<PAGE>
Registration No. 2-98383
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. 11
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:
SMITH BARNEY INC. STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES A
B.
Name of Depositor:
SMITH BARNEY INC.
<TABLE>
<S> <C>
C. Complete address of depositor's principal executive
office:
388 Greenwich Street
New York, New York 10013
D. Names and complete addresses of agents for service:
LAURIE A. HESSLEIN Copy to:
Smith Barney PIERRE DE ST. PHALLE,ESQ.
Inc. Davis Polk & Wardwell
388 Greenwich Street 450 Lexington Avenue
New York, New York 10013 New York, New York 10017
</TABLE>
The issuer has registered an indefinite number of Units pursuant to
Rule 24f-2 under the Investment Company Act of 1940, as amended,
and filed its Rule 24f-2 Notice for the year ended December 31, 1995
on February 27, 1996.
It is proposed that this filing will become effective March 25,
1996
pursuant to paragraph (b) of Rule 485.
<PAGE>
<PAGE>
THE SMITH BARNEY INC.
STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES A
(A Guardian Insurance & Annuity Company, Inc. Separate
Account Investment)
March 25, 1996
Prospectus - Part A
This Prospectus consists of two parts. Part A consists of an
Investment Summary relating to the Trusts of Series A of the Fund, a
statement of financial condition and a statement of operations and
changes in net assets for each Trust and a summary of each Trust's
portfolio. Part B contains a general description of the Fund. Part A
may not be distributed unless accompanied by Part B.
The Smith Barney Inc. Fund of Stripped ("Zero") U.S.
Treasury Securities Fund (the "Fund") was formed for the purpose of
providing, when the units issued by it are held to maturity of the
underlying securities, safety of capital and income through investment
in portfolios consisting of debt obligations of the United States of
America (the "Securities"). Series A of the Fund originally consisted
of three separate unit investment trusts designated as the 1991 Trust,
the 1995 Trust and the 2004 Trust (the "Trusts") holding Securities
with maturities corresponding to their respective designations. The
1991 Trust and 1995 Trust expired on November 15, 1991 and
November 15, 1995, respectively. Substantially all of the Securities
in the Trust are debt obligations of the United States of America which
have been stripped of their unmatured interest coupons, coupons
stripped from debt obligations of the United States of America and
receipts and certificates for such stripped debt obligations and stripped
coupons ("Stripped Treasury Securities"). The remaining Securities in
the Trust consist of interest-bearing debt obligations of the United
States of America ("Treasury Notes") deposited to provide income for
payment of Trust expenses.
Stripped Treasury Securities do not make any periodic
payments of interest prior to their maturities; accordingly, the Trust's
portfolio was acquired at a deep discount. There is no assurance that
the objectives of safety of capital and income will be met if the units
of fractional undivided interest in a Trust (the "Units") are sold prior
to the maturity of the underlying Securities in that Trust, as market
prices of the Securities before maturity, and therefore of the Units, will
vary with changes in interest rates and other factors. Moreover, the
value of Stripped Treasury Securities, and hence of the Units, will be
subject to greater fluctuations in response to changing interest rates
than the value of debt obligations making periodic distributions of
interest.
The offering price of the Units of the Trust is calculated on the
basis of the aggregate offering side evaluation of the underlying
Securities in that Trust, plus a transaction charge of 1.50 percent or
less of the price so determined (the "Offering Price"). The Sponsor
has undertaken to maintain a secondary market for Units of the Trust,
also at a price based upon the aggregate offering side evaluation of the
underlying Securities (the "Sponsor's Repurchase Price").
The Guardian Separate Account B (the "Account") of The
Guardian Insurance & Annuity Company, Inc. ("GIAC") is currently
the only eligible purchaser of Units of the Trust from the Sponsor.
The Account invests in Units of the Trusts to fund benefits under
Variable Life Insurance Policies issued by GIAC (the "Policies") in
accordance with allocation instructions received from purchasers of
Policies. These allocation rights are further described in the
accompanying Prospectus for the Policies. The rights described in this
Prospectus of the Account and the Sponsor (insofar as it holds Units)
as holders of Units should be distinguished from the rights of a Policy
owner set forth in the accompanying Prospectus describing the
Policies.
Read and retain both parts of this Prospectus for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Smith Barney Inc.
Sponsor
A-1<PAGE>
<PAGE>
<TABLE>
SMITH BARNEY INC. UNIT TRUSTS, STRIPPED
("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES A
INVESTMENT SUMMARY AS OF DECEMBER 29, 1995
Series A consists of one unit investment trust, the 2004 Trust,
designated for the maturity of its underlying portfolio.
<S> <C> <C>
2004
Trust
Face amount of securities$12,539,960
Number of units 12,539,960
Fractional undivided interest in trust represented by each
unit 1/12,539,960
Offering price per 1,000 units*
Aggregated offering side evaluation of securities in
trust**$7,679,673.84
Divided by number of units times 1,000$612.416
Plus the applicable transaction charge*** 9.326
Offering price per 1,000 units*$621.742
+
Sponsor's repurchase price per 1,000 units (based on
offering side evaluation of underlying securities)$612.416
+
Redemption price per 1,000 units (based on bid side
evaluation of underlying securities)****$611.835
+
Calculation of estimated net annual interest income from
Treasury Notes per 1,000 units
Gross annual income per 1,000 units $ .46
Less estimated annual expenses per 1,000 units .46
Net annual income per 1,000 units $0.00
Distributions
Distributions will be made on the first business day
following the
maturity of securities in a trust to holders of record on
the business
day immediately preceding the date of such distribution
Trustee's monthly fee
Per $1,000 face amount of underlying securities
(see "Expenses and Charges" in Part B)$.025
Evaluator's fee for each evaluation: $5.00
Evaluation time: 3:00 P.M., New York Time, on each
Business Day
Mandatory termination date: January 1, 2036
Minimum value of fund
Any Trust may be liquidated by the Trustee if the value
of that Trust is less than 40% of the principal amount of
Securities held in such Trust on the Initial Date of Deposit.
___________
* These figures are computed by dividing the aggregate
offering side evaluation of the underlying Securities in
the particular Trust (the price at which they could be
purchased directly by the public if available) by the
number of Units of the Trust outstanding, multiplying
the result times 1,000 and adding the applicable
transaction charge as described below. These figures
assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by
dividing the Offering Price per 1,000 Units above by
1,000, and multiplying by the number of Units.
** These figures include amortization of discount on the
Stripped Treasury Securities accreting to the expected
date of settlement (normally five Business Days after
purchase) for Units as if purchased on their date of
deposit. Interest on the Treasury Notes accruing to the
date five Business Days after deposit of such Notes will
be paid by the Trustee to the Sponsor as a special
distribution and recovered by the Trustee from
subsequent payments of interest on the Treasury Notes
in the Trust, and is therefore not included in the
evaluation of Securities in a Trust. See "Sale and
Redemption of Units - Pricing of Units" in Part B.
*** The transaction charges currently applicable to the 2004
Trust is 1.50% of the Offering Price per 1,000 Units
(1.523% of the net amount invested in Securities).
Transaction charges will decrease as the Trusts
approach maturity. See "Sale and Redemption of Units
- Sale of Units" in Part B. On August 4, 1986, an
Account purchased from the Sponsor all of the Units of
the Trust issued on that date in a private placement and
Sponsor waived all transaction charges in connection
with such purchase.
**** Figures shown are $9.907 less than the Offering Price
per 1,000 Units and $.581 less than the Sponsor's
Repurchase Price per 1,000 Units, with respect to the
2004 Trust.
+ Plus any cash on hand, accrued interest on Treasury
Notes and all other assets of the Trust less any accrued
expenses and any distribution payable to Holders. See
"Sale and Redemption of Units - Pricing of Units" in
Part B.
A-2
</TABLE>
A-2<PAGE>
<PAGE>
DESCRIPTION OF THE FUND
Structure and Offering
The objective of the Fund is to provide safety of capital
and income through investment in portfolios consisting primarily
of Stripped Treasury Securities. The Trust constituting Series A
of the Fund consists of Stripped Treasury Securities with a
maturity of approximately 8 3/4 years and Treasury Notes
deposited in order to provide income with which to pay
anticipated expenses of the Trust. The Sponsor intends to
deposit additional Stripped Treasury Securities, with maturities
identical to those of the Securities described in the portfolio of
the Trust below, in the Trust. Additional Treasury Notes with
maturities identical to those of the Notes described in the
portfolio of the Trust will be deposited to the extent necessary to
maintain a constant proportion of Treasury Notes to Stripped
Treasury Securities in the Trust. See "Description of the Fund -
Structure" in Part B of this Prospectus.
