As filed with the Securities and Exchange Commission on October 25, 1995
Registration No. 2-98914*
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
POST-EFFECTIVE AMENDMENT NO. 10
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,
39th DISCOUNT SERIES, SERIES 29 & 40th
DISCOUNT SERIES and SERIES 30 & 41st DISCOUNT SERIES
B. Name of depositor:
REICH & TANG DISTRIBUTORS L.P.
C. Complete address of depositor's principal executive office:
600 Fifth Avenue
New York, New York 10020
D. Name and complete address of agent for service:
PETER J. DeMARCO Copy of comments to:
Executive Senior MICHAEL R. ROSELLA, ESQ.
Vice President Battle Fowler LLP
Reich & Tang Distributors L.P. 75 East 55th Street
600 Fifth Avenue New York, NY 10022
New York, NY 10020 (212) 856-6858
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485.
/x/ on (October 31, 1995) 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, 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. 10
for all of the aforementioned Series.
1669.1
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 28, 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
-i-
965.1
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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
-ii-
965.1
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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
-iii-
965.1
<PAGE>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
(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
-iv-
965.1
<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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
81198.1
<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 1/2279th 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.
A-2
81198.1
<PAGE>
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 5.82% of
the Public Offering Price, which is the same as 6.179% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $344.87 plus accrued interest
of $14.52 under the monthly distribution plan, $16.51 under the semi-annual
distribution plan and $31.74 under the annual distribution plan, for a total
of $359.39, $361.38 and $376.61, 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
A-3
81198.1
<PAGE>
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 5.82% of the Public Offering Price (6.179% of the
net amount invested) plus net accrued interest. If such a market is not
maintained, a Certificateholder will be able to redeem his or her 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.
A-4
81198.1
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 28
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: July 25, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $750,000 $1.00 per Unit.
Number of Units ............. 2,279 Weighted Average Life to Maturity:
Fractional Undivided Inter- 20.2 Years.
est in Trust per Unit ..... 1/2279 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value
Bonds per Unit ............ $329.09 of Trust is less than $1,000,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2034
of Bonds in Trust ....... $742,733+++ or the disposition of the last
Divided by 2,279 Units .... $325.90 Bond in the Trust.
Plus Sales Charge of 5.82% Trustee***: Chase Manhattan
of Public Offering Price $18.97 Bank, N.A.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ................ $344.87+ plan $1.02 per $1,000; semi-
Redemption and Sponsor's annual plan $.54 per $1,000; and
Repurchase Price annual plan is $.35 per $1,000.
per Unit .................. $325.90+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $12 plus
Public Offering Price $.25 per each issue of Bonds in
over Redemption and excess of 50 issues (treating
Sponsor's Repurchase separate maturities as separate
Price per Unit ............ $18.97++++ issues).
Difference between Public Sponsor: Reich & Tang
Offering Price per Unit Distributors L.P.
and Principal Amount per Sponsor's Annual Fee: Maximum of
Unit Premium/(Discount) ... $15.78 $.25 per $1,000 principal amount
Evaluation Time: 4:00 p.m. of Bonds (see "Trust Expenses
New York Time. 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# ......... $28.54 $28.54 $28.54
Less estimated annual fees and
expenses ............................ 1.53 1.21 1.14
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $27.01 $27.33 $27.40
Estimated interest distribution# ...... 2.25 13.66 27.40
Estimated daily interest accrual# ..... .0750 .0759 .0761
Estimated current return#++ ........... 7.83% 7.92% 7.95%
Estimated long term return++ .......... 5.33% 5.47% 5.50%
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
A-5
81198.1
<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 sales charge for secondary market purchases is based upon the number
of years remaining to maturity of each bond in the Trust's portfolio.
(See "Public Offering" in Part B of this Prospectus.)
*** The Trustee maintains its corporate trust office at 770 Broadway, New
York, New York 10003 (tel. no.: 1-800-882-9898). 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 $14.52 monthly, $16.51 semi-annually
and $31.74 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.
A-6
81198.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 3 issues representing
obligations of issuers located in 2 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; none 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. Three
issues representing $750,000 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, Industrial Development 1 and School Building
1. For an explanation of the significance of these factors see "The
Trust--Portfolio" in Part B of this Prospectus.
As of June 30, 1995, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 33.3% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 33.3% were purchased at a
premium and approximately 33.3% 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.
- --------
* Changes in the Trust Portfolio: From July 1, 1995 to September 15,
1995, the entire principal amount of the Bond in portfolio no. 1 has
been called for redemption pursuant to pre-refunding provisions and is
no longer contained in the Trust.
A-7
81198.1
<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, 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
June 30, 1995 2,279 230.66 37.99 38.43 49.80 173.76
- --------
* 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.
A-8
81198.1
<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, 1995, 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, 1995, 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, 1995, 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cost $694,326) $ 757,573
Excess of other assets over total liabilities 23,449
---------
Net assets 2,279 units of fractional undivided
interest outstanding$342.70 per unit) $ 781,022
=========
See accompanying notes to financial statements.
MUNICIPAL SECURITIES TRUST, SERIES 28
Statements of Operations
Years ended June 30,
-------- ---- --------- ---- -------
-------- --------- -------
1995 1994 1993
-------- --------- -------
Investment income - interest $ 89,767 139,664 170,574
-------- --------- -------
Expenses:
Trustee's fees 2,505 2,714 3,041
Evaluator's fees 825 900 853
Sponsor's advisory fee 344 418 521
-------- --------- -------
Total expenses 3,674 4,032 4,415
-------- --------- -------
Investment income, net 86,093 135,632 166,159
-------- --------- -------
Realized and unrealized loss on investments:
Net realized loss
on bonds sold or called (23,788) (6,667) (26,411)
Unrealized appreciation
(depreciation) for the year (8,138) (93,363) 7,369
-------- --------- --------
Net loss
on investments (31,926) (100,030) (19,042)
-------- --------- --------
Net increase in
net assets resulting
from operations $ 54,167 35,602 147,117
======== ========= ========
-------- --------- --------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
---------- -- ---------- -- ----------
---------- ---------- ----------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 86,093 135,632 166,159
Net realized loss on
bonds sold or called (23,788) (6,667) (26,411)
Unrealized appreciation
(depreciation) for the year (8,138) (93,363) 7,369
---------- ---------- ----------
Net increase in net
assets resulting
from operations 54,167 35,602 147,117
---------- ---------- ----------
Distributions:
To Certificateholders:
Investment income 92,445 139,161 170,190
Principal 498,669 333,055 238,444
Redemptions:
Interest 2,107 605 742
Principal 55,439 14,597 32,546
---------- ---------- ----------
Total distributions and
redemptions 648,660 487,418 441,922
---------- ---------- ----------
Total decrease (594,493) (451,816) (294,805)
Net assets at beginning of year 1,375,515 1,827,331 2,122,136
---------- ---------- ----------
Net assets at end of year (including
undistributed net investment
income of$38,288, $46,747 and
$50,881, respectively) $ 781,022 1,375,515 1,827,331
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny S&P
Evaluation Services (Evaluator). 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).
(Continued)
MUNICIPAL SECURITIES TRUST, SERIES 28
Notes to Financial Statements
(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.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 125 and 65 units were redeemed during the years ended June 30, 1995
and 1994, respectively. No units were redeemed during the year ended June 30,
1993.
See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the years ended June 30, 1995,
1994 and 1993.
(5) Net Assets
At June 30, 1995, 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 (1,735,311)
Net unrealized appreciation 63,247
Undistributed net investment income 38,288
Undistributed proceeds from bonds sold or called (14,838)
Total $ 781,022
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York was
merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich & Tang")
has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the olbigations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Portfolio
June 30, 1995
<CAPTION>
PortAggregate Coupon Rate/ Redemption Feature
foliPrincipal 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 Avon Middle School Building NR 9.400% No Sinking Fund $ 255,000
Corporation Hendricks County, 1/01/2009 7/01/95 @ 102 Ref.
Indiana 1985 First Mortgage
Refunding Bonds (5)
2 250,000 Intermountain Power Agency (a AA 6.000 1/01/20 @ 100 S.F. 238,203
political subdivision of the State 7/01/2020 7/31/95 @ 100 Ref.
of Utah) Power Supply Revenue
Refunding Bonds, 1985 Series C
3 250,000 West Valley City, Salt Lake County, Baa1* 10.625 6/01/06 @ 100 S.F. 264,370
Utah Industrial Development Revenue 12/01/2010 12/01/95 @ 103 Ref.
Bonds GFI Ltd. #2) WVC Investment
Ltd. Project (K Mart Guaranteed)
Series 1984
-------- ---------
$ 750,000 $ 757,573
======== =========
</TABLE>
See accompanying footnotes to portfolio and notes to the financial statements
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 28
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized appreciation of all the bonds
was comprised of the following:
Gross unrealized appreciation $ 78,828
Gross unrealized depreciation (15,581)
Net unrealized appreciation $ 63,247
(4) The annual interest income, based upon bonds held at June 30, 1995, 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, 1995 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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
81561.1
<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"). 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.) 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 1/5926th 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
A-2
81561.1
<PAGE>
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 1.01% of
the Public Offering Price, which is the same as 1.021% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $267.41 plus accrued interest of $9.46 under the monthly
distribution plan, $11.13 under the semi-annual distribution plan and $26.49
under the annual distribution plan, for a total of $276.87, $278.54 and
$293.90, 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
A-3
81561.1
<PAGE>
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 1.01% (1.021% of the net amount invested) plus
net accrued interest. If such a market is not maintained, a Certificateholder
will be able to redeem his or her 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.
A-4
81561.1
<PAGE>
MUNICIPAL SECURITIES TRUST
39TH DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: October 10, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,510,000 $1.00 per Unit.
Number of Units ............. 5,926 Weighted Average Life
Fractional Undivided Inter- to Maturity: 3.54 Years.
est in Trust per Unit ..... 1/5926 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $254.81 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 ....... $1,568,870+++ The earlier of December 31,
Divided by 5,926 Units .... $264.74 2034 or the disposition of the
Plus Sales Charge of 1.01% last Bond in the Trust.
of Public Offering Price $2.67 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $267.41+ 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 .................. $264.74+ 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 ............ $2.67++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $12.60 Distributors L.P.
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# ......... $25.72 $25.72 $25.72
Less estimated annual fees and
expenses ............................ 1.26 .99 .92
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $24.46 $24.73 $24.80
Estimated interest distribution# ...... 2.03 12.36 24.80
Estimated daily interest accrual# ..... .0679 .0686 .0688
Estimated current return#++ ........... 9.15% 9.25% 9.27%
Estimated long term return++ .......... 3.19% 3.29% 3.32%
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
A-5
81561.1
<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 proceeds from securities called July 1, 1995 and certain amounts
distributable as of June 30, 1995 are reported in the summary of
essential information as if they had been distributed at year-end.
*** The Trustee maintains its corporate trust office at 770 Broadway, New
York, New York 10003 (tel. no.: 1-800-882-9898). 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 $9.46 monthly, $11.13 semi-annually and
$26.49 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.
A-6
81561.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 6 issues representing
obligations of issuers located in 5 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 16.56% are hospital revenue bonds; approximately
16.56% are issued in connection with the financing of nuclear generating
facilities; and approximately .01% 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 $1,510,000 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,
Hospital 1, Housing 1, Nuclear Power 1, 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.
As of June 30, 1995, none of the aggregate principal amount of the
Bonds were original issue discount bonds. Approximately 29.8% of the aggregate
principal amount of the Bonds in the Trust were purchased at a "market"
discount from par value at maturity, approximately 53.6% were purchased at a
premium and approximately 16.6% 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.
- --------
* Changes in the Trust Portfolio: From July 1, 1995 to September 15, 1995,
the entire principal amount of the Bond in portfolio no. 2 has been
called for redemption pursuant to pre-refunding provisions and is no
longer contained in the Trust. $5,000 of the principal amount of the
Bond in portfolio no. 3 has been called and is no longer contained in
the Trust. 18 Units have been redeemed from the Trust.
A-7
81561.1
<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, 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
June 30, 1995 5,926 317.59 34.97 35.33 41.28 129.74
- --------
* 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.
A-8
81561.1
<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, 1995, 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, 1995, 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, 1995, 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cost$1,513,994) $ 1,568,840
Excess of other assets over total liabilities 313,212
----------
Net assets 5,926 units of fractional undivided
interest outstanding,$317.59 per unit) $ 1,882,052
==========
See accompanying notes to financial statements.
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Statements of Operations
Years ended June 30,
---------- -- --------- -- --------
1995 1994 1993
---------- --------- --------
Investment income - interest $ 226,771 299,277 327,177
---------- --------- --------
Expenses:
Trustee's fees 3,973 4,168 4,654
Evaluator's fees 3,299 3,579 3,412
Sponsor's advisory fee 714 804 1,228
---------- --------- --------
Total expenses 7,986 8,551 9,294
---------- --------- --------
Investment income, net 218,785 290,726 317,883
---------- --------- --------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss)
on bonds sold or called 27,848 (6,306) (1,959)
Unrealized depreciation "
for the year (145,256) (169,643) (91,556)
---------- --------- --------
Net loss
on investments (117,408) (175,949) (93,515)
---------- --------- --------
Net increase in net
assets resulting
from operations $ 101,377 114,777 224,368
========== ========= ========
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
----------- -- ---------- -- ----------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 218,785 290,726 317,883
Net realized gain (loss) on
bonds sold or called 27,848 (6,306) (1,959)
Unrealized depreciation
for the year (145,256) (169,643) (91,556)
----------- ---------- ----------
Net increase in net
assets resulting
from operations 101,377 114,777 224,368
----------- ---------- ----------
Distributions:
To Certificateholders:
Investment income 227,813 292,245 317,578
Principal 838,688 308,768 -
Redemptions:
Interest 8,406 1,613 2,801
Principal 247,174 48,365 125,681
----------- ---------- ----------
Total distributions and
redemptions 1,322,081 650,991 446,060
----------- ---------- ----------
Total decrease (1,220,704) (536,214) (221,692)
Net assets at beginning of year 3,102,756 3,638,970 3,860,662
----------- ---------- ----------
Net assets at end of year (including
undistributed net investment
income of$61,741, $79,175 and
$82,307, respectively) $ 1,882,052 3,102,756 3,638,970
=========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny
S&P Evaluation Services (Evaluator). 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.
(Continued)
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Notes to Financial Statements
(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, 1995, 1994 and 1993.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 719, 99 and 234 units were redeemed during the years ended June 30,
1995, 1994 and 1993, respectively.
