<PAGE>
Registration No. 33-56916
S E C U R I T I E S A N D E X C H A N G E C O M M I S
S I O
N
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
to
F O R M 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:
SMITH BARNEY UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
(A UNIT INVESTMENT TRUST)
B.
Names of Depositors:
SMITH BARNEY INC.
<TABLE>
<S> <C>
C. Complete address of depositor's principal executive
office:
388 Greenwich St.
New York, New York 10013
D. Names and complete address of agent for service:
Copy to:
LAURIE A. HESSLEIN PIERRE DE ST. PHALLE, ESQ.
Smith Barney Inc. 450 Lexington Avenue
388 Greenwich Street New York, New York 10017
New York, New York 10013
It is proposed that this filing will become effective August 3,
1995
<PAGE>
</TABLE>
<PAGE>
REAL ESTATE VALUE TRUST 2
A UNIT INVESTMENT TRUST
[S]
[C]
Real Estate Value Trust 2 is a unit investment trust that
offers investors the opportunity to purchase Units
representing proportionate interests in a diversified portfolio
of publicly traded real estate investment trusts ("REITs")
purchased in the secondary market primarily for high current
income with a secondary objective of possible long term
capital growth. The value of the Units will fluctuate with the
value of the underlying securities and the increase and
decrease in their dividend rates. The minimum purchase is
$1,000 for individual purchases and $250 for purchases by
Individual Retirement Accounts, self-employed retirement
plans, pension funds and other tax-deferred retirement plans.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATIONS TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Inquiries should be directed to the Sponsor 1-800-298-UNIT
Prospectus dated August 3, 1995
Read and retain this Prospectus for future reference
PAGE
<PAGE>
<TABLE>
SMITH BARNEY UNIT TRUSTS, REAL ESTATE
VALUE TRUST 2
INVESTMENT SUMMARY AS OF AUGUST 1, 1995 (the
Evaluation Date)
<S> <C>
SPONSOR
Smith Barney Inc.
NUMBER OF UNITS - . . . . . . . . . . 59,300,000 Q
FRACTIONAL UNDIVIDED
INTEREST IN TRUST
REPRESENTED BY EACH UNIT -. . . . . . 1/59,300,000th
PUBLIC OFFERING PRICE
(per 1,000 Units)
Aggregate value of Securities in
Trust plus any undistributed
principalQQ . . . . . . . . . . $54,702,127
Divided by 59,300,000 Units
(times 1,000) . . . . . . . . . $ 922.46
Plus sales charge of 4.00% of
Public Offering Price
(4.167% of the net amount
invested in Securities)*. . . . 38.43
Public Offering Price per
1,000 Units . . . . . . . . . . $ 960.89
Plus the amount per 1,000
Units in the Income Account
(see Description of the
Trust - Income) . . . . . . . . 3.16
Total (per 1,000 Units). . . $ 964.05
SPONSOR'S REPURCHASE PRICE
per 1,000 UNITS and REDEMPTION
PRICE per 1,000 UNITS** (based on
underlying Securities plus amount
in Income Account) . . . . . . . . $ 925.62
MONTHLY INCOME DISTRIBUTIONS
Distributions of Income, if any, will
be paid on the first day of each month
to holders of record on the 15th day
of the previous month. A Final
Distribution will be made upon
termination of the Trust.
<PAGE>
RECORD DAY
The fifteenth day of each month
DISTRIBUTION DAY
The first day of each month
TRUSTEE
United States Trust Company of New York
TRUSTEE'S ANNUAL FEE
$1.50 per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
EVALUATION TIME
The close of trading on the New York
Stock Exchange (currently
4:00 P.M., New York time)
MINIMUM VALUE OF TRUST
The trust indenture between the Sponsor
and the Trustee (the "Indenture") may be
terminated if the net asset value of the
Trust is less than $3,000,000.
MANDATORY TERMINATION OF TRUST
On March 31, 1998 (the "Mandatory
Termination Date"), or at any earlier
time by the Sponsors with the consent
of Holders of 51% of the Units then
outstanding.
<PAGE>
<FN>
Q On the Initial Date of Deposit (February 2, 1993) the aggregate
value of Securities in the Trust was $960,450.00.
QQ Securities listed on a national securities exchange or NASDAQ
National Market System are valued at the closing sale price or if
no such price exists, at the mean between the closing bid and offer
prices. Securities traded in the over-the-counter market are valued
at the mean between bid and offer prices.
* The sales charge will be reduced on a graduated scale in the case
of purchases of 50,000 or more Units. See Public Sale of Units.
** Although not obligated to do so, the Sponsor intends to maintain
a market for Units based on the value of the underlying Securities.
See Market for Units. All redemptions of at least 50,000 Units
may, upon request by a redeeming Holder, be made "in kind" to
the Distribution Agent, who will either forward the distributed
securities to the Holder or sell the securities on behalf of the
redeeming Holder and distribute the proceeds (net of any
brokerage commission or other expenses incurred in the sale) to
the Holder. See Redemption.
</TABLE>
<PAGE>
SMITH BARNEY UNIT TRUSTS, REAL ESTATE VALUE TRUST
2
INVESTMENT SUMMARY AS OF AUGUST 1, 1995
Objectives of the Trust-The objective of the Trust is to provide
investors with a high level of current dividend income through
investment in a fixed portfolio of publicly traded real estate investment
trusts (REITs). An additional objective of the Trust is the potential for
long term capital appreciation. The REITs in the portfolio were selected
for their current dividend yields among REITs that are expected to
continue to make dividend payments. Selection criteria include extensive
analysis of historical financial data, operating cash flow, management
expertise, and performance.
Portfolio-The Portfolio contains 29 different REITs. The
Sponsor may deposit additional Securities, contracts to purchase
additional Securities or cash (or a bank letter of credit in lieu of cash)
with instructions to purchase Securities, allowing for the issuance of
additional Units at any time, and the Sponsor may cease creating Units
(temporarily or permanently) at any time. Each subsequent deposit will
include Securities, contracts to purchase Securities or cash sufficient to
maintain to the extent practicable the initial percentage relationship
among the number of shares of each Security (see Description of the
Trust-Structure and Offering). All Units (including additional Units) will
continue to the extent practicable to represent the same number of
shares of each underlying Security, subject to adjustment for stock splits,
stock dividends and similar events, that existed on the Initial Date of
Deposit.
Risk Factors-Investment in the Trust should be made with an
understanding that the value of the underlying Securities, and therefore
the value of the Units, will fluctuate, depending on a broad range of
economic and market influences which may affect the market value of
the Securities, including the profitability and financial condition of the
issuers of the Securities in the Portfolio, conditions in the real estate
industry, as well as market conditions and the value of common equities
generally, the impact of the Sponsor's buying and selling of Securities,
especially during the initial offering of Units of the Trust, and other
factors. Common equities may be especially susceptible to general stock
market movements and to volatile increases and decreases of value as
market confidence in and perceptions of the issuers change. Investors
should also be aware that there can be no assurance that the value of the
underlying Securities will increase or that the issuers of the Securities
will pay or maintain dividends on outstanding common shares. Any
distributions of income will generally depend upon the declaration of
dividends by the issuers of the Securities and the declaration of any
dividends depends upon many factors including the financial condition
of the issuers and general economic conditions (see Description of the
Trust-Risk Factors).
100% of the aggregate value of the Trust is represented by shares
of common equity of REITs. As a result, the trust is concentrated in the
real estate industry and in REITs and is subject to certain risks similar
to those associated with ownership of real estate generally.* The
approximate percentage of the aggregate value of the Trust represented
by each type of REIT is as follows: equity REITs, 85%; mortgage
REITs, 4%; hybrid REITs, 11%. For a brief summary of some of the
risks associated with REITs, see Description of the Trust-Risk Factors-
Real Estate Investment Trusts.
Although the Portfolio is not managed, the Sponsor may instruct
the Trustee to sell Securities under certain limited circumstances and to
reinvest the proceeds in substitute Securities. Securities, however, will
not be sold by the Trust to take advantage of market fluctuations or
changes in anticipated rates of appreciation (see Administration of the
Trust-Trust Supervision). The Trust may continue to hold Securities or
to purchase additional Securities in the initial percentage relationship
determined as of the date of deposit even though the evaluation of the
attractiveness of the Securities may have changed and the Securities
would not have been selected for the Trust if the evaluation were
performed again at that time.
* A Trust is considered to be "concentrated" in a particular category
when the Securities in that category constitute 25% or more of the
aggregate value of the Portfolio.
<PAGE>
Smith Barney UNIT TRUSTS, REAL ESTATE VALUE TRUST 2
INVESTMENT SUMMARY AS OF AUGUST 1, 1995
(CONTINUED)
Investors should also note that in connection with the
issuance of additional Units the Sponsor may deposit cash with
instructions to purchase Securities. Cash deposited with
instructions to purchase Securities will be in amounts sufficient to
maintain to the extent practicable the percentage relationship
among the number of shares of each Security based on the price
of the Securities at the Evaluation Time on the date the cash is
deposited. Unitholders will be at risk to the extent the price of a
Security increases or decreases between the time cash is deposited
and the time the Security is purchased. In addition, brokerage fees
(if any) incurred in purchasing Securities will be an expense of the
Trust. Price fluctuations during the period from the time of
deposit to the time the Securities are purchased and the
commissions payable by the Trust in purchasing Securities upon
the creation of additional Units will affect the value of every
Holder's Units and the income per Unit received by the Trust.
Public Offering Price-The Public Offering Price per 1,000
Units is equal to the aggregate value of the underlying Securities,
divided by the number of Units outstanding times 1,000, plus a
sales charge of 4.0%* of the Public Offering Price; this results in
a sales charge of 4.167%* of the net amount invested in underlying
Securities. Units are offered at the Public Offering Price plus the
net amount per Unit in the Income Account (see Public Sale of
Units). The minimum purchase is $1,000 (or $250 in the case of
purchases by Individual Retirement Accounts, Keogh plans,
pension funds and other tax-deferred retirement plans). Investors
should note that the Public Offering Price of Units varies each
business day with the value of the underlying Securities. There is
no "par value" for Units.
