<PAGE>
Registration No. 33-44989
S E C U R I T I E S A N D E X C H A N G E C O M M I S
S I O
N
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
to
F O R M S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF
1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact Name of Trust:
CORPORATE SECURITIES TRUST,
LONG-TERM DEBT
SERIES 23
B.
Name of Depositor:
SMITH BARNEY INC.
<TABLE>
<S> <C>
C. Complete address of depositor's principal executive
office:
SMITH BARNEY
INCORPORATED
1345 Avenue of the Americas
New York, New York 10105
D. Name and complete address of agent for service:
STEPHEN J. TREADWAY
Smith Barney
Incorporated
1345 Avenue of the Americas
New York, New York 10105
</TABLE>
It is proposed that this filing will become effective May 19,
1995
pursuant to paragraph (b) of Rule 485.
<PAGE>
CORPORATE 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>
CORPORATE SECURITIES TRUST
LONG-TERM DEBT SERIES 23
(Insured Portfolio)
[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 SPONSOR 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 SPONSOR 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 interest income through investment in a
fixed portfolio consisting primarily of long-term corporate debt
obligations issued by domestic and foreign companies ("Obligations"),
with fixed maturities in excess of 13 years (subject to redemption
provisions, see "Portfolio of Securities"). The Portfolio of the Trust
is concentrated in public utility securities.
THE OBJECTIVES of the Trust are current income and preservation
of principal through an investment in a portfolio consisting primarily
of long-term corporate debt obligations. Achievement of the Trust's
objectives is dependent upon the continued ability of the issuers of the
securities held by the Trust to meet their obligations to pay interest
and principal. See Part B, "Corporate Securities Trust--Portfolio."
THE PUBLIC OFFERING PRICE of the Units is equal to the
aggregate bid price of the underlying Obligations 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 Obligations at the date of
delivery of the Units to the purchaser is also added to the Public
Offering Price.
THE SPONSOR, 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 Obligations, as more fully described in Part B, "Public
Offering--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".
INSURANCE. Each debt obligation in an insured portfolio is covered
by an insurance policy as a result of which the Units of the Insured
Portfolio have received a rating of AAA by Standard & Poor's
Corporation as of the Date of Deposit. (See Part B, "Corporate
Securities Trust--Insurance on the Obligations in the Insured Portfolio
of a Trust.") There can be no assurance that Units of a Trust with an
insured portfolio will retain this AAA rating. No representation is
made as to the Insurers' abilities to meet their commitments.
Insurance guaranteeing the scheduled payment of all principal and
interest to the maturity of certain debt obligations has been obtained
either by the issuer at the time of issuance or the Sponsor at the date
of deposit. Insurance obtained by the issuer at the time of issuance or
by the Sponsor at the date of deposit is in effect throughout the life of
the debt obligations.
SPECIAL RISK CONSIDERATIONS. An investment in Units of
each Trust should be made with an understanding of the risks which
an investment in fixed rate long-term corporate debt obligations may
entail, including the risk that the value of the Units will decline with
increases in interest rates. Insurance obtained by a Trust containing
an insured portfolio or by the Sponsor or by the Obligation issuer does
not guarantee the market value of the debt obligations or the value of
the Units. Insurance obtained by the issuer of an Obligation or by the
Sponsor is effective so long as the Obligation is outstanding.
Therefore, any such insurance may be considered to represent an
element of market value in regard to the Obligations thus insured, but
the exact effect, if any, of this insurance on such market value cannot
be predicted. The insurance on the Obligations does not protect Unit
holders from the risk that the value of the Units may decline. (See
"Corporate Securities Trust--Insurance on the Obligations in the
Insured Portfolio of a Trust.")
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 May , 1995
Note: Part A of this Prospectus may not be distributed unless
accompanied by Part B.
<PAGE>
<TABLE>
CORPORATE SECURITIES TRUST
LONG-TERM DEBT SERIES 23
SUMMARY OF ESSENTIAL INFORMATION AS OF FEBRUARY
22, 1995+
Sponsor:SMITH BARNEY INC.
Trustee:UNITED STATES TRUST COMPANY OF NEW YORK
Evaluator:KENNY S&P EVALUATION SERVICES
<S><C>
Principal Amount of Securities in Trust$6,750,000
Number of Units 7,384
Fractional Undivided Interest in Trust per Unit 1/7,384
Principal Amount of Securities in Trust per Unit$914.13
Public Offering Price per Unit #*$ 903.31
Sales Charge (5% of Public Offering Price)# 45.16
Approximate Redemption and Sponsor's Repurchase Price
per Unit
(per Unit Bid Price of Securities)#**$858.15
Calculation of Estimated Net Annual Income per Unit:
Estimated Annual Income per Unit$73.00
Less Estimated Annual Expenses per Unit 1.96
Estimated Net Annual Income per Unit$71.04
Monthly Income Distribution per Unit$5.92
Daily Rate (360-day basis) of Income Accrual per
Unit$.1973
Estimated Current Return Based on Public Offering Price#
7.86%
Estimated Long-Term Return# 7.91%
<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 $21.00 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 February 22, 1995). (See "Public Offering--Offering Price".)
**Plus $19.22 per Unit representing accrued interest and the net of
cash on hand, accrued expenses and amounts distributable to Unit
holders of record as of February 22, 1995 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: February 10, 1993
Mandatory Termination Date: The Trust will terminate on the date
of maturity, redemption, sale or other disposition of the last
obligation held in the Trust. The actual date of termination of the
Trust may be considerably earlier (see Part B, "Amendment and
Termination of the Trust Agreement--Termination").
Minimum Value of Trust: Trust may be terminated if the value of
the Trust is less than $3,875,000.
Trustee's Annual Fee: $1.16 per $1,000 principal amount of bonds
($7,830 per year on the basis of bonds in the principal amount of
$6,750,000) plus expenses.
Evaluator's Fee: $.30 per bond per evaluation Number of
issues: 9
Sponsor's Annual Portfolio Supervision Fee: Maximum of $.25
per $1,000 face amount of the underlying Bonds
As of February 22, 1995, all of the Bonds were rated AAA by
Standard & Poor's Corporation as a result of the insurance. (See
"Corporate Securities Trust - Insurance").<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. 100% of the Bonds in the Trust consist
of bonds in the power facilities category. (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 February 22, 1995.
<TABLE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding
IncomePrincipal
UnitsNet AssetDistributionsDistributions
Period EndedOutstandingValue Per UnitPer UnitPer Unit
<S><C><C><C><C>
February 10, 19937,990$989.51$-$-
January 31, 19947,6901,003.9357.2759.16
January 31, 19957,384866.2271.04-
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Unit Holders, Sponsor and Trustee of
Corporate Securities Trust, Long-Term Debt Series 23:
We have audited the accompanying balance sheet of Corporate Securities
Trust, Long-Term Debt Series 23, including the portfolio of securities,
as of January 31, 1995, and the related statements of operations and
changes in net assets for the year ended January 31, 1995 and for the
period from February 10, 1993 (date of deposit) to January 31, 1994.
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 January 31, 1995 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 Corporate Securities
Trust, Long-Term Debt Series 23 as of January 31, 1995, and the results
of its operations and changes in its net assets for the year ended January
31, 1995 and for the period from February 10, 1993 (date of deposit) to
January 31, 1994, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New York, New York
March 31, 1995<PAGE>
<PAGE>
<TABLE>
CORPORATE SECURITIES TRUST,
LONG-TERM DEBT SERIES 23
BALANCE SHEET
January 31, 1995
ASSETS
<S><C>
Investments in tax exempt bonds, at market value
(Cost $6,900,789) (Note 3 to Portfolio of Securities)$6,241,930
Accrued interest 145,316
Cash 9,894
Total Assets$6,397,140
LIABILITIES AND NET ASSETS
Accrued expenses$ 956
Net Assets (7,384 units of fractional undivided
interest outstanding):
Original cost to investors (Note 1)$8,336,813
Less initial underwriting commission (sales charge)
(Note 1) 391,845
7,944,968
Cost of securities sold or redeemed since date of
deposit (February 10, 1993) (1,044,179)
Net unrealized market depreciation (658,859)
6,241,930
Undistributed net investment income 153,672
Undistributed proceeds from securities sold or
redeemed 582
Net Assets 6,396,184
Total Liabilities and Net Assets$6,397,140
Net asset value per unit$866.22
STATEMENTS OF OPERATIONS
For the period from
February 10, 1993
For the year endedthrough
January 31, 1995January 31, 1994
<S><C><C>
Investment Income-interest (Note 2)$ 541,944$ 589,887
Less expenses:
Trustee's fees and expenses 17,01911,850
Evaluator's fees 686 377
Total expenses 17,705 12,227
Net investment income 524,239 577,660
Realized and unrealized gain (loss) on investments:
Net gain (loss) on securities transactions (Note 5) (6,425)10,106
Net (increase) decrease in unrealized market depreciation
(1,029,985) 371,126
Net gain (loss) on investments (1,036,410) 381,232
Net increase (decrease) in net assets resulting from
operations$(512,171)$958,892
The accompanying Notes to Financial Statements are an integral part
of these statements.<PAGE>
<PAGE>
CORPORATE SECURITIES TRUST,
LONG-TERM DEBT SERIES 23
STATEMENTS OF CHANGES IN NET ASSETS
For the period from
February 10, 1993
For the year endedthrough
January 31, 1995January 31, 1994
Operations:
Net investment income$524,239$577,660
Net realized gain (loss) on securities transactions
(Note 5) (6,425)10,106
Net (increase) decrease in unrealized market depreciation
(1,029,985) 371,126
Net increase (decrease) in net assets resulting from
operations (512,171) 958,892
Distributions to Unit Holders:
Net investment income (Note 4) (528,715)(408,762)
Proceeds from securities sold or redeemed - (469,730)
Accrued interest at date of deposit - (79,640)
Total Distributions (528,715) (958,132)
Unit Redemptions by Unit Holders (Note 3):
Accrued interest at date of redemption (5,037)(5,713)
Value of Units at date of redemption (278,118) (299,430)
Total Redemptions (283,155) (305,143)
Decrease in net assets (1,324,041)(304,383)
Net Assets:
Beginning of period 7,720,225 8,024,608
End of period (including undistributed net
investment income of $153,672 and $163,185,
respectively)$6,396,184$7,720,225
</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 (February 10,
1993), exclusive of accrued interest, computed on the basis of the
aggregate offering price of the securities. The initial
underwriting commission (sales charge) was 4.70% of the
aggregate public offering price (4.932% 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) 606 Units were redeemed by the Trustee during the period from
February 10, 1993 (date of deposit) through January 31, 1995
(306 Units and 300 Units being redeemed in 1995 and 1994,
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 (loss) from the sale or redemption of securities is
computed on the basis of the 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 Sponsor is deemed to be issuer of each Trust's Units.
