Rule 497(b)
Registration No. 2-94580
NOTE: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
INSURED MUNICIPAL SECURITIES TRUST
SERIES 1
The Trust is a unit investment trust designated Series 1 ("Insured
Municipal Trust") with an underlying portfolio of long-term insured tax-
exempt bonds issued by or on behalf of states, municipalities and public
authorites and was formed to preserve capital and to provide interest
income (including, where applicable, earned original issue discount)
which, in the opinions of bond counsel to the respective issuers, is, with
certain exceptions, currently exempt from regular federal income tax under
existing law but may be subject to state and local taxes. Capital gains
are subject to tax. (See "Tax Status" and "The Trust--Portfolio" in
Part B of this Prospectus.) The Sponsor is Bear, Stearns & Co. Inc. The
value of the Units of the Trust will fluctuate with the value of the
underlying bonds. Minimum purchase: 1 Unit.
This Prospectus consists of two parts. Part A contains the Summary
of Essential Information as of June 30, 1994 (the "Evaluation Date"), a
summary of certain specific information regarding the Trust and audited
financial statements of the Trust, including the related portfolio, as of
the Evaluation Date. Part B of this Prospectus contains a general summary
of the Trust.
Investors should retain both parts of this
Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Part A Dated October 28, 1994
<PAGE>
THE TRUST. The Trust is a unit investment trust formed to preserve
capital and to provide interest income (including, where applicable,
earned original issue discount) which, in the opinions of bond counsel to
the respective issuers, is, with certain exceptions, currently exempt from
regular federal income tax under existing law through investment in a
fixed, diversified portfolio of long-term insured bonds (the "Bonds")
issued by or on behalf of states, municipalities and public authorities
which, because of irrevocable insurance, are rated "AAA" by Standard &
Poor's Corporation. Although the Supreme Court has determined that
Congress has the authority to subject interest on bonds such as the Bonds
in the Trust to regular federal income taxation, existing law excludes
such interest from regular federal income tax. Such interest income may,
however, be subject to the federal corporate alternative minimum tax and
to state and local taxes. (See "Tax Status" in Part B of this
Prospectus.) For a list of ratings on the Evaluation Date, see
"Portfolio." Some of the Bonds may be "Zero Coupon Bonds", which are
original issue discount bonds that provide for payment at maturity at par
value, but do not provide for the payment of any current interest. Some
of the Bonds in the Trust have been issued with optional refunding or
refinancing provisions ("Refunded Bonds") whereby the issuer of the Bond
has the right to call such Bond prior to its stated maturity date (and
other than pursuant to sinking fund provisions) and to issue new bonds
("Refunding Bonds") in order to finance the redemption. Issuers typically
utilize refunding calls in order to take advantage of lower interest rates
in the marketplace. Some of these Refunded Bonds may be called for
redemption pursuant to pre-refunding provisions ("Pre-Refunded Bonds")
whereby the proceeds from the issue of the Refunding Bonds are typically
invested in government securities in escrow for the benefit of the holders
of the Pre-Refunded Bonds until the refunding call date. Usually, Pre-
Refunded Bonds will bear a triple-A rating because of this escrow. The
issuers of Pre-Refunded Bonds must call such Bonds on their refunding call
date. Therefore, as of such date, the Trust will receive the call price
for such bonds but will cease receiving interest income with respect to
them. For a list of those Bonds which are Pre-Refunded Bonds, if any, as
of the Evaluation Date, see "Notes to Financial Statements" in this
Part A. Some of the Bonds in the portfolio may have been purchased at an
aggregate premium over par. All of the Bonds in the Trust were rated
"AAA" by Standard & Poor's Corporation at the time originally deposited in
the Trust. This rating results from insurance relating only to the Bonds
in the Trust and not to Units of the Trust. The insurance does not remove
market risk, as it does not guarantee the market value of the Units. For
a discussion of the significance of such ratings, see "Description of Bond
Ratings" in Part B of this Prospectus, and for a list of ratings on the
Evaluation Date see the "Portfolio." The payment of interest and
preservation of capital are, of course, dependent upon the continuing
ability of issuers of the Bonds or the insurers thereof to meet their
obligations. There can be no assurance that the Trust's investment
objectives will be achieved. Investment in the Trust should be made with
an understanding of the risks which an investment in long-term fixed rate
debt obligations may entail, including the risk that the value of the
underlying portfolio will decline with increases in interest rates, and
that the value of Zero Coupon Bonds is subject to greater fluctuation than
coupon bonds in response to changes in interest rates. Each Unit in the
Trust represents a 1/2923rd undivided interest in the principal and net
income of the Trust. The principal amount of Bonds deposited in the Trust
per Unit is reflected in the Summary of Essential Information. (See
"Organization" in Part B of this Prospectus.) The Units being offered
hereby are issued and outstanding Units which have been purchased by the
Sponsor in the secondary market.
