<PAGE>
As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-31514
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------------
Amendment No. 1
to
Form S-6
----------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
----------------
A. Exact name of trust:
EQUITY FOCUS TRUSTS
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
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.
[X]Check box if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Equity Focus Trusts
Global Research Selections
Series 2000-A
A Unit Investment Trust
SalomonSmithBarney
- ----------------------------
A member of citigroup [LOGO]
Global Research Selections, Series 2000-A is
designed to invest in Salomon Smith Barney's
top equity recommendations from around the
world. The objective is to select a
diversified portfolio of the world's premier
companies that will be placed in a unit
investment trust and remain fixed over the
trust's life of two years. Over this period,
the value of the units of the trust will
fluctuate with the value of the underlying
securities.
Global Research Selections, Series 2000-A
will have a minimum purchase of $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 March 15, 2000
Read and retain this Prospectus for future reference
<PAGE>
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
Use this Investment Summary to help you decide whether the portfolio comprising
Equity Focus Trusts--Global Research Selections, Series 2000-A is right for
you. More detailed information can be found later in this prospectus.
Investment Objectives
The Trust seeks to provide investors with capital appreciation. The Trust's
diversified portfolio of stocks is for growth-oriented investors. Dividend
income is a secondary objective of this portfolio.
There is no guarantee that the objectives 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 two-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
Throughout the U.S., Latin America, Europe, Asia Pacific and Japan, Salomon
Smith Barney's team of more than 265 research analysts follow a universe of
about 2,700 securities. Global Research Selections, Series 2000-A is a two-year
unit trust, designed to capitalize on these far-reaching capabilities in global
equity research.
The Trust's portfolio was identified through a two-tiered research process.
First, our analysts in each region identified their top equity recommendations
from a cross section of industry groups. Then, a selection committee of senior
analysts and strategists and managers combined their respective disciplines in
fundamental, economic and quantitative research to make the final selections.
Their goal was to identify a select portfolio of our most promising
recommendations, diversified by both geographic region and industry group.
Principal Risk Factors
Holders can lose money by investing in this Trust. 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 and foreign 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.
In addition, since the portfolio's holdings include foreign issuers the Trust
may be more strongly affected by the risks of investing in foreign securities,
which include:
. The value of the U.S. dollar relative to the foreign currencies.
. Future political and economic developments.
. Possible withholding taxes.
. Differing accounting practices.
A unit investment trust is not actively managed and the Trust will not sell
securities in response to ordinary market fluctuations. Instead securities will
not usually be sold until the Trust terminates, which could mean that the sale
price of the Trust securities
2
<PAGE>
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
may not be the highest price at which these securities traded during the life
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 period, a per unit amount
sufficient to reimburse the Sponsor for organization costs is added to the
public offering price. After the initial public offering period, the repurchase
and cash redemption price of units will be reduced to reflect the estimated
cost of liquidating securities to meet redemptions.
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.
Rollover Option and Termination
When the Trust is about to terminate, you may have the option to rollover your
proceeds into a future Global Research Selections portfolio, 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. You will pay your share
of expenses associated with a rollover or termination, including brokerage
commissions on the sale of securities.
Taxation
Your acquisition of units of the Trust will be the acquisition of an asset. In
general, dividends from 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.
3
<PAGE>
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
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 Amounts per
Public Offering Price 1,000 Units
--------------------- -----------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on
Purchase (as a percentage of offering
price).................................... 1.00%* $10.00
Deferred Sales Charge***................... 3.50%** $35.00
---- ------
Total..................................... 4.50% $45.00
==== ======
Maximum Sales Charge Imposed on Reinvested
Dividends ................................ 3.50%**** $35.00
==== ======
Reimbursement to Sponsor for Estimated Or-
ganization Costs.......................... .323% $ 3.24
==== ======
Estimated Cost of Liquidating Securities to
Meet Redemptions.......................... .095% $ 0.96
==== ======
Estimated Annual Trust Operating Expenses
(expenses deducted from Trust assets)
<CAPTION>
Amounts per
As a % of Net Assets 1,000 Units
--------------------- -----------
<S> <C> <C>
Trustee's Fee.............................. .092% $ .90
Maximum Portfolio Supervision, Bookkeeping
and Administrative Fees................... .026% $ .25
Other Operating Expenses................... .037% $ .36
---- ------
Total..................................... .155% $ 1.51
==== ======
<CAPTION>
Cumulative Expenses and
Charges Paid for Period:
Example ---------------------------------
1 year 2 years
------ -------
<S> <C> <C>
An investor would pay the following expenses
and charges on a $10,000 investment,
assuming the Trust's estimated annual
operating expense ratio of .155 and a 5%
annual return on the investment throughout
the period................................. $324 $515
</TABLE>
The example also assumes reinvestment of all dividends and distributions. 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
higher or lower.
- ------------
* The Initial Sales Charge would exceed 1.00% if the Public Offering Price
exceeds $1,000 per 1,000 Units, see Public Sale of Units--Public Offering
Price.
** The actual fee is $2.50 per month per 1,000 Units paid on seven monthly
Deferred Sales Charge Payment Dates during each of the two years of the
Trust. If the Unit price exceeds $1.00 per Unit, the deferred sales charge
will be less than 3.50%; if the Unit price is less than $1.00 per Unit,
the deferred sales charge will exceed 3.50%, see Public Sale of Units--
Public Offering Price.
*** Holders who sell, redeem or exchange their Units prior to the Special
Redemption Date will not be subject to a second year deferred sales charge
of $17.50 per 1,000 units, consisting of $2.50 per 1,000 units paid on
seven monthly Deferred Sales Charge Payment Dates. This would decrease the
total maximum sales charge for such Holders to 2.75% of the Public
Offering Price (assuming a $1,000 Public Offering Price per 1,000 Units;
due to fluctuations in the value of the securities the total maximum sales
charge may be more or less than 2.75% of the Public Offering Price).
**** Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment which may be more or less than 3.50%
of the Public Offering Price at the time of reinvestment.
4
<PAGE>
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
SUMMARY OF ESSENTIAL INFORMATION
AS OF MARCH 14, 2000+
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 September 1, 2000 through March 1, 2001
and May 1, 2001 through November 1, 2001.
Sales Charge
The sales charge consists of an initial sales charge and an annual deferred
sales charge. On the Initial Date of Deposit the initial sales charge is 1.00%
of the Public Offering Price. The initial sales charge is paid directly from
the amount invested. The annual deferred sales charge of approximately 1.75% is
paid during each of the two years of the Trust through a reduction of the net
asset value of the Trust by $2.50 per 1,000 units on seven Deferred Sales
Charge Payment Dates. As a result, the maximum total sales charge assessed to
Holders who elect to hold Units through the Mandatory Termination Date of the
Trust will be 4.50% of the Public Offering Price. The second year deferred
sales charge will not be imposed on Holders who sell, redeem or exchange their
Units prior to April 25, 2001. Upon a repurchase, redemption or exchange of
Units before March 1, 2001, any remaining first year deferred sales charge will
be deducted from the proceeds. Similarly, upon a repurchase, redemption or
exchange of units after April 25, 2001 but before November 1, 2001, any
remaining second year deferred sales charge payments will be deducted from the
proceeds.
Mandatory Termination Date
April 15, 2002, or at any earlier time by the Sponsor with the consent of
Holders of 51% of the Units then outstanding.
Special Redemption Date
April 25, 2001.
Distributions
Distributions of income, if any, will be made on the next to last business day
of each year commencing December 28, 2000, to Holders of record on the
immediately prior business day of each year, commencing December 27, 2000.
Distributions 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 business day immediately prior to a Distribution Day.
Distribution Day
On the next to last business day of each year and upon termination and
liquidation of the Trust.
Evaluation Time
4:00 P.M. New York time (or earlier close of the New York Stock Exchange)
thereafter.
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
$.90 Per 1,000 Units
Sponsor's Annual Fee
Maximum of $.25 per 1,000 Units.
- ------------
+The Initial Date of Deposit. The Initial 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.
5
<PAGE>
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
SUMMARY OF ESSENTIAL INFORMATION
AS OF MARCH 14, 2000
<TABLE>
<CAPTION>
<S> <C>
Portfolio
Number of issuers of common stock............................... 49
Number of different industry groups............................. 10
Portfolio contains issuers from the following industry groups:
Capital Goods/Conglomerates, 3 (6.62%); Consumer Cyclical,
6 (11.48%); Consumer Staples, 2 (4.50%); Energy, 3
(6.67%); Financials, 9 (20.37%); Healthcare, 4 (8.23%);
Raw & Intermediate Materials, 3 (4.91%); Technology, 8
(16.64%); Telecommunications, 10 (19.17%); and
Transportation, 1 (1.41%).
Number of non-U.S. issuers...................................... 24
Portfolio contains issuers from the following regions:
Asia Pacific, 1 (2.48%); Australia, 2 (3.09%); Europe, 13
(27.58%); Japan, 5 (10.69%); Latin America, 3 (3.07%);
United States, 25 (53.09%)
Number of American and/or Global Depository Receipts and/or
Shares......................................................... 17
Percentage of American and/or Global Depository Receipts and/or
Shares......................................................... 33.73%
Percentage of High Risk Securities (as described in footnote 2
to Portfolio).................................................. 20.02%
Percentage of Speculative Securities (as described in footnote 2
to Portfolio).................................................. 1.02%
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.......................... $ 993,339
===========
Divided by Number of Units of Trust (times 1,000)............... $ 993.34
Plus Initial Sales Charge of 1.00% of Public Offering Price
(1.010% of the net amount invested in Securities).............. $ 10.03
-----------
Public Offering Price........................................... $ 1,003.37
Plus Estimated Organization Costs............................... $ 3.24
Plus the amount in the Income and Capital Accounts.............. $ 0.00
-----------
Total........................................................... $ 1,006.61
===========
Sponsor's Repurchase Price and Redemption
Price per 1,000 Units (based on value of underlying Securities).. $ 979.08
Sponsor's Loss on Deposit......................................... $ 11,373
</TABLE>
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Equity Focus Trusts--Global Research
Selections, Series 2000-A:
We have audited the accompanying statement of financial condition, including
the portfolio, of Equity Focus Trusts--Global Research Selections, Series 2000-
A, as of March 14, 2000. 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
March 14, 2000, 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--Global Research Selections, Series 2000-A, as of March 14, 2000,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
March 14, 2000
7
<PAGE>
EQUITY FOCUS TRUSTS
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
Statement of Financial Condition as of Initial Date of Deposit, March 14, 2000
<TABLE>
<CAPTION>
TRUST PROPERTY(1)
<S> <C>
Investment in Securities:
Contracts to purchase Securities(2)................................ $ 996,579
---------
Total.............................................................. $ 996,579
=========
LIABILITIES
Reimbursement to Sponsor for Organization Cost(3)................... $ 3,240
Deferred Sales Charge(4)............................................ 17,500
---------
Total.............................................................. 20,740
=========
INTEREST OF UNITHOLDERS
1,000,000 Units of fractional undivided interest outstanding:
Cost to investors(5)................................................ 1,006,610
Less: Gross underwriting commissions(6)............................. 27,531
Less: Reimbursement to Sponsor for Organization Costs(3) ........... 3,240
---------
Net amount applicable to investors.................................. 975,839
---------
Total.............................................................. $ 996,579
=========
</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 4 to the Portfolio. See also the column headed
Market Value of Securities. An irrevocable letter of credit in the amount
of $2,500,000 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 $3.24 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. To the
extent actual organization costs are less than the estimated amount, only
the actual organization costs will be reimbursed to the Sponsor and
deducted from the assets of the Trust.
(4) A first year deferred sales charge of $17.50 per 1,000 Units is payable in
seven monthly payments of $2.50 per 1,000 Units. 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 March 1, 2001 the remaining portion of the
first year 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 first year 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--GLOBAL RESEARCH SELECTIONS, SERIES 2000-A,
ON THE INITIAL DATE OF DEPOSIT, MARCH 14, 2000
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Stock Investment Number Percentage of
Securities(1) Symbol Ranking(2) of Shares(3) of Portfolio Securities(4)
------------- ------ ---------- ------------ ------------ -------------
Asia Pacific
------------
<S> <C> <C> <C> <C> <C>
Hutchison Whampoa * # 13 HK 2M 1,400 2.48% $24,730
-----
2.48%
Australia
---------
Brambles Industries
Limited BIL AU 1L 500 1.41% 14,049
Lend Lease Corp. Limited LLC AU 1L 1,300 1.68 16,754
-----
3.09%
Europe
------
Air Liquide * # AI FP 1L 150 1.97% 19,608
AXA ADS # AXA 1M 400 2.40 23,900
Banco Bilbao Vizcaya ADR
# BBV 1M 1,600 2.31 23,000
BP Amoco ADR # BPA 1L 400 2.05 20,450
Ericsson (LM) Tel "B'
ADS * # ERICY 1M 200 1.87 18,675
Fortis (NL) NV # FOR NA 1M 1,000 2.45 24,384
Kingfisher PLC # KGF LN 2M 2,700 2.17 21,666
Marconi PLC ADR * # MCONY 1M 1,500 2.04 20,356
Nestle SA ADR * # NSRGY 1L 300 2.34 23,325
Nokia Corp. ADR # NOK 1M 100 2.06 20,575
Philips Electronics NV
ADR # PHG 2H 100 1.84 18,325
Telefonica SA ADR # TEF 2M 200 1.72 17,125
Vodafone AirTouch PLC
ADR # VOD 2H 400 2.36 23,475
-----
27.58%
Japan
-----
Canon Inc. ADR * # CANNY 2L 500 1.96% 19,500
Fujitsu Ltd. ADR * FJTSY 2H 150 2.29 22,793
Nippon Tel. & Tel. ADS # NTT 2M 300 1.95 19,388
Tokio Fire & Marine ADR
* TKIOY 2M 450 2.25 22,444
Toyota Motor Corp. ADR # TM 1M 250 2.24 22,328
-----
10.69%
Latin America
-------------
Cemex SA ADR # CX 1S 400 1.02% 10,125
Telefonos De Mexico ADR TMX 1M 150 1.03 10,331
Walmart de Mexico * WALMEXV MM 1H 3,800 1.02 10,162
-----
3.07%
</TABLE>
9
<PAGE>
PORTFOLIO OF EQUITY FOCUS TRUSTS--GLOBAL RESEARCH SELECTIONS, SERIES 2000-A,
ON THE INITIAL DATE OF DEPOSIT, MARCH 14, 2000, continued
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Stock Investment Number Percentage of
Securities(1) Symbol Ranking(2) of Shares(3) of Portfolio Securities(4)
------------- ------ ---------- ------------ ------------ -------------
United States
-------------
<S> <C> <C> <C> <C> <C>
Amer. Int'l Group AIG 1L 250 2.15% $ 21,438
America Online# AOL 1H 300 1.86 18,525
AT&T Corp.# T 1M 400 2.12 21,150
Amgen Inc.* AMGN 1H 400 2.10 20,900
Bristol-Myers Squibb BMY 1H 400 1.92 19,175
Chase Manhattan# CMB 1H 300 2.38 23,681
Cisco Systems* CSCO 1M 150 1.98 19,763
Coca-Cola Co.# KO 2L 500 2.16 21,563
Disney (Walt) Co.# DIS 1M 600 2.04 20,363
duPont (EI) de Nemours# DD 1M 400 1.92 19,125
Exxon Mobil Corp. XOM 1L 300 2.32 23,156
Federal Nat'l Mtge# FNM 1M 450 2.35 23,400
Gen'l Electric GE 1L 150 1.91 19,031
Hewlett-Packard HWP 1M 150 2.10 20,963
Home Depot* HD 1L 400 2.09 20,875
Intel Corp.* INTC 1M 200 2.37 23,575
Int'l Bus. Machines# IBM 1M 200 2.19 21,800
Johnson & Johnson# JNJ 2L 300 2.19 21,825
MCI Worldcom*# WCOM 1M 500 2.16 21,531
Microsoft Corp.* MSFT 1M 200 1.91 19,025
Pfizer PFE 1H 600 2.02 20,100
Schlumberger SLB 1L 300 2.30 22,875
Tyco International# TYC 1H 500 2.23 22,219
Wal-Mart Stores# WMT 1L 400 1.92 19,100
Wells Fargo WFC 1M 750 2.40 23,953
------
53.09%
------ --------
100.00% $996,579
====== ========
</TABLE>
The Notes following the Portfolio are an integral part of the Portfolio of
Securities.
10
<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 March 14, 2000. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Salomon Smith Barney has assigned these rankings according to the
following system, which uses two codes: a letter for the level of risk
(L,M,H,S or V) and a number for performance expectation (1-5).
RISK assesses predictability of earnings/dividends and stock price volatility:
L (Low Risk): highly predictable earnings/dividends, low price
volatility
M (Moderate Risk): moderately predictable earnings/dividends, moderate
price volatility
H (High Risk): low predictability of earnings/dividends, high price
volatility
S (Speculative): exceptionally low predictability of earnings/dividends,
highest risk of price volatility
V (Venture): Risk and return consistent with venture capital, suitable
only for well-diversified portfolios
PERFORMANCE rankings indicate the expected total return (capital gain or loss
plus dividends) over the next 12-18 months, assuming an unchanged, or "flat"
market; performance expectations depend on the risk category assigned to the
stock, as shown in the following chart.
<TABLE>
<CAPTION>
Low Risk Moderate Risk High Risk Speculative
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1 (Buy) Over 15% Over 20% Over 25% Over 30%
2 (Outperform) 5% to 15% 5% to 20% 10% to 25% 10% to 30%
3 (Neutral) -5% to 5% -5% to 5% -10% to 10% -10% to 10%
4 (Underperform) -5% to -15% -5% to -15% -10% to -20% -10% to -20%
5 (Sell) -15% or worse -15% or worse -20% or worse -20% or worse
</TABLE>
These rankings represent current opinions of Salomon Smith Barney research
analysts and are, of course, subject to change; no assurance can be given that
the stocks will perform as expected. These rankings have not been audited by
KPMG LLP.
(3) Per 1,000,000 Units.
(4) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on March 14, 2000. Subsequent to the
Initial Date of Deposit, Securities are valued, for Securities quoted on a
national securities exchange or 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 its parent, 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
parent, 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.
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DESCRIPTION OF THE TRUST
Objectives of the Trust
The objective of Equity Focus Trusts, Global Research Selections, Series
2000-A (the "Trust") is to provide investors with the possibility of capital
appreciation 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
Portfolio. The Sponsor has selected for the Portfolio securities that it
considers to have the potential for capital appreciation over a period of two
years relative to the risks and opportunities. The payment of dividends is a
secondary objective of the Trust.
Achievement of the Trust's objectives is dependent upon several factors
including the financial condition of the issuers of the Securities and any
appreciation of the Securities. Furthermore, because of various factors,
including without limitation, Trust sales charges and expenses, differences in
weightings of stocks, brokerage costs--currency fluctuations 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 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
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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 in
the Summary of Essential Information 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) 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. Holders of a
minimum of 1,000,000 Units may request to receive the Securities "in kind" (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).
