 1,000 Units)
from the aggregate sales charge (a maximum of 4.50% of the Public Offering
Price). On , 1998, the Initial Date of Deposit, the Initial Sales Charge
is $ per 1,000 Units (or 1.50% of the Public Offering Price). The Deferred
Sales Charge of the Trust is paid through a reduction of the net asset value of
the Trust by $1.25 per 1,000 Units on each Deferred Sales Charge Payment Date.
If a Holder sells or redeems Units before a Deferred Sales Charge Payment Date,
all future deductions of the Deferred Sales Charge will be waived; this will
have the effect of reducing the rate of sales charge for that Holder.
** All redemptions of 250,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
3
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
HEALTHCARE PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++............................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT...... 1/
PUBLIC OFFERING PRICE (per 1,000 Units)..............................
Aggregate value of Securities in Trust.............................. $
=========
Divided by Units (times 1,000)............................... $
Plus initial sales charge of 1.50% of Public Offering Price (1.523%
of the net amount invested in Securities)*+++......................
---------
Public Offering Price per 1,000 Units............................... $
---------
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income) $ 0
---------
Total (per 1,000 Units)............................................. $
=========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS
(based on value of underlying securities)........................... $
DISTRIBUTIONS
Distributions of income, if any, will be made on the day of of each
year commencing , 1998, to Holders of record on the day of each year
commencing , 1998, and will be automatically reinvested in additional
Units of this Trust unless the Holder elects to receive his distribution in
cash. A Final Distribution will be made upon termination of the Trust.
</TABLE>
<TABLE>
<S> <C>
SPONSOR'S PROFIT/LOSS ON DEPOSIT..... $
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units (see Expenses and
Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units (see
Expenses and Charges)
RECORD DAY
of each year.
DISTRIBUTION DAY
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, unless the
net asset value of Trust deposits has
exceeded $50,000,000. In that case, the
Indenture may be terminated if the net
asset value of the Trust is less than
$20,000,000. See Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
, 2000 (the "Mandatory Termination
Date"), or at any earlier time by the
Sponsor with the consent of Holders of
51% of the Units then outstanding.
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing
1, 1998 through 1, 2000.
</TABLE>
- ------------
+The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on , 1998. Valuation of Securities is based on the market
value per share as of , 1998, as more fully explained in footnote 4 to
Portfolio on page 16. After the Initial Date of Deposit, Securities quoted on a
national securities exchange or the Nasdaq National Market, or a foreign
securities exchange, are valued at the closing sale price or, if no price
exists, at the mean between the closing bid and offer prices. Securities not so
quoted are valued at the mean between bid and offer prices.
++The Sponsor may create additional Units during the offering period of the
Trust.
+++The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
*The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge imposed prior to the Mandatory Termination Date ($30.00 per 1,000 Units)
from the aggregate sales charge (a maximum of 4.50% of the Public Offering
Price). On , 1998, the Initial Date of Deposit, the Initial Sales Charge is
$ per 1,000 Units (or 1.50% of the Public Offering Price). The Deferred Sales
Charge of the Trust is paid through a reduction of the net asset value of the
Trust by $1.25 per 1,000 Units on each Deferred Sales Charge Payment Date. If a
Holder sells or redeems Units before a Deferred Sales Charge Payment Date, all
future deductions of the Deferred Sales Charge will be waived; this will have
the effect of reducing the rate of sales charge for that Holder.
**All redemptions of 250,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
4
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
TECHNOLOGY & TELECOMMUNICATIONS PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++.............................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST
REPRESENTED BY EACH UNIT............................................. 1/
PUBLIC OFFERING PRICE (per 1,000 Units)...............................
Aggregate value of Securities in Trust............................... $
========
Divided by Units (times 1,000)..................................... $
Plus initial sales charge of 1.50% of Public Offering Price (1.523%
of the net amount invested in Securities)*+++.......................
--------
Public Offering Price per 1,000 Units................................ $
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income).............................. $ 0
--------
Total (per 1,000 Units).............................................. $
========
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE** PER 1,000 UNITS
(based on value of underlying securities)............................ $
DISTRIBUTIONS
Distributions of income, if any, will be made on the day of of
each year commencing , 1998, to Holders of record on the day of
of each year commencing , 1998, and will be automatically
reinvested in additional Units of this Trust unless the Holder elects to
receive his distribution in cash. A Final Distribution will be made upon
termination of the Trust.
SPONSOR'S PROFIT/LOSS ON DEPOSIT...................................... $
</TABLE>
<TABLE>
<S> <C>
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
of each year.
DISTRIBUTION DAY
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, unless
the net asset value of Trust deposits
has exceeded $50,000,000. In that case,
the Indenture may be terminated if the
net asset value of the Trust is less
than $20,000,000. See Risk Factors, page
3.
MANDATORY TERMINATION OF TRUST
, 2000 (the "Mandatory Termination
Date"), or at any earlier time by the
Sponsor with the consent of Holders of
51% of the Units then outstanding.
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing
1, 1998 through 1, 2000.
</TABLE>
- ------------
+The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on , 1998. Valuation of Securities is based on the
market value per share as of , 1998, as more fully explained in footnote
4 to Portfolio on page 17. After the Initial Date of Deposit, Securities quoted
on a national securities exchange or the Nasdaq National Market, or a foreign
securities exchange, are valued at the closing sale price or, if no price
exists, at the mean between the closing bid and offer prices. Securities not so
quoted are valued at the mean between bid and offer prices.
++The Sponsor may create additional Units during the offering period of the
Trust.
+++The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
*The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge imposed prior to the Mandatory Termination Date ($30.00 per 1,000 Units)
from the aggregate sales charge (a maximum of 4.50% of the Public Offering
Price). On , 1998, the Initial Date of Deposit, the Initial Sales Charge
is $ per 1,000 Units (or 1.50% of the Public Offering Price). The Deferred
Sales Charge of the Trust is paid through a reduction of the net asset value of
the Trust by $1.25 per 1,000 Units on each Deferred Sales Charge Payment Date.
If a Holder sells or redeems Units before a Sales Charge Payment Date, all
future deductions of the Deferred Sales Charge will be waived; this will have
the effect of reducing the rate of sales charge for that Holder.
**All redemptions of 250,000 Units or more may, upon request by a redeeming
Holder, be made in kind to the Distribution Agent, who will either forward the
distributed securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any brokerage commission
or other expenses incurred in the sale) to the Holder. See Redemption.
5
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
OBJECTIVE OF THE TRUSTS -- The objective of the Equity Focus Trusts -- Sector
Series, 1998-A Portfolio (the " Portfolio") and the Equity Focus
Trusts--Sector Series, 1998-A- Portfolio (the " Portfolio") is to
provide investors with the possibility of capital appreciation through a
convenient and cost-effective investment in fixed portfolios consisting of
shares of the common stocks (the "Securities") selected by the Sponsor. The
Sponsor has selected for the Portfolios stocks which it considers to have
strong potential for capital appreciation over a period of one year relative to
risks and opportunities. The payment of dividends is not a primary objective of
the Portfolio and Portfolio. The objective of the Equity Focus
Trusts -- Sector Series, 1998-A- Portfolio (the " Portfolio") and the
Equity Focus Trusts--Sector Series, 1998-A Portfolio (the "
Portfolio") is to provide investors with the possibility of maximizing their
total return through a convenient and cost-effective investment in fixed
portfolios consisting of shares of Securities selected by the Sponsor. The
Sponsor has selected for the Portfolios stocks which it considers to have
the strong potential for capital appreciation and current dividend income over
a period of one year relative to risks and opportunities. The Energy Portfolio,
the Financials Portfolio, the Healthcare Portfolio and the Technology Portfolio
are collectively referred to herein as the "Trusts" or as the "Portfolios".
Achievement of each of the Trust's objectives is dependent upon several factors
including the financial condition of the issuers of the Securities and any
appreciation of the Securities. Furthermore, because of various factors,
including without limitation, Trust sales charges and expenses, unequal
weightings of stocks, brokerage costs and any delays in purchasing securities
with cash deposited, investors in the Trusts may not realize as high a total
return as the theoretical performance of the underlying stocks in their
respective Portfolios.
PORTFOLIOS -- The Energy Portfolio contains common stocks issued by
companies engaged primarily in the energy industry. The issue is a foreign
issue. Although there are certain risks of price volatility associated with
investment in common stocks (particularly with an investment in one or two
common stocks), your risk is reduced because your capital is divided among
stocks. (See Risk Factors.)
The Financials Portfolio contains common stocks issued by companies
engaged primarily in the financials industry. The issue is a foreign
issue. Although there are certain risks of price volatility associated with
investment in common stocks (particularly with an investment in one or two
common stocks), your risk is reduced because your capital is divided among
stocks. (See Risk Factors.)
The Healthcare Portfolio contains common stocks issued by companies
engaged primarily in the health care industry. The issue is a foreign
issue. Although there are certain risks of price volatility associated with
investment in common stocks (particularly with an investment in one or two
common stocks), your risk is reduced because your capital is divided among
stocks. (See Risk Factors.)
The Technology Portfolio contains common stocks issued by companies
engaged primarily in the technology and telecommunications industry. The
issue is a foreign issue. Although there are certain risks of price volatility
associated with investment in common stocks (particularly with an investment in
one or two common stocks), your risk is reduced because your capital is divided
among stocks. (See Risk Factors.)
The initial purchase of Securities for the Trusts will not necessarily
represent equal dollar amounts of each of the Securities; however, with the
initial deposit of Securities, the Sponsor established a proportionate
6
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
relationship among the number of shares of each stock deposited in the
Portfolio of a Trust. During the 90-day period following the Initial Date of
Deposit, the Sponsor may create additional Units of each of the Trusts by
depositing cash (or a bank letter of credit in lieu of cash) with instructions
to purchase Securities, additional Securities or contracts to purchase
additional Securities maintaining to the extent practicable the original
proportionate relationship among the number of shares of each stock in the
Portfolio of a Trust. Replacement Securities may be acquired under specified
conditions. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited in the Trusts on the Initial Date
of Deposit because of, among other reasons, purchase requirements, changes in
price or the unavailability of Securities. Any deposits of Securities in a
Trust after the 90-day period must replicate exactly the proportionate
relationship among the number of shares comprising that Portfolio at the end of
the initial 90-day period, subject to certain events discussed under
Administration of the Trusts--Trust Supervision. The Sponsor may cease creating
Units (temporarily or permanently) at any time. (See Administration of the
Trusts--Trust Supervision.)
RISK FACTORS -- Investment in the Trusts should be made with an understanding
that the value of the underlying Securities, and therefore the value of the
Units, will fluctuate, depending on the full range of economic and market
influences which may affect the market value of the Securities, including the
profitability and financial condition of issuers, conditions in a given
issuer's industry, market conditions and values of common stocks generally, and
other factors.
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trusts or to satisfy redemptions of Units, may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trusts may also
cause increased buying activity in certain of the stocks comprising each of the
Portfolios. After such announcement, investment advisory and brokerage clients
of the Sponsor and its affiliates may purchase individual Securities appearing
on the list during the course of the initial offering period. Such buying
activity in the stock of these companies prior to the purchase of the
Securities by a Trust may cause the Trust to purchase stocks at a higher price
than those buyers who effect purchases prior to purchases by the Trust.
The Trusts are not appropriate for investors requiring high current income or
conservation of capital. Securities representing approximately %, %, %
and % of the value of the Energy Portfolio, the Financials Portfolio, the
Healthcare Portfolio and the Technology Portfolio, respectively, have been
ranked High Risk by Salomon Smith Barney's Research Department, described as
"low predictability of earnings/dividends; high price volatility". Securities
representing approximately %, %, %, and % of the value of the Energy
Portfolio, the Financials Portfolio, the Healthcare Portfolio and the
Technology Portfolio, respectively, have been ranked Speculative by Salomon
Smith Barney's Research Department, described as "exceptionally low
predictability of earnings/dividends; highest risk of price volatility."
