<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 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
STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
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 THE 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 DECEMBER 21, 1998
EQUITY FOCUS TRUSTS
----------------------------------------
STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
A Unit Investment Trust
SalomonSmithBarney The Equity Focus Trusts--Strategic Series 1999-A,
- ---------------------------- 10/A+ Portfolio is a unit investment trust that
A member of citigroup [LOGO] offers investors the opportunity to purchase
Units representing proportionate interests in a
portfolio of equity securities purchased by the
Trust based upon the following two investment
strategies:
. investing in the Dow Jones Industrial
Average's (DJIA) ten highest dividend
yielding stocks, and
. investing in the DJIA stocks having a quality
ranking of A+ by Standard & Poor's.
The name "Dow Jones Industrial Average" is the
property of Dow Jones & Company, Inc., which is
not affiliated with the Sponsor and has not
participated in any way with the creation of the
Trust or in the selection of the stocks included
in the Trust and has not reviewed or approved the
information included in this Prospectus. Dow
Jones & Company, Inc. has not granted to the
Trust or the Sponsor a license to use the Dow
Jones Industrial Average.
The value of the Units 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 , 1999
Read and retain this Prospectus for future reference
<PAGE>
EQUITY FOCUS TRUSTS--STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
SUMMARY OF ESSENTIAL INFORMATION
AS OF , 1999+
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 1, 1999 through 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 ($17.50 per 1,000 units) from the maximum aggregate sales charge
(2.75% of the Public Offering Price). The deferred sales charge is paid through
a reduction of the net asset value of the Trust by $1.75 per 1,000 units on
each Deferred Sales Charge Payment Date. Upon a repurchase, redemption or
exchange of units before the final Deferred Sales Charge Payment Date, any
remaining deferred sales charge payments will be deducted from the proceeds.
MANDATORY TERMINATION DATE
, 2000, or at any earlier time by the Sponsor with the consent of Holders
of 51% of the Units then outstanding.
DISTRIBUTIONS
Distributions of income, if any, will be made on the Distribution Day in any
quarter if the balance in the Income Account is more than $5 per 1,000 Units on
the corresponding Record Day to Holders of record on that Record Day and will
be automatically reinvested in additional units of the Trust unless a Holder
elects to receive its distribution in cash. A final distribution will be made
upon termination of the Trust.
RECORD DAY
The 10th day of , , and .
DISTRIBUTION DAY
The 25th day of , , and , and upon termination and liquidation of
the Trust.
EVALUATION TIME
4:00 P.M. New York time (or earlier close of the New York Stock Exchange).
MINIMUM VALUE OF TRUST
The Trust Indenture may be terminated if the net value of the Trust is less
than 40% of the aggregate net asset value of the 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.
- ------------
+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--STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
SUMMARY OF ESSENTIAL INFORMATION
AS OF , 1999
<TABLE>
<CAPTION>
<S> <C>
PORTFOLIO
Number of issues of common stock.................................
Number of different industry groups..............................
Portfolio contains the following industry groups:
INITIAL NUMBER OF UNITS............................................ 1,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST
REPRESENTED BY EACH UNIT.......................................... 1/1,000,000
PUBLIC OFFERING PRICE PER 1,000 UNITS
Aggregate Value of Securities in Trust........................... $
===========
Divided by Number of Units of Trust (times 1,000)................ $
Plus Initial Sales Charge of 1.00% of Public Offering Price
(1.010% 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 ON DEPOSIT........................................ $
</TABLE>
3
<PAGE>
EQUITY FOCUS TRUSTS--STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
Use this Investment Summary to help you decide whether the portfolio comprising
the Equity Focus Trusts--Strategic Series 1999-A, 10/A+ Portfolio is right for
you. More detailed information can be found later in this prospectus.
INVESTMENT OBJECTIVE
The Trust's diversified portfolio of stocks is for growth and income-oriented
investors.
There is no guarantee that the objective of the Trust will be achieved.
INVESTMENT STRATEGY
The Trust uses a "buy and hold" strategy with a portfolio of stocks, designed
to remain fixed over its one-year life. Unlike a mutual fund, the portfolio is
not managed; however, a security can be sold under some adverse circumstances.
INVESTMENT CONCEPT AND SELECTION PROCESS
The Trust seeks to achieve its objectives by attempting to outperform the Dow
Jones Industrial Average (DJIA) and the S&P 500. The Trust will attempt to
outperform the DJIA and the S&P 500 by creating a portfolio that will invest
approximately half of its assets in each of the following two investment
strategies:
. The Trust will purchase an equal amount of each of the ten stocks in the
DJIA with the highest dividend yield, and
. The Trust will purchase an equal amount of each of the stocks in the DJIA
having a quality ranking of A+ by Standard & Poor's.
The Strategic 10/A+ Strategy results in an investment approach where both value
stocks and growth stocks are identified and purchased in an unbiased,
disciplined manner. Salomon Smith Barney is currently prohibited from
purchasing common stock in Citigroup Inc. which is one of the 30 companies that
comprise the DJIA, as Salomon Smith Barney is a wholly owned subsidiary of
Citigroup. Thus, the Trust cannot purchase Citigroup common stock even if it
fits into the Trust's selection criteria.
RISK FACTORS
The value of your units may increase or decrease depending on the value of the
stocks which make up the Trust. In addition, the amount of dividends you
receive depends on each particular issuer's dividend policy, the financial
condition of the companies and general economic conditions.
The Trust consists primarily of common stocks of domestic issuers. If you
invest in the Trust, you should understand the potential risks associated 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 is continually subject to stock market fluctuations and to
volatile increases or decreases in value as market confidence in and
perceptions of issuers change.
A unit investment trust is not actively managed and the trust will not sell
securities in response to ordinary market fluctuations. Instead securities will
4
<PAGE>
not usually be sold until the 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 the 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 Trust.
PUBLIC OFFERING PRICE
On the first day units are made available to the public, the Public Offering
Price will be approximately $1.00 per unit, with a minimum purchase of $250.
This price is based on the net asset value of the 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 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.
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 their 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.
EXCHANGE OPTION
When the Trust is about to terminate, you may have the option to exchange your
proceeds into a future Strategic Series, if one is available. The initial sales
charge will be waived if you decide to exchange; however, you will be subject
to the subsequent Series' deferred sales charge. If you decide not to exchange
your proceeds into the next series, you will receive a cash distribution after
the trust terminates.
TAXATION
Your acquisition of units of the Trust will be the acquisition of an asset. In
general, dividends of the 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 the Trust will generally
be subject to information reporting and withholding taxes.
An exchange of units in the Trust for units in another series 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.
5
<PAGE>
EQUITY FOCUS TRUSTS--STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
FEE TABLE
- --------------------------------------------------------------------------------
THIS FEE TABLE IS INTENDED TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
THAT YOU WILL BEAR DIRECTLY OR INDIRECTLY. SEE PUBLIC SALE OF UNITS AND
EXPENSES AND CHARGES. ALTHOUGH THE TRUST IS A UNIT INVESTMENT TRUST RATHER THAN
A MUTUAL FUND, THIS INFORMATION IS PRESENTED TO PERMIT A COMPARISON OF FEES.
- --------------------------------------------------------------------------------
UNITHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
AS A % OF INITIAL AMOUNTS PER
PUBLIC OFFERING PRICE 1,000 UNITS
--------------------- -----------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on
Purchase (as a percentage of offering
price)..................................... 1.00%* $10.00
Maximum Deferred Sales Charge............... 1.75%** 17.50
---- ------
Total...................................... 2.75% $27.50
==== ======
Maximum Sales Charge Imposed on Reinvested
Dividends ................................. 1.75%*** $17.50
==== ======
Reimbursement to Sponsor for Estimated Or-
ganization Costs........................... % $
==== ======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<CAPTION>
AMOUNTS PER
AS A % OF NET ASSETS 1,000 UNITS
--------------------- -----------
<S> <C> <C>
Trustee's Fee............................... % $
Maximum Portfolio Supervision, Bookkeeping
and Administrative Fees.................... % $
Other Operating Expenses.................... % $
---- ------
Total...................................... % $
==== ======
<CAPTION>
CUMULATIVE EXPENSES
PAID FOR PERIOD:
---------------------
1 YEAR
------
<S> <C> <C>
An investor would pay the following expenses
and charges on a $1,000 investment, assuming
the Trust's estimated operating expense
ratio of % in the first year and a 5%
annual return on the investment throughout
the period.................................. $
</TABLE>
The example assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. The example should not be
considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.
