<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 1994
REGISTRATION NO. 33-56203
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-6
----------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
----------------
A. EXACT NAME OF TRUST:
ANGELS WITH DIRTY FACES
B. NAME OF DEPOSITOR:
SMITH BARNEY INC.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE:
TWO WORLD TRADE CENTER -- 101ST FLOOR
NEW YORK, N.Y. 10048
D. NAMES AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY TO:
THOMAS D. HARMAN, ESQ.
SMITH BARNEY INC. PIERRE DE ST. PHALLE, ESQ.
388 GREENWICH STREET DAVIS POLK & WARDWELL
NEW YORK, NEW YORK 10013 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Beneficial Interest pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940, as amended.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, PROSPECTUS DATED NOVEMBER 16, 1994
ANGELS WITH DIRTY FACES
-----------
A SMITH BARNEY UNIT TRUST
A Unit Investment Trust
SMITH BARNEY
------------ Angels With Dirty Faces is a unit
investment trust that offers
investors the opportunity to
purchase Units representing
proportionate interests in a
portfolio of equity securities
selected by Smith Barney's
Investment Policy Committee as its
current "Angels with Dirty Faces"
list. These are stocks whose prices
had declined at least 25% from
their high within the 52 weeks
prior to selection and which Smith
Barney believes to have strong
growth prospects over the next two
years. The value of the Units will
fluctuate with the value of the
underlying securities. The minimum
purchase is $1,000 for individual
purchases, and $250 for purchases
by Individual Retirement Accounts,
self-employed retirement plans
(formerly Keogh 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
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Inquiries should be directed to the Sponsor at
(800) 298-UNIT.
Prospectus dated , 1994
Read and retain this Prospectus for future
reference
<PAGE>
ANGELS WITH DIRTY FACES
INVESTMENT SUMMARY AS OF , 1994+
<TABLE>
<S> <C>
SPONSOR
Smith Barney Inc.
INITIAL NUMBER OF UNITS++........................................ 1,000,000
FRACTIONAL UNDIVIDED INTEREST IN TRUST REPRESENTED BY EACH UNIT.. 1/1,000,000TH
PUBLIC OFFERING PRICE (per 1,000 Units)..........................
Aggregate value of Securities in Trust.......................... $
Divided by 1,000,000 Units
(times 1,000).................................................. $
Plus sales charge of 2.90% of Public Offering Price (2.99% of
the net amount invested in Securities)*........................ $
-------------
Public Offering Price per 1,000 Units........................... $
Plus the amount per 1,000 Units in the Income and Capital
Accounts (see Description of the Trust--Income)................ $ -0-
-------------
Total (per 1,000 Units)......................................... $
=============
</TABLE>
DISTRIBUTIONS
Net income, if any, will be distributed on the Distribution Day in any month,
along with the balance in the Capital Account (excluding amounts reserved to
purchase Securities) if that balance is more than $5 per 1,000 Units on the
Record Day in that month, to Holders on that Record Day. Otherwise, net
income will only be distributed in December 1995 and following termination of
the Trust.
These distributions will be automatically reinvested in additional Units of
the Trust unless the Holder elects to receive the distribution in cash. A
Final Distribution will be made shortly after termination of the Trust.
<TABLE>
<S> <C>
SPONSOR'S REPURCHASE PRICE AND REDEMPTION PRICE PER 1,000 UNITS (based
on value of underlying securities).................................... $
SPONSOR'S PROFIT (LOSS) ON DEPOSIT..................................... $
TRUSTEE'S ANNUAL FEE
$ per 1,000 Units
(see Expenses and Charges)
SPONSOR'S ANNUAL FEE
Maximum of $.25 per 1,000 Units
(see Expenses and Charges)
RECORD DAY--The 10th of each month.
</TABLE>
DISTRIBUTION DAY--The 25th of each month.
EVALUATION TIME--4:00 P.M. New York time
TRUSTEE AND DISTRIBUTION AGENT
United States Trust Company of New York
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 $500,000, un-
less the net asset value of Trust deposits has exceeded $12,000,000. In that
case, the Indenture may be terminated if the net asset value of the Trust is
less than $5,000,000. See Risk Factors, page 3.
MANDATORY TERMINATION OF TRUST
November 30, 1996 (the "Mandatory Termination Date"), or at any earlier time
by the Sponsor with the consent of Holders of 51% of the Units then outstand-
ing.
- -----------
+ The Initial Date of Deposit. The Trust Indenture was signed and the initial
deposit was made on the date of this Prospectus. Valuation of Securities is
based on the market value per share as of , 1994 as more fully explained
in the Notes to the Portfolio. After the Initial Date of Deposit Securities
quoted on a national securities exchange or NASDAQ National Market System, or a
foreign securities exchange, are valued at the closing sale price or if no
price exists, at the mean between the closing bid and offer prices; Securities
not so quoted are valued at the mean between bid and offer prices.
++ The Sponsor may create additional Units during the offering period of the
Trust.
* The sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units--Public Offering Price.
2
<PAGE>
ANGELS WITH DIRTY FACES
INVESTMENT SUMMARY AS OF , 1994 (CONTINUED)
OBJECTIVE OF THE TRUST -- The objective of the Trust is to provide investors
with the possibility of capital appreciation through a convenient and cost-
effective investment in a fixed portfolio consisting of shares of 22 common
stocks (the "Securities") selected by Smith Barney's Investment Policy
Committee as its current "Angels with Dirty Faces" list. These stocks are
selected by first identifying those companies whose prices had declined at
least 25% from their high within the 52 weeks prior to selection and which
Smith Barney's Research currently ranks 1 or 2 with respect to expected total
return over the next 12-18 months relative to the S&P 500 Stock Price Composite
Index and L (low), M (medium) or H (high) with respect to risk. See Footnote
(2) to Portfolio; Description of the Trust--The Portfolio. Then, from this list
Smith Barney's Investment Policy Committee selects the stocks which they
believe show the best prospects for growth over the next two years. The level
of dividends was of incidental importance in the selection process. Achievement
of the Trust's objective is, of course, dependent upon several factors
including the financial condition of the issuers of the Securities and any
appreciation of the Securities. Furthermore, because of Trust sales charges and
expenses, unequal weightings of stocks, brokerage costs and possible delays in
purchasing securities with cash deposited and other factors, an investor in the
Trust may not receive as high a total return as the theoretical performance of
the list.
PORTFOLIO -- The Portfolio contains common stocks issued by companies engaged
primarily in the following industries: technology, 5; telecommunications, 5;
retailing, 3; natural gas, 3; beverage, 1; chemicals, 1; financial services, 1;
leisure, 1; paper, 1; and pollution control, 1. Four of the stocks are foreign
issuers. (See Risk Factors.) The Trust may be considered to be concentrated in
stocks of issuers in the telecommunications industry ( % of total assets).
Although there are certain risks of price volatility associated with investment
in common stocks (particularly with an investment in one or two common stocks),
your risk may be reduced because your capital is divided among 22 stocks from
10 different industry groups.
With the initial deposit of Securities, the Sponsor established a
proportionate relationship among the number of shares of each stock deposited
in the Portfolio. The stocks have been weighted to increase the efficiency of
the Sponsor's buying and selling securities; accordingly, the Portfolio does
not contain equal values of each stock. During the 90-day period following the
Initial Date of Deposit, the Sponsor may create additional Units by depositing
cash (or a bank letter of credit in lieu of cash) with instructions to purchase
Securities as soon as practicable, maintaining to the extent feasible the
original proportionate relationship among the number of shares of each stock in
the Portfolio. Replacement Securities may be acquired under specified
conditions. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the Initial Date of Deposit
because of, among other reasons, purchase requirements, changes in price or the
unavailability of Securities. Any deposits after that 90-day period must
replicate exactly the proportionate relationship among the number of shares
comprising the Portfolio at the end of the initial 90-day period, subject to
certain events discussed under Administration of the Trust--Trust Supervision.
The Sponsor may cease creating Units (temporarily or permanently) at any time.
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 the full range of economic and market
influences which may affect the market value of the Securities, including the
profitability and financial condition of issuers, conditions in a given
issuer's industry, market conditions and values of common stocks generally, the
impact of the Sponsor's buying and selling Securities, especially during the
initial offering of Units of the Trust, and other factors.
Common stocks may be especially susceptible to general stock market movements
and to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. Investors should be aware that there can be
no assurance that the value of the underlying Securities will increase or that
the issuers of the Securities will pay dividends on outstanding shares. Any
distributions of income to Holders will generally depend upon the declaration
of dividends by the issuers of the Securities and the declaration of any
dividends depends upon several factors including the financial condition of the
issuers and general economic conditions.
3
<PAGE>
ANGELS WITH DIRTY FACES
INVESTMENT SUMMARY AS OF , 1994 (CONTINUED)
Unlike a mutual fund, the Portfolio is not actively managed and the Sponsors
receive no management fee. Therefore, the adverse financial condition of an
issuer will not necessarily require the sale of Securities from the Portfolio
or mean that the Sponsor will not continue to purchase the Security in order to
create additional Units. Although the Portfolio is regularly reviewed and
evaluated and the Sponsor may instruct the Trustee to sell
Securities under certain limited circumstances, Securities will not be sold by
the Trust to take advantage of market fluctuations or changes in anticipated
rates of appreciation. The Sponsor has currently assigned certain rankings to
the issuers of Securities based on stock performance and risk (see Portfolio).
