As filed with the Securities and Exchange Commission on October 21, 1994
Registration No. 2-98914 *
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
POST-EFFECTIVE AMENDMENT NO. 9
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:
MUNICIPAL SECURITIES TRUST, SERIES 28 & 38th DISCOUNT SERIES,
39th DISCOUNT SERIES, SERIES 29 & 40th DISCOUNT SERIES and
SERIES 30 & 41st DISCOUNT SERIES
B. Name of depositor:
BEAR, STEARNS & CO. INC.
C. Complete address of depositor's principal executive office:
245 Park Avenue
New York, New York 10167
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Managing Director MICHAEL R. ROSELLA, ESQ.
Bear, Stearns & Co. Inc. Battle Fowler
245 Park Avenue 75 East 55th Street
New York, NY 10167 New York, NY 10022
(212) 856-6858
E. Title and amount of securities being registered:**
MUNICIPAL SECURITIES TRUST: Series 30 & 41st Discount Series, 1028.
F. Proposed maximum aggregate offering price to the public of the
securities being registered: Series 30 & 41st Discount Series,
$552,117.60.***
G. Amount of filing fees: Series 30 & 41st Discount Series, $189.93.***
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485.
/X/ on (October 28, 1994) pursuant to paragraph (b) of Rule 485.
/ / 60 days after filing pursuant to paragraph (a) of Rule 485.
/ / on ( date ) pursuant to paragraph (a) of Rule 485.
* The Prospectus included in this Registration Statement constitutes a
combined Prospectus as permitted by the provisions of Rule 429 of the
General Rules and Regulations under the Securities Act of 1933. Said
Prospectus covers units of undivided interest in Municipal Securities
Trust, Series 28 & 38th Discount Series, 39th Discount Series,
Series 29 & 40th Discount Series and Series 30 & 41st Discount Series
covered by prospectuses heretofore filed as part of separate
registration statements on Form S-6 (Registration Nos. 2-98914,
33-00376, 33-00856 and 33-01869, respectively) under the Securities
Act. This filing constitutes Post-Effective Amendment No. 9 for all
of the aforementioned Series.
** Representing additional Units registered for purposes of resale in
the secondary market by the Depositor.
*** Estimated solely for purposes of calculating filing fee pursuant to
Section 24(e) and Rule 24e-2. Total amount of units redeemed or
repurchased for each series during previous fiscal year, all of which
are being used to reduce filing fee: Series 30 & 41st Discount
Series, 488 ($1,022.44).
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 28 AND 38TH DISCOUNT SERIES, 39TH DISCOUNT
SERIES, SERIES 29 AND 40TH DISCOUNT SERIES,
SERIES 30 AND 41ST DISCOUNT SERIES
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items required by Instruction as
to the Prospectus in Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust................... Front Cover of Prospectus
(b) Title of securities issued...... "
2. Name and address of each depositor.. The Sponsor
3. Name and address of trustee......... The Trustee
4. Name and address of principal
underwriters...................... The Sponsor
5. State of organization of trust...... Organization
6. Execution and termination of
trust agreement................... Trust Agreement, Amendment and
Termination
7. Changes of name..................... Not Applicable
8. Fiscal year......................... "
9. Litigation.......................... None
II. General Description of the Trust and Securities of the Trust
10. (a) Registered or bearer
securities...................... Certificates
(b) Cumulative or distributive
securities...................... Interest and Principal
Distributions
(c) Redemption...................... Trustee Redemption
(d) Conversion, transfer, etc....... Certificates, Sponsor
Repurchase, Trustee
Redemption, Exchange Privilege
and Conversion Offer
(e) Periodic payment plan........... Not Applicable
(f) Voting rights................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders.... Records, Portfolio, Trust
Agreement, Amendment and
Termination, The Sponsor, The
Trustee
(h) Consents required............... Trust Agreement, Amendment and
Termination
(i) Other provisions................ Tax Status
11. Type of securities
comprising units.................. Objectives, Portfolio,
Description of Portfolio
12. Certain information regarding
periodic payment certificates..... Not Applicable
13. (a) Load, fees, expenses, etc....... Summary of Essential
Information, Offering Price,
Volume and Other Discounts,
Sponsor's and Underwriters'
Profits, Total Reinvestment
Plan, Trust Expenses and
Charges
(b) Certain information regarding
periodic payment certificates... Not Applicable
(c) Certain percentages............. Summary of Essential
Information, Offering Price,
Total Reinvestment Plan
(d) Price differences............... Volume and Other Discounts
(e) Other loads, fees, expenses..... Certificates
(f) Certain profits receivable
by depositors, principal
underwriters, trustee or
affiliated persons.............. Sponsor's and Underwriters'
Profits
(g) Ratio of annual charges
to income....................... Not Applicable
14. Issuance of trust's securities...... Organization, Certificates
15. Receipt and handling of payments
from purchasers................... Organization
16. Acquisition and disposition of
underlying securities............. Organization, Objectives,
Portfolio, Portfolio Supervision
17. Withdrawal or redemption............ Comparison of Public Offering
Price, Sponsor's Repurchase
Price and Redemption Price,
Sponsor Repurchase, Trustee
Redemption
18. (a) Receipt, custody and
disposition of income........... Distribution Elections, Interest
and Principal Distributions,
Records, Total Reinvestment Plan
(b) Reinvestment of distributions... Total Reinvestment Plan
(c) Reserves or special funds....... Interest and Principal
Distributions
(d) Schedule of distributions....... Not Applicable
19. Records, accounts and reports....... Records, Total Reinvestment Plan
20. Certain miscellaneous provisions
of trust agreement................ Trust Agreement, Amendment and
Termination
(a) Amendment....................... "
(b) Termination..................... "
(c) and (d) Trustee, removal and
successor....................... The Trustee
(e) and (f) Depositor, removal
and successor................... The Sponsor
21. Loans to security holders........... Not Applicable
22. Limitations on liability............ The Sponsor, The Trustee,
The Evaluator
23. Bonding arrangements................ Part II--Item A
24. Other material provisions
of trust agreement................ Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor........... The Sponsor
26. Fees received by depositor.......... Not Applicable
27. Business of depositor............... The Sponsor
28. Certain information as to
officials and affiliated
persons of depositor.............. Part II--Item C
29. Voting securities of depositor...... Not Applicable
30. Persons controlling depositor....... "
31. Payments by depositor for certain
services rendered to trust........ "
32. Payment by depositor for certain
other services rendered to trust.. "
33. Remuneration of employees of
depositor for certain services
rendered to trust................... "
34. Remuneration of other persons for
certain services rendered to trust.. "
IV. Distribution and Redemption of Securities
35. Distribution of trust's
securities by states.............. Distribution of Units
36. Suspension of sales of
trust's securities................ Not Applicable
37. Revocation of authority
to distribute..................... "
38. (a) Method of distribution.......... Distribution of Units, Total
Reinvestment Plan
(b) Underwriting agreements......... "
(c) Selling agreements.............. "
39. (a) Organization of principal
underwriters.................... The Sponsor
(b) N.A.S.D. membership of
principal underwriters.......... "
40. Certain fees received by
principal underwriters............ Not Applicable
41. (a) Business of principal
underwriters.................... The Sponsor
(b) Branch offices of principal
underwriters.................... Not Applicable
(c) Salesmen of principal
underwriters.................... "
42. Ownership of trust's
securities by certain persons..... "
43. Certain brokerage commissions
received by principal
underwriters...................... "
44. (a) Method of valuation............. Summary of Essential
Information, Offering Price,
Accrued Interest, Volume and
Other Discounts, Total
Reinvestment Plan, Distribution
of Units
(b) Schedule as to offering price... Not Applicable
(c) Variation in offering price
to certain persons.............. Distribution of Units, Total
Reinvestment Plan, Volume and
Other Discounts
45. Suspension of redemption rights..... Trustee Redemption
46. (a) Redemption valuation............ Comparison of Public Offering
Price, Sponsor's Repurchase
Price and Redemption Price,
Trustee Redemption
(b) Schedule as to
redemption price................ Not Applicable
47. Maintenance of position in
underlying securities............. Comparison of Public Offering
Price, Sponsor's Repurchase
Price and Redemption Price,
Sponsor Repurchase, Trustee
Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation
of trustee........................ The Trustee
49. Fees and expenses of trustee........ Trust Expenses and Charges
50. Trustee's lien...................... "
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of
trust's securities................ Not Applicable
VII. Policy of Registrant
52. (a) Provisions of trust agreement
with respect to selection or
elimination of underlying
securities...................... Objectives, Portfolio, Portfolio
Supervision
(b) Transactions involving
elimination of underlying
securities...................... Not Applicable
(c) Policy regarding substitution
or elimination of underlying
securities...................... Objectives, Portfolio, Portfolio
Supervision, Substitution of
Bonds
(d) Fundamental policy not
otherwise covered............... Not Applicable
53. Tax status of trust................. Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during
last ten years.................... Not Applicable
55. Hypothetical account for issuers
of periodic payment plans......... "
56. Certain information regarding
periodic payment certificates..... "
57. Certain information regarding
periodic payment plans............ "
58. Certain other information
regarding periodic payment plans.. "
59. Financial Statements
(Instruction 1(c) to Form S-6)...... Statement of Financial Condition
<PAGE>
Note: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
SERIES 28
__________________________________________________________________
The Trust is a unit investment trust designated Series 28
("Municipal Trust") with an underlying portfolio of long-term tax-exempt
bonds issued by or on behalf of states, municipalities and public
authorities, 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
(including where applicable earned original discount) under existing law
but may be subject to state and local taxes. Such interest income may,
however, be a specific preference item for purposes of Federal individual
and/or corporate alternative minimum tax. Investors may recognize taxable
capital gain upon maturity or earlier redemption of the underlying bonds.
(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.
__________________________________________________________________
Prospectus Part A Dated October 28, 1994
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.
<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 bonds (the "Bonds") issued by or
on behalf of states, municipalities and public authorities. A Trust
designated as a short/intermediate-term trust must have a dollar-weighted
average portfolio maturity of more than two years but less than five
years; a Trust designated as an intermediate-term trust must have a
dollar-weighted average portfolio maturity of more than three years but
not more than ten years; a Trust designated as an intermediate/long-term
trust must have a dollar-weighted average portfolio maturity of more than
ten years but less than fifteen years; and a Trust designated as a long-
term trust must have a dollar-weighted average portfolio maturity of more
than ten years. 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 "Description of Portfolio" in this Part A
for a description of those Bonds which pay interest income subject to the
federal individual alternative minimum tax. See also "Tax Status" in
Part B of this Prospectus.) Some of the Bonds in the portfolio 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 portfolio may have been
purchased at an aggregate premium over par. 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. All
of the Bonds in the Trust were rated "A" or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. at the time originally
deposited in the Trust. 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 the issuers of the Bonds to meet their
obligations. There can be no assurance that the Trust's 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 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 fluctuations than coupon bonds in
response to changes in interest rates. Each Unit in the Trust represents
a 1/2404th 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 "The Trust--
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.
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 4.9% of
the Public Offering Price, which is the same as 5.152% of the net amount
invested in Bonds per Unit. In addition, accrued interest to 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 $581.21 plus accrued interest of $15.15 under the monthly
distribution plan, $19.00 under the semi-annual distribution plan and
$45.51 under the annual distribution plan, for a total of $596.36, $600.21
and $626.72, 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 the "Summary of Essential Information" and "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 "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 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 Sponsors
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 plan selected by the prior owner of
such Unit and may thereafter change the plan as provided in "Interest and
Principal Distributions" in Part B of this 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
Secondary Market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 4.9% of the Public
Offering Price (5.152% of the net amount invested) plus net accrued
interest. If such a market is not maintained, a Certificateholder will be
able to redeem his Units with the Trustee at a price also based upon the
aggregate bid price of the Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Insured Municipal Securities Trust" or "Municipal
Securities Trust." (See "Total Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
SERIES 28
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: July 25, 1985 Weighted Average Life to
Principal Amount of Bonds ...$1,275,000 Maturity: 10.6 Years.
Number of Units .............2,404 Minimum Value of Trust:
Fractional Undivided Inter- Trust may be terminated if
est in Trust per Unit .....1/2404 value of Trust is less than
Principal Amount of $1,000,000 in principal
Bonds per Unit ............$530.37 amount of Bonds.
Secondary Market Public Mandatory Termination Date:
Offering Price** The earlier of December 31,
Aggregate Bid Price 2034 or the disposition of
of Bonds in Trust .......$1,328,768+++ the last Bond in the Trust.
Divided by 2,404 Units ....$552.73 Trustee***: United States
Plus Sales Charge of 4.9% Trust Company of New York.
of Public Offering Price $28.48 Trustee's Annual Fee: Monthly
Public Offering Price plan $1.02 per $1,000; semi-
per Unit ................$581.21+ annual plan $.54 per $1,000;
Redemption and Sponsor's and annual plan is $.35 per
Repurchase Price $1,000.
per Unit ..................$552.73+ Evaluator: Kenny S&P
+++ Evaluation Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $12
Public Offering Price plus $.25 per each issue of
over Redemption and Bonds in excess of 50 issues
Sponsor's Repurchase (treating separate maturities
Price per Unit ............$28.48++++ as separate issues).
Difference between Public Sponsor: Bear, Stearns & Co.
Offering Price per Unit Inc.
and Principal Amount per Sponsor's Annual Fee: Maximum
Unit Premium/(Discount) ...$50.84 of $.25 per $1,000 principal
Evaluation Time: 4:00 p.m. amount of Bonds (see "Trust
New York Time. Expenses and Charges" in
Part B of this Prospectus).
Minimum Principal Distribution:
$1.00 per Unit.
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual Annual
Option Option Option
Gross annual interest income# ......... $50.17 $50.17 $50.17
Less estimated annual fees and
expenses ............................ 1.75 1.33 1.21
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $48.42 $48.84 $48.96
Estimated interest distribution# ...... 4.03 24.42 48.96
Estimated daily interest accrual# ..... .1345 .1356 .1360
Estimated current return#++ ........... 8.33% 8.40% 8.42%
Estimated long term return++ .......... 5.72% 5.79% 5.81%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $15.15 monthly, $19.00 semi-
annually and $45.51 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 in 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 7 issues representing
obligations of issuers located in 6 states. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of
state and local housing authorities; none are hospital revenue bonds;
approximately 29.4% are 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. Seven issues
representing $1,275,000 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: Coal Power 1, Gas Facilities 1, Industrial
Development 1, Nuclear Power 2, Pollution Control 1 and School Building 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 no. 3
has been called and is no longer contained in the Trust. 13 Units
have been redeemed from the Trust.
As of June 30, 1994, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 19.6% of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 60.8% were
purchased at a premium and approximately 19.6% 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 2,469 $859.51 $80.06 $80.63 $84.82 $130.82
June 30, 1993 2,425 753.50 68.17 68.71 75.56 96.74
June 30, 1994 2,404 572.18 57.05 84.05 63.46 138.34
* 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
Municipal Securities Trust, Series 28:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, Series 28 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 Municipal
Securities Trust, Series 28 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>
MUNICIPAL SECURITIES TRUST, SERIES 28
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $1,257,363) $ 1,328,748
Excess of other assets over total liabilities 46,767
-----------
Net assets ( 2,404 units of fractional undivided
interest outstanding, $572.18 per unit) $ 1,375,515
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Statements of Operations
<CAPTION>
Years ended June 30,
---------- ---- ---------- ---- ----------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Investment income - interest $ 139,664 170,574 200,228
---------- ---------- ----------
Expenses:
Trustee's fees 2,714 3,041 3,278
Evaluator's fees 900 853 756
Sponsor's advisory fee 418 521 550
---------- ---------- ----------
Total expenses 4,032 4,415 4,584
---------- ---------- ----------
Investment income, net 135,632 166,159 195,644
---------- ---------- ----------
Realized and unrealized gain (loss)
on investments:
Net realized loss
on bonds sold or called (6,667) (26,411) (10,444)
Unrealized appreciation
(depreciation) for the year (93,363) 7,369 17,974
---------- ---------- ----------
Net gain (loss)
on investments (100,030) (19,042) 7,530
---------- ---------- ----------
Net increase in net
assets resulting
from operations $ 35,602 147,117 203,174
========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
------------ -- ------------ -- ------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 135,632 166,159 195,644
Net realized loss on
bonds sold or called (6,667) (26,411) (10,444)
Unrealized appreciation
(depreciation) for the year (93,363) 7,369 17,974
------------ ------------ ------------
Net increase in net
assets resulting
from operations 35,602 147,117 203,174
------------ ------------ ------------
Distributions:
To Certificateholders:
Investment income 139,161 170,190 198,993
Principal 333,055 238,444 322,995
Redemptions:
Interest 605 742 -
Principal 14,597 32,546 -
------------ ------------ ------------
Total distributions and
redemptions 487,418 441,922 521,988
------------ ------------ ------------
Total decrease (451,816) (294,805) (318,814)
Net assets at beginning of year 1,827,331 2,122,136 2,440,950
------------ ------------ ------------
Net assets at end of year (including
undistributed net investment
income of $46,746, $50,881 and
$55,654, respectively) $ 1,375,515 1,827,331 2,122,136
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, Series 28 (Trust) was organized on July
25, 1985 by Bear Stearns and 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
United States Trust Company 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 appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.
Investments are carried at market value which is determined by either
Standard and Poor's Corporation, or Moody's Investors Service, Inc.
(Evaluator), as discussed in the footnotes to the portfolio. The
market value of the portfolio 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 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.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 21 and 44 units were redeemed during the years ended
June 30, 1994 and 1993, respectively. No units were redeemed in the
year ended June 30, 1992.
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.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the interest
of Certificateholders as follows:
Original cost to Certificateholders $ 2,554,811
Less initial gross underwriting commission (125,175)
2,429,636
Cost of securities sold or called (1,172,273)
Net unrealized appreciation 71,385
Undistributed net investment income 46,747
Undistributed proceeds from bonds sold or called 20
Total $ 1,375,515
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 2,500 units of fractional
undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 28
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 $ 50,000 Illinois Development BBB 10.375% No Sinking Fund $ 53,313
Finance Authority 3/01/2005 3/01/95 @ 102 Ref.
Pollution Control Revenue
Bonds, Series 1985
(Commonwealth Edison
Company Project)
2 250,000 Avon Middle School NR 9.400 No Sinking Fund 266,533
Building Corporation 1/01/2009 7/01/95 @ 102 Ref.
Hendricks County, Indiana
1985 First Mortgage
Refunding Bonds (5)
3 100,000 New Jersey Economic A3* 11.000 No Sinking Fund 102,628
Development Authority Gas 6/01/2014 7/31/94 @ 102 Ref.
Facilities Refunding
Revenue Bonds, 1984 Series
A (Elizabethtown Gas
Company Project)
4 250,000 North Carolina Eastern AAA 10.625 1/01/04 @ 100 S.F. 264,977
Municipal Power Agency 1/01/2015 1/01/95 @ 103 Ref.
Power System Revenue
Bonds, Series 1985A (5)
5 125,000 Piedmont Municipal Power AAA 10.250 1/01/19 @ 100 S.F. 132,259
Agency (South Carolina) 1/01/2025 1/01/95 @ 103 Ref.
Electric Revenue Bonds,
Series 1985 (5)
6 250,000 Intermountain Power Agency AA 6.000 1/01/20 @ 100 S.F. 230,745
(a political subdivision 7/01/2020 7/01/95 @ 100 Ref.
of the State of Utah)
Power Supply Revenue
Refunding Bonds, 1985
Series C (5)
7 250,000 West Valley City, Salt A1* 10.625 6/01/06 @ 100 S.F. 278,293
Lake County, Utah 12/01/2010 12/01/95 @ 103 Ref.
Industrial Development
Revenue Bonds GFI Ltd. #2)
WVC Investment Ltd.
Project (K Mart
Guaranteed) Series 1984
----------- ----------
$ 1,275,000 $ 1,328,748
=========== ==========
See accompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $ 85,451
Gross unrealized depreciation (14,066)
Net unrealized appreciation $ 71,385
(4) The annual interest income, based upon bonds held at June 30, 1994,
to the Trust is $120,625.
(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).
<PAGE>
Note: Part A of this Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
38TH DISCOUNT SERIES
(MULTIPLIER PORTFOLIO)
__________________________________________________________________
The Trust is a unit investment trust designated 38th Discount
Series ("Municipal Discount Trust") with an underlying portfolio of long-
term tax-exempt bonds 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. (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 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 bonds issued by
or on behalf of states, municipalities and public authorities (the
"Bonds"). 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 "Description of Portfolio" in this Part A for a description
of those Bonds which pay interest income subject to the federal individual
alternative minimum tax. See also "Tax Status" in Part B of this
Prospectus.) The Bonds were acquired at prices which resulted in the
portfolio as a whole being purchased at a deep discount from par value.
The portfolio may also include bonds issued at a substantial original
issue discount some of which 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 current interest. Some of
the Bonds in the portfolio may have been purchased at an aggregate premium
over par. 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 as of the Evaluation Date, if any, see "Notes to Financial
Statements" in this Part A. All of the Bonds in the Trust were rated "A"
or better by Standard & Poor's Corporation or Moody's Investors Service,
Inc. at the time originally deposited in the Trust. 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 the issuers of
the Bonds to meet their obligations. There can be no assurance that the
Trust's 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 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 fluctuations
than coupon bonds in response to changes in interest rates. Each Unit in
the Trust represents a 1/7977th 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
"The Trust--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.
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
5.5% of the Public Offering Price, which is the same as 5.820% of the net
amount invested in Bonds per Unit. In addition, accrued interest to
expected date of settlement including earned original issue discount 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
$326.47 plus accrued interest of $8.50 under the monthly distribution
plan, $10.51 under the semi-annual distribution plan and $24.22 under the
annual distribution plan, for a total of $334.97, $336.98 and $350.69,
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 the "Summary of Essential Information" and "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 "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 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 plan selected 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
secondary market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 5.5% (5.820% of
the net amount invested) plus net accrued interest. If such a market is
not maintained, a Certificateholder will be able to redeem his Units with
the Trustee at a price also based upon the aggregate bid price of the
Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Municipal Securities Trust." (See "Total
Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
38TH DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: July 25, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$2,360,000 $1.00 per Unit.
Number of Units .............7,977 Weighted Average Life
Fractional Undivided Inter- to Maturity: 9.7 Years.
est in Trust per Unit .....1/7977 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$295.85 value of Trust is less than
Secondary Market Public $3,200,000 in principal
Offering Price** amount of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$2,460,969+++ The earlier of December 31,
Divided by 7,977 Units ....$308.51 2034 or the disposition of
Plus Sales Charge of 5.5% the last Bond in the Trust.
of Public Offering Price $17.96 Trustee***: United States
Public Offering Price Trust Company of New York.
per Unit ................$326.47+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit ..................$308.51+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P
Excess of Secondary Market Evaluation Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............$17.96++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Bear, Stearns & Co.
Unit Premium/(Discount) ...$30.62 Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum
New York Time. 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# .........$28.19 $28.19 $28.19
Less estimated annual fees and
expenses ............................ 1.16 .87 .80
Estimated net annual interest ______ ______ ______
income (cash)# ......................$27.03 $27.32 $27.39
Estimated interest distribution# ...... 2.25 13.66 27.39
Estimated daily interest accrual# ..... .0750 .0758 .0760
Estimated current return#++ ........... 8.28% 8.37% 8.39%
Estimated long term return++ ...........5.60% 5.69% 5.71%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $8.50 monthly, $10.51 semi-
annually and $24.22 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 in 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. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of
state and local housing authorities; none are hospital revenue bonds;
approximately 30.5% are 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 $2,360,000 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: Coal Power 1, Gas Facilities 1, Industrial
Development 1, Nuclear Power 2, Pollution Control 1, School Building 1 and
Water 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 no. 3
has been called for redemption pursuant to pre-refunding provisions
and is no longer contained in the Trust. 60 Units have been
redeemed from the Trust.