- ------------
* The Initial Sales Charge is the difference between 2.75% and the deferred
sales charge ($17.50 per 1,000 Units) and would exceed 1.00% if the Public
Offering Price exceeds $1,000 per 1,000 Units.
** The actual fee is $1.75 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 1.75%; if the Unit price is less than $1.00 per Unit, the
deferred sales charge will exceed 1.75%.
*** Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment which may be more or less than 1.75% of
the Public Offering Price at the time of reinvestment.
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts, Strategic Series
1999-A, 10/A+ Portfolio:
We have audited the accompanying statement of financial condition, including
the portfolio, of Equity Focus Trusts, Strategic Series 1999-A, 10/A+
Portfolio, as of , 1999. This financial statement is the responsibility of
the Trustee (see note 1 to the statement of financial condition). Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of financial condition is free
of material misstatement. An audit of a statement of financial condition
includes examining, on a test basis, evidence supporting the amounts and
disclosures in that statement of financial condition. Our procedures included
confirmation with the Trustee of an irrevocable letter of credit deposited on
, 1999, for the purchase of securities, as shown in the statement of
financial condition and portfolio. An audit of a statement of financial
condition also includes assessing the accounting principles used and
significant estimates made by the Trustee, as well as evaluating the overall
statement of financial condition presentation. We believe that our audit of the
statement of financial condition provides a reasonable basis for our opinion.
In our opinion, the statement of financial condition referred to above
presents fairly, in all material respects, the financial position of Equity
Focus Trusts, Strategic Series 1999-A, 10/A+ Portfolio, as of , 1999, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
, 1999
7
<PAGE>
EQUITY FOCUS TRUSTS -- STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
STATEMENT OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, , 1999
<TABLE>
<CAPTION>
TRUST PROPERTY(1)
<S> <C>
Investment in Securities:
Contracts to purchase Securities(2)................................. $
--------
Total...............................................................
========
LIABILITIES
Reimbursement to Sponsor for Organization Cost(3)....................
Deferred Sales Charge(4).............................................
--------
Total...............................................................
--------
INTEREST OF UNITHOLDERS
1,000,000 Units of fractional undivided interest outstanding:
Cost to investors(5)................................................. $
Less: Gross underwriting commissions(6)..............................
Less: Reimbursement to Sponsor for Organization Costs(3) ............
--------
Net amount applicable to investors...................................
--------
Total................................................................ $
========
</TABLE>
- ------------
(1) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the
Trust and is responsible for establishing and maintaining a system of
internal controls directly related to, and designed to provide reasonable
assurance as to the integrity and reliability of, financial reporting of
the Trust. The Trustee is also responsible for all estimates and accruals
reflected in the Trust's financial statement other than the estimate of
organizational costs, for which the Sponsor is responsible.
(2) Aggregate cost to the Trust of the Securities listed under Portfolio of the
Trust, on the Initial Date of Deposit, is determined by the Trustee on the
basis set forth in footnote 3 to the Portfolio. See also the column headed
Market Value of Securities. 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 Svenska Handelsbanken.
(3) A portion of the Public Offering Price consists of an amount sufficient to
reimburse the Sponsor for all or a portion of the costs of establishing the
Trust. These costs have been estimated at $ per 1,000 Units for the
Trust. 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 the Trust.
(4) A deferred sales charge of $17.50 per 1,000 Units is payable in ten monthly
payments of $1.75 per 1,000 Units. Distributions will be made to an account
maintained by the Trustee from which the deferred sales charge obligation
of the investors to the Sponsor will be satisfied. If Units are redeemed
prior to 1, 2000 the remaining portion of the deferred sales charge
applicable to such Units will be transferred to such account on the
redemption date.
(5) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(6) Assumes a maximum aggregate sales charge of 2.75% of the Public Offering
Price (2.828% of the net amount invested); although due to fluctuations in
the value of the Securities, the total maximum sales charge may be more
than 2.75% of the Public Offering Price.
8
<PAGE>
PORTFOLIO OF EQUITY FOCUS TRUSTS--STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
ON THE INITIAL DATE OF DEPOSIT, , 1999
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
STOCK NUMBER PERCENTAGE OF VALUE OF
SECURITIES(1) SYMBOL OF SHARES(2) PORTFOLIO SECURITIES(3)
- ------------- ------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
% $
------ -----
100.00%
====== =====
</TABLE>
The Notes following the Portfolio are an integral part of the Portfolio of
Securities.
9
<PAGE>
NOTES TO PORTFOLIO OF SECURITIES
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1999. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Per 1,000,000 Units.
(3) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1999. Subsequent to the Initial
Date of Deposit, Securities are valued, for Securities quoted on a
national securities exchange or Nasdaq National Market, 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, or for Securities not
so quoted, at the mean between bid and offer prices on the over-the-
counter market. See Redemption--Computation of Redemption Price Per Unit.
----------------
The following information is unaudited:
*Salomon Smith Barney Inc., including subsidiaries and/or affiliates, usually
maintains a market in the securities of this company.
# Within the last three years, Salomon Smith Barney Inc., including its
subsidiaries, affiliates and/or predecessor firms, has acted as manager
(co-manager) of a public offering of the securities of this company or an
affiliate.
10
<PAGE>
DESCRIPTION OF THE TRUST
OBJECTIVE OF THE TRUST
The objective of Equity Focus Trusts, Strategic Series 1999-A, 10/A+
Portfolio (the "Trust") is to provide investors with the possibility of capital
appreciation and current dividend income for the Trust portfolio (the
"Portfolio") through a convenient and cost-effective investment in a fixed
portfolio consisting of shares of common stock and similar securities (the
"Securities") selected by the Sponsor for the Trust portfolio (the
"Portfolio"). The Trust seeks to achieve its objective by attempting to
outperform the Dow Jones Industrial Average ("DJIA") (which is not affiliated
with the Sponsor) and the S&P 500 by creating a portfolio that combines the
following two investment strategies:
. investing in the DJIA's ten (10) common stocks having the highest
dividend yield (the "Strategic 10 Strategy"); and
. investing in each of the stocks in the DJIA having a quality ranking
of A+ by Standard & Poor's (the "A+ Strategy").
The combination of the two investment strategies is referred to as the
"Strategic 10/A+ Strategy". The stocks for inclusion in the Portfolio pursuant
to this combined strategy will be determined as of two business days prior to
the Initial Date of Deposit. The Trust's portfolio will be comprised of
stocks. The Trust will initially invest half its assets in the Strategic 10
Strategy and half its assets in the A+ Strategy. In addition, within these two
strategies, stocks will be purchased in approximately equal dollar amounts.
As the term is used throughout this prospectus, the term "highest dividend
yield" means the yield for each Security calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed on that Security and
dividing the result by the market value of that Security as of two business
days prior to the Initial Date of Deposit. This rate is historical, and there
is no assurance that any dividends will be declared or paid in the future on
the Securities in the Trust.
Investing in DJIA stocks with the highest dividend yields may be effective in
achieving the Trust's investment objective because regular dividends are common
for established companies and dividends have accounted for a substantial
portion of the total return on DJIA stocks as a group. In addition, investing
in the DJIA stocks ranked A+ by Standard & Poor's can help the Trust achieve
its objective because these stocks represent opportunities for long-term
capital appreciation.
Achievement of the Trust's objective 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 Trust may not realize as high a total
return as the theoretical performance of the underlying stocks in the
Portfolio.
STRUCTURE AND OFFERING
This Series of Equity Focus Trusts is a "unit investment trust". The Trust
was created under New York law by a Trust Indenture (the "Indenture") between
the Sponsor and the Trustee. 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. On the date of this Prospectus, each unit of the Trust (a
"Unit") represented a fractional undivided interest in the Securities listed
under Portfolio set forth under the Summary of Essential Information.
Additional Units of the Trust will be
11
<PAGE>
issued in the amount required to satisfy purchase orders by depositing in the
Trust cash (or a bank letter of credit in lieu of cash) with instructions to
purchase Securities, contracts to purchase Securities together with irrevocable
letters of credit, or additional Securities. On each settlement date (estimated
to be three business days after the applicable date on which Securities were
deposited in the Trust), the Units will be released for delivery to investors
and the deposited Securities will be delivered to the Trustee. As additional
Units are issued by the Trust as a result of the deposit of cash (or a letter
of credit in lieu of cash) with instructions to purchase additional Securities,
the aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. There is no limit on the time period during which the Sponsor may
continue to make additional deposits of Securities into the Trust.