(5) Net Assets
At June 30, 1995, 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 (2,370,200)
Net unrealized appreciation 54,847
Undistributed net investment income 61,741
Undistributed proceeds from bonds sold or called 251,470
Total $ 1,882,052
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment
trusts sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich & Tang")
has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the olbigations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<TABLE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Portfolio
June 30, 1995
<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)
- -- ---------- --------------------- ---- ------------ ------------------- ----------
<C> <C> <C> <C> <C> <C> <C>
1 $ 400,000 Dade County , Florida Aaa* 10.000% 10/01/06 @ 100 S.F. $ 414,304
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. 257,708
Facilities Authority 9/01/2015 9/01/95 @ 102 Ref.
Revenue Bonds, Series
1985 (Illinois
Masonic Medical
Center) (5)
3 10,000 Nebraska Mortgage Aa* 10.125 7/15/03 @ 100 S.F. 10,288
Finance Fund Single 1/15/2014 1/15/96 @ 102 Ref.
Family Mortgage
Revenue Bonds, 1983
Series A
4 200,000 Tulsa Parking A 9.750 10/01/99 @ 100 S.F. 206,964
Authority (Tulsa, 10/01/2003 10/01/95 @ 102 Ref.
Oklahoma) Parking
Revenue Bonds,
Refunding Series 1985
A
5 220,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 229,700
Combined Utility 11/15/2012 11/15/95 @ 102 S.F.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
5a 180,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 187,936
Combined Utility 11/15/2012 11/15/95 @ 102 S.F.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
6 250,000 Matagorda County A- 10.125 No Sinking Fund 261,940
Navigation District 10/15/2014 10/15/95 @ 103 Ref.
Number One (Texas)
(Central Power and
Light Company
Project) Pollution
Control Revenue Bonds,
Series 1984
$ 1,510,000 $ 1,568,840
========== ==========
See accompanying footnotes to the portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 39TH DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized appreciation of all the bonds was
$54,847.
(4) The annual interest income, based upon the bonds held at June 30, 1995,
to the Trust is $152,451.
(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.
(6) Bonds sold or called after June 30, 1995 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 maybe 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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
81553.1
<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 1/1686th 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.
A-2
81553.1
<PAGE>
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 3.68% of
the Public Offering Price, which is the same as 3.820% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $412.47 plus accrued
interest of $15.19 under the monthly distribution plan, $17.78 under the
semi-annual distribution plan and $39.87 under the annual distribution plan,
for a total of $427.66, $430.25 and $452.34, 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
A-3
81553.1
<PAGE>
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 3.68% of the Public Offering Price (3.820% of the
net amount invested) plus net accrued interest. If such a market is not
maintained, a Certificateholder will be able to redeem his or her 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.
A-4
81553.1
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 29
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: November 7, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $650,000 $1.00 per Unit.
Number of Units ............. 1,686 Weighted Average Life
Fractional Undivided Inter- to Maturity: 9.70 Years.
est in Trust per Unit ..... 1/1686 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $385.53 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 ....... $670,761+++ The earlier of December 31,
Divided by 1,686 Units .... $397.84 2034 or the disposition of the
Plus Sales Charge of 3.68% last Bond in the Trust.
of Public Offering Price $14.64 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $412.47+ 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 .................. $397.84+ 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 ............ $14.64++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $26.94 Distributors L.P.
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# ......... $38.59 $38.59 $38.59
Less estimated annual fees and
expenses ............................ 1.77 1.44 1.34
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $36.82 $37.15 $37.25
Estimated interest distribution# ...... 3.06 18.57 37.25
Estimated daily interest accrual# ..... .1022 .1031 .1034
Estimated current return#++ ........... 8.93% 9.01% 9.03%
Estimated long term return++ .......... 2.90% 2.98% 3.01%
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
A-5
81553.1
<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.: 1-800-882-9898). 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 $15.19 monthly, $17.78 semi-annually
and $39.87 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.
A-6
81553.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO
The portfolio of the Trust consists of 4 issues representing
obligations of issuers located in 3 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 23% are hospital revenue bonds;
approximately 15% 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. Four issues representing $650,000 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 1
and Nuclear Power 1. For an explanation of the significance of these factors
see "The Trust--Portfolio" in Part B of this Prospectus.
As of June 30, 1995, 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 77% were purchased at a premium and approximately 23% 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.
A-7
81553.1
<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, 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
June 30, 1995 1,686 412.33 48.72 49.16 58.99 179.72
- --------
* 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.
A-8
81553.1
<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, 1995, 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, 1995, 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, 1995, 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cos$662,750) $ 674,739
Excess of other assets over total liabilities 20,452
---------
Net assets 1,686 units of fractional undivided
interest outstanding$412.33 per unit) $ 695,191
=========
See accompanying notes to financial statements.
MUNICIPAL SECURITIES TRUST, SERIES 29
Statements of Operations
Years ended June 30,
-------- ---- -------- ---- --------
-------- -------- --------
1995 1994 1993
-------- -------- --------
Investment income - interest $ 86,449 117,011 129,606
-------- -------- --------
Expenses:
Trustee's fees 2,163 2,187 2,497
Evaluator's fees 825 899 793
Sponsor's advisory fee 291 326 387
-------- -------- --------
Total expenses 3,279 3,412 3,677
-------- -------- --------
Investment income, net 83,170 113,599 125,929
-------- -------- --------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss)
on bonds sold or called 3,250 13,270 (2,225)
Unrealized depreciation
for the year (42,430) (88,359) (25,810)
-------- -------- --------
Net loss on
investments (39,180) (75,089) (28,035)
-------- -------- --------
Net increase in net
assets resulting
from operations $ 43,990 38,510 97,894
======== ======== ========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
---------- -- ---------- -- ----------
---------- ---------- ----------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 83,170 113,599 125,929
Net realized gain (loss)
on bonds sold or called 3,250 13,270 (2,225)
Unrealized depreciation
for the year (42,430) (88,359) (25,810)
---------- ---------- ----------
Net increase in net
assets resulting
from operations 43,990 38,510 97,894
---------- ---------- ----------
Distributions:
To Certificateholders:
Investment income 85,988 115,054 125,639
Principal 306,206 240,306 4,120
Redemptions:
Interest 1,988 1,683 1,530
Principal 57,534 50,337 40,889
---------- ---------- ----------
Total distributions and
redemptions 451,716 407,380 172,178
---------- ---------- ----------
Total decrease (407,726) (368,870) (74,284)
Net assets at beginning of year 1,102,917 1,471,787 1,546,071
---------- ---------- ----------
Net assets at end of year (including
undistributed net investment
income of$24,429, $29,235 and
$32,373, respectively) $ 695,191 1,102,917 1,471,787
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny S&P
Evaluation Services (Evaluator). 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).
(Continued)
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Notes to Financial Statements
(4), Continued
See "Financial and Statistical Information" in Part A of this Prospectus for
the amounts of per unit distributions during the years ended June 30, 1995,
1994 and 1993.
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. 104, 66 and 52 units were redeemed by the trust during the years
ended June 30, 1995, 1994 and 1993, respectively.
(5) Net Assets
At June 30, 1995, the net assets of the Trust represented the interest
of Certificaveholders 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 (1,279,114)
Net unrealized appreciation 11,989
Undistributed net investment income 24,429
Distributions in excess of proceeds
from bonds sold or called (3,977)
Total $ 695,191
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obLigations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Portfolio
June 30, 1995
<CAPTION>
Port Aggregate Coupon Rate/ Redemption Feature
foli 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)
<C> <C> <C> <C> <C> <C> <C>
1 $ 150,000 Allegheny County (Pennsylvania) A- 9.800% 7/01/00 @ 100 S.F. $ 153,645
Hospital Development Authority 7/01/2010 7/31/95 @ 102 Ref.
Hospital Revenue Refunding Bonds,
1985 Series A (St. Margaret
Memorial Hospital Project)
2 200,000 The Metropolitan Nashville Airport BAA2* 9.875 No Sinking Fund 207,500
Authority Special Facility Revenue 10/01/2005 10/01/95 @ 102 Ref.
Bonds Series 1985 (American
Airlines Inc. Project)
3 70,000 City of Austin, Texas Combined AAA 10.250 11/15/04 @ 100 S.F. 73,086
Utility Systems Revenue Refunding 11/15/2012 11/15/95 @ 102 Ref.
Bonds, Series 1985 (5)
3a 130,000 City of Austin, Texas Combined AAA 10.250 11/15/04 @ 100 S.F. 135,732
Utility Systems Revenue Refunding 11/15/2012 11/15/95 @ 102 Ref.
Bonds, Series 1985 (5)
4 100,000 Matagorda County Navigation A- 10.125 No Sinking Fund 104,776
District Number One (Texas) 10/15/2014 10/15/95 @ 103 Ref.
Pollution Control Revenue Bonds
(Central Power and Light Company
Project) Series 1984
$ 650,000 $ 674,739
</TABLE>
See accompanying footnotes to portfolio and notes to the financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 29
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized appreciation of all the bonds
was $11,989.
(4) The annual interest income, based upon bonds held at June 30, 1995, to the
Trust is $65,075.
(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.
(6) Bonds sold or called after June 30, 1995 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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
81530.1
<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"). 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.) 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 1/6241st 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
A-2
81530.1
<PAGE>
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 4.68% of
the Public Offering Price, which is the same as 4.909% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $253.84 plus accrued interest of $8.90 under the monthly
distribution plan, $10.32 under the semi-annual distribution plan and $24.95
under the annual distribution plan, for a total of $262.74, $264.16 and
$278.79, 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
A-3
81530.1
<PAGE>
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 4.68% (4.909% of the net amount invested) plus
net accrued interest. If such a market is not maintained, a Certificateholder
will be able to redeem his or her 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.
A-4
81530.1
<PAGE>
MUNICIPAL SECURITIES TRUST
40TH DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: November 7, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,460,000 $1.00 per Unit.
Number of Units ............. 6,241 Weighted Average Life
Fractional Undivided Inter- to Maturity: 13.1 Years.
est in Trust per Unit ..... 1/6241 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $233.94 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 ....... $1,513,439+++ The earlier of December 31,
Divided by 6,241 Units .... $242.50 2034 or the disposition of the
Plus Sales Charge of 4.68% last Bond in the Trust.
of Public Offering Price $11.34 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $253.84+ 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 .................. $242.50+ 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 ............ $11.34++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $19.90 Distributors L.P.
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# ......... $23.38 $23.38 $23.38
Less estimated annual fees and
expenses ............................ 1.07 .82 .75
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $22.31 $22.56 $22.63
Estimated interest distribution# ...... 1.85 11.28 22.63
Estimated daily interest accrual# ..... .0619 .0626 .0628
Estimated current return#++ ........... 8.79% 8.89% 8.92%
Estimated long term return++ ........... 2.96% 3.06% 3.09%
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
A-5
81530.1
<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.: 1-800-882-9898). 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 $8.90 monthly, $10.32 semi-annually and
$24.95 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.
A-6
81530.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 5 issues representing
obligations of issuers located in 3 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 31% are hospital revenue bonds;
approximately 27% 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. Five issues representing $1,460,000 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 1. For an explanation of the significance of these factors
see "The Trust--Portfolio" in Part B of this Prospectus.
As of June 30, 1995, none of the aggregate principal amount 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 76% were purchased at a premium and
approximately 24% 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.
- --------
* Changes in the Trust Portfolio: From July 1, 1995 to September 15, 1995,
34 Units have been redeemed from the Trust.
A-7
81530.1
<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, 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
June 30, 1995 6,241 252.75 34.49 34.87 41.75 194.39
- --------
* 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.
A-8
81530.1
<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,
1995 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, 1995, 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, 1995 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cos$1,487,112) $ 1,515,810
Excess of other assets over total liabilities 61,586
----------
Net assets 6,241 units of fractional undivided
interest outstanding$252.75 per unit) $ 1,577,396
==========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
---------- ---- --------- ---- ---------
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Investment income - interest $ 224,624 316,566 344,287
---------- --------- ---------
Expenses:
Trustee's fees 4,633 4,832 5,483
Evaluator's fees 2,475 2,686 2,559
Sponsor's advisory fee 796 854 1,388
---------- --------- ---------
Total expenses 7,904 8,372 9,430
---------- --------- ---------
Investment income, net 216,720 308,194 334,857
---------- --------- ---------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss)
on bonds sold or called 16,827 (33,222) 21,523
Unrealized depreciation
for the year (121,042) (168,073) (106,336)
---------- --------- ---------
Net loss
on investments (104,215) (201,295) (84,813)
---------- --------- ---------
Net increase in net
assets resulting
from operations $ 112,505 106,899 250,044
========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
---------- -- --------- - --------
---------- --------- --------
1995 1994 1993
---------- --------- --------
<S> <C> <C> <C>
Operations:
Investment income, net $ 216,720 308,194 334,857
Net realized gain (loss) on
bonds sold or called 16,827 (33,222) 21,523
Unrealized depreciation
for the year (121,042) (168,073) (106,336)
---------- --------- --------
Net increase in net
assets resulting
from operations 112,505 106,899 250,044
---------- --------- --------
Distributions:
To Certificateholders:
Investment income 226,034 307,744 334,306
Principal 1,228,621 89,174 -
Redemptions:
Interest 7,943 8,309 6,974
Principal 233,158 244,984 260,669
---------- --------- --------
Total distributions
and redemptions 1,695,756 650,211 601,949
---------- --------- --------
Total decrease (1,583,251) (543,312) (351,905)
Net assets at beginning of year 3,160,647 3,703,959 4,055,864
---------- --------- --------
Net assets at end of year (including
undistributed net investment
income of $63,954, $81,211 and
$89,070, respectively) $ 1,577,396 3,160,647 3,703,959
========== ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny S&P
Evaluation Services (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.
(Continued)
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Notes to Financial Statements
(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. 561, 520 and 526 units were redeemed during the years ended June 30,
1995, 1994, 1993 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, 1995,
1994 and 1993.
(5) Net Assets
At June 30, 1995, 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 (2,986,087)
Net unrealized appreciation 28,698
Undistributed net investment income 63,954
Distributions in excess of proceeds
from bonds sold or called (2,368)
Total $ 1,577,396
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich &
Tang") has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<TABLE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Portfolio
June 30, 1995
<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)
- -- --------- --------------------- ---- ------------ --------------------- ---------
<C> <C> <C> <C> <C> <C>
1 $ 350,000 Allegheny County A- 9.800% 7/01/00 @ 100 S.F. $ 358,505
(Pennsylvania) 7/01/2010 7/01/95 @ 102 Ref.