It is expected that for each 1,000 Units of a Trust
purchased, a Holder will receive total distributions of
approximately $1,000 for Units held until maturity of the
underlying Securities of that Trust. Actual distributions may be
more or less than this amount, however, as a result of changes
in the expenses incurred by a Trust or sales of Securities held by
a Trust prior to maturity in order to meet redemptions of Units.
See "Sale and Redemption of Units," "Expenses and Charges"
and "Administration of the Fund - Accounts and Distributions"
in Part B.
Currently, Units are sold only to the Account to fund
benefits under Policies issued by GIAC. The interest of a Policy
owner in the Units is subject to the terms of the Policy and is
described in the accompanying Prospectus for the Policies, which
should be reviewed carefully by a person considering the
purchase of a Policy. That Prospectus describes the relationship
between increases or decreases in the net asset value of, and any
distributions on, Units and the benefits provided under a Policy.
The rights described in this Prospectus of the Account and the
Sponsor (insofar as it holds Units) as holders of Units should be
distinguished from the rights of a Policy owner set forth in the
Prospectus describing the Policies. For purposes of this
Prospectus, the term "Holder" shall refer to the Account or,
when appropriate, the Sponsor. GIAC and the Sponsor may
mutually agree to terminate the offering of Units of any Trust at
any time.
Risk Factors
An investment in Units of a Trust should be made with an
understanding of the risks that such an investment may entail,
including the risk that the value of the Units will decline with
increases in interest rates. Unlike an investor in funds comprised
of securities making periodic distributions, an investor in the
Fund virtually eliminates the risk of being unable to invest
distributions at a rate as high as the anticipated yield on Trust
Units, but will forego the ability to reinvest such yield at higher
rates in the future. The market value of the underlying
Securities in a Trust prior to their maturities, and therefore the
value of the Units of that Trust, will fluctuate with changes in
interest rates and other factors. Moreover, the value of
obligations of a "zero coupon" nature, such as the Stripped
Treasury Securities underlying the Units, and therefore of the
Units, will be subject to greater fluctuations in response to
changing interest rates than the value of debt obligations making
periodic distributions of interest. Accordingly, while the full
faith and credit of the United States Government protects against
credit risks on the Securities in the Trust, sales of Units before
the maturity of the underlying portfolio Securities at a time when
interest rates have increased will involve greater market risk than
in a trust which is invested in interest-bearing debt obligations.
This risk is greater when the period to maturity is longer. See
"Description of the Fund - Risk Factors" in Part B of this
Prospectus.
A-3<PAGE>
Securities
The Trust consists primarily of Stripped Treasury
Securities, which are debt obligations of the United States of
America that have been stripped of their unmatured interest
coupons, coupons stripped from debt obligations of the United
States of America and receipts and certificates for such stripped
debt obligations and stripped coupons. The stripping of the
interest coupons will cause the Stripped Treasury Securities to be
purchased by the Trust at a deep discount. See "Description of
the Fund - Characteristics of the Securities" in Part B. The
Trust will also consist of a Treasury Note or Notes providing
interest income with which to pay anticipated expenses of such
Trust. The Securities are not rated but, in the opinion of the
Sponsor, have credit characteristics comparable to those of
Securities rated "AAA" by nationally recognized rating agencies.
Distributions
There will be no periodic payments of interest on the
Securities other than interest on the Treasury Notes in the Trust,
which will be used to pay anticipated expenses of the Trust
holding such Notes. Consequently, there should be no
distributions of interest income. However, each Stripped
Treasury Security will be treated for Federal income tax
purposes as having "original issue discount," which must be
amortized over the term of the Stripped Treasury Security and
included in a Holder's gross income before the Holder receives
the cash attributable to such income. Distributions will be made
in cash when the Securities in each Trust mature, and may
include any amount received on the sale of Securities in order to
redeem Units which exceeds the amount necessary to meet such
redemptions. See "Administration of the Fund - Accounts and
Distributions" and "Taxes" in Part B.
Market For Units
The Sponsor has undertaken to maintain a secondary
market for Units of the Trust based on the offering side
evaluation of the underlying Securities. In the absence of such
a market, a Holder will nonetheless be able to dispose of Units
through redemption at prices based on the bid side evaluation of
the underlying Securities of the Trust in which it holds Units.
Market conditions may cause the price received upon resale to
the Sponsor or redemption to be more or less than the amount
paid for Units. See "Sale and Redemption of Units" in Part B.
A-4
<PAGE>
<PAGE>
To the Sponsor and Holders of
The Smith Barney Fund Stripped ("Zero")
U.S. Treasury Securities, Series A-2004 Trust:
We have audited the accompanying statements of financial
condition of The Smith Barney Fund Stripped ("Zero") U.S.
Treasury Securities, Series A-2004 Trust,including the related
Portfolio, as of December 31, 1995 and 1994, and the related
statements of operations and changes in net assets and the
selected supplemental information for each of the years in the
two-year period ended Decenmber 31, 1995. These financial
statements and supplemental information are the responsibility of
the Fund's management. 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 and supplemental information 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 confirmations
from the custodian of cash and securities owned at December31,
1995. An audit also includes assessing the accounting principles
used and significant estimates made by management, 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 and supplemental
information referred to above present fairly, in all material
respects, the financial position of each of the respective Trusts
constituting The Smith Barney Fund of Stripped ("Zero") U.S.
Treasury Securities, Series A-2004 Trust, at December31, 1995
and 1994, and the results of its operations and the changes in its
net assets and supplemental information for each of the years in
the two-year period ended December 31, 1995 in conformity
with generally accepted accounting principles.
February 19, 1996
A-5
<PAGE>
REPORT ON INDEPENDENT ACCOUNTANTS
To the Sponsor and Holders of The Smith Barney Shearson Fund
of Stripped ("Zero") U.S. Treasury Securities, Series A:
We have audited the statements of financial condition of
THE SMITH BARNEY SHEARSON FUND of STRIPPED
("Zero") U.S. TREASURY SECURITIES, SERIES A, formerly
The Shearson Lehman Brothers Fund of Stripped ("Zero") U.S.
Treasury Securities, Series A (comprised of the 2004 Trust) for
the year ended December 31, 1993. These financial statements
and supplemental information are the responsibility of the Fund's
management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements and supplemental information
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
confirmations from the custodian of cash and securities owned at
December 31, 1993. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provide a reasonable
basis for our opinion.
In our opinion, the financial statements and supplemental
information referred to above present fairly, in all material
respects, the financial position of The Smith Barney Shearson
Fund of Stripped ("Zero") U.S. Treasury Securities, Series A at
December 31, 1993 in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND, L.L.P.
New York, New York
February 24, 1994
A-6<PAGE>
<PAGE>
<TABLE>
THE SMITH BARNEY FUND STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A - 2004 TRUST
Statements of Financial Condition
December 31, 1995 and 1994
<S> <C>
<C>
19951994
Trust Property:
Investment in securities at value (amortized cost
for 1995 and 1994, respectively, $6,551,442 and
$4,987,451$7,672,3985,165,082
Net other assets 5,424 6,510
7,677,8225,171,592
Interest of Holders: (for 1995 and 1994, respectively:
12,539,960 and 11,033,960 units of fractional
undivided interest outstanding)
Cost of Trust units, net of gross transaction charges
5,339,427 3,766,826
Unrealized appreciation of investment1,120,956177,631
Undistributed net investment income 1,217,439
1,227,135
Net assets$7,677,8225,171,592
Net asset value per unit$.6122.4687
See notes to financial statements.
A-7
<PAGE>
THE SMITH BARNEY FUND STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A - 2004 TRUST
Statements of Operations and Changes in Net Assets
For the years ended December 31, 1995, 1994 and 1993
199519941993
Operations:
Interest income$ 552,120378,501411,602
Expenses:
Trustee fees(3,840
) (7,671 )(4,142)
Other (3,085
) (1,270
) (1,162)
Total expenses (6,925
) (8,941
) (5,304)
Net investment income545,195369,560406,298
Realized gain on sale of securities245,044160,486222,439
Increase (decrease) in unrealized
appreciation 943,325(1,057,905
) 562,169
Net increase (decrease) in net
assets from operations1,733,564 (527,859
) 1,190,906
Capital share transactions:
Proceeds from sales of units2,399,934414,316355,249
Redemption of units:
Principal(827,333
) (654,692)(533,993)
Net investment income(554,891
) (315,096)(235,542)
Realized gains (245,044
) (160,486
) (222,439
)
Net increase (decrease) from
capital share transactions 772,666
(715,958 ) (636,725
)
Increase (decrease) in net assets2,506,230
(1,243,817 ) 554,181
Net assets:
Beginning of year5,171,5926,415,4095,681,228
End of year$7,677,8225,171,5926,415,409
Units sold 4,317,200903,600702,800
Units redeemed2,811,2002,309,2002,108,400
See notes to financial statements.