Distributions-Monthly distributions of dividends (net of
expenses) received by the Trust, if any, will be made in cash on or
shortly after the first day of each month to Holders of record on
the fifteenth day of the previous month. Alternatively, Holders
whose Units are held in "street name" by Smith Barney may elect
to have their distributions reinvested into Units of the Trust (see
Reinvestment Plan). Holders electing to reinvest distributions will
receive additional Units and therefore will own a greater
percentage of the Trust than Holders who receive their
distributions in cash. Capital gain net income (if any) recognized
by the Trust in any taxable year will be distributed annually after
the end of the year. In order to meet certain tax requirements the
Trust may make special distributions of income, including capital
gains, to Holders of record as of a date in December. These
distributions may also be invested in additional Units of the Trust.
It is anticipated that the proceeds of sale or redemption of
Securities will not be distributed but will be reinvested in
additional Securities. To the extent that the proceeds of sale or
Redemption of Securities are available for distribution, they will be
distributed on the next succeeding Distribution Day (see
Administration of the Trust-Accounts and Distributions). These
distributions may be invested in additional Units of the Fund.
Taxation-It is anticipated that the Trust and the REITs in
which the Trust invests will not be subject to Federal income tax
if certain requirements are satisfied (see Description of the Trust-
Real Estate Investment Trusts-REIT Taxation and Description of
the Trust-Taxes). Distributions which are taxable as ordinary
income to Holders will constitute dividends for Federal income tax
purposes but will not be eligible for the dividends-received
deduction for many corporations. Divided distributions to Holders
who are not U.S. citizens or residents ("Foreign Holders")
generally will be subject to a withholding tax of 30%, or a lower
treaty rate as if the Foreign Holder owned the REITs or the real
estate directly. However, capital gain dividends payable by the
Trust to Foreign Holders and gain realized by Foreign Holders on
the disposition of Units should not be subject to regular
withholding tax or withholding tax under the Foreign Investment
in Real Property Tax Act ("FIRPTA"), provided certain conditions
are met (see Description of the Trust-Taxes).
Market for Units-The Sponsor, though not obligated to do
so, intends to maintain a market for Units and continually to offer
to purchase Units from Holders at a price based on the aggregate
value of the underlying Securities (see Market for Units).
Whenever a market is not maintained, a Holder may be able to
dispose of his Units only through redemption (see Redemption).
Private Placements; Underwriting-None of the Securities in
the Trust consists of privately-placed common stocks. The Sponsor
has not participated as sole underwriter, managing underwriter or
member of an underwriting syndicate from which any of the
Securities in the Trust was acquired.
____________
* This sales charge will be reduced on a graduated scale in the
case of quantity purchases of 50,000 or more Units. See
Public Sale of Units-Public Offering Price.
<PAGE>
Independent Auditors' Report
The Unitholders, Sponsor and Trustee of
Smith Barney, Inc.Unit Trusts,
Real Estate Value Trust 2:
We have audited the accompanying statement of assets and
liabilities of Smith Barney, Inc. Trusts, Real Estate Value Trust 2
(formerly Smith Barney Shearson Unit Trusts, Real Estate Value
Trust 2), including the schedule of portfolio investments, as of
January 31, 1995, and the related statements of operations and
changes in net assets for the year then ended, and the period from
February 2, 1993(date of deposit) to January 31, 1994.
These financial statements are the responsibility of the Trustee.
Our responsibility is to express an opinion on these financial
statements 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 financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of investments held by the
Trustee as of January 31, 1995. An audit also includes assessing
the accounting principles used and significant estimates made by
the Trustee, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Smith
Barney, Inc. Unit Trusts, Real Estate Value Trust 2 as of January
31, 1995, the results of its operations and changes in its net assets
for the year then ended and the period from February 2, 1993(date
of deposit) to January 31, 1994, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
July 31, 1995
<PAGE>
<TABLE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Statement of Assets and Liabilities
January_31, 1995
Assets:
<S> <C>
Investments in securities at value (cost -
$65,857,725) $ 57,766,600
Cash 337,836
Total assets58,104,436
Liabilities:
Distribution payable to Unitholders:
Investment income 379,323
Accrued expenses 26,185
Total liabilities405,508
Net assets $57,698,928
Net assets consist of:
Cost of 1,000,000 units at date of deposit
1,000,470
Sales charge (40,020)
Deposit of 76,000,000 units 77,057,839
Redemption of 10,800,000 units (10,979,133)
Realized loss on investments (1,300,723)
Unrealized depreciation of investments - net
(8,091,125)
Net capital applicable to Unitholders
57,647,308
Undistributed net investment income 51,620
Net assets $57,698,928
Net asset value per 1,000 units on 66,200,000 units
of
fractional undivided interest outstanding $871.59
See accompanying notes to financial statements.<PAGE>
<PAGE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Statements of Operations
For the period
February 2, 1993
(date of deposit)
Year ended through
January 31, 1995 January 31, 1994
<S> <C> <C>
Income:
Dividend income $4,925,696 4,336,949
Total income 4,925,696 4,336,949
Total expenses (note 3) (134,491) (124,432)
Investment income - net 4,791,205
4,212,517
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on sale of securities
(1,300,898) 175
Increase in unrealized depreciation (7,098,528)
(992,597)
Net loss on investments (8,399,426)
(992,422)
Net increase (decrease) in net
assets from operations $(3,608,221)
3,220,095
See accompanying notes to financial statements.<PAGE>
<PAGE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Statements of Changes in Net Assets
For the period
February 2, 1993
(date of deposit)
Year ended through
January 31, 1995 January 31, 1994
Operations:
Investment income - net $4,791,205 4,212,517
Net realized gain (loss)(1,300,898) 175
Increase in unrealized depreciation (7,098,528)
(992,597)
Net increase (decrease) in net assets
from operations (3,608,221) 3,220,095
Distributions to Unitholders:
Investment income - net (4,884,070) (4,299,635)
Total distributions (4,884,070) (4,299,635)
Deposit of units -_______ 77,293,974
Redemption of units:
Principal(9,616,345) (967,498)
Investment income - net (6,032) 7,166
Realized gain (loss)(402,456) 1,500
Increase (decrease) in net assets (18,517,124)
75,255,602
Net assets:
Beginning of period 76,216,052 960,450
End of period $57,698,928 76,216,052
Other information:
Units soldUts. -_______ 76,000,000
Units redeemed Uts. 9,800,000 1,000,000
See accompanying notes to financial statements.<PAGE>
<PAGE>
</TABLE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Notes to Financial Statements
January_31, 1995 and 1994
(1) Summary of Significant Accounting Policies
Smith Barney, Inc. Unit Trusts, Real Estate
Value Trust 2 (the "Trust") (formerly Smith
Barney Shearson Unit Trusts, Real Estate Value
Trust 2) is registered under the Investment
Company Act of 1940 as a unit investment
trust. The following is a summary of
significant accounting policies consistently
followed by the Trust:
(a) Portfolio Valuation - Securities listed on
the New York Stock Exchange are valued
at the close of trading (currently 4:00
P.M. Eastern Time). Securities listed on a
national exchange are valued at the last
reported sales price or, in the absence of
reported sales, at the mean between the bid
and asked price.
(b) It is the Trust's policy to comply with the
requirements of the Internal Revenue Code
applicable to regulated investment
companies and to distribute all of its
taxable income to its unitholders;
accordingly, no Federal income tax
provision is required (see Taxes in this
Prospectus).
(c) Investment transactions are recorded as of
the trade date. Realized gains or losses on
sales of investments are determined on the
identified cost basis for financial reporting
and tax purposes. Dividend income is
recorded on the ex-dividend date.
(2) Distributions and Redemptions
Monthly distributions of net investment income
to Unitholders are made in cash on the first day
of each month to holders of record as of the
15th day of the preceding month. Receipts
other than interest, after deductions for
redemptions and applicable expenses, are
distributed as explained in "Administration of
the Trust - Accounts and Distributions" in this
Prospectus. Units may be redeemed upon
delivery of a request for redemption to the
Trustee.
(3) Fees and Transactions with Affiliates
Sponsor
The Sponsor, Smith Barney, Inc. (formerly
Smith Barney Shearson Inc.) receives an annual
fee (maximum of $.25 per $1,000 face amount
of securities in the Trust) for service it renders
with respect to monitoring, and when necessary,
providing advice to the Trustee with respect to
any adverse market or credit factors concerning
the security investments of the Trust and any
actions taken by the issuers of such securities
that may affect the issuer's capital structure, as
provided by the Indenture.
The Sponsor receives a sales charge applicable
to purchases of units at a rate of 4.00% of the
Offering Price.
<PAGE>
(Continued)<PAGE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Notes to Financial Statements
(3), Continued
Trustee
Until June 30, 1994, Boston Safe Deposit and
Trust Company ("Boston Safe") acted as
Trustee and Distribution Agent for an annual fee
($.72 per $1,000 face amount) paid monthly on
the largest face amount of securities in the Trust
during the preceding month. Effective July 1,
1994, United States Trust Company of New
York became the new trustee.
(4) Financial Highlights
Selected data per 1,000 units of the Trust
outstanding for the year ended January 31, 1995
and the period from February 2, 1993 (date of
deposit) to January 31, 1994 follows:
<TABLE> Period from
Feb. 2, 1993
Year ended to
Jan. 31,1995 Jan. 31, 1994
<S> <C> <C>
Income $74.41 68.47
Expenses (2.03) (1.96)
Investment income - net 72.38 66.51
Distributions to Unitholders:
Investment income - net (73.78)(64.53)
Realized and unrealized gain (loss)
on investments - net (129.85) 40.41
Net increase (decrease) in net asset
value (131.25) 42.39
Net asset value, beginning of period 1,002.84
960.45
Net asset value, end of period,
including
distributable funds $871.59 1,002.84
</TABLE>
(5) Concentration of Risk
The Securities in the Trust are concentrated in
real estate investment trust common stocks (see
"Risk Factors" in this Prospectus).
