File No. 33-90620 CIK No. 943057
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 3
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Legg Mason Unit Investment Trust, Series 5
(Exact Name of Trust)
Legg Mason Wood Walker, Incorporated
(Exact Name of Depositor)
100 Light St.
Baltimore, Maryland 21203-1476
(Complete address of Depositor's principal executive offices)
Legg Mason Wood Walker, Incorporated Chapman and Cutler
Attention: Marie K. Karpinski Attention: Mark J. Kneedy
100 Light St. 111 West Monroe Street
Baltimore, Maryland 21203-1476 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective on April
30, 1998 pursuant to paragraph (b) of Rule 485.
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT
TO REGISTRATION STATEMENT
------------------------------------
This Post-Effective Amendment to the Registration Statement comprises
the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1
1,373,729 UNITS
PROSPECTUS
Part One
Dated: April 30, 1998
Note: Part One of this Prospectus may not be distributed unless accompanied
by Part Two
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 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 believed, at the
initial Date of Deposit, would outperform other banking and financial stocks. At
December 31, 1997, each Unit represented a 1/1,373,729 undivided interest in the
principal and net income of the Trust (see "The Trusts" in Part Two).
The Units being offered by this Prospectus are issued and outstanding Units
which have been purchased by the Sponsor in the secondary market or from the
Trustee after having been tendered for redemption. The profit or loss resulting
from the sale of Units will accrue to the Sponsor. No proceeds from the sale of
Units will be received by the Trust.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is 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 of the Trust divided by the number of Units
outstanding, plus a sales charge of 3.65% (equivalent to 3.79% of the net amount
invested). At December 31, 1997, the Public Offering Price Per Unit was $48.97
(see "Public Offering Price" in Part Two). The minimum purchase is 50 Units.
Please retain all parts of this Prospectus for future reference.
-------------------------------------------------------------
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.
-------------------------------------------------------------
LEGG MASON WOOD WALKER, INCORPORATED
Sponsor
<PAGE>
LEGG MASON UNIT INVESTMENT TRUST, SERIES 5
LEGG MASON REGIONAL BANK AND THRIFT TRUST, SERIES 1
ESSENTIAL INFORMATION
AS OF DECEMBER 31, 1997
SPONSOR: LEGG MASON WOOD WALKER, INCORPORATED
EVALUATOR: GRAY, SEIFERT & COMPANY, INC.
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
<S><C>
Number of Units 1,373,729
Fractional Undivided Interest Per unit 1/1,373,729
Public Offering Price:
Aggregate Value of Securities in Portfolio(1) $64,827,072
Aggregate Value of Securities per Unit $47.19
Income and Capital Accounts in Portfolio ($5,906)
Income and Capital Accounts per Unit $0.00
Plus Sales Charge of 3.65%
(3.79% of the net amount invested)(2) $1.78
Public Offering Price Per Unit $48.97
Redemption Price and Sponsor's Repurchase Price
Per Unit $47.19
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit $1.78
Maximum Value of the Trust under which Trust Trust Agreement may be
Agreement may be Terminated terminated if value of the
Trust is less than $16,465,430
Evaluations for purpose 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(3) $.009371 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 bid 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) 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
<PAGE>
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 final
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.