A-8<PAGE>
</TABLE>
<PAGE>
THE SMITH BARNEY FUND STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A - 2004 TRUST
Notes to Financial Statements
December 31, 1995
(1) Significant Accounting Policies
The Smith Barney Fund Stripped ("Zero") U.S. Treasury
Securities, Series A - 2004 Trust (the "Fund") is registered
under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of
significant accounting policies consistently followed by the
Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted
accounting principles.
Valuations of securities by the evaluator was made on the
basis of current bid prices for the obligations.
The difference between the initial cost of Stripped U.S.
Treasury Securities and principal amount of each security
is being amortized over the period to its maturity date using
the interest method.
All items of income and expenses are attributable to the
unit holders, on a pro rata basis, for federal income tax
purposes in accordance with the grantor trust rules of the
Internal Revenue Code. Accordingly, no provision for
taxes is required to be made by the Trust.
(2) Transaction Charges
During the years ended December 31, 1995 and 1994, the
Sponsor, Smith Barney Inc., received transaction charges
aggregating $37,088 and $10,194, respectively.
Transaction charges with respect to initial deposit were
waived by the Sponsor.
(3) Investments
At December 31, 1995, the cost of investments for federal
income tax purposes was the same as the cost for financial
reporting purposes. There was gross unrealized
appreciation of $1,120,956.
The aggregate cost of purchases of securities during the
year ended December 31, 1995 was $2,399,934. The
aggregate proceeds from sales during the year ended
December 31, 1995 was $1,627,268.
(Continued)
A-9
<PAGE>
2
THE SMITH BARNEY FUND OF STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A - 2004 TRUST
Notes Financial Statements
(4) Supplemental Information
Selected data per 1,000 units of the Fund outstanding
throughout the years ended December 31, 1995, 1994 and
1993, respectively, are as follows (based on average units
outstanding throughout the years):
<TABLE>
19951994 1993
<S> <C> <C> <C>
Interest income $46.8934.91
32.70
Expenses .58 .83
.42
Net investment income 46.0334.08
32.28
Increase (decrease) in
unrealized appreciation* 97.53
(81.11) 60.11
Net increase (decrease) in
net assets from operations 143.56(47.03)
92.39
Net assets:
Beginning of year 468.70515.73
423.34
End of year $612.26468.70
515.73
</TABLE>
* If the amount shown per 1,000 units outstanding
throughout the period does not accord with the
change in the aggregate gains or losses in the
portfolio of securities for the period, it is because of
the timing of sales and redemptions of the Fund's
units in relation to fluctuating market values for the
portfolio.
A-10
<PAGE>
<TABLE> THE SMITH BARNEY FUND STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A - 2004 TRUST
Portfolio as of December 31, 1995
Aggregate
Principal Maturity
Amortized
Amount Title of Security CouponDate
CostValue
<C> <S> <C>
<C> <C> <C>
$12,490,000 Stripped U.S. Treasury Securities 0%
11/15/04$6,486,3327,601,664
49,960 U.S. Treasury Bonds 11.625%
11/15/04 65,110 70,734
$12,539,960
$6,551,4427,672,398
Portfolio as of December 31, 1994
Aggregate
Principal Maturity
Amortized
Amount Title of Security CouponDate
CostValue
$10,990,000 Stripped U.S. Treasury Securities 0%
11/15/04$4,931,3905,110,021
43,960 U.S. Treasury Bonds 11.625%
11/15/04 56,061 55,061
$11,033,960
$4,987,4515,165,082
See notes to financial statements.
A-11
</TABLE>
<PAGE>
* The summary description appearing in this Prospectus of rights of
Holders (as defined below) under the Indenture does not purport to
be complete and is qualified in its entirety by reference to the
complete text of the Indenture, which is filed with the Securities and
Exchange Commission as an exhibit to the Registration Statement
under the Securities Act of 1933 of which this Prospectus is a part.
THE SMITH BARNEY FUND OF
STRIPPED ("ZERO")
U.S. TREASURY SECURITIES, SERIES A
PROSPECTUS - PART B
Note: Part B of this Prospectus may not be distributed unless
accompanied by Part A.
DESCRIPTION OF THE FUND
Structure
Series A of The Smith Barney Shearson Fund of Stripped
("Zero") U.S. Treasury Securities (the "Fund") originally consisted
of three separate unit investment trusts (the "Trusts") created by one
Trust Indenture (the "Indenture")* among Shearson Lehman Brothers
Inc. (the "Sponsor"), The Bank of New York (the "Trustee") and
Kenny S&P Evaluation Services (formerly called Standard & Poor's
Corporation) (the "Evaluator") under New York law. One of the
Trusts expired on November 15, 1991. In July, 1993, Smith Barney
Shearson Inc. became the Sponsor of the Fund (see "Sponsor"). As
of the date of the Statement of Financial Condition of the Fund
included in Part A of this Prospectus, the Sponsor had deposited the
underlying Securities (described below) identified in the Portfolio in
Part A with the Trustee at prices equal to the evaluation of those
Securities on the offering side of the market as determined by the
Evaluator, and the Trustee had delivered to the Sponsor units of
fractional undivided interest ("Units") in each Trust as set forth in
the Statement of Financial Condition. See "Investment Summary"
and the financial statements for the Fund in Part A of this
Prospectus.
The Sponsor intends to deposit additional Securities in each of the
Trusts, with identical maturities to those of the Securities identified
in the portfolios of such Trusts in Part A. The Securities so deposited
may be represented by purchase contracts assigned to the Trustee
together with an irrevocable letter of credit issued by a commercial
bank, cash or cash equivalents to fund their purchase. Units in the
Trusts delivered to the Sponsor in connection with subsequent
deposits will be offered for sale by means of this Prospectus.
Units are offered for sale at a price based upon the offering side
evaluation of the Securities, plus a transaction charge of 1.50% or
less of the price so determined (the "Offering Price"). The Sponsor
has undertaken to maintain a secondary market in the Units, also
based upon the offering side evaluation of the Securities (the
"Sponsor's Repurchase Price"). In addition, Holders of Units
(including the Sponsor) have the right to have their Units redeemed
at a price based on the bid side evaluation of the Securities (the
"Redemption Price"). Redemptions will be made in cash or, at the
option of the Holder, in kind. See "Sale and Redemption of Units."
On the date of the Statement of Financial Condition of the Fund
included in Part A of this Prospectus, each Unit of a Trust
represented the fractional undivided interest in the Securities held in
the Trust set forth under "Investment Summary" in Part A. If Units
of any Trust are redeemed, the face amount of Securities in the Trust
will be reduced by amounts allocable to redeemed Units, and the
fractional undivided interest represented by each Unit in the balance
of the Trust will be increased. If additional Units are issued by any
Trust (through deposit of Securities by the Sponsor in connection
with the sale of additional Units), the face amount of Securities in
the Trust will be increased by amounts allocable to additional Units,
and the fractional undivided interest represented by each Unit in the
balance of the Trust will be decreased. Units will remain outstanding
until redeemed upon tender to the Trustee by a Holder or until the
liquidation of the Trust pursuant to the terms of the Indenture. See
"Sale and Redemption of Units" and "Administration of the Fund."
<PAGE>
As used herein, "Securities" includes "Stripped Treasury
Securities" (see "Characteristics of the Securities" below), interest-
bearing Treasury securities ("Treasury Notes"), and Stripped
Treasury Securities and Treasury Notes represented by contracts to
purchase such securities. The term "Holder" refers to the Sponsor,
when appropriate, and to The Guardian Separate Account B (the
"Account") established by The Guardian Insurance & Annuity
Company, Inc. ("GIAC"), which is currently the only eligible
purchaser of Units from the Sponsor. The Account invests in Units
to fund benefits under variable life insurance policies issued by
GIAC (the "Policies") in accordance with allocation instructions
received from purchasers of Policies. For further information as to
the rights of Policy owners, which should be distinguished from the
rights of Holders as set forth in this Prospectus, see the
accompanying Prospectus relating to the Policies.