Hospital Development
Authority Hospital
Revenue Refunding
Bonds Series 1985A
St. Margaret Memorial
Hospital Project
2 400,000 The Metropolitan Baa2* 9.875 No Sinking Fund 415,000
Nashville Airport 10/01/2005 10/01/95 @ 102 Ref.
Authority Specian
Facility Revenue
Bonds Series 1985
(American Airlines,
Inc. Project)
`
3 210,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 219,259
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
4 400,000 Matagorda County A- 10.125 No Sinking Fund 419,104
Navigation District 10/15/2014 10/15/95 @ 103 Ref.
Number One (Texas)
(Central Power and
Light Company
Project) Series 1984
5 100,000 Travis County (Texas) Aa* 10.125 11/01/00 @ 100 S.F. 103,942
Health Facilities 11/01/2015 11/01/95 @ 102 Ref.
Development
Corporation Hospital
Revenue Bonds
(Daughters of Charity
Health Systems -
Seton Medical Center)
Series 1985A
--------- ---------
$ 1,460,000 $ 1,515,810
========= =========
</TABLE>
See accompanying footnotes to portfolio and notes to the financial statements
<PAGE>
MUNICIPAL SECURITIES TRUST, 40TH DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized appreciation of all the bonds was
$28,698.
(4) The annual interest income to the Trust is $145,950.
(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.
(6) Bonds sold or called after June 30, 1995 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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
81216.1
<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 1/1833rd 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.
A-2
81216.1
<PAGE>
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 3.59% of
the Public Offering Price, which is the same as 3.723% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $713.80 plus accrued interest
of $14.94 under the monthly distribution plan, $19.87 under the semi-annual
distribution plan and $52.28 under the annual distribution plan, for a total
of $728.74, $733.67 and $766.08, 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
A-3
81216.1
<PAGE>
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 3.59% of the Public Offering Price (3.723% of the
net amount invested) plus net accrued interest. If such a market is not
maintained, a Certificateholder will be able to redeem his or her 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.
A-4
81216.1
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 30
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: December 12, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $1,195,000 $1.00 per Unit.
Number of Units ............. 1,833 Weighted Average Life
Fractional Undivided Inter- to Maturity: 9.1 Years.
est in Trust per Unit ..... 1/1833 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $651.94 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 ....... $1,263,043+++ The earlier of December 31,
Divided by 1,833 Units .... $689.06 2034 or the disposition of the
Plus Sales Charge of 3.59% last Bond in the Trust.
of Public Offering Price $24.74 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $713.80+ 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 .................. $689.06+ 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 ............ $24.74++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $61.86 Distributors L.P.
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# ......... $64.99 $64.99 $64.99
Less estimated annual fees and
expenses ............................ 2.04 1.57 1.41
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $62.95 $63.42 $63.58
Estimated interest distribution# ...... 5.24 31.71 63.58
Estimated daily interest accrual# ..... .1748 .1761 .1766
Estimated current return#++ ........... 8.82% 8.88% 8.91%
Estimated long term return++ .......... 8.12% 8.19% 8.21%
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
A-5
81216.1
<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.: 1-800-882-9898). 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 $14.94 monthly, $19.87 semi-annually
and $52.28 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.
A-6
81216.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 7 issues representing
obligations of issuers located in 5 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 17% are hospital revenue bonds; none 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 $1,195,000 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, Industrial Development 1 and Pollution Control 1. For
an explanation of the significance of these factors see "The Trust--Portfolio"
in Part B of this Prospectus.
As of June 30, 1995, 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 92% were purchased at a premium and approximately 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.
- --------
* Changes in the Trust Portfolio: From July 1, 1995 to September 15, 1995,
the entire principal amount of the Bond in portfolio no. 3 has been
called for redemption pursuant to pre-refunding provisions and is no
longer contained in the Trust. The entire principal amount of the Bond
in portfolio no. 7 has been called and is no longer contained in the
Trust.
A-7
81216.1
<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, 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
June 30, 1995 1,833 705.62 73.18 73.75 86.66 268.23
- --------
* 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.
A-8
81216.1
<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, 1995, 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, 1995, 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, 1995, 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Statement of Net Assets
June 30, 1995
Investments in marketable securities,
at market value (cos$1,247,288) $ 1,263,036
Excess of other assets over total liabilities 30,374
----------
Net assets 1,833 units of fractional undivided
interest outstanding$705.62 per unit) $ 1,293,410
==========
See accompanying notes to financial statements.
MUNICIPAL SECURITIES TRUST, SERIES 30
Statements of Operations
Years ended June 30,
-------- ---- -------- ---- --------
-------- -------- --------
1995 1994 1993
-------- -------- --------
Investment income - interest $ 139,716 182,447 183,718
-------- -------- --------
Expenses:
Trustee's fees 2,709 2,913 2,986
Evaluator's fees 825 898 793
Sponsor's advisory fee 456 459 461
-------- -------- --------
Total expenses 3,990 4,270 4,240
-------- -------- --------
Investment income, net135,726 178,177 179,478
-------- -------- --------
Realized and unrealized loss on investments:
Net realized loss
on bonds sold or called (20,442) (650) (975)
Unrealized depreciation
for the year (28,925) (67,475) (18,422)
-------- -------- --------
Net loss
on investments (49,367) (68,125) (19,397)
-------- -------- --------
Net increase in net
assets resulting
from operations $ 86,359 110,052 160,081
======== ======== ========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Statements of Changes in Net Assets
<CAPTION>
Years ended June 30,
---------- -- ---------- -- ----------
---------- ---------- ----------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operations:
Investment income, net $ 135,726 178,177 179,478
Net realized loss on
bonds sold or called (20,442) (650) (975)
Unrealized depreciation
for the year (28,925) (67,475) (18,422)
---------- ---------- ----------
Net increase in net
assets resulting
from operations 86,359 110,052 160,081
---------- ---------- ----------
Distributions:
Investment income 139,698 178,119 179,416
Principal 516,577 9,990 10,427
Redemptions: 3,411 - -
Investment income 122,728 - -
---------- ---------- ----------
Principal
Total distributions
and redemptions 782,415 188,109 189,843
---------- ---------- ----------
Total decrease (696,056) (78,057) (29,762)
Net assets at beginning of year 1,989,466 2,067,523 2,097,286
---------- ---------- ----------
Net assets at end of year (including
undistributed net investment
income o$30,366, $37,749 and $ 1,293,410 1,989,466 2,067,523
$37,692, respectively) ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny S&P
Evaluation Services (Evaluator). 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).
(Continued)
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Notes to Financial Statements
(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, 1995,
1994 and 1993.
The Trust Indenture and Agreement also requires the Trust to redeem units
tendered. 53 units were redeemed during the year ended June 30, 1995. No units
were redeemed during the years ended June 30, 1994 and 1993.
(5) Net Assets
At June 30, 1995, the net assets of the Trust represented the interest of
the 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 (746,343)
Net unrealized apPreciation 15,748
Undistributed net investment income 30,366
Undistributed proceeds from bonds sold or called 7
Total $ 1,293,410
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich & Tang")
has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<TABLE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Portfolio
June 30, 1995
<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)
- -- ----------- ------------------------------------------- ------- ------------ ---------------------- -----------
<C> <C> <C> <C> <C> <C> <C>
1 $ 100,000 State of Illinois Civic Center Bonds AAA 9.500% 12/01/06 @ 100 S.F. $ 105,605
(Dedicated Tax Revenue Bonds) Series 1985 12/15/2015 12/15/95 @ 103 Ref.
(5)
2 200,000 Illinois Educational Facilities Authority BBB+ 9.625 7/01/99 @ 100 S.F. 204,860
Revenue Refunding Bonds Chicago College of 7/01/2005 7/31/95 @ 102 Ref.
Osteopathic Medicine Series 1985
3 200,000 Maine Health and Higher Educational AAA 10.000 9/01/99 @ 100 S.F. 206,084
Facilities Authority Revenue Bonds 9/01/2015 9/01/95 @ 102 Ref.
(Osteopathic Hospital of Maine Inc.) 1985
(5)
4 200,000 Port Authority of the City of Saint Paul CCC 9.625 12/01/01 @ 100 S.F. 190,326
(Minnesota) Industrial Development Revenue 12/01/2014 12/01/95 @ 102 Ref.
Bonds Series 1985-T
5 195,000 The Metropolitan Nashville Airport Baa2* 9.875 No Sinking Fund 202,313
Authority Special Facility Revenue Bonds 10/01/2005 10/01/95 @ 102 Ref.
Series 1985 (American Airlines, Inc.
Project)
6 200,000 City of Austin, Texas Combined Utility AAA 11.000 11/15/00 @ 100 S.F. 251,356
Systems Revenue Refunding Bonds, Series A 11/15/2004 11/15/99 @ 100 Ref.
(5)
7 100,000 Brazos River Authority (Texas) Pollution A- 9.875 No Sinking Fund 102,492
Control Revenue Bonds (Houston Lighting & 8/01/2015 8/01/95 @ 102 Ref.
Power Company Project) Series 1985 A
----------- -----------
$ 1,195,000 $ 1,263,036
=========== ===========
</TABLE>
See accompanying footnotes to portfolio and notes to the financial statements
<PAGE>
MUNICIPAL SECURITIES TRUST, SERIES 30
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 32,073
Gross unrealized depreciation (16,325)
Net unrealized appreciation $ 15,748
(4) The annual interest income, based upon bonds held at June 30,1995, to the
Trust is $119,131.
(5) The bonds have been prerefunded and will be redeemed at the next refunding
call date.
(6) Bonds sold or called after June 30, 1995 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).
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 Reich & Tang
Distributors L.P. (successor Sponsor to 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, 1995 (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 31, 1995
82175.1
<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"). 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.) 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 1/8120th 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
A-2
82175.1
<PAGE>
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 3.15% of
the Public Offering Price, which is the same as 3.252% of the net amount
invested in Bonds per Unit. The sales charge for secondary market purchases is
based upon the number of years remaining to maturity of each bond in the
Trust's portfolio. (See "Public Offering" in Part B of this Prospectus.) 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 $335.18 plus accrued interest of $7.65 under the monthly
distribution plan, $9.85 under the semi-annual distribution plan and $25.45
under the annual distribution plan, for a total of $342.83, $345.03 and
$360.63, 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
A-3
82175.1
<PAGE>
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 3.15% (3.252% of the net amount invested) plus
net accrued interest. If such a market is not maintained, a Certificateholder
will be able to redeem his or her 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.
A-4
82175.1
<PAGE>
MUNICIPAL SECURITIES TRUST
41ST DISCOUNT SERIES
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1995
Date of Deposit: December 12, 1985 Minimum Principal Distribution:
Principal Amount of Bonds ... $2,575,000 $1.00 per Unit.
Number of Units ............. 8,120 Weighted Average Life
Fractional Undivided Inter- to Maturity: 9.3 Years.
est in Trust per Unit ..... 1/8120 Minimum Value of Trust:
Principal Amount of Trust may be terminated if
Bonds per Unit ............ $317.12 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 ....... $2,600,158+++ The earlier of December 31,
Divided by 8,120 Units .... $324.94 2034 or the disposition of the
Plus Sales Charge of 3.15% last Bond in the Trust.
of Public Offering Price $10.24 Trustee***: Chase Manhattan
Public Offering Price Bank, N.A.
per Unit ................ $335.18+ 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 .................. $324.94+ 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 ............ $10.24++++ Bonds in excess of 50 issues
Difference between Public (treating separate maturities
Offering Price per Unit as separate issues).
and Principal Amount per Sponsor: Reich & Tang
Unit Premium/(Discount) ... $18.06 Distributors L.P.
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# ......... $31.22 $31.22 $31.22
Less estimated annual fees and
expenses ............................ 1.14 .84 .76
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $30.08 $30.38 $30.46
Estimated interest distribution# ...... 2.50 15.19 30.46
Estimated daily interest accrual# ..... .0835 .0843 .0846
Estimated current return#++ ........... 8.97% 9.06% 9.09%
Estimated long term return++ .......... 8.92% 9.00% 9.03%
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
A-5
82175.1
<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 proceeds from securities called July 1, 1995 and certain amounts
distributable as of June 30, 1995 are reported in the summary of
essential information as if they had been distributed at year-end.
Certain units redeemable as of June 30, 1995 are reported in the summary
of essential information as if they had been redeemed.
*** The Trustee maintains its corporate trust office at 770 Broadway, New
York, New York 10003 (tel. no.: 1-800-882-9898). 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 $7.65 monthly, $9.85 semi-annually and
$25.45 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.
A-6
82175.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1995
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 8 issues representing
obligations of issuers located in 5 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; none 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 $2,575,000 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, Pollution Control 1 and Solid Waste 1. For an explanation of
the significance of these factors see "The Trust--Portfolio" in Part B of this
Prospectus.
As of June 30, 1995, 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 84.5% were purchased at a premium and approximately 15.5% 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.
- --------
* Changes in the Trust Portfolio: From July 1, 1995 to September 15, 1995,
281 Units have been redeemed from the Trust.
A-7
82175.1
<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, 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
June 30, 1995 8,120 335.19 35.64 36.03 42.83 139.36
- --------
* 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.
A-8
82175.1
<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,
1995, 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, 1995, 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, 1995, 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, 1995
except as to Note 7 as to
which the date is
September 28, 1995
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Statements of Operations
<CAPTION>
Years ended June 30,
---------- ---- --------- ---- ---------
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Investment income - interest $ 298,581 406,149 427,475
---------- --------- ---------
Expenses:
Trustee's fees 4,949 5,423 5,925
Evaluator's fees 2,473 2,687 2,559
Sponsor's advisory fee 971 1,071 1,893
---------- --------- ---------
Total expenses 8,393 9,181 10,377
---------- --------- ---------
Investment income, net 290,188 396,968 417,098
---------- --------- ---------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss)
on bonds sold or called (38,162) (30,159) 19
Unrealized depreciation
for the year (83,935) (130,529) (89,413)
---------- --------- ---------
Net loss
on investments (122,097) (160,688) (89,394)
---------- --------- ---------
Net increase in net
assets resulting
from operations $ 168,091 236,280 327,704
========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Statements of Changes in Net Assets
Years ended June 30,
----------- - ---------- ---------
----------- ---------- ---------
1995 1994 1993
----------- ---------- ---------
Operations:
Investment income, net $ 290,188 396,968 417,098
Net realized gain (loss) on
bonds sold or called (38,162) (30,159) 19
Unrealized depreciation
for the year (83,935) (130,529) (89,413)
----------- ---------- ----------
Net increase in net
assets resulting
from operations 168,091 236,280 327,704
----------- ---------- ----------
Distributions:
To Certificateholders:
Investment income 296,704 398,482 416,226
Principal 1,156,499 312,395 -
Redemptions:
Interest 6,485 1,915 92
Principal 195,403 98,244 5,477
----------- ---------- ---------
Total distributions
and redemptions 1,655,091 811,036 421,795
----------- ---------- ---------
Total decrease (1,487,000) (574,756) (94,091)
Net assets at beginning of year 4,208,775 4,783,531 4,877,622
----------- ---------- ---------
Net assets at end of year (including
undistributed net investment
income of$82,790, $95,791 and
$99,220, respectively) $ 2,721,775 4,208,775 4,783,531
=========== ========== =========
See accompanying notes to financial statements.
