<PAGE>
Registration No. 33-3762
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. 10
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
Coupon")
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 22,
1995.
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 COUPON")
U.S. TREASURY SECURITIES FUND, SERIES A
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, Financial Statements of each Trust and a summary of
each Trust's portfolio. Part B contains a general summary of
the Fund. Part A may not be distributed unless accompanied by
Part B.
The Smith Barney Inc. Stripped ("Zero Coupon") 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 each 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 each 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 each Trust, also at a price based upon the
aggregate offering side evaluation of the underlying Securities
(the "Sponsor's Repurchase Price").
Separate investment accounts (the "Accounts") of IDS
Life Insurance Company ("IDS Life") and IDS Life Insurance
Company of New York ("IDS Life of New York") are currently
the only eligible purchasers of Units of the Trust from the
Sponsor. The Accounts invest in Units of the Trust to fund
benefits under Variable Life Insurance Policies issued by IDS
Life and IDS Life of New York (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 Accounts 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
1<PAGE>
<PAGE>
<TABLE>
SMITH BARNEY INC. UNIT TRUSTS, STRIPPED ("ZERO
COUPON")
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$21,937,400
Number of units 21,937,400
Fractional undivided interest in trust represented by each unit
1/21,937,400
Offering price per 1,000 units*
Aggregated offering side evaluation of securities in trust**
$13,434,817.73
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 per 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 Trust approaches
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.
**** Figure shown is $9.907 less than the Offering Price per
1,000 Units and $.581 less than the Sponsor's Repurchase
Price per 1,000 Units.
+ 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.
2
</TABLE>
2
<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
Trusts 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 Trusts. 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 Trusts. 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 Accounts to
measure benefits under Policies issued by IDS Life and IDS
Life of New York. The interest of a Policy owner (an
"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 Units and the benefits provided
under a Policy. The rights described in this Prospectus of
the Accounts and the Sponsor (insofar as it holds Units) as
holders of Units should be distinguished from the rights of
an Owner set forth in the Prospectus describing the
Policies. For purposes of this Prospectus, the term
"Holder" shall refer to the Accounts or, when appropriate,
the Sponsor. IDS Life and IDS Life of New York 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
"zero coupon" obligations, 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.
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 the 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.
<PAGE>
To the Sponsor and Holders of
The Smith Barney Shearson Stripped ("Zero Coupon")
U.S. Treasury Securities Fund, Series A:
We have audited the statements of financial condition of
The Smith Barney Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, Series A-2004 Trust, and 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 December 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 The Smith Barney
Stripped ("Zero Coupon") U.S. Treasury Securities Fund,
Series A-2004 Trust, at December 31,1995 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.
KPMG Peat Marwick LLP
February 19, 1996A-5<PAGE>
<PAGE>
REPORT ON INDEPENDENT ACCOUNTANTS
To the Sponsor and Holders of The Smith Barney Shearson
Fund of Stripped ("Zero Coupon") U.S. Treasury
Securities, Series A:
We have audited the statements of financial
condition of THE SMITH BARNEY SHEARSON
STRIPPED ("ZERO COUPON") U.S. TREASURY
SECURITIES FUND, SERIES A, formerly The Shearson
Lehman Brothers Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, 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 provides 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 Stripped ("Zero Coupon") U.S. Treasury
Securities Fund, Series A for the year ended December 31,
1993, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND, L.L.P.
New York, New York
March 7, 1994
<PAGE>
<PAGE>
<TABLE> THE SMITH BARNEY FUND STRIPPED ("ZERO
COUPON")
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, $10,912,503 and
$9,473,778)$13,422,0899,705,090
Net other assets 8,083 7,910
$13,430,1729,713,000
Interest of Holders: (for 1995 and 1994, respectively:
21,937,400 and 20,732,600 units of fractional
undivided interest outstanding)
Cost of Trust units, net of gross transaction
charges 7,839,2387,003,241
Unrealized appreciation of investment2,509,586
231,312
Undistributed net investment income 3,081,348
2,478,447
Net assets$13,430,1729,713,000
Net asset value per unit$.6122.4685
See notes to financial statements.
7<PAGE>
<PAGE>
THE SMITH BARNEY FUND STRIPPED ("ZERO
COUPON")
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$ 694,096693,065598,518
Expenses:
Trustee fees(1,241
) (6,232 )(5,617)
Other (8,291
) (5,530) (1,162)
Total expenses (9,532
) (11,762
) (6,779)
Net investment income684,564681,303
591,739
Realized gain on sale of securities 27,394 56,917
171,987
Increase (decrease) in unrealized
appreciation2,278,274(1,667,575
) 858,140
Net increase (decrease) in net
assets from operations2,990,232
(929,355 ) 1,621,866
Capital share transactions:
Proceeds from sales of units 923,1971,029,175
1,223,985
Redemption of units:
Principal(87,200
) (119,125)(274,516)
Net investment income(81,663
) (94,474 )(183,018)
Realized gains (27,394
) (56,917
) (171,987)
Net increase (decrease) from
capital share transactions 726,940
758,659 594,464
Increase (decrease) in net assets3,717,172
(170,696 ) 2,216,330
Net assets:
Beginning of year9,713,0009,883,6967,667,366
End of year$13,430,1729,713,0009,883,696
Units sold 1,606,4002,108,4002,459,800
Units redeemed 401,600552,2001,405,600
See notes to financial statements.