INSURANCE. Each of the Bonds in the Trust is insured by a municipal
bond guaranty insurance policy obtained by either the Sponsor ("Sponsor-
Insured Bonds") or the issuers of the Bonds ("Pre-Insured Bonds") and
issued by one of the insurance companies (the "Insurance Companies"),
described under "Insurance on the Bonds" in Part B of this Prospectus,
covering scheduled payment of principal thereof and interest thereon when
such amounts shall become due for payment but shall not have been paid by
the issuer or any other insurer thereof. The insurance, unless obtained
by Municipal Bond Investors Assurance Corporation ("MBIA Corp."), will
also cover any accelerated payments of principal and the increase in
interest payments or premiums, if any, payable upon mandatory redemption
of the Bonds if interest on any Bonds is ultimately deemed to be subject
to regular federal income tax. Insurance obtained from MBIA Corp. only
guarantees the accelerated payments required to be made by or on behalf of
an issuer of small industrial revenue bonds and pollution control bonds if
there is an event which results in the loss of tax-exempt status of the
interest on such Bonds, including principal, interest or premium payments,
if any, as and when required. To the extent, therefore, that Bonds are
only covered by insurance obtained from MBIA Corp., such Bonds will not be
covered for the accelerated payments required to be made by or on behalf
of an issuer of other than small industrial revenue bonds or pollution
control revenue bonds if there occurs an event which results in the loss
of tax-exempt status of the interest on such Bonds. None of the insurance
will cover accelerated payments of principal or penalty interest or
premiums unrelated to taxability of interest on the Bonds (although the
insurance, including insurance obtained by MBIA Corp., does guarantee
payment of principal and interest in such amounts and at such times as
such amounts would have been due absent such acceleration). The insurance
relates only to the prompt payment of principal of and interest on the
securities in the portfolio, and does not remove market risks or guarantee
the market value of the Units in the Trust. The terms of the insurance
are more fully described under "Insurance on the Bonds" in Part B of this
Prospectus. For a discussion of the effect of an occurrence of nonpayment
of principal or interest on any Bonds in the Trust, see "Portfolio
Supervision" in Part B of this Prospectus. No representation is made
herein as to any Bond insurer's ability to meet its obligations under a
policy of insurance relating to any of the Bonds. In addition, investors
should be aware that, subsequent to the Date of Deposit, the rating of the
claims paying ability of the insurer of an underlying Bond may be
downgraded, which may result in a downgrading of the rating of the Units
in the Trust. The approximate percentage of the aggregate principal
amount of the portfolio that is insured by each insurance company is as
follows: AMBAC Indemnity Corp. ("AMBAC"), 52.6%; Industrial Indemnity
Company/Health Industry Bond Insurance Program ("IIC/HIBI"), 39.5%; and
Municipal Bond Insurance Association ("MBIA, Inc."), 7.9%.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price
of each Unit is equal to the aggregate bid price of the Bonds in the Trust
divided by the number of Units outstanding, plus a sales charge of 4.5% of
the Public Offering Price, or 4.712% of the net amount invested in Bonds
per Unit. In addition, accrued interest to the expected date of
settlement is added to the Public Offering Price. If Units had been
purchased on the Evaluation Date, the Public Offering Price per Unit would
have been $653.25 plus accrued interest of $15.49 under the monthly
distribution plan, $20.16 under the semi-annual distribution plan and
$51.42 under the annual distribution plan, for a total of $668.74, $673.41
and $704.67, respectively. The Public Offering Price per Unit can vary on
a daily basis in accordance with fluctuations in the aggregate bid price
of the Bonds. (See "Public Offering--Offering Price" in Part B of this
Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units of
each Trust are offered to investors on a "dollar price" basis (using the
computation method previously described under the "Public Offering Price")
as distinguished from a "yield price" basis often used in offerings of tax
exempt bonds (involving the lesser of the yield as computed to maturity of
bonds or to an earlier redemption date). Since they are offered on a