<PAGE>
(Continued)<PAGE>
3
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Notes to Financial Statements
(6) Deposits and Sales of Securities
For the year ended January 31, 1995, cost of
deposits and proceeds from sales of securities
were $2,887,623 and $2,914,940, respectively.
For the year ended January 31, 1994, cost of
deposits and proceeds from sales of securities
were $77,057,669 and $4,500, respectively.
(7) Notes to Portfolio
(a) At January_31, 1995, the aggregate cost of
investments for Federal income tax
purposes was the same as the cost for
financial reporting purposes, which was
$65,857,725.
(b) At January_31, 1995, the net unrealized
depreciation of common stocks consisted
of:
<TABLE>
<S> <C>
Gross unrealized appreciation $891,733
Gross unrealized depreciation (8,982,858)
Net unrealized depreciation $(8,091,125)
<PAGE>
SMITH BARNEY, INC. UNIT TRUSTS,
REAL ESTATE VALUE TRUST 2
Portfolio of Investments
January 31, 1995
Value Total Percent of
Securities Shares
per Share Value Net Assets
<C> <S> <C>
<C> <C> <C>
1 American Health Properties Inc. 109,230
20.500 $
2,239,214
3.88%
2 Berkshire Realty Co. 276,716
9.250 2,559,623
4.43%
3 BRE Properties Inc. Class A 68,186
30.750 2,096,720
3.63%
4 Burnham Pacific Properties Inc. 142,330
13.000 1,850,290
3.20%
5 Cousins Properties Inc. 129,090
16.875 2,178,393
3.77%
6 Federal Realty Investment Trust 88,046
20.875 1,837,960
3.18%
7 Health Care Property Investors Inc. 81,426
28.375 2,310,463
4.00%
8 HRE Properties Inc. 101,948
13.375 1,363,555
2.36%
9 IRT Property Co. 162,190
10.125 1,642,174
2.84%
10 Kimco Realty Co. 68,186
36.125 2,463,219
4.26%
11 Kranzco Realty Trust 102,610
18.000 1,846,980
3.20%
12 LTC Properties Inc. 209,192
12.500 2,614,900
4.53%
13 Meditrust 81,426
30.750 2,503,850
4.33%
14 Merry Land & Investments Co. Inc. 129,090
20.250 2,614,072
4.53%
15 MGI Properties 142,330
13.875 1,974,829
3.42%
16 Mid-America Realty Investors Inc. 115,850
7.375 854,394
1.48%
17 Nationwide Health Properties Inc. 74,806
36.750 2,749,121
4.76%
18 New Plan Realty Trust 88,046
20.500 1,804,943
3.12%
19 Property Trust of America 135,710
17.375 2,357,961
4.08%
20 Real Estate Investment Trust of California 176,092
15.375 2,707,414
4.69%
21 Santa Anita Realty Enterprises Inc. 61,120
13.750 840,400
1.45%
22 Simon Property Group 44,428
23.375 1,038,505
1.80%
23 Sizeler Property Investors Inc. 101,948
10.125 1,032,224
1.79%
24 Taubman Centers Inc. 189,994
9.000 1,709,946
2.96%
25 United Dominion Realty Trust Inc. 162,190
13.375 2,169,291
3.76%
26 Washington Real Estate Investment Trust 102,610
16.125 1,654,586
2.86%
27 Weingarten Realty Investors 68,186
35.375 2,412,080
4.18%
28 Wellsford Residential Property Trust 102,610
20.625 2,116,331
3.66%
29 Western Investment Real Estate Trust 176,092
12.625 2,223,162
3.85%
$
57,766,600
100.00%
See accompanying notes to the portfolio.
</TABLE>
<PAGE>
<PAGE>
DESCRIPTION OF THE TRUST
Structure and Offering
This Series of Smith Barney Unit Trusts (the "Trust") is
a"unit investment trust" created under New York law by a
trust indenture (the"Indenture")* between the Sponsor and
the Trustee. On the Evaluation Date,each unit of the Trust (a
"Unit") represented a fractional undivided interest in the
securities listed under Portfolio and net income of the Trust
set forth under Investment Summary. The Portfolio contains
various common equities. As used herein, the term
"Securities" means the common equities initially deposited in
The Trust and described under Portfolio and any additional
common equities acquired and held by the Trust pursuant to
the provisions of the Indenture. Additional Units of the Trust
may be issued at any time by depositing in the Trust
additional Securities, contracts to purchase Securities
together with irrevocable letter of credit or cash (or a bank
letter of credit in lieu of cash) with instructions to purchase
Securities. On each settlement date (estimated to be five
business days after the applicable date of the deposit in the
Trust), the Units will be released for delivery to investors
and the deposited Securities,contracts or cash will be
delivered to the Trustee. As additional Units are issued by
the Trust as a result of the deposit of additional Securities by
the Sponsor, 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.
Additional deposits will be in amounts which
maintain to the extent practicable the original percentage
relationship among the number of shares each Security in the
Trust established by the initial deposit of Securities. Thus,
although additional Units will be issued, to the extent
practicable each Unit will continue to represent the same
number of shares of each Security and the percentage
relationship among the number of shares of each Security in
the Trust will remain the same. The required percentage
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. However, it may not be practicable 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,
availability of Securities and restrictions upon those
securities the Sponsor may purchase. 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.
The Public Offering Price of Units prior to the
Evaluation Time specified on page 2 on any day will be
based on the aggregate value of the Securities in the Trust on
that day at the Evaluation Time, plus a sales charge. The
Public Offering Price will thus vary in the future from that
specified on page 2 of this Prospectus. See Public Sale of
Units--Public Offering Price for a complete description of
the pricing of Units.
____________
* 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.
<PAGE>
Units will be sold to investors at the Public Offering
Price next computed after receipt of the investor's order to
purchase Units, if Units are available to fill orders on that
day. The numbers of Units available may be insufficient to
meet demand, however, because of the Sponsor's inability to
purchase underlying Securities in amounts sufficient to
maintain the proportionate numbers of shares of each
Security required by the second preceding paragraph, and
thus the Sponsor may be unable to create sufficient Units on
a particular day. Additionally, the Sponsor may choose, in
its discretion, to stop creating Units at any time. The
Sponsor will execute orders to purchase in the order it
determines,in good faith, that they are received. The
Sponsor may,if unable to accept orders due to insufficient
Units on any given day, offer to execute the order as soon as
sufficient Units are created. An investor who does not
withdraw his offer to purchase Units will be deemed to have
had his order rejected each day Units are unavailable but to
place a new order for that number of Units each day until
that order is accepted. The investor's order will then be
executed, when Units are available, at the Public Offering
Price next calculated after this order is accepted. The
investor will, of course, be able to revoke his purchase order
at any time prior to acceptance by the Sponsor, and the
Sponsor may reject the purchase order if it decides to stop
creating Units temporarily or permanently. The Sponsor
reserves the right to accept or reject any purchase order in
whole or in part.
The holders ("Holders") of Units will have the right
to have their Units redeemed at a price based on the
aggregate value of the Securities("Redemption Price per
Unit") if they cannot be sold in the over-the-counter market
which the Sponsor proposes to maintain (see Market for
Units). 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 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).
Risk Factors
An investment in Units should be made with an
understanding of the risks which an investment in common
equities entails, including the risk that the financial condition
of the issuers of the Securities or the general condition of the
common equities market may worsen and the value of the
Securities and therefore the value of the Units may decline.
Common equities are especially susceptible to general stock
market movements and to volatile increases and decreases of
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. Shareholders of
common equities have rights to receive payments from the
issuers of those common equities that are generally
subordinate to those of creditors for holders of debt
obligations or preferred stocks of such issuers.Shareholders
of common equities of the type held by the Trust have a
right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and
have a right to participate in amounts available for
distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders
of preference stocks have the right to receive dividends at a
fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis, but generally do
not participate in other amounts available for distribution by
the issuing corporation. Cumulative preferred stock
dividends must be paid before common equities dividends
and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of
cumulative preferred stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those
common equities. Moreover,common equities 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 dividend son its common equities or the
rights of holders of common equities with respect to assets
of the issuer upon liquidation or bankruptcy. The value of
common equities are subject to market fluctuations for as
long as the common equities remain outstanding, and thus
the value of the Securities in the Portfolio may be expected
to fluctuate over the life of the Trust to values higher or
lower than those prevailing on the Evaluation Date.
<PAGE>
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 shares in
the Trust and will vote such shares in accordance with the
instructions of the Sponsor. Holders redeeming at least
1,000,000 Units may, however, be able upon request to
receive an "in kind"distribution of the Securities evidenced
by their Units (see Redemption).
Investors should be aware that the Trust is not an
actively "managed"trust, and as a result the adverse financial
condition of a company will not necessarily result in its
elimination from the Portfolio except under certain
circumstances (see Administration of the Trust--Trust
Supervision). In addition, Securities will not be sold by the
Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in
particular that the Securities were selected by the Sponsor as
of the date the Securities were purchased by the Trust. The
Trust may continue to purchase or hold Securities originally
selected even though the evaluation of the attractiveness of
the Securities may have changed and, if the evaluation were
performed again at that time, the Securities would not be
selected for the Trust.
Investors should note that in connection with the
issuance of additional Units the Sponsor may deposit
additional Securities, contracts to purchase Securities or cash
(or a letter of credit in lieu of cash)with instructions to
purchase Securities. Cash deposited with instructions to
purchase Securities will be in amounts sufficient to maintain
the original percentage relationship,subject to adjustment
under certain circumstances, among the number of shares of
each Security based on the price of the Securities at the
Evaluation Time on the date the cash is deposited. To the
extent the price of a Security increases 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.
Unitholders will be at risk because of price fluctuations
during the period from the date on which cash is deposited
to the time the Securities are purchased. 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 deducted from
amounts distributed to Holders. Thus, price fluctuations
during this period and commissions payable by the Trust in
purchasing Securities will affect the value of every Holder's
Units and the income per Unit received by the Trust.