<PAGE>
Report of Ernst & Young LLP, 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 assets and liabilities, including
the schedule of investments, of Legg Mason Unit Investment Trust, Series 5,
comprised of the Legg Mason Regional Bank and Thrift Trust, Series 1, as of
December 31, 1997, and the related statements of operations and changes in net
assets for each of the two years in the period then ended and for the period May
23, 1995 (Initial Date of Deposit) to December 31, 1995. These financial
statements are the responsibility of the Trust's Sponsor. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1997, by correspondence with
the Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Legg Mason Unit Investment
Trust, Series 5, comprising the Legg Mason Regional Bank and Thrift Trust,
Series 1, at December 31, 1997, and the results of its operations and changes in
its net assets for each of the two years in the period then ended and for the
period May 23, 1995 (Initial Date of Deposit) to December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
April 10, 1998
1
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<S><C>
ASSETS:
Securities, at value (cost $22,540,503) (Note 1) $ 64,827,072
Cash (overdraft) (48,944)
Receivable for securities sold 507,499
Dividends receivable 45,210
Deferred organizational expenses 17,916
--------------
Total assets 65,348,753
--------------
LIABILITIES:
Payable for fund shares repurchased 508,188
Accrued expenses 19,399
--------------
Total liabilities 527,587
--------------
Net assets $ 64,821,166
==============
ANALYSIS OF NET ASSETS:
Accumulated paid-in capital (1,373,729 units of fractional undivided
interest) $ 19,582,446
Dividends in excess of net investment income (5,150)
Undistributed net realized gains 2,957,301
Unrealized gain on investments 42,286,569
---------------
Net assets $ 64,821,166
===============
Net asset value per unit $47.19
===============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Schedule of Investments
December 31, 1997
<TABLE>
<CAPTION>
SHARES ISSUER MARKET VALUE
- -----------------------------------------------------------------------------------------------------------
<S><C>
42,075 Associated Banc-Corporation $ 2,319,384
47,000 Barnett Banks, Inc. 3,378,125
50,000 BB&T Corporation 3,203,125
18,000 CCB Financial Corporation 1,935,000
37,500 Centura Banks, Inc. 2,587,500
28,350 Commerce Bancshares, Inc. 1,920,713
50,000 Crestar Financial Corporation 2,850,000
48,000 Cullen/Frost Bankers, Inc. 2,913,000
27,000 Fifth Third Bancorp 2,203,875
65,000 First American Corporation 3,233,750
75,000 First Security Corporation 3,140,625
52,000 Marshall & Ilsley Corporation 3,230,500
35,400 Mercantile Bancorp 2,177,100
41,000 National City Corporation 2,695,750
100,000 North Fork Bancorporation, Inc. 3,356,250
83,000 Norwest Corporation 3,205,875
100,000 Pacific Century Financial Corporation 2,475,000
60,000 Peoples Heritage Financial Group, Inc. 2,760,000
10,000* Silicon Valley Bancshares 557,500
62,000 Summit Bancorp 3,301,500
40,000 SunTrust Banks, Inc. 2,855,000
90,000 TCF Financial Corporation 3,054,375
30,000 U.S. Bancorp 3,358,125
47,000 Zions Bancorporation 2,115,000
--------------
$ 64,827,072
==============
</TABLE>
(*) Non-income producing.
See accompanying notes to financial statements.
3
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Statements of Operations
<TABLE>
<CAPTION>
May 23, 1995
(Initial Date of
Year Ended Year Ended Deposit) to
December 31, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------
<S><C>
INVESTMENT INCOME:
Dividends $ 1,202,138 $ 1,384,134 $ 854,894
----------------------------------------------------------------
EXPENSES:
Trustee's fees and expenses 28,653 35,727 22,558
Evaluator's fees 13,647 11,185 7,794
Supervisory fees 9,083 9,321 6,496
Amortization of organizational
expense 12,873 12,873 7,830
Other 14,421 1,472 4,042
----------------------------------------------------------------
Total expenses 78,677 70,578 48,720
----------------------------------------------------------------
Net investment income 1,123,461 1,313,556 806,174
----------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments 6,996,873 4,680,042 -
Net change in unrealized gain on
investments 21,686,444 8,322,543 12,277,582
----------------------------------------------------------------
Net realized and unrealized
gain on investments 28,683,317 13,002,585 12,277,582
----------------------------------------------------------------
Increase in net assets resulting
from operations $ 29,806,778 $ 14,316,141 $ 13,083,756
================================================================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
May 23, 1995
(Initial Date of
Year Ended Year Ended Deposit) to
December 31, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------
<S><C>
FROM OPERATIONS:
Net investment income $ 1,123,461 $ 1,313,556 $ 806,174
Net realized gain on investments 6,996,873 4,680,042 -
Net unrealized gain on investments 21,686,444 8,322,543 12,277,582
----------------------------------------------------------------
Increase in net assets resulting
from operations 29,806,778 14,316,141 13,083,756
----------------------------------------------------------------
Net equalization debits (10,282) (80,926) -
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (1,400,682) (1,219,666) (806,174)
Net realized gains (5,098,745) (3,375,833) -
Return of capital - - (12,206)
----------------------------------------------------------------
(6,499,427) (4,595,499) (818,380)
----------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Redemption and cancellation of
165,561, 596,858, and 0
Trust units, respectively (6,096,260) (15,448,310) -
----------------------------------------------------------------
Increase (decrease) in net assets 17,200,809 (5,808,594) 12,265,376
NET ASSETS:
Beginning of period 47,620,357 53,428,951 41,163,575
----------------------------------------------------------------
End of period $ 64,821,166 $ 47,620,357 $ 53,428,951
================================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Notes to Financial Statements
December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
The Trust's securities are stated at the last sale price for securities listed
on a national securities exchange and at the last bid value for securities which
are traded in the over-the-counter market as reported by the Trust's Evaluator.
