<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 6, 1998
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
FORM S-6
----------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
----------------
A. EXACT NAME OF TRUST:
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
B. NAME OF DEPOSITOR:
SALOMON SMITH BARNEY INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
SALOMON SMITH BARNEY INC.
388 GREENWICH STREET, 23RD FLOOR
NEW YORK, NEW YORK 10013
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY TO:
LAURIE A. HESSLEIN
SALOMON SMITH BARNEY INC. MICHAEL R. ROSELLA, ESQ.
388 GREENWICH STREET BATTLE FOWLER LLP
NEW YORK, NEW YORK 10013 75 EAST 55TH STREET
NEW YORK, NEW YORK 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of beneficial interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM OFFERING PRICE TO THE PUBLIC OF THE SECURITIES BEING
REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No filing fee required.
H. APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 6, 1998
EQUITY FOCUS TRUSTS
SECTOR SERIES, 1998-B
ENERGY PORTFOLIO
FINANCIALS PORTFOLIO
HEALTHCARE PORTFOLIO
UTILITIES PORTFOLIO
UNIT INVESTMENT TRUSTS
SALOMON SMITH BARNEY The Equity Focus Trusts--Sector Series,
LOGO 1998-B consists of four separate unit
investment trusts designated as the Energy
Portfolio, the Financials Portfolio, the
Healthcare Portfolio, and the Utilities
Portfolio. Each Trust offers investors the
opportunity to purchase units representing
proportionate interests in a portfolio of
equity securities selected by Salomon
Smith Barney Equity Research from the
industry sector for which the particular
Trust is named. The value of the units of
each Trust will fluctuate with the value
of the underlying securities. The minimum
purchase is $250.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated November , 1998
Read and retain this Prospectus for future reference
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
SUMMARY OF ESSENTIAL INFORMATION
AS OF NOVEMBER , 1998+
<TABLE>
<S> <C>
SPONSOR
Salomon Smith Barney Inc.
TRUSTEE AND DISTRIBUTION AGENT
The Chase Manhattan Bank
DEFERRED SALES CHARGE PAYMENT DATES
The first day of each month commencing December 1, 1998 through November
1, 2000
SALES CHARGE
The sales charge consists of an initial sales charge and a deferred sales
charge. The initial sales charge is computed by deducting the maximum
deferred sales charge ($30.00 per 1,000 units) from the maximum aggregate
sales charge (4.50% of the Public Offering Price). The deferred sales
charge is paid through a reduction of the net asset value of the Trust by
$1.25 per 1,000 units on each Deferred Sales Charge Payment Date. If a
Holder's sales or redemption of units settles before a deferred sales
charge payment date, all future deductions of the deferred sales charge
will be waived. This will have the effect of reducing the sales charge
rate for that Holder.
MANDATORY TERMINATION DATE
November 30, 2000, or at any earlier time by the Sponsor with the consent
of Holders of 51% of the Units then outstanding. Mandatory Termination
Date.
</TABLE>
<TABLE>
<S> <C>
DISTRIBUTIONS
Distributions of income, if any, will be made on 25, to Holders of
record on 10th of each year and will be automatically reinvested
in additional units of a Trust unless the Holders elects to receive his
distribution in cash. A final distribution will be made upon termination
of a Trust.
RECORD DAY
10 of each year.
DISTRIBUTION DAY
</TABLE>
25 of each year, and upon termination and liquidation of a Trust.
EVALUATION TIME
4:00 P.M. New York time (or earlier close of the New York Stock Exchange).
MINIMUM VALUE OF TRUST
The Trust Indenture may be terminated if the net value of a Trust is less
than 40% of the aggregate net asset value of a Trust at the completion of the
initial public offering period.
TRUSTEE'S ANNUAL FEE
$ Per 1,000 Units
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units between the Sponsor and the Trustee.
- ------------
+The Initial Date of Deposit. The Date of Deposit is the date on which the
Trust Indenture between the Sponsor and the Trustee was signed and the deposit
with the Trustee was made.
2
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
SUMMARY OF ESSENTIAL INFORMATION
AS OF NOVEMBER , 1998
<TABLE>
<CAPTION>
ENERGY FINANCIALS HEALTHCARE UTILITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
PORTFOLIO
Number of issues of common stock...
Number of American Depository
Receipts and/or Shares............
Percentage of High Risk Securities
(as
described in footnote 2 to
Portfolios
on page 15).......................
INITIAL NUMBER OF UNITS..............
FRACTIONAL UNDIVIDED INTEREST IN
TRUST
REPRESENTED BY EACH UNIT............ 1/ 1/ 1/ 1/
PUBLIC OFFERING PRICE PER 1,000
UNITS...............................
Aggregate Value of Securities in
Trust............................. $ $ $ $
======== ======== ======== ========
Divided by Number of Units of Trust
(times 1,000)..................... $ $ $ $
Plus Initial Sales Charge of 1.50%
of
Public Offering Price (1.523% of
the net amount invested in
Securities)....................... $ $ $ $
Public Offering Price.............. $ $ $ $
Plus Estimated Organization Costs.. $ $ $ $
Plus the amount in the Income and
Capital Accounts.................. $ $ $ $
Total.............................. $ $ $ $
======== ======== ======== ========
SPONSOR'S REPURCHASE PRICE AND
REDEMPTION
PRICE PER 1,000 UNITS (based on
value of
underlying Securities).............. $ $ $ $
SPONSOR'S PROFIT/LOSS ON DEPOSIT..... $ $ $ $
</TABLE>
3
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
Use this Investment Summary to help you decide whether one or more of the four
portfolios comprising the Equity Focus Trusts--Sector Series, 1998-B is right
for you. More detailed information can be found later in this prospectus.
INVESTMENT OBJECTIVE
The Energy Portfolio, the Financials Portfolio and the Utilities Portfolio each
have a diversified portfolio of stocks for growth and income-oriented
investors.
The Healthcare Portfolio has a diversified portfolio of stocks for strong
growth-oriented investors. Dividend income is not a primary objective of this
portfolio.
There is no guarantee that the objectives of the Trusts will be achieved.
INVESTMENT STRATEGY
Each trust uses a "buy and hold" strategy with a portfolio of 15-35 stocks,
designed to remain fixed over its two-year life. Unlike a mutual fund, the
portfolios are not managed; however, a security can be sold under some adverse
circumstances.
INVESTMENT CONCEPT AND SELECTION PROCESS
Through the Trusts, investors can target a specific industry in the stock
market with a portfolio of stocks recommended by Salomon Smith Barney research
analysts. This series includes four portfolios, one for each of these market
sectors: Energy, Financials, Healthcare and Utilities.
When combined, these industries represent more than half of the stocks of the
Standard & Poor's 500 Composite Stock Index. However, only a select group will
qualify for the sector portfolios, following this rigorous screening process by
our analysts and strategists.
Step 1. One goal in building these portfolios is to include substantially all
of the sub-industry groups that Standard & Poor's uses to categorize the
S&P 500 Composite Stock Index.
Step 2. Then, our analysts will identify the stocks ranked "1" or "2" on
Salomon Smith Barney's Investment Ranking System that fall into these
categories.
Step 3. The next step is to create a "blended" portfolio made up of the
following: First, we will identify for each series a selection of "core"
holdings. For the most part, these are well-established stocks that our
analysts would recommend as equity "building blocks" for a broad spectrum
of investors. To complement these stocks and round out the portfolio, we
added some more opportunistic recommendations with somewhat higher
risk/reward characteristics.
Step 4. As a final step, our research analysts will establish a portfolio
weighting for each holding, based on factors such as:
. The strength of the analyst's recommendation
. The size of the company's stock market capitalization
. The recommended overall portfolio weighting of each sub-industry group
RISK FACTORS
The value of your units may increase or decrease depending on the value of the
stocks which make up each portfolio. In addition, the amount of dividends you
receive depends on a particular issuer's dividend policy, the financial
condition of that company and general economic conditions.
4
<PAGE>
Each portfolio consist primarily of common stocks of domestic issuers. If you
invest in a portfolio, you should understand the potential risks associates
with common stocks:
. The financial condition of the issuer may worsen.
. The overall stock market may falter.
. As a common stockholder, your right to receive payments of any kind
(including dividends or as a result of a liquidation or bankruptcy) from
the issuer is generally inferior to the rights of creditors, debt holders,
or preferred stockholders.
. Common stock are continually subject to stock market fluctuations and to
volatile increases or decreases in value as market confidence in and
perceptions of issuers change.
In addition, each portfolio's holdings are concentrated in a single, specific
industry or service sector. Compared to the broad market, an individual sector
may be more strongly affected by:
. Changes in the interest rates and general economic conditions.
. Moves in particular, dominant stocks within the sector.
. Changes in government regulations.
. Rapid obsolescence of products and/or services due to scientific
advances.
A unit investment trust is not actively managed and the trust will not sell
securities in response to ordinary market fluctuations. Instead securities will
not usually be sold until a Trust terminates, which could mean that the sale
price of the trust securities may not be the highest price at which these
securities traded during the life of that Trust.
When cash or a letter of credit is deposited with instructions to purchase
securities in order to create additional units, an increase in the price of a
particular security between the time of deposit and the time the securities are
purchased will cause the units to be comprised of less of that security and
more of the remaining securities. In addition, brokerage fees incurred in
purchasing the securities will be an expense of the Trusts.
PUBLIC OFFERING PRICE
On the first day units are made available to the public, the Public Offering
Price will be $1.00 per unit, with a minimum purchase of $250. This price is
based on the net asset value of each Trust plus the up-front sales charge.
Beginning on the Date of Deposit, the Trustee will calculate the Public
Offering Price of units by using the closing sales prices of the underlying
value of securities in the portfolio. The Public Offering Price will change
daily because prices of the underlying stocks will fluctuate.
The public offering price per unit will be calculated by:
. Adding the combined market value of the underlying stocks to any cash
held to purchase securities.
. Dividing that sum by the number of units outstanding.
. Adding an initial sales charge.
. Adding a per unit amount sufficient to reimburse the Sponsor for
organization costs.
In addition, during the initial public offering, a per unit amount sufficient
to reimburse the Sponsor for organization costs is added to the public offering
price.
MARKET FOR UNITS
The Sponsor intends to repurchase units at a price based on the net asset
value. If the Sponsor decides to discontinue the policy of repurchasing units,
you can redeem units through the Trustee, at a price determined by using the
same formula.
5
<PAGE>
EXCHANGE OPTION
During the life of a Trust, you may exchange units of one portfolio for units
of any of the other portfolios. When a Trust is about to terminate, you may
have the option to rollover your proceeds into a future portfolio, if it is
available. The initial sales charge will be waived if you decide to exchange or
rollover; however, you will be subject to the subsequent portfolio's deferred
charge. If you decide not to rollover your proceeds into the next portfolio,
you will receive a cash distribution after the trust terminates.
TAXATION
Your acquisition of units of a Trust will be the acquisition of an asset. In
general, dividends of a Trust will be taxed as ordinary income, whether
received in cash or reinvested in additional units. If you are a foreign
investor, you should be aware that distributions from a Trust will generally be
subject to information reporting and withholding taxes.
An exchange of units in one portfolio for units in another portfolio will be
treated as a sale of units, and any gain realized on the exchange may be
subject to federal income tax.
If you are taxed as an individual and have held your units for more than 12
months, you may be entitled to a 20% maximum federal income tax rate on gains
from the sale of your units.