The Portfolio
The securities in the Portfolio have been selected by the Salomon Smith
Barney Research Department. Salomon Smith Barney's Research Department is
staffed by over 265 investment analysts, who currently follow equities issued
by more than 2,700 companies (both domestic and foreign).
The Trust's portfolio was identified through a two-tiered research process.
First, our analysts in each geographic region identified their top equity
recommendations from a cross section of industry groups. Then, a selection
committee of senior analysts and strategists and managers combined their
respective disciplines in fundamental, economic and quantitative research to
make the final selections. Their goal was to identify a select portfolio of our
most promising recommendations, diversified by both geographic region and
industry group.
The investment rankings by Salomon Smith Barney normally pertain to an
outlook for a 12-18 month period (see footnote 2 to the Portfolio). In
selecting Securities for the Trust, the Sponsor has not expressed any belief as
to the potential of these Securities for capital appreciation over a period
longer than two years. There is, of course, no assurance that any of the
Securities in the Trust will appreciate in value, and indeed any or all of the
Securities may depreciate in value at any time in the future. See Description
of the Trust--Risk Factors.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trust for various reasons, including:
. sales charges and expenses of the Trust,
. the Portfolio may not be fully invested at all times,
. the stocks are normally purchased or sold at prices different from the
closing price used to determine the Trust's net asset value, and
. not all stocks may be weighted in the initial proportions at all times.
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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 or her total
return.
Total returns and/or average annualized returns for various periods of
previous series of Equity Focus Trusts and the Trust may be included from time
to time in advertisements and sales literature. Trust performance may be
compared to performance of the Salomon Smith Barney Primary Market World 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 business and 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. All of the foreign Securities are
publicly traded on a variety of foreign stock exchanges. Settlement of
contracts for foreign Securities varies by country and may take place prior to
the settlement of purchase of Units on the Initial Date of Deposit.
The Trust consists of such Securities held in the Trust from time to time and
any:
. additional and replacement Securities,
. 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, and
. 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 monies
held in the Trust to cover the purchase are reinvested in replacement
Securities in accordance with the Indenture (see Administration of the Trust--
Trust 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 its present size for any
length of time (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
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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
Common Stock
An investment in Units should be made with an understanding of the risks that
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.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally inferior 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, 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. Dividends on cumulative preferred
stock must be paid before any dividends are paid on common stock and any
cumulative preferred stock dividend which has been omitted is added to future
dividends payable to the holders of such cumulative preferred stock. Preferred
stocks are also entitled to rights on liquidation which are senior to those of
common stocks. For these reasons, preferred stocks generally entail less risk
than common stock.
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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 economic interest of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity, common stocks
have neither a fixed principal amount nor a maturity, and have values which are
subject to market fluctuations for as long as they remain outstanding.
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.
Dividends
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.
Fixed Portfolio
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 extraordinary
circumstances. Investors should note in particular that the Securities were
selected on the basis of the criteria set forth under Objective of the Trust
and that the Trust may continue to purchase or hold Securities originally
selected through this process even though the evaluation of the attractiveness
of the Securities may have changed. 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.
Additional Securities
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
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or decreases between the time cash is deposited with instructions to purchase
the Security and 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. Finally, pursuant to the terms of the Indenture,
subsequent deposits to create additional Units might not be covered by the
deposit of cash (or letter of credit in lieu of cash). In such circumstances,
should the Sponsor not deliver cash in consideration for the additional Units
delivered, the Trust may be unable to satisfy its contracts to purchase the
additional Securities. The failure of the Sponsor to deliver cash to the Trust,
or any delays in the Trust receiving such cash, may have significant adverse
consequences for the Trust.
Some of the Securities may have limited trading volume. The Trustee, with
directions from the Sponsor, will endeavor to purchase Securities with
deposited cash as soon as practicable reserving the right to purchase those
Securities over the 20 business days following each deposit in an effort to
reduce the effect of these purchases on the market price of those stocks. This
could, however, result in the Trust's failure to participate in any
appreciation of those stocks before the cash is invested. If any cash remains
at the end of this period (and such date is within the 90-day period following
the Initial Date of Deposit) and cannot be invested in one or more stocks at
what the Sponsor considers reasonable prices, it intends to use that cash to
purchase each of the other securities in the original proportionate
relationship among those securities. Similarly, at termination of the Trust,
the Sponsor reserves the right to sell Securities over a period of up to 20
business days following the Mandatory Termination Date to lessen the impact of
its sales on the market price of the Securities. The proceeds received by
Holders following termination of the Trust will reflect the actual sales
proceeds received on the Securities, which will likely differ from the closing
sale price on the Mandatory Termination Date. The Sponsor believes that the
purchase and sale of underlying Securities as described above is in the best
interest of Holders and may mitigate the negative market price consequences
stemming from the trading of large amounts of Securities that have limited
trading volumes. There can be no assurance, however, that any adverse price
consequences of heavy trading will in fact be mitigated.
Organization Costs
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 after 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 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.
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Termination
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.
Foreign Securities
The Trust will hold Securities of non-U.S. issuers directly and/or through
American Depository Receipts ("ADRs") or Global Depository Receipts ("GDRs").
There are certain risks involved in investing in securities of foreign
companies, which are in addition to the usual risks inherent in United States
investments. These risks include those resulting from:
. fluctuations in currency exchange rates or revaluation of currencies,
. future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign laws or
restrictions,
. reduced availability of public information concerning issuers, and
. the lack of uniform accounting, auditing and financial reporting
standards or other regulatory practices and requirements comparable to
those applicable to domestic companies.
Moreover, securities of many foreign companies may be less liquid and their
prices more volatile than those of securities of comparable domestic companies.
In addition, with respect to certain foreign countries, there is the
possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Trust,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that could reduce the yield on such securities. Since
the Trust may invest in securities quoted in currencies other than the United
States dollar, changes in foreign currency exchange rates may adversely affect
the value of foreign securities in the Portfolio and the net asset value of
Units of the Trust. Investment in foreign securities may also result in higher
expenses due to the cost of converting foreign currency to United States
dollars, the payment of fixed brokerage commissions on certain foreign
exchanges, which generally are higher than commissions on domestic exchanges,
and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, the Sponsor anticipates that adequate
information will be available to allow the Sponsor to supervise the Portfolio
as set forth in Administration of the Trust -- Trust Supervision.
On the basis of the best information available to the Sponsor at the present
time, none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this type
or because the issues qualify for an exemption, or the Trust, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trust.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an
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adverse impact on the marketability of international securities in the
Portfolio and on the ability of the Trust to satisfy its obligation to redeem
Units tendered to the Trustee for redemption (see Redemption).
Exchange Rate Fluctuation
In recent years, foreign exchange rates have fluctuated sharply. Income from
foreign equity securities held by the Trust, including those underlying any
ADRs or GDRs held by the Trust, as well as the trade value of the securities
themselves, would be payable in the currency of the country of their issuance.
However, the Trust will compute its income in United States dollars, and the
computation of income will be made on the date of its receipt by the Trust at
the foreign exchange rate in effect on that date. Therefore, if the value of
the foreign currency falls relative to the United States dollar between receipt
of the income or sale of the security and its conversion to United States
dollars, the risk of such decline will be borne by Holders. In addition, the
cost of converting such foreign currency to United States dollars would also
reduce the return to the Holder.
Depositary Shares and Receipts
American Depositary Shares ("ADSs"), and receipts therefor (ADRs), are issued
by an American bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. Global Depository Receipts are
receipts, issued by foreign banks or trust companies, or foreign branches of
U.S. banks, that represent an interest in shares of either a foreign or U.S.
corporation. These instruments may not necessarily be denominated in the same
currency as the securities into which they may be converted. Generally, ADSs
and ADRs are designed for use in the United States securities markets. For
purposes of this Prospectus the term ADR generally includes ADSs.
European Issuers
The Trust may be considered to be concentrated in common stock of European
companies. The economies of individual European countries may differ favorably
or unfavorably from the U.S. economy in gross national product, growth of gross
national product, rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. For a number of years, certain
European countries have been seeking economic and political unification, which
would reduce barriers between countries, increase competition among companies,
reduce government subsidies in certain industries and reduce or eliminate
currency fluctuations among these European countries. The Maastricht Treaty on
economic and monetary union attempts to provide a stable monetary framework. On
January 1, 1999, the European Monetary Union ("EMU") of eleven European nations
commenced. The countries in the European community face the need to reinforce
monetary cooperation in order to reduce the risk of a recurrence of tensions
between domestic and external policy objectives. A report of the European
Monetary Institute, the precursor of the new, single European central bank,
emphasized the need for several prospective member countries to undergo
strenuous cost cutting in the coming years. It also warned that high rates of
unemployment in many European countries could create a long-term strain on the
new currency unless countries change their labor policies, e.g., rigid work
rules and high taxes. No assurances can be given that these changes will result
in higher market prices for the European Securities in the Portfolio.
The risks associated with investing in European securities may be heightened
in the case of investments in smaller European securities markets because of
risks due to the inexperience of financial intermediaries, the lack of modern
technology, the lack of a sufficient capital base to expand business operations
and the possibility of permanent or temporary termination of trading and
greater spreads between bid and asked prices for securities in those markets.
Technology/Telecommunications Industries
The Trust may be considered to be concentrated in common stock of companies
engaged in
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technology related and/or telecommunications industries. The Trust's
investments in securities of technology related companies present certain risks
that may not exist to the same degree in other types of investments. Technology
stocks, in general, tend to be relatively volatile as compared to other types
of investments. Any such volatility will be reflected in the value of the
Trust's Units. The technology and science areas may be subject to greater
governmental regulation than many other areas and changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on these areas. Additionally, companies in these areas may be subject to
risks of developing technologies, competitive pressures and other factors and
are dependent upon consumer and business acceptance as new technologies evolve.
Competitive pressures may have a significant effect on the financial condition
of companies in the technology sector. For example, if technology continues to
advance at an accelerated rate, and the number of companies and product
offerings continues to expand, these companies could become increasingly
sensitive to short product cycles and aggressive pricing. Further, companies in
the technology industry spend heavily on research and development and are
subject to the risk that their products or services may not prove commercially
successful or may become obsolete quickly.
Certain companies whose securities are included in the Trust are engaged in
providing local, long-distance and wireless services, in the manufacture of
telecommunications products and in a wide range of other activities including
directory publishing, information systems and the operation of voice, data and
video telecommunications networks.
Payment on common stocks of companies in the telecommunications industry,
including local, long-distance and cellular service, the manufacture of
telecommunications equipment, and other ancillary services, is generally
dependent upon the amount and growth of customer demand, the level of rates
permitted to be charged by regulatory authorities and the effects of inflation
on the cost of providing services and the rate of technological innovation. To
meet increasing competition, companies may have to commit substantial capital,
particularly in the formulation of new products and services using new
technology. Telecommunications companies are undergoing significant change due
to varying and evolving levels of governmental regulation or deregulation and
other factors. As a result, competitive pressures are intense and the
securities of such companies may be subject to significant price volatility.
The companies in the Trust may consist of former government owned
telecommunications systems that have been privatized in states. The Sponsor
cannot predict whether such privatization will continue in the future or what,
if any, effect this will have on the Trust.
Liquidity
Since sales of the Securities by the Trust will be effected largely in
foreign securities markets, investors should realize that many of the
Securities may be traded in foreign countries where the securities markets are
not as developed or efficient as those of the United States. Foreign securities
markets, although growing in volume, generally have substantially less volume
than United States markets, and securities of many foreign companies are less
liquid and their prices more volatile than securities of comparable U.S.
companies. Fixed brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the United States and there
is generally less government supervision and regulation of exchanges, brokers
and issuers in foreign countries than there is in the United States. To the
extent the liquidity of these foreign facilities markets becomes impaired, the
ability of the Trust to respond to a substantial volume of requests for
redemption of Units received at or about the same time could be adversely
affected. This might occur, for example, as a result of economic or political
turmoil in a country in whose currency the Portfolio had a substantial portion
of its assets invested, or should relations between the United States and such
foreign country deteriorate markedly.
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Whether or not the Securities are listed on a foreign or national securities
exchange, the principal trading market for the Securities may be in the over-
the-counter market. As a result, the existence of a liquid trading market for
the Securities may depend on whether dealers will make a market in the
Securities. There can be no assurance that a market will be made for any of the
Securities, that any market for the Securities will be maintained or of the
liquidity of the Securities in any markets made. In addition, the Trust may be
restricted under the Investment Company Act of 1940 from selling Securities to
the Sponsor. The price at which the Securities may be sold to meet redemptions
and the value of the Units will be adversely affected if trading markets for
the Securities are limited or absent.
Legal Proceedings and Legislation
At any time after the Initial Date of Deposit, additional legal proceedings
may be initiated on various grounds, or legislation may be enacted, with
respect to any of the Securities in the Trust or to matters involving the
business of the issuer of the Securities. There can be no assurance that future
legal proceedings or legislation will not have a material adverse impact on the
Trust or will not impair the ability of the issuers of the Securities to
achieve their business and investment goals.
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 have taken 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
have been taken by the Trust's other service providers. 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 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 4.50% of the Public Offering
Price (4.712% of the net amount invested in Securities). The initial sales
charge is computed by deducting the deferred sales charge ($35.00 per 1,000
Units) from the aggregate maximum sales charge of 4.50%. The initial sales
charge on the Initial Date of Deposit is 1.00% of the Public Offering Price.
Subsequent to the Initial Date of Deposit, the amount of the initial sales
charge will vary with changes in the aggregate value of the Securities in the
Trust. The initial sales charge is deducted from the purchase price of a Unit
at the time of purchase and paid to the Sponsor. The first year deferred sales
charge is a monthly charge of $2.50 per 1,000 Units and is accrued in seven
monthly installments commencing on September 1, 2000 and will be charged to the
Capital Account on the first day of each month thereafter through March 1, 2001.
If a Deferred Sales Charge Payment Date is not a business day, the payment will
be charged to the Trust on the next business day. In addition, Holders who elect
to hold Units after April 25, 2001 (the "Special Redemption Date") will be
subject to an
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additional deferred sales charge of $17.50 per 1,000 Units. This second year
deferred sales charge will accrue in seven monthly installment of $2.50
commencing on May 1, 2001 through November 1, 2001 and will be charged to the
Capital Account. As a result, the maximum total sales charge assessed to such
Holders who elect not to hold Units past the Special Redemption Date of the
Trust will be 2.75% of the Public Offering Price (2.83% of the net amount
invested in Securities), while the maximum total sales charge assessed to such
Holders who do elect to hold Units past the Special Redemption Date of the
Trust will be 4.50% of the Public Offering Price (4.712% of the net amount
invested in Securities) (in each case assuming a $1,000 Public Offering Price
per 1,000 Units; due to fluctuations in the value of the Securities, the total
maximum sales charge may be more than 2.75% of 4.50% of the Public Offering
Price). To the extent that the entire first year deferred sales charge of
$17.50 per 1,000 Units has not been deducted at the time of repurchase or
redemption of Units prior to March 1, 2001, any unpaid amount will be deducted
from the proceeds or in calculating an in kind distribution. Similarly, to the
extent the entire second year deferred sales charge of $17.50 per 1,000 Units
has not been so deducted at the time of repurchase or redemption of units after
the Special Redemption Date but prior to November 1, 2001 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 March 15, 2000 (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 March 15, 2000 (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>
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.
- ------------
* 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.
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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 $2.50 per 1,000
Units.
On the Initial Date of Deposit, the Sponsor also realized a profit or loss on
deposit of the Securities into the Trust in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to the Trust (which is based on the aggregate value of the
Securities on the Date of Deposit) and the purchase price of such Securities to
the Sponsor. In the event that subsequent deposits are effected by the Sponsor
with the deposit of Securities (as opposed to cash or a letter of credit) with
respect to the sale of additional Units to the public, the Sponsor similarly
may realize a profit or loss. The Sponsor also may realize profits or sustain
losses as a result of fluctuations after the Initial Date of Deposit in the
aggregate value of the Securities and hence of the Public Offering Price
received by the Sponsor for Units. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement dates for purchase of Units may be
used in the Sponsor's business and may be of benefit to the Sponsor.
The Sponsor also receives an annual fee at the maximum rate of $.25 per 1,000
Units for the administrative and other services which it provides during the
life of the Trust (see Expenses and Charges--Fees). The Sponsor has not
participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the 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
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<PAGE>
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:
. the aggregate value of Securities in the Trust,
. amounts in the Trust, including dividends receivable on stocks trading
ex-dividend, and
. all other assets in the Trust.
deducting therefrom the sum of:
. taxes or other governmental charges against the Trust not previously
deducted,
. accrued fees and expenses of the Trustee (including legal and auditing
expenses), the Sponsor and counsel to the Trust and certain other
expenses, and
. amounts for distribution to Holders of record as of a date prior to the
evaluation.
The result of the above computation is divided by the number of Units
outstanding as of a date prior to the evaluation, and the result of such
computation is divided 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.
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.
After the initial public offering period, the Redemption Price per Unit will be
reduced to reflect the estimated cost of liquidating securities to meet
redemptions. 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
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<PAGE>
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 redeeming Holder if
the Holder tenders at least 1,000,000 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), except that with respect to any foreign
Security not held in ADR form, the value of that Security will be distributed
in cash.
In Kind Distributions on redemption of a minimum of 1,000,000 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 the Sponsor on behalf of any Holder to
obtain this more favorable price for the Holder.
(b) If the tendering Holder requests distribution in kind, the
Distribution Agent (or the Sponsor acting on behalf of the Distribution
Agent) shall sell any portion of the In Kind Distribution represented by
fractional interests in accordance with the foregoing and distribute net
cash proceeds to the tendering Holder together with certificates
representing whole shares of each of the Securities that comprise the In
Kind Distribution. (The Trustee may, however, offer the Sponsor the
opportunity to purchase the tendered Units in exchange for the numbers of
shares of each Security and cash, if any, which the Holder is entitled to
receive. The tax consequences to the Holder would be identical in either
case.)
Any amounts paid on redemption representing income received will be withdrawn
from the Income Account to the extent funds are available (an explanation of
such Account is set forth under Administration of the Trust -- Accounts and
Distributions). In addition, in implementing the redemption procedures
described above, the Trustee and the Distribution Agent shall make any
adjustments necessary to reflect differences between the Redemption Price of
the Units and the value of the In Kind Distribution as of the date of tender.
To the extent that Securities are distributed in kind, the size of the Trust
will be reduced.