dollar price basis, the rate of return on an investment in Units of each
Trust is measured in terms of "Estimated Current Return" and "Estimated
Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the
yield to maturity or to an earlier call date (whichever results in a lower
yield) for each Bond in the Trust's portfolio in accordance with accepted
bond practices, which practices take into account not only the interest
payable on the Bond but also the amortization of premiums or accretion of
discounts, if any; (2) calculating the average of the yields for the Bonds
in the Trust's portfolio by weighing each Bond's yield by the market value
of the Bond and by the amount of time remaining to the date to which the
Bond is priced (thus creating an average yield for the portfolio of the
Trust); and (3) reducing the average yield for the portfolio of the Trust
in order to reflect estimated fees and expenses of the Trust and the
maximum sales charge paid by investors. The resulting Estimated Long Term
Return represents a measure of the return to investors earned over the
estimated life of the Trust. (For the Estimated Long Term Return to
Certificateholders under the monthly, semi-annual and annual distribution
plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return
does not take into account the amortization of premium or accretion of
discount, if any, on the Bonds in the portfolio of the Trust. Moreover,
because interest rates on Bonds purchased at a premium are generally
higher than current interest rates on newly issued bonds of a similar type
with comparable rating, the Estimated Current Return per Unit may be
affected adversely if such Bonds are redeemed prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale
or other disposition of the Bonds in the Trust. The Public Offering Price
will vary with the changes in the bid prices of the Bonds. Therefore,
there is no assurance that the present Estimated Current Return or
Estimated Long Term Return will be realized in the future. (For the
Estimated Current Return to Certificateholders under the monthly, semi-
annual and annual distribution plans, see "Summary of Essential
Information". See "Estimated Long Term Return and Estimated Current
Return" in Part B of this Prospectus.)
A schedule of cash flow projections is available from the Sponsor
upon request.
DISTRIBUTIONS. Distributions of interest income, less expenses,
will be made by the Trust either monthly, semi-annually or annually
depending upon the plan of distribution applicable to the Unit purchased.
A purchaser of a Unit in the secondary market will initially receive
distributions in accordance with the distribution plan chosen by the prior
owner of such Unit and may thereafter change the plan as provided under
"Interest and Principal Distributions" in Part B of the Prospectus.
Distributions of principal, if any, will be made semi-annually on June 15
and December 15 of each year. (See "Rights of Certificateholders--
Interest and Principal Distributions" in Part B of this Prospectus. For
estimated monthly, semi-annual and annual interest distributions, see
"Summary of Essential Information.")
MARKET FOR UNITS. The Sponsor, although not obligated to do so,
intends to maintain a secondary market for the Units at prices based on
the aggregate bid price of the Bonds in the Trust portfolio. The reoffer
price will be based on the aggregate bid price of the Bonds plus a sales
charge of 4.5% of the Public Offering Price (4.712% of the net amount
invested), plus net accrued interest. If a market is not maintained a
Certificateholder will be able to redeem his Units with the Trustee at a
price also based on the aggregate bid price of the Bonds. (See
"Liquidity--Sponsor Repurchase" and "Public Offering--Offering Price" in
Part B of this Prospectus.)
TOTAL REINVESTMENT PLAN. Certificateholders under the semi-annual
and annual plans of distribution have the opportunity to have all their
regular interest distributions, and principal distributions, if any,
reinvested in available series of "Insured Municipal Securities Trust" or
"Municipal Securities Trust." (See "Total Reinvestment Plan" in Part B of
this Prospectus. Residents of Texas, see "Total Reinvestment Plan for
Texas Residents" in Part B of this Prospectus.) The Plan is not designed
to be a complete investment program.
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST
SERIES 1
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: December 12, 1984 Minimum Principal Distribution:
Principal Amount of Bonds ...$1,900,000 $1.00 per Unit.