Risk Factors
An investment in Units of the Trust should be made with an
understanding of the risks that such an investment may entail,
including the risk that the value of the Trust's portfolio and hence of
the Units will decline with increases in interest rates. High inflation
and recession, together with the fiscal and monetary measures
adopted to attempt to deal with these and other economic problems,
have contributed to wide fluctuations in interest rates and thus in the
value of fixed-rate debt obligations generally in recent years. The
Sponsor cannot predict future economic policies or their
consequences or, therefore, the course or extent of any similar
fluctuations in the future. Moreover, because interest on "zero
coupon" obligations, to which Stripped Treasury Securities are
economically similar (see "Characteristics of the Securities" below),
is not distributed on a current basis but is in effect compounded, the
value of securities of this type (and of a portfolio primarily
comprised of such obligations) is subject to greater fluctuations in
response to changing interest rates than the value of debt obligations
which distribute income regularly. Accordingly, while the full faith
and credit of the United States Government protects against credit
risks on the Securities in each Trust, disposition of Units before the
maturity of the underlying portfolio Securities at a time when
interest rates have increased will involve greater market risk than
disposition of interests in a trust holding interest-bearing debt
obligations. This risk is greater when the period to maturity is
longer. In addition, a direct Holder will recognize significant
amounts of taxable income before the receipt of the cash attributable
to such income.
Characteristics of the Securities
Each Trust consists primarily of Stripped Treasury Securities with
maturities corresponding to that Trust's designation. Each Trust also
holds Treasury Notes which are deposited in order to provide income
with which to pay anticipated expenses of the Trust. It is anticipated
that a constant proportion of Treasury Notes to Stripped Treasury
Securities will be maintained in each of the Trusts. All of the
Securities represent direct obligations of the United States
Government which are payable in full at maturity at their stated
maturity amount. The Securities in each Trust are not subject to
redemption prior to maturity and do not have any equity or
conversion features.
Stripped Treasury Securities held by any Trust will consist of one
or more of the following types of securities: (i) United States
Treasury debt obligations which have been stripped of their
unmatured interest coupons, (ii) coupons which have been stripped
from United States Treasury bonds, and (iii) receipts or certificates
for stripped United States Treasury debt obligations and stripped
coupons. Stripped debt obligations are bonds originally issued as
coupon bonds which have been stripped of their unmatured interest
coupons subsequent to issuance by the owner; stripped coupons are
coupons that were originally issued as part of and attached to coupon
bonds and have subsequently been stripped from those bonds by
their owner. Stripped debt obligations and coupons (other than when
represented by receipts or certificates as described below) are eligible
for purchase by the Trusts only if held in the book-entry system
maintained by the Federal Reserve pursuant to the United States
Treasury's Separate Trading of Registered Interest and Principal of
Securities program. Receipts or certificates for stripped United States
Treasury debt obligations and coupons evidence ownership of future
interest or principal payments on such obligations and coupons.
Such receipts have been offered for sale by several investment
banking firms, are traded in a secondary market, and currently
represent a large segment of the market for Stripped Treasury
Securities. As described in the offering circulars through which the
receipts are offered for sale, the completeness and correctness of
which are assumed here, the receipt sales programs of the several
firms are not identical but are similar to one another. The receipts
or certificates are typically issued by a major bank which acts as
custodian and nominal holder of the underlying stripped United
States Treasury obligations (which may be held by such bank either
in physical or in book-entry form). The terms of custody generally
provide that the underlying obligations will be held separate from the
general assets of the custodian and will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
custodian or any person claiming through the custodian, that the
custodian will be responsible for applying all payments received on
those underlying obligations to the related receipts or certificates
without making any deductions other than applicable tax withholding,
and that the custodian is required to maintain insurance for the
protection of holders of receipts or certificates in customary amounts
against losses resulting from the custody arrangement due to
dishonest or fraudulent action by the custodian's employees. The
offering circulars for such receipts and certificates generally provide
that the holders of receipts or certificates, as the real parties in
interest, are entitled to the rights and privileges accorded to holders
of the underlying stripped debt obligations and coupons, including
the right in the event of default in payment of principal or interest
thereon to proceed individually against the United States without
acting in concert with other holders of those receipts or certificates
or the custodian.
Stripped Treasury Securities are sold at a deep discount because
the buyer of those securities receives only the right to a future fixed
payment on the security and does not receive any rights to periodic
interest payments. Purchasers of Stripped Treasury Securities
acquire, in effect, discount obligations that are substantially similar
economically to the "zero coupon" bonds issued by corporations,
which are originally
<PAGE>
issued at a deep discount and do not make any periodic payments of
interest prior to maturity.
Yield
The economic effect of purchasing Units of a Trust is that the
investor who holds such Units until maturity of the underlying
Securities should receive, assuming, among other things, that the
income generated by the Treasury Notes held by such Trust equals
expenses incurred, a fixed yield that can be estimated at the time of
purchase, not only on his original investment but also on all
amortized discount during the life of the underlying Securities.
Accordingly, an investor in the Trusts, unlike an investor in funds
comprised of securities making periodic distributions, virtually
eliminates the risk of being unable to invest distributions at a rate as
high as the anticipated yield on Trust Units, but will forego the
ability to reinvest such yield at higher rates in the future. The
assumed or implicit automatic reinvestment of the portion of the
yield represented by amortized discount differentiates the Trusts
from funds comprised of securities on which periodic interest is paid.
Actual yield realized by an investor who holds Units until maturity
of the underlying Securities, however, may be more or less than the
yield estimated at the time of purchase of such Units as a result of
changes in the expenses incurred by a Trust or sales of Securities
held by a Trust prior to maturity in order to meet redemptions of
Units. See "Sale and Redemption of Units", "Expenses and
Charges" and "Administration of the Fund - Accounts and
Distributions."
A Holder will be required to include annually in gross income an
allocable portion of the discount on the Stripped Treasury Securities
before the receipt of the cash attributable to such income. For
Federal income tax purposes, inclusion will be on a basis that
reflects the effective semi-annual compounding of accrued but unpaid
interest represented by amortization of the discount on the Stripped
Treasury Securities. See "Taxes."
<PAGE>
SALE AND REDEMPTION OF UNITS
Pricing of Units
The price per Unit of a Trust (the "Price per Unit") is computed
as follows. The sum of (i) taxes or other governmental charges
against the Trust not previously deducted, (ii) accrued fees and
expenses of the Trustee (including legal and auditing expenses), the
Evaluator and counsel, and certain other expenses, and (iii) any cash
held for distribution to Holders of record as of a date prior to the
evaluation is subtracted from the sum of (a) the aggregate evaluation
of the Trust's portfolio Securities determined by the Evaluator, (b)
cash on hand in the Trust (other than cash deposited by the Sponsor
for the purchase of Securities), (c) accrued and unpaid interest on
the Treasury Notes as of the date of computation (except for interest
payable to the Sponsor as a special distribution, as explained below)
and (d) all other assets of the Trust. The resulting difference is
divided by the number of Units outstanding to arrive at the Price per
Unit for the Trust with respect to which the foregoing calculations
were made.
The aggregate evaluation of each Trust's portfolio Securities is
determined by the Evaluator on the basis of current prices for the
Securities, if available; current prices for comparable securities; the
value of the Securities as determined by appraisal; or any
combination of the foregoing. The Evaluator may obtain current
price information as to the Securities from investment dealers or
brokers (including the Sponsor) that customarily deal in those types
of securities.
The Price per Unit on the offering side of the market used to
determine the Offering Price and Sponsor's Repurchase Price is
computed as of the Evaluation Time on each Business Day, effective
for all such transactions since the immediately preceding Evaluation
Time. See "Sale of Units" and "Market for Units" below. The Price
per Unit on the bid side of the market used to determine the
Redemption Price is computed as of the Evaluation Time next
following the tender by a Holder of its Units for redemption,
effective for all redemptions since the immediately preceding
Evaluation Time. See "Redemption of Units" below. In addition, the
Price per Unit on the offering side and the bid side of the market is
determined (i) on June 30 and December 31 of each year (or on the
last Business Day prior to such dates) and (ii) on any Business Day
on which such a determination is requested by the Trustee or the
Sponsor.
As indicated under "Investment Summary" in Part A of this
Prospectus, the Stripped Treasury Securities and Treasury Notes
deposited in each Trust include elements of amortized discount and
accrued interest, respectively. Evaluations of Securities in a Trust
include discount amortized on the Stripped Treasury Securities from
the date of purchase or sale of Units of the Trust to the date of
settlement for such Units (normally five Business Days). Interest on
the Treasury Notes accruing prior to their deposit in a Trust and
after such deposit to the date five Business Days after such deposit
is paid to the Sponsor by the Trustee as a special distribution and
recovered by the Trustee from interest received on the Treasury
Notes, and is therefore not included in the evaluation of Securities
in the Trust. See "Investment Summary" in Part A of this
Prospectus.