The Trust may be terminated at any time and all
outstanding Units liquidated if the net asset value of the
Trust falls below the minimum value of the Trust indicated
under Investment Summary. If this occurs,the Sponsor
could then in its sole discretion terminate the Trust before
the Mandatory Termination Date specified under Investment
Summary.
The Trust is concentrated in the real estate industry.*
Of course, a portfolio concentrated in a single industry may
present more risks than a portfolio broadly invested over
several industries.
____________
* A Trust is considered to be "concentrated" in
a particular category when the Securities in
that category constitute 25% or more of
the aggregate value of the Portfolio.<PAGE>
<PAGE>
Percentages of concentrations for this Trust are set out under
Investment Summary. An investment in Units of the Trust
should be made with an understanding of the risks which this
investment may entail,
certain of which are summarized below.
Real Estate Investment Trusts
In General. Real estate investment trusts ("REITs")
are financial vehicles that have as their objective the pooling
of capital from a number of investors in order to participate
directly in real estate ownership or financing. REITs are
usually managed by separate advisory companies for a fee
which is ordinarily based on a percentage of the assets of the
REIT in addition to reimbursement of operating expenses.
REITs are differentiated by the types of real estate properties
held and the actual geographic location of properties and fall
into two major categories: equity REITs emphasize direct
property investment, holding their invested assets primarily
in the ownership of real estate or other equity interest, while
mortgage REITs concentrate on real estate financing, holding
their assets primarily in mortgages secured by real estate.
"Hybrid" REITs combine equity and mortgage operations.
REITs obtain capital funds for investment in underlying real
estate assets by selling debt or equity securities on the public
or institutional capital markets or by bank borrowings.
Thus, the returns on common equities of the REITs in which
the Trust invests will be significantly affected by changes in
costs of capital and, particularly in the case of highly
"leveraged" REITs,i.e. those with large amounts of
borrowings outstanding, by changes in the level of interest
rates. REITs are like closed-end management companies in
that they are essentially holding companies which rely on
professional managers to supervise their investments. A
Holder should realize that by investing in REITs indirectly
through the Trust, the Unitholder will bear not only a
proportionate share of the fees and expenses of the Trust,
but also,indirectly similar expenses of the underlying REITs.
Since all the REITs in the Trust will be purchased in the
secondary market, their purchase price will generally not
reflect high initial sales charges, nor high initial construction
or other costs.
The objective of an equity REIT is to purchase
income-producing real estate properties in order to generate
high levels of cash flow from rental income and a gradual
asset appreciation, and they typically invest in properties
such as office, retail, industrial, hotel and apartment building
sand health care facilities. Equity REITs frequently utilize
net lease arrangements to ensure that all operating costs
(insurance, rates, taxes,maintenance and repair) are borne by
the tenant. Other common lease conditions are land
purchase-leaseback arrangements and percentage rental
clauses or annual escalations to ensure increasing rental
payments. Mortgage REITs typically deal in construction
and development loans, normally short term (bridging),
junior loans, or those subordinated to an outstanding
mortgage; and first mortgages, generally long-term loans
secured by the underlying real estate property. A
sub-category of mortgage REITs is the"CMO-REIT", one
that uses bank loans and its own equity to purchase home
loans and mortgage-backed securities, which in turn are
pledged to secure a collateralized mortgage obligation (a
"CMO"). Performance of CMO REITs is dependent on
conditions of the mortgage securities market, which is
considered volatile and increasingly competitive, and
investors should be aware that CMO-REITs can be adversely
affected by changes in the mortgage securities market.
Investment in the Trust should be made with an
understanding of the many factors that may have an adverse
impact on the credit quality of a particular REIT or the real
estate industry generally. Risks associated with the direct
ownership of real estate include general and local economic
conditions,decline in real estate values, dependency on
management skill and heavy cash flow particularly in the
early stages of a REIT, unpredictability of timing and
amount of cash flow, over building and increased
competition, unusually adverse weather conditions, changing
demographics, changes in government regulations (including
tax laws and environmental, building, zoning and sales
regulations by various federal, state and local authorities),
increases in real estate taxes, operating expenses or costs of
material and labor, casualty or condemnation losses,
limitation on rents, faulty construction, changes in
neighborhood values, the appeal of properties to tenants, the
inability to secure performance guarantees as required and
the unavailability of construction financing or mortgage loans
at rates acceptable to builders and home buyers. Variations
in rental income and space availability and vacancy rates in
terms of supply and demand are additional factors affecting
real estate generally and REITs in particular.
Performance by individual REITs is dependent on the
types of real estate investments held. For example, the
effect of interest rate fluctuations on mortgage REITs is
greater than on equity REITs and the nature of the
underlying assets of a mortgage REIT may be considered
less tangible than that of an equity REIT. In addition, equity
REITs may be affected by changes in the value of the
underlying property it owns, while mortgage REITs may be
affected by the quality of credit extended.
REIT investment managers may concentrate
investments in specific geographic areas, depending on their
proximity to and knowledge of local real estate conditions;
the impact of economic conditions on REITs can also be
expected to vary with geographic location. Investors should
also be aware that both equity and mortgage REITs may not
be diversified and are subject to the risks of financing
projects. REITs are also subject to defaults by
borrowers,self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to
qualify for tax-free pass-through of income under the
Internal Revenue Code of 1986, as amended (the "Code"),
and to maintain exemption from the Investment Company
Act of 1940. In the event of a default by a borrower or
lessee, the REIT may experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial
costs associated with protecting its investments.
<PAGE>
REIT Taxation. Each of the REITs in which the
Trust invests will generally state their intention to operate in
such manner as to qualify for taxation as a "real estate
investment trust" under Sections 856-860 of the Code,
although, of course, no assurance can be given that each
REIT will a tall times so qualify.
The REIT provisions of the Code contain
three gross income requirements:
1. At least 75% of the REIT's gross income must be
derived directly or indirectly from statutorily
specified investments in real property or mortgages
on real property.
2. At least 95% of the REIT's gross income must be of
the type meeting the 75% requirement or must be
derived from dividends, interest, or gains from the
sale or disposition of stock or securities.
3. Short-term gains from the disposition of stock or
securities, gains from the disposition of property
where the property was held primarily for sale to
customers in the ordinary course of business, and
gains from the disposition of real property held for
less than 4 years must total less than 30% of the
REIT's gross income.
At the close of each quarter of a REIT's taxable year,
it also must satisfy three tests relating to the nature of its
assets. First, at least 75%of the value of its total assets must
be represented by real estate assets,cash, cash items, and
government securities. In addition, not more than 25%of its
total assets may be represented by securities (other than
those includible in the 75% asset class). Also, of the
investments included in the 25% asset class, the value of any
one issuer's securities owned may not exceed 5% of the
value of its total assets, nor can it own more than 10% of
any one issuer's outstanding voting securities.
So long as an issuer qualifies as a REIT, it will, in
general, be subject to Federal income tax only on income
that is not distributed to stockholders. In order to qualify as
a REIT for any taxable year, a REIT must, among other
things, distribute to its stockholders an amount at least equal
to the sum of 95% of its taxable income.
Failure to qualify for taxation as a REIT in any
taxable year will subject an issuer to tax on its taxable
income at regular corporate rates.Distributions to
stockholders in any year in which an issuer fails to qualify as
a REIT will not be deductible by the issuer. Unless entitled
to relief under specific statutory provisions, the issuer would
not qualify for taxation as a REIT for the next four taxable
years after failing to qualify in any year.
Each REIT may also be subject to state, local or
other taxation in various state, local or other jurisdictions.
Litigation and Legislation. In addition to the
possibility of regulatory or legislative action affecting the
Securities, at any time after the Date of Deposit, litigation
may be initiated on a variety of grounds with respect to the
Securities in the Trust. There can be no assurance that
future litigation will not have a material adverse effect on
the Trust or will not impair the ability of issuers to pay
dividends or to maintain or increase the current level of
dividends on the Securities.
The Portfolio
The Portfolio is diversified among REITs that the
Sponsor believes offer an opportunity for high current
income over the medium term. The Sponsor believes that
these potentially higher yielding Securities may reflect the
risks associated with the real estate market generally but that
the broad diversification among different issuers should
minimize the exposure to any single issuer. However,
investors should carefully review the Portfolio and the
objective of the Trust and consider their ability to assume
the risks involved before investing in the Trust. (See
Description of the Trust--RiskFactors above.)
The results of ownership of Units will differ from the
results of ownership of the underlying Securities of the Trust
for various reasons,including the sales charge included in the
Public Offering Price of Units and the expenses of the Trust.
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.
The Trust consists of those Securities listed under
Portfolio as may continue to be held from time to time in the
Trust and any additional Securities acquired and held by the
Trust pursuant to the provisions of the Indenture together
with undistributed income therefrom and undistributed and
uninvested cash realized from the disposition of Securities
which from time to time may be sold under certain
circumstances (see Administration of the Trust--Trust
Supervision). The Indenture authorizes, but does not require,
the Sponsor, as part of its administrative function, to instruct
the Trustee to reinvest the net proceeds of the sale or
redemptions of Securities in substitute Securities to the
extent that the proceeds are not required for the redemption
of Units. The Indenture also authorizes the Sponsor to
increase the size and the number of Units of the Trust by the
deposit of Additional Securities and the issue of a
corresponding number of additional Units subsequent to the
initial Date of Deposit provided that the original relationship
among the number of shares of each Security is maintained
(see Administration of the Trust--Trust Supervision). As a
result, the aggregate value of the Securities in the Portfolio
will vary over time.
<PAGE>
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 is authorized under the
Indenture to direct the Trustee to acquire replacement
obligations substantially similar to those originally contracted
for and not delivered to make up the original Portfolio of the
Trust. If replacement obligations are not acquired, the
Sponsor shall, on or before the next following Distribution
Day, cause to be refunded the attributable sales charge, plus
the attributable Cost of Securities to Trust listed under
Portfolio (see Administration of the Trust--Trust
Supervision).