A Holder may tender Units for redemption on any weekday (a "Tender Day")
which is not one of the following: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day (observed), Independence Day, Labor
Day, Thanksgiving or Christmas. The right of redemption
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<PAGE>
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:
. the aggregate value of the Securities determined by the Trustee,
. amounts in the Trust including dividends receivable on stocks trading ex-
dividend (with appropriate adjustments to reflect monthly distributions made
to Holders), and
. all other assets in the Trust;
deducting therefrom the sum of:
. taxes or other governmental charges against the Trust not previously
deducted,
. accrued fees and expenses of the Trustee (including legal and auditing
expenses), the Sponsor and counsel to the Trust and certain other expenses,
and
. 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, which shall be deemed to be the New York Stock Exchange if the
Securities are listed thereon, (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 on the last reported sales
prices as of the Evaluation Time on the over-the-counter market by one or more
reporting service (unless the Trustee deems such mean inappropriate as a basis
for evaluation) or, if no such prices are available, (1) on the basis of the
mean between current bid and offer prices on the over-the-counter market, (2)
on the basis of the mean between current bid and offer prices for comparable
securities, (3) 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 (4)
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
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<PAGE>
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.
The estimated expenses set forth in the Fee Table do not include the
brokerage commissions payable by the Trust in purchasing and selling
Securities.
Other Charges -- These include: (1) fees of the Trustee for extraordinary
services (for example, making distributions due to failure of contracts for
Securities), (2) expenses of the Trustee incurred for the benefit of the Trust
(including legal and auditing expenses) and expenses of counsel designated by
the Sponsor, (3) various governmental charges and fees and expenses for
maintaining the Trust's registration statement current with Federal and State
authorities, (4) expenses and costs of action taken by the Sponsor, in its
discretion, or the Trustee, in its discretion, to protect the Trust and the
rights and interests of Holders (for example, expenses in exercising the
Trust's rights under the underlying Securities), (5) indemnification of the
Trustee for any losses, liabilities and expenses incurred without gross
negligence, bad faith or willful misconduct on its part, (6) indemnification of
the Sponsor for any losses, liabilities and expenses incurred without gross
negligence, bad faith, willful misconduct or reckless disregard of their duties
and (7) expenditures incurred in contacting Holders upon termination of the
Trust. The amounts of these charges and fees are secured by a lien on the
Trust.
Payment of Expenses -- Funds necessary for the payment of the above fees will
be obtained in the following manner: (1) first, by deductions from the Income
Accounts (see below); (2) to the extent the Income Account funds are
insufficient, by distribution from the Capital Accounts (see below) (which will
reduce income distributions from the Accounts); and (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.
Since the Securities are all common stocks, and the income stream produced by
dividend payments
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<PAGE>
thereon is unpredictable (see 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.
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
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<PAGE>
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. The Sponsor intends to review the desirability
of retaining any Security in the Portfolio if its Investment Rating is reduced
below 3 by the Sponsor's Research Department. The Sponsor is authorized under
the Indenture to direct the Trustee to invest the proceeds of any sale of
Securities not required for redemption of Units in eligible money market
instruments having fixed final maturity dates no later than the next
Distribution Day (at which time the proceeds from the maturity of said
instrument shall be distributed to Holders) which are selected by the Sponsor
and which will include only the following instruments:
(i) Negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which
have, together with their branches or subsidiaries, more than $2 billion in
total assets, except that certificates of deposit or time deposits of
smaller domestic banks may be held provided the deposit does not exceed the
insurance coverage on the instrument (which currently is $100,000), and
provided further that the Trust's aggregate holding of certificates of
deposit or time deposits issued by the Trustee may not exceed the insurance
coverage of such obligations and (ii) U.S. treasury notes or bills.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion
it is in the best interest of the Holders of the Units to do so. In addition,
the Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the
Trustee to accept or reject such an offer or 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
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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 "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
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Security when practicable (provided that it becomes available within 110 days
after the Initial Date of Deposit), (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.
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
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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 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, Global Research Selections (an
"Exchange Series") at their relative net asset values, subject only to the
remaining deferred sales charge (as disclosed in the prospectus for the
Exchange Series). The exchange option described above will also be available to
investors in the Trust who elect to purchase units of an Exchange Series within
60 days of their liquidation of Units in the Trust.
Holders who retain their Units until the termination of the Trust may be able
to reinvest their terminating distributions into units of a subsequent series
of Equity Focus Trusts, Global Research Selections (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. Holders will pay their share of any
brokerage commissions on the sale of underlying Securities when their Units are
liquidated during the exchange or rollover. 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
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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 his or her 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.
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
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become effective upon the acceptance of appointment by the successor. In case
of such resignation or removal the Sponsor is to use its best efforts to
appoint a successor promptly and if upon resignation of the Trustee no
successor has accepted appointment within thirty days after notification, the
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Trustee shall be under no liability for any action taken in good
faith in reliance on prima facie properly executed documents or for the
disposition of monies or Securities, nor shall it be liable or responsible in
any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for any
taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee.
Sponsor
The Sponsor may resign at any time if a successor Sponsor is appointed by the
Trustee in accordance with the Indenture. Any new Sponsor must have a minimum
net worth of $2,000,000 and must serve at rates of compensation deemed by the
Trustee to be reasonable and as may not exceed amounts prescribed by the SEC.
If the Sponsor fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then the
Trustee may (1) appoint a successor Sponsor at rates of compensation deemed by
the Trustee to be reasonable and as may not exceed amounts prescribed by the
SEC, (2) terminate the Indentures and liquidate the 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 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
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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 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 (and Securities) held for more than one year may be subject to
a reduced tax rate of 20% on such gains, rather than the "regular"
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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 (and the
Trust has held the Securities) for more than one year. Capital losses are
generally 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 Trust may hold Securities or ADRs or GDRs of foreign corporations. For
United States income tax purposes, a holder of ADRs or GDRs is treated as
though it were holding directly the shares of the foreign corporation
represented by the ADRs or GDRs. Dividends paid by foreign issuers generally
will be subject to foreign withholding tax, which may entitle Holders to a
foreign tax credit (or deduction) against their U.S. income tax liability,
subject to the limitations applicable to the use of the foreign tax credit.
Foreign taxes withheld on payments to the Trust may be greater than the amounts
that would be withheld if the shares were held directly by a U.S. Holder. The
Trust will report as gross income earned by U.S. Holders their pro rata shares
of such dividends, including their pro rata shares of any corresponding amounts
of foreign tax withheld and their pro rata shares of any income or loss
resulting from currency conversion transactions. Gains and losses attributable
to increases or decreases in the value of foreign currencies in which such
securities are denominated, or in which dividends are paid, will be treated as
ordinary income or ordinary loss. Capital gains attributable to the Units or
the underlying Securities may also be subject to taxes by certain of those
jurisdictions.
The foregoing discussion relates only to the tax treatment of U.S. Holders
with regard to Federal and certain aspects of New York State and City income
taxes. Holders that are not U.S. citizens or residents ("Foreign Holders")
should be aware that dividend distributions from 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.
* * *
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
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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
Units of 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 be eligible for tax-deferred rollover treatment and, in
very limited cases, special 10 year averaging. 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, as amended ("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.
Auditors
The Statement of Financial Condition and the Portfolio included in this
Prospectus have been audited by KPMG 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
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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.
38
<PAGE>
Equity Focus Trusts
Global Research Selections
Series 2000-A
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
Trust set forth in its registration statements filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 (file
no. 333-31514) and the Investment Company Act of 1940 (file no. 811-3491), and
to which reference is hereby made. Copies may be reviewed at the Commission or
on the internet, or obtained from the Commission at prescribed rates by:
. calling: 1-800-SEC-0330
. visiting the SEC internet address: http://www.sec.gov.
. writing: Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549-6009
- --------------------------------------------------------------------------------
Index
<TABLE> Sponsor:
<S> <C> Salomon Smith Barney
Investment Summary 2 Inc. 388 Greenwich
Summary of Essential Information 5 Street 23rd Floor New
Independent Auditors' Report 7 York, New York 10013
Statement of Financial Condition 8 (212) 816-4000
Portfolio 9
Description of the Trust 12 Trustee:
Risk Factors 15
Public Sale of Units 21 The Chase Manhattan Bank
Market for Units 24 4 New York Plaza New
Redemption 24 York, New York 10004
Expenses and Charges 26 (800) 354-6565
Administration of the Trust 28
Exchange and Rollover Privileges 32
Reinvestment Plan 33
Resignation, Removal and Limitations
on Liability 33
Taxes 34
Miscellaneous 37
</TABLE>
- --------------------------------------------------------------------------------
SalomonSmithBarney
----------------------------
A member of citigroup [LOGO]
- --------------------------------------------------------------------------------
No person is authorized to give any information or to make any representations
with respect to this Trust, not contained in this Prospectus and you should not
rely on any other information.
- --------------------------------------------------------------------------------
UT6634
<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 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.
*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 LLP to the use of their name under the heading
"Miscellaneous--Auditors" in the Prospectus.
</TABLE>
- ------------
* Filed herewith.
II-2
<PAGE>
SIGNATURES
The registrant hereby identifies Equity Focus Trusts, Global Research
Selections (Reg. No. 333-85687) for the purposes of the representations
required by Rule 487 and represents the following:
(1) That the portfolio securities deposited in the series as to which
this registration statement is being filed do not differ materially in type
or quality from those deposited in such previous series;
(2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential information
for, the series with respect to which this registration statement is being
filed, this registration statement does not contain disclosures that differ
in any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined by
the Commission or the staff; and
(3) That it has complied with Rule 460 under the Securities Act of 1933.
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
14th day of March, 2000.
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
<PAGE>
EXHIBIT 1.1.1
EQUITY FOCUS TRUSTS,
GLOBAL RESEARCH SELECTIONS, SERIES 2000-A
REFERENCE TRUST INDENTURE
Dated as of March 14, 2000
This Trust Indenture between Salomon Smith Barney Inc., as
Sponsor, and The Chase Manhattan Bank, as Trustee (the "Indenture") sets forth
certain provisions in full and incorporates other provisions by reference to the
document entitled "Equity Focus Trusts, Standard Terms and Conditions of Trust
for Series formed on or subsequent to March 14, 2000" (the "Standard Terms and
Conditions of Trust") and such provisions as are set forth in full herein and
such provisions as are incorporated by reference constitute a single instrument.
All references herein to Articles and Sections are to Articles and Sections of
the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Sponsor and the Trustee agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a part of
this instrument as fully and to the same extent as though said provisions had
been set forth in full in this instrument
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
<PAGE>
(a) The Securities (including Contract Securities) deposited hereunder
are those listed in the Prospectus under Portfolio relating to the Global
Research Selections, Series 2000-A.
(b) SECTION 2.02 is hereby amended by adding the following sentence as
the second sentence of SECTION 2.02: "Effective as of the Evaluation Time on
March 15, 2000, in the event that the aggregate value of Securities in the Trust
has increased since the evaluation on March 14, 2000, the Trustee shall issue
such number of additional Units to the Holder of outstanding Units as of the
close of business on March 14, 2000, that the price per Unit computed as of the
Evaluation Time on March 15, 2000, plus the maximum applicable sales charge
shall equal approximately $1 per Unit (based on the number of Units outstanding
as of said Evaluation Time, including the additional Units issued pursuant to
this sentence); in the event that the aggregate value of Securities in the Trust
Fund has decreased since the evaluation on March 14, 2000, there will be a
reverse split of the outstanding Units, and said Holder will surrender to the
Trustee for cancellation such number of Units, that the price per Unit computed
as of the Evaluation Time on March 15, 2000 plus the maximum applicable sales
charge shall equal approximately $1 per Unit (based on the number of Units
outstanding as of said Evaluation Time, reflecting cancellation of Units
pursuant to this sentence)."
(c) For purposes of SECTION 7.03 the amount per year as compensation
for the Sponsor is hereby specified as the amount set forth under Summary of
Essential Information in the Prospectus as Sponsor's Annual Fee.
(d) For purposes of SECTION 8.05, the amount per year specified as
compensation for the Trustee is hereby specified as the amount set forth under
Summary of Essential Information in the Prospectus as Trustee's Annual Fee.
(e) For purposes of SECTION 9.01, the Termination Date shall be the
dates specified in the Prospectus under Mandatory Termination of Trust in the
Summary of Essential Information.
This Indenture shall be deemed effective when executed and delivered by
the Sponsor and the Trustee.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Indenture to be duly executed.
SALOMON SMITH BARNEY INC.
Sponsor
By: /s/ Kevin Kopczynski
------------------------------
Title: Senior Vice President
<PAGE>
THE CHASE MANHATTAN BANK, Trustee
By: /s/ Lionel Cottino
------------------------------
Title: Second Vice President
SEAL
ATTEST:
By: /s/ Rachelle Cohen
------------------------------
Rachelle Cohen
<PAGE>
Exhibit 2.1
EQUITY FOCUS TRUSTS
SALOMON SMITH BARNEY INC.,
Sponsor
THE CHASE MANHATTAN BANK,
Trustee
STANDARD TERMS
AND
CONDITIONS OF TRUST
FOR SERIES FORMED ON OR SUBSEQUENT TO THE
EFFECTIVE DATE SPECIFIED BELOW
DATED: MARCH 14, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
INTRODUCTION.....................................................................................1
ARTICLE I Definitions..........................................................................1
ARTICLE II Declaration of Trust; Original Issuance of Units.....................................6
SECTION 2.01 Declaration of Trust..................................................6
SECTION 2.02 Issuance of Units.....................................................6
SECTION 2.03 Conveyance of Interest of Sponsor.....................................6
SECTION 2.04 Certain Contracts Satisfactory........................................6
ARTICLE III Administration of Trust Fund.........................................................6
SECTION 3.01 Certain Moneys to Be Credited to Income Account; Advances
by Trustee............................................................6
SECTION 3.02 Certain Moneys to Be Credited to Capital Account......................7
SECTION 3.03 Establishment of Reserve Account......................................7
SECTION 3.04 Certain Deductions and Distributions..................................7
SECTION 3.05 Dividend Reinvestment Program........................................10
SECTION 3.06 Deposit of Additional Securities.....................................10
SECTION 3.07 Statements and Reports...............................................14
SECTION 3.08 Sale of Securities and of Certain Rights.............................15
SECTION 3.09 Reorganization or Similar Event......................................16
SECTION 3.10 Counsel..............................................................16
SECTION 3.11 Purchase of Substitute Securities....................................17
SECTION 3.12 Notice and Sale by Trustee...........................................18
SECTION 3.13 Action by Trustee Regarding Securities...............................18
SECTION 3.14 Trustee Not to Adjust Accounts.......................................18
SECTION 3.15 Notice of Change in Capital Account..................................19
SECTION 3.16 Foreign Exchange Transactions........................................19
SECTION 3.17 Extraordinary Distributions..........................................19
SECTION 3.18 Grantor Trust Status.................................................19
SECTION 3.19 Deferred Sales Charge................................................19
ARTICLE IV Evaluation of Securities............................................................20
SECTION 4.01 Evaluation of Securities.............................................20
SECTION 4.02 Liability of the Trustee.............................................21
ARTICLE V Trust Fund Evaluation and Redemption of Units.......................................22
SECTION 5.01 Trust Fund Evaluation................................................22
SECTION 5.02 Redemption of Units..................................................23
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
SECTION 5.03 Sponsor's Repurchase in Secondary Market.............................27
ARTICLE VI Transfer of Units...................................................................27
SECTION 6.01 Transfer of Units....................................................27
SECTION 6.02 Book-Entry Units.....................................................27
ARTICLE VII Sponsor.............................................................................28
SECTION 7.01 Certain Matters Regarding Succession.................................28
SECTION 7.02 Liability of Sponsor and Indemnification.............................28
SECTION 7.03 Compensation of Sponsor..............................................29
ARTICLE VIII Trustee............................................................................29
SECTION 8.01 General Matters Relating to Trustee..................................29
SECTION 8.02 Books and Records....................................................33
SECTION 8.03 Reports to Securities and Exchange Commission and Others.............34
SECTION 8.04 Indenture and List of Securities on File.............................34
SECTION 8.05 Compensation of Trustee..............................................34
SECTION 8.06 Resignation, Discharge or Removal of Trustee; Successors.............35
SECTION 8.07 Qualification of Trustee.............................................36
ARTICLE IX Termination.........................................................................36
SECTION 9.01 Procedure Upon Termination...........................................36
SECTION 9.02 Moneys to be Held in Trust Without Interest..........................37
SECTION 9.03 Dissolution of Sponsor Not to Terminate..............................37
ARTICLE X Miscellaneous Provisions............................................................38
SECTION 10.01 Amendment and Waiver.................................................38
SECTION 10.02 Initial Cost.........................................................38
SECTION 10.03 Registration (Initial and Current) of Units and Trust Fund...........39
SECTION 10.04 Certain Matters Relating to Holders..................................39
SECTION 10.05 New York Law to Govern...............................................40
SECTION 10.06 Notices..............................................................40
SECTION 10.07 Severability.........................................................40
SECTION 10.08 Separate and Distinct Series.........................................40
</TABLE>
-ii-
<PAGE>
EQUITY FOCUS TRUSTS
STANDARD TERMS AND CONDITIONS OF TRUST
For Series formed on or subsequent to
the effective date specified below
Effective as of
March 14, 2000
These Standard Terms and Conditions of Trust effective as of March 14,
2000 executed by Salomon Smith Barney Inc., as Sponsor, and The Chase Manhattan
Bank, as Trustee,
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Sponsor and the Trustee agree as follows:
INTRODUCTION
These Standard Terms and Conditions of Trust shall be applicable to
Series of Equity Focus Trusts formed on or subsequent to the effective date
hereof. For each Series of the Equity Focus Trusts to which these Standard
Terms and Conditions of Trust are to be applicable, the Sponsor and the Trustee
shall execute a Trust Indenture (or supplement or amendment to such Trust
Indenture) incorporating by reference these Standard Terms and Conditions of
Trust and designating any exclusion from or exception to such incorporation by
reference for the purposes of that series or variation of the terms hereof for
the purposes of that series and specifying for that series (i) the Securities
deposited in trust, (ii) the sponsor's fee and (iii) the Trustee's fee.
ARTICLE I
Definitions
-----------
Whenever used in this Indenture, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Business Day
------------
Any day other than a Saturday, Sunday or, in The City of New York, a
legal holiday or a day on which banking institutions are authorized by law to
close or a day on which the Sponsor is closed.
<PAGE>
Capital Account
- ---------------
The account created pursuant to Section 3.02.
Certificate
- -----------
If the Reference Trust Indenture specifies that Units may be evidenced
by Certificates, any Certificate manually executed by the Trustee, with the
manual or facsimile signature by the Sponsor in each case in such form as shall
be authorized by the Sponsor.
Contract Securities
- -------------------
Securities which are to be acquired by the Trust Fund pursuant to
contract.
Deposit Certificate
- -------------------
The meaning assigned to it in Section 2.02.
Distribution Agent
- ------------------
The Chase Manhattan Bank, or its successor, unless a different
Distribution Agent is designated in the Prospectus for the Trust.
Distribution Day
- ----------------
The dates for distribution from the Income Account and Capital Account
specified in the Prospectus.
Evaluation Time
- ---------------
The close of trading on the New York Stock Exchange, unless another
meaning is specified in the Prospectus.
Failed Contract Securities
- --------------------------
The meaning assigned to it in Section 3.11.