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Notes to Financial Statements
June 30, 1995, 1994 and 1993
(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 Kenny
S&P Evaluation Services (Evaluator). 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
or ex-date. Realized gains (losses) from securities transactions are
determined on the basis of average cost of the securities sold or
redeemed.
Other assets include securities called or matured which settled
subsequent to year end.
(3) Income Taxes
The Trust is not subject to Federal income taxes as provided for by
the Internal Revenue Code.
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Notes to Financial Statements
(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. 467, 185 and 10 units were redeemed in the years
ended June 30, 1995, 1994, and 1993, 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, 1995, 1994 and 1993.
(5) Net Assets
At June 30, 1995, 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 (2,322,777)
Net unrealized appreciation (13,982)
Undistributed net investment income 82,790
Distributions in excess of proceeds
from bonds sold or called (11,097)
Total $ 2,721,775
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.
(6) Successor Trustee
Effective September 2, 1995, United States Trust Company of New York
was merged into Chase Manhattan Bank (National Association) ("Chase").
Accordingly, Chase is the successor trustee of the unit investment trusts
sponsored by Bear Stearns and Co.
(7) Successor Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P. ("Reich & Tang")
has become the successor sponsor ("the Sponsor") to certain of the unit
investments trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear Stearns & Co. Inc., the previous sponsor.
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
<CAPTION>
Portfolio
June 30, 1995
Por Aggregate Coupon Rate/ Redemption Feature
fo 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. $ 258,940
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. 422,420
Civic Center Bonds 12/15/2015 12/15/95 @ 103 Ref.
(Dedicated Tax
Revenue Bonds) Series
1985 (5)
3 250,000 Illinois Educational BBB+ 9.625 7/01/99 @ 100 S.F. 256,075
Facilities Authority 7/01/2005 7/31/95 @ 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. 409,201
City of Saint Paul 12/01/2014 12/01/95 @ 102 Ref.
(Minnesota)
Industrial
Development Revenue
Bonds Series 1985 T
5 395,000 The Metroplitan Baa2* 9.875 No Sinking Fund 409,812
Nashville Airport 10/01/2005 10/01/95 @ 102 Ref.
Authority Special
Facility Revenue
Bonds, Series 1985
(American Airlines,
Inc. Project)
6 65,000 City of Austin, Texas AAA 11.000 11/15/00 @ 100 S.F. 81,691
Combined Utility 11/15/2004 11/15/99 @ 100 Ref.
Systems Revenue
Refunding Bonds,
Series 1984 (5)
7 200,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 208,818
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
7a 185,000 City of Austin, Texas AAA 10.250 11/15/04 @ 100 S.F. 193,157
Combined Utility 11/15/2012 11/15/95 @ 102 Ref.
Systems Revenue
Refunding Bonds,
Series 1985 (5)
8 400,000 Brazos River A- 9.875 No Sinking Fund 409,968
Authority (Texas) 8/01/2015 8/01/95 @ 102 Ref.
Pollution Control
Revenue Bonds
(Houston Lighting &
Power Company
Project), Series A
--------- ---------
$ 2,575,000 $ 2,650,082
========= =========
See acompanying footnotes to portfolio and notes to the financial statements
</TABLE>
<PAGE>
MUNICIPAL SECURITIES TRUST, 41ST DISCOUNT SERIES
Footnotes to Portfolio
June 30, 1995
(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, 1995, the net unrealized depreciation of all the bonds was
comprised of the following:
Gross unrealized appreciation $ 32,473
Gross unrealized depreciation (46,455)
Net unrealized depreciation $ (13,982)
(4) The annual interest income, based upon bonds held at June 30, 1995, to
the Trust is $253,571.
(5) The bonds have been prerefunded and will be redeemed at the next
refunding call date.
(6) Bonds sold or called after June 30, 1995 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 31, 1995
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 the Trust Indenture and
Agreements** (collectively, the "Trust Agreement"), dated the Date of Deposit,
among Reich & Tang Distributors L.P., as successor Sponsor to Bear, Stearns &
Co. Inc., or depending on the particular Trust, among Reich & Tang
Distributors L.P. and Gruntal & Co., Incorporated, as Co-Sponsors (the
Sponsors or Co-Sponsors, if applicable, are referred to herein as the
"Sponsor"), Kenny S&P Evaluation Services, a division of J.J. Kenny Co., Inc.,
as Evaluator, and, depending on the particular Trust, either The Bank of New
York or Chase Manhattan Bank, N.A., as Trustee. The name of the Sponsor and
the Trustee for a particular Trust is contained in the "Summary of Essential
Information" in Part A.
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
- --------
* 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.
1173.2
<PAGE>
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 Certificateholders 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
-2-
1173.2
<PAGE>
"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,
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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
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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 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 any Bond
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
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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
Certificateholders 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
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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.
The method used by the Evaluator for computing the sales charge
for secondary market purchases shall be based upon the number of years
remaining to maturity of each bond in the portfolio. Bonds will be deemed to
mature on their stated maturity dates unless bonds have been called for
redemption, funds have been placed in escrow to redeem them on an earlier call
date or are subject to a "mandatory put," in which case the maturity will be
deemed to be such other date.
The table below sets forth the various sales charges based on the
length of maturity of each Bond.
As Percent of Public
Time to Maturity Offering Price
less than 6 months 0%
6 mos. to 1 year 1%
over 1 yr. to 2 yrs. 1 1/2%
over 2 yrs. to 4 yrs. 2 1/2%
over 4 yrs. to 8 yrs. 3 1/2%
over 8 yrs. to 15 yrs. 4 1/2%
over 15 years 5 1/2%
(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
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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 Certificate-
holder 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 Certificateholder 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 Reich & Tang
Distributors L.P. and its affiliates, Gruntal & Co., Incorporated 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
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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
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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 Certifi-
cateholders 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
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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
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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 Certifi-
cateholders 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.
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 LLP, 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-
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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 Certificate-
holders may be deducted against ordinary income. Capital assets 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 reduced maximum tax rate 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 Certificate-
holder, 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
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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, Sub-
chapter S corporations with accumulated earnings and profits from Sub-
chapter 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
Certificateholder 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
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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 particular, Congress
may consider the adoption of some form of a "flat tax," which could have an
adverse impact on the value of tax-exempt bonds.
In 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 Section 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.
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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". Certificateholders 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, Reich & Tang
Distributors L.P., 600 Fifth Avenue, New York, N.Y. 10020. 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 Cer-
tificateholders, 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
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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 Certificateholders 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 Cer-
tificateholder at prices which will return to the Certificateholder 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.
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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".
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 Certificateholder
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
- --------
* Texas residents may elect to participate in the "Total Reinvestment Plan
for Texas Residents" hereinafter described.
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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 Certificate-
holders, and December 1 of each year for annual Certificateholders. 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
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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 Cer-
tificateholder fail to have an annual distribution plan, such Certificate-
holder 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 under-
lying 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.
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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
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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 Certificate-
holder 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 Certifi-
cateholders.
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 Certificateholders;
provided that no such amendment or waiver shall reduce any Certificateholder's
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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 Certificateholders, 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 Certificateholder, upon surrender for cancellation of his Certificate
for Units, his pro rata share of the Interest and Principal Accounts.
The Sponsor
Effective September 28, 1995, Reich & Tang Distributors L.P.
("Reich & Tang") has become the successor sponsor to certain of the unit
investment trusts previously sponsored by Bear, Stearns & Co. Inc. As
successor Sponsor, Reich & Tang has assumed all of the obligations and rights
of Bear, Stearns & Co. Inc., the previous sponsor.
Reich & Tang, a Delaware limited partnership, is engaged in the
brokerage business and is a member of the National Association of Securities
Dealers, Inc. Reich & Tang maintains its principal business offices at 600
Fifth Avenue, New York, New York 10020. Reich & Tang Asset Management L.P.
("RTAM LP"), a registered investment adviser, is the 99% limited partner of
the Sponsor. RTAM LP is 99.5% owned by New England Investment Companies, LP
("NEIC LP") and Reich & Tang Asset Management, Inc., a wholly owned subsidiary
of NEIC LP, owns the remaining .5% interest of RTAM LP and is its general
partner. NEIC LP's general partner is New England Investment Companies, Inc.
("NEIC"), a holding company offering a broad array of investment styles across
a wide range of asset categories through ten investment advisory/management
affiliates and two distribution affiliates. These affiliates in the aggregate
are investment advisers or managers to over 57 registered investment
companies. Reich & Tang 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); 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.
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For certain other Trusts as set forth in the "Summary of Essential
Information" in Part A, the Co-Sponsors are Reich & Tang and Gruntal & Co.,
Incorporated, both of whom have entered into an Agreement among Co-Sponsors
pursuant to which both parties have agreed to act as Co-Sponsors for the
Trust. Reich & Tang has been appointed by Gruntal & Co., Incorporated as
agent for purposes of taking any action required or permitted to be taken by
the Sponsors under the Trust Agreement. If the Sponsors are unable to agree
with respect to action to be taken jointly by them under the Trust Agreement
and they cannot agree as to which Sponsor shall act as sole Sponsor, then
Reich & Tang shall act as sole Sponsor. If one of the Sponsors fails to
perform its duties under the Trust Agreement or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, that
Sponsors may be discharged under the Trust Agreement and a new Sponsor(s) may
be appointed or the remaining Sponsor(s) may continue to act as Sponsors.
Gruntal & Co., Incorporated, a Delaware corporation, operates a
regional securities broker/dealer from its main office in New York City and
branch offices in nine states and the District of Columbia. The firm is very
active in the marketing of investment companies and has signed dealer
agreements with every mutual fund group, as well as being the managing
distributor for The Home Group Money Market and Mutual Funds. Further,
through its Syndicate Department, Gruntal & Co. Incorporated has underwritten
a large number of Closed-End Funds and has been Co-Manager on the following
offerings: Cigna High Income Shares; Dreyfus New York Municipal Income, Inc.;
Franklin Principal Maturity Trust and Van Kampen Merritt Limited Term High
Income Trust.
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
The Trustee is The Chase Manhattan Bank (National Association), a
national banking association with its principal executive office located at 1
Chase Manhattan Plaza, New York, New York 10081 and its unit investment trust
office at 770 Broadway, New York, New York 10003 (800) 882-9898. The Trustee
is subject to the supervision by the Comptroller of the Currency, 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,
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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 J.J.
Kenny Co., 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
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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 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, legal and auditing expenses,
advertising and selling expenses, initial fees and expenses of the Trustee and
other out-of-pocket expenses. The fees of the Evaluator, however, incurred
during the initial public offering are paid directly by the Trustee.
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 Certificateholders".
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 Certificate-
holders; 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
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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
(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 1.5%
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) 1.5% 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
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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 Certificate-
holder 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 $2,943.50 ($2,900 for unit and $43.50 for the sales charge).
The remaining $556.50 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 $3,059.50
($2,900 for units and $159.50 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
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Trust, Mortgage Securities Trust, New York Municipal Trust or Equity
Securities Trust sponsored by Reich & Tang Distributors L.P. 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 1.5% 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) 1.5% 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).
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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 $3,045
($3,000 for units and $45 for the sales charge). The remaining $330 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 $3,165 ($3,000 for units and
$165 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
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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 Certifi-
cateholder 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 Battle Fowler LLP, 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. Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005
have acted as counsel for Chase Manhattan Bank, N.A. On the initial date of
deposit, 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 LLP, independent certified public accountants for the periods
indicated in its reports appearing herein. The financial statements of KPMG
Peat Marwick LLP 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.
The bond rating is not a recommendation to purchase or sell a
security, inasmuch as it does not comment as to market price.
- --------
* As described by the rating agencies.
-31-
1173.2
<PAGE>
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
-32-
1173.2
<PAGE>
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.
-33-
1173.2
<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
1173.2
<PAGE>
FOR USE WITH MUNICIPAL SECURITIES TRUST
SERIES 26-55
35th-79th 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
Chase Manhattan Bank, N.A.
Attn: UIT Reinvestment Unit A
770 Broadway
New York, New York 10003
1173.2
<PAGE>
INDEX MUNICIPAL SECURITIES TRUST
(Unit Investment Trust)
Prospectus
Title Page
Dated: October 31, 1995
Summary of Essential Information............A-4
Information Regarding the Trust.............A-6 Sponsor:
Financial and Statistical Information.......A-7
Audit and Financial Information Reich & Tang Distributors L.P.
600 Fifth Avenue
Report of Independent Accountants.........F-1 New York, New York 10020
Statements of Net Assets..................F-2 212-830-5200
Statements of Operations..................F-3
Statements of Changes in Net Assets.......F-4 (and for certain Trusts:)
Notes to Financial Statements.............F-5 Gruntal & Co., Incorporated
Portfolio.................................F-7 14 Wall Street
New York, New York 10005
PART B 212-267-8800
The Trust.................................... 1
Public Offering.............................. 7 Trustee:
Estimated Long Term Return and
Estimated Current Return................... 9 Chase Manhattan Bank, N.A.
Rights of Certificateholders..................9 770 Broadway
Tax Status...................................12 New York, New York 10003
Liquidity....................................15 1-800-882-9898
Total Reinvestment Plan......................17
Trust Administration.........................21 or
Trust Expenses and Charges...................25
Exchange Privilege and Conversion Offer......26 The Bank of New York
Other Matters................................30 101 Barclay Street
Description of Bond Ratings..................31 New York, New York 10286
1-800-431-8002
Parts A and B of this Prospectus do not Evaluator:
contain all of the information set forth in
the registration statement and exhibits Kenny S&P Evaluation Services,
relating thereto, filed with the Securities a division of J.J. Kenny Co.,
and Exchange Commission, Washington, D.C., Inc.
under the Securities Act of 1933, and to 65 Broadway
which reference is made. New York, New York 10006
* * *
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.