SECURITY COST
The aggregate cost of the securities is based on the market value of such
securities on the date the securities were deposited in the Trust.
INVESTMENT INCOME
Dividends are recorded on the ex-dividend date.
EXPENSES OF THE TRUST
The Trust pays an annual fee for Trustee services to The Bank of New York of
$.0172 per Unit based on the largest number of Units outstanding during the
calendar year for which such compensation relates. The Evaluator, Gray, Seifert
& Company, an affiliate of the Sponsor, receives an annual fee of $.006 per Unit
based on the largest number of Units outstanding during the calendar year for
which such compensation relates. The Trust also pays recurring financial
reporting costs and an annual supervisory fee payable to the Sponsor.
Deferred organizational costs are being amortized on a straight-line basis over
four years from the Date of Deposit.
6
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Notes to Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
No provision for federal income taxes has been made since the Trust intends to
continue to qualify as a regulated investment company and distribute all of its
taxable income to its unitholders.
Distributions are determined on a tax basis and may differ from net investment
income and realized capital gains for financial reporting purposes.
EQUALIZATION
The Trust follows the accounting practice of equalization by which a portion of
the cost of redemptions of Trust shares is charged to undistributed net
investment income, so that income per unit available for distribution is not
affected by redemption of units.
2. TRUST SPONSOR AND REDEMPTION
Although not obligated to do so, Legg Mason Wood Walker, Incorporated, the Trust
Sponsor, intends, subject to change at any time, to maintain a market for Units
of the Trust and to continuously offer to purchase Units at prices, determined
by the Evaluator, based on the last sale price for securities listed on a
national securities exchange and on the last bid value for securities which are
traded in the over-the-counter market. The Sponsor may discontinue purchases of
the Units if the supply of Units exceeds demand or for other business reasons.
In the event that a market is not maintained for the Units, a unitholder may
tender his Units to the Trustee for redemption at the redemption price as set
forth in the Prospectus.
The Trust Sponsor does not charge the Trust any fees for services performed as
Sponsor but does receive an annual supervisory fee of $.005 per Unit based on
the largest number of Units outstanding during the calendar year for which such
compensation relates.
7
<PAGE>
Legg Mason Unit Investment Trust, Series 5
(Legg Mason Regional Bank and Thrift Trust, Series 1)
Notes to Financial Statements (continued)
3. INVESTMENTS
Proceeds from sales of securities were $13,101,493.
At December 31, 1997, the cost of securities for federal income tax purposes was
$22,540,503. Net unrealized appreciation and aggregate gross unrealized
appreciation for all securities for which there was an excess of value over tax
cost was $42,286,569. There was no unrealized depreciation for any securities
held by the Trust.
4. UNIT COST TO INVESTORS
The unit cost to initial investors of $20.00 was based on the aggregate
underlying value of the securities on the date of the investor's purchase, plus
a sales charge of 3.65% of the Public Offering Price which was equivalent to
3.79% of the net amount invested.
5. PER UNIT INFORMATION
<TABLE>
<CAPTION>
May 23, 1995
(Initial Date of
Year Ended Year Ended Deposit) to
December 31, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------
<S><C>
Investment income $ .86 $ .83 $ .40
Expenses (.06) (.04) (.02)
----------------------------------------------------------------
Net investment income .80 .79 .38
----------------------------------------------------------------
Net realized and unrealized gain
on investments 20.08 7.98 5.75
----------------------------------------------------------------
Distributions to unitholders from:
Net investment income (.99) (.73) (.38)
Net realized gains (3.64) (2.11) -
Return of capital - - (.01)
----------------------------------------------------------------
(4.63) (2.84) (.39)
----------------------------------------------------------------
Increase in net asset value 16.25 5.93 5.74
Net asset value:
Beginning of period 30.94 25.01 19.27
----------------------------------------------------------------
End of period $ 47.19 $ 30.94 $ 25.01
================================================================
</TABLE>
8
<PAGE>
LEGG MASON UNIT INVESTMENT TRUST
LEGG MASON REGIONAL BANK AND THRIFT TRUST SERIES
PROSPECTUS NOTE: This Part Two Prospectus must be
PART TWO accompanied by Part One of this
DATED: April 30, 1998 Prospectus.