During the 90-day period following the Initial Date of Deposit additional
deposits of cash or Securities in connection with the issuance and sale of
additional Units will maintain to the extent practicable the original
proportionate relationship among the number of shares of each Security in the
Portfolio of the Trust. The proportionate relationship among the Securities in
the Trust will be adjusted to reflect the occurrence of a stock dividend, a
stock split or a similar event which affects the capital structure of the
issuer of a Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the Initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices,
brokerage commissions or unavailability of Securities. Replacement Securities
may be acquired under specified conditions when Securities originally deposited
are unavailable (see Administration of the Trust--Trust Supervision). Units may
be continuously offered to the public by means of this Prospectus (see Public
Sale of Units--Public Distribution) resulting in a potential increase in the
number of Units outstanding. Deposits of Additional Securities subsequent to
the 90-day period following the Initial Date of Deposit must replicate exactly
the proportionate relationship among the number of shares of each of the
Securities comprising the Portfolio of the Trust at the end of the initial 90-
day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
page 2 on any day will be based on the aggregate value of the Securities in the
Trust on that day at the Evaluation Time, plus a sales charge. The Public
Offering Price for the Trust 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.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received. However, indications of interest received
prior to the effectiveness of the registration of the Trust which become orders
upon effectiveness will be accepted according to the order in which the
indications of interest were received. Further, 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.
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 holders ("Holders") of Units of the Trust will have the right to have
their Units redeemed for the Securities underlying the Units (see Redemption).
If any Units are redeemed, the aggregate value of Securities in the Trust will
be reduced and the fractional undivided interest in the Trust represented by
each remaining Unit will be increased. Units of the Trust will remain
outstanding until redeemed upon request to the Trustee by any Holder (which may
include the Sponsor), or termination of the Indenture (see Administration of
the Trust--Amendment and Termination).
12
<PAGE>
THE PORTFOLIO
Each of the Securities has been taken from the Dow Jones Industrial Average
("DJIA"). The DJIA comprises 30 common stocks chosen by the editors of The Wall
Street Journal as representative of the broad market and of American industry.
The companies are major factors in their industries and their stocks are widely
held by individuals and institutional investors. Changes in the components of
the DJIA are made entirely by the editors of The Wall Street Journal without
consultation with the companies, the stock exchange or any official agency. For
the sake of continuity, changes are made rarely. Most substitutions have been
the result of mergers, but from time to time, changes may be made to achieve a
better representation. The components of the DJIA may be changed at any time
for any reason. Any changes in the components of the DJIA after the date of
this Prospectus will not cause a change in the identity of the common stocks
included in the Trust's portfolio, including any Additional Securities
deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. For two periods of 17 consecutive years each, there were no changes to
the list: March 1939-July 1956 and June 1959-August 1976. The DJIA last changed
on March 17, 1997.
STOCKS CURRENTLY COMPRISING THE DJIA
AT&T Corporation Hewlett-Packard Co.
Allied Signal International Business Machines
Aluminum Company of America Corporation
American Express Company International Paper Company
Boeing Company Johnson & Johnson
Caterpillar Inc. J.P. Morgan & Company
Chevron Corporation McDonald's Corporation
Citigroup Inc. Merck & Company, Inc.
Coca-Cola Company Minnesota Mining & Manufacturing Company
Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Company
Eastman Kodak Company Procter & Gamble Company
Exxon Corporation Sears, Roebuck & Company
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
Walt Disney Company
The dividend yield for each Security was calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed and dividing the result
by the market value of the Security as of two business days prior to the
Initial Date of Deposit. This formula (an objective determination) served as
the basis for the Sponsor's selection of the ten stocks pursuant to the
Strategic 10 Strategy. The stocks selected for the portfolio pursuant to the A+
Strategy were chosen because they were ranked A+ according to Standard & Poor's
quality rankings. "A+" is the highest of Standard & Poor's earnings and
dividend rankings for common stocks.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the most
recent ten years--a period deemed long enough by Standard & Poor's to measure
significant time segments of secular growth, to capture indications of basic
change in trends
13
<PAGE>
as they develop, and to encompass the full peak-to-peak range of the business
cycle. Basic scores are computed for earnings and dividends, then adjusted as
indicated by a set of predetermined modifiers for growth, stability within
long-term trend, and cyclicality. Adjusted scores for earnings and dividends
are then combined to yield a final score.
These rankings are not a forecast of future market price performance, but are
basically an appraisal of past performance of earnings and dividends, and
relative current standing. They cannot take into account potential effects on
management changes, internal company policies not yet fully reflected in the
earnings and dividend record, public relations standing, recent competitive
shifts, and a host of other factors that may be relevant to investment status
and decision.
The companies represented in the Trust are some of the most well-known and
highly capitalized companies in America. The Securities were selected
irrespective of any research recommendation by the Sponsor. Investing in the
stocks of the DJIA may be effective as well as conservative because regular
dividends are common for established companies and dividends have accounted for
a substantial portion of the total return on stocks comprising the DJIA.
Although Equity Focus Trusts, Strategic Series, 10/A+ Portfolio was not
available until this year, during the last 25 years, the strategy of investing
approximately equal values in both the ten highest yielding and the A+ ranked
stocks in the DJIA each year generally would have yielded a higher total return
than an investment in either the 30 stocks which make up the DJIA or the S&P
500. The following table shows the hypothetical performance of investing
approximately equal amounts in the Strategic 10/A+ Strategy at the beginning of
each year and rolling over the proceeds. The total returns do not reflect sales
charges, commissions or taxes. These results represent past performance of the
Strategic 10/A+ Strategy, and should not be considered indicative of future
results of the Trust. The Trust's annual total return may be lower than the
DJIA or the S&P 500 in any one year. In fact, the Strategic 10/A+ Strategy has
underperformed the DJIA and the S&P 500 in certain years; however,
historically, long term cumulative total returns from this strategy has
outperformed the cumulative returns of both the DJIA and the S&P 500. Also,
investors in the Trust may not realize as high a total return as on a direct
investment in the stocks comprising the Strategic 10/A+ Strategy since the
Trust has sales charges and expenses and may not be fully invested at all
times. Unit prices fluctuate with the value of the underlying stocks, and there
is no assurance that dividends on these stocks will be paid or that the Units
will appreciate in value, and indeed any or all of the underlying stocks may
depreciate in value at any time in the future. See Risk Factors.
14
<PAGE>
The following table compares the actual performance of the DJIA and the S&P
500 against the hypothetical performance of the Strategic 10/A+ Strategy in
each of the past 25 years, as of December 31 in each of these years:
COMPARISON OF TOTAL RETURNS(1)
(UNLESS INDICATED, TOTAL RETURNS DO NOT INCLUDE SALES CHARGES, COMMISSIONS,
TAXES OR OTHER EXPENSES)
<TABLE>
<CAPTION>
DOW JONES
STRATEGIC INDUSTRIAL
YEAR ENDED 10/A+(2) AVERAGE (DJIA) S&P 500
---------- --------- -------------- -------
<S> <C> <C> <C>
1974 % % %
1975
1976
1977
1978 4.99 2.69 6.39
1979 6.78 10.52 18.02
1980 26.33 21.41 31.50
1981 5.24 (3.40) (4.83)
1982 28.13 25.79 20.26
1983 27.40 25.68 22.27
1984 7.23 1.06 5.95
1985 31.58 32.78 31.43
1986 30.89 26.91 18.37
1987 8.91 6.02 5.67
1988 17.43 15.95 16.58
1989 35.10 31.71 31.11
1990 (0.24) (0.57) (3.20)
1991 38.19 23.93 30.51
1992 8.53 7.34 7.67
1993 15.68 16.72 9.97
1994 5.91 4.95 1.30
1995 44.26 36.48 37.10
1996 28.15 28.57 22.69
1997 22.91 24.78 33.10
1998
</TABLE>
- ------------
(1) Total return does not take into consideration any sales charges,
commissions, expenses or taxes. The Total Return represents the sum of
Appreciation and Actual Dividend Yield. (i) Appreciation for the Strategic
10/A+ Portfolio is calculated by subtracting the market value of these
stocks as of the first trading day on the New York Stock Exchange in a
given calendar year from the market value of those stocks as of the last
trading day in that calendar year, and dividing the result by the market
value of the stocks as of the first trading day in that calendar year.