Each Portfolio's holdings will be concentrated in a single, specific industry
or service sector. Compared to the broad market, an individual sector may be
more strongly affected by changes in the economic climate; broad market shifts;
moves in a particular, dominant stock; or regulatory changes. Investors should
be prepared for volatile short-term movement in the value of Units. Investors
in the technology sector must be aware that competitive pressures and changing
domestic and international demand may have a substantial effect on the
financial condition of companies in the technology industry. Companies in the
technology industry spend heavily
7
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
on research and development and are sensitive to the risk of product
obsolescence. The profitability of financial services companies as a group is
largely dependent upon the availability and cost of capital funds which in turn
may fluctuate significantly in response to changes in interest rates and
general economic conditions. Additionally, investors in the financial services
sector should be aware that if government regulations are enacted which would
further reduce the separation between commercial and investment banking,
financial services companies may be significantly affected in terms of
profitability and competition. The energy industry may be subject to broad
risks resulting from governmental regulation, financing difficulties, supply
and demand of services or fuel, and special risks associated with environmental
conservation. Companies in the healthcare industry are also susceptible to
rapid obsolescence of products and services due to scientific advances.
Further, changes in government regulation may also have an adverse impact on
the healthcare industry. (See Risk Factors).
The Portfolio of each of the Trusts may contain Securities of issuers with
market capitalizations of $1 billion or less. Investing in such small
capitalization stocks may involve greater risks than investing in medium ($1
billion to $5 billion) or large (over $5 billion) capitalization stocks, since
they can be subject to more abrupt or erratic price movements. Investors should
note that definitions of what constitutes small, medium or large capitalization
stocks vary and, therefore, characterizations of these companies by persons
utilizing other definitions of these categories may be different than those
applied by the Trusts. (See Risk Factors--Small Capitalization Stock.)
If cash (or a letter of credit in lieu of cash) is deposited with
instructions to purchase Securities in connection with the issuance of
additional Units during the Public Offering Period, there is the risk that the
price of a Security will increase between the time of the deposit and the time
the Security is purchased resulting in a reduction in the number of shares
purchased for a Portfolio. Price fluctuations during the period from the time
of deposit of cash to the time the Securities are purchased, and payment of
brokerage fees, will affect the value of every Holder's Units, the number of
shares of each Security represented by each Unit and the income per Unit
received by each of the Trusts. Some of the Securities may have limited trading
volume. The Trustee, with directions from the Sponsor, will endeavor to
purchase Securities with deposited cash as soon as practicable, reserving the
right to purchase those Securities over the 20 business days following each
deposit in an effort to reduce the effect of these purchases on the market
price of those stocks. This could, however, result in the Trusts' failure to
participate in any appreciation of those stocks before the cash is invested. If
any cash remains at the end of this period and cannot be invested in one or
more stocks at what the Sponsor considers reasonable prices, it intends to use
that cash to purchase each of the other securities in the original
proportionate relationship among those securities. Similarly, at termination of
each of the Trusts, the Sponsor reserves the right to sell Securities over a
period of up to 20 business days to lessen the impact of its sales on the
market price of the Securities. The proceeds received by Holders following
termination of each of the Trusts will reflect the actual sales proceeds
received on the Securities, which will likely differ from the closing sale
price on the Mandatory Termination Date. (See 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
8
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998-A (CONTINUED)
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 the general economic conditions.
Unlike a mutual fund, the Portfolios are not actively managed and the Sponsor
receives no management fee. Therefore, the adverse financial condition of an
issuer will not necessarily require the sale of Securities from Portfolio or
mean that the Sponsor will not continue to purchase the Security in order to
create additional Units. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth above under
Objective of the Trusts and that each of the Trusts may continue to purchase or
hold Securities originally selected through this process even though the
evaluation of the attractiveness of the Securities may have changed. In the
event a public tender offer is made for a Security or a merger or acquisition
is announced affecting a Security, the Sponsor may instruct the Trustee to
tender or sell the Security on the open market when, in its opinion, it is in
the best interest of the holders of the Units to do so. Although the Portfolio
of each of the Trusts is regularly reviewed and evaluated and the Sponsor may
instruct the Trustee to sell Securities under certain limited circumstances,
Securities will not be sold by either Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. As a result, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of a Trust. The Sponsor has
currently assigned certain rankings to the issuers of Securities based on stock
performance expectations and level of risk (see footnote 2 to each of the
Portfolios). These rankings are subject to change. Securities will not
necessarily be sold by a Trust based on a change in rankings, although the
Sponsor intends to review the desirability of holding any Security if its
ranking is reduced below 3. The prices of single shares of each of the
Securities in the Trusts vary widely, and the effect of a dollar fluctuation,
either higher or lower, in stock prices will be much greater as a percentage of
the lower-price stocks' purchase price than as a percentage of the higher-price
stocks' purchase price.
Investors should note that should the size of a Trust be reduced below the
Minimum Value of Trust stated on pages 2 through 5 for the Energy Portfolio,
the Financials Portfolio, the Healthcare Portfolio and the Technology
Portfolio, respectively, that Trust may be terminated at that time by the
Sponsor, well before the Mandatory Termination Date of such Trust.
Any difference between the aggregate prices the Sponsor paid to acquire the
Securities and the aggregate prices at which Securities were initially
deposited in the Energy Portfolio, the Financials Portfolio, the Healthcare
Portfolio and the Technology Portfolio is noted on pages 2 through 5,
respectively, under Sponsor's Profit/Loss on Deposit. The Sponsor's profit or
loss on the deposit of Securities largely depends on whether the Securities'
prices rise in response to the Sponsor's purchases of possibly large volumes of
the Securities for initial and subsequent deposits in each of the Trusts. The
effect of the Sponsor's purchases of Securities on the prices of the Securities
is unpredictable.
FOREIGN SECURITIES AND AMERICAN DEPOSITORY RECEIPTS -- The Trusts may contain
Securities of foreign issuers or American Depository Receipts ("ADRs") for
securities that have been issued by non-United States issuers. These
instruments are subject to special considerations in addition to those
affecting common stocks of United States issuers. For a discussion of special
considerations relating to foreign securities and ADRs, see Description of the
Trusts Risk Factors; Taxes.
9
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in either of the
Trusts consists of privately-placed common stocks. Except as indicated under
Portfolios, the Sponsor has not participated as sole underwriter, managing
underwriter or member of an underwriting syndicate from which any of the
Securities in the Trusts were acquired.
PUBLIC OFFERING PRICE -- The Public Offering Price per 1,000 Units 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 the applicable sales charge. The total sales charge consists of an Initial
Sales Charge and a Deferred Sales Charge, the total of which equals a maximum
of 4.50%; this results in a sales charge of 4.712% of the net amount invested
in underlying Securities. The Initial Sales Charge is computed by deducting the
Deferred Sales Charge ($30.00 per 1,000 Units) from the aggregate sales charge.
On , 1998 the Initial Sales Charge is $ per 1,000 Units (1.50%* of the
Public Offering Price). The Initial Sales Charge is deducted from the purchase
price of a Unit at the time of purchase and paid to the Sponsor; it may be more
or less than 1.50% of the Public Offering Price because of fluctuations in
value of the Securities. The Deferred Sales Charge is paid through a reduction
of the net asset value of the Trust by $1.25 per 1,000 Units on each of the
twenty-four monthly Deferred Sales Charge Payment Dates, commencing on ,
1998 and will be charged on the first day of each month thereafter from 1,
1998 through 1, 2000. Units are offered at the Public Offering Price plus
the net amount per Unit in the Income Account (see Public Sale of Units). The
minimum purchase is $250. Investors should note that the Public Offering Price
of Units varies each business day with the value of the underlying Securities.
There is no "par value" for Units.
DISTRIBUTIONS -- Distributions of dividends (net of expenses) and any other
receipts (i.e., return of capital, stock dividends, if any, and gains) received
by each of the Trusts will be automatically reinvested in additional Units of
the respective Trust, subject only to the Deferred Sales Charge, and each
Holder of Units will participate unless the Holder elects to receive
distributions of dividends or other receipts, or both, in cash. Holders who
reinvest their distributions will receive additional Units and will therefore
own a greater percentage of a Trust than Holders who receive cash distributions
(see Reinvestment Plan). Distributions are expected to be made for the Energy
Portfolio, the Financials Portfolio, the Healthcare Portfolio and the
Technology Portfolio on each Distribution Day to Holders of record on the
immediately prior Record Day, as stated on pages 2 through 5, respectively. As
soon as practicable after termination of a Trust (generally after seven days),
the Trustee will distribute to each Holder his pro rata share of the amount
realized on disposition of the Securities remaining in that Trust plus any
other assets then in the Trust, less expenses of the Trust. The other assets of
the Trusts will include any dividends, interest income and net realized capital
gains which have not been distributed. The total distribution may be less than
the amount paid for Units.
MARKET FOR UNITS -- The Sponsor, though not obligated to do so, intends from
the commencement of each of the Trusts to maintain a market for Units and
continually to offer to purchase Units from Holders desiring to sell them at a
price based on the aggregate value of the underlying Securities (see Market for
Units). Whenever a market is not maintained, a Holder may be able to dispose of
his Units only through redemption (see Redemption).
- ------------
* This initial sales charge will be reduced on a graduated scale in the case
of quantity purchases. See Public Sale of Units--Public Offering Price.
10
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
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 EACH 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>
<CAPTION>
AS A % OF INITIAL AMOUNTS PER
PUBLIC OFFERING PRICE 1,000 UNITS
--------------------- -----------
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed
on Purchase (as a percentage of
offering price).................... 1.50%* $15.00
Maximum Deferred Sales Charge....... 3.00%** 30.00
---- ----------
Total.............................. 4.50% $45.00
==== ==========
Maximum Sales Charge Imposed on Re-
invested Dividends ................ 3.00%* $30.00***
==== ==========
ESTIMATED ANNUAL TRUST OPERATING EX-
PENSES
(AS A PERCENTAGE OF AVERAGE NET AS-
SETS)
<CAPTION>
AMOUNTS PER
AS A % OF NET ASSETS 1,000 UNITS
--------------------- -----------
<S> <C> <C> <C>
Trustee's Fee....................... . % $
Maximum Portfolio Supervision, Book-
keeping and Administrative Fees.... . % $
Organizational Expenses............. . % $
Other Operating Expenses............ . % $
Total.............................. . % $
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR PERIOD:
----------------------------------------
1 YEAR 2 YEARS
------ -------
<S> <C> <C> <C>
An investor would pay the following
expenses and charges on a $1,000
investment, assuming the Trust's
estimated operating expense ratio of
. % in the first year and . % in
the second year and a 5% annual
return on the investment throughout
the periods......................... $-- $--
</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.
Each of the Trusts (and therefore the Holders) will bear all or a portion of
its organizational costs--including costs of preparing the registration
statement, the indenture and other closing documents, registering units with
the SEC and the states and the initial audit of the Portfolios--as is common
for mutual funds. Historically, the sponsors of unit investment trusts have
paid all the costs of establishing those trusts. Advertising and selling
expenses will be paid by the Underwriters at no cost to the Trusts.
- ------------
* The Initial Sales Charge is the difference between 4.50% and the Deferred
Sales Charge ($30.00 per 1,000 Units) and would exceed 1.50% if the Public
Offering Price exceeds $1,000 per 1,000 Units.
