LEGG MASON UNIT INVESTMENT TRUST SERIES 5
Supplement to the Prospectus dated May 23, 1995
Notwithstanding anything to the contrary in the Prospectus, the Sponsor
may make sales of Units to dealers and other selling agents which represent
a concession or agency commission of 2.5% of the Public Offering Price for
secondary market sales. Resales of Units by such dealers or selling agents to
the public will be made at the Public Offering Price as described in the
Prospectus. In addition, any reduction of the sales charge for volume
purchases shall be the responsibility of the selling dealer.
November 30, 1995
<PAGE>
LEGG MASON UNIT INVESTMENT TRUST
SERIES 5
LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1
Legg Mason Regional Bank and Thrift Trust, Series 1 (the "Trust") was
formed with the investment objective of obtaining maximum capital appreciation
through investment in a fixed portfolio of equity securities of companies
diversified within the regional banking and thrift industries which Legg Mason
Wood Walker, Incorporated (the "Sponsor") believes will outperform other banking
and financial stocks. The securities selected are considered by the Sponsor to
have the potential to achieve the Trust's objective over the term of the Trust.
See "The Trust Portfolio." There is no assurance that the Trust will achieve its
objective.
UNITS OF THE TRUST ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK, AND UNITS ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION AND INVOLVE INVESTMENT RISK INCLUDING LOSS
OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The investor is advised to read and retain this Prospectus for future reference.
The date of this Prospectus is May 23, 1995.
LEGG MASON WOOD WALKER
INCORPORATED
111 SOUTH CALVERT STREET
P.O. BOX 1476
BALTIMORE, MARYLAND 21203-1476
(410) 539-0000/(800) 822-5544
<PAGE>
SUMMARY
THE TRUST. Legg Mason Unit Investment Trust, Series 5 (the "Fund"), which
consists of the Legg Mason Regional Bank and Thrift Trust, Series 1 (the
"Trust"), is a unit investment trust registered under the Investment Company Act
of 1940, as amended ("1940 Act").
The Trust initially consists of securities and delivery statements (I.E.,
contracts) or cash to purchase common stocks issued by companies which the
Sponsor believes have the potential to achieve the objective of the Trust (the
"Securities"). For the criteria used by the Sponsor in selecting the Securities,
see "The Trust Portfolio -- Securities Selection." The value of all portfolio
Securities and, therefore, the value of the Units may be expected to fluctuate
in value depending on the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the prices of
equity securities in general and the Securities in particular. Maximum capital
appreciation is, of course, dependent upon several factors including, among
other factors, the financial condition of the issuers of the Securities and
therefore, there can be no assurance that maximum capital appreciation will be
achieved (see "The Trust Portfolio"). The Trust was formed with the investment
objective of obtaining maximum capital appreciation over the life of the Trust
through investment in a fixed portfolio of equity securities of companies
diversified within the regional banking and thrift industries which the Sponsor
believes will outperform other banking and financial stocks. Of course,
achievement of the objective assumes that the Securities will continue to
provide maximum capital appreciation for the life of the Trust.
Each Unit (as hereinafter defined) of the Trust initially offered
represents that undivided interest in the Trust indicated under "Essential
Information." To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase, although the actual interest in the Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Sponsor, or
until the termination of the Trust Agreement.
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of the Trust
during the primary offering period is based on the aggregate underlying offer
value (see "Public Offering of Units -- Public Offering Price") of the
Securities in the Trust plus or minus a pro rata share of cash, if any, in the
Capital Account (as hereinafter defined) held or owned by the Trust, plus a
sales charge of 3.65% (equivalent to 3.79% of the net amount invested). The
sales charge is reduced during the primary offering period on a graduated scale
for sales involving at least 5,000 Units of the Trust. After the primary public
offering period, the secondary market price of the Units will be equal to the
aggregate underlying bid value of the Securities in the Trust, plus or minus a
pro rata share of cash, if any, in the Capital Account held or owned by the
Trust, plus a sales charge of 3.65%.
DISTRIBUTIONS OF INCOME AND CAPITAL. Distributions of dividends received
by the Trust and any funds in the Capital Account will be made semi-annually.
See "Unitholders -- Distributions to Unitholders."
REINVESTMENT. Unitholders of the Trust who own a minimum of 500 Units may
elect to have distributions of income, capital gains and/or capital on their
Units automatically invested in shares of any Legg Mason mutual fund. Such
distributions will be reinvested without charge (except in the event a mutual
fund has a front end sales charge, such charge will be incurred on reinvestment
therein) to the participant on each applicable Distribution Date. See
"Unitholders -- Distribution Reinvestment." A current prospectus for the
reinvestment fund selected, if any, will be furnished to any investor who
desires additional information with respect to reinvestment.
MARKET FOR UNITS. While under no obligation to do so, the Sponsor intends
to maintain a market for the Units of the Trust and offer to repurchase such
Units at prices subject to change at any time which are based on the current
underlying bid prices of the Securities in the Trust. If the supply of Units
exceeds demand or if some
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other business reason warrants it, the Sponsor may either discontinue all
purchases of Units or discontinue purchases of Units at such prices. A
Unitholder may also dispose of Units through redemption at the Redemption Price
on the date of tender to the Trustee. See "Redemption -- Computation of
Redemption Price."
TERMINATION. No later than the date specified under the Liquidation Period
in "Essential Information," Securities will begin to be sold in connection with
the termination of the Trust and it is expected that all Securities in the Trust
will be sold by the Mandatory Termination Date (as defined in "Essential
Information") or within a reasonable period of time thereafter. The Sponsor will
determine the manner, timing and execution of the sale of the underlying
Securities. See "Administration of the Trust -- Amendment and Termination."
RISK FACTORS. An investment in the Trust should be made with an
understanding of the risks associated therewith, including the possible
deterioration of either the financial condition of the issuers or the general
condition of the stock market. For certain risk considerations related to the
Trust, see "Risk Factors."
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LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON MAY 23, 1995
SPONSOR: LEGG MASON WOOD WALKER, INCORPORATED
EVALUATOR: GRAY, SEIFERT & COMPANY, INC.
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
<S> <C>
Number of Units........................................................... 2,136,148
Fractional Undivided Interest Per Unit.................................... 1/2,136,148
Public Offering Price:
Aggregate Value of Securities in Portfolio(1)........................... $41,163,575
Aggregate Value of Securities per Unit.................................. $19.27
Plus Sales Charge of 3.65%
(3.79% of the net amount invested)(2)................................ $0.73
Public Offering Price Per Unit(3)....................................... $20.00
Redemption Price Per Unit................................................. $19.15
Sponsor's Initial Repurchase Price Per Unit............................... $19.27
Excess of Public Offering Price Per Unit over Redemption Price Per Unit... $0.85
Excess of Public Offering Price Per Unit over Sponsor's Initial Repurchase
Price Per Unit....................................................... $0.73
Maximum Value of the Trust under which Trust Agreement may be
Terminated........................................................... Trust Agreement may be terminated if
value of the Trust is less than
$16,465,430
Evaluations for purposes of sale, purchase or redemption of Units of the Trust are made as of 4:00 p.m., Eastern
Time, next following receipt of an order for a sale or purchase of Units or receipt by the Trustee of Units
tendered for redemption (the "Evaluation Time")
Date of Deposit........................................................... May 23, 1995
Mandatory Termination Date................................................ May 31, 1999
Liquidation Period........................................................ Beginning on May 1, 1999 until no
later than the Mandatory Termination
Date
Evaluator's Annual Evaluation Fee......................................... Maximum of $.0060 per Unit
Trustee's Annual Fee...................................................... $.0172 per Unit
Sponsor's Annual Supervisory Fee.......................................... Maximum of $.005 per Unit
Estimated Annual Organizational Expenses(4)............................... $.006075 per Unit
Record and Computation Dates.............................................. FIFTEENTH day of June and December
Distribution Dates........................................................ LAST day of June and December
</TABLE>
(1) Each Security listed on a national securities exchange is valued at the last
sales price, or if the Security is not listed on a national securities
exchange, at the last asked price in the over-the-counter market.
(2) The sales charge will be reduced for certain purchases as set forth under
"Public Offering of Units -- Public Offering Price."
(3) On the Date of Deposit there will be no accumulated dividends in the Income
Account. Anyone ordering Units after such date will pay his or her pro rata
share of any accumulated dividends in such Income Account.
(4) The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration
statement, the trust indenture and other closing documents, registering
Units with the Securities and Exchange Commission and states, the initial
audit of the Trust portfolio and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of
preliminary prospectuses and prospectuses, expenses incurred in the
preparation and printing of brochures and other advertising materials and
any other selling expenses) as is common for mutual funds. Total
organizational expenses will be amortized over the life of the Trust. See
"Expenses of the Trust." Historically, the sponsors of unit investment
trusts have paid all the costs of establishing such trusts.