<PAGE>
If Units are redeemed by the Trustee, the aggregate
value of Securities in the Trust will be reduced by amounts
allocable to redeemed Units, and the fractional undivided
interest represented by each Unit in the balance will be
increased. However, if additional Units are issued by the
Trust through deposits by the Sponsor in connection with the
sale of additional Units, the aggregate value of Securities in
the Trust will be increased by amounts allocable to
additional Units and the fractional undivided interest
represented by each Unit in the balance will be decreased.
Units will remain outstanding until redeemed upon tender to
the Trustee by any Holder (which may include the Sponsor)
or until the termination of the Indenture. (See Redemption;
Administration of the Trust--Amendment and Termination.)
Because certain of the Securities from time to time
may be sold, or their percentage may be reduced under
certain extraordinary circumstances described below, or
because Securities may be distributed in redemption of
Units, no assurance can be given that the Trust will retain
for any length of time its present size (see Redemption;
Administration of the Trust--Amendment and Termination).
For Holders who do not redeem their Units, investments in
Units of the Trust will be liquidated on the fixed date
specified under Investment Summary--Mandatory
Termination of Trust, and may be liquidated sooner if the
net asset value of the Trust falls below that specified under
Investment Summary--Minimum Value of Trust (see Risk
Factors).
Income
The estimated net annual income per Unit is
determined by subtracting from the estimated annual
dividend income of the Securities in the Portfolio the
estimated annual expenses (total estimated annual Trustee's,
Sponsor's and administrative fees and expenses) and dividing
by the number of Units outstanding. The actual net annual
income per Unit will vary from estimates as the issuers of
the Securities change their dividend rates, as additional
Securities are purchased or as the expenses of the Trust
change.
There is no assurance that any dividends will be
declared or paid in the future on the Securities.
Record Days and Distribution Days are set forth
under Investment Summary.It is anticipated that an amount
equal to approximately one-twelfth of the amount of net
annual income per Unit estimated to be received by the Trust
will be distributed on or shortly after each Distribution Day
to the Holders of record on the preceding Record Day (see
Administration of the Trust--Accounts and Distributions).
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 of dividend payments, any monthly distribution to
Holders 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. In order to eliminate
fluctuations in monthly distributions resulting from such
variances, the Trustee is required by the Indenture to
advance such amounts as may be necessary to provide
monthly distributions of approximately equal amounts of
expected net annual income, subject to quarterly adjustments
by the Trustee to reflect dividends actually being paid to the
Trust and credited to the Income Account. The Trustee will
be reimbursed, without interest, for any such advances from
funds available from the Income Account on the next
ensuing Record Day.
It is anticipated that an amount equal to any capital
gain net income(i.e., the excess of capital gains over capital
losses) recognized by the Trust in any taxable year will be
distributed annually to Holders shortly before or after the
end of the year.
<PAGE>
TAXES
Taxation of the Trust
The Trust intends to qualify for and elect the special
tax treatment applicable to "regulated investment companies"
under Sections 851-855 of the Internal Revenue Code of
1986, as amended (the "Code").Qualification and election as
a "regulated investment company" involve no supervision of
investment policy or management by any government
agency. If the Trust qualifies as a "regulated investment
company" and distributes to Holders 90% or more of its
taxable income without regard to its net capital gain (net
capital gain is defined as the excess of net long-term capital
gain over net short-term capital loss), it will not be subject
to Federal income tax on any portion of its taxable income
(including any net capital gain)distributed to Holders in a
timely manner. In addition, the Trust will not be subject to
the 4% excise tax on certain undistributed income of
"regulated investment companies" to the extent it distributes
to Holders in a timely manner at least 98% of its taxable
income (including any net capital gain). It is anticipated that
the Trust will not be subject to Federal income tax or the
excise tax because the Indenture requires the distribution of
the Trust's taxable income (including any net capital gain) in
a timely manner. Although all or a portion of the Trust's
taxable income (including any net capital gain) for a taxable
year may be distributed shortly after the end of the calendar
year, such a distribution will be treated for Federal income
tax purposes as having been received by Holders during the
calendar year.
Distributions
Distributions to Holders of the Trust's dividend
income and net short-term capital gain in any year will be
taxable as ordinary income to Holders to the extent of the
Trust's taxable income (without regard to any net capital
gain)for that year. Any excess will be treated as a return of
capital and will reduce the Holder's basis in his Units and,
to the extent that such distributions exceed his basis, will be
treated as a gain from the sale of his Units as discussed
below. It is anticipated that substantially all of the
distributions of the Trust's dividend income and net short-
term capital gain will be taxable as ordinary income to
Holders.
Distributions that are taxable as ordinary income to
Holders will constitute dividends for Federal income tax
purposes but will not be eligible for the dividends-received
deduction for corporations. Distributions of the Trust's net
capital gain (designated as capital gain dividends by the
Trust)will be taxable to Holders as long-term capital gain,
regardless of the length of time the Units have been held by
a Holder. A Holder may recognize a taxable gain or loss if
the Holder sells or redeems his Units. Any gain or loss
arising from (or treated as arising from) the sale or
redemption of Units will be a capital gain or loss, except in
the case of a dealer. Capital gains are generally taxed at the
same rate as ordinary income. However, the excess of net
long-term capital gains over net short-term capital losses
may be taxed at a lower rate than ordinary income for
certain non-corporate taxpayers. A capital gain or loss is
long-term if the asset is held for more than one year and
short-term if held for one year or less. The deduction of
capital losses is subject to limitations.
A distribution of Securities to a Holder upon
redemption of his Units will be a taxable event to such
Holder, and that Holder will recognize taxable gain or loss
upon such distribution (equal to the difference between such
Holder's tax basis in his Units and the fair market value of
Securities received or any cash received in redemption),
which will be capital gain or loss except in the case of a
dealer in securities.Holders should consult their own tax
advisers in this regard.
For purposes of the alternative minimum tax
("AMT"), the Trust through its investment in REITs may
recognize items which are adjustments in computing the
alternative minimum taxable income or items of tax
preference. Under Section 59 of the Code, these items of
adjustment and preference are to be allocated between the
Trust and Holders in accordance with regulations to be
published, thereby potentially affecting the AMT liability of
the Trust and Holders.
<PAGE>
Holders will be taxed in the manner described above
regardless of whether distributions from the Trust are
actually received by the Holder or are reinvested pursuant to
the Reinvestment Plan.
The Federal tax status of each year's distributions
will be reported to Holders and to the Internal Revenue
Service. The foregoing discussion relates only to the
Federal income tax status of the Trust and to the tax
treatment of distributions by the Trust to U.S. Holders.
Distributions may also be subject to state and local taxation
and Holders should consult their own tax advisers in this
regard.
Foreign Holders
A "Foreign Holder" is a person or entity that, for
U.S. Federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership, or a
non-resident fiduciary of a foreign estate or trust.If a
distribution of the Trust's taxable income (without regard to
its net capital gain) to a Foreign Holder is not effectively
connected with a U.S.trade or business carried on by the
investor, such distribution will be subject to withholding tax
at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
However, a Foreign Holder should not be subject to
withholding tax under the Foreign Investment in Real
Property Tax Act with respect to gain arising from the sale
or redemption of Units or distributions of the Trust's net
capital gain (designated as capital gain dividends by the
Trust), provided that the REITs held by the Trust are
"domestically-controlled" within the meaning of Section
897(h) of the Code. Such income generally will not be
subject to Federal income tax unless the income is
effectively connected with a trade or business of such Holder
in the United States. In the case of a Foreign Holder who is
a non-resident alien individual, however, gain arising from
the sale or redemption of Units or distributions of the
Trust's net capital gain ordinarily will be subject to Federal
income tax at a rate of 30%if such individual is physically
present in the U.S. for 183 days or more during the taxable
year and, in the case of the gain arising from the sale or
redemption of Units, either the gain is attributable to an
office or other fixed place of business maintained by the
Holder in the United States or the Holder has a "tax home"
in the United States.
The tax consequences to a Foreign Holder entitled to
claim the benefits of an applicable tax treaty may be
different from those described herein.Foreign Holders should
consult their own tax advisers to determine whether
investment in the Trust is appropriate.
Retirement Plans
This Trust may be well suited for purchase by
Individual Retirement Accounts ("IRAs"), self-employed
retirement plans, pension funds and other qualified
retirement plans, certain of which are briefly described
below.Generally, capital gains and income received in each
of the foregoing plans are exempt from Federal taxation. All
distributions from such plans are generally treated as
ordinary income but may, in some cases, be eligible for
special 5 or 10 year averaging or tax-deferred rollover
treatment. Holders of Units in IRAs, Keogh plans and other
tax-deferred retirement plans should consult their plan
custodian as to the appropriate disposition of distributions.
Investors considering participation in any of these plans
should review specific tax laws related thereto and should
consult their attorneys or tax advisers with respect to the
establishment and maintenance of these plans. These 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.
<PAGE>
Retirement Plans for the Self-Employed--Keogh Plans.
Units of the Trust may be purchased by retirement plans
established pursuant to the Self-Employed Individuals Tax
Retirement Act of 1962 ("Keogh plans") for self-employed
individuals, partnerships or unincorporated companies.
Qualified individuals may generally make annual
tax-deductible contributions up to the lesser of 20%of annual
compensation or $30,000 in a Keogh plan. The assets of the
plan must be held in a qualified trust or other arrangement
which meets the requirements of the Code. Generally there
are penalties for premature distributions from a plan before
attainment of age 591/2, except in the case of a participant's
death or disability. Keogh plan participants may also
establish separate IRAs(see below) to which they may
contribute up to an additional $2,000 per year($2,250 if a
spousal account is also established).
Individual Retirement Account--IRA. Any individual
(including one covered by an employer retirement plan) can
establish an IRA or make use of a qualified IRA
arrangement set up by an employer or union for the purchase
of Units of the Trust. Any individual can make a
contribution to an IRA equal to the lesser of $2,000 ($2,250
if a spousal account is also established) or 100%of earned
income; such investment must be made in cash. However,
no deduction is permitted for an individual over the age of
701/2 and the deductible amount an individual under the age
of 701/2 may contribute will be reduced if the individual or
the individual's spouse is covered by an employer retirement
plan and the individual's adjusted gross income exceeds
$25,000 (in the case of a single individual) or $40,000 (in
the case of married individuals filing a joint return). For a
married individual who files a separate return, the deductible
contribution is limited to $200 if the individual or the
individual's spouse is covered by a retirement plan, unless
the individual's adjusted gross income exceeds $10,000 in
which case the deductible contribution is zero. A married
individual who did not live with a spouse for any part of the
year and files a separate return is treated as a single person
for purposes of these rules. Unless nondeductible
contributions were made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income
but generally are eligible for tax-deferred rollover treatment.
