AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-6
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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--EUROPEAN MONETARY UNION PORTFOLIO
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, NY 10013
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
LAURIE A. HESSLEIN MICHAEL R. ROSELLA, ESQ.
Smith Barney Inc. Battle Fowler LLP
388 Greenwich Street 75 East 55th Street
New York, New York 10013 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.
738337.1
<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 JULY 28, 1998
Equity Focus Trusts
European Monetary Union Portfolio
A Unit Investment Trust
SALOMON SMITH BARNEY The Equity Focus Trusts - European
Monetary Union Portfolio is a unit
A Member of TravelersGroup investment trust that offers investors
the opportunity to purchase Units
representing proportionate interests
in a portfolio of international equity
securities selected by Salomon Smith
Barney Equity Research which are
expected to benefit from the
establishment of the European Monetary
Union. The value of the Units of the
Trust will fluctuate with the value of
the underlying securities and with the
value of the U.S. dollar relative to
the various foreign currencies
represented in the portfolio. 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 AUGUST ___, 1998
READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
735050.2
<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY
UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<CAPTION>
<S> <C>
Sponsor Trustee's Annual Fee
Smith Barney Inc. $. per 1,000 Units
(see Expenses and Charges)
Initial Number of Units ++.................... Sponsor's Annual Fee
Maximum of $.25 per 1,000 Units
Fractional Undivided Interest in Trust (see Expenses and Charges)
Represented by Each Unit.................. Record Day
The business day immediately prior to a Distribution
Public Offering Price (per 1,000 Units)....... Day.
Aggregate value of Securities in Trust*....$ Distribution Day
===========
On the next to last business day of each year,
Divided by Units commencing December 30, 1998 and upon
(times 1,000)..........................$ termination and liquidation of the Trust.
Plus initial sales charge of 1.00% (1.010% of the Evaluation Time
net amount invested in Securities)**+++$ 4:00 P.M. New York time (or earlier close of the New
Public Offering Price per 1,000 Units......$ York Stock Exchange).
Plus the amount per 1,000 Units in the Income Trustee and Distribution Agent
and Capital Accounts (see Description The Chase Manhattan Bank
of the Trust--Income)..................$ -0- Minimum Value of Trust
------------
The trust indenture between the Sponsor and the Trustee
Total (per 1,000 Units)....................$ (the "Indenture") may be terminated if the net asset
===========
value of the Trust is less than $5,000,000, unless the net
Sponsor's Repurchase Price and Redemption asset value of Trust deposits has exceeded $50,000,000.
Price*** per 1,000 Units (based on value of In that case, the Indenture may be terminated if the net
underlying securities).....................$ asset value of the Trust is less than $20,000,000. See
Risk Factors, page 4.
Distributions Special Redemption Date
Distributions of income, if any, will be made on the September 30, 1999 (the "Special Redemption
next to last business day of each year commencing Date")
December 30, 1998, to Holders of record on the Mandatory Termination of Trust
immediately priorbusiness day of each year, commencing , 2000 (the "Mandatory Termination Date"), or at
December 29, 1998, and will be automatically any earlier time by the Sponsor with the consent of
reinvested in additional Units of the Trust unless the Holders of 51% of the Units then outstanding
Holder elects to receive his distribution in cash. A Deferred Sales Charge Payment Dates
Final Distribution will be madDeferred Sales Charge The first day of each month commencing
Payment Dates upon termination of the Trust. The first 1, 1999 through 1, 1999
day of each month commencing and 1, 1999 through 1, 2000
Sponsor's Profit/Loss On Deposit...............$
</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 in U.S. dollars as of , 1998, as more fully explained in
footnote 4 to Portfolio on page 12. After the Initial Date of Deposit,
Securities quoted on a foreign securities exchange, or a national securities
exchange or the Nasdaq National Market, 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.
* Approximately $. of the proceeds from the Public Offering Price per 1,000
Units will be invested in Securities during, and liquidated at the completion
of, the initial offering period, to reimburse the Sponsor for the payment of all
or a portion of the estimated costs incurred in organizing the Trust
("organization costs")--including costs of preparing the registration statement,
the trust indenture and other closing documents, registering units with the SEC
and the states and the initial audit of the Trust portfolio. The reimbursement
to the Sponsor for the organization costs will be paid from the assets of the
Trust as of the close of the initial offering period. To the extent the actual
organization costs are less than the estimated amount, only the actual
organization costs will be reimbursed to the Sponsor. To the extent that actual
organization costs are greater than the estimated amount, only the estimated
organization costs included in the Public Offering Price will be reimbursed to
the Sponsor and deducted from the assets of the Trust. See Risk Factors for a
discussion of the impact of a decrease in value of the Securities purchased with
the Public Offering Price proceeds intended to be used to reimburse the Sponsor.
735050.2
2
<PAGE>
** The sales charge consists of an Initial Sales Charge and an annual Deferred
Sales Charge. The Initial Sales Charge is computed by deducting the total
Deferred Sales Charge($35.00 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 1.00% of the Public
Offering Price). The Deferred Sales Charge during each of the two years of the
Trust is paid through reduction of Trust assets by $2.50 per 1,000 Units on
seven Deferred Sales Charge Payment Dates. The second year Deferred Sales Charge
will not be imposed on Holders who sell, redeem or exchange their Units prior to
the Special Redemption Date. Upon a repurchase, redemption or exchange of Units
before , 1999, any remaining first year Deferred Sales Charge payments will be
deducted from the proceeds. Similarly, upon a repurchase, redemption or exchange
of Units after the Special Redemption Date but before _____, 2000, any remaining
second year Deferred Sales Charge payments will be deducted from the proceeds.
*** As of the close of the initial offering period, the Sponsor's Repurchase
Price and Redemption Price per 1,000 Units for the Trust will be reduced to
reflect the payment of the per 1,000 Unit organization costs to the Sponsor.
This price reflects deductions for the first year Deferred Sales Charge payments
($17.50 per 1,000 Units initially). 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.
735050.2
3
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
Objective of the Trusts -- The objective of the Equity Focus Trusts -
European Monetary Union 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 for the Trust portfolio (the "Portfolio"). The Sponsor
has selected for the Portfolio international equities which it expects to
benefit from the establishment of the European monetary union (the "EMU") and
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. The Portfolio may be considered
speculative and therefore may be appropriate only for those investors able and
willing to assume the increased risks of higher price volatility and currency
fluctuations associated with investments in international equities. The
Portfolio should be considered as a vehicle for investing a portion of an
investor's assets in foreign securities and not as a complete equity investment
program. Achievement of the Trust's objectives is dependent upon several factors
including the financial condition of the issuers of the Securities and any
appreciation of the Securities. 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 the Portfolio.
Portfolios -- The Portfolio contains common stocks issued by companies
engaged primarily in the following industries: . 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. Although the Portfolio is
concentrated in the stocks of foreign issuers, it is diversified among
countries. The following EMU countries are represented in the Portfolio: . (See
Risk Factors.)
The initial purchase of Securities for the Trust will not necessarily
represent equal dollar amounts of each of the Securities; however, with the
initial deposit of Securities, the Sponsor established a proportionate
relationship among the number of shares of each stock deposited in the Portfolio
of the Trust. During the 90- day period following the Initial Date of Deposit,
the Sponsor may create additional Units of the Trust 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 the 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 Trust 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 the 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 Trust--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 Trust should be made with an
understanding that the value of the underlying Securities, and therefore the
value of the Units, will fluctuate, depending on the full range of economic and
market influences which may affect the market value of the Securities, including
the profitability and financial condition of issuers, changes in the economics
of the various countries represented in the Portfolio, currency exchange rate
fluctuations, conditions in a given issuer's industry, market conditions and
values of common stocks generally, and other factors.
735050.2
4
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
The Sponsor's buying and selling of the Securities, especially during
the initial offering of Units of the Trust or to satisfy redemptions of Units,
may impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trust may also cause
increased buying activity in certain of the stocks comprising the Portfolio.
After such announcement, investment advisory and brokerage clients of the
Sponsor and its affiliates may purchase individual Securities appearing on the
list during the course of the initial offering period. Such buying activity in
the stock of these companies prior to the purchase of the Securities by the
Trust may cause the Trust to purchase stocks at a higher price than those buyers
who effect purchases prior to purchases by the Trust.
The Trust is not appropriate for investors requiring high current
income or conservation of capital. Securities representing approximately % of
the value of the Portfolio, have been ranked High Risk by the Sponsor's Research
Department, described as "low predictability of earnings/dividends; high price
volatility". Securities representing approximately % of the value of the
Portfolio, have been ranked Speculative by the Sponsor's Research Department,
described as "exceptionally low predictability of earnings/dividends; highest
risk of price volatility."
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's organization costs,
may decrease in value during the initial offering period. To the extent the
proceeds from the sale of these Securities are insufficient to repay the Sponsor
for the Trust's organization costs, the Trustee will sell additional Securities
to allow the Trust to fully reimburse the Sponsor. In that event, the net asset
value per Unit will be reduced by the amount of Securities sold. This will also
result in an increase in the cost per Unit of the reimbursement to the Sponsor.
The Portfolio of the Trust may be concentrated in a 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 particular, dominant stock; or regulatory changes. Investors should be
prepared for volatile short-term movements in the value of Units. The
profitability of financial services companies and banks 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. Competitive pressures and changing demand may have a
substantial effect on the financial condition of companies in the technology and
telecommunications industries. Companies in the technology and
telecommunications industries are subject to governmental regulation and spend
heavily on research and development and are sensitive to the risk of product
obsolescence. (See Risk Factors -- Financials/Banking Industries and --
Technology/Telecommunications Industries.)