These rankings are subject to change. Securities will not necessarily be sold
by the Trust based on a change in such rankings of issuers by the Sponsor,
although the Sponsor intends to review the desirability of holding any Security
if its ranking is reduced below 3. The prices of single shares of each of the
Securities in the Trust vary widely, and the effect of a dollar of fluctuation,
either higher or lower, in stock prices will be much greater as a percentage of
the lower-price stocks' purchase price than as a percentage of the higher-price
stocks' purchase price.
Investors should note that should the size of the Trust be reduced below the
Minimum Value of Trust stated on page 2, the Trust may be terminated at that
time by the Sponsor, well before the Mandatory Termination Date of the Trust.
Any difference between the aggregate prices the Sponsor paid to acquire the
Securities and the aggregate prices at which Securities were initially
deposited in the Trust is noted on page 2 under Sponsor's Profit or (Loss) on
Deposit. The Sponsor's profit on the deposit of Securities largely depends on
whether the Securities' prices rise in response to the Sponsor's purchases of
possibly large volumes of the Securities for initial and subsequent deposits in
the Trust. The effect of the Sponsor's purchases of Securities on the prices of
the Securities is unpredictable.
Investors should note in particular that the Securities were selected on the
basis of the criteria set forth above under Objectives of the Trust and that
the Trust may continue to purchase or hold Securities originally selected
through this process even though the evaluation of the attractiveness of the
Securities may have changed. In the event a public tender offer is made for a
Security or a merger or acquisition is announced affecting a Security, the
Sponsor may instruct the Trustee to tender or sell the Security on the open
market when, in its opinion, it is in the best interest of the holders of the
Units to do so. In connection with the issuance of additional Units during the
Public Offering Period, the Sponsor may deposit cash (or a letter of credit in
lieu of cash) with instructions to purchase Securities or replacement
Securities, in each instance maintaining to the extent practicable the original
percentage relationship among the number of shares of each Security in the
Trust. (See Administration of the Trust -- Trust Supervision.) To the extent
the price of a Security increases or decreases between the deposit and the time
the Security is purchased, Units may represent less or more of that Security
and more or less of the other Securities in the Trust. In addition, brokerage
fees incurred in purchasing Securities with cash deposited with instructions to
purchase the 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 payment of brokerage fees, will affect the value of every
Holder's Units and the income per Unit received by the Trust. In particular,
Holders who purchase Units during the initial offering period would experience
a dilution of their investment as a result of any brokerage fees paid by the
Trust during subsequent deposits of additional Securities purchased with cash
deposited. However, some of the Securities may have limited trading volume,
and, while the Sponsor will endeavor to purchase Securities with deposited cash
within a day or two after the deposit, it reserves the right to purchase those
Securities over the twenty following business days in an effort to reduce the
effect of these purchases on the market price of those stocks. This could,
however, result in the Trust's failure to participate in any appreciation of
those stocks before the cash is invested. If any cash remains at the end of
this period and cannot be invested in one or more stocks at what the Sponsor
considers reasonable prices, it intends to use that cash to purchase each of
the other securities in the original proportionate relationship among those
securities. Similarly, at termination of the Trust, the Sponsor reserves the
right to sell Securities over a period of up to 20 business days to lessen the
4
<PAGE>
ANGELS WITH DIRTY FACES
INVESTMENT SUMMARY AS OF , 1994 (CONTINUED)
impact of its sales on the market price of the Securities. The proceeds
received by Holders following termination of the Trust will reflect the actual
sales proceeds received on the Securities, which will likely differ from the
closing sale price on the Mandatory Termination Date. (See Description of the
Trust -- Risk Factors.)
FOREIGN SECURITIES AND AMERICAN DEPOSITARY RECEIPTS -- The Trust may contain
Securities of foreign issuers or American Depositary Receipts ("ADRs") for
securities that have been issued by non-United States issuers. These
instruments are subject to special considerations in addition to those
affecting common stocks of United States issuers. For a discussion of special
considerations relating to foreign securities and ADRs, see Description of the
Trust -- Risk Factors; Taxes.
PRIVATE PLACEMENTS; UNDERWRITING -- None of the Securities in the Trust
consists of privately-placed common stocks. Except as indicated under
Portfolio, 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 were acquired.
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 2.90%* of
the Public Offering Price; this results in a sales charge of 2.99%* 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 -- Distributions of dividends (net of expenses) and any
principal received by the Trust will be made as described under Distributions
on page 2. Except for the Final Distribution, any such distribution will
automatically be reinvested in additional Units of the Trust at no extra charge
and each Holder of Units will participate unless the Holder elects to receive
distributions of dividends or principal, or both, in cash. Holders who reinvest
their distributions will receive additional Units and will therefore own a
greater percentage of the Trust than Holders who receive cash distributions
(see Reinvestment Plan). As soon as practicable after termination of the Trust
(generally within four weeks), the Trustee will distribute to each Unitholder
his pro rata share of the amount realized on disposition of the Securities
remaining in the Trust plus any other assets then in the Trust, less expenses
of the Trust. The other assets of the Trust will include any dividends,
interest income and net realized capital gains which have not been distributed.
The total distribution may be less than the amount paid for Units.
MARKET FOR UNITS -- The Sponsor, though not obligated to do so, intends from
the commencement of the Trust to maintain a market for Units and continually to
offer to purchase Units from Holders desiring to sell them at a price based on
the aggregate value of the underlying Securities (see Market for Units).
Whenever a market is not maintained, a Holder may be able to dispose of his
Units only through redemption (see Redemption).
- -----------
* This sales charge will be reduced on a graduated scale in the case of
quantity purchases. See Public Sale of Units -- Public Offering Price.
5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee and Unitholders of Angels With Dirty Faces:
We have audited the accompanying statement of financial condition, including
the portfolio of Angels With Dirty Faces, as of , 1994. This financial
statement is the responsibility of the Trust's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in that financial statement. Our
procedures included confirmation with the Trustee of an irrevocable letter of
credit deposited on , 1994, for the purchase of securities, as shown in
the statement of financial condition and portfolio of securities. An audit
also includes assessing the accounting principles used and significant
estimates made by the Trust's management, 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 statement referred to above presents fairly,
in all material respects, the financial position of Angels With Dirty Faces as
of , 1994, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
, 1994
ANGELS WITH DIRTY FACES
STATEMENT OF FINANCIAL CONDITION AS OF INITIAL DATE OF DEPOSIT, , 1994
<TABLE>
<S> <C>
TRUST PROPERTY
Investment in Securities:
Contracts to purchase Securities(1)................................... $
======
INTEREST OF HOLDERS
1,000,000 Units of fractional undivided interest outstanding:
Cost to investors(2).................................................. $
Gross underwriting commissions(3).....................................
------
Net amount applicable to investors...................................... $
======
</TABLE>
- -----------
(1) Aggregate cost to the Trust of the Securities listed under Portfolio on
the Initial Date of Deposit is determined by the Trustee on the basis set
forth in Footnote 5 to the Portfolio. See also the columns headed Cost of
Securities to Trust and Market Value per Share thereunder. An irrevocable
letter of credit in the amount of $1,000,000 has been deposited with the
Trustee for the purchase of Securities. The letter of credit was issued by
.
(2) Aggregate public offering price computed on the basis set forth under
Public Sale of Units--Public Offering Price.
(3) Assumes a sales charge of 2.90% of Public Offering Price computed on the
basis set forth under Public Sale of Units--Public Offering Price.
6
<PAGE>
PORTFOLIO OF ANGELS WITH DIRTY FACES ON THE INITIAL DATE OF DEPOSIT,
, 1994
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECLINE FROM COST OF
STOCK INVESTMENT 52-WK HIGH NUMBER MARKET VALUE SECURITIES PERCENT OF
SECURITIES(1) SYMBOL(2) RANKING(2) AS OF NOVEMBER 11, 1994 OF SHARES(4) PER SHARE(5) TO TRUST(5) NET ASSETS
------------- --------- ---------- ----------------------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Bell Atlantic Corp. BEL 1-H 17.5%
Burlington Resources BR 2-M 21.9%
cisco Systems *# CSCO 1-M 24.6%
Comsat Corp. CQ 1-M 38.9%
Consolidated Nat'l Gas CNG 1-L 27.7%
Dillard Dept. Stores DDS 2-H 30.5%
Engelhard Corp. EC 1-M 29.8%
Fingerhut Company # FHT 1-H 48.9%
Greater NY Savings *# GRTR 1-H 28.6%
Intl Game Technology IGT 1-M 46.3%
Kimberly-Clark KMB 1-M 16.7%
Nashua Corp. NSH 2-H 27.9%
National SemiConductor NSM 1-H 29.5%
Newbridge Networks* NN 1-M 54.5%
Panamerican Beverages # PB 1-H 22.5%
Questar Corp. STR 1-M 20.2%
Scitex Corp. * SCIXF 1-H 23.8%
Telecom Argentina * TECO2 1-H 24.4%
Telefonos de Mexico TMX 1-M 32.7%
Venture Stores VEN 1-M 39.7%
Viewlogic Systems* VIEW 1-H 26.7%
Wheelabrator Tech. WTI 1-H 34.1%
---- -------
100.00%
==== =======
</TABLE>
- -----------
(1) All Securities are represented entirely by contracts to purchase
Securities, which were entered into by the Sponsor on , 1994. All
contracts for domestic Securities are expected to be settled by the
initial settlement date for the purchase of Units.
