<PAGE>
REGISTRATION NO. 333-60035
RULE NO. 497(a)
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 SEPTEMBER 9, 1998
EQUITY FOCUS TRUSTS
EUROPEAN MONETARY UNION PORTFOLIO
A UNIT INVESTMENT TRUST
The Equity Focus Trusts--European
LOGO Monetary Union Portfolio is a unit
SalomonSmithBarney investment trust that offers investors
A Member of the opportunity to purchase Units
TravelersGroup[LOGO]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 September , 1998
Read and retain this Prospectus for future reference
<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
<TABLE>
<S> <C>
SPONSOR
Salomon Smith Barney Inc.
INITIAL NUMBER OF UNITS++..............................................
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT........
PUBLIC OFFERING PRICE (per 1,000 Units)................................
Aggregate value of Securities in Trust*............................... $
=======
Divided by Units (times 1,000)................................ $
Plus sales charge of 2.75% (2.778% of the net amount invested in
Securities)**+++..................................................... $
-------
Less Deferred Sales Charge per 1,000 Units............................
-------
Public Offering Price per 1,000 Units................................. $
Plus the amount per 1,000 Units in the Income and Capital Accounts
(see Description of the Trust--Income)............................... $ 0
-------
Total (per 1,000 Units)............................................... $
=======
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE*** PER 1,000 UNITS
(based on value of underlying securities)............................. $
DISTRIBUTIONS
Distributions of income, if any, will be made on the next to last business day
of each year commencing December 30, 1998, to Holders of record on the
immediately prior business day of each year, commencing December 29, 1998, and
will be automatically reinvested in additional Units of the Trust unless the
Holder elects to receive his distribution in cash. A Final Distribution will
be made upon termination of the Trust.
SPONSOR'S PROFIT/LOSS ON DEPOSIT ...................................... $
</TABLE>
TRUSTEE'S ANNUAL FEE
$. per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY
The business day immediately prior to a Distribution
Day.
DISTRIBUTION DAY
On the next to last business day of each year, commencing December 30, 1998
and upon termination and liquidation of the Trust.
EVALUATION TIME
4:00 P.M. New York time (or earlier close of the New York Stock Exchange).
TRUSTEE AND DISTRIBUTION AGENT
The Chase Manhattan Bank
MINIMUM VALUE OF TRUST
The trust indenture between the Sponsor and the Trustee (the "Indenture") may
be terminated if the net asset value of the Trust is less than $5,000,000,
unless the net asset value of Trust deposits has exceeded $50,000,000. In
that case, the Indenture may be terminated if the net asset value of the
Trust is less than $20,000,000. See Risk Factors, page 4.
SPECIAL REDEMPTION DATE
October 25, 1999 (the "Special Redemption Date")
MANDATORY TERMINATION OF TRUST
, 2000 (the "Mandatory Termination Date"), or at any earlier time by the
Sponsor with the consent of Holders of 51% of the Units then outstanding.
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing March 1, 1999 through September 1,
1999 and November 1, 1999 through May 1, 2000.
2
<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998+
- ------------
+ 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.
** 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 imposed prior to the Special Redemption Date ($17.50 per
1,000 Units) from the aggregate first year sales charge (a maximum of 2.75% 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.
3
<PAGE>
THE EUROPEAN MONETARY PORTFOLIO
INVESTOR'S GUIDE
On January 1, 1999 the world's second-largest market for stocks will be
formed when 11 countries in Continental Europe join together in economic and
monetary union. Prices for stocks, bonds and other financial instruments will
be quoted in the euro, a single currency. The European Central Bank will be the
sole monetary authority, and short-term interest rates will become identical
across the region. These are the first steps of European Monetary Union
("EMU"), which will encourage further the free movement of capital--
irrespective of national borders--and mark the beginning of a new era for
investing in the "euro zone."
WHY INVEST IN THE EURO ZONE? In simplest terms, we could say that EMU will
change the supply/demand dynamics of investing in European companies.
________________________________________________________________________________
SUPPLY: STOCK MARKETS ARE LIKELY TO EXPAND
________________________________________________________________________________
Consider this comparison:
. When combined, the 11 nations of EMU are home to more than 295 million
people, compared to 267 million in the U.S.
. They have a Gross Domestic Product of $6.3 trillion--just under that of
the U.S.