Number of Units .............2,923
Fractional Undivided Inter- Weighted Average Life to
est in Trust per Unit .....1/2923 Maturity:
Principal Amount of 5.8 Years.
Bonds per Unit ............$650.02 Minimum Value of Trust:
Secondary Market Public Trust may be terminated if
Offering Price** value of Trust is less than
Aggregate Bid Price $1,200,000 in principal amount
of Bonds in Trust .......$1,823,523+++ of Bonds.
Divided by 2,923 Units ....$623.85 Mandatory Termination Date:
Plus Sales Charge of 4.5% The earlier of December 31,
of Public Offering Price $29.40 2033 or the disposition of the
Public Offering Price last Bond in the Trust.
per Unit ................$653.25+ Trustee***: The Bank of New
Redemption and Sponsor's York.
Repurchase Price Trustee's Annual Fee: Monthly
per Unit ..................$623.85+ plan $1.08 per $1,000; semi-
+++ annual plan $.60 per $1,000;
++++ and annual plan is $.40 per
Excess of Secondary Market $1,000.
Public Offering Price Evaluator: Kenny S&P Evaluation
over Redemption and Services.
Sponsor's Repurchase Evaluator's Fee for Each
Price per Unit ............$29.40++++ Evaluation: Minimum of $12
Difference between Public plus $.25 per each issue of
Offering Price per Unit Bonds in excess of 50 issues
and Principal Amount per (treating separate maturities
Unit Premium/(Discount) ...$3.23 as separate issues).
Evaluation Time: 4:00 p.m. Sponsor: Bear, Stearns & Co.
New York Time. Inc.
Sponsor's Annual Fee: Maximum of
$.25 per $1,000 principal
amount of Bonds (see "Trust
Expenses and Charges" in Part B
of this Prospectus).
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual Annual
Option Option Option
Gross annual interest income# .........$63.29 $63.29 $63.29
Less estimated annual fees and
expenses ............................ 1.82 1.45 1.37
Estimated net annual interest ______ ______ ______
income (cash)# ......................$61.47 $61.84 $61.92
Estimated interest distribution# ...... 5.12 30.92 61.92
Estimated daily interest accrual# ..... .1707 .1717 .1720
Estimated current return#++ ........... 9.41% 9.47% 9.48%
Estimated long term return++ .......... 3.75% 3.80% 3.82%
Record dates .......................... 1st of Dec. 1 and Dec. 1
each month June 1
Interest distribution dates ........... 15th of Dec. 15 and Dec. 15
each month June 15
<PAGE>
* The Date of Deposit is the date on which the Trust Agreement was
signed and the deposit of the Bonds with the Trustee made.
** For information regarding offering price per Unit and applicable
sales charge under the Total Reinvestment Plan, see "Total
Reinvestment Plan" in Part B of this Prospectus.
*** The Trustee maintains its corporate trust office at 101 Barclay
Street, New York, New York 10286 (tel. no.: 1-800-431-8002). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to the expected date of settlement
(approximately five business days after purchase) of $15.49 monthly,
$20.16 semi-annually and $51.42 annually.
++ The estimated current return and estimated long term return are
increased for transactions entitled to a discount (see "Employee
Discounts" in Part B of this Prospectus), and are higher under the
semi-annual and annual options due to lower Trustee's fees and
expenses.
+++ Based solely upon the bid side evaluation of the underlying Bonds
(including, where applicable, undistributed cash from the principal
account). Upon tender for redemption, the price to be paid will be
calculated as described under "Trustee Redemption" in Part B of this
Prospectus.
++++ See "Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price" in Part B of this Prospectus.
# Does not include income accrual from original issue discount bonds,
if any.
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1994
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 8 issues representing
obligations of issuers located in 7 states and the District of Columbia.