Holder
- ------
The registered holder of any Unit, whether or not evidenced by a
Certificate, as recorded on the registration books of the Trustee.
-2-
<PAGE>
Income
- ------
Any dividend distribution by an issuer of a Security in respect
thereof, whether or not such distribution is taxable to the recipient thereof.
Income Account
- --------------
The account created pursuant to Section 3.01.
Indenture
- ---------
These Standard Terms and Conditions of Trust and the Reference Trust
Indenture and all amendments and supplements hereto and thereto.
Income Distribution
- -------------------
The meaning assigned to it in Section 3.04.
Prospectus
- ----------
The prospectus relating to the Trust Fund dated the date of the
Reference Trust Indenture filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933, as amended.
Record Day
- ----------
The Record Day for distributions from the Income Account and Capital
Account shall be the dates specified in the Prospectus.
Redemption Date
- ---------------
The meaning assigned to it in Section 5.02.
Redemption Distribution
- -----------------------
The meaning assigned to it in Section 5.02.
Reference Trust Indenture
- -------------------------
The Trust Indenture for the particular series of the Equity Focus
Trusts into which these Standard Terms and Conditions of Trust are incorporated
and all amendments and supplements thereto.
-3-
<PAGE>
Reserve Account
- ---------------
The account created pursuant to Section 3.03.
Restricted Securities
- ---------------------
Securities which were acquired in private placements and which at the
time cannot, in the opinion of counsel designated by the Sponsor and
satisfactory to the Trustee, be sold publicly by the Trustee without
registration under the Federal Securities Act of 1933, as amended (or similar
provisions of law subsequently enacted).
Securities
- ----------
The equity securities, including Contract Securities, (a) which are
listed or referred to as Securities in the Prospectus, (b) which have been
received by the Trust Fund in exchange or substitution pursuant to Section 3.09
hereof or in replacement of Failed Contract Securities pursuant to Section 3.11
or (c) which have been purchased by, or which the Trustee has contracted to
purchase on behalf of, the Trust Fund pursuant to Section 3.04 hereof, as may
from time to time continue to be held as a part of the Trust Fund.
Sponsor
- -------
Salomon Smith Barney Inc. or its successor or any successor Sponsor
appointed as herein provided.
Substitute Securities
- ---------------------
The meaning assigned to it in Section 3.11.
Tender Day
- ----------
The meaning assigned to it in Section 5.02.
Trust Fund
- ----------
The trust created by this Indenture which shall consist of the
Securities and all undistributed income or other amounts received or receivable
thereon and any undistributed cash held in the Capital and Income Accounts or
otherwise realized from the sale or liquidation of the Securities, exclusive of
any amounts which may be on deposit in the Reserve Account.
-4-
<PAGE>
Trust Fund Cash Evaluation
- --------------------------
The meaning assigned to it in Section 5.01(b).
Trust Fund Evaluation
- ---------------------
The meaning assigned to it in Section 5.01(a).
Trust Year
- ----------
The meaning assigned to it in Section 3.07.
Trustee
- -------
The Chase Manhattan Bank, or its successors or any successor Trustee
appointed as herein provided.
Unit
- ----
Each Unit of fractional undivided interest in and ownership of the
Trust Fund which shall be initially equal to the fraction specified in the
"Summary of Essential Information" in the Prospectus, the denominator of which
fraction shall be decreased by the number of any Units redeemed as provided in
Section 5.02 and increased by any additional Units which are specified in a
supplement or amendment to the Reference Trust Indenture or a Deposit
Certificate. Whenever reference is made herein to the "interest" of a Holder in
the Trust Fund or in the Income or Capital Accounts it shall mean such
fractional undivided interest represented by the number of Units held of record
by such Holder.
Unit Cash Value
- ---------------
The value of the fractional undivided interest and ownership of cash
in the Trust Fund represented by each Unit as determined in accordance with
Section 5.01(b) by a Trust Fund Cash Evaluation.
Unit Value
- ----------
The value of the fractional undivided interest and ownership of the
Trust Fund represented by each Unit as determined in accordance with Section
5.01(a) by a Trust Fund Evaluation.
-5-
<PAGE>
ARTICLE II
Declaration of Trust;
Original Issuance of Units
--------------------------
SECTION 2.01 Declaration of Trust. The Trustee declares that it
--------------------
holds and will hold the Trust Fund as Trustee in trust upon the trusts herein
set forth for the use and benefit of all present and future Holders.
SECTION 2.02 Issuance of Units. The Trustee acknowledges that the
-----------------
Securities and contracts for the purchase of Contract Securities listed under
the heading "Portfolio" in the Prospectus have been deposited with it by the
Sponsor on the date of the Reference Trust Indenture and on the same date it has
registered on the transfer books of the Trust to or on the order of the Sponsor
in exchange therefor the aggregate number of Units set forth under "Summary of
Essential Information - Initial Number of Units", in the Prospectus. On the
date of any supplement or amendment to the Reference Trust Indenture or upon the
delivery to the Trustee of a certificate (a "Deposit Certificate") relating to
the deposit of additional securities specified therein the Trustee shall
acknowledge that the Securities described therein have been deposited with it by
delivering to or on the order of the Sponsor in exchange therefor the Units
specified in such amendment or supplement or in such Deposit Certificate.
SECTION 2.03 Conveyance of Interest of Sponsor. The Sponsor hereby
---------------------------------
does, and at the time of any supplement or amendment to the Reference Trust
Indenture or delivery of any Deposit Certificate by execution thereof shall,
grant and convey all of its right, title and interest in and to the Securities
to the Trustee for the benefit of each Holder to the extent of such Holder's
interest in the Trust Fund.
SECTION 2.04 Certain Contracts Satisfactory. The Sponsor hereby
------------------------------
approves as satisfactory in form and substance the contracts to be entered into
or assumed by the Trustee with regard to any Securities listed under the heading
"Portfolio" in the Prospectus or in any Deposit Certificate acknowledged by the
Trustee and hereby authorize the Trustee on behalf of the Trust Fund to enter
into or assume such contracts, and otherwise to carry out the terms and
provisions thereof in order to complete the purchase of the Securities covered
thereby.
ARTICLE III
Administration of Trust Fund
----------------------------
SECTION 3.01 Certain Moneys to Be Credited to Income Account;
------------------------------------------------
Advances by Trustee. (a) Except to the extent that the Trustee is
- -------------------
participating in a dividend reinvestment program of an issuer of Securities in
accordance with Section 3.05, the Trustee shall collect the Income on the
Securities as it becomes payable and credit all Income to a separate account to
be
-6-
<PAGE>
known as the "Income Account", on the date on which the Trust Fund is entitled
to receive such income.
(b) The Trustee shall advance out of its own funds and cause to be
deposited in and credited to the Income Account any amount necessary to permit
the payment of the Income Distribution required to be made by the Trustee out of
the Income Account on each such Distribution Day; provided, however, that the
Trustee shall be entitled to be reimbursed without interest out of the Trust
Fund for any and all amounts advanced by it pursuant to this Section 3.01(b) on
the first Record Day following the date of such advance on which such amounts
may be reimbursed to the Trustee without reducing the amount in the Income
Account to an amount less than that required to make the Income Distribution
called for by Section 3.04 hereof.
SECTION 3.02 Certain Moneys to Be Credited to Capital Account. All
------------------------------------------------
moneys other than amounts credited to the Income Account received by the Trustee
in respect of the Securities under this Indenture (including all monies realized
by the Trustee from the sale of options, warrants or other similar rights
received in respect of the Securities) shall be credited to a separate account
to be known as the "Capital Account"; provided, however, that moneys which are
required to cover the purchase of Contract Securities shall be held specially by
the Trustee for such purchase and shall not be deemed to be part of the Capital
Account until the Sponsor shall have notified the Trustee that such contracts
have failed and the Trustee has received directions to distribute such moneys;
and provided, further, that moneys in the Capital Account available from the
sale of Securities pursuant to Section 3.08 shall be held specially for
distribution on the next succeeding Distribution Day following notification of
failure or receipt of proceeds, as the case may be.
SECTION 3.03 Establishment of Reserve Account. From time to time
--------------------------------
the Trustee may withdraw from the Income or Capital Accounts such amounts as it,
in its sole discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trust Fund. Such amounts so withdrawn shall be credited to a separate account
which shall be known as the "Reserve Account". The Trustee shall not be
required to distribute to the Holders any of the amounts in the Reserve Account;
provided, however, that if it, in its sole discretion, determines that such
amounts are no longer necessary for payment of any applicable taxes or other
governmental charges, then it shall promptly deposit such amounts in the account
from which withdrawn or if the Trust Fund has been terminated or shall be in the
process of termination, the Trustee shall distribute to each Holder such
holder's interest in the Reserve Account in accordance with Section 9.01.
SECTION 3.04 Certain Deductions and Distributions. On or before
------------------------------------
each Distribution Day the Trustee shall:
-7-
<PAGE>
(a) deduct from the Income Account, or to the extent funds are not
available in such Account, from the Capital Account and pay to itself
individually (i) any unpaid amounts that it is at the time entitled to
receive pursuant to Section 8.05 on account of its services theretofore
performed and expenses theretofore incurred and (ii) the amounts that it is
at the time entitled to receive under the terms of Section 3.01(b) in
reimbursement of amounts advanced by it pursuant to that Section;
(b) deduct from the Income Account, or to the extent funds are not
available in such Account, from the Capital Account an amount equal to
unpaid fees and expenses, if any, of counsel pursuant to Section 3.10 as
certified by the Sponsor;
(c) deduct from the Income Account, or to the extent funds are not
available in such Account, from the Capital Account the accrued portion of
the amount specified as compensation for the Sponsor in the Prospectus, and
hold such amount until it is payable as set forth below.
Quarterly or at such other times as the Sponsor shall determine, the
Sponsor may deliver to the Trustee a certificate in satisfactory form to the
Trustee, upon which the Trustee may rely, authorizing the Trustee to distribute
to the Sponsor on such Distribution Day, the amounts that the Sponsor is at the
time entitled to receive pursuant to Section 7.06 on account of certain
administrative services theretofore performed (calculated on the basis of a
daily accrual of the annual Sponsor's fee specified in the Reference Trust
Indenture). Any amounts that the Trustee has withheld pursuant to the
immediately preceding paragraph in excess of the amount to which the Sponsor is
entitled pursuant to Section 7.06, shall be distributed on the Distribution Day
next following the first Distribution after the conclusion of each annual period
among all the Holders of record at the close of business on the preceding Record
Day.
The Trustee shall as of each Record Day compute the amount
distributable from the Income Account to Holders on the next Distribution Day
(the "Income Distribution"), which amount, subject to the limitations on the
Trustee's advances set forth in SECTION 3.01(b), shall be equal to the cash
balance of the Income Account plus any amount receivable on obligations
purchased pursuant to SECTION 3.06(h) on or before the following Distribution
Day less accrued and unpaid expenses of the Trust fund and any amounts payable
from the Income Account in respect of Units tendered for redemption prior to
such Record Day divided by the number of Units outstanding on such Record Day;
provided, however, that as of the Record Date occurring in the month of December
of each calendar year, the Trustee shall advance to the Income Account, and
shall include in the cash balance thereof, the amount of any dividends not
received as of such Record Date which are payable to the Trust Fund prior to the
end of the calendar year, and provided further that the Trustee may increase or
decrease the amount of the resulting calculation in order to reflect the
differences in Income actually received or fees, expenses, losses, liabilities
or advances actually incurred or made in any prior period from the amounts
estimated therefor. The Trustee shall withhold from a Holder's Income
Distribution any portion of the Deferred Sales Charge, if any, deductible
therefrom pursuant to Section 3.19
-8-
<PAGE>
hereof. The Trustee shall be entitled to be reimbursed, without interest, for
any and all amounts advanced by it pursuant to the preceding sentence, or
otherwise hereunder, from funds subsequently received by the Trust Fund as
income on any of the Securities. The Trustee shall be deemed to be the
beneficial owner of the income of the Trust Fund to the extent such income is
required to reimburse the Trustee for amounts advanced by it pursuant to this
Section and to such extent shall have a lien on the assets of the Trust Fund
prior to the interest of the Holders.
Subject to the provisions of the succeeding two paragraphs,
distributions shall be made as follows: on or shortly after each Distribution
Day the Trustee shall distribute by check mailed to each Holder of record at the
close of business on the preceding Record Day, at the post office address of the
Holder appearing on the record books of the Trustee or by any other means
mutually agreed upon by the Holder and the Trustee, an amount substantially
equal to the Income Distribution in respect of such Distribution Day, plus the
Holder's pro rata share of the cash balance of the Capital Account (but not
including cash required to purchase Contract Securities or held for reinvestment
in Substitute Securities pursuant to Section 3.11) computed as of the close of
business on the preceding Record Day; provided, however, that the Trustee in its
-------- -------
discretion may on any Distribution Day determine that the amount of the Income
Distribution per Unit should be adjusted because of any unusual or extraordinary
increase or decrease in the expenses incurred or expected to be incurred by the
Trust Fund; and, provided further, that the Trustee shall not be required to
-------- -------
make a distribution from the Capital Account unless the cash balance on deposit
therein available for distribution shall be sufficient to distribute at least
the amount per Unit specified in the Prospectus. In making the computation of
such Holder's interest in the balance of the Income Capital Accounts, fractions
of less than one cent per unit may be omitted.
In the event that the Sponsor adopts a Reinvestment Plan the cash
distributions to Holders shall be automatically reinvested by the Sponsor in
additional Units of the Trust. Units of the Trust purchased under the
Reinvestment Plan shall be purchased at the Sponsor's Repurchase Price (the net
asset value per Unit without a sales charge) in effect at the close of business
on the Distribution Day. The Units purchased may be either previously issued
Units repurchased by the Sponsor or newly created Units created upon the deposit
of additional Securities in the Trust. The cost of the Reinvestment Plan will be
borne by the Sponsor, at no additional cost to the Trust or individual Holders.
Holders will receive an account statement reflecting any purchase of Units under
the Reinvestment Plan. The Sponsor reserves the right to amend, modify or
terminate the Reinvestment Plan at any time without prior notice.
A Holder may elect not to participate in the Reinvestment Plan by
notifying his or her financial consultant at Salomon Smith Barney Inc. or by
notifying the Trustee in writing by ten days prior to the Distribution Day,
which election may be modified or terminated by similar notice. The Sponsor
shall promptly inform the Trustee of any election or modification or termination
thereof received by it from a Holder and the Trustee shall be authorized
conclusively to rely on any notice so received from the Sponsor. In the event
the Holder elects not to participate in the Reinvestment Plan, or in the event
that the Sponsor does not adopt or
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terminates a Reinvestment Plan, the Trustee shall distribute the amount
described above by check mailed to each Holder of record at the close of
business on the preceding Record Day, at the post office address of the Holder
appearing on the record books of the Trustee or by any other means mutually
agreed upon by the Holder and the Trustee.
SECTION 3.05 Dividend Reinvestment Program. In the event an issuer of
-----------------------------
a security has a shareholder dividend reinvestment plan, a stock purchase plan
or a similar plan under which its shareholders may automatically reinvest their
dividends or invest optional cash payments in additional shares of the issuer's
common stock without brokerage commission or service charge or otherwise on a
basis favorable to the shareholder in the opinion of the Sponsor, the Trust Fund
(as a shareholder of such issuer), upon direction of the Sponsor, may
participate in such plans to the extent practicable given the other restrictions
on the purchase of Additional Securities. In such event, any additional shares
so purchased shall be immediately distributed to the Distribution Agent for the
pro rata benefit of the Holders, with instructions to the Distribution Agent to
sell the shares. The instructions shall set forth the names of the Holders and
the number of Units held by each Holder. Holders of Units will receive a cash
distribution of their pro rata share of the sales proceeds received by the
Distribution Agent (net of expenses and sales commissions), and any income
earned by the Trust Fund as a participant.
SECTION 3.06 Deposit of Additional Securities. (a) Subject to the
--------------------------------
requirements set forth below in this Section, the Sponsor may, on any Business
Day (the "Trade Date"), subscribe for Additional Units as follows:
(1) Prior to the Evaluation Time on the Trade Date, the Sponsor shall
provide notice (the "Subscription Notice") to the Trustee, by telecopy or
by written communication, of the Sponsor's intention to subscribe for
Additional Units. The Subscription Notice shall identify the additional
Securities to be acquired ("Additional Securities") (unless such Additional
Securities are a precise replication of the then existing portfolio) and
shall either (i) specify the quantity of Additional Securities to be
deposited by the Sponsor on the settlement date for such subscription or
(ii) instruct the Trustee to purchase Additional Securities with an
aggregate value as specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such Business Day, the
Sponsor shall verify with the Trustee, by telecopy, the number of
Additional Units to be created.
(3) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver the Additional Units created
thereby (which time shall not be later than the time by which the Trustee
is required to settle any contracts for the purchase of Additional
Securities entered into by the Trustee pursuant to the instruction of the
Sponsor referred to in subparagraph (1) above), the Sponsor shall deposit
with the Trustee (i) any Additional Securities specified in the
Subscription Notice (or contracts to purchase
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such Additional Securities together with cash or a letter of credit in the
amount necessary to settle such contracts) or (ii) cash or a letter of
credit in the amount equal to the aggregate value of the Additional
Securities specified in the Subscription Notice, together with, in each
case, cash equal to a pro rata portion of the Trust Fund Cash Evaluation
(as defined in Section 5.01(b) bearing the same ratio to the Units created
by the deposit as the Trust Fund Cash Evaluation bears to the Units
outstanding immediately prior to the deposit. Each deposit made pursuant to
this Section 3.06 during the 90 days following the initial date of deposit
shall replicate, to the extent practicable, the original proportionate
relationship among the number of shares of each Security in the Trust Fund
established on the initial date of deposit (the "Original Proportionate
Relationship"), adjusted, if appropriate, to reflect (1) the deposit of
Substitute Securities pursuant to Section 3.11, (2) sale of securities
pursuant to Section 3.08, 3.12 or 5.02 and (3) the occurrence of any stock
dividends, stock splits, redemptions, acquisition of shares through
dividend reinvestment plans or similar events. Each deposit pursuant to
this Section 3.06 made after the 90 days following the initial date of
deposit (except for deposits made to replace Failed Securities if such
deposits occur within 20 days from the date of a failure occurring within
such initial 90 day period) shall maintain exactly the proportionate
relationship existing among the Securities as of the expiration of such 90
day period adjusted as provided in the preceding sentence.
(4) On the settlement date for a subscription, the Trustee shall, in
exchange for the Securities and cash or letter of credit described above,
issue and deliver to or on the order of the Sponsor the number of Units
verified by the Sponsor with the Trustee.
(5) Each deposit of Additional Securities shall be listed in a Deposit
Certificate delivered to the Sponsor stating the date of such deposit and
the number of Additional Units being issued therefor. The Trustee shall
acknowledge in such Deposit Certificate the receipt of the deposit and the
number of Additional Units issued in respect thereof. The Additional
Securities shall be held, administered and applied by the Trustee in the
same manner as herein provided for the Securities.