. But their aggregate stock market capitalization lags that of the U.S. by
two-thirds.
HOW COULD THIS CHANGE? Until now, equity ownership in Europe has been
characterized by a larger degree of state ownership and cross-ownership by
corporations when compared with the U.S. As for individual investors, our
research shows that Europeans tend to allocate far less of their investment
portfolios to equities than U.S. investors.
As the euro-zone bloc evolves, our analysts believe the amount of stock made
available to the public, and the public appetite for that stock, could increase
from current levels. Should this occur, the "capitalization gap" between
European and U.S. stock markets could narrow while spurring rapid growth in
euro-zone capital markets.
________________________________________________________________________________
DEMAND: DRIVEN BY EUROPE'S "FOUR PILLARS"
________________________________________________________________________________
Our analysts believe that the expanding supply of euro-zone equities for
public ownership will be exceeded by a rapidly growing demand for stock
ownership. The mounting appetite for stocks could be driven by a number of
factors, including what our analyst call "The Four Pillars" supporting a
positive view on Europe.
Earnings Momentum: Europe could be in the acceleration phase of its economic
cycle. On the corporate level, profitability could be enhanced as the cost of
capital declines and companies restructure to compete on a new pan-European
scale.
Low Interest Rates: The advent of a single currency (the euro) and a sole
monetary authority could help sustain the low interest rates, a longer economic
cycle and an attractive environment for stocks.
<PAGE>
A Rising Appetite for Stocks: Should interest rates remain close to their
current historical lows, individual savers now invested in low-yielding cash
equivalents may seek the higher potential returns in equity markets.
Increased Merger & Acquisition Activity: Mergers, takeovers, restructurings
and stock repurchases could be on the rise. This escalation in corporate
activity could be an important source of liquidity and drive and higher
efficiency within European corporations.
EUROPEAN MONETARY UNION PORTFOLIO
INVESTING MADE EASY
As the 40-year quest for EMU becomes reality, there are industry groups and
individual companies that will emerge as prime beneficiaries. Of particular
interest to our analysts are stocks within the financial, telecommunications
and technology sectors. But which companies should you own? Why not take a
"portfolio approach" to investing in the euro zone, through the European
Monetary Union Portfolio. And let our analysts identify the most promising
opportunities among stocks that could benefit from economic and monetary unity.
Professional research expertise; diversification and the convenience of one
easy purchase...and all you need is $250 to get started.
SHOULD YOU INVEST IN THE "EMU" PORTFOLIO
The decision to invest in this unit trust depends, in part, on your
individual tolerance for risk. The Portfolio may not be appropriate for
investors seeking either preservation of capital or high current income, nor
would it be suitable for investors unable to assume the risks of price
volatility and currency fluctuations associated with investing in international
equities.
The Portfolio is designed for growth-oriented investors seeking international
diversification; however, there is no assurance that this investment objective
will be met. In addition, there is no assurance that dividend rates will be
maintained or that stock prices or currency exchange rates will not decline.
Investors should also be aware that there is a higher level of industry
concentration among the financial, telecommunications and technology sectors,
which involves special risks of investing.
<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 two years 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.
PORTFOLIO -- 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 the Portfolio at the end of the initial 90-day
period, subject to certain events discussed under Administration of the Trust--
Trust Supervision. The Sponsor may cease creating Units (temporarily or
permanently) at any time. (See Administration of the Trusts--Trust
Supervision.)
RISK FACTORS -- Foreign Securities and American Depositary Receipts -- The
Trust is concentrated in Securities of foreign issuers or American Depositary
Receipts ("ADRs") for securities that have been issued by non-United States
issuers. These instruments are subject to special considerations in addition to
those affecting
4
<PAGE>
EQUITY FOCUS TRUSTS -- EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
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.
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 economies 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.
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. Subject to
regulatory approval, 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. When Securities are
sold to reimburse the Sponsor for organizational costs, the Trustee will
generally sell such Securities to an extent which will maintain the same
proportionate relationship between the Securities contained in the Trust as
existed prior to such sale.