If cash (or a letter of credit in lieu of cash) is deposited with
instructions to purchase Securities in connection with the issuance of
additional Units during the Public Offering Period, there is the risk that the
price of a Security will increase between the time of the deposit and the time
the Security is purchased resulting in a reduction in the number of shares
purchased for the Portfolio. Price fluctuations during the period from the time
of deposit of cash to the time the Securities are purchased, and payment of
brokerage fees, will affect the value of every Holder's Units, the number of
shares of each Security represented by each Unit and the income per Unit
received by the Trust. Some of the Securities may have limited trading volume.
The Trustee, with directions from the Sponsor, will endeavor to purchase
Securities with deposited cash as soon as practicable, reserving the right to
purchase those Securities over the 20 business days following each deposit in an
effort to reduce the effect of these purchases on the market price of those
stocks. This could, however, result in the Trust's failure to participate in any
appreciation of those stocks before the cash is
735050.2
5
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
invested. If any cash remains at the end of this period and cannot be invested
in one or more stocks at what the Sponsor considers reasonable prices, it
intends to use that cash to purchase each of the other securities in the
original proportionate relationship among those securities. Similarly, at
termination of the Trust, the Sponsor reserves the right to sell Securities over
a period of up to 20 business days to lessen the impact of its sales on the
market price of the Securities. The proceeds received by Holders following
termination of the Trust will reflect the actual sales proceeds received on the
Securities, which will likely differ from the closing sale price on the
Mandatory Termination Date.
Common stocks may be especially susceptible to general stock market
movements and to volatile increases and decreases in value as market confidence
in and perceptions of the issuers change. Investors should be aware that there
can be no assurance that the value of the underlying Securities will increase or
that the issuers of the Securities will pay dividends on outstanding shares. Any
distributions of income to Holders will generally depend upon the declaration of
dividends by the issuers of the Securities and the declaration of any dividends
depends upon several factors including the financial condition of the issuers
and 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 Trust and that the Trust may continue to purchase or hold Securities
originally selected through this process even though the evaluation of the
attractiveness of the Securities may have changed. In the event a public tender
offer is made for a Security or a merger or acquisition is announced affecting a
Security, the Sponsor may instruct the Trustee to tender or sell the Security on
the open market when, in its opinion, it is in the best interest of the holders
of the Units to do so. Although the Portfolio of the Trust is regularly reviewed
and evaluated and the Sponsor may instruct the Trustee to sell Securities under
certain limited circumstances, Securities will not be sold by the Trust to take
advantage of market fluctuations or changes in anticipated rates of
appreciation. As a result, the amount realized upon the sale of the Securities
may not be the highest price attained by an individual Security during the life
of the Trust. The Sponsor has currently assigned certain rankings to the issuers
of Securities based on stock performance expectations and level of risk (see
footnote 2 to the Portfolio). 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 Trust 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 page 2 for the Portfolio 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 Portfolio, is noted on page 2 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
735050.2
6
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
Securities for initial and subsequent deposits in the Trust. The effect of the
Sponsor's purchases of Securities on the prices of the Securities is
unpredictable.
Foreign Securities and American Depository Receipts -- The Trust is
concentrated in 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, including exchange rate
fluctuations, see Risk Factors -- Foreign Securities and -- American Depositary
Shares and Receipts; Taxes.
Private Placements; Underwriting -- None of the Securities in the
Trust 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. In addition, during the initial offering
period, the Public Offering Price per 1,000 Units will include an amount
sufficient to reimburse the Sponsor for the payment of all or a portion of the
estimated organization and offering costs (collectively, "organization costs")
of the Trust. The total sales charge consists of an Initial Sales Charge and an
annual Deferred Sales Charge, the total of which equals a maximum of 4.50%* of
the Public Offering Price; 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 total Deferred Sales Charge ($35.00 per 1,000 Units) from the
aggregate sales charge (a maximum of 4.50% of the Public Offering Price). On ,
1998 the Initial Sales Charge is $ per 1,000 Units (1.00% 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
1.00% of the Public Offering Price because of fluctuations in value of the
Securities. The annual Deferred Sales Charge is paid through a reduction of the
net asset value of the Trust by $2.50 per 1,000 Units on each of the seven
monthly Deferred Sales Charge Payment Dates (commencing on , 1999 through , 1999
for the first year and commencing , 1 1999 through 1, 2000 for the second year).
In addition, Holders who sell, exchange or redeem their Units prior to the
Special Redemption Date will be subject only to the first year Deferred Sales
Charge of $17.50 per 1,000 Units. This would result in a sales charge of 2.75%
of the Public Offering Price to such Holders. Units are offered at the Public
Offering Price plus the net amount per Unit in the Income Account. See Public
Sale of Units -- Public Offering Price. 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 the Trust will be automatically reinvested in additional Units of
the 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 -------- * This sales charge
will be reduced on a graduated scale in the case of quantity purchases. See
Public Sale of Units -- Public Offering Price.
735050.2
7
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
reinvest their distributions will receive additional Units and will therefore
own a greater percentage of the Trust than Holders who receive cash
distributions (see Reinvestment Plan). Distribution and Record Days are shown on
page 2. As soon as practicable after termination of the Trust (generally after
seven days), the Trustee will distribute to each Holder his pro rata share of
the amount realized on disposition of the Securities remaining in the Trust plus
any other assets then in the Trust, less expenses of the Trust. The other assets
of the Trust will include any dividends, interest income and net realized
capital gains which have not been distributed. The total distribution may be
less than the amount paid for Units.
Market for Units -- The Sponsor, though not obligated to do so,
intends from the commencement of the Trust to maintain a market for Units and
continually to offer to purchase Units from Holders desiring to sell them at a
price based on the aggregate value of the underlying Securities (see Market for
Units). Whenever a market is not maintained, a Holder may be able to dispose of
his Units only through redemption (see Redemption).
735050.2
8
<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
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 the Trust is a unit investment trust rather than a
- --------------------------------------------------------------------------------
Unitholder Transaction Expenses
<TABLE>
<CAPTION>
As a % of Initial Amounts per
Public Offering Price 1,000 Units
--------------------------- --------------------------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a percent 1.00%* $10.00
of offering price)........................................... 1.75%** 17.50
Deferred Sales Charge per Year***............................ ---- -----
Maximum Total Sales Charge................................ 4.50% 45.00
==== =====
Maximum Sales Charge Imposed on Reinvested Dividends......... 3.50% $35.00****
==== =====
Reimbursement to Sponsor for Estimated Organization Costs....
====% $=====
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Amounts per
As a % of Net Assets 1,000 Units
--------------------------- --------------------------
Trustee's Fee................................................ . % $
Maximum Portfolio Supervision, Bookkeeping and Administrative Fees . % $
Other Operating Expenses..................................... . % $
Total..................................................... . % $
Cumulative Expenses
Paid for Period
------------------------------------------------------
1 2
Year Years
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.
- -------------------
* The Initial Sales Charge is the difference between 4.50% and the total
Deferred Sales Charge($35.00 per 1,000 Units) and would exceed 1.00% if
the Public Offering Price exceeds $1,000 per 1,000 Units.
** The actual fee is $2.50 per 1,000 Units, irrespective of the purchase or
redemption price, paid on seven monthly Deferred Sales Charge Payment
Dates during each year of the two year Trust. If the Holder sells,
exchanges or redeems Units before all the deductions have been made for a
particular year, the balance of the annual Deferred Sales Charge will be
paid from the sales proceeds. If the Unit price exceeds $1.00 per Unit,
the annual Deferred Sales Charge will be less than 1.75%; if the Unit
price is less than $1.00 per Unit, the annual Deferred Sales Charge will
exceed 1.75%.
*** Holders who sell, exchange or redeem their Units prior to the Special
Redemption Date will be subject only to the 1.75% Deferred Sales Charge
imposed during the first year of the Trust. See Public Sales of Units -
Public Offering Price.
**** Reinvested dividends will be subject only to the Deferred Sales Charge
remaining at the time of reinvestment which may be more or less than
3.50% of the Public Offering Price at the time of reinvestment (see
Reinvestment Plan).
735050.2
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<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts--European Monetary
Union Portfolio.
We have audited the accompanying statement of financial condition,
including the portfolio, of Equity Focus Trusts--European Monetary Union
Portfolio as of , 1998. These financial statements are the responsibility of the
Trustee (see note 6 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 statement 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. 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 statement of financial
condition provide a reasonable basis for our opinion.
In our opinion, the statement of financial condition referred to above
present fairly, in all material respects, the financial position of Equity Focus
Trusts--European Monetary Union Portfolio as of , 1998, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
New York, New York
, 1998
735050.2
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<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY UNION PORTFOLIO
Statement of Financial Condition as of Initial Date of Deposit, , 1998
TRUST PROPERTY
Investment in Securities:
Contracts to purchase Securities(1).................... $
Total..................................................
=========
LIABILITIES
Reimbursement to Sponsor for Organization Costs(2)..........
---------
Deferred Sales Charge(3)....................................
---------
INTEREST OF UNITHOLDERS
Units of fractional undivided interest outstanding:
Cost to investors(4)........................................ $
---------
Less: Gross underwriting commissions(5)....................
---------
Less: Reimbursement to Sponsor for Organization Costs(2)...
---------
Net amount applicable to investors..........................