(6) Additional Securities deposited or purchased with cash or a letter
of credit deposited may be purchased in round lots, and if the amount of
the deposit is insufficient to acquire round lots of each Security to be
acquired, Additional Securities may be deposited (or acquired with cash or
a letter of credit deposited) in the order of the Security in the Trust
Fund most under-represented immediately before the deposit with respect to
the Original Proportionate Relationship.
(7) All instructions to purchase Additional Securities pursuant to
this Section shall be in writing and shall direct the Trustee to perform
contracts to purchase Additional Securities which the Sponsor shall have
entered into and assigned to the Trustee including, if applicable, any
associated foreign exchange transactions.
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<PAGE>
(8) Notwithstanding the preceding, in the event that the Sponsor's
Subscription Notice shall instruct the Trustee to purchase Additional Securities
in an amount which, when added to the purchase amount of all other unsettled
contracts entered into by the Trustee, exceeds 50% of the value of the
Securities then held (taking into account the value of contracts to purchase
Securities only to the extent that there has been deposited with the Trustee
cash or an irrevocable letter of credit in an amount sufficient to settle their
purchase), the Sponsor shall deposit with the Trustee concurrently with the
Subscription Notice cash or an irrevocable letter of credit in an amount such
that, when added to 50% of the value of the Securities then held (determined as
above) the aggregate value shall be not less than the purchase amount of the
securities to be purchased pursuant to such Subscription Notice.
(b) If Securities of an issue of Securities originally deposited (an
'Original Issue') are unavailable or cannot be purchased at reasonable prices or
their purchase is prohibited or restricted by law, regulation or policies
applicable to the Trust Fund or the Sponsor at the time of a subsequent deposit
under Subsection 3.06(a), in lieu of the portion of the deposit that would
otherwise be represented by those Securities, the Sponsor may (1) deposit (or
instruct the Trustee to purchase) (i) Securities of another Original Issue or
(ii) Replacement Securities complying with the conditions of paragraphs (c) and
(d) of this Section, or (2) deposit cash or a letter of credit with instructions
to acquire the Securities of the Original Issue when practicable. Any cash or
letter of credit deposited under this Subsection 3.06(b) to acquire Securities
of an Original Issue or Replacement Securities which at the end of the 90 day
period following the Date of Deposit has not been used to purchase Securities
shall be used to purchase Securities in accordance with this Subsection 3.06(b),
provided that if an instruction to purchase an Additional Security or a
Replacement Security has not been given and such cash or letter of credit remain
in the Trust Fund after 110 days from the Date of Deposit, the amount thereof
shall be distributed, together with the attributable sales charge, at the time
and in the manner specified in Section 3.11 regarding failed contracts.
(c) Replacement Securities shall meet conditions (a) through (e) applicable
to Substitute Securities in Section 3.11.
(d) In addition to the requirements specified in paragraph (a), a
Replacement Security must:
(i) be publicly-traded common stock;
(ii) be issued by an issuer subject to or exempt from the reporting
requirements under Sections 13 or 15(d) of the Securities Exchange Act of
1934 (or similar provision of law); and
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<PAGE>
(iii) have characteristics sufficiently similar to the characteristics
of the other Securities in the Trust Fund as to be acceptable for
acquisition by the Trust Fund.
(e) The Sponsor may, simultaneously with the Subscription Notice
provided in Section 3.06(a), deliver to the Trustee the Additional
Securities or cash or letter of credit in the aggregate value of the
Additional Securities to be purchased pursuant to the Sponsor's
instruction, as specified in the Subscription Notice, together with cash
equal to the pro rata portion of the Trust Fund Cash Evaluation allocable
to the Additional Units to be created, all in the amounts and in the manner
provided by the preceding paragraphs of this Section, and the Trustee
shall, promptly following the Evaluation Time on such day, deliver to the
Sponsor the Additional Units created in respect of such deposit.
(f) Execution of a Deposit Certificate shall be deemed a certification
by the Sponsor that the purchase of the Securities specified in such
Deposit Certificate complies with the conditions specified in this Section,
as applicable. The Deposit Certificate shall be deemed to restate the
representations, agreements and certifications of the Sponsor made in
Sections 6-8, inclusive, of the Closing Memorandum for the Trust Fund to
which the deposit relates as though the representations, agreements and
certifications were made with respect to the Deposit Certificate and the
deposit of Securities with the Trustee. The Deposit Certificate shall also
be deemed to constitute, for value received, the sale, assignment and
transfer to the Trustee of all right, title and interest in and to the
Additional Securities identified in the Deposit Certificate and to
irrevocably constitute and appoint the Trustee the Sponsor's attorney in
all matters respecting such Securities with full power of substitution in
the premises. The Deposit Certificate shall include an acknowledgment by
the Trustee that it has delivered to the Sponsor the number of Units
specified in the Deposit Certificate. Any Additional Securities received
by the Trustee shall be deposited in the Trust Fund and shall be subject to
the terms and conditions of this Indenture to the same extent as the
securities originally deposited hereunder. Any contract to purchase
Additional Securities pursuant to this Section 3.06 that is declared by the
Sponsor to have failed due to reasons beyond the control of the Sponsor or
the Trustee, shall be immediately replaced by the Sponsor with a contract
to purchase Substitute Securities pursuant to Section 3.11.
(g) The Trustee shall have no responsibility or liability for any loss
or depreciation resulting from any purchase made pursuant to the Sponsor's
instructions and in the absence thereof shall have no duty to purchase any
securities. The Trustee shall have no responsibility or liability for
maintaining the composition of the Trust Fund.
(h) The Sponsor may direct the Trustee, with part or all of the
proceeds from the sale of Securities, to the extent not required for
redemption of Units, to purchase one or more debt obligations for deposit
in the Trust, provided that each such debt obligation
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<PAGE>
(1) is an "Eligible Security" as defined in paragraph (a)(5) of Rule 2a-7
pursuant to the Investment Company Act of 1940 or in the opinion of the
Sponsor has comparable credit characteristics, (2) has a fixed final
maturity date no later than the next Distribution Day and (3) shall be held
by the Trustee until its maturity. The proceeds from the maturity of any
said debt obligation shall be distributed to Holders on said Distribution
Day.
SECTION 3.07 Statements and Reports. With each distribution from
----------------------
the Income or Capital Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in a
separate statement to each Holder, the amount being distributed from each such
account expressed as a dollar amount per Unit.
Within a reasonable period of time after the last business day of each
calendar year or such other fiscal period specified in Part II of the Reference
Trust Indenture (the "Trust Year"), the Trustee shall furnish to each person who
at any time during the Trust Year then ended was a Holder a statement setting
forth, with respect to such Trust Year:
(a) as to the Income Account:
(1) the amount of income received on the Securities or the sale
pursuant to Section 3.08 of any rights to purchase securities;
(2) the deductions for applicable taxes and fees and expenses of the
Trustee and the Sponsor and of counsel pursuant to Section 3.10, and
accrued organizational expenses and Deferred Sales Charge, if any;
(3) the balance remaining after such deductions expressed both as a
total dollar amount and as a dollar amount per Unit outstanding on the last
business day of such Trust Year;
(4) the amounts received for purchases of Contract Securities, if any;
(b) as to the Capital Account:
(1) the net proceeds received (excluding any portion thereof credited
to the Income Account) from the sale or liquidation of any of the
Securities or any sale pursuant to Section 3.08;
(2) the deductions for payment of applicable taxes and fees and
expenses of the Trustee and the Sponsor and of counsel pursuant to Section
3.10, and accrued organizational expenses and Deferred Sales Charge, if
any;
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<PAGE>
(3) the balance remaining after such deductions expressed both as a
total dollar amount and as a dollar amount per Unit outstanding on the last
business day of such Trust Year; and
(c) the following information:
(1) a list of the Securities disposed of or acquired during such Trust
Year, and a list of the Securities as of the last business day of the Trust
Year showing which Securities, if any, constitute Restricted Securities;
(2) the number of Units outstanding on the last business day of the
Trust Year;
(3) the Unit Value based on the last Trust Fund Evaluation made during
the Trust Year; and
(4) the amounts actually distributed to Holders during the Trust Year
from the Income and Capital Accounts, separately stated, expressed both as
total dollar amounts and as dollar amounts per Unit outstanding on the
Record Days for such distributions and the status of such distributions for
Federal income tax purposes.
SECTION 3.08 Sale of Securities and of Certain Rights. The Sponsor
----------------------------------------
by written notice may direct the Trustee to sell Securities at such price and
time in such manner as shall be deemed appropriate by the Sponsor if the Sponsor
shall have determined that any one or more of the following conditions exist:
(a) that any materially adverse action or proceeding has been
instituted at law or in equity seeking to restrain or enjoin the
declaration or payment of anticipated dividends on any such Securities or
that there exists any other materially adverse legal question or impediment
affecting such Securities or the declaration or payment of dividends on the
same;
(b) that there has occurred any breach of covenants or warranty in any
trust indenture or other document relating to the issuer which might
materially and adversely affect either immediately or contingently the
declaration or payment of dividends on such Securities;
(c) that there has been a default in the payment of principal or par
or stated value of, premium, if any, or income or any other outstanding
securities of the issuer or the guarantor of such securities which might
materially and adversely, either immediately or contingently, affect the
declaration or payment of dividends on the Securities;
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<PAGE>
(d) that such materially adverse credit factors have occurred, that in
the opinion of the Sponsor the retention of such Securities would be
detrimental to the interest of the Holders; or
(e) that there has been a public tender offer made for a Security or a
merger or acquisition is announced affecting a Security, and that in the
opinion of the Sponsor the sale or tender of the Security is in the best
interest of the Holders.
Upon receipt of such direction from the Sponsor with respect to any
Securities, or in the case of options, warrants or other rights to purchase
securities distributed to the Trust Fund in respect of Securities as soon as is
practicable after receipt of such options, warrants or other rights, the Trustee
shall proceed to sell the specified Securities or any such rights. The Trustee
shall not be liable or responsible in any way for depreciation or loss incurred
by reason of any sale made pursuant to any such direction or by reason of the
failure of the Sponsor to give any such direction, and in the absence of such
direction the Trustee shall have no duty to sell any Securities under this
Section 3.08 except to the extent otherwise required by Section 3.12. The
Sponsor shall not be liable for errors of judgment in directing or failing to
direct the Trustee pursuant to this Section 3.08. This provision, however,
shall not protect the Trustee or Sponsor against any liability for which they
would otherwise be subject by reason of wilful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
SECTION 3.09 Reorganization or Similar Event. In the event that an
-------------------------------
offer by the issuer of any of the Securities or any other party shall be made to
issue new Securities in exchange or substitution for any Securities, the Trustee
shall reject such offer, except that if (1) the issuer failed to declare or pay
anticipated dividends with respect to such Securities or (2) in the opinion of
the Sponsor, given in writing to the Trustee, the issuer will probably fail to
declare or pay anticipated dividends with respect to such Securities in the
reasonably foreseeable future, the Sponsor shall instruct the Trustee in writing
to accept or reject such offer and to take any other action with respect thereto
as the Sponsor may deem proper. However, should any exchange or substitution be
effected notwithstanding such rejection or without an initial offer, any
Securities, cash and/or property received in exchange shall be deposited
hereunder and shall be sold, if securities or property, by the Trustee pursuant
to the Sponsor's direction, unless the Sponsor advises the Trustee to retain
such securities or property. The cash then remaining shall be distributed to
Holders on the next Distribution Day not fewer than 31 days from the date the
exchange consideration was received and otherwise in the manner set forth in
Section 3.04 regarding distributions from the Capital Account. This Section
shall apply, but its application shall not be limited, to public tender offers,
mergers, acquisitions, reorganizations and recapitalizations. Neither the
Sponsor nor the Trustee shall be liable to any person for action or failure to
take action pursuant to the terms of this Section 3.09.
SECTION 3.10 Counsel. The Sponsor may employ from time to time
-------
counsel to act on behalf of the Trust Fund for any legal services in connection
with the
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Securities, including advice as to whether any Securities constitute Restricted
Securities and any legal matters relating to the possible disposition or
acquisition of any Securities pursuant to any provision hereof. The fees and
expenses of such counsel shall be paid by the Trustee as provided in Section
3.04(b) hereof.
SECTION 3.11 Purchase of Substitute Securities. In the event that
---------------------------------
any contract to purchase Contract Securities is declared by the Sponsor to have
failed ("Failed Contract Securities"), the Sponsor may instruct the Trustee to
purchase, with funds held by the Trustee for the purchase of such Failed
Contract Securities, replacement securities ("Substitute Securities") which are
shares of the same common stock as the Failed Contract Securities, in an
aggregate number of shares not to exceed the number of shares of the Failed
Contract Securities. The aggregate purchase price of the Substitute Securities
shall not exceed the amount of funds held specially for the purchase of he
Failed Contract Securities. The Trustee shall have no duty or responsibility
with respect to the selection of Substitute Securities, and the selection by the
Sponsor of a security as a Substitute Security shall be deemed to be its
certification that such Substitute Securities comply with the foregoing and the
following conditions in the case of each such purchase or contract to purchase:
(a) The Substitute Securities shall not constitute Restricted
Securities;
(b) The purchase of the Substitute Securities shall not cause more
than 10% of the Trust Fund (on the basis of the Trust Fund Evaluation next
preceding the date of purchase of such Securities) to consist of securities
of a single issuer (or of two or more issuers which are Affiliated Persons
as such term is defined in the Investment Company Act of 1940) which
securities are not registered and are not being registered under the
Securities Act of 1933;
(c) The purchase of the Substitute Securities shall not cause the
Trust Fund to hold more than 50% of any issue which has been registered
under the Securities Act of 1933, as amended;
(d) The Substitute Securities must be deposited into the Trust Fund
within 110 days of the deposit of the Failed Contract Securities; and
(e) The written instructions of the Sponsor to the Trustee shall (1)
identify the Substitute Securities to be purchased, (2) state that the
contract to purchase, if any, to be entered into is satisfactory in form
and substance and (3) state that the foregoing conditions of clauses (a)
through (d) have been satisfied with respect to the Substitute Securities.
Upon satisfaction of the foregoing conditions with respect to any
Substitute Securities, the Trustee, at the direction of the Sponsor, shall enter
into the contract, if any, to
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purchase such Substitute Securities and take all steps reasonably necessary to
complete the purchase by the Trust Fund thereof.
Whenever a Substitute Security is acquired for the Trust Fund pursuant
to the provisions of this Section, the Trustee will, within five days after such
acquisition, mail to each Holder a notice of such acquisition, including an
identification of the Securities eliminated and acquired. The Trustee shall not
be liable or responsible in any way for depreciation or loss incurred by reason
of any purchase made pursuant to any such directions of the Sponsor and in the
absence of such directions, the Trustee shall not have any duty to purchase any
Substitute Securities under this Indenture. The Sponsor shall not be liable for
any failure to instruct the Trustee to purchase any Substitute Securities or for
errors of judgment in respect of this Section 3.11; provided that this provision
--------
shall not protect the Sponsor against any liability to which it would otherwise
be subject by reason of wilful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder.
SECTION 3.12 Notice and Sale by Trustee. If at any time a dividend
--------------------------
(once due and payable) on any of the Securities shall not have been duly paid,
the Trustee shall notify the Sponsor thereof. If within thirty days after such
notification the Sponsor has not given any instruction in writing to sell or to
hold or have not taken any action in connection with such Securities, the
Trustee may, in its sole discretion, sell such Securities forthwith, and neither
the Trustee nor the Sponsor shall be liable or responsible in any way for
depreciation or loss incurred by reason of such sale.
SECTION 3.13 Action by Trustee Regarding Securities. In the event
--------------------------------------
that the Trustee shall have been notified at any time of any action to be taken
or proposed to be taken by holders of the Securities the Trustee shall promptly
notify the Sponsor and shall thereupon take such action or refrain from taking
any action as the Sponsor may in writing direct; provided, however, that if the
Sponsor does not within five business days of the giving of such notice to the
Sponsor direct the Trustee to take or refrain from taking any action, the
Trustee may take such action as it, in its sole discretion, shall deem
advisable. The Securities may, in the discretion of the Trustee, be
interchanged from time to time into either bearer or registered form without any
notification thereof to the Sponsor or the Holders and may be registered in the
name of the Trustee or the name of any nominee designated by it. Neither the
Sponsor nor the Trustee shall be liable to any person for any action or failure
to take action with respect to this Section 3.13.
SECTION 3.14 Trustee Not to Adjust Accounts. Nothing in this
------------------------------
Indenture, or otherwise, shall be construed to require the Trustee to make any
adjustments between the Income Account and the Capital Account by reason of any
premium or discount in respect of any of the Securities.
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SECTION 3.15 Notice of Change in Capital Account. The Trustee shall
-----------------------------------
give prompt written notice to the Sponsor of all amounts credited to or
withdrawn from the Capital Account pursuant to any of the provisions of this
Article III, and the balance in such Account after giving effect to the credit
or withdrawal.
SECTION 3.16 Foreign Exchange Transactions. The Sponsor shall
-----------------------------
direct the Trustee with respect to the circumstances under which foreign
exchange transactions are to be entered into and with respect to the method
whereby calculation of U.S. dollar equivalents for purpose of net asset value
computations or otherwise are to be made, in order to convert amounts receivable
in respect of Securities in foreign currencies into U.S. dollars. The Trustee
shall have no liability for any loss or depreciation resulting from action taken
pursuant to such instruction.
SECTION 3.17 Extraordinary Distributions. Any property received by
---------------------------
the Trustees after the effective date of a series in a form other than cash or
additional shares of the Securities or of a Substitute Security received in a
non-taxable stock split or stock dividend, which shall be retained by the Trust,
shall be dealt with in the manner described in Section 3.09 and shall be
retained or disposed by the Trustee according to those provisions, provided,
however, that no property shall be retained which the Trustee determines shall
adversely affect its duties hereunder. The proceeds of any disposition shall be
credited to the Income or Capital Account of the Trust, as the Sponsor may
direct.
SECTION 3.18 Grantor Trust Status. The Trust is intended to be
--------------------
treated as a fixed investment (i.e., grantor) trust for income tax purposes, and
its powers shall be limited in accordance with the restrictions imposed on such
trusts by Treas. Reg. Section 301.7701-4.