** The actual fee is $1.25 per month per 1,000 Units, irrespective of the
purchase or redemption price, paid on each Deferred Sales Charge Payment
Date. If the Unit price exceeds $1.00 per Unit, the Deferred Sales Charge
will be less than 3.00%; if the Unit price is less than $1.00 per Unit, the
Deferred Sales Charge will exceed 3.00%.
*** Reinvested dividends will be subject only to the Deferred Sales Charge
remaining at the time of reinvestment which may be more or less than 3.00% of
the Public Offering Price at the time of reinvestment (see Reinvestment
Plan).
11
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts--Sector Series,
1998-A:
We have audited the accompanying statements of financial condition, including
the portfolios of Equity Focus Trusts--Sector Series, 1998-A, consisting of the
Energy Portfolio, the Financials Portfolio, the Healthcare Portfolio and the
Technology Portfolio, as of , 1998. These financial statements are the
responsibility of the Trustee (see note 5 to the statement of financial
condition). Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the statements of financial condition
are free of material misstatement. An audit of a statement of financial
condition includes examining, on a test basis, evidence supporting the amounts
and disclosures in that statement of financial condition. Our procedures
included confirmation with the Trustee of an irrevocable letter of credit
deposited on , 1998, for the purchase of securities, as shown in the
statements of financial condition and portfolios of securities. An audit of a
statement of financial condition also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall statement of financial condition presentation. We
believe that our audits of the statements of financial condition provide a
reasonable basis for our opinion.
In our opinion, the statements of financial condition referred to above
present fairly, in all material respects, the financial position of Equity
Focus Trusts--Sector Series, 1998-A as of , 1998, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
, 1998
12
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A
STATEMENT OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, , 1998
<TABLE>
<CAPTION>
ENERGY FINANCIALS HEALTHCARE TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
TRUST PROPERTY --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment in Securities:
Contracts to purchase Securi-
ties(1).......................... $ $ $ $
Organizational costs(2)............
---- ---- ---- ----
Total.............................
==== ==== ==== ====
LIABILITIES
Accrued Expenses(2)................
---- ---- ---- ----
INTEREST OF UNITHOLDERS
Units, Units, Units and
Units, respectively, of
fractional
undivided interest outstanding:
Cost to investors(3)............... $ $ $ $
Less: Gross underwriting commis-
sions(4)..........................
---- ---- ---- ----
Net amount applicable to investors.
---- ---- ---- ----
Total.............................. $ $ $ $
==== ==== ==== ====
</TABLE>
- ------------
(1) Aggregate cost to each Trust of the Securities listed under Portfolio of
such Trust, on the Initial Date of Deposit, is determined by the Trustee
on the basis set forth in footnote 4 to the Portfolio of such Trust. See
also the columns headed Cost of Securities to Trust. Irrevocable letters
of credit in the amount of $ have been deposited with the Trustee for
the purchase of Securities. The letters of credit were issued by .
(2) Organizational costs to be paid by the Trusts have been deferred and will
be amortized over the first year of each of the Trusts. Organizational
costs have been estimated based on projected total assets of $ , $
, $ and $ million, respectively. To the extent a Trust is larger
or smaller, the amount paid may vary.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes the initial sales charge at a rate of 1.50% of the Public Offering
Price (1.523% of the net amount invested in the Securities) computed on
the basis set forth under Public Sale of Units--Public Offering Price and
Underwriter's and Sponsor's Profits. A Deferred Sales Charge in the amount
of $1.25 per 1,000 Units is payable by a Trust on behalf of the Holders
out of net asset value of that Trust on each monthly Deferred Sales Charge
Payment Date ($15.00 per year) until the Trust terminates. The maximum
aggregate sales charge for a Holder holding Units over the entire expected
life of a Trust will equal a maximum of 4.50% of the Public Offering Price
(4.520% of the net amount invested). If a Holder sells or redeems Units
before a Deferred Sales Charge Payment Date, all future deductions of the
Deferred Sales Charge with respect to such Units will be waived; this will
have the effect of reducing the rate of sales charge for that Holder. The
initial portion of the sales charge will be reduced on a graduated basis
for quantity purchases. (See Public Sale of Units--Public Offering Price.)
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each of
the Trusts and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each of the Trusts. The Trustee is also responsible for all estimates and
accruals reflected in each of the Trusts' financial statements other than
estimates of organizational costs, for which Sponsor is responsible.
13
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A ENERGY PORTFOLIO ON THE INITIAL
DATE OF DEPOSIT, , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
%
------ ----
100.00% $
====== ====
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1998. All
contracts for domestic Securities are expected to be settled by the
intimal settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk
(L,M,H,S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1998. Subsequent to the Initial
Date of Deposit, valuation of Securities is based, for Securities quoted
on a national securities exchange or NASDAQ National Market System, or a
foreign securities exchange, on the closing sale prices, or if no price
exists, at the mean between the closing bid and offer prices, or for
Securities not so quoted, at the mean between bid and offer prices on the
over-the-counter market. See Redemption--Computation of Redemption Price
Per Unit.
----------------
The following information is unaudited:
*Smith Barney Inc. and/or Salomon Brothers Inc., including subsidiaries
and/or affiliates usually maintains a market in the securities of this
company.
# Within the last three years, Smith Barney Inc. and/or Salomon Brothers
Inc., including subsidiaries and/or affiliates have acted as manager (co-
manager) of a public offering of the securities of this company or an
affiliate.
14
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A FINANCIALS PORTFOLIO ON THE
INITIAL DATE OF DEPOSIT, , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
------ -------
100.00% $
====== =======
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1998. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk (L,
M, H, S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1998. Subsequent to the
Initial Date of Deposit, valuation of Securities is based, for Securities
quoted on a national securities exchange or NASDAQ National Market System,
or a foreign securities exchange, on the closing sale prices, or if no
price exists, at the mean between the closing bid and offer prices, or for
Securities not so quoted, at the mean between bid and offer prices on the
over-the-counter market. See Redemption--Computation of Redemption Price
Per Unit.
----------------
The following information is unaudited:
* Smith Barney Inc. and/or Salomon Brothers Inc, including subsidiaries
and/or affiliates, usually maintains a market in the securities of this
company.
# Within the last three years, Smith Barney Inc. and/or Salomon Brothers Inc,
including subsidiaries and/or affiliates, have acted as manager (co-
manager) of a public offering of the securities of this company or an
affiliate.
15
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A HEALTHCARE PORTFOLIO ON THE
INITIAL DATE OF DEPOSIT, , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
%
------ ----
100.00% $
====== ====
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1998. All
contracts for Securities are expected to be settled by the intimal
settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk
(L,M,H,S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1998. Subsequent to the Initial
Date of Deposit, valuation of Securities is based, for Securities quoted
on a national securities exchange or NASDAQ National Market System, or a
foreign securities exchange, on the closing sale prices, or if no price
exists, at the mean between the closing bid and offer prices, or for
Securities not so quoted, at the mean between bid and offer prices on the
over-the-counter market. See Redemption--Computation of Redemption Price
Per Unit.
----------------
The following information is unaudited:
*Smith Barney Inc. and/or Salomon Brothers Inc., including subsidiaries
and/or affiliates usually maintains a market in the securities of this
company.
# Within the last three years, Smith Barney Inc. and/or Salomon Brothers
Inc., including subsidiaries and/or affiliates have acted as manager (co-
manager) of a public offering of the securities of this company or an
affiliate.
16
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-A TECHNOLOGY & TELECOMMUNICATIONS
PORTFOLIO ON THE INITIAL DATE OF DEPOSIT, , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
STOCK INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) SYMBOL RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- ------ ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
------ ------
100.00% $
====== ======
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on ,1998. All contracts
for domestic Securities are expected to be settled by the intimal
settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk
(L,M,H,S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1998. Subsequent to the Initial
Date of Deposit, valuation of Securities is based, for Securities quoted
on a national securities exchange or NASDAQ National Market System, or a
foreign securities exchange, on the closing sale prices, or if no price
exists, at the mean between the closing bid and offer prices, or for
Securities not so quoted, at the mean between bid and offer prices on the
over-the-counter market. See Redemption--Computation of Redemption Price
Per Unit.
----------------
The following information is unaudited:
*Smith Barney Inc. and/or Salomon Brothers Inc, including subsidiaries and/or
affiliates, usually maintains a market in the securities of this company.
# Within the last three years, Smith Barney Inc. and/or Salomon Brothers Inc.
including subsidiaries and/or affiliates, have acted as manager (co-
manager) of a public offering of the securities of this company or an
affiliate.
17
<PAGE>
DESCRIPTION OF THE TRUSTS
STRUCTURE AND OFFERING
This Series of the Equity Focus Trusts -- Sector Series consists of four
"unit investment trusts" designated as the Energy Portfolio, the Financials
Portfolio, the Healthcare Portfolio and the Technology Portfolio (the
"Portfolios" or the "Trusts"). Each Trust was created under New York law by a
Trust Indenture (the "Indenture")* between the Sponsor and the Trustee. On the
date of this Prospectus, each unit of a Trust (a "Unit") represented a
fractional undivided interest in the securities listed under Portfolios (the
"Securities") set forth under Investment Summary. Additional Units of a Trust
will be issued in the amount required to satisfy purchase orders by depositing
in such Trust cash (or a bank letter of credit in lieu of cash) with
instructions to purchase Securities, contracts to purchase Securities together
with irrevocable letters of credit, or additional Securities. On each
settlement date (estimated to be three business days after the applicable date
on which Securities were deposited in a Trust), the Units will be released for
delivery to investors and the deposited Securities will be delivered to the
Trustee. As additional Units are issued by the Trusts as a result of the
deposit of cash (or a letter of credit in lieu of cash) with instructions to
purchase additional Securities, the aggregate value of the Securities in each
of the Trusts will be increased and the fractional undivided interest in the
Trusts represented by each Unit will be decreased. There is no limit on the
time period during which the Sponsor may continue to make additional deposits
of Securities into the Trusts.
During the 90-day period following the Initial Date of Deposit additional
deposits of cash or Securities in connection with the issuance and sale of
additional Units will maintain to the extent practicable the original
proportionate relationship among the number of shares of each Security in the
Portfolios of each of the Trusts. The proportionate relationship among the
Securities in each of the Trusts will be adjusted to reflect the occurrence of
a stock dividend, a stock split or a similar event which affects the capital
structure of the issuer of a Security in a Trust but which does not affect
that Trust's percentage ownership of the common stock equity of such issuer at
the time of such event. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date
of Deposit because of, among other reasons, purchase requirements, changes in
prices, brokerage commissions or unavailability of Securities. Replacement
Securities may be acquired under specified conditions when Securities
originally deposited are unavailable (see Administration of the Trusts --
Trust Supervision). Units may be continuously offered to the public by means
of this Prospectus (see Public Sale of Units -- Public Distribution) resulting
in a potential increase in the number of Units outstanding. Deposits of
Additional Securities subsequent to the 90-day period following the Initial
Date of Deposit must replicate exactly the proportionate relationship among
the number of shares of each of the Securities comprising the Portfolios of
each of the Trusts at the end of the initial 90-day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
pages 2 through 5 on any day will be based on the aggregate value of the
Securities in a Trust on that day at the Evaluation Time, plus a sales charge.
The Public Offering Price for each of the Trusts will thus vary in the future
from that specified on pages 2 through 5 of this Prospectus. See Public Sale
of Units Public Offering Price for a complete description of the pricing of
Units.
- ------------
* 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.
18
<PAGE>
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units. The Sponsor reserves
the right to accept or reject any purchase order in whole or in part.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trusts
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received and except further that
orders from such indications of interest that are made pursuant to the
exchange privilege (see Exchange and Rollover Privileges herein) will be
accepted before any other orders for Units. The Sponsor may accept or reject
any purchase order in whole or in part.