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THE TRUST
Legg Mason Unit Investment Trust, Series 5, which consists of the Legg
Mason Regional Bank and Thrift Trust, Series 1, is a unit investment trust
created under the laws of the State of New York pursuant to a trust indenture
dated the Date of Deposit (the "Trust Agreement") between Legg Mason Wood
Walker, Incorporated (the "Sponsor") and The Bank of New York (the "Trustee").
* Legg Mason Unit Investment Trust, Series 5 is the successor to Series 1-4 of
The Maryland Tax-Exempt Trust, each series of which was sponsored by Legg Mason
Wood Walker, Incorporated.
The portfolio contains common stocks issued by companies diversified within
the regional banking and thrift industries. As used herein, the term
"Securities" means the common stocks initially deposited in the Trust and
described in the portfolio and any additional common stocks acquired and held by
the Trust pursuant to the provisions of the Trust Agreement.
The Trust consists of (a) the Securities listed under "Schedule of
Investments" as may continue to be held from time to time in the Trust, (b) any
additional Securities acquired and held by the Trust pursuant to the provisions
of the Trust Agreement and (c) any cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way for any failure
in any of the Securities. However, should any contract for the purchase of any
of the Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
On the Date of Deposit, the Sponsor will deliver to the Trustee Securities
or contracts or cash for the purchase thereof for deposit in the Trust. For the
Securities, contracts and cash to be so deposited, the Trustee will deliver to
the Sponsor documentation evidencing the ownership of that number of Units of
the Trust set forth under "Essential Information." To the extent cash has been
deposited to purchase additional Securities, Unitholders could experience a
dilution of their investment and a reduction in their anticipated income because
of price fluctuations in the Securities between the time of the cash deposit and
the actual purchase of the additional Securities.
THE TRUST PORTFOLIO
SECURITIES SELECTION. At all times the Trust will hold at least 80% of its
assets in equity securities issued by companies diversified within the regional
banking and thrift industries. In selecting Securities for the Trust, the
following factors, among others, were considered by the Sponsor: (a) the quality
of the Securities, (b) the price of the Securities relative to other similar
securities, (c) the potential for capital appreciation and (d) the potential
benefit to the issuer of the Securities from the continued consolidation within
the regional banking and thrift industries and improving industry fundamentals.
In selecting the Securities for the Trust, the Sponsor will choose equity
securities that in its view have the potential for capital appreciation.
Although there can be no assurance that such Securities will appreciate in value
over the life of the Trust, over time stock investments have generally
outperformed most other asset classes. However, it should be understood that
common stocks carry greater risks, including the risk that the value of an
investment can decrease (see "Risk Factors"), and past performance is no
guarantee of future results. The Trust will not invest in banks or thrifts that
have lending arrangements with affiliates of the Trust as of the Date of
Deposit.
* Reference is made to the Trust Agreement and any statement contained herein is
qualified in its entirety by the provisions of the Trust Agreement.
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<PAGE>
In offering the Units to the public, the Sponsor is not recommending any of
the individual Securities in the Trust but rather the entire pool of Securities,
taken as a whole, which are represented by the Units.
The following information provides a brief summary for the Securities that
are included in the Trust. For specific information and the market price of each
Security as of the Date of Deposit, see "Schedule of Investments."
AMFED FINANCIAL, INC. is the holding company for American Federal Savings
Bank, which operates 43 full service offices throughout Nevada. The company has
20 offices in northern Nevada, which includes the Reno/Sparks/Lake Tahoe Region
and 29 offices in southern Nevada, which includes Las Vegas.
ASSOCIATED BANCCORP., headquartered in Green Bay, Wisconsin, is a
diversified multibank holding company with over 85 banking locations in
Wisconsin and Illinois. This $3.3 billion asset company offers a full range of
traditional banking services and a variety of financially related products and
services through affiliates.
BANKCORP HAWAII, INC. is a regional bank holding company with more than 115
offices throughout Hawaii, Asia and the Pacific. Its principal subsidiaries
include the State's largest commercial bank, Bank of Hawaii; a thrift holding
company, Bancorp Pacific Inc.; Arizona Commercial Bank; and First National Bank
of Arizona.
BARNETT BANKS, INC. is a leading financial institution in Florida with 625
Florida offices. Having $41.3 billion in assets and $28.5 billion in loans,
Barnett is one of the premier retail banking franchises in the country.
BOATMEN'S BANCSHARES, INC., with assets of $28.9 billion, operates more
than 400 locations in 9 states. Boatmen's has the leading market share in
Missouri, Arkansas, and New Mexico. Boatmen's also ranks among the nation's
largest providers of trust services, with $36 billion under management.
CCB FINANCIAL CORPORATION, headquartered in Durham, North Carolina, has
$3.8 billion in assets and operates in the economically attractive Research
Triangle area of central North Carolina.
CENTURA BANKS, INC. is a bank holding company headquartered in Rocky Mount,
North Carolina. Centura, with assets of $4.1 billion, offers a full range of
banking services in 147 offices.
COMMERCE BANCSHARES, INC., with assets of $8.0 billion, operates over 180
locations in Missouri, Illinois and Kansas. Including those of four recent
acquisitions, Commerce Bancshares will have over 200 locations.
CRESTAR FINANCIAL CORPORATION is the holding company for three banks and
336 banking offices in Virginia, Maryland and the District of Columbia. The
holding company currently has total assets of over $14.0 billion.
CULLEN/FROST BANKERS, INC. is a multibank holding company with assets of
$3.6 billion. The corporation has 28 offices in four major Texas banking
markets: San Antonio, Austin, Corpus Christi and Houston/Galveston.
FIFTH THIRD BANCORP, with assets of $15.6 billion, is headquartered in
Cincinnati, Ohio with offices in Ohio, Kentucky and Indiana.
FIRST AMERICAN CORPORATION is the holding company for First American
National Bank. The bank attracts deposits and offers real estate mortgage,
consumer and commercial loans in Tennessee from more than 140 offices.
FIRST FINANCIAL CORPORATION is the holding company for First Financial
Bank, Wisconsin's largest thrift institution. The corporation has $5.1 billion
in assets and operates 124 consumer banking offices in Wisconsin and Illinois.
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FIRST SECURITY CORPORATION, with assets of $12.2 billion, is the largest
financial services organization headquartered in the intermountain west. The
corporation's six banks operate over 250 full-service offices in Utah, Idaho,
New Mexico, Oregon, Nevada and Wyoming.
FIRST VIRGINIA BANKS, INC., with assets of $7.8 billion, serves Virginia,
Maryland and Tennessee from 350 offices.
FIRST WESTERN BANCORP, INC., headquartered in New Castle, Pennsylvania, has
$1.6 billion in assets and 42 banking offices.
FORT WAYNE NATIONAL CORPORATION, with assets of $2.1 billion, is the only
independent banking company operating in Fort Wayne, Indiana.
FOURTH FINANCIAL CORPORATION is a $7.7 billion company with 138 branches in
Kansas and Oklahoma. The corporation has the leading market share in Kansas and
is the third largest financial institution in Oklahoma.
HAWKEYE BANCORPORATION, with assets of $1.9 billion and 64 banking
locations, is Iowa's largest independent bank holding company.
HIBERNIA CORPORATION is the largest statewide bank and the second largest
financial institution in Louisiana. Hibernia dominates New Orleans' banking
market and has $6.8 billion in assets.
INTEGRA FINANCIAL CORPORATION, with assets of $13.8 billion, is the fifth
largest bank holding company in Pennsylvania. The Bank has 26 offices located in
22 separate counties in western Pennsylvania.
LIBERTY BANCORP, INC. is a $2.9 billion bank holding company headquartered
in Oklahoma. It has 31 offices in the Oklahoma City and Tulsa, Oklahoma
metropolitan areas.
MARSHALL & ILSLEY CORPORATION is headquartered in Milwaukee, Wisconsin. The
corporation has 34 affiliate banks in Wisconsin, with more than 225 offices
combined, and a bank in Phoenix, Arizona with 12 offices.
MERCANTILE BANKSHARES CORPORATION, with $5.9 billion in assets, is
headquartered in Baltimore, Maryland. The corporation operates 155 branches
located in Maryland, Delaware and Virginia.
NATIONAL CITY CORPORATION is headquartered in Cleveland, Ohio. Through its
614 offices the company offers a wide range of banking and financial services
throughout Ohio, Kentucky and southern Indiana.
NORTH FORK BANCORPORATION, INC., headquartered in Mattituck, Long Island,
New York, offers commercial bank services in Suffolk, Nassau, Westchester and
Rockland Counties, New York through its more than 40 offices.
NORWEST CORPORATION, headquartered in Minneapolis, Minnesota, provides
banking, insurance, investments and other financial services from over 2,500
locations in the United States and internationally, particularly Canada.