As of June 30, 1994, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 16.9% of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 66.2% were
purchased at a premium and approximately 16.9% 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 8,000 $507.31 $45.40 $45.90 $48.16 $71.08
June 30, 1993 8,000 440.29 39.48 39.90 43.53 54.97
June 30, 1994 7,977 319.68 29.78 30.18 35.41 98.19
* 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
Municipal Securities Trust, 38th Discount Series:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, 38th Discount Series 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 Municipal Securities
Trust, 38th Discount Series 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>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $2,346,220) $ 2,460,914
Excess of other assets over total liabilities 89,178
-------------
Net assets (7,977 units of fractional undivided
interest outstanding, $319.68 per unit) $ 2,550,092
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
----------- ---- ---------- ---- ------------
1994 1993 1992
----------- ---------- ------------
<S> <C> <C> <C>
Investment income - interest $ 244,261 325,810 376,939
----------- ---------- ------------
Expenses:
Trustee's fees 4,450 5,588 6,911
Evaluator's fees 2,687 2,559 2,268
Sponsor's advisory fee 931 1,613 1,666
----------- ---------- ------------
Total expenses 8,068 9,760 10,845
----------- ---------- ------------
Investment income, net 236,193 316,050 366,094
----------- ---------- ------------
Realized and unrealized gain (loss)
on investments:
Net realized loss
on bonds sold or called (25,509) (37,337) (20,218)
Unrealized appreciation
(depreciation) for the year (150,118) (57,714) 30,177
----------- ---------- ------------
Net gain (loss)
on investments (175,627) (95,051) 9,959
----------- ---------- ------------
Net increase in net
assets resulting
from operations $ 60,566 220,999 376,053
=========== ========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
------------ -- --------------- - ------------
1994 1993 1992
------------ --------------- ------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 236,193 316,050 366,094
Net realized loss on
bonds sold or called (25,509) (37,337) (20,218)
Unrealized appreciation
(depreciation) for the year (150,118) (57,714) 30,177
------------ --------------- ------------
Net increase in net
assets resulting
from operations 60,566 220,999 376,053
------------ --------------- ------------
Distributions:
To certificateholders:
Investment income 239,666 317,439 364,878
Principal 784,611 439,760 568,640
Redemptions:
Interest 269 - -
Principal 8,222 - -
------------ --------------- ------------
Total distributions
and redemptions 1,032,768 757,199 933,518
------------ --------------- ------------
Total decrease 60,566 (536,200) (557,465)
Net assets at beginning of year 3,522,294 4,058,494 4,615,959
------------ --------------- ------------
Net assets at end of year (including
undistributed net investment
income of $89,123, $106,384 and
$110,823, respectively) $ 3,582,860 3,522,294 4,058,494
============ =============== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, 38th Discount Series (Trust) was
organized on July 25, 1985 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
United States Trust Company 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 appreciation (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 portofolio. The
market value of the investments 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 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. 23 units were redeemed during the year ended June
30, 1994. No units were redeemed during the years ended June 30,
1993 and 1992.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 4,679,984
Less initial gross underwriting commission (257,360)
4,422,624
Cost of securities sold or called (2,076,404)
Net unrealized appreciation 114,694
Undistributed net investment income 89,123
Undistributed proceeds from bonds sold or called 55
Total $ 2,550,092
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 8,000 units of
fractional undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
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 $ 100,000 Illinois Development BBB 10.375% No Sinking Fund $ 106,628
Finance Authority 3/01/2005 3/01/95 @ 102 Ref.
Pollution Control
Revenue Bonds, Series
1985 (Commonwealth
Edison Company
Project)
2 400,000 Avon Middle School NR 9.400 No Sinking Fund 426,452
Building Corporation 1/01/2010 7/01/95 @ 102 Ref.
Hendricks County,
Indiana 1985 First
Mortgage Refunding
Bonds (5)
3 200,000 New Jersey Economic A3* 11.000 No Sinking Fund 205,256
Development Authority 6/01/2014 7/31/94 @ 102 Ref.
Gas Facilities
Refunding Revenue
Bonds, 1984 Series A
(Elizabethtown Gas
Company Project)
4 400,000 North Carolina AAA 10.625 1/01/04 @ 100 S.F. 423,964
Eastern Municipal 1/01/2015 1/01/95 @ 103 Ref.
Power Agency Power
System Revenue Bonds,
Series 1985A (5)
5 320,000 Piedmont Municipal AAA 10.250 1/01/19 @ 100 S.F. 338,582
Power Agency (South 1/01/2025 1/01/95 @ 103 Ref.
Carolina) Electric
Revenue Bonds, Series
1985 (5)
6 400,000 Intermountain Power AA 6.000 1/01/20 @ 100 S.F. 369,192
Agency (a political 7/01/2020 7/01/95 @ 100 Ref.
subdivision of the
State of Utah) Power
Supply Revenue
Refunding Bonds, 1985
Series C
7 400,000 West Valley City, A1* 10.625 6/01/06 @ 100 S.F. 445,268
Salt Lake County, 12/01/2010 12/01/95 @ 103 Ref.
Utah Industrial
Development Revenue
Bonds (GFI Ltd. #2)
WVC Investment Ltd.
Project (K Mart
Guaranteed) Series
1984
8 140,000 West Virginia Water BBB+ 9.375 11/01/06 @ 100 S.F. 145,572
Development Authority 11/01/2015 11/01/94 @ 102 Ref.
Water Development
Refunding and
Improvement Revenue
Bonds (Loan Program)
1985 Series A (5)
---------- ---------
$ 2,360,000 $ 2,460,914
========== =========
See accompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 38TH DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $ 142,162
Gross unrealized depreciation (27,468)
Net unrealized appreciation $ 114,694
(4) The annual interest income, based upon bonds held at
June 30, 1994, to the Trust is $224,900.
(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).
<PAGE>
Note: Part A of this Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
39TH DISCOUNT SERIES
(MULTIPLIER PORTFOLIO)
__________________________________________________________________
The Trust is a unit investment trust designated 39th Discount
Series ("Municipal Discount Trust") with an underlying portfolio of long-
term tax-exempt bonds 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. (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 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 bonds issued by
or on behalf of states, municipalities and public authorities (the
"Bonds"). 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 "Description of Portfolio" in this Part A for a description
of those Bonds which pay interest income subject to the federal individual
alternative minimum tax. See also "Tax Status" in Part B of this
Prospectus.) The Bonds were acquired at prices which resulted in the
portfolio as a whole being purchased at a deep discount from par value.
The portfolio may also include bonds issued at a substantial original
issue discount some of which 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 current interest. Some of
the Bonds in the portfolio may have been purchased at an aggregate premium
over par. 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 as of the Evaluation Date, if any, see "Notes to Financial
Statements" in this Part A. All of the Bonds in the Trust were rated "A"
or better by Standard & Poor's Corporation or Moody's Investors Service,
Inc. at the time originally deposited in the Trust. 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 the issuers of
the Bonds to meet their obligations. There can be no assurance that the
Trust's 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 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 fluctuations
than coupon bonds in response to changes in interest rates. Each Unit in
the Trust represents a 1/6645th 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
"The Trust--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.
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
5.5% of the Public Offering Price, which is the same as 5.820% of the net
amount invested in Bonds per Unit. In addition, accrued interest to
expected date of settlement including earned original issue discount 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
$481.50 plus accrued interest of $9.84 under the monthly distribution
plan, $13.04 under the semi-annual distribution plan and $34.26 under the
annual distribution plan, for a total of $491.34, $494.54 and $515.76,
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 the "Summary of Essential Information" and "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 "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 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 plan selected 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
secondary market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 5.5% (5.820% of
the net amount invested) plus net accrued interest. If such a market is
not maintained, a Certificateholder will be able to redeem his Units with
the Trustee at a price also based upon the aggregate bid price of the
Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Municipal Securities Trust." (See "Total
Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
39TH DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: October 10, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$2,830,000 $1.00 per Unit.
Number of Units .............6,645 Weighted Average Life
Fractional Undivided Inter- to Maturity: 4.97 Years.
est in Trust per Unit .....1/6645 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$425.88 value of Trust is less than
Secondary Market Public $2,800,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$3,023,582+++ The earlier of December 31,
Divided by 6,645 Units ....$455.02 2034 or the disposition of the
Plus Sales Charge of 5.5% last Bond in the Trust.
of Public Offering Price $26.48 Trustee***: United States Trust
Public Offering Price Company of New York.
per Unit ................$481.50+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit ..................$455.02+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............$26.48++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Bear, Stearns & Co.
Unit Premium/(Discount) ...$55.62 Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.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# .........$43.15 $43.15 $43.15
Less estimated annual fees and
expenses ............................ 1.42 1.08 .98
Estimated net annual interest ______ ______ ______
income (cash)# ......................$41.73 $42.07 $42.17
Estimated interest distribution# ...... 3.47 21.03 42.17
Estimated daily interest accrual# ..... .1159 .1168 .1171
Estimated current return#++ ........... 8.67% 8.74% 8.76%
Estimated long term return++ .......... 4.01% 4.08% 4.10%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $9.84 monthly, $13.04 semi-
annually and $34.26 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 in 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 10 issues representing
obligations of issuers located in 7 states. The Sponsor has participated
as a sole underwriter or manager, co-manager or member of an underwriting
syndicate from which 5.7% of the initial aggregate principal amount of the
Bonds were acquired. None of the Bonds are obligations of state and local
housing authorities; approximately 23% are hospital revenue bonds;
approximately 23% are issued in connection with the financing of nuclear
generating facilities; and approximately 1.6% 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.
Ten issues representing $2,830,000 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: Airport 1, Coal Power 1, Education
Assistance 1, Hospital 2, Housing 1, Nuclear Power 2, Parking Authority 1
and Waste Water 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, $15,000 of the principal amount of the Bonds in portfolio
no. 15, $20,000 of the principal amount of the Bonds in portfolio
no. 15a and $30,000 of the principal amount of the Bonds in
portfolio no. 4 have been called and are no longer contained in the
Trust. The entire principal amount of the Bonds in portfolio no. 8
has been called for redemption pursuant to pre-refunding provisions
and is no longer contained in the Trust. 95 Units have been
redeemed from the Trust.
As of June 30, 1994, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 30% of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 61.2% were
purchased at a premium and approximately 8.8% 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 6,978 $553.26 $46.62 $47.11 $47.63 $14.70
June 30, 1993 6,744 539.59 46.06 46.48 46.88 -0-
June 30, 1994 6,645 466.93 43.48 43.91 45.96 46.11
* 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
Municipal Securities Trust, 39th Discount Series:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, 39th Discount Series 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 Municipal
Securities Trust, 39th Discount Series 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>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $2,837,671) $ 3,037,774
Excess of other assets over total liabilities 64,982
-------------
Net assets ( 6,645 units of fractional undivided
interest outstanding, $466.93 per unit) $ 3,102,756
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
------------ ---- ------------- ---- -----------
1994 1993 1992
------------ ------------- -----------
<S> <C> <C> <C>
Investment income - interest $ 299,277 327,177 339,398
------------ ------------- -----------
Expenses:
Trustee's fees 4,168 4,654 5,598
Evaluator's fees 3,579 3,412 3,024
Sponsor's advisory fee 804 1,228 1,241
------------ ------------- -----------
Total expenses 8,551 9,294 9,863
------------ ------------- -----------
Investment income, net 290,726 317,883 329,535
------------ ------------- -----------
Realized and unrealized gain (loss)
on investments:
Net realized loss
on bonds sold or called (6,306) (1,959) (605)
Unrealized appreciation
(depreciation) for the year (169,643) (91,556) 11,433
------------ ------------- -----------
Net gain (loss)
on investments (175,949) (93,515) 10,828
------------ ------------- -----------
Net increase in net
assets resulting
from operations $ 114,777 224,368 340,363
============ ============= ===========
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
-------------- -- ------------ -- -------------
1994 1993 1992
-------------- ------------ -------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 290,726 317,883 329,535
Net realized loss on
bonds sold or called (6,306) (1,959) (605)
Unrealized appreciation
(depreciation) for the year (169,643) (91,556) 11,433
-------------- ------------ -------------
Net increase in net
assets resulting
from operations 114,777 224,368 340,363
-------------- ------------ -------------
Distributions:
To Certificateholders
Investment income 292,245 317,578 327,114
Principal 308,768 - 102,620
Redemptions:
Interest 1,613 2,801 116
Principal 48,365 125,681 5,499
-------------- ------------ -------------
Total distributions and
redemptions 650,991 446,060 435,349
-------------- ------------ -------------
Total decrease (536,214) (221,692) (94,986)
Net assets at beginning of year 3,638,970 3,860,662 3,955,648
-------------- ------------ -------------
Net assets at end of year (including
undistributed net investment
income of $79,175, $82,307 and
$87,115, respectively) $ 3,102,756 3,638,970 3,860,662
============== ============ =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, 39th Discount Series (Trust) was
organized on October 10, 1985 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
United States Trust Company 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 appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.
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 investments 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 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. 99 units, 234 units and 10 units were redeemed
during the years ended June 30, 1994, 1993 and 1992, respectively.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 4,110,224
Less initial gross underwriting commission (226,030)
3,884,194
Cost of securities sold or called (1,046,523)
Net unrealized appreciation 200,103
Undistributed net investment income 79,175
Distribution in excess of proceeds
from bonds sold or called (14,193)
Total $ 3,102,756
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 7,000 units of fractional
undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
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 $ 400,000 Dade County , Florida AAA* 10.000% 10/01/06 @ 100 S.F. $ 434,484
Solid Waste System 10/01/2010 10/01/95 @ 102 Ref.
Special Obligation
Revenue Bonds Series
1985 A (5)
2 250,000 Illinois Health AAA 10.250 9/01/95 @ 100 S.F. 271,183
Facilities Authority 9/01/2015 9/01/95 @ 102 Ref.
Revenue Bonds, Series
1985 (Illinois
Masonic Medical
Center) (5)
3 400,000 Illinois Health BB+ 10.300 6/01/01 @ 100 S.F. 431,380
Facilities Authority 6/01/2013 6/01/95 @ 102 Ref.
Revenue Bonds, Series
1985-A (Grant
Hospital of Chicago)
4 45,000 Nebraska Mortgage AA* 10.125 7/15/03 @ 100 S.F. 46,514
Finance Fund Single 1/15/2014 1/15/95 @ 103 Ref.
Family Mortgage
Revenue Bonds, 1983
Series A
5 400,000 North Carolina AAA 10.000 1/01/02 @ 100 S.F. 422,736
Eastern Municipal 1/01/2017 1/01/95 @ 103 Ref.
Power Agency Power
System Revenue Bonds,
Series 1985 E (5)
6 200,000 Tulsa Parking A 9.750 10/01/99 @ 100 S.F. 216,408
Authority (Tulsa, 10/01/2003 10/01/95 @ 102 Ref.
Oklahoma) Parking
Revenue Bonds,
Refunding Series 1985
A
7 220,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 241,080
Combined Utility 11/15/2012 11/15/95 @ 102 S.F.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
7a 180,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 197,248
Combined Utility 11/15/2012 11/15/95 @ 102 S.F.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
8 125,000 City of Houston, A* 10.875 7/01/04 @ 100 S.F. 128,125
Texas Airport System 7/01/2013 7/01/94 @ 102.5 Ref.
Subordinate Lien
Refunding Revenue
Bonds Series 1984
9 250,000 Matagorda County A- 10.125 No Sinking Fund 274,435
Navigation District 10/15/2014 10/15/95 @ 103 Ref.
Number One (Texas)
(Central Power and
Light Company
Project) Series 1984
10 340,000 State of Wisconsin AA 10.000 7/01/03 @ 100 S.F. 354,181
Health Education 1/01/2012 1/01/95 @ 103 Ref.
Assistance Loan
Revenue Obligaton
Bonds, 1985 Series A
10a 20,000 State of Wisconsin AA 10.000 7/01/03 @ 100 S.F. 20,000
Health Education 1/01/2012 7/01/94 @ 100 Ref.
Assistance Loan
Revenue Obligaton
Bonds, 1985 Series A
------------- ---------
$ 2,830,000 $ 3,037,774
============= =========
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $ 206,587
Gross unrealized depreciation (6,484)
Net unrealized appreciation $ 200,103
(4) The annual interest income, based upon the bonds held at June 30,
1994, to the Trust is $286,788.
(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).
<PAGE>
Note: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
SERIES 29
__________________________________________________________________
The Trust is a unit investment trust designated Series 29
("Municipal Trust") with an underlying portfolio of long-term tax-exempt
bonds issued by or on behalf of states, municipalities and public
authorities, 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
(including where applicable earned original discount) under existing law
but may be subject to state and local taxes. Such interest income may,
however, be a specific preference item for purposes of Federal individual
and/or corporate alternative minimum tax. Investors may recognize taxable
capital gain upon maturity or earlier redemption of the underlying Bonds.
(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 bonds (the "Bonds") issued by or
on behalf of states, municipalities and public authorities. A Trust
designated as a short/intermediate-term trust must have a dollar-weighted
average portfolio maturity of more than two years but less than five
years; a Trust designated as an intermediate-term trust must have a
dollar-weighted average portfolio maturity of more than three years but
not more than ten years; a Trust designated as an intermediate/long-term
trust must have a dollar-weighted average portfolio maturity of more than
ten years but less than fifteen years; and a Trust designated as a long-
term trust must have a dollar-weighted average portfolio maturity of more
than ten years. 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 "Description of Portfolio" in this Part A
for a description of those Bonds which pay interest income subject to the
federal individual alternative minimum tax. See also "Tax Status" in
Part B of this Prospectus.) Some of the Bonds in the portfolio 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 portfolio may have been
purchased at an aggregate premium over par. 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. All
of the Bonds in the Trust were rated "A" or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. at the time originally
deposited in the Trust. 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 the issuers of the Bonds to meet their
obligations. There can be no assurance that the Trust's 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 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 fluctuations than coupon bonds in
response to changes in interest rates. Each Unit in the Trust represents
a 1/1790th 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 "The Trust--
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.
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 4.9% of
the Public Offering Price, which is the same as 5.152% of the net amount
invested in Bonds per Unit. In addition, accrued interest to expected
date of settlement is added to the Public Offering Price. If Units had
been purchased for sale on the Evaluation Date, the Public Offering Price
per Unit would have been $630.72 plus accrued interest of $15.68 under the
monthly distribution plan, $19.76 under the semi-annual distribution plan
and $51.56 under the annual distribution plan, for a total of $646.40,
$650.48 and $682.28, 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 the "Summary of Essential Information" and
"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 "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 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 plan selected by the prior owner of
such Unit and may thereafter change the plan as provided in "Interest and
Principal Distributions" in Part B of this 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
Secondary Market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 4.9% of the Public
Offering Price (5.152% of the net amount invested) plus net accrued
interest. If such a market is not maintained, a Certificateholder will be
able to redeem his Units with the Trustee at a price also based upon the
aggregate bid price of the Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Insured Municipal Securities Trust" or "Municipal
Securities Trust." (See "Total Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
SERIES 29
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: November 7, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$1,000,000 $1.00 per Unit.
Number of Units .............1,790 Weighted Average Life
Fractional Undivided Inter- to Maturity: 7.2 Years.
est in Trust per Unit .....1/1790 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$558.66 value of Trust is less than
Secondary Market Public $800,000 in principal amount of
Offering Price** Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$1,073,681+++ The earlier of December 31,
Divided by 1,790 Units ....$599.82 2034 or the disposition of the
Plus Sales Charge of 4.9% last Bond in the Trust.
of Public Offering Price $30.91 Trustee***: United States Trust
Public Offering Price Company of New York.
per Unit ................$630.72+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit ..................$599.82+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............$30.91++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Bear, Stearns & Co.
Unit Premium/(Discount) ...$72.06 Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.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# .........$56.01 $56.01 $56.01
Less estimated annual fees and
expenses ............................ 1.96 1.53 1.40
Estimated net annual interest ______ ______ ______
income (cash)# ......................$54.05 $54.48 $54.61
Estimated interest distribution# ...... 4.50 27.24 54.61
Estimated daily interest accrual# ..... .1501 .1513 .1516
Estimated current return#++ ........... 8.57% 8.64% 8.66%
Estimated long term return++ .......... 4.27% 4.34% 4.36%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $15.68 monthly, $19.76 semi-
annually and $51.56 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 in 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 6 issues representing
obligations of issuers located in 5 states. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of
state and local housing authorities; approximately 30% are hospital
revenue bonds; approximately 30% are 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. Six issues representing $1,000,000 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: Airport 1, Coal Power 1,
Hospital 2 and Nuclear Power 2. For an explanation of the significance of
these factors see "The Trust--Portfolio" in Part B of this Prospectus.
As of June 30, 1994, none of the Bonds were original issue discount
bonds. None of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity,
approximately 85% were purchased at a premium and approximately 15% 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 1,908 $810.31 $82.37 $82.97 $89.37 $212.95
June 30, 1993 1,856 792.99 66.87 67.43 72.34 2.22
June 30, 1994 1,790 616.15 63.83 64.35 66.63 133.98
* 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
Municipal Securities Trust, Series 29:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, Series 29 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
Municipal Securities Trust, Series 29 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>
MUNICIPAL SECURITIES TRUST, SERIES 29
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $1,019,250) $ 1,073,669
Excess of other assets over total liabilities 29,248
------------
Net assets ( 1,790 units of fractional undivided
interest outstanding, $616.15 per unit) $ 1,102,917
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Statements of Operations
<CAPTION>
Years ended June 30,
------------ ---- ------------ ---- ------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Investment income - interest $ 117,011 129,606 160,017
------------ ------------ ------------
Expenses:
Trustee's fees 2,187 2,497 2,852
Evaluator's fees 899 793 750
Sponsor's advisory fee 326 387 453
------------ ------------ ------------
Total expenses 3,412 3,677 4,055
------------ ------------ ------------
Investment income, net 113,599 125,929 155,962
------------ ------------ ------------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss)
on bonds sold or called 13,270 (2,225) 684
Unrealized appreciation
(depreciation) for the year (88,359) (25,810) 9,892
------------ ------------ ------------
Net gain (loss)
on investments (75,089) (28,035) 10,576
------------ ------------ ------------
Net increase in net
assets resulting
from operations $ 38,510 97,894 166,538
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
----------- -- ----------- -- -----------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 113,599 125,929 155,962
Net realized gain (loss)
on bonds sold or called 13,270 (2,225) 684
Unrealized appreciation
(depreciation) for the year (88,359) (25,810) 9,892
----------- ----------- -----------
Net increase in net
assets resulting
from operations 38,510 97,894 166,538
----------- ----------- -----------
Distributions:
To Certificateholders:
Investment income 115,054 125,639 159,585
Principal 240,306 4,120 407,281
Redemptions:
Interest 1,683 1,530 2,067
Principal 50,337 40,889 91,503
----------- ----------- -----------
Total distributions and
redemptions 407,380 172,178 660,436
----------- ----------- -----------
Total decrease (368,870) (74,284) (493,898)
Net assets at beginning of year 1,471,787 1,546,071 2,039,969
----------- ----------- -----------
Net assets at end of year (including
undistributed net investment
income of $29,235, $32,373 and
$33,613, respectively) $ 1,102,917 1,471,787 1,546,071
=========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, Series 29 (Trust) was organized on
November 7, 1985 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
United States Trust Company 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 appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.
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 investments 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 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).
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 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.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 66, 52 and 92 units were redeemed by the trust
during the years ended June 30, 1994, 1993 and 1992, respectively.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the interest
of Certificateholders as follows:
Original cost to Certificateholders $ 2,041,904
Less initial gross underwriting commission (100,040)
1,941,864
Cost of securities sold or called (922,614)
Net unrealized appreciation 54,419
Undistributed net investment income 29,235
Undistributed proceeds from bonds sold or called 13
Total $ 1,102,917
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 2,000 units of fractional
undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 29
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 $ 150,000 Maine Health and Higher AAA 9.800% No Sinking Fund $ 159,541
Educational Facilities 4/01/2014 4/01/95 @ 102.5 Ref.
Authority for Mid-Maine
Medical Center (5)
2 200,000 North Carolina Eastern AAA 10.250 No Sinking Fund 211,614
Municipal Power Agency 1/01/2009 1/01/95 @ 103 Ref.
Power System Revenue
Bonds, 1985 D (5)
3 150,000 Allegheny County A- 9.800 7/01/00 @ 100 S.F. 159,596
(Pennsylvania) Hospital 7/01/2010 7/01/95 @ 102 Ref.
Development Authority
Hospital Revenue
Refunding Bonds, 1985
Series A (St. Margaret
Memorial Hospital
Project)
4 200,000 The Metropolitan BAA2* 9.875 No Sinking Fund 213,980
Nashville Airport 10/01/2005 10/01/95 @ 102 Ref.
Authority Special
Facility Revenue Bonds
Series 1985 (American
Airlines Inc. Project)
5 70,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 76,707
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds, Series
1985 (5)
5a 130,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 142,457
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds, Series
1985 (5)
6 100,000 Matagorda County A- 10.125 No Sinking Fund 109,774
Navigation District 10/15/2014 10/15/95 @ 103 Ref.
Number One (Texas)
Pollution Control
Revenue Bonds (Central
Power and Light Company
Project) Series 1984
---------- -----------
$ 1,000,000 $ 1,073,669
========== ===========
See accompanying footnotes portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $54,419.
(4) The annual interest income, based upon bonds held at June 30, 1994,
to the Trust is $100,275.
(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).
<PAGE>
Note: Part A of this Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
40TH DISCOUNT SERIES
(MULTIPLIER PORTFOLIO)
__________________________________________________________________
The Trust is a unit investment trust designated 40th Discount
Series ("Municipal Discount Trust") with an underlying portfolio of long-
term tax-exempt bonds 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. (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 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 bonds issued by
or on behalf of states, municipalities and public authorities (the
"Bonds"). 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 "Description of Portfolio" in this Part A for a description
of those Bonds which pay interest income subject to the federal individual
alternative minimum tax. See also "Tax Status" in Part B of this
Prospectus.) The Bonds were acquired at prices which resulted in the
portfolio as a whole being purchased at a deep discount from par value.
The portfolio may also include bonds issued at a substantial original
issue discount some of which 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 current interest. Some of
the Bonds in the portfolio may have been purchased at an aggregate premium
over par. 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 as of the Evaluation Date, if any, see "Notes to Financial
Statements" in this Part A. All of the Bonds in the Trust were rated "A"
or better by Standard & Poor's Corporation or Moody's Investors Service,
Inc. at the time originally deposited in the Trust. 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 the issuers of
the Bonds to meet their obligations. There can be no assurance that the
Trust's 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 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 fluctuations
than coupon bonds in response to changes in interest rates. Each Unit in
the Trust represents a 1/6802nd 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
"The Trust--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.
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
5.5% of the Public Offering Price, which is the same as 5.820% of the net
amount invested in Bonds per Unit. In addition, accrued interest to
expected date of settlement including earned original issue discount 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
$479.07 plus accrued interest of $9.30 under the monthly distribution
plan, $12.36 under the semi-annual distribution plan and $33.77 under the
annual distribution plan, for a total of $488.37, $491.43 and $512.84,
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 the "Summary of Essential Information" and "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 "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 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
Sponsors 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 plan selected 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
secondary market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 5.5% (5.820% of
the net amount invested) plus net accrued interest. If such a market is
not maintained, a Certificateholder will be able to redeem his Units with
the Trustee at a price also based upon the aggregate bid price of the
Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Municipal Securities Trust." (See "Total
Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
40TH DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: November 7, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$2,885,000 $1.00 per Unit.