The holders ("Holders") of Units of either of the Trusts will have the right
to have their Units redeemed for the Securities underlying the Units (see
Redemption). If any Units are redeemed, the aggregate value of Securities in a
Trust will be reduced and the fractional undivided interest in such Trust
represented by each remaining Unit will be increased. Units of each of the
Trusts will remain outstanding until redeemed upon request to the Trustee by
any Holder (which may include the Sponsor), or termination of the Indenture
(see Administration of the Trusts Amendment and Termination).
THE PORTFOLIOS
Smith Barney's Equity Focus Trusts are each based on a specific research
investing theme or industry trend identified by analysts of Smith Barney Inc.,
and Salomon Brothers Inc., both under the common control of Salomon Smith
Barney Holdings, Inc., based on an analysis of each company and the industry
group as a whole. Salomon Smith Barney's Research Department is staffed by
over 100 investment analysts, who currently follow equities issued by more
than 1,600 companies (both domestic and foreign) in 86 industry groups or
stock areas of the market. The Securities included in the Portfolios were
selected by the Sponsor as stocks deemed to have above-average appreciation
potential over the 12 months following the selection of a Portfolio. The
investment rankings by Salomon Smith Barney normally pertain to an outlook for
a 12-18 month period (see footnote 2 to the Portfolios on pages 14 through
17). In selecting Securities for each of the Trusts, the Sponsor has not
expressed any belief as to the potential of these Securities for capital
appreciation over a period longer than one year. There is, of course, no
assurance that any of the Securities in the Trust will appreciate in value,
and indeed any or all of the Securities may depreciate in value at any time in
the future. See Risk Factors.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trusts for various reasons, including
sales charges and expenses of the Trusts, because the Portfolios may not be
fully invested at all times, the stocks are normally purchased or sold at
prices different from the closing price used to determine each Trust's net
asset value, and not all stocks may be weighted in the initial proportions at
all times. Additionally, results of ownership to different Holders will vary
depending on the net asset value of the underlying Securities on the days
Holders bought and sold their Units. Of course, any purchaser of securities,
including Units, will have to pay sales charges or commissions, which will
reduce his total return.
Total returns and/or average annualized returns for various periods of
previous series of Equity Focus Trusts and the Trusts may be included from
time to time in advertisements and sales literature. Trust performance may be
compared to performance of the Standard & Poor's Energy Composite, Standard &
Poor's Financials Index, Standard & Poor's Health Care Composite and Standard
& Poor's Technology Index. As with other performance data, performance
comparisons should not be considered representative of a Trust's relative
performance for any future period. Advertising and sales literature for the
Trusts may also include excerpts from the Sponsor's
19
<PAGE>
research reports on one or more of the stocks in the Trusts, including a brief
description of its businesses and market sector, and the basis on which the
stock was selected.
All of the domestic Securities are publicly traded either on a stock
exchange or in the over-the-counter market. Most of the contracts to purchase
Securities deposited initially in each of the Trusts are expected to settle in
three business days, in the ordinary manner for such Securities. Any foreign
Securities are publicly traded on a variety of foreign stock exchanges.
Settlement of contracts for foreign Securities varies by country and may take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
Each of the Trusts consists of such Securities as may continue to be held
from time to time in that Trust and any additional and replacement Securities
and any money market instruments acquired and held by such Trust pursuant to
the provisions of the Indenture (including the provisions with respect to the
deposit into the Trusts of Securities in connection with the sale of
additional Units to the public) together with undistributed income therefrom
and undistributed and uninvested cash realized from the disposition of
Securities (see Administration of the Trusts Accounts and Distributions; Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the
redemption of Units. Any money market instruments acquired by a Trust must be
held until maturity and must mature no later than the next Distribution Day
and the proceeds distributed to Holders at that time. If sufficient Securities
are not available at what the Sponsor considers a reasonable price, excess
cash received on the creation of Units may be held in an interest-bearing
account with the Trustee until that cash can be invested in Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. However, should any
contract deposited hereunder (or to be deposited in connection with the sale
of additional Units) fail, the Sponsor shall, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under the Portfolio for the
relevant Trust, unless substantially all of the monies held in such Trust to
cover the purchase are reinvested in replacement Securities in accordance with
the Indenture (see Administration of the Trusts Portfolio Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, or because Securities may be distributed in redemption of Units, no
assurance can be given that either of the Trusts will retain for any length of
time its present size (see Redemption; Administration of the Trusts Amendment
and Termination). For Holders who do not redeem their Units, investments in
Units of a Trust will be liquidated on the fixed date specified under
Investment Summary Mandatory Termination of Trust, and may be liquidated
sooner if the net asset value of a Trust falls below that specified under
Investment Summary Minimum Value of Trust (see Risk Factors).
INCOME
There is no assurance that dividends will be declared or paid in the future
on the Securities.
Record and Distribution Days for each of the Trusts are set forth under
Investment Summary. Income Distributions, if any, will be automatically
reinvested in additional Units of the appropriate Trust at no extra charge
unless a Holder elects to receive his distributions in cash (see Reinvestment
Plan). Because dividends on the Securities are not received by the Trusts at a
constant rate throughout the year and because the issuers of the Securities
may change the schedules or amounts or dividend payments, any distributions,
whether reinvested or paid in cash, may be more or less than the amount of
dividend income actually received by a Trust and credited to the income
account established under the Indenture (the "Income Account") as of the
Record Day.
20
<PAGE>
RISK FACTORS
GENERAL
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 Trusts or to satisfy redemptions of Units may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trusts may also
cause increased buying activity in certain of the stocks comprising each of
the Portfolios. After such announcement, investment advisory and brokerage
clients of the Sponsor and its affiliates may purchase individual Securities
appearing on the list during the course of the initial offering period. Such
buying activity in the stock of these companies prior to the purchase of the
Securities by the Trusts may cause the Trusts to purchase stocks at a higher
price than those buyers who effect purchases prior to purchases by a Trust.
The Trusts are not appropriate for investors requiring conservation of
capital or high current income. Securities representing approximately %, %,
% and % of the value of the Energy Portfolio, the Financials Portfolio, the
Healthcare Portfolio and the Technology Portfolio, respectively, have been
ranked High Risk by Salomon Smith Barney's Research Department, described as
"low predictability of earnings/dividends; high price volatility." Securities
representing approximately %, %, %, and % of the value of the Energy
Portfolio, the Financials Portfolio, the Healthcare Portfolio and the
Technology Portfolio, respectively, have been ranked Speculative by Salomon
Smith Barney's Research Department, described as "exceptionally low
predictability of earnings/dividends; highest risk of price volatility."
Each Trust's holdings will be concentrated in a single, specific industry or
service sector. Compared to the broad market, an individual sector may be more
strongly affected by changes in the economic climate; broad market shifts;
moves in a particular, dominant stock; or regulatory changes. Investors should
be prepared for volatile short-term movement in the value of Units.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of preference
stocks have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis,
but generally do not participate in other amounts available for distribution
by the issuing corporation. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stocks are also entitled to rights on liquidation
which are senior to those of common stocks. Moreover, common stocks do not
represent an obligation
21
<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 Portfolios may be
expected to fluctuate over the life of the Trusts to values higher or lower
than those prevailing on the Initial Date of Deposit.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of a
Trust. If dividends are insufficient to cover expenses, it is likely the
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 Trust--Taxes.
Holders will be unable to dispose of any of the Securities in the
Portfolios, as such, and will not be able to vote the Securities. As the
holder of the Securities, the Trustee will have the right to vote all of the
voting stocks in each of the Trusts and will vote in accordance with the
instructions of the Sponsor. Holders will, however, be able upon request to
receive an "in kind" distribution of the Securities evidenced by their Units
if they tender a minimum of 250,000 Units (see Redemption).
Investors should be aware that the Trusts are not "managed" trusts and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the Portfolios of either of the Trusts
except under extraordinary circumstances. Investors should note in particular
that the Securities were selected on the basis of the criteria set forth under
Objective of the Trusts in the Investment Summary and that the Trusts may
continue to purchase or hold Securities originally selected though this
process even through the evaluation of the attractiveness of the Securities
may have changed. A number of the Securities in the Trust may also be owned by
other clients of the Sponsor. However, because these clients may have
differing investment objectives, the Sponsor may sell certain Securities from
those accounts in instances where a sale by a Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. (See
Administration of the Trusts--Trust Supervision.) In the event a public tender
offer is made for a Security or a merger or acquisition is announced affecting
a Security, the Sponsor may instruct the Trustee to tender or sell the
Security on the open market when, in its opinion, it is in the best interest
of the holders of the Units to do so. Although each Portfolio is regularly
reviewed and evaluated and the Sponsor may instruct the Trustee to sell
Securities under certain limited circumstances, Securities will not be sold by
the Trusts to take advantage of market fluctuations or changes in anticipated
rates of appreciation. As a result, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trusts. The Sponsor has currently assigned certain
rankings to the issuers of Securities based on stock performance expectations
and level of risk (see footnote 2 to the Portfolios on pages 14 through 17).
These rankings are subject to change. Securities will not necessarily be sold
by a Trust based on a change in rankings, although the Sponsor intends to
review the desirability of holding any Security if its ranking is reduced
below 3. The prices of single shares of each of the Securities in the Trusts
vary widely, and the effect of a dollar of fluctuation, either higher or
lower, in stock prices will be much greater as a percentage of the lower-price
stocks' purchase price than as a percentage of the higher-price stocks'
purchase price.
Investors should note that in connection with the issuance of additional
Units during the Public Offering Period set forth in the Investment Summary,
the Sponsor may deposit cash (or a letter of credit in lieu of cash)
22
<PAGE>
with instructions to purchase Securities, additional Securities or contracts
to purchase Securities, in each instance maintaining the original percentage
relationship, subject to adjustment under certain circumstances, among the
number of shares of each Security in a Trust. To the extent the price of a
Security increases or decreases between the time cash is deposited with
instructions to purchase the Security at the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or
less of the other Securities in such Trust. In addition, brokerage fees (if
any) incurred in purchasing Securities with cash deposited with instructions
to purchase the Securities will be an expense of the Trusts. Price
fluctuations between the time of deposit and the time the Securities are
purchased, and payment of brokerage fees, will affect the value of every
Holder's Units and the Income per Unit received by each of the Trusts.
A 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 and deposits of
Securities in the Trust have not exceeded $50,000,000 at that time. At any
time after deposits in a Trust have exceeded $50,000,000, the Trust may be so
terminated if the net asset value of the Trust falls below $20,000,000.
Investors should note that if the net asset value of a Trust should fall below
the applicable minimum value, the Sponsor may then in its sole discretion
terminate the Trust before the Mandatory Termination Date specified under
Investment Summary.
Small Capitalization Stock. Investing in small capitalization stocks may
involve greater risk than investing in medium and large capitalization stocks,
since they can be subject to more abrupt or erratic price movements. Small
market capitalization companies ("Small-Cap Companies") are those with market
capitalizations of $1 billion or less at the time of the Trusts' investment.
Many Small-Cap Companies will have had their securities publicly traded, if at
all, for only a short period of time and will not have had the opportunity to
establish a reliable trading pattern through economic cycles. The price
volatility of Small-Cap Companies is relatively higher than larger, older and
more mature companies. The greater price volatility of Small-Cap Companies may
result from the fact that there may be less market liquidity, less information
publicly available or fewer investors who monitor the activities of these
companies. In addition, the market prices of these securities may exhibit more
sensitivity to changes in industry or general economic conditions. Some Small-
Cap Companies will not have been in existence long enough to experience
economic cycles or to demonstrate whether they are sufficiently well managed
to survive downturns or inflationary periods. Further, a variety of factors
may affect the success of a company's business beyond the ability of its
management to prepare or compensate for them, including domestic and
international political developments, government trade and fiscal policies,
patterns of trade and war or other military conflict which may affect
industries or markets or the economy generally.