PEOPLES HERITAGE FINANCIAL GROUP, INC., a $2.8 billion thrift headquartered
in Portland, Maine, is the largest independent financial institution remaining
in Maine.
SILICON VALLEY BANCSHARES, headquartered in Santa Clara, California, has
$1.1 billion in assets. Its primary customers are venture capital businesses.
SOUTHERN NATIONAL CORPORATION resulted from the merger between BB&T
Financial Corporation and Southern National. The new organization is the 35th
largest bank in the US and the 6th largest in the Southeast. With $19 billion in
assets, Southern National has the largest deposit market share in North
Carolina.
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SUNTRUST BANKS, INC., headquartered in Atlanta, Georgia, operates more than
650 offices throughout Georgia, Florida and Tennessee. Through its subsidiaries,
Suntrust Banks offers a full range of commercial banking services, investment
and trust services, and mortgage banking services.
TCF FINANCIAL CORPORATION is the largest savings bank and 3rd largest
financial institution headquartered in Minneapolis, Minnesota. The corporation
has approximately 200 offices from which it offers financial services in
Minnesota, Illinois, Wisconsin and Iowa.
UJB FINANCIAL CORPORATION, headquartered in Princeton, New Jersey, has
$15.2 billion in assets and operates 270 offices throughout New Jersey and
eastern Pennsylvania.
VICTORIA BANKSHARES, INC., headquartered in Victoria, Texas, has $1.7
billion in assets and operates 37 offices in South Central Texas.
WEST ONE BANCORP, headquartered in Boise, Idaho, is a community-oriented
regional financial services company with assets of $8.8 billion. The bank
operates more than 250 offices in Idaho, Washington, Oregon and Utah.
ZIONS BANCORPORATION is headquartered in Salt Lake City, Utah, and through
its subsidiaries provides commercial banking and investment services in the
states of Utah, Nevada and Arizona.
RISK FACTORS
GENERAL. The Trust may be an appropriate investment vehicle for investors
who desire to participate in a portfolio of equity securities with greater
diversification than they might be able to acquire individually. An investment
in Units of the Trust should be made with an understanding of the risks inherent
in an investment in equity securities, including the risk that the financial
condition of the issuers of the Securities may become impaired or that the
general condition of the stock market may worsen (both of which may contribute
directly to a decrease in the value of the Securities and thus in the value of
the Units) or the risk that holders of common stock have a right to receive
payments from the issuers of those stocks that is generally inferior to that of
creditors of, or holders of debt obligations issued by, the issuers and that the
rights of holders of common stock generally rank inferior to the rights of
holders of preferred stock. 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.
An investment in Units of the Trust should be made with an understanding of
the problems and risks inherent in the financial institutions industry in
general. Banks, thrifts and their holding companies are especially subject to
the adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Economic conditions in the real estate markets, which have been weak in the
recent past, can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by real
estate, as has recently been the case for a number of banks and thrifts with
respect to commercial real estate in the northeastern and southwestern regions
of the United States. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-chartered, to
state regulation as well. Such regulations impose strict capital requirements
and limitations on the nature and extent of business activities that banks and
thrifts may pursue. Furthermore, bank regulators have a wide range of discretion
in connection with their supervisory and enforcement authority and may
substantially restrict the permissible activities of a particular institution if
deemed to pose significant risks to the soundness of such institution or the
safety of the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital
8
<PAGE>
requirements applicable to banks and increases in deposit insurance premiums
required to be paid by banks to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to pay
dividends. Neither federal insurance of deposits nor governmental regulations,
however, ensure the solvency or profitability of banks or their holding
companies or insure against any risk of investment in the securities issued by
such institutions.
The statutory requirements applicable to, and regulatory supervision of,
banks, thrifts and their holding companies have increased significantly and have
undergone substantial changes in recent years. To a great extent, these changes
are embodied in the Financial Institutions Reform, Recovery and Enforcement Act,
enacted in August 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991 and the regulations promulgated under these laws. Many
of the regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and prospects of
the Securities in the Trust's portfolio cannot be predicted with certainty.
Failure to enact such legislation, on the other hand, may lead to declining
earnings and an inability to compete with unregulated financial institutions.
Efforts to expand the ability of federal thrifts to branch on an interstate
basis have been initially successful through promulgation of regulations, and
legislation to liberalize interstate banking has recently been signed into law.
Under the legislation, banks will be able to purchase or establish subsidiary
banks in any state, one year after the legislation's enactment. Starting in
mid-1997, banks would be allowed to turn existing banks into branches, though
states could pass laws to permit interstate branch banking before then.
Consolidation is likely to continue in both cases. The Securities and Exchange
Commission ("SEC") and the Financial Accounting Standards Board require the
expanded use of market value accounting by banks and have imposed rules
requiring market accounting for investment securities held in trading accounts
or available for sale. Adoption of additional such rules may result in increased
volatility in the reported health of the industry and mandated regulatory
intervention to correct such problems. In late 1993, the United States Treasury
Department proposed a restructuring of the bank regulatory agencies which, if
implemented, may adversely affect certain of the Securities in the Trust's
portfolio. Additional legislative and regulatory changes may be forthcoming. For
example, the bank regulatory authorities have proposed substantial changes to
the Community Reinvestment Act and fair lending laws, rules and regulations, and
there can be no certainty as to the effect, if any, that such changes would have
on the Securities in the Trust's portfolio. In addition, the deposit insurance
system is reviewed by Congress and federal regulators, from time to time, and
proposed reforms of that system could, among other things, further restrict the
ways in which deposited moneys can be used by banks or reduce the dollar amount
or number of deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions become
more limited and as consumers look for savings vehicles other than bank
deposits. Banks and thrifts face significant competition from other financial
institutions such as mutual funds, credit unions, mortgage banking companies and
insurance companies, and increased competition may result from legislative
broadening of regional and national interstate banking powers as has been
recently proposed. Among other benefits, proposed legislation would allow banks
and bank holding companies to acquire across previously prohibited state lines
and to consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of thrift regulatory reform might
ultimately be adopted or what ultimate effect such reform might have on the
Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company, without prior Federal Reserve Board ("FRB") approval, from (1)
acquiring, directly or indirectly, more than 5% of the outstanding shares of any
class of voting securities of a bank or bank holding company, (2) acquiring
control of a bank or another bank holding company, (3) acquiring all or
substantially all the assets of a bank, or (4) merging or consolidating with
another bank holding company. In considering an application with respect to any
such transaction, the FRB is required to consider a variety of factors,
including the potential anti-competitive effects of the transaction, the
financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined
organi-
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zation would serve, the record of performance of each combining organization
under the Community Reinvestment Act and the Equal Credit Opportunity Act, and
the prospective availability to the FRB of information appropriate to determine
ongoing regulatory compliance with applicable banking laws. In addition, the
Federal Change In Bank Control Act and various state laws impose limitations on
the availability of one or more individuals or other entities to acquire control
of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways that
would weaken its financial health, such as by borrowing. The FRB may also impose
limitations on the payment of dividends as a condition to its approval of
certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Securities or whether such approvals, if necessary, will
be obtained.
SPECIFIC RISK FACTORS. Holders of common stock incur more risk than
holders of preferred stock and debt obligations because common stockholders, as
owners of the entity, have generally inferior rights to receive payments from
the issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stock issued by the issuer. Holders of common stock of
the type held by the portfolio have a right to receive dividends only when and
if, and in the amounts, declared by the issuer's Board of Directors and 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 preferred stock 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 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
degree of protection of capital of debt securities. Indeed, the issuance of debt
securities or even preferred stock will create prior claims for payment of
principal, interest, liquidation preferences 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. Further, unlike debt securities
which typically have a stated principal amount payable at maturity (whose value,
however, will be subject to market fluctuations prior thereto), common stocks
have neither a fixed principal amount nor a maturity and have values which are
subject to market fluctuations for as long as the stocks remain outstanding. The
value of the Securities in the portfolios thus may be expected to fluctuate over
the entire life of the Trust to values higher or lower than those prevailing on
the Date of Deposit.
Whether or not the Securities are listed on a national securities exchange,
the principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Trust is restricted under the
1940 Act from selling Securities to the Sponsor. The price at which the
Securities may be sold to meet redemptions and the value of the Trust will be
adversely affected if trading markets for the Securities are limited or absent.
LITIGATION AND LEGISLATION. From time to time, Congress considers
proposals to reduce the rate of the dividends-received deduction. Enactment into
law of a proposal to reduce the rate would adversely affect the after-tax return
to investors who can take advantage of the deduction. Unitholders are urged to
consult their own tax advisers. Further, at any time after the Date of Deposit,
litigation may be initiated on a variety of grounds, or
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<PAGE>
legislation may be enacted with respect to the Securities in the Trust or the
issuers of the Securities. There can be no assurance that future litigation or
legislation will not have a material adverse effect on the Trust or will not
impair the ability of issuers to achieve their business goals.