In addition to the deposit by it of contracts representing Securities
expected to settle within the usual settlement time for sales of
securities (normally five Business Days), the Sponsor may deposit
contracts representing Securities with an agreed-upon delayed
settlement date which will not be delivered to the Sponsor (or to the
Trust) by the settlement date for Units acquired by the Sponsor on
its deposit of such contracts. Amortized discount on such Securities
will not accrete to the benefit of the Trust holding the contract
representing the Securities until the settlement date for such
Securities.
The Price per Unit of a Trust will vary in accordance with
fluctuations in the evaluation of the underlying Securities.
Amortization of discount will have the effect of increasing at any
particular time the value of the underlying Securities.
<PAGE>
As used in this Prospectus, the term "Business Day" means every
Monday through Friday except for New Year's Day, Martin Luther
King's Birthday, Presidents' Day, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving and
Christmas.
Sale of Units
The Offering Price per Unit of a Trust is determined by
evaluating the Trust's portfolio Securities on the offering side of the
market in determining the Price per Unit (see "Pricing of Units") and
adding the applicable transaction charge. The transaction charge
varies with the remaining years to maturity of the Stripped Treasury
Securities in the Trust, as follows:
<TABLE>
<S> <C><C>
Percent of
Percent of
Offering
Net Amount
Remaining Years to Maturity
Price
Invested
Less than 3 years
.5
.503
At least 3 years but less than 8 years
1.00
1.010
At least 8 years but less than 13 years
1.50
1.523
</TABLE>
The transaction charges set forth above, which do not reflect
distribution expenses because all sales are currently made to the
Account, are less than sales charges on comparable unit investment
trusts offered to the public by the Sponsor. On Units sold to the
Account, GIAC initially pays the transaction charge. GIAC has
represented that it intends to recover any transaction charges paid by
it from the Investment Division within the Account corresponding to
the Trust with respect to which the transaction charge was paid
through a charge against the assets of such Division. Reference
should be made to the accompanying Prospectus relating to the
Policies for further information.
Market For Units
The Sponsor has undertaken to maintain a secondary market for
Units of each Trust and to offer continuously to purchase Units of
each Trust at the Sponsor's Repurchase Price. The Sponsor's
Repurchase Price per Unit of a Trust is determined by evaluating
the Trust's portfolio Securities on the offering side of the market in
determining the Price per Unit (see "Pricing of Units").
The right of Holders to resell their Units to the Sponsor may be
suspended and payment postponed for any period during which the
right of redemption with respect to such Units has been suspended.
See "Redemption of Units" below.
Consolidated financial statements of the Sponsor are incorporated
by reference in this Prospectus. See "Financial Information
Concerning the Sponsor" in Part A of this Prospectus.
Redemption of Units
In addition to the right of a Holder to sell Units to the Sponsor at
the Sponsor's Repurchase Price, a Holder (including the Sponsor)
is also entitled to redeem Units at the office of the Trustee upon
tender of certificates, if issued, and payment of any relevant tax
without any other fee. The Redemption Price per Unit of a Trust is
determined by evaluating the Trust's portfolio Securities on the bid
side of the market in determining the Price per Unit (see "Pricing
of Units").
<PAGE>
Because the Sponsor's Repurchase Price is based on the offering
side evaluation of the Securities in a Trust and the Redemption Price
is based on the bid side evaluation of such Securities, it is expected
that it will always be to the advantage of a Holder (other than the
Sponsor) to resell Units to the Sponsor rather than to redeem them.
Unless the Account has elected an in kind payment, the Sponsor
therefore expects to repurchase any Units tendered for redemption by
the Account.
The Sponsor, as a Holder, intends to redeem Units it has
purchased in the secondary market or acquired on deposit of
Securities in a Trust if it determines it is undesirable to continue to
hold those Units in its inventory. Factors which the Sponsor will
consider in making such a determination will include the number of
Units of all Trusts which it has in its inventory, the salability of the
Units, and its estimate of the time required to sell the Units and
general market conditions. The Sponsor has committed to redeem
Units only in an amount substantially equal to the value of one or
more portfolio Securities, so that uninvested cash generated by a
redemption is de minimis.
Certificates to be redeemed must be properly endorsed or
accompanied by a written instrument or instruments of transfer. The
Trustee will redeem Units either in cash or, if specified at the option
of the Holder, in kind as requested in writing to the Trustee. A
Holder will be entitled to receive redemption proceeds within seven
calendar days following tender or, if the seventh calendar day is not
a Business Day, on the last Business Day prior thereto.
In kind distributions will take the form of distributions of
certificates representing whole Securities and cash representing
fractional interests in such Securities. The Securities to be received
by a Holder upon redemption of its Units in kind will be selected by
the Trustee from a list supplied by the Sponsor. The Trustee is
empowered to sell Securities in order to make funds available for
cash distributions and for in kind distributions to the extent
necessary to redeem fractional interests in whole Securities
represented by Units redeemed. To the extent that Securities are
redeemed in kind or sold, the size of the relevant Trust will be
reduced. Sales may be required at a time when Securities would not
otherwise be sold and may result in lower prices than might
otherwise be realized. In addition, because the Sponsor may specify
minimum face amounts in which Securities may be sold, the
proceeds of sale may exceed the amount required to redeem Units.
Any excess proceeds will be distributed to Holders upon maturity
of the Securities in the relevant Trust.
The right of Holders to redeem their Units may be suspended and
payment postponed for any period (i) during which the New York
Stock Exchange (the "NYSE") is closed other than for customary
weekend and holiday closings, or (ii) during which, as determined
by the Securities and Exchange Commission (the "Commission"),
(a) trading on the NYSE is restricted or (b) an emergency exists as
a result of which disposal or evaluation of the Securities is not
reasonably practicable, or (iii) for any other periods which the
Commission may by order permit.
Comparison of Offering Price, Sponsor's
Repurchase Price and Redemption Price
With respect to each Trust, on the date of the Statement of
Financial Condition of the Fund included in Part A of this
Prospectus, the Offering Price per Unit (which includes the
transaction charge) and the Sponsor's Repurchase Price per Unit
(each based on the offering side evaluation of Securities in a Trust)
exceeded the Redemption Price per Unit (based on the bid side
evaluation thereof) by the amounts set forth under "Investment
Summary" in Part A.
On the date of the Statement of Financial Condition of the Fund
included in Part A, the bid prices for Securities in each of the Trusts
were lower than the offering prices thereof (see Portfolio of the Fund
in Part A). For this and other reasons (including fluctuations in the
market prices of the Securities and the fact that the Offering Price
includes a transaction charge), the amount realized by a Holder upon
any sale or redemption of Units may be less than the price paid for
such Units.
<PAGE>
TAXES
The following discussion relates only to Holders (the Account and
the Sponsor) of Units of the Fund, and not to Policy owners. For
information on tax consequences to Policy owners, see the attached
Prospectus relating to the Policies.
In the opinion of Davis Polk & Wardwell, special counsel for the
Sponsor, under existing law:
Each Trust is not an association taxable as a corporation for
Federal income tax purposes, and income received by the Trust will
be treated as the income of the Holders of the Trust in the manner
set forth below.
Each Holder will be considered the owner of a pro rata portion
of each Security in its Trust under the grantor trust rules of Sections
671-679 of the Internal Revenue Code of 1986, as amended. In order
to determine the face amount of a Holder's pro rata portion of each
Security in its Trust on the date of the Statement of Financial
Condition of the Fund included in Part A of this Prospectus, see
"Face Amount of Securities" under the Investment Summary in Part
A. The total cost to a Holder for its Units, including transaction
charges, is allocated among its pro rata portion of each Security in
its Trust (in proportion to the fair market values thereof on the date
the Holder purchases its Units) in order to determine its tax cost for
its pro rata portion of each Security. In order for a Holder who
purchased its Units on the date of the Statement of Financial
Condition of the Fund included in Part A of this Prospectus to
determine the fair market value of its pro rata portion of each
Security in its Trust on such date, see Sponsor's Repurchase Price
under the Investment Summary in Part A.
Each Trust consists primarily of Stripped Treasury Securities. A
Holder is required to treat its pro rata portion of each Stripped
Treasury Security in its Trust as a bond that was originally issued on
the date the Holder purchased its Units at an original issue discount
equal to the excess of the stated redemption price at maturity over
the Holder's tax cost therefor as discussed above, and to include
annually in income a portion of such original issue discount
determined under a formula which takes into account the semi-annual
compounding of interest.