1173.2
<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, 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 Formation and Agreement among Limited Partners,
as amended, of Reich & Tang Distributors L.P.
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
- --------
* Being filed by this Amendment.
II-1
1669.1
<PAGE>
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, 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 LLP (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, 39th Discount Series, Series 29 & 40th Discount
Series and Series 30 & 41st Discount Series, respectively, on
October 15, 1986 and incorporated herein by reference).
*99.5.1 -- Consents of the Evaluator including Confirmation of Ratings.
*99.6.0 -- Power of Attorney of Reich & Tang Distributors L.P., the
Depositor, by its Officers and a majority of its Directors.
*27 -- Financial Data Schedule(s) (for EDGAR filing only).
- --------
* Being filed by this Amendment.
II-2
1669.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrants, Municipal Securities Trust, Series 28, 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 25th day of October, 1995.
MUNICIPAL SECURITIES TRUST, SERIES 28, 39th
DISCOUNT SERIES, SERIES 29 & 40th DISCOUNT SERIES
and SERIES 30 & 41st DISCOUNT SERIES
(Registrants)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.,
as general partner
By: /s/ LORRAINE C. HYLSLER
Lorraine C. Hylsler
(Authorized Signatory)
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 principal officers and a majority
of the directors of Reich & Tang Asset Management, Inc., the general partner
of Reich & Tang Distributors L.P., the Depositor, in the capacities and on the
dates indicated.
<TABLE>
<S> <C> <C>
Name Title Date
PETER S. VOSS President, Chief Executive Officer )
and Director )
G. NEAL RYLAND Executive Vice President, Treasurer ) October 25, 1995
and Chief Financial Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director )By: /s/LORRAINE C. HYLSLER
STEVEN W. DUFF Director ) Lorraine C. Hylsler
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYLSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
- ---------------
</TABLE>
* An executed power of attorney is filed herewith.
II-3
1669.1
<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, 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 12, 1995
except as to Note 7 as to
which the date is
September 28, 1995
II-4
1669.1
<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, 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 Formation and Agreement among Limited
Partners, as amended, of Reich & Tang Distributors
L.P...............................................
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, 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 LLP (formerly Battle, Fowler,
Jaffin & Kheel) as to tax status of securities being
-1-
1669.1
<PAGE>
Exhibit Description Page No.
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, 39th Discount Series, Series 29 & 40th
Discount Series and Series 30 & 41st Discount Series,
respectively, on October 15, 1986 and incorporated
herein by reference).
99.5.1 Consents of the Evaluator including Confirmation of
Ratings............................................
99.6.0 Power of Attorney of Reich & Tang Distributors L.P.,
the Depositor, by its Officers and a majority of its
Directors..........................................
27 Financial Data Schedule(s) (for EDGAR filing only).
-2-
1669.1
<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
<SERIES>
<NUMBER> 1
<NAME> MST, SERIES 28
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 694326
<INVESTMENTS-AT-VALUE> 757573
<RECEIVABLES> 21282
<ASSETS-OTHER> 2289
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 781144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122
<TOTAL-LIABILITIES> 122
<SENIOR-EQUITY> 781022
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 539250
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63247
<NET-ASSETS> 781022
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 89767
<OTHER-INCOME> 0
<EXPENSES-NET> 3674
<NET-INVESTMENT-INCOME> 86093
<REALIZED-GAINS-CURRENT> (23788)
<APPREC-INCREASE-CURRENT> (8138)
<NET-CHANGE-FROM-OPS> 54167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 92445
<DISTRIBUTIONS-OF-GAINS> 498669
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 125
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (594493)
<ACCUMULATED-NII-PRIOR> 46747
<ACCUMULATED-GAINS-PRIOR> 20
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 572.18
<PER-SHARE-NII> 37.99
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 173.76
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 342.70
<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, 39 DISCOUNT SERIES
<SERIES>
<NUMBER> 1
<NAME> MST, 39 DISCOUNT SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 1513994
<INVESTMENTS-AT-VALUE> 1568840
<RECEIVABLES> 34041
<ASSETS-OTHER> 279571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1882452
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 400
<TOTAL-LIABILITIES> 400
<SENIOR-EQUITY> 1882052
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1351525
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 54847
<NET-ASSETS> 1882052
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 226771
<OTHER-INCOME> 0
<EXPENSES-NET> 7986
<NET-INVESTMENT-INCOME> 218785
<REALIZED-GAINS-CURRENT> 27848
<APPREC-INCREASE-CURRENT> (145256)
<NET-CHANGE-FROM-OPS> 101377
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 227813
<DISTRIBUTIONS-OF-GAINS> 838688
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 719
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1220704)
<ACCUMULATED-NII-PRIOR> 79175
<ACCUMULATED-GAINS-PRIOR> (14193)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 466.93
<PER-SHARE-NII> 34.97
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 129.74
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 317.59
<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
<SERIES>
<NUMBER> 1
<NAME> MST, SERIES 29
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 662750
<INVESTMENTS-AT-VALUE> 674739
<RECEIVABLES> 16865
<ASSETS-OTHER> 3697
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 695301
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 110
<TOTAL-LIABILITIES> 110
<SENIOR-EQUITY> 695191
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 359750
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11989
<NET-ASSETS> 695191
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 86449
<OTHER-INCOME> 0
<EXPENSES-NET> 3279
<NET-INVESTMENT-INCOME> 83170
<REALIZED-GAINS-CURRENT> 3250
<APPREC-INCREASE-CURRENT> (42430)
<NET-CHANGE-FROM-OPS> 43990
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 85988
<DISTRIBUTIONS-OF-GAINS> 306206
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 104
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (407726)
<ACCUMULATED-NII-PRIOR> 29235
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 616.15
<PER-SHARE-NII> 48.72
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-NAV-END> 412.33
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<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, 40 DISCOUNT SERIES
<SERIES>
<NUMBER> 2
<NAME> MST, 40 DISCOUNT SERIES
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
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<INVESTMENTS-AT-VALUE> 1515810
<RECEIVABLES> 39609
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<TOTAL-ASSETS> 1577897
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 501
<TOTAL-LIABILITIES> 501
<SENIOR-EQUITY> 1577396
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<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1459375
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<ACCUM-APPREC-OR-DEPREC> 28698
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 224624
<OTHER-INCOME> 0
<EXPENSES-NET> 7904
<NET-INVESTMENT-INCOME> 216720
<REALIZED-GAINS-CURRENT> 16827
<APPREC-INCREASE-CURRENT> (121042)
<NET-CHANGE-FROM-OPS> 112505
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 226034
<DISTRIBUTIONS-OF-GAINS> 1228621
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 561
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1583251)
<ACCUMULATED-NII-PRIOR> 81211
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<GROSS-ADVISORY-FEES> 0
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<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 464.66
<PER-SHARE-NII> 34.49
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 194.39
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 252.75
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<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
<SERIES>
<NUMBER> 1
<NAME> MST, Series 30
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 1247289
<INVESTMENTS-AT-VALUE> 1263036
<RECEIVABLES> 29727
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<TOTAL-ASSETS> 1293565
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 155
<TOTAL-LIABILITIES> 155
<SENIOR-EQUITY> 1293410
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 639300
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15748
<NET-ASSETS> 1293410
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 139716
<OTHER-INCOME> 0
<EXPENSES-NET> 3990
<NET-INVESTMENT-INCOME> 135726
<REALIZED-GAINS-CURRENT> (20442)
<APPREC-INCREASE-CURRENT> (28925)
<NET-CHANGE-FROM-OPS> 86359
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 139698
<DISTRIBUTIONS-OF-GAINS> 516577
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 53
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (696056)
<ACCUMULATED-NII-PRIOR> 37749
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1001.75
<PER-SHARE-NII> 73.18
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 268.23
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 705.62
<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 DISCOUNT SERIES 41
<SERIES>
<NUMBER> 2
<NAME> MST DISCOUNT SERIES 41
<S> <C>
<FISCAL-YEAR-END> Jun-30-1995
<PERIOD-START> Jul-01-1994
<PERIOD-END> Jun-30-1995
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2664064
<INVESTMENTS-AT-VALUE> 2650082
<RECEIVABLES> 54881
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<TOTAL-ASSETS> 2722144
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 369
<TOTAL-LIABILITIES> 369
<SENIOR-EQUITY> 2721775
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
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<ACCUMULATED-NET-GAINS> 1340800
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (13982)
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> (38162)
<APPREC-INCREASE-CURRENT> (83935)
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<DISTRIBUTIONS-OF-INCOME> 296704
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<PER-SHARE-DIVIDEND> 139.36
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</TABLE>
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
REICH & TANG DISTRIBUTORS L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of January 4,
1991, is entered into by and among REICH & TANG, INC., a Delaware corporation,
and REICH & TANG L.P., a Delaware limited partnership.
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement.
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with the Person in question; provided, however, that, for purposes of
the restrictive provisions of Sections 7.5, 7.6, and 7.8, neither the MLP nor
any Operating Partnership nor any of their respective subsidiaries shall be
deemed to be Affiliates of the General Partner. As used herein, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the
307427.1
<PAGE>
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreed Value" of any Contributed Property means the fair market
value of such property as of the time of contribution (or, in the case of
cash, the amount thereof), as determined by the General Partner using such
reasonable method of valuation as it may adopt.
"Agreement" means this agreement of limited partnership, as
amended or restated from time to time.
"Business Day" means any day other than a Saturday, a Sunday, or a
legal holiday recognized as such by the Government of the United States or the
State of New York or the District of Columbia.
"Capital Contribution" means any Contributed Property
which a Partner contributes to the Partnership.
"Certificate of Limited Partnership" means the Certificate of
Limited Partnership filed with the Secretary of State of the State of Delaware
as described in the first sentence of Section 2.5, as amended or restated from
time to time.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Contributed Property" means any cash, property or other
consideration (in such form as may be permitted under the Delaware Act)
contributed to the Partnership.
"Contributing Partner" means any Partner contributing
Contributed Property to the Partnership.
-2-
307427.1
<PAGE>
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, and any successor to such Act.
"Designated Expenses" means all costs and expenses (direct or
indirect) incurred by the General Partner which are directly or indirectly
related to the formation, capitalization, business or activities of the
Partnership (including, without limitation, expenses, direct or indirect,
reasonably allocated to the General Partner by its Affiliates); provided,
however, that Designated Expenses shall not include any cost or expense for
which the General Partner is not entitled to be reimbursed by reason of the
proviso at the end of the Section 7.10(b).
"General Partner" means RTI, in its capacity as the general
partner of the Partnership, and any successor to RTI as such general partner.
"Indemnitee" means the General Partner, any Affiliate of the
General Partner, any Person who is or was a director, officer, employee or
agent of the General Partner or any such Affiliate, or any Person who is or
was serving at the request of the General Partner or any such Affiliate as a
director, officer, partner, trustee, employee or agent of another Person.
"Limited Partner" means the MLP, in its capacity as the limited
partner of the Partnership, and any successor to the MLP as such limited
partner.
"Liquidator" has the meaning specified in Section 12.3.
-3-
307427.1
<PAGE>
"MLP" means Reich & Tang L.P., a Delaware limited
partnership.
"MLP Agreement" means the agreement of limited partnership, dated
as of May 29, 1987, governing the rights and obligations of the partners of
the MLP.
"MLP General Partner" means RTI, in its capacity as the general
partner of the MLP, and any successor to RTI as such general partner.
"Net Agreed Value" means with respect to any Contributed Property,
the Agreed Value of such Contributed Property reduced by any indebtedness
either assumed by the Partnership upon contribution of such Contributed
Property or to which such Contributed Property is subject when contributed.
"Operating Partnership" means any limited partnership through
which the MLP may conduct any and all of its activities, the general partner
of which shall be RTI or the general partner of the MLP and the limited
partner of which shall be the MLP.
"Opinion of Counsel" means a written opinion of counsel (who may
be regular counsel of the General Partner or any of its Affiliates) acceptable
to the General Partner.
"Partner" means the General Partner or the Limited
Partner.
"Partnership" means Reich & Tang Distributors L.P., a Delaware
limited partnership.
"Partnership Interest" means a general partner's or
limited partner's interest in the Partnership.
-4-
307427.1
<PAGE>
"Person" means an individual, a corporation, a
partnership, a trust, an unincorporated organization, an
association or any other entity.
"RTI" means Reich & Tang, Inc.
"RTI Contributed Property" means any cash, property or other
consideration (in such form as may be permitted under the Delaware Act)
contributed to the Partnership by RTI.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor to such statute.
References herein to "States" include, except as the context may
otherwise require, the State of Delaware.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation. Subject to the provisions of this
Agreement, the General Partner and the Limited Partner have formed the
Partnership as a limited partnership pursuant to the provisions of the
Delaware Act. The General Partner and the Limited Partner hereby enter into
this Agreement to set forth the rights and obligations of the Partners and
certain matters related thereto. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the
Delaware Act.
2.2 Name. The name of the Partnership shall be, and
the business of the Partnership shall be conducted under the name
-5-
307427.1
<PAGE>
of, "Reich & Tang Distributors L.P."; provided, however, that (a) the
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, (b) the General Partner in its sole
discretion may change the name of the Partnership at any time and from time to
time and (c) the name under which the Partnership conducts business shall
include "Ltd." or "Limited Partnership" (or similar words or letters) where
necessary for purposes of maintaining the limited liability status of the
Limited Partner or otherwise complying with the laws of any jurisdiction that
so requires.
2.3 Principal Office; Registered Office. The principal office of
the Partnership shall be 100 Park Avenue, New York, N.Y. 10017, or such other
place as the General Partner may from time to time designate. The Partnership
may maintain offices at such other places as the General Partner deems
advisable.
2.4 Term. The Partnership shall continue in existence until the
close of Partnership business on December 31, 2086 or until the earlier
termination of the Partnership in accordance with the provisions of Article
XII.
2.5 Organizational Certificate. A Certificate of Limited
Partnership of the Partnership has been filed with the Secretary of State of
Delaware as required by the Delaware Act. The General Partner shall cause to
be filed such other certificates or documents as may be required for the
formation, operation and qualification of a limited partnership in Delaware
-6-
307427.1
<PAGE>
and any other state in which the Partnership may elect to do business. The
General Partner shall thereafter file any necessary amendments to the
Certificate of Limited Partnership and any such other certificates and
documents and do all things requisite to the maintenance of the Partnership as
a limited partnership (or as a partnership in which the Limited Partner has
limited liability) under the laws of Delaware and any state or jurisdiction in
which the Partnership may elect to do business.