(2) Symbols in italics indicate symbols on a foreign securities exchange.
(3) Smith Barney Inc. has assigned these rankings according to the following
system, which uses two codes: a number for stock performance (1-5) and a
letter for risk (L, M, H, S or V).
Guide to Investment Ratings: Rank is a guide to the expected total return
over the next 12-18 months relative to the S&P 500. 1 (Buy): more than 15%
total return. 2 (Outperform): 5%-15% total return. 3 (Neutral): plus 5% to
minus 5% total return. 4 (Underperform): minus 5% to minus 15% total return.
5 (Sell): minus 15% or more total return. Risk takes into account
predictability of earnings and dividend, financial leverage, and stock price
volatility. L (Low Risk): predictable earnings and dividends, suitable for
the conservative investor. M (Medium Risk): moderately predictable earnings
and dividends, suitable for the average equity investor. H (High Risk):
earnings and dividends are less predictable, suitable for the aggressive
investor. S (Speculative): very low predictability of fundamentals and a
high degree of volatility, suitable only for investors/traders with
diversified portfolios that can withstand material losses. V (Venture):
indicates a stock with venture capital characteristics that is suitable for
sophisticated investors with a high tolerance for risk and broadly
diversified investment portfolios.
These rankings represent current research opinions and, of course, are subject
to change; no assurances can be given that the stocks will perform as
indicated. These rankings have not been audited by KPMG Peat Marwick LLP.
(4) Per 1,000,000 Units.
(5) Valuation of Securities by the Trustee was made using the market value per
share as of the Evaluation Time on , 1994. The values per share of
securities trading on foreign securities exchanges have been translated at
the spot rate as of the Evaluation Time on , 1994. Subsequent to the
Initial Date of Deposit, valuation of Securities is based, for Securities
quoted on a national securities exchange or NASDAQ National Market System,
or a foreign securities exchange, on the closing sale prices, or if no
price exists, at the mean between the closing bid and offer prices, or for
Securities not so quoted, at the mean between bid and offer prices on the
over-the-counter market. See Redemption--Computation of Redemption Price
Per Unit.
---------------
*Smith Barney usually maintains a market in the securities of this company.
#Within the last three years, Smith Barney or one of its affiliates was the
manager (co-manager) of a public offering of the securities of this company
or an affiliate.
7
<PAGE>
DESCRIPTION OF THE TRUST
STRUCTURE AND OFFERING
This 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
date of this Prospectus, each unit of the Trust (a "Unit") represented a
fractional undivided interest in the securities listed under Portfolio (the
"Securities") and net income of the Trust set forth under Investment Summary.
Additional Units of the Trust will be issued in the amount required to satisfy
purchase orders by depositing in the Trust cash (or a bank letter of credit in
lieu of cash) with instructions to purchase Securities as soon as practicable.
On each settlement date (estimated to be five business days after the
applicable date on which Securities were deposited in the Trust), the Units
will be released for delivery to investors and the deposited cash will be
delivered to the Trustee. As additional Units are issued by the Trust, 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 of cash in connection with the issuance and sale of
additional Units will be used to purchase Securities so as to maintain to the
extent practicable the original proportionate relationship among the number of
shares of each Security. The proportionate relationship among the Securities
in the Trust will be adjusted to reflect the occurrence of a stock dividend, a
stock split or a similar event which affects the capital structure of the
issuer of a Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. It may not be possible to maintain the exact original
proportionate relationship among the Securities deposited on the Initial Date
of Deposit because of, among other reasons, purchase requirements, changes in
prices, brokerage commissions or unavailability of Securities. Replacement
Securities may be acquired under specified conditions when Securities
originally deposited are unavailable (see Administration of the Trust -- Trust
Supervision). Units may be continuously offered to the public by means of this
Prospectus (see Public Sale of Units -- Public Distribution) resulting in a
potential increase in the number of Units outstanding. Any deposits of cash
subsequent to the 90-day period following the Initial Date of Deposit must be
used to purchase Securities to replicate exactly the proportionate
relationship among the number of shares of each of the Securities comprising
the Portfolio at the end of the initial 90-day period.
The Public Offering Price of Units prior to the Evaluation Time specified on
page 2 on any day will be based on the aggregate value of the Securities in
the Trust on that day at the Evaluation Time, plus a sales charge. The Public
Offering Price will thus vary in the future from that specified on page 2 of
this Prospectus. See Public Sale of Units -- Public Offering Price for a
complete description of the pricing of Units.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units.
The Sponsor will execute orders to purchase in the order it determines, in
good faith, that they are received, except it is expected that indications of
interest received prior to the effectiveness of the registration of the Trust
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received. The Sponsor may 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 for cash (see Redemption). If any Units are redeemed, the aggregate
value of Securities in the Trust will be reduced and the fractional undivided
interest in the Trust represented by each remaining Unit will be increased.
Units 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).
- -----------
* To the extent references in this Prospectus are to articles and sections of
the Indenture, which is incorporated by reference into this Prospectus, the
statements made herein are qualified in their entirety by such reference.
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<PAGE>
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that the
financial condition of the issuers of the Securities or the general condition
of the common stock market may worsen and the value of the Securities and
therefore the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the
issuers of those common stocks that are generally subordinate to those of
creditors or holders of debt obligations or preferred stocks of such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. By contrast, holders of preference
stocks have the right to receive dividends at a fixed rate when and as
declared by the issuer's board of directors, normally on a cumulative basis,
but generally do not participate in other amounts available for distribution
by the issuing corporation. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stocks are also entitled to rights on liquidation
which are senior to those of common stocks. Moreover, common stocks do not
represent an obligation of the issuer and, therefore, do not offer any
assurance of income or provide the same degree of protection of capital as do
debt securities. The issuance of additional debt securities or preferred stock
will create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer to
declare or pay dividends on its common stock or the rights of holders of
common stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of common stocks are subject to market fluctuations for
as long as the common stocks remain outstanding, and thus the value of the
Securities in the Portfolio may be expected to fluctuate over the life of the
Trust to values higher or lower than those prevailing on the Initial Date of
Deposit.
Since the Securities are all common stocks, and the income stream produced
by dividend payments thereon is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses of the
Trust. If dividends are insufficient to cover expenses, it is likely that
Securities will have to be sold to meet Trust expenses. See Expenses and
Charges -- Payment of Expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
Holders will be unable to dispose of any of the Securities in the Portfolio,
as such, and will not be able to vote the Securities. As the holder of the
Securities, the Trustee will have the right to vote all of the voting stocks
in the Trust and will vote in accordance with the instructions of the Sponsor.
Investors should be aware that the Trust is not a "managed" trust and, as a
result, the adverse financial condition of a company will not result in the
elimination of its securities from the portfolio of the Trust (the
"Portfolio") except under extraordinary circumstances (see Administration of
the Trust -- Trust Supervision).
Investors should note that in connection with the issuance of additional
Units during the Public Offering Period set forth in the Investment Summary,
the Sponsor will deposit cash (or a letter of credit in lieu of cash) with
instructions to purchase Securities, maintaining to the extent practicable the
original percentage relationship, subject to adjustment under certain
circumstances, among the number of shares of each Security in the Trust. To
the extent the price of a Security increases or decreases between the time
cash is deposited with instructions to purchase the Security and the time the
cash is used to purchase the Security, Units may represent less or more of
that Security and more or less of the other Securities in the Trust. In
addition, brokerage fees (if any) incurred in purchasing Securities with cash
deposited with instructions to purchase the Securities will be an expense of
the Trust. Price fluctuations between the time of deposit and the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Holder's Units and the Income per Unit received by the Trust.
9
<PAGE>
The Trust may be terminated at any time and all outstanding Units liquidated
if the net asset value of the Trust falls below $500,000 and deposits of
Securities in the Trust have not exceeded $12,000,000 at that time. At any
time after deposits in the Trust have exceeded $12,000,000, the Trust may be
so terminated if the net asset value of the Trust falls below $5,000,000.
Investors should note that if the net asset value of the Trust should fall
below the applicable minimum value, the Sponsor may then in its sole
discretion terminate the Trust before the Mandatory Termination Date specified
under Investment Summary.
Telecommunications Stocks. The telecommunications industry is subject to
varying degrees of regulatory, political and economic risk which may affect
the prices of companies involved in that industry. These risks depend on a
number of factors including the country in which a company is located.
Telecommunications companies in both developed and emerging countries are
undergoing significant change due to varying and envolving levels of
governmental regulation or deregulation and technological advances as well as
other factors. Foreign telephone companies, which currently monopolize
provision of telephone services within their countries, have both the
opportunity for significant expansion of telephone usage and the possibility
of increased competition as domestic and foreign companies seek to take
advantage of this potential. Regional Bell Holding Companies are subject to
limitations under a consent decree which could hamper their ability to adjust
to changes in technology and products. Technological innovations in fiber
optics, cellular products and services, voices messaging, call waiting and
automatic dialing offer additional potential for significant expansion.