Appreciation for the DJIA is calculated by subtracting the opening value
of the DJIA as of the first trading day in each calendar year from the
closing value of the DJIA as of the last trading day in that calendar
year, and dividing the result by the opening value of the DJIA as of the
first trading day in that calendar year. Appreciation for the S&P 500 is
calculated by subtracting the opening value of the S&P 500 as of the first
trading day in each calendar year from the closing value of the S&P 500 as
of the last trading day in that calendar year, and dividing the result by
the opening value of the S&P 500 as of the first trading day in that
calendar year. (ii) Actual Dividend Yield for the Strategic 10/A+
Portfolio is calculated by adding the total dividends received on the
stocks in the calendar year and dividing the result by the market value of
the stocks as of the first trading day in that calendar year. Actual
Dividend Yield for the DJIA is calculated by taking the total dividends
credited to the DJIA and dividing the result by the opening value of the
DJIA as of the first trading day in that calendar year.
(2) The Strategic 10/A+ Portfolio in any given calendar year was selected by
(i) ranking the dividend yields for each of the stocks in the DJIA as of
the beginning of that calendar year, based upon an annualization of the
last quarterly or semi-annual regular dividend distribution (which would
have been declared in the preceding calendar year) divided by that stock's
market value on the first trading day on the New York Stock Exchange in
that calendar year and (ii) selecting the stocks in the DJIA which were
ranked A+ according to Standard & Poor's quality rankings.
15
<PAGE>
These results represent past performance and should not be considered
indicative of future results of this Trust. Unit prices may fluctuate with the
value of the underlying stocks, and there is no assurance that dividends on
these stocks will be paid or that the Units will appreciate in value.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trust for various reasons, including:
. sales charges and expenses of the Trust
. because the portfolios fully invested at all times
. the stocks are normally purchased or sold at prices different from the
closing price used to determine the Trust's net asset value, and
. not all stocks may be weighted in the initial proportions at all times.
Additionally, results of ownership to different Holders will vary depending on
the net asset value of the underlying Securities on the days Holders bought and
sold their Units. Of course, any purchaser of securities, including Units, will
have to pay sales charges or commissions, which will reduce his total return.
Total returns and/or average annualized returns for various periods of
previous Strategic Series may be included from time to time in advertisements
and sales literature. Trust performance may be compared to performance of the
Dow Jones Industrial Average and the S&P 500 Composite Stock Index. As with
other performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future period.
Advertising and sales literature for the Trust may also include excerpts from
the Sponsor's research reports on one or more of the stocks in the Trust,
including a brief description of its industry group, and the basis on which the
stock was selected.
All of the domestic Securities are publicly traded either on a stock exchange
or in the over-the-counter market. Most of the contracts to purchase Securities
deposited initially in the Trust are expected to settle in three business days,
in the ordinary manner for such Securities.
The Trust consists of such Securities as may continue to be held from time to
time in the Trust and any additional and replacement Securities and any money
market instruments acquired and held by the Trust pursuant to the provisions of
the Indenture (including the provisions with respect to the deposit into the
Trust of Securities in connection with the sale of additional Units to the
public) together with undistributed income therefrom and undistributed and
uninvested cash realized from the disposition of Securities (see Administration
of the Trust-Accounts and Distributions; Trust Supervision). The Indenture
authorizes, but does not require, the Trustee to invest the net proceeds of the
sale of any Securities in eligible money market instruments to the extent that
the proceeds are not required for the redemption of Units. Any money market
instruments acquired by the Trust must be held until maturity and must mature
no later than the next Distribution Day and the proceeds distributed to Holders
at that time. If sufficient Securities are not available at what the Sponsor
considers a reasonable price, excess cash received on the creation of Units may
be held in an interest-bearing account with the Trustee until that cash can be
invested in Securities. Neither the Sponsor nor the Trustee shall be liable in
any way for any default, failure or defect in any of the Securities. However,
should any contract deposited hereunder (or to be 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 Market Value of Securities listed under the Portfolio of
the Trust, unless substantially all of the
16
<PAGE>
monies held in the Trust to cover the purchase are reinvested in replacement
Securities in accordance with the Indenture (see Administration of the Trust--
Portfolio Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, or because Securities may be distributed in redemption of Units, no
assurance can be given that the Trust will retain for any length of time its
present size (see Redemption; Administration of the Trust--Amendment and
Termination). For Holders who do not redeem their Units, investments in Units
of the Trust will be liquidated on the fixed date specified under Mandatory
Termination of Trust, and may be liquidated sooner if the net asset value of
the 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 the Trust is set forth under the Summary of
Essential Information. Income Distributions, if any, will be automatically
reinvested in additional Units of the Trust, subject only to the remaining
applicable Deferred Sales Charge deduction, unless a Holder elects to receive
his distributions in cash (see Reinvestment Plan). Because dividends on the
Securities are not received by the Trust at a constant rate throughout the year
and because the issuers of the Securities may change the schedules or amounts
or dividend payments, any distributions, whether reinvested or paid in cash,
may be more or less than the amount of dividend income actually received by the
Trust and credited to the income account established under the Indenture (the
"Income Account") as of the Record Day.
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 Trust or to satisfy redemptions of Units may
impact upon the value of the underlying Securities and the Units. The
publication of the list of the Securities selected for the Trust may also cause
increased buying activity in certain of the stocks comprising the Portfolio.
After such announcement, investment advisory and brokerage clients of the
Sponsor and its affiliates may purchase individual Securities appearing on the
list during the course of the initial offering period. Such buying activity in
the stock of these companies prior to the purchase of the Securities by the
Trust may cause the Trust to purchase stocks at a higher price than those
buyers who effect purchases prior to purchases by the Trust.
17
<PAGE>
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.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of preference
stocks have the right to receive dividends at a fixed rate when and as declared
by the issuer's board of directors, normally on a cumulative basis, but
generally do not participate in other amounts available for distribution by the
issuing corporation. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stocks are also entitled to rights on liquidation which are senior to
those of common stocks. Moreover, common stocks do not represent an obligation
of the issuer and, therefore, do not offer any assurance of income or provide
the same degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks are subject
to market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Securities in the Portfolio may be expected to fluctuate
over the life of the Trust to values higher or lower than those prevailing on
the Initial Date of Deposit.
Since the Securities are all common stocks, and the income stream produced by
dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of the
Trust. If dividends are insufficient to cover expenses, it is likely 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 Taxes.
Holders will be unable to dispose of any of the Securities in the Portfolio,
as such, and will not be able to vote the Securities. As the holder of the
Securities, the Trustee will have the right to vote all of the voting stocks in
the Trust and will vote in accordance with the instructions of the Sponsor.
Investors should be aware that the Trust is not "managed" and as a result,
the adverse financial condition of a company will not result in the elimination
of its securities from the Portfolio of the Trust except under
18
<PAGE>
extraordinary circumstances. Investors should note in particular that the
Securities were selected on the basis of the criteria set forth under
Objectives of the Trust and that the Trust may continue to purchase or hold
Securities originally selected though this process even through the evaluation
of the attractiveness of the Securities may have changed. A number of the
Securities in the Trust may also be owned by other clients of the Sponsor.
However, because these clients may have differing investment objectives, the
Sponsor may sell certain Securities from those accounts in instances where a
sale by the Trust would be impermissible, such as to maximize return by taking
advantage of market fluctuations. (See Administration of the Trust -- Trust
Supervision.) In the event a public tender offer is made for a Security or a
merger or acquisition is announced affecting a Security, the Sponsor may
instruct the Trustee to tender or sell the Security on the open market when, in
its opinion, it is in the best interest of the holders of the Units to do so.
Although the Portfolio is regularly reviewed and evaluated and the Sponsor
may instruct the Trustee to sell Securities under certain limited
circumstances, Securities will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation. As a
result, the amount realized upon the sale of the Securities may not be the
highest price attained by an individual Security during the life of the Trust.
The prices of single shares of each of the Securities in the Trust vary widely,
and the effect of a dollar of fluctuation, either higher or lower, in stock
prices will be much greater as a percentage of the lower-price stocks' purchase
price than as a percentage of the higher-price stocks' purchase price.
