<PAGE>
Registration No. 2-65741
S E C U R I T I E S A N D E X C H A N G E C O M M I S
S I O
N
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 14
to
F O R M S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF
1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact Name of Trust:
TAX EXEMPT SECURITIES TRUST,
SERIES 29
B.
Names of Depositors:
SMITH BARNEY SHEARSON INCORPORATED
KIDDER, PEABODY & CO. INCORPORATED
<TABLE>
<S> <C>
C. Complete addresses of depositors' principal executive
offices:
SMITH BARNEY SHEARSON KIDDER,
PEABODY & CO.
SHEARSON INC. INCORPORATED
1345 Avenue of the Americas 60 Broad Street
New York, New York 10105 New York, New York 10005
D. Names and complete addresses of agents for service:
STEPHEN J. TREADWAY GILBERT R. OTT, JR.
Smith Barney Kidder, Peabody & Co.
Shearson Inc. Incorporated
1345 Avenue of the Americas 10 Hanover Square
New York, New York 10105 New York, New York 10005
</TABLE>
It is proposed that this filing will become effective February 17,
1994
pursuant to paragraph (b) of Rule 485.
<PAGE>
TAX EXEMPT SECURITIES TRUST
CROSS-REFERENCE SHEET
Pursuant to Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction
as to the Prospectus in Form S-6)
<TABLE>
Form N-89B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
<C> <S> <C>
1. . . . . . . . . (a) Name of trust Prospectus front cover
(b) Title of securities issued . .
2.Name and address of each depositor Sponsors: Prospectus back
cover
3. . . . Name and address of trustee Trustee
4.Name and address of each principal underwriterSponsors:
Prospectus back cover
5. . .State of organization of trust Tax Exempt Securities
Trust
6.Execution and termination of trust agreementTax Exempt
Securities Trust - The
Trust:
Amendment and Termination
of the Trust Agreement 7. .
. . . . . . . . Changes of name *
8. . . . . . . . . . . . Fiscal year *
9. . . . . . . . . . . . .Litigation *
II. General Description of the Trust and
Securities of the Trust
10.(a) Registered or bearer securities Rights of Unit Holders
(b) Cumulative or distributive securities
(c) Redemption . . . . . . . . . .
(d) Conversion, transfer, etc. . .
(e) Periodic payment plan. . . . . *
(f) Voting rights. . . . . . . . .
(g) Notice to certificate holders Rights of Unit Holders -
Reports and Records:
Sponsors -
Responsibility: Trustee -
Resignation: Amendment
and Termination of the
Trust Agreement -
Amendment
(h) Consents required. . . . . . . Sponsors - Responsibility:
Amendment and Termination
of the Trust Agreement (i) Other
provisions . . . . . . . Tax Exempt Securities Trust - Tax Status
11.Type of securities comprising units Prospectus front cover:
Tax Exempt Securities
Trust - Portfolio
12.Certain information regarding periodic
payment certificates. . . . . . . *
13.. .(a) Load, fees, expenses, etc. Prospectus front cover:
Summary of Essential
Information; Public
Offering - Offering
Price; Public Offering -
Sponsors' and
Underwriters' Profits:
Tax Exempt Securities
Trust - Expenses and
Charges
<PAGE>
Form N-89B-2 Form S-6
Item Number Heading in Prospectus
II. General Description of the Trust and
Securities of the Trust
<C> <S> <C>
(b) Certain information regarding periodic
payment certificates . . . . *
(c) Certain percentages. . . . . . Public Offering - Offering
Price
(d) Certain other fees, etc, payable by holders
Rights of Unit Holders - Certificates
(e) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons . . . . . . Public Offering - Sponsors'
and Underwriters' Profits:
Rights of Unit Holders -
Redemption of Units -
Purchase by the Sponsors of
Units Tendered for
Redemption
(f) Ratio of annual charges to income*
14.. .Issuance of trust's securities Tax Exempt Securities
Trust - The Trust: Rights
of Unit Holders -
Certificates
15.Receipt and handling of payments from purchasers*
16.Acquisition and disposition of underlying
securities . . . . . . . . . . . . Tax Exempt Securities Trust
- Portfolio: Sponsors -
Responsibility
17.. . . . .Withdrawal or redemption Rights of Unit Holders -
Redemption of Units
18.(a) Receipt, custody and disposition of incomeRights of Units
Holders - Distribution of
Interest and Principal:
Rights of Unit Holders -
Reports and Records
(b) Reinvestment of distributions *
(c) Reserves or special funds. . . Rights of Unit Holders -
Distribution of Interest
and Principal: Tax Exempt
Securities Trust - Expenses
and Charges - Other Charges (d) Schedule of
distributions. . . *
19.. . Records, accounts and reports Rights of Unit Holders -
Reports and Records:
Rights of Unit Holders -
Distribution of Interest
and Principal
20.Certain miscellaneous provisions of trust agreementAmendment
and Termination of the Trust
(a) Amendment. . . . . . . . . . . Agreement: Trustee -
Resignation: Trustee -
(b) Termination . . . . . . . . . Resignation: Trustee -
Limitations on Liability:
(c) and (d) Trustee, removal and successorSponsors -
Responsibility: Sponsors - Resignation
(e) and (f) Depositors, removal and successor
21.. . . . Loans to security holders *
22.. . . . .Limitations on liability Sponsors - Limitations on
Liability: Trustee -
Limitations on Liability:
Tax Exempt Securities
Trust - Portfolio
23.. . . . . . .Bonding arrangements *
24.Other material provisions of trust agreement*
______
* Inapplicable, answer negative or not required.
<PAGE>
<PAGE> Form N-89B-2 Form S-6
Item Number Heading in Prospectus
III. Organization, Personnel and
Affiliated Persons of Depositor
<C> <S> <C>
25.. . . .Organization of depositors Sponsors
26.. . . Fees received by depositors *
27.. . . . . .Business of depositors Sponsors
28.Certain information as to officials and
affiliated persons of depositors [Contents of Registration
Statement]
29.. Voting securities of depositors *
30.. .Persons controlling depositors *
31.Payments by depositor for certain services
rendered to trust . . . . . . . . *
32.Payments by depositors for certain other services
rendered to trust . . . . . . . . *
33.Remuneration of employees of depositors for
certain services rendered to trust *
34.Remuneration of other persons for certain services
rendered to trust . . . . . . . . *
IV. General Description of the Trust and
Securities of the Trust
35.Distribution of trust's securities by statesPublic Offering -
Distribution of Units
36.Suspension of sales of trust's securities*
37.Revocation of authority to distribute*
38.. . . .(a) Method of distribution Public Offering -
Distribution of Units
(b) Underwriting agreements. . . .
(c) Selling agreements . . . . . .
39.(a) Organization of principal underwritersSponsors
(b) N.A.S.D. membership of principal underwriters
40.Certain fees received by principal underwriters*
41.(a) Business of principal underwritersSponsors
(b) Branch offices of principal underwriters*
(c) Salesmen of principal underwriters*
42.Ownership of trust's securities by certain persons*
43.Certain brokerage commissions received by principal
underwriters. . . . . . . . . . . *
44.. . . . . (a) Method of valuation Prospectus front cover:
Public Offering -
Offering Price: Public
Offering - Distribution
of Units
(b) Schedule as to offering price *
(c) Variation in offering price to certain personsPublic
Offering - Distribution of Units
45.. Suspension of redemption rights *
46.. . . . .(a) Redemption Valuation Rights of Unit Holders -
Redemption of Units -
Computation of Redemption
Price per Unit
(b) Schedule as to redemption price *
47.Maintenance of position in underlying securities
Public Offering - Market for Units: Rights of Unit Holders -
Redemption of Units - Purchase by the Sponsors of Units
tendered for Redemption; Rights of Unit Holders - Redemption
of Units - Computation of Redemption Price per Unit
______
* Inapplicable, answer negative or not required.<PAGE>
<PAGE> Form N-89B-2 Form S-6
Item Number Heading in Prospectus
V. Information Concerning the Trustee
or Custodian
<C> <S> <C>
48.Organization and regulation of trusteeTrustee
49.. . .Fees and expenses of trustee Tax Exempt Securities
Trust - Expenses and
Charges
50.. . . . . . . . . .Trustee's lien Tax Exempt Securities
Trust - Expenses and
Charges - Other Charges
VI. Information Concerning Insurance of
Holders of Securities
51.Insurance of holders of trust's securities*
VI. Policy of Registrant
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying securitiesProspectus
front cover: Sponsors-Responsibility
(b)Transactions involving elimination of
underlying securities . . . . . *
(c)Policy regarding substitution or elimination
of underlying securities. . . . Sponsors - Responsibility
(d)Fundamental policy not otherwise covered*
53. Tax status of trust . . . . . . Prospectus front cover: Tax
Exempt Securities Trust -
Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during last ten years*
55. . . . . . . . . . . . . . . . . *
56. Certain information regarding periodic payment
securities . . . . . . . . . . . . *
57. . . . . . . . . . . . . . . . . *
58. . . . . . . . . . . . . . . . . *
59. Financial statements (Instruction 1(c) to form S-6)
Statement of Financial Condition of The Tax Exempt Securities
Trust
______
* Inapplicable, answer negative or not required.
<PAGE>
</TABLE>
SERIES 29
[S] [C]
In the opinion of counsel, under existing law interest income to the
Trust and, with certain exceptions, to Unit holders is exempt from all
Federal income tax, but may be subject to state and local taxes.
Capital gains, if any, are subject to tax. Investors should retain both
parts of this Prospectus for future reference.
THE INITIAL PUBLIC OFFERING OF UNITS IN THE TRUST
HAS BEEN COMPLETED. THE UNITS OFFERED HEREBY ARE
ISSUED AND OUTSTANDING UNITS WHICH HAVE BEEN
ACQUIRED BY THE SPONSORS EITHER BY PURCHASE FROM
THE TRUSTEE OF UNITS TENDERED FOR REDEMPTION OR
IN THE SECONDARY MARKET. SEE PART B, "RIGHTS OF
UNIT HOLDERS--REDEMPTION OF UNITS--PURCHASE BY THE
SPONSORS OF UNITS TENDERED FOR REDEMPTION" AND
"MARKET FOR UNITS". THE PRICE AT WHICH THE UNITS
OFFERED HEREBY WERE ACQUIRED WAS NOT LESS THAN
THE REDEMPTION PRICE DETERMINED AS PROVIDED
HEREIN. SEE PART B, "RIGHTS OF UNIT HOLDERS--
REDEMPTION OF UNITS--COMPUTATION OF REDEMPTION
PRICE PER UNIT".
THE TRUST is a unit investment trust formed for the purpose of
obtaining for its Unit holders tax-exempt interest income through
investment in a fixed portfolio consisting primarily of long term
municipal bonds rated at the time of deposit A or better by Standard
& Poor's Corporation or Moody's Investors Service, with certain
ratings being provisional or conditional. (See "Portfolio of
Securities".) The bonds are issued on behalf of states, counties,
territories, possessions and municipalities of the United States and
authorities or political subdivisions thereof. The interest on such
bonds is exempt from all Federal income tax (except in certain
instances depending upon the Unit holder) under existing law in the
opinion of recognized bond counsel to the issuing governmental
authorities. See "Tax Status" for further information regarding the
Federal income tax treatment of interest on municipal bonds.
THE OBJECTIVES of the Trust are tax-exempt income and
conservation of capital through an investment in a diversified
portfolio consisting primarily of municipal bonds. There is, of course,
no guarantee that the Trust's objectives will be achieved since the
payment of interest and preservation of principal are dependent upon
the continued ability of the issuers of the bonds to meet such
obligations.
THE PUBLIC OFFERING PRICE of the Units is equal to the
aggregate bid price of the underlying Securities in the Trust's
portfolio divided by the number of Units outstanding, plus a sales
charge equal to 5% of the Public Offering Price (5.263% of the
aggregate bid price of the Securities per Unit). A proportional share
of accrued and undistributed interest on the Securities at the date of
delivery of the Units to the purchaser is also added to the Public
Offering Price.
THE SPONSORS, although not obligated to do so, intend to
maintain a market for the Units at prices based upon the aggregate
bid price of the underlying Securities, as more fully described in Part
B, "Market for Units". If such a market is not maintained, a Unit
holder may be able to dispose of his Units only through redemption
at prices based upon the aggregate bid price of the underlying
Securities.
MONTHLY DISTRIBUTIONS of principal and interest received by
the Trust will be made on or shortly after the fifteenth day of each
month to holders of record on the first day of that month. For
further information regarding the distributions by the Trust, see the
"Summary of Essential Information".
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.
Prospectus Part A dated February 17, 1994
Note: Part A of this Prospectus may not be distributed unless
accompanied by Part B.
<PAGE>
<TABLE>
TAX EXEMPT SECURITIES TRUST, SERIES 29
SUMMARY OF ESSENTIAL INFORMATION AS OF
NOVEMBER 18, 1993+
Sponsors: SMITH BARNEY SHEARSON INC. and
KIDDER, PEABODY & CO.
INCORPORATED
Trustee: UNITED STATES TRUST COMPANY
OF NEW YORK
Evaluator: KENNY S&P EVALUATION SERVICES
<S> <C>
Principal Amount of Securities in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,960,000
Number of Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,147
Fractional Undivided Interest in Trust per Unit. . . . . . . . . . . . . . . . . . . . . . . . . 1/11,147
Principal Amount of Securities in Trust per Unit . . . . . . . . . . . . . . . . . . . . . . . . $ 444.96
Public Offering Price per Unit #*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 485.37
Sales Charge (3.25% of Public Offering Price)# . . . . . . . . . . . . . . . . . . . . . . . . . 15.77
Approximate Redemption and Sponsors' Repurchase Price per Unit
(per Unit Bid Price of Securities)#** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 469.60
Calculation of Estimated Net Annual Income per Unit:
Estimated Annual Income per Unit . . . . . . . . . . . . . . . . . . . . . . . $ 35.96
Less Estimated Annual Expenses per Unit. . . . . . . . . . . . . . . . . . . . 1.07
Estimated Net Annual Income per Unit . . . . . . . . . . . . . . . . . . . . . $ 34.89
Monthly Income Distribution per Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.90
Daily Rate (360-day basis) of Income Accrual per Unit. . . . . . . . . . . . . . . . . . . . . . $ .0969
Estimated Current Return Based on Public Offering Price# . . . . . . . . . . . . . . . . . . . . 7.18%
Estimated Long-Term Return#. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04%
<FN>
#Subject to changes in the prices of the underlying
securities. The aggregate bid price of the securities is determined
on each business day as of the Evaluation Time.
*Plus $9.68 per Unit representing accrued interest and the
net of cash on hand, accrued expenses and amounts distributable
to Unit holders through the expected date of settlement (five
business days after November 18, 1993). (See "Public Offering--
Offering Price".)
The sales charge was previously reduced because prerefundings
of Portfolio securities have shortened the average life of the
Trust.
**Plus $8.82 per Unit representing accrued interest and
the net of cash on hand, accrued expenses and amounts
distributable to Unit holders of record as of November 18, 1993
on a pro rata basis . (See "Redemption of Units--Computation
of Redemption Price per Unit".)
</TABLE>
Record Dates: The first day of each month
Distribution Dates: The fifteenth day of each month
Evaluation Time: Close of trading on the New York Stock
Exchange (currently 4:00 P.M. New York time)
Date of Deposit and Trust Agreement: November 7, 1979
Mandatory Termination Date: December 31, 2025
Minimum Value of Trust: Trust may be terminated if the value
of the Trust is less than $2,000,000 and must be terminated if the
value of the Trust is less than $1,000,000
Trustee's Annual Fee: $1.26 per $1,000 principal amount of bonds
($6,250 per year on the basis of bonds in the principal amount of
$4,960,000) plus expenses.