As such, the Sponsor has the responsibility of issuer under the
Act with respect to financial statements of each Trust included in
the Registration Statement.
<PAGE>
<TABLE>
CORPORATE SECURITIES TRUST, LONG-TERM DEBT SERIES
23
PORTFOLIO OF SECURITIES - January 31, 1995
RatingsRedemptionPrincipalMarket
Security Description (1) Provisions (2) Amount Value (3)
<S><C><C><C><C>
Dayton Power & Light Company, FirstAAA 1/15/03 @
104.075$730,000$702,005
Mortgage Bonds, 8.15% due 1/15/2026
Florida Power & Light, First MortgageAAA3/2/95 @
105.8401,000,000936,650
Bonds, 7.875% due 1/1/2013
Georgia Power Company, First Mortgage AAA3/2/95 @
105.8201,000,000932,350
Bonds, 7.95% due 2/1/2023
Midwest Power Systems Inc., General
Mortgage Revenue Bonds, AAA3/2/95 @ 106.281,000,000933,870
8.125% due 2/1/2023
Mississippi Power & Light Company,
General and Refunding Mortgage Bonds, AAA1/15/98 @
106.351,000,000967,090
8.65% due 1/15/2023
Pennsylvania Power & Light Company,AAA2/1/03 @
103.57270,000249,334
First Mortgage Bonds, 7.875% due 2/1/2023
Philadelphia Electric Company, First and
Refunding Mortgage Bonds, AAA9/1/97 @ 105.201,000,000939,110
8.25% due 9/1/2022
Public Service Electric & Gas, First and
Refunding Mortgage Bonds, AAA --340,000204,870
5.00% due 7/1/2037
Public Service Electric & Gas, First and
Refunding Mortgage Bonds, AAA -- 410,000 376,651
8.00% due 6/1/2037
$6,750,000$6,241,930
At January 31, 1995, the net unrealized market depreciation of all bonds
was comprised of the following:
<S><C>
Gross unrealized market appreciation$-
Gross unrealized market depreciation (658,859)
Net unrealized market depreciation$(658,859)
</TABLE>
The accompanying Notes are an integral part of this Portfolio.
<PAGE>
<PAGE>
CORPORATE SECURITIES TRUST, LONG-TERM DEBT SERIES
23
NOTES TO PORTFOLIO OF SECURITIES - January 31, 1995
(1) All Ratings are by Standard & Poor's Corporation. 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.
(3) The market value of securities as of January 31, 1995 was
determined by the Evaluator on the basis of bid prices for the
securities at such date.
(4) Bond insurance policies that insure against default in the payment
of principal and interest on each of the Obligations so long as they
remain outstanding have been obtained from Financial Security
Assurance (FSA). The AAA rating on each of the Obligations
insured is based on the claims paying ability of FSA. No premium
is payable therefore by the Trust.
A-7
<PAGE>
<PAGE>
<PAGE> PROSPECTUS-PART B
Note that Part B of the Prospectus may not be distributed
unless accompanied with Part A.
CORPORATE SECURITIES TRUST
The Trust
The 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") (Reference is
hereby made to said Trust Agreement and any statements contained
herein are qualified
in their entirety by the provisions of said Trust Agreement), among
Smith Barney Inc. (the "Sponsor"), United States Trust Company of
New York, as Trustee, and J.J. Kenny Co., Inc., as Evaluator. On
the Date of Deposit, the
Sponsor deposited with the Trustee, including 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 (such obligations being referred to
herein as the "Obligations" or
"Securities"). The Trustee thereafter delivered to the Sponsor
registered certificates of beneficial interest (the "Certificate")
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
Sponsor either by purchase from the Trustee of Units tendered for
redemption or in the
secondary market. See "Rights of Unit Holders--Redemption of
Units--Purchase by the Sponsor of Units Tendered for Redemption"
and "Public Offering--Market for Units."
Objectives
The objectives of the Trust are current income and
the preservation of principal through an investment in a portfolio
consisting primarily of long-term corporate debt obligations ( the
"Portfolio"). 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 obligations or the
creditworthiness of the
insurers to meet such Obligations. The insurance does not protect
Unit holders from the risk that the value of the Units may decline
before the ratings of the
Obligations subsequent to the Date of Deposit, set forth in Part
A--"Portfolio of Securities" may have declined due to, among other
<PAGE>
factors, a decline in the creditworthiness of the issuer of said
Obligations.
The Trust may be an appropriate investment vehicle
for investors who desire to participate in a portfolio consisting
primarily of long-term taxable debt obligations with greater
diversification than they might be able
to acquire individually. In addition, debt obligations of the type
deposited in the Trust are often not available in small amounts.
An investment in Units of the Trust should be made
with an understanding of the risks which an investment in fixed
rate long-term debt obligations may entail, including the risk that
the value of the Portfolio and hence of the Units will decline with
increases in interest rates.
Portfolio
In selecting Obligations for the Trust, the following
factors, among others, were considered by the Sponsor: (i) the
quality of the
Obligations, (ii) the yield and price of the Obligations relative
to other debt securities of comparable quality and maturity, (iii)
the diversification of the
Portfolio and (iv) the availability, rating of the claims paying
ability of an insurer, and cost of insurance of the scheduled
payment of principal and interest,
when due, on the Obligations in the Trust. Subsequent to the Date
of Deposit, an Obligation may cease to be rated or its rating may
be reduced below its rating
as of the Date of Deposit. Neither event requires elimination of
such Obligation from the Portfolio, but may be considered in the
Sponsor's decision whether to
direct the Trustee to dispose of the Obligation. For a description
of the meaning of the rating symbols as published by the above
rating services, see "Bond Ratings." (As described by the rating
agencies.)
A portion of the Portfolio (see "Portfolio Summary As
of Date of Deposit") (not to exceed 10% of the aggregate offering
side evaluation), may be restricted securities ("Restricted
Securities"). Restricted Securities are
acquired on a private placement basis and cannot be offered for
sale publicly by the Trustee unless and until such securities are
registered with the Securities and
Exchange Commission or are otherwise determined by counsel to the
Sponsor to be exempt from such registration. Among the additional
factors which will be considered by the Evaluator in determining
the value of any Restricted
Securities are (i) an estimate of the existence and extent of any
available market therefor, (ii) the estimated period of time during
which such Securities will not be freely marketable, (iii) the
estimated expenses of qualifying such Securities
<PAGE>
for public sale, if required, (iv) estimated underwriting
commissions, if any, and (v) any credit or other factors affecting
the issuer or the guarantor of such
Securities. If the Trustee is required to sell Restricted
Securities in the open
market, there is no assurance that the price realized on the sale
of such Securities would not be adversely affected by the absence
of an established secondary market for certain of such Securities.
The secondary market, if any, would probably be limited to
institutional investors and any such sale would generally result in
a loss to the Trust.
The debt obligations in the Portfolio may be
subordinate to other debt of an issuer. Thus, in the event of the
bankruptcy, liquidation or
reorganization of an issuer the holders of senior debt obligations
(which includes secured debt) are entitled to be paid in full prior
to any payments on the
subordinated debt. Therefore, assets of an issuer may be
insufficient to make payments in full on the subordinated debt. A
default on senior debt will also
generally prevent payments from being made on subordinated debt.
In the event the issuer of a security defaults on the payments of
income or principal, the Trust may incur expenses in exercising its
rights to recover such payments.
Because amounts (if any) recovered by the Trustee may not be
reflected in the value of the Units until actually received by the
Trust, it is possible that a Unit
holder would bear a portion of the cost of recovery without
receiving the benefit of any portion of the payment recovered if
the Units are sold before the recovery is received or the sale
price does not adequately reflect the potential recovery.