FEDERAL TAX STATUS
The Trust is an association taxable as a corporation and intends to elect
and qualify on a continuing basis for special federal income tax treatment as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). If the Trust so qualifies and timely distributes to
Unitholders 90% or more of its taxable income (without regard to its net capital
gain, i.e., the excess of its net long-term capital gain over its net short-term
capital loss), it will not be subject to federal income tax on the portion of
its taxable income (including any net capital gain) that it distributes to
Unitholders. In addition, to the extent the Trust timely distributes to
Unitholders at least 98% of its taxable income (including any net capital gain),
it will not be subject to the 4% excise tax on certain undistributed income of
regulated investment companies. Because the Trust intends to timely distribute
its taxable income (including any net capital gain), it is anticipated that the
Trust will not be subject to federal income tax or the excise tax. Although all
or a portion of the Trust's taxable income (including any net capital gain) for
the taxable year may be distributed to Unitholders shortly after the end of the
calendar year, such a distribution will be treated for federal income tax
purposes as having been received by Unitholders during the calendar year just
ended.
Distributions to Unitholders of the Trust's taxable income (other than its
net capital gain) will be taxable as ordinary income to Unitholders. To the
extent that distributions to a Unitholder in any year exceed the Trust's current
and accumulated earnings and profits, they will be treated as a return of
investment and will reduce the Unitholder's adjusted basis in his Units and, to
the extent that they exceed his basis, will be treated as a gain from the sale
of his Units as discussed below.
Distributions of the Trust's net capital gain which are properly designated
as capital gain dividends by the Trust will be taxable to Unitholders as
long-term capital gain, regardless of the length of time the Units have been
held by a Unitholder. A Unitholder may recognize a taxable gain or loss if the
Unitholder sells or redeems his Units. Any gain or loss arising from (or treated
as arising from) the sale or redemption of Units will be a capital gain or loss,
except in the case of a dealer or a financial institution. For taxpayers other
than corporations, net capital gains are presently subject to a maximum stated
marginal tax rate of 28%. However, it should be noted that legislative proposals
are introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed. A capital loss
is long-term if the asset is held for more than one year and short-term if held
for one year or less. If a Unitholder holds Units for six months or less and
subsequently sells such Units at a loss, the loss will be treated as a long-term
capital loss to the extent that any capital gain distribution is made with
respect to such Units during the six-month period or less that the Unitholder
owns the Units.
The Revenue Reconciliation Act of 1993 (the "Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate
for taxpayers other than corporations. Because some or all capital gains are
taxed at a comparatively lower rate under the Act, the Act includes a provision
that would recharacterize capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Unitholders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes.
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The federal tax status of each year's distributions will be reported to
Unitholders and to the Internal Revenue Service. The foregoing discussion
relates only to the federal income tax status of the Trust and to the tax
treatment of distributions by the Trust to U.S. Unitholders. Unitholders that
are not U.S. citizens or residents should be aware that distributions from the
Trust will generally be subject to a withholding tax of 30%, or a lower treaty
rate, and should consult their own tax advisers to determine whether investment
in the Trust is appropriate. Units in the Trust and Trust distributions may also
be subject to state and local taxation and Unitholders should consult their own
tax advisers in this regard.
Under the Code, certain miscellaneous itemized deductions, such as
investment expenses, tax return preparation fees and employee business expenses,
will be deductible by individuals only to the extent they exceed 2% of adjusted
gross income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust so long as the Units
are held by or for 500 or more persons at all times during the taxable year. In
the event the Units are held by fewer than 500 persons, additional taxable
income will be realized by the individual (and other noncorporate) Unitholders
in excess of the distributions received by the Unitholder.
Each Unitholder will be requested to provide his or her taxpayer
identification number to the Trustee and to certify that the Unitholder has not
been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to federally prescribed back-up withholding. Distributions by the
Trust will generally be subject to United States income taxation and withholding
in the case of Units held by non-resident alien individuals, foreign
corporations or other non-United States persons. Such persons should consult
their tax advisers.
Unitholders will be notified annually of the amounts of income dividends
includable in the Unitholder's gross income and amounts of Trustee expenses
which may be claimed as itemized deductions.
Dividend income and distributions of capital gains may also be subject to
state and local taxes. Investors should consult their tax advisers for specific
information on the tax consequences of particular types of distributions.
Unitholders desiring to purchase Units for tax-deferred plans and
Individual Retirement Accounts ("IRAs") should consult their investment
executive for details on establishing such accounts. Units may also be purchased
by persons who already have self-directed plans established.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. During the primary offering period, Units of the
Trust are offered at the Public Offering Price (which is based on the aggregate
underlying value of the Securities in the Trust and includes a sales charge of
3.65% of the Public Offering Price which charge is equivalent to 3.79% of the
net amount invested) plus a pro rata share of any accumulated dividends in the
Income Account of the Trust. In the secondary market, Units are expected to be
offered at a price based on the aggregate underlying value of the Securities in
the Trust plus a pro rata share of any accumulated dividends, plus a sales
charge of 3.65%. Such underlying value shall also include the proportionate
share of any undistributed cash held in the Capital Account of the Trust.
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<PAGE>
The sales charge applicable to quantity purchases during the primary
offering period only will be reduced on a graduated basis to any purchaser
acquiring 5,000 or more Units as follows:
<TABLE>
<CAPTION>
PERCENTAGE
OF SALES PERCENT OF
CHARGE PER NET AMOUNT
NO. OF UNITS* UNIT INVESTED
<S> <C> <C>
Less than 5,000......................................................................... 3.65% 3.79%
5,000 but less than 12,500.............................................................. 3.15% 3.25%
12,500 but less than 25,000............................................................. 2.65% 2.72%
25,000 but less than 50,000............................................................. 2.15% 2.20%
50,000 or more.......................................................................... 1.50% 1.52%
</TABLE>
* The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $20 per Unit and will be applied
on whichever basis is more favorable to the investor.
The reduced sales charges as shown in the table above will apply to all
primary purchases of Units by the same purchaser. Additionally, Units purchased
in the name of a spouse or child (under 21) of such purchaser will be deemed to
be additional purchases by such purchaser. The reduced sales charges will also
be applicable to a trust or other fiduciary purchasing for a single trust estate
or single fiduciary account.
The Sponsor intends to permit officers, directors and employees of the
Sponsor and its affiliates to purchase Units of the Trust without a sales
charge, although a transaction processing fee may be imposed on such trades.
As indicated above, the initial Public Offering Price of the Units will be
established by adding to the determination of the aggregate underlying value of
the Securities a sales charge equal to 3.79% of such value and dividing the sum
so obtained by the number of Units outstanding. Such underlying value shall
include the proportionate share of any cash held in the Capital Account. This
computation produces a gross underwriting profit equal to 3.65% of the Public
Offering Price. Such price determination as of the opening of business on the
Date of Deposit will be made on the basis of an evaluation of the Securities in
the Trust to be prepared by the Trustee. After the opening of business on the
Date of Deposit, the Evaluator will appraise or cause to be appraised daily the
value of the underlying Securities as of the Evaluation Time on days the New
York Stock Exchange, Inc. ("Exchange") is open and will adjust the Public
Offering Price of the Units commensurate with such valuation. Such Public
Offering Price will be effective for all orders received at or prior to the
Evaluation Time on each such day. Orders received by the Trustee, Sponsor or any
dealer for purchases, sales or redemptions after that time, or on a day when the
Exchange is closed, will be held until the next determination of price.
The value of the Securities will generally be determined on each business
day by the Evaluator based on the last sales prices for Securities listed on a
national securities exchange and on the last asked prices for Securities traded
over-the-counter during the primary offering period and on the last sales prices
for Securities listed on a national securities exchange and on the last bid
prices for Securities traded over-the-counter during the secondary market and
for redemptions or by taking into account the same factors referred to under
"Redemption -- Computation of Redemption Price."
The minimum purchase in both the primary and secondary markets is 50 Units.
PUBLIC DISTRIBUTION OF UNITS. During the primary offering period, Units of
the Trust will be distributed to the public at the Public Offering Price
thereof. Upon the completion of the primary offering, Units which may be
acquired in the secondary market (see "Market for Units") may be offered at a
price determined in the manner provided above.
The Sponsor intends to qualify Units of the Trust for sale in a number of
states. The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units.
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<PAGE>
SPONSOR PROFITS. The Sponsor will receive gross sales charges equal to the
percentage of the Public Offering Price of the Units of the Trust as stated
under "Public Offering Price." In addition, the Sponsor may realize a profit (or
sustain a loss) as of the Date of Deposit resulting from the difference between
the purchase prices of the Securities to the Sponsor and the cost of such
Securities to the Trust, which is based on the evaluation of the Securities on
the Date of Deposit.