Foreign Securities. The Trusts may hold Securities of non-U.S. issuers
directly or through ADRs. There are certain risks involved in investing in
securities of foreign companies, which are in addition to the usual risks
inherent in United States investments. These risks include those resulting
from fluctuations in currency exchange rates, revaluation of currencies,
future adverse political and economic developments and the possible imposition
of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers
and the lack of uniform accounting, auditing and financial reporting standards
or other regulatory practices and requirements comparable to those applicable
to domestic companies. Moreover, securities of many foreign companies may be
less liquid and their prices more volatile than those of securities of
comparable domestic companies. In addition, with respect to certain foreign
countries, there is the possibility of expropriation, nationalization,
confiscatory taxation and limitations on the use or removal of funds or other
assets of the Trusts, including the withholding of dividends. Foreign
securities may be subject to foreign government taxes that could reduce the
yield on such securities. Since the Trusts may invest in securities quoted in
currencies other than the United States dollar, changes in foreign currency
exchange rates may adversely affect the value of
23
<PAGE>
foreign securities in the Portfolios and the net asset value of Units of the
Trusts. Investment in foreign securities may also result in higher expenses
due to the cost of converting foreign currency to United States dollars, the
payment of fixed brokerage commissions on certain foreign exchanges, which
generally are higher than commissions on domestic exchanges, and expenses
relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. However, the Sponsor anticipates that
adequate information will be available to allow the Sponsor to supervise each
Portfolio as set forth in Administration of the Trusts--Portfolio Supervision.
On the basis of the best information available to the Sponsor at the present
time, none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trusts of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this
type or because the issues qualify for an exemption, or the Trusts, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trusts.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
international securities in the Portfolios and on the ability of each of the
Trusts to satisfy their obligation to redeem Units tendered to the Trustee for
redemption (see Redemption).
Exchange Rate Fluctuation. In recent years, foreign exchange rates have
fluctuated sharply. Income from foreign equity securities held by the Trusts,
including those underlying any ADRs held by a Trust, would be payable in the
currency of the country of their issuance. However, the Trusts will compute
their income in United States dollars, and the computation of income will be
made on the date of its receipt by the Trusts at the foreign exchange rate in
effect on that date. Therefore, if the value of the foreign currency falls
relative to the United States dollar between receipt of the income and its
conversion to United States dollars, the risk of such decline will be borne by
Holders. In addition, the cost of converting such foreign currency to United
States dollars would also reduce the return to the Holder.
American Depositary Shares and Receipts. American Depositary Shares
("ADSs"), and receipts therefor (ADRs), are issued by an American bank or
trust company to evidence ownership of underlying securities issued by a
foreign corporation. These instruments may not necessarily be denominated in
the same currency as the securities into which they may be converted.
Generally, ADSs and ADRs are designed for use in the United States securities
markets. For purposes of this Prospectus the term ADR generally includes ADSs.
ENERGY PORTFOLIO
The Energy Trust is particularly subject to risks that are inherent to the
utility industry, including difficulty in obtaining an adequate return on
invested capital, difficulty in financing large construction programs during
an inflationary period, restrictions on operations and increased cost and
delays attributable to environmental considerations and regulation, difficulty
in raising capital in adequate amounts on reasonable terms in periods of high
inflation and unsettled capital markets, increased costs and reduced
availability of certain types of fuel, occasional reduced availability and
high costs of natural gas for resales, the effects of energy conservation, the
24
<PAGE>
effects of a national energy policy and lengthy delays and greatly increased
costs and other problems associated with the design, construction, licensing,
regulation and operation of nuclear facilities for electric generation,
including, among other considerations, the problems associated with the use of
radioactive materials and the disposal of radioactive wastes. There are
substantial differences between the regulatory practices and policies of
various jurisdictions, and any given regulatory agency may periodically make
major shifts in policy. There is no assurance that regulatory authorities will
grant rate increases in the future or that such increases will be adequate to
permit the payment of dividends on common stocks. Additionally, existing and
possible future regulatory legislation may make it even more difficult for
these utilities to obtain adequate relief. Certain of the issuers of
securities held by the Energy Portfolio may own or operate nuclear generating
facilities. Governmental authorities may from time to time review existing
policies, and impose additional requirements governing the licensing,
construction and operation of nuclear power plants. Moreover, price
disparities within selected utility groups and discrepancies in relation to
averages and indices have occurred frequently for reasons not directly related
to the general movements or price trends of utility common stocks. Causes of
these discrepancies include changes in the overall demand for and supply of
various securities (including the potentially depressing effect of new stock
offerings), and changes in investment objectives, market expectations or cash
requirements of other purchasers and sellers of securities.
FINANCIALS PORTFOLIO
The financial services and financial services-related industries will be
particularly affected by certain economic, competitive and regulatory
developments. The profitability of financial services companies as a group is
largely dependent upon the availability and cost of capital funds which in
turn may fluctuate significantly in response to changes in interest rates and
general economic conditions. Credit losses resulting from financial
difficulties of borrowers can negatively impact the sector. Rising interest
rates and inflation may negatively affect certain financial services companies
as the costs of lending money, attracting deposits and doing business rise.
Insurance companies may be subject to severe price competition. Financial
institutions are subject to regulation and supervision by governmental
authorities and changes in governmental policies may impact the way financial
institutions conduct business. Such governmental regulation may limit both the
amounts and types of loans and other financial commitments they can make, and
the interest rates and fees they can charge. Also, if government regulation
which would further reduce the separation between commercial and investment
banking is ultimately enacted, financial services companies may be
significantly affected in terms of profitability and competition.
HEALTHCARE PORTFOLIO
Companies in the health care industry are, generally, subject to
governmental regulation and approval of their products and services, which
could have a significant effect on their price and availability. Furthermore,
the types of products or services produced or provided by these companies may
quickly become obsolete. The costs of providing health care services are
subject to increase as a result of, among other factors, changes in medical
technology and increased labor costs. In addition, health care facility
construction and operation is subject to federal, state and local regulation
relating to the adequacy of medical care, equipment, personnel, operating
policies and procedures, rate-setting, and compliance with building codes and
environmental laws. Facilities are subject to periodic inspection by
governmental and other authorities to assure continued compliance with the
various standards necessary for licensing and accreditation. These regulatory
requirements are subject to change and, to comply, it may be necessary for a
hospital or other health care facility to incur substantial capital
expenditures or increased operating expenses to effect changes in its
facilities, equipment, personnel and services. Additionally, a number of
legislative proposals concerning healthcare have been introduced in the U.S.
Congress
25
<PAGE>
in recent years or have been reported to be under consideration. These
proposals span a wide range of topics, including cost controls, national
health insurance, incentives for competition in the provision of health care
services, tax incentives and penalties related to health care insurance
premiums, and promotion of prepaid healthcare plans. Any of these proposals,
if enacted, may have an adverse effect on the health care industry.
TECHNOLOGY PORTFOLIO
The Technology Portfolio's investments in securities of technology related
companies present certain risks that may not exist to the same degree in other
types of investments. Technology stocks, in general, tend to be relatively
volatile as compared to other types of investments. Any such volatility will
be reflected in the value of the Technology Portfolio's Units. The technology
and science areas may be subject to greater governmental regulation than many
other areas and changes in governmental policies and the need for regulatory
approvals may have a material adverse effect on these areas. Additionally,
companies in these areas may be subject to risks of developing technologies,
competitive pressures and other factors and are dependent upon consumer and
business acceptance as new technologies evolve. Competitive pressures may have
a significant effect on the financial condition of companies in the technology
sector. For example, if technology continues to advance at an accelerated
rate, and the number of companies and product offerings continues to expand,
these companies could become increasingly sensitive to short product cycles
and aggressive pricing. Further, companies in the technology industry spend
heavily on research and development and are subject to the risk that their
products or services may not prove commercially successful or may become
obsolete quickly.
The Technology Portfolio may be susceptible to factors affecting the
communications industry. The communications industry is subject to
governmental regulation and the products and services of communications
companies may be subject to rapid obsolescence. These factors could affect the
value of the Technology Portfolio's Units. Telephone companies in the United
States, for example, are subject to both state and federal regulations
affecting permitted rates of returns and the kinds of services that may be
offered. In addition, federal communications laws regarding the cable
television industry have recently been amended to eliminate government
regulation of cable television rates where competition is present and allow
rates to be dictated by market conditions. In the absence of competition,
however, rates shall be regulated by federal and state governments to protect
the interest of subscribers. Certain types of companies represented in the
Technology Portfolio may be engaged in fierce competition for a share of the
market of their products. As a result, competitive pressures are intense and
the stocks are subject to rapid price volatility. While the Technology
Portfolio may include securities of established suppliers of traditional
communication products and services, this Trust may invest in smaller
communications companies which may benefit from the development of new
products and services. These smaller companies may present greater
opportunities for capital appreciation, and may also involve greater risk than
large, established issuers. Such smaller companies may have limited product
lines, market or financial resources, and their securities may trade less
frequently and in limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
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. Each Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by a Trust will be treated as
income of the Holders in the manner set forth below.
26
<PAGE>
2. Each Holder will be considered the owner of a pro rata portion of each
Security in a Trust under the grantor trust rules of Sections 671-679 of
the Internal Revenue Code of 1986, as amended (the "Code"). A Holder should
determine its tax cost for each Security represented by its Units by
allocating the total cost for its Units, including the sales charge, among
each Security in a Trust represented by its Units (in proportion to the
fair market values thereof on the date the Holder purchases its Units).
3. A Holder will be considered to have received all of the dividends paid
on its pro rata portion of each Security when such dividends are received
by a Trust even if the Holder does not actually receive such distributions
but rather reinvests its dividend distributions pursuant to the
Reinvestment Plan. An individual Holder who itemizes deductions will be
entitled to deduct its pro rata share of fees and expenses paid by a Trust
only to the extent that this amount together with the Holder's other
miscellaneous deductions exceeds 2% of its adjusted gross income.
Distributions with respect to corporate equity securities held by the Trusts
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 by a Trust from domestic corporations.
The dividends-received deduction is currently 70%. However, Congress from
time to time considers proposals to reduce this percentage, 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 its Units are debt
financed), these limitations may be applicable to dividends received by a
Holder from a Trust which would otherwise qualify for the dividends-received
deduction under the principles discussed above. Accordingly, Holders should
consult their own tax advisers in this regard. A corporate Holder should be
aware that the receipt of dividend income for which the dividends-received
deduction is available may give rise to an alternative minimum tax liability
(or increase an existing liability) because the dividend income will be
included in the 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 its 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 its basis for the same
Securities (previously represented by its Units) prior to such redemption or
exchange, and its holding period for such Securities will include the period
during which it held its 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 its 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 its Units or
when the Trustee sells the Securities from a Trust.
Capital gains realized by corporations are generally taxed at the same rate
as ordinary income. However, capital gains realized by noncorporate taxpayers
are taxable at a maximum rate of 28% if the taxpayer has a
27
<PAGE>
holding period of more than 12 months and at a maximum rate of 20% if the
taxpayer has a holding period of more than 18 months. The deduction of capital
losses is subject to limitations.
Each of the Trusts may hold Securities or ADRs of foreign corporations. For
United States income tax purposes, a holder of ADRs is treated as though it
were holding directly the shares of the foreign corporation represented by the
ADRs. Dividends paid by foreign issuers generally will be subject to
withholding tax.