Additional Considerations Regarding the Trust
The Portfolio of the Trust may be concentrated in
Obligations issued by gas and electric public utilities. (See Part
A--"Portfolio Summary as
of Date of Deposit.") Therefore, an investment in Units offered
hereby should be made with an understanding of the risks generally
associated with that
industry. Utilities are generally subject to extensive regulation
by state utility commissions which, for example, establish the
rates which may be charged and
the appropriate rate of return on an approved asset base, which
must be approved by the state commissions. Certain utilities have
had difficulty from time to time persuading regulators, who are
subject to political pressures, to
grant rate increases necessary to maintain an adequate return on
investment and voters in many states have the ability to impose
limits on rate adjustments (for
example, by initiative or referendum). Any unexpected limitations
could negatively affect the profitability of utilities whose
<PAGE>
budgets are planned far in
advance. Also, changes in certain accounting standards implemented
by the Financial Accounting Standards Board could cause significant
write-downs of assets and reductions in earnings for many
investor-owned utilities. Certain of
the issuers of the Obligations in the Portfolio may own or operate
nuclear generating facilities. Governmental authorities may from
time to time review existing, and impose additional, requirements
governing the licensing, construction and operation of nuclear
power plants. In addition, gas pipeline
and distribution companies have had difficulties in adjusting to
short and surplus energy supplies, enforcing or being required to
comply with long-term contracts
and avoiding litigation from their customers, on the one hand, or
suppliers, on the other. Other problems include difficulty in
financing large construction programs during inflationary periods,
rising costs of transportation to transport
fossil fuels, the uncertainty of transmission service costs,
changes in tax laws which may adversely affect a utility's ability
to operate in a profitable manner,
recent reductions in estimates for future demand for electricity
and gas in certain regions, uncertain availability and increased
cost of capital, steady rises in fuels
costs and costs associated with converting to alternate sources of
fuel for electric generation, restrictions on operations and
increased costs and delays attributable
to environmental considerations and regulations, difficulty of
raising capital in adequate amounts on reasonable terms in periods
of high inflation and unsettled
capital markets, the greatly increased costs and reduced
availability of certain
types of fuel, the occasionally reduced availability and high cost
of natural gas for resale, the effects of energy conservation, the
effects of a national energy policy and lengthy delays and greatly
increased costs. Other problems include those associated with the
design, construction, licensing, regulation and
operation of nuclear facilities for electric generation
(particularly in the aftermath of the Three Mile Island incident),
such as the problems associated
with the use of radioactive materials and the disposal of
radioactive wastes. There are substantial differences between the
regulatory policies and practices
of various jurisdictions, and any given regulatory agency may make
major shifts in policy from time to time. There is no assurance
that regulatory legislation may make it even more difficult for
these utilities to obtain adequate rate relief.
The Portfolio of the Trust may contain issues of
foreign corporate obligors or similar entities or foreign
sovereignties (see Part A--"Portfolio Summary as of Date of
Deposit"). These foreign issues involve
investment risks that are different from those of domestic issues,
including future political and economic developments and the
<PAGE>
possible imposition of exchange controls or other foreign
governmental restrictions or foreign taxes.
In addition, it generally is more difficult to obtain and enforce
a judgment against a foreign obligor, there may be less publicly
available information about
a foreign obligor than about a domestic issuer and foreign obligors
are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers.
Most of the Obligations 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 an
obligation 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
Obligation's call or redemption
price. To the extent that an Obligation was deposited in a Trust
at a price higher than the price at which it is redeemable,
redemption will result in a loss
of capital when compared with the original public offering price of
the Units. Conversely, to the extent that an Obligation was
acquired at a price lower than
the redemption price, redemption will result in an increase in
capital when compared with the original public offering price of
the Units. Monthly
distributions will generally be reduced by the amount of the income
which would otherwise have been paid with respect to redeemed
obligations. The Estimated
Current Return and Estimated Long-Term Return of the Units may be
affected by such redemptions. The Portfolio of Securities in Part
A contains a listing of
the sinking fund and call provisions, if any, with respect to each
of the Obligations in a Trust. Because certain of the Obligations
may from time to
time under certain circumstances be sold or redeemed or will mature
in accordance with their terms and proceeds from such events will
be distributed to Unit holders and will not be reinvested, no
assurance can be given that a
Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable
in any way for any default, failure or defect in any Obligation.
The Portfolio of the Trust may consist of some
Obligations whose current market values were below face value on
the Date of Deposit. A
primary reason for the market value of such Obligations being less
than face value at maturity is that the interest coupons of such
Obligations are at lower
rates than the current market interest rate for comparably rated
Obligations, even though at the time of the issuance of such
Obligations the interest coupons
thereon represented then prevailing interest rates on comparably
rated Obligations then newly issued. Obligations selling at market
discounts tend to increase in market value as they approach
maturity when the principal amount is payable.
To the best knowledge of the Sponsor, and except as
may otherwise be indicated in this Prospectus, there was no
litigation pending as of
the Date of Deposit in respect of any Obligations 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 Obligations in a Trust. Such
litigation, may, if successful, affect
the validity of such Obligations or the tax-free nature of the
interest thereon. While the outcome of litigation of such nature
can never to entirely predicted,
the Trust has received opinions of bond counsel to the issuing
authorities of each Obligations on the date of issuance to the
effect that such Obligations have been
validly issued. 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 the Obligations. The
Sponsor is unable to predict whether any such
litigation may be instituted or if instituted, whether it will have
a material adverse effect on a Trust.
The yields on Securities of the type deposited in the
Trust are dependent on a variety of factors, including general
money market conditions,
interest rates, general conditions of the corporate bond market,
size of a particular offering, the maturity of the obligation and
rating of the issue. The ratings represent the opinions of the
rating organizations as to the quality of the
securities which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of
quality. Consequently, securities with the same maturity, coupon
and rating may have different yields, while securities of the same
maturity and coupon with different ratings may have the same yield.
Unit Holders of a Trust not designated as containing
an insured portfolio should omit the section " Insurance on the
Obligations in the Insured Portfolio of a Trust" and continue with
"The Units." All of the Obligations in
any Series not identified as insured are not insured and the
following section "Insurance on the Obligations in the Insured
Portfolio of a Trust" is inapplicable to such Series.
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 the Trust as set
<PAGE>
forth in the "Summary of Essential Information" in Part A. If any
Units are redeemed by the Trustee, the principal amount of the
Obligations 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
Sponsor, 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" of Part A.
Estimated Current Return and Estimated Long-Term Return
Under accepted bond practice, 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 the Trust are offered on a
dollar price basis, the rate of
return on an investment in Units of the 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 of
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 Public Offering Price, see Part A, "Summary
of Essential Information."
The Estimated Long-Term Return for a Trust is a
measure of the return to the investor over the estimated life of a
Trust. The Estimated Long-Term Return represents an average of the
yields to maturity (or call) of
the Bonds in a Trust's portfolio calculated in accordance with
accepted bond practice and adjusted to reflect expenses and sales
charges. In calculating
<PAGE>
Estimated Long-Term Return, the average yield for a 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. The Estimated Long-Term Return calculation does not
take into account the difference in the timing of payments to
Unitholders who choose the quarterly or semi-annual plan of
distribution which will reduce the economic return compared to
those who choose the monthly plan of distribution.
A Trust may experience expenses and portfolio charges
different from those assumed in the calculation of Estimated
Long-Term Return. There
thus can be no assurance that the Estimated Current Returns or
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.
Taxes
On the Date of Deposit, Messrs. Davis Polk &
Wardwell,special counsel for the Sponsor, and special counsel on
New York taxmatters, rendered
an opinion under then existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), theregulations then
promulgated thereunder and then current rulings of theInternal
Revenue Service, substantially to the effect:
The Trust is not an association taxable as a
corporation for United States federal income tax purposes.
Each Unit holder will be considered the owner of a
pro rataportion of the assets of the Trust, under Sections 671-678
of the Code. Each Unit holder
will be considered to have received his pro rata shareof interest
derived from such Trust assets when it is received by theTrust.
Each Unit holder will be
required to include in his gross incomeas determined for Federal
income tax purposes original issue discountwith respect to his
interest in an Obligation held
by the Trust at the sametime and in the same manner as though the
Unit holder were the directowner of such interest. Each Unit
holder's prorata share of each
expense paid by the Trust is deductible by the Unitholder to the
<PAGE>
same extent as though the expense had been paid directly by him.
Each Unit holder will have a taxable event when an
Obligation is disposed of (whether by sale, exchange, redemption,
orpayment at maturity or
when the Unit holder redeems or sells his Units. The total tax cost
of each Unit to a Unit holder is allocated among theObligations
held in the Trust (in
accordance with the proportion of the Trust assets comprised by
eachObligation) in order to determine his per Unit tax cost for his
pro ratainterest in each
Obligation. If a Unit holder's tax cost of his pro rata interest
in an Obligation exceeds the amount payable by the issuer of
theObligation in respect of such pro
rata interest upon the maturity of theObligation, such excess is a
"bond premium" which may be amortized by the Unit holder at the
Unit holder's election as provided in Section 171 of the Code.
The tax cost basis of a Unit holder with respect to
his interest in an Obligation is increased by the amount of
original issue discount
thereon properly included in the Unit holder's gross income as
determined for Federal income tax purposes and reduced by the
amount of any amortized bond premium.
A Unit holder will recognize taxable gain or loss
when all or part of his pro rata interest in an Obligation is
disposed of in a taxable transaction for
an amount greater (or less) than his tax cost therefor. Any such
gain recognized on a sale or exchange and not constituting a
realization of accrued "market
discount" in the case of an Obligation issued after July 18, 1984
and any such loss will be capital gain or loss, except in the case
of a dealer or financial
institution. Gain realized on the disposition of the interest of
a Unit holder in a market discount Obligation 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 Obligation in a case in which the
Unit holder's tax cost for
his pro rata interest in the Obligation 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
Obligation). Any capital gain or loss arising from the disposition
of a Unit holder's pro rata
interest in an Obligation will be long-term capital gain or loss if
the Unit holder has held his Units and the Trust has held the
Obligation for more than one year.
If the Unit holder disposes of a Unit, he is deemed
thereby to have disposed of his entire pro rata interest in all
Trust assets represented by the Unit.
<PAGE>
Under the personal income tax laws of the State and
City of New York, the income of the Trust will be treated as the
income of the Unit holder.
An individual Unit holder who itemizes deductions may
deduct his pro rata share of fees and other expenses of the Trust
only to the extent that
such expenses, together with other investment expenses and
miscellaneous deductions of the Unit holder, exceed 2% of the Unit
holder's adjusted gross income.