Evaluator's Fee: $.30 per bond per evaluation Number of
issues: 10 Number of States: 10
As of November 18, 1993, 6 (78%) of the Bonds were
rated by Standard & Poor's Corporation (21% being rated AAA,
36% being rated A and 21% being rated BBB) and 3 (12%) of
the Bonds were rated by Moody's Investors Service (4% being
rated Aaa and 8% being rated B) and 1 (10%) of the Bonds was
not rated by either service. Ratings assigned by the bond rating
services are subject to change from time to time.<PAGE>
<PAGE>
Additional Considerations - Investment in the Trust should be made
with an understanding that the value of the underlying Portfolio may
decline with increases in interest rates. Approximately 27% of the
Bonds in the Trust consist of hospital revenue bonds (including
obligations of health care facilities). Approximately 36% of the
Bonds in the Trust consist of obligations of municipal housing
authorities. (See Part B, "Tax Exempt Securities Trust-Portfolio" for
a brief summary of additional considerations relating to certain of
these issues.)
+ The percentages referred to in this summary are each computed
on the basis of the aggregate bid price of the Bonds as of November
18, 1993.
<TABLE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding
<S> <C> <C> <C> <C>
IncomePrincipal
Units Net AssetDistributions
Distributions
Period Ended Outstanding Value Per UnitPer Unit
Per Unit
October 31, 1991 12,137 $ 754.76 $57.83 $
14.64
October 31, 1992 11,976 659.76 54.90 90.62
October 31, 1993 11,147 483.38 39.48
180.50
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Unit Holders, Sponsors and Trustee of
Tax Exempt Securities Trust, Series 29:
We have audited the accompanying balance sheet of Tax Exempt
Securities Trust, Series 29, including the portfolio of securities, as of
October 31, 1993, and the related statements of operations and
changes in net assets for each of the years in the three-year period
ended October 31, 1993. These financial statements are the
responsibility of the Trustee (see Note 6). 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 October 31, 1993 by
correspondence with the Trustee. An audit also includes assessing
the accounting principles used and significant estimates made by the
Trustee, as well as evaluating the overall financial statement
presentation. We believe that our 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 Tax Exempt
Securities Trust, Series 29 as of October 31, 1993, and the results of
its operations and changes in its net assets for each of the years in the
three-year period ended October 31, 1993, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK
New York, New York
January 25, 1994
<PAGE>
<PAGE>
<TABLE>
TAX EXEMPT SECURITIES TRUST, SERIES 29
BALANCE SHEET
October 31, 1993
ASSETS
<S> <C>
Investments in tax exempt bonds, at market value
(Cost $4,785,244) (Note 3 to Portfolio of Securities) $
5,260,309
Accrued interest 159,389
Total Assets
$5,419,698
LIABILITIES AND NET ASSETS
Overdraft payable $30,605
Accrued expenses 844
Total Liabilities 31,449
Net Assets (11,147 units of fractional
undivided interest outstanding):
Original cost to investors (Note 1) $14,230,007
Less initial underwriting commission (sales
charge) (Note 1) 569,240
13,660,767
Cost of securities sold or redeemed since date of
deposit (November 7, 1979) (8,875,523
)
Net unrealized market appreciation 475,065
5,260,309
Undistributed net investment income 119,311
Undistributed proceeds from securities sold or
redeemed 8,629
Net Assets 5,388,249
Total Liabilities and Net Assets $5,419,698
Net asset value per unit $483.38
STATEMENTS OF OPERATIONS
For the years ended October 31, 1993, 1992 and 1991
1993 1992 1991
<S> <C>
<C> <C>
Investment Income-interest (Note 2) . . . . . . . . . . . . . . . . . . . . . $
442,885 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
672,857 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
716,950
Less expenses:
Trustee's fees and expenses. . . . . . . . . . . . . . . . . . . . . . .
9,330 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,462 11,850
Evaluator's fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,131
863 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,032
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .
10,461 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,325
14,882
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . .
432,424 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
659,532 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
702,068
Realized and unrealized gain (loss) on investments:
Net realized gain on securities transactions (Note 5). . . . . . . . . .
135,081 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,050
2,100
Net increase (decrease) in unrealized market
appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(58,459 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(57,103 )
175,146
Net gain (loss) on investments . . . . . . . . . . . . . . . . . . . . .
76,622 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49,053)
177,246
Net increase in net assets resulting from operations . . . . . . . . . . $
509,046 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
610,479 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 879,314
The accompanying Notes to Financial Statements are an integral
part of these statements.<PAGE>
<PAGE> TAX EXEMPT SECURITIES TRUST, SERIES 29
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 1993, 1992 and 1991
1993 1992 1991
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . $
432,424 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
659,532 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 702,068
Net realized gain on securities transactions (Note 5). . . . . . . . . .
135,081 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,050
2,100
Net increase (decrease) in unrealized market
appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(58,459 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(57,103 )
175,146
Net increase in net assets resulting from operations . . . . . . . . . .
509,046 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
610,479 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
879,314
Distributions to Unit Holders:
Net investment income (Note 4) . . . . . . . . . . . . . . . . . . . . .
(460,775 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(663,156)
(703,937 )
Proceeds from securities sold or redeemed. . . . . . . . . . . . . . . .
(2,141,252 )
(1,089,9
77 )
(178,276)
Total Distributions . . . . . . . . . . . . . . . . . . . . . . . .
(2,602,027 )
(1,753,1
33 )
(882,213)
Unit Redemptions by Unit Holders (Note 3):
Accrued interest at date of redemption . . . . . . . . . . . . . . . . .
(8,027 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,803) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (525
)
Value of Units at date of redemption . . . . . . . . . . . . . . . . . .
(412,147 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(114,760 )
(31,817)
Total Redemptions . . . . . . . . . . . . . . . . . . . . . . . . .
(420,174 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(116,563 )
(32,342)
Decrease in net assets . . . . . . . . . . . . . . . . . . . . . . . . .
(2,513,155 )
(1,259,2
17 )(35,2
41)
Net Assets:
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,901,404 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,160,621 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,195,862
End of year (including undistributed net
investment income of $119,311, $155,689
and $161,116, respectively). . . . . . . . . . . . . . . . . . . . . . $
5,388,249 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,901,404 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,160,621
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(1) The original cost to the investors represents the aggregate initial
public offering price as of the date of deposit (November 7,
1979), exclusive of accrued interest, computed on the basis of the
aggregate offering price of the securities. The initial
underwriting commission (sales charge) was 4.00% of the
aggregate public offering price (4.167% of the aggregate offering
price of the securities).
(2) Interest income represents interest earned on the Trust's
portfolio and has been recorded on the accrual basis.
(3) 1,033 Units were redeemed by the Trustee during the three years
ended October 31, 1993 (829 Units, 161 Units and 43 Units
being redeemed in 1993, 1992 and 1991, respectively).
(4) Interest received by the Trust is distributed to Unit holders on
the fifteenth day of each month, after deducting applicable
expenses.
(5) The gain from the sale or redemption of securities is computed
on the basis of average cost of the issue sold or redeemed.
(6) The Trustee has custody of and responsibility for all accounting
and financial books, records, financial statements and related
data of each Trust and is responsible for establishing and
maintaining a system of internal control directly related to, and
designed to provide reasonable assurance as to the integrity and
reliability of, financial reporting of each Trust. The Trustee is
also responsible for all estimates of expenses and accruals
reflected in each Trust's financial statements. The Evaluator
determines the price for each underlying Bond included in each
Trust's Portfolio of Securities on the basis set forth in Part B,
"Public Offering - Offering Price". Under the Securities Act of
1933, as amended (the "Act"), the Sponsors are deemed to be
issuers of each Trust's Units. As such, the Sponsors have the
responsibility of issuers under the Act with respect to financial
statements of each Trust included in the Registration Statement.
<PAGE>
<TABLE>
TAX EXEMPT SECURITIES TRUST, SERIES 29
PORTFOLIO OF SECURITIES - October 31, 1993
<S> <C> <C> <C>
<C>
Ratings
Redemption Principal
Market
Security Description (1)
Provisions (2) Amount
Value (3)
Lomod Bunker Hill Housing Development
Corporation, California, Senior Citizen
Facilities Revenue Bonds, RHF Bunker
Hill Corporation, Section 8 Assisted A+ 12/15/93
@ 100 $ 450,000$447,386
Project, 7.6% due 12/15/10 S.F.
12/15/03 @ 100
Las Villas Housing Development Corp.,
Florida, First Lien Revenue Bonds,
Section 8 Assisted-Las Villas Housing A 5/1/94 @
102 1/2 685,000705,673
Project, 8.8% due 11/1/10 S.F.
Currently @ 100
Illinois Environmental Facilities Financing
Authority, Pollution Control Revenue Bonds,
Commonwealth Edison Company Project, BBB 11/28/93
@ 101 1,100,0001,116,126
8.5% due 11/1/09 S.F.
11/1/05 @ 100
City of Detroit, Michigan, Sewage Disposal Aaa* --
175,000197,622
System Revenue Bonds, 7.10% due 12/15/09 S.F. 2/1/00
@ 100
City of Vadnais Heights, Ramsey County,
Minnesota, Housing Development Revenue
Bonds, Riverwood Housing Foundation A+ 2/1/94 @
100 700,000709,898
Project, 7.5% due 8/1/09 S.F.
Currently @ 100
Ohio Water Development Authority,
Water Development Revenue Refunding AAA 12/1/00 @
100 570,000646,266
Bonds, 8.0% due 12/1/18 (p)
Charleston County, South Carolina, Hospital
Facilities Revenue Bonds, Roper Hospital AAA --
425,000489,111
Project, 7.0% due 10/1/11 S.F.
10/1/96 @ 100
The Health and Educational Facilities
Board of the County of Cannon, Tennessee,
Industrial Development Revenue Bonds,
Hospital Corporation of America Project, B1* --
250,000277,848
8.5% due 12/1/09
Carbon County, Utah, Industrial
Development Revenue Bonds, Hospital
Corporation of America Project, NR 12/1/95 @
100 475,000521,607
8.5% due 12/1/09 (p)
The Industrial Development Authority
of the City of Salem, Virginia,
Industrial Development Revenue Bonds,
Hospital Corporation of America B1* --
130,000 148,772
Project, 8.5% due 12/1/09 S.F.
11/1/00 @ 100
$4,960,000$5,260,309
The accompanying Notes are an integral part of this Portfolio.
A-6<PAGE>
<PAGE>
TAX EXEMPT SECURITIES TRUST, SERIES 29
PORTFOLIO OF SECURITIES - October 31, 1993
(Continued)
At October 31, 1993 the net unrealized market appreciation of all tax
exempt bonds was comprised of the following:
<S> <C>
Gross unrealized market appreciation $ 475,065
Gross unrealized market depreciation -
Net unrealized market appreciation $ 475,065
</TABLE>
NOTES TO PORTFOLIO OF SECURITIES:
(1) All Ratings are by Standard & Poor's Corporation, except those
identified by an asterisk (*) which are by Moody's Investors
Service. The meaning of the applicable rating symbols is set
forth in Part B, "Ratings".
(2) There is shown under this heading the year in which each issue
of bonds initially or currently is redeemable and the redemption
price for that year; unless otherwise indicated, each issue
continues to be redeemable at declining prices thereafter, but
not below par. "S.F." indicates a sinking fund has been or will
be established with respect to an issue of bonds. The prices at
which bonds may be redeemed or called prior to maturity may
or may not include a premium and, in certain cases, may be less
than the cost of the bonds to the Trust. Certain bonds in the
portfolio, including bonds not listed as being subject to
redemption provisions, may be redeemed in whole or in part
other than by operation of the stated redemption or sinking
fund provisions under certain unusual or extraordinary
circumstances specified in the instruments setting forth the
terms and provisions of such bonds. For example, see
discussion of obligations of municipal housing authorities under
"Tax Exempt Securities Trust-Portfolio" in Part B.
(3) The market value of securities as of October 31, 1993 was
determined by the Evaluator on the basis of bid prices for the
securities at such date.
(p) It is anticipated that these bonds will be redeemed prior to
their scheduled maturity, pursuant to a pre-refunding, as
reflected under the column "Redemption Provisions".
A-7
<PAGE>
[TEXT]
PROSPECTUS -- PART B
Note that Part B of the Prospectus may not be distributed
unless accompanied by Part A.
TAX EXEMPT SECURITIES TRUST
The Trusts
Each Trust is one of a series of similar but separate unit
investment trusts created under the laws of the State of New York by a
Trust Indenture and Agreement and related Reference Trust Agreement
dated the Date of Deposit (collectively, the "Trust Agreement"), among
the sponsors, United States Trust Company of New York, as trustee (the
"Trustee"), and Kenny Information Systems, Inc., as evaluator (the
"Evaluator"). The sponsors are Smith Barney Shearson Inc. and Kidder,
Peabody & Co. Incorporated (the "Sponsors" or "Co-sponsors"). Each
Trust containing Bonds of a state for which such Trust is named (a "State
Trust") and each Long Term Trust, National Trust, Long-Intermediate
Term Trust, Intermediate Term Trust, Selected Term Trust,
Short-Intermediate Term Trust and Short Term Trust are
referred to herein as the "Trust" or "Trusts," unless the context requires
otherwise. On the Date of Deposit, the Sponsors deposited contracts and
funds (represented by a certified check or checks and/or an irrevocable
letter or letters of credit, issued by a major commercial bank) for the
purchase of certain interest-bearing obligations (the "Bonds") and/or
Units of preceding Series of
Tax Exempt Securities Trust (the "Deposited Units") (such Bonds and
Deposited Units, if any, being referred to herein collectively as the
<PAGE>
"Securities"). The Trustee thereafter delivered to the Sponsors registered
certificates of beneficial interest (the "Certificates") representing the units
(the "Units") comprising the entire ownership of each Trust. The initial
public offering of Units in each Trust has been completed. The Units
offered hereby are issued and outstanding
Units which have been acquired by the Sponsors either by purchase from
the Trustee of Units tendered for redemption or in the secondary market.
See "Rights or Unit Holders -- Redemption of Units -- Purchase by the
Sponsors of Units Tendered for Redemption" and "Market for Units".
References to multiple Trusts in Part B herein should be read as
references to a single Trust if Part A indicates the creation of only one
Trust.
Objectives
The objectives of a Trust are tax-exempt income and conservation
of capital through an investment in a diversified portfolio of municipal
bonds. There is, of course, no guarantee that a Trust's objectives will
be achieved since the payment of interest and the preservation of
principal are dependent upon the
continued ability of the issuers of the bonds to meet such obligations.
Subsequent to the Date of Deposit, the ratings of the Bonds set forth in
Part A - "Portfolio of Securities" may have declined due to, among other
factors, a decline in creditworthiness of the issuer of said Bonds.