Legg Mason Regional Bank and Thrift Trust Series (the "Trusts") were
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"), believed at each Trust's Initial Date
of Deposit would outperform other banking and financial stocks. The securities
selected were considered by the Sponsor to have the potential to achieve each
Trust's objective over the term of the Trusts. See " The Trust Portfolio." There
is no assurance that the Trusts will achieve their objective.
Units of the Trusts 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
All parts of this Prospectus should be read and retained for
future reference.
Legg Mason Wood Walker
Incorporated
100 Light Street
P.O. Box 1476
Baltimore, Maryland 21203-1476
(410) 539-0000/(800) 822-5544
<PAGE>
SUMMARY
The Trusts. Legg Mason Unit Investment Trust Series (the "Fund"), which
consists of the Legg Mason Regional Bank and Thrift Trust Series (the "Trusts"),
is a series of unit investment trusts registered under the Investment Company
Act of 1940, as amended ("1940 Act").
Each Trust consists of common stocks issued by the companies set forth
in "Schedule of Investments" in Part One for each 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 things, 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"). Each Trust was formed with the investment
objective of obtaining maximum capital appreciation over the life of the
respective Trust through investment in a fixed portfolio of equity securities of
companies diversified within the regional banking and thrift industries which
the Sponsor believed at each Trust's Initial Date of Deposit would 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.
As of the date of Part One of this Prospectus, each Unit of a Trust
represents that undivided interest in such Trust indicated under "Essential
Information" in Part One. To the extent that any Units are redeemed by the
Trustee, the fractional undivided interest in such 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
is based on the aggregate underlying 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 a Trust, plus a sales charge of 3.65% (equivalent to 3.79% of the net
amount invested).
Distributions of Income and Capital. Distributions of dividends
received by a Trust and any funds in the Capital Account will be made
semi-annually. See "Unitholders--Distributions to Unitholders."
Market for Units. While under no obligation to do so, the Sponsor
intends to maintain a market for the Units of the Trusts and offer to repurchase
such Units at prices subject to change at any time which are based on the last
sales prices for underlying 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. If the supply of Units exceeds demand or if some 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" in Part One of this Prospectus, 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" in Part One of this
Prospectus) 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 Trusts 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
Trusts, see "Risk Factors."
-2-
<PAGE>
THE TRUSTS
Legg Mason Unit Investment Trust Series, which consists of the Legg
Mason Regional Bank and Thrift Trust Series, is a series of unit investment
trusts created under the laws of the State of New York pursuant to a trust
indenture dated as of each Trust's Initial Date of Deposit (the "Trust
Agreement") between Legg Mason Wood Walker, Incorporated (the "Sponsor"), and
The Bank of New York (the "Trustee").*
Each Trust's 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 a 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.
Each Trust consists of (a) the Securities listed under "Schedule of
Investments" in Part One of this Prospectus as may continue to be held from time
to time in such 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.
* Reference is made to the Trust Agreement and any statement contained herein is
qualified in its entirety by the provisions of the Trust Agreement.
THE TRUST PORTFOLIO
Securities Selection. At all times each 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 Trusts,
the following factors, among others, were considered by the Sponsor at each
Trust's Date of Deposit: (a) the quality of the Securities, (b) the price of the
Securities relative to other similar securities, (c) the potential for capital
appreciation of the Securities 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 Trusts, the Sponsor chose equity
securities that in its view had the potential for capital appreciation. Although
there can be no assurance that such Securities will appreciate in value over the
life of the Trusts, 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 Trusts will not invest in banks or thrifts that have lending arrangements
with affiliates of the Trusts as of the Date of Deposit.
In offering the Units to the public, the Sponsor is not recommending
any of the individual Securities in the Trusts but rather the entire pool of
Securities, taken as a whole, which are represented by the Units.
RISK FACTORS
General. The Trusts 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 Trusts should be made with an understanding of the
risks inherent in an investment in equity securities, including: (a) the risk
that the financial condition of the issuers of the Securities may become
impaired, (b) the risk 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) and (c) 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 Trusts 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. Banks and thrifts are highly dependent on net interest income. Recent
profits have benefited from the relatively high yield on earning assets and
relatively low cost of funds. There is no certainty that these conditions will
continue, especially in a rising interest rate environment. Commercial loan
demand for banks has not been robust and an increasing number of commercial
loans have been securitized, which may have a potentially adverse effect on the
market share of the commercial banking system. Bank and thrift institutions had
received significant consumer mortgage fee income as a result of activity in the
mortgage and refinance markets. As initial home purchasing and refinancing
activity subsided, this income diminished. Economic conditions in the real
estate markets, which have been weak in the 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. 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
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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 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. In
addition, federal legislation is currently pending before Congress which would
require a significant one-time charge to be assessed to thrifts in order to
bolster depleted deposit insurance funds. To the extent this or similar
legislation is adopted, thrift earnings and profitability will be negatively
impacted. 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 a Trust's portfolio
cannot be predicted with certainty. Periodic efforts by recent Administrations
to introduce legislation broadening the ability of banks to compete with new
products have not been successful, but if enacted could lead to more failures as
a result of increased competition and added risks. 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 were allowed
to turn existing banks into branches. 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.