Under the income tax laws of the State and City of New York, each Trust is
not an association taxable as a corporation and the income of a Trust will be
treated as the income of the Holders in the same manner as for Federal income
tax purposes.
The foregoing discussion relates only to the tax treatment of U.S. Holders
with regard to Federal and certain aspects of New York State and City income
taxes. Holders that are not U.S. citizens or residents ("Foreign Holders")
should be aware that divided distributions from a 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 for each of the Trusts, the Trustee will
furnish to each Holder of that Trust a 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 an information
return to each Holder and to the Internal Revenue Service.
RETIREMENT PLANS
These Trusts may be well suited for purchase by Individual Retirement
Accounts ("IRAs"), Keogh plans, pension funds and other qualified retirement
plans. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. All distributions from such plans
(other than from certain IRAs known as "Roth IRAs") are generally treated as
ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Holders of Units in IRAs, Keogh
plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan. Such plans are
offered by brokerage firms, including the Sponsor of these Trusts, and other
financial institutions. Fees and charges with respect to such plans may vary.
Before investing in a Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in a Trust; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of a Trust are deemed "plan assets" under ERISA and the Department
of Labor regulations regarding the definition of "plan assets."
28
<PAGE>
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units for each of the Trusts is computed by
adding to the aggregate value of the Securities in a Trust (as determined by
the Trustee) and any cash held to purchase Securities, divided by the number
of Units of the Trust outstanding, the applicable Initial Sales Charge. The
total sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge equal, in the aggregate, to a maximum charge of 4.50% of the Pubic
Offering Price (4.712% of the net amount invested in Securities). The Initial
Sales Charge is computed by deducting the Deferred Sales Charge ($30.00 per
1,000 Units) from the aggregate sales charge. On , 1998, the Initial
Sales Charge is per 1,000 Units or 1.50% of the Public Offering Price. The
Initial Sales Charge is deducted from the purchase price of a Unit at the time
of purchase and paid to the Sponsor. The Deferred Sales Charge is a monthly
charge of $1.25 per 1,000 Units and is accrued in 24 monthly installments
commencing on , 1998 and will be charged to the Capital Account on the
first day of each month thereafter from 1, 1998 through 1, 2000. If
a Deferred Sales Charge Payment Date is not a business day, the payment will
be charged to the Trust on the next business day. However, any remaining
deferred sales charge will be refunded by the Sponsor when Units of any Sector
Series are repurchased or redeemed. Units purchased pursuant to the
Reinvestment Plan are subject only to the remaining applicable Deferred Sales
Charge deduction (see Reinvestment Plan).
Purchasers on , 1998 (the first day Units will be available to the
public) will be able to purchase Units at $1.00 each (including the initial
sales charge). To allow Units to be priced at $1.00, the Units outstanding as
of the Evaluation Time on , 1998 (all of which are held by the Sponsor)
will be split (or split in reverse). The Public Offering Price on any
subsequent date will vary from the Public Offering Price on the date of the
initial Prospectus (set forth under Investment Summary) in accordance with
fluctuations in the aggregate value of the underlying Securities. Units will
be sold to investors at the Public Offering Price next determined after
receipt of the investor's purchase order. A proportionate share of the amount
in the Income Account (described under Administration of the Trust--Accounts
and Distributions) on the date of delivery of the Units to the purchaser is
added to the Public Offering Price.
The initial 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>
INITIAL
SALES CHARGE
---------------------
PERCENT OF PERCENT OF MAXIMUM DOLLAR
OFFERING NET AMOUNT AMOUNT DEFERRED
NUMBER OF UNITS PRICE INVESTED PER 1,000 UNITS
- --------------- ---------- ---------- ---------------
<S> <C> <C> <C>
Fewer than 50,000......................... 1.50% 1.523% $30.00
50,000 but less than 100,000.............. 1.25 1.266 30.00
100,000 but less than 250,000............. 1.00 1.010 30.00
250,000 but less than 1,000,000........... .50 .503 30.00
1,000,000 or more......................... 0 0 30.00
</TABLE>
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units in the amounts stated. Purchases of Units will
not be aggregated with purchases of units of any other series of Equity Focus
Trusts. Units held in the name of the spouse of the purchaser or in the name
of a child of the purchaser under 21 years of age are deemed to be registered
in the name of the purchaser for purposes of calculating the applicable sales
charge. The graduated sales charges are also applicable to a trustee or other
fiduciary purchasing securities for a single trust estate or single fiduciary
account.
29
<PAGE>
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
national stock exchange or Nasdaq National Market are valued at the closing
sale 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 only subject to the applicable deferred sales
charge. Sales to these plans involve less selling effort and expense than
sales to employee groups of other companies.
PUBLIC DISTRIBUTION
Units will be distributed to the public at the Public Offering Price through
the Sponsor, as sole underwriter of the Trusts, and may also be distributed
through dealers.
The Sponsor intends to qualify Units of each of the Trusts for sale in all
states of the United States where qualification is deemed necessary through
the Sponsor and dealers who are members of the National Association of
Securities Dealers, Inc. Sales to dealers, if any, will initially be made at
prices which represent a concession from the Public Offering Price per Unit to
be established at the time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 4.50% 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 each of the Trusts in the amount set forth
under Investment Summary, which equals the difference between the cost of the
Securities to a Trust (which is based on the aggregate value of the Securities
on the Date of Deposit) and the purchase price of such Securities to the
Sponsor. In the event that subsequent deposits are effected by the Sponsor
with the deposit of Securities (as opposed to cash or a letter of credit) with
respect to the sale of additional Units to the public, the Sponsor similarly
may realize a profit or loss. The Sponsor also may realize profits or sustain
losses as a result of fluctuations after the Initial Date of Deposit in the
aggregate value of the Securities and hence of the Public Offering Price
received by the Sponsor for Units. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement dates for purchase of Units may
be used in the Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25 per
1,000 Units for the administrative and other services which it provides during
the life of each of the Trusts (see Expenses and Charges--Fees). The Sponsor
has not participated as sole underwriter or manager or member of any
underwriting syndicate from which any of the Securities in the Portfolios on
the Initial Date of Deposit were acquired, except as indicated under
Portfolios.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or the prices at which the Securities are sold after it redeems
such Units, as the case may be.
30
<PAGE>
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial
Date of Deposit at prices, subject to change at any time, which will be
computed by adding (1) the aggregate value of Securities in a Trust, (2)
amounts in a Trust including dividends receivable on stocks trading ex-
dividend and (3) all other assets in a Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against a Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to a Trust and certain other
expenses and (c) amounts for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result of such computation by the
number of Units outstanding as of a date prior to the evaluation; and dividing
the result of such computation by the number of Units outstanding as of the
date of computation. The Sponsor may discontinue purchases of Units if the
supply of Units exceeds demand or for any other business reason. The Sponsor,
of course, does not in any way guarantee the enforceability, marketability or
price of any Securities in the Portfolios or of the Units. On any given day,
however, the price offered by the Sponsor for the purchase of Units shall be
an amount not less than the Redemption Price per Unit, based on the aggregate
value of Securities in a Trust on the date on which the Units of such Trust
are tendered for redemption (see Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of
all series of unit trusts which it has in its inventory, the saleability of
such units and its estimate of the time required to sell such units and
general market conditions. For a description of certain consequences of such
redemption for the remaining Holders, see Redemption.
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest
or Pacific Stock Exchanges, or in such other manner as may be acceptable to
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trusts--Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for a Trust. While these minimum amounts may vary
from time to time in accordance with market conditions, the Sponsor believes
that the minimum amounts which would be specified would be a sufficient number
of shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
The Trustee will redeem Units "in kind" upon request of a redeeming Holder
if the Holder tenders at least 250,000 Units. Thus, a Holder will be able
(except during a period described in the last paragraph under this
31
<PAGE>
heading), not later than the seventh calendar day following such tender (or if
the seventh calendar day is not a business day, on the first business day
prior thereto), to receive in kind an amount per Unit equal to the Redemption
Price per Unit (computed as described in Redemption--Computation of Redemption
Price per Unit) as determined as of the day of tender. The Redemption Price
per Unit for in kind distributions (the "In Kind Distribution") will take the
form of the distribution of whole and fractional shares of each of the
Securities in the amounts and the appropriate proportions represented by the
fractional undivided interest in a Trust of the Units tendered for redemption
(based upon the Redemption Price per Unit), except that with respect to any
foreign Security not held in ADR form, the value of that Security will be
distributed in cash.
In Kind Distributions on redemption of a minimum of 250,000 Units will be
held by the Chase Manhattan Bank, as Distribution Agent, for the account, and
for disposition in accordance with the instructions of, the tendering Holder
as follows:
(a) If the tendering Holder requests cash payment, the Distribution Agent
shall sell the In Kind Distribution as of the close of business on the date
of tender and remit to the Holder not later than seven calendar days
thereafter the net proceeds of sale, after deducting brokerage commissions
and transfer taxes, if any, on the sale. The Distribution Agent may sell
the Securities through the Sponsor, and the Sponsor may charge brokerage
commissions on those sales. Since these proceeds will be net of brokerage
commissions, Holders who wish to receive cash for their Units should always
offer them for sale to the Sponsor in the secondary market before seeking
redemption by the Trustee. The Trustee may offer Units tendered for
redemption and cash liquidation to it to the Sponsor on behalf of any
Holder to obtain this more favorable price for the Holder.
(b) If the tendering Holder requests distribution in kind, the
Distribution Agent (or the Sponsor acting on behalf of the Distribution
Agent) shall sell any portion of the In Kind Distribution represented by
fractional interests in accordance with the foregoing and distribute net
cash proceeds to the tendering Holder together with certificates
representing whole shares of each of the Securities that comprise the In
Kind Distribution. (The Trustee may, however, offer the Sponsor the
opportunity to purchase the tendered Units in exchange for the numbers of
shares of each Security and cash, if any, which the Holder is entitled to
receive. The tax consequences to the Holder would be identical in either
case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available (an
explanation of such Account is set forth under Administration of the Trusts--
Accounts and Distributions). In addition, in implementing the redemption
procedures described above, the
Trustee and the Distribution Agent shall make any adjustments necessary to
reflect differences between the Redemption Price of the Units and the value of
the In Kind Distribution as of the date of tender. To the extent that
Securities are distributed in kind, the size of that Trust will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, 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.
32
<PAGE>
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed by the Trustee as of the Evaluation
Time on each June 30 and December 31 (or the last business day prior thereto),
as of the Evaluation Time next following the tender of any Unit for redemption
on any Tender Day, and on any other business day desired by the Trustee or the
Sponsor, by adding (1) the aggregate value of the Securities determined by the
Trustee, (2) amounts in a Trust including dividends receivable on stocks
trading ex-dividend (with appropriate adjustments to reflect monthly
distributions made to Holders) and (3) all other assets in a Trust; deducting
therefrom the sum of (a) taxes or other governmental charges against a Trust
not previously deducted, (b) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Sponsor and counsel to a Trust
and certain other expenses and (c) amounts for distribution to Holders of
record as of a date prior to the evaluation; and dividing the result of such
computation by the number of Units outstanding as of the date thereof.
The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: if the Securities are listed on a national
securities exchange or NASDAQ National Market System, or a foreign securities
exchange, such evaluation shall generally be based on the closing sale price
on such exchange (unless the Trustee deems such price inappropriate as a basis
for evaluation) or, if there is no closing sale price on such exchange, at the
mean between the closing offering and bid side evaluation. If the Securities
are not so listed or, if so listed and the principal market therefor is other
than on such exchange, such evaluation shall generally be made by the Trustee
in good faith based at the mean between current bid and offer prices on the
over-the-counter market (unless the Trustee deems such mean inappropriate as a
basis for evaluation) or, if bid and offer prices are not available, (1) on
the basis of the mean between current bid and offer prices for comparable
securities, (2) by the Trustee's appraising the value of the Securities in
good faith at the mean between the bid side and the offer side of the market
or (3) by any combination thereof.