Portfolio
The following factors, among others, were considered in selecting
the Bonds for each Trust: (1) the Bonds are obligations of the states,
counties, municipalities, territories or possessions of the United States
and authorities or political subdivisions thereof, so that the interest on
them will, in the opinion of recognized bond counsel to the issuing
governmental authorities, given on the
date of the original delivery of the Bonds, be exempt from Federal
income tax under existing law to the extent described in "Tax Status"
herein, (2) all the Bonds deposited in a State Trust are obligations of the
state for which such Trust is named or of the counties, territories or
municipalities of such state, and authorities or political subdivisions
thereof, or of the Territory of Guam or the
Commonwealth of Puerto Rico, so that the interest on them will, in the
opinion of recognized bond counsel to the issuing governmental
authorities, be exempt from Federal income tax under existing law to the
extent described in "Tax Status" herein and from state income taxes in
the state for which such Trust is
named in each case to the extent described in "Tax Exempt Securities
Trust -- Tax Status", (3) the Bonds were chosen in part on the basis of
their respective maturity dates, (4) the Bonds are diversified as to
purpose of issue and location of issuer, except in the case of a State
<PAGE>
Trust where the Bonds are diversified only as to purpose of issue, and
(5) in the opinion of the Sponsors, the Bonds
are fairly valued relative to other bonds of comparable quality and
maturity. The rating of each issue as of a recent date is set forth in Part
A, "Portfolio of Securities" (the "Portfolio"). For a description of the
meaning of the applicable rating symbols as published by Standard &
Poor's and Moody's, see "Bond Ratings". It should be emphasized,
however, that the ratings of Standard & Poor's and Moody's represent
their opinions as to the quality of the bonds which
they undertake to rate, and that these ratings are general and not absolute
standards of quality.
The Bonds in the Portfolio of a Trust were chosen in part on the
basis of their respective maturity dates. An Intermediate Term Trust and
a Selected Term Trust will have a dollar-weighted average portfolio
maturity of more than three years but not more than ten years from the
Date of Deposit. A Long-Intermediate Term Trust will have a
dollar-weighted average portfolio maturity of more than ten years but
less than fifteen years from the Date of Deposit. A Long Term Trust,
National Trust or a State Trust not specified as
to term will have a dollar-weighted average portfolio maturity of more
than ten years from the Date of Deposit. For the actual maturity dates
of each of the Bonds contained in a Trust, see Part A, "Portfolio of
Securities". A sale or other disposition of a Bond by the Trust prior to
the maturity of such Bond may be at a price which results in a loss to the
Trust. The inability of an issuer to pay the principal amount due upon
maturity of a Bond would result in a loss to the Trust.
The Trusts may be an appropriate investment vehicle for investors
who desire to participate in a portfolio of tax-exempt fixed income
securities with greater diversification than they might be able to acquire
individually. In addition, bonds of the type deposited in the Trusts are
often not available in small amounts. Investors should be aware that
ordinarily the market value of bonds will decrease as prevailing interest
rates increase, and will increase as interest rates decrease. In general,
bonds with long term maturities (such as those held in a Long Term
Trust) usually yield more than bonds with shorter
term maturities (such as those held in a Short Term Trust), assuming all
bonds share similar credit characteristics. Long term bonds, however,
are often more vulnerable to a decline in market value than are short
term bonds, in the event interest rates and yields rise. If long term
bonds are held for a period approaching their maturity dates, such impact
on the value of the long term bonds will be lessened.
Additional Considerations Regarding the Trusts
The Portfolio of a Trust may contain Bonds that are general
obligations of governmental entities and/or bonds that are guaranteed by
<PAGE>
governmental entities. (See Part A - "Summary of Essential
Information" for information relating to the particular Trust described
therein.) General obligation bonds are general obligations of a state or
local government secured by the power of such issuer to levy taxes, and
are backed by the pledge of such governmental entity. The ability of the
issuer of a general obligation bond to meet its obligation depends largely
upon its economic condition. Many issuers rely upon ad valorem real
property taxes as a source of revenue. Proposals in
the form of state legislative or voter initiatives to limit ad valorem real
property taxes have been introduced in various states. It is not presently
possible to predict the impact of these or future proposals, if adopted, on
states, local governments or school districts or on their abilities to make
future payments on their outstanding debt obligations. The remaining
issues are payable from the income of specific projects or authorities and
are not supported by the issuer's power to levy taxes. This latter group
of issues contains Bonds that are also supported by the moral obligations
of governmental entities. In the event of a
deficiency in the debt service reserve funds of moral obligation bonds,
the governmental entity having the moral commitment may (but is not
legally obligated to ) satisfy such deficiency. However, in the event of
a deficiency in the debt service reserve funds of bonds not backed by
such moral obligations, no such moral commitment of a governmental
entity exists.
The Portfolio of the Trust may contain other Bonds which are
"private activity bonds" (often called Industrial Revenue Bonds ("IRBs")
if issued prior to 1987) which would be primarily of two types: (1)
Bonds for a publicly owned facility which a private entity may have a
right to use or manage to some degree, such as an airport, seaport
facility or water system and (2) facilities deemed owned or beneficially
owned by a private entity but which were financed with tax-exempt
bonds of a public issuer, such as a manufacturing
facility or a pollution control facility. In the case of the first type, bonds
are generally payable from a designated source of revenues derived from
the facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions.
In most cases of project financing of the first type, issuers are obligated
to pay the principal of, any premium then due, or interest on the private
activity bonds only to the extent that funds are available from receipts or
revenues of the issuer derived from the
project or the operator or from the unexpended proceeds of the bonds.
Such revenues include user fees, service charges, rental and lease
payments, and mortgage and other loan payments.
The second type of issue will generally finance projects which are
owned by or for the benefit of, and are operated by, corporate entities.
Ordinarily, such private activity bonds are not general obligations of
governmental entities and are not backed by the taxing power of such
entities, and are solely dependent upon the creditworthiness of the
<PAGE>
corporate user of the project or corporate guarantor.
The private activity bonds in the Trust have generally been issued
under bond resolutions, agreements or trust indentures pursuant to which
the revenues and receipts payable under the issuer's arrangements with
the users or the corporate operator of a particular project have been
assigned and pledged to the holders of the private activity bonds. In
certain cases a mortgage on the underlying project has been assigned to
the holders of the private activity bonds or a trustee as additional
security. In addition, private activity bonds are
frequently directly guaranteed by the corporate operator of the project or
by another affiliated company. See "Description of Portfolio" in Part A
for the amount of private activity bonds contained therein.
Most of the Bonds in the Portfolio of a Trust are subject to
redemption prior to their stated maturity date pursuant to sinking fund or
call provisions. In general, a call or redemption provision is more likely
to be exercised when the offering price valuation of a bond is higher than
its call or redemption price, as it might be in periods of declining interest
rates, than when such price valuation is less than the bond's call or
redemption price. The Bonds may also be subject to other calls, which
may be permitted or required by events which cannot be predicted (such
as destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues). To the extent that
a Unit holder purchases a Unit at a time when an underlying bond is
evaluated at a price higher than the price at which it is redeemable,
redemption will result in a loss of capital when compared with the public
offering price of the Unit at the time of such purchase by the Unit
holder. Conversely, to the extent that a called Bond was evaluated at a
price lower than the redemption price, the difference will represent an
increase in capital. Monthly distributions will
generally be reduced by the amount of the income which would
otherwise have been paid with respect to redeemed bonds. The
Estimated Current Return and Estimated Long-Term Return of the Units
may be affected by such redemptions. Each Portfolio of Securities in
Part A of this Prospectus contains a listing of the
sinking fund and call provisions, if any, with respect to each of the
Bonds in a Trust. From time to time under certain circumstances,
certain of the Bonds may be sold or redeemed or will mature in
accordance with their terms and the proceeds thereof will be distributed
to Unit holders and will not be reinvested.
Thus no assurance can be given that a Trust will retain for any length of
time its present size and composition. Neither the Sponsors nor the
Trustee shall be liable in any way for any default, failure or defect in any
Bond.
The Portfolio of the Trust may consist of some Bonds whose
current market values were below face value on the Date of Deposit. A
primary reason for the market value of such Bonds being less than face
<PAGE>
value at maturity is that the interest coupons of such Bonds are at lower
rates than the current market interest rate for comparably rated Bonds,
even though at the time of the issuance of such Bonds the interest
coupons thereon represented then prevailing interest rates on comparably
rated Bonds then newly issued. Bonds selling at market discounts tend
to increase in market value as they approach maturity when the principal
amount is payable. A market discount tax-exempt Bond held
to maturity will have a larger portion of its total return in the form of
taxable ordinary income and less in the form of tax-exempt income than
a comparable Bond bearing interest at current market rates. Under the
provisions of the Internal Revenue Code in effect on the date of this
Prospectus, any ordinary income attributable to market discount will be
taxable but will not be realized until maturity, redemption or sale of the
Bonds or Units. Gain on the disposition of a Bond purchased at a market
discount generally will be treated as ordinary income rather than capital
gain, to the extent of accrued market discount.
The Portfolio of a Trust may contain Bonds in the hospital
facilities category that are payable from revenues derived from hospitals
and health care facilities which, generally, were constructed or are being
constructed from the proceeds of such Bonds. The ability of the issuers
of such bonds to meet their obligations is dependent, among other things,
upon the revenues, costs and occupancy levels of the subject facilities.
Revenues and expenses of hospitals and health care facilities will be
affected by future events and conditions relating generally to, among
other things, demand for health care services at the particular type of
facility, increasing costs of medical technology,
utilization practices of physicians, the ability of the facilities to provide
the services required by patients, employee strikes and other adverse
labor actions, economic developments in the service area, demographic
changes, greater longevity and the higher medical expenses of treating
the elderly, increased competition from other health care providers and
rates that can be charged for the services provided. Additionally, a
major portion of hospital revenues typically is derived from Federal or
state programs such as Medicare and Medicaid and from Blue Cross and
other insurers. The future solvency of the
Medicare trust fund is periodically subject to question. Changes in the
compensation and reimbursement formulas of these governmental
programs or in the rates of insurers may reduce revenues available for
the payment of principal of or interest on hospital revenue bonds.
Governmental legislation or regulations and other factors, such as the
inability to obtain sufficient malpractice insurance, may also adversely
impact upon the revenues or costs of hospitals. Future actions by the
federal government with respect to Medicare and by the federal and state
governments with respect to Medicaid, reducing the
total amount of funds available for either or both of these programs or
changing the reimbursement regulations or their interpretation, could
adversely affect the amount of reimbursement available to hospital
facilities. A number of additional legislative proposals concerning health
<PAGE>
care are typically under review by the United States Congress at any
given time. These proposals span a wide range
of topics, including cost controls, national health insurance, incentives
for competition in the provision of health care services, tax incentives
and penalties related to health care insurance premiums and promotion
of prepaid health care plans. The Sponsors are unable to predict the
effect of any of these proposals, if enacted, on any of the Bonds in the
Portfolio of a Trust.
The Portfolio of a Trust may contain Bonds of housing authorities
that are payable from revenues derived by state housing finance agencies
or municipal housing authorities from repayments on mortgage and home
improvement loans made by such agencies. Since housing authority
obligations, which are not general obligations of a particular state, are
generally supported to a large extent by Federal housing subsidy
programs, the failure of a housing authority to meet the qualifications
required for coverage under the Federal programs, or any legal or
administrative determination that the coverage of such Federal programs
is not available to a housing authority, could result in a
decrease or elimination of subsidies available for payment of principal
and interest on such housing authority's obligations. It is unclear
whether legislation extending the authority to issue mortgage revenue
bonds will continue to be enacted if any portion of the Bonds Proceeds
are not committed for this purpose, Bonds in such amount could be
subject to earlier mandatory redemption at par.
Weaknesses in Federal housing subsidy programs and their
administration may result in a decrease of subsidies available for payment
of principal and interest on housing authority bonds. Repayment of
housing loans and home improvement loans in a timely manner is
dependent on factors affecting the housing market generally and upon the
underwriting and management ability of the individual agencies (i.e., the
initial soundness of the loan and the effective
use of available remedies should there be a default in loan payments).
Economic developments, including fluctuations in interest rates, failure
or inability to increase rentals and increasing construction and operating
costs, may also adversely impact upon revenues of housing authorities.
In the case of some housing authorities, inability to obtain additional
financing could also reduce revenues available to pay existing
obligations.
The Portfolio of a Trust may contain Bonds of housing authorities
which require the issuer to retire such obligations at par from unused
proceeds of the issue within a stated period. Moreover, housing
authority obligations may contain provisions which require the issuer to
redeem such obligations at par prior to any optional or mandatory
redemption dates or maturity under certain
unusual or extraordinary circumstances, including among others, if the
project is condemned or sold or if the project is destroyed and insurance
proceeds are used to redeem the bonds. In the case of certain of the
<PAGE>
obligations which were deposited in a Trust at a price higher than their
par value, such a retirement at par would result in a loss of capital to a
purchaser of Units of the Trust at their original public offering price.
Also, monthly distributions from such Trust would be reduced by the
amount of the income that would otherwise have been
paid with respect to retired Bonds. The Estimated Current Return and
Estimated Long-Term Return of the Units might be adversely affected if
the return on retired Bonds is greater than the average return on the
Bonds in the Trust. In recent periods of declining interest rates there
have been increased redemptions of housing securities according to such
redemption provisions for two reasons: (i) conventional mortgage loans
have become available at interest rates equal to
or less than the interest rates charged on the mortgage loans which back
such housing securities and (ii) mortgage loans made with the proceeds
of housing securities may be prepaid earlier than their maturity dates.
Therefore, issuers of such housing securities have experienced
insufficient demand to complete mortgage loan originations for all of the
money made available from such securities. The Sponsors are unable to
predict at this time whether such redemptions will continue to be made
at the same rate, or what effect, if any,
such redemptions will have on the Bonds in a Trust. To the extent such
obligations are evaluated at a price higher than their value at the time a
Unit holder purchases a Unit, such a retirement at par would result in a
loss of capital to such a purchaser. Also, monthly distributions would
be reduced by the amount of income that otherwise would have been paid
with respect to retired bonds.
The Portfolio of a Trust may contain Bonds which are subject to
the requirements of Section 103A of the Internal Revenue Code of 1954,
as amended, (the "1954 Code") or Section 143 of the Internal Revenue
Code of 1986 (the "Code" or the "1986 Code"). Sections 103A and 143
provide that obligations issued to provide single family housing will be
exempt from Federal income taxation if all of the proceeds of the issue
(exclusive of issuance costs and a reasonable required reserve) are used
to make or acquire loans which meet requirements including certain
requirements which must be satisfied after
issuance. If proceeds of the issue are not used to acquire such loans, the
issuer may be required to redeem all or a portion of such issue from such
uncommitted proceeds to maintain the issue's tax exemption. Bond
counsel to each such issuer has issued an opinion that the interest on such
Bonds was exempt from Federal income tax at the time the Bonds were
issued. The failure of the issuers of such Bonds to meet certain ongoing
compliance requirements imposed by Sections 103A or 143 could render
the interest on such Bonds subject to Federal
income taxation, possibly from the date of their issuance. If interest on
such Bonds in a Trust is deemed to be subject to Federal income
taxation, the loss of tax-exempt status can be expected to adversely affect
the market value of such Bonds. In this event and under the terms of the
Trust Agreement the Sponsors may direct the sale of such Bonds. The
<PAGE>
sale of such Bonds in such circumstances is likely to result in a loss to
the Trust.
The tax exemption for certain housing authority bonds depends
on qualification under Section 103(b)(4)(A) of the 1954 Code or Section
142 of the 1986 Code and appropriate Treasury regulations. Both
Sections require that specified minimum percentages of the units in each
rental housing project financed by the tax-exempt debt are to be
continuously occupied by low or moderate income tenants for specified
periods. Department of the Treasury regulations issued under Section
103(b)(4)(A) of the 1954 Code provide that in
order to prevent possible retroactive Federal income taxation of interest
on such Bonds certain conditions must be met. The regulations provide,
however, that such retroactive taxation will not occur if the issuer
corrects any non-compliance occurring after the issuance of the Bonds
within a reasonable period after such non-compliance is first discovered
or should have been discovered by the issuer.