6
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
FEE TABLE
- --------------------------------------------------------------------------------
THIS FEE TABLE IS INTENDED TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. SEE PUBLIC SALE OF UNITS AND
EXPENSES AND CHARGES. ALTHOUGH EACH TRUST IS A UNIT INVESTMENT TRUST RATHER
THAN A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF
FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AS A % OF INITIAL AMOUNTS PER
PUBLIC OFFERING PRICE 1,000 UNITS
--------------------- -----------
<S> <C> <C> <C>
Maximum Initial Sales Charge Imposed on
Purchase (as a percentage of offering
price)................................ 1.50%* $15.00
Maximum Deferred Sales Charge.......... 3.00%** 30.00
---- ------
Total................................. 4.50% $45.00
==== ======
Maximum Sales Charge Imposed on Rein-
vested Dividends ..................... 3.00%*** $30.00
==== ======
Reimbursement to Sponsor for Estimated
Organization Costs.................... % $
==== ======
ESTIMATED ANNUAL TRUST OPERATING EX-
PENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<CAPTION>
AMOUNTS PER
AS A % OF NET ASSETS 1,000 UNITS
--------------------- -----------
<S> <C> <C> <C>
Trustee's Fee.......................... . % $
Maximum Portfolio Supervision, Book-
keeping and Administrative Fees....... . % $
Other Operating Expenses............... . % $
---- ------
Total................................. % $
==== ======
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR PERIOD:
-------------------------------------
1 YEAR 2 YEARS
------ -------
<S> <C> <C> <C>
An investor would pay the following
expenses and charges on a $1,000
investment, assuming the Trust's
estimated operating expense ratio of
. % in the first year and . % in
the second year and a 5% annual return
on the investment throughout the
periods................................ $ $
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The example should not be
considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.
Each of the Trusts (and therefore the Holders) will bear all or a portion of
its organizational costs--including costs of preparing the registration
statement, the indenture and other closing documents, registering units with
the SEC and the states and the initial audit of the Portfolios. Advertising and
selling expenses will be paid by the Underwriters at no cost to the Trusts.
- ------------
* The Initial Sales Charge is the difference between 4.50% and the deferred
sales charge ($30.00 per 1,000 Units) and would exceed 1.50% if the Public
Offering Price exceeds $1,000 per 1,000 Units.
** The actual fee is $1.25 per month per 1,000 Units, irrespective of the
purchase or redemption price, paid on each Deferred Sales Charge Payment
Date. If the Unit price exceeds $1.00 per Unit, the deferred sales charge
will be less than 3.00%; if the Unit price is less than $1.00 per Unit, the
deferred sales charge will exceed 3.00%.
*** Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment which may be more or less than 3.00% of
the Public Offering Price at the time of reinvestment.
7
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts--Sector Series,
1998-B:
We have audited the accompanying statements of financial condition, including
the portfolios, of Equity Focus Trusts--Sector Series, 1998-B, consisting of
the Energy Portfolio, the Financials Portfolio, the Healthcare Portfolio and
the Utilities Portfolio, as of November , 1998. These financial statements
are the responsibility of the Trustee (see note 5 to the statement of financial
condition). Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the statements of financial condition
are free of material misstatement. An audit of a statement of financial
condition includes examining, on a test basis, evidence supporting the amounts
and disclosures in that statement of financial condition. Our procedures
included confirmation with the Trustee of an irrevocable letter of credit
deposited on November , 1998, for the purchase of securities, as shown in the
statements of financial condition and portfolios of securities. An audit of a
statement of financial condition also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall statement of financial condition presentation. We
believe that our audits of the statements of financial condition provide a
reasonable basis for our opinion.
In our opinion, the statements of financial condition referred to above
present fairly, in all material respects, the financial position of each of the
respective portfolios constituting Equity Focus Trusts--Sector Series, 1998-B,
as of November , 1998, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
November , 1998
8
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
STATEMENTS OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, NOVEMBER ,
1998
<TABLE>
<CAPTION>
ENERGY FINANCIALS
PORTFOLIO PORTFOLIO
TRUST PROPERTY --------- ----------
<S> <C> <C>
Investment in Securities:
Contracts to purchase Securities(1).................... $ $
----- -----
Total..................................................
===== =====
LIABILITIES
Reimbursement to Sponsor for Organization Cost(2).......
----- -----
INTEREST OF UNITHOLDERS
Units of fractional undivided interest Outstanding for
each respective trust:
Cost to investors(3).................................... $ $
Less: Gross underwriting commissions(4).................
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
such Trust, on the Initial Date of Deposit, is determined by the Trustee on
the basis set forth in footnote 4 to the Portfolios. See also the columns
headed Cost of Securities to Trust. An irrevocable letter of credit in the
amount of $ has been deposited with the Trustee for the purchase
of Securities. The letter of credit was 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
Trusts. These costs have been estimated at $ per 1,000 Units for the
Energy Portfolio and $ per 1,000 Units for the Financials
Portfolio. 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 greater than the estimated amount, only
the estimated organization costs added to the Public Offering Price will be
reimbursed to the Sponsor and deducted from the assets of a Trust.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes the initial sales charge at a rate of 1.50% of the Public Offering
Price (1.523% of the net amount invested in the Securities) computed on the
basis set forth under Public Sale of Units--Public Offering Price and
Underwriter's and Sponsor's Profits. A deferred sales charge in the amount
of $1.25 per 1,000 Units is payable by a Trust on behalf of the Holders out
of net asset value of that Trust on each monthly Deferred Sales Charge
Payment Date ($15.00 per year) until the Trust terminates. The maximum
aggregate sales charge for a Holder holding Units over the entire expected
life of a Trust will equal a maximum of 4.50% of the Public Offering Price
(4.520% of the net amount invested). The initial portion of the sales
charge will be reduced on a graduated basis for quantity purchases. (See
Public Sale of Units Public Offering Price.)
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each of
the Trusts and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each of the Trusts. The Trustee is also responsible for all estimates and
accruals reflected in each of the Trusts' financial statements other than
estimates of organizational costs, for which the Sponsor is responsible.
9
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
STATEMENTS OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, NOVEMBER ,
1998
<TABLE>
<CAPTION>
HEALTHCARE UTILITIES
PORTFOLIO PORTFOLIO
TRUST PROPERTY ---------- ---------
<S> <C> <C>
Investment in Securities:
Contracts to purchase Securities(1)....................
----- -----
Total................................................... $ $
===== =====
LIABILITIES
Accrued Expenses(2).....................................
----- -----
INTEREST OF UNITHOLDERS
Units of fractional undivided interest Outstanding for
each respective trust:
Cost to investors(3).................................... $ $
Less: Gross underwriting commissions(4).................
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
such Trust, on the Initial Date of Deposit, is determined by the Trustee on
the basis set forth in footnote 4 to the Portfolios. See also the columns
headed Cost of Securities to Trust. An irrevocable letter of credit in the
amount of $ has been deposited with the Trustee for the purchase
of Securities. The letter of credit was 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
Trusts. These costs have been estimated at $ per 1,000 Units for the
Healthcare Portfolio and $ per 1,000 Units for the Utilities
Portfolio. 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 greater than the estimated amount, only
the estimated organization costs added to the Public Offering Price will be
reimbursed to the Sponsor and deducted from the assets of a Trust.
(3) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(4) Assumes the initial sales charge at a rate of 1.50% of the Public Offering
Price (1.523% of the net amount invested in the Securities) computed on the
basis set forth under Public Sale of Units--Public Offering Price and
Underwriter's and Sponsor's Profits. A deferred sales charge in the amount
of $1.25 per 1,000 Units is payable by a Trust on behalf of the Holders out
of net asset value of that Trust on each monthly Deferred Sales Charge
Payment Date ($15.00 per year) until the Trust terminates. The maximum
aggregate sales charge for a Holder holding Units over the entire expected
life of a Trust will equal a maximum of 4.50% of the Public Offering Price
(4.520% of the net amount invested). The initial portion of the sales
charge will be reduced on a graduated basis for quantity purchases. (See
Public Sale of Units--Public Offering Price.)
(5) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of each of
the Trusts and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
each of the Trusts. The Trustee is also responsible for all estimates and
accruals reflected in each of the Trusts' financial statements other than
estimates of organizational costs, for which the Sponsor is responsible.
10
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B ENERGY PORTFOLIO ON THE INITIAL
DATE OF DEPOSIT, NOVEMBER , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
STOCK INVESTMENT NUMBER PERCENTAGE OF VALUE OF
SYMBOL RANKING(2) OF SHARES(3) PORTFOLIO SECURITIES(4)
------ ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
------ ----
100.00% $
====== ====
</TABLE>
The Notes following the Portfolios are an integral part of each Portfolio of
Securities.
11
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
FINANCIALS PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, NOVEMBER , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
STOCK INVESTMENT OF PERCENTAGE OF VALUE OF
SYMBOL RANKING(2) SHARES(3) PORTFOLIO SECURITIES(4)
------ ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
------ ----
100.00% $
====== ====
</TABLE>
The Notes following the Portfolios are an integral part of each Portfolio of
Securities.
12
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
HEALTHCARE PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, NOVEMBER , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
STOCK INVESTMENT OF PERCENTAGE OF VALUE OF
SYMBOL RANKING(2) SHARES(3) PORTFOLIO SECURITIES(4)
------ ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
------ ----
100.00% $
====== ====
</TABLE>
The Notes following the Portfolios are an integral part of each Portfolio of
Securities.
13
<PAGE>
EQUITY FOCUS TRUSTS--SECTOR SERIES, 1998-B
UTILITIES PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, NOVEMBER , 1998
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
STOCK INVESTMENT OF PERCENTAGE OF VALUE OF
SYMBOL RANKING(2) SHARES(3) PORTFOLIO SECURITIES(4)
------ ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
------ ----
100.00% $
====== ====
</TABLE>
The Notes following the Portfolios are an integral part of each Portfolio of
Securities.
14
<PAGE>
NOTES TO PORTFOLIOS OF SECURITIES
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on November , 1998.
All contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the following
system, which uses two codes: a letter for the level of risk (L,M,H,S or V)
and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable only
for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
LOW RISK MODERATE RISK HIGH RISK SPECULATIVE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG Peat Marwick LLP.
(3) Per Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on November , 1998. Subsequent to the
Initial Date of Deposit, Securities are valued, for Securities quoted on a
national securities exchange or NASDAQ National Market System, or a foreign
securities exchange, at the closing sale prices, or if no price exists, at
the mean between the closing bid and offer prices, and for Securities not
so quoted, at the mean between bid and offer prices on the over-the-counter
market. See Redemption--Computation of Redemption Price Per Unit.
----------------
The following information is unaudited:
*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, has acted as manager (co-
manager) of a public offering of the securities of this company or an
affiliate.
15
<PAGE>
DESCRIPTION OF THE TRUSTS
OBJECTIVES OF THE TRUSTS
The objective of the Equity Focus Trusts--Sector Series, 1998-B, Energy
Portfolio (the "Energy Portfolio"), Financials Portfolio (the "Financials
Portfolio") and the Utilities Portfolio (the "Utilities Portfolio") is to
provide investors with the possiblity of capital appreciation and current
dividend income through a convenient and cost-effective investment in fixed
portfolios consisting of shares of Securities selected by the Sponsor. The
Sponsor has selected for the Energy, Financials and Utilities Portfolios stocks
which it considers to have the strong potential for capital appreciation and
current dividend income over a period of one year relative to risks and
opportunities. The objective of the Equity Focus Trusts--Sector Series, 1998-B,
Healthcare Portfolio (the "Healthcare Portfolio") is to provide investors with
the possibility of capital appreciation through a convenient and cost-effective
investment in fixed portfolios consisting of shares of the common stocks (the
"Securities") selected by the Sponsor. The Sponsor has selected for the
Healthcare Portfolio stocks which it considers to have strong potential for
capital appreciation over a period of one year relative to risks and
opportunities. The payment of dividends is not a primary objective of the
Healthcare Portfolio. The Energy Portfolio, the Financials Portfolio, the
Healthcare Portfolio and the Utilities Portfolio are collectively referred to
herein as the "Trusts" or as the "Portfolios." Achievement of each of the
Trust's objectives is dependent upon several factors including the financial
condition of the issuers of the Securities and any appreciation of the
Securities. Furthermore, because of various factors, including without
limitation, Trust sales charges and expenses, unequal weightings of stocks
brokerage costs and any delays in purchasing securities with cash deposited,
investors in the Trusts may not realize as high a total return as the
theoretical performance of the underlying stocks in their respective
Portfolios.
