As filed with the Securities and Exchange Commission on April 7, 1994
Registration No. 33-25038
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
Post-Effective
Amendment No. 6
to
Form 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 SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
(A UNIT INVESTMENT TRUST)
B. Name of depositor:
SMITH BARNEY SHEARSON INC.
C. Complete address of depositor's principal executive offices:
1345 Avenue of the Americas
New York, New York 10105
D. Name and complete address of agent for service:
Copy to:
THOMAS D. HARMAN, ESQ. PIERRE DE ST. PHALLE, ESQ.
Smith Barney Shearson Inc. 450 Lexington Avenue
388 Greenwich Street New York, New York 10017
New York, New York 10013
The issuer has registered an indefinite number of Units under the
Securities Act of 1933 pursuant to Rule 24f-2 and filed the Rule 24f-2 Notice
for the most recent fiscal year on February 24, 1994.
[X] Check box if it is proposed that this filing will become effective
on April 7, 1994 pursuant to paragraph (b) of Rule 485.
==============================================================================
[GRAPHIC 1]
High Yield Municipal Series 8
A Unit Investment Trust
This Trust is a unit investment trust designed to provide investors with a
high level of current income exempt from regular Federal income taxes through
investment in a diversified fixed portfolio consisting primarily of "high
yield," "high risk" intermediate- and long-term municipal obligations. On the
Date of Deposit all of the obligations were rated in the category B or better
by either Standard & Poor's Corporation or Moody's Investors Service, or had
in the opinion of the Sponsor comparable credit characteristics. The value of
Units of the Trust will fluctuate with the value of the underlying Securities
which will fluctuate with changes in interest rates and in the credit ratings
of the issuers and other factors.
The Securities included in the Trust are commonly known as "junk bonds" and
are subject to greater market fluctuations and risk of loss of income and
principal than are investments in lower-yielding, higher rated fixed-income
securities. A reduction in the credit rating of a Security or a general
increase in interest rates would be expected to decrease the value of the
underlying Portfolio. The securities included in the Trust should be viewed as
speculative and an investor should review his ability to assume the risks
associated with speculative municipal bonds.
The minimum purchase is 1,000 Units.
[GRAPHIC 2]
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Inquiries should be directed to the Sponsor 1-800-298-UNIT
Prospectus dated April 7, 1994
Read and retain this Prospectus for future reference
- ------------------------------------------------------------------------------
SMITH BARNEY SHEARSON UNIT TRUSTS HIGH YIELD MUNICIPAL SERIES 8
INVESTMENT SUMMARY AS OF DECEMBER 31, 1993 (the Evaluation Date)
- ------------------------------------------------------------------------------
Face amount of Securities+............................ $ 6,609,000++
Number of Units....................................... 7,811,876
Face Amount of Securities per
1,000 Units......................................... $ 846.02
Fractional Undivided Interest in
Trust Represented by Each Unit...................... 1/7,811,876th
Public Offering Price per 1,000 Units:
Aggregate bid side evaluation of
the underlying Securities plus
any undistributed principal...................... $ 7,261,438*
-----------
Divided by 7,811,876 Units
times 1,000...................................... $ 929.54
Plus sales charge (5.5% of Public
Offering Price, 5.82% of amount
invested in Securities**......................... 54.10
-----------
Public Offering Price per
1,000 Units...................................... $ 983.64***
============
Sponsor's Repurchase Price and
Redemption Price per 1,000 Units*
($54.10 less than Public Offering
Price per 1,000 Units)****........................... $ 929.54***
Premium and Discount Issues in Portfolio:
Face amount of Securities with
bid side evaluation -
Over par...................................... 89%
At par........................................ 0%
Under par..................................... 11%
Calculation of Estimated Net Annual
Interest Rate per 1,000 Units:
Annual interest rate per
1,000 Units...................................... 7.214%
Less estimated annual expenses
per 1,000 Units expressed as
a percentage..................................... 0.213%
-----------
Estimated net annual interest
rate per 1,000 Units............................. 7.001%
-----------
Daily Rate as which Estimated Net
Annual Income Accrues per
1,000 Units.......................................... 0.0194%
Monthly Income Distributions per
1,000 Units.......................................... $ 5.83
Evaluation Time - 4:00P.M. New York Time
Record Day - The fifteenth day of each month
Distribution Day - The first day of the following month
Minimum Capital Distribution
No distribution need be made from Capital Accounts if
balance in Account is less than $5.00 per 1,000 Units.
Mandatory Termination Date
One year after the maturity date of the last maturing
Security listed under the Portfolio (see Portfolio)
Minimum Value of Trust
Trust may be terminated if the value of the Trust is less
than 40% of the face amount of Securities on the Date of
Deposit.+ As of the Evaluation Date the value of the
Trust was 67% of the original Face Amount of the Securities.
Trustee's Annual Fee
$0.72 per $1,000 face amount of Securities (see Expenses
and Charges)
Sponsor's Annual Fee
Maximum of $0.25 per $1,000 face amount of Securities
(see Expenses and Charges)
Evaluator's Fee for Each Evaluation
Maximum of $15 per Evaluation (see Expenses and
Charges)
Number of Issues in Portfolio........................ 22
Number of Issues/Percentage of Aggregate
Face Amount of Portfolio Rated by:*****
Standard & Poor's Corporation -
AAA......................................... 5 (13%)
BBB......................................... 9 (44%)
B........................................... 2 (14%)
Moody's Investors Service -
Aaa......................................... 4 (12%)
Baa......................................... 5 (21%)
Ba.......................................... 4 (26%)
B........................................... 1 (4%)
Number of Issues Not Rated:******.................... 4 (21%)
Number of Issuers by Industry/
Industry Concentrations:+++
Airports/Port/Highway Revenue Bonds................. 1
Hospitals........................................... 7 (33%)
Housing............................................. 1
Industrial Development Revenue...................... 4
Miscellaneous....................................... 2
Pollution Control................................... 1
State/Local Municipal
Electric Utilities................................ 6
Percentage of Aggregate Face Amount of
Portfolio+++ Comprised of:
Alternative Minimum Tax Bonds
(see Portfolio and Taxes).......................... 6%
Obligations of issuers located in 3 States
of Michigan (19%), Alabama (13%)
and Florida (11%).................................. 43%
- ---------
+ On the Date of Deposit (August 19, 1987), the face amount of
Securities was $11,000,000
++ On the Evaluation Date none of the Portfolio consisted of
defaulted bonds. (See Risk Factors - "High Yield" Bonds).
* Subject to changes in the prices of the underlying bonds.
The aggregate bid price of the Securities is determined on each business
day as of the Evaluation Time, effective for all sales made subsequent to
the last preceding determination and does not include Securities received
in lieu of cash interest payments which are included in undistributed net
investment income.
** The sales charge will be reduced on a graduated scale in the case
of quantity purchases of Units (see Public Sale of Units - Public Offering
Price). The resulting reduction in the Public Offering Price will increase
the effective current return on a Unit.
*** Plus accrued interest. For Units purchased or redeemed on the
Evaluation Date, accrued interest is approximately equal to the
undistributed net investment income of the Trust (see Statement of Assets
and Liabilities) divided by the number of oustanding Units plus the
estimated daily interest accrual per Unit and less the daily expense
accrual per Unit to the expected date of settlement normally 5 business days
after purchase or redemption.
**** Ratings subject to change from time to time. Certain of the
ratings may be provisional or conditional. See "Description of Ratings".
***** Issues currently unrated by both Standard & Poor's and Moody's.
See Description of Ratings.
+++ A Trust is considered to be "concentrated" in a particular
category when the Securities in that category constitute 25% or more of the
aggregate face amount of the Portfolio (see Other Risk Factors).
REPORT OF INDEPENDENT ACCOUNTANTS
The Unitholders, Sponsor and Trustee of
Smith Barney Shearson Unit Trusts,
High Yield Municipal Series 8:
We have audited the accompanying statement of assets and liabilities
of Smith Barney Shearson Unit Trusts, High Yield Municipal Series 8
(formerly Shearson Lehman Brothers Unit Trusts, High Yield Municipal Series
8), including the schedule of portfolio investments, as of December 31,
1993, and the related statements of operations and changes in net assets
for each of the three years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements and financial highlights 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
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by the Trustee, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Smith Barney Shearson Unit Trusts, High Yield Municipal Series
8 (formerly Shearson Lehman Brothers Unit Trusts, High Yield Municipal
Series 8), as of December 31, 1993, the results of its operations and
changes in its net assets for each of the three years in the period then
ended, and the financial highlights for each of the five years in the
period then ended in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND
Boston, Massachusetts /s/COOPERS & LYBRAND
February 18, 1994
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1993
__________
ASSETS
Investments in securities, at value
(cost $6,266,806) (see accompanying Portfolio Schedule) $ 7,261,384
Interest receivable 139,631
Cash - income account 76,045
Cash - principal account 54
-------------
Total assets 7,477,114
-------------
LIABILITIES AND NET ASSETS
Distribution payable to Unitholders:
Investment income - net 45,543
Accrued Sponsor fees 413
Accrued other fees and expenses 12,075
-------------
Total liabilities 58,031
-------------
Net assets at December 31, 1993 equivalent to
$949.72 per 1,000 units on 7,811,876 units
of fractional undivided interest outstanding: $ 7,419,083
=============
Net assets consist of:
Cost of 11,000,000 units at date of deposit $ 10,972,641
Sales charge (493,790)
Redemption of 3,188,124 units (3,131,733)
Realized gain on investments 290,870
Unrealized appreciation of investments - net 994,578
Principal distributions (1,371,128)
-------------
Net capital applicable to Unitholders 7,261,438
Undistributed net investment income 157,645
-------------
Net assets $ 7,419,083
=============
The accompanying notes are an integral part of the financial statements.
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
STATEMENTS OF OPERATIONS
________
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Income:
Interest income $ 577,934 $ 629,638 $ 746,594
------------- ------------- -------------
Total income 577,934 629,638 746,594
------------- ------------- -------------
Expenses:
Trustee's fees (Note 3) 4,878 5,403 6,373
Evaluator's fees 3,997 3,951 3,795
Sponsor's fees (Note 3) 1,777 1,876 2,210
Accountant's fees 3,003 2,319 3,825
Printing - - 2,136
Other 3,923 5,028 466
------------- ------------- -------------
Total expenses 17,578 18,577 18,805
------------- ------------- -------------
Investment income - net 560,356 611,061 727,789
------------- ------------- -------------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) (16,261) 142,354 59,250
Increase in unrealized
appreciation of
investments - net 344,362 123,128 438,420
Net gain on ------------- ------------- -------------
investments 328,101 265,482 497,670
------------- ------------- -------------
Net increase
in net assets resulting
from operations $ 888,457 $ 876,543 $ 1,225,459
============= ============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
STATEMENTS OF CHANGES IN NET ASSETS
__________
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Operations:
Investment income - net $ 560,356 $ 611,061 $ 727,789
Net realized gain (loss) (16,261) 142,354 59,250
Increase in unrealized
appreciation of
investments - net 344,362 123,128 438,420
------------- ------------- -------------
Net increase in net assets
resulting from operations 888,457 876,543 1,225,459
Distributions to Unitholders
(Note 2):
Principal (255,996) (929,646) (185,486)
Investment income - net (560,580) (612,897) (731,120)
Redemption of units:
(Note 2):
Principal - (520,128) (765,297)
Investment income - net - (11,479) (15,658)
------------- ------------- -------------
Increase (decrease)
in net assets 71,881 (1,197,607) (472,102)
Net assets:
Beginning of period 7,347,202 8,544,809 9,016,911
------------- ------------- -------------
End of period $ 7,419,083 $ 7,347,202 $ 8,544,809
============= ============= =============
Other information:
Undistributed net investment $ 157,645 $ 157,869 $ 171,184
income, end of period ============= ============= =============
Units redeemed - 535,566 790,192
============= ============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
- ------------------------------------------------------------------------------
PORTFOLIO OF SMITH BARNEY SHEARSON UNIT TRUSTS, AS OF DECEMBER 31, 1993
HIGH YIELD MUNICIPAL SERIES 8
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings of
Issues(7c)
---------------------
Moody's Standard
Portfolio No. and Title of Investors & Poor's Face
Securities Service Corp. Amount Coupon
----------------------------------- ------- ----- ---------- ------
<S> <C> <C> <C> <C>
1. City of Elizabethtown (Kentucky), NR NR $125,000 10.250%
Industrial Building Revenue Bonds,
Series 1986A (Elizabethtown Medical
Rehabilitation Center Project)*
2. City of Highland Park, Hospital B1 B 250,000 9.875
Finance Authority (Highland Park,
Michigan) Hospital Facilities
Revenue Bonds, Michigan Health Care
Corporation Project, Series 1987 A
3. City of Sikeston, Missouri, Electric Aaa AAA 215,000 6.250
System Revenue Bonds, 1978 Series A
4. Claiborne County, Mississippi, NR NR 250,000 9.875
Pollution Control Revnue Bonds,
(Middle South Energy, Inc.