Number of Units .............6,802 Weighted Average Life
Fractional Undivided Inter- to Maturity: 8.1 Years.
est in Trust per Unit .....1/6802 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$424.14 value of Trust is less than
Secondary Market Public $3,200,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$3,079,434+++ The earlier of December 31,
Divided by 6,802 Units ....$452.72 2034 or the disposition of the
Plus Sales Charge of 5.5% last Bond in the Trust.
of Public Offering Price $26.35 Trustee***: United States Trust
Public Offering Price Company of New York.
per Unit ................$479.07+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit ..................$452.72+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............$26.35++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Bear, Stearns & Co.
Unit Premium/(Discount) ...$54.93 Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.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# .........$42.12 $42.12 $42.12
Less estimated annual fees and
expenses ............................ 1.27 .93 .82
Estimated net annual interest ______ ______ ______
income (cash)# ......................$40.85 $41.19 $41.30
Estimated interest distribution# ...... 3.40 20.59 41.30
Estimated daily interest accrual# ..... .1134 .1144 .1147
Estimated current return#++ ........... 8.53% 8.60% 8.62%
Estimated long term return++ ...........4.23% 4.30% 4.32%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $9.30 monthly, $12.36 semi-
annually and $33.77 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 in 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 9 issues representing
obligations of issuers located in 7 states. The Sponsor has not
participated as a sole underwriter or manager, co-manager or member of an
underwriting syndicate from which any of the initial aggregate principal
amount of the Bonds were acquired. None of the Bonds are obligations of
state and local housing authorities; approximately 37.3% are hospital
revenue bonds; approximately 27.7% are 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. Nine issues representing $2,885,000 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: Airport 1, Coal Power 1,
Hospital 4, Nuclear Power 2 and Water 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, 5 Units have been redeemed from the Trust.
As of June 30, 1994, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 13.9% of the
aggregate principal amount of the Bonds in the Trust were purchased at a
"market" discount from par value at maturity, approximately 74% were
purchased at a premium and approximately 12.1% 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 7,848 $516.80 $49.39 $49.88 $52.99 $ 1.44
June 30, 1993 7,322 505.87 42.82 43.22 45.20 -0-
June 30, 1994 6,802 464.66 42.65 43.02 43.33 13.11
* 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
Municipal Securities Trust, 40th Discount Series:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, 40th Discount Series 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 Municipal
Securities Trust, 40th Discount Series 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>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $2,929,660) $ 3,079,400
Excess of other assets over total liabilities 81,247
-------------
Net assets 6,802 units of fractional undivided
interest outstanding, $464.66 per unit) $ 3,160,647
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
------------- ---- ---------- ---- -----------
1994 1993 1992
------------- ---------- -----------
<S> <C> <C> <C>
Investment income - interest $ 316,566 344,287 402,162
------------- ---------- -----------
Expenses:
Trustee's fees 4,832 5,483 6,989
Evaluator's fees 2,686 2,559 2,268
Sponsor's advisory fee 854 1,388 1,491
------------- ---------- -----------
Total expenses 8,372 9,430 10,748
------------- ---------- -----------
Investment income, net 308,194 334,857 391,414
------------- ---------- -----------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss)
on bonds sold or called (33,222) 21,523 (4,394)
Unrealized appreciation
(depreciation) for the year (168,073) (106,336) 6,898
------------- ---------- -----------
Net gain (loss)
on investments (201,295) (84,813) 2,504
------------- ---------- -----------
Net increase in net
assets resulting
from operations $ 106,899 250,044 393,918
============= ========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
-------------- -- ------------ -- -------------
1994 1993 1992
-------------- ------------ -------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 308,194 334,857 391,414
Net realized gain (loss) on
bonds sold or called (33,222) 21,523 (4,394)
Unrealized appreciation
(depreciation) for the year (168,073) (106,336) 6,898
-------------- ------------ -------------
Net increase in net
assets resulting
from operations 106,899 250,044 393,918
-------------- ------------ -------------
Distributions:
To Certificateholders:
Investment income 307,744 334,306 394,655
Principal 89,174 - 803,518
Redemptions:
Interest 8,309 6,974 2,262
Principal 244,984 260,669 84,757
-------------- ------------ -------------
Total distributions and
redemptions 650,211 601,949 1,285,192
-------------- ------------ -------------
Total decrease (543,312) (351,905) (891,274)
Net assets at beginning of year 3,703,959 4,055,864 4,947,138
-------------- ------------ -------------
Net assets at end of year (including
undistributed net investment
income of $81,211, $89,070 and
$97,980, respectively) $ 3,160,647 3,703,959 4,055,864
============== ============ =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, 40th Discount Series (Trust) was
organized on November 7, 1985 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 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 appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.
Investments are carried at market value which is determined by the
Evaluator 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 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.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 520, 526 and 152 units were redeemed during the
years ended June 30, 1994, 1993, 1992 respectively.
See "Financial and Statistical Information" on page A of this
Prospectus for the amounts of per unit distributions during the years
ended June 30, 1994, 1993 and 1992.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 4,733,519
Less initial gross underwriting commission (260,320)
4,473,199
Cost of securities sold or called (1,543,539)
Net unrealized appreciation 149,740
Undistributed net investment income 81,211
Undistributed proceeds from bonds sold or called 36
Total $ 3,160,647
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 8,000 units of
fractional undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
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 $ 100,000 Pulaski County, Arkansas A- 10.125% No Sinking Fund $ 105,266
Hospital Revenue Refunding 3/01/2015 3/01/95 @ 102 Ref.
and Construction Bonds
(Arkansas Childrens Hospital
Project) Series 1985
1a 150,000 Pulaski County, Arkansas BBB+ 10.125 No Sinking Fund 158,230
Hospital Revenue Refunding 3/01/2015 3/01/95 @ 102 Ref.
and Construction Bonds
(Arkansas Childrens Hospital
Project) Series 1985 (5)
2 375,000 Maine Health and Higher AAA 9.800 4/01/05 @ 100 S.F. 398,854
Educational Facilities 4/01/2014 4/01/95 @ 102.5 Ref.
Authority for Mid Maine
Medical Center (5)
3 400,000 North Carolina Eastern AAA 10.250 1/01/04 @ 100 S.F. 423,227
Municipal Power Agency Power 1/01/2009 1/01/95 @ 103 Ref.
System Revenue Bonds, 1985D
(5)
4 350,000 Allegheny County A- 9.800 7/01/00 @ 100 S.F. 372,390
(Pennsylvania) Hospital 7/01/2010 7/01/95 @ 102 Ref.
Development Authority
Hospital Revenue Refunding
Bonds Series 1985A St.
Margaret Memorial Hospital
Project
5 400,000 The Metropolitan Nashville BAA2* 9.875 No Sinking Fund 427,960
Airport Authority Specian 10/01/2005 10/01/95 @ 102 Ref.
FaciLivy Revenue Bonds Series
1985 (American Airlines, Inc.
Project)
`
6 210,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 230,122
Combined Utility Systems 11/15/2012 11/15/95 @ 102 Ref.
Revenue Refunding Bonds,
Series 1985 (5)
7 400,000 Matagorda County Navigation A- 10.125 No Sinking Fund 439,096
District Number One (Texas) 10/15/2014 10/15/95 @ 103 Ref.
(Central Power and Light
Company Project) Series 1984
8 100,000 Travis County (Texas) Health AA* 10.125 11/01/00 @ 100 S.F. 108,335
Facilities Development 11/01/2015 11/01/95 @ 102 Ref.
Corporation Hospital Revenue
Bonds (Daughters of Charity
Health Systems - Seton
Medical Center) Series 1985A
9 400,000 West Virginia Water BBB+ 937.500% 11/01/06 @ 100 S.F. 415,920
Development Authority Water 11/01/2015 11/01/94 @ 102 Ref.
Development Revenue Loan
Program Series A Refunding
and Improvement Bonds (5)
---------- ----------
$ 2,885,000 $ 3,079,400
========== ==========
See accompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $149,740.
(4) The annual interest income to the Trust is $286,512.
(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).
<PAGE>
Note: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
SERIES 30
__________________________________________________________________
The Trust is a unit investment trust designated Series 30
("Municipal Trust") with an underlying portfolio of long-term tax-exempt
bonds issued by or on behalf of states, municipalities and public
authorities, 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
(including where applicable earned original discount) under existing law
but may be subject to state and local taxes. Such interest income may,
however, be a specific preference item for purposes of Federal individual
and/or corporate alternative minimum tax. Unitholders may recognize
taxable capital gain upon maturity or earlier redemption of the underlying
bonds. (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 bonds (the "Bonds") issued by or
on behalf of states, municipalities and public authorities. A Trust
designated as a short/intermediate-term trust must have a dollar-weighted
average portfolio maturity of more than two years but less than five
years; a Trust designated as an intermediate-term trust must have a
dollar-weighted average portfolio maturity of more than three years but
not more than ten years; a Trust designated as an intermediate/long-term
trust must have a dollar-weighted average portfolio maturity of more than
ten years but less than fifteen years; and a Trust designated as a long-
term trust must have a dollar-weighted average portfolio maturity of more
than ten years. 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 "Description of Portfolio" in this Part A
for a description of those Bonds which pay interest income subject to the
federal individual alternative minimum tax. See also "Tax Status" in
Part B of this Prospectus.) Some of the Bonds in the portfolio 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 portfolio may have been
purchased at an aggregate premium over par. 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. All
of the Bonds in the Trust were rated "A" or better by Standard & Poor's
Corporation or Moody's Investors Service, Inc. at the time originally
deposited in the Trust. 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 the issuers of the Bonds to meet their
obligations. There can be no assurance that the Trust's 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 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 fluctuations than coupon bonds in
response to changes in interest rates. Each Unit in the Trust represents
a 1/1986th 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 "The Trust--
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.
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 4.9% of
the Public Offering Price, which is the same as 5.152% of the net amount
invested in Bonds per Unit. In addition, accrued interest to 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 $1,033.37 plus accrued interest of $15.75 under the
monthly distribution plan, $22.94 under the semi-annual distribution plan
and $68.09 under the annual distribution plan, for a total of $1,049.12,
$1,056.31 and $1,101.46, 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 the "Summary of Essential Information" and
"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 "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 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 plan selected by the prior owner of
such Unit and may thereafter change the plan as provided in "Interest and
Principal Distributions" in Part B of this 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
Secondary Market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 4.9% of the Public
Offering Price (5.152% of the net amount invested) plus net accrued
interest. If such a market is not maintained, a Certificateholder will be
able to redeem his Units with the Trustee at a price also based upon the
aggregate bid price of the Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Insured Municipal Securities Trust." (See "Total
Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
SERIES 30
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: December 12, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$1,820,000 $1.00 per Unit.
Number of Units .............1,986 Weighted Average Life to
Fractional Undivided Inter- Maturity:
est in Trust per Unit .....1/1986 8.9 Years.
Principal Amount of Minimum Value of Trust:
Bonds per Unit ............$916.41 Trust may be terminated if
Secondary Market Public value of Trust is less than
Offering Price** $800,000 in principal amount of
Aggregate Bid Price Bonds.
of Bonds in Trust .......$1,951,716+++ Mandatory Termination Date:
Divided by 1,986 Units ....$982.74 The earlier of December 31,
Plus Sales Charge of 4.9% 2034 or the disposition of the
of Public Offering Price $50.63 last Bond in the Trust.
Public Offering Price Trustee***: United States Trust
per Unit ................$1,033.37+ Company of New York.
Redemption and Sponsor's Trustee's Annual Fee: Monthly
Repurchase Price plan $1.02 per $1,000; semi-
per Unit ..................$982.74+ annual plan $.54 per $1,000;
+++ and annual plan is $.35 per
++++ $1,000.
Excess of Secondary Market Evaluator: Kenny S&P Evaluation
Public Offering Price Services.
over Redemption and Evaluator's Fee for Each
Sponsor's Repurchase Evaluation: Minimum of $12
Price per Unit ............$50.63++++ plus $.25 per each issue of
Difference between Public Bonds in excess of 50 issues
Offering Price per Unit (treating separate maturities
and Principal Amount per as separate issues).
Unit Premium/(Discount) ...$116.96 Sponsor: Bear, Stearns & Co.
Evaluation Time: 4:00 p.m. Inc.
New York Time. 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# .........$91.64 $91.64 $91.64
Less estimated annual fees and
expenses ............................ 2.32 1.71 1.51
Estimated net annual interest ______ ______ ______
income (cash)# ......................$89.32 $89.93 $90.13
Estimated interest distribution# ...... 7.44 44.96 90.13
Estimated daily interest accrual# ..... .2481 .2498 .2503
Estimated current return#++ ........... 8.64% 8.70% 8.72%
Estimated long term return++ .......... 7.44% 7.50% 7.52%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $15.75 monthly, $22.94 semi-
annually and $68.09 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 in 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 11 issues representing
obligations of issuers located in 8 states. The Sponsor has participated
as a sole underwriter or manager, co-manager or member of an underwriting
syndicate from which 5% of the initial aggregate principal amount of the
Bonds were acquired. None of the Bonds are obligations of state and local
housing authorities; approximately 11% are hospital revenue bonds;
approximately 11% are issued in connection with the financing of nuclear
generating facilities; and approximately 1.4% 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.
Eleven issues representing $1,820,000 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: Airport 1, Civic Center 1, Coal Power 1,
Education 1, Hospital 1, Housing 1, Industrial Development 1, Nuclear
Power 1, Pollution Control 2 and Water 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 no. 5
and $20,000 of the principal amount of the Bonds in portfolio no. 8
have been called and are no longer contained in the Trust. $5,000
of the principal amount of the Bonds in portfolio no. 8 has been
called for redemption pursuant to pre-refunding provisions and is no
longer contained in the Trust. 10 Units have been redeemed from the
Trust.
As of June 30, 1994, none of the Bonds were original issue discount
bonds. None of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity,
approximately 94.5% were purchased at a premium and approximately 5.5%
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 1,986 $1,056.04 $90.73 $91.40 $91.69 -0-
June 30, 1993 1,986 1,041.05 90.18 90.81 91.38 $5.25
June 30, 1994 1,986 1,001.75 89.52 90.18 90.64 5.03
* 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
Municipal Securities Trust, Series 30
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, Series 30 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 Municipal
Securities Trust, Series 30 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>
MUNICIPAL SECURITIES TRUST, SERIES 30
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $1,907,032) $ 1,951,704
Excess of other assets over total liabilities 37,762
------------
Net assets ( 1,986 units of fractional undivided
interest outstanding, $1,001.75 per unit) $ 1,989,466
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Statements of Operations
<CAPTION>
Years ended June 30,
----------- ---- ----------- ---- -----------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Investment income - interest $ 182,447 183,718 184,862
----------- ----------- -----------
Expenses:
Trustee's fees 2,913 2,986 3,103
Evaluator's fees 898 793 750
Sponsor's advisory fee 459 461 463
----------- ----------- -----------
Total expenses 4,270 4,240 4,316
----------- ----------- -----------
Investment income, net 178,177 179,478 180,546
----------- ----------- -----------
Realized and unrealized loss
on investments:
Net realized loss
on bonds sold or called (650) (975) (325)
Unrealized depreciation
for the year (67,475) (18,422) (14,718)
----------- ----------- -----------
Net loss
on investments (68,125) (19,397) (15,043)
----------- ----------- -----------
Net increase in net
assets resulting
from operations $ 110,052 160,081 165,503
=========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
------------ -- ------------ -- ------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 178,177 179,478 180,546
Net realized loss on
bonds sold or called (650) (975) (325)
Unrealized depreciation
for the year (67,475) (18,422) (14,718)
------------ ------------ ------------
Net increase in net
assets resulting
from operations 110,052 160,081 165,503
------------ ------------ ------------
Distributions to certificateholders:
Investment income 178,119 179,416 180,532
Principal 9,990 10,427 -
------------ ------------ ------------
Total distributions 188,109 189,843 180,532
------------ ------------ ------------
Total decrease (78,057) (29,762) (15,029)
Net assets at beginning of year 2,067,523 2,097,286 2,112,315
------------ ------------ ------------
Net assets at end of year (including
undistributed net investment
income of $37,749, $37,692 and
$37,631, respectively) $ 1,989,466 2,067,523 2,097,286
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, Series 30 (Trust) was organized on
December 12, 1985 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
United States Trust Company 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 appreciation (depreciation) of investments and to record
interest income and expenses on the accrual basis.
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 investments 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 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).
(4), Continued
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. No units were redeemed during the years ended June
30, 1994, 1993 and 1992.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 2,096,352
Less initial gross underwriting commission (102,720)
1,993,632
Cost of securities sold or called (86,600)
Net unrealized appreciation 44,672
Undistributed net investment income 37,749
Undistributed proceeds from bonds sold or called 13
Total $ 1,989,466
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 2,000 units of
fractional undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 30
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 $ 100,000 State of Illinois AAA 9.500% 12/01/06 @ 100 S.F. $ 109,939
Civic Center Bonds 12/15/2015 12/15/95 @ 103 Ref.
(Dedicated Tax
Revenue Bonds) Series
1985 (5)
2 200,000 Illinois Educational BBB+ 9.625 7/01/99 @ 100 S.F. 211,708
Facilities Authority 7/01/2005 7/01/95 @ 102 Ref.
Revenue Refunding
Bonds Chicago College
of Osteopathic
Medicine Series 1985
3 200,000 Maine Health and AAA 10.000 9/01/99 @ 100 S.F. 215,784
Higher Educational 9/01/2015 9/01/95 @ 102 Ref.
Facilities Authority
Revenue Bonds
(Osteopathic Hospital
of Maine Inc.) (5)
4 200,000 Port Authority of the CCC 9.625 12/01/01 @ 100 S.F. 191,824
City of Saint Paul 12/01/2014 12/01/95 @ 102 Ref.
(Minnesota)
Industrial
Development Revenue
Bonds Series 1985-T
5 200,000 Salem County, New A2* 10.375 No Sinking Fund 206,338
Jersey Industrial 9/01/2014 9/01/94 @ 102 Ref.
Development Authority
Pollution Control
Financing Authority
Revenue Bonds (Public
Service Electric and
Gas Project) 1984B
Series
6 200,000 North Carolina AAA 10.250 1/01/04 @ 100 S.F. 211,614
Eastern Municipal 1/01/2009 1/01/95 @ 103 Ref.
Power Agency Power
System Revenue Bonds,
1985D (5)
7 195,000 The Metropolitan BAA2* 9.875 No Sinking Fund 208,631
Nashville Airport 10/01/2005 10/01/95 @ 102 Ref.
Authority Special
Facility Revenue
Bonds Series 1985
(American Airlines,
Inc. Project)
8 25,000 Texas Housing Agency AA* 10.500 3/01/03 @ 100 S.F. 25,804
Single Family 9/01/2009 9/01/94 @ 102 Ref.
Mortgage Revenue
Bonds, 1983
Series A (5)
9 200,000 City of Austin, Texas AAA 11.000 11/15/00 @ 100 S.F. 254,518
Combined Utility 11/15/2004 11/15/99 @ 100 Ref.
Systems Revenue
Refunding Bonds, 1984
Series A (5)
10 100,000 Brazos River A- 9.875 No Sinking Fund 107,500
Authority (Texas) 8/01/2015 8/01/95 @ 102 Ref.
Pollution Control
Revenue Bonds
(Houston Lighting &
Power Company
Project) Series A
11 200,000 West Virginia Water BBB+ 9.500% 11/01/16 @ 100 S.F. 208,044
Development Authority 11/01/2025 11/01/94 @ 102 Ref.
Water Development
Refunding and
Improvement Revenue
Bonds (Loan Program)
Series A (5).
----------- ---------
$ 1,820,000 $ 1,951,704
=========== =========
See accompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $ 71,199
Gross unrealized depreciation (26,527)
Net unrealized appreciation $ 44,672
(4) The annual interest income, based upon bonds held at June 30, 1994,
to the Trust is $182,006.
(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).
<PAGE>
Note: Part A of this Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
41ST DISCOUNT SERIES
(MULTIPLIER PORTFOLIO)
__________________________________________________________________
The Trust is a unit investment trust designated 41st Discount
Series ("Municipal Discount Trust") with an underlying portfolio of long-
term tax-exempt bonds 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. (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 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 bonds issued by
or on behalf of states, municipalities and public authorities (the
"Bonds"). 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 "Description of Portfolio" in this Part A for a description
of those Bonds which pay interest income subject to the federal individual
alternative minimum tax. See also "Tax Status" in Part B of this
Prospectus.) The Bonds were acquired at prices which resulted in the
portfolio as a whole being purchased at a deep discount from par value.
The portfolio may also include bonds issued at a substantial original
issue discount some of which 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 current interest. Some of
Bonds in the portfolio may have been purchased at an aggregate premium
over par. 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 as of the Evaluation Date, if any, see "Notes to Financial
Statements" in this Part A. All of the Bonds in the Trust were rated "A"
or better by Standard & Poor's Corporation or Moody's Investors Service,
Inc. at the time originally deposited in the Trust. 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 the issuers of
the Bonds to meet their obligations. There can be no assurance that the
Trust's 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 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 fluctuations
than coupon bonds in response to changes in interest rates. Each Unit in
the Trust represents a 1/8587th 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
"The Trust--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.
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
5.5% of the Public Offering Price, which is the same as 5.820% of the net
amount invested in Bonds per Unit. In addition, accrued interest to
expected date of settlement including earned original issue discount 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
$506.86 plus accrued interest of $8.00 under the monthly distribution
plan, $11.40 under the semi-annual distribution plan and $33.71 under the
annual distribution plan, for a total of $514.86, $518.26 and $540.57,
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 the "Summary of Essential Information" and "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 "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 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
Sponsors 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 plan selected 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 market for the Units at prices based upon the
aggregate bid price of the Bonds in the portfolio of the Trust. The
secondary market repurchase price is based on the aggregate bid price of
the Bonds in the Trust portfolio, and the reoffer price is based on the
aggregate bid price of the Bonds plus a sales charge of 5.5% (5.820% of
the net amount invested) plus net accrued interest. If such a market is
not maintained, a Certificateholder will be able to redeem his Units with
the Trustee at a price also based upon the aggregate bid price of the
Bonds. (See "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 their
interest distributions and principal distributions, if any, reinvested in
available series of "Municipal Securities Trust." (See "Total
Reinvestment Plan" and for 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>
MUNICIPAL SECURITIES TRUST
41ST DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1994
Date of Deposit: December 12, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ...$3,885,000 $1.00 per Unit.
Number of Units .............8,587 Weighted Average Life
Fractional Undivided Inter- to Maturity: 8.9 Years.
est in Trust per Unit .....1/8587 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............$452.43 value of Trust is less than
Secondary Market Public $3,600,000 in principal amount
Offering Price** of Bonds.
Aggregate Bid Price Mandatory Termination Date:
of Bonds in Trust .......$4,112,984+++ The earlier of December 31,
Divided by 8,587 Units ....$478.98 2034 or the disposition of the
Plus Sales Charge of 5.5% last Bond in the Trust.
of Public Offering Price $27.88 Trustee***: United States Trust
Public Offering Price Company of New York.
per Unit ................$506.86+ Trustee's Annual Fee: Monthly
Redemption and Sponsor's plan $1.02 per $1,000; semi-
Repurchase Price annual plan $.54 per $1,000;
per Unit ..................$478.98+ and annual plan is $.35 per
+++ $1,000.
++++ Evaluator: Kenny S&P Evaluation
Excess of Secondary Market Services.
Public Offering Price Evaluator's Fee for Each
over Redemption and Evaluation: Minimum of $12
Sponsor's Repurchase plus $.25 per each issue of
Price per Unit ............$27.88++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Bear, Stearns & Co.
Unit Premium/(Discount) ...$54.43 Inc.
Evaluation Time: 4:00 p.m. Sponsor's Annual Fee: Maximum of
New York Time. $.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# .........$44.80 $44.80 $44.80
Less estimated annual fees and
expenses ............................ 1.28 .91 .81
Estimated net annual interest ______ ______ ______
income (cash)# ......................$43.52 $43.89 $43.99
Estimated interest distribution# ...... 3.62 21.94 43.99
Estimated daily interest accrual# ..... .1208 .1219 .1221
Estimated current return#++ ........... 8.59% 8.66% 8.68%
Estimated long term return++ .......... 7.72% 7.79% 7.81%
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 770 Broadway,
New York, New York 10003 (tel. no.: 1-800-428-8890). For
information regarding redemption by the Trustee, see "Trustee
Redemption" in Part B of this Prospectus.
+ Plus accrued interest to expected date of settlement (approximately
five business days after purchase) of $8.00 monthly, $11.40 semi-
annually and $33.71 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 in 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 12 issues representing
obligations of issuers located in 8 states. The Sponsor has participated
as a sole underwriter or manager, co-manager or member of an underwriting
syndicate from which 4% of the initial aggregate principal amount of the
Bonds were acquired. None of the Bonds are obligations of state and local
housing authorities; none are hospital revenue bonds; approximately 11.8%
are 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. Twelve issues representing $3,885,000
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:
Airport 1, Civic Center 1, Coal Power 2, Education 1, Industrial
Development 1, Nuclear Power 2, Pollution Control 2, Solid Waste 1 and
Water 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 no. 5
has been called and is no longer contained in the Trust. 31 Units
have been redeemed from the Trust.