Advances like formation of a national cellular grid could also contribute to
the anticipated growth of this industry. As a result, competitive pressures
are intense, and the securities of these companies may be subject to rapid
price volatility. In addition, companies offering telephone services are
experiencing increasing competition from cellular telephones, and the cellular
telephone industry, because of its limited operating history, faces
uncertainty concerning the future of the industry and demand. All
telecommunications companies in both developed and emerging countries are
subject to the additional risk that technological innovations could make their
products and services obsolete.
Foreign Securities. The Trust may hold securities of non-U.S. issuers or
through American Depositary Shares ("ADSs") and receipts therefor ("ADRs").
There are certain risks involved in investing in securities of foreign
companies, which are in addition to the usual risks inherent in United States
investments. These risks include those resulting from fluctuations in currency
exchange rates, revaluation of currencies, future adverse political and
economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions, reduced
availability of public information concerning issuers and the lack of uniform
accounting, auditing and financial reporting standards or of other regulatory
practices and requirements comparable to those applicable to domestic
companies. Moreover, securities of many foreign companies may be less liquid
and their prices more volatile than those of securities of comparable domestic
companies. In addition, with respect to certain foreign countries, there is
the possibility of expropriation, nationalization, confiscatory taxation and
limitations on the use or removal of funds or other assets of the Trust,
including the withholding of dividends. Foreign securities may be subject to
foreign government taxes that could reduce the yield on such securities. Since
the Trust may invest in securities quoted in currencies other than the United
States dollar, changes in foreign currency exchange rates may adversely affect
the value of foreign securities in the Portfolio and the net asset value of
Units of the Trust. Investment in foreign securities may also result in higher
expenses due to the cost of converting foreign currency to United States
dollars, the payment of fixed brokerage commissions on certain foreign
exchanges, which generally are higher than commissions on domestic exchanges,
and expenses relating to foreign custody.
In addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. However, the Sponsor anticipates that
adequate information will be available to allow the Sponsor to supervise the
Portfolio as set forth in Administration of the Trust--Portfolio Supervision.
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On the basis of the best information available to the Sponsor at the present
time none of the Securities is subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from sale of, the Securities either because the
particular jurisdictions have not adopted any currency regulations of this
type or because the issues qualify for an exemption, or the Trust, as an
extraterritorial investor, has qualified its purchase of the Securities as
exempt by following applicable "validation" or similar regulatory or exemptive
procedures. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payments to the Trust.
In addition, the adoption of exchange control regulations and other legal
restrictions could have an adverse impact on the marketability of
international securities in the Portfolio and on the ability of the Trust to
satisfy its obligation to redeem Units tendered to the Trustee for redemption
(see Redemption).
Exchange Rate Fluctuation. In recent years, foreign exchange rates have
fluctuated sharply. Income from foreign equity securities, including those
underlying any ADRs held by the Trust, would be payable in the currency of the
country of their issuance. However, the Trust will compute its income in
United States dollars, and the computation of income will be made on the date
of its receipt by the Trust at the foreign exchange rate in effect on that
date. Therefore, if the value of the foreign currency falls relative to the
United States dollar between receipt of the income and the making of Trust
distributions, the risk of such decline will be borne by Holders. In addition,
the cost of converting such foreign currency to United States dollars would
also reduce the return to the Holder.
ADRs and ADSs are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation. These
instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. Generally, ADSs and ADRs are
designed for use in the United States securities markets. For purposes of this
Prospectus, the term ADR generally includes ADSs.
THE PORTFOLIO
The Sponsor's Equity Research Department is staffed by 98 investment
analysts, who currently follow equities issued by more than 1,200 companies
(both domestic and foreign) in 77 industry groups or stock areas of the
market. Smith Barney has developed a list of stocks we call "Angels with Dirty
Faces" that it believes offer attractive potential for total return over the
coming two years. The list was developed using a three-tiered screening
process. First, Smith Barney's Research Department identified each stock whose
price had declined by 25% or more from its 52-week high (and is therefore
relatively depressed). These stocks were then screened by eliminating any
stock Smith Barney Research rates lower than 2 as to growth prospects and has
a volatility rating greater than H. Stocks are ranked 1 (Buy) or 2
(Outperform) on the Sponsor's investment ranking system according to how the
Sponsor's Equity Research analysts expect the stocks to perform in comparison
to the Standard & Poor's 500 Stock Price Composite Index (the "Index"). The
Index is a market value-weighted index showing the change in aggregate market
value of 500 stocks traded on the New York Stock Exchange, American Stock
Exchange and over-the-counter. The selection is not limited to small, high-
growth companies. Stocks rated 1 are expected by the Sponsor's Equity Research
Department to achieve a total return in excess of 15% over the total return of
the Index over the next 12-18 months. Stocks rated 2 are expected to
outperform the total return of the Index by 5%-15% over the same period. (See
Footnote 2 to the Portfolio.) As of November 15, 1994, approximately 149
companies followed by the Equity Research Department of the Sponsor were
ranked 1 or 2 on the Sponsor's investment ranking system. As a final step in
selecting the "Angels with Dirty Faces" list, Smith Barney's Investment Policy
Committee, comprised of nine senior research analysts, reviews each of these
stocks, focusing on the company's position relative to industry trends,
overall market conditions and the general economic environment. Smith Barney
believes that the process can help investors to identify stocks that are
attractive on a relative price basis and whose opportunities for growth are
therefore enhanced. Through this process emerges a select list of stocks which
the Sponsor believes have strong prospects for growth over the next two years.
In order to increase the efficiencies in the Sponsor's purchase or sale of
potentially large volumes of these securities in a
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<PAGE>
short period of time, the Sponsor determined the weightings of the Securities
in the Portfolio by considering relative trading volume and market
capitalization, among other factors. As a result, the Trust does not own equal
values of each of the Securities in the list. Of course, there can be no
assurance that the Sponsor's expectations will be realized or that the
objective of the Trust will be achieved.
The results of ownership of Units will differ from the results of ownership
of the underlying Securities of the Trust for various reasons, including sales
charges and expenses of the Trust, brokerage costs and possible delays in
purchasing Securities with cash deposited in creating additional Units.
Additionally, results of ownership to different Holders will vary depending on
the net asset value of the underlying Securities on the days such Holders
bought and sold their Units. Of course, any purchaser of securities, including
Units, will have to pay sales charges or commissions, which will reduce his
total return.
Advertising and sales literature for the Trust may include excerpts from the
Sponsor's research reports on one or more of the stocks in the Trust,
including a brief description of its businesses and market sector, and the
basis on which the stock was selected. In selecting Securities for the Trust,
the Sponsor has not expressed any belief as to the potential of these
Securities for capital appreciation over a period longer than two years. There
is, of course, no assurance that any of the Securities in the Trust will
appreciate in value, and indeed any or all of the Securities may depreciate in
value at any time in the future. See Description of the Trust -- Risk Factors.
All of the domestic Securities are publicly traded either on a stock
exchange or in the over-the-counter market. Most of the contracts to purchase
Securities deposited initially in the Trust are expected to settle in five
business days, in the ordinary manner for such Securities. Any foreign
Securities are publicly traded on a variety of foreign stock exchanges.
Settlement of contracts for foreign Securities varies by country and may take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
The Trust consists of such Securities as may continue to be held from time
to time in the Trust and any additional and replacement Securities and any
money market instruments acquired and held by the Trust pursuant to the
provisions of the Indenture (including the provisions with respect to the
deposit into the Trust of Securities in connection with the sale of additional
Units to the public) together with undistributed income therefrom and
undistributed and uninvested cash realized from the disposition of Securities
(see Administration of the Trust -- Accounts and Distributions; -- Trust
Supervision). The Indenture authorizes, but does not require, the Trustee to
invest the net proceeds of the sale of any Securities in eligible money market
instruments to the extent that the proceeds are not required for the
redemption of Units. Any money market instruments acquired by the Trust must
be held until maturity and must mature no later than the next Distribution Day
and the proceeds distributed to Holders at that time. If sufficient Securities
are not available at what the Sponsor considers a reasonable price, excess
cash received on the creation of Units may be held in an interest-bearing
account with the Trustee until that cash can be invested in Securities.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any of the Securities. However, should any
contract deposited hereunder (or to be deposited in connection with the sale
of additional Units) fail, the Sponsor shall, on or before the next following
Distribution Day, cause to be refunded the attributable sales charge, plus the
attributable Cost of Securities to Trust listed under Portfolio, unless
substantially all of the monies held in the Trust to cover the purchase are
reinvested in replacement Securities in accordance with the Indenture (see
Administration of the Trust -- Portfolio Supervision).
Because certain of the Securities from time to time may be sold, or their
percentage may be reduced under certain extraordinary circumstances described
below, 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).
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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 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.
Income Distributions, if any, will be automatically reinvested in additional
Units of the Trust at no extra charge unless a Holder elects to receive his
distributions in cash (see Reinvestment Plan). Because dividends on the
Securities are not received by the Trust at a constant rate throughout the
year and because the issuers of the Securities may change the schedules or
amounts of dividend payments, any distributions, whether reinvested or paid in
cash, may be more or less than the amount of dividend income actually received
by the Trust and credited to the income account established under the
Indenture (the "Income Account") as of the Record Day.