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 a 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 enacted. Among other benefits, the legislation allows 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 a
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 organization 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.
Some of the nation's largest banks, already working to upgrade their
own computer systems to meet the year 2000 deadline, are concerned that some
borrowers may fail to upgrade their computers in time, creating problem loans
and increasing overall loan losses. This is commonly known as the "Year 2000
Problem." Banks considered most vulnerable by analysts include those lending
primarily to small businesses, which aren't as likely as large businesses to
have a plan for upgrading their computers. Also at risk are banks with
significant exposure
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overseas, where many foreign businesses are not moving as quickly to resolve
this problem. Analysts warn that it will be difficult for banks to determine
their potential loan losses related to year 2000 credit risk.
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 the issuer, or of
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 Trusts
to values higher or lower than those prevailing on a Trust's 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 Trusts are
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
Trusts will be adversely affected if trading markets for the Securities are
limited or absent.
Like other investment companies, financial and business organizations
and individuals around the world, the Trusts would be adversely affected if the
computer systems used by the Sponsor, Evaluator and Trustee or other service
providers to the Trusts do not properly process and calculate date-related
information and data involving dates of January 1, 2000 and thereafter. The
Sponsor, Evaluator and Trustee are taking steps that they believe are reasonably
designed to address the Year 2000 Problem with respect to computer systems that
they use and to obtain reasonable assurances that comparable steps are being
taken by the Trusts' other service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse impact
to the Trusts.
The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Securities contained in the Trusts, to varying degrees
based upon various factors, including, but not limited to, their industry sector
and degree of technological sophistication. The Sponsor is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the
Securities contained in the Trusts.
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 a Trust's Date of
Deposit, litigation may be initiated on a variety of grounds, or 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 Trusts or will not impair the ability
of issuers to achieve their business goals.
FEDERAL TAX STATUS
Each 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 a 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 a 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 each Trust intends to timely distribute
its taxable income (including any net capital gain), it is anticipated that the
Trusts will not be subject to federal income tax or the excise tax.
Distributions to Unitholders of a Trust's taxable income other than
distributions which are designated as dividends, will be taxable as ordinary
income to Unitholders except that to the extent that distributions to a
Unitholder
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in any year exceed a 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.
Although distributions generally will be treated as distributed when
paid, distributions declared in October, November or December payable to
Unitholders of record on a specified date in one of those months and paid during
January of the following year will be treated as having been distributed by the
Trusts (and received by the Unitholder) on December 31 of the year such
distributions are declared.
Distributions of a Trust's net capital gain which are properly
designated as capital gain dividends by a 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. The Taxpayer Relief
Act of 1997 (the "1997 Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) is subject to a maximum
marginal stated tax rate of either 28% or 20%, depending upon the holding
periods of the capital assets. Capital gain or loss is long-term if the holding
period for the asset is more than one year, and is short-term if the holding
period for the asset is one year or less. The date on which a Unit is acquired
(i.e., the "trade date") is excluded for purposes for determining the holding
period of the Unit. Generally, capital gains realized from assets held for more
than one year but not more than 18 months are taxed at a maximum marginal stated
tax rate of 28% and capital gains realized from assets (with certain exclusions)
held for more than 18 months are taxed at a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Further,
capital gains realized from assets held for one year or less are taxed at the
same rates as ordinary income. Legislation is currently pending that provides
the appropriate methodology that should be applied in netting the realized
capital gains and losses. Such legislation is proposed to be effective
retroactively for tax years ending after May 6, 1997. Note, however, that the
1997 Act provides that the application of the rules described above in the case
of pass-through entities such as the Trusts will be prescribed in future
Treasury Regulations. The Internal Revenue Service has released preliminary
guidance which provides that, in general, pass-through entities such as the
Trusts may designate their capital gains dividends as either a 20% rate gain
distribution or a 28% rate gain distribution, depending on the nature of the
gain received by the pass-through entity. Unitholders should consult their own
tax advisors as to the tax rate applicable to capital gain dividends. Note that
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 1997 Act includes other provisions that treat certain other
transactions designed to reduce or eliminate risk of loss and opportunities for
gain (e.g., short sales, offsetting notional principal contracts, futures or
forward contracts or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
such constructive sales rules.