Project) Series 1984 C
5. Gary, Indiana Environmental Baa3 NR 430,000 5.700
Improvement Revenue Bonds (U.S.
Steel Corp., Gary Project)
Series 1977
6. Greater Detroit Resource Recovery NR BBB- 300,000 9.250
Authority, Michigan, Adjustable/
Fixed Rate Resource Recovery
Revenue Bonds, Series 1984 H
7. Harris County, Texas, Toll Road NR AAA 150,000 7.400
Multiple Mode Senior Lien Pre-
refunded Revenue Bonds, Series 1985 A
8. Hospital Authority of Marion County Aaa AAA 163,000 8.625
(Indiana), Hospital Revenue
Refunding Bonds, Series 1987
(University Heights Hospital)
9. Industrial Development Corporation Baa3 BBB- 265,000 10.250
of Port of Corpus Christi, Texas
Refunding Revenue Bonds, Series
1987A (Valero Refining and Marketing
Company Project)
10. Jackson County, Oklahoma Memorial NR BBB- 600,000 9.000
Hospital Authority, Hospital
Revenue Refunding Bonds, (Jackson
County Memorial Hospital Project),
Series 1987
11. Louisiana Public Facilities NR AAA 100,000 8.000
Authority, Hospital Revenue
Refunding Bonds (Southern Baptist
Hospitals, INc. Project) Series 1986
12. Massachusetts Municipal Wholesale Baa1 BBB+ 150,000 6.375
Electric Company, Power Supply
System Revenue Bonds, 1977 Series A
13. Massachusetts Municipal Wholesale Aaa BBB+ 205,000 8.750
Electric Company, Power Supply
System Revenue Bonds, 1987
Prerefunded Series A
14. Massachusetts Municipal Wholesale Baa1 BBB+ 15,000 8.750
Electric Company, Power Supply
System Revenue Bonds, 1987 Series A
15. Michigan State Hospital Finance BA B+ 700,000 7.500
Authority, Hospital Revenue and
Refunding Bonds (Detroit Osteopathic
Hospital Corporation), Series 1987 A
16. Pope County, Arkansas, Pollution Baa2 BBB 500,000 11.000
Control Revenue Bonds, Series
1985 (Arkansas Power & Light
Company Project)
17. Sam Rayburn Municipal Power Aaa AAA 200,000 9.625
Agency (Texas), Power Supply
System Revenue Refunding Bonds,
Prerefunded Series 1985
18. St. John's County, Florida NR NR 746,000 9.500
Industrial Development Authority
Industrial Development Revenue
Bonds, Prerefunded Seris 1987 A
(Vicars Landing Project)
19. The Industrial Development Board of Ba1 BBB 105,000 6.625
the City of Mobile, Alabama,
Dock and Wharf Revenue Bonds,
1979 Series (Ideal Basic Industries,
Inc. Project)
20. The Industrial Development Board of Ba1 BBB 775,000 6.875
the City of Mobile, Alabama,
Dock and Wharf Revenue Bonds,
1979 Series (Ideal Basic Industries,
Inc. Project)
21. Wood County, West Virginia, NR NR 250,000 9.500
Commerical Development Revenue
Bonds, (West Virginia Rehabilitation
Services, Inc., Project), 1986 Series *
22. Wood County, West Virginia, Ba3 NR 115,000 9.500
Industrial Development Revenue
Bonds, Series 1980 A (The Kroger
Co. Project) __________
$6,609,000
==========
</TABLE>
<TABLE>
<CAPTION>
Optional Sinking
Portfolio No. and Title of Refunding Fund Value
Securities Maturities Redemptions(7a) Redemptions(7a) (Notes 1 and (7b))
----------------------------------- ---------- -------------------- --------------- ------------------
<S> <C> <C> <C> <C>
1. City of Elizabethtown (Kentucky), 12/01/2016 12/01/1996 @ 103.000 12/01/2002 135,876
Industrial Building Revenue Bonds,
Series 1986A (Elizabethtown Medical
Rehabilitation Center Project)*
2. City of Highland Park, Hospital 12/01/2019 12/01/1997 @ 102.500 12/01/1997 270,148
Finance Authority (Highland Park,
Michigan) Hospital Facilities
Revenue Bonds, Michigan Health Care
Corporation Project, Series 1987 A
3. City of Sikeston, Missouri, Electric 06/012008 -- 06/01/1999 234,509
System Revenue Bonds, 1978 Series A
4. Claiborne County, Mississippi, 12/01/2014 12/01/1998 @ 103.000 -- 307,540
Pollution Control Revnue Bonds,
(Middle South Energy, Inc.
Project) Series 1984 C
5. Gary, Indiana Environmental 05/15/2007 Currently @ 100.000 05/15/1994 431,023
Improvement Revenue Bonds (U.S.
Steel Corp., Gary Project)
Series 1977
6. Greater Detroit Resource Recovery 12/13/2008 12/13/1995 @ 103.000 12/13/1999 328,140
Authority, Michigan, Adjustable/
Fixed Rate Resource Recovery
Revenue Bonds, Series 1984 H
7. Harris County, Texas, Toll Road 08/15/2017 02/15/1997 @ 103.000 -- 170,323
Multiple Mode Senior Lien Pre-
refunded Revenue Bonds, Series 1985 A
8. Hospital Authority of Marion County 10/01/2012 10/01/1999 @ 102.000 -- 199,096
(Indiana), Hospital Revenue
Refunding Bonds, Series 1987
(University Heights Hospital)
9. Industrial Development Corporation 06/01/2017 06/01/1997 @ 103.000 06/01/2009 317,595
of Port of Corpus Christi, Texas
Refunding Revenue Bonds, Series
1987A (Valero Refining and Marketing
Company Project)
10. Jackson County, Oklahoma Memorial 08/01/2015 08/01/1997 @ 102.000 08/01.1999 670,632
Hospital Authority, Hospital
Revenue Refunding Bonds, (Jackson
County Memorial Hospital Project),
Series 1987
11. Louisiana Public Facilities 05/15/2012 -- 05/15/1997 130,421
Authority, Hospital Revenue
Refunding Bonds (Southern Baptist
Hospitals, INc. Project) Series 1986
12. Massachusetts Municipal Wholesale 07/01/2015 02/01/1994 @ 102.000 07/01/1999 153,512
Electric Company, Power Supply
System Revenue Bonds, 1977 Series A
13. Massachusetts Municipal Wholesale 07/01/2018 07/01/1997 @ 102.000 -- 242,300
Electric Company, Power Supply
System Revenue Bonds, 1987
Prerefunded Series A
14. Massachusetts Municipal Wholesale 07/01/2018 07/01/1997 @ 102.000 07/01/1994 17,215
Electric Company, Power Supply
System Revenue Bonds, 1987 Series A
15. Michigan State Hospital Finance 11/01/2010 11/01/1997 @ 102.000 11/01/1999 699,223
Authority, Hospital Revenue and
Refunding Bonds (Detroit Osteopathic
Hospital Corporation), Series 1987 A
16. Pope County, Arkansas, Pollution 12/01/2015 12/01/1995 @ 102.000 -- 573,290
Control Revenue Bonds, Series
1985 (Arkansas Power & Light
Company Project)
17. Sam Rayburn Municipal Power 09/01/2004 09/01/1995 @ 102.000 -- 224,226
Agency (Texas), Power Supply
System Revenue Refunding Bonds,
Prerefunded Series 1985
18. St. John's County, Florida 02/01/2017 02/01/1997 @ 103.000 -- 880,899
Industrial Development Authority
Industrial Development Revenue
Bonds, Prerefunded Seris 1987 A
(Vicars Landing Project)
19. The Industrial Development Board of 08/01/1999 08/01/1994 @ 100.500 -- 106,465
the City of Mobile, Alabama,
Dock and Wharf Revenue Bonds,
1979 Series (Ideal Basic Industries,
Inc. Project)
20. The Industrial Development Board of 08/01/2009 08/01/1994 @ 100.500 08/01/2005 783,726
the City of Mobile, Alabama,
Dock and Wharf Revenue Bonds,
1979 Series (Ideal Basic Industries,
Inc. Project)
21. Wood County, West Virginia, 12/01/2015 12/01/1996 @ 103.000 08/01/1996 267,880
Commerical Development Revenue
Bonds, (West Virginia Rehabilitation
Services, Inc., Project), 1986 Series *
22. Wood County, West Virginia, 08/01/2006 02/03/1994 @ 101.500 08/01/2001 117,345
Industrial Development Revenue
Bonds, Series 1980 A (The Kroger
Co. Project) __________
$7,261.384
==========
The accompany notes are an integral part of the financial statements.
______
* Alternative Minimum Tax Bond (see Other Risk Factors -
Alternative Minimum Tax Bonds on p. 18).
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
NOTES TO FINANCIAL STATEMENTS
__________
1. Summary of Significant Accounting Policies:
Smith Barney Shearson Unit Trusts, High Yield Municipal Series 8
(the "Trust"), (formerly Shearson Lehman Brothers Unit Trusts,
High Yield Municipal Series 8), 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 Trust:
(a) Bonds are stated at value as determined by Kenny S&P
Evaluation Services (the "Evaluator") on the basis set
forth under "Public Sale of Units - Public Offering Price"
in this Prospectus, using bid side evaluations. Cost is
based on offering side evaluations at the date of deposit,
December 15, 1988.
(b) The Trust is not an association taxable as a corporation for Federal
income tax purposes. Accordingly, no provision for taxes on income
is required (see TAXES in Prospectus).
(c) Investment transactions are recorded as of the trade date. Realized
gains or losses on sales of investments are determined on the
identified cost basis for financial reporting and tax purposes.
Interest income is recorded on the accrual basis.
2. Distributions and Redemptions:
Monthly distributions of net investment income to Unitholders are made in
cash on the first day of each month to holders of record as of the 15th
day of the preceding month. Receipts other than interest, after
deductions for redemptions and applicable expenses, are distributed as
explained in "Administration of the Trust - Accounts and Distributions" in
this Prospectus. Units may be redeemed upon delivery of a request for
redemption to the Trustee.
3. Fees and Transactions with Affiliates:
Sponsor
The Sponsor, Smith Barney Shearson Inc. (formerly Shearson Lehman
Brothers Inc. ("Shearson")), receives an annual fee (maximum of $.25
per $1,000 face amount of securities in the Trust) for service it
renders with respect to monitoring, and when necessary providing
advice to the Trustee with respect to any adverse market or credit
factors concerning the security investments of the Trust and any
actions taken by the issuers of such securities that may affect the
issuer's capital structure, as provided by the Indenture.
The Sponsor receives a sales charge applicable to purchases of units
at a rate of 5.50% of the Offering Price.
On March 12, 1993, Primerica Corporation ("Primerica"), Smith Barney,
Harris Upham & Co. Incorporated ("Smith Barney") and Shearson signed a
definitive agreement pursuant to which Primerica and Smith Barney
would acquire the assets of the domestic retail brokerage and asset
management businesses of Shearson (the "Transaction"). On July 30,
1993, the Transaction between Shearson, Primerica and Smith Barney was
completed. Effective as of the close of business on that day, Smith
Barney was renamed Smith Barney Shearson Inc. and became the Sponsor
of the Trust.
Trustee
Boston Safe Deposit and Trust Company ("Boston Safe") acts as Trustee
and Distribution Agent for an annual fee ($.72 per $1,000 face amount)
paid monthly on the largest face amount of securities in the Trust
during the preceding month.
The Trustee was formerly an indirect wholly owned subsidiary of
Shearson. On September 14, 1992, Shearson entered into an agreement
for the sale of The Boston Company, Inc. ("TBC"), the parent company
of Boston Safe, to Mellon Bank Corporation ("Mellon"). On May 21,
1993, the acquisition of TBC by Mellon was completed. As a result,
Boston Safe, a wholly owned subsidiary of TBC, is now an indirect
wholly owned subsidiary of Mellon.