Similar rules are expected to be issued under 1986 Code Section 142.
If the interest on any of the Bonds in a Trust that are housing securities
should ultimately be deemed to be taxable, the Sponsors may instruct the
Trustee to sell such Bonds and, since they would be sold as taxable
securities, it is expected that such Bonds would have to be sold at a
substantial discount from the current market price of a comparable
tax-exempt security.
The Portfolio of a Trust may contain Bonds of issuers in the
power facilities category which are generally payable from revenues
derived from the sale of electricity generated and distributed by power
agencies using hydroelectric, nuclear, fossil or other power sources. The
ability of the issuers of such Bonds to make payments of principal of, or
interest on, such obligations is dependent, among other things, upon the
continuing ability of such issuers to derive sufficient revenues from their
operations to meet debt service requirements. General problems of the
power and electric utility industry include difficulty in financing large
construction programs during an inflationary period, restrictions on
operations and increased costs and delays attributable to
environmental considerations, uncertain technical and cost factors relating
to the construction and operation of nuclear power generating facilities,
the difficulty of the capital markets in absorbing utility debt and equity
securities, the availability of fuel for electric generation at reasonable
prices, the steady rise in fuel costs and the costs associated with
conversion to alternate fuel sources such as coal, the difficulty of
obtaining natural gas for resale, and the effects of
present or proposed energy or natural resource conservation programs.
Current and future environmental legislation, regulations or other
governmental actions may increase the cost of utility service. The
Sponsor is unable to predict the ultimate form that any such legislation,
regulations or other governmental action may take or the resulting impact
on the Securities.
<PAGE>
The Portfolio of a Trust may contain Bonds issued for the
financing of nuclear power plants. Federal, state or municipal
governmental authorities may from time to time impose additional
regulations or take other governmental action which might cause delays
in the licensing, construction or operation of nuclear power plants, or the
suspension of operation of such plants which have been or are being
financed by proceeds of such Bonds. Such delays,
suspensions, or other action may affect the payment of interest on, or the
repayment of the principal amount of, such Bonds. The Sponsors are
unable to predict the ultimate form any such regulations or other
governmental action may take or their impact on the Bonds in such
Trust.
The Portfolio of a Trust may contain Bonds of issuers which are
in the water and sewer facilities category. Bonds in the water and sewer
facilities category include securities issued to finance public water and
sewer projects for water management and supply and sewer control and
securities issued by public issuers on behalf of private corporations for
such projects. These Bonds are payable from the income of specific
facilities or from payments made by such private corporations to the state
authorities issuing such Bonds. The income of such facilities is generated
from the payment of user fees. The
ability of state and local water and sewer authorities to meet their
obligations may be affected by failure of municipalities to utilize fully the
facilities constructed by these authorities, economic or population decline
and resulting decline in revenue from user charges, rising construction
and maintenance costs and delays in construction of facilities, impact of
environmental requirements, the difficulty of obtaining or discovering
new supplies of fresh water, the effect of conservation programs and the
impact of "no growth" zoning ordinances.
The Portfolio of a Trust may contain Bonds of issuers which are
revenue obligations of universities and schools. The ability of
universities and schools to meet their obligations is dependent upon
various factors, including the revenues, costs, and enrollment levels of
the institutions. In addition, their ability may be affected by declines in
enrollment and tuition revenue, the availability of Federal, state and
alumni financial support, the method and validity, under state
constitutions, of present systems of financing public
education, fluctuations in interest rates and construction costs, increased
maintenance and energy costs, failure or inability to raise tuition or room
charges and adverse results of endowment fund investments. Studies
undertaken by public and private groups differ with respect to statistics
and projections for postsecondary enrollment at educational institutions
during the 1990s.
<PAGE>
The Portfolio of a Trust may contain Bonds of issuers in the
pollution control facilities category. Bonds in the pollution control
facilities category include securities issued to finance public water,
sewage or solid waste treatment facilities and securities issued by a
public issuer on behalf of a private
corporation to provide facilities for the treatment of air, water and solid
waste pollution. These Bonds are payable from the income of specific
facilities, state authorities or from payments made by such private
corporations.
The Portfolio of a Trust may contain Bonds which are in the
capital improvement facilities category. Capital improvement bonds are
bonds issued to provide funds to assist political subdivisions or agencies
of a state through acquisition of the underlying debt of a state or local
political subdivision or agency which bonds are secured by the proceeds
of the sale of the bonds, proceeds from investments and the indebtedness
of a local political subdivision or agency. The risks of an investment in
such bonds include the risk of possible prepayment or failure of payment
of proceeds on and default of the underlying debt.
The Portfolio of a Trust may contain Bonds in the resource
recovery category. The issuers of such Bonds are municipalities or
agencies or authorities thereof that have allocated the proceeds of the
issue towards the construction and operation of a resource recovery
facility operated by a corporate operator. Payments on the bonds are
dependent upon the creditworthiness of the corporate operator of the
particular project. The operation of such facilities typically depends
upon the delivery thereto of specified quantities of solid waste from
which refuse-derived fuel can be extracted and in turn converted into
electricity or steam by the facility. The
operation of the facility may be limited or totally curtailed from
operating because of failure to comply with governmental regulations
concerning the environment, failure to obtain necessary environmental
permits, zoning permits and other municipal ordinances or inability to
maintain or renew such permits because of an inability to comply with
changes in government environmental regulations. If the resource
recovery facility is unable to operate or cannot operate at full capacity,
the corporate operator of such facility will be unable to generate revenues
necessary to cover payments on the resource recovery bonds.
Furthermore, the corporate operator's revenue is typically derived from
the sale of the power generated by the facility to a power agency or
company under a power purchase agreement. The continued flow and
level of payments made by the corporate operator might therefore depend
upon the financial condition of the
purchaser under such a power agreement and the operator's continued
ability to generate the minimum amount of power required to be
delivered thereunder. Such purchaser may be subject to the various
general problems and risks associated with the power industry and the
regulatory environment in which it operates. A decline in price of the
<PAGE>
extracted materials or the electricity or steam
created by the facility may also result in insufficient revenues generated
by the corporate operator as will an increase in its operating costs.
Finally, there may be technological risks that become apparent in the
long run that are not presently apparent because of the relatively short
history of these facilities, which risks
may involve the successful construction or operation of such facilities.
The Portfolio of a Trust may contain Bonds secured in whole or
in part by governmental payments, pursuant to a lease agreement, service
contract, installment sale or other agreement. A governmental entity that
enters into such an agreement cannot obligate future governments to
make payments thereunder, but generally has covenanted to take such
action as is necessary to include all such payments due under such
agreement in its annual budgets and to make the appropriations therefor.
However, a budgetary imbalance in future fiscal years could affect the
ability and willingness of the governing legislative body to appropriate,
and the availability of monies to make, the payments provided for under
such agreement. The failure of a governmental entity to meet its
obligations under such an agreement could result in an insufficient
amount of funds to cover debt service on the Bonds.
The Portfolio of a Trust may contain Bonds of issuers in the
convention facilities category. Bonds in the convention facilities category
include special limited obligation securities issued to finance convention
and sports facilities payable from rental payments and annual
governmental appropriations. The governmental agency is not obligated
to make payments in any year in which the monies have not been
appropriated to make such payments. In addition, these facilities are
limited use facilities that may not be used for purposes other than as
convention centers or sports facilities.
The Portfolio of a Trust may also contain Deposited Units of
preceding Series of Tax Exempt Securities Trust. The objectives of the
various preceding Series which are represented by Deposited Units
included in the Portfolio of the Series of Tax Exempt Securities Trust
offered hereby are similar to the objectives of the Series offered hereby,
and the Sponsors, Trustee and Evaluator of the various Series
represented by the Deposited Units have
responsibilities and authority to receive fees substantially identical to
those described in this Prospectus. On the respective dates of deposit of
said preceding Series, the underlying debt obligations in their portfolios
were rated in the category of A or better by Standard & Poor's
Corporation or by Moody's Investors Service. While certain of such
debt obligations included in the portfolios of said preceding Series may
not presently meet such criteria, the
Deposited Units of such previous Series did not represent more than 5%
of the face amount of the Securities in the Portfolio of the Series of Tax
Exempt Securities Trust offered hereby as of the Date of Deposit. All
<PAGE>
of the underlying debt obligations of these Series have stated maturities
in excess of 10 years from the Date of Deposit.
To the best knowledge of the Sponsors, and except as otherwise
may be indicated in this Prospectus, there was no litigation pending as
of the date of this Prospectus in respect of any Bonds which might have
reasonably been expected to have a material adverse effect upon a Trust.
At any time after the date of this Prospectus, litigation may be initiated
on a variety of grounds with respect to Bonds in a Trust. Such
litigation, as, for example, suits challenging the issuance of pollution
control revenue bonds under recently-enacted environmental protection
statutes, may, if successful, affect the validity
of such Bonds or the tax-free nature of the interest thereon. While the
outcome of litigation of such nature can never be entirely predicted, each
Trust has received opinions of bond counsel to the issuing authorities of
each Bond on the date of issuance to the effect that such Bonds have
been validly issued and that the interest thereon is exempt from Federal
income tax. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations
undertaken with respect to Bonds. The Sponsors are
unable to predict whether any such litigation may be instituted or if
instituted, whether it will have a material adverse effect on a Trust.
Under the Federal Bankruptcy Code, political subdivisions, public
agencies or other instrumentalities of any state (including municipalities)
which are insolvent or unable to meet their debts as they mature may file
a petition in Federal bankruptcy court. Generally, the filing of such a
petition operates as a stay of any proceeding to enforce a claim against
the debtor. The Federal Bankruptcy Code also requires the debtor to file
a plan for the adjustment of its debts which may modify or alter the
rights of creditors and would authorize the
Federal bankruptcy court to permit the debtor to incur additional debt
which could have priority over existing creditors and which could be
secured. Any plan of reorganization confirmed by the court must be
approved by the requisite number of creditors. If confirmed by the
bankruptcy court, the plan would be binding upon all creditors affected
by it. Amendments made to the federal bankruptcy laws ease the
requirements that must be met before a municipality
may seek federal court protection to assist in reorganizing its debts. This
easing of requirements may encourage financially troubled municipalities
to seek court assistance in reorganizing their debts. The Sponsors are
unable to predict the effect these bankruptcy provisions may have on a
Trust.
<PAGE>
The Units
On the date of this Prospectus each Unit in a Trust represented
a fractional undivided interest in the principal and net income of such
Trust as is set forth in Part A, "Summary of Essential Information". If
any Units are redeemed after the date of this Prospectus by the Trustee,
the principal amount of Bonds in the affected Trust will be reduced by
an amount allocable to redeemed Units and the fractional undivided
interest in the affected Trust represented by each unredeemed Unit will
be increased. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unit
holder, which may include the Sponsors, or until the termination of the
Trust Agreement. (See "Amendment and Termination of the Trust
Agreement-Termination.") References in this Prospectus to "Units" are
to Units which represented the fractional undivided interest indicated in
the "Summary of Essential Information" in Part A.
Estimated Current Return And Estimated Long-Term Return
Under accepted bond practice, tax-exempt bonds are customarily
offered to investors on a "yield price" basis (as contrasted to a "dollar
price" basis) at the lesser of the yield as computed to maturity of the
bonds or to an earlier redemption date and which takes into account not
only the interest payable on the bonds but also the amortization or
accretion to a specified date of any premium over or discount from the
par (maturity) value in the bond's
purchase price. Since Units of a Trust are offered on a dollar price
basis, the rate of return on an investment in Units of a Trust is stated in
terms of "Estimated Current Return," computed by dividing the Net
Annual Income per Unit by the Public Offering Price per Unit. Any
change in either the Net Annual Income per Unit or the Public Offering
Price per Unit will result in a change in the Estimated Current Return.
The Net Annual Income per Unit of a Trust is determined by dividing
the total annual interest income to such Trust, less estimated annual fees
and expenses of the Trustee, the Sponsor and the Evaluator, by the
number of Units of such Trust outstanding. The Net Annual
Income per Unit of a Trust will change as the income or expenses of
such Trust changes and as Bonds are redeemed, paid, sold or exchanged.
For a statement of the Net Annual Income per Unit and the Estimated
Current Return based on the Public Offering Price, see Part A,
"Summary of Essential Information".
The Estimated Long-Term Return for each Trust is a measure of
the return to the investor over the estimated life of the Trust. The
Estimated Long-Term Return represents an average of the yields to
maturity (or call) of the Bonds in the Trust's portfolio calculated in
accordance with accepted bond practice and adjusted to reflect expenses
and sales charges. In calculating Estimated Long-Term Return, the
<PAGE>
average yield for the Trust's portfolio is derived by weighing each
Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced.
Once the average portfolio yield is computed, this figure is then reduced
to reflect estimated expenses and the effect of the maximum sales charge
paid by investors.
A Trust may experience expenses and portfolio changes different
from those assumed in the calculation of Estimated Long-Term Return.
There thus can be no assurance that the Estimated Current Returns or the
Estimated Long-Term Returns quoted for a Trust will be realized in the
future. Since both Estimated Current Return and Estimated Long-Term
Return quoted on a given business day are based on the market value of
the underlying Bonds on that day, subsequent calculations of these
performance measures will reflect the then-current market value of the
underlying bonds and may be higher or lower.
Tax Status
In the opinion of bond counsel to the issuing governmental
authorities given at the time of the original delivery of the Bonds,
interest income on the Bonds comprising the Portfolio of each Trust is
(except in certain instances, depending upon the Unit holder, as
described below) exempt from Federal income tax under the provisions
of the Internal Revenue Code in effect as of the date of issuance. In the
case of Bonds issued when the Internal Revenue Code of 1954 was in
effect, redesignation of the Code as the Internal
Revenue Code of 1986 (the "Code" or the "1986 Code") has not
adversely affected such exemption. (See "Tax Exempt Securities Trust
- - Portfolio.")
On the Date of Deposit for the Trusts, Messrs. Cahill Gordon &
Reindel, special counsel for the Sponsors, rendered an opinion under
then existing provisions of the Code, the regulations then promulgated
thereunder and then current rulings of the Internal Revenue Service
substantially to the effect that:
None of the Trusts is an association taxable as a
corporation for Federal income tax purposes, and interest on the
underlying debt obligations which is exempt from Federal income
tax under the Code when received by each Trust (or by a
previously issued Series in whose property the Trust has an
ownership interest) will retain its status as tax-exempt interest,
for Federal income tax purposes, to the Unit holders.
Each Unit holder will be considered the owner of a pro
rata portion of the assets of the Trust assets, Units of which are
held by him (including any ownership interest of the Trust in
<PAGE>
property comprising a previously issued Series) under Sections
671-678 of the Code. Each Unit holder will be considered to
have received a pro rata share of interest derived from such Trust
assets when it is received by the Trust (or by the previously
issued Series), and each Unit holder will have a taxable event
when an underlying debt obligation is disposed of (whether by
sale, exchange, redemption, or payment at maturity) or when the
Unit holder redeems or sells Units. The total tax cost of each
Unit to a Unit holder is allocated among each of the underlying
debt obligations held in the particular Trust (in accordance with
the proportion of the particular Trust assets comprised by each
underlying debt obligation) in order to determine the Unit
holder's per Unit tax cost for each underlying debt obligation,
and the tax cost reduction requirements of the Code relating to
amortization of bond premium will apply separately to the per
Unit tax cost of each underlying debt obligation. Therefore,
under some circumstances a Unit holder may realize taxable
gains when Units are sold or redeemed for an amount equal to or
less than the Unit holder's original cost.