STRUCTURE AND OFFERING
This Series of the Equity Focus Trusts -- Sector Series consists of four
separate "unit investment trusts". Each Trust was created under New York law by
a Trust Indenture (the "Indenture")* 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. between the Sponsor and the Trustee. On the
date of this Prospectus, each unit of a Trust (a "Unit") represented a
fractional undivided interest in the Securities listed under Portfolios set
forth under the Summary of Essential Information. Additional Units of a Trust
will be issued in the amount required to satisfy purchase orders by depositing
in such Trust cash (or a bank letter of credit in lieu of cash) with
instructions to purchase Securities, contracts to purchase Securities together
with irrevocable letters of credit, or additional Securities. On each
settlement date (estimated to be three business days after the applicable date
on which Securities were deposited in a Trust), the Units will be released for
delivery to investors and the deposited Securities will be delivered to the
Trustee. As additional Units are issued by the Trusts as a result of the
deposit of cash (or a letter of credit in lieu of cash) with instructions to
purchase additional Securities, the aggregate value of the Securities in each
of the Trusts will be increased and the fractional undivided interest in the
Trusts represented by each Unit will be decreased. There is no limit on the
time period during which the Sponsor may continue to make additional deposits
of Securities into the Trusts.
- ------------
* 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.
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<PAGE>
During the 90-day period following the Initial Date of Deposit additional
deposits of cash or Securities in connection with the issuance and sale of
additional Units will maintain to the extent practicable the original
proportionate relationship among the number of shares of each Security in the
Portfolios of each of the Trusts. The proportionate relationship among the
Securities in each of the Trusts will be adjusted to reflect the occurrence of
a stock dividend, a stock split or a similar event which affects the capital
structure of the issuer of a Security in a Trust but which does not affect that
Trust's percentage ownership of the common stock equity of such issuer at the
time of such event. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date
of Deposit because of, among other reasons, purchase requirements, changes in
prices, brokerage commissions or unavailability of Securities. Replacement
Securities may be acquired under specified conditions when Securities
originally deposited are unavailable (see Administration of the Trusts--Trust
Supervision). Units may be continuously offered to the public by means of this
Prospectus (see Public Sale of Units--Public Distribution) resulting in a
potential increase in the number of Units outstanding. Deposits of Additional
Securities subsequent to the 90-day period following the Initial Date of
Deposit must replicate exactly the proportionate relationship among the number
of shares of each of the Securities comprising the Portfolios of each of the
Trusts at the end of the initial 90-day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
page 2 on any day will be based on the aggregate value of the Securities in a
Trust on that day at the Evaluation Time, plus a sales charge. The Public
Offering Price for each of the Trusts will thus vary in the future from the
amount set forth in the Summary of Essential Information. See Public Sale of
Units Public Offering Price for a complete description of the pricing of Units.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units. The Sponsor reserves
the right to accept or reject any purchase order in whole or in part.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trusts
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 each of the Trusts will have the right to
have their Units redeemed for the Securities underlying the Units (see
Redemption). If any Units are redeemed, the aggregate value of Securities in a
Trust will be reduced and the fractional undivided interest in such Trust
represented by each remaining Unit will be increased. Units of each of the
Trusts will remain outstanding until redeemed upon request to the Trustee by
any Holder (which may include the Sponsor), or termination of the Indenture
(see Administration of the Trusts Amendment and Termination).
THE PORTFOLIOS
Salomon Smith Barney's Equity Focus Trusts are each based on a specific
research investing theme or industry trend identified by analysts of Smith
Barney Inc., and Salomon Brothers Inc., both under the common control of
Salomon Smith Barney Holdings, Inc., based on an analysis of each company and
the industry group as a whole. Salomon Smith Barney's Research Department is
staffed by over 100 investment analysts, who
17
<PAGE>
currently follow equities issued by more than 1,600 companies (both domestic
and foreign) in 86 industry groups or stock areas of the market. The Securities
included in the Portfolios were selected by the Sponsor as stocks deemed to
have above-average appreciation potential over the 12 months following the
selection of a Portfolio. The investment rankings by Salomon Smith Barney
normally pertain to an outlook for a 12-18 month period (see footnote 2 to the
Portfolios). In selecting Securities for each of the Trusts, the Sponsor has
not expressed any belief as to the potential of these Securities for capital
appreciation over a period longer than one year. There is, of course, no
assurance that any of the Securities in the Trust will appreciate in value, and
indeed any or all of the Securities may depreciate in value at any time in the
future. See Risk Factors.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trusts for various reasons, including:
. sales charges and expenses of the Trust
. because the portfolios may not be fully invested at all times
. the stocks are normally purchased or sold at prices different from the
closing price used to determine each Trust's net asset value, and
. not all stocks may be weighted in the initial proportions at all times.
Additionally, results of ownership to different Holders will vary depending on
the net asset value of the underlying Securities on the days Holders bought and
sold their Units. Of course, any purchaser of securities, including Units, will
have to pay sales charges or commissions, which will reduce his total return.
Total returns and/or average annualized returns for various periods of
previous series of Equity Focus Trusts and the Trusts may be included from time
to time in advertisements and sales literature. Trust performance may be
compared to performance of the Standard & Poor's Energy Composite, Standard &
Poor's Financials Index, Standard & Poor's Health Care Composite, and Standard
& Poor's Utilities Index. As with other performance data, performance
comparisons should not be considered representative of a Trust's relative
performance for any future period. Advertising and sales literature for the
Trusts may also include excerpts from the Sponsor's research reports on one or
more of the stocks in the Trusts, including a brief description of its
businesses and market sector, and the basis on which the stock was selected.
All of the domestic Securities are publicly traded either on a stock exchange
or in the over-the-counter market. Most of the contracts to purchase Securities
deposited initially in each of the Trusts are expected to settle in three
business days, in the ordinary manner for such Securities. Any foreign
Securities are publicly traded on a variety of foreign stock exchanges.
Settlement of contracts for foreign Securities varies by country and may take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
Each of the Trusts consists of such Securities as may continue to be held
from time to time in that Trust and any additional and replacement Securities
and any money market instruments acquired and held by such Trust pursuant to
the provisions of the Indenture (including the provisions with respect to the
deposit into the Trusts of Securities in connection with the sale of additional
Units to the public) together with undistributed income therefrom and
undistributed and uninvested cash realized from the disposition of Securities
(see Administration of the Trusts Accounts and Distributions; Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the redemption
of Units. Any money market instruments acquired by a Trust must be held until
maturity and must mature no later than the next Distribution
18
<PAGE>
Day and the proceeds distributed to Holders at that time. If sufficient
Securities are not available at what the Sponsor considers a reasonable price,
excess cash received on the creation of Units may be held in an interest-
bearing account with the Trustee until that cash can be invested in Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any of the Securities. However, should any contract
deposited hereunder (or to be deposited in connection with the sale of
additional Units) fail, the Sponsor shall, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under the Portfolio for the
relevant Trust, unless substantially all of the monies held in such Trust to
cover the purchase are reinvested in replacement Securities in accordance with
the Indenture (see Administration of the Trusts Portfolio Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, or because Securities may be distributed in redemption of Units, no
assurance can be given that either of the Trusts will retain for any length of
time its present size (see Redemption; Administration of the Trusts Amendment
and Termination). For Holders who do not redeem their Units, investments in
Units of a Trust will be liquidated on the fixed date specified under Mandatory
Termination of Trust, and may be liquidated sooner if the net asset value of a
Trust falls below that specified under Minimum Value of Trust set forth in the
Summary of Essential Information (see Risk Factors).
INCOME
There is no assurance that dividends will be declared or paid in the future
on the Securities.
Record and Distribution Days for each of the Trusts are set forth under the
Summary of Essential Information. Income Distributions, if any, will be
automatically reinvested in additional Units of the appropriate Trust at no
extra charge unless a Holder elects to receive his distributions in cash (see
Reinvestment Plan). Because dividends on the Securities are not received by the
Trusts at a constant rate throughout the year and because the issuers of the
Securities may change the schedules or amounts or dividend payments, any
distributions, whether reinvested or paid in cash, may be more or less than the
amount of dividend income actually received by a Trust and credited to the
income account established under the Indenture (the "Income Account") as of the
Record Day.
19
<PAGE>
RISK FACTORS
GENERAL
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails. These include the risk that the
financial condition of the issuers of the Securities or the general condition
of the common stock market may worsen and the value of the Securities and
therefore the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises.
The Sponsor's buying and selling of the Securities, especially during the
initial offering of Units of the Trusts or to satisfy redemptions of Units may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trusts may also
cause increased buying activity in certain of the stocks comprising each of the
Portfolios. After such announcement, investment advisory and brokerage clients
of the Sponsor and its affiliates may purchase individual Securities appearing
on the list during the course of the initial offering period. Such buying
activity in the stock of these companies prior to the purchase of the
Securities by the Trusts may cause the Trusts to purchase stocks at a higher
price than those buyers who effect purchases prior to purchases by a Trust.
Each Trust's holdings will be concentrated in a single, specific industry or
service sector. Compared to the broad market, an individual sector may be more
strongly affected by:
. changes in the economic climate
. broad market shifts
. moves in particular, dominant stocks, or
. regulatory changes.
Investors should be prepared for volatile short-term movement in the value of
Units.
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
will be purchased in the same proportionate relationship as all the Securities
contained in the Trust. Securities will be sold to reimburse the Sponsor for
the Trust's organization costs at the completion of the initial public offering
period, which is expected to be 90 days from the Initial Date of Deposit (a
significantly shorter time period than the life of the Trust). During the
initial public offering period, there may be a decrease in the value of the
Securities. To the extent the proceeds from the sale of these Securities are
insufficient to repay the Sponsor for the Trust 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 additional Securities sold. Although the dollar amount of the
reimbursement due to the Sponsor will remain fixed and will never exceed the
amount set forth for each Portfolio under "Plus Estimated Organization Costs"
in the Summary of Essential Information, this will result in a greater
effective cost per Unit to Holders for the reimbursement to the Sponsor. When
Securities are sold to reimburse the Sponsor for organization costs, the
Trustee will sell such Securities to an extent which will maintain the same
proportionate relationship among the Securities contained in the Trust as
existed prior to such sale.
20
<PAGE>
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of preference
stocks have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis, but
generally do not participate in other amounts available for distribution by the
issuing corporation. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stocks are also entitled to rights on liquidation which are senior to
those of common stocks. Moreover, common stocks do not represent an obligation
of the issuer and, therefore, do not offer any assurance of income or provide
the same degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks are subject
to market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Securities in the Portfolios may be expected to fluctuate
over the life of the Trusts to values higher or lower than those prevailing on
the Initial Date of Deposit.
Since the Securities are all common stocks, and the income stream produced by
dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of a
Trust. If dividends are insufficient to cover expenses, it is likely the
Securities will have to be sold to meet Trust expenses. See Expenses and
Charges--Payment of Expenses. Any such sales may result in capital gains or
losses to Holders. See Description of Trust--Taxes.
Holders will be unable to dispose of any of the Securities in the Portfolios,
as such, and will not be able to vote the Securities. As the holder of the
Securities, the Trustee will have the right to vote all of the voting stocks in
each of the Trusts and will vote in accordance with the instructions of the
Sponsor.