---------
$
Total =========
- -----------------
(1) Aggregate cost to each Trust of the Securities listed under Portfolio
of the 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) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs
of establishing the Trust. These costs have been estimated at $ per
1,000 Units. A payment will be made as of the close of the initial
public offering period to an account maintained by the Trustee from
which the obligation of the investors to the Sponsor will be
satisfied. To the extent that actual organization costs are less than
the estimated amount, only the actual organization costs will be
deducted from the assets of the Trust. To the extent that actual
organization costs are greater than the estimated amount, only the
estimated organization costs included in the Public Offering Price
will be reimbursed to the Sponsor and deducted from the assets of the
Trust.
(3) An annual Deferred Sales Charge of $17.50 per 1,000 Units is payable
in seven monthly payments of $2.50 per 1,000 Units ( 1, 1999 to 1,
1999 for the first year and 1, 1999 to 1, 2000 for the second year).
Distributions will be made to an account maintained by the Trustee
from which the Deferred Sales Charge obligation of the investors to
the Sponsor will be satisfied.
(4) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(5) Assumes a maximum total sales charge of 4.50% of Public Offering Price
computed on the basis set forth under Public Sale of Units --Public
Offering Price.
(6) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide
reasonable assurance as to the integrity and reliability of, financial
reporting of the Trust. The Trustee is also responsible for all
estimates and accruals reflected in the Trust's financial statements
other than estimates of organizational costs, for which Sponsor is
responsible.
735050.2
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<PAGE>
EQUITY FOCUS TRUSTS - EUROPEAN MONETARY UNION PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, , 1998
<TABLE>
<CAPTION>
Cost of
Country [Investment Number of Percent of Securities
Securities(1) of Issuer Ranking(2)] Shares(3) Net Assets to Trust(4)
- ------------- --------- ----------- --------- ---------- -----------
<S> <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 based on the U.S. dollar offer side value of the relevant exchange
rate determined by the Trustee as of the Evaluation Time on , 1998.
Subsequent to the Initial Date of Deposit, valuation of Securities is
based, for Securities quoted on a foreign securities exchange, or national
securities exchange or NASDAQ National Market System, 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.
735050.2
12
<PAGE>
DESCRIPTION OF THE TRUST
Structure and Offering
This Series of the Equity Focus Trusts--European Monetary Union
Portfolio (the "Portfolio" or the "Trust"). The 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 the Trust (a "Unit") represented a
fractional undivided interest in the securities listed under Portfolios (the
"Securities") set forth under Investment Summary. Additional Units of the Trust
will be issued in the amount required to satisfy purchase orders by depositing
in the Trust cash (or a bank letter of credit in lieu of cash) with instructions
to purchase Securities, contracts to purchase Securities together with
irrevocable letters of credit, or additional Securities. On each settlement date
(estimated to be three business days after the applicable date on which
Securities were deposited in the Trust), the Units will be released for delivery
to investors and the deposited Securities will be delivered to the Trustee. As
additional Units are issued by the Trust as a result of the deposit of cash (or
a letter of credit in lieu of cash) with instructions to purchase additional
Securities, the aggregate value of the Securities in 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
Trust.
During the 90-day period following the Initial Date of Deposit
additional deposits of cash or Securities in connection with the issuance and
sale of additional Units will maintain to the extent practicable the original
proportionate relationship among the number of shares of each Security in the
Portfolio of the Trust. The proportionate relationship among the Securities in
each of the Trust will be adjusted to reflect the occurrence of a stock
dividend, a stock split or a similar event which affects the capital structure
of the issuer of a Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the Initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices,
brokerage commissions or unavailability of Securities. Replacement Securities
may be acquired under specified conditions when Securities originally deposited
are unavailable (see Administration of the Trust--Trust Supervision). Units may
be continuously offered to the public by means of this Prospectus (see Public
Sale of Units--Public Distribution) resulting in a potential increase in the
number of Units outstanding. Deposits of Additional Securities subsequent to the
90-day period following the Initial Date of Deposit must replicate exactly the
proportionate relationship among the number of shares of each of the Securities
comprising the 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 page 2 on any day will be based on the aggregate value of the
Securities in the Trust on that day at the Evaluation Time, plus a sales charge.
The Public Offering Price for each of the Trusts will thus vary in the future
from that specified on page 2 of this Prospectus. See Public Sale of Units --
Public Offering Price for a complete description of the pricing of Units.
Units will be sold to investors at the Public Offering Price next
computed after receipt of the investor's order to purchase Units. The Sponsor
reserves the right to accept or reject any purchase order in whole or in part.
The Sponsor will execute orders to purchase in the order it
determines, in good faith, that they are received, except it is expected that
indications of interest received prior to the effectiveness of the registration
of the Trust which become orders upon effectiveness will be accepted according
to the order in which the indications of interest -------- * 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.
735050.2
13
<PAGE>
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 the Trust will have the right to
have their Units redeemed for the Securities underlying the Units (see
Redemption). If any Units are redeemed, the aggregate value of Securities in the
Trust will be reduced and the fractional undivided interest in the Trust
represented by each remaining Unit will be increased. Units 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 Trust -- Amendment and Termination).
The Portfolio
Smith Barney's Equity Focus Trusts are each based on a specific
research investing theme or industry trend identified by 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. The Trust seeks to identify and invest in companies
positioned to capitalize on the establishment of the European monetary union
("EMU") scheduled to begin in January 1999 and continue in phases over the
two-year life of the Trust. In general, the portfolio is expected to be
comprised of large capitalization companies that are likely to benefit from the
broader and more integrated marketplace, and a more coordinated economic
environment. The selections, which will be identified from the universe of
Salomon Smith Barney stock recommendations, are expected to be diversified by
industry group and geographic location across the eleven (11) "Euro" countries.
These EMU members include Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain. Salomon Smith Barney has
30 senior research analysts who follow 400 international equities that fall into
25 industry groups and are located in 25 countries in both developing and
emerging European markets. The Securities included in the Portfolio 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 Smith Barney normally pertain to an outlook for a 12-18
month period (see footnote 2 to the Portfolio on page 12). In selecting
Securities for the Trust, the Sponsor has not expressed any belief as to the
potential of these Securities for capital appreciation over a period longer than
one year. There is, of course, no assurance that any of the Securities in the
Trust will appreciate in value, and indeed any or all of the Securities may
depreciate in value at any time in the future. See Risk Factors.
The results of ownership of Units will differ from the results of
ownership of the underlying Securities of the Trust for various reasons,
including sales charges and expenses of the Trust, because the Portfolio may not
be fully invested at all times, the stocks are normally purchased or sold at
prices different from the closing price used to determine the Trust's net asset
value, and not all stocks may be weighted in the initial proportions at all
times. Additionally, results of ownership to different Holders will vary
depending on the net asset value of the underlying Securities on the days
Holders bought and sold their Units. Of course, any purchaser of securities,
including Units, will have to pay sales charges or commissions, which will
reduce his total return.
Total returns and/or average annualized returns for various periods of
previous series of Equity Focus Trusts and the Trust may be included from time
to time in advertisements and sales literature. As with other performance data,
performance comparisons should not be considered representative of the Trust's
relative performance for any future period. Advertising and sales literature for
the Trust may also include excerpts from the Sponsor's research reports on one
or more of the stocks in the Trust, including a brief description of its
businesses and market sector, and the basis on which the stock was selected.
All of the 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. Any domestic ADRs are publicly traded either on a
stock exchange or in the over-the-
735050.2
14
<PAGE>
counter market. Most of the contracts to purchase ADRs deposited initially in
the Trust are expected to settle in three business days, in the ordinary manner
for such Securities.
The Trust consist of such Securities as may continue to be held from
time to time in the Trust and any additional and replacement Securities and any
money market instruments acquired and held by such Trust pursuant to the
provisions of the Indenture (including the provisions with respect to the
deposit into the Trust of Securities in connection with the sale of additional
Units to the public) together with undistributed income therefrom and
undistributed and uninvested cash realized from the disposition of Securities
(see Administration of the Trust -- Accounts and Distributions; -- Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the redemption
of Units. Any money market instruments acquired by the Trust must be held until
maturity and must mature no later than the next Distribution Day and the
proceeds distributed to Holders at that time. If sufficient Securities are not
available at what the Sponsor considers a reasonable price, excess cash received
on the creation of Units may be held in an interest-bearing account with the
Trustee until that cash can be invested in Securities. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect in any
of the Securities. However, should any contract deposited hereunder (or to be
deposited in connection with the sale of additional Units) fail, the Sponsor
shall, on or before the next following Distribution Day, cause to be refunded
the attributable sales charge, plus the attributable Cost of Securities to Trust
listed under the Portfolio for the Trust, unless substantially all of the monies
held in the Trust to cover the purchase are reinvested in replacement Securities
in accordance with the Indenture (see Administration of the Trust -- Portfolio
Supervision).
Because certain of the Securities from time to time may be sold, or
their percentage may be reduced under certain extraordinary circumstances
described below, or because Securities may be distributed in redemption of
Units, no assurance can be given that the Trust will retain for any length of
time its present size (see Redemption; Administration of the Trust -- Amendment
and Termination). For Holders who do not redeem their Units, investments in
Units of the Trust will be liquidated on the fixed date specified under
Investment Summary -- Mandatory Termination of Trust, and may be liquidated
sooner if the net asset value of 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 the Trust are set forth under
Investment Summary. Income Distributions, if any, will be automatically
reinvested in additional Units of the Trust at no extra charge unless a Holder
elects to receive his distributions in cash (see Reinvestment Plan). Because
dividends on the Securities are not received by the Trust at a constant rate
throughout the year and because the issuers of the Securities may change the
schedules or amounts 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 the Trust and credited to the income account established under the
Indenture (the "Income Account") as of the Record Day.
735050.2
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<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 Trust or to satisfy redemptions of Units
may impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trust may also cause
increased buying activity in certain of the stocks comprising the Portfolio.