In addition, it should be noted that capital gains may be
recharacterized 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.
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 Trusts and to the tax
treatment of distributions by the Trusts to United States Unitholders.
Distributions by the Trusts 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. Units in the Trusts and Trust
distributions may also be subject to state and local taxation and Unitholders
should consult their own tax advisers in this regard. Each Unitholder will be
requested to provide the Unitholder's 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 a Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back up withholding.
A Unitholder who is a foreign investor (i.e. and investor other than a
United States citizen or resident or a United States corporation, partnership,
estate or trust) should be aware that, generally, subject to applicable tax
treaties, distributions from the Trusts which constitute dividends for Federal
income tax purposes (other than dividends which the Trusts designate as capital
gains dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from
the Trusts that are designated by the Trusts as capital gain dividends should
not be subject to United States income taxes, including withholding taxes, if
all of the following conditions are met: (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) the foreign investor (if an individual)
is not present in the United States for 183 days or more during his or her
taxable year, and (iii) the foreign investor provides all certification which
may be required of his or her status. Foreign investors should consult their
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tax advisers with respect to United States tax consequences of ownership of
Units. Units in the Trusts and Trust distributions may also be subject to state
and local taxation and Unitholders should consult their 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 a 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 a Trust to such
Unitholder (including amounts received upon the redemption of Units) will be
subject to federally prescribed back-up withholding. Distributions by a 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. Units of the Trusts are 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 in the Income Account of a Trust, plus a
sales charge of 3.65% (equivalent to 3.78% of the net amount invested). Such
underlying value shall also include the proportionate share of any undistributed
cash held in the Capital Account of the Trust.
The Sponsor intends to permit officers, directors and employees of the
Sponsor and its affiliates and, at the Sponsor's discretion, investment clients
of the Sponsor in certain accounts subject to a comprehensive "wrap fee" to
purchase Units of the Trusts without a sales charge, although a transaction
processing fee may be imposed on such trades.
As indicated above, the Public Offering Price of the Units as of the
date of Part One of this Prospectus as set forth in "Essential Information" in
Part One was 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 date of
the Part One of this Prospectus was made on the basis of an evaluation of the
Securities in the Trusts, which was prepared by the Trustee.
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 redemption 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 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 is 50 Units.
Public Distribution of Units. Units will 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.
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."
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MARKET FOR UNITS
While not obligated to do so, the Sponsor intends, subject to change at
any time, to maintain a market for Units of the Trusts 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. 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 Trusts 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 third business day
following the day on which a tender for redemption is received (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" in Part One of this
Prospectus, next following such tender, multiplied by the number of Units being
redeemed. Any Units redeemed shall be canceled 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 a Trust at the time of redemption.
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 a Trust to the extent that funds are
available for such purpose, or from the Capital Account. All other amounts paid
on redemption shall be withdrawn from the Capital Account for a Trust. The
Trustee is empowered to sell Securities for a Trust in order to make funds
available for the redemption of Units of such 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 a Trust will, and the diversity of such 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 value of the Securities in a Trust. 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 a Trust determined on the basis of (i) the cash on
hand in a Trust or monies in the process of being collected and (ii) the value
of the Securities in a 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
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accrued expenses of such Trust. The Evaluator may determine the value of the
Securities in the Trusts 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."
RETIREMENT PLANS
The Trusts 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 Trusts 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 each 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 reissued 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 accounting 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 a Trust is credited by
the Trustee to the Income Account of such Trust. Other receipts are credited to
the Capital Account of a Trust. Income received by a 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 a 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.
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 a 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 a Trust and, to the extent funds are not sufficient therein,
from the Capital Account of a Trust, the amounts necessary to pay the expenses
of such 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 a Trust. Amounts so withdrawn shall not be considered a part of a
Trust's
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<PAGE>
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 a Trust such amounts as may be necessary to
cover redemptions of Units.