When a contract to acquire an underlying debt obligation
is settled after the Unit holder's settlement date for a Unit, the
Unit holder's proportionate share of the interest accrued on the
underlying debt obligation on the debt obligation's settlement date
will exceed the portion of the purchase price that was allocable
to interest accrued on the Unit settlement date. A Unit holder
will not be subject to Federal income tax on the Unit holder's
proportionate share of the interest which accrues during the
period between the Unit settlement date and the debt obligation's
settlement date either when such interest is received by the Trust
or when it is distributed to the Unit holder.
Under the income tax laws of the State and City of New
York, the income of each Trust will be treated as the income of
its Unit holders.
If the proceeds received by a Trust upon the sale or redemption
of an underlying debt obligation exceed a Unit holder's adjusted tax cost
allocable to the debt obligation disposed of, that Unit holder will realize
a taxable gain to the extent of such excess. Conversely, if the proceeds
received by a Trust upon the sale or redemption of an underlying debt
obligation are less than a Unit holder's adjusted tax cost allocable to the
debt obligation disposed of, that Unit holder will realize a loss for tax
purposes to the extent of such difference.
The Revenue Reconciliation Act of 1993 (P.L. 103-66) was
recently enacted. P.L. 103-66 increases maximum marginal income taxes
<PAGE>
for individuals and corporations (generally effective for taxable years
beginning after December 31, 1992), extends the authority to issue
certain categories of tax-exempt bonds (qualified small issue bonds and
qualified mortgage bonds), limits the availability of capital gain treatment
for tax-exempt bonds purchased at a market discount, increases the
amount of Social Security benefits subject to tax
(effective for taxable years beginning after December 31, 1993) and
makes a variety of other changes. Prospective investors are urged to
consult their own tax advisors as to the effect of P.L. 103-66 on an
investment in Units.
Any gain recognized on a sale or exchange of a Unit holder's pro
rata interest in a Bond, and not constituting a realization of accrued
"market discount", and any loss will be a capital gain or loss, except in
a case of a dealer or financial institution. Gain realized on the
disposition of the interest of
a Unit holder in a market discount Bond is treated as ordinary income to
the extent the gain does not exceed the accrued market discount. A Unit
holder has an interest in a market discount Bond in a case in which the
tax cost for the Unit holder's pro rata interest in the Bond is less than the
stated redemption price thereof at maturity (or the issue price plus
original issue discount accrued
up to the acquisition date, in the case of an original issue discount Bond.
Any capital gain or loss arising from the disposition of a Unit holder's
pro rata interest in a Bond for more than one year. Under the Code, net
capital gain (i.e., the excess of net long-term capital gain over net
short-term capital loss) of individuals, estates and trusts is subject to a
maximum nominal tax rate of 28%. Such net capital gain may,
however, result in a disallowance of itemized
deductions and/or affect a personal exemption phase-out.
In the case of certain of the underlying debt obligations
comprising the Portfolio of a Trust, the opinions of bond counsel indicate
that although interest on such underlying debt obligations is generally
exempt from Federal income tax, such underlying debt obligations are
"industrial development bonds" under the 1954 Code or "private activity
bonds" under the 1986 Code, and interest on such underlying debt
obligations will not be exempt from Federal
income tax for any period during which such underlying debt obligations
are held by a "substantial user" of the facilities financed by the proceeds
of such underlying debt obligations (or a "related person" to such a
"substantial user"). In the opinion of Messrs. Cahill Gordon & Reindel,
interest attributable to such underlying debt obligations (although not
subject to Federal income tax to a Trust), if received by a Unit holder
who is such a "substantial user" or "related person," will be taxable (i.e.,
not tax-exempt) to the Unit holder to the same
extent as if such underlying debt obligations were held directly by the
Unit holder as owner. No investigation as to the users or of the facilities
financed by the underlying debt obligations has been made by the
<PAGE>
Sponsors or their counsel. Investors should consult their tax counsel for
advice with respect to the effect of these provisions on their particular
tax situations.
Furthermore, exemption of interest on a Bond from regular
Federal income tax requires that the issuer of the Bond (or other user of
the Bond proceeds) meet certain ongoing compliance requirements.
Failure to meet these requirements could result in loss of the exemption
and such loss of exemption could apply retroactively from the date of
issuance. A Bond may provide that if a loss of exemption is determined
to have occurred, the Bond is immediately due and payable; and, in the
case of a secured Bond, that the
security can be reached if the Bond is not then paid. If such a loss of
exemption were to occur and the Bond did not contain such an
acceleration clause, or if the acceleration did not in fact result in payment
of the Bond, the affected Bond would likely be sold as a taxable bond.
Sale of a Bond as a taxable bond would
likely result in a realization of proceeds less than the cost of the Bond.
Persons in receipt of Social Security benefits should be aware that
a portion of such Social Security benefits may be includible in gross
income. For 1993, the includible amount for a taxable year is the lesser
of (a) one-half of the Social Security benefits or (b) one-half of the
amount by which the sum of "modified adjusted gross income" plus
one-half of the Social Security benefits
exceeds a "base amount." The base amount is $25,000 for unmarried
taxpayers, $32,000 for married taxpayers filing a joint return and zero
for married taxpayers not living apart who file separate returns.
For 1994 and subsequent taxable years, two threshold amounts
apply. The 1993 rule continues to apply to a taxpayer whose modified
adjusted gross income plus one-half of his or her Social Security benefits
does not exceed $34,000 threshold ($44,000 for married taxpayers filing
a joint return). Taxpayers with modified adjusted gross income in excess
of the $34,000 threshold ($44,000 for married taxpayers filing a joint
return) are, however, required to include up to 85% of their Social
Security benefits in gross income.
Modified adjusted gross income is adjusted gross income
determined without regard to certain otherwise allowable deductions and
exclusions from gross income, plus tax exempt interest on municipal
obligations including interest on the Bonds. To the extent that Social
Security benefits are includible in gross income they will be treated as
any other item of gross income and therefore may be taxable. Although
tax exempt interest is included in modified adjusted gross income solely
for the purpose of determining what portion, if any, of Social Security
benefits will be included in gross income, no
tax exempt interest, including that received from a Trust, will be subject
to Federal income tax.
<PAGE>
The exemption of interest on municipal obligations for Federal
income tax purposes does not necessarily result in exemption under any
other Federal tax law or under the income or other tax laws of any state
or city. The laws of the several states vary with respect to the taxation
of such obligations.
Opinions relating to the validity of the Bonds and the exemption
of interest thereon from Federal income tax are rendered by bond
counsel to the issuing governmental authorities given at the time of the
original delivery of the Bonds. Neither the Sponsors nor their counsel
have made any review of proceedings relating to the issuance of Bonds
or the bases for bond counsels' opinions. It is the view of the Sponsors
that interest on the Securities will not be a tax preference item for
purposes of the alternative minimum tax under the
Tax Reform Act of 1986 (the "1986 Act"). Unit holders are urged to
consult their own tax advisors concerning an investment in Units.
The Code provides, generally, that adjustments to taxable income
to produce alternative minimum taxable income for corporations will
include 75% of the amount by which adjusted current earnings (which
would include tax-exempt interest) of the taxpayer exceeds the alternative
minimum taxable income of the taxpayer before any amount is added to
alternative minimum taxable income because of this adjustment.
The Code also imposes an additional 12/100% ($12.00 per
$10,000) environmental tax on the alternative minimum taxable income
(determined without regard to any alternative tax net operating loss
deduction) of a corporation in excess of $2,000,000 for each taxable year
beginning before January 1, 1996. The environmental tax is an excise
tax and is deductible for United States federal income tax purposes (but
not for purposes of the environmental tax itself). Although the
environmental tax is based on alternative
minimum taxable income, the environmental tax must be paid in addition
to any Federal income taxes payable by the corporation.
For Federal income tax purposes, Trust expenses allocable to
producing or collecting Trust interest income are not deductible because
the income derived by a Trust is exempt from Federal income tax. A
state or local income tax may provide for a deduction for the portion of
such Trust expenses attributable to the production or collection of income
derived by a Trust and taxed by the state or locality. The effect on any
such deductions of the 1986 Act rules whereby investment expenses and
other miscellaneous deductions are deductible only to the extent in excess
of 2% of adjusted gross income would depend upon the law of the
particular state or locality involved.
From time to time other proposals have been introduced before
Congress the purpose of which is to restrict or eliminate the Federal
income tax exemption for interest on securities similar to the Bonds in
<PAGE>
a Trust or to require treatment of such interest generally as a "tax
preference" for alternative minimum tax purposes, and it can be expected
that similar proposals may be introduced in the future. The Trusts and
the Sponsors cannot predict what legislation, if any, in respect of the tax
status of interest on Bonds may be proposed by the Executive Branch or
by members of Congress, nor can they predict which proposals, if any,
might be enacted or whether any legislation if
enacted would apply to the Bonds in a Trust.
The Portfolio of a Trust may contain one or more Bonds which
were originally issued at a discount ("original issue discount"). In
general, original issue discount can be defined as the difference between
the price at which a Bond was issued and its stated redemption price at
maturity. In the case of a Bond issued before September 4, 1982,
original issue discount is deemed to accrue (be "earned") as tax-exempt
interest ratably over the period from the date of issuance of the Bond to
the date of maturity and is apportioned among the original holder of the
obligation and subsequent purchasers in accordance with a ratio the
numerator of which is the number of calendar days
the obligation was owned by the holder and the denominator of which is
the total number of calendar days from the date of issuance of the
obligation to its date of maturity. Gain or loss upon the disposition of
an original issue discount Bond in a Portfolio is measured by the
difference between the amount realized upon
disposition of and the amount paid for such obligation. A holder is
entitled, however, to exclude from gross income that portion of such gain
attributable to accrued interest and the "earned" portion of original issue
discount.
In the case of a Bond issued after September 3, 1982, original
issue discount is deemed to accrue on a constant interest method which
corresponds, in general, to the economic accrual of interest (adjusted to
eliminate proportionately on an elapsed-time basis any excess of the
amount paid for the Bond by a Trust over the sum of the issue price and
the accrued original issue discount on the acquisition date). The Unit
holder's tax basis with regard to such Bond is increased by the amount
of original issue discount that is deemed to accrue while the Unit holder
holds his Units and the Trust holds the
Bond. The difference between the amount realized on a disposition of
the Bond (ex currently accrued interest) and the adjusted tax basis of the
Bond will give rise to taxable gain or deductible loss upon a disposition
of the Bond by a Trust (or a sale or redemption of Units by a Unit
Holder).
In addition, investors should be aware that no deduction is
allowed for Federal income tax purposes for interest on indebtedness
incurred or continued to purchase or carry Units. Under rules used by
the Internal Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying particular
<PAGE>
assets, the purchase of Units may be considered to have been made with
borrowed funds even though the borrowed funds are not directly
traceable to the purchase of the Units.
All taxpayers are required to report for information purposes on
their Federal income tax returns the amount of tax-exempt interest they
receive.
Investors should consult their own tax advisors with respect to the
applicability of the foregoing general comments to their own particular
situations and as respects state and local tax consequences of an
investment in Units.
Expenses and Charges
Initial Expenses
At no cost to a Trust the Sponsors have borne all the expenses of
creating and establishing the Trust, including the cost of the initial
preparation and execution of the Trust Agreement, initial preparation and
printing of the certificates for Units, the fees of the Evaluator during the
initial public offering, legal expenses, advertising and selling expenses
and other out-of-pocket expenses. The costs of maintaining the
secondary market, such as printing, legal and accounting, will be borne
by the Sponsors except as otherwise provided in the Trust Agreement.
Trustee's, Sponsors' and Evaluator's Fees
The Trustee will receive for its ordinary recurring services to a
Trust an annual fee in the amount set forth under Part A, "Summary of
Essential Information." For a discussion of the services performed by
the Trustee pursuant to its obligations under the Trust Agreement, see
"Rights of Unit Holders." The Trustee will receive the benefit of any
reasonable cash balances in the Interest and Principal accounts.
The Portfolio supervision fee (the "Supervision Fee"), which is
earned for Portfolio supervisory services, is based upon the greatest face
amount of Bonds in the Trust at any time during the calendar year with
respect to which the fee is being computed. The Supervision Fee has
been incurred by Portfolios which have come into existence after August
14, 1991, beginning with Series 345 initially, and each Series, in
existence, thereafter.
The Supervision Fee, which is not to exceed the amount set forth
in Part A--"Summary of Essential Information", may exceed the actual
costs of providing Portfolio supervisory services for such Trust, but at
no time will the total amount the Sponsors receive for Portfolio
supervisory services rendered to all series of Tax Exempt Securities
Trust in any calendar year exceed the aggregate cost to them of
<PAGE>
supplying such services in such year. In addition, the
Sponsors may also be reimbursed for bookkeeping and other
administrative services provided to the Trust in amounts not exceeding
their costs of providing these services.
The Evaluator determines the aggregate bid price of the
underlying securities on a daily basis at a fee in the amount set forth
under Part A, "Summary of Essential Information," for each evaluation
of the Bonds in a Trust. For a discussion of the services performed by
the Evaluator pursuant to its obligations under the Trust Agreement, see
"Evaluator-Responsibility" and "Public Offering-Offering Price".
Any of such fees may be increased without approval of the Unit
holders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of
Labor's Consumer Price Index entitled "All Services Less Rent" or, if
such Index is no longer published, in a similar index to be determined by
the Trustee and the Sponsors.
In addition, at the time of any such increase, the Trustee shall also be
entitled to charge thereafter an additional fee at a rate or amount to be
determined by the Trustee and the Sponsors based upon the face amount
of Deposited Units in a Trust, for the Trustee's services in maintaining
such Deposited Units. The approval of Unit holders shall not be
required for charging of such additional fee.
Other Charges
The following additional charges are or may be incurred by a
Trust: all expenses of the Trustee (including fees and expenses of counsel
and auditors) incurred in connection with its activities under the Trust
Agreement, including reports and communications to Unit holders;
expenses and costs of any action undertaken by the Trustee to protect a
Trust and the rights and interests
of the Unit holders; fees of the Trustee for any extraordinary services
performed under the Trust Agreement; indemnification of the Trustee for
any loss or liability accruing to it without gross negligence, bad faith or
willful misconduct on its part, arising out of or in connection with its
acceptance or administration of a Trust; in the case of certain trusts to
the extent lawful, expenses (including
legal, accounting and printing expenses) of maintaining registration or
qualification of the Units and/or a Trust under Federal or state securities
laws subsequent to initial registration so long as the Sponsors are
maintaining a market for the Units and all taxes and other governmental
charges imposed upon the Bonds or any part of a Trust (no such taxes
or charges are being levied or made or, to the knowledge of the
Sponsors, contemplated). The above expenses, including the Trustee's
fee, when paid by or owing to the Trustee, are secured by a lien on the
Trust. In addition, the Trustee is empowered to sell Bonds in order to
make funds available to pay all expenses.
<PAGE>
PUBLIC OFFERING
Offering Price
The Public Offering Price of the Units of a Trust is determined
by adding to the Evaluator's determination of the aggregate bid price of
the Bonds per Unit a sales charge equal to the percentage of the Public
Offering Price indicated for each Trust in Part A, "Summary of Essential
Information". The aggregate bid price of the underlying Bonds may be
expected to be less than the aggregate offering price (see "Public
Offering - Method of Evaluation"). A
proportionate share of accrued and undistributed interest on the Bonds in
a Trust at the date of delivery of the Units of such Trust to the purchaser
is also added to the Public Offering Price.