After such announcement, investment advisory and brokerage clients of the
Sponsor and its affiliates may purchase individual Securities appearing on the
list during the course of the initial offering period. Such buying activity in
the stock of these companies prior to the purchase of the Securities by the
Trust may cause the Trust to purchase stocks at a higher price than those buyers
who effect purchases prior to purchases by the Trust.
The Trust is not appropriate for investors requiring conservation of
capital or high current income. Securities representing approximately % of the
value of the Portfolio have been ranked High Risk by the Sponsor's Research
Department, described as "low predictability of earnings/dividends; high price
volatility." Securities representing approximately %, of the value of the
Portfolio have been ranked Speculative by the Sponsor's Research Department,
described as "exceptionally low predictability of earnings/dividends; highest
risk of price volatility."
The Securities purchased with the portion of the Public Offering Price
intended to be used to reimburse the Sponsor for the Trust's organization costs,
may decrease in value during the initial offering period. To the extent the
proceeds from the sale of these Securities are insufficient to repay the Sponsor
for the Trust's organization costs, the Trustee will sell additional Securities
to allow the Trust to fully reimburse the Sponsor. In that event, the net asset
value per Unit will be reduced by the amount of Securities sold. This will also
result in an increase in the cost per Unit of the reimbursement to the Sponsor.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared by the issuer's
board of directors and have a right to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preference stocks have the right
to receive dividends at a fixed rate when and as declared by the issuer's board
of directors, normally on a cumulative basis, but generally do not participate
in other amounts available for distribution by the issuing corporation.
Cumulative preferred stock dividends must be paid before common stock dividends
and any cumulative preferred stock dividend omitted is added to future dividends
payable to the holders of cumulative preferred stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those of common stocks.
Moreover, common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and inclination
of the issuer to declare or pay dividends on its common stock or the rights of
holders of common stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of common stocks are subject to market fluctuations for as
long as the common stocks remain
735050.2
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<PAGE>
outstanding, and thus the value of the Securities in the Portfolio may be
expected to fluctuate over the life of the Trust to values higher or lower than
those prevailing on the Initial Date of Deposit.
Since the Securities are all common stocks, and the income stream
produced by dividend payments thereon is unpredictable, the Sponsor cannot
provide any assurance that dividends will be sufficient to meet any or all
expenses of the Trust. If dividends are insufficient to cover expenses, it is
likely 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
Portfolio, as such, and will not be able to vote the Securities. As the holder
of the Securities, the Trustee will have the right to vote all of the voting
stocks in the Trust and will vote in accordance with the instructions of the
Sponsor. Holders will, however, be able upon request to receive an "in kind"
distribution of the Securities evidenced by their Units if they tender a minimum
of 250,000 Units (see Redemption).
Investors should be aware that the Trust is not "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 the Trust except under
extraordinary circumstances. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth under Objective
of the Trust in the Investment Summary and that the Trust may continue to
purchase or hold Securities originally selected 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 the Trust would be impermissible, such as to maximize
return by taking advantage of market fluctuations. (See Administration of the
Trust -- Trust Supervision.) In the event a public tender offer is made for a
Security or a merger or acquisition is announced affecting a Security, the
Sponsor may instruct the Trustee to tender or sell the Security on the open
market when, in its opinion, it is in the best interest of the holders of the
Units to do so. Although the Portfolio is regularly reviewed and evaluated and
the Sponsor may instruct the Trustee to sell Securities under certain limited
circumstances, Securities will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation. As a
result, the amount realized upon the sale of the Securities may not be the
highest price attained by an individual Security during the life of the Trust.
[The Sponsor has currently assigned certain rankings to the issuers of
Securities based on stock performance expectations and level of risk (see
footnote 2 to the Portfolio on page 12). These rankings are subject to change.
Securities will not necessarily be sold by the Trust based on a change in
rankings, although the Sponsor intends to review the desirability of holding any
Security if its ranking is reduced below 3.] The prices of single shares of each
of the Securities in the Trust vary widely, and the effect of a dollar of
fluctuation, either higher or lower, in stock prices will be much greater as a
percentage of the lower-price stocks' purchase price than as a percentage of the
higher-price stocks' purchase price.
Investors should note that in connection with the issuance of
additional Units during the Public Offering Period set forth in the Investment
Summary, the Sponsor may deposit cash (or a letter of credit in lieu of cash)
with instructions to purchase Securities, additional Securities or contracts to
purchase Securities, in each instance maintaining the original percentage
relationship, subject to adjustment under certain circumstances, among the
number of shares of each Security in the Trust. To the extent the price of a
Security increases or decreases between the time cash is deposited with
instructions to purchase the Security at the time the cash is used to purchase
the Security, Units may represent less or more of that Security and more or less
of the other Securities in the Trust. In addition, brokerage fees (if any)
incurred in purchasing Securities with cash deposited with instructions to
purchase the Securities will be an expense of the Trust. Price fluctuations
between the time of deposit and the time the Securities are purchased, and
payment of brokerage fees, will affect the value of every Holder's Units and the
Income per Unit received by the Trust.
735050.2
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<PAGE>
The Trust may be terminated at any time and all outstanding Units
liquidated if the net asset value of the Trust falls below $5,000,000 and
deposits of Securities in the Trust have not exceeded $50,000,000 at that time.
At any time after deposits in the 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 the Trust should fall below
the applicable minimum value, the Sponsor may then in its sole discretion
terminate the Trust before the Mandatory Termination Date specified under
Investment Summary.
Foreign Securities. The Trust is concentrated in Securities of
non-U.S. issuers directly or through ADRs. The Securities of certain of the
issuers contained in the Portfolio may be held both directly and 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 Trust, including the withholding of dividends.
Foreign securities may be subject to foreign government taxes that could reduce
the yield on such securities. Since the Trust may invest in securities quoted in
currencies other than the United States dollar, changes in foreign currency
exchange rates may adversely affect the value of foreign securities in the
Portfolio and the net asset value of Units of the Trust. Investment in foreign
securities may also result in higher expenses due to the cost of converting
foreign currency to United States dollars, the payment of fixed brokerage
commissions on certain foreign exchanges, which generally are higher than
commissions on domestic exchanges, and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, the Sponsor anticipates that adequate
information will be available to allow the Sponsor to supervise the Portfolio as
set forth in Administration of the Trust--Portfolio Supervision.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities is subject to exchange control restrictions
under existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this type
or because the issues qualify for an exemption, or the Trust, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control regulations
might not be adopted in the future which might adversely affect payments to the
Trust.
In addition, the adoption of exchange control regulations and other
legal restrictions could have an adverse impact on the marketability of
international securities in the Portfolio and on the ability of the Trust to
satisfy their obligation to redeem Units tendered to the Trustee for redemption
(see Redemption).
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.
735050.2
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<PAGE>
Exchange Rate Fluctuation. In recent years, foreign exchange rates
have fluctuated sharply. Income from foreign equity securities held by the
Trust, including those underlying any ADRs held by the Trust, would be payable
in the currency of the country of their issuance. However, the Trust will
compute their income in United States dollars, and the computation of income
will be made on the date of its receipt by the Trust at the foreign exchange
rate in effect on that date. Therefore, if the value of the foreign currency
falls relative to the United States dollar between receipt of the income and its
conversion to United States dollars, the risk of such decline will be borne by
Holders.
The Trustee is required to conduct the Portfolio's foreign exchange
conversions either on a spot (i.e., cash) or forward foreign exchange basis,
whichever will synchronize the currency conversions as exactly as practicable
with the settlement dates of the relevant foreign stock or with the dividend
distribution dates of the Portfolio, as the case may be. Foreign currency
exchange conversions are generally conducted on a principal basis and foreign
exchange dealers realize a profit based upon the difference between the price at
which they are willing to buy a particular currency (bid price) and the price at
which they are willing to sell the currency (offer price). The cost to the
Portfolio of engaging in these foreign currency conversions also varies with
such factors as the currency involved, the length of the contract period and the
market conditions then prevailing. Portfolio evaluations include the cost of
buying or selling a forward foreign exchange contract in the relevant currency
to correspond to the settlement period for purchases and redemptions of Units.
In May, 1998, the participating countries were announced by European
Union ministers, as well as the bilateral exchange rates at which the
participating currencies will be "locked-in" upon commencement of EMU. The
announcement of the forward rates was intended to give the financial markets
sufficient warning to avoid a speculative attack on EMU in the run-up to January
1, 1999.
The eleven (11) countries eligible for the first wave of entry are
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal and Spain. On January 1, 1999, EMU will commence. The
exchange rates of the participating countries will be locked-in against each
other and the euro. At this time, the euro will become a currency in its own
right, and participating national currencies will become sub- denominations of
the euro (in the same way that the cent is a sub-denomination of the dollar).
From January 1, 1999, all governments debt will be issued in euros and
intergovernmental transactions will take place in the single currency.
Commercial banking will be possible in both euros and the national currencies.
Between January 1, 1999 and July 1, 2002, euro notes and coins will
gradually replace the cash of national currencies. Euro cash must be introduced
by January 1, 2002 at the latest. By July 1, 2002, domestic currencies will no
longer be legal tender.
European Risks Factors. The economics of individual European countries
may differ favorably or unfavorably from the U.S. economy in gross national
product, growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position. For a
number of years, certain European countries have been seeking economic and
political unification which would reduce barriers between countries, increase
competition among companies, reduce government subsidies in certain industries
and reduce or eliminate currency fluctuations among these European countries.