TAXES
The following discussion addresses only the tax consequences of Units held
as capital assets and does not address the tax consequents of Units held by
dealers, financial institutions or insurance companies.
In the opinion of Davis Polk & Wardwell, special counsel for the Sponsor,
under existing law:
The Trust is not an association taxable as a corporation for Federal income
tax purposes, and income received by the Trust will be treated as income of
the Holders in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of each
Security in the Trust under the grantor trust rules of Sections 671-679 of the
Internal Revenue Code of 1986, as amended (the "Code"). A Holder should
determine his tax cost for each Security represented by his Units by
allocating the total cost for his Units, including the sales charge, among
each Security in the Trust represented by his Units (in proportion to the fair
market values thereof on the date the Holder purchases his Units). In order
for a Holder who purchases Units on the Initial Date of Deposit to determine
the fair market value of his pro rata portion of each security on such date,
see Cost of Securities to Trust under Portfolio.
A Holder will be considered to have received all of the dividends paid on
his pro rata portion of each Security when such dividends are received by the
Trust even if the Holder does not actually receive such distributions but
rather reinvests his dividend distributions pursuant to the Reinvestment Plan.
An individual Holder who itemizes deductions will be entitled to deduct his
pro rata share of fees and expenses paid by the Trust only to the extent that
this amount together with the Holder's other miscellaneous deductions exceeds
2% of his adjusted gross income.
Distributions which are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes but will be eligible for
the dividends-received deduction for corporations (other than corporations
such as "S" corporations which are not eligible for such deduction because of
their special characteristics and other than for purposes of special taxes
such as the accumulated earnings tax and the personal holding company tax)
only to the extent of dividends received from domestic corporations by the
Trust.
The dividends-received deduction is currently 70%. However, Congress from
time to time considers proposals to reduce the rate, and enactment of such a
proposal would adversely affect the after-tax return to investors who can take
advantage of the deduction. Holders are urged to consult their own tax
advisers.
Section 246 and 246A of the Code contain limitations on the eligibility of
dividends for the corporate dividends-received deduction (in addition to the
limitation discussed above). Depending upon the corporate Holder's
circumstances (including whether he has a 45-day holding period for his Units
and whether his Units are debt
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financed), these limitations may be applicable to dividends received by a
Holder from the Trust which would otherwise qualify for the dividends-received
deduction under the principles discussed above. Accordingly, Holders should
consult their own tax advisers in this regard. A corporate Holder should be
aware that the receipt of dividend income for which the dividends received
deduction is available may give rise to an alternative minimum tax liability
(or increase an existing liability) because the dividend income will be
included in the corporation's "adjusted current earnings" for purposes of the
adjustment to alternative minimum taxable income required by Section 56(g) of
the Code.
A distribution of Securities by the Trustee to a Holder (or to his agent,
including the Distribution Agent) upon redemption of Units (or an exchange of
Units for Securities by the Holder with the Sponsor) will not be a taxable
event to the Holder or to other Holders. The redeeming or exchanging Holder's
basis for such Securities will be equal to his basis for the same Securities
(previously represented by his Units) prior to such redemption or exchange,
and his holding period for such Securities will include the period during
which he held his Units. However, a Holder will have a taxable gain or loss,
which will be a capital gain or loss except in the case of a dealer, when the
Holder (or his agent, including the Distribution Agent) sells the Securities
so received in redemption, when a redeeming or exchanging Holder receives cash
in lieu of fractional shares, when the Holder sells his Units for cash or when
the Trustee sells the Securities from the Trust. 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 noncorporate 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.
The Trust may hold Securities or ADRs of foreign corporations. For United
States income tax purposes, a holder of ADRs is treated as though he were
holding directly the shares of the foreign corporation represented by the
ADRs.
Under the income tax laws of the State and City of New York, the Trust is
not an association taxable as a corporation and the income of the Trust will
be treated as the income of the Holders in the same manner as for Federal
income tax purposes.
Dividends paid by foreign issuers generally will be subject to withholding
tax, which will be unavailable as a credit or deduction for Holders.
The foregoing discussion relates only to the tax treatment of U.S. Holders
with regard to Federal and certain aspects of New York State and City income
taxes. Holders that are not U.S. citizens or residents ("Foreign Holders")
should be aware that dividend distributions from the Trust will be subject to
a withholding tax of 30%, or a lower treaty rate. Holders may be subject to
taxation in New York or in other jurisdictions (including a Foreign Holder's
country of residence) and should consult their own tax advisers in this
regard.
* * *
After the end of each calendar year, the Trustee will furnish to each Holder
an annual statement containing information relating to the dividends received
by the Trust on the Securities, the gross proceeds received by the Trust from
the disposition of any Security (resulting from redemption or the sale by the
Trust of any Security), and the fees and expenses paid by the Trust. The
Trustee will also furnish annual information returns to each Holder and to the
Internal Revenue Service.
RETIREMENT PLANS
This Trust may be well suited for purchase by Individual Retirement Accounts
("IRAs"), Keogh plans, pension funds and other qualified retirement plans,
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 such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisers with respect
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<PAGE>
to the establishment and maintenance of any such plan. Such plans are offered
by brokerage firms, including the Sponsor of this Trust, and other financial
institutions. Fees and charges with respect to such plans may vary.
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 59 1/2, except in the case of a participant's
death or disability and certain other limited circumstances. 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 a qualified private or government
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
Fund. Any individual can make a contribution to an IRA equal to the lesser of
$2,000 ($2,250 in a spousal account) or 100% of earned income; such investment
must be made in cash. However, the deductible amount an individual may
contribute will be reduced if the individual's adjusted gross income exceeds
$25,000 (in the case of a single individual), $40,000 (in the case of married
individuals filing a joint return) or $200 (in the case of a married
individual filing a separate return). A married individual filing a separate
return will not be entitled to any deduction if the individual is covered by
an employer-maintained retirement plan without regard to whether the
individual's spouse is an active participant in an employer retirement plan.
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 position 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 Trusts.
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 sales charge of 2.99% thereof.
This sales charge is equal to a gross underwriting profit of 2.90% of the
Public Offering Price and is subject to change by the Sponsor at any time.
Purchasers on , 1994 (the first day Units will be available to the
public) will be able to purchase Units at $1.00 each (including the sales
charge). To allow Units to be priced at $1.00, the Units outstanding as of the
Evaluation Time on (all of which are held by the Sponsor) will be split
(or split in reverse). The Public Offering Price on any subsequent date will
vary from the Public Offering Price on the date of the initial Prospectus (set
forth under Investment Summary) in accordance with fluctuations in the
aggregate value of the underlying Securities. Units will be sold to investors
at the Public Offering Price next determined after receipt of the investor's
purchase order. A proportionate share of the amount in the Income Account
(described under Administration of the Trust -- Accounts and Distributions) on
the date of delivery of the Units to the purchaser is added to the Public
Offering Price.
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The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least 50,000 Units. Sales charges are
as follows:
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OFFERING NET AMOUNT
NUMBER OF UNITS PRICE INVESTED
- --------------- ---------- ----------
<S> <C> <C>
Fewer than 50,000......................................... 2.90% 2.987%
50,000 but less than 100,000.............................. 2.50 2.564
100,000 but less than 250,000............................. 2.00 2.041
250,000 or more .......................................... 1.50 1.523
</TABLE>
The above graduated sales charges will apply to all purchases on any one day
by the same purchaser of Units in the amounts stated. Purchases of Units will
not be aggregated with purchases of units of any other series of Smith Barney
Unit Investment Trusts. Units held in the name of the spouse of the purchaser
or in the name of a child of the purchaser under 21 years of age are deemed to
be registered in the name of the purchaser for purposes of calculating the
applicable sales charge. The graduated sales charges are also applicable to a
trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account.
Valuation of Securities by the Trustee is made as of the close of business
on the New York Stock Exchange on each business day. Securities quoted on a
national stock exchange or NASDAQ National Market System are valued at the
closing sales price, or, if no closing sales price exists, at the mean between
the closing bid and offer prices. Securities not so quoted are valued at the
mean between bid and offer prices.
Employees of the Sponsor and its subsidiaries, affiliates and employee-
related accounts may purchase Units pursuant to employee benefit plans, at a
price equal to the aggregate value of the Securities in the Trust divided by
the number of Units outstanding 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 for sale in all states of the United
States where qualification is deemed necessary through the Sponsor and dealers
who are members of the National Association of Securities Dealers, Inc. Sales
to dealers, if any, will initially be made at prices which represent a
concession from the Public Offering Price per Unit to be established at the
time of sale by the Sponsor.
UNDERWRITER'S AND SPONSOR'S PROFITS
The Sponsor, as sole underwriter, receives a gross underwriting commission
equal to the sales charge of 2.90% of the Public Offering Price (subject to
reduction on a graduated scale basis in the case of volume purchases, as
referred to above).