Pursuant to employee benefit plans, Units of a Trust are available
to employees of certain of the Sponsors at a Public Offering Price equal
to the Evaluator's determination of the aggregate bid price of Bonds of
a Trust per Unit plus a sales charge of 1.25% of the Public Offering
Price. Sales through such plans to employees of the Sponsors require
less selling effort and selling expenses than sales to the general public.
Method of Evaluation
The aggregate bid price of the Bonds (which is used to calculate
the price at which the Sponsors repurchase and sell Units in the
secondary market and the Redemption Price at which Units may be
redeemed) will be determined by the Evaluator (1) on the basis of the
current bid prices for the Bonds,
(2) if bid prices are not available for any Bonds, on the basis of current
bid prices of comparable securities, (3) by appraisal, or (4) by any
combination of the above. Such determinations will be made each
business day as of the Evaluation Time set forth in the "Summary of
Essential Information," in Part A, effective for all sales made subsequent
to the last preceding determination.
The term "business day", as used herein shall exclude Saturdays,
Sundays and any day on which the New York Stock Exchange is closed.
The difference between the bid and offering prices of the Bonds may be
expected to average approximately 1.5% of principal amount. In the
case of actively traded securities, the difference may be as little as 0.5
of 1%, and in the case of inactively traded securities such difference will
usually not exceed 3%. The price at which Units may be repurchased
by the Sponsors in the secondary market could be less than the price paid
by the Unit holder. For information
relating to the calculation of the Redemption Price per Unit, which is
also based upon the aggregate bid price of the underlying Bonds and
which may be expected to be less than the Public Offering Price per
Unit, see "Rights of Unit Holders - Redemption of Units".
Distribution of Units
Units acquired in the secondary market (see "Public Offering -
Market for Units") may be offered by this Prospectus at the Public
Offering Price determined in the manner provided above (see "Public
Offering - Offering Price").
The Sponsors will allow a discount on Units sold to members of
the National Association of Securities Dealers, Inc. Such discount is
subject to change from time to time.
Sales will be made only with respect to whole Units, and the
Sponsors reserve the right to reject, in whole or in part, any order for
the purchase of Units. A purchaser does not become a Unit holder
(Certificate holder) or become entitled to exercise the rights of a Unit
holder (including the right to redeem his Units) until he has paid for his
Units. Generally, such payment must be made within five business days
after an order for the purchase of Units has been placed. The price paid
by a Unit holder is the Public Offering
Price in effect at the time his order is received, plus accrued interest (see
"Public Offering - Method of Evaluation"). This price may be different
from the Public Offering Price in effect on any other day, including the
day on which the Unit holder made payment for the Units.
Market for Units
Although not obligated to do so, the Sponsors presently intend to
maintain a market for the Units of a Trust and to continuously offer to
purchase such Units at prices based upon the aggregate bid price of the
underlying Bonds which may be less than the price paid by the Unit
holder. For information relating to the method and frequency of the
Evaluator's determination of the aggregate bid price of the underlying
Bonds, see "Public Offering -- Method of Evaluation". The costs of
maintaining the secondary market, such as printing,
legal and accounting, will be borne by the Sponsors except as otherwise
provided in the Trust Agreement. The Sponsors may cease to maintain
such a market at any time and from time to time without notice if the
supply of Units of a Trust of this Series exceeds demand or for any other
reason. In this event the Sponsors may nonetheless purchase Units, as
a service to Unit holders, at
prices based on the current Redemption Price of those Units. In the
event that a market is not maintained for the Units of a Trust, a Unit
holder of such Trust desiring to dispose of his Units may be able to do
so only by tendering such Units to the Trustee for redemption at the
Redemption Price, which is based upon the aggregate bid price of the
underlying Bonds. (See "Rights of Unit
Holders - Redemption of Units").
<PAGE>
Exchange Option
Unit holders may elect to exchange any or all of their Units of
this series for units of one or more of any series of Tax Exempt
Securities Trust (the "Exchange Trust") available for sale in the state in
which the Unit holder resides at a Public Offering Price for the units of
the Exchange Trust to be acquired based on a fixed sales charge of $25
per unit. The Sponsors reserve the right to modify, suspend or terminate
this plan at any time without further
notice to Unit holders. Therefore, there is no assurance that a market
for units will in fact exist on any given date on which a Unit holder
wishes to sell his Units of this series and thus there is no assurance that
the Exchange Option will be available to a Unit holder. Exchanges will
be effected in whole units only.
Any excess proceeds from Unit holders' Units being surrendered will be
returned and Unit holders will not be permitted to advance any new
money in order to complete an exchange.
An exchange of Units pursuant to the Exchange Option for units
of an Exchange Trust will generally constitute a "taxable event" under
the Code, i.e., a Holder will recognize a gain or loss at the time of
exchange. However, an exchange of Units of this Trust for units of any
other similar series of the Tax Exempt Securities Trust which are grantor
trusts for U.S. federal income tax purposes will not constitute a taxable
event to the extent that the underlying
securities in each trust do not differ materially either in kind or in extent.
Unit holders are urged to consult their own tax advisors as to the tax
consequences to them of exchanging Units in particular cases.
Units of the Exchange Trust will be sold under the Exchange
Option at the bid prices of the underlying securities in the particular
portfolio involved per unit plus a fixed charge of $25 per unit. As an
example, assume that a Unit holder, who has three units of a trust with
a current price of $1,020 per unit based on the bid prices of the
underlying securities, desires to exchange
his Units for units of a series of an Exchange Trust with a current price
of $880 per unit based on the bid prices of the underlying securities. In
this example, the proceeds from the Unit holder's units will aggregate
$3,060. Since only whole units of an Exchange Trust may be purchased
under the Exchange Option,
the Unit holder would be able to acquire three units in the Exchange
Trust for a total cost of $2,715 ($2,640 for the units and $75 for the
sales charge). The remaining $345 would be returned to the Unit holder
in cash.
Reinvestment Programs
Distributions of interest and principal, if any, are made to Unit
holders monthly. The Unit holder will have the option of either
<PAGE>
receiving his monthly income check from the Trustee or participating in
one of the reinvestment programs offered by certain of the Sponsors
provided such Unit holder meets the minimum qualifications of the
reinvestment program and such program lawfully qualifies for sale in the
jurisdiction in which the Unit holder
resides. Upon enrollment in a reinvestment program, the Trustee will
direct monthly interest distributions and principal distributions, if any,
to the reinvestment program selected by the Unit holder. Since each
Sponsor has arranged for different reinvestment alternatives, Unit holders
should contact the Sponsors for more complete information, including
charges and expenses. The appropriate prospectus will be sent to the
Unit holder. The Unit holder should
read the prospectus for a reinvestment program carefully before deciding
to participate. Participation in the reinvestment program will apply to all
Units of a Trust owned by a Unit holder and may be terminated at any
time by the Unit holder, or the program may be modified or terminated
by the Trustee or the program's Sponsor.
Sponsors' Profits
For their services the Sponsors receive a gross commission equal
to a percentage of the Public Offering Price of the Units. In maintaining
a market for the Units of a Trust (see "Public Offering - Market for
Units"), the Sponsors also realize profits or sustain losses in the amount
of any difference between the price at which they buy such Units and the
price at which they resell or redeem such Units (see "Public Offering -
Offering Price").
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units of a Trust is evidenced by registered
certificates executed by the Trustee and the Sponsors. A Certificate is
transferable by presentation and surrender of the Certificate to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer.
Certificates may be issued in denominations of one Unit or any
multiple thereof. A Unit holder may be required to pay $2.00 per
certificate reissued or transferred, and to pay any governmental charge
that may be imposed in connection with each such transfer or
interchange. For new certificates issued to replace destroyed, stolen or
lost certificates, the Unit holder must furnish indemnity satisfactory to
the Trustee and must pay such expenses
as the Trustee may incur. Mutilated certificates must be surrendered to
the Trustee for replacement.
<PAGE>
Distribution of Interest and Principal
Interest and principal received by a Trust will be distributed on
each Monthly Distribution Date on a pro rata basis to Unit holders in
such Trust of record as of the preceding Record Date. All distributions
will be net of applicable expenses and funds required for the redemption
of Units and, if applicable, reimbursements to the Trustee for interest
payments advanced to Unit holders on previous Monthly Distribution
Dates. (See Part A, "Summary of Essential Information," and "Tax
Exempt Securities Trust -Expenses and
Charges" and "Rights of Unit Holders - Redemption of Units" in this
Section.)
The Trustee will credit to the Interest Account of a Trust all
interest received by such Trust, including that part of the proceeds of any
disposition of Bonds of such Trust which represents accrued interest.
Other receipts will be credited to the Principal Account of the affected
Trust. The pro rata share of the Interest Account and the pro rata share
of cash in the Principal Account represented by each Unit of a Trust will
be computed by the Trustee
each month as of the Record Date. (See Part A, "Summary of Essential
Information"). Proceeds received from the disposition of any of the
Bonds subsequent to a Record Date and prior to the next succeeding
Distribution Date will be held in the Principal Account and will not be
distributed until the following Distribution Date. The distribution to the
Unit holders 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 one-twelfth of
such holders' pro rata share of the estimated annual income to the
Interest Account after deducting estimated expenses (the "Monthly
Interest Distribution") plus such holders' pro rata share of the cash
balance in the Principal Account
computed as of the close of business on the preceding Record Date.
Persons who purchase Units between a Record Date and a Distribution
Date will receive their first distribution on the second Distribution Date
following their purchase of Units. No distribution need be made from
the Principal Account if the balance therein is less than an amount
sufficient to distribute $1.00 per Unit.
The Monthly Interest Distribution per Unit as of the date shown under
Part A, "Summary of Essential Information" for a Trust will change as
the income and expenses of such Trust change and as Bonds are
exchanged, redeemed, paid or sold.
Normally, interest on the Bonds in the Portfolio of a Trust is paid
on a semi-annual basis. Because Bond interest is not received by a Trust
at a constant rate throughout the year, any Monthly Interest Distribution
may be more or less than the amount credited to the Interest Account as
of the Record Date. In order to eliminate fluctuations in Monthly
Interest Distributions resulting from such variances, the Trustee is
<PAGE>
required by the Trust Agreement to advance such amounts as may be
necessary to provide Monthly Interest
Distributions of approximately equal amounts. The Trustee will be
reimbursed, without interest, for any such advances from funds available
from the Interest Account on the next ensuing Record Date or Record
Dates, as the case may be. If all or a portion of the Bonds for which
advances have been made subsequently fail to pay interest when due, the
Trustee may recoup advances made by it in anticipation of receipt of
interest payments on such Bonds by reducing the amount distributed per
Unit in one or more Monthly Interest Distributions. If units are
redeemed subsequent to such advances by the Trustee, but prior to
receipt by the Trustee of actual notice of such failure to pay interest, the
amount of which was so advanced by the Trustee, each remaining Unit
holder will be subject to a greater pro rata reduction in his Monthly
Interest Distribution than would have occurred absent such redemptions.
Funds which are available for future distributions, payments of expenses
and redemptions are in accounts which are non-interest bearing to Unit
holders and are available for use by
United States Trust Company of New York, pursuant to normal banking
procedures. The Trustee is entitled to the benefit of holding any
reasonable cash balances in the Interest and Principal Accounts. The
Trustee anticipates that the average cash balance in the Interest Account
will be approximately 2% in excess
of the amounts anticipated to be required for Monthly Distributions to
Unit holders. In addition, because of the varying interest payment dates
of the Bonds comprising a Trust Portfolio, accrued interest at any point
in time will be greater than the amount of interest actually received by
a Trust and distributed to Unit holders. Therefore, there will always
remain an item of accrued interest
that is added to the value of the Units. This accrued but undistributed
interest is known as the accrued interest carryover. If a Unit holder sells
or redeems all or a portion of his Units, a portion of his sale proceeds
will be allocable to his proportionate share of the accrued interest
carryover. Similarly, if a Unit holder
redeems all or a portion of his Units, the Redemption Price per Unit
which he is entitled to receive from the Trustee will include his accrued
interest carryover on the Bonds. (See "Rights of Unit Holders -
Redemption of Units -Computation of Redemption Price per Unit.")
As of the first day of each month the Trustee will deduct from the
Interest Account of a Trust and, to the extent funds are not sufficient
therein, from the Principal Account of such Trust, amounts necessary to
pay the expenses of such Trust. (See "Tax Exempt Securities Trust -
Expenses and Charges".) 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 assets until such time as the Trustee shall return all or
any part of such amounts to the appropriate account. In addition, the
<PAGE>
Trustee may withdraw from the Interest Account and the Principal
Account such amounts as may be necessary to cover redemption of Units
by the Trustee. (See "Rights of Unit
Holders - Redemption of Units".) The Trustee is also entitled to
withdraw from the Interest Account, and, to the extent funds are not
sufficient therein, from the Principal Account, on one or more Record
Dates as may be appropriate, amounts sufficient to recoup advances
which the Trustee has made in anticipation of the receipt by a Trust of
interest in respect of Bonds which subsequently fail to pay interest when
due.
Reports and Records
The Trustee shall furnish Unit holders in connection with each
distribution a statement of the amount of interest, if any, and the amount
of other receipts, if any, which are being distributed, expressed in each
case as a dollar amount per Unit. In the event that the issuer of any of
the Bonds fails to make payment when due of any interest or principal
and such failure results in a change in the amount which would otherwise
be distributed as a monthly distribution, the Trustee will, with the first
such distribution following such
failure, set forth in an accompanying statement, the issuer and the Bond,
the amount of the reduction in the distribution per Unit resulting from
such failure, the percentage of the aggregate principal amount of Bonds
which such Bond represents and, to the extent then determined,
information regarding any disposition or legal action with respect to such
Bond. Within a reasonable time after the end of each calendar year, the
Trustee will furnish to each person who
at any time during the calendar year was a Unit holder of record, a
statement (1) as to the Interest Account: interest received (including
amounts representing interest received upon any disposition of Bonds),
if the issuers of the Bonds are located in different states or territories,
then the percentage of such interest by
such states or territories, deductions for payment of applicable taxes and
for fees and expenses of a Trust, redemptions of Units and 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; (2) as to the
Principal Account: the dates of disposition of any Bonds and the net
proceeds received therefrom (excluding any portion representing
interest), deductions for payments of applicable taxes and for fees and
expenses of a Trust, redemptions of Units, and
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; (3) a list of the Bonds held and the number of Units
outstanding on the last business day of such calendar year; (4) the
<PAGE>
Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (5) amounts actually
distributed during such calendar year from the Interest Account and from
the Principal Account, separately stated, expressed both as total dollar
amounts and as dollar amounts representing the pro rata share of each
Unit outstanding. The accounts of a Trust will be audited not less
frequently than annually by independent auditors designated by the
Sponsors, and the report of such auditors
shall be furnished by the Trustee to Unit holders upon request.
The Trustee shall keep available for inspection by Unit holders
at all reasonable times during the usual business hours, books of record
and account of its transactions as Trustee including records of the names
and addresses of Unit holders, certificates issued or held, a current list
of Bonds in the Portfolio of a Trust and a copy of the Trust Agreement.
Redemption of Units
Units may be tendered to the Trustee for redemption at its unit
investment trust office at 770 Broadway, New York, New York 10003,
upon payment of any relevant tax. At the present time there are no
specific taxes related to the redemption of the Units. No redemption fee
will be charged by the Sponsors or the Trustee. Units redeemed by the
Trustee will be canceled.