An individual Unit holder who is neither a citizen
nor a resident of the United States and a corporate Unit holder
other than a United States
domestic corporation (a "foreign Unit holder") will not
generally be subject to United States federal income taxes,
including withholding taxes, on his, her or its pro rata share of
interest and original issue discount on an Obligation or any gain
from the sale or other disposition of his,
her or its pro rata portion of an Obligation held in the Trust
which interest or original issue discount is not effectively
connected with the conduct by the
foreign Unit holder of a trade or business within the United States
and which gain is either (I) not from sources within the United
States or (II) not so effectively connected, provided that:
(i) with respect to U.S.-source interest and
original issue discount (a) the Obligation as issued after July
18, 1984,
(b) the foreign Unit holder does not own 10 percent
or more
of the total combined voting power of all classes of
voting
stock of the issuer of the Obligation or The
Travelers Inc. and
(c) the foreign Unit holder is not a controlled
foreign corporation
related (within the meaning of Section 864(d)(4) of
the Code)
to the issuer of the Obligation or The Travelers
Inc.;
(ii) with respect to any U.S.-source capital
gain, the
foreign Unit holder (if an individual) is not present
in the
United States for 183 days or more during his or her
taxable
year in which the gain was realized and so certifies;
and
(iii) the foreign Unit holder provides the
<PAGE>
required
certifications regarding (a) his, her or its status,
(b) in the
case of U.S.-source income, the fact that the
interest, original issue
discount or gain is not effectively connected with
the conduct
by the foreign Unit holder of a trade or business
within the
United States, and (c) if determined to be required,
the 10
percent stock ownership and controlled foreign
corporation
matters mentioned in clause (i)(b) and (c) above.
Foreign Unit holders should consult their own tax
counsel
with respect to United States tax consequences of
ownership
of Units.
Each Unit holder (other than a foreign Unit holder
who has properly
provided the certifications described in the preceding paragraph)
will be
requested to provide the Unit holders taxpayer identification
number to the Trustee and to certify that the Unit holder has not
been notified
that payments to the Unit holder are subject to back-up
withholding. If the
taxpayer identification number and an appropriate certification are
not provided
when requested, 31% back-up withholding will apply.
Interest paid by a Unit holder other than a
corporation on indebtedness incurred or continued to purchase or
carry Units will be deductible
as investment interest to the extent permitted by Section 163(d) of
the Code. Unit holders should, however, be aware that interest on
indebtedness incurred
or continued to purchase or carry Units may not be currently
deductible to the
extent that such indebtedness is attributable to the Unit holder's
interest in market discount bonds held by the Trust. Any such
deferred interest will not be deductible until the earlier of the
date the market discount bonds are disposed
of or the Unit holder disposes of his Units. The interest
deduction deferral rule and the above rule requiring treatment of
market discount as ordinary income
upon disposition of a market discount bond will not apply if the
Unit holder elects to include market discount in income on a
current basis. Unit holders
<PAGE>
should also be aware that the amortization of bond premium may,
under some circumstances, cause a unit holder to realize taxable
gains when his Units are
sold or redeemed for an amount equal to or less than his original
cost. Under the Code, amortizable bond premium is treated as an
offset to interest income from the underlying Obligation rather
than as a separate deduction.
When a contract to acquire an underlying 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 Obligation on the
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 required to include in gross income for Federal income
tax purposes his proportionate share of the interest which accrues
during the period between the
Unit settlement date and the Obligation's settlement date. The
Unit holder will, however, be required to reduce his tax cost basis
with regard to the Unit
holder's proportionate interest in the debt obligation involved to
the extent that such interest is received by the Trust for the
account of the Unit holder.
The Revenue Reconciliation Act of 1993 (P.L. 103-66)
was recently enacted. P.L. 103-66 increases maximum marginal income
tax rates for individuals and corporations (generally effective for
taxable years beginning after December 31, 1992), extends the
authority to issuecertain 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 an Obligation, and not constituting
a realization of accrued "market discount", and any loss will be a
capital gain or loss, except in the case
of a dealer or financial institution. Gain realized on the
disposition of the interest of a Unit holder in a market discount
Obligation 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 Obligation in a
case in which the tax cost for the Unit holder's pro rata interest
in the Obligation is less than the stated redemption price thereof
at maturity ( or the issue price plus original issue
<PAGE>
discount accrued up to the acquisition date, in the case of an
original issue discount Obligation. Any capital gain or loss
arising from the disposition of a
Unit holder's pro rata interest in a Obligation will be a long-term
capital gain or loss if the Unit holder has held Units and the
Trust has held the Obligation 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.
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 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 filling 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 ($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 municipa obligations
including interest on the Obligations. 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 the Trust,
will be subject to Federal income tax.
The Portfolio of a Trust may contain one or more
Obligations 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 an Obligation was issued and its stated
redemption price at maturity. In the case of a Bond issued before
July 2, 1982, original issue discount is deemed
to accrue (be "earned") as tax-exempt interest ratably over the
<PAGE>
period from the date of issuance of the Obligation 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 Obligation in the Portfolio is measured by the
difference between the amount realized upon disposition of and the
amount paid for such obligation. A holder may, however, 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 an Obligation issued after July 1
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 the 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 an Obligation is increased by the amount of original issue
discount that is
deemed to accrue and is included in gross income by the Unit holder
while the Unit holder holds his units and the Trust holds the
Obligation. The difference between theamount realized on a
disposition 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 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 tax counsel for advice
with respect to the effect, if any, of the foregoing tax
considerations as they relate to their
particular tax situation and as respects to state and local tax
<PAGE>
consequences of an investment in Units.
Insurance on the Obligations in the Portfolio of a Trust
Certain of the Obligations in an insured portfolio of
a Trust are insured to maturity by AMBAC, Connie Lee, Cap. Gty.,
FSA, MBIA and/or
MBIAC (the "Insurance Companies") at the cost of the issuer of such
Obligation or the Sponsor and the remainder of the Obligations are
insured by one of the
above mentioned insurers (individually an "Insurer" and
collectively the
"Insurers") under a Portfolio Insurance policy obtained by a Trust
(see Part A -- "Portfolio Summary as of Date of Deposit" for the
percentage of the
Obligations in a Trust insured by insurance obtained by the issuer
or the Sponsor and the percentage for which the Trust purchased
Portfolio Insurance). The
respective insurance policies are noncancellable and, except in the
case of any Portfolio Insurance, will continue in force so long as
Obligations are outstanding and the Insurers remain in business.
The insurance policies guarantee the
scheduled payment of principal and interest on but do not guarantee
the market value of the Obligations covered by each policy nor do
they guarantee the value
of the Units. The value of any insurance obtained by the issuer or
by the Sponsor for an Obligation is reflected and included in the
market value of such
Obligation. In the event the issuer of an insured Obligation
defaults in payment of interest or principal the insurance company
insuring the Obligation will be
required to pay to the Trustee any interest or principal payments
due. Payment under the insurance policies is made in respect of
principal of and interest on
Obligations covered thereby which becomes due for payment but is
unpaid. Each such policy for payment to a trustee or paying agent
of the defaulted principal or interest due. In turn, such trustee
or paying agent will make payment to the bondholder (in this case,
the Trustee) upon presentation of
satisfactory evidence of such bondholder's right to receive such
payment. The single premium for any insurance policy or policies
obtained by an issuer of
Securities or the Sponsor has been paid in advance by such issuer
or the Sponsor and any such policy or policies are noncancellable
and will continue in force so
long as the Obligations so insured are outstanding. Insurance is
not a substitute for the basic credit of an issuer, but supplement
the existing credit and provides
additional security. Contracts to purchase Obligations are not
covered by insurance although Obligations underlying such contracts
are covered by insurance upon physical delivery to the Trust.
<PAGE>
A description of each of the insurers follows:
AMBAC Indemnity Corporation
AMBAC Indemnity Corporation ("AMBAC-Indemnity") is a
Wisconsin-domiciled stock insurance company, regulated by the
Insurance Department of Wisconsin. Such regulation, however, is
no guarantee that
AMBAC Indemnity would be able to perform on its contracts in the
event a claim should be made thereunder at some time in the future.
AMBAC Indemnity is a wholly-owned subsidiary of AMBAC Inc., a 100%
publicly-held company. Moody's Investors Service,Inc. and Standard
& Poor's Corporation have both assigned a triple-A claims-paying
ability rating to AMBAC Indemnity.
AMBAC Indemnity is licensed to do business in 50
states, the District of Columbia and the Commonwealth of Puerto
Rico, with admitted assets (unaudited) of approximately
$1,936,000,000 and statutory capital (unaudited) of approximately
$2,060,000,000 as of June 30, 1994. Statutory capital consists of
statutory contingency reserve and AMBAC Indemnity's policyholders'
surplus.
Copies of AMBAC Indemnity's financial statements
prepared in accordance with statutory accounting standards are
available from AMBAC Indemnity's administrative offices and its
telephone number are One State Street Plaza, 17th Floor, New York,
New York 10004 and (212) 668-0340.
AMBAC Indemnity has obtained a ruling from the
Internal Revenue Service to the effect that the insuring of an
obligation by AMBAC Indemnity will not effect the treatment for
federal income tax purposes of
interest on such obligation and that insurance proceeds
representing maturing interest paid by AMBAC Indemnity under policy
provisions substantially
identical to those contained in its municipal bond insurance policy
shall be treated for federal income tax purposes in the same manner
as if such payments were made by the issuer of the Bonds.
AMBAC Indemnity makes no representation regarding the
Bonds or the advisability of investing in the Bonds and makes no
representation regarding, nor has it participated in the
preparation of, the Official Statement.
Capital Guaranty Insurance Company
Capital Guaranty Insurance Company ("Cap Gty.") is a
triple-A rated, Maryland-domiciled monoline stock insurance
company, and is a wholly-owned subsidiary of Capital Guaranty
Corporation and Capital Guaranty Corporation is a publicly owned
company whose shares are traded on the New York Stock Exchange.