On the Initial Date of Deposit, the Sponsor also realized a profit or loss
on deposit of the Securities into the Trust in the amount set forth under
Investment Summary, which equals the difference between the cost of the
Securities to the Trust (which is based on the aggregate value of the
Securities on the Date of Deposit) and the purchase price of such Securities
to the Sponsor. The Sponsor also may realize profits or sustain losses as a
result of fluctuations after the Initial Date of Deposit in the aggregate
value of the Securities and hence of the Public Offering Price received by the
Sponsor for Units. Cash, if any, made available by buyers of Units to the
Sponsor prior to the settlement dates for purchase of Units may be used in the
Sponsor's business and may be of benefit to the Sponsor.
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The Sponsor also receives an annual fee at the maximum rate of $.25 per
1,000 Units for the administrative and other services which it provides during
the life of the Trust (see Expenses and Charges -- Fees). The Sponsor has not
participated as sole underwriter or manager or member of any underwriting
syndicate from which any of the Securities in the Portfolio on the Initial
Date of Deposit were acquired, except as indicated under Portfolio.
In maintaining a market for the Units (see Market for Units), the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the prices at which it buys Units (based on the aggregate value of the
Securities) and the prices at which it resells such Units (which include the
sales charge) or redeem those Units.
MARKET FOR UNITS
While the Sponsor is not obligated to do so, its intention is to maintain a
market for Units and offer continuously to purchase Units from the Initial
Date of Deposit at prices, subject to change at any time, which will be
computed by adding (1) the aggregate value of Securities in the Trust, (2)
amounts in the Trust including dividends receivable on stocks trading ex-
dividend and (3) all other assets in the Trust; deducting therefrom the sum of
(a) taxes or other governmental charges against the Trust not previously
deducted, (b) accrued fees and expenses of the Trustee (including legal and
auditing expenses), the Sponsor and counsel to the Trust and certain other
expenses and (c) amounts for distribution to Holders of record as of a date
prior to the evaluation; and dividing the result of such computation by the
number of Units outstanding as of the date of computation. The Sponsor may
discontinue purchases of Units if the supply of Units exceeds demand or for
any other business reason. The Sponsor, of course, does not in any way
guarantee the enforceability, marketability or price of any Securities in the
Portfolio or of the Units. On any given day, however, the price offered by the
Sponsor for the purchase of Units shall be an amount not less than the
Redemption Price per Unit, based on the aggregate value of Securities in the
Trust on the date on which the Units are tendered for redemption (see
Redemption).
The Sponsor may, of course, redeem any Units it has purchased in the
secondary market to the extent that it determines that it is undesirable to
continue to hold such Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of units of
all series of unit trusts which it has in its inventory, the saleability of
such units and its estimate of the time required to sell such units and
general market conditions. For a description of certain consequences of such
redemption for the remaining Holders, see Redemption.
REDEMPTION
Units may be redeemed by the Trustee at its corporate trust office upon
payment of any relevant tax without any other fee, accompanied by a written
instrument or instruments of transfer with the signature guaranteed by a
national bank or trust company, a member firm of any of the New York, Midwest
or Pacific Stock Exchanges, or in such other manner as may be acceptable to
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions (see Administration of the Trust--Accounts and
Distribution). The Securities to be sold will be selected by the Trustee from
those designated on the current list provided by the Sponsor for this purpose.
Provision is made in the Indenture under which the Sponsor may, but need not,
specify minimum amounts in which blocks of Securities are to be sold in order
to obtain the best price for the Trust. While these minimum amounts may vary
from time to time in accordance with market conditions, the Sponsor believes
that the minimum amounts which would be specified would be a sufficient number
of shares to obtain institutional rates of brokerage commissions (generally
between 1,000 and 5,000 shares).
A Holder may tender Units for redemption on any weekday (a "Tender Day")
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. The right of redemption may be suspended and payment postponed for
any period, determined by the Securities and Exchange Commission ("SEC"), (1)
during which the New York Stock Exchange,
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Inc. is closed other than for customary weekend and holiday closings, (2)
during which the trading on that Exchange is restricted or an emergency exists
as a result of which disposal or evaluation of the Securities is not
reasonably practicable or (3) for such periods as the SEC may by order permit
(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 of such computation by the number of Units outstanding as of the date
thereof (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, or a foreign securities
exchange, such evaluation shall generally be based on the closing sale price
on such exchange (unless the Trustee deems such price inappropriate as a basis
for evaluation) or, if there is no closing sale price on such exchange, at the
mean between the closing offering and bid side evaluation. If the Securities
are not so listed or, if so listed and the principal market therefor is other
than on such exchange, such evaluation shall generally be made by the Trustee
in good faith based at the mean between current bid and offer prices on the
over-the-counter market (unless the Trustee deems such mean inappropriate as a
basis for evaluation) or, if bid and offer prices are not available, (1) on
the basis of the mean between current bid and offer prices for comparable
securities, (2) by the Trustee's appraising the value of the Securities in
good faith at the mean between the bid side and the offer side of the market
or (3) by any combination thereof.
EXPENSES AND CHARGES
Initial Expenses -- All of the expenses incurred in establishing the Trust,
including the cost of the initial preparation, printing and execution of the
registration statement, this prospectus and the indenture, the initial fees
and expenses of the Trustee, legal expenses, advertising and selling expenses
and any other out-of-pocket expenses, will be paid at no cost to the Trust.
Fees -- The Trustee's and Sponsor's fees are set forth under Investment
Summary. The Trustee receives for its services as Trustee payable in monthly
installments, the amount set forth under Investment Summary. The Trustee's fee
(in respect of services as Trustee), payable monthly, is based on the largest
number of Units outstanding during the preceding month (Section 8.05). Certain
regular and recurring expenses of the Trust, including certain mailing and
printing expenses, are borne by the Trust. The Trustee receives benefits to
the extent that it holds funds on deposit in the various non-interest bearing
accounts created under the Indenture. The Sponsor's fee, which is earned for
trust supervisory services, is based on the largest number of Units
outstanding during the year. The Sponsor's fee, which is not to exceed the
maximum amount set forth under Investment Summary, may exceed the actual costs
of providing supervisory services for this Trust, but at no time will the
total amount the Sponsor receives for trust supervisory services rendered to
all series of Smith Barney Unit Trusts in any calendar year exceed the
aggregate cost to it of supplying these services in that year. In addition,
the Sponsor may also be reimbursed for bookkeeping or other administrative
services provided to the Trust in amounts not exceeding its cost of providing
those services. The fees of the Trustee and Sponsor may be increased without
approval of Holders in proportion to increases under the classification "All
Services Less Rent" in the Consumer Price Index published by the United States
Department of Labor (Sections 7.03 and 8.05).
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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) expenses of the Trustee incurred for the
benefit of the Trust (including legal and auditing expenses) and expenses of
counsel designated by the Sponsor (Sections 3.04, 3.09, 7.02(b), 8.01 and
8.05), (3) various governmental charges (Sections 3.03 and 8.01(h)), (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 7.02(b) and 8.01(d)), (5) indemnification of
the Trustee for any losses, liabilities and expenses incurred without gross
negligence, bad faith or wilful misconduct on its part (Section 8.05), (6)
indemnification of the Sponsor for any losses, liabilities and expenses
incurred without gross negligence, bad faith, wilful misconduct or reckless
disregard of their duties (Section 7.02(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 thereon is unpredictable (see Description of the Trust --
Risk Factors), the Sponsor cannot provide any assurance that dividends will
be sufficient to meet any or all expenses of the Trust. If dividends are
insufficient to cover expenses, it is likely that Securities will have to be
sold to meet Trust expenses. Any such sales may result in capital gains or
losses to Holders. See Description of the Trust -- Taxes.
ADMINISTRATION OF THE TRUST
RECORDS
The Trustee keeps records of the transactions of the Trust at its corporate
trust office including names, addresses and holdings of all Holders, a current
list of the Securities and a copy of the Indenture. Such records are available
to Holders for inspection at reasonable times during business hours (Section
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 such
dividends as a holder of record of the Securities. All other receipts (i.e.,
return of capital, stock dividends, if any, and gains) will be credited by the
Trustee to a Capital Account. If a Holder elects to receive his distribution
in cash, any income distribution for the Holder as of each Record Day will be
made on the following Distribution Day or shortly thereafter and shall consist
of an amount equal to the Holder's pro rata share of the distributable balance
in the Income Account as of such Record Day, after deducting estimated
expenses. The first distribution for persons who purchase Units between a
Record Day and a Distribution Day will be made on the second Distribution Day
following their purchase of Units. In addition, amounts from the Capital
Account may be distributed from time to time to Holders of record. The Trustee
may withdraw from the Income Account, from time to time, such amounts as it
deems requisite to establish a reserve for any taxes or other governmental
charges that may be payable out of the Trust (Section 3.03). Funds held by the
Trustee in the various accounts created under the Indenture do not bear
interest (Section 8.01).
Purchases at Market Discount -- Certain of the shareholder dividend
reinvestment, stock purchase or similar plans maintained by issuers of the
Securities offer shares pursuant to such plans at a discount from market
value. Subject to any applicable regulations and plan restrictions, the
Sponsor intends to direct the Trustee to participate in any such plans to the
greatest extent possible taking into account the Securities held by the Trust
in the issuers offering such plans. In such event, the Indenture requires that
the Trustee forthwith distribute in kind to the Distribution Agent the
Securities received upon any such reinvestment to be held for the accounts of
the Holders in proportion to their
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respective interests in the Trust. It is anticipated that Securities so
distributed shall immediately be sold. Therefore, the cash received upon such
sale, after deducting sales commissions and transfer taxes, if any, will be
used for cash distributions to Holders.