Investors should note that in connection with the issuance of additional
Units during the Public Offering Period the Sponsor may deposit cash (or a
letter of credit in lieu of cash) with instructions to purchase Securities,
additional Securities or contracts to purchase Securities, in each instance
maintaining the original percentage relationship, subject to adjustment under
certain circumstances, among the number of shares of each Security in the
Trust. To the extent the price of a Security increases or decreases between the
time cash is deposited with instructions to purchase the Security at the time
the cash is used to purchase the Security, Units may represent less or more of
that Security and more or less of the other Securities in the Trust. In
addition, brokerage fees (if any) incurred in purchasing Securities with cash
deposited with instructions to purchase the Securities will be an expense of
the Trust. Price fluctuations between the time of deposit and the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Holder's Units and the Income per Unit received by the Trust.
The 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 the Trust should fall
below the applicable minimum value, the Sponsor may then in its sole discretion
terminate the Trust before the Mandatory Termination Date specified in the
Summary of Essential Information.
Year 2000 Issue. The Trust, like other businesses and entities, could be
adversely affected if the computer systems used by the Sponsor and Trustee or
other service providers to the 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 Trust's 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 the Trust. The
Year 2000 Problem may thus also adversely affect issuers of the Securities
contained in the Trust, to
19
<PAGE>
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.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units for the Trust is computed by adding
the applicable initial sales charge to the aggregate value of the Securities in
the Trust (as determined by the Trustee) and any cash held to purchase
Securities, divided by the number of Units of the Trust outstanding. The total
sales charge consists of an initial sales charge and a deferred sales charge
equal, in the aggregate, to a maximum charge of 2.75% of the Public Offering
Price (2.83% of the net amount invested in Securities) (assuming a $1,000
Public Offering Price per 1,000 Units); although due to fluctuations in the
value of the securities, the total maximum sales charge may be more than 2.75%
of the Public Offering Price. The initial sales charge is computed by deducting
the deferred sales charge ($17.50 per 1,000 Units) from the aggregate sales
charge. The initial sales charge on the Initial Date of Deposit is 1.00% of the
Public Offering Price. The initial sales charge is deducted from the purchase
price of a Unit at the time of purchase and paid to the Sponsor. The deferred
sales charge is a monthly charge of $1.75 per 1,000 Units and is accrued in 10
monthly installments commencing on 1, 1999 and will be charged to the
Capital Account on the first day of each month thereafter through 1, 2000.
If a Deferred Sales Charge Payment Date is not a business day, the payment will
be charged to the Trust on the next business day. To the extent the entire
Deferred Sales Charge of $17.50 per 1,000 Units has not been so deducted at the
time of repurchase or redemption of units prior to 1, 2000 any unpaid
amount will be deducted from the proceeds or in calculating an in kind
distribution. Units purchased pursuant to the Reinvestment Plan are subject
only to the remaining applicable deferred sales charge deduction (see
Reinvestment Plan).
Purchasers on , 1999 (the first day Units will be available to the
public) will be able to purchase Units at approximately $1.00 each (including
the initial sales charge). To allow Units to be priced at approximately $1.00,
the Units outstanding as of the Evaluation Time on , 1999 (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......................... 1.00% 1.010% $17.50
50,000 but less than 100,000.............. .75 .758 17.50
100,000 but less than 250,000............. .25 .253 17.50
250,000 but less than 1,000,000........... 0 0 17.50
</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.
20
<PAGE>
For purchases of at least 1,000,000 Units or $1,000,000 or more, the total
sales charge will be 1.00% (or 1.010% of the net amount invested).
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units in the amounts stated. Purchases of Units will
not be aggregated with purchases of units of any series of a unit investment
trust sponsored by Salomon Smith Barney. Units held in the name of the spouse
of the purchaser or in the name of a child of the purchaser under 21 years of
age are deemed to be registered in the name of the purchaser for purposes of
calculating the applicable sales charge. The graduated sales charges are also
applicable to a trustee or other fiduciary purchasing securities for a single
trust estate or single fiduciary account.
Valuation of Securities by the Trustee is made as of the close of business on
the New York Stock Exchange on each business day. Securities quoted on 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.
The holders of units of any affiliated unit investment trust with an initial
sales charge of 1.00% and a one or two year life (the "Exchangeable Series")
may exchange units of the Exchangeable Series for units of the Trust at their
relative net asset values, subject only to the applicable deferred sales
charge. An exchange of Exchangeable Series units for Units of the Trust will
generally be a taxable event.
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 Trust, and may also be distributed
through dealers.
The Sponsor intends to qualify Units of the Trust for sale in all states of
the United States where qualification is deemed necessary through the Sponsor
and dealers who are members of the National Association of Securities Dealers,
Inc. Sales to dealers, if any, will initially be made at prices which represent
a concession from the Public Offering Price per Unit to be established at the
time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the initial sales charge of 1.00% of the Public Offering Price
(subject to reduction on a graduated scale basis in the case of volume
purchases, and subject to reduction for purchasers as described under Public
Offering Price above) and the monthly Deferred Sales Charge of $1.75 per 1,000
Units.
21
<PAGE>
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 the Trust (which is based on the aggregate value of the
Securities on the Date of Deposit) and the purchase price of such Securities to
the Sponsor. In the event that subsequent deposits are effected by the Sponsor
with the deposit of Securities (as opposed to cash or a letter of credit) with
respect to the sale of additional Units to the public, the Sponsor similarly
may realize a profit or loss. The Sponsor also may realize profits or sustain
losses as a result of fluctuations after the Initial Date of Deposit in the
aggregate value of the Securities and hence of the Public Offering Price
received by the Sponsor for Units. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement dates for purchase of Units may be
used in the Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25 per 1,000
Units for the administrative and other services which it provides during the
life of the Trust (see Expenses and Charges -- Fees). The Sponsor has not
participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolio on the Initial Date
of Deposit were acquired, except as indicated under Portfolio.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or the prices at which the Securities are sold after it redeems
such Units, as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial Date
of Deposit at prices, subject to change at any time, which will be computed by
adding (1) the aggregate value of Securities in the Trust, (2) amounts in the
Trust including dividends receivable on stocks trading ex-dividend and (3) all
other assets in the Trust; deducting therefrom the sum of (a) taxes or other
governmental charges against the Trust not previously deducted, (b) accrued
fees and expenses of the Trustee (including legal and auditing expenses), the
Sponsor and counsel to the Trust and certain other expenses and (c) amounts for
distribution to Holders of record as of a date prior to the evaluation; and
dividing the result of such computation by the number of Units outstanding as
of a date prior to the evaluation; and dividing the result of such computation
by the number of Units outstanding as of the date of computation. The Sponsor
may discontinue purchases of Units if the supply of Units exceeds demand or for
any other business reason. The Sponsor, of course, does not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. On any given day, however, the price offered by the
Sponsor for the purchase of Units shall be an amount not less than the
Redemption Price per Unit, based on the aggregate value of Securities in the
Trust on the date on which the Units of the Trust are tendered for redemption
(see Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of all
series of unit trusts which it has in its inventory, the saleability of such
units and its estimate of the time required to sell such units and general
market conditions. For a description of certain consequences of such redemption
for the remaining Holders, see Redemption.
22
<PAGE>
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest
or Pacific Stock Exchanges, or in such other manner as may be acceptable to the
Trustee. In certain instances the Trustee may require additional documents such
as, but not limited to, trust instruments, certificates of death, appointments
as executor or administrator or certificates of corporate authority.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trust -- Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for the Trust. While these minimum amounts may vary
from time to time in accordance with market conditions, the Sponsor believes
that the minimum amounts which would be specified would be a sufficient number
of shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
The Trustee will redeem Units "in kind" upon request of a redeeming Holder if
the Holder tenders at least 250,000 Units. Thus, a Holder will be able (except
during a period described in the last paragraph under this heading), not later
than the seventh calendar day following such tender (or if the seventh calendar
day is not a business day, on the first business day prior thereto), to receive
in kind an amount per Unit equal to the Redemption Price per Unit (computed as
described in Redemption--Computation of Redemption Price per Unit) as
determined as of the day of tender. The Redemption Price per Unit for in kind
distributions (the "In Kind Distribution") will take the form of the
distribution of whole and fractional shares of each of the Securities in the
amounts and the appropriate proportions represented by the fractional undivided
interest in the Trust of the Units tendered for redemption (based upon the
Redemption Price per Unit).
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
23
<PAGE>
Kind Distribution. (The Trustee may, however, offer the Sponsor the
opportunity to purchase the tendered Units in exchange for the numbers of
shares of each Security and cash, if any, which the Holder is entitled to
receive. The tax consequences to the Holder would be identical in either
case.)