<PAGE>
Cap Gty. is authorized to provide insurance in 49
states, the District of Columbia and three U.S. territories. Cap
Gty. focuses on insuring
municipal securities and our policies guaranty the timely payment
of principal and interest when due for payment on new issue and
secondary market issue
municipal bond transactions. Cap Gty.'s claims paying ability is
rated "Triple-A" by both Moody's and Standard & Poor's. Therefore,
if Cap Gty. insures an
issue with a stand alone rating of less than "Triple-A," such issue
would be "upgraded" to "Triple A" by virtue of Cap Gty.'s
insurance.
As of June 30, 1994, Cap Gty. had $13.7 billion in net exposure
outstanding and total admitted assets of $286,825,253 (unaudited),
and total statutory policyholder's surplus of approximately
$181,383,432 (unaudited).
MBIA
The insurance companies comprising MBIA and their
respective percentage liabilities are as follows: The Aetna
Casualty and Surety Company,
thirty-three percent (33%); The Fund American Companies, Inc.,
thirty percent (30%); The Travelers Indemnity Company, fifteen
percent (15%); Cigna
Property and Casualty Company, twelve percent (12%); and The
Continental Insurance Company, ten percent (10%). Each insurance
company comprising
MBIA is licensed to do business in various states. Such state
regulation, however, is no guarantee that any of the insurance
companies comprising MBIA
will be able to perform on its contract of insurance in the event
a claim should be made thereunder. All policies are individual
obligations of the participating
insurance companies and their obligations thereunder cannot be
increased beyond their percentage commitment; therefore, each
company will not be obligated to
pay any unpaid obligation of any other member of MBIA. However,
each insurance company is a multiline insurer involved in several
lines of insurance
other than municipal bond insurance, and the assets of each
insurance company also secure all of its other insurance policy and
surety bond obligations. The
MBIA companies listed above or their parent organizations have been
in the insurance business from seventy to well over a hundred
years. Standard &
Poor's Corporation rates all new issues insured by MBIA, "AAA" and
Moody's Investors Service rates all bond issues insured by MBIA,
"Aaa".
<PAGE>
MBIAC
MBIAC is the principal operating subsidiary of MBIA,
Inc. The principal shareholders of MBIA, Inc. are The Aetna
Casualty and Surety
Company, The Fund American Companies, Inc., subsidiaries of CIGNA
Corporation and Credit Local de France, CAECL S.A., and they own
approximately 35% of the outstanding common stock of MBIA Inc.
Neither MBIA, Inc. nor its shareholders are obligated to pay the
debts of or claims
against MBIAC. MBIAC, is a limited liability corporation rather
than a several
liability association. MBIAC is domiciled in the State of New York
and licensed to do business in all 50 states, the District of
Columbia and the
Commonwealth of Puerto Rico. As of March 31, 1994, MBIAC had
admitted assets of $3.2 billion (unaudited), total liabilities of
$2.2 billion (unaudited), and
total capital and surplus of $998 million (unaudited), in
accordance with statutory accounting practices prescribed or
permitted by insurance regulatory
authorities. Standard & Poor's Corporation rates all new issues
insured by MBIAC and Moody's Investors Service rates all bond
issues insured by MBIAC,
"AAA" and "Aaa", respectively.
Connie Lee Insurance Co.
Connie Lee Insurance Co. ("Connie Lee"), a Wisconsin
stock insurance company, is owned by the College Construction Loan
Insurance
Association, an insurance holding company authorized and
established by Congress as a private corporation under the laws of
the District of Columbia.
The legislation establishing the company stipulated that it provide
a mix of direct insurance and reinsurance business to issuers
incurring debt obligations for an
"education facilities purpose." The enabling legislation calls for
Connie Lee to provide credit enhancement services to colleges,
universities, teaching hospitals, and other educational
institutions. As of June 30, 1994, policyholders' surplus
(unaudited) was $105,009,992 (unaudited), and total admitted assets
(unaudited) were $3,006,058. Standard & Poor's Corporation has
rated the claims-paying ability of Connie Lee "AAA".
Financial Security Assurance
Financial Security Assurance ("FSA") is a monoline
insurance company incorporated on March 16, 1984 under the laws of
the State of New York. It is a wholly-owned subsidary of Financial
<PAGE>
Secrutiy Assurance Holdings Ltd. FSA is approximately 60.5% owned
by US WEST Capital Corporation,
Inc., 7.6% by Fund American Enterprises Holdings Inc. and 7.4%
owned by Tokio Marine and Fire Insurance Co. Ltd. ("Tokio Marine").
US WEST, operates businesses involved in communications, data
solutions, marketing
services and capital assets, including the provision of telephone
services in 14 states in the western and midwestern United States.
Tokio Marine is a major Japanese property and casualty insurance
company. No shareholder of FSA is
obligated to pay any debt of FSA or any claim under any insurance
policy issued by FSA or to make any additional contribution to the
capital of FSA. FSA and its two wholly owned subsidiaries are
licensed directly or indirectly through its subsidiaries to engage
in financial guaranty insurance business in all 50 states, the
District of Columbia, United Kingdom and Puerto Rico.
FSA and its subsidiaries are engaged exclusively in
the business of writing financial guaranty insurance, principally
in respect of securities offered in domestic and foreign markets.
FSA and its subsidiaries principally insure asset-backed,
collateralized and municipal securities.
U.S. West is a subsidiary of U.S. West, Inc., which
operates businesses involved in communications, data solutions,
marketing services and capital assets, including the provision of
telephone services in 14 states in the western and midwestern
United States.
Pursuant to an intercompany agreement, liabilities on
financial guaranty insurance written by FSA or either of its
subsidiaries proportional to their respective capital surplus and
reserves, subject to applicalbe statutory risk
limitations. In addition, FSA reinsures a portion of its
liabilities under certain of its financial guaranty insurance
policies with other reinsureres under various
quota-share treaties and on a transaction-by-transaction basis.
Such reinsurance is utilized by FSA as a risk management device and
to comply with certain
statutory and rating agency requirements; it does not alter or
limit FSA's obligations under any financial guaranty insurance
policy. As of June 30, 1994 total shaoreholder equity of FSA and
its wholly-owned subsidiaries was (unaudited) $530,024,000 and
total unearned premium reserves was (unaudited)
$206,026,000.
The financial information relating to AMBAC, Cap
Gty., Connie Lee, FSA, MBIA and MBIAC has been obtained from
publicly available sources. No representation is made herein as
to the accuracy or adequacy of such information or as to the
absence of material adverse changes in such information subsequent
to the dates thereof, but the Sponsor is not aware that the
information herein is inaccurate or incomplete.
<PAGE>
Portfolio Insurance
In an effort to protect Unit holders against delay in
payment of interest and against principal loss, insurance
("Portfolio Insurance") may be
obtained by a Trust from any of the insurers discussed above for
those Obligations not insured by the issuer or Sponsor,
guaranteeing the scheduled
payment of interest and principal in respect of certain of the
Obligations deposited in and delivered to the Trust. Any Portfolio
Insurance policy obtained
by a Trust will be noncancellable and will continue in force so
long as the Trust is in existence and the Obligations described in
the policy continue to be held by
the Trust (see Part A -- "Schedule of Portfolio Securities") and
the Insurer remains in business. As a result of any such Portfolio
Insurance and any insurance obtained by the issuer or Sponsor from
the Insurers, the Units of a Trust with an insured portfolio were
rated AAA by Standard & Poor's Corporation as of the Date of
Deposit. (See "Bond Ratings.") Portfolio Insurance obtained by a
Trust is effective only while the Obligations thus insured are held
in the Trust.
Insurance is not a substitute for the basic credit of
an issuer, but supplements the existing credit and provides
additional security therefor. If an
issue is accepted for insurance, a noncallable policy for the
scheduled payment of interest and principal on the Obligation is
issued by the Insurers. A monthly
premium is paid by the Trust for the Portfolio Insurance obtained
by such Trust. Upon the sale from a Trust of an Obligation covered
by Portfolio Insurance
obtained by the Trust, the Trustee, pursuant to an irrevocable
commitment of the Insurer, has the right to obtain permanent
insurance (i.e., insurance to
maturity of the Obligation regardless of the identity of the holder
thereof) ("Permanent Insurance") with respect to such Obligation
upon the payment of a single predetermined insurance premium from
the proceeds of the sale of such
Obligation. Such Trust will obtain and pay a premium for the
Permanent Insurance upon the sale of an Obligation if the Sponsor
determines that such sale will result in a net realization greater
than would the sale of such Obligation without the purchase of such
Permanent Insurance. Accordingly, any Obligation
covered by Portfolio Insurance in a Trust is eligible to be sold on
an insured basis. The premium for any Permanent Insurance with
respect to an Obligation is determined based upon the insurability
of such Obligation as of the Date of Deposit and will not be
increased or decreased thereafter.
Neither the Public Offering Price nor any evaluation
of Units for purposes of repurchases or redemptions reflects any
<PAGE>
element of value for any
Portfolio Insurance obtained and any Permanent Insurance obtainable
by a Trust unless an Obligation is in default in payment of
principal or interest or in
significant risk of such default. The value of any Permanent
Insurance will be equal to the difference between (i) the market
value of a defaulted Obligation
assuming the exercise of the right to obtain Permanent Insurance
(less the insurance premium attributable to the purchase of
Permanent Insurance) and (ii) the market value of such defaulted
Obligation not covered by Permanent Insurance. In addition, the
Evaluator will consider the ability of an Insurer to meet its
commitments under a Portfolio Insurance policy, including the
commitment to issue Permanent Insurance.
Nonpayment of premiums on a Portfolio Insurance
policy obtained by a Trust will not result in the cancellation of
the insurance but will permit an Insurer to take action against the
Trust to recover premium payments
due it. Premium rates for each issue of Obligations protected by
Portfolio Insurance obtained by a Trust are fixed for the life of
the Trust.