Investors should be aware that the Trusts are not "managed" trusts and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the Portfolio of any of the Trusts except
under extraordinary circumstances. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth under
Objectives of the Trusts and that the Trusts may continue to purchase or hold
Securities originally selected though this process even through the evaluation
of the attractiveness of the Securities may have changed. A number of the
Securities in the Trust may also be owned by other clients of the Sponsor.
However, because these clients may have differing investment objectives, the
Sponsor may sell certain Securities from those accounts in instances where a
sale by a Trust would be impermissible, such as to maximize return by taking
advantage of market fluctuations. (See Administration of the Trusts--Trust
Supervision.) In the event a public tender offer is made for a Security or a
merger or acquisition is announced affecting a Security, the Sponsor may
instruct the Trustee to tender or sell the Security on the open market when, in
its opinion, it is in the best interest of the holders of the Units to do so.
Although each Portfolio is regularly reviewed and evaluated and the Sponsor
may instruct the Trustee to sell Securities under certain limited
circumstances, Securities will not be sold by the Trusts to take advantage of
market fluctuations or changes in anticipated rates of appreciation. As a
result, the amount realized upon the
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<PAGE>
sale of the Securities may not be the highest price attained by an individual
Security during the life of the Trusts. The Sponsor has currently assigned
certain rankings to the issuers of Securities based on stock performance
expectations and level of risk (see footnote 2 to the Portfolios). These
rankings are subject to change. Securities will not necessarily be sold by a
Trust based on a change in rankings, although the Sponsor intends to review the
desirability of holding any Security if its ranking is reduced below 3. The
prices of single shares of each of the Securities in the Trusts vary widely,
and the effect of a dollar of fluctuation, either higher or lower, in stock
prices will be much greater as a percentage of the lower-price stocks' purchase
price than as a percentage of the higher-price stocks' purchase price.
Investors should note that in connection with the issuance of additional
Units during the Public Offering Period the Sponsor may deposit cash (or a
letter of credit in lieu of cash) with instructions to purchase Securities,
additional Securities or contracts to purchase Securities, in each instance
maintaining the original percentage relationship, subject to adjustment under
certain circumstances, among the number of shares of each Security in a Trust.
To the extent the price of a Security increases or decreases between the time
cash is deposited with instructions to purchase the Security at the time the
cash is used to purchase the Security, Units may represent less or more of that
Security and more or less of the other Securities in such Trust. In addition,
brokerage fees (if any) incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Trusts.
Price fluctuations between the time of deposit and the time the Securities are
purchased, and payment of brokerage fees, will affect the value of every
Holder's Units and the Income per Unit received by each of the Trusts.
A Trust may be terminated at any time and all outstanding Units liquidated if
the net asset value of the Trust falls below 40% of the aggregate net asset
value of the Trust at the completion of the initial public offering period.
Investors should note that if the net asset value of a Trust should fall below
the applicable minimum value, the Sponsor may then in its sole discretion
terminate the Trust before the Mandatory Termination Date specified in the
Summary of Essential Information.
Small Capitalization Stock. Investing in small capitalization stocks may
involve greater risk than investing in medium and large capitalization stocks,
since they can be subject to more abrupt or erratic price movements. Small
market capitalization companies ("Small-Cap Companies") are those with market
capitalizations of $1 billion or less at the time of a Trust's investment. Many
Small-Cap Companies will have had their securities publicly traded, if at all,
for only a short period of time and will not have had the opportunity to
establish a reliable trading pattern through economic cycles. The price
volatility of Small-Cap Companies is relatively higher than larger, older and
more mature companies. The greater price volatility of Small-Cap Companies may
result from the fact that there may be less market liquidity, less information
publicly available or fewer investors who monitor the activities of these
companies. In addition, the market prices of these securities may exhibit more
sensitivity to changes in industry or general economic conditions. Some Small-
Cap Companies will not have been in existence long enough to experience
economic cycles or to demonstrate whether they are sufficiently well managed to
survive downturns or inflationary periods. Further, a variety of factors may
affect the success of a company's business beyond the ability of its management
to prepare or compensate for them, including domestic and international
political developments, government trade and fiscal policies, patterns of trade
and war or other military conflict which may affect industries or markets or
the economy generally.
Foreign Securities. The Trusts may hold Securities of non-U.S. issuers
directly or through American Depository Receipts ("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
22
<PAGE>
those resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers and
the lack of uniform accounting, auditing and financial reporting standards or
other regulatory practices and requirements comparable to those applicable to
domestic companies. Moreover, securities of many foreign companies may be less
liquid and their prices more volatile than those of securities of comparable
domestic companies. In addition, with respect to certain foreign countries,
there is the possibility of expropriation, nationalization, confiscatory
taxation and limitations on the use or removal of funds or other assets of the
Trusts, including the withholding of dividends. Foreign securities may be
subject to foreign government taxes that could reduce the yield on such
securities. Since the Trusts may invest in securities quoted in currencies
other than the United States dollar, changes in foreign currency exchange rates
may adversely affect the value of foreign securities in the Portfolios and the
net asset value of Units of the Trusts. Investment in foreign securities may
also result in higher expenses due to the cost of converting foreign currency
to United States dollars, the payment of fixed brokerage commissions on certain
foreign exchanges, which generally are higher than commissions on domestic
exchanges, and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, the Sponsor anticipates that adequate
information will be available to allow the Sponsor to supervise each Portfolio
as set forth in Administration of the Trusts--Portfolio Supervision.
On the basis of the best information available to the Sponsor at the present
time, none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trusts of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this type
or because the issues qualify for an exemption, or the Trusts, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trusts.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of international
securities in the Portfolios and on the ability of each of the Trusts to
satisfy their obligation to redeem Units tendered to the Trustee for redemption
(see Redemption).
Exchange Rate Fluctuation. In recent years, foreign exchange rates have
fluctuated sharply. Income from foreign equity securities held by the Trusts,
including those underlying any ADRs held by a Trust, would be payable in the
currency of the country of their issuance. However, the Trusts will compute
their income in United States dollars, and the computation of income will be
made on the date of its receipt by the Trusts at the foreign exchange rate in
effect on that date. Therefore, if the value of the foreign currency falls
relative to the United States dollar between receipt of the income and its
conversion to United States dollars, the risk of such decline will be borne by
Holders. In addition, the cost of converting such foreign currency to United
States dollars would also reduce the return to the Holder.
American Depositary Shares and Receipts. American Depositary Shares ("ADSs"),
and receipts therefor (ADRs), are issued by an American bank or trust company
to evidence ownership of underlying securities
23
<PAGE>
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.
Year 2000 Issue. The Trusts, like other businesses and entities, could be
adversely affected if the computer systems used by the Sponsor and Trustee or
other service providers to a Trust do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Sponsor and Trustee are taking steps that
they believe are reasonably designed to address the Year 2000 Problem with
respect to computer systems that they use and to obtain reasonable assurances
that comparable steps are being taken by the Trusts' other service providers.
The Sponsor expects that their systems will be compliant before the year 2000.
However, there can be no assurance that the Year 2000 Problem will be properly
or timely resolved so to avoid any adverse impact to each Trust. The Year 2000
Problem may thus also adversely affect issuers of the Securities contained in
the Trust, to varying degrees based upon various factors. The Sponsor is unable
to predict what effect, if any, the Year 2000 Problem will have on such
issuers.
ENERGY PORTFOLIO
The Energy Portfolio is particularly subject to risks that are inherent to
the utility industry, including:
. difficulty in obtaining an adequate return on invested capital
. difficulty in financing large construction programs during an
inflationary period
. restrictions on operations and increased cost and delays attributable to
environmental considerations and regulations
. difficulty in raising capital in adequate amounts on reasonable terms in
periods of high inflation and unsettled capital markets
. increased costs and reduced availability of certain types of fuel
. occasional reduced availability and high costs of natural gas for resales
. the effects of energy conservation, and
. the effects of a national energy policy and lengthy delays and greatly
increased costs and other problems associated with the design,
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including, among other considerations, the
problems associated with the use of radioactive materials and the disposal
of radioactive wastes.
There are substantial differences between the regulatory practices and policies
of various jurisdictions, and any given regulatory agency may periodically make
major shifts in policy. There is no assurance that regulatory authorities will
grant rate increases in the future or that such increases will be adequate to
permit the payment of dividends on common stocks. Additionally, existing and
possible future regulatory legislation may make it even more difficult for
these utilities to obtain adequate relief. Certain of the issuers of securities
held by the Energy Portfolio may own or operate nuclear generating facilities.
Governmental authorities may from time to time review existing policies, and
impose additional requirements governing the licensing, construction and
operation of nuclear power plants. Moreover, price disparities within selected
utility groups and discrepancies in relation to averages and indices have
occurred frequently for reasons not directly related to the general movements
or price trends of utility common stocks. Causes of these discrepancies include
changes in the
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overall demand for and supply of various securities (including the potentially
depressing effect of new stock offerings), and changes in investment
objectives, market expectations or cash requirements of other purchasers and
sellers of securities.
The Energy Portfolio may be considered to be concentrated in common stocks of
companies engaged in refining and marketing oil and related products. According
to the U.S. Department of Commerce, the factors which will most likely shape
the industry include:
. the price and availability of oil from the Middle East
. changes in United States environmental policies, and
. the continued decline in U.S. production of crude oil.
Possible effects of these factors may be increased U.S. and world dependence on
oil from the Organization of Petroleum Exporting Countries and highly uncertain
and potentially more volatile oil prices and a higher rate of growth for
natural gas production than for other fuels. Factors which the Sponsor believes
may increase the profitability of oil and petroleum operations include
increasing demand for oil and petroleum products as a result of the continued
increases in annual miles driven and the improvement in refinery operating
margins caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness to
adjust production levels are the two principal requirements for stable crude
oil markets. Without excess capacity, supply disruptions in some countries
cannot be compensated for by others.
FINANCIALS PORTFOLIO
The financial services and financial services-related industries will be
particularly affected by certain economic, competitive and regulatory
developments. The profitability of financial services companies as a group is
largely dependent upon the availability and cost of capital funds which in turn
may fluctuate significantly in response to changes in interest rates and
general economic conditions. Credit losses resulting from financial
difficulties of borrowers can negatively impact the sector. Rising interest
rates and inflation may negatively affect certain financial services companies
as the costs of lending money, attracting deposits and doing business rise.
Insurance companies may be subject to severe price competition. Financial
institutions are subject to regulation and supervision by governmental
authorities and changes in governmental policies may impact the way financial
institutions conduct business. Such governmental regulation may limit both the
amounts and types of loans and other financial commitments they can make, and
the interest rates and fees they can charge. Also, if government regulation
which would further reduce the separation between commercial and investment
banking is ultimately enacted, financial services companies may be
significantly affected in terms of profitability and competition.
HEALTHCARE PORTFOLIO
Companies in the health care industry are, generally, subject to governmental
regulation and approval of their products and services, which could have a
significant effect on their price and availability. Furthermore, the types of
products or services produced or provided by these companies may quickly become
obsolete. The costs of providing health care services are subject to increase
as a result of, among other factors, changes in medical technology and
increased labor costs. In addition, health care facility construction and
operation is subject to federal, state and local regulation relating to the
adequacy of medical care, equipment, personnel, operating policies and
procedures, rate-setting, and compliance with building codes and environmental
laws. Facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards necessary
for licensing and accreditation. These regulatory requirements
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<PAGE>
are subject to change and, to comply, it may be necessary for a hospital or
other health care facility to incur substantial capital expenditures or
increased operating expenses to effect changes in its facilities, equipment,
personnel and services. Additionally, a number of legislative proposals
concerning healthcare have been introduced in the U.S. Congress in recent years
or have been reported to be under consideration. These proposals span a wide
range of topics, including cost controls, national health insurance, incentives
for competition in the provision of health care services, tax incentives and
penalties related to health care insurance premiums, and promotion of prepaid
healthcare plans. Any of these proposals, if enacted, may have an adverse
effect on the health care industry.