Any amounts paid on redemption representing income received will be withdrawn
from the Income Account to the extent funds are available (an explanation of
such Account is set forth under Administration of the Trust -- Accounts and
Distributions). In addition, in implementing the redemption procedures
described above, the Trustee and the Distribution Agent shall make any
adjustments necessary to reflect differences between the Redemption Price of
the Units and the value of the In Kind Distribution as of the date of tender.
To the extent that Securities are distributed in kind, the size of the Trust
will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Martin Luther King, Jr. Day,
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 the Trust including dividends receivable on stocks
trading ex-dividend (with appropriate adjustments to reflect monthly
distributions made to Holders) and (3) all other assets in the Trust; deducting
therefrom the sum of (a) taxes or other governmental charges against the Trust
not previously deducted, (b) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Sponsor and counsel to the Trust
and certain other expenses and (c) amounts for distribution to Holders of
record as of a date prior to the evaluation; and dividing the result of such
computation by the number of Units outstanding as of the date thereof. As of
the close of the initial public offering period the Redemption Price per 1,000
Units will be reduced to reflect the payment of the per 1,000 Unit organization
costs to the Sponsor. Therefore, the amount of the Redemption Price per 1,000
Units received by a Holder will include the portion representing organization
costs only when such Units are tendered for redemption prior to the close of
the initial public offering period.
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
24
<PAGE>
comparable securities, (2) by the Trustee's appraising the value of the
Securities in good faith at the mean between the bid side and the offer side of
the market or (3) by any combination thereof.
EXPENSES AND CHARGES
Initial Expenses -- Investors will reimburse the Sponsor on a per 1,000 Units
basis, for all or a portion of the estimated costs incurred in organizing the
Trust including the cost of the initial preparation, printing and execution of
the registration statement and the indenture, Federal and State registration
fees, the initial fees and expenses of the Trustee, legal expenses and any
other out-of-pocket costs. The estimated organization costs will be paid from
the assets of the Trust as of the close of the initial public offering period.
To the extent that actual organization costs are less than the estimated
amount, only the actual organization costs will be deducted from the assets of
the Trust. To the extent that actual organization costs are greater than the
estimated amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor. Any balance of the expenses
incurred in establishing the Trust, as well as advertising and selling
expenses, will be paid by the Underwriters at no cost to the Trust.
Fees -- The Trustee's and Sponsor's fees are set forth under Summary of
Essential Information. The Trustee receives for its services as Trustee and
Distribution Agent payable in monthly installments, the amount set forth under
Summary of Essential Information. The Trustee's fee (in respect of services as
Trustee), payable monthly, is based on the largest number of Units outstanding
during the preceding month. Certain regular and recurring expenses of the
Trust, including certain mailing and printing expenses, are borne by the Trust.
The Trustee receives benefits to the extent that it holds funds on deposit in
the various non-interest bearing accounts created under the Indenture. The
Sponsor's fee, which is earned for trust supervisory services, is based on the
largest number of Units outstanding during the year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under Summary of Essential
Information, may exceed the actual costs of providing supervisory services for
the Trust, but at no time will the total amount the Sponsor receives for trust
supervisory services rendered to all series of Salomon Smith Barney Unit Trusts
in any calendar year exceed the aggregate cost to it of supplying these
services in that year. In addition, the Sponsor may also be reimbursed for
bookkeeping or other administrative services provided to the Trust in amounts
not exceeding its cost of providing those services. The fees of the Trustee and
Sponsor may be increased without approval of Holders in proportion to increases
under the classification "All Services Less Rent" in the Consumer Price Index
published by the United States Department of Labor.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the Trust
(including legal and auditing expenses) and expenses of counsel designated by
the Sponsor, (3) various governmental charges and fees and expenses for
maintaining the Trust's registration statement current with Federal and State
authorities, (4) expenses and costs of action taken by the Sponsor, in its
discretion, or the Trustee, in its discretion, to protect the Trust and the
rights and interests of Holders (for example, expenses in exercising the
Trust's rights under the underlying Securities), (5) indemnification of the
Trustee for any losses, liabilities and expenses incurred without gross
negligence, bad faith or willful misconduct on its part, (6) indemnification of
the Sponsor for any losses, liabilities and expenses incurred without gross
negligence, bad faith, willful misconduct or reckless disregard of their duties
and (7) expenditures incurred in contacting Holders upon termination of the
Trust. The amounts of these charges and fees are secured by a lien on the
Trust.
25
<PAGE>
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 Portfolio
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 Trust -- 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 Trust --
Risk Factors), the Sponsor cannot provide any assurance that dividends will be
sufficient to meet any or all expenses of the Trust. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Taxes.
ADMINISTRATION OF THE TRUST
RECORDS
The Trustee keeps records of the transactions of the Trust at its corporate
trust office including names, addresses and holdings of all Holders of record,
a current list of the Securities and a copy of the Indenture. Such records are
available to Holders for inspection at reasonable times during business hours.
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to the Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive its distribution in
cash, any income distribution for the Holder as of each Record Day will be made
on the following Distribution Day or shortly thereafter and shall consist of an
amount equal to the Holder's pro rata share of the distributable balance in the
Income Account as of such Record Day, after deducting estimated expenses. The
first distribution for persons who purchase Units between a Record Day and a
Distribution Day will be made on the second Distribution Day following their
purchase of Units. In addition, amounts from the Capital Account may be
distributed from time to time to Holders of Record. No distribution need be
made from the Capital Account if the balance therein is less than an amount
sufficient to distribute $5.00 per 1,000 Units. The Trustee may withdraw from
the Income Account, from time to time, such amounts as it deems requisite to
establish a reserve for any taxes or other governmental charges that may be
payable out of the Trust. Funds held by the Trustee in the various accounts
created under the Indenture do not bear interest. Distributions of amounts
necessary to pay the Deferred Sales Charge will be made from the Capital
Account to an account maintained by the Trustee for purposes of satisfying
investors' sales charge obligations. Although the Sponsor may collect the
Deferred Sales Charge monthly, to keep Units more fully invested the Sponsor
currently does not anticipate sales of Securities to pay the Deferred Sales
Charge until after the last Deferred Sales Charge Payment Date. Proceeds of the
disposition of any Securities not used to pay the Deferred Sales Charge or to
redeem Units will be held in the Capital Account and distributed on the Final
Distribution upon termination of the Trust.
26
<PAGE>
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market value.
Subject to any applicable regulations and plan restrictions, the Sponsor
intends to direct the Trustee to participate in any such plans to the greatest
extent possible taking into account the Securities held by the Trust in the
issuers offering such plans. In such event, the Indenture requires that the
Trustee forthwith distribute in kind to the Distribution Agent the Securities
received upon any such reinvestment to be held for the accounts of the Holders
in proportion to their respective interests in the Trust. It is anticipated
that Securities so distributed shall immediately be sold. Therefore, the cash
received upon such sale, after deducting sales commissions and transfer taxes,
if any, will be used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trust are
generally made in brokerage transactions (as distinguished from principal
transactions) and the Sponsor or any of its affiliates may act as brokers
therein if the Trustee expects thereby to obtain the most favorable prices and
execution. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
The Trust is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. Therefore the adverse
financial condition of an issuer will not necessarily require the sale of its
Securities from the Portfolio. However, the Portfolio is regularly reviewed.
Traditional methods of investment management for a managed fund (such as a
mutual fund) typically involve frequent changes in a portfolio of securities on
the basis of economic, financial and market analyses. However, while it is the
intention of the Sponsor to continue the Trust's investment in the Securities
in the original proportions, it has the power but not the obligation to direct
the disposition of the Securities upon institution of certain legal
proceedings, default under certain documents adversely affecting future
declaration or payment of anticipated dividends, or a substantial decline in
price or the occurrence of materially adverse credit factors that, in the
opinion of the Sponsor, would make the retention of the Securities detrimental
to the interests of the Holders. Further, the Trust will likely continue to
hold a Security and purchase additional shares even if its issuer is no longer
included in the Strategic 10, is no longer ranked A+ by Standard & Poor's or
even if it is deleted from the DJIA. The Sponsor is authorized under the
Indenture to direct the Trustee to invest the proceeds of any sale of
Securities not required for redemption of Units in eligible money market
instruments having fixed final maturity dates no later than the next
Distribution Day (at which time the proceeds from the maturity of said
instrument shall be distributed to Holders) which are selected by the Sponsor
and which will include only the following instruments:
(i) Negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which
have, together with their branches or subsidiaries, more than $2 billion in
total assets, except that certificates of deposit or time deposits of
smaller domestic banks may be held provided the deposit does not exceed the
insurance coverage on the instrument (which currently is $100,000), and
provided further that the Trust's aggregate holding of certificates of
deposit or time deposits issued by the Trustee may not exceed the insurance
coverage of such obligations and (ii) U.S. treasury notes or bills.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its
27
<PAGE>
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
the Portfolio and no replacement security is acquired, the Trustee shall within
a reasonable period of time thereafter notify Holders of the Trust of the sale
of the Security. Except as stated in this and the following paragraphs, the
Trust may not acquire any securities other than (1) the Securities and (2)
securities resulting from stock dividends, stock splits and other capital
changes of the issuers of the Securities.