The Masstricht Treaty on economic and monetary union attempts to provide a
stable monetary framework. However, until the EMU takes effect, which is
intended to occur January 1, 1999, the countries in the European community will
face the need to reinforce monetary cooperation in order to reduce the risk of a
recurrence of tensions between domestic and external policy objectives. A recent
report of the European Monetary Institute, the precursor of a new, single
European central bank, emphasized the need for several prospective member
countries to undergo strenuous cost cutting in the coming years. It also warned
that high rates of unemployment in many European countries could create a
long-term strain on the new currency unless countries change their labor
policies, e.g., rigid work rules and high taxes. No assurances can be given that
the EMU will take effect or that the changes planned for Europe can be
successfully implemented or that these changes will result in higher market
prices for the Securities in the Portfolio.
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The risks associated with investing in European Securities may be
heightened in the case of investments in smaller European securities markets
because of risks due to the inexperience of financial intermediaries, the lack
of modern technology, the lack of a sufficient capital base to expand business
operations and the possibility of permanent or temporary termination of trading
and greater spreads between bid and asked prices for securities in those
markets.
Financials/Banking Industries. The Trust may be considered to be
concentrated in common stock of companies engaged in the financial services
and/or banking industries. 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.
The financial services industry includes credit card issuers, asset
management companies and companies that provide private mortgage insurance, home
equity loans, pont-of-sale loans for various durable goods and other consumer
and commercial loans. Companies in the credit card and certain other businesses
are subject to the demands of a competitive market, including increased use of
solicitations, target marketing and pricing competition. Because of increased
competition, some credit card issuers have pursued customers with lower credit
quality and have experienced rising delinquency rates. Profitability for credit
card issuers is largely dependent on the ability to generate new receivables as
well as on their continued ability to fund themselves by asset securitization,
the level of delinquencies and losses and pricing power. Social, legal and
economic factors, including inflation, unemployment levels and interest rates,
may result in changes in market demand, credit use and payment patterns of
customers. No assurance can be given as to what effect these factors may have on
the credit card industry. Asset management companies also operate in a
competitive environment and their profitability is dependent upon the
performance of their funds relative to that of competing firms and to conditions
in the equity and fixed income markets in general. Companies in other areas of
the financial services industry are dependent on federal housing legislation and
other laws and regulations that affect the demand for home equity loans and
mortgage insurance. These companies are also subject to insurance laws and
regulations in the jurisdictions where they do business. Future changes in laws
or regulations relating to this industry may adversely affect market demand,
restrict premium rates or otherwise impair transactions in this industry.
Companies in this industry are exposed to credit risk and may be adversely
affected by economic events such as national or regional economic recession,
falling housing prices, rising unemployment rates and changes in interest rates.
The activities of banks and bank holding companies are subject to
comprehensive regulation which is expected to continue to change over the life
of the Trust. In addition, regulators require banks and thrifts to maintain
minimum capital requirements; to the extent additional equity is issued to meet
the requirements, outstanding equity holdings will be diluted. The enactment of
any new legislation or regulations, or any change in interpretation of
enforcement of existing laws or regulations, may affect the profitability of
participants in the banking industry.
Banks are subject to substantial competition from other banking and
thrift institutions and from other financial service institutions for deposits,
as well as corporate and retail customers. To the extent a bank's portfolio is
concentrated in assets related to a particular industry or geographic region,
the bank's operating results will be adversely affected by depressed conditions
in certain markets, including real estate, agriculture and energy.
735050.2
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<PAGE>
Profitability, therefore, is subject to significant fluctuation. Banks are also
exposed to the risks of a deflationary economy, which may diminish the value of
a bank's direct investments and contribute to loan defaults if the value of
secured property or other collateral for loans declines.
Technology/Telecommunications Industries. The Trust may be considered
to be concentrated in common stock of companies engaged in technology related
and/or telecommunications industries.
The Trust'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 Trust'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.
Certain companies whose securities are included in the Trust are
engaged in providing local, long-distance and wireless services, in the
manufacture of telecommunications products and in a wide range of other
activities including directory publishing, information systems and the operation
of voice, data and video telecommunications networks.
Payment on common stocks of companies in the telecommunications
industry, including local, long-distance and cellular service, the manufacture
of telecommunications equipment, and other ancillary services, is generally
dependent upon the amount and growth of customer demand, the level of rates
permitted to be charged by regulatory authorities and the effects of inflation
on the cost of providing services and the rate of technological innovation. To
meet increasing competition, companies may have to commit substantial capital,
particularly in the formulation of new products and services using new
technology. Telecommunications companies are undergoing significant change due
to varying and evolving levels of governmental regulation or deregulation and
other factors. As a result, competitive pressures are intense and the securities
of such companies may be subject to significant price volatility.
The international companies in the Trust consist predominantly of
former government owned telecommunications systems that have been privatized in
states. The Sponsor cannot predict whether such privatization will continue in
the future or what, if any, effect this will have on the Trust.
Liquidity. Since sales of the Securities by the Trust will generally
be effected only in foreign securities markets, investors should realize that
many of the Securities may be trade in foreign countries where the securities
markets are not as developed or efficient as those of the United States. Foreign
securities markets, although growing in volume, generally have substantially
less volume than United States markets, and securities of may foreign companies
are less liquid and their prices more volatile than securities of comparable
U.S. companies. Fixed brokerage commissions and other transaction costs on
foreign securities exchange are generally higher than in the United States and
there is generally less government supervision and regulation of exchanges,
brokers and issuers in foreign countries than there is in the United States. To
the extent the liquidity of these foreign facilities markets becomes impaired,
the ability of the Trust to respond to a substantial volume of requests for
redemption of Units received at or about the same time could be adversely
affected. This might occur, for example, as a result of economic or political
turmoil in a country in whose currency the Portfolio had a substantial portion
of its assets invested, or should relations between the United States and such
foreign country deteriorate markedly.
735050.2
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Whether or not the Securities are listed on a national securities
exchange, the principle trading market for the Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Securities may depend on whether dealers will make a market in the
Securities. There can be no assurance that a market will be made for any of the
Securities, that any market for the Securities will be maintained or of the
liquidity of the Securities in any markets made. In addition, the Trust may be
restricted under the Investment Company Act of 1940 from selling Securities to
the Sponsor. The price at which the Securities may be sold to meet redemptions
and the value of the Units will be adversely affected if trading markets for the
Securities are limited or absent.
TAXES
The following discussion addresses only the tax consequences of Units
held as capital assets and does not address the tax consequences of Units held
by dealers, financial institutions or insurance companies.
In the opinion of Battle Fowler LLP, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a
corporation for Federal income tax purposes, and income received by a
Trust will be treated as income of the Holders in the manner set forth
below.
2. Each Holder will be considered the owner of a pro rata
portion of each Security in 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 and any gain
or loss resulting from the conversion of foreign currency into U.S.
dollars when such dividends are received or amounts are converted by
the Trust even if the Holder does not actually receive such
distributions because all or a portion of them are subject to
withholding taxes, used to pay a portion of the Trust's expenses, or
reinvested pursuant to the Reinvestment Plan. An individual Holder who
itemizes deductions will, subject to certain limitations based on
adjusted gross income levels, 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
Trust that are taxable as ordinary income to Holders will constitute dividends
for Federal income tax purposes but will generally not be eligible for the
dividends-received deduction. That deduction which is available to 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) applies only to the extent of dividends received by the
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 the Trust which would otherwise qualify for the dividends-
735050.2
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<PAGE>
received deduction under the principles discussed above. 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 the 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 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. Pending legislation would generally
eliminate the 18 month holding period requirement, and provide generally that
long term capital gains of noncorporate taxpayers will be taxed at a maximum
federal income tax rate of 20%. The deduction of capital losses is subject to
limitations.
The Trust may hold Securities or ADRs of foreign corporations. For
United States income tax purposes, a holder of ADRs is treated as though it were
holding directly the shares of the foreign corporation represented by the ADRs.
Dividends paid by foreign issuers generally will be subject to foreign
withholding tax, which may entitle Holders to a foreign tax credit (or
deduction) against their U.S. income tax liability, subject to the limitations
applicable to the use of the foreign tax credit. Amounts withheld on payments to
the Trust may be greater than the amounts that would be withheld if the shares
were held directly by a U.S. Holder. The trust will report as gross income
earned by U.S. Holders their pro rata shares of such dividends, including their
pro rata shares of any corresponding amounts of foreign tax withheld. Capital
gains attributable to the Units or the underlying securities may also be subject
to taxes by certain of those jurisdictions.
Under the income tax laws of the State and City of New York, the Trust
is not an association taxable as a corporation and the income of the Trust will
be treated as the income of the Holders in the same manner as for Federal income
tax purposes.
The foregoing discussion relates only to the tax treatment of U.S.
Holders with regard to Federal and certain aspects of New York State and City
income taxes. Holders that are not U.S. citizens or residents ("Foreign
Holders") should be aware that divided distributions from a Trust attributable
to dividends received by the Trust from domestic and certain foreign
corporations will be subject to a U.S. 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. It is expected that income
earned by Holders who are Foreign Holders will not be U.S. source income and
will not be subject to any U.S. withholding tax. Holders may be subject to
taxation in New York or in other jurisdictions (including a Foreign Holder's
country of residence) and should consult their own tax advisers in this regard.
* * *
After the end of each fiscal year the Trustee will furnish to each
Holder of the 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
735050.2
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<PAGE>
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
This Trust may be well suited for purchase by Individual Retirement
Accounts ("IRAs"), Keogh plans, pension funds and other qualified retirement
plans. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. 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 this Trust, and other financial institutions. Fees and
charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in a Trust; (b) whether the investment satisfies the diversification requirement
of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the Trust are
deemed "plan assets" under ERISA and the Department of Labor regulations
regarding the definition of "plan assets."