As of June 30, 1994, none of the aggregate principal amount of the
Bonds were original issue discount bonds. 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 89.7% were purchased at a premium and
approximately 10.3% 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 8,782 $555.41 $49.88 $50.43 $51.19 $45.20
June 30, 1993 8,772 545.32 55.16 47.74 48.91 -0-
June 30, 1994 8,587 490.13 45.72 46.16 47.84 36.38
* 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
Municipal Securities Trust, 41st Discount Series:
We have audited the accompanying statement of net assets, including the
portfolio, of Municipal Securities Trust, 41st Discount Series 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 Municipal
Securities Trust, 41st Discount Series 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>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Statement of Net Assets
June 30, 1994
<S> <C>
Investments in marketable securities,
at market value (cost $4,043,026) $ 4,112,979
Excess of other assets over total liabilities 95,796
-------------
Net assets ( 8,587 units of fractional undivided
interest outstanding, $490.13 per unit) $ 4,208,775
=============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
----------- ---- ---------- ---- ----------
1994 1993 1992
----------- ---------- ----------
<S> <C> <C> <C>
Investment income - interest $ 406,149 427,475 463,894
----------- ---------- ----------
Expenses:
Trustee's fees 5,423 5,925 7,787
Evaluator's fees 2,687 2,559 2,298
Sponsor's advisory fee 1,071 1,893 1,893
----------- ---------- ----------
Total expenses 9,181 10,377 11,978
----------- ---------- ----------
Investment income, net 396,968 417,098 451,916
----------- ---------- ----------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) on
bonds sold or called (30,159) 19 6,983
Unrealized depreciation
for the year (130,529) (89,413) (87,259)
----------- ---------- ----------
Net loss
on investments (160,688) (89,394) (80,276)
----------- ---------- ----------
Net increase in net
assets resulting
from operations $ 236,280 327,704 371,640
=========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
------------- - ------------- ------------
1994 1993 1992
------------- ------------- ------------
<S> <C> <C> <C>
Operations:
Investment income, net $ 396,968 417,098 451,916
Net realized gain (loss) on
bonds sold or called (30,159) 19 6,983
Unrealized depreciation
for the year (130,529) (89,413) (87,259)
------------- ------------- ------------
Net increase in net
assets resulting
from operations 236,280 327,704 371,640
------------- ------------- ------------
Distributions:
To Certificateholders:
Investment income 398,482 416,226 446,273
Principal 312,395 - 396,946
Redemptions:
Interest 1,915 92 4,530
Principal 98,244 5,477 129,323
------------- ------------- ------------
Total distributions and
redemptions 811,036 421,795 977,072
------------- ------------- ------------
Total decrease (574,756) (94,091) (605,432)
Net assets at beginning of year 4,783,531 4,877,622 5,483,054
------------- ------------- ------------
Net assets at end of year (including
undistributed net investment
income of $95,791, $99,220 and
$102,466, respectively) $ 4,208,775 4,783,531 4,877,622
============= ============= ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Notes to Financial Statements
June 30, 1994, 1993 and 1992
(1) Organization and Financial and Statistical Information
Municipal Securities Trust, 41st Discount Series (Trust) was
organized on December 12, 1985 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
United States Trust Company 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 appreciation (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 investments 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 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.
The Trust Indenture and Agreement also requires the Trust to redeem
units tendered. 185, 10 and 218 units were redeemed in the years
ended June 30, 1994, 1993, and 1992, respectively.
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.
(5) Net Assets
At June 30, 1994, the net assets of the Trust represented the interest
of Certificateholders as follows:
Original cost to Certificateholders $ 5,277,091
Less initial gross underwriting commission (290,250)
4,986,841
Cost of securities sold or called (943,815)
Net unrealized appreciation 69,953
Undistributed net investment income 95,791
Undistributed proceeds from bonds sold or called 5
Total $ 4,208,775
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 9,000 units of
fractional undivided interest of the Trust as of the date of deposit.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
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 $ 250,000 Dade County, Florida AAA* 10.000% 10/01/06 @ 100 S.F. $ 271,553
Solid Waste System 10/01/2010 10/01/95 @ 102 Ref.
Special Obligation
Revenue Bonds, Series
1985 A (5)
2 400,000 State of Illinois AAA 9.500 12/01/06 @ 100 S.F. 439,756
Civic Center Bonds 12/15/2015 12/15/95 @ 103 Ref.
(Deducated Tax
Revenue Bonds) Series
1985 (5)
3 250,000 Illinois Educational BBB+ 9.625 7/01/99 @ 100 S.F. 264,635
Facilities Authority 7/01/2005 7/01/95 @ 102 Ref.
Revenue Refunding
Bonds Chicago College
of Osteopathic
Medicine Series 1985
4 430,000 Port Authority of the CCC 9.625 12/01/01 @ 100 S.F. 412,422
City of Saint Paul 12/01/2014 12/01/95 @ 102 Ref.
(Minnesota)
Industrial
Development Revenue
Bonds Series 1985 T
5 400,000 Salem County, New A2* 10.375 No Sinking Fund 412,676
Jersey Industrial 9/01/2014 9/01/94 @ 102 Ref.
Development Authority
Pollution Control
Financing Authority
Revenue Bonds (Public
Service Electric and
Gas Project) 1984 B
Series
6 150,000 North Carolina AAA 10.125 1/01/01 @ 100 S.F. 158,618
Eastern Municipal 1/01/2003 1/01/95 @ 103 Ref.
Power Agency Power
System Revenue Bonds,
1985 D (5)
7 310,000 North Carolina AAA 10.250 1/01/04 @ 100 S.F. 328,002
Eastern Municipal 1/01/2009 1/01/95 @ 103 Ref.
Power Agency Power
System Revenue Bonds,
1985 D (5)
8 395,000 The Metroplitan BAA2* 9.875 No Sinking Fund 422,611
Nashville Airport 10/01/2005 10/01/95 @ 102 Ref.
Authority Special
Facility Revenue
Bonds, Series 1985
(American Airlines,
Inc. Project)
9 65,000 City of Austin, Texas AAA 11.000 11/15/00 @ 100 S.F. 82,718
Combined Utility 11/15/2004 11/15/99 @ 100 Ref.
Systems Revenue
Refunding Bonds,
Series 1984 (5)
10 200,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 219,164
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
10a 185,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 202,726
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
11 400,000 Brazos River A- 9.875 No Sinking Fund 430,000
Authority (Texas) 8/01/2015 8/01/95 @ 102 Ref.
Pollution Control
Revenue Bonds
(Houston Lighting &
Power Company
Project), Series A
12 450,000 West Virginia Water BBB+ 9.500 11/01/16 @ 100 S.F. 468,098
Development Authority 11/01/2025 11/01/94 @ 102 Ref.
Water Development
Refunding and
Imrprovement Revenue
Bonds (Loan Program)
1985 Series A (5)
----------- ----------
$ 3,885,000 $ 4,112,979
=========== ==========
See acompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1994
(1) All ratings are by Standard & Poor's Corporation, except for those
identified by an asterisk (*) which are by Moody's Investors Service,
Inc. 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 $ 122,518
Gross unrealized depreciation ( 52,565)
Net unrealized appreciation $ 69,953
(4) The annual interest income, based upon bonds held at June 30, 1994,
to the Trust is $384,781.
(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).
<PAGE>
Note: Part B of This Prospectus May Not Be
Distributed Unless Accompanied by Part A.
Please Read and Retain Both Parts
of This Prospectus for Future Reference.
MUNICIPAL SECURITIES TRUST
Prospectus Part B
Dated: October 28, 1994
THE TRUST
Organization
"Municipal Securities Trust" (the "Trust") consists of the "unit
investment trusts" designated as set forth in Part A.* The Trust was
created under the laws of the State of New York pursuant to a Trust
Indenture and Agreements** (collectively, the "Trust Agreement"), dated
the Date of Deposit, among Bear, Stearns & Co. Inc., as Sponsor, Kenny S&P
Evaluation Services, as Evaluator, and, depending on the particular Trust,
either The Bank of New York or United States Trust Company of New York, as
Trustee. The name of the Trustee for a particular Trust is contained in
the "Summary of Essential Information" in Part A. For a description of
the Trustee for a particular Trust, see "Trust Administration--The
Trustee."
* This Part B relates to the outstanding series of Municipal Securities
Trust or Municipal Securities Trust Discount Series as reflected in
Part A attached hereto.
** References in this Prospectus to the Trust Agreements are qualified
in their entirety by the respective Trust Indentures and Agreements
which are incorporated herein by reference.
On the Date of Deposit the Sponsor deposited with the Trustee
long-term bonds and/or delivery statements relating to contracts for the
purchase of certain such bonds (the "Bonds") and cash or an irrevocable
letter of credit issued by a major commercial bank in the amount required
for such purchases. Thereafter, the Trustee, in exchange for the Bonds so
deposited, delivered to the Sponsor the Certificates evidencing the
ownership of all Units of the Trust.
The Trust consists of the bonds described under "The Trust" in
Part A of this Prospectus, the interest (including, where applicable
earned original discount) on which, in the opinions of bond counsel to the
respective issuers given at the time of original delivery of the Bonds, is
exempt from regular federal income tax under existing law.
Each "Unit" outstanding on the Evaluation Date represented an
undivided interest or pro rata share in the principal and interest of the
Trust in the per Unit ratio set forth under "Summary of Essential
Information" in Part A. To the extent that any Units are redeemed by the
Trustee, the fractional undivided interest or pro rata share in the Trust
represented by each unredeemed Unit will increase, although the actual
interest in the Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Certificateholders, which may include the Sponsor or until the termination
of the Trust Agreement.
Objectives
The Trust, one of a series of similar but separate unit
investment trusts formed by the Sponsor, offers investors the opportunity
to participate in a portfolio of long-term tax-exempt bonds with a greater
diversification than they might be able to acquire themselves. The
objectives of the Trust are 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 given at
the time of original delivery of the Bonds, is, with certain exceptions,
exempt from regular federal income tax under existing law. Such interest
income may, however, be subject to the federal corporate alternative
minimum tax and to state and local taxes. An investor will realize
taxable income upon maturity or early redemption of the market discount
bonds in a Trust portfolio and will realize, where applicable, tax-exempt
income to the extent of the earned portion of interest, including original
issue discount earned on the bonds in a Trust portfolio. Investors should
be aware that there is no assurance the Trust's objectives will be
achieved as these objectives are dependent on the continuing ability of
the issuers of the Bonds to meet their interest and principal payment
requirements, on the continuing satisfaction of the Bonds of the
conditions required for the exemption of interest thereon from regular
federal income tax, and on the market value of the Bonds, which can be
affected by fluctuations in interest rates and other factors.
Since disposition of Units prior to final liquidation of the
Trust may result in an investor receiving less than the amount paid for
such Units (see "Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price"), the purchase of a Unit should be looked upon
as a long-term investment. Neither the Trust nor the Total Reinvestment
Plan is designed to be a complete investment program.
Portfolio
All of the Bonds in the Trust were rated "A" or better by
Standard & Poor's Corporation or Moody's Investors Service, Inc. at the
time originally deposited in the Trust. For a list of the ratings of each
Bond on the Evaluation Date, see "Portfolio" in Part A.
For information regarding (i) the number of issues in the Trust,
(ii) the range of fixed maturities of the Bonds, (iii) the number of
issues payable from the income of a specific project or authority and
(iv) the number of issues constituting general obligations of a government
entity, see "The Trust" and "Portfolio" in Part A.
When selecting Bonds for the Trust, the following factors, among
others, were considered by the Sponsor on the Date of Deposit: (a) the
quality of the Bonds and whether such Bonds were rated "A" or better by
either Standard & Poor's Corporation or Moody's Investors Service, Inc.,
(b) the yield and price of the Bonds relative to other tax-exempt
securities of comparable quality and maturity, (c) income to the Certifi-
cateholders of the Trust and (d) the diversification of the Trust
portfolio, as to purpose of issue and location of issuer, taking into
account the availability in the market of issues which meet the Trust's
quality, rating, yield and price criteria. Subsequent to the Evaluation
Date, a Bond may cease to be rated or its rating may be reduced below that
specified above. Neither event requires an elimination of such Bond from
a Trust but may be considered in the Sponsor's determination to direct the
Trustee to dispose of the Bond. See "Portfolio Supervision". For an
interpretation of the bond ratings see "Description of Bond Ratings".
Housing Bonds. Some of the aggregate principal amount of the
Bonds may consist of obligations of state and local housing authorities
whose revenues are primarily derived from mortgage loans to rental housing
projects for low to moderate income families. Since such obligations are
usually not general obligations of a particular state or municipality and
are generally payable primarily or solely from rents and other fees,
adverse economic developments including failure or inability to increase
rentals, fluctuations of interest rates and increasing construction and
operating costs may reduce revenues available to pay existing obligations.
See "Description of Portfolio" in Part A for the amount of rental housing
bonds contained therein.
Hospital Revenue Bonds. Some of the aggregate principal amount
of the Bonds may consist of hospital revenue bonds. Ratings of hospital
bonds are often initially based on feasibility studies which contain
projections of occupancy levels, revenues and expenses. Actual experience
may vary considerably from such projections. A hospital's gross receipts
and net income will be affected by future events and conditions including,
among other things, demand for hospital services and the ability of the
hospital to provide them, physicians' confidence in hospital management
capability, economic developments in the service area, competition,
actions by insurers and governmental agencies and the increased cost and
possible unavailability of malpractice insurance. Additionally, a major
portion of hospital revenue typically is derived from federal or state
programs such as Medicare and Medicaid which have been revised
substantially in recent years and which are undergoing further review at
the state and federal level.
The health care delivery system is undergoing considerable
alteration and consolidation. Consistent with that trend, the ownership
or management of a hospital or health care facility may change, which
could result in (i) an early redemption of bonds, (ii) alteration of the
facilities financed by the Bonds or which secure the Bonds, (iii) a change
in the tax exempt status of the Bonds or (iv) an inability to produce
revenues sufficient to make timely payment of debt service on the Bonds.
Proposals for significant changes in the health care system and
the present programs for third party payment of health care costs are
under consideration in Congress and many states. Future legislation or
changes in the areas noted above, among other things, would affect all
hospitals to varying degrees and, accordingly, any adverse change in these
areas may affect the ability of such issuers to make payment of principal
and interest on such bonds. See "Description of Portfolio" in Part A for
the amount of hospital revenue bonds contained therein.
Nuclear Power Facility Bonds. Certain Bonds may have been
issued in connection with the financing of nuclear generating facilities.
In view of recent developments in connection with such facilities,
legislative and administrative actions have been taken and proposed
relating to the development and operation of nuclear generating
facilities. The Sponsor is unable to predict whether any such actions or
whether any such proposals or litigation, if enacted or instituted, will
have an adverse impact on the revenues available to pay the debt service
on the Bonds in the portfolio issued to finance such nuclear projects.
See "Description of Portfolio" in Part A for the amount of bonds issued to
finance nuclear generating facilities contained therein.
Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy
bonds" which are obligations of which all or a significant portion of the
proceeds are to be used directly or indirectly for mortgages on owner-
occupied residences. Section 103A of the Internal Revenue Code of 1954,
as amended, provided as a general rule that interest on "mortgage subsidy
bonds" will not be exempt from Federal income tax. An exception is
provided for certain "qualified mortgage bonds." Qualified mortgage bonds
are bonds that are used to finance owner-occupied residences and that meet
numerous statutory requirements. These requirements include certain
residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions and (for bonds
issued after December 31, 1984) certain information reporting,
certification, public hearing and policy statement requirements. In the
opinions of bond counsel to the issuing governmental authorities, interest
on all the Bonds in a Trust that might be deemed "mortgage subsidy bonds"
will be exempt from Federal income tax when issued. See "Description of
Portfolio" in Part A for the amount of mortgage subsidy Bonds contained
therein.
Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue
bonds." Under the Internal Revenue Code of 1986, as amended (the "Code")
(and under similar provisions of the prior tax law) "mortgage revenue
bonds" are obligations the proceeds of which are used to finance owner-
occupied residences under programs which meet numerous statutory
requirements relating to residency, ownership, purchase price and target
area requirements, ceiling amounts for state and local issuers, arbitrage
restrictions, and certain information reporting certification, and public
hearing requirements. There can be no assurance that additional federal
legislation will not be introduced or that existing legislation will not
be further amended, revised, or enacted after delivery of these Bonds or
that certain required future actions will be taken by the issuing
governmental authorities, which action or failure to act could cause
interest on the Bonds to be subject to federal income tax. If any portion
of the Bonds proceeds are not committed for the purpose of the issue,
Bonds in such amount could be subject to earlier mandatory redemption at
par, including issues of Zero Coupon Bonds (see "Discount and Zero Coupon
Bonds"). See "Description of Portfolio" in Part A for the amount of
mortgage revenue bonds contained therein.
Private Activity Bonds. The portfolio of the Trust may contain
other Bonds which are "private activity bonds" (often called Industrial
Revenue Bonds ("IRBs") if issued prior to 1987) which would be primarily
of two types: (1) Bonds for a publicly owned facility which a private
entity may have a right to use or manage to some degree, such as an
airport, seaport facility or water system and (2) facilities deemed owned
or beneficially owned by a private entity but which were financed with
tax-exempt bonds of a public issuer, such as a manufacturing facility or a
pollution control facility. In the case of the first type, bonds are
generally payable from a designated source of revenues derived from the
facility and may further receive the benefit of the legal or moral
obligation of one or more political subdivisions or taxing jurisdictions.
In most cases of project financing of the first type, receipts or revenues
of the Issuer are derived from the project or the operator or from the
unexpended proceeds of the bonds. Such revenues include user fees,
service charges, rental and lease payments, and mortgage and other loan
payments.
The second type of issue will generally finance projects which
are owned by or for the benefit of, and are operated by, corporate
entities. Ordinarily, such private activity bonds are not general
obligations of governmental entities and are not backed by the taxing
power of such entities, and are solely dependent upon the creditworthiness
of the corporate user of the project or corporate guarantor.
The private activity bonds in the Trust have generally been
issued under bond resolutions, agreements or trust indentures pursuant to
which the revenues and receipts payable under the issuer's arrangements
with the users or the corporate operator of a particular project have been
assigned and pledged to the holders of the private activity bonds. In
certain cases a mortgage on the underlying project has been assigned to
the holders of the private activity bonds or a trustee as additional
security. In addition, private activity bonds are frequently directly
guaranteed by the corporate operator of the project or by another
affiliated company. See "Description of Portfolio" in Part A for the
amount of private activity bonds contained therein.
Litigation. Litigation challenging the validity under state
constitutions of present systems of financing public education has been
initiated in a number of states. Decisions in some states have been
reached holding such school financing in violation of state constitutions.
In addition, legislation to effect changes in public school financing has
been introduced in a number of states. The Sponsor is unable to predict
the outcome of the pending litigation and legislation in this area and
what effect, if any, resulting changes in the sources of funds, including
proceeds from property taxes applied to the support of public schools, may
have on the school bonds in a Trust.
Legal Proceedings Involving the Trusts. The Sponsor has been
notified of the following events involving the County of El Paso, Colorado
Single Family Mortgage Revenue Bonds, 1982 Series A (the "El Paso Bonds")
contained in the portfolio of several of the Trusts set forth in Part A of
this Prospectus:
The Sponsor has been notified by the bond trustee that the
obligor on the El Paso Bonds failed to make to the bond trustee the full
interest payment due on September 1, 1994. The failure to make a full
interest payment to the bond trustee constitutes an event of default under
the terms of the bond indenture. Accordingly, the Trusts containing the
El Paso Bonds have stopped accruing interest on the El Paso Bonds.
Other than the event of default relating to the El Paso Bonds
described above, as of the date of this Prospectus the Sponsor has not
been notified or made aware of any litigation pending with respect to
any Bonds which might reasonably be expected to have a material adverse
effect on a Trust. Such litigation, as, for example, suits challenging
the issuance of pollution control revenue bonds under recently-enacted
environmental protection statutes, may affect the validity of such
Bonds or the tax-free nature of the interest thereon. At any time after
the date of this Prospectus litigation may be instituted on a variety
of grounds with respect to the El Paso Bonds or any other Bonds in a
Trust. The Sponsor is unable to predict whether any such litigation
may be instituted or, if instituted, whether it might have a material
adverse effect on a Trust.
Other Factors. The Bonds in the Trust, despite their optional
redemption provisions which generally do not take effect until 10 years
after the original issuance dates of such bonds (often referred to as "ten
year call protection"), do contain provisions which require the issuer to
redeem such obligations at par from unused proceeds of the issue within a
stated period. In recent periods there have been increased redemptions of
bonds, particularly housing bonds, pursuant to such redemption provisions.
In addition, the Bonds in the Trusts are also subject to mandatory
redemption in whole or in part at par at any time that voluntary or
involuntary prepayments of principal on the underlying collateral are made
to the trustee for such bonds or that the collateral is sold by the bond
issuer. Prepayments of principal tend to be greater in periods of
declining interest rates; it is possible that such prepayments could be
sufficient to cause a bond to be redeemed substantially prior to its
stated maturity date, earliest call date or sinking fund redemption date.
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, or termination of a contract).
In 1976 the federal bankruptcy laws were amended so that an
authorized municipal debtor could more easily seek federal court
protection to assist in reorganizing its debts so long as certain
requirements were met. Historically, very few financially troubled
municipalities have sought court assistance for reorganizing their debts;
notwithstanding, the Sponsors are unable to predict to what extent
financially troubled municipalities may seek court assistance in
reorganizing their debts in the future and, therefore, what effect, if
any, the applicable federal bankruptcy law provisions will have on the
Trusts.
The Trust may also include "moral obligation" bonds. Under
statutes applicable to such bonds, if an issuer is unable to meet its
obligations, the repayment of such bonds becomes a moral commitment but
not a legal obligation of the state or municipality in question. See
"Description of Portfolio" and "The Trust" in Part A of this Prospectus
for the amount of moral obligations bonds contained in the Trust.
Certain of the Bonds in the Trust are subject to redemption
prior to their stated maturity dates pursuant to sinking fund or call
provisions. A sinking fund is a reserve fund appropriated specifically
toward the retirement of a debt. A callable bond is one which is subject
to redemption or refunding prior to maturity at the option of the issuer.
A refunding is a method by which a bond is redeemed at or before maturity
from the proceeds of a new issue of bonds. In general, call provisions
are more likely to be exercised when the offering side evaluation of a
bond is at a premium over par than when it is at a discount from par. A
listing of the sinking fund and call provisions, if any, with respect to
each of the Bonds is contained under "Portfolio" in Part A of this
Prospectus. Certificateholders will realize a gain or loss on the early
redemption of such Bonds, depending upon whether the price of such Bonds
is at a discount from or at a premium over par at the time Certificate-
holders purchase their Units.
Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any of the Bonds. Because certain
of the Bonds from time to time may be redeemed or will mature in
accordance with their terms or may be sold under certain circumstances, no
assurance can be given that a Trust will retain its present size and
composition for any length of time. The proceeds from the sale of a Bond
or the exercise of any redemption or call provision will be distributed to
Certificateholders on the next distribution date, except to the extent
such proceeds are applied to meet redemptions of Units. See "Trustee
Redemption".
Discount and Zero Coupon Bonds
Some of the Bonds in the Municipal Discount Trust and Municipal
Trust may contain original issue discount bonds (see "Description of
Portfolio" in the Part A). The original issue discount, which is the
difference between the initial purchase price of the Bonds and the face
value, is deemed to accrue on a daily basis and the accrued portion will
be treated as tax-exempt interest income for regular federal income tax
purposes. Upon sale or redemption, any gain realized that is in excess of
the earned portion of original issue discount will be taxable as capital
gain. (See "Tax Status".) The current value of an original issue
discount bond reflects the present value of its face amount at maturity.
The market value tends to increase more slowly in early years and in
greater increments as the Bonds approach maturity. Of these original
issue discount bonds, a portion of the aggregate principal amount of the
Bonds in the Trust are Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at face value unless sooner sold or redeemed. The market value
of Zero Coupon Bonds is subject to greater fluctuation than coupon bonds
in response to changes in interest rates. Zero Coupon Bonds generally are
subject to redemption at compound accreted value based on par value at
maturity. Because the issuer is not obligated to make current interest
payments, Zero Coupon Bonds may be less likely to be redeemed than coupon
bonds issued at a similar interest rate.
Some of the Bonds in the Trust may have been purchased at a
"market" discount from par value at maturity. This is because the coupon
interest rates on the discount bonds at the time they were purchased and
deposited in the Trust were lower than the current market interest rates
for newly issued bonds of comparable rating and type. At the time of
issuance the discount bonds were for the most part issued at then current
coupon interest rates. The current returns (coupon interest income as a
percentage of market price) of discount bonds will be lower than the
current returns of comparably rated bonds of similar type newly issued at
current interest rates because discount bonds tend to increase in market
value as they approach maturity and the full principal amount becomes
payable. A discount bond held to maturity will have a larger portion of
its total return in the form of capital gain and less in the form of tax-
exempt interest income than a comparable bond newly issued at current
market rates. Gain on the disposition of a Bond purchased at a market
discount generally will be treated as ordinary income, rather than capital
gain, to the extent of accrued market discount. Discount bonds with a
longer term to maturity tend to have a higher current return and a lower
current market value than otherwise comparable bonds with a shorter term
of maturity. If interest rates rise, the value of discount bonds will
decrease; and if interest rates decline, the value of discount bonds will
increase. The discount does not necessarily indicate a lack of market
confidence in the issuer.