UTILITIES PORTFOLIO
The ability of utilities to pay dividends on their common stock is dependent
on various factors, including:
. the rates they may charge their customers
. the demand for a utility's services, and
. the cost of providing these services.
Utilities, in particular investor-owned utilities, are subject to extensive
regulation relating to the rates which they may charge customers. Utilities can
experience regulatory political, and consumer resistance to rate increases.
Utilities engaged in long-term capital projects are especially sensitive to
regulatory lags in granting rate increases. Any difficulty in obtaining timely
and adequate rate increases could adversely affect a utility's results of
operations.
The demand for a utility's services is influenced by, among other factors,
competition, weather conditions and economic conditions. Electric utilities,
for example, have experienced increased competition as a result of the
availability of other energy sources, the effects of conservation on the use of
electricity, self-generation by industrial customers and the generation of
electricity by co-generators and other independent power producers. Also,
increased competition will result if federal regulators determine that
utilities must open their transmission lines to competitors.
A utility's costs are influenced by the utility's cost of capital, the
availability and cost of fuel and other factors, and there can be no assurance
that a utility will be able to pass on any increased costs to customers through
increased rates. Utilities also incur substantial capital expenditures and
operating expenses to comply with environmental, energy, licensing and other
laws and regulations relating to, among other things, air emissions, the
quality of drinking water, waste water discharge, solid and hazardous substance
handling and disposal, and siting and licensing of facilities. Environmental
legislation and regulations are changing rapidly and are the subject of current
public policy debate and legislative proposals. It is likely that utilities
will be subject to increasingly stringent environmental standards in the future
that could result in significant capital expenditures. Future legislation and
regulation could include, for example, regulation of so-called electromagnetic
fields associated with electric transmission and distribution lines as well as
emissions of carbon dioxide and other so-called greenhouse gases associated
with the burning of fossil fuels. Compliance with these requirements may limit
a utility's operations or require substantial investments in new equipment and,
as a result, may adversely affect a utility's results of operations.
Electric utilities which own or operate nuclear power plants are exposed to
risks inherent in the nuclear industry. These risks include exposure to new
requirements resulting from extensive federal and state
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regulatory oversight, public controversy, decommissioning costs, and spent fuel
and radioactive waste disposal issues. Nuclear power plants have experienced
substantial cost increases, construction delays and licensing difficulties. In
addition, nuclear power plants typically require substantial capital additions
and modifications throughout their operating lives to meet safety,
environmental, operational and regulatory requirements and to replace and
upgrade various plant systems. The high degree of regulatory monitoring and
controls imposed on nuclear plants could cause a plant to be out of service or
on limited service for long periods. When a nuclear facility owned by an
investor-owned utility is out of service or operating on a limited service
basis, the utility operator or its owners may be liable for the recovery of
replacement power costs. Risks of substantial liability also arise from the
operation of nuclear facilities and from the use, handling and possible
radioactive emissions associated with nuclear fuel. Insurance may not cover all
types or amounts of loss which may be experienced in connection with the
ownership and operation of a nuclear plant and severe financial consequences
could result from a significant accident or occurrence. Also there are risks of
recovering costs of decommissioning nuclear plants.
The Public Utility Holding Company Act of 1935 (the "1935 Act") regulates,
among other things, certain acquisitions of voting securities of electric
utility companies by anyone who is an "affiliate" of a public utility company.
In addition, the 1935 Act requires a "holding company" to register as such with
the Securities and Exchange Commission and be otherwise subject to certain
restrictions on the acquisition of securities and other interests in public
utility companies. This regulatory structure may discourage consolidation in
the electric utility industry or otherwise negatively affect the value of
utility stocks generally. In order to avoid becoming an "affiliate," the Trust
has adopted an investment restriction that it will not purchase securities of a
public utility company if by reason thereof the Utility Portfolio would hold 5%
or more of the outstanding voting securities of the issuer. Nevertheless, if
the Utility Portfolio were to be considered to be a member of an organized
group of persons, the 1935 Act might limit the Utility Portfolio's acquisitions
of the voting securities of public utility companies by reason of the control
by the group of 5% or more of the voting securities of a public utility
company.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units for each of the Trusts is computed by
adding to the aggregate value of the Securities in a Trust (as determined by
the Trustee) and any cash held to purchase Securities, divided by the number of
Units of the Trust outstanding, the applicable initial sales charge. The total
sales charge consists of an initial sales charge and a deferred sales charge
equal, in the aggregate, to a maximum charge of 4.50% of the Public Offering
Price (4.712% of the net amount invested in Securities). The initial sales
charge is computed by deducting the deferred sales charge ($30.00 per 1,000
Units) from the aggregate sales charge. The initial sales charge on the Initial
Date of Deposit is 1.50% of the Public Offering Price. The initial sales charge
is deducted from the purchase price of a Unit at the time of purchase and paid
to the Sponsor. The deferred sales charge is a monthly charge of $1.25 per
1,000 Units and is accrued in 24 monthly installments commencing on December 1,
1998 and will be charged to the Capital Account on the first day of each month
thereafter through November 1, 2000. If a Deferred Sales Charge Payment Date is
not a business day, the payment will be charged to the Trust on the next
business day. If a Holder's sale or redemption of Units settles before a
Deferred Sales Charge Payment Date, all future deductions of the Deferred Sales
charge will be waived. Units purchased pursuant to the Reinvestment Plan are
subject only to the remaining applicable deferred sales charge deduction (see
Reinvestment Plan).
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Purchasers on November , 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 November , 1998 (all of which are held by the
Sponsor) will be split (or split in reverse). The Public Offering Price on any
subsequent date will vary from the Public Offering Price on the date of the
initial Prospectus (set forth under Investment Summary) in accordance with
fluctuations in the aggregate value of the underlying Securities. Units will be
sold to investors at the Public Offering Price next determined after receipt of
the investor's purchase order. A proportionate share of the amount in the
Income Account (described under Administration of the Trust--Accounts and
Distributions) on the date of delivery of the Units to the purchaser is added
to the Public Offering Price.
The initial sales charge applicable to quantity purchases is reduced on a
graduated scale for sales to any purchaser of at least 50,000 Units. Sales
charges are as follows:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
---------------------
PERCENT OF PERCENT OF MAXIMUM DOLLAR
OFFERING NET AMOUNT AMOUNT DEFERRED
NUMBER OF UNITS* PRICE INVESTED PER 1,000 UNITS
- ---------------- ---------- ---------- ---------------
<S> <C> <C> <C>
Fewer than 50,000......................... 1.50% 1.523% $30.00
50,000 but less than 100,000.............. 1.25 1.266 30.00
100,000 but less than 250,000............. 1.00 1.010 30.00
250,000 but less than 1,000,000........... .50 .503 30.00
1,000,000 or more......................... 0 0 30.00
</TABLE>
- ------------
* The reduced sales charge is also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $1,000 for 1,000 Units, etc.
The above graduated sales charges will apply to all purchases in the
aggregate of one or more of Portfolios or any portfolios of Equity Focus
Trusts--Sector Series, 1998-A 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 national
stock exchange or Nasdaq National Market are valued at the closing sale price,
or, if no closing sales price exists, at the mean between the closing bid and
offer prices. Securities not so quoted are valued at the mean between bid and
offer prices.
Employees of the Sponsor and its subsidiaries, affiliates and employee-
related accounts may purchase Units pursuant to employee benefit plans, at a
price equal to the aggregate value of the Securities in the Trust divided by
the number of Units outstanding only subject to the applicable deferred sales
charge. Sales to these plans involve less selling effort and expense than sales
to employee groups of other companies.
PUBLIC DISTRIBUTION
Units will be distributed to the public at the Public Offering Price through
the Sponsor, as sole underwriter of the Trusts, and may also be distributed
through dealers.
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The Sponsor intends to qualify Units of each of the Trusts for sale in all
states of the United States where qualification is deemed necessary through the
Sponsor and dealers who are members of the National Association of Securities
Dealers, Inc. Sales to dealers, if any, will initially be made at prices which
represent a concession from the Public Offering Price per Unit to be
established at the time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the initial sales charge of 1.50% of the Public Offering Price
(subject to reduction on a graduated scale basis in the case of volume
purchases, and subject to reduction for purchasers as described under Public
Offering Price above) and the monthly Deferred Sales Charge of $1.25 per 1,000
Units.
On the Initial Date of Deposit, the Sponsor also realized a profit or loss on
deposit of the Securities into each of the Trusts in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to a Trust (which is based on the aggregate value of the Securities
on the Date of Deposit) and the purchase price of such Securities to the
Sponsor. In the event that subsequent deposits are effected by the Sponsor with
the deposit of Securities (as opposed to cash or a letter of credit) with
respect to the sale of additional Units to the public, the Sponsor similarly
may realize a profit or loss. The Sponsor also may realize profits or sustain
losses as a result of fluctuations after the Initial Date of Deposit in the
aggregate value of the Securities and hence of the Public Offering Price
received by the Sponsor for Units. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement dates for purchase of Units may be
used in the Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25 per 1,000
Units for the administrative and other services which it provides during the
life of each of the Trusts (see Expenses and Charges--Fees). The Sponsor has
not participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolios on the Initial
Date of Deposit were acquired, except as indicated under Portfolios.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or the prices at which the Securities are sold after it redeems
such Units, as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial Date
of Deposit at prices, subject to change at any time, which will be computed by
adding (1) the aggregate value of Securities in a Trust, (2) amounts in a Trust
including dividends receivable on stocks trading ex-dividend and (3) all other
assets in a Trust; deducting therefrom the sum of (a) taxes or other
governmental charges against a Trust not previously deducted, (b) accrued fees
and expenses of the Trustee (including legal and auditing expenses), the
Sponsor and counsel to a Trust and certain other expenses and (c) amounts for
distribution to Holders of record as of a date prior to the evaluation; and
dividing the result of such computation by the number of Units outstanding as
of 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
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business reason. The Sponsor, of course, does not in any way guarantee the
enforceability, marketability or price of any Securities in the Portfolios or
of the Units. On any given day, however, the price offered by the Sponsor for
the purchase of Units shall be an amount not less than the Redemption Price per
Unit, based on the aggregate value of Securities in a Trust on the date on
which the Units of such Trust are tendered for redemption (see Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of all
series of unit trusts which it has in its inventory, the saleability of such
units and its estimate of the time required to sell such units and general
market conditions. For a description of certain consequences of such redemption
for the remaining Holders, see Redemption.
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest
or Pacific Stock Exchanges, or in such other manner as may be acceptable to the
Trustee. In certain instances the Trustee may require additional documents such
as, but not limited to, trust instruments, certificates of death, appointments
as executor or administrator or certificates of corporate authority.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trusts--Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for a Trust. While these minimum amounts may vary from
time to time in accordance with market conditions, the Sponsor believes that
the minimum amounts which would be specified would be a sufficient number of
shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
The Trustee will redeem Units "in kind" upon request of a redeeming Holder if
the Holder tenders at least 250,000 Units. Thus, a Holder will be able (except
during a period described in the last paragraph under this heading), not later
than the seventh calendar day following such tender (or if the seventh calendar
day is not a business day, on the first business day prior thereto), to receive
in kind an amount per Unit equal to the Redemption Price per Unit (computed as
described in Redemption--Computation of Redemption Price per Unit) as
determined as of the day of tender. The Redemption Price per Unit for in kind
distributions (the "In Kind Distribution") will take the form of the
distribution of whole and fractional shares of each of the Securities in the
amounts and the appropriate proportions represented by the fractional undivided
interest in a Trust of the Units tendered for redemption (based upon the
Redemption Price per Unit), except that with respect to any foreign Security
not held in ADR form, the value of that Security will be distributed in cash.