MARKET FOR UNITS
After the primary offering period, while not obligated to do so, the
Sponsor intends, subject to change at any time, to maintain a market for Units
of the Trust offered hereby and to continuously offer to purchase said Units at
prices, determined by the Evaluator, based on the last sales prices for
Securities listed on a national securities exchange and on the last bid value of
the underlying Securities which are traded in the over-the-counter market. To
the extent that a market is maintained during the initial offering period, the
prices at which Units will be repurchased will be based upon the last sales
prices for Securities listed on a national securities exchange and on the last
asked price of the Securities in the Trust which are traded in the
over-the-counter market. The aggregate bid prices of the underlying Securities
are expected to be less than the related aggregate asked prices (which is the
evaluation method used during the primary public offering period). ACCORDINGLY,
UNITHOLDERS WHO WISH TO DISPOSE OF THEIR UNITS SHOULD INQUIRE OF THEIR
INVESTMENT EXECUTIVE AS TO CURRENT MARKET PRICES IN ORDER TO DETERMINE WHETHER
THERE IS IN EXISTENCE ANY PRICE IN EXCESS OF THE REDEMPTION PRICE AND, IF SO,
THE AMOUNT THEREOF. The offering price of any Units resold by the Sponsor will
be in accordance with that described in the currently effective Prospectus
describing such Units. Any profit or loss resulting from the resale of such
Units will belong to the Sponsor. The Sponsor may suspend or discontinue
purchases of Units of the Trust if the supply of Units exceeds demand, or for
other business reasons.
REDEMPTION
GENERAL. A Unitholder who does not dispose of Units in the secondary
market described above may cause Units to be redeemed by the Trustee by making a
written request to the Trustee, at its Unit Investment Trust Division, 101
Barclay Street, 20th Floor, New York, New York 10286, and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee,
properly endorsed or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Trustee. Unitholders must sign the request,
and such certificate or transfer instrument, exactly as their names appear on
the records of the Trustee and on any certificate representing the Units to be
redeemed. Additional documentation may be requested, and a signature guarantee
is always required, from corporations, executors, administrators, trustees,
guardians or associations. The signatures must be guaranteed by a participant in
the Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guaranty program in addition to, or in substitution for, STAMP, as may
be accepted by the Trustee. A certificate should only be sent by registered or
certified mail for the protection of the Unitholder. Since tender of the
certificate is required for redemption when one has been issued, Units
represented by a certificate cannot be redeemed until the certificate
representing such Units has been received by the purchasers.
Redemption shall be made by the Trustee on the seventh calendar day
following the day on which a tender for redemption is received, or if the
seventh calendar day is not a business day, on the first business day prior
thereto (the "Redemption Date") by payment of cash equivalent to the Redemption
Price for the Trust, determined as set forth below under "Computation of
Redemption Price," as of the Evaluation Time stated under "Essential
Information," next following such tender, multiplied by the number of Units
being redeemed. Any Units redeemed shall be cancelled and any undivided
fractional interest in the Trust extinguished. The price received upon
redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the Trust at the time of redemption.
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<PAGE>
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's
taxpayer identification number in the manner required by such regulations. Any
amount so withheld is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a tax return. Under normal
circumstances the Trustee obtains the Unitholder's taxpayer identification
number from the selling investment executive. However, any time a Unitholder
elects to tender Units for redemption, such Unitholder should make sure that the
Trustee has been provided a certified taxpayer identification number in order to
avoid this possible back-up withholding. In the event the Trustee has not been
previously provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing unpaid dividends shall be
withdrawn from the Income Account of the Trust to the extent that funds are
available for such purpose. All other amounts paid on redemption shall be
withdrawn from the Capital Account for the Trust. The Trustee is empowered to
sell Securities for the Trust in order to make funds available for the
redemption of Units of the Trust. Such sale may be required when Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized. To the extent that Securities are sold, the size of the
Trust will, and the diversity of the Trust may, be reduced but each remaining
Unit will continue to represent approximately the same proportionate interest in
each Security. The price received upon redemption may be more or less than the
amount paid by the Unitholder depending on the value of the Securities in the
portfolio at the time of redemption.
The right of redemption may be suspended and payment postponed (1) for any
period during which the Exchange is closed, other than customary weekend and
holiday closings, or during which (as determined by the SEC) trading on the
Exchange is restricted; (2) for any period during which an emergency exists as a
result of which disposal by the Trustee of Securities is not reasonably
practicable or it is not reasonably practicable to fairly determine the value of
the underlying Securities in accordance with the Trust Agreement; or (3) for
such other period as the SEC may by order permit. The Trustee is not liable to
any person in any way for any loss or damage which may result from any such
suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The Redemption Price per Unit (as well as
the secondary market price) will be determined on the basis of the aggregate
underlying bid value of the Securities in the Trust. On the Date of Deposit, the
Public Offering Price per Unit (which is based on the underlying offering prices
of the Securities and includes the sales charge) will exceed the value at which
Units could be redeemed by the amount shown under "Essential Information." While
the Trustee has the power to determine the Redemption Price per Unit when Units
are tendered for redemption, such authority will be delegated to the Evaluator
which determines the price per Unit on a daily basis. The Redemption Price per
Unit is the pro rata share of each Unit in the Trust determined on the basis of
(i) the cash on hand in the Trust or monies in the process of being collected
and (ii) the value of the Securities in the Trust less (a) amounts representing
taxes or other governmental charges payable out of the Trust, (b) any amount
owing to the Trustee for its advances and (c) the accrued expenses of the Trust.
The Evaluator may determine the value of the Securities in the Trust in the
following manner: if the Security is listed on a national securities exchange,
the evaluation will generally be based on the last sales price on the exchange
(unless the Evaluator deems the price inappropriate as a basis for evaluation).
If the Security is not so listed or, if so listed and the principal market for
the Security is other than on the exchange, the evaluation will generally be
made by the Evaluator in good faith based on the last bid price in the
over-the-counter market (unless the Evaluator deems such price inappropriate as
a basis for evaluation) or, if a bid price is not available, (1) on the basis of
the current bid price for comparable securities, (2) by the Evaluator's
appraising the value of the Securities in good faith at the bid side of the
market or (3) by any combination thereof. See "Public Offering of Units --
Public Offering Price."
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<PAGE>
RETIREMENT PLANS
The Trust may be suitable for purchase by IRAs, Self-Employed Individual
Retirement Plans ("Keogh Plan"), pension plans and other qualified retirement
plans, certain of which are briefly described below. Generally, capital gains
and income received under each of the foregoing plans are deferred from Federal
taxation. All distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special income averaging or
tax-deferred rollover treatment. Investors considering participation in any such
plan should review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and maintenance of
any such plan. Such plans are offered by brokerage firms and other financial
institutions. Fees and charges with respect to such plans may vary.
UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be evidenced
by certificates unless a Unitholder, the Unitholder's investment executive or
the clearing agent for such investment executive makes a written request to the
Trustee. Units are transferable by making a written request to the Trustee and,
in the case of Units evidenced by a certificate, by presenting and surrendering
such certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent by registered or
certified mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate representing
the Units to be transferred. Such signatures must be guaranteed as stated under
"Redemption -- General."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple thereof, subject to the Trust's
minimum investment requirement of 50 Units. Fractions of Units, if any, will be
computed to three decimal places. Any certificate issued will be numbered
serially for identification, issued in fully registered form and will be
transferable only on the books of the Trustee. The Trustee may require a
Unitholder to pay a reasonable fee, to be determined at the sole discretion of
the Trustee, for each certificate re-issued or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer or
interchange. The Trustee at the present time does not intend to charge for the
normal transfer or interchange of certificates. Destroyed, stolen, mutilated or
lost certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity (generally amounting to 1 1/2% of the market value of the Units),
affidavit of loss, evidence of ownership and payment of expenses incurred.
DISTRIBUTIONS TO UNITHOLDERS. Income received by the Trust is credited by
the Trustee to the Income Account of the Trust. Other receipts are credited to
the Capital Account of the Trust. Income received by the Trust will be
distributed on or shortly after the last day of June and December of each year
on a pro rata basis to Unitholders of record as of the preceding record date
(which will be the fifteenth day of the related month). All distributions will
be net of applicable expenses. There is no assurance that any actual
distributions will be made since all dividends received may be used to pay
expenses. In addition, amounts from the Capital Account of the Trust, if any,
will be distributed at least annually in December to the Unitholders then of
record. Proceeds received from the disposition of any of the Securities after a
record date and prior to the following distribution date will be held in the
Capital Account and not distributed until the next distribution date applicable
to the Capital Account. The Trustee shall not be required to make a distribution
from the Capital Account unless the cash balance on deposit therein available
for distribution shall be sufficient to distribute at least $1.00 per 50 Units.