PUBLIC OFFERING
Offering Price
The secondary market Public Offering Price per Unit is computed
by adding to the aggregate bid price of the Bonds in each Trust divided by
the number of Units outstanding, an amount based on the applicable sales
charge times such aggregate bid price of the Bonds in each Trust (see
"Public Offering Price" in Part A for the applicable sales charge for the
Trust). A proportionate share of accrued interest on the Bonds to the
expected date of settlement for the Units is added to the Public Offering
Price. Accrued interest is the accumulated and unpaid interest on a Bond
from the last day on which interest was paid and is initially accounted
for daily by the Trust at the daily rate set forth under "Summary of
Essential Information" in Part A. The secondary market Public Offering
Price can vary on a daily basis from the amount stated in Part A in
accordance with fluctuations in the prices of the Bonds. The price to be
paid by each investor will be computed on the basis of an evaluation made
on the day the Units are purchased. The aggregate bid price evaluation of
the Bonds is determined in the manner set forth under "Trustee
Redemption".
The Evaluator may obtain current prices for the Bonds from
investment dealers or brokers (including the Sponsor) that customarily
deal in tax-exempt obligations or from any other reporting service or
source of information which the Evaluator deems appropriate.
Accrued Interest
An amount of accrued interest which represents accumulated
unpaid or uncollected interest on a Bond from the last day on which
interest was paid thereon will be added to the Public Offering Price and
paid by the Certificateholder at the time the Units are purchased. Since
the Trust normally receives the interest on Bonds twice a year and the
interest on the Bonds in the Trust is accrued on a daily basis, the Trust
will always have an amount of interest accrued but not actually received
and distributed to Certificateholders. A Certificateholder will not
recover his proportionate share of accrued interest until the Units are
sold or redeemed, or the Trust is terminated. At that time, the Certifi-
cateholder will receive his proportionate share of the accrued interest
computed to the settlement date in the case of a sale or termination and
to the date of tender in the case of redemption.
Employee Discounts
Employees (and their immediate families) of Bear, Stearns & Co.
Inc. and of any underwriter of a Trust, pursuant to employee benefit
arrangements, may purchase Units of a Trust at a price equal to the bid
side evaluation of the underlying securities in the Trust divided by the
number of Units outstanding plus a reduced sales charge of $10.00 per
Unit. Such arrangements result in less selling effort and selling
expenses than sales to employee groups of other companies. Resales or
transfers of Units purchased under the employee benefit arrangements may
only be made through the Sponsor's secondary market, so long as it is
being maintained.
Distribution of Units
Certain banks and thrifts will make Units of the Trust available
to their customers on an agency basis. A portion of the sales charge paid
by their customers is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Units; however,
the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
The Sponsor intends to qualify the Units for sale in
substantially all States through dealers who are members of the National
Association of Securities Dealers, Inc. Units may be sold to dealers at
prices which represent a concession of up to (a) 4% of the Public Offering
Price for the Municipal Securities Trust Series or (b) $25.00 per unit for
the Municipal Securities Trust Discount Series, subject to the Sponsor's
right to change the dealers' concession from time to time. Such Units may
then be distributed to the public by the dealers at the Public Offering
Price then in effect. In addition, for transactions of 1,000,000 Units or
more, the Sponsor intends to negotiate the applicable sales charge and
such charge will be disclosed to any such purchaser. The Sponsor reserves
the right to reject, in whole or in part, any order for the purchase of
Units. The Sponsor reserves the right to change the discounts from time
to time.
Sponsor's Profits
The Sponsor will receive a gross commission on all Units sold in
the secondary market equal to the applicable sales charge on each
transaction. (See "Offering Price".) In addition, in maintaining a
market for the Units (see "Sponsor Repurchase"), the Sponsor will realize
profits or sustain losses in the amount of any difference between the
price at which it buys Units and the price at which it resells such Units.
Participants in the "Total Reinvestment Plan" can designate a
broker as the recipient of a dealer concession. See "Total Reinvestment
Plan".
Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price
The secondary market Public Offering Price of Units will be
determined on the basis of the current bid prices of the Bonds in the
Trust, plus the applicable sales charge. The value at which Units may be
resold in the secondary market or redeemed will be determined on the basis
of the current bid prices of such Bonds without any sales charge. On the
Evaluation Date, the Public Offering Price per Unit (based on the bid
prices of the Bonds in the Trust plus the sales charge) exceeded the
Repurchase and Redemption Price per Unit (based upon the bid prices of the
Bonds in the Trust without the sales charge) by the amount shown under
"Summary of Essential Information" in Part A of this Prospectus. For this
reason, among others (including fluctuations in the market prices of Bonds
and the fact that the Public Offering Price includes the applicable sales
charge), the amount realized by a Certificateholder upon any redemption or
repurchase of Units may be less than the price paid for such Units.
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
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 a 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 each 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
each Trust); and (3) reducing the average yield for the portfolio of each
Trust in order to reflect estimated fees and expenses of that Trust and
the maximum sales charge paid by Certificateholders. The resulting
Estimated Long Term Return represents a measure of the return to
Certificateholders earned over the estimated life of each Trust. The
Estimated Long Term Return as of the day prior to the Evaluation Date is
stated for each Trust under "Summary of Essential Information" in Part A.
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 portfolios of each 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. On the day prior to the Evaluation Date, the Estimated Net
Annual Interest Income per Unit divided by the Public Offering Price
resulted in the Estimated Current Return stated for each Trust under
"Summary of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of each Trust
will vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to each Trust and with the redemption, maturity, sale
or other disposition of the Bonds in each Trust. The Public Offering
Price will vary with 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.
A schedule of cash flow projections is available from the
Sponsors upon request.
RIGHTS OF CERTIFICATEHOLDERS
Certificates
Ownership of Units of the Trust is evidenced by registered
Certificates executed by the Trustee and the Sponsor. Certificates may be
issued in denominations of one or more Units and will bear appropriate
notations on their faces indicating which plan of distribution has been
selected by the Certificateholder. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed and/or
accompanied by a written instrument or instruments of transfer. Although
no such charge is presently made or contemplated, the Trustee may require
a Certificateholder to pay $2.00 for each Certificate reissued or
transferred and any governmental charge that may be imposed in connection
with each such transfer or interchange. Mutilated, destroyed, stolen or
lost Certificates will be replaced upon delivery of satisfactory indemnity
and payment of expenses incurred.
Interest and Principal Distributions
Interest received by the Trust is credited by the Trustee to an
Interest Account and a deduction is made to reimburse the Trustee without
interest for any amounts previously advanced. Proceeds representing
principal received from the maturity, redemption, sale or other
disposition of the Bonds are credited to a Principal Account.
Distributions to each Certificateholder from the Interest
Account are computed as of the close of business on each Record Date for
the following Payment Date and consist of an amount substantially equal to
one-twelfth, one-half or all of each Certificateholder's pro rata share of
the Estimated Net Annual Interest Income in the Interest Account,
depending upon the applicable plan of distribution. Distributions from
the Principal Account will be computed as of each semi-annual Record Date,
and will be made to the Certificateholders on or shortly after the next
semi-annual Payment Date. Proceeds representing principal received from
the disposition of any of the Bonds between a Record Date and a Payment
Date which are not used for redemptions of Units will be held in the
Principal Account and not distributed until the second succeeding semi-
annual Payment Date. No distributions will be made to Certificateholders
electing to participate in the Total Reinvestment Plan, except as provided
thereunder. Persons who purchase Units between a Record Date and a
Payment Date will receive their first distribution on the second Payment
Date after such purchase.
Because interest payments are not received by the Trust at a
constant rate throughout the year, interest distributions may be more or
less than the amount credited to the Interest Account as of a given Record
Date. For the purpose of minimizing fluctuations in the distributions
from the Interest Account, the Trustee will advance sufficient funds,
without interest, as may be necessary to provide interest distributions of
approximately equal amounts. All funds in respect of the Bonds received
and held by the Trustee prior to distribution to Certificateholders may be
of benefit to the Trustee and do not bear interest to Certificateholders.
As of the first day of each month, the Trustee will deduct from
the Interest Account, and, to the extent funds are not sufficient therein,
from the Principal Account, amounts necessary to pay the expenses of the
Trust (as determined on the basis set forth under "Trust Expenses and
Charges"). The Trustee also may withdraw from said accounts such amounts,
if any, as it deems necessary to establish a reserve for any applicable
taxes or other governmental charges that may be payable out of the Trust.
Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may
withdraw from the Interest and Principal Accounts such amounts as may be
necessary to cover redemptions of Units by the Trustee.
The estimated monthly, semi-annual or annual interest
distribution per Unit will be in the amount shown under Summary of
Essential Information and will change and may be reduced as bonds mature
or are redeemed, exchanged or sold, or as expenses of the Trust fluctuate.
No distribution need be made from the Principal Account until the balance
therein is an amount sufficient to distribute $1.00 per Unit.
Distribution Elections
Interest is distributed monthly, semi-annually or annually,
depending upon the distribution plan applicable to the Unit purchased.
Record Dates are the first day of each month for monthly distributions,
the first day of each June and December for semi-annual distributions and
the first day of each December for annual distributions. Payment Dates
will be the fifteenth day of each month following the respective Record
Dates. Certificateholders purchasing Units in the secondary market will
initially receive distributions in accordance with the election of the
prior owner. Every October each Certificateholder may change his
distribution election by notifying the Trustee in writing of such change
between October 1 and November 1 of each year. (Certificateholders
deciding to change their election should contact the Trustee by calling
the number listed on the back cover hereof for information regarding the
procedures that must be followed in connection with this written
notification of the change of election.) Failure to notify the Trustee on
or before November 1 of each year will result in a continuation of the
plan for the following 12 months.
Records
The Trustee shall furnish Certificateholders in connection with
each distribution a statement of the amount of interest, if any, and the
amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit. Within a reasonable time after
the end of each calendar year (normally prior to January 31 of the
succeeding year), the Trustee will furnish to each person who at any time
during the calendar year was a Certificateholder of record, a statement
showing (a) as to the Interest Account: interest received (including any
earned original issue discount and amounts representing interest received
upon any disposition of Bonds), amounts paid for redemptions of Units, if
any, deductions for applicable taxes and fees and expenses of the Trust,
and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; (b) as to the Principal Account: the
dates of disposition of any Bonds and the net proceeds received therefrom
(including any unearned original issue discount but excluding any portion
representing accrued interest), deductions for payments of applicable
taxes and fees and expenses of the Trust, amounts paid for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; (c) a list of the Bonds held and the
number of Units outstanding on the last business day of such calendar
year; (d) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (e) amounts actually
distributed to Certificateholders during such calendar year from the
Interest and Principal Accounts, separately stated, expressed both as
total dollar amounts and as dollar amounts representing the pro rata share
of each Unit outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Certificate-
holders at all reasonable times during usual business hours, books of
record and account of its transactions as Trustee, including records of
the names and addresses of Certificateholders, Certificates issued or
held, a current list of Bonds in the portfolio and a copy of the Trust
Agreement.
TAX STATUS
All Bonds acquired by the Trust were accompanied by copies of
opinions of bond counsel to the issuing governmental authorities given at
the time of original delivery of the Bonds to the effect that the interest
thereon is exempt from regular federal income tax, but such interest may
be subject to the federal corporate alternative minimum tax and to state
and local taxes. Neither the Sponsor nor the Trustee nor their respective
counsel have made any review of the proceedings relating to the issuance
of the Bonds or the bases for such opinions, and express no opinion as to
these matters, and neither the Trustee nor the Sponsor nor their
respective counsel have made an independent examination or verification
that the federal income tax status of the Bonds has not been altered since
the time of the original delivery of those opinions.
The Revenue Reconciliation Act of 1993 ("P.L. 103-66") was
recently enacted. P.L. 103-66 increases maximum marginal income tax rates
for individuals and corporations (generally effective for taxable years
beginning after December 31, 1992), extends the authority to issue certain
categories of tax-exempt bonds (qualified small issue bonds and qualified
mortgage bonds), limits the availability of capital gain treatment for
tax-exempt bonds purchased at a market discount, increases the amount of
Social Security benefits subject to tax (effective for taxable years
beginning after December 31, 1993) and makes a variety of other changes.
Prospective investors are urged to consult their own tax advisors as to
the effect of P.L. 103-66 on an investment in Units.
In rendering the opinion set forth below, counsel has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness
of the facts set forth therein.
In the opinion of Battle Fowler, counsel for the Sponsor, under
existing law:
The Trust is not an association taxable as a corporation for federal
income tax purposes under the Internal Revenue Code of 1986 (the "Code"),
and income received by the Trust that consists of interest excludable from
federal gross income under the Code will be excludable from the federal
gross income of the Certificateholders of the Trust.
Each Certificateholder will be considered the owner of a pro rata
portion of the Trust under Section 676(a) of the Code. Thus, each Cer-
tificateholder will be considered to have received his pro rata share of
Bond interest when it is received by the Trust, and the net income
distributable to Certificateholders that is exempt from federal income tax
when received by the Trust will constitute tax-exempt income when received
by the Certificateholders.
Gain (other than any earned original issue discount) realized on a
sale or redemption of the Bonds or on a sale of a Unit is, however,
includable in gross income for federal income tax purposes, generally as
capital gain, although gain on the disposition of a Bond or a Unit
purchased at a market discount generally will be treated as ordinary
income, rather than capital gain, to the extent of accrued market
discount. (It should be noted in this connection that such gain does not
include any amounts received in respect of accrued interest.) Such gain
may be long or short-term depending on the facts and circumstances.
Capital losses are deductible to the extent of capital gains; in addition,
up to $3,000 of capital losses of non-corporate Certificateholders may be
deducted against ordinary income. Capital assets acquired on or after
January 1, 1988 must be held for more than one year to qualify for long-
term capital gain treatment. Individuals who realize long-term capital
gains will be subject to a maximum tax rate of 28% on such gain.
Each Certificateholder will realize taxable gain or loss when the
Trust disposes of a Bond (whether by sale, exchange, redemption or payment
at maturity), as if the Certificateholder had directly disposed of his pro
rata share of such Bond. The gain or loss is measured by the difference
between (i) the tax cost of such pro rata share and (ii) the amount
received therefor. For this purpose, a Certificateholder's tax cost for
each Bond is determined by allocating the total tax cost of each Unit
among all of the Bonds held in the Trust (in accordance with the portion
of the Trust comprised by each Bond). In order to determine the amount of
taxable gain or loss, the Certificateholder's amount received is similarly
allocated at that time. The Certificateholder may exclude from the amount
received any amounts that represent accrued interest or the earned portion
of any original issue discount but may not exclude amounts attributable to
market discount. Thus, when a Bond is disposed of by the Trust at a gain,
taxable gain will equal the difference between (i) the amount received and
(ii) the amount paid plus any original issue discount (limited, in the
case of Bonds issued after June 8, 1980, to the portion earned from the
date of acquisition to the date of disposition). Gain on the disposition
of a Bond purchased at a market discount generally will be treated as
ordinary income, rather than capital gain, to the extent of accrued market
discount. No deduction is allowed for the amortization of bond premium on
tax-exempt bonds such as the Bonds in computing regular federal income
tax.
Discount generally accrues based on the principle of compounding of
accrued interest, not on a straight-line or ratable method, with the
result that the amount of earned original issue discount is less in the
earlier years and more in the later years of a bond term. The tax basis
of a discount bond is increased by the amount of accrued, tax-exempt
original issue discount thus determined. This method of calculation will
produce higher capital gains (or lower losses) to a Certificateholder, as
compared to the results produced by the straight-line method of accounting
for original issue discount, upon an early disposition of a Bond by the
Trust or of a Unit by a Certificateholder.
A Certificateholder may also realize taxable income or loss when a
Unit is sold or redeemed. The amount received is allocated among all the
Bonds in the Trust in the same manner as when the Trust disposes of Bonds
and the Certificateholder may exclude accrued interest and the earned
portion of any original issue discount (but not amounts attributable to
market discount). The return of a Certificateholder's tax cost is
otherwise a tax-free return of capital.
A portion of social security benefits is includable in gross income
for taxpayers whose "modified adjusted gross income" combined with a
portion of their benefits exceeds a base amount. The base amount is
$25,000 for an individual, $32,000 for a married couple filing a joint
return and zero for married persons filing separate returns. Interest on
tax-exempt bonds is to be added to adjusted gross income for purposes of
computing the amount of benefits that are includable in gross income and
determining whether an individual's income exceeds the base amount above
which a portion of the benefits would be subject to tax. For taxable
years beginning after December 31, 1993, the amount of Social Security
benefits subject to tax has been increased.
Corporate Certificateholders are required to include in federal
corporate alternative minimum taxable income 75 percent of the amount by
which the adjusted current earnings (which will include tax-exempt
interest) of the corporation exceeds alternative minimum taxable income
(determined without this item). Further, interest on the Bonds is
includable in a 0.12% additional corporate minimum tax imposed by the
Superfund Amendments and Reauthorization Act of 1986 for taxable years
beginning before January 1, 1996. In addition, in certain cases, Subchap-
ter S corporations with accumulated earnings and profits from Subchapter C
years will be subject to a minimum tax on excess "passive investment
income" which includes tax-exempt interest.
The Trust is not subject to the New York State Franchise Tax on
Business Corporations or the New York City General Corporation Tax. For a
Certificateholder who is a New York resident, however, a pro rata portion
of all or part of the income of the Trust will be treated as the income of
the Certificateholder under the income tax laws of the State and City of
New York. Similar treatment may apply in other states.
The exemption of interest on municipal obligations for federal
income tax purposes does not necessarily result in exemption under the
income tax laws of any state or political subdivision. In general,
municipal bond interest exempt from federal income tax is taxable income
to residents of the State or City of New York under the tax laws of those
jurisdictions unless the bonds are issued by the State of New York or one
of its political subdivisions or by the Commonwealth of Puerto Rico or one
of its political subdivisions. For corporations doing business in New
York State, interest earned on state and municipal obligations that are
exempt from federal income tax, including obligations of New York State,
its political subdivisions and instrumentalities, must be included in
calculating New York State and New York City entire net income for
purposes of computing New York State and New York City franchise (income)
tax. The laws of the several states and local taxing authorities vary
with respect to the taxation of such obligations and each Certificate-
holder is advised to consult his own tax advisor as to the tax
consequences of his Certificates under state and local tax laws.
In the case of Bonds that are industrial revenue bonds ("IRBs")
or certain types of private activity bonds, the opinions of bond counsel
to the respective issuing authorities indicate that interest on such Bonds
is exempt from regular federal income tax. However, interest on such
Bonds will not be exempt from regular federal income tax for any period
during which such Bonds are held by a "substantial user" of the facilities
financed by the proceeds of such Bonds or by a "related person" thereof
within the meaning of the Code. Therefore, interest on any such Bonds
allocable to a Certificateholder who is such a "substantial user" or
"related person" thereof will not be tax-exempt. Furthermore, in the case
of Bonds that qualify for the "small issue" exemption, the "small issue"
exemption will not be available or will be lost if, at any time during the
three-year period beginning on the later of the date the facilities are
placed in service or the date of issue, all outstanding tax-exempt IRBs,
together with a proportionate share of any present issue, of an owner or
principal user (or related person) of the facilities exceeds $40,000,000.
In the case of IRBs issued under the $10,000,000 "small issue" exemption,
interest on such IRBs will become taxable if the face amount of the IRBs
plus certain capital expenditures exceeds $10,000,000.
In addition, a Bond can lose its tax-exempt status as a result
of other subsequent but unforeseeable events such as prohibited
"arbitrage" activities by the issuer of the Bond or the failure of the
Bond to continue to satisfy the conditions required for the exemption of
interest thereon from regular federal income tax. No investigation has
been made as to the current or future owners or users of the facilities
financed by the Bonds, the amount of such persons' outstanding tax-exempt
IRBs, or the facilities themselves, and no assurance can be given that
future events will not affect the tax-exempt status of the Bonds.
Investors should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.
Interest on indebtedness incurred or continued to purchase or
carry the Units is not deductible for federal income tax purposes. In
addition, under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to
have been made with borrowed funds even though the borrowed funds are not
directly traceable to the purchase of Units. Also, in the case of certain
financial institutions that acquire Units, in general no deduction is
allowed for interest expense allocable to such Units.
From time to time proposals have been introduced before Congress
to restrict or eliminate the federal income tax exemption for interest on
debt obligations similar to the Bonds in the Trust, and it can be expected
that similar proposals may be introduced in the future.
In a 1988 decision (South Carolina v. Baker), the U.S. Supreme
Court held that the federal government may constitutionally require states
to register bonds they issue and subject the interest on such bonds to
federal income tax if not registered, and that there is no constitutional
prohibition against the federal government's taxing the interest earned on
state or other municipal bonds. The Supreme Court decision affirms the
authority of the federal government to regulate and control bonds such as
the Bonds in the Trust and to tax interest on such bonds in the future.
The decision does not, however, affect the current exemption from taxation
of the interest earned on the Bonds in the Trust in accordance with Sec-
tion 103 of the Code.
The opinions of bond counsel or special tax counsel to the
issuing governmental authorities to the effect that interest on the Bonds
is exempt from regular federal income tax may be limited to law existing
at the time the Bonds were issued, and may not apply to the extent that
future changes in law, regulations or interpretations affect such Bonds.
Investors are advised to consult their own tax advisors for advice with
respect to the effect of any legislative changes.
LIQUIDITY
Sponsor Repurchase
The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units. The Sponsor's secondary market
repurchase price will be based on the aggregate bid price of the Bonds in
the Trust portfolio, determined by the Evaluator on a daily basis, and
will be the same as the redemption price. See "Trustee Redemption". Cer-
tificateholders who wish to dispose of their Units should inquire of the
Sponsor prior to making a tender for redemption. The Sponsor may
discontinue repurchases of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the
date on which Certificates representing Units are physically received in
proper form by the Sponsor, Bear, Stearns & Co. Inc., 245 Park Avenue, New
York, N.Y. 10167. Units received after 4:00 P.M., New York Time, will be
deemed to have been repurchased on the next business day. In the event a
market is not maintained for the Units, a Certificateholder may be able to
dispose of Units only by tendering them to the Trustee for redemption.
Prospectuses relating to certain other bond trusts indicate an
intention by the respective Sponsors, subject to change, to repurchase
units on the basis of a price higher than the bid prices of the bonds in
the trust. Consequently, depending on the prices actually paid, the
secondary market repurchase price of other trusts may be computed on a
somewhat more favorable basis than the repurchase price offered by the
Sponsor for units of this Trust, although in all bond trusts, the purchase
price of a unit depends primarily on the value of the bonds in the trust
portfolio.
Units purchased by the Sponsor in the secondary market may be
reoffered for sale by the Sponsor at a price based on the aggregate bid
price of the Bonds in the Trust plus the applicable sales charge (see
"Public Offering Price" in Part A) plus net accrued interest. Any Units
that are purchased by the Sponsor in the secondary market also may be
redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service to
Certificateholders, elect to purchase any Units tendered to the Trustee
for redemption. (See "Trustee Redemption".) For example, if in order to
meet redemptions of Units the Trustee must dispose of Bonds, and if such
disposition cannot be made by the redemption date (seven calendar days
after tender), the Sponsor may elect to purchase such Units. Such
purchase shall be made by payment to the Certificateholder not later than
the close of business on the redemption date of an amount equal to the
Redemption Price on the date of tender.
Trustee Redemption
Units also may be tendered to the Trustee for redemption at its
corporate trust office as set forth in Part A of this Prospectus, upon
proper delivery of Certificates representing such Units and payment of any
relevant tax. At the present time there are no specific taxes related to
the redemption of Units. No redemption fee will be charged by the Sponsor
or the Trustee. Units redeemed by the Trustee will be cancelled.
Certificates representing Units to be redeemed must be delivered
to the Trustee and must be properly endorsed or accompanied by proper
instruments of transfer with signature guaranteed (or by providing
satisfactory indemnity, as in the case of lost, stolen or mutilated
Certificates). Thus, redemptions of Units cannot be effected until
Certificates representing such Units have been delivered by the person
seeking redemption. (See "Certificates".) Certificateholders must sign
exactly as their names appear on the faces of their Certificates. In
certain instances the Trustee may require additional documents such as,
but not limited to, trust instruments, certificates of death, appointments
as executor or administrator or certificates of corporate authority.
Within seven calendar days following a tender for redemption,
or, if such seventh day is not a business day, on the first business day
prior thereto, the Certificateholder will be entitled to receive in cash
an amount for each Unit tendered equal to the Redemption Price per Unit
computed as of the Evaluation Time on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the
Trustee, except that with respect to Units received after the close of
trading on the New York Stock Exchange, the date of tender is the next day
on which such Exchange is open for trading, and such Units will be deemed
to have been tendered to the Trustee on such day for redemption at the
Redemption Price computed on that day.
Accrued interest paid on redemption shall be withdrawn from the
Interest Account, or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be
withdrawn from the Principal Account. The Trustee is empowered to sell
Bonds in order to make funds available for redemptions. Such sales, if
required, could result in a sale of Bonds by the Trustee at a loss. To
the extent Bonds are sold, the size and diversity of the Trust will be
reduced.