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<PAGE>
In Kind Distributions on redemption of a minimum of 250,000 Units will be
held by the Chase Manhattan Bank, as Distribution Agent, for the account, and
for disposition in accordance with the instructions of, the tendering Holder as
follows:
(a) If the tendering Holder requests cash payment, the Distribution Agent
shall sell the In Kind Distribution as of the close of business on the date
of tender and remit to the Holder not later than seven calendar days
thereafter the net proceeds of sale, after deducting brokerage commissions
and transfer taxes, if any, on the sale. The Distribution Agent may sell
the Securities through the Sponsor, and the Sponsor may charge brokerage
commissions on those sales. Since these proceeds will be net of brokerage
commissions, Holders who wish to receive cash for their Units should always
offer them for sale to the Sponsor in the secondary market before seeking
redemption by the Trustee. The Trustee may offer Units tendered for
redemption and cash liquidation to it to the Sponsor on behalf of any
Holder to obtain this more favorable price for the Holder.
(b) If the tendering Holder requests distribution in kind, the
Distribution Agent (or the Sponsor acting on behalf of the Distribution
Agent) shall sell any portion of the In Kind Distribution represented by
fractional interests in accordance with the foregoing and distribute net
cash proceeds to the tendering Holder together with certificates
representing whole shares of each of the Securities that comprise the In
Kind Distribution. (The Trustee may, however, offer the Sponsor the
opportunity to purchase the tendered Units in exchange for the numbers of
shares of each Security and cash, if any, which the Holder is entitled to
receive. The tax consequences to the Holder would be identical in either
case.)
Any amounts paid on redemption representing income received will be withdrawn
from the Income Account to the extent funds are available (an explanation of
such Account is set forth under Administration of the Trusts--Accounts and
Distributions). In addition, in implementing the redemption procedures
described above, the Trustee and the Distribution Agent shall make any
adjustments necessary to reflect differences between the Redemption Price of
the Units and the value of the In Kind Distribution as of the date of tender.
To the extent that Securities are distributed in kind, the size of that Trust
will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Martin Luther King, Jr. Day,
President's 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 a Trust including dividends receivable on stocks
trading ex-dividend (with appropriate adjustments to reflect monthly
distributions made to Holders) and (3) all other assets in a Trust; deducting
therefrom the sum of (a) taxes or other governmental charges against a Trust
not previously deducted, (b) accrued fees and expenses of the
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Trustee (including legal and auditing expenses), the Sponsor and counsel to a
Trust and certain other expenses and (c) amounts for distribution to Holders of
record as of a date prior to the evaluation; and dividing the result of such
computation by the number of Units outstanding as of the date thereof.
The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: if the Securities are listed on a national
securities exchange or NASDAQ National Market System, or a foreign securities
exchange, such evaluation shall generally be based on the closing sale price on
such exchange (unless the Trustee deems such price inappropriate as a basis for
evaluation) or, if there is no closing sale price on such exchange, at the mean
between the closing offering and bid side evaluation. If the Securities are not
so listed or, if so listed and the principal market therefor is other than on
such exchange, such evaluation shall generally be made by the Trustee in good
faith based at the mean between current bid and offer prices on the over-the-
counter market (unless the Trustee deems such mean inappropriate as a basis for
evaluation) or, if bid and offer prices are not available, (1) on the basis of
the mean between current bid and offer prices for comparable securities, (2) by
the Trustee's appraising the value of the Securities in good faith at the mean
between the bid side and the offer side of the market or (3) by any combination
thereof.
EXPENSES AND CHARGES
Initial Expenses -- Investors will reimburse the Sponsor on a per 1,000 Units
basis, for all or a portion of the estimated costs incurred in organizing each
of the Trusts including the cost of the initial preparation, printing and
execution of the registration statement and the indenture, Federal and State
registration fees, the initial fees and expenses of the Trustee, legal expenses
and any other out-of-pocket costs. The estimated organization costs will be
paid from the assets of a 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 added to the
Public Offering Price will be reimbursed to the Sponsor. Any balance of the
expenses incurred in establishing the Trusts, as well as advertising and
selling expenses, will be paid by the Underwriters at no cost to the Trusts.
Fees -- The Trustee's and Sponsor's fees are set forth under Investment
Summary. The Trustee receives for its services as Trustee and Distribution
Agent payable in monthly installments, the amount set forth under Investment
Summary. The Trustee's fee (in respect of services as Trustee), payable
monthly, is based on the largest number of Units outstanding during the
preceding month. Certain regular and recurring expenses of the Trusts,
including certain mailing and printing expenses, are borne by the Trusts. The
Trustee receives benefits to the extent that it holds funds on deposit in the
various non-interest bearing accounts created under the Indenture. The
Sponsor's fee, which is earned for trust supervisory services, is based on the
largest number of Units outstanding during the year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under Investment Summary, may
exceed the actual costs of providing supervisory services for the Trusts, but
at no time will the total amount the Sponsor receives for trust supervisory
services rendered to all series of Smith Barney Unit Trusts in any calendar
year exceed the aggregate cost to it of supplying these services in that year.
In addition, the Sponsor may also be reimbursed for bookkeeping or other
administrative services provided to the Trusts in amounts not exceeding its
cost of providing those services. The fees of the Trustee and Sponsor may be
increased without approval of Holders in proportion to increases under the
classification "All Services Less Rent" in the Consumer Price Index published
by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of
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the Trusts (including legal and auditing expenses) and expenses of counsel
designated by the Sponsor, (3) various governmental charges and fees and
expenses for maintaining the Trusts' registration statement current with
Federal and State authorities, (4) expenses and costs of action taken by the
Sponsor, in its discretion, or the Trustee, in its discretion, to protect the
Trusts and the rights and interests of Holders (for example, expenses in
exercising a Trust's rights under the underlying Securities), (5)
indemnification of the Trustee for any losses, liabilities and expenses
incurred without gross negligence, bad faith or willful misconduct on its part,
(6) indemnification of the Sponsor for any losses, liabilities and expenses
incurred without gross negligence, bad faith, willful misconduct or reckless
disregard of their duties and (7) expenditures incurred in contacting Holders
upon termination of each Trust. The amounts of these charges and fees are
secured by a lien on the Trusts.
Payment of Expenses -- Funds necessary for the payment of the above fees will
be obtained in the following manner: (1) first, by deductions from the Capital
Accounts (see below); (2) to the extent the Capital Account funds are
insufficient, by distribution from the Income Accounts (see below) (which will
reduce income distributions from the Accounts); (3) to the extent the Income
and Capital Accounts are insufficient, by selling Securities from the
Portfolios and using the proceeds to pay the expenses (thereby reducing the net
asset value of the Units). Payment of the Deferred Sales Charge will be made in
the manner described under Administration of the Trusts--Accounts and
Distributions below.
Since the Securities are all common stocks, and the income stream produced by
dividend payments thereon is unpredictable (see Description of the Trusts--Risk
Factors), the Sponsor cannot provide any assurance that dividends will be
sufficient to meet any or all expenses of the Trusts. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trusts--Taxes.
ADMINISTRATION OF THE TRUSTS
RECORDS
The Trustee keeps records of the transactions of each of the Trusts at its
corporate trust office including names, addresses and holdings of all Holders
of record, a current list of the Securities and a copy of the Indenture. Such
records are available to Holders for inspection at reasonable times during
business hours.
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to a Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive its distribution in
cash, any income distribution for the Holder as of each Record Day will be made
on the following Distribution Day or shortly thereafter and shall consist of an
amount equal to the Holder's 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
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$5.00 per 1,000 Units. The Trustee may withdraw from the Income Account, from
time to time, such amounts as it deems requisite to establish a reserve for any
taxes or other governmental charges that may be payable out of the Trusts.
Funds held by the Trustee in the various accounts created under the Indenture
do not bear interest. Distributions of amounts necessary to pay the Deferred
Sales Charge will be made from the Capital Account to an account maintained by
the Trustee for purposes of satisfying investors' sales charge obligations.
Although the Sponsor may collect the Deferred Sales Charge monthly, to keep
Units more fully invested the Sponsor currently does not anticipate sales of
Securities to pay the Deferred Sales Charge until after the last Deferred Sales
Charge Payment Date. Proceeds of the disposition of any Securities not used to
pay the Deferred Sales Charge or to redeem Units will be held in the Capital
Account and distributed on the Final Distribution upon termination of the
appropriate Trust.
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market value.
Subject to any applicable regulations and plan restrictions, the Sponsor
intends to direct the Trustee to participate in any such plans to the greatest
extent possible taking into account the Securities held by the Trusts in the
issuers offering such plans. In such event, the Indenture requires that the
Trustee forthwith distribute in kind to the Distribution Agent the Securities
received upon any such reinvestment to be held for the accounts of the Holders
in proportion to their respective interests in a Trust. It is anticipated that
Securities so distributed shall immediately be sold. Therefore, the cash
received upon such sale, after deducting sales commissions and transfer taxes,
if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trusts are
generally made in brokerage transactions (as distinguished from principal
transactions) and the Sponsor or any of its affiliates may act as brokers
therein if the Trustee expects thereby to obtain the most favorable prices and
execution. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
Each of the Trusts is a unit investment trust which normally follows a buy
and hold investment strategy and is not actively managed. Therefore the adverse
financial condition of an issuer will not necessarily require the sale of its
Securities from a Portfolio. However, each Portfolio is regularly reviewed.
Traditional methods of investment management for a managed fund (such as a
mutual fund) typically involve frequent changes in a portfolio of securities on
the basis of economic, financial and market analyses. However, while it is the
intention of the Sponsor to continue a Trust's investment in the Securities in
the original proportions, it has the power but not the obligation to direct the
disposition of the Securities upon institution of certain legal proceedings,
default under certain documents adversely affecting future declaration or
payment of anticipated dividends, or a substantial decline in price or the
occurrence of materially adverse credit factors that, in the opinion of the
Sponsor, would make the retention of the Securities detrimental to the
interests of the Holders. The Sponsor intends to review the desirability of
retaining in a Portfolio any Security if its Investment Rating is reduced below
3 by Salomon Smith Barney's Research Department. The Sponsor is authorized
under the Indenture to direct the Trustee to invest the proceeds of any sale of
Securities not required for redemption of Units in eligible money market
instruments having fixed final maturity dates no later than the next
Distribution
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Day (at which time the proceeds from the maturity of said instrument shall be
distributed to Holders) which are selected by the Sponsor and which will
include only the following instruments:
(i) Negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which
have, together with their branches or subsidiaries, more than $2 billion in
total assets, except that certificates of deposit or time deposits of
smaller domestic banks may be held provided the deposit does not exceed the
insurance coverage on the instrument (which currently is $100,000), and
provided further that a Trust's aggregate holding of certificates of
deposit or time deposits issued by the Trustee may not exceed the insurance
coverage of such obligations and (ii) U.S. treasury notes or bills.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion
it is in the best interest of the Holders of the Units to do so. In addition,
the Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the
Trustee to accept or reject such an offer to take any other action with respect
thereto as the Sponsor may deem proper if (1) the issuer failed to declare or
pay anticipated dividends with respect to such Securities or (2) in the written
opinion of the Sponsor the issuer will probably fail to declare or pay
anticipated dividends with respect to such Securities in the reasonably
foreseeable future. Any Securities so received in exchange or substitution
shall be sold unless the Sponsor directs that they be held by the Trustee
subject to the terms and conditions of the Indenture to the same extent as
Securities originally deposited thereunder. If a Security is eliminated from a
Portfolio and no replacement security is acquired, the Trustee shall within a
reasonable period of time thereafter notify Holders of that Trust of the sale
of the Security. Except as stated in this and the following paragraphs, the
Trusts may not acquire any securities other than (1) the Securities and (2)
securities resulting from stock dividends, stock splits and other capital
changes of the issuers of the Securities.