Continued
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
NOTES TO FINANCIAL STATEMENTS, Continued
__________
4. Financial Highlights:
Selected data per 1,000 units of the Trust outstanding for each
of the five years in the period ended December 31, 1993
follows:
1993 1992 1991 1990 1989
-------- ---------- ---------- ---------- ----------
Income $ 73.99 $ 78.08 $ 84.36 $ 86.93 $ 86.17
Expenses (2.25) (2.30) (2.12) (2.17) (1.89)
-------- ---------- ---------- ---------- ----------
Investment
income - net 71.74 75.78 82.24 84.76 84.28
Distributions to
Unitholders:
Investment
income - net (71.76) (76.07) (82.54) (84.54) (65.58)
Principal (32.77) (116.07) (20.37) - -
Realized and
unrealized gain
(loss) on
investments - net 41.99 33.24 57.52 (41.26) 57.61
-------- ---------- ---------- ---------- ----------
Net increase
(decrease) in
net asset value 9.20 (83.12) 36.85 (41.04) 76.31
Net asset value,
beginning of
period 940.52 1,023.64 986.79 1,027.83 951.52
-------- ---------- ---------- ---------- ----------
Net asset value,
end of period,
including
distributable
funds $949.72 940.52 $1,023.64 $ 986.79 $1,027.83
======== ========== ========== ========== ==========
5. Concentration of Risk:
The Securities in the Trust are concentrated in "high yield" municipal
bonds (see RISK FACTORS in the Prospectus).
6. Sales of Securities:
For the year ended December 31, 1993, proceeds from sales, including
maturities and calls, of securities were $256,000.
7. Notes to Portfolio:
(a) Commencing on date indicated, sinking fund redemptions are at par and
generally redeem only part of an issue. Optional refunding
redemptions, which may be exercised in whole or in part, are
initially at the price indicated in the portfolio, then subsequently
at prices declining to par. Certain bonds may provide for redemption
at par prior or in addition to any optional or mandatory redemption
dates or maturity. Some of the securities may have mandatory sinking
funds which contain optional provisions permitting the issuer to
increase the principal amount of bonds called on a mandatory
redemption date.
Continued
SMITH BARNEY SHEARSON UNIT TRUSTS,
HIGH YIELD MUNICIPAL SERIES 8
NOTES TO FINANCIAL STATEMENTS, Continued
__________
7. Notes to Portfolio, Continued:
(b) At December 31, 1993, the aggregate cost of investments for federal
income tax purposes was the same as the cost for financial reporting
purposes, which was $6,266,806.
At December 31, 1993, the net unrealized appreciation of bonds
consisted of:
Gross unrealized appreciation $ 997,213
Gross unrealized depreciation (2,635)
----------
Net unrealized appreciation $ 994,578
==========
(c) A description of the ratings symbols and their meanings, as described
by the rating companies themselves, appear under "Description of
Ratings" in this Prospectus. These ratings are unaudited.
TRUST STRUCTURE
This Series (the "Trust") of Smith Barney Shearson Unit Trusts is a
"unit investment trust" created under New York law by a Trust Indenture (the
"Indenture") among the Sponsor, the Trustee and the Evaluator. To the extent
that references in this Prospectus are to articles and sections of the
Indenture, which are incorporated by reference into this Prospectus, the
statements made herein are qualified in their entirety by this reference. The
Securities listed under Portfolio have been deposited with the Trustee.
Certain of the Securities in the Trust may have been valued at a market
discount. Securities trade at less than par value because the interest rates
on the securities are lower than interest on comparable debt securities being
issued at currently prevailing interest rates. The current returns of
securities trading at a market discount are lower than the current returns of
comparably rated debt securities of a similar type issued at currently
prevailing interest rates because discount securities tend to increase in
market value as they approach maturity and the full principal amount becomes
payable. If currently prevailing interest rates for newly issued and otherwise
comparable securities increase, the market discount of previously issued
securities will become deeper, and if currently prevailing interest rates for
newly issued comparable securities decline, the market discount of previously
issued securities will be reduced, other things being equal. Market discount
attributable to interest rate changes does not indicate a lack of market
confidence in the issue.
Certain of the Securities in the Trust may have been valued at a market
premium. Securities trade at a premium because the interest rates on the
Securities are higher than interest on comparable debt securities being issued
at currently prevailing interest rates. The current returns of securities
trading at a market premium are higher than the current returns of comparably
rated debt securities of a similar type issued at currently prevailing
interest rates because premium securities tend to decrease in market value as
they approach maturity when the face amount becomes payable. Because part of
the purchase price is returned not at maturity but through current income
payments, an early redemption of a premium security at par will result in a
reduction in yield. If currently prevailing interest rates for newly issued
and otherwise comparable securities increase, the market premium of previously
issued securities will decline and if currently prevailing interest rates for
newly issued comparable securities decline, the market premium of previously
issued securities will increase, other things being equal. Market premium
attributable to interest rate changes does not indicate market confidence in
the issue.
The holders ("Holders") of Units will have the right to have their Units
redeemed (see Redemption) at a price based on the aggregate bid side
evaluation of the Securities ("Redemption Price per Unit") if they cannot be
sold in the over-the-counter market that the Sponsor proposes to maintain (see
Market for Units). The Trust will not continuously offer Units for sale to the
public. On the Evaluation Date, each unit of interest ("Unit") represented the
fractional undivided interest in the Securities and net income of the Trust
set forth under Investment Summary. Thereafter, if any Units are redeemed, the
face amount of Securities in the Trust will be reduced, and the fractional
undivided interest represented by each remaining Unit in the balance will be
increased. Units will remain outstanding until redeemed upon tender to the
Trustee by any Holder (which may include the Sponsor) or until the termination
of the Indenture (see Redemption; Administration of the Trust--Amendment and
Termination).
RISK FACTORS
"High Yield" Bonds
An investment in Units of the Trust should be made with an understanding
of the risks that an investment in "high yield", fixed-rate intermediate- and
long-term municipal debt obligations or "junk bonds" may entail, including
increased credit risks and the risk that the value of the Units will decline,
and may decline precipitously, with increases in interest rates or reductions
in the credit quality of the underlying Securities. In recent years, there
have been wide fluctuations in interest rates and thus in the value of
fixed-rate debt obligations generally. Securities such as those included in
the Trust are, under most circumstances, subject to greater market
fluctuations and risk of loss of income and principal than are investments in
lower yielding, higher rated securities, and their value may decline
precipitously because of increases in interest rates, not only because the
increases in rates generally decrease values but also because increased rates
may indicate a slowdown in the economy and a decrease in the value of assets
generally that may adversely affect the credit of issuers of high yield
securities resulting in a higher incidence of default among high yield
securities. The Sponsor cannot predict future economic policies or their
consequences, or therefore, the course or extent of any similar market
fluctuations in the future. To the extent that payment of amounts due on the
Securities depends on revenue from publicly held corporations, an investor
should realize that these Securities, in many cases, do not have the benefit
of covenants that would prevent the corporations from engaging in capital
restructurings which could have the effect of reducing the ability of the
issuer to meet its obligations and might result in the ratings of the
Securities and the value of the underlying Portfolio being reduced.
The Trust portfolio contains "high yield" municipal bonds. "High yield"
or "junk" bonds, the generic names for bonds that, if rated, are rated below
BBB by Standard & Poor's or Baa by Moody's. Trading of high yield bonds takes
place primarily in over-the-counter markets consisting of groups of dealer
firms that are typically major securities firms. Because the high yield bond
market is a dealer market, rather than an auction market, no single obtainable
price for a given bond prevails at any given time. Prices are determined by
negotiation between traders. The existence of a liquid trading market for the
Securities may depend on whether dealers will make a market in the Securities.
There can be no assurance that a market will be made for any of the
Securities, that any market for the Securities will be maintained or of the
liquidity of the Securities in any markets made. Not all dealers maintain
markets in all high yield bonds. Therefore, since there are fewer traders in
these bonds than there are in "investment grade" bonds, the bid-offer spread
is usually greater for high yield bonds than it is for investment grade bonds.
In addition, the Trust may be restricted under the Investment Company Act of
1940 from selling Securities to the Sponsor. The price at which the Securities
may be sold to meet redemptions and the value of the Trust will be adversely
affected if trading markets for the Securities are limited or absent. If the
rate of redemptions is great, the value of the Trust may decline to a level
that requires liquidation (see Amendment and Termination).
Lower-rated and comparable non-rated securities tend to offer higher
yields than higher-rated securities with the same maturities because the
creditworthiness of the issuers of lower-rated securities may not be as strong
as that of other issuers. Because investors generally perceive that there are
greater risks associated with the lower-rated and non-rated securities in the
Trust, the yields and prices of these securities tend to fluctuate more than
higher-rated securities with changes in the perceived quality of the credit of
their issuers. In addition, the market value of high yield, fixed-income
securities may fluctuate more than the market value of higher-rated securities
since high yield, fixed-income securities tend to reflect short-term credit
developments to a greater extent than higher-rated securities. Also, because
high yield bonds may be more sensitive to adverse changes in credit status
than bonds of investment grade, sales of Securities from the Portfolio may
occur more frequently than sales of portfolio securities from trusts invested
in higher-rated bonds; this could result in possible loss of principal and a
more rapid decline in the size of the Trust than otherwise would be the case.
Lower-rated and non-rated securities generally involve greater risks of loss
of income and principal than higher-rated securities, and recent studies have
indicated that the number of defaults by issuers and the amount of debt in
default have increased substantially in the past few years. The issuers of
lower-rated and non-rated securities may possess less creditworthy
characteristics than the issuers of higher-rated securities and, especially in
the case of issuers whose obligations or credit standing have recently been
downgraded, may be subject to claims by debtholders, owners of property leased
to the issuer or others that, if sustained, would make it more difficult for
the issuers to meet their payment obligations. High yield bonds are also
affected by variables such as interest rates, inflation rates and real growth
in the economy. Therefore, investors should consider carefully the relative
risks associated with investment in securities which carry lower ratings or
which are not rated. Finally, the value of the Units reflects the value of the
portfolio securities, including the value (if any) of securities in default.
Should any Security default in the payment of principal or interest, the Trust
may incur additional expenses seeking payment on the defaulted Security.
Because amounts (if any) recovered by the Trust in payment under the defaulted
Security may not be reflected in the value of the Units until actually
received by the Trust, and depending upon when a Holder purchases or sells his
Units, it is possible that a Holder would bear a portion of the cost of
recovery without receiving any portion of the payment recovered.
Securities that are rated lower than BBB or Baa should be considered
speculative as such ratings indicate a quality of less than investment grade.
Securities that are not rated by either Standard & Poor's or Moody's should
also be considered speculative. There is no established retail secondary
market for many of these Securities. The Sponsor does not anticipate that
these Securities could be sold other than to institutional investors.
However, the Sponsor expects that there is a readily available market among
institutional investors for these Securities in the event it is necessary to
sell such Securities to meet redemptions of Units. The limited market for
these Securities may affect the price of the particular Security to be sold
for purposes of redemption and the amount actually realized by the Trust upon
a sale. Any sale may therefore result in a loss to the Trust. Investors should
carefully review the objective of the Trust and consider their ability to
assume the risks involved before making an investment in the Trust. (See
Description of Ratings for a description of speculative ratings issued by
Standard & Poor's and Moody's.)
Other Risk Factors
As set forth under Investment Summary and Portfolio, the Trust may
contain or be concentrated* in one or more of the classifications of
Securities referred to below. Percentages of any concentrations for this Trust
are set forth under Investment Summary. An investment in Units of the Trust
should be made with an understanding of the risks which these investments may
entail, certain of which are described below.
- --------------------
* A Trust is considered to be "concentrated" in a particular category when the
Securities in that category constitute 25% or more of the aggregate face
amount of the Portfolio.
- --------------------
Alternative Minimum Tax Bonds. Interest from alternative minimum tax
bonds (generally called private activity bonds in the Code), other than from
bonds issued for charitable, educational and certain other purposes, is exempt
from the regular Federal income tax for individuals and corporations. However,
such interest is a preference item for purposes of the alternative minimum tax
for individuals and corporations. (See Taxes.)