Each Holder will be considered to have received the income on
its pro rata portion of the Treasury Notes in its Trust when interest
on the Notes is received by its Trust. A Holder who itemizes
deductions will be entitled to deductions for income tax purposes of
the Holder's pro rata share of expenses paid by its Trust, including
fees of the Trustee and the Evaluator.
A Holder will recognize taxable gain or loss when all or part of
his pro rata portion of a Security is disposed of by the Fund for an
amount greater or less than his adjusted tax basis. Any such taxable
gain or loss will be capital gain or loss except that any gain from
the disposition of a Holder's pro rata portion of a Security acquired
by the Holder at a "market discount" (i.e., if the Holder's original
cost for his pro rata portion of the Security (plus any original issue
discount which will accrue thereon) is less than its stated redemption
price at maturity) will be treated as ordinary income to the extent the
gain does not exceed the accrued market discount. Capital gains are
generally taxed at the same rate as ordinary income. However, the
excess of net long-term capital gains over net short-term capital
losses may be taxed at a lower rate than ordinary income for certain
noncorporate taxpayers. A capital gain or loss is long-term if the
asset is held for more than one year and short-term if held for one
year or less. The deduction of capital losses is subject to limitations.
A Holder will also be considered to have disposed of all or part of
his pro rata portion of each Security when he sells or redeems all or
some of his Units.
Holders will be required for Federal income tax purposes to
include amounts in ordinary gross income in advance of the receipt
of the cash attributable to such income. Therefore, direct purchase
of Units may be appropriate only for a tax-deferred account which
is not subject to a current tax on income accrued in advance of the
receipt of the cash attributable to such income.
<PAGE>
Under the income tax laws of the State and City of New York,
each Trust is not an association taxable as a corporation and income
received by the Trust will be treated as the income of the Holders of
the Trust in the same manner as for Federal income tax purposes.
The foregoing discussion relates only to Federal and New York
State and City income taxes. Holders also may be subject to state
and local taxation in other jurisdictions. Holders should consult their
own tax advisers regarding specific questions as to Federal, state or
local taxes.
SPONSOR'S PROFITS
The Sponsor receives a transaction charge at the rates set forth
under "Sale and Redemption of Units - Sale of Units" on any sale
by it of Units, regardless of whether such Units were acquired by the
Sponsor on the deposit of Securities in a Trust or in the secondary
market maintained by it. In addition, the Sponsor may realize a
profit on the deposit of Securities in a Trust based upon the
difference between the cost of the Securities to the Trust (which is
based on the offering side evaluation of the Securities) and the price
paid by the Sponsor for such Securities. The Sponsor also may
realize profits or sustain losses as a result of fluctuations in the
aggregate value of a Trust's portfolio Securities and hence in the
Offering Price for the related Units sold by the Sponsor subsequent
to the date of the acquisition by the Sponsor of such Units on its
deposit of Securities in a Trust.
In maintaining a secondary market for the Units, the Sponsor also
will realize profits or sustain losses in the amount of any difference
between the Sponsor's Repurchase Price at the time of such purchase
and the Offering Price or Redemption Price at the time of resale or
redemption, as the case may be.
Cash, if any, received from purchasers of Units by the Sponsor
prior to the settlement dates for purchase of Units or prior to
payment for Securities upon their delivery may be used in the
Sponsor's business, subject to the limitations of Rule 15c3-3 under
the Securities Exchange Act of 1934, and may be of benefit to the
Sponsor.
EXPENSES AND CHARGES
Initial Expenses
The Sponsor has borne all expenses incurred in creating and
establishing the Fund, including the cost of the initial preparation of
the Indenture, the initial fees and expenses of the Trustee, legal and
auditing expenses and other out-of-pocket expenses.
Sponsor's Fees
The Sponsor receives no fee from the Fund for its services as
such. However, while the transaction charges paid by GIAC to the
Sponsor are not directly charged to the Account, GIAC has
represented that it will recover such transaction charges through
charges against the assets of the Division of the Account
corresponding to the Trust with respect to which the transaction
charge was paid. Policy owners therefore will indirectly bear these
charges. Reference should be made to the accompanying Prospectus
relating to the Policies for further information.
Trustee's and Evaluator's Fees
The Trustee's and Evaluator's fees are set forth under
"Investment Summary" in Part A of this Prospectus. The Trustee's
fees, payable semi-annually out of the assets of each Trust, are
determined monthly based on the largest face amount of Securities
in a Trust during the preceding month. The Trustee also may benefit
to the extent that it holds funds on deposit in the various non-
interest bearing accounts created under the Indenture. See
"Administration of the Fund - Accounts and Distributions."
<PAGE>
The Evaluator's fees set forth under "Investment Summary" in
Part A for each determination of the Offering Price and Sponsor's
Repurchase Price will be paid by the Sponsor. The Evaluator's fees
for determining the Redemption Price will be borne by the Trust.
Charges Borne by the Trusts
In addition to the Trustee's and Evaluator's fees borne by the
Trusts identified above, charges borne by the Trusts include: (i) fees
of the Trustee for extraordinary services, (ii) certain expenses of the
Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsor, (iii) various governmental charges, (iv)
expenses and costs of any action taken to protect a Trust, (v)
indemnification of the Sponsor and the Trustee for any loss, liability
and expense incurred without gross negligence, bad faith, wilful
misconduct or reckless disregard of their duties and (vi) to the extent
then lawful, expenses (including, but not limited to, legal, auditing
and printing expenses) of maintaining registration or qualification of
the Units and/or the Fund under Federal or state securities laws
subsequent to initial registration.
The above fees and expenses, including the Trustee's and
Evaluator's fees, are deducted from the Income Account of each
Trust in any month in which interest is paid on the Treasury Notes
in such Trust and, to the extent funds are not then available in the
Income Account, from the Capital Account of the Trust to which
they relate. To the extent funds are not available in the Capital
Account, the Trustee is empowered to sell Securities in the Trust in
order to make funds available to pay such amounts. The above fees,
expenses and advances, when paid by or owing to the Trustee, are
secured by a lien on the assets of the relevant Trust.
ADMINISTRATION OF THE FUND
Records
The Trustee keeps records of transactions of the Fund, including
a current list of the Securities held in each Trust and a copy of the
Indenture. These records are available to Holders for inspection at
the office of the Trustee at reasonable times during the Trustee's
business hours. Portfolio Supervision
<PAGE>
In selecting Securities for deposit in the Fund, the following
factors, among others, are considered by the Sponsor: (i) the types
of Securities available; (ii) the prices of those Securities relative to
other comparable securities; (iii) the yield to maturity of those
Securities; and (iv) the maturities of those Securities.
Neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in any of the Securities. In the event
of a failure to deliver Securities that have been purchased for a Trust
under a contract ("Failed Securities"), the Sponsor is authorized
under the Indenture to direct the Trustee to use the funds reserved
for the purchase of Failed Securities to acquire substitute Securities
with identical maturities ("Substitute Securities"). Substitute
Securities must be purchased at a price that results in a yield to
maturity as of their date of deposit which is equivalent to the yield
to maturity of the Failed Securities. If the Sponsor does not or
cannot, in accordance with the restrictions on its ability to do so
summarized above, direct the Trustee to purchase Substitute
Securities, the Sponsor will, within 30 days after delivery to the
Sponsor of notice of default on the contract, cause to be refunded the
transaction charge and cost of Securities to the Trust attributable to
Units acquired on deposit of contracts to purchase the Failed
Securities, plus accrued interest and amortization. Within five days
after the acquisition of Substitute Securities or a refund by the
Sponsor, the Trustee will notify all Holders of the affected Trust of
the acquisition of the Substitute Securities or such refund and, within
30 days thereafter, make a pro rata distribution of the amount of
such refund or the amount, if any, by which the cost to the Trust of
the Failed Securities exceeded the cost of the Substitute Securities.
In the event that it becomes necessary for the Trust to sell
Securities in order to make funds available for cash redemptions, the
Securities to be sold will be selected by the Trustee from a list
supplied by the Sponsor. Securities will be chosen for this list by the
Sponsor on the basis of market factors. Provision is made under the
Indenture for the Sponsor to specify minimum face amounts in which
blocks of Securities are to be sold in order to obtain the best price
for the Trust. While these minimum amounts may vary from time to
time in accordance with market conditions, the Sponsor believes that
the minimum face amounts specified would range from $25,000 to
$100,000.