PUBLIC SALE OF UNITS
Public Offering Price
The Public Offering Price of the Units for the Trust is computed by
adding to the aggregate value of the Securities in the Trust (as determined by
the Trustee) and any cash held to purchase Securities, divided by the number of
Units of the Trust outstanding, the applicable Initial Sales Charge. In
addition, during the initial public offering period a portion of the Public
Offering Price per 1,000 Units also consists of an amount sufficient to
reimburse the Sponsor for the payment of all or a portion of the cost incurred
in organizing and offering the Trust, see Expenses and Changes Initial Expenses.
The total sales charge consists of an Initial Sales Charge and annual 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 total Deferred Sales Charge ($35.00
per 1,000 Units) from the aggregate sales charge (a maximum of 4.50% of the
Public Offering Price). On , 1998, the Initial Sales Charge is per 1,000 Units
or 1.00% 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 annual Deferred Sales Charge is a monthly charge of $2.50 per 1,000 Units
and is accrued in seven monthly installments on the Deferred Sale Charge Payment
Dates (commencing 1, 1999 through 1, 1999 for the first year and commencing 1,
1999 through 1, 2000 for the second year) and will be charged to the Capital
Account. 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. In addition,
Holders who sell, redeem or exchange their Units prior to the Special Redemption
Date will be subject only to the first year Deferred Sales Charge of 17.50 per
1,000 Units. The maximum total sales charge assessed to such Holders who sell,
redeem or exchange their Units prior to the Special Redemption Date of the Trust
will be 2.75% of the Public Offering Price (2.778% of the net amount invested in
Securities). To the extent the entire first year Deferred Sales Charge of $17.50
per 1,000 Units has not been so deducted at the time of repurchase or redemption
of units prior to September 30, 1999 any unpaid amount will be deducted from the
proceeds or in calculating an in kind distribution. Similarly, to the extent the
second year Deferred Sales Charge of 17.50 per 1,000 Units has not been so
deducted at the time of repurchase or redemption of Units after the Special
Redemption Date but prior to 1, 2000, any unpaid amount will be deducted from
the
735050.2
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<PAGE>
proceeds or in calculating an in kind distribution. However, any remaining
deferred sales charge will be refunded by the Sponsor when Units of any European
Monetary Union Portfolio 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 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>
First Year Sales Charges Cumulative Two Year Sales Charges
--------------------------- -----------------------------------------
Percent of Percent of Percent of
Number of Offering Net Amount Percent of Net Amount
Units* Price Invested Offering Price Invested
- ------------------- ---------- ---------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Fewer than 50,000.................. 2.75% 2.788% 4.50% 4.7
50,000 but less than 100,000....... 2.50% 2.519% 4.25% 4.439%
100,000 but less than 250,000...... 2.00% 2.005% 3.75% 3.896%
250,000 but less than 1,000,000.... 1.75% 1.750% 3.50% 3.627%
1,000,000 or more.................. 1.00% 1.000% 2.75% 2.828%
</TABLE>
The above graduated sales charges will apply to all purchases on any
one day by the same purchaser of Units in the amounts stated. Purchases of Units
will not be aggregated with purchases of units of any other series of Equity
Focus Trusts. Units held in the name of the spouse of the purchaser or in the
name of a child of the purchaser under 21 years of age are deemed to be
registered in the name of the purchaser for purposes of calculating the
applicable sales charge. The graduated sales charges are also applicable to a
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account.
Valuation of Securities by the Trustee is made as of the close of
business on the New York Stock Exchange on each business day. Securities quoted
on a foreign securities exchange (based on the U.S. dollar equivalent), national
stock exchange or Nasdaq National Market are valued at the last reported 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.
- ---------------------
* The breakpoint sales charges are also applied on a dollar basis utilizing
a breakpoint equivalent in the above table of $1.00 per Unit and will be
applied on whichever basis is more favorable to the investor.
735050.2
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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 the Trust 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% the Public Offering Price (4.712%
of the Public Offering Price) subject to reduction on a graduated scale basis in
the case of volume purchases, and subject to reduction for purchasers as
described under Public Offering Price above.
On the Initial Date of Deposit, the Sponsor also realized a profit or
loss on deposit of the Securities into the Trust in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to the Trust (which is based on the aggregate value of the Securities
on the Date of Deposit) and the purchase price of such Securities to the
Sponsor. In the event that subsequent deposits are effected by the Sponsor with
the deposit of Securities (as opposed to cash or a letter of credit) with
respect to the sale of additional Units to the public, the Sponsor similarly may
realize a profit or loss. The Sponsor also may realize profits or sustain losses
as a result of fluctuations after the Initial Date of Deposit in the aggregate
value of the Securities and hence of the Public Offering Price received by the
Sponsor for Units. Cash, if any, made available by buyers of Units to the
Sponsor prior to the settlement dates for purchase of Units may be used in the
Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25
per 1,000 Units for the administrative and other services which it provides
during the life of the Trust (see Expenses and Charges -- Fees). The Sponsor has
not participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolios on the Initial Date
of Deposit were acquired, except as indicated under Portfolio.
In maintaining a market for the Units (see Market for Units), the
Sponsor will also realize profits or sustain losses in the amount of any
difference between the prices at which it buys Units (based on the aggregate
value of the Securities) and the prices at which it resells such Units (which
include the sales charge) or the prices at which the Securities are sold after
it redeems such Units, as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to
maintain a market for Units and offer continuously to purchase Units from the
Initial Date of Deposit at prices, subject to change at any time, which will be
computed by adding (1) the aggregate value of Securities in the Trust, (2)
amounts in the Trust including dividends receivable on stocks trading
ex-dividend and (3) all other assets in a Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against the Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to the Trust and certain other
expenses and (c) amounts for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result of such computation by the
number of Units outstanding as of 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
735050.2
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or of the Units. On any given day, however, the price offered by the Sponsor for
the purchase of Units shall be an amount not less than the Redemption Price per
Unit, based on the aggregate value of Securities in the Trust on the date on
which the Units of the 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 Trust -- Accounts
and Distribution). The Securities to be sold will be selected by the Trustee
from those designated on the current list provided by the Sponsor for this
purpose. Provision is made in the Indenture under which the Sponsor may, but
need not, specify minimum amounts in which blocks of Securities are to be sold
in order to obtain the best price for the Trust. While these minimum amounts may
vary from time to time in accordance with market conditions, the Sponsor
believes that the minimum amounts which would be specified would be a sufficient
number of shares to obtain institutional rates of brokerage commissions
(generally between 1,000 and 5,000 shares).
The Trustee will redeem Units "in kind" upon request of a redeeming
Holder if the Holder tenders at least 250,000 Units. Thus, a Holder tendering at
least 250,000 Units will be able (except during a period described in the last
paragraph under this heading), not later than the seventh calendar day following
such tender (or if the seventh calendar day is not a business day, on the first
business day prior thereto), to receive in kind an amount per Unit equal to the
Redemption Price per Unit (computed as described in Redemption -- Computation of
Redemption Price per Unit) as determined as of the day of tender. The Redemption
Price per Unit for in kind distributions (the "In Kind Distribution") will take
the form of the distribution of whole and fractional shares of each of the
Securities in the amounts and the appropriate proportions represented by the
fractional undivided interest in the Trust of the Units tendered for redemption
(based upon the Redemption Price per Unit), except that with respect to any
foreign Security not held in ADR form, the value of that Security will be
distributed in cash.
In Kind Distributions on redemption of a minimum of 250,000 Units will
be held by the 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
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redemption by the Trustee. The Trustee may offer Units tendered for redemption
and cash liquidation to it to the Sponsor on behalf of any Holder to obtain this
more favorable price for the Holder.
(b) If the tendering Holder requests distribution in kind, the
Distribution Agent (or the Sponsor acting on behalf of the Distribution Agent)
shall sell any portion of the In Kind Distribution represented by fractional
interests in accordance with the foregoing and distribute net cash proceeds to
the tendering Holder together with certificates representing whole shares of
each of the Securities that comprise the In Kind Distribution. (The Trustee may,
however, offer the Sponsor the opportunity to purchase the tendered Units in
exchange for the numbers of shares of each Security and cash, if any, which the
Holder is entitled to receive. The tax consequences to the Holder would be
identical in either case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available (an
explanation of such Account is set forth under Administration of the Trust --
Accounts and Distributions). In addition, in implementing the redemption
procedures described above, the Trustee and the Distribution Agent shall make
any adjustments necessary to reflect differences between the Redemption Price of
the Units and the value of the In Kind Distribution as of the date of tender. To
the extent that Securities are distributed in kind, the size of the Trust will
be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender
Day") which is not one of the following: New Year's Day, 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.
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 the Trust including dividends
receivable on stocks trading ex-dividend (with appropriate adjustments to
reflect monthly distributions made to Holders) and (3) all other assets in the
Trust; deducting therefrom the sum of (a) taxes or other governmental charges
against the Trust not previously deducted, (b) accrued fees and expenses of the
Trustee (including legal and auditing expenses), the Sponsor and counsel to the
Trust and certain other expenses and (c) amounts for distribution to Holders of
record as of a date prior to the evaluation; and dividing the result of such
computation by the number of Units outstanding as of the date thereof. As of the
close of the initial public offering period the Redemption Price per 1,000 Units
will be reduced to reflect the payment of the per 1,000 Unit organization costs
to the Sponsor.
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
foreign securities exchange, or a national securities exchange or NASDAQ
National Market System, 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.