The Trustee is not required to pay interest on funds held in the Capital or
Income Accounts (but may itself earn interest thereon and therefore benefit from
the use of such funds). The Trustee is authorized to reinvest any funds held in
the Capital or Income Accounts, pending distribution, in U.S. Treasury
obligations which mature on or before the next applicable distribution date. Any
obligations so acquired must be held until they mature and proceeds therefrom
may not be reinvested.
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<PAGE>
The distribution to the Unitholders as of each record date will be made on
the following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the Unitholders' pro rata share of
the dividend distributions then held in the Income Account after deducting
estimated expenses. Because dividends are not received by the Trust at a
constant rate throughout the year, such distributions to Unitholders are
expected to fluctuate. Persons who purchase Units will commence receiving
distributions only after such person becomes a record owner. Notification to the
Trustee of the transfer of Units is the responsibility of the purchaser, but in
the normal course of business such notice is provided by the selling firm.
As of the first day of each month, the Trustee will deduct from the Income
Account of the Trust and, to the extent funds are not sufficient therein, from
the Capital Account of the Trust amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Expenses of the Trust"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of the
Trust. Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the Income
and Capital Accounts of the Trust such amounts as may be necessary to cover
redemptions of Units.
DISTRIBUTION REINVESTMENT. Legg Mason Wood Walker, Inc., the Sponsor, is
the investment manager and principal underwriter of several level and low-load
mutual funds. Unitholders of the Trust who own a minimum of 500 Units may elect
to have distributions of capital (including capital gains, if any) or dividends
or both automatically invested in shares of any one of these funds. Since the
portfolio securities and investment objectives of such Legg Mason-advised mutual
funds generally will differ significantly from those of the Trust, Unitholders
should carefully consider the consequences before selecting such mutual funds
for reinvestment. Detailed information with respect to the investment objectives
and the management of such mutual funds is contained in their respective
prospectuses, which can be obtained from the Sponsor without charge upon
request. An investor should read the prospectus of the reinvestment fund
selected prior to making the election to reinvest. Unitholders who desire to
have such distributions automatically reinvested should inform their investment
executive at the time of purchase or should file a written notice of election
with the Trustee.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Trustee an election
to have such distributions reinvested without charge (except that in the event a
mutual fund has a front end sales charge, such sales charge will be incurred on
reinvestments therein). Such election must be received by the Trustee at least
ten days prior to the record date applicable to any distribution in order to be
in effect for such record date. Any such election shall remain in effect until a
subsequent notice is received by the Trustee. See "Unitholders -- Distributions
to Unitholders."
STATEMENTS TO UNITHOLDERS. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder 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.
The accounts of the Trust are required to be audited annually, at the
Trust's expense, by independent public accountants designated by such Sponsor,
unless the Sponsor determines that such an audit would not be in the best
interest of the Unitholders of the Trust. The accountants' report will be
furnished by the Trustee to any Unitholder of the Trust upon written request.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was a Unitholder of the Trust a statement, covering the calendar year, setting
forth for the Trust:
A. As to the Income Account:
1. Income received;
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<PAGE>
2. Deductions for applicable taxes and for fees and expenses of the
Trust and for redemptions of Units, if any; and
3. The balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; and
B. As to the Capital Account:
1. The dates of disposition of any Securities and the net proceeds
received therefrom;
2. Deductions for payment of applicable taxes and fees and expenses
of the Trust held for distribution to Unitholders of record as of a date
prior to the determination; and
3. The balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; and
C. The following information:
1. A list of the Securities as of the last business day of such
calendar year;
2. The number of Units outstanding on the last business day of such
calendar year;
3. The Redemption Price based on the last evaluation made during
such calendar year;
4. The amount actually distributed during such calendar year from
the Income and Capital Accounts separately stated, expressed both as
total dollar amounts and as dollar amounts per Unit outstanding on the
record dates for each such distribution.
RIGHTS OF UNITHOLDERS. A Unitholder may at any time tender Units to the
Trustee for redemption.
No Unitholder shall have the right to control the operation and management
of the Trust in any manner, except to vote with respect to the amendment of the
Trust Agreement or termination of the Trust.
INVESTMENT SUPERVISION
The Trust is a unit investment trust and is not an "actively managed" fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The portfolio of the Trust will not be actively
managed and therefore the adverse financial condition of an issuer will not
necessarily require the sale of its securities from the portfolio. However, the
Sponsor may direct the Trustee to dispose of Securities upon default in payment
of amounts due on debt obligations of the issuer of the Securities or upon a
decline in price or the occurrence of other market or credit factors that in the
opinion of the Sponsor would make the retention of such Securities in the Trust
detrimental to the interest of the Unitholders. In addition, the Sponsor will
instruct the Trustee to dispose of certain Securities and to take such further
action as may be needed from time to time to ensure that the Trust continues to
satisfy the qualifications of a regulated investment company, including the
requirements with respect to diversification under Section 851 of the Code.
Pursuant to the Trust Agreement, the Sponsor is not authorized to direct the
reinvestment of the proceeds of the sale of Securities in replacement securities
except in the event the sale is the direct result of serious adverse credit
factors affecting the issuer of the Security which, in the opinion of the
Sponsor, would make the retention of such Security detrimental to the Trust. If
such factors exist, the Sponsor is authorized, but not obligated, to direct the
reinvestment of the proceeds of the sale of such Securities in any other
securities which meet the criteria necessary for inclusion in the Trust on the
Date of Deposit (including other Securities already deposited in the Trust). The
Trustee may sell any securities or other properties acquired in exchange for
Securities such as those acquired in connection with a merger or other
transaction. If offered such
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<PAGE>
new or exchanged securities or property, the Trustee shall reject the offer.
However, in the event such securities or property are nonetheless acquired by
the Trust, they may be accepted for deposit in the Trust and either sold by the
Trustee or held in the Trust pursuant to the direction of the Sponsor. Proceeds
from the sale of Securities (or any securities or other property received by the
Trust in exchange for Securities) are credited to the Capital Account for
distribution to Unitholders or to meet redemptions. Except as stated under "The
Trust" for failed securities and as provided in this paragraph, the acquisition
by the Trust of any securities other than the Securities is prohibited.
The Trustee may sell Securities, designated by the Sponsor, from the Trust
for the purpose of redeeming Units of the Trust tendered for redemption and the
payment of expenses.
ADMINISTRATION OF THE TRUST
THE TRUSTEE. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its offices at
101 Barclay Street, New York, New York 10286, (800) 221-7668. The Bank of New
York is subject to supervision and examination by the Superintendent of Banks of
the State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the FDIC to the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated
in selecting the portfolio of the Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreement, reference is made to
the material set forth under "Unitholders."
In accordance with the Trust Agreement, the Trustee shall keep records of
all transactions at its office. Such records shall include the name and address
of, and the number of Units held by, every Unitholder of the Trust. Such books
and records shall be open to inspection by any Unitholder of the Trust at all
reasonable times during usual business hours. The Trustee shall make such annual
or other reports as may from time to time be required under any applicable state
or federal statute, rule or regulation. The Trustee shall keep a certified copy
or duplicate original of the Trust Agreement on file in its office available for
inspection at all reasonable times during usual business hours by any
Unitholder, together with a current list of the Securities held in the Trust.
Pursuant to the Trust Agreement, the Trustee may employ one or more agents for
the purpose of custody and safeguarding of Securities comprising the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of the trust created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days before
the date specified in such notice when such resignation is to take effect. The
Sponsor upon receiving notice of such resignation is obligated to appoint a
successor trustee promptly. If, upon such resignation, no successor trustee has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The Sponsor may at any time
remove the Trustee, with or without cause, and appoint a successor trustee as
provided in the Trust Agreement. Notice of such removal and appointment shall be
mailed to each Unitholder by the Sponsor. Upon execution of a written acceptance
of such appointment by such successor trustee, all the rights, powers, duties
and obligations of the original Trustee shall vest in the successor. The Trustee
must be a corporation organized under the laws of the United States or any state
thereof, be authorized under such laws to exercise trust powers and have at all
times aggregate capital, surplus and undivided profits of not less than
$5,000,000.