Certificates for Units to be redeemed must be properly endorsed
or accompanied by a written instrument of transfer. Unit holders must
sign exactly as their name appears on the face of the certificate with the
signature guaranteed by an officer of a national bank or trust company
or by a member of either the New York, Midwest or Pacific Stock
Exchange. In certain instances the Trustee may require additional
documents such as, but not limited to, trust instruments, certificates of
death, appointments as executor or administrator or certificates of
corporate authority.
Within seven calendar days following such tender, the Unit holder
will be entitled to receive in cash an amount for each Unit tendered equal
to the Redemption Price per Unit computed as of the Evaluation Time set
forth in the "Summary of Essential Information" in Part A on the date
of tender. (See "Redemption of Units - Computation of Redemption
Price per Unit".) The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except as regards Units
received after the close of trading on the New
York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading, and such Units will be deemed to have
been tendered to the Trustee on such day for redemption at the
Redemption Price computed on that day. For information relating to the
purchase by the Sponsors of Units tendered to the Trustee for redemption
<PAGE>
at prices which may be, in certain circumstances, in excess of the
Redemption Price, see "Redemption of
Units - Purchase by the Sponsors of Units Tendered for Redemption."
Accrued interest paid on redemption shall be withdrawn from the
Interest Account, or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be
withdrawn from the Principal Account. The Trustee is empowered to
sell Bonds in order to make funds available for redemption. Such sales,
if required, could result in a sale of Bonds by the Trustee at a loss. To
the extent Bonds are sold, the size and diversity of a Trust will be
reduced.
The Trustee reserves the right to suspend the right of redemption
and to postpone the date of payment of the Redemption Price per Unit
for any period during which the New York Stock Exchange is closed,
other than weekend and holiday closings, or trading on that Exchange is
restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or
evaluation of the underlying Bonds is not reasonably practicable, or for
such other periods as the Securities and Exchange Commission has by
order permitted.
Computation of Redemption Price per Unit - The Redemption
Price per Unit of a Trust is determined by the Trustee on the basis of the
bid prices of the Bonds in such Trust as of the Evaluation Time on the
date any such determination is made. The Redemption Price per Unit of
a Trust is each Unit's pro rata share, determined by the Trustee, of: (1)
the aggregate value of the Bonds in such Trust on the bid side of the
market (determined by the Evaluator as set forth under "Public Offering
- - Method of Evaluation") (2) cash on hand in such Trust and accrued and
unpaid interest on the Bonds as of the date of
computation, less (a) amounts representing taxes or governmental charges
payable out of such Trust, (b) the accrued expenses of such Trust, and
(c) cash held for distribution to Unit holders of such Trust of record as
of a date prior to the evaluation.
Purchase by the Sponsors of Units Tendered for Redemption
- - The Trust Agreement requires that the Trustee notify the Sponsors of
any tender of Units for redemption. So long as the Sponsors are
maintaining a bid in the secondary market, the Sponsors, prior to the
close of business on the second succeeding business day, will purchase
any Units tendered to the Trustee
for redemption at the price so bid by making payment therefor to the
Unit holder in an amount not less than the Redemption Price not later
than the day on which the Units would otherwise have been redeemed by
the Trustee. (See"Public Offering - Market for Units".) Units held by
the Sponsors may be tendered to the Trustee for redemption as any other
Units, provided that the Sponsors shall not receive for Units purchased
<PAGE>
as set forth above a higher price than they paid,
plus accrued interest.
The offering price of any Units resold by the Sponsors will be the
Public Offering Price determined in the manner provided in this
Prospectus. (See "Public Offering - Offering Price".) Any profit
resulting from the resale of such Units will belong to the Sponsors which
likewise will bear any loss resulting from a lower offering or redemption
price subsequent to their acquisition of such Units. (See "Public Offering
- - Sponsors' Profits".)
SPONSORS
Smith Barney Shearson Inc., 1345 Avenue of the Americas, New
York, New York 10105 ("Smith Barney"), was incorporated in Delaware
in 1960 and traces its history through predecessor partnerships to 1873.
Smith Barney, an investment banking and securities broker-dealer firm,
is a member of the New York Stock Exchange, Inc. and other major
securities and commodities exchanges, the National Association of
Securities Dealers, Inc. and the Securities Industry Association. Smith
Barney is an indirect wholly-owned subsidiary of The Travelers Inc.
(formerly, Primerica Corporation).
Kidder, Peabody & Co. Incorporated, 10 Hanover Square, New
York, New York 10005 ("Kidder, Peabody"), was incorporated in
Delaware in 1956 and traces its history through predecessor partnerships
to 1865. Kidder,Peabody, an investment banking and securities
broker-dealer firm, is a member
of the New York Stock Exchange, Inc. and other major securities and
option exchanges, the National Association of Securities Dealers, Inc.
and the Securities Industry Association.
On May 26, 1989 the Commission granted Kidder, Peabody a
permanent exemption from certain provisions of the Investment Company
Act of 1940 which otherwise would have rendered Kidder, Peabody
ineligible to serve as sponsor, depositor or underwriter of the Trust, as
a result of an injunction entered against Kidder, Peabody. The injunction
arose out of certain alleged activities of Kidder, Peabody not involving
the Trust or any other investment company and which are described
below. In order to obtain the
permanent exemption, Kidder, Peabody retained a consultant (at its own
expense) to review the policies and procedures utilized by it to prevent
violations of the federal securities laws in connection with its investment
company business, and to recommend, where appropriate, changes in
policies, procedures and staffing necessary to assure ongoing compliance.
The Commission considered the application of Kidder, Peabody for a
permanent exemption after the Commission had received a copy of the
consultant's report and recommendations and reports from Kidder,
<PAGE>
Peabody setting forth the actions it had taken or proposed to take in
respect of the implementation of the consultant's recommendations.
On June 4, 1987 the Commission filed a complaint (the
"Complaint") in the United States District Court for the Southern District
of New York, in a civil action entitled Securities and Exchange
Commission v. Kidder, Peabody & Co. Incorporated, 87 Civ. 3869 (R0)
(the "SEC Action"). On the same day, Kidder, Peabody entered into, and
the parties filed in the SEC Action, a related Consent and Undertakings,
in which Kidder, Peabody neither admitted nor denied any of the
allegations in the Complaint except as to
jurisdiction, and pursuant to which Consent and Undertakings the District
Court entered a Final Judgment of Permanent Injunction and other relief
as to Kidder, Peabody (the "Final Judgment"). The exemption from the
Act was requested by Kidder, Peabody as a result of the Final Judgment.
The Complaint in the injunctive action brought by the
Commission alleges that Kidder, Peabody violated sections 10(b) and
14(e) of the Securities Exchange Act of 1934 (the "Exchange Act") and
rules promulgated thereunder by engaging, for its own account, in
purchases or sales of the securities of six named companies while in the
possession of material, non-public information concerning tender offers
or other extraordinary corporate transactions concerning such companies.
The Complaint asserts that such information was obtained by a former
executive of Kidder, Peabody as part of a scheme for the exchange of
non-public information with a partner at another investment banking
firm. These allegations are directed to events in 1984 and 1985; the
executive ceased employment with Kidder, Peabody in February, 1986.
Other allegations of the Complaint allege violations by Kidder, Peabody
of sections 7(c) and 17(a)(1) of the Exchange Act and various rules
promulgated thereunder and aiding and abetting in violations by another
entity of sections 15(c)(3) and 17(a)(1) of the Exchange Act and various
rules promulgated thereunder. These provisions relate to the maintenance
and preservation of accurate books and records, adherence to margin
requirements prescribed by the
Federal Reserve Board and compliance with net capital requirements
applicable to broker-dealers. The violations alleged in the Complaint
with respect to all of these provisions stem from several transactions in
1984 and 1985 involving another broker-dealer. According to the
Complaint, oral understandings between Kidder, Peabody and the other
broker-dealer enabled the other broker- dealer to avoid adherence to the
net capital requirements and constituted an impermissible extension of
credit to such entity by Kidder, Peabody.
Among other provisions, the Final Judgment enjoins Kidder,
Peabody from engaging in certain transactions, acts, practices or courses
of business which constitute or would constitute violations of Sections
7(c), 10(b), 14(e) and 17(a)(1), or constitute or would constitute aiding
and abetting violations of Sections 15(c)(3) and 17(a)(1), of the Exchange
<PAGE>
Act and various rules promulgated thereunder. The Final Judgment also
requires that Kidder, Peabody pay a penalty of approximately $11.6
million to the U.S. Treasury under the Insider Trading Sanctions Act of
1984, and establish a fund of approximately $13.7 million which would
be available to compensate anyone with valid claims of injury from the
conduct alleged.
Also, on June 4, 1987, the Commission instituted administrative
proceedings against Kidder, Peabody pursuant to Section 15(b)(4) of the
Exchange Act, entitled In the Matter of Kidder, Peabody & Co.
Incorporated, Administrative Proceeding File No. 3-6855 (the "SEC
Order"). On the same day, Kidder, Peabody filed an Offer of Settlement
(the "Offer") with respect to the SEC Order, which was accepted by the
Commission and incorporated into the SEC Order. The Final Judgment
was the basis for the SEC Order. In the SEC Order, the Commission
censured Kidder, Peabody and ordered that Kidder, Peabody comply
with its undertakings (consisting of certain
remedial measures to be taken by Kidder, Peabody designed to prevent
future occurrence of the conduct alleged in the Complaint and to ensure
Kidder, Peabody's compliance on an ongoing basis with the federal
securities laws and the rules and regulations of self-regulatory
organizations) set forth in the Order.
None of the allegations in the Complaint relate to any of Kidder,
Peabody's activities in connection with any unit investment trust or any
other investment company.
Smith Barney sponsors seven open-end investment companies,
Smith Barney Equity Funds, Inc., Smith Barney Funds, Inc., Smith
Barney Variable Account Funds, Smith Barney Tax Free Money Fund,
Inc., Smith Barney Money Funds, Inc., Smith Barney Muni Funds and
Smith Barney World Funds, Inc. and four closed-end investment
companies, The Inefficient-Market Fund, Inc., Smith Barney
Intermediate Municipal Fund, Inc., Smith Barney
Municipal Fund, Inc. and Smith Barney High Income Opportunity Fund
Inc. Smith Barney also sponsors all Series of Corporate Securities Trust,
Government Securities Trust and Harris, Upham Tax-Exempt Fund and
acts as co-sponsor of certain trusts of The Equity Income Fund, Concept
series. Kidder, Peabody sponsors Target Corporate High Yield Series
Unit Trust and twelve open-end investment companies: Kidder, Peabody
Government Money Fund, Inc., Kidder, Peabody Premium Account
Fund, Kidder, Peabody Tax-Exempt Money Fund,
Inc., Kidder, Peabody Cash Reserve Fund, Inc., Kidder, Peabody
Exchange Money Fund, Kidder, Peabody Equity Income Fund, Inc.,
Kidder, Peabody Government Income Fund, Inc., Liquid Institutional
Reserves, Kidder, Peabody Global Equity Fund, Kidder, Peabody
Intermediate Term Fixed Income Fund
and Kidder, Peabody Asset Allocation Fund and Kidder, Peabody
California Tax Exempt Money Fund, Inc. Kidder, Peabody Asset
<PAGE>
Management, Inc., a subsidiary of Kidder, Peabody, is the investment
adviser and administrator of each of the twelve open-end investment
companies. The Sponsors have acted previously as managing
underwriters of other investment companies. In addition
to participating as a member of various underwriting and selling groups
or as agent of other investment companies, the Sponsors also execute
orders for the purchase and sale of securities of investment companies
and sell securities to such companies in their capacities as brokers or
dealers in securities.
Limitations on Liability
The Sponsors are jointly and severally liable for the performance
of their obligations arising from their responsibilities under the Trust
Agreement, but will be under no liability to Unit holders for taking any
action or refraining from any action in good faith or for errors in
judgment or responsible in any way for depreciation or loss incurred by
reason of the sale of any Bonds, except in cases of willful misfeasance,
bad faith, gross negligence or reckless disregard of their obligations and
duties. (See "Tax Exempt Securities Trust - Portfolio" and "Sponsors -
Responsibility.")
Responsibility
The Sponsors are empowered to direct the Trustee to dispose of
Bonds or deposited Units of other trusts when certain events occur that
adversely affect the value of the Bonds, including default in payment of
interest or principal, default in payment of interest or principal on other
obligations of the same issuer, institution of legal proceedings, default
under other documents adversely affecting debt service, decline in price
or the occurrence of other market or credit factors, or decline in
projected income pledged for debt service
on revenue bonds and advanced refunding that, in the opinion of the
Sponsors, may be detrimental to the interests of the Unit holders.
The Sponsors intend to provide portfolio services for each Trust
in order to determine whether the Trustee should be directed to dispose
of any such Bonds.
It is the responsibility of the Sponsors to instruct the Trustee to
reject any offer made by an issuer of any of the Bonds to issue new
obligations in exchange and substitution for any Bonds pursuant to a
refunding or refinancing plan, except that the Sponsors may instruct the
Trustee to accept such an offer or to take any other action with respect
thereto as the Sponsors may deem proper if the issuer is in default with
respect to such Bonds or in the judgment of the Sponsors the issuer will
<PAGE>
probably default in respect to such
Bonds in the foreseeable future. Any obligations so received in exchange
or substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations in
exchange or substitution for underlying Bonds, the Trustee is required to
give notice thereof to each Unit holder, identifying the Bonds eliminated
and the Bonds substituted therefor.
Except as stated in this paragraph, the acquisition by a Trust of any
securities other than the Bonds initially deposited in the Trust is
prohibited.
Smith Barney Shearson Inc. has been appointed by Kidder,
Peabody & Co. Incorporated as agent for purposes of taking any action
required or permitted to be taken by the Sponsors under the Trust
Agreement. If the Sponsors are unable to agree with respect to action to
be taken jointly by them under the Trust Agreement and they cannot
agree as to which Sponsor shall act as sole Sponsor, then Smith Barney
Shearson Inc. shall act as sole Sponsor. If one of the Sponsors fails to
perform its duties under the Trust Agreement or becomes incapable of
acting or becomes bankrupt or its affairs are taken over
by public authorities, that Sponsor is automatically discharged under the
Trust Agreement and the remaining Sponsor acts as Sponsor.
Resignation
Any Sponsor may resign provided that at the time of such
resignation each remaining Sponsor maintains a net worth of $1,000,000
and is agreeable to such resignation. Concurrently with or subsequent
to such resignation a new Sponsor may be appointed by the remaining
Sponsor and the Trustee to assume the duties of the resigning Sponsor.
If all Sponsors resign or otherwise fail or become unable to perform their
duties under the Trust Agreement, and no express provision is made for
action by the Trustee in such event, the Trustee may appoint a successor
sponsor or terminate the Trust Agreement and liquidate the affected
Trusts.