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
5
<PAGE>
EQUITY FOCUS TRUSTS -- EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
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 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 the Portfolio
or mean that the Sponsor will not continue to purchase the Security in order to
create additional Units. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth above under
Objective of the Trust and that the Trust may continue to purchase or hold
Securities originally selected through this process even though the evaluation
of the attractiveness of the Securities may have changed. In the event a public
tender offer is made for a Security or a merger or acquisition is announced
affecting a Security, the Sponsor may instruct the Trustee to tender or sell
the Security on the open market when, in its opinion, it is in the best
interest of the holders of the Units to do so. Although the Portfolio 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
6
<PAGE>
EQUITY FOCUS TRUSTS -- EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
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 Securities for initial and
subsequent deposits in the Trust. The effect of the Sponsor's purchases of
Securities on the prices of the Securities is unpredictable.
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in the Trust
consists of privately-placed common stocks. Except as indicated under
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 a
Deferred Sales Charge, the total of which equals a maximum of 2.75%* of the
Public Offering Price; this results in a sales charge of 2.778%* of the net
amount invested in underlying Securities. The Initial Sales Charge is computed
by deducting the Deferred Sales Charge ($17.50 per 1,000 Units) from the
aggregate sales charge (a maximum of 2.75% 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 Deferred Sales Charge is paid through a reduction
of the net asset value of the Trust by $2.50 per 1,000
- ------------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units -- Public Offering Price.
7
<PAGE>
EQUITY FOCUS TRUSTS -- EUROPEAN MONETARY UNION PORTFOLIO
INVESTMENT SUMMARY AS OF , 1998 (CONTINUED)
Units on each of the seven monthly Deferred Sales Charge Payment Dates,
commencing on March 1, 1999 through September 1, 1999. In addition, Holders who
elect to hold units subsequent to the Special Redemption Date will be subject
to a deferred sales charge of $17.50 per 1,000 Units which will be imposed
after such date in the manner described under Public Sale of Units--Public
Offering Price. This would increase the total maximum sales charge to 4.50% of
the Public Offering Price to such Holders (assuming a $1,000 Public Offering
Price per 1,000 Units; due to fluctuations in the value of the securities, the
total maximum sales charge may be more than 4.50% of the Public Offering
Price). 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 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).
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 MUTUAL FUND, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AS A % OF INITIAL AMOUNTS PER
PUBLIC OFFERING PRICE 1,000 UNITS
--------------------- -----------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on
Purchase (as a percentage of offering
price)..................................... 1.00%* $10.00
Deferred Sales Charge***.................... 1.75%** 17.50
---- ------
Total Sales Charge......................... 2.75% $27.50
==== ======
Maximum Sales Charge Imposed per year on
Reinvested Dividends....................... 1.75%**** $17.50
==== ======
Reimbursement to Sponsor for Estimated
Organization Costs......................... % $
==== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<CAPTION>
AMOUNTS PER
AS A % OF NET ASSETS 1,000 UNITS
--------------------- -----------
<S> <C> <C>
Trustee's Fee............................... . % $
Maximum Portfolio Supervision, Bookkeeping
and Administrative Fees.................... . % $
Other Operating Expenses.................... . % $
---- ------
Total...................................... . % $
==== ======
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR PERIOD:
---------------------------------
1 YEAR 2 YEARS
------ -------
<S> <C> <C>
An investor would pay the following expenses
and charges on a $1,000 investment, assuming
the Trust's estimated operating expense
ratio of . % in the first year and . % in
the second year and a 5% annual return on
the investment throughout the periods....... $ $
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The example should not be
considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.
- ------------
* The Initial Sales Charge is the difference between 2.75% and the Deferred
Sales Charge ($17.50 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. If the Holder sells, exchanges or redeems Units before all the
deductions have been made the balance of the Deferred Sales Charge will be
paid from the sales proceeds. If the Unit price exceeds $1.00 per Unit,
the Deferred Sales Charge will be less than 1.75%; if the Unit price is
less than $1.00 per Unit, the Deferred Sales Charge will exceed 1.75%.
*** In addition to the Deferred Sales Charge set forth above, Holders who
elect to hold Units subsequent to the Special Redemption Date will be
subject to a deferred sales charge of $17.50 per 1,000 Units which will be
imposed after such date in the manner described under Public Sale of
Units--Public Offering Price. This would increase the total maximum sales
charge for such Holders to 4.50% of the Public Offering Price (assuming a
$1,000 Public Offering Price per 1,000 Units; due to fluctuations in the
Value of the Securities, the total maximum sales charge may be more than
4.50% of the 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 1.75%
of the Public Offering Price at the time of reinvestment (see Reinvestment
Plan).