SECTION 3.19 Deferred Sales Charge. In the event that the
---------------------
Prospectus provides for a Deferred Sales Charge, then the Trustee shall, on the
dates specified in and as permitted by the Prospectus, withdraw from the Income
Account, the Capital Account and/or distributions to be made therefrom, as such
accounts or distributions are designated in the Prospectus as the source of the
payments of the Deferred Sales Charge, an amount per Unit specified in the
Prospectus and credit such amount to a special, non-Trust account maintained at
the Trustee out of which the Deferred Sales Charge will be distributed to the
Sponsor. If the balances in the Income and Capital Accounts are insufficient to
make any withdrawal designated to be made therefrom, the Trustee shall, as
directed by the Sponsor, either advance funds in an amount equal to the proposed
withdrawal and be entitled to reimbursement of such advance upon the deposit of
additional monies in the Income Account or the Capital Account, sell Securities
and credit the proceeds thereof to such special Sponsor's account or credit
Securities in kind to such special Sponsor's Account, provided, however, that
--------
the Trustee shall not be required to advance an aggregate amount in excess of
$15,000 pursuant to this Section. Such directions shall identify the Securities,
if any, to be sold or distributed in kind and shall contain, if the Trustee is
directed by the Sponsor to sell a Security, instructions as to execution of such
sales. The Trustee shall have no liability for any loss or depreciation
resulting from
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sales made in accordance with the Sponsor's instruction. If a Holder redeems
Units prior to full payment of the Deferred Sales Charge, the Trustee shall, if
so provided in the Prospectus, on the Redemption Date, withhold from the
Redemption Price payment to such Holder an amount equal to the unpaid portion of
the Deferred Sales Charge and distribute such amount to such special Sponsor's
Account or, if the Sponsor shall purchase such Unit pursuant to the terms of
Section 5.02 hereof, the Sponsor shall pay the Redemption Price for such Unit
less the unpaid portion of the Deferred Sales Charge. If the Prospectus provides
for a waiver or refund of any portion of the Deferred Sales Charge under
specified circumstances (such as, for example, in connection with a redemption
or sale of Units following the death or disability of the Holder), the Trustee
shall deduct and pay to the Sponsor the full amount of the Deferred Sales Charge
chargeable upon the redemption in the absence of such waiver or refund and the
Sponsor shall pay to the affected Holder the amount of such waiver or refund;
the Trustee shall have no responsibility to the affected Holder with respect to
the amount to be so refunded. The Sponsor may at any time instruct the Trustee
to distribute to the Sponsor cash or Securities previously credited to the
special Sponsor's Account. Notwithstanding the foregoing but only when provided
for in the Prospectus of a particular series, unless the Sponsor shall otherwise
direct, the Trustee shall accrue the liability for the Deferred Sales Charge on
each Deferred Sales Charge payment date but shall defer the payment thereof and
any sale of Securities as shall be necessary to provide funds for such payment,
until the last Deferred Sales Charge payment date specified in the Prospectus or
such earlier time as a Unit is redeemed. Accordingly, any person who acquires a
Unit subsequent to one or more Deferred Sales Charge payment dates will acquire
the Unit subject to the unpaid liability for such Deferred Sales Charge
payments. Neither the Trustee nor the Sponsor shall have any liability for loss
or depreciation resulting from such deferral of payment and sale of Securities.
ARTICLE IV
Evaluation of Securities
------------------------
SECTION 4.01 Evaluation of Securities. The Trustee shall determine
------------------------
separately and promptly furnish to the Sponsor upon request the value of each
issue of Securities as of the Evaluation Time on the basis set forth in this
Section on the days on which the Trust Fund Evaluation is required by Section
5.01. If the Securities are listed on a national or foreign securities exchange
or NASDAQ National Market System, the evaluation shall be determined on the
basis of the last reported sales price at or prior to the Evaluation Time on the
exchange, if any, where the Securities are principally traded, which shall be
deemed to be the New York Stock Exchange if the Securities are listed thereon
(unless the Trustee deems such price inappropriate as a basis for valuation) or,
if there is no sale price on such exchange, at the mean between the closing bid
and offering prices. Notwithstanding the preceding, if the Trust contains a
Security which is an American Depository Receipt ("ADR") and there is no closing
price for the ADR for the relevant business day but there is a closing sale
price for such a day for the stock represented by the
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ADR on a foreign exchange where the stock represented by the ADR is principally
traded, the Trustee shall, unless the Sponsor shall otherwise direct, use the
closing price for the stock on such foreign exchange. If the Securities are not
so listed or, if so listed but the principal market therefor is not on any such
exchange, the evaluation shall be based on the last reported sale prices as of
the Evaluation Time on the over-the-counter market by one or more reporting
services selected by the Sponsor and the Trustee as hereinafter provided (unless
the Trustee deems such prices inappropriate as a basis for valuations) or, if no
such sale prices are available, (1) on the basis of the mean between current bid
and offering prices for the Securities, (2) if bid and offering prices are not
available for any Securities, on the basis of the mean between current bid and
offering prices for comparable securities, (3) by determining the value of the
Securities at the mean between the bid and offering sides of the market by
appraisal or (4) by any combination of the above. The Trustee may obtain current
bid and offering prices for the Securities from investment dealers or brokers
(including the Sponsor) that customarily deal in similar securities or from any
other reporting service or source of information which the Trustee deems
appropriate. With respect to any Security which is not listed on a national
exchange, the Sponsor and the Trustee shall, from time to time, designate one or
more reporting services or other sources of information on which the Trustee
shall be authorized to rely in evaluating such Security, and the Trustee shall
have no liability for any errors contained in the information so received. The
cost thereof shall be an expense reimbursable to the Trustee from the Income and
Capital Accounts.
Pursuant to Section 3.16, the Sponsor shall direct the Trustee with
respect to the method of calculating U.S. dollar equivalents of prices quoted in
foreign currency.
For each evaluation, the Trustee shall also determine and furnish to
the Sponsor the aggregate of (a) the value of all Securities on the basis of
such evaluation and (b) cash on hand in the Trust Fund (other than cash held
specially for the purpose of Contract Securities).
In making the evaluations specified in this Section 4.01 and in
Section 5.01, the Trustee shall value all contracts for purchase or sale of
Securities as Securities or cash, respectively (with corresponding deductions
from cash or number of shares), as of the first business day following the day
on which contracts are entered into.
SECTION 4.02 Liability of the Trustee. The Sponsor and the Holders
------------------------
may rely on any evaluation furnished by the Trustee and shall have no
responsibility for the accuracy thereof. The determinations made by the Trustee
hereunder shall be made in good faith upon the basis of the best information
available to it. The Trustee shall be under no liability to the Sponsor or the
Holders for errors in judgment, provided, however, that this provision shall not
protect the Trustee against any liability to which it would otherwise be subject
by reason of wilful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder.
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ARTICLE V
Trust Fund Evaluation
and
Redemption of Units
-------------------
SECTION 5.01 Trust Fund Evaluation.
---------------------
(a) As of the Evaluation Time (x) on each December 31 and June 30 (or the
last Business Day prior thereto) commencing with the first such day which is
more than six months after the date of the Reference Trust Indenture, (y) on any
business day as of the Evaluation Time next following the tender of any Unit for
redemption, and (z) on any other Business Day desired by it or requested by the
Sponsor, the Trustee shall:
(1) Add
(A) cash on hand in the Trust Fund, other than cash held specifically
for the purchase of Contract Securities;
(B) the aggregate value of each issue of the Securities other than
Contract Securities;
(C) any interest and dividends receivable on stocks trading
exdividend, plus
(D) all other assets of the Trust; and
(2) Deduct
(A) amounts representing any applicable taxes or governmental charges
payable out of the Trust Fund and for which no deductions shall have
previously been made for the purpose of addition to the Reserve Account,
(B) amounts representing estimated accrued fees and expenses of the
Trust Fund including but not limited to unpaid fees and expenses of the
Trustee (including legal and auditing expenses), the Sponsor and of counsel
pursuant to Section 3.10, and
(C) cash allocated for distribution to Holders of record, or the
redemption of Units, as of a date prior to the evaluation then being made.
The resulting figure is herein called a "Trust Fund Evaluation." Amounts
receivable by the Trust in a foreign currency shall be converted to U.S. dollars
based on current exchange rates, pursuant to the Sponsor's direction, in the
same manner as provided in Section 4.01 for the
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conversion of the valuation of foreign Securities, and the Evaluation shall
report such conversion with each evaluation made pursuant to Section 4.01.
(b) In addition, on any business day as of the Evaluation Time next
following the tender of any Unit for redemption, the Trustee shall:
(1) Add cash on hand in the Trust Fund, other than cash declared held
especially for the purchase of Contract Securities; and all other assets of
the Trust Fund (other than Securities), and
(2) Deduct the amounts referred to in paragraphs (A), (B) and (C) of
clause (2) of Section 5.01(a).
The resulting figure is herein called a "Trust Fund Cash Evaluation".
SECTION 5.02 Redemption of Units. (a) A Holder may tender Units for
-------------------
redemption on any weekday (a "Tender Day") which is not one of the following:
New Year's Day, Martin Luther King, Jr. Day, Presidents Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day or
Christmas; provided that any tender received after the Evaluation Time or
--------
received on a day which is not a Tender Day shall be deemed to be made as of the
next succeeding Tender Day. Any Unit tendered by a Holder or his duly
authorized attorney for redemption at the Trustee's Office (effected by tender
of such documents as the Trustee shall reasonably require and, in the case of
certificated Units, by the related Certificate) shall be redeemed and canceled
by the Trustee on the third Business Day following the Tender Day (the
"Redemption Date"). Units tendered for redemption by the Sponsor on any
- ----------------
Business Day shall be deemed to have been tendered before the Evaluation Time on
such Business Day provided that the Depositors advise the Trustee before the
later of the Trustee's close of business and 5:00 p.m. New York City time. By
such advice, the Sponsor will be deemed to certify that all Units so tendered
were either (a) tendered to the Sponsor or to a retail dealer between the
Evaluation Time on the preceding Business Day and the Evaluation Time on such
Business Day or (b) acquired previously by the Sponsor but which the Sponsor
determined to redeem prior to the Evaluation Time on such Business Day.
(b) Subject to deduction of any tax or other governmental charges due
thereon, redemption is to be made by payment of cash equal to the Unit Value as
of the Evaluation Time next following the tender plus any Accrued Income per
Unit from, and including, the day next following such Evaluation Time to, but
not including, the day of payment to the redeeming Holder, multiplied by the
number of Units being redeemed (the "Redemption Price"). The portion of the
----------------
Redemption Price representing the pro rata share of the cash on hand in the
Income Account and such Accrued Income shall be withdrawn from the Income
Account to the extent funds are available for such purpose. The balance of the
Redemption Price, including Accrued Income to the extent unavailable in the
Income Account, shall be withdrawn from the Capital Account to the extent that
funds are available for such purpose; if the available balance
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in the Capital Account shall be insufficient, the Trustee shall sell Securities
from among those designated for such purpose by the Sponsor on the current list
as provided in subsection (d) below, in such amounts as shall be necessary for
the purposes of such redemption; provided, however, that no amount in the
-------- -------
Capital Account may be used for any redemption unless the Sponsor so directs in
writing. Instead, Units shall be redeemed by the Trustee's segregating on the
books of the Trust those Securities selected from among those designated on such
current list by the Sponsor for the account of the Holder (to the extent the
value thereof is equal to the Redemption Price (less any cash distributed from
the Income and Capital Accounts as directed by the Sponsor)). The Trustee shall
sell the Securities, any portion of which have been segregated as provided
below, or collect the redemption proceeds thereof and distribute such sale or
redemption proceeds (1) to the Holder, to the extent described in the
immediately preceding sentence, and (2) to the Capital Account, to the extent of
any balance of the sale or redemption proceeds; provided that if the Sponsor
--------
contemplates any further deposit of Additional Securities into the Trust in
accordance with Section 3.06, the Securities to be segregated shall be selected
by the Sponsor so as to maintain, to the extent practicable, the proportionate
relationship among the number of shares of each Security then existing. In the
event that funds are withdrawn from the Capital Account or Securities are sold
for payment of any portion of the Redemption Price representing Accrued Income,
the Capital Account shall be reimbursed when sufficient funds are available in
the Income Account. As used in this Section 5.02, "Accrued Income" shall mean
net accrued but unpaid interest on Securities or interest earned on Funds
deposited for purchase of Securities as provided in Section 3.06(i) and with
respect to Common Stocks and Preferred Stocks, net dividends declared but unpaid
but, except as otherwise instructed by the Sponsor, only for the period
commencing three Business Days prior to the record date therefor and ending on
the date received by the Trustee.
(c) If the Prospectus for the Trust provides for in-kind redemption, a
Holder who satisfies any requirements specified in such Prospectus for in-kind
redemption may, in lieu of redeeming Units in the manner provided in subsection
(b) above, redeem Units and request that a distribution in kind be made by the
Trustee to the Distribution Agent of (1) Securities (the "Securities
----------
Distribution") equal to the fractional undivided interest represented by each
- ------------
Unit in all Securities in the Trust to the extent of the Unit Value of the Units
redeemed plus (2) an amount in cash (the "Cash Distribution") equal to the Unit
-----------------
Value less the value of the Securities Distribution, determined as of the
Evaluation Time next following the tender, multiplied by the number of Units
being redeemed (such Securities Distribution and Cash Distribution in the
aggregate being referred to herein as the "Redemption Distribution"). In making
-----------------------
a Cash Distribution to the Distribution Agent the Trustee shall withdraw the
Holder's pro rata share of the cash in the Income Account and Capital Account
from such accounts to the extent that funds are available for such purpose.
Upon receipt of a Redemption Distribution the Distribution Agent shall
hold such distribution for the account of the tendering Holder. Securities
shall be held in the name of the Distribution Agent or its nominee and cash
shall be held in a non-interest bearing account. Upon receipt of proper
instructions from the tendering Holder, the Distribution Agent shall
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deliver the Redemption Distribution pursuant to such directions (except that if
any securities received are available only in book entry form, unless the
tendering Holder designates an agent to hold such securities in its name which
agent is, or clears through, a member of the depository for those securities,
the Distribution Agent shall sell those securities and distribute the cash
proceeds, net of transaction costs, if any) as soon as practical, as directed by
such tendering Holder upon payment of such reasonable fees set by the Trustee or
the Distribution Agent to cover the cost of delivery, including costs for
shipping, handling and insurance.
Notwithstanding anything herein to the contrary, in the event that any
such tender of Units pursuant to this Section 5.02(c) would result in the
disposition, by the Trustee or the Distribution Agent, of less than a whole
Security, the Trustee or Distribution Agent shall distribute cash in lieu
thereof and sell such Securities as directed by the Sponsor as required to make
such cash available.
(d) From time to time or at the request of the Trustee, the Sponsor
shall deliver to the Trustee and maintain a current list of Securities to be
sold upon the redemption of Units. Once Units have been tendered for redemption,
the Sponsor shall designate which of such Securities are to be sold. In
connection therewith, the Sponsor may specify the minimum number of shares of
any Securities to be sold at any one time and the date and manner in which such
sale is to be made by the Trustee. If the Sponsor fails to deliver such a list
or designate Securities to be sold, the Trustee, in its sole discretion, may, or
may hire an agent to, establish a current list of Securities for such purposes
and designate which Securities are to be sold. In connection with any sale of
Securities pursuant to this Section 5.02, the Sponsor shall furnish the Trustee
with any documents necessary for the transfer of such Securities or compliance
with transfer restrictions, if any, on such Securities.
(e) The Trustee shall, when selling Securities, use its reasonable
best efforts to secure the best price obtainable for the Trust taking into
account any minimum number of shares or value limitations on sales that have
been specified by the Sponsor. The Trustee shall place orders with brokers
(which may include the Sponsor and its affiliates) or dealers with which it may
reasonably expect to obtain the most favorable price and execution of orders.
In the event that it is necessary to sell any Securities other than by
the above means, and if the Sponsor shall so direct in writing accompanied by
any documents necessary to transfer such Securities or to comply with transfer
restrictions, if any, on such Security, the Trustee shall transfer any such
Securities to a participation trust with a trustee selected by the Sponsor
(which may include the Trustee, but the Trustee shall have no obligation to act
as such and may receive additional compensation for so acting) to be governed by
a trust indenture in exchange for certificates of participation in such trust
and shall then sell such certificates of participation in the manner directed by
the Sponsor. The Trustee shall be entitled to receive such written notice and
may act in reliance thereon. In the event that the moneys received upon the
sale of such certificates exceed the amount needed to pay the Redemption Price,
the Trustee shall credit such excess to the Capital Account or the Income
Account, as appropriate, in
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proportion to the amounts that represent the principal and accrued interest on
the Security transferred to such participation trust. Sales of certificates of
participation in any such trust by the Trustee shall be made in such manner as
the Sponsor shall determine should realize the best price for the Trust.
In the event that funds are withdrawn from the Capital Account or
Securities are sold for payment of any portion of the Redemption Price
representing Accrued Income, the Capital Account shall be reimbursed when
sufficient funds are available in the Income Account.
(f) The Trustee may, in its discretion, and shall when so directed by
the Sponsor in writing, suspend the right of redemption or postpone the date of
payment of the Redemption Price beyond the Redemption Date (1) for any period
during which the New York Stock Exchange is closed other than customary weekend
and holiday closings; (2) for any period during which (as determined by the
Securities and Exchange Commission by rule, regulation or order) (A) trading on
the New York Stock Exchange is restricted or (B) an emergency exists as a result
of which disposal by the Trust of Securities is not reasonably practicable or it
is not reasonably practicable fairly to determine the Trust Value; or (3) for
such other periods as the Securities and Exchange Commission may by order
permit. Subject to Section 22 of the Investment Company Act, the right of
redemption shall terminate upon the earlier of the Termination Date or the
giving of notice of termination to Holders by the Trustee pursuant to Section
9.01.
(g) Not later than the close of business on the day of tender of a
Unit for redemption by a Holder other than the Sponsor, the Trustee shall notify
the Sponsor of such tender. The Sponsor shall have the right to purchase such
Unit by notifying the Trustee of its election to make such purchase as soon as
practicable thereafter but in no event subsequent to (1) the close of business
on the first Business Day after the day on which such Unit was tendered for
redemption or (2) in the case of a tender for redemption by check, the
Redemption Date. Such purchase shall be made by payment for such Unit by the
Sponsor (1) to the Trustee on behalf of the Holder in the case of a tender for
redemption other than by check, and (2) to the Trustee in the case of a tender
for redemption by check, in either case not later than the close of business on
the Redemption Date of an amount not less than the Redemption Price which would
otherwise be payable by the Trustee to such Holder. So long as the Sponsor is
maintaining a bid in the secondary market at no less than the Redemption Price,
the Sponsor will repurchase any Unit so tendered to the Trustee for redemption.
Any Unit purchased by the Sponsor from the Trustee may at the option of the
Sponsor be tendered to the Trustee for redemption in the manner provided in
subsection (a) of this Section 5.02. The Trustee is hereby irrevocably
authorized in its discretion, but without obligation, in the event that the
Sponsor does not elect to purchase any Unit tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the Sponsor for
redemption, in lieu of redeeming such Unit, to sell such Unit in the over-the-
counter market for the account of the tendering Holder at a price which will
return to the Holder an amount in cash, net after deducting brokerage
commissions, transfer taxes and other charges, equal to or in excess of the
Redemption Price which such Holder would
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otherwise be entitled to receive on redemption pursuant to this Section 5.02.