THE SPONSOR. The Sponsor, Legg Mason Wood Walker, Incorporated, is a
wholly owned subsidiary of Legg Mason, Inc. and is a registered broker-dealer
incorporated under the laws of the State of Maryland. The
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Sponsor is a member firm of the New York Stock Exchange and is a member of the
National Association of Securities Dealers, Inc. The Sponsor and other
subsidiaries of Legg Mason, Inc. offer a full line of investment services
including investment research and trade execution services for listed and
unlisted equity and fixed-income securities and options; exchange floor
execution; investment banking services for corporations and public sector
clients; and professional investment management services for individual and
institutional clients. Among other specialties, the Sponsor and the other
subsidiaries of Legg Mason, Inc., most notably Gray, Seifert & Company, Inc.,
are recognized for their concentrated focus on research and securities analysis
with respect to regional thrift institutions and regional and community banks
and bank holding companies. The Sponsor and other subsidiaries of Legg Mason,
Inc. may, but need not, make a principal market as dealer in one or more of the
Securities in the Trust. As of March 31, 1995 the stockholders' equity of Legg
Mason Wood Walker, Incorporated, on an unconsolidated basis, was $129,173,000
(audited). The foregoing information with regard to the Sponsor relates to the
Sponsor only and not to the Trust. Such information is included in this
Prospectus only for the purpose of informing investors as to the responsibility
of the Sponsor and its ability to carry out its contractual obligations with
respect to the Trust. More detailed financial information concerning the Sponsor
can be obtained upon request from the Sponsor.
If at any time the Sponsor shall fail to perform any of its duties under
the Trust Agreement or shall become incapable of acting or shall be adjudged
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the SEC, or (b) terminate the Trust
Agreement and liquidate the Trust as provided therein, or (c) continue to act as
Trustee without terminating the Trust Agreement.
THE EVALUATOR. Gray, Seifert & Company, Inc., an affiliate of the Sponsor,
serves as Evaluator. The Evaluator may resign or be removed by the Sponsor in
which event the Sponsor is to use its best efforts to appoint a satisfactory
successor. Such resignation or removal shall become effective upon acceptance of
appointment by the successor evaluator. If upon resignation of the Evaluator no
successor has accepted appointment within thirty days after notice of
resignation, the Evaluator may apply to a court of competent jurisdiction for
the appointment of a successor. Notice of such resignation or removal and
appointment shall be mailed by the Trustee to each Unitholder.
AMENDMENT AND TERMINATION. The Trust Agreement may be amended by the
Trustee and the Sponsor without the consent of any of the Unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the SEC or any successor governmental agency; or (3) to make such
provisions as shall not adversely affect the interests of the Unitholders. The
Trust Agreement with respect to the Trust 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 Units representing 66-2/3% of the Units then
outstanding of the Trust, provided that no such amendment or waiver will reduce
the interest of any Unitholder thereof without the consent of such Unitholder or
reduce the percentage of Units required to consent to any such amendment or
waiver without the consent of all Unitholders of the Trust. In no event shall
the Trust Agreement be amended to increase the number of Units of the Trust
issuable thereunder or to permit the acquisition of any Securities in addition
to or in substitution for those initially deposited in the Trust, except in
accordance with the provisions of the Trust Agreement. The Trustee shall
promptly notify Unitholders of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
liquidation, redemption or other disposition of the last of the Securities held
in the Trust but in no event is it to continue beyond the Mandatory Termination
Date set forth under "Essential Information." If the value of the Trust shall be
less than the applicable minimum value stated under "Essential Information" (40%
of the aggregate value of the Securities -- based
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<PAGE>
on the value at the Date of Deposit of such Securities into the Trust), the
Trustee may, in its discretion, and shall, when so directed by the Sponsor,
terminate the Trust. The Trust may be terminated at any time by Unitholders
representing 66-2/3% of the Units thereof then outstanding.
No later than the date specified under "Liquidation Period" set forth under
"Essential Information," the Trustee will begin to sell all of the underlying
Securities on behalf of Unitholders in connection with the termination of the
Trust. The Sponsor has agreed to assist the Trustee in these sales. The sale
proceeds will be net of any incidental expenses involved in the sales. At
termination of the Trust, written notice thereof will be sent by the Trustee to
all Unitholders of the Trust. Within a reasonable period after termination, the
Trustee will sell any Securities remaining in the Trust and, after paying all
expenses and charges incurred by the Trust, will distribute to Unitholders
thereof their pro rata share of the balances remaining in the Income and Capital
Accounts of the Trust.
LIMITATIONS ON LIABILITY. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreement, but will be under no liability to the Unitholders for taking any
action or refraining from any action in good faith pursuant to the Trust
Agreement or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct or its reckless disregard for its
duties thereunder. The Sponsor shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Securities.
The Trustee: The Trust Agreement provides that the Trustee shall be under
no liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own gross negligence, bad faith or willful
misconduct, or its reckless disregard for its duties under the Trust Agreement,
nor shall the Trustee be liable or responsible in any way for depreciation or
loss incurred by reason of the sale by the Trustee of any Securities. In the
event that the Sponsor shall fail to act, the Trustee may act and shall not be
liable for any such action taken by it 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 thereof. In addition, the Trust
Agreement contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee, Sponsor and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. The Trust Agreement provides that the determinations made by
the Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, bad faith or willful misconduct or its
reckless disregard for its obligations under the Trust Agreement.
EXPENSES OF THE TRUST
The Sponsor will not charge the Trust any fees for services performed as
Sponsor but will receive that fee set forth under "Essential Information" for
providing supervisory services. Such fee, which is calculated monthly, is based
on the largest number of Units outstanding during the calendar year for which
such compensation relates. The Sponsor will also receive a portion of the sale
commissions paid in connection with the purchase of Units and will share in
profits, if any, related to the deposit of Securities in the Trust.
The Trustee receives for its services that fee set forth under "Essential
Information." The Trustee's fee which is calculated monthly is based on the
largest number of Units outstanding during the calendar year for which such
compensation relates. The Trustee's fees are payable monthly on or before the
fifteenth day of the month from the Income Account to the extent funds are
available and then from the Capital Account. The Trustee benefits to the extent
there are funds for future distributions, payment of expenses and redemptions in
the Capital and Income Accounts since these Accounts are non-interest bearing
and the amounts earned by the Trustee are
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retained by the Trustee. Part of the Trustee's compensation for its services to
the Trust is expected to result from the use of these funds.
For evaluation of Securities in the Trust, the Evaluator shall receive that
fee set forth under "Essential Information," payable monthly, based upon the
largest number of Units outstanding during the calendar year for which such
compensation relates.
The Trustee's fees, the Sponsor's supervisory fees and the Evaluator's fees
are deducted from the Income Account of the Trust to the extent funds are
available and then from the Capital Account. Each such fee may be increased
without approval of Unitholders by amounts not exceeding a proportionate
increase in the Consumer Price Index or any equivalent index substituted
therefor.
Expenses incurred in establishing the Trust, including the cost of the
initial preparation of documents relating to the Trust (including the
Prospectus, Trust Agreement and certificates), federal and state registration
fees, the initial fees and expenses of the Trustee, legal and accounting
expenses, payment of closing fees and any other out-of-pocket expenses, will be
paid by the Trust and amortized over the life of the Trust. The following
additional charges are or may be incurred by the Trust: (a) fees for the
Trustee's extraordinary services; (b) expenses of the Trustee (including legal
and auditing expenses, but not including any fees and expenses charged by an
agent for custody and safeguarding of Securities) and of counsel, if any; (c)
various governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or the rights and interests of the Unitholders; (e)
indemnification of the Trustee for any loss, liability or expense incurred by it
in the administration of the Trust not resulting from gross negligence, bad
faith or willful misconduct on its part or its reckless disregard for its
obligations under the Trust Agreement; (f) indemnification of the Sponsor for
any loss, liability or expense incurred in acting in that capacity without gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the Trust Agreement; and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust. The fees and expenses set
forth herein are payable out of the Trust and, when owing to the Trustee, are
secured by a lien on the Trust. Since the Securities are all common stocks, and
the income stream produced by dividend payments, if any, is unpredictable, the
Sponsor cannot provide any assurance that dividends will be sufficient to meet
any or all expenses of the Trust. If the balances in the Income and Capital
Accounts are insufficient to provide for amounts payable by the Trust, the
Trustee has the power to sell Securities to pay such amounts. These sales may
result in capital gains or losses to Unitholders. See "Federal Tax Status."
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to
federal tax law have been passed upon by Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments, of the
Trust at the opening of business on the Date of Deposit appearing in this
Prospectus and Registration Statement has been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and in the Registration Statement, and is included herein in reliance
upon such report given the authority of such firm as experts in accounting and
auditing.