Under the provisions of a Portfolio Insurance policy,
an Insurer unconditionally and irrevocably agrees to pay to its
agent (the "Fiscal Agent")
that portion of the principal of and interest on an Obligation
which shall become due for payment but shall be unpaid by reason of
nonpayment by the issuer of
the Obligation. The term "due for payment" means, when referring
to the principal of an Obligation, its stated maturity date or the
date on which it shall have been called for mandatory sinking fund
redemption and does not refer to any earlier date on which payment
is due by reason of call for redemption (other than by mandatory
sinking fund redemption), acceleration or other advancement of
maturity. When used in reference to interest on an Obligation, the
term "due for payment" means the stated date for payment of
interest.
An Insurer will make any such payments to the Fiscal
Agent on the date such principal or interest becomes due for
payment or on the business
day next following the day on which an Insurer shall have received
notice of nonpayment, whichever is later. The Fiscal Agent will
disburse to the Trustee
the face amount of principal and interest which is then due for
payment but is unpaid by reason of nonpayment by the issuer, but
only upon receipt by the Fiscal Agent of (i) evidence of the
Trustee's right to receive payment of the
principal or interest due for payment and (ii) evidence, including
any appropriate instruments of assignment, that all of the rights
to payment of such principal or
interest due for payment shall thereupon vest in the Insurer. Upon
<PAGE>
any such disbursement, the Insurer shall become the owner of the
Obligation, appurtenant coupon or right to payment of principal or
interest on such Obligation, and shall
succeed to all of the Trustee's rights thereunder, including the
right to payment thereof.
In determining whether to insure bonds, an Insurer
applies its own standards, which are not necessarily the same as
the criteria used in regard
to the selection of bonds by the Sponsor. An Insurer's
determination to issue insurance with respect to a bond is made
prior to or on the date of deposit of a bond in a Trust. Any
Portfolio Insurance obtained by a Trust covers certain
obligations deposited in the Trust and physically delivered to the
Trustee or a custodian for the Trust in the case of bearer bonds or
registered in the name of
the Trustee or its nominee or delivered along with an assignment in
the case of registered bonds, or registered in the name of the
Trustee or its nominee in the
case of Obligations held in book-entry form. Contracts to purchase
Obligations are not covered by insurance obtained by a Trust even
though Obligations underlying such contracts will become covered by
insurance upon physical delivery to the Trust.
Insurance obtained by a Trust or by the Obligation's
issuer or by the Sponsor does not guarantee the market value of the
Obligations or the value of the Units. Any Portfolio Insurance
obtained by a Trust is effective only
as to Obligations owned by and held in such Trust. In the event of
a sale of any such Obligation by the Trustee, the Portfolio
Insurance terminates as to such
Obligation on the date of sale but the Trustee may exercise the
right to obtain Permanent Insurance with respect to the Obligation
upon the payment of an insurance premium from the proceeds of the
sale of such Obligation. Insurance obtained by the issuer of an
Obligation or by the Sponsor is effective so long as such
Obligation is outstanding. Such insurance may be considered to
represent an element of market value in regard to the Obligations
thus insured.
A contract of Portfolio Insurance relating to a Trust
and the negotiations in respect thereof represent the only
relationship between an Insurer
and the Trust. Otherwise, neither an Insurer nor its parent, or
any affiliate thereof, has any significant relationship, direct or
indirect, with a Trust or the
Sponsor, except that the Sponsor has in the past and may from time
to time in the future, in the normal course of its business,
participate as sole underwriter
or as manager or as a member of underwriting syndicates in the
distribution of new issues of bonds in which the investors or the
affiliates of an Insurer have or will be participants or for which
a policy of insurance guaranteeing the
<PAGE>
scheduled payment of interest and principal has been obtained from
an Insurer.
The purpose of any Portfolio Insurance obtained by a
Trust with an insured portfolio is to obtain a higher yield on the
Obligations in the Portfolio
than would be available if all the Obligations in such Portfolio
had the Standard & Poor's Corporation "AAA", Moody's Investors
Service "Aaa", Fitch Investors
Service, Inc. and/or Duff & Phelps Credit Rating Co. "AAA"
rating(s) and, at the same time, to have the protection of
Portfolio Insurance with respect to
scheduled payment of interest and principal on the Obligations.
There is, of course, no certainty that such purpose will be
realized.
Because the Obligations in a Trust are insured by the
Insurers as to the scheduled payment of principal and interest and
on the basis of the
financial condition and the method of operation of the Insurers,
Standard & Poor's Corporation has assigned a "AAA" investment
rating to Units of the
Trust. This is the highest rating assigned to debt obligations by
Standard & Poor's Corporation. (See "Bond Ratings.") The
obtaining of this rating by a
Trust with an insured portfolio should not be construed as an
approval of the offering of the Units by Standard & Poor's
Corporation or as a guarantee of the
market value of a Trust with an insured portfolio or the Units.
Standard &
Poor's Corporation has indicated that this rating is not a
recommendation to buy,
hold or sell Units nor does it take into account the extent to
which expenses of a Trust with an insured portfolio or sales by a
Trust with an insured portfolio
of Obligations for less than the purchase price paid by a Trust
with an insured portfolio will reduce payment to Unit Holders of
the interest and principal
required to be paid on the insured Obligations. There is no
guarantee that the "AAA" investment rating with respect to the
Obligations or Units will be maintained.
Insurance Premiums
The cost of the insurance (the "Insurance Premiums")
for Insurance to Maturity has been paid by the issuers at the time
of issuance, by a previous holder of an Obligation or by the
Sponsor on the first business day
after the Date of Deposit. The Insurance Premiums paid by the
Sponsor were paid from the acquisition profit of the Sponsor (see
"Public Offering--Sponsor and Underwriters' Profits"), and, if such
profit was not sufficient to cover the
<PAGE>
cost of said Insurance Premiums, from the sales charge imposed on
the purchasers of Units or from other general funds of the Sponsor.
Insurance Company Risks
Insurance companies are subject to regulation and
supervision in the jurisdictions in which they do business under
statutes which delegate
regulatory, supervisory and administrative owners to state
insurance commissioners. Although the Federal government does not
regulate the business
of insurance, current and proposed Federal measures such as
controls on medical care costs, national health insurance, tax law
changes or the relative desirability of various personal investment
vehicles and repeal of the current antitrust exemption for the
insurance business may significantly affect the insurance business.
Insurance companies are also affected by a variety of
state and Federal regulatory measures and judicial decisions which
may result in short-term adverse effects on the profitability of
various lines of insurance.
In addition, all insurance companies write policies
and set premiums based upon actuarial assumptions about mortality,
injuries and the occurrence of accidents which are well supported
by past experience but do not
take account of future events that could affect the financial
condition of one or more insurance companies. Further, the
currently highly competitive insurance
business may become more competitive with the deregulation of
financial service businesses. And as insurance companies expand
into non-traditional lines of business, new and different types of
risks may be involved.
Expenses and Charges
At no cost to the Trust, the Sponsor has 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,
legal expenses, advertising and selling expenses and other
out-of-pocket expenses. The cost of maintaining the secondary
market, such as printing, legal and accounting, will be borne by
the Sponsor except as otherwise provided in the Trust Agreement.
Trustee's, Sponsor's and Evaluator's Fees -- The
Trustee will receive for its ordinary recurring services to the
Trust an annual fee in the amount set forth in Part A--"Summary of
Essential Information". For a discussion of the services performed
by the Trustee pursuant to its obligation
<PAGE>
under the Trust Agreement, see "Rights of Unit Holders". The
Trustee will receive the benefit of any reasonable cash balances in
the Income 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 Obligations in the Trust at any
time during the calendar year with respect to
which the fee is being computed.
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 Sponsor
receives for Portfolio supervisory services
rendered to all series of Corporate Securities Trust in any
calendar year exceed the aggregate cost to them of supplying such
services in such year. In addition, the Sponsor 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 in the Trusts on a daily basis at a fee
in the amount set forth under Part A, "Summary of Essential
Information", for each evaluation of
the Obligations in a Trust. For a discussion of the services
performed by the Evaluator pursuant to its obligations under the
Trust Agreements, 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 in
no longer published, in a similar Index to be determined by the
Trustee and the Sponsor.
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 Sponsor 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 (including counsel fees
and expenses of counsel and auditors) of the Trustee incurred in
connection with its activities under the Trust Agreement, including
reports and communications to Unit holders; the expenses and costs
of any action undertaken by the Trustee to protect the Trust and
the rights and interests of the Unit holders; fees of the
<PAGE>
Trustee for any extraordinary services performed under the Trust
Agreement, indemnification of a 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 the
Trust under Federal or state securities laws subsequent to initial
registration so long as the Sponsor is maintaining a market for the
Units; and all taxes and
other governmental charges imposed upon the Securities or any part
of the Trust (no such taxes or charges are being levied or made or,
to the knowledge of the
Sponsor, 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
Obligations in order to make funds available to pay all expenses.
PUBLIC OFFERING
Offering Price
The Public Offering Price of the Units of the Trust
is determined by adding to the Evaluator's determination of the
aggregate bid price
of the Obligations per Unit a sales charge equal to the percentage
of the Public Offering Price indicated for the Trust in Part A,
"Summary of Essential
Information". The aggregate bid price of the underlying
Obligations may be expected to be less than the aggregate offering
price of the Obligations. (See
"Method of Evaluation".) A proportionate share of accrued and
undistributed interest on the Obligations 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 the
Trust are available to employees of the Sponsor, at a Public
Offering Price equal to the Evaluator's determination of the
aggregate bid price of Obligations of a Trust
per Unit plus a sales charge of 1.25% of the Public Offering Price
and after the Initial Public Offering period, at a Public Offering
Price equal to the Evaluator's
determination of the aggregate bid price of the Obligations 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 Sponsor result in less selling effort and
selling expenses than sales to the general public.