The Sponsor has participated as a sole underwriter or manager, co-manager
or member of an underwriting syndicate from which 10% of the initial
aggregate principal amount of the Bonds were acquired. Approximately 7.8%
of the Bonds are obligations of state and local housing authorities;
approximately 39.4% are hospital revenue bonds; none were issued in
connection with the financing of nuclear generating facilities; and none
are "mortgage subsidy" bonds. All of the Bonds in the Trust are subject
to redemption prior to their stated maturity dates pursuant to sinking
fund or call provisions. The Bonds may also be subject to other calls,
which may be permitted or required by events which cannot be predicted
(such as destruction, condemnation, termination of a contract, or receipt
of excess or unanticipated revenues). None of the Bonds are general
obligation bonds. Eight issues representing $1,900,000 of the principal
amount of the Bonds are payable from the income of a specific project or
authority and are not supported by the issuer's power to levy taxes. The
portfolio is divided for purpose of issue as follows: Electric 1,
Federally Insured Mortgage 1, Hospital 3, Pollution Control 1, Sewage
Disposal 1 and Utility 1. For an explanation of the significance of these
factors see "The Trust--Portfolio" in Part B of this Prospectus.
* Changes in the Trust Portfolio: From July 1, 1994 to September 23,
1994, the entire principal amount of the Bonds in Portfolio nos. 1
and 5 have been redeemed and are no longer contained in the Trust;
33 Units have been redeemed from the Trust.
As of June 30, 1994, $150,000 (approximately 7.8% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of
these original issue discount bonds, $150,000 (approximately 7.8% of the
aggregate principal amount of the Bonds) were Zero Coupon Bonds. Zero
Coupon Bonds do not provide for the payment of any current interest and
provide for payment at maturity at par value unless sooner sold or
redeemed. The market value of Zero Coupon Bonds is subject to greater
fluctuations than coupon bonds in response to changes in interest rates.
None of the aggregate principal amount of the Bonds in the Trust were
purchased at a "market" discount from par value at maturity, approximately
76.5% were purchased at a premium and approximately 15.7% were purchased
at par. For an explanation of the significance of these factors see
"Discount and Zero Coupon Bonds" in Part B of this Prospectus.
None of the Bonds in the Trust are subject to the federal individual
alternative minimum tax under the Tax Reform Act of 1986. See "Tax
Status" in Part B of this Prospectus.
<PAGE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
Distribu-
tions of
Distributions of Interest Principal
During the Period (per Unit) During
Net Asset* Semi- the
Units Out- Value Monthly Annual Annual Period
Period Ended standing Per Unit Option Option Option (Per Unit)
June 30, 1992 2,944 $969.14 $88.85 $89.41 $93.11 $ 36.33
June 30, 1993 2,944 733.84 77.80 78.32 87.04 202.54
June 30, 1994 2,923 639.21 64.11 64.58 69.00 48.43
* Net Asset Value per Unit is calculated by dividing net assets as
disclosed in the "Statement of Net Assets" by the number of Units
outstanding as of the date of the Statement of Net Assets. See
Note 5 of Notes to Financial Statements for a description of the
components of Net Assets.
<PAGE>
Independent Auditors' Report
The Sponsor, Trustee and Certificateholders
Insured Municipal Securities Trust, Series 1:
We have audited the accompanying statement of net assets, including the
portfolio, of Insured Municipal Securities Trust, Series 1 as of June 30,
1994, and the related statements of operations, and changes in net assets
for each of the years in the three year period then ended. These
financial statements are the responsibility of the Trustee (see note 2).