<PAGE>
8<PAGE>
THE SMITH BARNEY FUND STRIPPED ("ZERO
COUPON")
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>
$21,850,000 Stripped U.S. Treasury Securities 0%
11/15/04$10,799,23913,298,347
87,400 U.S. Treasury Bonds 11.625%
11/15/04 113,264 123,742
$21,937,400
$10,912,50313,422,089
Portfolio as of December 31, 1994
Aggregate
Principal Maturity
Amortized
Amount Title of Security CouponDate
CostValue
$20,650,000 Stripped U.S. Treasury Securities 0%
11/15/04$9,367,2539,601,631
82,600 U.S. Treasury Bonds 11.625%
11/15/04 106,525 103,459
$20,732,600
$9,473,7789,705,090
See notes to financial statements.
</TABLE> 9<PAGE>
<PAGE>
THE SMITH BARNEY FUND STRIPPED ("ZERO
COUPON")
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
Coupon") 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
$24,946 and $34,646, 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
$2,509,586.
The aggregate cost of purchases of securities
during the year ended December 31, 1995 was
$923,197. The aggregate proceeds from sales
during the year ended December 31, 1995 was
$196,257.
(Continued)
<PAGE>
A-10<PAGE>
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 the 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 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
* 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.
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."
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 separate investment accounts (the "Accounts")
established by The IDS Life Insurance Company
("IDS Life") and IDS Life Insurance Company of
New York ("IDS Life of New York"), which are
currently the only eligible purchasers of Units from
the Sponsor. The Accounts invest in Units to fund
benefits under variable life insurance policies issued
by IDS Life and IDS Life of New York (the
"Policies") in accordance with allocation instructions
received from purchasers of Policies. (the "Owners").
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 the 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
The Trust consists primarily of Stripped Treasury
Securities with maturities corresponding to that
Trust's designation. The 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 the Trust. 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 the
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 issued at a deep discount and
do not make any periodic payments of interest prior
to maturity.
<PAGE>
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."
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.
<PAGE>
The aggregate evaluation of the 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 the 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 the Trust and to offer
continuously to purchase Units of the 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.
<PAGE>
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").
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 the 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 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.
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:
The 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.
The 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.
<PAGE>
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.
Under the income tax laws of the State and City
of New York, the 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 the 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 the 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
the 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
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 the Trust of
the Fund: an Income Account, a Capital Account,
and a Reserve Account. Interest received on the
Treasury Notes held by the 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
the 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.
<PAGE>
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.
The accounts of the 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.
<PAGE>
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.
<PAGE>
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.
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.
<PAGE>
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
COUPON")
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.
<S> <C><C>
Index to Parts A and B
Investment Summary 2
Independent Auditors Report 5
Report of Independent Accountants 6
Statement of Financial Condition7
Statement of Operations and Changes in
Net Assets 8
Portfolio9
Notes to Financial Statements10
Description of the Fund12
Sale and Redemption of Units 15
Taxes 19
Sponsor's Profits21
Expenses and Charges 21
Administration of the Fund 22
Sponsor 26
Trustee26
Evaluator 27
Legal Opinion 28
Independent Auditors 28
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, NY 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.
29
</TABLE>
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
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant, The Smith Barney Inc. Stripped ("Zero
Coupon") 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.
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
ROBERT H. LESSIN
By GINA LEMON
(As authorized signatory for
Smith Barney Inc. and
Attorney-in-fact for the persons listed above)
II-3<PAGE>
<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 Fund of Stripped ("Zero Coupon") U.S. Treasury
Securities, Series A, formerly The Smith Barney Fund of
Stripped ("Zero Coupon") 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 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
Exhibit 4.1B
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective
Amendement No. 10 to the Registration Statement on
Forms S-6 (File No. 33-3762) of our report dated March 7,
1994, on our audit of the financial statements of Smith
Barney Inc. (formerly, Smith Barney Shearson) Stripped
("Zero Coupon") U.S. Treasury Securities, Series A.
COOPERS & LYBRAND, L.L.P.
New York, New York
March 22, 1996
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: The Smith Barney Fund of Stripped ("Zero
Coupon")
U.S. Treasury Securities Fund, Series A
Gentlemen:
We have examined the post-effective Amendment to
the Registration Statement
File No. 33-3762 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