TRUSTEE
The Trustee is United States Trust Company of New York, with
its principal place of business at 114 West 47th Street, New York, New
York 10036. United States Trust Company of New York has, since its
establishment in 1853, engaged primarily in the management of trust and
agency accounts for individuals and corporations. The Trustee is a
member of the New York Clearing House Association and is subject to
supervision and examination by the Superintendent of Banks of the State
of New York, the Federal Deposit Insurance Corporation and the Board
<PAGE>
of Governors of the Federal Reserve System. In connection with the
storage and handling of certain Bonds deposited
in the Trust, the Trustee may use the services of The Depository Trust
Company. These services may include safekeeping of the Bonds and
coupon-clipping, computer book-entry transfer and institutional delivery
services. The Depository Trust Company is a limited purpose trust
company organized under the Banking Law of the State of New York,
a member of the Federal Reserve System and a clearing agency
registered under the Securities Exchange Act of 1934.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the disposition of any monies,
securities or certificates or in respect of any evaluation or for any action
taken in good faith reliance on prima facie properly executed documents
except in cases of willful misfeasance, bad faith, gross negligence or
reckless disregard for its obligations and duties. In addition, the Trustee
shall not be personally liable for any taxes or other governmental charges
imposed upon or in respect of a Trust which the Trustee may be required
to pay under current or future law of the United States or any other
taxing authority having jurisdiction. (See"Tax
Exempt Securities Trust - Portfolio".) For information relating to the
responsibilities and indemnification of the Trustee under the Trust
Agreement, reference is made to the material set forth under "Rights of
Unit Holders," "Sponsors - Resignation" and "Other Charges".
Resignation
By executing an instrument in writing and filing the same with the
Sponsors, the Trustee and any successor may resign. In such an event,
the Sponsors are obligated to appoint a successor trustee as soon as
possible. If the Trustee becomes incapable of acting or becomes
bankrupt or its affairs are taken over by public authorities, the Sponsors
may remove the Trustee and appoint a
successor as provided in the Trust Agreement. Such resignation or
removal shall become effective upon the acceptance of appointment by
the successor trustee. If no successor has accepted the appointment
within thirty days after notice of resignation, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective
only when the successor trustee accepts its appointment as such or when
a court of competent jurisdiction appoints a successor trustee.
<PAGE>
EVALUATOR
The Evaluator is Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc., with main offices located at 65
Broadway, New York, New York 10006.
Limitations on Liability
The Trustee, Sponsors and Unit holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the Trust
Agreement shall be made in good faith upon the basis of the best
information available to it; provided, however, that the Evaluator shall
be under no liability to the Trustee, the Sponsors or Unit holders for
errors in judgment. But this provision shall not protect the Evaluator in
cases of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Responsibility
The Trust Agreement requires the Evaluator to evaluate the Bonds
of a Trust on the basis of their bid prices on the last business day of June
and December in each year, on the day on which any Unit of such Trust
is tendered for redemption and on any other day such evaluation is
desired by the Trustee or is requested by the Sponsors. For information
relating to the responsibility of the Evaluator to evaluate the Bonds on
the basis of their bid prices, see "Public Offering - Offering Price".
Resignation
The Evaluator may resign or may be removed by the joint action
of the Sponsors and the Trustee, and in such event, the Sponsors and the
Trustee are to use their best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon the acceptance
of appointment by a 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.
<PAGE>
AMENDMENT AND TERMINATION OF THE TRUST
AGREEMENT
Amendment
The Sponsors and the Trustee have the power to amend the Trust
Agreement without the consent of any of the Unit holders when such an
amendment is (1) to cure any ambiguity or to correct or supplement any
provision of the Trust Agreement which may be defective or inconsistent
with any other provision contained therein, or (2) to make such other
provisions as shall not adversely affect the interests of the Unit holders;
provided, that the Trust Agreement is not amended to increase the
number of Units issuable thereunder or to permit the deposit or
acquisition of securities either in addition
to or in substitution for any of the Bonds initially deposited in a Trust,
except for the substitution of certain refunding securities for such Bonds
or to permit the Trustee to engage in business or investment activities not
specifically authorized in the Trust Agreement as originally adopted. In
the event of any amendment, the Trustee is obligated to notify promptly
all Unit holders of the substance of such amendment.
Termination
The Trust Agreement provides that if the principal amount of
Bonds is less than 50% of the principal amount of the Bonds originally
deposited in such Trust, the Trustee may in its discretion and will, when
directed by the Sponsors, terminate such Trust. A Trust may be
terminated at any time by 100% of the Unit holders. See Part A for
additional optional and mandatory
termination provisions. However, in no event may a Trust continue
beyond the Mandatory Termination Date set forth under Part A,
"Summary of Essential Information". In the event of termination,
written notice thereof will be sent by the Trustee to all Unit holders.
Within a reasonable period after termination,
the Trustee will sell any Bonds remaining in the affected Trust, and,
after paying all expenses and charges incurred by such Trust, will
distribute to each Unit holder, upon surrender for cancellation of his
certificate for Units, his pro rata share of the balances remaining in the
Interest and Principal Account of such Trust.
LEGAL OPINIONS
Certain legal matters in connection with the Trusts have been
passed upon by Messrs. Cahill Gordon & Reindel, a partnership
including professional corporations, 80 Pine Street, New York, New
York 10005, as special counsel for the Sponsors. Messrs. Carter,
<PAGE>
Ledyard & Milburn, 2 Wall Street, New York, New York 10005, act as
counsel for the Trustee.
AUDITORS
The Statements of Financial Condition and Portfolio of Securities
of a trust included in this Prospectus have been audited by KPMG Peat
Marwick, independent auditors, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.
BOND RATINGS
All ratings except those identified otherwise are by Standard &
Poor's Corporation.
Standard & Poor's Corporation
A Standard & Poor's corporate or municipal bond rating is a
current assessment of the creditworthiness of an obligor with respect to
a specific debt obligation. This assessment of creditworthiness may take
into consideration obligors such as guarantors, insurers, or lessees.
The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished to
Standard & Poor's by the issuer and obtained by Standard & Poor's from
other sources it considers reliable. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of,
such information.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the obligation;
II. Nature of and provisions of the obligation; and
III.Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or
other arrangement under the laws of bankruptcy and other
<PAGE>
laws affecting creditors' rights.
A summary of the meaning of the applicable rating symbols as
published by Standard & Poor's follows:
AAA - This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay
interest and repay principal.
AA - Bonds rated AA have a very strong capacity to pay interest
and repay principal, and in the majority of instances differ from AAA
issues only in small degrees.
A - Bonds rated A have a strong capacity to pay interest and
repay principal, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
bonds in higher-rated categories.
BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they normally
exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to weakened capacity to
pay interest and repay principal for bonds in this category than for bonds
in the higher-rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms
of the obligation. BB indicates the lowest degree of speculation and C the
highest degree of speculation. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Plus(+) or Minus(-): To provide more detailed indications of
credit quality, the ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "p" following a rating indicates
the rating is provisional. A provisional rating assumes the successful
completion of the project being financed by the issuance of the bonds
being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion
of the project. This rating, however, while addressing credit quality
subsequent to completion, makes no comment on the likelihood of, or the
risk of default upon failure of, such completion. Accordingly, the
investor should exercise his own judgment with
respect to such likelihood and risk.
<PAGE>
Conditional Ratings: Indicated by "Con" are given to bonds for
which the continuance of the security rating is contingent upon Standard
& Poor's receipt of an executed copy of the escrow agreement or closing
issuance of insurance by the respective insurance company.
Moody's Investors Service
A brief description of the applicable Moody's Investors Service's
rating symbols and their meanings is as follows:
Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group, they comprise what are
generally known as high grade bonds. Aa bonds are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger
than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations; i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
<PAGE>
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Note: Those municipal bonds in the Aa, A, Baa, Ba and B groups
which Moody's believes possess the strongest investment attributes are
designated by the symbols Aa1, A1, Baa1, Ba1 and B1, respectively. In
addition, Moody's applies numerical modifiers, 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category. Although Industrial Revenue Bonds and Environmental Control
Revenue Bonds are tax-exempt issues, they are included in the corporate
bond rating system.
Conditional ratings, indicated by "Con" are given to bonds for
which the security depends upon the completion of some act or the
fulfillment of some condition. These are bonds secured by (a) earnings
of projects under construction, (b) earnings of projects unseasoned in
operating experience, (c) rentals which begin when facilities are
completed, or (d) payments to which some other limiting condition
attaches. A parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
Note: NR indicates, among other things, that no rating has been
requested, that there is insufficient information on which to base a rating,
or that Standard & Poor's Corporation and Moody's Investors Service do
not rate a particular type of obligation as a matter of policy. Subsequent
to the Date of Deposit the credit characteristics of the Issuers of
Securities may have changed. Currently, certain of the Securities in the
Portfolio of a Trust may be unrated
and have credit characteristics comparable to securities rated below the
minimum requirements of such Trust for acquisition of a Security. See
<PAGE>
Part A - "Portfolio of Securities" herein to ascertain the ratings on the
Securities, if any, on the date
of the Portfolios of Securities.
Fitch Investors Service, Inc.
A brief description of the applicable Fitch Investors Service, Inc.
rating symbols and their meanings is as follow:
AAA - Bonds which are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA - Bonds which are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong although not quite as strong as bonds rated AAA.
A - Bonds which are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds
with higher ratings.
BBB - Bonds which are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The
likelihood that these bonds will fall below investment grade is higher
than for bonds with higher ratings.
Plus (+) Minus (-) - Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the `AAA',
`DDD', `DD' or `D' categories.
Conditional - A conditional rating is promised on the successful
completion of a project of the occurrence of a specific event.
Duff & Phelps Credit Rating Co.
A brief description of the applicable Duff & Phelps Credit Rating Co.
rating symbols and their meanings is as follows:
AAA-Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
<PAGE>
AA-High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic
conditions.
A-Protection factors are average but adequate. However, risk
factors are more variable and greater in periods of economic stress.
BBB-Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
NR- Not rated (credit characteristics comparable to A or better
on the Date of Deposit).
[/TEXT]
<PAGE>
<TABLE>
Prospectus
This Prospectus contains information concerning the Trust and
the Sponsors, but does not contain all the information set forth
in the registration statements and exhibits relating thereto, which
the Trust has filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is
hereby made.
<S>
<C>
Index:
Page
Summary of Essential Information. . . . . . . . . . . . . . . . . . . . . . . . . .
A-2
Series 29
Financial and Statistical Information . . . . . . . . . . . . . . . . . . . . . . . A-3
Report of Independent Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . A-3
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4
Statements of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-4
Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . A-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . A-
5
11,147 Units
Portfolio of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
Tax Exempt Securities Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Considerations Regarding the Trusts. . . . . . . . . . . . . . . . . . 2
PROSPECTUS
The Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dated February 17, 1994
Estimated Current Return and Estimated Long-Term Return . . . . . . . . . . . . . 9
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Expenses and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Offering Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Sponsors
Method of Evaluation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Distribution of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Market for Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SMITH BARNEY SHEARSON INC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Reinvestment Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1345 Avenue of the Americas
Sponsors' Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
New York, New York 10105
Rights of Unit Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(800) 298-UNIT
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distribution of Interest and Principal. . . . . . . . . . . . . . . . . . . . . . 17
Reports and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Redemption of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
&
Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
KIDDER, PEABODY & CO.
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Incorporated
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10 Hanover Square
Evaluator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
New York, New York 10005
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(212) 747-5951
Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Amendment and Termination of the Trust Agreement. . . . . . . . . . . . . . . . . . 25
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Bond Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Standard & Poor's Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Moody's Investors Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Fitch Investors Service, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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.
</TABLE>
<PAGE> PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement
on Form S-6 comprises the following papers and documents:
The facing Sheet on Form S-6.
The cross-reference sheet.
The Prospectus consisting of pages A-1 - A- , and 1- , back cover.
Signatures.
Written consents of the following persons:
KPMG Peat Marwick
Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc.
(included in Exhibit 4.6A)
The following exhibits:
*4.6A - Consent of Kenny S&P Evaluation Services, a division
of Kenny Information Systems, Inc. as Evaluator.
* Filed herewith.
II-1
<PAGE>
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York, 10006-2511
Telephone 212/770-4000
Smith Barney Shearson
Incorporated
1345 Avenue of the Americas
New York, NY 10105
RE:Tax Exempt Securities Trust
Series 29
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-65741 for the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Sincerely,
F.A. Shinal
Senior Vice President
Chief Financial Officer
tru:l-31
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to
the use of their name in the Prospectus included in this Post-
Effective Amendment to the Registration Statement ("Post-
Effective Amendment") is contained in their opinion filed as
Exhibit 3.1 to the Registration Statement.
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of
our report dated January 25, 1994 included herein and to the
reference to our firm under the heading "AUDITORS" in the
prospectus.
KPMG PEAT MARWICK
New York, New York
January 27, 1994
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Tax Exempt Securities Trust, Series 29,
certifies that it meets all the requirements for
effectiveness of this Post-Effective Amendment pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of New York,
and State of New York on the 27th day of January, 1994.
Signatures appear on pages II-3 and II-4.
A majority of the members of the Board of Directors of Smith
Barney Shearson Incorporated have signed this Post-Effective
Amendment pursuant to Powers of Attorney authorizing the person
signing this Post-Effective Amendment to do so on behalf of such
members.
These Powers of Attorney were filed with the Securities
and Exchange Commission under the Securities Act of 1933 with the
Registration Statement of Tax Exempt Securities Trust,
Appreciation Series 7, Registration No. 2-78499 and with the
Registration Statement of Tax Exempt Securities Trust, Series
110, Intermediate Term Series 15 and Short-Intermediate Term
Series 13, Registration Nos. 2-97179, 2-95591 and 2-96184,
respectively, with the Registration Statement of Tax Exempt
Securities Trust, Series 284, Amendment No. 2, Registration No.
33-22777, with the Registration Statement of Tax Exempt
Securities Trust, Series 295, Amendment No. 1, Registration No.
33-26376, and with the Registration Statement of Tax Exempt
Securities Trust, Series 335, Amendment No. 1, Registration No.
33-37952.
A majority of the members of the Board of Directors of
Kidder, Peabody & Co. Incorporated have signed this Post-
Effective Amendment pursuant to Powers of Attorney authorizing
the person signing this Post-Effective Amendment to do so on
behalf of such members. These Powers of Attorney were filed with
the Securities and Exchange Commission under the Securities Act
of 1933 as an exhibit to the Registration Statement of Tax Exempt
Securities Trust, Series 303, Post-Effective Amendment No. 1,
Registration No. 33-28378.
<PAGE>
TAX EXEMPT SECURITIES TRUST
BY SMITH BARNEY SHEARSON INC.
By
(George S. Michinard, Jr.)
By the following persons,* who constitute a majority of
the directors of Smith Barney Shearson Incorporated:
Steven D. Black
James S. Boshart III
Robert K. Difazio
James Dimon
Robert Druskin
Toni A. Elliot
Lewis L. Glucksman
John B. Hoffman
A. Richard Janiak, Jr.
Robert Q. Jones
Robert B. Kane
Jeffrey B. Lane
Thomas A. Maguire
Howard D. Marsh
William J. Mills II
John C. Morris
A. George Saks
Bruce D. Sargent
Melvin B. Taub
Jacques S. Theriot
Stephen J. Treadway
Paul Underwood
Philip M. Waterman, Jr.
By
(George S. Michinard, Jr.
Attorney-in-Fact)
* Pursuant to Powers of Attorney previously filed.
II-3
<PAGE>
TAX EXEMPT SECURITIES TRUST
By Kidder, Peabody & Co. Incorporated
By
(Gilbert R. Ott, Jr.)
By the following persons*, who constitute a majority
of the directors of Kidder, Peabody & Co. Incorporated:
Edward A. Cerullo
Michael A. M. Keehner
John M. Liftin
James A. Mullin
Richard W. O'Donnell
Thomas F. Ryan, Jr.
By
(Gilbert R. Ott, Jr.
Attorney-in-Fact)
___
* Pursuant to Powers of Attorney previously filed.
II-4