2.6 Partnership Interests. Effective as of the date
hereof, the Limited Partner has a 99% Partnership Interest and
the General Partner has a 1% Partnership Interest.
ARTICLE III
PURPOSE
3.1 Purpose. The purpose and business of the Partnership shall be
to engage in any lawful activity for which limited partnerships shall be
organized under the Delaware Act.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions. (a) Prior to the date hereof, the
Limited Partner contributed to the Partnership certain assets necessary to
conduct the business of the Partnership, and the General Partner contributed
to the Partnership an amount equal to 1/99th of the Net Agreed Value of the
Capital Contribution then being made by the Limited Partner.
-7-
307427.1
<PAGE>
(b) Whenever a Partner makes a Capital Contribution (other than
Capital Contributions required by Section 4.1 (a)), the other Partner shall
contribute to the Partnership Contributed Property such that the Net Agreed
Value of the Capital Contribution then being made by the General Partner is
equal to 1/99th of the Net Agreed Value of the Capital Contribution then being
made by the Limited Partner.
4.2 No Preemptive Rights. No Partner shall have any
preemptive right with respect to the issuance or sale of
securities that may be issued by the Partnership.
4.3 No Interest. No interest shall be paid by the
Partnership on Capital Contributions.
4.4 Loans from Partners. Loans or other advances by a Partner to
or for the account of the Partnership shall not be considered Capital
Contributions.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions. From time to time, not less often then
quarterly, the General Partner shall review the Partnership's accounts to
determine whether distributions are appropriate. The General Partner may make
such cash distributions as it, in its sole discretion, may determine, without
being limited to current or accumulated income or gains, from any Partnership
funds, including, without limitation, Partnership revenues, Capital
Contributions or borrowed funds.
-8-
307427.1
<PAGE>
In its sole discretion, the General Partner may also distribute to the
Partners other Partnership property, or securities of the Partnership or other
entities.
All distributions shall be made concurrently to both Partners and
shall be made 99% to the Limited Partner and 1% to the General Partner.
Amounts paid pursuant to Section 7.4 shall not be deemed to be
distributions for purpose of this Agreement.
ARTICLE VI
INCOME TAX MATTERS
6.1 Tax Allocations. (a) For federal income tax
purposes, each item of income, gain, loss, deduction and credit
of the Partnership shall be allocated 99% to the Limited Partner
and 1% to the General Partner.
6.2 Preparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, losses, deductions, credits and other items necessary for federal and
state income tax purposes and shall use all reasonable efforts to furnish to
the Limited Partner within 90 days after the close of the taxable year the tax
information reasonably required for federal and state income tax reporting
purposes. The classification, realization and recognition of income, gains,
losses, deductions, credits and other items shall be on the accrual method of
-9-
307427.1
<PAGE>
accounting for federal income tax purposes, unless the General Partner shall
determine otherwise in its sole discretion.
6.3 Tax Elections. Except as otherwise provided
herein, the General Partner shall, in its sole discretion,
determine whether to make any available election.
6.4 Tax Controversies. Subject to the provisions hereof, the
General Partner is designated as the Tax Matters Partner (as defined in
Section 6231 of the Code) and is authorized and required to represent the
Partnership (at the Partnership's expense) in connection with all examinations
of the Partnership's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. The Limited Partner
agrees to cooperate with the General Partner and to do or refrain from doing
any and all things reasonably required by the General Partner to conduct such
proceedings.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS;
INDEMNIFICATION
7.1 Powers of General Partner. Except as otherwise
expressly provided in this Agreement, all powers to control and manage the
business and affairs of the Partnership shall be exclusively vested in the
General Partner, and the Limited
-10-
307427.1
<PAGE>
Partner shall not have any power to control or manage the business and affairs
of the Partnership.
In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provisions of this Agreement, the General
Partner is hereby authorized and empowered, in the name of and on behalf of
the Partnership, to do and perform any and all acts and things which it deems
appropriate or necessary in the conduct of the business and affairs of the
Partnership, including, without limitation, the following:
(a) to lend or borrow money, to assume, guarantee or otherwise
become liable for indebtedness and other liabilities and to issue evidences of
indebtedness;
(b) to buy, lease (as lessor or lessee), sell, mortgage, encumber
or otherwise acquire or dispose of any or all of the assets of the Partnership
(subject to the provisions of Article XIV);
(c) to own, use and invest the assets of the
Partnership;
(d) to purchase or sell products, services and
supplies;
(e) to make tax, regulatory or other filings, and to render
periodic and other reports, to governmental agencies or bodies having
jurisdiction over the assets or business of the Partnership;
-11-
307427.1
<PAGE>
(f) to open, maintain and close bank accounts and to
draw checks and other orders for the payment of money;
(g) to negotiate, execute and perform any contracts,
conveyances or other instruments;
(h) to distribute Partnership cash;
(i) to utilize the services of officers and employees
of the General Partner or of any other Persons and to select and
dismiss employees (if any) and outside attorneys, accountants,
consultants and contractors;
(j) to maintain insurance for the benefit of the
Partnership and the Partners;
(k) to form, participate in or contribute or loan cash or property
to limited or general partnerships, joint ventures, corporations or similar
arrangements;
(l) to expand the business activities in which the
Partnership is engaged or engage in new business activities by
acquisition or internal development; and
(m) to conduct litigation and incur legal expenses and otherwise
deal with or settle claims or disputes; in each case at such times and upon
such terms and conditions as the General Partner deems appropriate or
necessary, and subject to any express restrictions contained elsewhere in this
Agreement.
7.2 Duties of General Partner. The General Partner
shall manage the business and affairs of the Partnership in the
manner the General Partner deems appropriate or necessary.
-12-
307427.1
<PAGE>
Without limiting the generality of the foregoing, the General Partner's duties
shall include the following:
(a) to take possession of the assets of the
Partnership;
(b) to staff and operate the business of the
Partnership with the officers and employees of the General
Partner or of other Persons;
(c) to render or cause to be rendered technical services and
perform or cause to be performed financial, accounting, logistical and other
administrative functions for the Partnership;
(d) to render such reports and make such periodic and other
filings as may be required under applicable federal, state and local laws,
rules and regulations;
(e) to provide or cause to be provided purchasing,
procurement, repair and other services for the Partnership; and
(f) to conduct the business of the Partnership in accordance with
this Agreement and all applicable laws, rules and regulations; in each case in
such a manner as the General Partner deems appropriate or necessary.
7.3 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership
-13-
307427.1
<PAGE>
and to enter into any contracts on behalf of the Partnership, and such Person
shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. The
Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution
and delivery of such certificate, document or instrument, this Agreement was
in full force and effect, (b) the Person executing and delivering such
certificate, document or instrument was duly authorized and empowered to do so
for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
7.4 Compensation and Reimbursement of the General
Partner. (a) Except as provided in this Section 7.4 or elsewhere
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in this Agreement, or any other agreement contemplated or permitted hereby or
thereby, the General Partner shall not be compensated for its services as
General Partner to the Partnership.
(b) The General Partner shall be promptly reimbursed for all
Designated Expenses, in addition to any reimbursement as a result of
indemnification in accordance with Section 7.10. The General Partner shall
determine such Designated Expenses in any reasonable manner determined by it.
(c) The General Partner may propose and adopt without the approval
of the Limited Partner fringe benefit plans, including, without limitation,
plans comparable to those that cover employees employed by the MLP and plans
involving the issuance of units of partnership interest, for the benefit of
employees of the Partners, the Partnership, or any of their respective
Affiliates, in respect of services performed, or obligated to be performed,
directly or indirectly, for the benefit of the Partnership.
7.5 Partnership Funds. The funds of the Partnership shall be
deposited in such account or accounts as shall be designated by the General
Partner, and shall not be commingled with the funds of the General Partner or
any of its Affiliates. All withdrawals from or charges against such accounts
shall be made by the General Partner or by its agents, which agents may be
Affiliates of the General Partner. Funds of the Partnership may be invested as
determined by the General Partner.
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7.6 Outside Activities; Contracts with Affiliates; Loans to or
from Affiliates. (a) The General Partner shall not have any business interests
or engage in any business activities except for those relating to the
Partnership, the MLP or any Operating Partnership, provided that the General
Partner shall be allowed to manage its own passive investments and the
investments of an RTI benefit plan, if any.
(b) Any Affiliate of the General Partner and any director,
officer, partner or employee of the General Partner or any of its Affiliates
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including
business interests and activities in direct competition with the Partnership,
for their own account and for the account of others, without having or
incurring any obligation to offer any interest in such businesses or
activities to the Partnership, or either Partner. Neither the Partnership nor
either of the Partners shall have any rights by virtue of this Agreement or
the partnership relationship governed hereby in any such business interests.
(c) The Limited Partner hereby agrees that the General Partner is
authorized to execute, deliver and perform any other agreements, acts,
transactions and matters contemplated hereby on behalf of the Partnership
without any further approval or vote of the Limited Partner, notwithstanding
any other provision of this Agreement.
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(d) Subject to the provisions of Section 7.4(a), the General
Partner and its Affiliates may enter into contracts with, or render services
to, the Partnership provided that such contracts or services are on terms that
are fair and reasonable to the Partnership.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey property to, or purchase property from, the
Partnership, directly or indirectly, except pursuant to transactions that are
fair and reasonable to the Partnership.
(f) The General Partner or any of its Affiliates may lend to the
Partnership funds needed by the Partnership for such periods of time as the
General Partner may determine; provided, however, that the General Partner or
an Affiliate may not charge the Partnership interest greater than the rate
(including points or other financing charges or fees) that would be charged to
the Partnership by unrelated lenders on comparable loans. The Partnership
shall reimburse the General Partner or its Affiliate, as the case may be, for
any costs incurred by the General Partner or Affiliate in connection with the
borrowing of funds obtained by such General Partner or Affiliate and loaned to
the Partnership.
(g) The Partnership may lend funds to the General Partner or any
of its Affiliates; provided, however, that the Partnership may not lend funds
to the General Partner or an Affiliate unless such funds consist of funds
available after
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provision for working capital and such reserves as the General Partner deems
appropriate and such loans shall bear interest at the rate (including points
or other financing charges or fees) that the General Partner would be charged
by unrelated lenders on comparable loans.
7.7 Tax Basis and Value Determinations. To the extent that the
General Partner is required pursuant to the provisions of this Agreement to
establish fair market values or allocate amounts realized, tax basis, Agreed
Values or Net Agreed Values, the General Partner shall establish such values
and make such allocations in a manner that is reasonable and fair to the
Limited Partner, taking into account all applicable laws, governmental
regulations, rulings and decisions. The General Partner may, in its sole
discretion, modify or revise such allocations in order to comply with such
laws, governmental regulations, rulings or decisions or to the extent it
otherwise deems such modification or revision appropriate or necessary. The
General Partner is authorized, to the extent deemed by it to be appropriate or
necessary, to utilize the services of an independent appraiser in establishing
such values or allocations and the General Partner shall in such cases be
entitled to rely on the values or allocations established by such independent
appraiser.
7.8 Resolution of Conflicts of Interest; Standard of
Care. (a) Unless otherwise expressly provided in this Agreement
or any other agreement contemplated hereby, (i) whenever a
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conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership or the Limited Partner,
on the other hand, or (ii) whenever this Agreement or any other agreement
contemplated hereby provides that the General Partner or any of its Affiliates
shall act in a manner which is, or provides terms which are, fair and/or
reasonable to the Partnership, the MLP, any Operating Partnership or the
Limited Partner, the General Partner or such Affiliate shall resolve such
conflict of interest, take such action or provide such terms, considering, in
each case, the relative interests of each party to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting or engineering practices or principles, and in
the absence of bad faith by the General Partner or such Affiliate, shall not
constitute a breach of this Agreement or any other agreement contemplated
hereby or a breach of any standard of care or duty imposed hereby or under the
Delaware Act or any other applicable law, rule or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is permitted
or required to make a decision (i) in its "discretion" or under a grant of
similar authority or latitude, the General Partner or such Affiliate shall be
entitled, to the extent permitted by applicable law, to consider only such
interests and factors as it desires and shall have no
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duty or obligation to give any consideration to any interest of or factors
affecting the Partnership or the Limited Partner, or (ii) in its "good faith"
or under another express standard, the General Partner or such Affiliate shall
act under such express standard and, except as required by applicable law,
shall not be subject to any other or different standards imposed by this
Agreement, any other agreement contemplated hereby or applicable law.
7.9 Other Matters Concerning the General Partner. (a) The General
Partner may rely and shall be protected in acting or refraining from acting
upon any certificate, document or other instrument believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, and other
consultants and advisors selected by it and any opinion or advice of any such
Person as to matters which the General Partner believes to be within such
Person's professional or expert competence shall be full and complete
authorization and protection with respect to any action taken or suffered or
omitted by the General Partner hereunder in good faith and in accordance with
such opinion or advice.
(c) The General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents, and the General Partner shall not
be responsible for any
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misconduct or negligence on the part of any such agent appointed by the
General Partner in good faith.
7.10 Limited Liability; Indemnification. (a) Notwith-standing
anything to the contrary in this Agreement, and except to the extent required
by applicable law, no Indemnitee shall be liable to the Partnership or any
Partner for any action taken or omitted to be taken by such Indemnitee,
provided that such Indemnitee acted in good faith and such action or omission
does not involve the gross negligence or willful misconduct of such
Indemnitee. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that an Indemnitee did
not act in good faith or that an action or omission involves gross negligence
or willful misconduct.
(b) The Partnership shall, to the extent permitted by applicable
law, indemnify each Indemnitee against expenses (including legal fees and
expenses), judgments, fines and amounts paid in settlement, actually and
reasonably incurred by such Indemnitee, in connection with any threatened,
pending or completed claim, demand, action, suit or proceeding to which such
Indemnitee was or is a party or is threatened to be made a party, by reason of
(i) such Indemnitee's status as a General Partner, any Affiliate of the
General Partner, any Person who is or was a director, officer, employee or
agent of the General Partner or any such Affiliate, or any Person who is or
was serving at the
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request of the General Partner or any such Affiliate as a director, officer,
partner, trustee, employee or agent of another Person or (ii) any action taken
or omitted to be taken by such Indemnitee in any capacity referred to in
clause (i) of this Section 7.10(b), relating to this Agreement or the
property, business, affairs or management of the Partnership, the MLP, or any
Operating Partnership (provided the Indemnitee acted in good faith and the act
or omission which is the basis of such claim, demand, action, suit or
proceeding does not involve the gross negligence or willful misconduct of such
Indemnitee).