Revenue Bonds of Hospitals and Health Care Facilities. The ability of
hospitals and other health care facilities to meet their obligations with
respect to revenue bonds issued on their behalf is dependent on various
factors, including the level of payments received from private third-party
payors and government programs and the costs of providing health care
services.
A significant portion of the revenues of hospitals and other health care
facilities is derived from private third-party payors and government programs,
including the Medicare and Medicaid programs. Both private third-party payors
and government programs have undertaken cost containment measures designed to
limit payments made to health care facilities. Furthermore, government
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all
of which may materially decrease the rate of program payments for health care
facilities. There can be no assurance that payments under governmental
programs will remain at levels comparable to present levels or will, in the
future, be sufficient to cover the costs allocable to patients participating
in such programs. In addition, there can be no assurance that a particular
hospital or other health care facility will continue to meet the requirements
for participation in such programs.
The costs of providing health care services are subject to increase as a
result of, among other factors, changes in medical technology and increased
labor costs. In addition, health care facility construction and operation is
subject to federal, state and local regulations relating to the adequacy of
medical care, equipment, personnel, operating policies and procedures,
rate-setting, and compliance with building codes and environmental laws.
Facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards
necessary for licensing and accreditation. These regulatory requirements are
subject to change and, to comply, it may be necessary for a hospital or other
health care facility to incur substantial capital expenditures or increased
operating expenses to effect changes in its facilities, equipment, personnel
and services.
Hospitals and other health care facilities are subject to claims and
legal actions by patients and others in the ordinary course of business.
Although these claims are generally covered by insurance, there can be no
assurance that a claim will not exceed the insurance coverage of a health care
facility or that insurance coverage will be available to a facility. In
addition, a substantial increase in the cost of insurance could adversely
affect the results of operations of a hospital or other health care facility.
The Clinton Administration may impose regulations which could limit price
increases for hospitals, the level of reimbursements for third-party payors or
other measures to reduce health care costs and make health care available to
more individuals, which would reduce profits for hospitals. Some states, such
as New Jersey, have significantly changed their reimbursement systems. If a
hospital cannot adjust to the new system by reducing expenses or raising
rates, financial difficulties may arise. Also, Blue Cross has denied
reimbursement for some hospitals for services other than emergency room
services. The lost volume would reduce revenue unless replacement patients
were found.
Certain hospital bonds may provide for redemption at par at any time upon
the sale by the issuer of the hospital facilities to a nonaffiliated entity or
in other circumstances. For example, certain hospitals may have the right to
call bonds at par if the hospital may legally be required because of the bonds
to perform procedures against specified religious principles. Certain
FHA-insured bonds may provide that all or a portion of those bonds, otherwise
callable at a premium, can be called at par in certain circumstances. If a
hospital defaults upon a bond obligation, the realization of Medicare and
Medicaid receivables may be uncertain and, if the bond obligation is secured
by the hospital facilities, legal restrictions on the ability to foreclose
upon the facilities and the limited alternative uses to which a hospital can
be put may reduce severely its collateral value.
The Internal Revenue Service is currently engaged in a program of
intensive audits of certain large tax-exempt hospital and health care facility
organizations. Although these audits have not yet been completed, it has been
reported that the tax-exempt status of some of these organizations may be
revoked. At this time, it is uncertain whether any of the hospital and health
care facility obligations held by the Trust will be affected by such audit
proceedings.
State and Local Municipal Utility Bonds. The ability of utilities to
meet their obligations with respect to revenue bonds issued on their behalf is
dependent on various factors, including the rates they may charge their
customers, the demand for a utility's services and the cost of providing those
services. Utilities, in particular investor-owned utilities, are subject to
extensive regulations relating to the rates which they may charge customers.
Utilities can experience regulatory, political and consumer resistance to rate
increases. Utilities engaged in long-term capital projects are especially
sensitive to regulatory lags in granting rate increases. Any difficulty in
obtaining timely and adequate rate increases could adversely affect a
utility's results of operations.
The demand for a utility's services is influenced by, among other
factors, competition, weather conditions and economic conditions. Electric
utilities, for example, have experienced increased competition as a result of
the availability of other energy sources, the effects of conservation on the
use of electricity, self-generation by industrial customers and the generation
of electricity by co-generators and other independent power producers. Also,
increased competition will result if federal regulators determine that
utilities must open their transmission lines to competitors. Utilities which
distribute natural gas also are subject to competition from alternative fuels,
including fuel oil, propane and coal.
The utility industry is an increasing cost business making the cost of
generating electricity more expensive and heightening its sensitivity to
regulation. A utility's costs are influenced by the utility's cost of
capital, the availability and cost of fuel and other factors. In addition,
natural gas pipeline and distribution companies have incurred increased costs
as a result of long-term natural gas purchase contracts containing "take or
pay" provisions which require that they pay for natural gas even if natural
gas is not taken by them. There can be no assurance that a utility will be
able to pass on these increased costs to customers through increased rates.
Utilities incur substantial capital expenditures for plant and equipment. In
the future they will also incur increasing capital and operating expenses to
comply with environmental legislation such as the Clean Air Act of 1990, and
other energy, licensing and other laws and regulations relating to, among
other things, air emissions, the quality of drinking water, waste water
discharge, solid and hazardous substance handling and disposal, and siting and
licensing of facilities. Environmental legislation and regulations are
changing rapidly and are the subject of current public policy debate and
legislative proposals. It is increasingly likely that some or many utilities
will be subject to more stringent environmental standards in the future that
could result in significant capital expenditures. Future legislation and
regulation could include, among other things, regulation of so-called
electromagnetic fields associated with electric transmission and distribution
lines as well as emissions of carbon dioxide and other so-called greenhouse
gases associated with the burning of fossil fuels. Compliance with these
requirements may limit a utility's operations or require substantial
investments in new equipment and, as a result, may adversely affect a
utility's results of operations.
The electric utility industry in general is subject to various external
factors including (a) the effects of inflation upon the costs of operation and
construction, (b) substantially increased capital outlays and longer
construction periods for larger and more complex new generating units, (c)
uncertainties in predicting future load requirements, (d) increased financing
requirements coupled with limited availability of capital, (e) exposure to
cancellation and penalty charges on new generating units under construction,
(f) problems of cost and availability of fuel, (g) compliance with rapidly
changing and complex environmental, safety and licensing requirements, (h)
litigation and proposed legislation designed to delay or prevent construction
of generating and other facilities, (i) the uncertain effects of conservation
on the use of electric energy, (j) uncertainties associated with the
development of a national energy policy, (k) regulatory, political and
consumer resistance to rate increases and (l) increased competition as a
result of the availability of other energy sources. These factors may delay
the construction and increase the cost of new facilities, limit the use of, or
necessitate costly modifications to, existing facilities, impair the access of
electric utilities to credit markets, or substantially increase the cost of
credit for electric generating facilities. The Sponsors cannot predict at
this time the ultimate effect of such factors on the ability of any issuers to
meet their obligations with respect to Bonds.
The National Energy Policy Act ("NEPA'), which became law in October,
1992, makes it mandatory for a utility to permit non-utility generators of
electricity access to its transmission system for wholesale customers, thereby
increasing competition for electric utilities. NEPA also mandated demand-side
management policies to be considered by utilities. NEPA prohibits the Federal
Energy Regulatory Commission from mandating electric utilities to engage in
retail wheeling, which is competition among suppliers of electric generation
to provide electricity to retail customers (particularly industrial retail
customers) of a utility. However, under NEPA, a state can mandate retail
wheeling under certain conditions.
There is a concern by the public, the scientific community, and the U.S.
Congress regarding environmental damage resulting from the use of fossil
fuels. Congressional support for the increased regulation of air, water, and
soil contaminants is building and there are a number of pending or recently
enacted legislative proposals which may affect the electric utility industry.
In particular, on November 15, 1990, legislation was signed into law that
substantially revises the Clean Air Act (the "1990 Amendments"). The 1990
Amendments seek to improve the ambient air quality throughout the United
States by the year 2000. A main feature of the 1990 Amendments is the
reduction of sulphur dioxide and nitrogen oxide emissions caused by electric
utility power plants, particularly those fueled by coal. Under the 1990
Amendments the U.S. Environmental Protection Agency ("EPA") must develop
limits for nitrogen oxide emissions by 1993. The sulphur dioxide reduction
will be achieved in two phases. Phase I addresses specific generating units
named in the 1990 Amendments. In Phase II the total U.S. emissions will be
capped at 8.9 million tons by the year 2000. The 1990 Amendments contain
provisions for allocating allowances to power plants based on historical or
calculated levels. An allowance is defined as the authorization to emit one
ton of sulphur dioxide.
The 1990 Amendments also provide for possible further regulation of toxic
air emissions from electric generating units pending the results of several
federal government studies to be conducted over the next three to four years
with respect to anticipated hazards to public health, available corrective
technologies, and mercury toxicity.
Electric utilities which own or operate nuclear power plants are exposed
to risks inherent in the nuclear industry. These risks include exposure to
new requirements resulting from extensive federal and state regulatory
oversight, public controversy, decomissioning costs, and spent fuel and
radioactive waste disposal issues. While nuclear power construction risks are
no longer of paramount concern, the emerging issue is radioactive waste
disposal. In addition, nuclear plants typically require substantial capital
additions and modifications throughout their operating lives to meet safety,
environmental, operational and regulatory requirements and to replace and
upgrade various plant systems. The high degree of regulatory monitoring and
controls imposed on nuclear plants could cause a plant to be out of service or
on limited service for long periods. When a nuclear facility owned by an
investor-owned utility or a state or local municipality is out of service or
operating on a limited service basis, the utility operator or its owners may
be liable for the recovery of replacement power costs. Risks of substantial
liability also arise from the operation of nuclear facilities and from the
use, handling, and possible radioactive emissions associated with nuclear
fuel. Insurance may not cover all types or amounts of loss which may be
experienced in connection with the ownership and operation of a nuclear plant
and severe financial consequences could result from a significant accident or
occurrence. The Nuclear Regulatory Commission has promulgated regulations
mandating the establishment of funded reserves to assure financial capability
for the eventual decommissioning of licensed nuclear facilities. These funds
are to be accrued from revenues in amounts currently estimated to be
sufficient to pay for decommissioning costs.
The ability of state and local joint action power agencies to make
payments on bonds they have issued is dependent in large part on payments made
to them pursuant to power supply or similar agreements. Courts in Washington,
Oregon and Idaho have held that certain agreements between the Washington
Public Power Supply System ("WPPSS") and the WPPSS participants are
unenforceable because the participants did not have the authority to enter
into the agreements. While these decisions are not specifically applicable to
agreements entered into by public entities in other states, they may cause a
reexamination of the legal structure and economic viability of certain
projects financed by joint power agencies, which might exacerbate some of the
problems referred to above and possibly lead to legal proceedings questioning
the enforceability of agreements upon which payment of these bonds may depend.
Litigation and Legislation
To the best knowledge of the Sponsor, there was no litigation pending as
of the Date of Deposit with respect to any Debt Obligations that might
reasonably be expected to have a material adverse effect upon the Trust. At
any time litigation may be initiated on a variety of grounds with respect to
the Debt Obligations. Litigation, for example, challenging the issuance of
pollution control revenue bonds under recently-enacted environmental
protection statutes may affect the validity of Debt Obligations or the
tax-free nature of their interest. While the outcome of litigation of this
nature can never be entirely predicted, opinions of bond counsel are delivered
on the date of issuance of each Debt Obligation to the effect that the Debt
Obligation has been validly issued and that the interest thereon is exempt
from Federal income tax. In addition, other factors may arise from time to
time which potentially may impair the ability of issuers to make payments due
on Debt Obligations.
Under the Federal Bankruptcy Act, a political subdivision or public
agency or instrumentality of any state, including municipalities may proceed
to restructure or otherwise alter the terms of its obligations, including
those of the type of which the Trust is comprised. The Sponsor is unable to
predict what effect, if any, this legislation will have on the Trust.
From time to time Congress considers proposals to tax the interest on
State and local obligations, such as the Debt Obligations. The Supreme Court
clarified in South Carolina v. Baker (decided April 20, 1988) that the U.S.
Constitution does not prohibit Congress from passing a non-discriminatory tax
on State and local obligations. This type of legislation, if enacted into law
could adversely affect an investment in Units. Holders are urged to consult
their own tax advisors.