9
<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
is free of material misstatement. An audit of a statement of financial
condition includes examining, on a test basis, evidence supporting the amounts
and disclosures in that statement of financial condition. Our procedures
included confirmation with the Trustee of an irrevocable letter of credit
deposited on , 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
presents 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
10
<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY UNION PORTFOLIO
STATEMENTS OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, , 1998
<TABLE>
<CAPTION>
TRUST PROPERTY(6)
<S> <C>
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............................................................... $
=======
</TABLE>
- ------------
(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) A first year Deferred Sales Charge of $17.50 per 1,000 Units is payable in
seven monthly payments of $2.50 per 1,000 Units (March 1, 1999 to
September 1, 1999. 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. If Units are redeemed prior to
, 1999 the remaining portion of the first year Deferred Sales Charge
applicable to such Units will be transferred to such account on the
redemption date.
(4) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(5) Assumes a maximum first year sales charge of 2.75% of 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 the Sponsor is responsible.
11
<PAGE>
EQUITY FOCUS TRUSTS--EUROPEAN MONETARY UNION PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
COST OF
COUNTRY INVESTMENT NUMBER PERCENT OF SECURITIES
SECURITIES(1) OF ISSUER RANKING(2) OF SHARES(3) NET ASSETS TO TRUST(4)
- ------------- --------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
% $
------
100.00% $
====== ========
</TABLE>
- ------------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on ,1998. All contracts
for domestic Securities are expected to be settled by the initial
settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk
(L,M,H,S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price
volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable
only for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share 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:
* Salomon Smith Barney Inc., including subsidiaries and/or affiliates,
usually maintains a market in the securities of this company.
# Within the last three years, Salomon Smith Barney Inc. including its
subsidiaries, affiliates and/or predecessor firms, have acted as manager
(co-manager) of a public offering of the securities of this company or an
affiliate.
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
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.
- ------------
* To the extent references in this Prospectus are to articles and sections of
the Indenture, which is incorporated by reference into this Prospectus, the
statements made herein are qualified in their entirety by such reference.
13
<PAGE>
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trust
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received and except further that
orders from such indications of interest that are made pursuant to the
exchange privilege (see Exchange and Rollover Privileges herein) will be
accepted before any other orders for Units. The Sponsor may accept or reject
any purchase order in whole or in part.
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
Salomon Smith Barney's Equity Focus Trusts are each based on a specific
research investing theme or industry trend identified by analysts of Salomon
Smith Barney 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 European
Research 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 24 months following the selection of a
Portfolio. The investment rankings by Salomon Smith Barney normally pertain to
an outlook for a 12-18 month period (see footnote 2 to the 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 two years. 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
14
<PAGE>
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-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 consists of such Securities as may continue to be held from time
to time in the Trust and any additional and replacement Securities and any
money market instruments acquired and held by 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.
15
<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. Subject to
regulatory approval, 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. When Securities are
sold to reimburse the Sponsor for organizational costs, the Trustee will
generally sell such Securities to an extent which will maintain the same
proportionate relationship between the Securities contained in the Trust as
existed prior to such sale.
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
16
<PAGE>
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 is subject to market fluctuations
for as long as the common stocks remain outstanding, and thus the value of the
Securities in the Portfolio may be expected to fluctuate over the life of the
Trust to values higher or lower than those prevailing on the Initial Date of
Deposit.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of the
Trust. If dividends are insufficient to cover expenses, it is likely 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 a "managed" trust and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the 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 though the evaluation of the attractiveness of the Securities may
have changed. A number of the Securities in the Trust may also be owned by
other clients of the Sponsor. However, because these clients may have
differing investment objectives, the Sponsor may sell certain Securities from
those accounts in instances where a sale by the Trust would be impermissible,
such as to maximize return by taking advantage of market fluctuations. (See
Administration of the Trust--Trust Supervision.) In the event a public tender
offer is made for a Security or a merger or acquisition is announced affecting
a Security, the Sponsor may instruct the Trustee to tender or sell the
Security on the open market when, in its opinion, it is in the best interest
of the holders of the Units to do so. Although the Portfolio is regularly
reviewed and evaluated and the Sponsor may instruct the Trustee to sell
Securities under certain limited circumstances, Securities will not be sold by
the Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation. As a result, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust. The Sponsor has currently assigned certain
rankings to the issuers of Securities based on stock performance expectations
and level of risk (see footnote 2 to the Portfolio on page 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-priced stocks'
purchase price than as a percentage of the higher-priced 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
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<PAGE>
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 and at
the time the cash is used to purchase the Security, Units may represent less
or more of that Security and more or less of the other Securities in the
Trust. In addition, brokerage fees (if any) incurred in purchasing Securities
with cash deposited with instructions to purchase the Securities will be an
expense of the Trust. Price fluctuations between the time of deposit and the
time the Securities are purchased, and payment of brokerage fees, will affect
the value of every Holder's Units and the Income per Unit received by the
Trust.