(c) Expenses (including legal fees and expenses) incurred in
defending any claim, demand, action, suit or proceeding subject to Section
7.10(b) shall be paid by the Partnership in advance of the final disposition
of such claim, demand, action, suit or proceeding upon receipt of an
undertaking (which need not be secured) by or on behalf of the Indemnitee to
repay such amount if it shall ultimately be determined, as permitted by the
Delaware Act or other applicable law, that the Indemnitee is not entitled to
be indemnified by the Partnership as authorized hereunder.
(d) The indemnification provided by Section 7.10(b) shall be in
addition to any other rights to which an Indemnitee may be entitled, and shall
continue as to an Indemnitee who has ceased to serve in a capacity for which
the Indemnitee is entitled to indemnification and shall inure to the benefit
of the
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heirs, successors, assigns, administrators and personal
representatives of the Indemnitee.
(e) To the extent commercially reasonable, the Partnership shall
purchase and maintain insurance on behalf of the Indemnitees against any
liability which may be asserted against or expense which may be incurred by an
Indemnitee in connection with the Partnership's activities, whether or not the
Partnership would have the power to indemnify an Indemnitee against such
liability under the provisions of this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole or
in part under Section 7.10(b) because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 7.10 are for the benefit of the
Indemnitees and the heirs, successors, assigns, administrators and personal
representatives of the Indemnitees and shall not be deemed to create any
rights for the benefit of any other Persons.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability. The Limited Partner
shall have no liability under this Agreement (including, without limitation,
liability under Section 7.10) except as provided in Section 4.1.
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8.2 Management of Business. The Limited Partner shall not take
part in the operation, management or control (within the meaning of the
Delaware Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind
the Partnership.
8.3 Outside Activities. The Limited Partner shall be entitled to
and may have business interests and engage in business activities in addition
to those relating to the Partnership, including business interests and
activities in direct competition with the Partnership. Neither the Partnership
nor the General Partner shall have any rights by virtue of this Agreement or
the partnership relationship created hereby in any business ventures of the
Limited Partner.
8.4 Return of Capital. The Limited Partner shall not be entitled
to the withdrawal or return of his Capital Contribution, except to the extent,
if any, that distributions made pursuant to this Agreement or upon termination
of the Partnership may be considered as such by law and then only to the
extent provided for in this Agreement.
8.5 Rights of Limited Partners Relating to the Partnership. In
addition to other rights provided by this Agreement or by applicable law, the
Limited Partner shall have all rights of a limited partner pursuant to the
Delaware Act.
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ARTICLE IX
BOOKS, RECORDS AND ACCOUNTING
9.1 Books, Records and Accounting. The General
Partner shall keep or cause to be kept books and records with respect to the
Partnership's business, which books and records shall at all times be kept at
the principal office of the Partnership. Any books and records maintained by
the Partnership in the regular course of its business, including books of
account and records of Partnership proceedings, may be kept on, or be in the
form of, punch cards, disks, magnetic tape, photographs, micrographics or any
other information storage device, provided that the records so kept are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial
reporting purposes, on the accrual basis, or on a cash basis adjusted
periodically to an accrual basis, as the General Partner shall determine in
its sole discretion, in accordance with generally accepted accounting
principles and applicable law.
9.2 Fiscal Year. The fiscal year of the Partnership for financial
reporting purposes shall be the calendar year, unless the General Partner
shall determine otherwise in its sole discretion.
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ARTICLE X
TRANSFER OF PARTNERSHIP INTERESTS; SUCCESSOR PARTNERS
10.1 Transfer of Partnership Interests. Neither
Partner may transfer any of its Partnership Interest unless (a) all of its
Partnership Interest is being transferred and the transferee assumes all of
the rights and obligations of such Partner hereunder, (b) the transfer is to
an Affiliate of such Partner or is in connection with the Partner's merger or
consolidation with, or a transfer of all or substantially all of a Partner's
assets to, another Person, or the transfer is approved by the other Partner
and (c) the Partnership receives an Opinion of Counsel that (i) such transfer
would not result in the loss of limited liability of the Limited Partner or
cause the Partnership or the MLP or any Operating Partnership to be treated as
an association taxable as a corporation for federal income tax purposes.
10.2 Successor Partners. Any Person becoming a
successor General Partner pursuant to Section 11.1 or the proviso
to Section 12.1 or the transferee of the entire Partnership
Interest of a Partner pursuant to Section 10.1 shall be admitted
to the Partnership as a successor Partner, effective as of the
date an amendment or restatement of the Certificate of Limited
Partnership is filed with the Secretary of the State of Delaware
effecting such substitution; provided, however, that no such
successor shall be so admitted until it has agreed in writing to
assume that former Partner's obligations hereunder. This
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Agreement and the Certificate of Limited Partnership shall be amended as
appropriate to reflect the termination of the former Partner and the admission
of the successor Partner.
ARTICLE XI
REMOVAL OF THE GENERAL PARTNER
11.1 Removal of the General Partner. The removal of
the MLP General Partner from the MLP shall also constitute the removal of the
General Partner from the Partnership, effective as of the date on which the
MLP General Partner's removal is effective. The Person approved as successor
MLP General Partner (or its designated Affiliate) shall become the successor
General Partner.
11.2 Sale of Former General Partner's Interest. If a successor
General Partner is approved pursuant to Section 11.1 or 12.2 or the proviso to
Section 12.1, such successor shall purchase from the former General Partner
and the former General Partner shall sell to such successor, the Partnership
Interest of the former General Partner for an amount in cash equal to the fair
market value thereof, determined as of the date of the departure of the former
General Partner. Such fair market value shall be determined by agreement
between the former General Partner and its successor or, failing agreement
within 30 days after the date the successor General Partner is so admitted, by
a firm of independent appraisers jointly selected by the former General
Partner and its successor (or, if the former General
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Partner and its successor cannot agree on the selection of such a firm within
45 days after the date the successor General Partner is so admitted, by a firm
of independent appraisers selected by two firms, one of which will be selected
by the former General Partner and the other of which will be selected by the
successor).
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution. The Partnership shall be dissolved,
and its affairs shall be wound up, upon:
(a) expiration of its term as provided in
section 2.4;
(b) bankruptcy or dissolution of the General Partner, or any
other event that results in the General Partner ceasing to be a general
partner in the Partnership (other than by reason of removal pursuant to
Section 11.1 or a transfer pursuant to Section 10.1); or
(c) an election by the General Partner to
dissolve the Partnership;
provided, however, that the Partnership shall not be dissolved upon an event
described in Section 12.1(b) if, within 90 days of such event, the Limited
Partner agrees in writing to continue the business of the Partnership and to
the appointment of a successor General Partner.
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For purposes of this Section 12.1, bankruptcy of the General
Partner shall be deemed to have occurred when (i) it commences a voluntary
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
it seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator for it or for all or any substantial part of its properties,
(iii) it is adjudged a bankrupt or insolvent, or has entered against it a
final and nonappealable order for relief, under any bankruptcy, insolvency or
similar law now or hereafter in effect, (iv) it executes and delivers a
general assignment for the benefit of its creditors, (v) it files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against it in any involuntary proceeding of the nature
described in clause (i) above, or (vi) (1) any involuntary proceeding of the
nature described in clause (i) above has not been dismissed 120 days after the
commencement thereof or (2) the appointment without its consent or
acquiescence of a trustee, receiver or liquidator for it or for all or any
substantial part of its properties has not been vacated or stayed within 90
days of such appointment, or (3) such appointment has been stayed but is not
vacated within 90 days after the expiration of any such stay.
12.2 Reconstitution. Upon dissolution of the
Partnership in accordance with Section 12.1(b), and a failure of
all Partners to agree to continue the business of the Partnership
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and to the appointment of a successor General Partner as provided in the
proviso to Section 12.1, then within 180 days after the event described in
Section 12.1(b), the remaining Partners may elect to reconstitute the
Partnership and continue its business by forming a new partnership on terms
identical to those set forth in this Agreement and having as a general partner
a Person approved by such Partners. Upon any such election by such Partners,
all partners shall be bound thereby and shall be deemed to have consented
thereto. Unless such an election is made within such 180-day period, the
Partnership shall conduct only activities necessary to wind up its affairs. If
such an election is made within such 180-day period, then (a) the
reconstituted partnership shall continue until the end of the term set forth
in Section 2.4 unless earlier dissolved in accordance with this Article XII
and (b) all necessary steps shall be taken to cancel this Agreement and the
Certificate of Limited Partnership and to enter into a new partnership
agreement and certificate of limited partnership; provided that the right to
reconstitute and to continue the business of the Partnership shall not exist
and may not be exercised unless the Partnership received an Opinion of Counsel
that (i) the exercise of the right would not result in the loss of limited
liability of the Limited Partner and (ii) neither the Partnership, the
reconstituted partnership, the MLP nor any Operating Partnership would be
treated as an association taxable as a corporation for federal income tax
purposes.
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12.3 Liquidation. Upon dissolution of the Partnership, unless the
Partnership is reconstituted pursuant to Section 12.2, the General Partner or,
in the event the General Partner has been removed or dissolved or become
bankrupt (as defined in section 12.1), a liquidator or liquidating committee
approved by the Limited Partner shall be the liquidator of the Partnership
(the "Liquidator"). The Liquidator (if other than the General Partner) shall
be entitled to receive such compensation for its services as may be approved
by the Limited Partner. The Liquidator shall agree not to resign at any time
without 15 days' prior written notice and (if other than the General Partner)
may be removed at any time, with or without cause, by notice of removal
approved by the Limited Partner. Upon dissolution, resignation or removal of
the Liquidator, a successor and substitute Liquidator (who shall have and
succeed to all rights, powers and obligations of the original Liquidator)
shall, within 30 days thereafter, be approved by the Limited Partner. Except
as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or approval of any of the parties hereto, all of the powers
conferred upon the General Partner under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers, other than the restrictions set forth in Article
XIV) to the extent appropriate or necessary in the good faith judgment of the
Liquidator to carry out the duties and
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functions of the Liquidator hereunder for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidator to
complete the winding-up and liquidation of the Partnership as provided for
herein. The Liquidator shall liquidate the assets of the Partnership and apply
and distribute the proceeds of such liquidation in the following order of
priority, unless otherwise required by mandatory provisions of applicable law:
(a) to creditors of the Partnership (including
Partners); and
(b) to the Partners, 99% to the Limited Partner
and 1% to the General Partner;
provided, however, that the Liquidator may place in escrow a reserve of cash
or other assets of the Partnership for contingent liabilities in an amount
determined by the Liquidator to be appropriate for such purposes.
12.4 Distribution in Kind. Notwithstanding the provisions of
Section 12.3 requiring the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if on dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole discretion, defer for a reasonable
time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership and may, in its sole discretion, distribute to
the
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Partners, or to specific classes of Partners, as tenants in common, in lieu of
cash, and as their interests may appear in accordance with the provisions of
Section 12.3(b), undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any distributions in kind shall
be subject to such conditions relating to the disposition and management
thereof as the Liquidator deems reasonable and equitable and to any joint
ownership agreements or other agreements governing the ownership and operation
of such properties at such time. The Liquidator shall determine the fair
market value of any property distributed in kind using such reasonable method
of valuation as it may adopt.
12.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership property pursuant to Sections
12.3 and 12.4, the Partnership shall be terminated, and the Liquidator (or the
Limited Partner if necessary) shall cause the cancellation of the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than Delaware and shall take such
other actions as may be necessary to terminate the Partnership.
12.6 Return of Capital. The General Partner shall not be
personally liable for the return of the Capital Contributions of the Limited
Partner, or any portion thereof, it being expressly understood that any such
return shall be made solely from Partnership assets.
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12.7 Waiver of Partition. Each Partner hereby waives
any rights to partition of the Partnership property.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
13.1 Amendments Which May be Adopted Solely by the General
Partner. The General Partner may amend any provision of this Agreement without
the consent of the Limited Partner, and may execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection
therewith, to reflect:
(a) a change in the name of the Partnership, in
the location of the principal place of business of the
Partnership or in the registered office or registered agent
of the Partnership;
(b) a change that the General Partner deems appropriate or
necessary to (i) qualify, or continue the qualification of, the
Partnership as a limited partnership (or a partnership in which the
Limited Partner has limited liability) under the laws of any state or
jurisdiction or (ii) ensure that the Partnership will not be treated as
an association taxable as a corporation for federal income tax purposes;
(c) a change that the General Partner in its sole discretion
deems appropriate or necessary to satisfy any requirements, conditions
or guidelines contained in any
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order, rule or regulation of any federal or state agency or
contained in any federal or state statute;
(d) a change that is appropriate or necessary, as determined
by an Opinion of Counsel, to prevent the Partnership, the General
Partner, its Affiliates and their respective directors and officers from
in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee
Retirement Income Security Act of 1974, as amended, whether or not
substantially similar to plan asset regulations currently applied or
proposed by the United States Department of Labor;
(e) a change that is required or contemplated by
any provision of this Agreement, including, without
limitation, Section 10.2;
(f) a change that in the good faith opinion of the General
Partner does not adversely affect the Limited Partner in any material
respect; or
(g) any changes or events similar to the
foregoing.
13.2 Other Amendments. Amendments to this Agreement
(other than amendments adopted pursuant to Section 13.1) shall be
effective only when approved by both Partners.
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ARTICLE XIV
CERTAIN RESTRICTIONS
14.1 Sale of Assets. Without the prior approval of
the Limited Partner, the General Partner shall not, acting on behalf of the
Partnership, sell or otherwise dispose of, or consent to the sale or other
disposition of, all or substantially all of the assets owned directly or
indirectly by the Partnership.
14.2 Minimum Net Worth of General Partner. The General Partner
shall at all times have assets that can be reached by creditors (excluding its
Partnership Interest or its interest in the MLP or any Operating Partnership
and any notes receivable from or payable to the Partnership, the MLP or any
Operating Partnership) having a fair market value (using such reasonable
method of valuation as the General Partner may adopt) sufficient so that in
the Opinion of Counsel the Partnership will not be treated as an association
taxable as a corporation for federal income tax purposes.