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with
the deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. Replacement Securities that are replacing Failed Securities will
be deposited into a Trust within 110 days of the date of deposit of the
contracts that have failed at a purchase price that does not exceed the amount
of funds reserved for the purchase of Failed Securities. The Replacement
Securities shall satisfy certain conditions specified in the Indenture
including, among other conditions, requirements that the Replacement Securities
shall be publicly-traded common stocks; shall be issued by an issuer subject to
or exempt from the reporting requirements under Section 13 or 15(d) of the
Securities Exchange Act of 1934 (or similar provisions of law); shall not
result in more than 10% of a Trust consisting of securities of a single issuer
(or of two or more issuers which are Affiliated Persons as this term is defined
in the Investment Company Act of 1940) which are not registered and are not
being registered under the Securities Act of 1933 or result in a Trust owning
more than 50% of any single issue which has been registered under the
Securities Act of 1933; and shall have, in the opinion of the Sponsor,
characteristics sufficiently similar to the characteristics of the other
Securities in that Trust as to be acceptable for acquisition by such Trust.
Whenever a Replacement Security has been acquired for a Trust, the Trustee
shall, on the next Distribution Day that is more than 30 days thereafter, make
a pro rata distribution of the amount, if any, by which the cost to that Trust
of the Failed Security exceeded the cost of the Replacement Security. If
Replacement Securities are not acquired, the Sponsor will, on or before the
next following
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Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under Portfolios plus income
attributable to the Failed Security. Any property received by the Trustee after
the Initial Date of Deposit as a distribution on any of the Securities in a
form other than cash or additional shares of the Securities received in a non-
taxable stock dividend or stock split, shall be retained or disposed of by the
Trustee as provided in the Indenture. The proceeds of any disposition shall be
credited to the Income or Capital Account of a Trust.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trusts by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase
Additional Securities, or Additional Securities in exchange for the
corresponding number of additional Units during the 90-day period subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on the
Initial Date of Deposit (the "Original Proportionate Relationship") is
maintained to the extent practicable. Deposits of Additional Securities
subsequent to the 90-day period following the Initial Date of Deposit must
replicate exactly the original proportionate relationship among the number of
shares of each Security comprising a Portfolio at the end of the initial 90-day
period.
With respect to deposits of cash (or a letter of credit) with instructions to
purchase Additional Securities, Additional Securities or contracts to purchase
Additional Securities, in connection with creating additional Units of a Trust
during the 90-day period following the Initial Date of Deposit, the Sponsor may
specify minimum amounts of additional Securities to be deposited or purchased.
If a deposit is not sufficient to acquire minimum amounts of each Security,
Additional Securities may be acquired in the order of the Security most under-
represented immediately before the deposit when compared to the Original
Proportionate Relationship. If Securities of an issue originally deposited are
unavailable at the time of subsequent deposit or cannot be purchased at
reasonable prices or their purchase is prohibited or restricted by law,
regulation or policies applicable to the Trusts or the Sponsor, the Sponsor may
(1) deposit cash or a letter of credit with instructions to purchase the
Security when practicable (provided that it becomes available within 110 days
after the Initial Date of Deposit) or (2) deposit (or instruct the Trustee to
purchase) Securities of one or more other issues originally deposited or (3)
deposit or instruct the Trustee to purchase) a Replacement Security that will
meet the conditions described above. Any funds held to acquire Additional or
Replacement Securities which have not been used to purchase Securities at the
end of the 90-day period beginning with the Initial Date of Deposit, shall be
used to purchase Securities as described above or shall be distributed to
Holders together with the attributable sales charge.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of 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
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payment of applicable taxes and for fees and expenses of the Trustee and
counsel and certain other expenses, to the extent that the Income Account is
insufficient, and the balance remaining after such distribution and deductions,
expressed both as a total dollar amount and as a dollar amount per Unit
outstanding on the last business day of such calendar year; (3) a list of the
Securities held and the number of Units outstanding on the last business day of
such calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (5) amounts actually
distributed during such calendar year from the Income Account expressed both as
total dollar amounts and as dollar amounts per Unit outstanding on the record
dates for such distributions.
In order to enable them to comply with federal and state tax reporting
requirements, Holders will be furnished with evaluations of Securities upon
request to the Trustee.
BOOK-ENTRY UNITS
Ownership of Units of a Trust will not be evidenced by certificates. All
evidence of ownership of the Units will be recorded in book-entry form either
at Depository Trust Company ("DTC") through an investor's broker's account or
through registration of the Units on the books of the Trustee. Units held
through DTC will be deposited by the Sponsor with DTC in the Sponsor's DTC
account and registered in the nominee name CEDE & CO. Individual purchases of
beneficial ownership interest in a Trust will be made in book-entry form
through DTC or the Trustee. Ownership and transfer of Units will be evidenced
and accomplished by book-entries made by DTC and its participants if the Units
are evidenced at DTC, or otherwise will be evidenced and accomplished by book-
entries made by the Trustee. DTC will record ownership and transfer of the
Units among DTC participants and forward all notices and credit all payments
received in respect of the Units held by the DTC participants. Beneficial
owners of Units will receive written confirmation of their purchases and sale
from the broker-dealer or bank from whom their purchase was made. Units are
transferable by making a written request properly accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unit Holder. Holders must sign such
written request exactly as their names appear on the records of the Trusts.
Such signatures must be guaranteed by a commercial bank or trust company,
savings and loan association or by a member firm of a national securities
exchange.
AMENDMENT AND TERMINATION
The Sponsor may amend the Indenture, with the consent of the Trustee but
without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the SEC
or any successor governmental agency and (3) to make such other provisions as
shall not materially adversely affect the interest of the Holders (as
determined in good faith by the Sponsor). The Indenture may also be amended in
any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the Holders of 51% of the Units, provided
that no such amendment or waiver will reduce the interest in a Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders. The Indenture will terminate upon the earlier of the disposition of
the last Security held thereunder or the Mandatory Termination Date specified
under Investment Summary. The Indenture may also be terminated by the Sponsor
if the value of the Trust is less than the minimum value set forth under
Investment Summary (as described under Description of the Trusts -- Risk
Factors) and may be terminated at any time by written instrument executed by
the Sponsor and consented to by Holders of 51% of the Units. The Trustee shall
deliver written notice of any termination to each Holder
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of record within a reasonable period of time prior to the termination. Within a
reasonable period of time after such termination, the Trustee must sell all of
the Securities then held and distribute to each Holder, after deductions of
accrued and unpaid fees, taxes and governmental and other charges, such
Holder's interest in the Income and Capital Accounts. Such distribution will
normally be made by mailing a check in the amount of each Holder's interest in
such accounts to the address of such nominee Holder appearing on the record
books of the Trustee.
EXCHANGE AND ROLLOVER PRIVILEGES
Holders may exchange their Units of a Trust into units of any then
outstanding series of Equity Focus Trusts -- Sector Series (an "Exchange
Series") at their relative net asset values, subject only to the remaining
deferred sales charge (as disclosed in the prospectus for the Exchange Series).
The exchange option described above will also be available to investors in the
Trusts who elect to purchase units of an Exchange Series within 60 days of
their liquidation of Units in a Trust.
Holders who retain their Units until the termination of a Trust, may reinvest
their terminating distributions into units of a subsequent series of Equity
Focus Trusts -- Sector Series (the "New Series") provided one is offered. Such
purchaser may be entitled to a reduced sales load (as disclosed in the
prospectus for the New Series) upon the purchase of units of the New Series.
Under the exchange and rollover privilege, the Sponsor's repurchase price
would be based upon the market value of the Securities in a Trust portfolio and
units in the Exchange Series or New Series will be sold to the Holder at a
price based on the aggregate market price of the securities in the portfolio of
the Exchange Series or New Series. Exercise of the exchange or rollover
privilege by Holders is subject to the following conditions: (i) the Sponsor
must have units available of an Exchange Series or New Series during initial
public offering or, if such period is completed, must be maintaining a
secondary market in the units of the available Exchange Series or New Series
and such units must be available in the Sponsor's secondary market account at
the time of the Holder's elections; and (ii) exchange will be effected only in
whole units. Holders will not be permitted to advance any funds in excess of
their redemption in order to complete the exchange. Any excess proceeds
received from the Holder for exchange will be remitted to such holder.
It is expected that the terms of the Exchange Series or New Series will be
substantially the same as the terms of the Trusts described in this Prospectus,
and that similar reinvestment programs will be offered with respect to all
subsequent series of the Trusts. The availability of these options do not
constitute a solicitation of an offer to purchase units of an Exchange Series
or a New Series or any other security. A Holder's election to participate in
either of these options will be treated as an indication of interest only.
Holders should contact their financial professionals to find out what suitable
Exchange or New Series is available and to obtain a prospectus. Holders may
acquire units of those Series which are lawfully for sale in states where they
reside and only those Exchange Series in which the Sponsor is maintaining a
secondary market. At any time prior to the exchange by the Holder of units of
an Exchange Series, or the purchase by a Holder of units of a New Series, such
Holder may change its investment strategy and receive its terminating
distribution. An election of either of these options will not prevent the
holder from recognizing taxable gain or loss (except in the case of loss, if
and to the extent the Exchange or New Series, as the case may be, is treated as
substantially identical to a Trust) as a result of the liquidation, even though
no cash will be distributed to pay any taxes. Holders should consult their own
tax advisers in this regard. The Sponsor reserves the right to modify, suspend
or terminate either or both of these reinvestment privileges at any time.
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REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Smith Barney Inc. or directly in the name of the Holder, unless
the Holder notifies its financial consultant at Smith Barney Inc. or the
Trustee, respectively, to the contrary, will be reinvested automatically in
additional Units of the Trust in which the Holder is making such reinvestment
at no extra charge pursuant to the Trust's "Reinvestment Plan". If the Holder
does not wish to participate in the Reinvestment Plan, the Holder must notify
its financial consultant at Smith Barney Inc. or the Trustee at least ten
business days prior to the Distribution Day to which that election is to apply.
The election may be modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of that Trust at the Sponsor's Repurchase Price (the
net asset value per Unit without any sales charge) in effect at the close of
business on the Distribution Day. These may be either previously issued Units
repurchased by the Sponsor or newly issued Units created upon the deposit of
additional Securities in the Trust (see Description of the Trusts -- Structure
and Offering). Each participant will receive an account statement reflecting
any purchase or sale of Units under the Reinvestment Plan.
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to either of the Trusts. The Sponsor reserves the right to amend, modify or
terminate the Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units of
a trust at any time, or by the Sponsor without the consent of any of the
Holders if the Trustee becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor. In case
of such resignation or removal the Sponsor is to use its best efforts to
appoint a successor promptly and if upon resignation of the Trustee no
successor has accepted appointment within thirty days after notification, the
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Trustee shall it be under no liability for any action taken in
good faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
SPONSOR
The Sponsor may resign at any time if a successor Sponsor is appointed by the
Trustee in accordance with the Indenture. Any new Sponsor must have a minimum
net worth of $2,000,000 and must serve at rates of compensation deemed by the
Trustee to be reasonable and as may not exceed amounts prescribed by the SEC.
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If the Sponsor fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may (1) appoint a successor Sponsor at rates of compensation deemed by
the Trustee to be reasonable and as may not exceed amounts prescribed by the
SEC, (2) terminate the Indentures and liquidate the Trusts or (3) continue to
act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trusts or to the Holders for
taking any action or for refraining from taking any action in good faith or for
errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Sponsor may transfer all or substantially
all of its assets to a corporation or partnership which carries on its business
and duly assumes all of its obligations under the Indenture and in such event
it shall be relieved of all further liability under the Indenture.