Payment of the Securities and Life of the Trust
Because certain of the Securities from time to time may be redeemed or
prepaid or will mature in accordance with their terms or may be sold under
certain circumstances described herein, no assurance can be given that the
Trust will retain for any length of time its present size and composition (see
Redemption). Many of the Securities may be subject to redemption prior to
their stated maturity dates pursuant to optional refunding or sinking fund
redemption provisions or otherwise. In general, optional refunding redemption
provisions are more likely to be exercised when the offering side evaluation
is at a premium over par than when it is at a discount from par. Generally,
the offering side evaluation of Securities will be at a premium over par when
market interest rates fall below the coupon rate on the Securities. The
percentage of the face amount of Securities in the Portfolio which were at a
bid side evaluation in excess of par is set forth under Investment Summary.
Certain Securities in the Portfolio may be subject to sinking fund provisions.
These provisions are designed to redeem a significant portion of an issue
gradually over the life of the issue; obligations to be redeemed are generally
chosen by lot. The Portfolio contains a listing of the sinking fund and
optional redemption provisions with respect to the Securities.
Tax Exemption
In the opinion of bond counsel rendered on the date of issuance of each
Security, the interest on the Securities is excludable from gross income under
then existing law for regular Federal income tax purposes (except in certain
circumstances depending on the Holder) but may be subject to state and local
taxes and may be a preference item for purposes of the alternative minimum
tax. As discussed under Description of the Trust--Taxes, interest on some or
all of the Securities may become subject to regular Federal income tax,
perhaps retroactively to their date of issuance, as a result of changes in
Federal law or as a result of the failure of issuers (or other users of the
proceeds of the municipal organizations) to comply with certain ongoing
requirements.
The Internal Revenue Service announced on June 14, 1993 that it will be
expanding its examination program with respect to tax-exempt bonds. The
expanded examination program will consist of, among other measures, increased
enforcement against abusive transactions, broader audit coverage (including
the expected issuance of audit guidelines) and expanded compliance achieved by
means of expected revisions to the tax-exempt bond information return forms.
At this time, it is uncertain whether the tax exempt status of any of the Debt
Obligations would be affected by the expanded examination program, or whether
such effect, if any, would be retroactive.
In certain cases, a Security may provide that if the interest on the
Security should ultimately be determined to be taxable, the Security would
become due and payable by its issuer, and, in addition, may provide that any
related letter of credit or other security could be called upon if the issuer
failed to satisfy all or part of its obligation. In other cases, however, a
Security may not provide for the acceleration or redemption of the Security or
a call upon the related letter of credit or other security upon a
determination of taxability. In those cases in which a Security does not
provide protection from a determination of taxability or in which both the
issuer and the bank or other entity issuing the letter of credit or other
security are unable to meet their obligations to pay the amounts due on the
Security as a result of a determination of taxability, the Trustee would be
obligated to sell the Security and, since it would be sold as a taxable
security, it is expected that it would have to be sold at a substantial
discount from current market price. In addition, as mentioned above, Holders
might be required to pay income tax on interest received prior to the date of
the determination of taxability.
DESCRIPTION OF THE TRUST
The Portfolio
The Portfolio contains different issues of municipal debt obligations
with fixed final maturity dates, which on the Date of Deposit were either
rated in the category B or better by either Standard & Poor's or Moody's or
had, in the opinion of the Sponsor, comparable credit characteristics. As used
herein the term "Securities" means the debt obligations initially deposited in
the Trust and described under Portfolio and any substitute Securities acquired
and held by the Trust pursuant to the provisions of the Indenture (see
Administration of the Trust--Trust Supervision). See Investment Summary for a
summary of particular matters relating to the Portfolio.
In selecting Securities for deposit in the Trust, the Sponsor considered
the following factors, among others: (i) whether the Securities were rated in
the category B or better by Standard & Poor's or Moody's or, if unrated, had,
in the opinion of the Sponsor, comparable credit characteristics, (ii) the
yield and price of the Securities relative to other comparable debt
securities, (iii) the diversification of the Portfolio as to various
classifications, taking into account the availability in the market of issues
which meet the Trust's criteria. Subsequent to the Date of Deposit, a Security
may cease to be rated by Standard & Poor's or Moody's or its rating or ranking
may be reduced. Neither event requires elimination of that Security from the
Portfolio, but may be considered in the Sponsor's determination to direct the
disposal of the Security (see Administration of the Trust--Trust Supervision).
The Sponsor has the power but not the obligation to direct the
disposition of Debt Obligations upon institution of certain legal proceedings,
default under certain documents adversely affecting future declaration or
payment of anticipated interest, or a substantial decline in price or the
occurrence of other materially adverse market or credit factors, that in the
opinion of the Sponsor would make the retention of such Debt Obligations
detrimental to the interests of the Holders (Section 3.09).
The yields on debt obligations of the type deposited in the Trust are
dependent on a variety of factors, including general money market conditions,
general conditions of the municipal bond market, size of a particular
offering, the maturity of the obligation and rating of the issue. The ratings
represent the opinions of the rating organizations as to the quality of the
debt obligations which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Investors should be aware that credit ratings of debt securities evaluate the
ability of the issuer to pay interest and principal but do not evaluate the
risk of decline in the market value of the debt securities for other reasons.
Consequently, debt obligations with the same maturity, coupon and rating may
have different yields, while debt obligations of the same maturity and coupon
with different ratings may have the same yield.
The Trust consists of the Securities listed under Portfolio (including
any substitute debt obligations deposited in the Trust pursuant to the terms
of the Indenture) as long as they may continue to be held from time to time in
the Trust together with accrued and undistributed interest thereon and
undistributed and uninvested cash realized from the disposition or redemption
of Securities (see Administration of the Trust--Trust Supervision).
Income; Estimated Current Return; Estimated Long-Term Return
The estimated net annual interest rate per 1,000 Units on the Evaluation
Date is set forth under Investment Summary. This rate shows the percentage
return based on face amount per 1,000 Units after deducting estimated annual
fees and expenses expressed as a percentage and assumes the timely payment of
all interest. This rate will change as Securities mature, are exchanged,
redeemed, paid or sold or as the expenses of the Trust change.
Normally, interest on the Securities in the Trust is paid on a
semi-annual (or less frequently, annual) basis. Because interest on the
Securities is not received by the Trust at a constant rate throughout the
year, any Monthly Income Distribution may be more or less than the interest
actually received by the Trust. In order to eliminate fluctuations, the
Trustee is required to advance the amounts necessary to provide approximately
equal Monthly Income Distributions. The Trustee will be reimbursed, without
interest, for these advances from interest received on the Securities.
In addition to the Public Offering Price, the price of a Unit includes
accrued interest on the Securities. Because of the varying payment dates of
the Securities, accrued interest at any time will be greater than the amount
of interest actually received by the Trust and distributed to Holders.
Therefore, accrued interest (if any) is always added to the value of the
Units. If a Holder sells all or a portion of his Units, he will receive his
proportionate share of the accrued interest from the purchaser of his Units.
Similarly, if a Holder redeems all or a portion of his Units, the Redemption
Price per Unit will include accrued interest on the Securities.
Interest on the Securities in the Trust, less estimated fees of the
Trustee and Sponsor and certain other expenses, is expected to accrue at the
daily rate (based on a 360-day year) shown under Investment Summary. The
actual daily rate will vary as Securities are exchanged, redeemed, paid or
sold or as the expenses of the Trust change.
Estimated Current Return and Estimated Long Term Return give different
information about the return to investors. Estimated Current Return on a Unit
represents annual cash receipts from coupon-bearing debt obligations in the
Portfolio (after estimated annual expenses) divided by the Public Offering
Price (including the sales charge).
Unlike Estimated Current Return, Estimated Long Term Return is a measure
of the estimated return to the investor earned over the estimated life of the
Trust. The Estimated Long Term Return represents an average of the yields to
maturity (or earliest call date for obligations trading at prices above the
particular call price) of the Debt Obligations in the Portfolio, calculated in
accordance with accepted bond practice and adjusted to reflect expenses and
sales charges. Under accepted bond practice, bonds are customarily offered to
investors on a "yield price" basis, which involves computation of yield to
maturity (or earlier call date), and which takes into account not only the
interest payable on the bonds but also the amortization or accretion to a
specified date of any premium over or discount from the par (maturity) value
in the bond's purchase price. In calculating Estimated Long Term Return, the
average yield for the Portfolio is derived by weighting each Debt Obligation's
yield by the market value of the Debt Obligation and by the amount of time
remaining to the date to which the Debt Obligation is priced. Once the
average Portfolio yield is computed, this figure is then adjusted for
estimated expenses and the effect of the maximum sales charge paid by
investors. The Estimated Long Term Return calculation does not take into
account certain delays in distributions of income and the timing of other
receipts and distributions on Units and may, depending on maturities, over or
understate the impact of sales charges. Both of these factors may result in a
lower figure.
Both Estimated Current Return and Estimated Long Term Return are subject
to fluctuation with changes in Portfolio composition (including the
redemption, sale or other disposition of Debt Obligations in the Portfolio),
changes in market value of the underlying Debt Obligations and changes in fees
and expenses, including sales charges. The size of any difference between
Estimated Current Return and Estimated Long Term Return can also be expected
to fluctuate at least as frequently. In addition, both return figures may not
be directly comparable to yield figures used to measure other investments, and
since the return figures are based on certain assumptions and variables the
actual returns received by a Unitholder may be higher or lower.
The Public Offering Price of Units will vary in accordance with
fluctuations in the prices of the Securities and the applicable sales charges.
Any change in either the net annual interest rate per Unit or the Public
Offering Price will result in a change in the current return.
TAXES
The following discussion addresses only the tax consequences of Units
held as capital assets and does not address the tax consequences of Units held
by dealers, financial institutions or insurance companies.
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 in the manner set forth below.
Each Holder will be considered the owner of a pro rata portion of
each Debt Obligation in the Trust under the grantor trust rules of
Sections 671-679 of the Internal Revenue Code of 1986, as amended (the
"Code"). The total cost to a Holder of his Units, including sales charges,
is allocated among his pro rata portion of each Debt Obligation (in
proportion to the fair market values thereof on the date the Holder
purchases his Units) in order to determine his tax basis for his pro rata
portion of each Debt Obligation.
Each Holder will be considered to have received the interest on his
pro rata portion of each Debt Obligation when interest on the Debt
Obligation is received by the Trust. In the opinion of bond counsel
(delivered on the date of issuance of the Debt Obligation), such interest
will be excludable from gross income for regular Federal income tax
purposes (except in certain limited circumstances referred to below).
Amounts received by the Trust pursuant to a bank letter of credit,
guarantee or insurance policy with respect to payments of principal,
premium or interest on a Debt Obligation will be treated for Federal
income tax purposes in the same manner as if such amounts were paid by the
issuer of the Debt Obligation.
The Trust may contain Debt Obligations which were originally issued
at a discount ("original issue discount"). In general, original issue
discount is defined as the difference between the price at which a debt
obligation was issued and its stated redemption price at maturity.
Original issue discount on a tax-exempt obligation issued after September
3, 1982 is deemed to accrue as tax-exempt interest over the life of the
obligation under a formula based on the compounding of interest. Original
issue discount on a tax-exempt obligation issued before July 1, 1982 is
deemed to accrue as tax-exempt interest ratably over the life of the
obligation. Original issue discount on any other tax-exempt obligation is
also deemed to accrue as tax-exempt interest over the life of the
obligation, although it is not clear whether such accrual is ratable or is
determined under a formula based on the compounding of interest. If a
Holder's tax basis for his pro rata portion of a Debt Obligation issued
with original issue discount is greater than its "adjusted issue price"
thereof but less than its stated redemption price at maturity (as may be
adjusted for certain payments), the Holder will be considered to have
purchased his pro rata portion of the Debt Obligation at an "acquisition
premium". A Holder's adjusted tax basis for his pro rata portion of the
Debt Obligation issued with original issue discount will include original
issue discount accrued during the period such Holder held his Units. Such
increases to the Holder's tax basis in his pro rata portion of the Debt
Obligation resulting from the accrual of original issue discount, however,
will be reduced by the amount of any such acquisition premium.
If a Holder's tax basis for his pro rata portion of a Debt Obligation
exceeds the redemption price at maturity thereof (subject to certain
adjustments), the Holder will be considered to have purchased his pro rata
portion of the Debt Obligation with "amortizable bond premium". The Holder
is required to amortize such premium over the term of the Debt Obligation.