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EXPENSES AND CHARGES
Initial Expenses -- Investors will reimburse the Sponsor on a per
1,000 Units basis, for all or a portion of the estimated costs incurred in
organizing the Trust--including the cost of the initial preparation, printing
and execution of the registration statement and the indenture, Federal and State
registration fees, the initial fees and expenses of the Trustee, legal expenses
and any other out-of-pocket costs. The estimated organization costs will be paid
from the assets of the Trust as of the close of the initial public offering
period. To the extent that actual organization costs are less than the estimated
amount, only the actual organization costs will be deducted from the assets of
the Trust. To the extent that actual organization costs are greater than the
estimated amount, only the estimated organization costs included in the Public
Offering Price will be reimbursed to the Sponsor. Any balance of the expenses
incurred in establishing the Trust, as well as advertising and selling expenses,
will be paid by the Underwriters at no cost to the Trust.
Fees -- The Trustee's and Sponsor's fees are set forth under
Investment Summary. The Trustee receives for its services as Trustee and
Distribution Agent payable in monthly installments, the amount set forth under
Investment Summary. The Trustee's fee (in respect of services as Trustee),
payable monthly, is based on the largest number of Units outstanding during the
preceding month. Certain regular and recurring expenses of the Trust, including
certain mailing and printing expenses, are borne by the Trust. The Trustee
receives benefits to the extent that it holds funds on deposit in the various
non-interest bearing accounts created under the Indenture. The Sponsor's fee,
which is earned for trust supervisory services, is based on the largest number
of Units outstanding during the year. The Sponsor's fee, which is not to exceed
the maximum amount set forth under Investment Summary, may exceed the actual
costs of providing supervisory services for the Trust, but at no time will the
total amount the Sponsor receives for trust supervisory services rendered to all
series of Smith Barney Unit Trust in any calendar year exceed the aggregate cost
to it of supplying these services in that year. In addition, the Sponsor may
also be reimbursed for bookkeeping or other administrative services provided to
the Trust in amounts not exceeding its cost of providing those services. The
fees of the Trustee and Sponsor may be increased without approval of Holders in
proportion to increases under the classification "All Services Less Rent" in the
Consumer Price Index published by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for
extraordinary services (for example, making distributions due to failure of
contracts for Securities), (2) expenses of the Trustee incurred for the benefit
of the Trust (including legal and auditing expenses) and expenses of counsel
designated by the Sponsor, (3) various governmental charges and fees and
expenses for maintaining the Trust's registration statement current with Federal
and State authorities, (4) expenses and costs of action taken by the Sponsor, in
its discretion, or the Trustee, in its discretion, to protect the Trust and the
rights and interests of Holders (for example, expenses in exercising the Trust's
rights under the underlying Securities), (5) indemnification of the Trustee for
any losses, liabilities and expenses incurred without gross negligence, bad
faith or 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 the Trust. The
amounts of these charges and fees are secured by a lien on the Trust.
Payment of Expenses -- Funds necessary for the payment of the above
fees will be obtained in the following manner: (1) first, by deductions from the
Capital Accounts (see below); (2) to the extent the Capital Account funds are
insufficient, by distribution from the Income Accounts (see below) (which will
reduce income distributions from the Accounts); (3) to the extent the Income and
Capital Accounts are insufficient, by selling Securities from the Portfolios and
using the proceeds to pay the expenses (thereby reducing the net asset value of
the Units).
Since the Securities are all common stocks, and the income stream
produced by dividend payments thereon is unpredictable (see Description of the
Trust -- Risk Factors), the Sponsor cannot provide any assurance that dividends
will be sufficient to meet any or all expenses of the Trust. If dividends are
insufficient to cover expenses,
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it is likely that Securities will have to be sold to meet Trust expenses. Any
such sales may result in capital gains or losses to Holders. See Description of
the Trust -- Taxes.
ADMINISTRATION OF THE TRUST
Records
The Trustee keeps records of the transactions of the Trust at its
corporate trust office including names, addresses and holdings of all Holders of
record, a current list of the Securities and a copy of the Indenture. Such
records are available to Holders for inspection at reasonable times during
business hours.
Accounts and Distributions
Dividends payable to the Trust are credited by the Trustee to an
Income Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive 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 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 Trust. 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 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 Trust in the issuers
offering such plans. In such event, the Indenture requires that the Trustee
forthwith distribute in kind to the Distribution Agent the Securities received
upon any such reinvestment to be held for the accounts of the Holders in
proportion to their respective interests in the Trust. It is anticipated that
Securities so distributed shall immediately be sold. Therefore, the cash
received upon such sale, after deducting sales commissions and transfer taxes,
if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities
transactions with a broker or dealer only if it expects to obtain the most
favorable prices and executions of orders. Transactions in securities held in
the Trust are generally made in brokerage transactions (as distinguished from
principal transactions) and the Sponsor or any of its affiliates may act as
brokers therein if the Trustee expects thereby to obtain the most favorable
prices and execution. The furnishing of statistical and research information to
the Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
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Trust Supervision
The Trust is a unit investment trust which normally follows a buy and
hold investment strategy and is not actively managed. However, the Portfolio is
regularly reviewed. Traditional methods of investment management for a managed
fund (such as a mutual fund) typically involve frequent changes in a portfolio
of securities on the basis of economic, financial and market analyzes. The
Portfolio of the Trust, however, will not be actively managed and therefore the
adverse financial condition of an issuer will not necessarily require the sale
of its Securities from the Portfolio. However, while it is the intention of the
Sponsor to continue the Trust's investment in the Securities in the original
proportions, it has the power but not the obligation to direct the disposition
of the Securities upon institution of certain legal proceedings, default under
certain documents adversely affecting future declaration or payment of
anticipated dividends, or a substantial decline in price or the occurrence of
materially adverse credit factors that, in the opinion of the Sponsor, would
make the retention of the Securities detrimental to the interests of the
Holders. The Sponsor intends to review the desirability of retaining in the
Portfolio any Security if its Investment Rating is reduced below 3 by the
Sponsor's Research Department. The Sponsor is authorized under the Indenture to
direct the Trustee to invest the proceeds of any sale of Securities not required
for redemption of Units in eligible money market instruments 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:
(i) Negotiable certificates of deposit or time deposits of domestic
banks which are members of the Federal Deposit Insurance Corporation and which
have, together with their branches or subsidiaries, more than $2 billion in
total assets, except that certificates of deposit or time deposits of smaller
domestic banks may be held provided the deposit does not exceed the insurance
coverage on the instrument (which currently is $100,000), and provided further
that the Trust's aggregate holding of certificates of deposit or time deposits
issued by the Trustee may not exceed the insurance coverage of such obligations
and (ii) U.S. treasury notes or bills.
In the event a public tender offer is made for a Security or a merger
or acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion it
is in the best interest of the Holders of the Units to do so. In addition, the
Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the Trustee
to accept or reject such an offer to take any other action with respect thereto
as the Sponsor may deem proper if (1) the issuer failed to declare or pay
anticipated dividends with respect to such Securities or (2) in the written
opinion of the 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 the Trust of the sale of the
Security. Except as stated in this and the following paragraphs, the Trust may
not acquire any securities other than (1) the Securities and (2) securities
resulting from stock dividends, stock splits and other capital changes of the
issuers of the Securities.
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with the
deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. Replacement Securities that are replacing Failed Securities will be
deposited into the Trust within 110 days of the date of deposit of the contracts
that have failed at a purchase price that does not exceed the amount of funds
reserved for the purchase of Failed Securities. The Replacement Securities shall
satisfy certain conditions specified in the Indenture including, among other
conditions, requirements that the Replacement Securities shall be
publicly-traded common stocks; shall be issued by an issuer subject to or exempt
735050.2
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from the reporting requirements under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (or similar provisions of law); shall not result in more
than 10% of the Trust consisting of securities of a single issuer (or of two or
more issuers which are Affiliated Persons as this term is defined in the
Investment Company Act of 1940) which are not registered and are not being
registered under the Securities Act of 1933 or result in the Trust owning more
than 50% of any single issue which has been registered under the Securities Act
of 1933; and shall have, in the opinion of the Sponsor, characteristics
sufficiently similar to the characteristics of the other Securities in the Trust
as to be acceptable for acquisition by the Trust. Whenever a Replacement
Security has been acquired for the Trust, the Trustee shall, on the next
Distribution Day that is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to that Trust of the
Failed Security exceeded the cost of the Replacement Security. If Replacement
Securities are not acquired, the Sponsor will, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under Portfolios plus income
attributable to the Failed Security. Any property received by the Trustee after
the Initial Date of Deposit as a distribution on any of the Securities in a form
other than cash or additional shares of the Securities received in a non-taxable
stock dividend or stock split, shall be retained or disposed of by the Trustee
as provided in the Indenture. The proceeds of any disposition shall be credited
to the Income or Capital Account of the Trust.
The Indenture also authorized the Sponsor to increase the size and
number of Units of the Trust by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase Additional
Securities, or Additional Securities in exchange for the corresponding number of
additional Units during the 90-day period subsequent to the Initial Date of
Deposit, provided that the original proportionate relationship among the number
of shares of each Security established on the Initial Date of Deposit (the
"Original Proportionate Relationship") is maintained to the extent practicable.
Deposits of Additional Securities subsequent to the 90-day period following the
Initial Date of Deposit must replicate exactly the original proportionate
relationship among the number of shares of each Security comprising the
Portfolio at the end of the initial 90-day period.