The Trustee shall pay to the Holder the net proceeds of any such sale no later
than the day the Holder would otherwise be entitled to receive payment of the
Redemption Price hereunder.
(h) Neither the Sponsor, the Trustee nor any Distribution Agent shall
be liable or responsible in any way for depreciation or loss incurred by reason
of any sale of Securities made pursuant to this Section 5.02.
SECTION 5.03 Sponsor's Repurchase in Secondary Market. The Trustee
----------------------------------------
shall have no obligation, except as stated below, should a Holder choose to sell
any or all of his Units to the Sponsor in a secondary market transaction as set
forth in the Prospectus. The Trustee's obligations under such circumstances are
limited to those in Section 6.01.
ARTICLE VI
Transfer of Units
-----------------
SECTION 6.01 Transfer of Units. Units may be transferred by the
-----------------
registered Holder thereof by presentation and surrender of transfer
instructions, at the principal office of the Trustee properly endorsed or
accompanied by such documents executed by the registered Holder or his
authorized attorney as the Trustee deems necessary to evidence the authority of
the person making such transfer. The Trustee may deem and treat the person in
whose name any Unit shall be registered upon the books of the Trustee as the
owner of such Unit for all purposes hereunder and the Trustee shall not be
affected by any notice to the contrary. The transfer books maintained by the
Trustee for the purposes of this Section 6.01 shall be closed in connection with
the termination of the Trust Fund pursuant to Article IX hereof.
A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer shall be paid to the
Trustee. A Holder may be required to pay $2 (or such other amount as may be
specified by the Trustee and approved by the Sponsor) on any such transfer.
The Trustee may also adopt other reasonable rules and regulations for
the transfer, tender and redemption of Units.
SECTION 6.02 Book-Entry Units. Unless the Reference Trust Indenture
----------------
otherwise provides, ownership of Units of the Trust will not be evidenced by
Certificates.
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<PAGE>
ARTICLE VII
Sponsor
-------
SECTION 7.01 Certain Matters Regarding Succession. The covenants,
------------------------------------
provisions and agreements herein contained shall in every case be binding upon
any successor to the business of the Sponsor. In the event of the death,
resignation or withdrawal of any partner of any successor Sponsor which may be a
partnership, the partner so dying, resigning or withdrawing shall be relieved of
all further liability hereunder if at the time of such death, resignation or
withdrawal such Sponsor maintains a net worth (determined in accordance with
generally accepted accounting principles) of at least $1,000,000. In the event
of an assignment by the Sponsor to a successor corporation or partnership as
permitted by the next following sentence, the Sponsor shall be relieved of all
further liability under this Indenture. The Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries on
the business of the Sponsor, if at the time of such transfer such successor duly
assumes all the obligations of the Sponsor under this Indenture.
SECTION 7.02 Liability of Sponsor and Indemnification. (a) The
----------------------------------------
Sponsor shall be under no liability to the Trust Fund or the Holders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Indenture, or for errors in judgment or for depreciation or
loss incurred by reason of the purchase or sale of any Securities, provided,
--------
however, that this provision shall not protect the Sponsor against any liability
to which it would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder. The Sponsor may
rely in good faith on any paper, order, notice, list, affidavit, receipt,
evaluation, opinion, endorsement, assignment, draft or any other document of any
kind prima facie properly executed and submitted to it by the Trustee, the
Trustee's counsel or any other person for any matters arising hereunder. The
Sponsor shall in no event be deemed to have assumed or incurred any liability,
duty, or obligation to any Holder or the Trustee other than as expressly
provided for herein.
(b) The Trust Fund shall pay and hold the Sponsor harmless from and against
any loss, liability or expense incurred in acting as Sponsor of the Trust Fund
other than by reason of wilful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties hereunder, including the costs and expenses of the
defense against any claim or liability in the premises. The Sponsor shall not
be under any obligation to appear in, prosecute or defend any legal action which
in its opinion may involve it in any expense or liability; provided, however,
--------
that the Sponsor may in its discretion undertake any such action which it may
deem necessary or desirable in respect of this Indenture and the rights and
duties of the parties hereto and the interests of the Holders hereunder and, in
such event, the legal expenses and costs of any such action and any liability
resulting therefrom shall be expenses, costs and liabilities of the Trust Fund
and shall be paid directly by the Trustee out of the Income and Capital Accounts
as provided by Section 3.04.
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<PAGE>
(c) None of the provisions of this Indenture shall be deemed to protect or
purport to protect the Sponsor against any liability to the Trust Fund or to the
Holders to which the Sponsor would otherwise be subject by reason of wilful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of the Sponsor's reckless disregard of its obligations and duties
under this Indenture.
SECTION 7.03 Compensation of Sponsor. The Sponsor shall perform
-----------------------
such reviews and procedures as it may deem necessary for the Sponsor to give the
consents and directions required by these Standard Terms and Conditions of
Trust. The Sponsor shall receive at the times set forth in Section 3.04 as
compensation for performing certain administrative services under this indenture
an amount equal to the lesser of the cost to the Sponsor of supplying such
administrative services including legal and auditing expenses (which costs shall
be set forth in a certificate delivered by the Sponsor to the Trustee, in form
satisfactory to the Trustee, upon which the Trustee may rely) and a pro-rata
portion (covering the number of months of services included in the certificate)
of the amount per year specified as compensation for the Sponsor in Part II of
the Reference Trust Indenture for each Unit in the Trust Fund. The computation
of such compensation shall be made on the basis of the largest number of Units
in the Trust Fund at any time during such year. Such rate may be increased by
the Trustee from time to time, without the consent or approval of any Holder or
the Sponsor, by amounts not exceeding the proportionate increase, during the
period from the date of such Reference Trust Agreement to the date of any such
increase, in consumer prices as published either under the classification "All
Services Less Rent" in the Consumer Price Index published by the United States
Department of Labor or, if such Index is no longer published, a similar index.
The Sponsor shall also receive, at the times set forth in Section
3.04, reimbursement for any and all expenses and disbursements incurred
hereunder, including legal and auditing expenses, in connection with such action
as the Sponsor in its discretion may deem necessary at any and all times to
undertake in order to protect the Trust Fund and the rights and interests of the
Holders pursuant to the terms of this Indenture.
ARTICLE VII
Trustee
-------
SECTION 8.01 General Matters Relating to Trustee. (a) All moneys
-----------------------------------
deposited with or received by the Trustee hereunder shall be held by it without
interest in trust as part of the Trust or the Reserve Account of such Trust
until required to be disbursed in accordance with the provisions of this
Indenture and such moneys will be segregated by separate recordation on the
trust ledger of the Trustee so long as such practice preserves a valid
preference under applicable law, or if such preference is not so preserved, the
Trustee shall handle such moneys in such other manner as shall constitute the
segregation and holding thereof
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in trust within the meaning of the Investment Company Act of 1940. The
responsibilities and authority granted by this paragraph shall apply equally to
the Distribution Agent.
(b) The Trustee shall be under no liability for any action taken in good
faith on any paper, order, list, demand, request, consent, affidavit, notice,
opinion, direction, endorsement, assignment, resolution, draft or other document
whether or not of the same kind, prima facie properly executed, or for the
disposition of moneys or Securities pursuant to this Indenture; provided,
--------
however, that this provision shall not protect the Trustee against any liability
to which it would otherwise be subject by reason of wilful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder, and the Trustee may
construe any of the provisions of this Indenture insofar as the same may appear
to be ambiguous or inconsistent with any other provisions hereof, and any
construction of any such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto and the Holders.
(c) The Trustee shall not be responsible for or in respect of the recitals
herein, the validity or sufficiency of this Indenture or for the due execution
hereof by the Sponsor or for the form, character, genuineness, sufficiency,
value or validity of any Securities (except that the Trustee shall be
responsible for the exercise of due care in determining the genuineness of
Contract Securities delivered to it), and the Trustee shall in no event assume
or incur any liability, duty or obligation to any Holder or to the Sponsor,
other than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signature by or on behalf
of the Sponsor.
(d) The Trustee shall not be under any obligation to appear in, prosecute
or defend any action, which in its opinion may involve it in expense or
liability unless it shall be furnished with such reasonable security and
indemnity against such expense or liability as it may require, and any pecuniary
cost of the Trustee from such actions shall be deductible from and a charge
against the Income and Capital Accounts. The Trustee shall in its discretion
undertake such action as it may deem necessary at any and all times to protect
the Trust Fund and the rights and interests of the Holders pursuant to the terms
of this Indenture; provided, however, that the expenses and costs of such
--------
actions, undertakings or proceedings shall be reimbursable to the Trustee from
the Income and Capital Accounts.
(e) (i) Subject to the provisions of subparagraphs (ii) and (iii) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys, accountants
and auditors and shall not be answerable for the default or misconduct of any
such agents, sub-custodians, attorneys, accountants or auditors if such agents,
sub-custodians, attorneys, accountants or auditors shall have been selected with
reasonable care. The Trustee shall be fully protected in respect of any action
under this Indenture taken or suffered in good faith by the Trustee in
accordance with the opinion of counsel, which may be counsel to the Sponsor
acceptable to the Trustee, provided, however, that this disclaimer of liability
shall not (i) excuse the Trustee from the responsibilities specified in
subparagraph (ii) below or (ii) limit the obligation of the Trustee to indemnify
the
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Trust under subparagraph (iii) below. The fees and expenses charged by such
agents, sub-custodians, attorneys, accountants or auditors shall constitute an
expense of the Trust reimbursable from the Income and Capital Accounts of the
affected Trust as set forth in Section 8.05 hereof.
(ii) The Trustee may place and maintain in the care of an eligible
foreign custodian (which is employed by the Trustee as a sub-custodian as
contemplated by subparagraph (i) of this paragraph (e) and which may be an
affiliate or subsidiary of the Trustee or any other entity in which the
Trustee may have an ownership interest) the Trust's foreign securities,
cash and cash equivalents in amounts reasonably necessary to effect the
Trust's foreign securities transactions, provided that the Trustee hereby
agrees to perform all the duties assigned by rule 17f-5 as now in effect or
as it may be amended in the future, to the boards of management investment
companies. The Trustee's duties under the preceding sentence will not be
delegated.
As used in this subparagraph (ii),
(1) "foreign securities" include: securities issued and sold
primarily outside the United States by a foreign government, a national of
any foreign country or a corporation or other organization incorporated or
organized under the laws of any foreign country and securities issued or
guaranteed by the government of the United States or by any state or any
political subdivision thereof or by any agency thereof or by any entity
organized under the laws of the United States or of any state thereof which
have been issued and sold primarily outside the United States.
(2) "eligible foreign custodian" means
(a) The following securities depositories and clearing agencies which
operate transnational systems for the central handling of securities or
equivalent book entries which, by appropriate exemptive order issued by the
Securities and Exchange Commission, have been qualified as eligible foreign
custodians for the Trust but only for so long as such exemptive order
continues in effect: Morgan Guaranty Trust Company of New York, Brussels,
Belgium, in its capacity as operator of the Euroclear System ("Euroclear"),
and Cedel Bank, S.A. ("Cedel").
(b) Any other entity that shall have been qualified as an eligible
foreign custodian for the foreign securities of the Trust by the Securities
and Exchange Commission by exemptive order, rule or other appropriate
action, commencing on such date as it shall have been so qualified but only
for so long as such exemptive order, rule or other appropriate action
continues in effect.
(iii) The Trustee will indemnify and hold the Trust harmless from and
against any loss occurring as a result of an eligible foreign custodian's
willful misfeasance, reckless disregard, bad faith, or gross negligence in
performing custodian duties.
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(f) If at any time the Sponsor shall fail to undertake or perform any of
the duties which by the terms of this Indenture are required by it to be
undertaken or performed, or shall become incapable of acting, or if a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Sponsor in an involuntary case, or the Sponsor shall commence a
voluntary case, under any applicable bankruptcy, insolvency, or other similar
law now or hereafter in effect, or any receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) for the Sponsor or for
any substantial part of its property shall be appointed or the Sponsor shall
make any general assignment for the benefit of creditors or shall generally fail
to pay its debts as they become due, then in any such case, the Trustee may do
any one or more of the following: (1) appoint a successor Sponsor which shall
act hereunder in all respects in place of such Sponsor and which may be
compensated semi-annually, at rates deemed by the Trustee to be reasonable under
the circumstances, by deduction from the Income Account or, to the extent funds
are not available in such Account, from the Capital Account, but no such
deduction shall be made exceeding such reasonable amount as the Securities and
Exchange Commission may prescribe in accordance with Section 26(a)(2)(C) of the
Investment Company Act of 1940; (2) act hereunder in its own absolute discretion
without appointing any successor Sponsor and receive additional compensation at
rates determined as provided in clause (1); or (3) terminate this Indenture and
the trust created hereby and liquidate the Trust Fund in the manner provided in
Section 9.01.
(g) (1) If the value of the Trust Fund as shown by any Trust Fund
Evaluation shall be less than the liquidation amount specified in clause (2) of
this subsection (g), the Trustee may in its discretion, and shall if so directed
by the Sponsor, terminate this Indenture and the trust created hereby and
liquidate the Trust Fund all in the manner provided in Section 9.01.
(2) The liquidation amount referred to in clause (1) shall be 40% of the
aggregate net asset value of the Trust at the completion of the initial
public offering period.
(h) In no event shall the Trustee be personally liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
the interest thereon. The Trustee shall be reimbursed and indemnified out of
the Income and Capital Accounts for all such taxes and charges, for any tax or
charge imposed against the Trustee as trustee of the Trust Fund and for any
expenses, including counsel fees, which the Trustee may sustain or incur with
respect to such taxes or charges.
(i) Notwithstanding any provisions of this Indenture to the contrary,
except as set forth in Sections 7.03 and 8.05, no payment to the Sponsor or to
any principal underwriter (as defined in the Investment Company Act of 1940) for
the Trust Fund or to any affiliated person (as so defined) or agent of a Sponsor
or such underwriter shall be allowed the Trustee as an expense except for
payment of such reasonable amounts as the Securities and Exchange Commission may
prescribe as compensation for performing bookkeeping and other administrative
services of a character normally performed by the Trustee.
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(j) The Trustee except by reason of its own gross negligence, bad faith or
wilful misconduct shall not be liable for any action taken, omitted or suffered
to be taken by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
(k) All provisions of paragraphs (b), (c), (d), (e), (h) and (j) of this
Section 8.01 shall be deemed to apply to the Distribution Agent as fully and to
the same extent as the Trustee.
(l) The Trustee in its individual or any other capacity may become owner or
pledgee or, or be an underwriter or dealer in respect of, stock, bonds or other
obligations issued by the same issuer (or affiliate of such issuer) or any
obligor of any Securities at any time held as part of the Trust and may deal in
any manner with the same or with the issuer (or an affiliate of the issuer) with
the same rights and powers as if it were not the Trustee hereunder.
(m) The Trust may include a letter or letters of credit for the purchase of
Contract Securities issued by the Trustee in its individual capacity for the
account of the Sponsor, and the Trustee may otherwise deal with the Sponsor with
the same rights and powers as if it were not the Trustee hereunder.
SECTION 8.02 Books and Records. The Trustee shall keep proper books of
-----------------
record and account of all the transactions under this Indenture at its principal
office including, as agent of the Sponsor, a record of the name and address of,
and the Units issued by the Trust Fund and held or beneficially owned by, every
Holder, and such books and records shall be open to inspection by any Holder at
all reasonable times during usual business hours of the Trustee.
Unless the Sponsor otherwise directs, the Trustee shall cause audited
statements as to the assets and income of the Trust to be prepared on an annual
basis by independent public accountants selected by the Sponsor. Such audited
statements will be made available to Holders upon request.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of counsel to the Sponsor, reasonably acceptable to the
Trustee, the Trustee shall pay, or reimburse to the Sponsor or others, the costs
of the preparation of documents and information with respect to the Trust
required by law or regulation in connection with the maintenance of a secondary
market in units of the Trust. Such costs may include but are not limited to
accounting and legal fees, blue sky registration and filing fees, printing
expenses and other reasonable expenses related to documents required under
Federal and state securities laws.
The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute or rule or
regulation thereunder.
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SECTION 8.03 Reports to Securities and Exchange Commission and Others.
--------------------------------------------------------
The Trustee shall make such annual or other reports, make such elections and
file such tax returns as the Sponsor directs or as may from time to time be
required under applicable state or Federal statute or rule or regulation
thereunder.
SECTION 8.04 Indenture and List of Securities on File. The Trustee
----------------------------------------
shall keep a certified copy or duplicate original of this Indenture on file at
its principal office available for inspection at all reasonable times during its
usual business hours by any Holder, and the Trustee shall keep and so make
available for inspection a current list of the Securities.
SECTION 8.05 Compensation of Trustee. (a) The Trustee shall deduct
-----------------------
from the Income Account or, to the extent funds are not available in such
account, from the Capital Account and pay to itself in equal monthly
installments, on or shortly after the first day of the month, its fee in the
annual amount set forth in Part II of the Reference Trust Indenture . The
computation of such compensation shall be made on the basis of the largest
number of Units outstanding at any time during the previous month.
(b) The Trustee's compensation may be increased by the Trustee prior to the
end of each calendar year (such increase to be retroactive to and effective from
January 1 of such calendar year) without the consent or approval of any Holder
or the Sponsor by an amount which shall not exceed the proportionate increase
(i) during the previous calendar year, or (ii) in the case of the calendar year
of the creation of the Trust Fund, during the period from the date of the
Reference Trust Indenture to December 31 of such year, in consumer prices as
established for such period either (a) by the Consumer Price Index published by
the United States Department of Labor under the classification "All Services
Less Rent", or (b) if such index is no longer published, in a similar index;
provided, however, that the right to increase its fees shall not be cumulative
- --------
and, if not exercised by the Trustee for any calendar year, shall be deemed
waived. No exercise of its right to such increase shall be effective unless
made by the Trustee by means of notification to the Sponsor within 60 days
following the publication of the annual consumer price information referred to
in the preceding sentence.
(c) The Trustee shall also receive, at such times as it shall deem
convenient in the administration of the Trust, reimbursement for any and all
expenses and disbursements incurred hereunder, including legal, evaluating and
auditing expenses and additional compensation for any extraordinary services
performed hereunder, which extraordinary services shall include but not be
limited to all costs and expenses incurred by the Trustee in making any annual
or other reports or filing tax returns pursuant to Section 8.03, or in making
any distribution of cash attributable to failed contracts covering Contract
Securities in accordance with Section 3.04.
(d) The Trustee shall be indemnified from the Trust Fund and held harmless
against any loss, liability or expense incurred without gross negligence, bad
faith or wilful misconduct on the part of the Trustee arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability in
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the premises. The provisions of this paragraph shall be deemed to apply to the
Distribution Agent in respect of any loss, liability or expense arising out of
or in connection with such Agent's actions hereunder to the same extent as such
provisions apply to the Trustee with respect to its acceptance and
administration of the Trust.