ARTICLE XV
GENERAL PROVISIONS
15.1 Opinions Regarding Taxation as a Partnership.
Notwithstanding any other provisions of this Agreement, the requirement, as a
condition to any action proposed to be taken under this Agreement, that the
Partnership receive an Opinion of Counsel that the proposed action would not
result in the
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Partnership or any other Person being treated as an association taxable as a
corporation for federal income tax purposes (a) shall not be applicable to the
extent that the Partnership or such person is at such time treated in all
material respects as an association taxable as a corporation for federal
income tax purposes and (b) shall be deemed satisfied by an Opinion of Counsel
containing conditions, limitations and qualifications which are acceptable to
the General Partner in its sole discretion.
15.2 Personal Property. The Partnership Interest of
any Partner shall be personal property for all purposes.
15.3 Addresses and Notices. Any notice to the Partnership, the
General Partner or the Limited Partner shall be deemed given if received by it
in writing at the principal office of the Partnership designated pursuant to
Section 2.3.
15.4 Headings. All article or section headings in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any of the provisions hereof.
15.5 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
successors and assigns.
15.6 Integration. This Agreement constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
-37-
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<PAGE>
15.7 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or of any other covenant, duty,
agreement or condition.
15.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
15.9 Severability. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions hereof, or of such
provision in other respects, shall not be affected thereby.
-38-
307427.1
<PAGE>
15.10 Applicable Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of Delaware.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
General Partner and the Limited Partner as of the date first above written.
REICH & TANG, INC.
As General Partner
By:_________________________
REICH & TANG L.P.
As Limited Partner
By: Reich & Tang, Inc.,
its General Partner
By:__________________________
-39-
307427.1
<PAGE>
AGREEMENT
OF
LIMITED PARTNERSHIP
OF
REICH & TANG DISTRIBUTORS L.P.
307427.1
<PAGE>
REICH & TANG DISTRIBUTORS L.P.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
"Affiliate"................................................................ 1
"Agreed Value"............................................................. 2
"Agreement"................................................................ 2
"Business Day"............................................................. 2
"Capital Contribution"..................................................... 2
"Certificate of Limited Partnership"....................................... 2
"Code"..................................................................... 2
"Contributed Property"..................................................... 2
"Contributing Partner"..................................................... 2
"Delaware Act"............................................................. 3
"Designated Expenses"...................................................... 3
"General Partner".......................................................... 3
"Indemnitee"............................................................... 3
"Limited Partner".......................................................... 3
"Liquidator"............................................................... 3
"MLP"...................................................................... 4
"MLP Agreement"............................................................ 4
"MLP General Partner"...................................................... 4
"Net Agreed Value"......................................................... 4
"Operating Partnership".................................................... 4
"Opinion of Counsel"....................................................... 4
"Partner".................................................................. 4
"Partnership".............................................................. 4
"Partnership Interest"..................................................... 4
"Person"................................................................... 5
"RTI"...................................................................... 5
"RTI Contributed Property"................................................. 5
"Securities Act"........................................................... 5
"States"................................................................... 5
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 Formation............................................................. 5
2.2 Name.................................................................. 5
2.3 Principal Office; Registered Office................................... 6
2.4 Term.................................................................. 6
2.5 Organizational Certificate............................................ 6
2.6 Partnership Interests................................................. 7
-i-
307427.1
<PAGE>
ARTICLE III
PURPOSE
3.1 Purpose............................................................... 7
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions................................................. 7
4.2 No Preemptive Rights.................................................. 8
4.3 No Interest........................................................... 8
4.4 Loans from Partners................................................... 8
ARTICLE V
DISTRIBUTIONS
5.1 Distributions......................................................... 8
ARTICLE VI
INCOME TAX MATTERS
6.1 Tax Allocations....................................................... 9
6.2 Preparation of Tax Returns............................................ 9
6.3 Tax Elections......................................................... 10
6.4 Tax Controversies..................................................... 10
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS;
INDEMNIFICATION
7.1 Powers of General Partner............................................. 10
7.2 Duties of General Partner............................................. 12
7.3 Reliance by Third Parties............................................. 13
7.4 Compensation and Reimbursement of the General Partner................. 14
7.5 Partnership Funds..................................................... 15
7.6 Outside Activities; Contracts with Affiliates; Loans to or
from Affiliates...................................................... 16
7.7 Tax Basis and Value Determinations.................................... 18
7.8 Resolution of Conflicts of Interest; Standard of Care................. 18
7.9 Other Matters Concerning the General Partner.......................... 20
7.10 Limited Liability; Indemnification................................... 21
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability............................................... 23
8.2 Management of Business................................................ 24
8.3 Outside Activities.................................................... 24
8.4 Return of Capital..................................................... 24
8.5 Rights of Limited Partners Relating to the Partnership................ 24
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307427.1
<PAGE>
ARTICLE IX
BOOKS, RECORDS AND ACCOUNTING
9.1 Books, Records and Accounting......................................... 25
9.2 Fiscal Year........................................................... 25
ARTICLE X
TRANSFER OF PARTNERSHIP INTERESTS; SUCCESSOR PARTNERS
10.1 Transfer of Partnership Interests.................................... 26
10.2 Successor Partners................................................... 26
ARTICLE XI
REMOVAL OF THE GENERAL PARTNER
11.1 Removal of the General Partner....................................... 27
11.2 Sale of Former General Partner's Interest............................ 27
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 Dissolution.......................................................... 28
12.2 Reconstitution....................................................... 29
12.3 Liquidation.......................................................... 31
12.4 Distribution in Kind................................................. 32
12.5 Cancellation of Certificate of Limited Partnership................... 33
12.6 Return of Capital.................................................... 33
12.7 Waiver of Partition.................................................. 34
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT
13.1 Amendments Which May be Adopted Solely by the General
Partner.............................................................. 34
13.2 Other Amendments..................................................... 35
ARTICLE XIV
CERTAIN RESTRICTIONS
14.1 Sale of Assets....................................................... 36
14.2 Minimum Net Worth of General Partner................................. 36
ARTICLE XV
GENERAL PROVISIONS
15.1 Opinions Regarding Taxation as a Partnership......................... 36
15.2 Personal Property.................................................... 37
15.3 Addresses and Notices................................................ 37
15.4 Headings............................................................. 37
15.5 Binding Effect....................................................... 37
15.6 Integration.......................................................... 37
15.7 Waiver............................................................... 38
-iii-
307427.1
<PAGE>
15.8 Counterparts......................................................... 38
15.9 Severability......................................................... 38
15.10 Applicable Law...................................................... 39
-iv-
307427.1
<PAGE>
Amended and Restated Agreement of
Limited Partnership of
Reich & Tang Distributors L.P.
First Amendment
This First Amendment (the "First Amendment") to the Amended
and Restated Agreement of Limited Partnership of Reich & Tang Distributors
L.P. (the "Agreement") is entered into as of the 1st day of October, 1994 (the
"Amendment Date") by and among Reich & Tang Asset Management, Inc. ("R&TAM" or
the "General Partner") and Reich & Tang Asset Management L.P.
("R&TAMLP" or the "Limited Partner").
Section references and other capitalized terms not otherwise
defined herein have the meaning assigned to them by the Agreement.
WHEREAS, pursuant to Section 10.1 of the Agreement, New
England Investment Companies, Inc. ("NEIC") has transferred its entire general
Partnership Interest in the Partnership to R&TAM in accordance with the terms
of the Acknowledgement of Contribution, Issuance of Shares and Purchase and
Sale in respect of Reich & Tang Asset Management, Inc. of even date herewith;
WHEREAS, pursuant to Section 10.1 of the Agreement, New
England Investment Companies, L.P. ("NEICLP") has transferred its entire
limited Partnership Interest in the Partnership to R&TAMLP in accordance with
the terms of the Contribution to Partnership in respect of Reich & Tang Asset
Management L.P. of even date herewith;
WHEREAS, in connection with the aforementioned transfers,
NEIC and NEICLP have relinquished all of their Partnership Interests and are
no longer Partners of the Partnership, and R&TAM and R&TAMLP have agreed to
assume the obligations of NEIC and NEICLP, respectively, and have become
successor Partners of the Partnership; and
WHEREAS, R&TAM and R&TAMLP wish to amend the Agreement by
adopting this First Amendment, thereby setting forth the agreements with
respect to the conduct of the business of the Partnership and each of their
rights and obligations.
NOW THEREFORE, in consideration of the foregoing premises,
the agreements and covenants contained herein and other good and valuable
consideration received, the receipt and sufficiency of which are hereby
acknowledged, R&TAM and R&TAMLP hereby agree as follows, all amendments to be
effective as of the Amendment Date unless otherwise indicated:
307427.1
<PAGE>
(a) The definition of General Partner in Article I is
amended in its entirety to read as follows:
""General Partner" means R&TAM, in its capacity as
the general partner of the Partnership and any
successor to R&TAM as such general partner."
(b) The definition of Limited Partner in Article I is
amended in its entirety to read as follows:
""Limited Partner" means R&TAMLP, in its capacity
as the limited partner of the Partnership and any
successor to R&TAMLP as such limited partner."
(c) The definition of MLP Agreement in Article I is amended
in its entirety to read as follows:
""MLP Agreement" means the Amended and Restated Agreement of
Limited Partnership of Reich & Tang L.P., dated as of
September 15, 1993, as may be amended from time to time."
(d) New definitions of R&TAM and R&TAMLP are added
in Article I to read as follows:
""R&TAM" means Reich & Tang Asset Management,
Inc., a Massachusetts corporation."
""R&TAMLP" means Reich & Tang Asset Management
L.P., a Delaware limited partnership."
(e) In Section 4.1(a), the words "Limited Partner" are
replaced by the word "MLP" wherever such words appear.
(f) Section 14.2 is deleted.
-vi-
307427.1
<PAGE>
IN WITNESS WHEREOF, this First Amendment is duly executed by
the General Partner and the Limited Partner as of the date first above
written.
REICH & TANG ASSET MANAGEMENT, INC.
As General Partner
By:/s/Peter D. Hansen
Title: President
REICH & TANG ASSET MANAGEMENT, L.P.
As Limited Partner
By: Reich & Tang Asset Management, Inc.,
its general partner
By:Peter D. Hansen
Title: President
Consented to:
NEW ENGLAND INVESTMENT COMPANIES, INC.
By:/s/Edward N. Wadsworth
Title: Executive Vice President
and General Counsel
NEW ENGLAND INVESTMENT COMPANIES, L.P.
By: New England Investment Companies, Inc.,
its general partner
By:/s/Edward N. Wadsworth
Title: Executive Vice President
and General Counsel
-vii-
307427.1
<PAGE>
STATE OF NEW YORK
CERTIFICATE OF AMENDMENT OR CHANGE OF
REICH & TANG DISTRIBUTORS L.P.
UNDER SECTION 121-903 OF
THE REVISED LIMITED PARTNERSHIP ACT
1. The name of the limited partnership is: Reich & Tang
Distributors L.P.
2. The jurisdiction of organization of the foreign limited
partnership is: Delaware
3. The date the foreign limited partnership was authorized to
do business in the state was: March 4, 1991
4. The sole general partner of the foreign limited partnership has been
deleted, and a new general partner is being substituted. The new general
partner is: Reich & Tang Asset Management, Inc., 600 Fifth Avenue, New
York, New York 10020. Such change has been effected under the laws of
the jurisdiction of organization on October 1, 1994.
IN WITNESS WHEREOF, this Certificate of Amendment has been
duly executed and subscribed and does affirm the foregoing as true under the
penalties of perjury this day of October, 1994.
REICH & TANG DISTRIBUTORS L.P.
By: Reich & Tang Asset Management, Inc.,
General Partner
By:/s/Edward N. Wadsworth
Edward N. Wadsworth, Clerk
307427.1
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF LIMITED PARTNERSHIP
OF
REICH & TANG DISTRIBUTORS L.P.
Reich & Tang Distributors L.P., a limited partnership
organized under the Delaware Revised Uniform Limited Partnership Act (the
"Act"), for the purpose of amending its Certificate of Limited Partnership
pursuant to Section 17-202 of the Act, hereby certifies that effective on
October 1, 1994, Paragraph 3 of the Certificate of Limited Partnership is
amended to read in its entirety as follows:
3. General Partner. The name and the business
address of the sole general partner of the Partnership is:
Reich & Tang Asset Management, Inc., 600 Fifth Avenue, New York, New
York 10020.
IN WITNESS WHEREOF, this Certificate of Amendment has been
duly executed by a general partner thereunto duly authorized as of the 1st day
of October, 1994.
REICH & TANG DISTRIBUTORS L.P.
By: Reich & Tang Asset Management, Inc.,
General Partner
By: /s/Peter D. Hansen
Name: Peter D. Hansen
Title: President
307427.1
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681
October 31, 1995
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Municipal Securites Trust Series 28
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 J. J. Kenny Co., 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 J. J. Kenny Co.,
Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681
October 31, 1995
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Municipal Securites 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 J. J. Kenny Co., 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 J. J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681
October 31, 1995
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Municipal Securites Trust Series 29
and 40th Discount Series
Gentlemen:
We have examined the post-effective Amendment to the Registration Statement
File No. 33-00856 for the above-captioned trust. We hereby acknowledge that
Kenny S&P Evaluation Services, a division of J. J. Kenny Co., 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 J. J.
Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
J.J KENNY STANDARD & POOR'S
65 Broadway A Division of The McGraw-Hill Companies
New York, NY 10006-2551
Tel (212) 770-4422
Fax (212) 797-8681
October 31, 1995
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, New York 10020
Re: Municipal Securites 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 J. J. Kenny Co., 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 J. J. Kenny Co.,
Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
above-referenced Amendment to the Registration Statement for the respective
bonds comprising the trust portfolio are the ratings currently indicated in our
KENNYBASE database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
FAC/trh
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Peter S. Voss
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
G. Neal Ryland
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Richard E. Smith III
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Steven W. Duff
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Edward N. Wadsworth
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney and agent to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Bernadette N. Finn
302504.1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Lorraine C. Hylsler with full power of substitution,
as his true and lawful attorney to execute in his name and on his
behalf, in any and all capacities, the Registration Statement on Form S-6, and
any and all amendments thereto (including pre-effective amendments) filed by
Reich & Tang Asset Management, Inc., General Partner of Reich & Tang
Distributors L.P., as sponsor of various series of unit investment trusts,
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, and under the Investment Company Act of 1940, as amended, and any
and all other instruments which such attorney and agent deems necessary or
advisable to enable the Fund to comply with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, the rules,
regulations and requirements of the Securities and Exchange Commission, and
the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorney and agent shall do or cause to be done by virtue hereof.
------------------------------
Richard DeSanctis
302504.1