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities
owned as of June 30, 1994, by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insured
Municipal Securities Trust, Series 1 as of June 30, 1994, and the results
of its operations and the changes in its net assets for each of the years
in the three year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
September 15, 1994
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $1,801,958) $ 1,826,622
Excess of other assets over total liabilities 41,789
-----------
Net assets (2,923 units of fractional undivided
interest outstanding, $639.21 per unit) $ 1,868,411
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Statements of Operations
<CAPTION>
Years ended June 30,
------------ ------------ ------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Investment income - interest $ 194,327 231,486 270,703
------------ ------------ ------------
Expenses:
Trustee's fees 3,855 4,015 4,379
Evaluator's fees 827 857 756
Sponsor's advisory fee 584 660 741
------------ ------------ ------------
Total expenses 5,266 5,532 5,876
------------ ------------ ------------
Investment income, net 189,061 225,954 264,827
------------ ------------ ------------
Realized and unrealized gain
(loss) on investments:
Net realized gain (loss)
on bonds sold or called 3,000 (9,450) 2,250
Unrealized depreciation
for the year (138,932) (83,371) (26,027)
------------ ------------ ------------
Net loss on investments (135,932) (92,821) (23,777)
------------ ------------ ------------
Net increase in net
assets resulting
from operations $ 53,129 133,133 241,050
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
---------- ---------- ----------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 189,061 225,954 264,827
Net realized gain (loss)
on bonds sold or called 3,000 (9,450) 2,250
Unrealized depreciation
for the year (138,932) (83,371) (26,027)
---------- ---------- ----------
Net increase in net
assets resulting
from operations 53,129 133,133 241,050
---------- ---------- ----------
Distributions to Certificateholders:
Investment income 188,540 229,579 263,467
Principal 141,803 596,278 107,319
Redemptions:
Interest 483 - 2,006
Principal 14,318 - 55,207
---------- ---------- ----------
Total distributions
and redemptions 345,144 825,857 427,999
---------- ---------- ----------
Total decrease (292,015) (692,724) (186,949)
Net assets at beginning of year 2,160,426 2,853,150 3,040,099
---------- ---------- ----------
Net assets at end of year (including
undistributed net investment
income of $76,547, $76,509 and
$80,134, respectively) $ 1,868,411 2,160,426 2,853,150
========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Insured Municipal Securities Trust, Series 1 (Trust) was organized on
December 12, 1984 by Bear, Stearns & Co. Inc. (Sponsor) under the
laws of the State of New York by a Trust Indenture and Agreement, and
is registered under the Investment Company Act of 1940.
(2) Summary of Significant Accounting Policies
The Bank of New York (Trustee) has custody of and responsibility for
the accounting records and financial statements of the Trust and is
responsible for establishing and maintaining a system of internal
control related thereto.
The Trustee is also responsible for all estimates of expenses and
accruals reflected in the Trust's financial statements. The
accompanying financial statements have been adjusted to record the
unrealized depreciation of investments and to record interest income
and expenses on the accrual basis.
The discount on the zero-coupon bonds is accreted by the interest
method over the respective lives of the bonds. The accretion of such
discount is included in interest income; however, it is not
distributed until realized in cash upon maturity or sale of the
respective bonds.
Investments are carried at market value which is determined by either
Standard & Poor's Corporation or Moody's Investors Service, Inc.
(Evaluator) as discussed in the footnotes to the portfolio. The
market value of the invetments is based upon the bid prices for the
bonds at the end of the year, except that the market value on the
date of deposit represents the cost to the Trust based on the
offering prices for investments at that date. The difference between
cost (including accumulated accretion of original issue discount on
zero-coupon bonds) and market value is reflected as unrealized
appreciation (depreciation) of investments. Securities transactions
are recorded on the trade date. Realized gains (losses) from
securities transactions are determined on the basis of average cost
of the securities sold or redeemed.
(3) Income Taxes
The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.
(4) Trust Administration
The fees and expenses of the Trust are incurred and paid on the basis
set forth under "Trust Expenses and Charges" in Part B of this
Prospectus.
The Trust Indenture and Agreement provides for interest distributions
as often as monthly (depending upon the distribution plan elected by
the Certificateholders).
The Trust Indenture and Agreement further requires that principal
received from the disposition of bonds, other than those bonds sold
in connection with the redemption of units, be distributed to
Certificateholders.
See "Financial and Statistical Information" in Part A of this
Prospectus for the amounts of per unit distributions during the years
ended June 30, 1994, 1993 and 1992.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 21 and 56 units were redeemed by the Trust during
the years ended June 30, 1994 and 1992, respectively. No units were
redeemed during the year ended June 30, 1993.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 3,035,665
Less initial gross underwriting commission (136,590)
2,899,075
Cost of securities sold or called (1,128,775)
Net unrealized appreciation 24,664
Undistributed net investment income 76,547
Distributions in excess of proceeds from
bonds sold or called (3,100)
Total $ 1,868,411
The original cost to Certificateholders, less the initial gross
underwriting commission, represents the aggregate initial public
offering price net of the applicable sales charge on 3,000 units of
fractional undivided interest of the Trust as of the date of deposit.
Undistributed net investment income includes accumulated accretion of
original issue discount of $31,658.