It should be noted that certain transactions which are
prohibited under Section 408 of the Code will cause all or a
portion of the amount in an IRA to be deemed to be
distributed and subject to tax at that time. A participant's
entire interest in an IRA must be, or commence to
be,distributed to the participant not later than the April 1
following the taxable year during which the participant
attains age 70 1/2. Taxable distributions made before
attainment of age 59 1/2, except in the case of a participant's
death or disability, or where the amount distributed is part of
a series of substantially equal periodic (at least annual)
payments that are to be made over the life expectancies of
the participant and his or her beneficiary, are generally
subject to a surtax in an amount equal to 10% of the
distribution.
Corporate Pension and Profit-Sharing Plans. A
pension or profit-sharing plan established for employees of a
corporation may purchase Units of the Trust.
PUBLIC SALE OF UNITS
Public Offering Price
The Public Offering Price of the Units is computed
by adding to the aggregate value of the Securities in the
Trust (as determined by the Trustee),divided by the number
of Units outstanding, a charge of 4.167% thereof. This sales
charge is equal to a gross underwriting profit of 4.00% of
the Public Offering Price and is subject to change by the
Sponsor at any time. The Public Offering Price on the date
of this Prospectus or on any subsequent date will vary from
the Public Offering Price on the Evaluation Date (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, to
the extent Units are available for purchase on that day. See
Description of the Trust--Structure. 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.
<PAGE>
The sales charge applicable to quantity purchases and
the concession to dealers per Unit (referred to below under
Public Distribution) is reduced on a graduated scale for sales
to any purchaser of at least 50,000 Units. Sales charges are
as follows:
Percent of Percent of
Offering Net Amount
Concession
Price Investedto Dealers
Number of Units
Less than 50,000. . . . . . . . . . . . . . . . . . . 4.0%
4.167%. . . . . . . . . . . . . . . . . . . . . . 2.7%
50,000 but less than 100,000. . . . . . . . . . . . . 3.5
3.627 . . . . . . . . . . . . . . . . . . . . . . .2.2
100,000 but less than 250,000 . . . . . . . . . . . . 3.0
3.093 . . . . . . . . . . . . . . . . . . . . . . .1.8
250,000 but less than 500,000 . . . . . . . . . . . . 2.5
2.564 . . . . . . . . . . . . . . . . . . . . . . .1.5
500,000 but less than 1,000,000 . . . . . . . . . . . 2.0
2.041 . . . . . . . . . . . . . . . . . . . . . . .1.2
1,000,000 or more . . . . . . . . . . . . . . . . . . 1.5
1.523 . . . . . . . . . . . . . . . . . . . . . . .0.7
The above graduated sales charges will apply on
all purchases on any one day by the same purchaser of
Units in the amounts stated. Purchases of Units will not
be aggregated with purchases of units of any other series
of Smith Barney Shearson Unit Trusts. Units held in the
name of the spouse of the purchaser or in the name of a
child of the purchaser under 21 years of age are deemed
to be registered in the name of the purchaser for
purposes of calculating the applicable sales charge. The
graduated sales charges are also applicable to a trustee or
other fiduciary purchasing securities for a single trust
estate or single fiduciary account.
The value of the Securities is determined on each
business day by the Trustee based on the closing sale
prices on the day the valuation is made for Securities
listed on a national stock exchange or, if no such price
exists, at the offering side evaluation, or on the mean
between bid and offering prices on the day valuation is
made for Securities not so listed or, if in either case such
prices are unavailable, taking into account the same
factors referred to under Redemption.
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 plus a
reduced sales charge of .5%.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 in all states
of the United States in which qualification is deemed
necessary for sale by itself and by 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 of 2.7% of
the Public Offering Price per Unit (reduced as set forth
above in cases of certain quantity purchases) but the
Sponsor reserves the right to change the amount of the
concession to dealers from time to time. The Sponsor
does not intend to qualify Units for sale in any foreign
country and this Prospectus does not constitute an offer
to sell Units in any country where Units cannot lawfully
be sold.
<PAGE>
Sponsor's Profits
The Sponsor, as sole underwriter, receives a
gross underwriting commission equal to the sales charge
of 4.00% of the Public Offering Price(subject to
reduction on a graduated scale basis in the case of
volume purchases).
On each subsequent deposit of Securities with
respect to the sale of additional Units to the public, the
Sponsor may realize a profit or loss in an amount 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 the Securities to the Sponsor. In addition, the Sponsor
may realize profits or sustain losses in respect of
Securities deposited in the Trust which were acquired by
the Sponsor from underwriting syndicates of which the
Sponsor was a member. The Sponsor also may realize
profits or sustain losses as a result of fluctuations after
any date of deposit of 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 subject to the limitations of Rule 15c
3-3 under the Securities Exchange Act of 1934 and
maybe 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). Unless otherwise indicated
under Portfolio, the Sponsor did not participate 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.
In maintaining a market for the Units (see Market
for Units), the Sponsorwill also realize profits or sustain
losses in the amount of any difference between the prices
at which it buys Units (based on the aggregate value of
the Securities) and the prices at which it resells such
Units (which include the sales charge) or the prices at
which the Securities are sold after it redeems such Units,
as the case may be.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its
intention is to maintain a market for Units and offer
continuously to purchase Units at prices, subject to
change at any time, which will be computed on the basis
of the aggregate value of the Securities, taking into
account the same factors referred to in determining the
Redemption Price per Unit (see Redemption). 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 will 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
are tendered for redemption (see Redemption).
The Sponsor may redeem any Units it has
purchased in the secondary market if it determines that it
is undesirable to continue to hold the Units in its
inventory. Factors which the Sponsor will consider in
making this determination will include the number of
units of all series of unit trusts that it holds in its
inventory, the sale ability of the units and its estimate of
the time required to sell the units and general market
conditions. For a description of certain consequences of
any redemption for the remaining Holders, see
Redemption.
REDEMPTION
<PAGE>
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 an eligible guarantor institution, or in any
other manner 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.
On the seventh calendar day following the tender
(or if the seventh calendar day is not a business day on
the first business day prior thereto),the Holder will be
entitled to receive the proceeds of the redemption in an
amount per Unit equal to the Redemption Price per Unit
(see below) as determined as of the day of tender. The
Trustee is authorized in its discretion, if the Sponsor
does not elect to repurchase any Units tendered for
redemption or if the Sponsor tenders Units for
redemption, to sell the Units in the over-the-counter
market at prices which will return to the Holder a net
amount in cash equal to or in excess of the Redemption
Price per Unit for the Units (Section 5.02).
The Trustee is empowered to sell Securities in
order to make funds available for redemption (Section
5.02) if funds are not otherwise available in the Capital
and Income Accounts to meet redemptions (see
Administration of the Trust--Accounts and Distribution).
The Securities to be sold will be selected by the Trustee
from those designated on the current list provided by the
Sponsor for this purpose. Provision is made in the
Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities
are to be sold in order to obtain the best price for the
Trust.While these minimum amounts may vary from time
to time in accordance with market conditions, the
Sponsor believes that the minimum amounts which would
be specified would be a sufficient number of shares to
obtain institutional rates of brokerage commissions
(generally between 1,000 and 5,000 shares).
Holders tendering more than 1,000,000 Units for
redemption may request distribution in kind ("In Kind
Distributions") from the Trustee in lieu of cash
redemption of an amount and value of Securities per Unit
equal to the Redemption Price per Unit as determined as
of the Evaluation Time next following the tender. An In
Kind Distribution on redemption of Units will beheld by
the Trustee as distribution agent (the "Distribution
Agent") for the account of, and for disposition in
accordance with the instructions of, the tendering Holder.
The tendering Holder will be entitled to receive whole
shares of each of the Securities comprising the Portfolio
and cash from the Capital Account equal to the fractional
shares to which the tendering Holder is entitled. In
implementing these redemption procedures, the Trustee
and Distribution Agent shall make any adjustments
necessary to reflect differences between the Redemption
Price of the Units and the value of the Securities
distributed in kind as of the date of tender. If funds in
the Capital Account are insufficient to cover the required
cash distribution to the tendering Holder, the Trustee
may sell Securities according to the criteria discussed
above.
To the extent that Securities are redeemed in kind
or sold, the size and diversity of the Trust will be
reduced. Sales will usually be required at a time when
Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the
amount paid by the Holder depending on the value of the
Securities in the Portfolio at the time of redemption. In
addition,because of the minimum amounts in which
Securities are required to be sold,the proceeds of sale
may exceed the amount required at the time to redeem
Units; these excess proceeds will be distributed to
Holders unless reinvested in substitute Securities (see
Administration of the Trust--Portfolio Supervision).
<PAGE>
A Holder may tender Units for redemption on any
weekday which is not one of the following: New Year's
Day, Washington's Birthday, Good Friday, Memorial
Day (observed), Independence Day, Labor Day,
Thanksgiving or Christmas (a"Tender Day"). The right
of redemption may be suspended and payment
postponed(1) for any period during which the New York
Stock Exchange, Inc. is closed other than for customary
weekend and holiday closings, (2) for any period during
which, as determined by the Securities and Exchange
Commission ("SEC"), (i) trading on that Exchange is
restricted or (ii) an emergency exists as a result of which
disposal or evaluation of the Securities is not reasonably
practicable or (3) for any other periods which the SEC
may by order permit (Section 5.02).