The Redemption Price per Unit is the pro rata share of each Unit
in the Trust determined by the Trustee on the basis of (i) the cash on
hand in the Trust or moneys in the process of being collected, (ii) the
value of the Bonds in the Trust based on the bid prices of such Bonds and
(iii) interest accrued thereon, less (a) amounts representing taxes or
other governmental charges payable out of the Trust, (b) the accrued
expenses of the Trust and (c) cash allocated for the distribution to Cer-
tificateholders of record as of the business day prior to the evaluation
being made. The Evaluator may determine the value of the Bonds in the
Trust for purposes of redemption (1) on the basis of current bid prices of
the Bonds obtained from dealers or brokers who customarily deal in bonds
comparable to those held by the Trust, (2) on the basis of bid prices for
bonds comparable to any Bonds for which bid prices are not available,
(3) by determining the value of the Bonds by appraisal, or (4) by any
combination of the above.
The Trustee is irrevocably authorized in its discretion, if the
Sponsor does not elect to purchase a Unit tendered for redemption or if
the Sponsor tenders a Unit for redemption, in lieu of redeeming such Unit,
to sell such Unit in the over-the-counter market for the account of the
tendering Certificateholder at prices which will return to the Certifi-
cateholder an amount in cash, net after deducting brokerage commissions,
transfer taxes and other charges, equal to or in excess of the Redemption
Price for such Unit. The Trustee will pay the net proceeds of any such
sale to the Certificateholder on the day he would otherwise be entitled to
receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of
redemption and to postpone the date of payment of the Redemption Price per
Unit for any period during which the New York Stock Exchange is closed,
other than customary weekend and holiday closings, or trading on that
Exchange is restricted or during which (as determined by the Securities
and Exchange Commission) an emergency exists as a result of which disposal
or evaluation of the Bonds is not reasonably practicable, or for such
other periods as the Securities and Exchange Commission may by order
permit. The Trustee and the Sponsor are not liable to any person or in
any way for any loss or damage which may result from any such suspension
or postponement.
A Certificateholder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.
TOTAL REINVESTMENT PLAN
Under the Total Reinvestment Plan (the "Plan"), semi-annual and
annual Certificateholders (except Texas residents*) may elect to have all
regular interest and principal distributions, if any, with respect to
their Units reinvested either in units of various series of "Municipal
Securities Trust" which will have been created shortly before each semi-
annual or annual Payment Date (a "Primary Series") or, if units of a
Primary Series are not available, in units of a previously formed series
of the Trust which have been repurchased by the Sponsor in the secondary
market, including the units being offered hereby (a "Secondary Series")
(Primary Series and Secondary Series are hereafter collectively referred
to as "Available Series"). June 15 and December 15 of each year, in the
case of semi-annual Certificateholders, and December 15 of each year in
the case of annual Certificateholders, are the "Plan Reinvestment Dates".
* Texas residents may elect to participate in the "Total Reinvestment
Plan for Texas Residents" hereinafter described.
Under the Plan (subject to compliance with applicable blue sky
laws), fractional units ("Plan Units") will be purchased from the Sponsor
at a price equal to the aggregate offering price per Unit of the bonds in
the Available Series portfolio during the initial offering of the
Available Series or at the aggregate bid price per Unit of the Available
Series if its initial offering has been completed, plus a sales charge
equal to 3.627% of the net amount invested in such bonds or 3-1/2% of the
Reinvestment Price per Plan Unit, plus accrued interest, divided by one
hundred (the "Reinvestment Price per Plan Unit"). All Plan Units will be
sold at this reduced sales charge of 3-1/2% in comparison to the regular
sales charge levied on primary and secondary market sales of units in any
series of "Municipal Securities Trust". Participants in the Plan will
have the opportunity to designate, in the Authorization Form for the Plan,
the name of a broker to whom the Sponsor will allocate a sales commission
of 1-1/2% per Plan Unit, payable out of the 3-1/2% sales charge. If no
such designation is made, the Sponsor will retain the sales commission.
Under the Plan, the entire amount of a participant's income and
principal distributions will be reinvested. For example, a Certificate-
holder who is entitled to receive $130.50 interest income from the Trust
would acquire 13.05 Plan Units assuming that the Reinvestment Price per
Plan Unit, plus accrued interest, was $10.
A semi-annual or annual Certificateholder may join the Plan at
the time he invests in Units of the Trust or any time thereafter by
delivering to the Trustee an Authorization Form which is available from
brokers or the Sponsor. In order that distributions may be reinvested on
a particular Plan Reinvestment Date, the Authorization Form must be
received by the Trustee not later than the 15th day of the month preceding
such Date. Authorization Forms not received in time for a particular Plan
Reinvestment Date will be valid only for the second succeeding Plan
Reinvestment Date. Similarly, a participant may withdraw from the Plan at
any time by notifying the Trustee (see below). However, if written
confirmation of withdrawal is not given to the Trustee prior to a
particular distribution, the participant will be deemed to have elected to
participate in the Plan with respect to that particular distribution and
his withdrawal would become effective for the next succeeding
distribution.
Once delivered to the Trustee, an Authorization Form will
constitute a valid election to participate in the Plan with respect to
Units purchased of the Trust (and with respect to Plan Units purchased
with the distributions from the Units purchased of the Trust) for each
subsequent distribution as long as the Certificateholder continues to
participate in the Plan. However, if an Available Series should
materially differ from the Trust in the opinion of the Sponsor, the
authorization will be voided and participants will be provided with both a
notice of the material change and a new Authorization Form which would
have to be returned to the Trustee before the Certificateholder would
again be able to participate in the Plan. The Sponsor anticipates that a
material difference which would result in a voided authorization would
include such facts as the inclusion of bonds in the Available Series
portfolio the interest income on which was not exempt from federal income
tax, or the inclusion of bonds which were not rated "A" or better by
either Standard & Poor's Corporation or Moody's Investors Service, Inc. on
the date such bonds were initially deposited in the Available Series
portfolio.
The Sponsor has the option at any time to use units of a
Secondary Series to fulfill the requirements of the Plan in the event
units of a Primary Series are not available either because a Primary
Series is not then in existence or because the registration statement
relating thereto is not declared effective in sufficient time to
distribute final prospectuses to Plan participants (see below). It should
be noted that there is no assurance that the quality and diversification
of the Bonds in any Available Series or the estimated current return
thereon will be similar to that of this Trust.
It is the Sponsor's intention that Plan Units will be offered on
or about each semi-annual and annual Record Date for determining who is
eligible to receive distributions on the related Payment Date. Such
Record Dates are June 1 and December 1 of each year for semi-annual Cer-
tificateholders, and December 1 of each year for annual Certificate-
holders. On each Record Date, the Sponsor will send a current Prospectus
relating to the Available Series being offered for the next Plan
Reinvestment Date along with a letter which reminds each participant that
Plan Units are being purchased for him as part of the Plan unless he
notifies the Trustee in writing by that Plan Reinvestment Date that he no
longer wishes to participate in the Plan. In the event a Primary Series
has not been declared effective in sufficient time to distribute a final
Prospectus relating thereto and there is no Secondary Series as to which a
registration statement is currently effective, it is the Sponsor's
intention to suspend the Plan and distribute to each participant his
regular semi-annual or annual distribution. If the Plan is so suspended,
it will resume in effect with the next Plan Reinvestment Date assuming
units of an Available Series are then being offered.
To aid a participant who might desire to withdraw either from
the Plan or from a particular distribution, the Trustee has established a
toll free number (see below) for participants to use for notification of
withdrawal, which must be confirmed in writing prior to the Plan
Reinvestment Date. Should the Trustee be so notified, it will make the
appropriate cash disbursement. Unless the withdrawing participant
specifically indicates in his written confirmation that (a) he wishes to
withdraw from the Plan for that particular distribution only, or (b) he
wishes to withdraw from the Plan for less than all units of each series of
"Municipal Securities Trust" which he might then own (and specifically
identifies which series are to continue in the Plan), he will be deemed to
have withdrawn completely from the Plan in all respects. Once a
participant withdraws completely, he will only be allowed to again
participate in the Plan by submitting a new Authorization Form. A sale or
redemption of a portion of a participant's Plan Units will not constitute
a withdrawal from the Plan with respect to the remaining Plan Units owned
by such participant.
Unless a Certificateholder notifies the Trustee in writing to
the contrary, each semi-annual and annual Certificateholder who has
acquired Plan Units will be deemed to have elected the semi-annual and
annual plan of distribution, respectively, and to participate in the Plan
with respect to distributions made in connection with such Plan Units.
(Should the Available Series from which Plan Units are purchased for the
account of an annual Certificateholder fail to have an annual distribution
plan, such Certificateholder will be deemed to have elected the semi-
annual plan of distribution, and to participate in the Plan with respect
to distributions made in connection with such Plan Units.) A participant
who subsequently desires to have distributions made with respect to Plan
Units delivered to him in cash may withdraw from the Plan with respect to
such Plan Units and remain in the Plan with respect to units acquired
other than through the Plan. Assuming a participant has his distributions
made with respect to Plan Units reinvested, all such distributions will be
accumulated with distributions generated from the Units of the Trust used
to purchase such additional Plan Units. However, distributions related to
units in other series of "Municipal Securities Trust" will not be
accumulated with the foregoing distributions for Plan purchases. Thus, if
a person owns units in more than one series of "Municipal Securities
Trust" (which are not the result of purchases under the Plan),
distributions with respect thereto will not be aggregated for purchases
under the Plan.
Although not obligated to do so, the Sponsor has maintained and
intends to continue to maintain a market for the Plan Units and
continuously to offer to purchase Plan Units at prices based upon the
aggregate bid price of the bonds in the Available Series portfolio, during
the initial offering of the Available Series, or at the aggregate bid
price of the Bonds in the Available Series if its initial offering has
been completed. The Sponsor may discontinue such purchases at any time.
The aggregate bid price of the underlying bonds may be expected to be less
than the aggregate offering prices. In the event that a market is not
maintained for Plan Units, a participant desiring to dispose of his Plan
Units may be able to do so only by tendering such Plan Units to the
Trustee for redemption at the Redemption Price of full units in the
Available Series corresponding to such Plan Units, which is based upon the
aggregate bid price of the underlying bonds as described in the "Municipal
Securities Trust" Prospectus for the Available Series in question. If a
participant wishes to dispose of his Plan Units, he should inquire of the
Sponsor as to current market prices prior to making a tender for
redemption to the Trustee.
Any participant may tender his Plan Units for redemption to the
Available Series trustee. Participants may redeem Plan Units by making a
written request to the Trustee, at the address listed in the "Summary of
Essential Information" in Part A on the Redemption Form supplied by the
Trustee. The redemption price per Plan Unit will be determined as set
forth in the "Municipal Securities Trust" Prospectus of the Available
Series from which such Plan Unit was purchased following receipt of the
request and adjusted to reflect the fact that it relates to a Plan Unit.
There is no charge for the redemption of Plan Units.
The Trust Agreement requires that the Trustee notify the Sponsor
of any tender of Plan Units for redemption. So long as the Sponsor is
maintaining a bid in the secondary market, the Sponsor will purchase any
Plan Units tendered to the Trustee for redemption by making payment
therefor to the Certificateholder in an amount not less than the
redemption price for such Plan Units on the date of tender not later than
the day on which such Plan Units would otherwise have been redeemed by the
Trustee.
Participants in the Plan will not receive individual
certificates for their Plan Units unless the amount of Plan Units
accumulated represents the principal amount of bonds originally underlying
each Unit and, in such case, a written request for certificates is made to
the Trustee. All Plan Units will be accounted for by the Trustee on a
book entry system. Each time Plan Units are purchased under the Plan, a
participant will receive a confirmation stating his cost, number of Units
purchased and estimated current return. Questions regarding a
participant's statement should be directed to the Trustee by calling the
Trustee at the number listed in the "Summary of Essential Information" in
Part A.
All expenses relating to the operation of the Plan are borne by
the Sponsor. Both the Sponsor and the Trustee reserve the right to
suspend, modify or terminate the Plan at any time for any reason,
including the right to suspend the Plan if the Sponsor is unable or
unwilling to establish a Primary Series or is unable to provide Secondary
Series units. All participants will receive notice of any such
suspension, modification or termination.
Total Reinvestment Plan for Texas Residents
Except as specifically provided under this Section, and unless
the context otherwise requires, all provisions and definitions contained
under the heading "Total Reinvestment Plan" shall be applicable to the
Total Reinvestment Plan for Texas Residents ("Texas Plan").
Semi-annual and annual Certificateholders of the Trust who are
residents of Texas have the option prior to any semi-annual or annual
distribution to elect affirmatively to reinvest that distribution,
including both interest and principal, if any, in an Available Series.
A resident of Texas who is a semi-annual Certificateholder may
join the Texas Plan for any particular semi-annual or annual distribution
by delivering to the Trustee an Authorization Form For Texas Residents
("Texas Authorization Form") specifically mentioning the date of the
particular semi-annual or annual distribution he wishes to reinvest. On
or about each semi-annual or annual Record Date, Texas Authorization Forms
shall be sent by the Trustee to every Certificateholder who is a resident
of Texas. In the event that the Sponsor suspends the Plan or the Texas
Plan, no Texas Authorization Forms shall be sent. In order that
distributions may be reinvested on a particular Plan Reinvestment Date,
the Texas Authorization Form must be received by the Trustee on or before
such Date. Texas Authorization Forms not received in time for the Plan
Reinvestment Date will be deemed void. A participant who delivers a Texas
Authorization Form to the Trustee may thereafter withdraw said
authorization by notifying the Trustee at its toll free telephone number
prior to a Plan Reinvestment Date. Such notification of a withdrawal must
be confirmed in writing prior to the Plan Reinvestment Date. Under no
circumstances shall a Texas Authorization Form be provided or accepted by
the Trustee which provides for the reinvestment of distributions for more
than one Plan Reinvestment Date.
On or about each semi-annual and annual Record Date, the Sponsor
will send a current Prospectus relating to the Available Series being
offered on the next Plan Reinvestment Date along with a letter
incorporating a Texas Authorization Form which specifies the funds
available for reinvestment, reminds each participant that no Plan Units
will be purchased for him unless the Texas Authorization Form is received
by the Trustee on or before that particular Plan Reinvestment Date, and
states that the Texas Authorization Form is valid only for that particular
semi-annual or annual distribution. If the Available Series should
materially differ from the Trust, the participant will be provided with a
notice of the material change and a new Texas Authorization Form which
would have to be returned to the Trustee before the Certificateholder
would again be able to participate in the Plan.
Each semi-annual and annual Certificateholder who has acquired
Plan Units will be deemed to have elected the semi-annual and annual plan
of distribution, respectively, with respect to such Units, but such Cer-
tificateholder will not be deemed to participate in the Plan for any
particular distribution unless and until he delivers to the Trustee a
Texas Authorization Form pertaining to those Plan Units. (Should the
Available Series from which Plan Units are purchased for the account of an
annual Certificateholder fail to have an annual distribution plan, such
Certificateholder will be deemed to have elected the semi-annual plan of
distribution, and to participate in the Plan with respect to distributions
made, in connection with such Plan Units.)
TRUST ADMINISTRATION
Portfolio Supervision
The Sponsor may direct the Trustee to dispose of Bonds upon
(i) default in payment of principal or interest on such Bonds,
(ii) institution of certain legal proceedings with respect to the issuers
of such Bonds, (iii) default under other documents adversely affecting
debt service on such Bonds, (iv) default in payment of principal or
interest on other obligations of the same issuer or guarantor, (v) with
respect to revenue Bonds, decline in revenues and income of any facility
or project below the estimated levels calculated by proper officials
charged with the construction or operation of such facility or project or
(vi) decline in price or the occurrence of other market or credit factors
which in the opinion of the Sponsor would make the retention of such Bonds
in the Trust detrimental to the interests of the Certificateholders. If a
default in the payment of principal or interest on any of the Bonds occurs
and if the Sponsor fails to instruct the Trustee to sell or hold such
Bonds, the Trust Agreement provides that the Trustee may sell such Bonds.
The Sponsor is authorized by the Trust Agreement to direct the
Trustee to accept or reject certain plans for the refunding or refinancing
of any of the Bonds. Any bonds received in exchange or substitution will
be held by the Trustee subject to the terms and conditions of the
Agreement to the same extent as the Bonds originally deposited. Within
five days after such deposit, notice of such exchange and deposit shall be
given by the Trustee to each Certificateholder registered on the books of
the Trustee, including an identification of the Bonds eliminated and the
bonds substituted therefor. Except as stated, the acquisition by the
Trust of any securities other than the bonds initially deposited is
prohibited.
Trust Agreement, Amendment and Termination
The Trust Agreement may be amended by the Trustee, the Sponsor
and the Evaluator without the consent of any of the Certificateholders:
(1) to cure any ambiguity or to correct or supplement any provision which
may be defective or inconsistent; (2) to change any provision thereof as
may be required by the Securities and Exchange Commission or any successor
governmental agency; or (3) to make such other provisions in regard to
matters arising thereunder as shall not adversely affect the interests of
the Certificateholders.
The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the
consent of the holders of Certificates evidencing 66-2/3% of the Units
then outstanding, for the purpose of modifying the rights of Certificate-
holders; provided that no such amendment or waiver shall reduce any Cer-
tificateholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of the holders of all Certificates. The Trust
Agreement may not be amended, without the consent of the holders of all
Certificates then outstanding, to increase the number of Units issuable or
to permit the acquisition of any bonds in addition to or in substitution
for those initially deposited in the Trust, except in accordance with the
provisions of the Trust Agreement. The Trustee shall promptly notify Cer-
tificateholders, in writing, of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon
the maturity, redemption or other disposition, as the case may be, of the
last of the Bonds held in the Trust but in no event is it to continue
beyond the end of the calendar year preceding the fiftieth anniversary of
the execution of the Trust Agreement. If the value of the Trust shall be
less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate the Trust. The Trust may also
be terminated at any time with the consent of the holders of Certificates
representing 100% of the Units then outstanding. In the event of
termination, written notice thereof will be sent by the Trustee to all
Certificateholders. Within a reasonable period after termination, the
Trustee must sell any Bonds remaining in the Trust, and, after paying all
expenses and charges incurred by the Trust, distribute to each Certifi-
cateholder, upon surrender for cancellation of his Certificate for Units,
his pro rata share of the Interest and Principal Accounts.
The Sponsor
The Sponsor, Bear, Stearns & Co. Inc., a Delaware corporation,
is engaged in the underwriting, investment banking and brokerage business
and is a member of the National Association of Securities Dealers, Inc.
and all principal securities and commodities exchanges, including the New
York Stock Exchange, the American Stock Exchange, the Midwest Stock
Exchange and the Pacific Stock Exchange. Bear Stearns maintains its
principal business offices at 245 Park Avenue, New York, New York 10167
and, since its reorganization from a partnership to a corporation in
October, 1985 has been a wholly-owned subsidiary of The Bear Stearns
Companies Inc. Bear Stearns, through its predecessor entities, has been
engaged in the investment banking and brokerage business since 1923. Bear
Stearns is the sponsor for numerous series of unit investment trusts,
including: A Corporate Trust, Series 1; New York Municipal Trust,
Series 1 (and Subsequent Series), Discount & Zero Coupon Fund-1st Series
(and Subsequent Series); Municipal Securities Trust, Series 1 (and
Subsequent Series), 1st Discount Series (and Subsequent Series), Multi-
State Series 1 (and Subsequent Series), High Income Trust Series 1 (and
Subsequent Series), Insured Municipal Securities Trust, Series 1-4
(Multiplier Portfolio), Series 1 (and Subsequent Series), 5th Discount
Series (and Subsequent Series), Navigator Series (and Subsequent Series),
Mortgage Securities Trust, CMO Series 1 (and Subsequent Series) and Equity
Securities Trust, Series 1, Signature Series, Gabelli Communications
Income Trust (and Subsequent Series). The information included herein is
only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations.
The Sponsor is liable for the performance of its obligations
arising from its responsibilities under the Trust Agreement, but will be
under no liability to Certificateholders for taking any action, or
refraining from taking any action, in good faith pursuant to the Trust
Agreement, or for errors in judgment except in cases of its own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
The Sponsor may resign at any time by delivering to the Trustee
an instrument of resignation executed by the Sponsor.
If at any time the Sponsor shall resign or fail to perform any
of its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then
the Trustee may either (a) appoint a successor Sponsor; (b) terminate the
Trust Agreement and liquidate the Trust; or (c) continue to act as Trustee
without terminating the Trust Agreement. Any successor Sponsor appointed
by the Trustee shall be satisfactory to the Trustee and, at the time of
appointment, shall have a net worth of at least $1,000,000.
The Trustee
For certain of the Trusts as set forth in the "Summary of
Essential Information" in Part A, the Trustee is United States Trust
Company of New York, with its principal place of business at 770 Broadway,
New York, New York 10003. United States Trust Company of New York has,
since its establishment in 1853, engaged primarily in the management of
trust and agency accounts for individuals and corporations. The Trustee
is a member of the New York Clearing House Association and is subject to
supervision and examination by the Superintendent of Banks of the State of
New York, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
For certain other Trusts as set forth in the "Summary of
Essential Information" in Part A, the Trustee is The Bank of New York, a
trust company organized under the laws of New York, having its offices at
101 Barclay Street, New York, New York 10286 (1-800-431-8002). The Bank
of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by
the Federal Deposit Insurance Corporation to the extent permitted by law.
The Trustee must be a banking corporation organized under the laws of the
United States or any state which is authorized under such laws to exercise
corporate trust powers and must have at all times an aggregate capital,
surplus and undivided profits of not less than $5,000,000. The duties of
the Trustee are primarily ministerial in nature. The Trustee did not
participate in the selection of Securities for the portfolio of the Trust.
The Trustee shall not be liable or responsible in any way for
taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for any
disposition of any moneys, Bonds or Certificates in accordance with the
Trust Agreement, except in cases of its own willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and
duties; provided, however, that the Trustee shall not in any event be
liable or responsible for any evaluation made by the Evaluator. In
addition, the Trustee shall not be liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or the Trust
which it may be required to pay under current or future law of the United
States or any other taxing authority having jurisdiction. The Trustee
shall not be liable for depreciation or loss incurred by reason of the
sale by the Trustee of any of the Bonds pursuant to the Trust Agreement.
For further information relating to the responsibilities of the
Trustee under the Trust Agreement, see "Rights of Certificateholders".
The Trustee may resign by executing an instrument in writing and
filing the same with the Sponsor, and mailing a copy of a notice of
resignation to all Certificateholders. In such an event the Sponsor is
obligated to appoint a successor Trustee as soon as possible. In
addition, if the Trustee becomes incapable of acting or becomes bankrupt
or its affairs are taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor as provided in the Trust
Agreement. Notice of such removal and appointment shall be mailed to each
Certificateholder by the Sponsor. If upon resignation of the Trustee no
successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court
of competent jurisdiction for the appointment of a successor. The
resignation or removal of the Trustee becomes effective only when the
successor Trustee accepts its appointment as such or when a court of
competent jurisdiction appoints a successor Trustee. Upon execution of a
written acceptance of such appointment by such successor Trustee, all the
rights, powers, duties and obligations of the original Trustee shall vest
in the successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Trustee shall be a party, shall be the
successor Trustee. The Trustee must always be a banking corporation
organized under the laws of the United States or any State and have at all
times an aggregate capital, surplus and undivided profits of not less than
$2,500,000.
The Evaluator
The Evaluator is Kenny S&P Evaluation Services, a division of
Kenny Information Systems, Inc. with main offices located at 65 Broadway,
New York, New York 10006. The Evaluator is a wholly-owned subsidiary of
McGraw-Hill, Inc. The Evaluator is a registered investment advisor and
also provides financial information services.
The Trustee, the Sponsor and Certificateholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for
the accuracy thereof. Determinations by the Evaluator under the Trust
Agreement shall be made in good faith upon the basis of the best
information available to it, provided, however, that the Evaluator shall
be under no liability to the Trustee, the Sponsor, or Certificateholders
for errors in judgment, except in cases of its own willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and
duties.
The Evaluator may resign or may be removed by the Sponsor and
the Trustee, and the Sponsor and the Trustee are to use their best efforts
to appoint a satisfactory successor. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor
Evaluator. If upon resignation of the Evaluator no successor has accepted
appointment within thirty days after notice of resignation, the Evaluator
may apply to a court of competent jurisdiction for the appointment of a
successor.
TRUST EXPENSES AND CHARGES
At no cost to the Trust, the Sponsor has borne all the expenses
of creating and establishing the Trust, including the cost of initial
preparation and execution of the Trust Agreement, registration of the
Trust and the Units under the Investment Company Act of 1940 and the
Securities Act of 1933, preparation and printing of the Certificates, the
fees of the Evaluator during the initial public offering, legal and
auditing expenses, advertising and selling expenses, initial fees and
expenses of the Trustee and other out-of-pocket expenses.
The Sponsor will not charge the Trust a fee for its services as
such. See "Sponsor's Profits".
The Trustee will receive for its ordinary recurring services to
the Trust an annual fee in the amount set forth under "Summary of
Essential Information" in Part A of this Prospectus. For a discussion of
the services performed by the Trustee pursuant to its obligations under
the Trust Agreement, see "Trust Administration" and "Rights of Certifi-
cateholders".
The Evaluator will receive, for each daily evaluation of the
Bonds in the Trust, a fee in the amount set forth under "Summary of
Essential Information" in Part A of this Prospectus.
The Trustee's and Evaluator's fees are payable monthly as of the
Record Date from the Interest Account to the extent funds are available
and then from the Principal Account. Both fees may be increased without
approval of the Certificateholders by amounts not exceeding proportionate
increases in consumer prices for services as measured by the United States
Department of Labor's Consumer Price Index entitled "All Services Less
Rent".