The Trustee will follow a policy that it will place securities transactions
with a broker or dealer only if it expects to obtain the most favorable prices
and executions of orders. Transactions in securities held in the Trust are
generally made in brokerage transactions (as distinguished from principal
transactions) and the Sponsor or any of its affiliates may act as brokers
therein if the Trustee expects thereby to obtain the most favorable prices and
execution. The furnishing of statistical and research information to the
Trustee by any of the securities dealers through which transactions are
executed will not be considered in placing securities transactions.
TRUST SUPERVISION
The Trust is a unit investment trust which normally follows a buy and hold
investment strategy and is not actively managed. However, the Portfolio is
regularly reviewed. Traditional methods of investment management for a managed
fund (such as a mutual fund) typically involve frequent changes in a portfolio
of securities on the basis of economic, financial and market 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, while it is the intention
of the Sponsor to continue the Trust's investment in the Securities in the
original proportions, it has the power but not the obligation to direct the
disposition of the Securities upon institution of certain legal proceedings,
default under certain documents adversely affecting future declaration or
payment of anticipated dividends, or a substantial decline in price or the
occurrence of other materially adverse market or credit factors that, in the
opinion of the Sponsor, would make the retention of the Securities detrimental
to the interests of the Holders (Section 3.08). The Sponsor intends to review
the desirability of retaining in the Portfolio any Security if its Investment
Rating is reduced below 3 by the Sponsor's Research Department. The Sponsor is
authorized under the Indenture to direct the Trustee to invest the proceeds of
any sale of Securities not required for redemption of Units in eligible money
market instruments selected by the Sponsor which will include only the
following instruments:
(i) negotiable certificates of deposit or time deposits of domestic banks
which are members of the Federal Deposit Insurance Corporation and which have,
together with their branches or subsidiaries, more than $2 billion in total
assets, except that certificates of deposit or time deposits of smaller
domestic banks may be held provided the deposit does not exceed the insurance
coverage on the instrument (which currently is $100,000), and provided further
that the Trust's aggregate holding of certificates of deposit or time deposits
issued by the Trustee may not exceed the insurance coverage of such
obligations and (ii) U.S. Treasury notes or bills.
In the event a public tender offer is made for a Security or a merger or
acquisition is announced affecting a Security, the Sponsor may instruct the
Trustee to tender or sell the Security on the open market when in its opinion
it is in the best interest of the Holders of the Units to do so. In addition,
the Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities except that the Sponsor may instruct the
Trustee to accept or reject such an offer to take any other action with
respect thereto as the Sponsor may deem proper if (1) the issuer failed to
declare or pay anticipated dividends with respect to such Securities or (2) in
the written opinion of the Sponsor the issuer will probably fail to declare or
pay anticipated dividends with respect to such Securities in the reasonably
foreseeable future. Any Securities so received in exchange or substitution
will be held by the Trustee subject to the terms and conditions of the
Indenture to the same extent as Securities originally deposited thereunder.
Within five days after the deposit of Securities in exchange or substitution
for underlying Securities, the Trustee is required to give notice thereof to
each Holder, identifying the Securities eliminated and the Securities
substituted therefor (Section 3.11). Except as stated in this and the
following paragraphs, the Trust may not acquire any securities other than (1)
the Securities and (2) securities resulting from stock dividends, stock splits
and other capital changes of the issuers of the Securities (Sections 3.09,
10.01).
The Sponsor is authorized to direct the Trustee to acquire replacement
Securities ("Replacement Securities") to replace any Securities, for which
purchase contracts have failed ("Failed Securities"), or, in connection with
the
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deposit of Additional Securities, when Securities of an issue originally
deposited are unavailable at the time of subsequent deposit, as described more
fully below. Replacement Securities that are replacing Failed Securities will
be deposited into the Trust within 110 days of the date of deposit of the
contracts that have failed at a purchase price that does not exceed the amount
of funds reserved for the purchase of Failed Securities. The Replacement
Securities shall satisfy certain conditions specified in the Indenture
including, among other conditions, requirements that the Replacement
Securities shall be publicly-traded common stocks; shall be issued by an
issuer subject to or exempt from the reporting requirements under Section 13
or 15(d) of the Securities Exchange Act of 1934 (or similar provisions of
law); shall not result in more than 10% of the Trust consisting of securities
of a single issuer (or of two or more issuers which are Affiliated Persons as
this term is defined in the Investment Company Act of 1940) which are not
registered and are not being registered under the Securities Act of 1933 or
result in the Trust owning more than 50% of any single issue which has been
registered under the Securities Act of 1933 (Section 3.11); and shall have, in
the opinion of the Sponsor, characteristics sufficiently similar to the
characteristics of the other Securities in the Trust as to be acceptable for
acquisition by the Trust. Whenever a Security has been eliminated by the
Trust, the Trustee shall within five days thereafter notify all Holders of the
sale of the Security eliminated and the acquisition of the Replacement
Security. Whenever a Replacement Security has been acquired for the Trust, the
Trustee shall, on the next Distribution Day that is more than 30 days
thereafter, make a pro rata distribution of the amount, if any, by which the
cost to the Trust of the Failed Security exceeded the cost of the Replacement
Security. If Replacement Securities are not acquired, the Sponsor will, on or
before the next following Distribution Day, cause to be refunded the
attributable sales charge, plus the attributable Cost of Securities to Trust
listed under Portfolio plus income attributable to the Failed Security.
The Indenture also authorizes the Sponsor to increase the size and number of
Units of the Trust by the deposit of cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units during the 90-day period subsequent
to the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on the
Initial Date of Deposit (the "Original Proportionate Relationship") is
maintained to the extent practicable. Deposits of cash subsequent to the 90-
day period following the Initial Date of Deposit must be used to purchase
Securities to replicate exactly the original proportionate relationship among
the number of shares of each Security comprising the Portfolio at the end of
the initial 90-day period.
With respect to deposits of cash or a letter of credit with instructions to
purchase Additional Securities, in connection with creating additional Units
of the Trust during the 90-day period following the Initial Date of Deposit,
the Sponsor may specify minimum amounts of additional Securities to be
deposited or purchased. If a deposit is not sufficient to acquire minimum
amounts of each Security, Additional Securities may be acquired in the order
of the Security most under-represented immediately before the deposit when
compared to the Original Proportionate Relationship. If Securities of an issue
originally deposited are unavailable at the time of subsequent deposit or
cannot be purchased at reasonable prices or their purchase is prohibited or
restricted by law, regulation or policies applicable to the Trust or the
Sponsor, the Sponsor may deposit cash or a letter of credit with instructions
to purchase (1) the Security when practicable (provided that it becomes
available within 110 days after the Initial Date of Deposit) or (2) Securities
of one or more other issues originally deposited or (3) a Replacement Security
that will meet the conditions described above. Any funds held to acquire
Additional or Replacement Securities which have not been used to purchase
Securities at the end of the 90-day period beginning with the Initial Date of
Deposit shall be used to purchase Securities as described above or shall be
distributed to Holders together with the attributable sales charge.
REPORTS TO HOLDERS
The Trustee will furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of each calendar year and following
the Termination of the Trust, the Trustee will furnish to each person who at
any time during the preceding 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
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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 that calendar year; (2) as to the Capital Account: the
dates of disposition of any Securities and the net proceeds received
therefrom; deductions for payment of applicable taxes and for fees and
expenses of the Trustee and counsel and certain other expenses, to the extent
that the Income Account is insufficient, and the balance remaining after such
distribution and deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of that calendar
year; (3) a list of the Securities held and the number of Units outstanding on
the last business day of that calendar year; (4) the Redemption Price per Unit
based upon the computation thereof made on the last business day of that
calendar year; and (5) amounts actually distributed during that calendar year
from the Income Account expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the record dates for such distributions
(Section 3.07).
In order to enable them to comply with federal and state tax reporting
requirements, Holders will be furnished with evaluations of Securities upon
request to the Trustee.
EVIDENCE OF OWNERSHIP
If a purchaser of Units holds his Units through an account for his benefit
at the Sponsor, that purchaser will be the beneficial owner of the Units but
the Sponsor will be the record Holder. Units held in such an account with the
Sponsor are transferable by the beneficial owner to another account with the
Sponsor by notice to the Sponsor, payment of any sums required for taxes or
other governmental charges and compliance with any formalities required by the
Sponsor.
All record Holders of Units (including the Sponsor for any Units held by it
in accounts for the benefit of others) are required to hold their Units in
uncertificated form. The Trustee will credit a record Holder's account with
the number of Units held by the Holder. If any Units are not held in an
account with the Sponsor, or if Units so held are to be transferred outside
such an account, such Units are transferable by the Trustee, with a payment of
any sums payable for taxes or other governmental charges imposed upon these
transactions and compliance with the formalities necessary to redeem Units
(Section 6.01).