<PAGE>
Method of Evaluation
The aggregate bid price of the Obligations (which is
used to calculate the price at which the Sponsor 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 Obligations, (2) if bid prices are not available for any
obligations, 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 other day on which the New
York Stock Exchange is closed. The difference between the bid and
offering prices of the Obligations 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 Sponsor 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
Obligations and which may be expected to be less than the Public
Offering Price per Unit, see
"Rights of Unit Holders--Redemption of Units".
The value of the Portfolio Insurance (including the
right to obtain Permanent Insurance) will be considered by the
Evaluator in its evaluation
of Obligations insured by Portfolio Insurance only when they are in
default in payment of principal or interest or insignificant risk
of default. No value has
been attributed to this insurance as of the date of this
Prospectus. If Portfolio
Insurance is to be valued, the Evaluator will consider, among other
things, the ability of the Insurer to meet its commitments under a
Trust's Portfolio Insurance policy, including the commitments to
issue Permanent Insurance.
In determining the bid prices of Obligations covered
by Insurance of Maturity, the evaluator took into account the
insurance issued in
respect of those Obligations and the AAA rating assigned to certain
of those Obligations as a result of the insurance. In making its
evaluation, the Evaluator
<PAGE>
first determined the quality of the insurance issued by the
Insurance Companies and then compared the Obligations to other
securities which had comparable
insurance and which were of comparable quality. In addition, the
Evaluator, in accordance with its practice, obtained from dealers
and brokers two sets of
bid prices for the Obligations: one based on actual bid prices for
such Obligations (without insurance) and the other based on said
dealer's or broker's estimation of such bid prices as if such
Obligations were insured.
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 Sponsor 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 Sponsor 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 Sponsor
presently intends
to maintain a market for the Units of the respective Trusts and to
continuously offer to purchase such Units at prices based upon the
aggregate bid price of the
underlying Obligations 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
Obligations. (See "Public Offering-Method of Evaluation".) The
costs of maintaining the secondary market, such as printing, legal
<PAGE>
and accounting, will be borne by the
Sponsor except as otherwise provided in the Trust Agreement. The
Sponsor may cease to maintain such a market at any time and from
time to time, without
notice if the supply of Units exceeds demand, or for any other
reason. In this event the Sponsor 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, a Unit
holder of such a 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 also based
upon the aggregate bid price of the underlying Obligations which
may be expected to be less than the aggregate of the offering
price. (See "Rights of Unit Holders--Redemption of Units".)
Exchange Option
Unit holders may elect to exchange any or all of
their Units in this series of a Trust for units of one or more of
the long-term debt series of
Corporate Securities Trust and any series of Tax Exempt Securities
Trust (the "Exchange Trusts") available for sale in the state in
which the Unit holder
resides at a Public Offering Price for the units of the Exchange
Trusts to be acquired based on a fixed sales charge of $25 per
unit. The Sponsor reserves
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 Unit holder will recognize gain or loss at the time of
exchange. However, an exchange of Units of this Trust for units of
any other similar series of trusts
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.
<PAGE>
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. A Unit holder owning at least 10
Units will have the option
of either receiving his monthly income check from the Trustee or
participating in one of the reinvestment programs offered by
certain of the Sponsor 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 the Sponsor has
arranged for different reinvestment alternatives, Unit holders
should contact the
Sponsor 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 the 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.
Sponsor's and Underwriters' Profits
For their services, the Underwriters receive a
commission based on an adjustment of the Public Offering Price by
a fixed dollar amount per Unit. See Part A, "Underwriting." The
Sponsor receives a gross commission equal
<PAGE>
to the applicable sales charge for Units it has underwritten and
receives the difference between he applicable sales charge and the
Underwriter's commission
for the remainder of the Units. In addition, the Sponsor may
realize a profit or
sustain a loss, as the case may be, in an amount of any difference
between the cost of the Obligations to the Trust (which is based on
the aggregate of the
offering prices of the Obligations on the Date of Deposit) and the
purchase price of such Obligations to the Sponsor (which is the
cost of the Obligations at the
time they were acquired for the account of the Trust). See Part A,
"Portfolio of Securities"--Note (3). Under certain circumstances,
an Underwriter may be
entitled to share in such profits, if any, realized by the
Sponsor. During the
initial public offering period, the Underwriters may also realize
profits or sustain
losses, as the case may be, on the sale of the Units as a result of
changes after the Date of Deposit in the offering prices of the
Obligations and hence in the
Public Offering Price received by the Underwriters for Units. A
Sponsor may also realize profits or sustain losses with respect to
Obligations deposited in the
Trust which were acquired from its own organization or from
underwriting
syndicates of which it was a member. Cash, if any, made available
to the Sponsor prior to the anticipated first settlement date for
the purchase of units
may be used in the Sponsor's business to the extent permitted by
applicable regulations and may be of use to the Sponsor.
For their services, the Sponsor receive a gross
commission equal to a percentage of the Public Offering Price of
the Units. In maintaining
a market for the Units of the respective Trusts (see "Public
Offering--Market for Units"), the Sponsor also realizes 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 is evidenced by registered
certificates executed by the Trustee and the Sponsor. Certificates
are transferable by presentation and surrender to the Trustee of
the certificate properly endorsed or
accompanied by a written instrument or instruments of transfer.
<PAGE>
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.
Distribution of Interest and Principal
Interest and principal received by the 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 "Expenses and Charges" and "Rights of
Unit Holders--Redemption of Units" in this section.)
The Trustee will credit to the Interest Account of
each respective Trust all interest received by such Trust,
including that part of the
proceeds of any disposition of Obligations of such Trust which
represents accrued interest and including all moneys paid pursuant
to any insurance contract
representing interest on any Obligation in the Trusts. 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 Obligations 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
holder's pro rata share of the estimated annual income to the
Interest Account after deducting
estimated expenses (the "Monthly Interest Distribution") plus such
holder's 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 of
this Prospectus is shown in the "Summary of Essential Information"
in Part A for the particular Trust and will change as the income
and expenses of the Trust change and as Obligations are exchanged,
redeemed, paid or sold.
Normally, interest on the Obligations in the
Portfolio of each Trust is paid on a semi-annual basis. Because
Obligation interest is not received
by the Trusts 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 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 Obligations
for which advances have
been made subsequently fail to pay interest when due and if one or
more of the insurers of such Obligations fails to meet its
obligation under its policy of
insurance, the Trustee may recoup advances made by it in
anticipation of receipt
of interest payments on such Obligations 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 the failure of the issuer to pay
the interest due on the
underlying Obligation and the concurrent failure of the respective
insurance company to meet its obligation under its insurance
policy, 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
<PAGE>
of the amounts anticipated to be required for Monthly Distributions
to Unit holders. In addition, because of the varying interest
payment dates of the
Obligations comprising the Trust Portfolio, accrued interest at any
point in time will be greater than the amount of interest actually
received by a particular 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 excess accrued but
undistributed interest amount is known as the accrued interest
carryover. If a Unit holder sells all or redeems 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 sells or
redeems all or a portion of his
Units, the Redemption Price per Unit which he is entitled to
receive from the Trustee will include accrued interest carryover on
the Obligations. (See "Rights
of Unit Holders --Redemption of Units--Computation of Redemption
Price per Unit".) 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 it has made in anticipation of
the receipt by the Trust of interest
in respect of Obligations which subsequently fail to pay interest
when due.
As of the first day of each month the Trustee will
deduct from the Interest Account of the 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 "Expenses and Charges".) The Trustee
also may withdraw from said account such amounts, if any, as it
deems necessary to establish a reserve for any governmental charges
payable out of the Trust. Amounts so withdrawn shall not be
considered a part of the Trust's assets until
such time as the Trustee shall return all or any part of such
amounts to the appropriate account. In addition, the 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".)
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 Obligations
<PAGE>
fails to make payment when due of any interest or principal and
such failure results in a change in the amount that 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 Obligations, the amount of the reduction in the
distribution per Unit resulting
from such failure, the percentage of the aggregate principal amount
of Obligations 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 Obligations), deductions for payment of applicable
taxes and for fees and
expenses of the Trust, redemption 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 Obligations and the net
proceeds received therefrom
(excluding any portion representing interest), deductions for
payments of applicable taxes and for fees and expenses of the
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 Obligations held and the number of
Units outstanding on the last
business day of such calendar year; (4) the 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 Trusts will be audited not less
frequently than annually by independent auditors designated by the
Sponsor, and the report of such auditors shall be furnished by the
Trustee to Unit holders of such Trusts 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
<PAGE>
addresses of Unit holders, certificates issued or held, a current
list of Obligations in the Portfolio and a copy of the Trust
Agreement.
Redemption of Units
Units may be tendered to the Trustee for redemption
at its corporate 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 Sponsor 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" of 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 Sponsor
of Units tendered to the Trustee for redemption at prices which
may, in certain circumstances, be in excess of the Redemption
Price, see "Redemption of Units-
- -Purchase by the Sponsor 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
Obligations in order to make funds available for redemption. Such
sales, if required, could result in a
<PAGE>
sale of Obligations by the Trustee at a loss. To the extent
Obligations are sold, the size and diversity of the 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 Obligations 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 Obligations 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 Obligations in such Trust on the bid side of
the market (determined by the
Evaluator as set forth under "Public Offering Prices--Method of
Evaluation"), (2) cash on hand in such Trust, and accrued and
unpaid interest on the
Obligations 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.
The Evaluator may determine the value of the
Obligations on the basis of (1) current bid prices for the
Obligations, (2) if bid prices are not
available for any Obligations, on the basis of current bid prices
for comparable securities, (3) if Obligations are listed on a
national securities exchange, on the
basis of the closing prices on such exchange, (4) by determining
the value of securities on the bid side of the market by appraisal,
or (5) by any combination of the above.