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with
the deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. Replacement Securities that are replacing Failed Securities will
be deposited into the Trust within 110 days of the date of deposit of the
contracts that have failed at a purchase price that does not exceed the amount
of funds reserved for the purchase of Failed Securities. The Replacement
Securities shall satisfy certain conditions specified in the Indenture
including, among other conditions, requirements that the Replacement Securities
shall be publicly-traded common stocks; shall be issued by an issuer subject to
or exempt from the reporting requirements under Section 13 or 15(d) of the
Securities Exchange Act of 1934 (or similar provisions of law); shall not
result in more than 10% of the Trust consisting of securities of a single
issuer (or of two or more issuers which are Affiliated Persons as this term is
defined in the Investment Company Act of 1940) which are not registered and are
not being registered under the Securities Act of 1933 or result in the Trust
owning more than 50% of any single issue which has been registered under the
Securities Act of 1933; and shall have, in the opinion of the Sponsor,
characteristics sufficiently similar to the characteristics of the other
Securities in the Trust as to be acceptable for acquisition by the Trust.
Whenever a Replacement Security has been acquired for the Trust, the Trustee
shall, on the next Distribution Day that is more than 30 days thereafter, make
a pro rata distribution of the amount, if any, by which the cost to the Trust
of the Failed Security exceeded the cost of the Replacement Security. If
Replacement Securities are not acquired, the Sponsor will, on or before the
next following Distribution Day, cause to be refunded the attributable sales
charge, plus the attributable Market Value of Securities listed under Portfolio
plus income attributable to the Failed Security. Any property received by the
Trustee after the Initial Date of Deposit as a distribution on any of the
Securities in a form other than cash or additional shares of the Securities
received in a non-taxable stock dividend or stock split, shall be retained or
disposed of by the Trustee as provided in the Indenture. The proceeds of any
disposition shall be credited to the Income or Capital Account of the Trust.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trust by the deposit of cash (or a letter of credit) with
instructions to purchase Additional Securities, contracts to purchase
Additional Securities, or Additional Securities in exchange for the
corresponding number of additional Units during the 90-day period subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on the
Initial Date of Deposit (the
28
<PAGE>
"Original Proportionate Relationship") is maintained to the extent practicable.
Deposits of Additional Securities subsequent to the 90-day period following the
Initial Date of Deposit must replicate exactly the original proportionate
relationship among the number of shares of each Security comprising the
Portfolio at the end of the initial 90-day period.
With respect to deposits of cash (or a letter of credit) with instructions to
purchase Additional Securities, Additional Securities or contracts to purchase
Additional Securities, in connection with creating additional Units of the
Trust during the 90-day period following the Initial Date of Deposit, the
Sponsor may specify minimum amounts of additional Securities to be deposited or
purchased. If a deposit is not sufficient to acquire minimum amounts of each
Security, Additional Securities may be acquired in the order of the Security
most under-represented immediately before the deposit when compared to the
Original Proportionate Relationship. If Securities of an issue originally
deposited are unavailable at the time of subsequent deposit or cannot be
purchased at reasonable prices or their purchase is prohibited or restricted by
law, regulation or policies applicable to the Trust or the Sponsor, the Sponsor
may (1) deposit cash or a letter of credit with instructions to purchase the
Security when practicable (provided that it becomes available within 110 days
after the Initial Date of Deposit) or (2) deposit (or instruct the Trustee to
purchase) Securities of one or more other issues originally deposited or (3)
deposit (or instruct the Trustee to purchase) a Replacement Security that will
meet the conditions described above. Any funds held to acquire Additional or
Replacement Securities which have not been used to purchase Securities at the
end of the 90-day period beginning with the Initial Date of Deposit, shall be
used to purchase Securities as described above or shall be distributed to
Holders together with the attributable sales charge.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of each calendar year, the Trustee will
furnish to each person who at any time during the calendar year was a Holder of
record a statement (1) as to the Income Account: income received; deductions
for applicable taxes and for fees and expenses of the Trustee and counsel, and
certain other expenses; amounts paid in connection with redemptions of Units
and the balance remaining after such distributions and deductions, expressed in
each case both as a total dollar amount and as a dollar amount per Unit
outstanding on the last business day of such calendar year; (2) as to the
Capital Account: the disposition of any Securities (other than pursuant to In
Kind Distributions) and the net proceeds received therefrom; the results of In
Kind Distributions in connection with redemption of Units; deductions for
payment of applicable taxes and for fees and expenses of the Trustee and
counsel and certain other expenses, to the extent that the Income Account is
insufficient, and the balance remaining after such distribution and deductions,
expressed both as a total dollar amount and as a dollar amount per Unit
outstanding on the last business day of such calendar year; (3) a list of the
Securities held and the number of Units outstanding on the last business day of
such calendar year; (4) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (5) amounts actually
distributed during such calendar year from the Income Account expressed both as
total dollar amounts and as dollar amounts per Unit outstanding on the record
dates for such distributions.
In order to enable them to comply with federal and state tax reporting
requirements, Holders will be furnished with evaluations of Securities upon
request to the Trustee.
29
<PAGE>
BOOK-ENTRY UNITS
Ownership of Units of the Trust will not be evidenced by certificates. All
evidence of ownership of the Units will be recorded in book-entry form either
at Depository Trust Company ("DTC") through an investor's broker's account or
through registration of the Units on the books of the Trustee. Units held
through DTC will be deposited by the Sponsor with DTC in the Sponsor's DTC
account and registered in the nominee name CEDE & CO. Individual purchases of
beneficial ownership interest in the Trust will be made in book-entry form
through DTC or the Trustee. Ownership and transfer of Units will be evidenced
and accomplished by book-entries made by DTC and its participants if the Units
are evidenced at DTC, or otherwise will be evidenced and accomplished by book-
entries made by the Trustee. DTC will record ownership and transfer of the
Units among DTC participants and forward all notices and credit all payments
received in respect of the Units held by the DTC participants. Beneficial
owners of Units will receive written confirmation of their purchases and sale
from the broker-dealer or bank from whom their purchase was made. Units are
transferable by making a written request properly accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unit Holder. Holders must sign such
written request exactly as their names appear on the records of the Trust. Such
signatures must be guaranteed by a commercial bank or trust company, savings
and loan association or by a member firm of a national securities exchange.
AMENDMENT AND TERMINATION
The Sponsor may amend the Indenture, with the consent of the Trustee but
without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the SEC
or any successor governmental agency and (3) to make such other provisions as
shall not materially adversely affect the interest of the Holders (as
determined in good faith by the Sponsor). The Indenture may also be amended in
any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the Holders of 51% of the Units, provided
that no such amendment or waiver will reduce the interest in the Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders. The Indenture will terminate upon the earlier of the disposition of
the last Security held thereunder or the Mandatory Termination Date specified
under Summary of Essential Information. The Indenture may also be terminated by
the Sponsor if the value of the Trust is less than the minimum value set forth
under Summary of Essential Information (as described under Description of the
Trust -- Risk Factors) and may be terminated at any time by written instrument
executed by the Sponsor and consented to by Holders of 51% of the Units. The
Trustee shall deliver written notice of any termination to each Holder of
record within a reasonable period of time prior to the termination. Within a
reasonable period of time after such termination, the Trustee must sell all of
the Securities then held and distribute to each Holder, after deductions of
accrued and unpaid fees, taxes and governmental and other charges, such
Holder's interest in the Income and Capital Accounts. Such distribution will
normally be made by mailing a check in the amount of each Holder's interest in
such accounts to the address of such nominee Holder appearing on the record
books of the Trustee.