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 Trusts are required to be audited annually, at each
Trust's expense, by independent public auditors designated by such Sponsor,
unless the Sponsor determines that such an audit would not be in the best
interest of the Unitholders of such Trust. The report of independent auditors
will be furnished by the Trustee to any Unitholder of a 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 a Trust a statement, covering the calendar year,
setting forth for such Trust:
A. As to the Income Account:
1. Income received;
2. Deductions for applicable taxes and for fees and
expenses of a Trust and for redemptions of Units, if
any;
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 a Trust held for distribution to
Unitholders of record as of a date prior to the
determination;
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; and
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 a Trust in any manner, except to vote with respect
to the amendment of the Trust Agreement or termination of such Trust.
INVESTMENT SUPERVISION
Each 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 Trusts 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 a 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 a 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 a 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 a Trust on the
Trust's initial Date of Deposit (including other Securities already deposited in
such Trust). The Trustee may sell any securities or other properties acquired in
exchange for Securities
-10-
<PAGE>
such as those acquired in connection with a merger or other transaction. If
offered such new or exchanged securities or property, the Trustee shall reject
the offer. However, in the event such securities or property are nonetheless
acquired by a Trust, they may be accepted for deposit in such 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 a Trust in exchange for Securities) are credited to the
Capital Account for distribution to Unitholders or to meet redemptions. Except
as stated under "The Trusts" for failed securities and as provided in this
paragraph, the acquisition by a Trust of any securities other than the
Securities is prohibited.
The Trustee may sell Securities, designated by the Sponsor, from a
Trust for the purpose of redeeming Units of the Trust tendered for redemption
and the payment of expenses.
ADMINISTRATION OF THE TRUSTS
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 Trusts. 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 Trusts.
Such books and records shall be open to inspection by any Unitholder of the
Trusts 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 Trusts. Pursuant to the Trust Agreement, the Trustee may employ one or more
agents for the purpose of custody and safeguarding of Securities comprising the
Trusts.
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 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, through its over 100 offices located in
21 states, 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. 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 Trusts. As of December 31, 1997 the stockholders' equity of
Legg Mason Wood Walker, Incorporated, on an unconsolidated basis, was
approximately $230,326,000 (unaudited). The foregoing information with regard to
the Sponsor relates to the Sponsor only and not to the Trusts. 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 Trusts. 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
-11-
<PAGE>
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 a 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 a 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 a Trust. In no event shall the
Trust Agreement be amended to increase the number of Units of a Trust issuable
thereunder or to permit the acquisition of any Securities in addition to or in
substitution for those initially deposited in a 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 each Trust shall terminate upon the
liquidation, redemption or other disposition of the last of the Securities held
in such Trust, but in no event is it to continue beyond the Mandatory
Termination Date set forth under "Essential Information" in Part One of this
Prospectus. If the value of a Trust shall be less than the applicable minimum
value stated under "Essential Information" in Part One of this Prospectus, (40%
of the aggregate value of the Securities--based on the value at a Trust's
initial Date of Deposit of such Securities into the Trust), the Trustee may, in
its discretion, and shall, when so directed by the Sponsor, terminate such
Trust. Each 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" in Part One of this Prospectus, the Trustee will
begin to sell all of the underlying Securities on behalf of Unitholders in
connection with the termination of the Trusts. 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 each Trust, written notice
thereof will be sent by the Trustee to all Unitholders of the respective Trust.
Within a reasonable period after termination, the Trustee will sell any
Securities remaining in such 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. 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 TRUSTS
The Sponsor will not charge a Trust any fees for services performed as
Sponsor but will receive that fee set forth under "Essential Information" in
Part One of this Prospectus, 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.
The Trustee receives for its services that fee set forth under
"Essential Information" in Part One of this Prospectus. 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
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<PAGE>
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 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 a Trust, the Evaluator shall receive
that fee set forth under "Essential Information" in Part One of this Prospectus,
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 a 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 Trusts, including the cost of the
initial preparation of documents relating to the Trusts (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 Trusts and amortized over the life of the Trusts. The following
additional charges are or may be incurred by a 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 Trusts 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 Trusts 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 Trusts. The fees and expenses set
forth herein are payable out of the Trusts and, when owing to the Trustee, are
secured by a lien on the Trusts. 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 Trusts. 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 financial statements of each Trust appearing in Part One of their
respective Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein and in the Registration Statement, and are included herein in
reliance upon such report given the authority of such firm as experts in
accounting and auditing.