Purchase by the Sponsor of Units Tendered for
Redemption--The Trust Agreement requires that the Trustee notify
the Sponsor of any tender of Units for redemption. So long as the
Sponsor is maintaining a bid in the secondary market, the Sponsor,
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 therefore to the Unit holder
in an amount not less than the Redemption Price not later than the
<PAGE>
day on which the Units would otherwise have been redeemed by the
Trustee. (See "Public Offering--Market for Units".) Units held by
the Sponsor may be tendered to the
Trustee for redemption as any other Units, provided that the
Sponsor shall not receive for Units purchased as set forth above a
higher price than it paid, plus accrued interest.
The offering price of any Units resold by the Sponsor
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 Sponsor which likewise will bear
any loss resulting from a lower offering or redemption price
subsequent to their acquisition of such Units. (See "Public
Offering--Sponsor' Profits".)
SPONSOR
Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013 ("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).
Smith Barney sponsors numerous open-end investment
companies and closed-end investment companies. 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. The Sponsor has 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 Sponsor also executes 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 Sponsor is 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 of 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
<PAGE>
of any Obligations, except in cases of willful misfeasance, bad
faith, gross negligence or reckless disregard of their obligations
and duties. (See "Sponsor -- Responsibility".)
Responsibility
The Sponsor is empowered to direct the Trustee to
dispose of Obligations or deposited Units of other Trusts when
certain events occur that
adversely affect the value of the Obligations, if the Sponsor
determines that any insurance that may be applicable to the
Obligations cannot be relied upon to
maintain the interests of the Trusts to at least as great an extent
as such disposition, 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 Obligations
and advanced refunding that, in the opinion of the Sponsor, may be
detrimental to the interests of the Unit Holders.
The Sponsor intends to provide portfolio services for
each Trust in order to determine whether the Trustee should be
directed to dispose of any such Obligations.
It is the responsibility of the Sponsor to instruct
the Trustee to reject any offer made by an issuer of any of the
Obligations to issue new
obligations in exchange and substitution for any Obligations
pursuant to a refunding or refinancing plan, except that the
Sponsor may instruct the Trustee
to accept such an offer or to take any other action with respect
thereto as the Sponsor may deem proper if the issuer is in default
with respect to such
Obligations or in the judgment of the Sponsor the issuer will
probably default in respect to such Obligations 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 Obligations
originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying
Obligations, the Trustee is required to give notice thereof to each
Unit holder, identifying the Obligations eliminated and the
Obligations substituted therefor. Except as stated in this
paragraph, the acquisition by the Trust of any securities other
than the Obligations initially deposited in each respective Trust
is prohibited.
Whenever any security is deposited in the Portfolio
<PAGE>
in substitution for an Obligation held by the Trust, the Trustee,
as agent for the Sponsor, will mail, within five days od such
substitution, to each Unit holder a notice of the substitution,
including an identification of the of the Obligation
eliminated and the security substituted.
Resignation
If the Sponsor resigns or otherwise fails or becomes
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 the 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 the subject to
supervision and
examination by the Superintendent of Banks of the State of New
York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System. In connection with the
storage and handling of certain
Obligations deposited in the Trust, the Trustee may use the
services of The Depository Trust Company. These services may
include safekeeping of the
Obligations 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 moneys, 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
<PAGE>
or future law of the United States or any other taxing authority
having jurisdiction. 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," "Sponsor--Resignation" and "Other
Charges."
Resignation
By executing an instrument in writing and filing the
same with the Sponsor, the Trustee and any successor may resign.
In such an event the
Sponsor is 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 Sponsor 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.
EVALUATOR
The Evaluator is Kenny Information, Systems, Inc., a
division of J.J. Kenny Co., Inc. with main offices located at 65
Broadway, New York, New York 10006.
Limitations on Liability
The Trustee, Sponsor 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 Sponsor, 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.
<PAGE>
Responsibility
The Trust Agreement requires the Evaluator to
evaluate the Obligations 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 Sponsor. For information
relating to the responsibility of the Evaluator to evaluate the
Obligations 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 Sponsor and the Trustee, and in such event, the
Sponsor 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.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT
Amendment
The Sponsor 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 Obligations
initially deposited in the
respective Trusts, except for the substitution of certain refunding
securities for such Obligations or to permit the Trustee to engage
in business or in investment
activities not specifically authorized in the Trust Agreement as
originally adopted or to adversely affect the characterization of
the Trust as a grantor trust for
federal income tax purposes. In the event of any amendment, the
Trustee is obligated to notify promptly all Unit holders of the
substance of such amendment.
<PAGE>
Termination
The Trust Agreement provides that if the principal
amount of Obligations is less than 50% of the principal amount of
the Obligations originally deposited in such Trust, the Trustee may
in its discretion and will,
when directed by the Sponsor, terminate such Trust. Each Trust may
be terminated at any time by 100% of the Unit holders. See Part A
for additional mandatory and optional termination provisions.
However, in no event may any
trust continue beyond the Mandatory Termination Date set forth in
Part A of this Prospectus under "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 Obligations 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 Account and Principal
Account of such Trust.
LEGAL OPINIONS
Certain legal matters in connection with the Trust
have been passed upon by Messrs. Davis Polk & Wardwell, a
partnership including
professional corporations, 450 Lexington Avenue, New York, New York
10017, as special counsel for the Sponsor and as special counsel on
New York tax matters.
AUDITORS
The Statements of Financial Condition and Portfolio
of Securities of each Trust included in this Prospectus have been
audited by KPMG Peat Marwick LLP, independent auditors, as
indicated in their report with
respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving accounting and
auditing.
RATINGS
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.
<PAGE>
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. Standard & Poor's does not perform
any audit in connection with any rating and may, on occasion, rely
on unaudited financial
information. 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 laws affecting creditors' rights.
A summary of the meaning of the applicable rating
symbols as
published by Standard & Poor's follows:
AAA--Debt rated AAA has the highest rating assigned
by
Standard & Poor's. Capacity to pay interest and repay principal is
extremely
strong.
AA--Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the higher rated
issues only in small degree.
A--Debt rated A has a strong capacity to pay interest
and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
<PAGE>
than debt 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 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.
D--Debt rated D is in default, and payment of
interest and/or repayment of principal is in arrears.
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 that the rating is provisional. A provisional
rating assumes the successful
completion of the project being financed by the debt 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 of the project,
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.
Conditional rating(s), 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 or
closing documentation confirming investments and cash flows and/or
the security rating is conditional upon the issuance of insurance
by the respective insurance company.
Moody's Investors Service
A summary of the meaning of the applicable Moody's Investors
Service's rating symbols and their meanings is as follows:
<PAGE>
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 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 a
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 fluctuations 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 s
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.
B--Bonds which are rated B generally lack the
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.
<PAGE>
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 Part A-"Portfolio of Securities" herein to ascertain the
ratings on the Securities, if any, on the date of the Portfolio of
Securities.
Fitch Investors Service, Inc.
A brief description of the applicable Fitch Investors
Service, Inc. rating symbols and their meanings is as follows:
<PAGE>
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.
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
<PAGE>
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).
<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
Corporate Securities Trust Series 23
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
7,384 Units
Portfolio of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-6
Tax Exempt Securities Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROSPECTUS
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dated May 19, 1995
Estimated Current Return and Estimated Long-Term Return . . . . . . . . . . . . 4
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Expenses and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Offering Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sponsors
Method of Evaluation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Distribution of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Market for Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SMITH BARNEY INC.
Exchange Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Reinvestment Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1345 Avenue of the Americas
Sponsor's Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
New York, New York 10105
Rights of Unit Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(800) 298-UNIT
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Distribution of Interest and Principal. . . . . . . . . . . . . . . . . . . . . 18
Reports and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Redemption of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Evaluator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Limitations on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Amendment and Termination of the Trust Agreement. . . . . . . . . . . . . . . . . 24
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Bond Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Standard & Poor's Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 25
Moody's Investors Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Fitch Investors Service, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 27
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 Incorporated
388 Greenwich Street
New York, NY 10013
RE:Corporate Securities Trust
Series 23
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-44989 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,
John R. Fitzgerald
Vice President
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 March 31, 1995 included herein and to the
reference to our firm under the heading "AUDITORS" in the
prospectus.
KPMG PEAT MARWICK
New York, New York
May 9, 1995
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant, Corporate Securities Trust, Series 23,
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 9th day of May, 1995.
Signatures appear on pages II-3.
A majority of the members of the Board of Directors of Smith
Barney Inc. have signed this Post-Effective Amendment
pursuant to Powers of Attorney authorizing the person signing
this Post-Effective Amendment to do so on behalf of such members.
These Powers of Attorney were filed with the Securities
and Exchange Commission under the Securities Act of 1933 with the
Registration Statement of Corporate Securities Trust,
Appreciation Series 7, Registration No. 2-78499 and with the
Registration Statement of Corporate Securities Trust, Series
110, Intermediate Term Series 15 and Short-Intermediate Term
Series 13, Registration Nos. 2-97179, 2-95591 and 2-96184,
respectively, with the Registration Statement of Tax Exempt
Securities Trust, Series 284, Amendment No. 2, Registration No.
33-22777, with the Registration Statement of Tax Exempt
Securities Trust, Series 295, Amendment No. 1, Registration No.
33-26376, and with the Registration Statement of Tax Exempt
Securities Trust, Series 335, Amendment No. 1, Registration No.
33-37952.
<PAGE>
Corporate Securities Trust
BY SMITH BARNEY INC.
By
(George S. Michinard, Jr.)
By the following persons,* who constitute a majority of
the directors of Smith Barney Inc. :
Steven D. Black
James S. Boshart III
Robert A. Case
James Dimon
Robert Druskin
Robert F. Greenhill
Jeffrey B. Lane
Robert H. Lessin
John F. Lyness
Jack L. Rivkin
By
(George S. Michinard, Jr.
Attorney-in-Fact)
* Pursuant to Powers of Attorney previously filed.
II-3