The Trust may be terminated at any time and all outstanding Units liquidated
if the net asset value of the Trust falls below $5,000,000 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
18
<PAGE>
"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.
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, along with 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.
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<PAGE>
European Risks Factors. The economies 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 Maastricht 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.
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
20
<PAGE>
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.
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.
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<PAGE>
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 be effected
largely 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 many 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 exchanges 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.
Whether or not the Securities are listed on a national securities exchange,
the principal 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.
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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) generally applies only to the extent of
dividends received by the Trust from domestic corporations. The dividends-
received deduction is currently 70%, and 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.
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 20% if the taxpayer has a holding period of
more than one year. 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
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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 and their pro rata
shares of any income or loss resulting from currency conversion transactions.
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 dividend distributions from a Trust attributable to any
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. However, 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 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."
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<PAGE>
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
Deferred Sales Charge equal, in the aggregate, to a maximum charge prior to
the Special Redemption Date of 2.75% of the Pubic Offering Price (2.778% of
the net amount invested in Securities). The Initial Sales Charge is computed
by deducting the Deferred Sales Charge ($17.50 per 1,000 Units) from the
aggregate sales charge prior to the Special Redemption Date. 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 Deferred Sales
Charge is a monthly charge of $2.50 per 1,000 Units and is accrued in seven
monthly installments on the Deferred Sales Charge Payment Dates (commencing
March 1, 1999 through September 1, 1999 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 select to hold Units after the Special Redemption Date will be
subject to an additional Deferred Sales Charge of $17.50 per 1,000 Units which
will accrue in seven monthly installments on the Deferred Sales Charge Payment
Dates commencing on November 1, 1999 through May 1, 2000 and will be charged
to the Capital Account. As a result, the maximum total sales charge assessed
to such Holders who elect to hold Units through the Mandatory Termination Date
of the Trust will be 4.50% of the Public Offering Price (4.712% of the net
amount invested in Securities) (assuming a $1,000 Public Offering Price per
1,000 Units; due to fluctuations in the value of the securities, the total
maximum sales charge may be more than 4.5% of the Public Offering Price). 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 October 25, 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 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.
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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 CUMULATIVE TWO YEAR
SALES CHARGES SALES CHARGES
--------------------- -------------------------
PERCENT OF PERCENT OF PERCENT OF
OFFERING NET AMOUNT PERCENT OF NET AMOUNT
NUMBER OF UNITS* PRICE INVESTED OFFERING PRICE INVESTED
- ---------------- ---------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Fewer than 50,000.............. 2.75% 2.788% 4.50% 4.712%
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.
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.
- ------------
* 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.
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UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 4.50% of the Public Offering Price (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
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Securities in the Portfolios or of the Units. On any given day, however, the
price offered by the Sponsor for the purchase of Units shall be an amount not
less than the Redemption Price per Unit, based on the aggregate value of
Securities in 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:
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(a) If the tendering Holder requests cash payment, the Distribution Agent
shall sell the In Kind Distribution as of the close of business on the date
of tender and remit to the Holder not later than seven calendar days
thereafter the net proceeds of sale, after deducting brokerage commissions
and transfer taxes, if any, on the sale. The Distribution Agent may sell
the Securities through the Sponsor, and the Sponsor may charge brokerage
commissions on those sales. Since these proceeds will be net of brokerage
commissions, Holders who wish to receive cash for their Units should always
offer them for sale to the Sponsor in the secondary market before seeking
redemption by the Trustee. The Trustee may offer Units tendered for
redemption and cash liquidation to it to the Sponsor on behalf of any
Holder to obtain this more favorable price for the Holder.