-13-
<PAGE>
PART TWO
CONTENTS PAGE
SUMMARY.......................................................................2
THE TRUSTS....................................................................3
THE TRUST PORTFOLIO...........................................................3
RISK FACTORS..................................................................3
FEDERAL TAX STATUS............................................................6
PUBLIC OFFERING OF UNITS......................................................7
Public Offering Price......................................................7
Public Distribution of Units...............................................7
Sponsor Profits............................................................7
MARKET FOR UNITS..............................................................8
REDEMPTION....................................................................8
General....................................................................8
Computation of Redemption Price............................................9
RETIREMENT PLANS..............................................................9
UNITHOLDERS...................................................................9
Ownership of Units.........................................................9
Distributions to Unitholders...............................................9
Statements to Unitholders.................................................10
Rights of Unitholders.....................................................11
INVESTMENT SUPERVISION.......................................................11
ADMINISTRATION OF THE TRUSTS.................................................11
The Trustee...............................................................11
The Sponsor...............................................................12
The Evaluator.............................................................12
Amendment and Termination.................................................12
Limitations on Liability..................................................13
EXPENSES OF THE TRUSTS.......................................................13
LEGAL OPINIONS...............................................................14
INDEPENDENT AUDITORS.........................................................14
THIS PROSPECTUS DOES NOT CONTAIN 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 OF
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 COUNTY.
LEGG MASON UNIT INVESTMENT TRUST SERIES
PROSPECTUS
PART TWO
APRIL 30, 1998
LEGG MASON REGIONAL BANK AND THRIFT TRUST SERIES
LEGG MASON WOOD WALKER, INCORPORATED
100 LIGHT STREET
P.O. BOX 1476
BALTIMORE, MARYLAND 21203-1476
(410) 539-0000/(800) 822-5544
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Legg Mason Unit Investment Trust, Series 5, certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Baltimore and State of Maryland on the
29th day of April, 1998.
Legg Mason Unit Investment Trust, Series 5
(Registrant)
By Legg Mason Wood Walker, Incorporated
(Depositor)
By /s/ Kathi D. Bair
_________________________________________
Kathi D. Bair
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities on April 29, 1998:
Signature Title
--------- -----
Raymond A. Mason Chairman of the Board
James W. Brinkley President and Director
Edmund J. Cashman, Jr. Senior Executive Vice President
and Director
Richard J. Himelfarb Senior Executive Vice President
and Director
Edward A. Taber III Senior Executive Vice President
and Director
Robert A. Frank Executive Vice President
and Director
Robert G. Sabelhaus Executive Vice President
and Director
Charles A. Bacigalupo Senior Vice President, Secretary
and Director
Thomas M. Daly, Jr. Senior Vice President
and Director
Jerome M. Dattel Senior Vice President
and Director
Thomas E. Hill Senior Vice President
and Director
Arnold S. Hoffman Senior Vice President
and Director
Carl Hohnbaum Senior Vice President
and Director
William B. Jones, Jr. Senior Vice President
and Director
Laura L. Lange Senior Vice President
and Director
Marvin H. McIntyre Senior Vice President
and Director
Douglas C. Petty, Jr. Senior Vice President
and Director
Mark I. Preston Senior Vice President
and Director
M. Walter D'Alessio Director
F. Barry Bilson Senior Vice President
and Director
/s/ Kathi D. Bair
_________________________
(Attorney-in-fact)*
- -------------------------------
*An executed copy of the related powers of attorney were filed as Exhibit 7.1 to
the initial Registration Statement for Legg Mason Unit Investment Trust, Series
5 as filed on March 24, 1995 and Amendment No. 1 to the Registration Statement
for Legg Mason Unit Investment Trust, Series 5 as filed on May 22, 1995 (file
no. 33-90620).
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated April 10, 1998 in this Post-Effective
Amendment No. 3 to Registration Statement (Form S-6 No. 33-90620) and related
Prospectus of Legg Mason Unit Investment Trust, Series 5.
/s/ Ernst & Young LLP
Baltimore, Maryland
April 27, 1998
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 22,540,503
<INVESTMENTS-AT-VALUE> 64,827,072
<RECEIVABLES> 503,765
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 17,916
<TOTAL-ASSETS> 65,348,753
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 527,587
<TOTAL-LIABILITIES> 527,587
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,582,446
<SHARES-COMMON-STOCK> 1,373,729
<SHARES-COMMON-PRIOR> 1,539,290
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (5,150)
<ACCUMULATED-NET-GAINS> 2,957,301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 42,286,569
<NET-ASSETS> 64,821,166
<DIVIDEND-INCOME> 1,202,138
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
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</TABLE>