Computation of Redemption Price per Unit
Redemption Price per Unit is computed by the
Trustee, as of the Evaluation Time, on each June 30 and
December 31 (or the last business day prior thereto),as
of the Evaluation Time next following the tender of any
Unit for redemption on any Tender Day, and on any
other business day desired by the Trustee or the Sponsor,
by adding (1) the aggregate value of the Securities
determined by the Trustee, (2) amounts in the Trust
including dividends receivable on stocks trading
ex-dividend (with appropriate adjustments to reflect
monthly distributions made to Holders) and (3) all other
assets in the Trust;deducting therefrom the sum of (a)
taxes or other governmental charges against the Trust not
previously deducted, (b) accrued fees and expenses of the
Trustee (including legal and auditing expenses), the
Sponsor and counsel to the Trust and certain other
expenses and (c) amounts for distribution to Holders of
record as of a date prior to the evaluation; and dividing
the result by the number of Units outstanding as of the
date of computation(Sections 4.01 and 5.01).
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, the evaluation will generally be based on its
closing sale price (unless the Trustee deems the price
inappropriate as a basis for evaluation) or, if there is no
closing sale price, at the mean between the closing bid
and asked prices. If the Securities are not so listed or, if
so listed and the principal market for the Securities is
other than on the exchange, the evaluation will generally
be made by the Trustee in good faith based on the mean
between current bid and offer prices on the
over-the-counter market (unless the Trustee deems these
prices inappropriate as a basis for evaluation), or if bid
and offer prices are not available, (1) on the basis of the
mean between current bid and offer prices for
comparable Securities (2) by the Trustee's appraising the
value of the Securities in good faith at the mean between
the bid side and the offer side of the market or (3) by
any combination thereof.
EXPENSES AND CHARGES
Fees
The Trustee's fee is set forth under Investment
Summary. The Trustee receives for its services as
Trustee and Distribution Agent and for reimbursement of
expenses incurred on behalf of the Trust, payable in
monthlyinstallments, the amount set forth under
Investment Summary. This fee (in respect of services as
Trustee) is calculated on the basis of the largest number
of Units outstanding during the preceding month (Section
8.05).Certain regular and recurring expenses of the
Trust, including certain mailing and printing expenses,
are borne by the Trust. The Trustee also 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 is set forth under
Investment Summary. The Sponsor receives this fee,
payable in quarterly installments, for such services as it
may render in respect of monitoring and, when
necessary,providing advice to the Trustee with respect to
any adverse market or credit factors concerning the
Securities and any actions taken by the issuers of
Securities that may affect the issuer's capital structure, as
provided by the Indenture. In addition, the Sponsor may
also be reimbursed for bookkeeping and other
administrative services provided to the Trust in amounts
not exceeding its costs of providing these 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 (Sections 7.04 and 8.05).
<PAGE>
Other Charges
These include: (1) fees of the Trustee for
extraordinary services (for example, making distributions
due to failure of contracts for Securities)(Section 8.05),
(2) certain expenses of the Trustee(including legal and
auditing expenses) and expenses of counsel designated by
the Sponsor (Sections 3.04, 7.03(b), 8.01 and 8.05), (3)
various governmental charges (Sections 3.03 and
8.01(j)), (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)
(Sections 7.03(b) and 8.01(e)), (5) indemnification of the
Trustee for any losses, liabilities and expenses incurred
without gross negligence, bad faith or wilful misconduct
on its part (Section 8.01), (6)indemnification of the
Sponsor for any losses, liabilities and expenses incurred
without gross negligence, bad faith, wilful misconduct or
reckless disregard of its duties (Section 7.03(b)) and (7)
expenditures incurred in contacting Holders upon
termination of the Trust (Section 9.02). 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 Account (see
below)(which will reduce income distributions from the
Account); (2) to the extent the Income Account funds are
insufficient, by distribution from the Capital Account
(see below); (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)(Section 8.05).
Since the Securities are all common stocks, and
the income stream produced by dividend payments 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. These sales
may result in capital gains or losses to Holders. See
Description of the Trust--Taxes.
REINVESTMENT PLAN
Holders whose Units of the Trust are held in
"street name" by Smith Barney Shearson Inc. may elect
to have their distributions of dividend income,capital
gains or both, automatically reinvested in Units of this
Series. This option is called the "Reinvestment Plan".
To participate in the Reinvestment Plan, a Holder
must notify his Smith Barney Shearson Financial
Consultant at least two business days prior to the
distribution date for the first distribution to be reinvested.
The election may be modified or terminated by similar
notice.
The Sponsor will receive cash distributions on
Units of Holders electing to participate and 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 date. 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). 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.
<PAGE>
Holders participating in the Reinvestment Plan
will be taxed on their reinvested distributions in the
manner described in taxes even though distributions are
automatically reinvested in the Trust.
ADMINISTRATION OF THE TRUST
Records
The Trustee keeps a register of the names,
addresses and holdings of all Holders. The Trustee also
keeps records of the transactions of the Trust, including a
current list of the Securities and a copy of the Indenture,
which are available to Holders for inspection at the office
of the Trustee at reasonable times during business
hours(Sections 8.02 and 8.04).
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 the 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. Any
monthly income distribution for each 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 one twelfth of the Holder's pro rata share of the
estimated annual income to the Income Account as of
that 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. The Trustee may withdraw from the Income
Account,from time to time, any amounts it deems
necessary to establish a reserve for any taxes or other
governmental charges that may be payable out of the
Trust(Section 3.03). Funds held by the Trustee in the
various accounts created under the Indenture do not bear
interest (Section 8.01(a)).
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 these 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 of these plans to
the greatest extent possible taking into account the
Securities held by the Trust in the issuers offering these
plans. The Indenture requires the Trustee to sell the
Securities received and distribute the proceeds after
deducting sales commissions and transfer taxes,if any, to
Holders.
The Trustee will follow a policy that it will place
securities transactions with a broker or dealer only if it
expects to obtain the most favorable prices and
executions of orders. Transactions in securities held in
the Trust are generally made in brokerage transactions
(as distinguished from principal transactions) and the
Sponsor or any of its affiliates may act as brokers 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 be considered in placing securities transactions.
Trust Supervision
The Trust is a unit investment trust and is not an
actively managed fund.Traditional methods of investment
management for a managed fund typically involve
frequent changes in a portfolio of securities on the basis
of economic, financial and market analyses. The
Portfolio of the Trust, however,will not be actively
managed and therefore the adverse financial condition of
an issuer will not necessarily require the sale of its
securities from the Portfolio. However, the Sponsor may
direct the disposition of Securities upon default in
payment of amounts due on any of the Securities,
institution of certain legal proceedings, default under
certain documents materially and adversely affecting
future declaration or payment of amounts due, or decline
in price or the occurrence of other market or credit
factors that in the opinion of the Sponsor would make the
retention of these Securities detrimental to the interest of
the Holders or if the disposition of these securities is
necessary in order to enable the Trust to make
distributions of the Trust's capital gain net income or
desirable in order to maintain the qualification of the
Trust as a regulated investment company under the
Code(Section 3.10). If a default in the payment of
amounts due on any Security occurs and if the Sponsor
fails to give instructions to sell or hold that Security, the
Indenture provides that the Trustee, within 30 days of
that failure by the Sponsor, may sell the Security
(Section 3.13).
<PAGE>
The Sponsor is also authorized to direct the
reinvestment of the proceeds of the redemption or sale of
Securities (provided, however, that proceeds received
from Securities sold for purposes of redemption of Units
and in excess of the amount needed for these purposes
may be reinvested only in an amount each year not to
exceed 10% of the aggregate value of the Securities in
the Trust on the dates of their deposit), as well as
moneys held to cover the purchase of Securities pursuant
to contracts which have failed, in substitute Securities
("Replacement Securities") which satisfy certain
conditions specified in the Indenture including, among
other conditions, requirements that the Replacement
Securities shall be selected by the Sponsor from a list of
securities maintained by it and updated from time to
time; be publicly-traded common equities issued by
REITs; be issued subject to or exempt from the reporting
requirements under Section 13 or 15(d) of the Securities
and Exchange Act of 1934 (or similar provisions of law);
and have,in the opinion of the Sponsor characteristics
sufficiently similar to the characteristics of the other
equities in the Trust to be acceptable for acquisition by
the Trust. These conditions also require that the
purchase of the Replacement Securities will not (i)
disqualify the Trust as a regulated investment company
under the Code, (ii) result in more than 25% 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 (iii) result in the Trust owning
more than 50% of any single issue which has been
registered under the Securities Act of 1933(Section 3.12).
Replacement Securities currently will be selected from
the Securities comprising the Portfolio of the Trust. If
the Sponsor adds new securities to the list, reinvestments
of proceeds of the redemption or sale of Securities will
be made in those new securities.
Whenever a Replacement Security has been
acquired for the Trust, the Trustee shall, on the next
monthly distribution date 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 Security
originally deposited exceeded the cost of the Replacement
Security. If Replacement Securities are not acquired, the
Sponsor will, on or before the next following
Distribution Day, cause to be refunded the attributable
sales charge, plus the attributable Cost of Securities to
Trust listed under Portfolio.
The Indenture also authorizes the Sponsor to
increase the size and number of Units of the Trust by the
deposit of Additional Securities, contracts to purchase
Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange
for the corresponding number of additional Units
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.
With respect to deposits of Additional Securities
(or cash or a letter of credit with instructions to purchase
Additional Securities), in connection with creating
additional Units of the Trust following the initial Date of
Deposit, the Sponsor may specify minimum numbers of
shares 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 originally deposited are unavailable at the time
of subsequent deposit or cannot be purchased at
reasonable prices or their purchase is prohibited or
restricted by law, regulation or policies applicable to the
Trust or the Sponsor, the Sponsor may (1) deposit cash
or a letter of credit with instructions to purchase the
Security when practicable or (2) deposit (or instruct the
Trustee to purchase) additional shares of Securities
originally deposited or (3) deposit (or instruct the Trustee
to purchase) a Replacement Security that will meet the
conditions described above.