(b) If the tendering Holder requests distribution in kind, the
Distribution Agent (or the Sponsor acting on behalf of the Distribution
Agent) shall sell any portion of the In Kind Distribution represented by
fractional interests in accordance with the foregoing and distribute net
cash proceeds to the tendering Holder together with certificates
representing whole shares of each of the Securities that comprise the In
Kind Distribution. (The Trustee may, however, offer the Sponsor the
opportunity to purchase the tendered Units in exchange for the numbers of
shares of each Security and cash, if any, which the Holder is entitled to
receive. The tax consequences to the Holder would be identical in either
case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available (an
explanation of such Account is set forth under Administration of the Trust--
Accounts and Distributions). In addition, in implementing the redemption
procedures described above, the Trustee and the Distribution Agent shall make
any adjustments necessary to reflect differences between the Redemption Price
of the Units and the value of the In Kind Distribution as of the date of
tender. To the extent that Securities are distributed in kind, the size of the
Trust will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, 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
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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.
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 Salomon Smith Barney Unit Trusts in any
calendar year exceed the aggregate cost to it of supplying these services in
that year. In addition, the Sponsor may also be reimbursed for bookkeeping or
other administrative services provided to the Trust in amounts not exceeding
its cost of providing those services. The fees of the Trustee and Sponsor may
be increased without approval of Holders in proportion to increases under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the Trust
(including legal and auditing expenses) and expenses of counsel designated by
the Sponsor, (3) various
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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, 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
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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.
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 analysis. 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
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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 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
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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 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.
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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 purchase 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 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).
35
<PAGE>
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 does 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.
REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Salomon Smith Barney Inc. or directly in the name of the Holder,
unless the Holder notifies its financial consultant at Salomon 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 Salomon 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.
36
<PAGE>
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 be under no liability for any action taken in
good faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
SPONSOR
The Sponsor may resign at any time if a successor Sponsor is appointed by
the Trustee in accordance with the Indenture. Any new Sponsor must have a
minimum net worth of $2,000,000 and must serve at rates of compensation deemed
by the Trustee to be reasonable and as may not exceed amounts prescribed by
the SEC. If the Sponsor fails to perform its duties or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may (1) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and as may not exceed
amounts prescribed by the SEC, (2) terminate the Indentures and liquidate the
Trusts or (3) continue to act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the 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.
37
<PAGE>
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
Salomon Smith Barney Inc. ("Salomon Smith Barney"), was incorporated in
Delaware in 1960 and traces its story through predecessor partnerships to
1873. On September 1, 1998, Salomon Brothers Inc. merged with and into Smith
Barney Inc. ("Smith Barney") with Smith Barney surviving the merger and
changing its name to Salomon Smith Barney Inc. The merger of Salomon Brothers
Inc. and Smith Barney followed the merger of their parent companies in
November 1997. Salomon 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. Salomon
Smith Barney is an indirect wholly-owned subsidiary of The Travelers Inc. The
Sponsor or an affiliate is investment adviser, principal underwriter or
distributor of more than 60 open-end investment companies and investment
manager of 12 closed-end investment companies. Salomon 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.
38
<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
<TABLE>
<S> <C>
Investment Summary 2
Independent Auditors' Report 10
Statements of Financial Condition 11
Portfolios 12
Description of the Trust 13
Risk Factors 16
Taxes 22
Public Sale of Units 25
Market for Units 27
Redemption 28
Expenses and Charges 30
Administration of the Trust 31
Exchange and Rollover Privileges 36
Reinvestment Plan 36
Resignation, Removal and Limitations on Liability 37
Miscellaneous 38
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPONSOR: TRUSTEE: INDEPENDENT ACCOUNTANTS:
<S> <C> <C>
Salomon Smith Barney Inc. The Chase Manhattan Bank KPMG Peat Marwick LLP
388 Greenwich Street 4 New York Plaza 345 Park Avenue
23rd Floor New York, New York 10004 New York, New York 10154
New York, New York 10013 (800) 354-6565
(212) 816-4000
</TABLE>
- --------------------------------------------------------------------------------
LOGO
SalomonSmithBarney
A Member of TravelersGroup[LOGO]
- --------------------------------------------------------------------------------
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 SMITH BARNEY INC.