AMENDMENT AND TERMINATION
The Sponsor may amend the Indenture, with the consent of the Trustee but
without the consent of any of the Holders, (1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, (2) to change any provision thereof as may be required by the
SEC or any successor governmental agency and (3) to make such other provisions
as shall not materially adversely affect the interest of the Holders (as
determined in good faith by the Sponsor). The Indenture may also be amended in
any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the Holders of 51% of the Units, provided
that no such amendment or waiver will reduce the interest in the Trust of any
Holder without the consent of such Holder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Holders (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(g) 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 such termination, the
Trustee must sell all of the Securities then held. The Sponsor reserves the
right to sell Securities over a period of up to 20 business days to lessen the
impact of its sales on the market prices of the Securities. Therefore, the
proceeds received on sales of the Securities will likely differ from the
closing sale price on the Mandatory Termination Date. After the sales proceeds
are received, the Trustee will 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). Such
distribution will normally be made by mailing a check in the amount of each
Holder's interest in such accounts to the address of such Holder appearing on
the record books of the Trustee.
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REINVESTMENT PLAN
Distributions of income and/or principal, if any, on Units held in street
name through Smith Barney Inc. or directly in the name of the Holder, unless
the Holder notifies his financial consultant at Smith Barney Inc. or the
Trustee, respectively, to the contrary, will be reinvested automatically in
additional Units of the Trust at no extra charge pursuant to the Trust's
"Reinvestment Plan". If the Holder does not wish to participate in the
Reinvestment Plan, the Holder must notify his financial consultant at Smith
Barney Inc. or the Trustee at least ten business days prior to the
Distribution Day to which that election is to apply. The election may be
modified or terminated by similar notice.
Distributions being reinvested will be paid in cash to the Sponsor, who will
use them to purchase Units of the Trust at the Sponsor's Repurchase Price (the
net asset value per Unit without any sales charge) in effect at the close of
business on the Distribution Day. These may be either previously issued Units
repurchased by the Sponsor or newly issued Units created upon the deposit of
additional Securities in the Trust (see Description of the Trust -- Structure
and Offering). Each participant will receive an account statement reflecting
any purchase or sale of Units under the Reinvestment Plan.
The costs of the Reinvestment Plan will be borne by the Sponsor, at no cost
to the Trust. The Sponsor reserves the right to amend, modify or terminate the
Reinvestment Plan at any time without prior notice.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
TRUSTEE
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units
at any time, or by the Sponsor without the consent of any of the Holders if
the Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor. In case of such
resignation or removal the Sponsor is to use its best efforts to appoint a
successor promptly and if upon resignation of the Trustee no successor has
accepted appointment within thirty days after notification, the Trustee may
apply to a court of competent jurisdiction for the appointment of a successor
(Section 8.06). The Trustee shall be under no liability for any action taken
in good faith in reliance on prima facie properly executed documents or for
the disposition of monies or Securities, nor shall it be liable or responsible
in any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee (Sections
3.08, 3.11, 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 $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 shall be under no liability to the Trust or to the Holders for
taking any action or for refraining from taking any action in good faith or
for errors in judgment and shall not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, shall not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its
23
<PAGE>
obligations and duties (Section 7.02). The Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries
on its business and duly assumes all of its obligations under the Indenture
and in such event it shall be relieved of all further liability under the
Indenture (Section 7.01).
MISCELLANEOUS
TRUSTEE
The Trustee is United States Trust Company of New York, with its principal
place of business at 770 Broadway, New York, New York 10003. 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 Stocks
deposited in the Trust, the Trustee may use the services of The Depository
Trust Company. These services may include safekeeping of the Stocks, computer
book-entry transfer and institutional delivery services. The Depository Trust
Company is a limited purpose trust company organized under the Banking Law of
the State of New York, a member of the Federal Reserve System and a clearing
agency registered under the Securities Exchange Act of 1934.
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsor.
AUDITORS
The Statement of Financial Condition and the Portfolio included in this
Prospectus have been audited by KPMG Peat Marwick LLP, independent auditors,
as indicated in their report with respect thereto, and is so included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
SPONSOR
Smith Barney Inc., 1345 Avenue of the Americas, New York, New York 10105
("Smith Barney"), was incorporated in Delaware in 1960 and traces its history
through predecessor partnerships to 1873. Smith Barney, an investment banking
and securities broker-dealer firm, is a member of the New York Stock Exchange,
Inc. and other major securities and commodities exchanges, the National
Association of Securities Dealers, Inc. and the Securities Industry
Association. Smith Barney is an indirect wholly-owned subsidiary of The
Travelers Inc. The Sponsor or an affiliate is investment adviser, principal
underwriter or distributor of thirty-three open-end investment companies and
investment manager of ten closed-end investment companies. Smith Barney also
sponsors all Series of Corporate Securities Trust, Government Securities
Trust, Harris, Upham Tax-Exempt Fund and Tax Exempt Securities Trust, and acts
as co-sponsor of most Series of Defined Asset Funds.
24
<PAGE>
ANGELS WITH DIRTY FACES
---------------
A SMITH BARNEY UNIT TRUST
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
INDEX
<TABLE>
<S> <C>
Investment Summary 2
Report of Independent Accountants 6
Statement of Financial Condition 6
Portfolio of Angels With Dirty Faces 7
Description of the Trust 8
Taxes 13
Public Sale of Units 15
Market for Units 17
Redemption 17
Expenses and Charges 18
Administration of the Trust 19
Reinvestment Plan 23
Resignation, Removal and Limitations on Liability 23
Miscellaneous 24
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPONSOR: TRUSTEE: INDEPENDENT ACCOUNTANTS:
<S> <C> <C>
Smith Barney Inc. United States Trust Company KPMG Peat Marwick LLP
Two World Trade Center of New York 345 Park Avenue
101st Floor 770 Broadway New York, New York 10154
New York, New York 10048 New York, New York 10003
(800) 298-UNIT
</TABLE>
- --------------------------------------------------------------------------------
SMITH BARNEY
------------
- --------------------------------------------------------------------------------
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 REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
UT 6096K4
<PAGE>
PART II
ADDITIONAL INFORMATION NOT INCLUDED IN THE PROSPECTUS
A. The following information relating to the Depositor is incorporated by
reference to the SEC filings indicated and made a part of this Registration
Statement.
<TABLE>
<CAPTION>
SEC FILE OR
IDENTIFICATION NUMBER
---------------------
<C> <S> <C>
I. Bonding Arrangements and Date of Organization of
the Depositor filed pursuant to Items A and B of
Part II of the Registration Statement on Form S-6
under the Securities Act of 1933: 2-67446
II. Information as to Officers and Directors of the
Depositor filed pursuant to Schedules A and D of
Form BD under Rules 15b1-1 and 15b3-1 of the
Securities Exchange Act of 1934: 8-12324
III. Charter documents of the Depositor filed as
Exhibits to the Registration Statement on Form S-
6 under the Securities Act of 1933 (Charter, By-
Laws): 2-52898
B. The Internal Revenue Service Employer Identification
Numbers of the Sponsor and Trustee are as follows:
Smith Barney Inc. 13-2518466
United States Trust Company of New York, Trustee 13-5459866
</TABLE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
THE REGISTRATION STATEMENT ON FORM S-6 IS COMPRISED OF THE FOLLOWING PAPERS
AND DOCUMENTS:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the Cross-
Reference Sheet to the Registration Statement of The Uncommon Values
Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
The Prospectus.
Additional Information not included in the Prospectus (Part II).
The undertaking to file reports.
The signatures.
Written Consents of the following persons:
KPMG Peat Marwick LLP (included in Exhibit 5.1)
Davis Polk & Wardwell (included in Exhibit 3.1)
The following exhibits:
<TABLE>
<C> <S>
1.1 -- Form of Reference Trust Indenture (incorporated by reference to
Exhibit 1.1 to the Registration Statement of The Uncommon Values Unit
Trust, 1985 Series (Reg. No. 2-97046)).
2.1 -- Form of Standard Terms and Conditions of Trust (incorporated by
reference to Exhibit 2.1 to the Registration Statement of The
Uncommon Values Unit Trust, 1985 Series, 1933 Act File No. 2-97046).
*3.1 -- Opinion of counsel as to the legality of securities being issued
including their consent to the use of their name under the headings
"Taxes" and "Miscellaneous--Legal Opinion" in the Prospectus.
*5.1 -- Consent of KPMG Peat Marwick LLP to the use of their name under the
heading "Miscellaneous --Auditors" in the Prospectus.
</TABLE>
- --------
* To be filed by amendment.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Amendment thereto 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 16th day of November 1994.
SIGNATURES APPEAR ON PAGE II-4
A majority of the members of the Board of Directors of Smith Barney Inc. has
signed this Registration Statement or Amendment thereto pursuant to Powers of
Attorney authorizing the person signing this Registration Statement or
Amendment to the Registration Statement to do so on behalf of such members.
II-3
<PAGE>
Smith Barney Inc., Depositor
/s/ Kevin Kopczynski
By .................................
(KEVIN KOPCZYNSKI)
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
Jack L. Rivkin
/s/ Kevin Kopczynski
By ..................................
(KEVIN KOPCZYNSKI
ATTORNEY-IN-FACT)
- --------
* Pursuant to Powers of Attorney filed under the 1933 Act file Numbers 33-
56722 and 33-51999.
II-4