The following additional charges are or may be incurred by the
Trust: all expenses (including counsel and auditing fees) of the Trustee
incurred and advances made in connection with its activities under the
Trust Agreement, including the expenses and costs of any action undertaken
by the Trustee to protect the Trust and the rights and interests of the
Certificateholders; fees of the Trustee for any extraordinary services
performed under the Trust Agreement; indemnification of the Trustee for
any loss or liability accruing to it without gross negligence, bad faith
or willful misconduct on its part, arising out of or in connection with
its acceptance or administration of the Trust; indemnification of the
Sponsor for any loss, liabilities and expenses incurred in acting as
Sponsor of the Trust without gross negligence, bad faith or willful
misconduct on its part; and all taxes and other governmental charges
imposed upon the Bonds or any part of the Trust (no such taxes or charges
are being levied, made or, to the knowledge of the Sponsor, contemplated).
The above expenses, including the Trustee's fees, when paid by or owing to
the Trustee are secured by a first lien on the Trust. In addition, the
Trustee is empowered to sell Bonds in order to make funds available to pay
all expenses.
EXCHANGE PRIVILEGE AND CONVERSION OFFER
Exchange Privilege
Certificateholders may elect to exchange any or all of their
Units of these Trusts for Units of one or more of any available series of
Insured Municipal Securities Trust, Municipal Securities Trust, New York
Municipal Trust, Mortgage Securities Trust, A Corporate Trust or Equity
Securities Trust (upon receipt by Equity Securities Trust of an
appropriate exemptive order from the Securities and Exchange Commission)
(the "Exchange Trusts") at a reduced sales charge as set forth below.
Under the Exchange Privilege, the Sponsor's repurchase price of the Units
being surrendered, and only after the initial offering period is
completed, will be based on the aggregate bid price of the Bonds in the
particular Trust portfolio. Units in an Exchange Trust then will be sold
to the Certificateholder at a price based on the aggregate offer price of
the Bonds in the Exchange Trust portfolio during the initial public
offering period of the Exchange Trust (or for Units of Equity Securities
Trust, based on the market value of the underlying securities in the
Equity Trust portfolio); or based on the aggregate bid price of the Bonds
in the Exchange Trust portfolio if its initial public offering has been
completed, plus accrued interest (or for Units of Equity Securities Trust,
based on the market value of the underlying securities in the Equity Trust
portfolio) and a reduced sales charge as set forth below.
Except for unitholders who wish to exercise the Exchange
Privilege within the first five months of their purchase of Units of
Trust, the sales charge applicable to the purchase of units of an Exchange
Trust shall be $15 per unit (or per 1,000 Units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust)
(approximately 1.5% of the price of each Exchange Trust unit (or 1,000
Units for the Mortgage Securities Trust or 100 Units for the Equity
Securities Trust)). For unitholders who wish to exercise the Exchange
Privilege within the first five months of their purchase of Units of
Trust, the sales charge applicable to the purchase of units of an Exchange
Trust shall be the greater of (i) $15 per unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust), or (ii) an amount which when coupled with the sales charge paid by
the unitholder upon his original purchase of Units of the Trust at least
equals the sales charge applicable in the direct purchase of units of an
Exchange Trust. The Exchange Privilege is subject to the following
conditions:
(1) The Sponsor must be maintaining a secondary market in both
the Units of the Trust held by the Certificateholder and the Units of
the available Exchange Trust. While the Sponsor has indicated its
intention to maintain a market in the Units of all Trusts sponsored
by it, the Sponsor is under no obligation to continue to maintain a
secondary market and therefore there is no assurance that the
Exchange Privilege will be available to a Certificateholder at any
specific time in the future. At the time of the Certificateholder's
election to participate in the Exchange Privilege, there also must be
Units of the Exchange Trust available for sale, either under the
initial primary distribution or in the Sponsor's secondary market.
(2) Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and
the selling Certificateholder will not be permitted to advance any
new funds in order to complete an exchange. Units of the Mortgage
Securities Trust may only be acquired in blocks of 1,000 Units.
Units of the Equity Securities Trust may only be acquired in blocks
of 100 Units.
(3) The Sponsor reserves the right to suspend, modify or
terminate the Exchange Privilege. The Sponsor will provide
unitholders of the Trust with 60 days' prior written notice of any
termination or material amendment to the Exchange Privilege, provided
that, no notice need be given if (i) the only material effect of an
amendment is to reduce or eliminate the sales charge payable at the
time of the exchange, to add one or more series of the Trust eligible
for the Exchange Privilege or to delete a series which has been
terminated from eligibility for the Exchange Privilege, (ii) there is
a suspension of the redemption of units of an Exchange Trust under
Section 22(e) of the Investment Company Act of 1940, or (iii) an
Exchange Trust temporarily delays or ceases the sale of its units
because it is unable to invest amounts effectively in accordance with
its investment objectives, policies and restrictions. During the 60
day notice period prior to the termination or material amendment of
the Exchange Privilege described above, the Sponsor will continue to
maintain a secondary market in the units of all Exchange Trusts that
could be acquired by the affected unitholders. Unitholders may,
during this 60 day period, exercise the Exchange Privilege in
accordance with its terms then in effect. In the event the Exchange
Privilege is not available to a Certificateholder at the time he
wishes to exercise it, the Certificateholder will immediately be
notified and no action will be taken with respect to his Units
without further instructions from the Certificateholder.
To exercise the Exchange Privilege, a Certificateholder should
notify the Sponsor of his desire to exercise his Exchange Privilege. If
Units of a designated, outstanding series of an Exchange Trust are at the
time available for sale and such Units may lawfully be sold in the state
in which the Certificateholder is a resident, the Certificateholder will
be provided with a current prospectus or prospectuses relating to each
Exchange Trust in which he indicates an interest. He may then select the
Trust or Trusts into which he desires to invest the proceeds from his sale
of Units. The exchange transaction will operate in a manner essentially
identical to a secondary market transaction except that units may be
purchased at a reduced sales charge.
Example: Assume that after the initial public offering has been
completed, a Certificateholder has five units of a Trust with a current
value of $700 per unit which he has held for more than 5 months and the
Certificateholder wishes to exchange the proceeds for units of a secondary
market Exchange Trust with a current price of $725 per unit. The proceeds
from the Certificateholder's original units will aggregate $3,500. Since
only whole units of an Exchange Trust may be purchased under the Exchange
Privilege, the Certificateholder would be able to acquire four units (or
4,000 Units of the Mortgage Securities Trust or 400 Units of the Equity
Securities Trust) for a total cost of $2,960 ($2,900 for unit and $60 for
the sales charge). The remaining $540 would be remitted to the
Certificateholder in cash. If the Certificateholder acquired the same
number of units at the same time in a regular secondary market
transaction, the price would have been $3,068.80 ($2,900 for units and
$168.80 for the sales charge, assuming a 5 1/2% sales charge times the
public offering price).
The Conversion Offer
Unit owners of any registered unit investment trust for which
there is no active secondary market in the units of such trust (a
"Redemption Trust") may elect to redeem such units and apply the proceeds
of the redemption to the purchase of available Units of one or more series
of A Corporate Trust, Municipal Securities Trust, Insured Municipal
Securities Trust, Mortgage Securities Trust, New York Municipal Trust or
Equity Securities Trust (upon receipt by the Equity Securities Trust of an
appropriate exemptive order from the Securities and Exchange Commission)
sponsored by Bear, Stearns & Co. Inc. or the Sponsor (the "Conversion
Trusts") at the Public Offering Price for units of the Conversion Trust
based on a reduced sales charge as set forth below. Under the Conversion
Offer, units of the Redemption Trust must be tendered to the trustee of
such trust for redemption at the redemption price, which is based upon the
aggregate bid side evaluation of the underlying bonds in such trust and is
generally about 1-1.2% to 2% lower than the offering price for such bonds
(or for Units of Equity Securities Trust, based on the market value of the
underlying securities in the Equity Trust portfolio). The purchase price
of the units in the Conversion Trust will be based on the aggregate offer
price of the bonds in the Conversion Trust Portfolio during its initial
offering price (or for Units of Equity Securities Trust, based on the
market value of the underlying securities in the Equity Trust portfolio);
or, at a price based on the aggregate bid price of the underlying bonds if
the initial public offering of the Conversion Trust has been completed,
plus accrued interest (or for Units of Equity Securities Trust, based on
the market value of the underlying securities in the Equity Trust
portfolio) and a sales charge as set forth below.
Except for unitholders who wish to exercise the Conversion Offer
within the first five months of their purchase of units of a Redemption
Trust, the sales charge applicable to the purchase of Units of the
Conversion Trust shall be $15 per Unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust). For unitholders who wish to exercise the Conversion Offer within
the first five months of their purchase of units of a Redemption Trust,
the sales charge applicable to the purchase of Units of a Conversion Trust
shall be the greater of (i) $15 per Unit (or per 1,000 Units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust) or (ii) an amount which when coupled with the sales charge paid by
the unitholder upon his original purchase of units of the Redemption Trust
at least equals the sales charge applicable in the direct purchase of
Units of a Conversion Trust. The Conversion Offer is subject to the
following limitations:
(1) The Conversion Offer is limited only to unit owners of any
Redemption Trust, defined as a unit investment trust for which there
is no active secondary market at the time the Certificateholder
elects to participate in the Conversion Offer. At the time of the
unit owner's election to participate in the Conversion Offer, there
also must be available units of a Conversion Trust, either under a
primary distribution or in the Sponsor's secondary market.
(2) Exchanges under the Conversion Offer will be effected in
whole units only. Unit owners will not be permitted to advance any
new funds in order to complete an exchange under the Conversion
Offer. Any excess proceeds from units being redeemed will be
returned to the unit owner. Units of the Mortgage Securities Trust
may only be acquired in blocks of 1,000 units. Units of the Equity
Securities Trust may only be acquired in blocks of 100 Units.
(3) The Sponsor reserves the right to modify, suspend or
terminate the Conversion Offer at any time without notice to unit
owners of Redemption Trusts. In the event the Conversion Offer is
not available to a unit owner at the time he wishes to exercise it,
the unit owner will be notified immediately and no action will be
taken with respect to his units without further instruction from the
unit owner. The Sponsor also reserves the right to raise the sales
charge based on actual increases in the Sponsor's costs and expenses
in connection with administering the program, up to a maximum sales
charge of $20 per unit (or per 1,000 units for the Mortgage
Securities Trust or per 100 Units for the Equity Securities Trust).
To exercise the Conversion Offer, a unit owner of a Redemption
Trust should notify his retail broker of his desire to redeem his
Redemption Trust Units and use the proceeds from the redemption to
purchase Units of one or more of the Conversion Trusts. If Units of a
designated, outstanding series of a Conversion Trust are at that time
available for sale and if such Units may lawfully be sold in the state in
which the unit owner is a resident, the unit owner will be provided with a
current prospectus or prospectuses relating to each Conversion Trust in
which he indicates an interest. He then may select the Trust or Trusts
into which he decides to invest the proceeds from the sale of his Units.
The transaction will be handled entirely through the unit owner's retail
broker. The retail broker must tender the units to the trustee of the
Redemption Trust for redemption and then apply the proceeds to the
redemption toward the purchase of units of a Conversion Trust at a price
based on the aggregate offer or bid side evaluation per Unit of the
Conversion Trust, depending on which price is applicable, plus accrued
interest and the applicable sales charge. The certificates must be
surrendered to the broker at the time the redemption order is placed and
the broker must specify to the Sponsor that the purchase of Conversion
Trust Units is being made pursuant to the Conversion Offer. The unit
owner's broker will be entitled to retain $5 of the applicable sales
charge.
Example: Assume a unit owner has five units of a Redemption
Trust which has held for more than 5 months with a current redemption
price of $675 per unit based on the aggregate bid price of the underlying
bonds and the unit owner wishes to participate in the Conversion Offer and
exchange the proceeds for units of a secondary market Conversion Trust
with a current price of $750 per Unit. The proceeds from the unit owner's
redemption of units will aggregate $3,375. Since only whole units of a
Redemption Trust may be purchased under the Conversion Offer, the unit
owner will be able to acquire four units of the Conversion Trust (or 4,000
units of the Mortgage Securities Trust or 400 Units for the Equity
Securities Trust) for a total cost of $2,860 ($2,800 for units and $60 for
the sales charge). The remaining $515 would be remitted to the unit owner
in cash. If the unit owner acquired the same number of Conversion Trust
units at the same time in a regular secondary market transaction, the
price would have been $2,962.96 ($2,800 for units and $162.96 sales
charge, assuming a 5 1/2% sales charge times the public offering price).
Description Of The Exchange Trusts And The Conversion Trusts
A Corporate Trust may be an appropriate investment vehicle for
an investor who is more interested in a higher current return on his
investment (although taxable) than a tax-exempt return (resulting from the
fact that the current return from taxable fixed income securities is
normally higher than that available from tax-exempt fixed income
securities). Municipal Securities Trust and New York Municipal Trust may
be appropriate investment vehicles for an investor who is more interested
in tax-exempt income. The interest income from New York Municipal Trust
is, in general, also exempt from New York State and local New York income
taxes, while the interest income from Municipal Securities Trust is
subject to applicable New York State and local New York taxes, except for
that portion of the income which is attributable to New York obligations
in the Trust portfolio, if any. The interest income from each State Trust
of the Municipal Securities Trust, Multi-State Series is, in general,
exempt from state and local taxes when held by residents of the state
where the issuers of bonds in such State Trusts are located. The Insured
Municipal Securities Trust combines the advantages of providing interest
income free from regular federal income tax under existing law with the
added safety of irrevocable insurance. Insured Navigator Series further
combines the advantages of providing interest income free from regular
federal income tax and state and local taxes when held by residents of the
state where issuers of bonds in such state trusts are located with the
added safety of irrevocable insurance. Mortgage Securities Trust offers
an investment vehicle for investors who are interested in obtaining safety
of capital and a high level of current distribution of interest income
through investment in a fixed portfolio of collateralized mortgage
obligations. Equity Securities Trust offers investors an opportunity to
achieve capital appreciation together with a high level of current income.
Tax Consequences Of The Exchange Privilege And The Conversion Offer
A surrender of units pursuant to the Exchange Privilege or the
Conversion Offer normally will constitute a "taxable event" to the Cer-
tificateholder under the Code. The Certificateholder will recognize a tax
gain or loss that will be of a long or short-term capital or ordinary
income nature depending on the length of time the units have been held and
other factors. A Certificateholder's tax basis in the Units acquired
pursuant to the Exchange Privilege or Conversion Offer will be equal to
the purchase price of such Units. Investors should consult their own tax
advisors as to the tax consequences to them of exchanging or redeeming
units and participating in the Exchange Privilege or Conversion Offer.
OTHER MATTERS
Legal Opinions
The legality of the Units originally offered and certain matters
relating to federal tax law have been passed upon by Messrs. Battle
Fowler, 75 East 55th Street, New York, New York 10022, or Berger Steingut
Tarnoff & Stern, 600 Madison Avenue, New York, New York 10022, as counsel
for the Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New
York, New York 10005 have acted as counsel for United States Trust Company
of New York. On the initial date of deposit, Messrs. Booth & Baron acted
as counsel for The Bank of New York.
Independent Auditors
The financial statements of the Trusts included in Part A of
this Prospectus as of the dates set forth in Part A have been examined by
KPMG Peat Marwick, independent certified public accountants for the
periods indicated in its reports appearing herein. The financial
statements of KPMG Peat Marwick have been so included in reliance on its
report given upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF BOND RATINGS*
Standard & Poor's Corporation
A brief description of the applicable Standard & Poor's
Corporation rating symbols and their meanings is as follows:
A Standard & Poor's corporate or municipal bond rating is a
current assessment of the creditworthiness of an obligor with respect to a
specific debt obligation. This assessment of creditworthiness may take
into consideration obligors such as guarantors, insurers, or lessees.
* As described by the rating agencies.
The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price.
The ratings are based on current information furnished to
Standard & Poor's by the issuer and obtained by Standard & Poor's from
other sources it considers reliable. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of,
such information.
The ratings are based, in varying degrees, on the following
considerations:
(1) Likelihood of default--capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
(2) Nature of and provisions of the obligation.
(3) Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA -- This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay
principal and interest.
AA -- Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
they differ from AAA issues only in small degrees.
A -- Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the A
category.
Plus (+) or Minus (-): To provide more detailed indications of
credit quality, the ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings -- (Prov.) following a rating indicates the
rating is provisional, which assumes the successful completion of the
project being financed by the issuance of the bonds 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. Accordingly, the investor should exercise his own
judgment with respect to such likelihood and risk.
Moody's Investors Service, Inc.
A brief description of the applicable Moody's Investors Service,
Inc.'s rating symbols and their meanings is as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are protected by
a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long term
risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa -- Bonds which are rated Baa are considered 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.
Those bonds in the A and Baa group which Moody's believes
possess the strongest investment attributes are designated by the symbol
A 1 and Baa 1. Other A bonds comprise the balance of the group. These
rankings (1) designate the bonds which offer the maximum in security
within their quality group, (2) designate bonds which can be bought for
possible upgrading in quality and (3) additionally afford the investor an
opportunity to gauge more precisely the relative attractiveness of
offerings in the market place.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
Con-Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally.
These are debt obligations 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. Rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
<PAGE>
FOR USE WITH MUNICIPAL SECURITIES TRUST
SERIES 1-25
1st-34th DISCOUNT SERIES
==========================================================================
AUTHORIZATION FOR INVESTMENT IN MUNICIPAL SECURITIES TRUST
TRP PLAN - TOTAL REINVESTMENT PLAN
I hereby elect to participate in the TRP Plan and am the owner of _____
units of Series ___/___ Discount Series.
I hereby authorize The Bank of New York, Trustee, to pay all semi-annual
or annual distributions of interest and principal (if any) with respect to
such units to The Bank of New York, as TRP Plan Agent, who shall
immediately invest the distributions in units of the available series of
Municipal Securities Trust.
The foregoing authorization is subject in Date ______________, 19__
all respects to the terms and conditions of
participation set forth in the prospectus
relating to such available series.
____________________________________ ___________________________
Registered Holder (print) Registered Holder (print)
_____________________________________ ____________________________
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)
My Brokerage Firm's Name
Street Address
City, State & Zip Code
Salesman's Name ___________________________ Salesman's No.
UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM AND MAIL THIS CARD.
==========================================================================
Mail to your Broker
or
The Bank of New York
101 Barclay Street
New York, New York 10286
<PAGE>
FOR USE WITH MUNICIPAL SECURITIES TRUST
SERIES 26-44
35th-72nd DISCOUNT SERIES
==========================================================================
AUTHORIZATION FOR INVESTMENT IN MUNICIPAL SECURITIES TRUST
TRP PLAN - TOTAL REINVESTMENT PLAN
I hereby elect to participate in the TRP Plan and am the owner of _____
units of Series ___/___ Discount Series.
I hereby authorize the United States Trust Company of New York, Trustee,
to pay all semi-annual or annual distributions of interest and principal
(if any) with respect to such units to the United States Trust Company of
New York, as TRP Plan Agent, who shall immediately invest the
distributions in units of the available series of Municipal Securities
Trust.
The foregoing authorization is subject in Date ______________, 19__
all respects to the terms and conditions of
participation set forth in the prospectus
relating to such available series.
___________________________________________
Registered Holder (print) Registered Holder (print)
___________________________________________
Registered Holder Signature Registered Holder Signature
(Two signatures if joint tenancy)
My Brokerage Firm's Name
Street Address
City, State & Zip Code
Salesman's Name ___________________________ Salesman's No.
UNIT HOLDERS NEED ONLY DATE AND SIGN THIS FORM AND MAIL THIS CARD.
==========================================================================
Mail to your Broker
or
United States Trust Company of New York
Attn: UIT Reinvestment Unit A
770 Broadway
New York, New York 10003
<PAGE>
INDEX MUNICIPAL SECURITIES TRUST
(Unit Investment Trust)
Prospectus
Title Page
Dated: October 28, 1994
Summary of Essential Information . . . A-4
Information Regarding the Trust . . . . A-6 Sponsor:
Financial and Statistical Information . A-7
Audit and Financial Information Bear, Stearns & Co. Inc.
Report of Independent Accountants . . F-1 245 Park Avenue
Statements of Net Assets . . . . . . F-2 New York, New York 10167
Statements of Operations . . . . . . F-3 212-272-2500
Statements of Changes in Net Assets . F-4
Notes to Financial Statements . . . . F-5 Trustee:
Portfolio . . . . . . . . . . . . . . F-7
The Trust . . . . . . . . . . . . . . . 1 United States Trust Company
Public Offering . . . . . . . . . . . . 7 of New York
Estimated Long Term Return and 770 Broadway
Estimated Current Return . . . . . . 8 New York, New York 10003
Rights of Certificateholders . . . . . 9 1-800-428-8890
Tax Status . . . . . . . . . . . . . . 11
Liquidity . . . . . . . . . . . . . . . 15 or
Total Reinvestment Plan . . . . . . . . 17
Trust Administration . . . . . . . . . 21 The Bank of New York
Trust Expenses and Charges . . . . . . 25 101 Barclay Street
Exchange Privilege and Conversion Offer 26 New York, New York 10286
Other Matters . . . . . . . . . . . . . 30 1-800-431-8002
Description of Bond Ratings . . . . . . 30
Evaluator:
Parts A and B of this Prospectus do not Kenny S&P Evaluation
contain all of the information set forth in Services
the registration statement and exhibits 65 Broadway
relating thereto, filed with the Securities New York, New York 10006
and Exchange Commission, Washington, D.C.,
under the Securities Act of 1933, and to
which reference is made.
* * *
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.
* * *
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon
as having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsor. The Trust is registered as a unit investment trust under the
Investment Company Act of 1940. Such registration does not imply that the
Trust or any of its Units have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer
thereof.
</MODULE CONTENT>
[/DOCUMENT]
</DOCUMENT
<PAGE>
PART II
ADDITIONAL INFORMATION NOT REQUIRED
IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statements on Form S-6
comprises the following papers and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Signatures.
Consent of Independent Auditors.
Consent of Counsel (included in Exhibit 99.3.1).
Consents of the Evaluator including Confirmation of Ratings (included in
Exhibit 99.5.1).
The following exhibits:
99.1.1 -- Reference Trust Agreement including certain Amendments
to the Trust Indenture and Agreement referred to under
Exhibit 1.1.1 below (filed as Exhibit 1.1 to Amendments
No. 1 to Form S-6 Registration Statements Nos. 2-98914,
33-00376, 33-00856 and 33-01869 of Municipal Securities
Trust, Series 28 & 38th Discount Series, 39th Discount
Series, Series 29 & 40th Discount Series and Series 30 &
41st Discount Series, respectively, on July 25, 1985,
October 10, 1985, November 7, 1985 and December 12, 1985,
respectively, and incorporated herein by reference).
99.1.1.1 -- Trust Indenture and Agreement for Municipal Securities
Trust, Series 26 and Subsequent Series (filed as
Exhibit 1.1.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 2-96861 of Municipal Securities Trust,
Series 26 and 35th Discount Series on April 25, 1985 and
incorporated herein by reference).
99.1.3.4 -- Certificate of Incorporation of Bear, Stearns & Co. Inc., as
amended (filed as Exhibit 99.1.3.4 to Form S-6 Registration
Statement Nos. 33-50891 and 33-50901 of Insured Municipal
Securities Trust, New York Navigator Insured Series 15 and
New Jersey Navigator Insured Series 11; and Municipal
Securities Trust, Multi-State Series 44, respectively, on
December 9, 1993 and incorporated herein by reference).
99.1.3.5 -- By-Laws of Bear, Stearns & Co. Inc., as amended (filed as
Exhibit 99.1.3.5 to Form S-6 Registration Statement Nos.
33-50891 and 33-50901 of Insured Municipal Securities Trust,
New York Navigator Insured Series 15 and New Jersey
Navigator Insured Series 11; and Municipal Securities Trust,
Multi-State Series 44, respectively, on December 9, 1993 and
incorporated herein by reference).
99.1.4 -- Form of Agreement Among Underwriters (filed as Exhibit 1.4
to Amendment No. 1 to Form S-6 Registration Statement
No. 2-98117 of Municipal Securities Trust, 37th Discount
Series on June 19, 1985 and incorporated herein by
reference).
99.2.1 -- Forms of Certificates (filed as Exhibit 2.1 to Amendment
No. 1 to Form S-6 Registration Statement No. 2-96861 of
Municipal Securities Trust, Series 26 and 35th Discount
Series on April 25, 1985, and to Amendment No. 1 to Form S-6
Registration Statement No. 33-01869 of Municipal Securities
Trust, Series 29 and 40th Discount Series on December 12,
1985 and incorporated herein by reference).
99.3.1 -- Opinion of Berger Steingut Tarnoff & Stern (formerly Berger
& Steingut) (formerly Baskin and Steingut, P.C.) (formerly
Baskin and Sears, P.C.) as to the legality of the securities
being registered including their consent to the filing
thereof and to the use of their name under the heading
"Legal Opinions" in the Prospectus (filed as Exhibit 3.1 to
Amendment No. 1 to Form S-6 Registration Statements
Nos. 2-98914, 33-00376, 33-00856 and 33-01869 of Municipal
Securities Trust, Series 28 & 38th Discount Series,
39th Discount Series, Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series, respectively, on July 25,
1985, October 10, 1985, November 7, 1985 and December 12,
1985, respectively, and incorporated herein by reference).