TAXES
The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units by U.S.
citizens and residents and corporations organized in the United States. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"), 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 Trusts are not associations taxable as corporations for Federal
income tax purposes, and income received by the Trusts will be treated as
income of the Holders in the manner set forth below.
2. Each Holder will be considered the owner of a pro rata portion of each
Security in a Trust under the grantor trust rules of Sections 671-679 of
the Code. A taxable event will generally occur with respect to each
Unitholder when a Trust disposes of a Security (whether by sale, exchange
or redemption) or upon the sale, exchange or redemption of Units by such
Holder. 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 the Securities in the Trust in which it
holds Units (in proportion to the fair market values of those Securities on
the date the Holder purchases its Units).
3. A Holder will be considered to have received all of the dividends paid
on its pro rata portion of each Security when such dividends are received
by a Trust even if the Holder does not actually receive such distributions
but rather reinvests its dividend distributions pursuant to the
Reinvestment Plan. An individual Holder who itemizes deductions will be
entitled to deduct its pro rata share of fees and expenses paid by a Trust,
but only to the extent that this amount together with the Holder's other
miscellaneous deductions exceeds 2% of its adjusted gross income. The
deduction of fees and expenses may also be limited by Section 68 of the
Code, which reduces the amount of itemized deductions that are allowed for
individuals with incomes in excess of certain thresholds.
4. Under the income tax laws of the State and City of New York, each
Trust is not an association taxable as a corporation and is not subject to
the New York Franchise Tax on Business Corporations or the New York City
General Corporation Tax. For a Holder who is a New York resident, however,
a pro rata portion of all or part of the income of a Trust will be treated
as income of the Holder under the income tax laws of the State and City of
New York. Similar treatment may apply in other states.
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A Holder's pro rata portion of dividends paid with respect to a Security held
by a Trust is taxable as ordinary income to the extent of the issuing
corporation's current or accumulated "earnings and profits" as provided in
Section 316 of the Code. A Holder's pro rata portion of dividends paid on such
Security that exceed such current or accumulated earnings and profits will
first reduce the Holder's tax basis in such Security, and to the extent that
such dividends exceed the Holder's tax basis will generally be treated as
capital gain.
A corporation that owns Units will generally be entitled to a 70% dividends-
received deduction with respect to its pro rata portion of dividends received
by a Trust from a domestic corporation or from a qualifying foreign corporation
in the same manner as if such corporate Holder directly owned the Securities
paying such dividends. However, a corporation owning Units should be aware that
Sections 246 and 246A of the Code impose additional limitations on the
eligibility of dividends for the 70% dividends-received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days (as determined under Section 246(c) of the
Code) during the 90-day period beginning on the date that is 45 days before the
date on which the stock becomes ex-dividend. Moreover, the allowable percentage
of the deduction will be reduced from 70% if a corporate Holder owns certain
stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. The dividends-received deduction is
not available to "S" corporations and certain other corporations, and is not
available for purposes of special taxes such as the accumulated earnings tax
and the personal holding company tax. Congress from time to time considers
proposals to reduce this deduction.
A Holder's portion of gain, if any, upon the sale, exchange or redemption of
Units or the disposition of Securities held by a Trust will generally be
considered a capital gain and will be long-term if the Holder has held its
Units (and the Trust has held the Securities) for more than one year. Capital
gains realized by corporations are generally taxed at the same rates applicable
to ordinary income, although non-corporate taxpayers who realize long-term
capital gains with respect to Units held for more than one year may be subject
to a reduced tax rate of 20% on such gains, rather than the "regular" maximum
tax rate of 39.6%. Tax rates may increase prior to the time when Holders may
realize gains from the sale, exchange or redemption of the Units or Securities.
A Holder's portion of loss, if any, upon the sale or redemption of Units or
the disposition of Securities held by a Trust will generally be considered a
capital loss and will be long-term if the Holder has held its Units for more
than one year. Capital losses are deductible to the extent of capital gains; in
addition, up to $3,000 of capital losses ($1,500 for married individuals filing
separately) recognized by non-corporate Holders may be deducted against
ordinary income.
A pro rata distribution of Securities by the Trustee to a Holder (or to its
agent, including the Distribution Agent) upon redemption of Units will not be a
taxable event to the Holder or to other Holders. The redeeming or exchanging
Holder's basis for such Securities will be equal to its basis for the same
Securities (previously represented by its Units) prior to such redemption or
exchange, and its holding period for such Securities will include the period
during which it held its Units. However, a Holder will have a taxable gain or
loss, which will be a capital gain or loss except in the case of a dealer, when
the Holder (or its agent, including the Distribution Agent) sells the
Securities so received in redemption, when a redeeming or exchanging Holder
receives cash in lieu of fractional shares, when the Holder sells its Units or
when the Trustee sells the Securities from a Trust.
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Each of the Trusts may hold Securities or ADRs of foreign corporations. For
United States income tax purposes, a holder of ADRs is treated as though it
were holding directly the shares of the foreign corporation represented by the
ADRs. Dividends paid by foreign issuers generally will be subject to 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 a Trust may be greater than the amounts that would be withheld if the shares
were held directly by a U.S. Holder. The Trusts will report as gross income
earned by U.S. Holders their pro rata shares of such dividends, including their
pro rata shares of any corresponding amounts of foreign tax withheld 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.
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 a 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 for each of the Trusts, the Trustee will
furnish to each Holder of that Trust a statement containing information
relating to the dividends received by the Trust on the Securities, the gross
proceeds received by the Trust from the disposition of any Security (resulting
from redemption or the sale by the Trust of any Security), and the fees and
expenses paid by the Trust. The Trustee will also furnish an information return
to each Holder and to the Internal Revenue Service.
RETIREMENT PLANS
These Trusts may be well suited for purchase by Individual Retirement
Accounts ("IRAs"), Keogh plans, pension funds and other qualified retirement
plans. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. All distributions from such plans
(other than from certain IRAs known as "Roth IRAs") are generally treated as
ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Holders of Units in IRAs, Keogh
plans and other tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions. Investors
considering participation in any such plan should review specific tax laws
related thereto and should consult their attorneys or tax advisers with respect
to the establishment and maintenance of any such plan. Such plans are offered
by brokerage firms, including the Sponsor of these Trusts, and other financial
institutions. Fees and charges with respect to such plans may vary.
Before investing in a Trust, the trustee or investment manager of an employee
benefit plan (e.g., a pension or profit sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in a Trust; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of a
Trust are deemed "plan assets" under ERISA and the Department of Labor
regulations regarding the definition of "plan assets."
42
<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
Superintendent of Banks of the State of New York, the Federal Deposit Insurance
Corporation and the Board of Governors of the Federal Reserve System. In
connection with the storage and handling of certain Stocks deposited in the
Trusts, the Trustee may use the services of The Depository Trust Company. These
services may include safekeeping of the Stocks, computer book-entry transfer
and institutional delivery services. The Depository Trust Company is a limited
purpose trust company organized under the Banking Law of the State of New York,
a member of the Federal Reserve System and a clearing agency registered under
the Securities Exchange Act of 1934.
LEGAL OPINION
The legality of the Units has been passed upon by Battle Fowler LLP, 75 East
55th Street, New York, New York 10022, as special counsel for the Sponsor.
AUDITORS
The Statements of Financial Condition and the Portfolios included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors, as
indicated in their report with respect thereto, and is so included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
SPONSOR
Salomon Smith Barney Inc. ("Salomon Smith Barney"), was incorporated in
Delaware in 1960 and traces its history 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 Citigroup 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.
43
<PAGE>
EQUITY FOCUS TRUSTS
SECTOR SERIES, 1998-B
ENERGY PORTFOLIO
FINANCIALS PORTFOLIO
HEALTHCARE PORTFOLIO
UTILITIES PORTFOLIO
UNIT INVESTMENT TRUSTS
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
INDEX
<TABLE>
<S> <C>
Summary of Essential Information 2
Investment Summary 4
Independent Auditors' Report 8
Statements of Financial Condition 9
Portfolios 11
Description of the Trusts 16
Risk Factors 20
Public Sale of Units 27
Market for Units 29
Redemption 30
Expenses and Charges 32
Administration of the Trusts 33
Exchange and Rollover Privileges 38
Reinvestment Plan 39
Resignation, Removal and Limitations on Liability 39
Taxes 40
Miscellaneous 43
</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>
- --------------------------------------------------------------------------------
Salomon Smith Barney
-------------------------
A member of citigroupLOGO
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THE TRUSTS, NOT CONTAINED IN THIS PROSPECTUS; AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
UT 6514
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A.The following information relating to the Depositor is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
<TABLE>
<CAPTION>
SEC FILE OR
IDENTIFICATION NUMBER
---------------------
<C> <S> <C>
I. Bonding Arrangements and Date of Organization
of the Depositor filed pursuant to Items A and
B of Part II of the Registration Statement on
Form S-6 under the Securities Act of 1933:
Salomon Smith Barney Inc. 2-67446
II. Information as to Officers and Directors of the
Depositor filed pursuant to Schedules A and D
of Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934:
Salomon Smith Barney Inc. 8-12324
III. Charter documents of the Depositor filed as
Exhibits to the Registration Statement on Form
S-6 under the Securities Act of 1933 (Charter,
By-Laws):
Salomon Smith Barney Inc. 33-65332, 33-36037
B.The Internal Revenue Service Employer Identification Numbers of the Sponsor
and Trustee are as follows:
Salomon Smith Barney Inc. 13-1912900
The Chase Manhattan Bank 13-4994650
</TABLE>
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
THE REGISTRATION STATEMENT ON FORM S-6 COMPRISES THE FOLLOWING PAPERS AND
DOCUMENTS:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of The Uncommon
Values Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The undertaking to file reports.
The signatures.
Written Consents as of the following persons:
KPMG Peat Marwick LLP (included in Exhibit 5.1)
Battle Fowler LLP (included in Exhibit 3.1)
The following exhibits:
To be filed with Amendment to Registration Statement.
<TABLE>
<C> <C> <S>
*1.1.1 -- Form of Reference Trust Indenture.
2.1 -- Form of Standard Terms and Conditions of Trust (incorporated by
reference to Exhibit 2.1 to the Registration Statement of The
Uncommon Values Unit Trust, 1985 Series, 1933 Act File No. 33-
97046).
*3.1 -- Opinion of counsel as to the legality of the securities being
issued including their consent to the use of their names under
the headings "Taxes" and "Legal Opinion" in the Prospectus.
*5.1 -- Consent of KPMG Peat Marwick LLP to the use of their name under
the heading "Miscellaneous--Auditors" in the Prospectus.
</TABLE>
- ------------
* Filed herewith.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the requirements of the Securities Act of
1933, the Registrant has duly caused this Registration Statement or Amendment
to the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized in the City of New York and State of New York on the
6th day of November, 1998.
SIGNATURES APPEAR ON PAGE II-4.
A majority of the members of the Board of Directors of Salomon Smith Barney
Inc. has signed this Registration Statement or Amendment to the Registration
Statement pursuant to Powers of Attorney authorizing the person signing this
Registration Statement or Amendment to the Registration Statement to do so on
behalf of such members.
II-3
<PAGE>
SALOMON SMITH BARNEY UNIT TRUSTS
(REGISTRANT)
SALOMON SMITH BARNEY INC.
(DEPOSITOR)
By the following persons*, who constitute a majority of the Board of
Directors of Salomon Smith Barney Inc.:
Deryck C. Maughan
/s/ Kevin Kopczynski
By___________________________________
Kevin Kopczynski
(As authorized signatory for
Salomon Smith Barney Inc. and
Attorney-in-fact for the persons
listed above)
- ------------
* Pursuant to Powers of Attorney filed as exhibits to Registration Statement
Nos. 33-56722, 33-51999 and 333-41765.
II-4