If a Holder requests in kind redemption of its Units, the Securities
received by the Holder upon redemption will also be selected by the
Trustee from a list supplied by the Sponsor.
The Sponsor may direct the disposition of Securities upon default
in payment of principal or interest which is not promptly cured,
institution of certain legal proceedings, default in payment of
principal of or interest on other securities constituting obligations of
the United States Government, or a decline in price or the
occurrence of other market or credit factors that in the opinion of
the Sponsor would make the retention of the Securities in any Trust
detrimental to the interest of the Holders of that Trust. If a default
in the payment of principal or interest on any Security occurs and
if the Sponsor fails to give instructions to sell or hold the Security
within 30 days after the notification of such failure by the Trustee
to the Sponsor, the Indenture provides that the Trustee may sell the
Security.
Accounts and Distributions
The Indenture provides for the creation by the Trustee of three
accounts on behalf of each Trust of the Fund: an Income Account,
a Capital Account, and a Reserve Account. Interest received on the
Treasury Notes held by each Trust is credited to the Income
Account. Proceeds from the disposition of any Security (other than
proceeds representing interest and penalties on the Treasury Notes
which are credited to the Income Account) which are not used for
redemption of Units are credited to the Capital Account of the
relevant Trust. A Reserve Account may be created by the Trustee
on behalf of each Trust in accordance with the terms of the Indenture
by withdrawals from time to time from the Income or Capital
Accounts of amounts deemed requisite by the Trustee to establish a
reserve for any taxes or other governmental charges that may be
payable out of the assets of such Trust.
Any date on which a distribution to Holders of Units is made is
referred to herein as a "Distribution Day." Because funds held by
the Trustee in the various accounts do not bear interest, and because
of the "zero coupon" nature of Stripped Treasury Securities which
constitute substantially all of the assets of the Trusts, it is anticipated
that no distributions will be made to Holders of Units until the next
Business Day following the maturity of the Securities in the Trust
portfolio to which the Units relate. Distributions will be made to
Holders as of the Business Day immediately preceding the
Distribution Day (the "Record Day") by mail on the Distribution
Day and will consist of an amount equal to each Holder's pro rata
share of the cash balance in the Income and Capital Accounts of a
Trust as of the close of business on the Record Day, less any accrued
expenses, fees or liabilities owed by the Trust and amounts allocated
by the Trustee to the Reserve Account.
Reports to Holders
After the end of each calendar year, the Trustee will furnish to
Holders of Units in the relevant Trust a statement (i) summarizing
transactions for the year in the Income, Capital and Reserve
Accounts of the Trust, (ii) identifying Securities sold and purchased
during, and listing Securities held at the end of, the year by the
Trust, (iii) stating the Trust's Offering Price, Sponsor's Repurchase
Price and Redemption Price per Unit based upon the computation
thereof made at the end of the year and (iv) specifying the amounts,
if any, distributed during the year from the Trust's Income and
Capital Accounts.
<PAGE>
The accounts of each Trust will be audited at least annually by
independent certified public accountants designated by the Sponsor,
and the report of such accountants will be furnished by the Trustee
to Holders. Upon distribution of the assets of a Trust as described
under "Accounts and Distributions", the Trustee will furnish to
Holders as of the Record Day a statement of the amounts of interest
and other receipts being distributed, expressed in each case as a
dollar amount per Unit.
Certificates
Upon request to the Trustee and payment of postage, Holders are
entitled to a registered Certificate for Units. Certificates are
transferable or interchangeable upon presentation at the office of the
Trustee, and payment of any taxes or governmental charges imposed
on the transaction, plus a transfer charge specified by the Trustee and
approved by the Sponsor. Mutilated, destroyed, stolen or lost
Certificates will be replaced upon delivery of satisfactory indemnity
and payment of expenses incurred.
Unless a Certificate is requested, Holders will hold their Units in
uncertificated form. The Trustee will credit each such Holder's
account with the number of Units purchased by that Holder.
Uncertificated Units are transferable through the same procedures
applicable to Units evidenced by Certificates, except that no
Certificate need be presented to the Trustee and none will be issued
upon transfer unless requested by the Holder.
Amendment and Liquidation
The Sponsor and Trustee may amend the Indenture without the
consent of Holders (i) to cure any ambiguity or to correct or
supplement any of its provisions which may be defective or
inconsistent, (ii) to make any changes in its provisions required by
the Commission or any successor governmental agency, or (iii) to
make any other changes which do not adversely affect the interest
of the Holders, as determined in good faith by the Sponsor.
The provisions of the Indenture with respect to any Trust also
may be amended in any respect or waived by the Sponsor and
Trustee with the consent of the Holders of 51% of the Units of such
Trust then outstanding. However, none of such amendments or
waivers may permit the acquisition by a Trust of Securities with
maturity dates differing from those of the Securities described in the
portfolio of such Trust in Part A of this Prospectus or reduce the
percentage of Units required to consent to such amendments or
waivers without the consent of all Holders of Units in such Trust.
The Trustee will promptly notify Holders of the substance of any
such amendment.
The Indenture will terminate in accordance with its terms upon
the earlier of the distribution of all assets of any Trust, as to the
Trust holding the assets so distributed, or the date specified under
"Investment Summary - Mandatory Termination Date" in Part A of
this Prospectus. A Trust may be liquidated if the value of the Trust
is less than the minimum value set forth under "Investment
Summary" in Part A. A Trust also may be terminated by action of
Holders of 51% of the Units in such Trust at any time. The Trustee
will deliver written notice of any proposed termination of a Trust to
each Holder within a reasonable period of time prior to its proposed
liquidation, specifying the times at which Holders may surrender
their Certificates for cancellation or otherwise receive payment for
their Units if held in uncertificated form. Within a reasonable period
of time after notice of proposed termination of a Trust, the Trustee
must sell all of the Securities then held in the Trust and distribute
to each Holder the Holder's interest in the Income and Capital
Accounts after deduction of accrued expenses, fees or liabilities
owed by the Trust and any amounts allocated by the Trustee to the
Reserve Account. Such distribution normally will be made by
mailing a check to the address of the Holder appearing on the record
books of the Trustee on the Record Day prior to the Distribution
Day on which such checks are mailed.
<PAGE>
SPONSOR
The Sponsor, a Delaware corporation which is an indirect wholly
owned subsidiary of The Travelers Inc., is engaged in the
underwriting, securities and commodities brokerage, and investment
advisory business, and is a member of the NYSE, other major
securities exchanges and commodity exchanges, and the National
Association of Securities Dealers, Inc. In July, 1993, Primerica
Corporation ("Primerica") and its subsidiary, Smith Barney, Harris
Upham & Co. Incorporated, acquired the domestic retail brokerage
and asset management businesses of Shearson Lehman Brothers
Inc., previously the sponsor of the Fund. As a result of this
acquisition, Smith Barney Shearson Inc. is now the Sponsor of the
Fund. In January, 1994, Primerica completed a merger with The
Travelers Corporation and they became The Travelers Inc. The
Sponsor has acted as principal underwriter and managing underwriter
of other investment companies. The Sponsor, in addition to
participating as a member of various selling groups or as an agent
of other investment companies, executes orders on behalf of
investment companies for the purchase and sale of securities of such
companies and sells securities to such companies in its capacity as
a broker or dealer in securities.
Limitations on Liability
The Sponsor will not be liable to the Fund or to Holders for
taking any action or refraining from taking any action in good faith
or for errors in judgment and will not be responsible for depreciation
or loss with respect to the Securities held by the Fund, except in
cases of wilful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations under the Indenture. The acquisition of
all or substantially all of the assets of the Sponsor and the assumption
of its obligations under the Indenture by a corporation or partnership
which carries on its business will relieve the Sponsor of its
obligations and duties under the Indenture.
Resignation and Removal
If the Sponsor fails to perform its duties, becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public
authorities, the Trustee may (i) appoint a successor Sponsor at rates
of compensation not exceeding any maximum prescribed by the
Commission and in an amount deemed reasonable by the Trustee, (ii)
liquidate the Fund and distribute the proceeds of the sale of
Securities held in the Fund as provided under "Administration of the
Fund - Amendment and Liquidation" or (iii) continue to act as
Trustee in accordance with the Indenture.
TRUSTEE
The Trustee is The Bank of New York, a New York corporation
authorized to do a banking business with its corporate trust office at
101 Barclay Street, New York, New York, which is subject to
supervision 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.