(e) The Trustee's normal and extraordinary compensation and reimbursement
of the above mentioned expenses and losses shall be charged by the Trustee
against the Income Account, or to the extent funds are not available in such
account, from the Capital Account in accordance with Section 3.04 on or before
each Distribution Day or as otherwise provided in this Section 8.05. If the
balances in the Income and Capital Accounts shall be insufficient to provide for
amounts payable pursuant to this Section 8.05, the Trustee shall have the power
to sell Securities in the manner provided in Section 5.02 hereof. The Trustee
shall not be liable or responsible in any way for depreciation or loss incurred
by reason of any Sale of Securities made pursuant to this Section 8.05. Any
moneys payable to the Trustee shall be secured by a prior lien on the Trust
Fund.
SECTION 8.06 Resignation, Discharge or Removal of Trustee; Successors.
--------------------------------------------------------
(a) The Trustee may resign and be discharged of the trust created by this
Indenture by executing an instrument in writing resigning as such Trustee,
filing the same with the Sponsor and mailing a copy of a notice of resignation
to all Holders then of record, not less than sixty days before the date
specified in such instrument when, subject to Section 8.06(c), such resignation
is to take effect. Upon receiving such notice of resignation, the Sponsor shall
use their best efforts promptly to appoint a successor Trustee in the manner and
meeting the qualifications hereinafter provided, by written instrument or
instruments delivered to such resigning Trustee and the successor Trustee.
Notice of such appointment of a successor Trustee shall be mailed promptly after
acceptance of such appointment by the successor Trustee to each Holder then of
record. The Sponsor may remove the Trustee at any time with or without cause
and appoint a successor Trustee by written instrument or instruments delivered
not less than 60 days prior to the effective date of such removal and
appointment to the Trustee so removed and to the successor Trustee. Notice of
such resignation or removal of a trustee and appointment of a successor Trustee
shall be mailed by the successor Trustee, promptly after its acceptance of such
appointment, to each Holder then of record.
(b) In case at any time the Trustee shall resign and no successor Trustee
shall have been appointed within thirty days after notice of resignation has
been received by the Sponsor, the retiring Trustee may forthwith apply to a
court of competent jurisdiction for the appointment of a successor Trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(c) Any successor Trustee appointed hereunder shall execute and acknowledge
to the Sponsor and the retiring Trustee an instrument accepting such appointment
hereunder, and such
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successor Trustee without any further act, deed or conveyance shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder with like effect as if originally named a Trustee herein and shall be
bound by all the terms and conditions of this Indenture. Upon the request of
such successor Trustee, the retiring Trustee shall, upon payment of all amounts
due the retiring Trustee, execute and deliver an instrument acknowledged by it
transferring to such successor Trustee all the rights and powers of the retiring
Trustee; and the retiring Trustee shall transfer, deliver and pay over to the
successor Trustee all Securities and moneys at the time held by it hereunder, if
any, together with all necessary instruments of transfer and assignment or other
documents properly executed necessary to effect such transfer and such of the
records or copies thereof maintained by the retiring Trustee in the
administration hereof as may be requested by the successor Trustee, including
but not limited to, all relevant cost basis accounting records of the Trust, and
shall thereupon be discharged from all duties and responsibilities under this
Indenture. Any resignation or removal of a Trustee and appointment of a
successor Trustee pursuant to this Section 8.06 shall become effective upon such
acceptance of appointment by the successor Trustee.
(d) Any corporation into which a Trustee hereunder may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which such Trustee hereunder shall be a party, shall be the
successor Trustee under this Indenture without the execution or filing of any
paper, instrument or further act to be done on the part of the parties hereto,
anything herein, or in any agreement relating to such merger or consolidation,
by which any such Trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
SECTION 8.07 Qualification of Trustee. The Trustee and any successor
------------------------
shall be a banking or trust corporation meeting the requirements of the
Investment Company Act of 1940 for trustees, organized and doing business under
the laws of the United States, or any state thereof, having at all times an
aggregate capital, surplus, and undivided profits of not less than $5,000,000.
ARTICLE IX
Termination
-----------
SECTION 9.01 Procedure Upon Termination. This Indenture and the
--------------------------
trust created hereby shall terminate upon the Termination Date set forth in the
Prospectus under Mandatory Termination Date in the Summary of Essential
Information or upon the sale or other disposition as the case may be of the last
Security held hereunder unless sooner terminated as hereinbefore specified and
may be terminated at any time by written instrument executed by the Sponsor and
consented to (as provided in Section 10.01) by Holders owning 51% of the Units
then outstanding under this Indenture, provided that in no event shall this
--------
trust continue beyond January 1 of the fiftieth year after the creation of this
Trust.
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Written notice of any termination, specifying the date determined by
the Trustee upon which the transfer books of the Trustee maintained pursuant to
Section 6.01 shall be closed, shall be given by the Trustee to each Holder.
Within a reasonable period of time after such termination the Trustee shall,
subject to any applicable provisions of law, sell all of the Securities then
held, if any, and shall:
(a) deduct from the income Account or, to the extent that funds are
not available in such Account, from the Capital Account and pay to itself
individually an amount equal to the sum of (1) its accrued compensation as
determined in accordance with Section 8.05 for its ordinary services, (2)
any compensation due it for its extraordinary services and (3) any other
expenses and disbursements of the Trustee as provided herein;
(b) deduct from the Income Account or, to the extent that funds are
not available in such Account, from the Capital Account and pay accrued and
unpaid fees to the Sponsor and counsel pursuant to Section 3.10;
(c) deduct from the Income Account or, to the extent that funds are
not available from such Account, from the Capital Account any amounts which
it, in its sole discretion, shall deem requisite to be deposited in the
Reserve Account to provide for any applicable taxes or other governmental
charges that may be payable out of the Trust Fund;
(d) distribute forthwith to each Holder of Units in uncertificated
form or to Holders of Certificates, upon surrender of Certificates, such
Holder's interest in the balances of the Income and the Capital Accounts,
and, on the conditions set forth in Section 3.03 hereof, the Reserve
Account, provided that such distribution shall be made to Holders of record
--------
as of the date of such computation and shall be distributed to them within
five days or shortly thereafter;
(e) together with such distribution to each Holder as provided for in
paragraph (c), furnish to each such Holder a final statement as of the date
of the computation of the amount distributable to Holders, setting forth
the date and information in substantially the form and manner provided for
in Section 3.07 hereof.
SECTION 9.02 Moneys to be Held in Trust Without Interest. The
-------------------------------------------
Trustee shall be under no liability with respect to moneys in the Income,
Capital and Reserve Accounts upon termination, except to hold the same in trust
without interest.
SECTION 9.03 Dissolution of Sponsor Not to Terminate. The
---------------------------------------
dissolution of the Sponsor shall not, subject to Section 8.01(f), operate to
terminate this Indenture or the Trust Fund.
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ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.01 Amendment and Waiver. This Indenture may be amended
--------------------
from time to time by the Sponsor and the Trustee without the consent of any of
the Holders (a) to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
contained herein; (b) to change any provision hereof as may be required by the
Securities and Exchange Commission or any successor governmental agency
exercising similar authority; (c) to permit the deposit of Securities with
respect to additional Units issued pursuant to Section 3.06 of this Indenture;
or (d) to make such other provisions in regard to matters or questions arising
hereunder as shall not materially adversely affect the interests of the Holders.
This Indenture may also be amended from time to time by the Sponsor and the
Trustee (or the performance of any of the provisions of this Indenture may be
waived) with the consent of Holders owning 51% of the Units at the time
outstanding under the Indenture for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the holders of Units; provided,
--------
however, that no such amendment or waiver shall (i) reduce the interest in the
Trust Fund represented by Units without the consent of the Holder of each such
Unit or (ii) reduce the aforesaid percentage of Units, the Holders of which are
required to consent to any such amendment, without the consent of all the
Holders then outstanding.
Unless the Sponsor otherwise directs, notice of any such amendment shall be
included in the annual statement provided pursuant to Section 3.07.
It shall not be necessary for the consent of Holders under this Section
10.01 or under Section 9.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Holders shall be subject to such
reasonable regulations as the Trustee may prescribe.
SECTION 10.02 Initial Cost. Subject to reimbursement as hereinafter
------------
provided, the cost of organizing the Trust and sale of the Trust Units shall be
borne by the Sponsor, provided, however, that the liability on the part of the
-------- -------
Sponsor under this Section shall not include any fees or other expenses incurred
in connection with the administration of the Trust subsequent to the deposit
referred to in Section 2.01. Upon notification from the Sponsor after the
primary offering period is concluded, the Trustee shall withdraw from the
Account or Accounts specified in the Prospectus or, if no Account is therein
specified, from the Capital Account, and pay to the Sponsor the Sponsor's
reimbursable expenses of organizing the Trust and sale of the Trust Units in an
amount certified to the Trustee by the Sponsor. If the balance
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<PAGE>
of the Principal Account is insufficient to make such withdrawal, the Trustee
shall, as directed by the Sponsor, sell Securities identified by the Sponsor, or
distribute to the Sponsor Securities having a value, as determined under Section
4.01 as of the date of distribution, sufficient for such reimbursement. The
reimbursement provided for in this Section shall be for the account of the
Holders of record at the conclusion of the primary offering period and shall not
be reflected in the computation of Unit Value prior thereto. As used herein, the
Sponsor's reimbursable expenses of organizing the Trust and sale of the Trust
Units shall include the cost of the initial preparation and typesetting of the
registration statement, prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust, SEC and state blue sky
registration fees and expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto but not including the expenses incurred in the printing
of preliminary prospectuses and prospectuses, expenses incurred in the
preparation and printing of brochures and other advertising materials and any
other selling expenses. Any cash which the Sponsor has identified as to be used
for reimbursement of expenses pursuant to this Section shall be reserved by the
Trustee for such purpose and shall not be subject to distribution or, unless the
Sponsor otherwise directs, used for payment of redemptions in excess of the
per-Unit amount allocable to Units tendered for redemption.
SECTION 10.03 Registration (Initial and Current) of Units and Trust
-----------------------------------------------------
Fund. The Sponsor agrees and undertakes on their own part to initially register
- ----
the Units and the Trust Fund with the Securities and Exchange Commission and
under the Blue Sky laws of such states as the Sponsor may select. If the
Sponsor shall maintain a market in the Units, the Sponsor shall, if required by
applicable law, keep the registration of the Units and the Trust Fund with the
Securities and Exchange Commission on a current basis. Except as provided in
Sections 8.02 and 10.02, registration charges, Blue Sky fees, printing costs,
attorney's fees, and other miscellaneous out-of-pocket expenses incurred
pursuant to this Section and related to all Units shall all be borne by the
Sponsor. The Sponsor shall do all things that may be necessary or required to
comply with this provision and the Trustee shall not incur any liability or be
under any obligation or expense in connection therewith.
SECTION 10.04 Certain Matters Relating to Holders. (a) The death or
-----------------------------------
incapacity of any Holder shall not operate to terminate this Indenture or the
Trust Fund, nor entitle his legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them. Each Holder expressly waives
any right he may have under any rule of law, or the provisions of any statute,
or otherwise, to require the Trustee at any time to account, in any manner other
than as expressly provided in this indenture, in respect of the Securities or
moneys from time to time received, held and applied by the Trustee hereunder.
(b) No Holder shall have any right to vote except as provided in Sections
9.01 and 10.01 or in any manner otherwise to control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth be construed
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<PAGE>
so as to constitute the Holders from time to time as partners or members of an
association; nor shall any Holder ever be under any liability to any third
persons by reason of any action taken by the parties to this Indenture, or for
any other cause whatsoever.
SECTION 10.05 New York Law to Govern. All laws or rules of
----------------------
construction of the State of New York shall govern the rights of the parties
hereto and the Holders and the interpretation of the provisions hereof.
SECTION 10.06 Notices. Any notice, demand, direction or instruction
-------
to be given to the Sponsor hereunder shall be in writing and shall be duly given
if mailed or delivered to the Sponsor at 388 Greenwich Street, New York, New
York 10013, Attention: Unit Trust Department or at such other address as shall
be specified by the Sponsor to the other parties hereto in writing. Any notice,
demand, direction or instruction to be given to the Trustee shall be in writing
and shall be duly given if mailed or delivered to the principal office of the
Trustee, 4 New York Plaza, 6th Floor, New York, NY 10004, Attention: Unit
Investment Trust, or such other address as shall be specified to the other
parties hereto by the Trustee in writing. Any notice to be given to a Holder
shall be duly given if mailed or delivered to each Holder at the address such
holder appearing on the registration books of the Trustee.
SECTION 10.07 Severability. If any one or more of the covenants,
------------
agreements, provisions or terms of this Indenture shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the Units or the
rights of the Holders thereof.
SECTION 10.08 Separate and Distinct Series. Each Series of Equity
----------------------------
Focus Trusts to which these Standard Terms and Conditions of Trust Dated March
14, 2000 shall be applicable shall, for all financial and administrative
purposes, be considered separate and distinct from every other Series, and the
assets of one Series shall not be commingled with the assets of another Series
nor shall the expenses of any one Series be charged against any other Series.
Nothing herein contained shall be construed to prohibit the use of securities
depositaries by the Trustee in servicing any Series holding the Securities.
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IN WITNESS WHEREOF, the parties hereto have caused these Standard
Terms and Conditions of Trust to be duly executed.
SALOMON SMITH BARNEY INC.
Sponsor
By: /s/ Kevin Kopczynski
------------------------------
Title: Senior Vice President
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Lionel Cottino
------------------------------
Title: Second Vice President
SEAL
ATTEST:
By: /s/ Rachelle Cohen
------------------------------
Rachelle Cohen
<PAGE>
Exhibit 3.1
[LETTERHEAD OF BATTLE FOWLER LLP]
March 14, 2000
Salomon Smith Barney Inc.
Unit Trust Department
388 Greenwich Street, 23rd Floor
New York, New York 10013
Re: Equity Focus Trusts - Global Research Selections, Series 2000-A
---------------------------------------------------------------
Dear Sirs:
- ----------
We have acted as special counsel for Salomon Smith Barney Inc.
as Depositor, Sponsor and Principal Underwriter (the "Depositor") of Equity
Focus Trusts - Global Research Selections, Series 2000-A (the "Trust") in
connection with the deposit of securities (the "Securities") therein pursuant to
the Trust Agreement referred to below, by which the Trust was created and under
which the units of fractional undivided interest (the "Units") have been issued.
Pursuant to the Trust Agreement, the Depositor has transferred to the Trust
certain securities and contracts to purchase certain securities together with
irrevocable letters of credit to be held by the Trustee upon the terms and
conditions set forth in the Trust Agreement. (All securities to be acquired by
the Trust are collectively referred to as the "Securities.")
In connection with our representation, we have examined the
originals or certified copies of the following documents relating to the
creation of the Trust, the deposit of the Securities, and the issuance and sale
of the Units: (a) the Standard Terms and Conditions of Trust dated March 14,
2000, and the Reference Trust Indenture of even date herewith relating to the
Trust (collectively, the "Trust Agreement") between the Depositor and The Chase
Manhattan Bank as Trustee; (b) the Closing Memorandum relating to the deposit of
the Securities in the Trust; (c) the
<PAGE>
BATTLE FOWLER LLP Page 2
Salomon Smith Barney Inc.
March 14, 2000
Notification of Registration on Form N-8A and the Registration Statement on Form
N-8B-2, as amended, relating to the Trust, as filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Investment Company Act of
1940 (the "1940 Act"); (d) the Registration Statement on Form S-6 (Registration
No. 333-31514) filed with the Commission pursuant to the Securities Act of 1933
(the "1933 Act"), and Amendment No. 1 thereto (said Registration Statement, as
amended by said Amendment No. 1 being herein called the "Registration
Statement"); (e) the proposed form of final prospectus (the "Prospectus")
relating to the Units, which is expected to be filed with the Commission on or
about March 15, 2000; (f) resolutions of the Executive Committees of the
Depositor authorizing the execution and delivery by the Depositor of the Trust
Agreement and the consummation of the transactions contemplated thereby; (g) the
Certificates of Incorporation and By-laws of the Depositor, each certified to by
an authorized officer of the Depositor as of a recent date; (h) a certificate of
an authorized officer of the Depositor with respect to certain factual matters
contained therein ("Officers Certificate"); and (i) certificates or telegrams of
public officials as to matters set forth upon therein.
We have assumed the genuineness of all agreements, instruments
and documents submitted to us as originals and the conformity to originals of
all copies thereof submitted to us. We have also assumed the genuineness of all
signatures and the legal capacity of all persons executing agreements,
instruments and documents examined or relied upon by us.
Where matters are stated to be "to the best of our knowledge"
or "known to us," our knowledge is limited to the actual knowledge of those
attorneys in our office who have performed services for the Trust, their review
of documents provided to us by the Depositor in connection with this engagement,
and inquiries of officers of the Depositor, the results of which are reflected
in the Officers Certificate. We have not independently verified the accuracy of
the matters set forth in the written statements or certificates upon which we
have relied. We have not reviewed the financial statements, compilation of the
Securities held by the Trust, or other financial or statistical data contained
in the Registration Statement and the Prospectus, as to which we understand you
have been furnished with the reports of the accountants appearing in the
Registration Statement and the Prospectus. In addition, we have made no specific
inquiry as to whether any stop order or investigatory proceedings have been
commenced with respect to the Registration Statement or the Depositor nor have
we reviewed court or government agency dockets.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
<PAGE>
BATTLE FOWLER LLP Page 3
Salomon Smith Barney Inc.
March 14, 2000
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as to
matters of Federal and Delaware corporate law. No opinion is expressed as to the
effect that the law of any other jurisdiction might have upon the subject matter
of the opinions expressed herein under applicable conflicts of law principles,
rules or regulations or otherwise.
Based on and subject to the foregoing, we are of the opinion
that:
(1) The Trust Agreement has been duly authorized and executed
and delivered by an authorized officer of the Depositor and is a valid and
binding obligation of the Depositor in accordance with its terms.
(2) The execution and delivery of the Certificates evidencing
the Units has been duly authorized by the Depositor and such Certificates when
executed by the Depositor and the Trustee in accordance with the provisions of
the Certificates and the Trust Agreement and issued for the consideration
contemplated therein, will constitute fractional undivided interests in the
Trust, and will be entitled to the benefits of the Trust Agreement. Upon payment
of the consideration for the Units as provided in the Trust Agreement and the
Registration Statement, the Units will be fully paid and non-assessable by the
Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Taxes" and "Legal Opinion."
This opinion is intended solely for the benefit of the addressee in connection
with the issuance of the Units of the Trust and may not be relied upon in any
other manner or by any other person without our express written consent.
Very truly yours,
/s/ Battle Fowler LLP
Battle Fowler LLP
<PAGE>
EXHIBIT 5.1
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee and Unit Holders of Equity Focus Trusts - Global Research
Selections, Series 2000-A:
We consent to the use of our report dated March 14, 2000, included herein and to
the reference to our firm under the heading "Auditors" in the Prospectus.
/s/ KPMG LLP
KPMG LLP
New York, New York
March 14, 2000