<PAGE>
<TABLE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Portfolio
June 30, 1994
<CAPTION>
Port- Aggregate Coupon Rate/ Redemption Feature
folio Principal Name of Issuer Ratings Date(s) of S.F.--Sinking Fund Market
No. Amount and Title of Bonds (1) Maturity(2) Ref.--Refunding(2)(7) Value(3)
- ----- --------- --------------------- ------- ------------ --------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1 $ 300,000 City of Kansas City, AAA 10.625% 9/01/98 @ 100 S.F. $ 303,663
Kansas Utility System 9/01/2007 9/01/94 @ 100 Ref.
Revenue Refunding
Bonds Series 1984
(AMBAC) (5)
2 300,000 County of Jefferson, AAA 10.625 10/01/08 @ 100 S.F. 311,409
Kentucky Insured 10/01/2014 10/01/94 @ 102 Ref.
Hospital Revenue
Bonds, Series A (NKC
Hospitals, Inc.
Project) (IIC/HIBI)
(5)
3 100,000 City of Detroit, AAA 10.625 12/15/95 @ 100 S.F. 106,275
Michigan Sewage 12/15/2009 12/15/94 @ 103 Ref.
Disposal System
Revenue Bonds, 1984
Series (AMBAC) (5)
4 300,000 Mercer County, North AAA 10.500 6/30/09 @ 100 S.F. 315,621
Dakota Pollution 6/30/2013 12/30/94 @ 102 Ref.
Control Revenue
Bonds, Series 1984
(Basin Electric Power
Cooperative-Antelope
Valley Station)
(AMBAC)
5 150,000 Midwest City Oklahoma AAA 10.750 7/01/04 @ 100 S.F. 154,500
Memorial Hospital 7/01/2014 7/01/94 @ 103 Ref.
Authority Revenue,
Hospital Revenue
Bonds 1984 Series A
(IIC/HIBI) (5)
6 300,000 Piedmont Municipal AAA 10.500 1/01/15 @ 100 S.F. 317,790
Power Agency (South 1/01/2019 1/01/95 @ 103 Ref.
Carolina) Electric
Revenue Bonds, Series
1984 (AMBAC) (5)
7 300,000 Rio Grande Valley AAA 10.500 11/01/97 @ 100 S.F. 313,077
Health Facilities 11/01/2014 11/01/94 @ 102 Ref.
Development
Corporation Hospital
Revenue Bonds (Valley
Baptist Medical
Center Project)
Series 1984
Harlingen, Texas
(IIC/HIBI) (5)
8 150,000 District of Columbia AAA 0.000 2/01/09 @ 13.943 S.F. 4,287
Housing Finance 2/01/2027 2/01/04 @ 8.067 Ref.
Agency Multi-Family
Mortgage Revenue
Bonds, Series 1984
(FHA Insured Mortgage
Loan-Benning Heights
Project-100% Section
8 Assisted) (MBIA)
--------- ---------
$ 1,900,000 $ 1,826,622
========= =========
See accompanying footnotes to the portfolio and the notes to the financial statements.
</TABLE>
<PAGE>
INSURED MUNICIPAL SECURITIES TRUST, SERIES 1
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation. A brief
description of the ratings symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B of this Prospectus.
(2) See "The Trust - Portfolio" in Part B of this Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of
this Prospectus for a statement of the Federal tax consequences to a
Certificateholder upon the sale, redemption or maturity of a bond.
(3) At June 30, 1994, the net unrealized appreciation of all the bonds
was comprised of the following:
Gross unrealized appreciation $ 56,172
Gross unrealized depreciation ( 31,508)
Net unrealized appreciation $ 24,664
(4) The annual interest income, based upon bonds held at June 30,
1994, (excluding accretion of original issue discount on zero-coupon
bonds) to the Trust is $185,000.
(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.
(6) Bonds sold or called after June 30, 1994 are noted in a footnote
"Changes in Trust Portfolio" under "Description of Portfolio" in Part
A of this Prospectus.
(7) The Bonds may also be subject to other calls, which may be
permitted or required by events which cannot be predicted (such as
destruction, condemnation, termination of a contract, or receipt of
excess or unanticipated revenues).