With respect to deposits of cash (or a letter of credit) with
instructions to purchase Additional Securities, Additional Securities or
contracts to purchase Additional Securities, in connection with creating
additional Units of the Trust during the 90-day period following the Initial
Date of Deposit, the Sponsor may specify minimum amounts of additional
Securities to be deposited or purchased. If a deposit is not sufficient to
acquire minimum amounts of each Security, Additional Securities may be acquired
in the order of the Security most under-represented immediately before the
deposit when compared to the Original Proportionate Relationship. If Securities
of an issue originally deposited are unavailable at the time of subsequent
deposit or cannot be purchased at reasonable prices or their purchase is
prohibited or restricted by law, regulation or policies applicable to the Trust
or the Sponsor, the Sponsor may (1) deposit cash or a letter of credit with
instructions to purchase the Security when practicable (provided that it becomes
available within 110 days after the Initial Date of Deposit) or (2) deposit (or
instruct the Trustee to purchase) Securities of one or more other issues
originally deposited or (3) deposit or instruct the Trustee to purchase) a
Replacement Security that will meet the conditions described above. Any funds
held to acquire Additional or Replacement Securities which have not been used to
purchase Securities at the end of the 90-day period beginning with the Initial
Date of Deposit, shall be used to purchase Securities as described above or
shall be distributed to Holders together with the attributable sales charge.
Reports to Holders
The Trustee will furnish Holders with each distribution a statement of
the amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of 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
735050.2
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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 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 the Trust will not be evidenced by certificates.
All evidence of ownership of the Units will be recorded in book-entry form
either at Depository Trust Company ("DTC") through an investor's broker's
account or through registration of the Units on the books of the Trustee. Units
held through DTC will be deposited by the Sponsor with DTC in the Sponsor's DTC
account and registered in the nominee name CEDE & CO. Individual purchases of
beneficial ownership interest in the Trust will be made in book-entry form
through DTC or the Trustee. Ownership and transfer of Units will be evidenced
and accomplished 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 Trust. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
Amendment And Termination
The Sponsor may amend the Indenture, with the consent of the Trustee
but without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the SEC
or any successor governmental agency and (3) to make such other provisions as
shall not materially adversely affect the interest of the Holders (as determined
in good faith by the Sponsor). The Indenture may also be amended in any respect
by the Sponsor and the Trustee, or any of the provisions thereof may be waived,
with the consent of the Holders of 51% of the Units, provided that no such
amendment or waiver will reduce the interest in the Trust of any Holder without
the consent of such Holder or reduce the percentage of Units required to consent
to any such amendment or waiver without the consent of all Holders. The
Indenture will terminate upon the earlier of the disposition of the last
Security held thereunder or the Mandatory Termination Date specified under
Investment Summary. The Indenture may also be terminated by the Sponsor if the
value of the Trust is less than the minimum value set forth under Investment
Summary (as described under Description of the Trust-- Risk Factors) and may be
terminated at any time by written instrument executed by the Sponsor and
consented to by Holders of 51% of the Units. The Trustee shall deliver written
notice of any termination to each Holder of record within a reasonable period of
time prior to the termination. Within a reasonable period of time after such
termination, the Trustee must sell all of the Securities then held and
distribute to each Holder, after deductions of accrued and unpaid fees, taxes
and governmental and other charges, such Holder's interest in the Income and
Capital Accounts. Such distribution will normally be made
735050.2
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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.
An investment in Units of the Trust will terminate on or before the
(approximately two years from the Initial Date of Deposit). At the termination
of the Trust, Holders will be given three options in receiving their terminating
distributions: (1) to receive their pro rata share of the underlying Securities
in-kind, if they own at least 250,000 Units; (2) to receive cash upon the
liquidation of their pro rata share of the underlying Securities; or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of the
Equity Focus Trust, European Monetary Union Portfolio (if one is offered) at a
reduced sales charge (see Exchange and Rollover Privileges).
EXCHANGE AND ROLLOVER PRIVILEGES
Holders may exchange their Units of the Trust into units of any then
outstanding series of Equity Focus Trusts--European Monetary Union Portfolio (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 Trust who elect to purchase units of an Exchange Series within 60 days of
their liquidation of Units in the Trust.
Holders who retain their Units until the termination of the Trust, may
reinvest their terminating distributions into units of a subsequent series of
Equity Focus Trusts--European Monetary Union Portfolio (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 the Trust
portfolio and units in the Exchange Series or New Series will be sold to the
Holder at a price based on the aggregate market price of the securities in the
portfolio of the Exchange Series or New Series. Exercise of the exchange or
rollover privilege by Holders is subject to the following conditions: (i) the
Sponsor must have units available of an Exchange Series or New Series during
initial public offering or, if such period is completed, must be maintaining a
secondary market in the units of the available Exchange Series or New Series and
such units must be available in the Sponsor's secondary market account at the
time of the Holder's elections; and (ii) exchange will be effected only in whole
units. Holders will not be permitted to advance any funds in excess of their
redemption in order to complete the exchange. Any excess proceeds received from
the Holder for exchange will be remitted to such holder.
It is expected that the terms of the Exchange Series or New Series
will be substantially the same as the terms of the Trust described in this
Prospectus, and that similar reinvestment programs will be offered with respect
to all subsequent series of the Trust. The availability of these options do not
constitute a solicitation of an offer to purchase units of an Exchange Series or
a New Series or any other security. A Holder's election to participate in either
of these options will be treated as an indication of interest only. Holders
should contact their financial professionals to find out what suitable Exchange
or New Series is available and to obtain a prospectus. Holders may acquire units
of those Series which are lawfully for sale in states where they reside and only
those Exchange Series in which the Sponsor is maintaining a secondary market. At
any time prior to the exchange by the Holder of units of an Exchange Series, or
the purchase by a Holder of units of a New Series, such Holder may change 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 the
Trust) as a result of the liquidation, even though no cash will be distributed
to pay any taxes. Holders should consult their own tax advisers in this regard.
The Sponsor reserves the right to modify, suspend or terminate either or both of
these reinvestment privileges at any time.
735050.2
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<PAGE>
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 Smith Barney Inc. or the Trustee at least ten business
days prior to the Distribution Day to which that election is to apply. The
election may be modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor,
who will use them to purchase Units of the Trust at the Sponsor's Repurchase
Price (the net asset value per Unit without any sales charge) in effect at the
close of business on the Distribution Day. These may be either previously issued
Units repurchased by the Sponsor or newly issued Units created upon the deposit
of additional Securities in the Trust (see Description of the Trust--Structure
and Offering). Each participant will receive an account statement reflecting any
purchase or sale of Units under the Reinvestment Plan.
The costs of the Reinvestment Plan will be borne by the Sponsor, at no
cost to the Trust. The Sponsor reserves the right to amend, modify or terminate
the Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
Trustee
The Trustee or any successor may resign upon notice to the Sponsor.
The Trustee may be removed upon the direction of the Holders of 51% of the Units
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.
735050.2
35
<PAGE>
The Sponsor shall be under no liability to the Trust or to the Holders
for taking any action or for refraining from taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Sponsor may transfer all or substantially all
of its assets to a corporation or partnership which carries on its business and
duly assumes all of its obligations under the Indenture and in such event it
shall be relieved of all further liability under the Indenture.
MISCELLANEOUS
Trustee
The name and address of the Trustee are shown on the back cover of
this prospectus. The Trustee is subject to supervision and examination by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation and the
Board of Governors of the Federal Reserve System. In connection with the storage
and handling of certain Stocks deposited in the Trust, the Trustee may use the
services of The Depository Trust Company These services may include safekeeping
of the Stocks, computer book-entry transfer and institutional delivery services.
The Depository Trust Company is a limited purpose trust company organized under
the Banking Law of the State of New York, a member of the Federal Reserve System
and a clearing agency registered under the Securities Exchange Act of 1934.
Legal Opinion
The legality of the Units has been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022, as special counsel for the
Sponsor.
Auditors
The 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.
735050.2
36
<PAGE>
Equity Focus Trusts
European Monetary Union Portfolio
A Unit Investment Trust
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
Investment Summary
Independent Auditors' Report Statements of
Financial Condition Portfolios Description
of the Trust Risk Factors Taxes Public Sale
of Units Market for Units Redemption
Expenses and Charges Administration of the
Trust Exchange and Rollover Privileges
Reinvestment Plan
Resignation, Removal and Limitations on Liability
Miscellaneous
- --------------------------------------------------------------------------------
Sponsor: Trustee: Independent Accountants:
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
- --------------------------------------------------------------------------------
SALOMON SMITH BARNEY
--------------------
A Member of TravelersGroup
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any representations
with respect to the Trust, 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.
- --------------------------------------------------------------------------------
Salomon Smith Barney is the service mark used by Salomon Brothers Inc and Smith
Barney Inc., affiliated but separately registered broker/dealers under common
control of Salomon Smith Barney Holdings Inc.
735050.2
<PAGE>
<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.
SEC FILE OR
IDENTIFICATION NO.
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, ByLaws): 33-65332,
33-36037 Smith Barney Inc.
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
II-1
738337.1
<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:
*1.1.1 -- Form of Reference Trust Indenture.
2.1 -- Form of Standard Terms and Conditions of Trust
(incorporated by reference to Exhibit 2.1 to the
Registration Statement of The Uncommon Values Unit Trust,
1985 Series, 1933 Act File No. 33-97046).
*3.1 -- Opinion of counsel as to the legality of the securities
being issued including their consent to the use of their
names under the headings "Taxes" and "Legal Opinion" in
the Prospectus.
*5.1 -- Consent of KPMG Peat Marwick LLP to the use of their name
under the heading "Miscellaneous - Auditors" in the
Prospectus.
- --------
* To be filed with Amendment to Registration Statement.
II-2
738337.1
<PAGE>
SIGNATURES
PURSUANT TO 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 27th DAY OF
JULY, 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
738337.1
<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
By: /s/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
738337.1