EXPENSES AND CHARGES
Initial Expenses -- All or some portion of the expenses incurred in
establishing each of the Trusts, including the cost of the initial
preparation, printing and execution of the registration statement and the
indenture, Federal and State registration fees, the initial fees and expenses
of the Trustee, legal expenses and any other out-of-pocket expenses, will be
paid by the Trusts and amortized over one year. Any balance of the expenses
incurred in establishing the Trusts, as well as advertising and selling
expenses, will be paid by the Underwriters at no cost to the Trusts.
Fees -- The Trustee's and Sponsor's fees are set forth under Investment
Summary. The Trustee receives for its services as Trustee and Distribution
Agent payable in monthly installments, the amount set forth under Investment
Summary. The Trustee's fee (in respect of services as Trustee), payable
monthly, is based on the largest number of Units outstanding during the
preceding month. Certain regular and recurring expenses of the Trusts,
including certain mailing and printing expenses, are borne by the Trusts. The
Trustee receives benefits to the extent that it holds funds on deposit in the
various non-interest bearing accounts created under the Indenture. The
Sponsor's fee, which is earned for trust supervisory services, is based on the
largest number of Units outstanding during the year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under Investment Summary, may
exceed the actual costs of providing supervisory services for the Trusts, but
at no time will the total amount the Sponsor receives for trust supervisory
services rendered to all series of Smith Barney Unit Trusts in any calendar
year exceed the aggregate cost to it of supplying these services in that year.
33
<PAGE>
In addition, the Sponsor may also be reimbursed for bookkeeping or other
administrative services provided to the Trusts in amounts not exceeding its
cost of providing those services. The fees of the Trustee and Sponsor may be
increased without approval of Holders in proportion to increases under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the
Trusts (including legal and auditing expenses) and expenses of counsel
designated by the Sponsor, (3) various governmental charges and fees and
expenses for maintaining the Trusts' registration statement current with
Federal and State authorities, (4) expenses and costs of action taken by the
Sponsor, in its discretion, or the Trustee, in its discretion, to protect the
Trusts and the rights and interests of Holders (for example, expenses in
exercising a Trust's rights under the underlying Securities), (5)
indemnification of the Trustee for any losses, liabilities and expenses
incurred without gross negligence, bad faith or willful misconduct on its
part, (6) indemnification of the Sponsor for any losses, liabilities and
expenses incurred without gross negligence, bad faith, willful misconduct or
reckless disregard of their duties and (7) expenditures incurred in contacting
Holders upon termination of each Trust. The amounts of these charges and fees
are secured by a lien on the Trusts.
Payment of Expenses -- Funds necessary for the payment of the above fees
will be obtained in the following manner: (1) first, by deductions from the
Capital Accounts (see below); (2) to the extent the Capital Account funds are
insufficient, by distribution from the Income Accounts (see below) (which will
reduce income distributions from the Accounts); (3) to the extent the Income
and Capital Accounts are insufficient, by selling Securities from the
Portfolios and using the proceeds to pay the expenses (thereby reducing the
net asset value of the Units). Payment of the Deferred Sales Charge will be
made in the manner described under Administration of the Trusts--Accounts and
Distributions below.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable (see Description of the Trusts--
Risk Factors), the Sponsor cannot provide any assurance that dividends will be
sufficient to meet any or all expenses of the Trusts. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trusts--Taxes.
ADMINISTRATION OF THE TRUSTS
RECORDS
The Trustee keeps records of the transactions of each of the Trusts at its
corporate trust office including names, addresses and holdings of all Holders
of record, a current list of the Securities and a copy of the Indenture. Such
records are available to Holders for inspection at reasonable times during
business hours.
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to a Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive its 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
34
<PAGE>
pro rata share of the distributable balance in the Income Account as of such
Record Day, after deducting estimated expenses. The first distribution for
persons who purchase Units between a Record Day and a Distribution Day will be
made on the second Distribution Day following their purchase of Units. In
addition, amounts from the Capital Account may be distributed from time to
time to Holders of Record. No distribution need be made from the Capital
Account if the balance therein is less than an amount sufficient to distribute
$5.00 per 1,000 Units. The Trustee may withdraw from the Income Account, from
time to time, such amounts as it deems requisite to establish a reserve for
any taxes or other governmental charges that may be payable out of the Trusts.
Funds held by the Trustee in the various accounts created under the Indenture
do not bear interest. Distributions of amounts necessary to pay the Deferred
Sales Charge will be made from the Capital Account to an account maintained by
the Trustee for purposes of satisfying investors' sales charge obligations.
Although the Sponsor may collect the Deferred Sales Charge monthly, to keep
Units more fully invested the Sponsor currently does not anticipate sales of
Securities to pay the Deferred Sales Charge until after the last Deferred
Sales Charge Payment Date. Proceeds of the disposition of any Securities not
used to pay the Deferred Sales Charge or to redeem Units will be held in the
Capital Account and distributed on the Final Distribution upon termination of
the appropriate Trust.
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market
value. Subject to any applicable regulations and plan restrictions, the
Sponsor intends to direct the Trustee to participate in any such plans to the
greatest extent possible taking into account the Securities held by the Trusts
in the issuers offering such plans. In such event, the Indenture requires that
the Trustee forthwith distribute in kind to the Distribution Agent the
Securities received upon any such reinvestment to be held for the accounts of
the Holders in proportion to their respective interests in a Trust. It is
anticipated that Securities so distributed shall immediately be sold.
Therefore, the cash received upon such sale, after deducting sales commissions
and transfer taxes, if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trusts are
generally made in brokerage transactions (as distinguished from principal
transactions) and the Sponsor or any of its affiliates may act as brokers
therein if the Trustee expects thereby to obtain the most favorable prices and
execution. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
Each of the Trusts is a unit investment trust which normally follows a buy
and hold investment strategy and is not actively managed. However, each
Portfolio is regularly reviewed. Traditional methods of investment management
for a managed fund (such as a mutual fund) typically involve frequent changes
in a portfolio of securities on the basis of economic, financial and market
analyses. The Portfolio of each of the Trusts, 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 such Portfolio. However,
while it is the intention of the Sponsor to continue a Trust's investment in
the Securities in the original proportions, it has the power but not the
obligation to direct the disposition of the Securities upon institution of
certain legal proceedings, default under certain documents adversely affecting
future declaration or payment of anticipated dividends, or a substantial
decline in price or the occurrence of materially adverse credit factors that,
in the opinion of the Sponsor, would make the retention of the Securities
detrimental to the interests of the Holders. The Sponsor intends to review the
desirability of retaining in a Portfolio any Security if its Investment Rating
is reduced below 3 by Salomon Smith Barney'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 having fixed final maturity dates no later than the
next Distribution Day (at which time the proceeds from the maturity of said
instrument shall be distributed to Holders) which are selected by the Sponsor
and which will include only the following instruments:
35
<PAGE>
(i) Negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which
have, together with their branches or subsidiaries, more than $2 billion in
total assets, except that certificates of deposit or time deposits of
smaller domestic banks may be held provided the deposit does not exceed the
insurance coverage on the instrument (which currently is $100,000), and
provided further that a Trust's aggregate holding of certificates of
deposit or time deposits issued by the Trustee may not exceed the insurance
coverage of such obligations and (ii) U.S. treasury notes or bills.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion it
is in the best interest of the Holders of the Units to do so. In addition, the
Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the Trustee
to accept or reject such an offer to take any other action with respect thereto
as the Sponsor may deem proper if (1) the issuer failed to declare or pay
anticipated dividends with respect to such Securities or (2) in the written
opinion of the Sponsor the issuer will probably fail to declare or pay
anticipated dividends with respect to such Securities in the reasonably
foreseeable future. Any Securities so received in exchange or substitution shall
be sold unless the Sponsor directs that they be held by the Trustee subject to
the terms and conditions of the Indenture to the same extent as Securities
originally deposited thereunder. If a Security is eliminated from a Portfolio
and no replacement security is acquired, the Trustee shall within a reasonable
period of time thereafter notify Holders of that Trust of the sale of the
Security. Except as stated in this and the following paragraphs, the Trusts may
not acquire any securities other than (1) the Securities and (2) securities
resulting from stock dividends, stock splits and other capital changes of the
issuers of the Securities.
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with
the deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. Replacement Securities that are replacing Failed Securities will
be deposited into a Trust within 110 days of the date of deposit of the
contracts that have failed at a purchase price that does not exceed the amount
of funds reserved for the purchase of Failed Securities. The Replacement
Securities shall satisfy certain conditions specified in the Indenture
including, among other conditions, requirements that the Replacement
Securities shall be publicly-traded common stocks; shall be issued by an
issuer subject to or exempt from the reporting requirements under Section 13
or 15(d) of the Securities Exchange Act of 1934 (or similar provisions of
law); shall not result in more than 10% of a Trust consisting of securities of
a single issuer (or of two or more issuers which are Affiliated Persons as
this term is defined in the Investment Company Act of 1940) which are not
registered and are not being registered under the Securities Act of 1933 or
result in a Trust owning more than 50% of any single issue which has been
registered under the Securities Act of 1933; and shall have, in the opinion of
the Sponsor, characteristics sufficiently similar to the characteristics of
the other Securities in that Trust as to be acceptable for acquisition by such
Trust. Whenever a Replacement Security has been acquired for a Trust, the
Trustee shall, on the next Distribution Day that is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to that Trust of the Failed Security exceeded the cost of the Replacement
Security. If Replacement Securities are not acquired, the Sponsor will, on or
before the next following Distribution Day, cause to be refunded the
attributable sales charge, plus the attributable Cost of Securities to Trust
listed under Portfolios plus income attributable to the Failed Security. Any
property received by the Trustee after the Initial Date of Deposit as a
distribution on any of the Securities in a form other than cash or additional
shares of the Securities received in a non-taxable
36
<PAGE>
stock dividend or stock split, shall be retained or disposed of by the Trustee
as provided in the Indenture. The proceeds of any disposition shall be
credited to the Income or Capital Account of a Trust.
The Indenture also authorized the Sponsor to increase the size and number of
Units of the Trusts by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase
Additional Securities, or Additional Securities in exchange for the
corresponding number of additional Units during the 90-day period subsequent
to the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on the
Initial Date of Deposit (the "Original Proportionate Relationship") is
maintained to the extent practicable. Deposits of Additional Securities
subsequent to the 90-day period following the Initial Date of Deposit must
replicate exactly the original proportionate relationship among the number of
shares of each Security comprising a Portfolio at the end of the initial 90-day
period.
With respect to deposits of cash (or a letter of credit) with instructions
to purchase Additional Securities, Additional Securities or contracts to
purchase Additional Securities, in connection with creating additional Units
of a Trust during the 90-day period following the Initial Date of Deposit, the
Sponsor may specify minimum amounts of additional Securities to be deposited
or purchased. If a deposit is not sufficient to acquire minimum amounts of
each Security, Additional Securities may be acquired in the order of the
Security most under-represented immediately before the deposit when compared
to the Original Proportionate Relationship. If Securities of an issue
originally deposited are unavailable at the time of subsequent deposit or
cannot be purchased at reasonable prices or their purchase is prohibited or
restricted by law, regulation or policies applicable to the Trusts or the
Sponsor, the Sponsor may (1) deposit cash or a letter of credit with
instructions to purchase the Security when practicable (provided that it
becomes available within 110 days after the Initial Date of Deposit) or (2)
deposit (or instruct the Trustee to purchase) Securities of one or more other
issues originally deposited or (3) deposit or instruct the Trustee to
purchase) a Replacement Security that will meet the conditions described
above. Any funds held to acquire Additional or Replacement Securities which
have not been used to purchase Securities at the end of the 90-day period
beginning with the Initial Date of Deposit, shall be used to purchase
Securities as described above or shall be distributed to Holders together with
the attributable sales charge.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of each calendar year, the Trustee
will furnish to each person who at any time during the calendar 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 calendar
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 calendar
year; (3) a list of the Securities held and the number of Units outstanding on
the last business day of such calendar
37
<PAGE>
year; (4) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (5) amounts actually distributed
during such calendar year from the Income Account expressed both as total
dollar amounts and as dollar amounts per Unit outstanding on the record dates
for such distributions.