EXCHANGE AND ROLLOVER PRIVILEGES
Holders may exchange their Units of the Trust into units of any then
outstanding series of Equity Focus Trusts, Strategic Series (an "Exchange
Series") at their relative net asset values, subject only to the remaining
30
<PAGE>
deferred sales charge (as disclosed in the prospectus for the Exchange Series).
The exchange option described above will also be available to investors in the
Trust who elect to purchase units of an Exchange Series within 60 days of their
liquidation of Units in the Trust.
Holders who retain their Units until the termination of the Trust, may
reinvest their terminating distributions into units of a subsequent series of
Equity Focus Trusts, Strategic 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 the Trust portfolio
and units in the Exchange Series or New Series will be sold to the Holder at a
price based on the aggregate market price of the securities in the portfolio of
the Exchange Series or New Series. Exercise of the exchange or rollover
privilege by Holders is subject to the following conditions: (i) the Sponsor
must have units available of an Exchange Series or New Series during initial
public offering or, if such period is completed, must be maintaining a
secondary market in the units of the available Exchange Series or New Series
and such units must be available in the Sponsor's secondary market account at
the time of the Holder's elections; and (ii) exchange will be effected only in
whole units. Holders will not be permitted to advance any funds in excess of
their redemption in order to complete the exchange. Any excess proceeds
received from the Holder for exchange will be remitted to such holder.
It is expected that the terms of the Exchange Series or New Series will be
substantially the same as the terms of the Trust described in this Prospectus,
and that similar reinvestment programs will be offered with respect to all
subsequent series of the Trust. The availability of these options do not
constitute a solicitation of an offer to purchase units of an Exchange Series
or a New Series or any other security. A Holder's election to participate in
either of these options will be treated as an indication of interest only.
Holders should contact their financial professionals to find out what suitable
Exchange or New Series is available and to obtain a prospectus. Holders may
acquire units of those Series which are lawfully for sale in states where they
reside and only those Exchange Series in which the Sponsor is maintaining a
secondary market. At any time prior to the exchange by the Holder of units of
an Exchange Series, or the purchase by a Holder of units of a New Series, such
Holder may change its investment strategy and receive its terminating
distribution. An election of either of these options will not prevent the
holder from recognizing taxable gain or loss (except in the case of loss, if
and to the extent the Exchange or New Series, as the case may be, is treated as
substantially identical to the Trust) as a result of the liquidation, even
though no cash will be distributed to pay any taxes. Holders should consult
their own tax advisers in this regard. The Sponsor reserves the right to
modify, suspend or terminate either or both of these reinvestment privileges at
any time.
REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units will be reinvested
automatically in additional Units of the Trust, subject only to the remaining
applicable Deferred Sales Charge deduction, pursuant to the Trust's
"Reinvestment Plan". If the Holder does not wish to participate in the
Reinvestment Plan and wishes to receive cash distributions, the Holder must
notify its financial consultant at Salomon Smith Barney Inc., Robinson-Humphrey
or the Trustee (depending upon whether the Units are held in street name
through Salomon Smith Barney Inc., Robinson-Humphrey or directly in the name of
the Holder, respectively), 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.
31
<PAGE>
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of the Trust at the Sponsor's Repurchase Price (the
net asset value per Unit without any sales charge) in effect at the close of
business on the Distribution Day. These may be either previously issued Units
repurchased by the Sponsor or newly issued Units created upon the deposit of
additional Securities in the Trust (see Description of the Trust -- Structure
and Offering). Each participant will receive an account statement reflecting
any purchase or sale of Units under the Reinvestment Plan.
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to the Trust. The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units of
a trust at any time, or by the Sponsor without the consent of any of the
Holders if the Trustee becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor. In case
of such resignation or removal the Sponsor is to use its best efforts to
appoint a successor promptly and if upon resignation of the Trustee no
successor has accepted appointment within thirty days after notification, the
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Trustee shall it be under no liability for any action taken in
good faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
SPONSOR
The Sponsor may resign at any time if a successor Sponsor is appointed by the
Trustee in accordance with the Indenture. Any new Sponsor must have a minimum
net worth of $2,000,000 and must serve at rates of compensation deemed by the
Trustee to be reasonable and as may not exceed amounts prescribed by the SEC.
If the Sponsor fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may (1) appoint a successor Sponsor at rates of compensation deemed by
the Trustee to be reasonable and as may not exceed amounts prescribed by the
SEC, (2) terminate the Indentures and liquidate the Trust or (3) continue to
act as Trustee without terminating the Indenture.
The Sponsor shall be under no liability to the Trust or to the Holders for
taking any action or for refraining from taking any action in good faith or for
errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties. The Sponsor may transfer all or substantially
all of its assets to
32
<PAGE>
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 Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Trust will be treated as
income of the Holders in the manner set forth below.
2. Each Holder will be considered the owner of a pro rata portion of each
Security in the Trust under the grantor trust rules of Sections 671-679 of
the Code. A taxable event will generally occur with respect to each Holder
when the 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 the 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 the
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, the 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 the 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.
A Holder's pro rata portion of dividends paid with respect to a Security held
by the 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 corporate Holder will generally be entitled to a 70% dividends-received
deduction with respect to its pro rata portion of dividends received by the
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
33
<PAGE>
dividends. However, a corporate Holder 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 gain, if any, upon the sale, exchange or redemption of Units or
the disposition of Securities held by the 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 Holders 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 loss, if any, upon the sale or redemption of Units or the
disposition of Securities held by the 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 the Trust.
The foregoing discussion relates only to the tax treatment of U.S. Holders
with regard to Federal and certain aspects of New York State and City income
taxes. Holders that are not U.S. citizens or residents ("Foreign Holders")
should be aware that dividend distributions from the Trust attributable to any
dividends received by the Trust from domestic and certain foreign corporations
will be subject to a U.S. withholding tax of 30%, or a lower treaty rate, and
under certain circumstances gain from the disposition of Securities or Units
may also be subject to Federal income tax. However, it is expected that in
general any gains realized 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.
* * *
34
<PAGE>
After the end of each fiscal year for the Trust, the Trustee will furnish to
each Holder a statement containing information relating to the dividends
received by the Trust, 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
The Trust may be well suited for purchase by Individual Retirement Accounts
("IRAs"), Keogh plans, pension funds and other qualified retirement plans.
Generally, capital gains and income received in each of the foregoing plans are
exempt from Federal taxation. All distributions from such plans (other than
from certain IRAs known as "Roth IRAs") are generally treated as ordinary
income but may, in some cases, be eligible for special 5 or 10 year averaging
or tax-deferred rollover treatment. Holders of Units in IRAs, Keogh plans and
other tax-deferred retirement plans should consult their plan custodian as to
the appropriate disposition of distributions. Investors considering
participation in any such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any such plan. Such plans are offered by
brokerage firms, including the Sponsor of this Trust, and other financial
institutions. Fees and charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in the Trust; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of the Trust are deemed "plan assets" under ERISA and the Department
of Labor regulations regarding the definition of "plan assets."
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 Securities deposited in the
Trust, the Trustee may use the services of The Depository Trust Company. These
services may include safekeeping of the Securities, 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.
35
<PAGE>
AUDITORS
The Statement of Financial Condition and the Portfolio included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors, as
indicated in their report with respect thereto, and is so included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
SPONSOR
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.
36
<PAGE>
EQUITY FOCUS TRUSTS
----------------------------------------------
STRATEGIC SERIES 1999-A, 10/A+ PORTFOLIO
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 7
Statement of Financial Condition 8
Portfolio 9
Description of the Trust 11
Risk Factors 17
Public Sale of Units 20
Market for Units 22
Redemption 23
Expenses and Charges 25
Administration of the Trust 26
Exchange and Rollover Privileges 30
Reinvestment Plan 31
Resignation, Removal and Limitations on Liability 32
Taxes 33
Miscellaneous 35
</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>
- --------------------------------------------------------------------------------
SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
WITH RESPECT TO THE TRUSTS, NOT CONTAINED IN THIS PROSPECTUS; AND ANY
INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY PERSON TO
WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
Salomon Smith Barney is the service mark used by Salomon Smith Barney Inc. UT
<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>
- ------------
* To be filed by Amendment.
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
21st day of December, 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
Michael A. Carpenter
/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. 333-62533 and 333-66875.
II-4