Such amortization is only a reduction of basis for his pro rata portion of
the Debt Obligation and does not result in any deduction against the
Holder's income. Therefore, under some circumstances, a Holder may
recognize taxable gain when his pro rata portion of a Debt Obligation is
disposed of for an amount equal to or less than his original tax basis
therefor.
A Holder will recognize taxable gain or loss when all or part of his
pro rata portion of a Debt Obligation is disposed of for an amount greater
or less than his original 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 Debt Obligation acquired by the Holder at a
"market discount" (i.e., where the Holder's original tax basis for his pro
rata portion of the Debt Obligation (plus any original issue discount
which will accrue thereon until its maturity) is less than its stated
redemption price at maturity) would 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 be
considered to have disposed of all or part of his pro rata portion of each
Debt Obligation when he sells or redeems all or some of his Units.
Under Section 265 of the Code, a Holder (except a corporate Holder)
will not be entitled to deduct his pro rata share of fees and expenses of
the Trust, because the fees and expenses are incurred in connection with
the production of tax-exempt income. Further, if borrowed funds are used
by a Holder to purchase or carry Units, interest on this indebtedness will
not be deductible for Federal income tax purposes. In addition, under
rules used by the Internal Revenue Service, the purchase of Units may be
considered to have been made with borrowed funds even though the borrowed
funds are not directly traceable to the purchase of Units.
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 in the same
manner as for Federal income tax purposes, but will not necessarily be
tax-exempt.
From time to time proposals are introduced in Congress and State
legislatures which, if enacted into law, could have an adverse impact on
the tax-exempt status of Debt Obligations. It is impossible to predict
whether any legislation in respect of the tax status of interest on such
obligations may be proposed and eventually enacted at the Federal or state
level.
The foregoing discussion relates only to Federal and New York State
and City income taxes. Depending on their state of residence, Holders may
be subject to state and local taxation and should consult their own tax
advisers in this regard.
* * *
The Trust may include Debt Obligations issued after August 7, 1986.
Interest on certain of these Debt Obligations (including any original issue
discount) is a preference item for purposes of the alternative minimum tax
("AMT") for individuals and corporations. See Investment Summary and
Portfolio. In addition, a corporate holder should be aware that the accrual or
receipt of tax-exempt interest not otherwise subject to the AMT nonetheless
may give rise to an alternative minimum tax liability (or increase an existing
liability) because the interest income will be included in the corporation's
"adjusted current earnings" for purposes of the adjustment to alternative
minimum taxable income required by Section 56(g) of the Code, and will be
taken into account for purposes of the environmental tax on corporations under
Section 59A of the Code, which is based on alternative minimum taxable income.
In addition, interest on the Debt Obligations must be taken into consideration
in computing the portion, if any, of social security benefits that will be
included in an individual's gross income and subject to Federal income tax.
Holders are urged to consult their own tax advisers concerning an investment
in Units.
At the time of issuance of each Debt Obligation, an opinion relating to
the validity of the Debt Obligation and to the exemption of interest thereon
from regular Federal income taxes was or will be rendered by bond counsel.
Neither the Sponsor nor Davis Polk & Wardwell have made or will make any
review of the proceedings relating to the issuance of the Debt Obligations or
the basis for these opinions. In the case of certain Debt Obligations, the tax
exemption is dependent upon the issuer's (and other users') compliance with
certain ongoing requirements, and the opinion of bond counsel assumes that
these requirements will be complied with. However, there can be no assurance
that the issuer (and other users) will comply with these requirements, in
which event the interest on the Debt Obligation could be determined to be
taxable, in most cases retroactively from the date of issuance.
In the case of certain of the Debt Obligations, the opinions of bond
counsel indicate that interest on these Debt Obligations received by a
"substantial user" of the facilities being financed with the proceeds of these
Debt Obligations, or persons related thereto, for periods while these Debt
Obligations are held by such a user or related person, will not be exempt from
regular Federal income taxes, although interest on these Debt Obligations
received by others would be exempt from regular Federal income taxes.
"Substantial user" is defined under U.S. Treasury Regulations to include only
a person whose gross revenue derived with respect to the facilities financed
by the issuance of bonds is more than 5% of the total revenue derived by all
users of these facilities, or who occupies more than 5% of the usable area of
these facilities or for whom these facilities or a part thereof were
specifically constructed, reconstructed or acquired. "Related persons" are
defined to include certain related natural persons, affiliated corporations,
partners and partnerships.
After the end of each calendar year, the Trustee will furnish to each
Holder an annual statement containing information relating to the interest
received by the Trust on the Debt Obligations, the gross proceeds received by
the Trust from the disposition of any Debt Obligation (resulting from
redemption or payment at maturity of any Debt Obligation or the sale by the
Trust of any Debt Obligation), and the fees and expenses paid by the Trust.
The Trustee will also furnish annual information returns to each Holder and to
the Internal Revenue Service. Holders are required to report to the Internal
Revenue Service the amount of tax-exempt interest received during the year.
PUBLIC SALE OF UNITS
Public Offering Price
The Public Offering Price of the Units is computed by adding to the bid
side evaluation of the Securities (as determined by the Evaluator), divided by
the number of Units outstanding, the sales charge at the applicable percentage
of the bid side evaluation per Unit. A proportionate share of accrued and
undistributed interest on the Securities to the date of delivery of the Units
to the purchaser is added to the Public Offering Price. The Public Offering
Price on the date of this Prospectus or on any subsequent date will vary from
the Public Offering Price on the Evaluation Date (set forth under Investment
Summary) in accordance with fluctuations in the aggregate bid side evaluation
of the underlying Securities.
The applicable percentage of sales charge and the concession to dealers
referred to below under Public Distribution is reduced on a graduated scale
for sales to any purchaser of at least 100,000 Units and will be applied on
whichever basis is more favorable to the purchaser. Sales charges are as
follows:
Sales Charge Sales Charge
as Percent ofas Percent of
Bid Side PublicNet Amount
Number of Units Offering Price Invested
1,000 - 99,999 5.50%f1T5.820%
100,000 - 249,999 5.00 5.263
250,000 - 499,999 4.50 4.172
500,000 - 999,999 4.00 4.167
1,000,000 or more 3.50 3.627
The above graduated sales charges will apply on all purchases on any one
day by the same purchaser of Units only in the amounts stated. For this
purpose purchases of one or more Series sponsored by the Sponsor that have the
same rates of sales charge will be aggregated with concurrent purchases of any
other unit trusts sponsored by the Sponsor. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed to be registered in the name of the purchaser. The
graduated sales charges are also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
Employees of the Sponsor and its affiliates may purchase Units of this
Trust at a price equal to the bid side evaluation of the Securities, divided
by the number of Units outstanding, plus a reduced sales charge of 1.5%.
The aggregate bid side evaluations of the Securities are determined by
the Evaluator, taking into account the same factors referred to under
Redemption--Computation of Redemption Price per Unit. This determination is
made each business day as of the Evaluation Time set forth under Investment
Summary, effective for all sales made since the last of these evaluations. The
term "business day", as used herein and under "Redemption", shall exclude
Saturdays, Sundays and the following holidays as observed by the New York
Stock Exchange: New Year's Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas.
Comparison of Public Offering Price, Sponsor's Repurchase Price and Redemption
Price
On the Evaluation Date, the Public Offering Price per 1,000 Units (which
includes the sales charge) exceeded the Sponsor's Repurchase Price and the
Redemption Price per 1,000 Units by the amount set forth under Investment
Summary.
In the past, the bid prices of publicly offered issues of "high yield"
bonds have been lower than the offering prices by as much as 1.50% or more of
face amount in the case of inactively traded issues and as little as .25% in
the case of actively traded issues, but the difference between the offering
and bid prices has averaged about 1.00% of face amount. For this and other
reasons (including fluctuations in the market prices of the Securities, and
the fact that the Public Offering Price includes the sales charge), the amount
realized by a Holder upon any redemption of Units may be less than the price
paid by him for the Units.
Public Distribution
Units may be offered directly to the public by this Prospectus at the
Public Offering Price determined in the manner provided above.
The Sponsor has qualified Units in all states in the U.S. in which
qualification is deemed necessary for sale by itself and by dealers who are
members of the National Association of Securities Dealers, Inc. Sales to
individuals in California are restricted to persons who have (i) annual income
of at least $30,000 and a net worth of at least $30,000, exclusive of home,
home furnishings and automobiles or (ii) net worth of at least $75,000,
exclusive of home, home furnishings and automobiles. The Sponsor does not
intend to qualify Units for sale in any foreign countries and this Prospectus
does not constitute an offer to sell Units in any country where Units cannot
lawfully be sold. Sales to dealers, if any, will initially be made at prices
which represent a concession of the amount per 1,000 Units specified in the
table above, but the Sponsor reserves the right to change the amount of the
concession to dealers from time to time. Any dealer may reallow a concession
not in excess of the concession to dealers.
Sponsor's Profits
Upon sale of the Units, the Sponsor will receive sales charges at the
rates set forth in the table above. Cash, if any, made available by buyers of
Units to the Sponsor prior to the settlement date for purchase of Units 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. In
maintaining a market for the Units (see Market for Units), the Sponsor will
also realize profits or sustain losses in the amount of any difference between
the prices at which it buys Units and the prices at which it resells these
Units (which include the sales charge) or the prices at which it redeems the
Units (based on the bid side evaluation of the Securities), as the case may
be.
MARKET FOR UNITS
Although the Sponsor is not obligated to do so, it intends to maintain a
secondary market for Units of this Series and continuously to offer to
purchase Units of this Series at prices, subject to change at any time, which
will be computed on the basis of the bid side of the market, taking into
account the same factors referred to in determining the bid side evaluation of
Securities for purposes of redemption (see Redemption). The Sponsor may
discontinue purchases of Units of this Series should the supply of Units
exceed demand or for other business reasons. In this event the Sponsor may
nonetheless under certain circumstances purchase Units, as a service to
Holders, at prices based on the current redemption prices for those Units (see
Redemption). The Sponsor, of course, does not in any way guarantee the
enforceability, marketability or price of any Securities in the Portfolio or
of the Units.
The Sponsor may redeem any Units it has purchased in the secondary market
if it determines that it is undesirable to continue to hold these Units in its
inventory. Factors which the Sponsor will consider in making this
determination will include the number of units of all series of all trusts
that it holds in its inventory, the saleability of the units and its estimate
of the time required to sell the units and general market conditions. For a
description of certain consequences of any redemption for remaining Holders,
see Redemption.
Holders who wish to dispose of their Units should inquire of the Trustee
or their bank or broker as to current market prices in order to determine if
there exist over-the-counter prices in excess of the redemption price and the
repurchase price.
REDEMPTION
Although it is anticipated that Units in most cases can be sold in the
over-the-counter market at a price per 1,000 Units that will at least equal
the Redemption Price per 1,000 Units (see Market for Units), Units may be
redeemed at the office of the Trustee upon delivery on any business day, as
defined under Public Sale of Units--Public Offering Price, of a request for
redemption, and payment of any relevant tax, without any other fee (Section
5.02). In certain instances the Trustee may require additional documents
including, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority.
On the seventh calendar day following the tender (or if the seventh
calendar day is not a business day on the first business day prior thereto),
the Holder will be entitled to receive the proceeds of the redemption in an
amount per 1,000 Units equal to the Redemption Price per 1,000 Units (see
below) as determined as of the Evaluation Time next following the tender. So
long as the Sponsor is maintaining a market at prices equal to or in excess of
the Redemption Price per 1,000 Units, the Sponsor will repurchase any Units
tendered for redemption no later than the close of business on the second
business day following the tender (see Market for Units). The Trustee is
authorized in its discretion, if the Sponsor does not elect to repurchase any
Units tendered for redemption or if the Sponsor tenders Units for redemption,
to sell the Units in the over-the-counter market at prices which will return
to the Holder a net amount in cash equal to or in excess of the Redemption
Price per 1,000 Units for the Units (Section 5.02).
The Trustee is empowered to sell Securities in order to make funds
available for redemption (Section 5.02) if funds are not otherwise available
in the Capital and Income Accounts to meet redemptions (see Administration of
the Trust--Accounts and Distributions). The Securities to be sold will be
selected from a list supplied by the Sponsor. Securities will be chosen for
this list by the Sponsor on the basis of those market and credit factors as it
may determine are in the best interests of the Trust. 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.