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REPORT OF INDEPENDENT AUDITORS
TO THE UNITHOLDERS OF
LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
(LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1):
We have audited the accompanying statement of net assets, including the
schedule of investments, of Legg Mason Unit Investment Trust, Series 5,
comprising the Legg Mason Regional Bank and Thrift Trust, Series 1, as of the
opening of business on May 23, 1995. The statement of net assets is the
responsibility of the Trust's Sponsor. Our responsibility is to express an
opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of net assets is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of net assets. Our
procedures included confirmation of the letter of credit held by the Trustee and
deposited in the Trust on May 23, 1995. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall presentation of the statement of net assets. We
believe our audit provides a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of Legg Mason Unit
Investment Trust, Series 5, comprising the Legg Mason Regional Bank and Thrift
Trust, Series 1, at the opening of business on May 23, 1995, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Baltimore, Maryland
May 23, 1995
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<PAGE>
LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
(LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1)
STATEMENT OF NET ASSETS
AT THE OPENING OF BUSINESS ON MAY 23, 1995, THE DATE OF DEPOSIT
<TABLE>
<S> <C>
ASSETS
Investment in Securities represented by purchase contracts (1)(2).................................. $ 41,163,575
Organizational costs(3)............................................................................ 52,000
Total assets....................................................................................... 41,215,575
LIABILITIES
Accrued organizational costs....................................................................... 52,000
Net assets......................................................................................... $ 41,163,575
ANALYSIS OF NET ASSETS
Cost to investors (4).............................................................................. $ 42,722,962
Less: sales charge (4)............................................................................. 1,559,387
Net assets (1)(2)(4)............................................................................... $ 41,163,575
Number of Units.................................................................................... 2,136,148
</TABLE>
(1) Aggregate cost of the Securities listed in the Schedule of Investments is
based on evaluations as determined by The Bank of New York.
(2) An irrevocable letter of credit has been deposited with the Trustee covering
the funds (aggregating $42,000,000) necessary for the purchase of the
Securities in the Trust represented by purchase contracts.
(3) Deferred organizational costs will be amortized on a straight-line basis
over four years commencing on the Date of Deposit.
(4) The aggregate cost to investors includes a sales charge computed at the rate
of 3.65% of the Public Offering Price (equivalent to 3.79% of the net amount
invested) assuming no reduction of sales charges for quantity purchases.
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<PAGE>
LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
(LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1)
SCHEDULE OF INVESTMENTS
AT THE OPENING OF BUSINESS ON MAY 23, 1995, THE DATE OF DEPOSIT
<TABLE>
<CAPTION>
AGGREGATE
NAME OF ISSUER COST OF
OF SECURITIES SECURITIES
DEPOSITED OR PERCENTAGE OF NUMBER OF TO
CONTRACTED FOR (1) PORTFOLIO(1) SYMBOL SHARES PRICE PER SHARE TRUST (2)
<S> <C> <C> <C> <C> <C>
AmFed Financial, Inc. 1.4% AMFF 23,500 $ 24.25 $ 569,875
Associated BancCorp 0.5 ASBC 5,000 38.75 193,750
Bankcorp Hawaii, Inc. 3.7 BOH 52,000 29.50 1,534,000
Barnett Banks, Inc. 3.8 BBI 32,000 48.50 1,552,000
Boatmen's Bancshares, Inc. 3.5 BOAT 44,000 33.00 1,452,000
CCB Financial Corporation 1.8 CCBF 18,000 42.00 756,000
Centura Banks, Inc. 3.7 CBC 58,000 26.375 1,529,750
Commerce Bancshares, Inc. 1.9 CBSH 25,000 31.50 787,500
Crestar Financial Corporation 3.6 CF 33,000 45.375 1,497,375
Cullen/Frost Bankers, Inc. 4.1 CFBI 41,300 40.50 1,672,650
Fifth Third Bancorp 3.7 FITB 29,000 52.50 1,522,500
First American Corporation 3.5 FATN 42,000 33.875 1,422,750
First Financial Corporation 1.8 FFHC 44,000 16.50 726,000
First Security Corporation 3.7 FSCO 60,000 25.50 1,530,000
First Virginia Banks, Inc. 1.4 FVB 16,200 35.375 573,075
First Western Bancorp, Inc. 0.7 FWBI 10,000 28.25 282,500
Fort Wayne National Corporation 1.4 FWNC 20,000 28.50 570,000
Fourth Financial Corporation 3.6 FRTH 45,000 33.00 1,485,000
Hawkeye Bancorporation 2.2 HWKB 41,000 21.625 886,625
Hibernia Corporation 1.8 HIB 90,000 8.375 753,750
Integra Financial Corporation 5.1 ITG 43,000 48.375 2,080,125
Liberty Bancorp, Inc. 1.7 LBNA 21,000 33.75 708,750
Marshall & Ilsley Corporation 3.7 MRIS 70,000 21.75 1,522,500
Mercantile Bankshares Corporation 2.4 MRBK 41,000 23.875 978,875
National City Corporation 3.7 NCC 52,000 28.875 1,501,500
North Fork Bancorporation, Inc. 3.7 NFB 85,000 17.875 1,519,375
Norwest Corporation 3.5 NOB 53,000 27.25 1,444,250
Peoples Heritage Financial Group, Inc. 2.2 PHBK 60,000 15.125 907,500
Silicon Valley Bancshares 0.7 SIVB 18,000 16.75 301,500
Southern National Corporation 3.6 SNB 67,000 22.25 1,490,750
Suntrust Banks, Inc. 3.7 STI 27,000 57.00 1,539,000
TCF Financial Corporation 3.6 TCB 33,000 45.50 1,501,500
UJB Financial Corporation 3.6 UJB 50,000 29.625 1,481,250
Victoria Bankshares, Inc. 0.9 VICT 14,000 26.25 367,500
West One Bancorp 4.5 WEST 56,200 33.00 1,854,600
Zions Bancorporation 1.6 ZION 15,000 44.50 667,500
100.00% $ 41,163,575
</TABLE>
25
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS
(1) All of the Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with
the Trustee. At the Date of Deposit, the Sponsor has assigned to the Trustee
all of its rights, title and interest in and to such undelivered Securities.
Contracts to purchase Securities were entered into on or before May 22, 1995
and all have expected settlement dates on or before May 31, 1995 (see "The
Trust"). Percentages are based on the cost of Securities to the Trust.
(2) The market value of each Security is based on the closing sales price on a
national securities exchange if the Security is listed thereon or, if not so
listed, then on the closing asked price on the over-the-counter market, in
each case on the day prior to the Date of Deposit. As of the Date of Deposit
the aggregate cost of the Securities to the Sponsor was $40,908,618 and its
gross profit was $254,957.
The Sponsor in its general securities business acts as agent or principal
in connection with the purchase and sale of equity securities, which may include
Securities in the Trust, and may act as a market maker in certain of the
Securities. The Sponsor may also from time to time issue reports on and make
recommendations relating to equity securities, which may include the Securities.
From time to time the Sponsor may act as investment banker or an employee or
affiliate may be a director of a company whose shares are included among the
Securities; nonpublic information concerning such a company would not be
disclosed to or for the benefit of the Trust under such circumstances.
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY.......................................... 2
ESSENTIAL INFORMATION............................ 4
THE TRUST........................................ 5
THE TRUST PORTFOLIO.............................. 5
RISK FACTORS..................................... 8
FEDERAL TAX STATUS............................... 11
PUBLIC OFFERING OF UNITS......................... 12
Public Offering Price.......................... 12
Public Distribution of Units................... 13
Sponsor Profits................................ 14
MARKET FOR UNITS................................. 14
REDEMPTION....................................... 14
General........................................ 14
Computation of Redemption Price................ 15
RETIREMENT PLANS................................. 16
UNITHOLDERS...................................... 16
Ownership of Units............................. 16
Distributions to Unitholders................... 16
Distribution Reinvestment...................... 17
Statements to Unitholders...................... 17
Rights of Unitholders.......................... 18
INVESTMENT SUPERVISION........................... 18
ADMINISTRATION OF THE TRUST...................... 19
The Trustee.................................... 19
The Sponsor.................................... 19
The Evaluator.................................. 20
Amendment and Termination...................... 20
Limitations on Liability....................... 21
EXPENSES OF THE TRUST............................ 21
LEGAL OPINIONS................................... 22
INDEPENDENT AUDITORS............................. 22
REPORT OF INDEPENDENT AUDITORS................... 23
STATEMENT OF NET ASSETS.......................... 24
SCHEDULE OF INVESTMENTS.......................... 25
</TABLE>
THIS PROSPECTUS DOES NOT CONTAIN ALL OF THE INFORMATION WITH RESPECT TO THE
INVESTMENT COMPANY SET FORTH IN ITS REGISTRATION STATEMENT 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.
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 BY THE TRUST, THE TRUSTEE, OR THE
SPONSOR. SUCH REGISTRATION DOES NOT IMPLY THAT THE TRUST OR THE UNITS HAVE BEEN
GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES OR ANY STATE
OR ANY AGENCY OR OFFICER THEREOF.
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 OR COUNTRY.
LEGG MASON
UNIT INVESTMENT TRUST
SERIES 5
PROSPECTUS
May 23, 1995
LEGG MASON
REGIONAL BANK AND THRIFT TRUST
SERIES 1
LEGG MASON WOOD WALKER, INCORPORATED
111 SOUTH CALVERT STREET
P.O. BOX 1476
BALTIMORE, MARYLAND 21203-1476
(410) 539-0000/(800) 822-5544
LMF-105