Limitations on Liability
The Trustee will not be liable to the Fund or to Holders of Units
for taking any action or refraining from taking any action in good
faith or for errors in judgment and will not be responsible for
depreciation or loss with respect to the purchase or sale of or the
failure to sell any Securities held by the Fund, nor will the Trustee
be personally liable for any taxes or other governmental charges
imposed on the Fund or the Securities. The Trustee will not be
liable for any action taken in good faith in reliance on prima facie
properly executed documents. However, the foregoing limitations
(and other exculpatory provisions in the Indenture relating to the
Trustee) will not protect the Trustee in cases of wilful misfeasance,
bad faith, gross negligence, or reckless disregard of its duties and
obligations under the Indenture.
<PAGE>
Resignation and Removal
The Trustee or any successor may resign upon notice to the
Sponsor and may be removed upon the direction of the Holders of
51% of the Units at any time. The Trustee may also be removed by
the Sponsor without the consent of Holders if it becomes incapable
of acting, becomes bankrupt or its affairs are taken over by public
authorities. In case of such resignation or removal, the Sponsor will
use its best efforts to appoint a successor promptly. If no successor
Trustee is appointed within thirty days after notification by or to the
Trustee of its resignation or removal, the Trustee may apply to a
court for the appointment of a successor. Resignation or removal of
the Trustee will become effective upon appointment of a successor
Trustee.
EVALUATOR
The Evaluator is Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc., with main offices located at 65
Broadway, New York, New York 10006. Kenny Information
Systems, Inc. is a wholly owned subsidiary of J.J. Kenny Co., Inc.
which is a wholly owned subsidiary of McGraw-Hill, Inc.
Limitations on Liability
The Trustee and the Sponsor may rely on any evaluation
furnished by the Evaluator and will have no responsibility to Holders
for its accuracy. Determinations by the Evaluator under the Indenture
will be made in good faith upon the basis of the best information
available to it. The Evaluator will not be liable to the Trustee, the
Sponsor or the Holders for errors in judgment except in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties.
Resignation and Removal
The Evaluator may resign upon notice to the Sponsor and
Trustee, and may be removed at any time by the Sponsor. Upon
such resignation or removal, the Sponsor will use its best efforts to
appoint a successor promptly. If no successor Evaluator has
accepted appointment within thirty days after notification of
resignation or removal, the Evaluator may apply to a court for the
appointment of a successor. Resignation or removal of the Evaluator
will become effective upon appointment of a successor Evaluator.
LEGAL OPINION
The legality of the Units offered hereby has been passed upon for
the Sponsor by Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York 10017. Emmet, Marvin & Martin, 120
Broadway, New York, New York 10271, acts as counsel for the
Trustee.
INDEPENDENT AUDITORS
The Statement of Financial Condition, including the Portfolio, and
the Statements of Operations and Changes in Net Assets of the Fund
set forth in Part A of this Prospectus have been audited by KPMG
Peat Marwick LLP, independent auditors, to the extent indicated in
their report thereon also included. Such financial statements have
been included herein in reliance upon such report given on the
authority of such firm as experts in accounting and auditing. <PAGE>
<PAGE>
<TABLE>
THE SMITH BARNEY INC. STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND, SERIES A
PROSPECTUS
Parts A and B of this Prospectus do not contain all of the
information with respect to the Fund set forth in its registration
statements and exhibits relating thereto which have been filed with
the Securities and Exchange Commission, Washington, D.C. under
the Securities Act of 1933 and the Investment Company Act of 1940,
and to which reference is hereby made.
Index to Parts A and B
<S> <C>
Investment Summary A-2
Independent Auditors ReportA-5
Report of Independent AccountantsA-6
Statement of Financial ConditionA-7
Statement of Operations and Changes in Net AssetsA-
8
Notes to Financial StatementsA-9
PortfolioA-11
Description of the FundB-1
Sale and Redemption of UnitsB-4
TaxesB-7
Sponsor's ProfitsB-8
Expenses and ChargesB-8
Administration of the FundB-9
SponsorB-12
TrusteeB-12
EvaluatorB-13
Legal OpinionB-13
Independent AuditorsB-13
Sponsors: Evaluator:
Trustee: Independent Auditors:
Sponsor: Evaluator:
Trustee: Independent Auditors:
Smith Barney Inc. Kenny S&P Evaluation The Chase
Manhattan Bank KPMG Peat Marwick LLP
Unit Trust Department Services (National
Association) 345 Park Avenue
388 Greenwich St. 65 Broadway 1 Chase
Manhattan Plaza New York, NY 10154
New York, New York 10013 New York, New York 10006 New York,
New York 10081 (212) 758-9700
1(800) 298-UNIT (212) 208-8580 1(800)
354-6565
No person is authorized to give any information or to make any
representations with respect to this investment company not
contained in this Prospectus, and any information or
representations not contained herein must not be relied upon as
having been authorized. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any
state to any person to whom it is not lawful to make such offer
in such state.
</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 Prospectus consisting of 29 pages
- Signatures.
Written consents of the following persons:
- KPMG Peat Marwick LLP (included as Exhibit 4.1A)
- Coopers & Lybrand, L.L.P. (included as Exhibit 4.1B)
- Kenny S&P Evaluation Services (included in Exhibit
4.2)
The following exhibits:
1.1 Restated Certificate of Incorporation of Smith
Barney Inc., as amended August 2, 1993
(incorporated by reference to Exhibit 3(i) to the
Registration Statement of Tax Exempt Securities
Trust, Series 377, Reg. No. 33-65332).
1.2 Bylaws of Smith Barney Inc. (incorporated by
reference to Exhibit 3(ii) to the Registration
Statement of Tax Exempt Securities Trust, Series
327, Reg. No. 33-36037).
4.1A Consent of KPMG Peat Marwick LLP.
4.1B Consent of Coopers & Lybrand L.L.P.
4.2 Consent of Kenny S&P Evaluation Services.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, The Smith Barney Inc. Stripped ("Zero") U.S.
Treasury Securities Fund, Series A (A Unit Investment Trust),
certifies that it meets all of the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement or Amendment thereto to be signed on its behalf by
the undersigned thereunto duly authorized in the City of New
York and State of New York on the 25th day of March, 1996.
THE SMITH
BARNEY INC. FUND
OF
STRIPPED ("ZERO") U.S. TREASURY
SECURITIES, SERIES A
(Registrant)
Signatures appear on page II-3
A majority of the members of the Board of Directors of
Smith Barney Inc. has signed this Registration Statement or
Amendment to the Registration Statement pursuant to Powers of
Attorney authorizing the person signing this Registration
Statement or Amendment to the Registration Statement to do so
on behalf of such members.
II-2
<PAGE>
Smith Barney INC.
Depositor
By the following persons, who constitute a majority of
Powers of Attorney have been filed under
the Board of Directors of Smith Barney Inc.:
the following 1933 Act File
Numbers: 33-56722 and 33-51999
STEVEN D. BLACK
JAMES BOSHART III
ROBERT A. CASE
JAMES DIMON
ROBERT DRUSKIN
JEFFREY LANE
JACK L. RIVKIN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
II-3
<PAGE>
Exhibit 4.1A
CONSENT OF Independent AUDITORS
We consent to the use of our report dated February 19,
1996, on the statement of financial condition of the Smith Barney
Stripped ("Zero") U.S. Treasury Securities, Series A-2004 Trust,
including the related portfolios, as of December 31, 1995 and
1994, and the related statements of operations and changes in net
assets and the selected supplemental information for each of the
years in the two-year period ended December 31, 1995, included
herein and to the reference to our firm under the heading
"AUDITORS" in the prospectus.
KPMG Peat Marwick LLP
New York, New York
March 5, 1996
<PAGE>
<PAGE>
Exhibit 4.1B
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendement
No. 11 to the Registration Statement on Forms S-6 (File No. 2-
98383) of our report dated February 24, 1994, on our examination
of the financial statements of The Smith Barney Inc.(formerly,
Smith Barney Shearson) Stripped ("Zero") U.S. Treasury
Securities Fund, Series A.
COOPERS & LYBRAND, L.L.P.
New York, New York
March 22, 1996
<PAGE>
<PAGE>
STANDARD & POOR'S
A Division of The Mcgraw-Hill Companies
65 Broadway
New York, New York, 10006-2511
Telephone 212/770-4000
Smith Barney Incorporated
388 Greenwich Street
New York, NY 10013
RE: The Smith Barney Fund of Stripped ("Zero")
U.S. Treasury Securities Fund, Series A
Gentlemen:
We have examined the post-effective Amendment to
the Registration Statement
File No. 2-98383 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,
Frank A. Ciccotto