In order to enable them to comply with federal and state tax reporting
requirements, Holders will be furnished with evaluations of Securities upon
request to the Trustee.
BOOK-ENTRY UNITS
Ownership of Units of a Trust will not be evidenced by certificates. All
evidence of ownership of the Units will be recorded in book-entry form either
at Depository Trust Company ("DTC") through an investor's broker's account or
through registration of the Units on the books of the Trustee. Units held
through DTC will be deposited by the Sponsor with DTC in the Sponsor's DTC
account and registered in the nominee name CEDE & CO. Individual purchases of
beneficial ownership interest in a Trust will be made in book-entry form through
DTC or the Trustee. Ownership and transfer of Units will be evidenced and
accomplished by book-entries made by DTC and its participants if the Units are
evidenced at DTC, or otherwise will be evidenced and accomplished by book-
entries made by the Trustee. DTC will record ownership and transfer of the Units
among DTC participants and forward all notices and credit all payments received
in respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchases and sale from the broker-
dealer or bank from whom their purchase was made. Units are transferable by
making a written request properly accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the Unit Holder. Holders must sign such written request
exactly as their names appear on the records of the Trusts. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
AMENDMENT AND TERMINATION
The Sponsor may amend the Indenture, with the consent of the Trustee but
without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the
SEC or any successor governmental agency and (3) to make such other provisions
as shall not materially adversely affect the interest of the Holders (as
determined in good faith by the Sponsor). The Indenture may also be amended in
any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the Holders of 51% of the Units, provided
that no such amendment or waiver will reduce the interest in a Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders. The Indenture will terminate upon the earlier of the disposition of
the last Security held thereunder or the Mandatory Termination Date specified
under Investment Summary. The Indenture may also be terminated by the Sponsor
if the value of the Trust is less than the minimum value set forth under
Investment Summary (as described under Description of the Trusts -- Risk
Factors) and may be terminated at any time by written instrument executed by
the Sponsor and consented to by Holders of 51% of the Units. The Trustee shall
deliver written notice of any termination to each Holder of record within a
reasonable period of time prior to the termination. Within a reasonable period
of time after such termination, the Trustee must sell all of the Securities
then held and distribute to each Holder, after deductions of accrued and
unpaid fees, taxes and governmental and other charges, such Holder's interest
in the Income and Capital Accounts. Such distribution will normally be made by
mailing a check in the amount of each Holder's interest in such accounts to
the address of such nominee Holder appearing on the record books of the
Trustee.
38
<PAGE>
EXCHANGE AND ROLLOVER PRIVILEGES
Holders may exchange their Units of a Trust into units of any then
outstanding series of Equity Focus Trusts -- Sector Series (an "Exchange
Series") at their relative net asset values, subject only to the remaining
deferred sales charge (as disclosed in the prospectus for the Exchange
Series). The exchange option described above will also be available to
investors in the Trusts who elect to purchase units of an Exchange Series
within 60 days of their liquidation of Units in a Trust.
Holders who retain their Units until the termination of a Trust, may
reinvest their terminating distributions into units of a subsequent series of
Equity Focus Trusts -- Sector Series (the "New Series") provided one is
offered. Such purchaser may be entitled to a reduced sales load (as disclosed
in the prospectus for the New Series) upon the purchase of units of the New
Series.
Under the exchange and rollover privilege, the Sponsor's repurchase price
would be based upon the market value of the Securities in a Trust portfolio
and units in the Exchange Series or New Series will be sold to the Holder at a
price based on the aggregate market price of the securities in the portfolio
of the Exchange Series or New Series. Exercise of the exchange or rollover
privilege by Holders is subject to the following conditions: (i) the Sponsor
must have units available of an Exchange Series or New Series during initial
public offering or, if such period is completed, must be maintaining a
secondary market in the units of the available Exchange Series or New Series
and such units must be available in the Sponsor's secondary market account at
the time of the Holder's elections; and (ii) exchange will be effected only in
whole units. Holders will not be permitted to advance any funds in excess of
their redemption in order to complete the exchange. Any excess proceeds
received from the Holder for exchange will be remitted to such holder.
It is expected that the terms of the Exchange Series or New Series will be
substantially the same as the terms of the Trusts described in this
Prospectus, and that similar reinvestment programs will be offered with
respect to all subsequent series of the Trusts. The availability of these
options do not constitute a solicitation of an offer to purchase units of an
Exchange Series or a New Series or any other security. A Holder's election to
participate in either of these options will be treated as an indication of
interest only. Holders should contact their financial professionals to find
out what suitable Exchange or New Series is available and to obtain a
prospectus. Holders may acquire units of those Series which are lawfully for
sale in states where they reside and only those Exchange Series in which the
Sponsor is maintaining a secondary market. At any time prior to the exchange
by the Holder of units of an Exchange Series, or the purchase by a Holder of
units of a New Series, such Holder may change its investment strategy and
receive its 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 a Trust) as a result of the
liquidation, even though no cash will be distributed to pay any taxes. Holders
should consult their own tax advisers in this regard. The Sponsor reserves the
right to modify, suspend or terminate either or both of these reinvestment
privileges at any time.
REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Smith Barney Inc. or directly in the name of the Holder, unless
the Holder notifies its financial consultant at Smith Barney Inc. or the
Trustee, respectively, to the contrary, will be reinvested automatically in
additional Units of the Trust in which the Holder is making such reinvestment
at no extra charge pursuant to the Trust's "Reinvestment Plan". If the Holder
does not wish to participate in the Reinvestment Plan, the Holder must notify
its financial consultant at
39
<PAGE>
Smith Barney Inc. or the Trustee at least ten business days prior to the
Distribution Day to which that election is to apply. The election may be
modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of that Trust at the Sponsor's Repurchase Price
(the net asset value per Unit without any sales charge) in effect at the close
of business on the Distribution Day. These may be either previously issued
Units repurchased by the Sponsor or newly issued Units created upon the
deposit of additional Securities in the Trust (see Description of the
Trusts -- Structure and Offering). Each participant will receive an account
statement reflecting any purchase or sale of Units under the Reinvestment
Plan.
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to either of the Trusts. The Sponsor reserves the right to amend, modify or
terminate the Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units
of a trust at any time, or by the Sponsor without the consent of any of the
Holders if the Trustee becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities. Such resignation or removal
shall become effective upon the acceptance of appointment by the successor. In
case of such resignation or removal the Sponsor is to use its best efforts to
appoint a successor promptly and if upon resignation of the Trustee no
successor has accepted appointment within thirty days after notification, the
Trustee may apply to a court of competent jurisdiction for the appointment of
a successor. The Trustee shall it 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 Indentures and liquidate the
Trusts or (3) continue to act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trusts or to the Holders for
taking any action or for refraining from taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless
40
<PAGE>
disregard of its obligations and duties. The Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries
on its business and duly assumes all of its obligations under the Indenture
and in such event it shall be relieved of all further liability under the
Indenture.
MISCELLANEOUS
TRUSTEE
The name and address of the Trustee are shown on the back cover of this
prospectus. The Trustee is subject to supervision and examination by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System. In connection with the
storage and handling of certain Stocks deposited in the Trusts, the Trustee
may use the services of The Depository Trust Company These services may include
safekeeping of the Stocks, computer book-entry transfer and institutional
delivery services. The Depository Trust Company is a limited purpose trust
company organized under the Banking Law of the State of New York, a member of
the Federal Reserve System and a clearing agency registered under the Securities
Exchange Act of 1934.
LEGAL OPINION
The legality of the Units has been passed upon by Battle Fowler LLP, 75 East
55th Street, New York, New York 10022, as special counsel for the Sponsor.
AUDITORS
The Statements of Financial Condition and the Portfolios included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors,
as indicated in their report with respect thereto, and is so included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
SPONSOR
Smith Barney Inc. ("Smith Barney"), was incorporated in Delaware in 1960 and
traces its story 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 name Salomon Smith Barney is a service
mark of Smith Barney. Smith Barney and Salomon Brothers Inc are affiliated but
separately registered broker/dealers under common control of Salomon Smith
Barney Holdings Inc. Salomon Brothers Inc and Salomon Smith Barney Holdings
Inc. have been licensed to use the Salomon Smith Barney service mark. 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.
41
<PAGE>
EQUITY FOCUS TRUSTS
SECTOR SERIES, 1998-A
ENERGY PORTFOLIO
FINANCIALS PORTFOLIO
HEALTHCARE PORTFOLIO
TECHNOLOGY & TELECOMMUNICATIONS PORTFOLIO
UNIT INVESTMENT TRUSTS
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
INDEX
<TABLE>
<S> <C>
Investment Summary
Independent Auditors' Report
Statements of Financial Condition
Portfolios
Description of the Trusts
Risk Factors
Taxes
Public Sale of Units
Market for Units
Redemption
Expenses and Charges
Administration of the Trusts
Exchange and Rollover Privileges
Reinvestment Plan
Resignation, Removal and Limitations on Liability
Miscellaneous
</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>
- --------------------------------------------------------------------------------
SALOMON SMITH BARNEY
-------------------------------
A Member of TravelersGroup LOGO
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THE TRUSTS, NOT CONTAINED IN THIS PROSPECTUS; AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
<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:
Smith Barney Inc. 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:
Smith Barney Inc. 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):
Smith Barney Inc. 33-65332, 33-36037
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 13-4994650
</TABLE>
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
THE REGISTRATION STATEMENT ON FORM S-6 COMPRISES 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 as of the following persons:
KPMG Peat Marwick LLP (included in Exhibit 5.1)
Battle Fowler LLP (included in Exhibit 3.1)
The following exhibits:
To be filed with Amendment to Registration Statement.
<TABLE>
<C> <C> <S>
*1.1.1 -- Form of Reference Trust Indenture.
-- 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. 33-
2.1 97046).
-- Opinion of counsel as to the legality of the securities being
issued including their consent to the use of their names under
*3.1 the headings "Taxes" and "Legal Opinion" in the Prospectus.
-- Consent of KPMG Peat Marwick LLP to the use of their name under
*5.1 the heading "Miscellaneous--Auditors" in the Prospectus.
</TABLE>
- ------------
* To be filed with Amendment to Registration Statement.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the requirements of the Securities Act of
1933, the Registrant has duly caused this Registration Statement or Amendment
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized in the City of New York and State of New York on the
12th Day of May, 1998.
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 to the Registration Statement
pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
II-3
<PAGE>
SMITH BARNEY UNIT TRUSTS (REGISTRANT)
SMITH BARNEY INC.
(DEPOSITOR)
By the following persons*, who constitute a majority of the Board of
Directors of Smith Barney Inc.:
James Dimon
Deryck C. Maughan
/s/ Gina Lemon
By___________________________________
Gina Lemon
(As authorized signatory for Smith
Barney Inc. and Attorney-in-fact
for the persons listed above)
- ------------
* Pursuant to Powers of Attorney filed as exhibits to Registration Statement
Nos. 33-56722, 33-51999 and 333-42679.
II-4