99.3.1.2 -- Opinion of Battle Fowler (formerly Battle, Fowler, Jaffin &
Kheel) as to tax status of securities being registered
including their consent to the filing thereof and to the use
of their name under the heading "Tax Status" in the
Prospectus (filed as Exhibit 3.1.2 to Post-Effective
Amendment No. 1 to Form S-6 Registration Statements
Nos. 2-98914, 33-00376, 33-00856 and 33-01869 of Municipal
Securities Trust, Series 28 & 38th Discount Series, 39th
Discount Series, Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series, respectively, on
October 15, 1986 and incorporated herein by reference).
*99.3.1.3 -- Opinion of Battle Fowler as to the legality of units being
registered.
*99.5.1 -- Consents of the Evaluator including Confirmation of Ratings.
99.6.0 -- Power of Attorney of Bear, Stearns & Co. Inc., the
Depositor, by its Officers and a majority of its Directors
(filed as Exhibit 6.0 to Post-Effective Amendment No. 8 to
Form S-6 Registration Statements Nos. 2-92113, 2-92660,
2-93073, 2-93884 and 2-94545 of Municipal Securities Trust,
Multi-State Series 4, 5, 6, 7 and 8, respectively on
October 30, 1992 and incorporated herein by reference).
*27 -- Financial Data Schedule(s) (for EDGAR filing only).
* Being filed by this Amendment.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrants, Municipal Securities Trust, Series 28 & 38th Discount
Series, 39th Discount Series, Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series, certify that they have met all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statements pursuant to Rule 485(b) under the Securities Act
of 1933. The registrants have duly caused this Post-Effective Amendment
to the Registration Statements to be signed on their behalf by the
undersigned thereunto duly authorized, in the City of New York and State
of New York on the 28th day of October, 1994.
MUNICIPAL SECURITIES TRUST, SERIES 28 & 38th DISCOUNT SERIES,
39th DISCOUNT SERIES, SERIES 29 & 40th DISCOUNT SERIES and SERIES
30 & 41st DISCOUNT SERIES
(Registrants)
BEAR, STEARNS & CO. INC.
(Depositor)
By: PETER J. DeMARCO
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement has been
signed below by the following persons, who constitute the officers and a
majority of the directors of Bear, Stearns & Co. Inc., the Depositor, in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Name Title Date
ALAN C. GREENBERG Chairman of the Board, )
Director and Senior Managing )
Director )
JAMES E. CAYNE President, Chief Executive )
Officer, Director and Senior ) October 28, 1994
Managing Director )
JOHN C. SITES, JR. Executive Vice President, Director )
and Senior Managing Director )
MICHAEL L. TARNOPOL Executive Vice President, Director )
and Senior Managing Director ) By:PETER J. DeMARCO
VINCENT J. MATTONE Executive Vice President, Director ) Attorney-in-Fact
and Senior Managing Director )
ALAN D. SCHWARTZ Executive Vice President, Director )
and Senior Managing Director )
DOUGLAS P.C. NATION Director and Senior Managing )
Director )
WILLIAM J. MONTGORIS Chief Operating Officer/Chief )
Financial Officer, Senior )
Vice President-Finance and Senior )
Managing Director )
KENNETH L. EDLOW Secretary and Senior Managing )
Director )
MICHAEL MINIKES Treasurer and Senior Managing )
Director )
MICHAEL J. ABATEMARCO Controller, Assistant Secretary )
and Senior Managing Director )
MARK E. LEHMAN Senior Vice President - General )
Counsel and Senior Managing )
Director )
FREDERICK B. CASEY Assistant Treasurer and Senior )
Managing Director )
</TABLE>
_______________
* An executed power of attorney was filed as Exhibit 6.0 to Post-
Effective Amendment No. 8 to registration Statements
Nos. 2-92113, 2-92660, 2-93073, 2-93884 and 2-94545 on
October 30, 1992.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in these Post-Effective Amendments to the Registration
Statements of our reports on the financial statements of Municipal Securities
Trust, Series 28; Municipal Securities Trust, Series 29; Municipal Securities
Trust, Series 30; Municipal Securities Trust, 38th Discount Series; Municipal
Securities Trust, 39th Discount Series; Municipal Securities Trust, 40th
Discount Series; and Municipal Securities Trust, 41st Discount Series included
herein and to the reference to our firm under the heading "Independent
Auditors" in the Prospectus which is part of this Registration Statement.
KPMG Peat Marwick LLP
New York, New York
October 24, 1994
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
99.1.1 Reference Trust Agreement including
certain Amendments to the Trust Indenture
and Agreement referred to under
Exhibit 1.1.1 below (filed as Exhibit 1.1
to Amendments No. 1 to Form S-6
Registration Statements Nos. 2-98914,
33-00376, 33-00856 and 33-01869 of
Municipal Securities Trust, Series 28 &
38th Discount Series, 39th Discount
Series, Series 29 & 40th Discount Series
and Series 30 & 41st Discount Series,
respectively, on July 25, 1985,
October 10, 1985, November 7, 1985 and
December 12, 1985, respectively, and
incorporated herein by reference).
99.1.1.1 Trust Indenture and Agreement for
Municipal Securities Trust, Series 26 and
Subsequent Series (filed as Exhibit 1.1.1
to Amendment No. 1 to Form S-6
Registration Statement No. 2-96861 of
Municipal Securities Trust, Series 26 and
35th Discount Series on April 25, 1985 and
incorporated herein by reference).
99.1.3.4 Certificate of Incorporation of Bear,
Stearns & Co. Inc., as amended (filed as
Exhibit 99.1.3.4 to Form S-6 Registration
Statement Nos. 33-50891 and 33-50901 of
Insured Municipal Securities Trust, New
York Navigator Insured Series 15 and New
Jersey Navigator Insured Series 11; and
Municipal Securities Trust, Multi-State
Series 44, respectively, on December 9,
1993 and incorporated herein by
reference).
99.1.3.5 By-Laws of Bear, Stearns & Co. Inc., as
amended (filed as Exhibit 99.1.3.5 to Form
S-6 Registration Statement Nos. 33-50891
and 33-50901 of Insured Municipal
Securities Trust, New York Navigator
Insured Series 15 and New Jersey Navigator
Insured Series 11; and Municipal
Securities Trust, Multi-State Series 44,
respectively, on December 9, 1993 and
incorporated herein by reference).
99.1.4 Form of Agreement Among Underwriters
(filed as Exhibit 1.4 to Amendment No. 1
to Form S-6 Registration Statement
No. 2-98117 of Municipal Securities Trust,
37th Discount Series on June 19, 1985 and
incorporated herein by reference).
99.2.1 Forms of Certificates (filed as
Exhibit 2.1 to Amendment No. 1 to Form S-6
Registration Statement No. 2-96861 of
Municipal Securities Trust, Series 26 &
35th Discount Series on April 25, 1985,
and to Amendment No. 1 to Form S-6
Registration Statement No. 33-01869 of
Municipal Securities Trust, Series 29 and
40th Discount Series on December 12, 1985
and incorporated herein by reference).
99.3.1 Opinion of Berger Steingut Tarnoff & Stern
(formerly Berger & Steingut) (formerly
Baskin and Steingut, P.C.) (formerly
Baskin and Sears, P.C.) as to the legality
of the securities being registered
including their consent to the filing
thereof and to the use of their name under
the heading "Legal Opinions" in the
Prospectus (filed as Exhibit 3.1 to
Amendment No. 1 to Form S-6 Registration
Statements Nos. 2-98914, 33-00376,
33-00856 and 33-01869 of Municipal
Securities Trust, Series 28 & 38th
Discount Series, 39th Discount Series,
Series 29 & 40th Discount Series and
Series 30 & 41st Discount Series,
respectively, on July 25, 1985,
October 10, 1985, November 7, 1985 and
December 12, 1985, respectively, and
incorporated herein by reference).
99.3.1.2 Opinion of Battle Fowler (formerly Battle,
Fowler, Jaffin & Kheel) as to tax status
of securities being registered including
their consent to the filing thereof and to
the use of their name under the heading
"Tax Status" in the Prospectus (filed as
Exhibit 3.1.2 to Post-Effective Amendment
No. 1 to Form S-6 Registration Statements
Nos. 2-98914, 33-00376, 33-00856 and
33-01869 of Municipal Securities Trust,
Series 28 & 38th Discount Series, 39th
Discount Series, Series 29 & 40th Discount
Series and Series 30 & 41st Discount
Series, respectively, on October 15, 1986
and incorporated herein by reference).
99.3.1.3 Opinion of Battle Fowler as to the
legality of units being
registered.........................
99.5.1 Consents of the Evaluator including
Confirmation of
Ratings............................
99.6.0 Power of Attorney of Bear, Stearns & Co.
Inc., the Depositor, by its Officers and a
majority of its Directors (filed as
Exhibit 6.0 to Post-Effective Amendment
No. 8 to Form S-6 Registration Statements
Nos. 2-92113, 2-92660, 2-93073, 2-93884
and 2-94545 of Municipal Securities Trust,
Multi-State Series 4, 5, 6, 7 and 8,
respectively on October 30, 1992 and
incorporated herein by reference).
27 Financial Data Schedule(s) (for EDGAR filing only).
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted
from the financial statements
and supporting schedules as of
the end of the most current period
and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000773019
<NAME> MST, SERIES 28 AND 38TH DISCOUNT SERIES
<SERIES>
<NUMBER> 28
<NAME> SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 1257363
<INVESTMENTS-AT-VALUE> 1328748
<RECEIVABLES> 43463
<ASSETS-OTHER> 3459
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1375670
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 155
<TOTAL-LIABILITIES> 155
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2404
<SHARES-COMMON-PRIOR> 2425
<ACCUMULATED-NII-CURRENT> 46747
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 20
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 71385
<NET-ASSETS> 1375515
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 139664
<OTHER-INCOME> 0
<EXPENSES-NET> 4032
<NET-INVESTMENT-INCOME> 135632
<REALIZED-GAINS-CURRENT> (6667)
<APPREC-INCREASE-CURRENT> (93363)
<NET-CHANGE-FROM-OPS> 35602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 139766
<DISTRIBUTIONS-OF-GAINS> 347652
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 21
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (451816)
<ACCUMULATED-NII-PRIOR> 50881
<ACCUMULATED-GAINS-PRIOR> 22
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1601423
<PER-SHARE-NAV-BEGIN> 753.50
<PER-SHARE-NII> 48.96
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 63.46
<PER-SHARE-DISTRIBUTIONS> 138.34
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 572.18
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the financial
statements and supporting schedules as
of the end of the most current period
and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000773019
<NAME> MST, SERIES 28 AND 38TH DISCOUNT SERIES
<SERIES>
<NUMBER> 38
<NAME> DISCOUNT
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 2346220
<INVESTMENTS-AT-VALUE> 2460914
<RECEIVABLES> 78846
<ASSETS-OTHER> 10697
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2550457
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365
<TOTAL-LIABILITIES> 365
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7977
<SHARES-COMMON-PRIOR> 8000
<ACCUMULATED-NII-CURRENT> 89123
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 55
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 114694
<NET-ASSETS> 2550092
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 242630
<OTHER-INCOME> 1631
<EXPENSES-NET> 8068
<NET-INVESTMENT-INCOME> 236193
<REALIZED-GAINS-CURRENT> (25509)
<APPREC-INCREASE-CURRENT> (150118)
<NET-CHANGE-FROM-OPS> 60566
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 239935
<DISTRIBUTIONS-OF-GAINS> 792833
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (972202)
<ACCUMULATED-NII-PRIOR> 106384
<ACCUMULATED-GAINS-PRIOR> 6
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3036193
<PER-SHARE-NAV-BEGIN> 440.29
<PER-SHARE-NII> 27.39
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 35.41
<PER-SHARE-DISTRIBUTIONS> 98.19
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 319.68
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the
financial statements and supporting
schedules as of the end of the most
current period and is qualified in its
entirety by reference to such financial
statements
</LEGEND>
<CIK> 0000777622
<NAME> MST, 39TH DISCOUNT SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 2837671
<INVESTMENTS-AT-VALUE> 3037774
<RECEIVABLES> 83534
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3121308
<PAYABLE-FOR-SECURITIES> 18110
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 442
<TOTAL-LIABILITIES> 18552
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6645
<SHARES-COMMON-PRIOR> 6744
<ACCUMULATED-NII-CURRENT> 79175
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 14193
<ACCUM-APPREC-OR-DEPREC> 200103
<NET-ASSETS> 3102756
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 299277
<OTHER-INCOME> 0
<EXPENSES-NET> 8551
<NET-INVESTMENT-INCOME> 290726
<REALIZED-GAINS-CURRENT> (6306)
<APPREC-INCREASE-CURRENT> (169643)
<NET-CHANGE-FROM-OPS> 114777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 293858
<DISTRIBUTIONS-OF-GAINS> 357133
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 99
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (536214)
<ACCUMULATED-NII-PRIOR> 82307
<ACCUMULATED-GAINS-PRIOR> (26085)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3370863
<PER-SHARE-NAV-BEGIN> 539.59
<PER-SHARE-NII> 42.17
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 45.96
<PER-SHARE-DISTRIBUTIONS> 46.11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 466.93
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information
extracted from the financial
statements and supporting
schedules as of the end of the
most current period and is
qualified in its entirety by
reference to such financial
statements
</LEGEND>
<CIK> 0000779237
<NAME> MST, SERIES 29 AND 40TH DISCOUNT SERIES
<SERIES>
<NUMBER> 29
<NAME> SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 1019250
<INVESTMENTS-AT-VALUE> 1073669
<RECEIVABLES> 30691
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1104360
<PAYABLE-FOR-SECURITIES> 1304
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139
<TOTAL-LIABILITIES> 1443
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1790
<SHARES-COMMON-PRIOR> 1856
<ACCUMULATED-NII-CURRENT> 29235
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 54419
<NET-ASSETS> 1102917
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 117011
<OTHER-INCOME> 0
<EXPENSES-NET> 3412
<NET-INVESTMENT-INCOME> 113599
<REALIZED-GAINS-CURRENT> 13270
<APPREC-INCREASE-CURRENT> (88359)
<NET-CHANGE-FROM-OPS> 38510
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 116737
<DISTRIBUTIONS-OF-GAINS> 290643
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 66
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (368870)
<ACCUMULATED-NII-PRIOR> 32373
<ACCUMULATED-GAINS-PRIOR> 6
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1287352
<PER-SHARE-NAV-BEGIN> 792.99
<PER-SHARE-NII> 54.61
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 66.63
<PER-SHARE-DISTRIBUTIONS> 133.98
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 616.15
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the financial
statements and supporting schedules as
of the end of the most current period
and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000779237
<NAME> MST, SERIES 29 AND 40TH DISCOUNT SERIES
<SERIES>
<NUMBER> 40
<NAME> DISCOUNT
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 2929660
<INVESTMENTS-AT-VALUE> 3079400
<RECEIVABLES> 83592
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3162992
<PAYABLE-FOR-SECURITIES> 1910
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 435
<TOTAL-LIABILITIES> 2345
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6802
<SHARES-COMMON-PRIOR> 7322
<ACCUMULATED-NII-CURRENT> 81211
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 36
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 149740
<NET-ASSETS> 3160647
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 316566
<OTHER-INCOME> 0
<EXPENSES-NET> 8372
<NET-INVESTMENT-INCOME> 308194
<REALIZED-GAINS-CURRENT> (33222)
<APPREC-INCREASE-CURRENT> (168073)
<NET-CHANGE-FROM-OPS> 106899
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 316053
<DISTRIBUTIONS-OF-GAINS> 334158
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 520
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (543312)
<ACCUMULATED-NII-PRIOR> 89070
<ACCUMULATED-GAINS-PRIOR> 10194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 3432303
<PER-SHARE-NAV-BEGIN> 505.87
<PER-SHARE-NII> 41.30
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 43.33
<PER-SHARE-DISTRIBUTIONS> 13.11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 464.66
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information
extracted from the financial
statements and supporting
schedules as of the end of
the most current period and is
qualified in its entirety by
reference to such financial statements
</LEGEND>
<CIK> 0000784850
<NAME> MST, SERIES 30 AND 41ST DISCOUNT SERIES
<SERIES>
<NUMBER> 30
<NAME> SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 1907032
<INVESTMENTS-AT-VALUE> 1951704
<RECEIVABLES> 50761
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2002465
<PAYABLE-FOR-SECURITIES> 12800
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 199
<TOTAL-LIABILITIES> 12999
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1986
<SHARES-COMMON-PRIOR> 1986
<ACCUMULATED-NII-CURRENT> 37749
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44672
<NET-ASSETS> 1989466
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 182447
<OTHER-INCOME> 0
<EXPENSES-NET> 4270
<NET-INVESTMENT-INCOME> 178177
<REALIZED-GAINS-CURRENT> (650)
<APPREC-INCREASE-CURRENT> (67475)
<NET-CHANGE-FROM-OPS> 110052
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 178119
<DISTRIBUTIONS-OF-GAINS> 9990
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (78057)
<ACCUMULATED-NII-PRIOR> 37691
<ACCUMULATED-GAINS-PRIOR> 3
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2028495
<PER-SHARE-NAV-BEGIN> 1041.05
<PER-SHARE-NII> 90.13
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 90.64
<PER-SHARE-DISTRIBUTIONS> 5.03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1001.75
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary
financial information extracted
from the financial statements and
supporting schedules as of the
end of the most current period and is
qualified in its entirety by reference
to such financial statements
</LEGEND>
<CIK> 0000784850
<NAME> MST, SERIES 30 AND 41ST DISCOUNT SERIES
<SERIES>
<NUMBER> 41
<NAME> DISCOUNT
<S> <C>
<FISCAL-YEAR-END> Jun-30-1994
<PERIOD-START> Jul-01-1993
<PERIOD-END> Jun-30-1994
<PERIOD-TYPE> YEAR
<INVESTMENTS-AT-COST> 4043026
<INVESTMENTS-AT-VALUE> 4112979
<RECEIVABLES> 98956
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4211935
<PAYABLE-FOR-SECURITIES> 2702
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 458
<TOTAL-LIABILITIES> 3160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 8587
<SHARES-COMMON-PRIOR> 8772
<ACCUMULATED-NII-CURRENT> 95791
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 69953
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 69953
<NET-ASSETS> 4208775
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 406149
<OTHER-INCOME> 0
<EXPENSES-NET> 9181
<NET-INVESTMENT-INCOME> 396968
<REALIZED-GAINS-CURRENT> (30159)
<APPREC-INCREASE-CURRENT> (130529)
<NET-CHANGE-FROM-OPS> 236280
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 400397
<DISTRIBUTIONS-OF-GAINS> 410639
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 185
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (574756)
<ACCUMULATED-NII-PRIOR> 99220
<ACCUMULATED-GAINS-PRIOR> 2643
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 4496153
<PER-SHARE-NAV-BEGIN> 545.32
<PER-SHARE-NII> 43.99
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 47.84
<PER-SHARE-DISTRIBUTIONS> 36.38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 490.13
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
BATTLE FOWLER
75 EAST 55TH STREET
NEW YORK, NY 10022
(212) 856-7000
October 28, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Re: Municipal Securities Trust, Series 30 and 41st
Discount Series
Gentlemen:
We have acted as counsel for Bear Stearns & Co., Inc. as Depositor
and Sponsor (the "Depositor") of Municipal Securities Trust, Series 30 and
41st Discount Series (the "Trust") in connection with the preparation of
Post-Effective Amendment No. 9 to Registration Statement on Form S-6 (the
"Registration Statement") filed pursuant to Rule 24e-2 of the Securities
Act of 1933 registering the issuance by the Trust of 1,028 units of
fractional undivided interest of the Trust (the "Units"). Such Units were
originally issued by the Trust on December 12, 1985 and are being
registered under the Registration Statement for resale by the Depositor of
the Trust. All terms specifically defined in such Registration Statement
shall have the same meaning when used herein.
We have examined copies of the following documents (a) the Trust
Indenture and Reference Trust Agreement, dated December 12, 1985, relating
to the Trust among the Depositor, United States Trust Company of New York,
as Trustee, and Standard & Poor's Corporation, as Evaluator (the "Trust
Agreements") pursuant to which the Units were originally issued; (b) the
Notification of Registration on Form N-8A and the Registration Statement
on Form N-8B-2, as amended, relating to the Trust, as filed with the
Securities and Exchange Commission (the "Commission") pursuant to the
Investment Company Act of 1940 (the "1940 Act"); (c) the Registration
Statement on Form S-6 (Registration No. 33-01869) filed with the
Commission pursuant to the Securities Act of 1933 (the "1933 Act"), and
Amendment No. 1 thereto (said Registration Statement, as amended by said
Amendment No. 1 being herein called the "Registration Statement") and all
subsequent Post-Effective Amendments to the Registration Statement as
filed with the Commission; (d) the proposed form of final Prospectus (the
"Prospectus") relating to the Units, which is expected to be filed with
the Commission this day; (e) certified resolutions of the Executive
Committee of the Depositor authorizing the execution and delivery by the
Depositor of the Trust Agreements and the consummation of the transactions
contemplated thereby; (f) the Certificate of Incorporation and By-Laws of
the Depositor, each certified to by an authorized officer of the
Depositor as of a recent date; and (g) a certificate of an authorized
officer of the Depositor with respect to certain factual matters contained
therein.
We have also examined the Application for Orders of Exemption
from certain provisions of Sections 14(a) and 22(d) of the 1940 Act and
Rules 19b-1 and 22c-1 thereunder, and the First Amendment thereto, and the
Application for Orders of Exemption from certain provisions of
Sections 11(a) and 11(c) and 22(d) of the 1940 Act, which have been filed
with the Commission by Bear, Stearns & Co. Inc. on behalf of New York
Municipal Trust, Series 1 and Subsequent Series, and the related exemptive
Orders issued on November 8, 1978 and April 29, 1981 and the Application
for an Amended Order of Exemption from certain provisions of Section 11(a)
of the 1940 Act, which has been filed with the Commission by the
Depositors; the Trusts; Municipal Securities Trust, Series 1 (and
Subsequent Series (including Insured Municipal Securities Trust, Series 1
(and Subsequent Series) and 5th Discount Series (and Subsequent Series));
New York Municipal Trust, Series 1 (and Subsequent Series); and A
Corporate Trust, Series 1 (and Subsequent Series) on October 2, 1990 and
as amended thereafter and the related Exemptive Order (IC-18290) issued by
the Commission on August 28, 1991.
In rendering this opinion we have assumed the genuineness of all
signatures, the authenticity and completeness of all documents,
certificates and instruments submitted to us as originals, the conformity
with the originals of all documents, certificates and instruments
submitted to us as copies and the legal capacity to sign of all
individuals executing such documents, certificates and instruments.
We have assumed that each party has duly authorized, executed
and delivered each of the Trust Agreements, Registration Statement and
other instruments, certificates, agreements, documents executed in
connection with the transactions contemplated thereby (collectively "UIT
Documents") to which it is a party.
We have assumed that each party is duly qualified and has full
power and authority to perform its obligations under the UIT Documents and
the transactions contemplated by the UIT Documents.
We have assumed that each party complied with all orders, rules,
regulations applicable to it or in connection with the UIT Documents or
the transactions contemplated thereby. We have further assumed that no
party to the transaction contemplated by the UIT Documents is subject to
any statute, rule or regulation, or to any impediment to which contracting
parties are not generally subject, which requires such party to obtain the
authorization or consent of, or to register or make a declaration or
filing with, or inquiry of any governmental agency or regulatory
authority.
Based on such examination and assumptions, we are of the opinion
that the Units when sold by the Depositor and purchased and paid for by
the Unitholder, duly executed, authenticated and delivered in accordance
with the Trust Agreement and the Registration Statement relating to such
Units, the Units will be (i) validly issued, fully paid and nonassessable
and (iii) legal, valid and binding obligations of the Trust, and the
holders of the Units will be entitled to the benefits of the related Trust
Agreement, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and general principles of
equity regardless of whether such enforceability is considered in a
proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and further consent to the use of our name
wherever appearing in the Registration Statement, including the Prospectus
and forms of Prospectus Supplements constituting a part thereof, as
originally filed or as amended or supplemented.
Very truly yours,
Battle Fowler
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681
John R. Fitzgerald
Vice President
October 28, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
RE: Municipal Securities Trust
Series 28 and 38th Discount Series
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 2-98914 for the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Sincerely,
John R. Fitzgerald
JRF/cns
<PAGE>
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681
John R. Fitzgerald
Vice President
October 28, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
RE: Municipal Securities Trust
39th Discount Series
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-00376 for the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Sincerely,
John R. Fitzgerald
JRF/cns
<PAGE>
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681
John R. Fitzgerald
Vice President
October 28, 1994
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
RE: Municipal Securities Trust
Series 29 and 40th Discount Series
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-00856 of the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Sincerely,
John R. Fitzgerald
JRF/cns
<PAGE>
KENNY S&P EVALUATION SERVICES
A Division of Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006-2511
Telephone 212/770-4440
Fax: 212/797-8681
John R. Fitzgerald
Vice President
October 28, 1994
Bear, Stearns & Co., Inc.
245 Park Avenue
New York, NY 10167
RE: Municipal Securities Trust
Series 30 and 41st Discount Series
Gentlemen:
We have examined the post-effective Amendment to the
Registration Statement File No. 33-01869 for the above-captioned
trust. We hereby acknowledge that Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. is currently acting
as the evaluator for the trust. We hereby consent to the use in
the Amendment of the reference to Kenny S&P Evaluation Services,
a division of Kenny Information Systems, Inc. as evaluator.
In addition, we hereby confirm that the ratings
indicated in the above-referenced Amendment to the Registration
Statement for the respective bonds comprising the trust portfolio
are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter
with the Securities and Exchange Commission.
Sincerely,
John R. Fitzgerald
JRF/cns