To the extent that Securities are sold, the size and diversity of the
Trust will be reduced. Sales will usually be required at a time when
Securities would not otherwise be sold and may result in lower prices than
might otherwise be realized. The price received upon redemption may be more or
less than the amount paid by the Holder depending on the value of the
Securities in the Portfolio at the time of redemption. In addition, because of
the minimum face amounts in which Securities are required to be sold, the
proceeds of sale may exceed the amount required at the time to redeem Units;
these excess proceeds will be distributed to Holders (see Administration of
the Trust--Trust Supervision).
The right of redemption may be suspended and payment postponed (1) for
any period during which the New York Stock Exchange, Inc. is closed other than
for customary weekend and holiday closings, (2) for any period during which,
as determined by the Securities and Exchange Commission ("SEC"), (i) trading
on that Exchange is restricted or (ii) an emergency exists as a result of
which disposal or evaluation of the Securities is not reasonably practicable
or (3) for any other periods which the SEC may by order permit (Section 5.02).
Computation of Redemption Price per 1,000 Units
Redemption Price per 1,000 Units is computed by the Trustee, as of the
Evaluation Time, on each June 30 and December 31 (or the last business day
prior thereto), on any business day as of the Evaluation Time next following
the tender of any Unit for redemption, and on any other business day desired
by the Trustee or the Sponsor, by adding (a) the aggregate bid side evaluation
of the Securities, (b) cash on hand in the Trust (other than cash covering
contracts to purchase Securities), (c) accrued and unpaid interest on the
Securities up to but not including the date of redemption and (d) all other
assets of the Trust; deducting therefrom the sum of (x) taxes or other
governmental charges against the Trust not previously deducted, (y) accrued
fees and expenses of the Trustee (including legal and auditing expenses), the
Sponsor, the Evaluator and counsel, and certain other expenses and (z) cash
held for distribution to Holders of record as of a date prior to the
evaluation; and dividing the result by the number of Units outstanding as of
the date of computation (Section 5.01).
The current aggregate bid side evaluation of the Securities is determined
by the Evaluator in the following manner: if the Securities are listed on a
national securities exchange ("high yield" bonds are usually not so listed),
this evaluation is generally based on the closing sale prices on that exchange
(unless the Evaluator deems these prices inappropriate as a basis for
valuation). If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange or there are no
closing sale prices on the exchange, the evaluation shall generally be based
on the closing sale prices on the over-the-counter market (unless the
Evaluator deems these prices inappropriate as a basis for evaluation). If
closing sale prices are unavailable, the evaluation is generally determined
(a) on the basis of current bid side prices for the Securities, (b) if bid
side prices are not available for any Securities, on the basis of current bid
prices for comparable securities, (c) by appraising the value of the
Securities on the bid side of the market or (d) by any combination of the
above. Among the factors which will be considered in determining the value of
any Restricted Securities are (i) an estimate of the existence and extent of
any available market therefor, (ii) the extent of any discount at which these
Securities were acquired by the Trust, (iii) the estimated period of time
during which these Securities will not be freely marketable, (iv) the
estimated expenses of qualifying these Securities for public sale, (v)
estimated underwriting commissions, if any, and (vi) any credit or other
factors affecting the issuer or the guarantor of these Securities. In making
evaluations, opinions of counsel may be relied upon as to whether any
Securities are Restricted Securities.
EXPENSES AND CHARGES
Fees
The Trustee's, Sponsor's and Evaluator's fees are set forth under
Investment Summary. The Sponsor's fee, which is earned for trust supervisory
services, is based on the face amount of Securities in the Trust at the
beginning of each annual period. The Sponsor's fee, which is not to exceed the
maximum amount set forth under Investment Summary, may exceed the actual costs
of providing supervisory services for this Trust, but at no time will the
total amount it receives for trust supervisory services rendered to all series
of Smith Barney Shearson Unit Trusts in any calendar year exceed the aggregate
cost to it of supplying these services in that year (Section 7.04). The
Sponsor may also be reimbursed for bookkeeping and other administrative
services provided to the Trust in amounts not exceeding its costs of providing
these services. The Trustee's fees, payable in monthly installments, are based
on the face amount of Securities in the Trust at the beginning of each monthly
period. Certain regular and recurring expenses of the Trust, including the
Evaluator's fee and certain mailing and printing expenses, are borne by the
Trust (Section 3.14). The Trustee also receives benefits to the extent that it
holds funds on deposit in the various non-interest bearing accounts created
under the Indenture. The foregoing fees may be adjusted for inflation in
accordance with the terms of the Indenture without approval of Holders
(Sections 4.02, 7.06 and 8.05).
Other Charges
These include: (a) fees of the Trustee for extraordinary services
(Section 8.05), (b) certain expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor (Sections 3.04,
3.08, 8.01 and 8.05), (c) various governmental charges (Sections 3.03 and 8.01
(h)), (d) expenses and costs of action taken to protect the Trust (Section
8.01 (d)), (e) indemnification of the Trustee for any losses, liabilities and
expenses incurred without gross negligence, bad faith or wilful misconduct on
its part (Section 8.05), (f) indemnification of the Sponsor for any losses,
liabilities and expenses incurred without gross negligence, bad faith, wilful
misconduct or reckless disregard of its duties (Section 7.03(b)) and (g)
expenditures incurred in contacting Holders upon termination of the Trust
(Section 9.02). The amounts of these charges and fees are secured by a lien on
the Trust and, if the balances in the Income and Capital Accounts (see below)
are insufficient, the Trustee has the power to sell Securities to pay these
amounts (Section 8.05).
ADMINISTRATION OF THE TRUST
Records
The Trustee keeps a register of the names, addresses and holdings of all
Holders. The Trustee also keeps records of the transactions of the Trust,
including a current list of the Securities and a copy of the Indenture, which
are available to Holders for inspection at the office of the Trustee at
reasonable times during business hours (Sections 6.01, 8.02 and 8.04).
Accounts and Distributions
Interest received is credited to an Income Account and other receipts to
a Capital Account (Sections 3.01 and 3.02). The Monthly Income Distribution
for each Holder as of each Record Day will be made on the following
Distribution Day or shortly thereafter and shall consist of an amount
substantially equal to one-twelfth of the Holder's pro rata share of the
estimated annual income to the Income Account, after deducting estimated
expenses, plus that Holder's pro rata share of the distributable cash balance
of the Capital Account computed as of the close of business on the preceding
Record Day. Estimates of the amounts of the Monthly Income Distributions are
set forth under Investment Summary. Proceeds received from the disposition,
payment or prepayment of any of the Securities subsequent to a Record Day and
prior to the succeeding Distribution Day will be held in the Capital Account
to be distributed on the second succeeding Distribution Day. The first
distribution for persons who purchase Units between a Record Day and a
Distribution Day will be made on the second Distribution Day following their
purchase of Units. No distribution need be made from the Capital Account if
the balance therein is less than the amount set forth under Investment Summary
(Section 3.04). A Reserve Account may be created by the Trustee by withdrawing
from the Income or Capital Accounts, from time to time, those amounts as it
deems requisite to establish a reserve for any taxes or other governmental
charges that may be payable out of the Trust (Section 3.03). Funds held by the
Trustee in the various accounts created under the Indenture do not bear
interest (Section 8.01).
Trust Supervision
The Trust is a unit investment trust and is not a managed fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its securities from the Portfolio.
However, the Sponsor may direct the disposition of Securities upon default in
payment of amounts due on any of the Securities, institution of certain legal
proceedings, default in payment of amounts due on other securities of the same
issuer or guarantor, or decline in price or the occurrence of other market or
credit factors that in the opinion of the Sponsor would make the retention of
these Securities detrimental to the interest of the Holders (Section 3.06). If
a default in the payment of amounts due on any Security occurs and if the
Sponsor fails to give instructions to sell or hold that Security, the
Indenture provides that the Trustee, within 30 days of that failure by the
Sponsor, shall sell the Security (Section 3.10).
The Sponsor is required to instruct the Trustee to reject any offer made
by an issuer of any of the Securities to issue new Securities in exchange or
substitution for any Securities pursuant to a refunding or refinancing plan,
except that the Sponsor may instruct the Trustee to accept or reject any offer
or to take any other action with respect thereto as the Sponsor may deem
proper if (a) the issuer is in default with respect to these Securities or (b)
in the written opinion of the Sponsor the issuer will probably default with
respect to these Securities in the reasonably foreseeable future. Any
Securities so received in exchange or substitution will be held by the Trustee
subject to the terms and conditions of the Indenture to the same extent as
Securities originally deposited thereunder. Within five days after the deposit
of Securities in exchange or substitution for underlying Securities, the
Trustee is required to give notice thereof to each Holder, identifying the
Securities eliminated and the Securities substituted therefor (Section 3.07).
Except as stated herein, the acquisition by the Trust of any securities other
than the Securities initially deposited is prohibited.
Reports to Holders
The Trustee will furnish Holders with each distribution a statement of
the amounts of interest and the amounts of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit. After
the end of each calendar year, the Trustee will furnish to each person who at
any time during the calendar year was a Holder of record, a statement (i)
summarizing transactions for that year in the Income and Capital Accounts,
(ii) identifying Securities sold and purchased during the year and listing
Securities held and the number of Units outstanding at the end of that
calendar year, (iii) stating the Redemption Price per Unit based upon the
computation thereof made at the end of that calendar year and (iv) specifying
the amounts distributed during that calendar year from the Income and Capital
Accounts (Section 3.06). The accounts of the Trust shall be audited at least
annually by independent certified public accountants designated by the Sponsor
and the report of the accountants shall be furnished by the Trustee to Holders
upon request (Section 8.01 (e)).
In order to enable them to comply with Federal and state tax reporting
requirements, Holders will be furnished upon request to the Trustee with
evaluations of Securities furnished to it by the Evaluator (Section 4.02).
Evidence of Ownership
Each purchaser is entitled to receive, on request, without charge (except
perhaps a small mailing charge) a registered Certificate for his Units. These
Certificates are transferable or interchangeable upon presentation at the
office of the Trustee, with a payment of $2.00 if required by the Trustee (or
other amounts specified by the Trustee and approved by the Sponsor) for each
new Certificate and any sums payable for taxes or other governmental charges
imposed upon the transaction (Section 6.01) and compliance with the
formalities necessary to redeem Certificates (see Redemption). Mutilated,
destroyed, stolen or lost Certificates will be replaced upon delivery of
satisfactory indemnity and payment of expenses incurred (Section 6.02).
Amendment and Termination
The Sponsor and Trustee may amend the Indenture, without the consent of
the Holders, (a) to cure any ambiguity or to correct or supplement any
provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the SEC or any successor governmental
agency or (c) to make any other provisions which do not materially adversely
affect the interest of the Holders (as determined in good faith by the
Sponsor). The Indenture may also be amended in any respect by the Sponsor and
the Trustee, or any of the provisions thereof may be waived, with the consent
of the Holders of 51% of the Units, provided that none of these amendments or
waivers will reduce the interest in the Trust of any Holder without the
consent of the Holder or reduce the percentage of Holders of Units required to
consent to any of these amendments or waivers without the consent of all
Holders (Section 10.01).
The Indenture will terminate upon the earlier of the disposition of the
last Security held thereunder or the mandatory termination date. The Indenture
may be terminated by the Sponsor if the value of the Trust is less than the
minimum value set forth under Investment Summary, and may be terminated at any
time by Holders of 51% of the Units (Sections 8.01 (g) and 9.01). The Trustee
will deliver written notice of any termination to each Holder within a
reasonable period of time prior to the termination. Within a reasonable period
of time after the termination, the Trustee must sell all of the Securities
then held and distribute to each Holder, after deductions for accrued but
unpaid fees, taxes and governmental and other charges, the Holder's interest
in the Income and Capital Accounts (Section 9.01). This distribution will
normally be made by mailing a check in the amount of each Holder's interest in
these accounts to the address of the Holder appearing on the record books of
the Trustee.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
Trustee
The Trustee or any successor may resign upon notice to the Sponsor. The
Trustee may be removed upon the direction of the Holders of 51% of the Units
at any time or by the Sponsor without the consent of any of the Holders if the
Trustee becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities. The resignation or removal shall become
effective upon the acceptance of appointment by the successor. In case of
resignation or removal the Sponsor is to use its best efforts to appoint a
successor promptly and if upon resignation of the Trustee no successor has
accepted appointment within thirty days after notification, the Trustee may
apply to a court of competent jurisdiction for the appointment of a successor
(Section 8.06). The Trustee shall be under no liability for any action taken
in good faith in reliance on prima facie properly executed documents or for
the disposition of moneys or Securities, nor shall it be liable or responsible
in any way for depreciation or loss incurred by reason of the sale of any
Security. This provision, however, shall not protect the Trustee in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. In the event of the failure of the Sponsor to act, the
Trustee may act under the Indenture and shall not be liable for any of these
actions taken in good faith. The Trustee shall not be personally liable for
any taxes or other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon. In addition, the Indenture contains
other customary provisions limiting the liability of the Trustee (Sections
3.06, 3.09, 8.01 and 8.05).