<PAGE>
During the life of the Trust the Sponsor, as part
of its administrative responsibilities, may make additions
and deletions to the list referred to above and may
conduct regular quarterly reviews to determine whether
or not to recommend the disposition of Securities
pursuant to the procedures under the Indenture
summarized above. In addition, the Sponsor will
undertake to perform such other reviews and procedures
as it may deem necessary for it to make the reinvestment
recommendations and to give the consents and directions
required by the Indenture and to make such changes in
the original proportionate relationship among the number
of shares of each Security as maybe required by any
sales or purchases of Securities provided for
thereunder.The Trustee or the Sponsor may employ
outside consultants to assist in supervising the Portfolio
of the Trust. For the administrative services in making
recommendations and giving consents and directions and
making the reviews called for in connection therewith,
the Sponsor will receive the administrative fee referred to
under Sponsor's Fee.
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 (normally within 20 to 60 days), 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 the calendar year; (2) as to the
Capital Account: the dates of 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 the
distribution and deductions, expressed both as a total
dollar amount and as a dollar amount per Unit
outstanding on the last business day of the calendar year;
(3) a list of the Securities held and the number of Units
outstanding on the last business day of the calendar year;
(4)the Redemption Price per Unit based upon the
computation made on the last business day of the
calendar year; and (5) amounts actually distributed
during the calendar year from the Income Account
expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the record dates for the
distributions (Section 3.09). The accounts of the Trust
shall be audited at least annually by independent certified
public accountants designated by the sponsor and the
report of the accountants shall be furnished by the
Trustees to Holders upon request (Section 8.01(e)).
Evidence of Ownership
Each purchaser is entitled to receive, on request,
without charge (except perhaps a small mailing charge) a
registered Certificate for his Units. These Certificates are
transferable or interchangeable upon presentation at the
office of the Trustee, with a payment of $2.00 if
required by the Trustee (or other amounts specified by
the Trustee and approved by the Sponsor) for each new
Certificate and any sums payable for taxes or other
governmental charges imposed upon the transaction
(Section 6.01) and compliance with the formalities
necessary to redeem Certificates (see Redemption).
Mutilated,destroyed, stolen or lost Certificates will be
replaced upon delivery of satisfactory indemnity and
payment of expenses incurred (Section 6.02).
<PAGE>
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 Holders of Units required to
consent to any such amendment or waiver without the
consent of all Holders (Section 10.01). The Indenture
will terminate upon the earlier of the disposition of the
last Security held thereunder or the Mandatory
Termination Date specified under Investment Summary.
The Indenture may also be terminated by the Sponsor if
the value of the Trust is less than the minimum value set
forth under Investment Summary (as described under
Description of the Trust--Risk Factors) and may be
terminated at any time by written instrument executed by
the Sponsor and consented to by Holders of 51% of the
Units (Sections 8.01 (i) and 9.01). The Trustee shall
deliver written notice of any termination to each Holder
within a reasonable period of time prior to the
termination. Within a reasonable period of time after the
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 (Section 9.01). This distribution will
normally be made by mailing a check in the amount of
each Holder's interest in these accounts to the address of
the Holder appearing on the record books of the Trustee.
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 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. The resignation or removal shall become
effective upon the acceptance of appointment by the
successor. In case of 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(Section
8.06). The Trustee will be under no liability for any
action taken in good faith in reliance on prima facie
properly executed documents or for the disposition of
moneys 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 will not be liable for any of these actions taken in
good faith. The Trustee will 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
(Sections 3.10, 3.12, 8.01 and 8.05).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
<PAGE>
$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
Indenture and liquidate the Trust or (3) continue to act as
Trustee without terminating the Indenture.
The Sponsor is 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 will 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, will not protect the Sponsor incases of wilful
misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties (Section 7.03). 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 that event it will be relieved of all
further liability under the Indenture (Section 7.01).
MISCELLANEOUS
Trustee
The Trustee is United States Trust Company of
New York, with its principal place of business at 114
West 47th Street, New York, New York 10036.
United States Trust Company of New York has, since its
establishment in 1853, engaged primarily in the
management of trust and agency accounts for individuals
and corporations. The Trustee is a member of the New
York Clearing House Association and 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 Bonds deposited in any
of the State Trusts, the Trustee may use the services of
the Depository Trust Company. These services may
include safekeeping of the Bonds and coupon-clipping,
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
Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017, as counsel for the Sponsor.
Auditors
The Financial Statements and Portfolios of
Securities included in this Prospectus have been audited
by KPMG Peat Marwick LLP, independent auditors, as
indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said
firm as experts in accounting and auditing.
Sponsor
The Sponsor, Smith Barney Inc. ("Smith Barney"), an
investment banking and securities broker-dealer firm, is a
member of the New York Stock Exchange, Inc., other major
securities exchanges and commodity exchanges, and the
National Association of Securities Dealers, Inc. Smith
Barney is an indirect wholly-owned subsidiary of The
Travelers Inc. In July 1993, Smith Barney, Harris Upham &
Co. Incorporated and Primerica Corporation (now The
Travelers Inc.) acquired the assets of the domestic retail
brokerage and asset management business of Shearson
Lehman Brothers Inc., previously the Sponsor of this Trust.
Smith Barney was incorporated in 1960 under the laws of
the State of Delaware and its history can be traced through
predecessor partnerships to 1873. Smith Barney is engaged
in the securities underwriting and securities and commodities
brokerage business with over 100 branch offices throughout
the world and more than 25,000 employees.It acts as
sponsor of numerous unit investment trust funds and as
principal underwriter of other investment companies. Smith
Barney acts as investment adviser to various individual and
institutional clients whose portfolios include corporate,
United States Government and municipal securities.
Affiliates of Smith Barney are investment managers of other
investment companies, including money market funds, with
assets in excess of $50 billion. The principal executive
offices of
<PAGE>
Smith Barney are located at 388 Greenwich St., New York,
New York 10013.
<PAGE>
<PAGE>
REAL ESTATE VALUE TRUST 2
A UNIT INVESTMENT TRUST
<TABLE>
PROSPECTUS
This Prospectus does not contain all of the information set
forth in the registration statements and exhibits relating
thereto which have been filed with the Securities and
Exchange Commission, Washington, D.C. under the
Securities Act of 1933 and the Investment Company Act of
1940, and to which reference is hereby made.
Index
<S> <C>
Investment Summary 2
Report of Independent Accountants 5
Statement of Condition 6
Portfolio11
Description of the Trust12
Taxes 19
Public Sale of Units21
Market for Units23
Redemption 25
Expenses and Charges 25
Reinvestment Plan 26
Administration of the Trust27
Resignation, Removal and Limitations on
Liability 30
Miscellaneous 31
</TABLE>
[S] [C] [C] [C]
Sponsor: Evaluator:Trustee:
Independent Auditors:
Smith Barney Inc. Kenny S&P Evaluation
United States Trust KPMG Peat Marwick LLP
Unit Trust Department Services Company of New
York 345 Park Avenue
388 Greenwich Street 65 Broadway 114 West 47th
Street New York, NY 10154
23rd Floor New York, New York
10006 New York, NY 10036 (212)
758-9700
New York, New York 10013 (212) 208-85801(800) 257-
2356
1(800) 298-UNIT
No person is authorized to give any information or to make
any representations with respect to this investment company
not contained in this Prospectus, and any information or
representations not contained herein must not be relied upon
as having been authorized. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is not lawful
to make such offer in such state.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement
on Form S-6 comprises the following papers and documents:
The facing Sheet on Form S-6.
The cross-reference sheet(incorporated by reference to
the Cross-Reference Sheet to the Registration Statement
to The Uncommon Values Unit Trust, 1987 Series,
1933 Act File No.33-13956).
The Prospectus consisting of pages A-1 - A- ,
and 1- , back cover.
Signatures.
The following exhibit:
5.1 - Consent of KPMG Peat Marwick LLP
II-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Real Estate Value Trust 2
certifies that it meets all the requirements for
effectiveness of this Post-Effective Amendment pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment 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 3rd day of August, 1995.
Signatures appear on pages II-3.
A majority of the members of the Board of Directors of Smith
Barney Inc. have signed this Post-Effective
Amendment pursuant to Powers of Attorney authorizing the person
signing this Post-Effective Amendment to do so on behalf of such
members.
These Powers of Attorney were filed with the Securities
and Exchange Commission under the Securities Act of 1933 with the
Registration Statement of Tax Exempt Securities Trust,
Appreciation Series 7, Registration No. 2-78499 and with the
Registration Statement of Tax Exempt Securities Trust, Series
110, Intermediate Term Series 15 and Short-Intermediate Term
Series 13, Registration Nos. 2-97179, 2-95591 and 2-96184,
respectively, with the Registration Statement of Tax Exempt
Securities Trust, Series 284, Amendment No. 2, Registration No.
33-22777, with the Registration Statement of Tax Exempt
Securities Trust, Series 295, Amendment No. 1, Registration No.
33-26376, and with the Registration Statement of Tax Exempt
Securities Trust, Series 335, Amendment No. 1, Registration No.
33-37952.
<PAGE>
TAX EXEMPT SECURITIES TRUST
BY SMITH BARNEY INC.
By
_________________________________________
(George S. Michinard)
By the following persons*, who constitute a majority of
the
directors of Smith Barney Inc.:
Steven D. Black
James S. Boshart III
Robert A. Case
James Dimon
Robert Druskin
Robert F. Greenhill
Jeffrey B. Lane
Robert H. Lessin
John F. Lyness
Michael B. Panitch
Jack L. Rivkin
By
_________________________________________
(George S. Michinard As authorized signatory for
Smith Barney Inc. and
Attorney-in-Fact for the persons listed above)
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
CONSENT OF Independent AUDITORS
We consent to the use of
our report dated July 31, 1995, on the statement of assets
and liabilities of Smith Barney Inc. Unit Trusts, Real
Estate Value Trust 2(formerly, Smith Barney Shearson
Unit Trusts, Real Estate Value Trust 2),including the
schedule of portfolio investments, as of January 31, 1995,
and the related statements of operations and changes in
net assets for the year then ended, and the period from
February 2, 1993 (date of deposit) to January 31, 1994,
included herein and to the reference to our firm under
the heading "AUDITORS" in the prospectus.
KPMG Peat Marwick
LLP
New York, New York
August 2, 1995