Evaluator
The Evaluator may resign or may be removed, effective upon the acceptance
of appointment by its successor, by the Sponsor, who is to use its best
efforts to appoint a successor promptly. If upon resignation of the Evaluator
no successor has accepted appointment within thirty days after notification,
the Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor (Section 4.04). Determinations by the Evaluator
under the Indenture shall be made in good faith upon the basis of the best
information available to it; provided, however, that the Evaluator shall be
under no liability to the Trustee, the Sponsor or the Holders for errors in
judgment. This provision, however, shall not protect the Evaluator in cases of
wilful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties (Section 4.04). The Trustee, the Sponsor and the
Holders may rely on any evaluation furnished by the Evaluator and shall have
no responsibility for the accuracy thereof.
Sponsor
The Sponsor may resign at any time if a successor Sponsor is appointed by
the Trustee in accordance with the Indenture. Any new Sponsor must have a
minimum net worth of $2,000,000 and must serve at rates of compensation deemed
by the Trustee to be reasonable and as may not exceed amounts prescribed by
the SEC. If the Sponsor fails to perform its duties or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may (1) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and as may not exceed
amounts prescribed by the SEC, (2) terminate the Indenture and liquidate the
Trust or (3) continue to act as Trustee without terminating the Indenture.
The Sponsor is under no liability to the Trust or to the Holders for
taking any action or for refraining from taking any action in good faith or
for errors in judgment and will not be liable or responsible in any way for
depreciation of any Security or Units or loss incurred in the sale of any
Security or Units. This provision, however, will not protect the Sponsor in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties (Section 7.03). The Sponsor may transfer all or
substantially all of its assets to a corporation or partnership which carries
on its business and duly assumes all of its obligations under the Indenture
and in that event it will be relieved of all further liability under the
Indenture.
MISCELLANEOUS
Trustee
The Trustee is Boston Safe Deposit and Trust Company ("Boston Safe"), a
trust company incorporated under the laws of Massachusetts and subject to
regulation by the Federal Deposit Insurance Corporation and the Massachusetts
Commissioner of Banks. Its principal office is at One Boston Place, Boston,
Massachusetts 02106. The Trustee was formerly an indirect wholly-owned
subsidiary of Shearson Lehman Brothers Inc. ("Shearson"). On September 14,
1992, Shearson entered into an agreement for the sale of The Boston Company,
Inc. ("TBC"), the parent company of Boston Safe, to Mellon Bank Corporation
("Mellon"). On May 21, 1993, the acquisition of TBC by Mellon was completed.
As a result, Boston Safe, a wholly owned subsidiary of TBC, is now an indirect
wholly owned subsidiary of Mellon. Mellon is a publicly owned holding company
registered under the Federal Bank Holding Company Act of 1956 and, through its
subsidiaries, provides a comprehensive range of financial products and
services in domestic and selected international markets.
Legal Opinion
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as counsel for the Sponsor.
Auditors
The financial statements on pages 4-12 of this Prospectus have been
included in reliance upon the report of Coopers & Lybrand, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
Sponsor
The Sponsor, Smith Barney Shearson Inc., ("Smith Barney") an investment
banking and securities broker-dealer firm, is a member of the New York Stock
Exchange, Inc., other major securities exchanges and commodity exchanges, and
the National Association of Securities Dealers, Inc. Smith Barney is an
indirect wholly-owned subsidiary of The Travelers Inc. In July, 1993, Smith
Barney, Harris Upham & Co. Incorporated and Primerica Corporation (now The
Travelers Inc.) acquired the assets of the domestic retail brokerage and asset
management business of Shearson Lehman Brothers Inc., previously the Sponsor
of this Trust. Smith Barney was incorporated in 1960 under the laws of the
State of Delaware and its history can be traced through predecessor
partnerships to 1873. Smith Barney is engaged in the securities underwriting
and securities and commodities brokerage business with over 100 branch offices
throughout the world and more than 6,000 employees. It acts as sponsor of
numerous unit investment trust funds and as a principal underwriter of other
investment companies. Smith Barney acts as investment adviser to various
individual and institutional clients whose portfolios include corporate,
United States Government and municipal securities. Affiliates of Smith Barney
are investment managers of other investment companies, including money market
funds, with assets in excess of $9.5 billion. The principal executive offices
of Smith Barney are located at 1345 Avenue of the Americas, New York, New York
10105.
DESCRIPTION OF RATINGS (as described by the rating companies themselves)
Standard & Poor's Corporation
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC--Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation.
Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB--Debt rated `BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The `BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied `BBB -' rating.
B--Debt rated `B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The `B' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied `BB' or `BB -' rating.
CCC--Debt rated `CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The `CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied `B' or `B -' rating.
CC--the rating `CC' is typically applied to debt subordinated to senior
debt that is assigned an actual or implied `CCC' rating.
C--The rating `C' is typically applied to debt subordinated to senior
debt which is assigned an actual or implied `CCC -' debt rating. The `C'
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
CI--The rating `CI' is reserved for income bonds on which no interest is
being paid.
D--Debt rated `D' is in payment default. The `D' rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The `D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
NR--Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
The ratings may be modified by the addition of a plus or minus sign to
show relative standing within the major rating categories.
A provisional rating, indicated by "p" following a rating, assumes the
successful completion of the project being financed by the issuance of the
debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.
Moody's Investors Service
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
NR--Should no rating be assigned, the reason may be one of the following:
(a) an application for rating was not received or accepted; (b) the issue or
issuer belongs to a group of securities that are not rated as a matter of
policy; (c) there is a lack of essential data pertaining to the issue or
issuer; or (d) the issue was privately placed, in which case the rating is not
published in Moody's publications.
Moody's applies numerical modifiers 1, 2, and 3 in generic rating
classifications in its corporate bond rating system. The modifier 1 indicates
that the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
Conditional ratings, indicated by "Con", are given to bonds for which the
security depends upon the completion of some act or the fulfillment of some
condition. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operating experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. A parenthetical rating denotes
probable credit stature upon completion of construction or elimination of
basis of condition.
[GRAPHIC 1]
High Yield Municipal Series
High Yield Municipal Series 8
A Unit Investment Trust
PROSPECTUS
This Prospectus does not contain all of the information with respect to the
investment company 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
Investment Summary.................................................. 2
Report of Independent Accountants................................... 3
Financial Statements................................................ 4
Portfolio........................................................... 10
Trust Structure..................................................... 14
Risk Factors........................................................ 15
Other Risk Factors.................................................. 17
Description of the Trust............................................ 23
Taxes............................................................... 25
Public Sale of Units................................................ 28
Market for Units.................................................... 30
Redemption.......................................................... 31
Expenses and Charges................................................ 32
Administration of the Trust......................................... 33
Resignation, Removal and Limitations on Liability................... 36
Miscellaneous....................................................... 37
Description of Ratings.............................................. 38
</TABLE>
<TABLE>
<CAPTION>
Independent
Sponsor: Evaluator: Trustee: Accountants:
- -------- --------- -------- ------------
<S> <C> <C> <C>
Smith Barney Shearson Inc. Kenny S&P Evaluation Boston Safe Deposit and Coopers & Lybrand
Unit Trust Department Services Trust Company One Post Office Square
Two World Trade Center 65 Broadway One Boston Place Boston, Massachusetts 02109
101st Floor New York, New York 10006 Boston, Massachusetts 02106 (617) 478-5000
New York, New York 10048 (212) 208-8580 1 (800) 222-6128
1-800-298-UNIT
</TABLE>
[GRAPHIC 2]
No person is authorized to give any information or to make any representations
with respect to this investment company not contained in this Prospectus; and
any information or representation not contained herein must not be relied upon
as having been authorized. 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.
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement on Form S-6 is
comprised of the following papers and documents:
The facing sheet of Form S-6.
The Cross-Reference Sheet (incorporated by reference to the
Cross-Reference Sheet to the Registration Statement of Shearson
Lehman Brothers Unit Trusts, High Yield Municipal Series 1, 1933 Act
File No. 33-15191).
The Prospectus.
The signatures.
The following exhibits:
4.1 Kenny S&P Evaluation Services
5.1 Coopers & Lybrand
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Shearson Lehman Brothers Unit Trusts, High Yield Municipal Series
8 (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
7th day of April, 1994.
Signatures appear on page II-3
A majority of the members of the Board of Directors of Shearson Lehman
Brothers Inc. has signed this Registration Statement or Amendment thereto
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.
SMITH BARNEY SHEARSON UNIT TRUSTS
(Registrant)
SMITH BARNEY SHEARSON INC.
(Depositor)
By the following persons* who constitute a majority of the Board of
Directors of Smith Barney Shearson Inc.:
- --------------------
* Pursuant to Powers of Attorney filed under the 1933 Act file Numbers
33-56722 and 33-51999.
- --------------------
STEVEN D. BLACK
JAMES S. BOSHART III
ROBERT A. CASE
ROBERT K. DIFAZIO
JAMES DIMON
ROBERT DRUSKIN
HERBERT DUNN
TONI ELLIOTT
LEWIS GLUCKSMAN
ROBERT F. GREENHILL
JOHN B. HOFFMAN
A. RICHARD JANIAK, JR.
ROBERT Q. JONES
ROBERT B. KANE
JEFFREY LANE
ROBERT H. LESSEN
THOMAS A. MAGUIRE, JR.
HOWARD D. MARSH
JOHN F. MCCANN
WILLIAM J. MILLS II
JOHN C. MORRIS
CHARLES O'CONNOR
HUGH J. O'HARE
JOSEPH J. PLUMERI II
JACK L. RIVKIN
A. GEORGE SAKS
BRUCE D. SARGENT
DON M. SHAGRIN
DAVID M. STANDRIDGE
MELVIN B. TAUB
JACQUES S. THERIOT
STEPHEN J. TREADWAY
PAUL UNDERWOOD
PHILIP M. WATERMAN, JR.
/s/ GINA LEMON
---------------------------
(As authorized signatory for
Smith Barney Shearson Inc.
and Attorney-in-fact for
the persons listed above)
EXHIBIT INDEX
Exhibit
No. Description Page No.
- --- ----------- --------
4.1 Consent of the Evaluator
5.1 Consent of Coopers & Lybrand
[LETTERHEAD OF KENNY S&P EVALUATION SERVICES]
Exhibit 4.1
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc. April 7, 1994
65 Broadway
New York, New York 10006-2511
Telephone 212/770-4900
F.A. Shinal
Senior Vice President
Chief Financial Officer
Smith Barney Shearson Inc.
Two World Trade Center, 101st Floor
New York, New York 10048
RE: Smith Barney Shearson Unit Trusts
High Yield Municipal Series 8
---------------------------------
Gentlemen:
We have examined the post-effective Amendment to the Registration
Statement File No. 33-25038 for the above-captioned trust. We hereby
acknowledge that Kenny S&P Evaluation Services, a division of Kenny
Information Systems, Inc. is currently acting as the evaluator for the trust.
We hereby consent to the use in the Amendment of the reference to Kenny S&P
Evaluation Services, a division of Kenny Information Systems, Inc. as
evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in
our KENNYBASE database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
F.A. Shinal
Senior Vice President
Chief Financial Officer
FAS/cns
Exhibit 5.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 6 to the
Registration Statement on Form S-6 (File No. 33-25038) of our report dated
February 18, 1994 on our audit of the financial statements and financial
highlights of Smith Barney Shearson Unit Trusts, High Yield Municipal
Series 8 (formerly Shearson Lehman Brothers Unit Trusts, High Yield
Municipal Series 8). We also consent to the reference to our firm under
the caption "Miscellaneous-Auditors."
COOPERS & LYBRAND
/s/COOPERS & LYBRAND
Boston, Massachusetts
April 6, 1994
