As filed with the Securities and Exchange Commission on October 25, 1996
Registration No. 33-29313*
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 7
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 45 AND
SERIES 46
B. Name of depositors: REICH & TANG DISTRIBUTORS L.P.
GRUNTAL & CO., INCORPORATED
C. Complete address of depositors' principal executive offices:
Reich & Tang Distributors L.P. Gruntal & Co., Incorporated
600 Fifth Avenue 14 Wall Street
New York, NY 10020 New York, NY 10005
D. Name and complete address of agent for service:
<TABLE>
<S> <C> <C>
PETER J. DeMARCO LEE FENSTERSTOCK Copy of comments to:
Executive Vice President President MICHAEL R. ROSELLA, ESQ.
Reich & Tang Gruntal & Co., Incorporated Battle Fowler LLP
Distributors L.P. 14 Wall Street 75 East 55th Street
600 Fifth Avenue New York, NY 10005 New York, NY 10022
New York, New York 10020 (212) 856-6858
</TABLE>
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, 1996) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
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 (the "Act").
Said Prospectus covers units of undivided interest in Municipal Securities
Trust, Series 45 and Series 46 covered by prospectuses heretofore filed as
part of separate registration statements on Form S-6 (Registration Nos.
33-29313 and 33-30144, respectively) under the Act. This filing constitutes
Post-Effective Amendment No. 7 for all of the aforementioned Series.
Each of the Registrants has registered an indefinite number of securities
under the Act pursuant to Section 24(f) under the Investment Company Act of
1940, as amended, and Rule 24f-2 thereunder, and each of the Registrants
filed a Rule 24f-2 Notice for its fiscal year ended June 30, 1996 on August
23, 1996.
991.1
<PAGE>
MUNICIPAL SECURITIES TRUST
SERIES 45
AND SERIES 46
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)
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
<S> <C> <C>
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
</TABLE>
II. General Description of the Trust and Securities of the Trust
<TABLE>
<S> <C> <C>
10. (a) Registered or bearer
securities...................... Certificates
(b) Cumulative or distributive
securities...................... Interest and Principal Distributions
(c) Redemption...................... Trustee Redemption
(d) Conversion, transfer, etc....... Certificates, Sponsor Repurchase,
Trustee Redemption, Exchange
Privilege and Conversion Offer
(e) Periodic payment plan........... Not Applicable
(f) Voting rights................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders.... Records, Portfolio, Trust Agreement,
Amendment and Termination, The
Sponsor, The Trustee
(h) Consents required............... Trust Agreement, Amendment and
Termination
(i) Other provisions................ Tax Status
11. Type of securities
comprising units.................. Objectives, Portfolio, Description
of Portfolio
12. Certain information regarding
periodic payment certificates..... Not Applicable
13. (a) Load, fees, expenses, etc....... Summary of Essential Information,
Offering Price, Volume and Other
Discounts, Sponsor's and
Underwriters' Profits, Total
Reinvestment Plan, Trust Expenses
and Charges
</TABLE>
-i-
978.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
(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
</TABLE>
III. Organization, Personnel and Affiliated Persons of Depositor
<TABLE>
<S> <C> <C>
25. Organization of depositor........... The Sponsor
26. Fees received by depositor.......... Not Applicable
27. Business of depositor............... The Sponsor
28. Certain information as to
officials and affiliated
persons of depositor.............. Part II--Item C
29. Voting securities of depositor...... Not Applicable
30. Persons controlling depositor....... "
31. Payments by depositor for certain
services rendered to trust........ "
</TABLE>
-ii-
978.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
<S> <C> <C>
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.. "
</TABLE>
IV. Distribution and Redemption of Securities
<TABLE>
<S> <C> <C>
35. Distribution of trust's
securities by states.............. Distribution of Units
36. Suspension of sales of
trust's securities................ Not Applicable
37. Revocation of authority
to distribute..................... "
38. (a) Method of distribution.......... Distribution of Units, Total
Reinvestment Plan
(b) Underwriting agreements......... "
(c) Selling agreements.............. "
39. (a) Organization of principal
underwriters.................... The Sponsor
(b) N.A.S.D. membership of
principal underwriters.......... "
40. Certain fees received by
principal underwriters............ Not Applicable
41. (a) Business of principal
underwriters.................... The Sponsor
(b) Branch offices of principal
underwriters.................... Not Applicable
(c) Salesmen of principal
underwriters.................... "
42. Ownership of trust's
securities by certain persons..... "
43. Certain brokerage commissions
received by principal
underwriters...................... "
44. (a) Method of valuation............. Summary of Essential Information,
Offering Price, Accrued Interest,
Volume and Other Discounts,
Total Reinvestment Plan,
Distribution of Units
(b) Schedule as to offering price... Not Applicable
(c) Variation in offering price
to certain persons.............. Distribution of Units, Total
Reinvestment Plan, Volume and
Other Discounts
45. Suspension of redemption rights..... Trustee Redemption
46. (a) Redemption valuation............ Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Trustee
Redemption
(b) Schedule as to
redemption price................ Not Applicable
47. Maintenance of position in
underlying securities............. Comparison of Public Offering Price,
Sponsor's Repurchase Price and
Redemption Price, Sponsor
Repurchase, Trustee Redemption
</TABLE>
-iii-
978.1
<PAGE>
<TABLE>
<CAPTION>
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
V. Information Concerning the Trustee or Custodian
<S> <C> <C>
48. Organization and regulation
of trustee........................ The Trustee
49. Fees and expenses of trustee........ Trust Expenses and Charges
50. Trustee's lien...................... "
</TABLE>
VI. Information Concerning Insurance of Holders of Securities
<TABLE>
<S> <C> <C>
51. Insurance of holders of
trust's securities................ Not Applicable
</TABLE>
VII. Policy of Registrant
<TABLE>
<S> <C> <C>
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
</TABLE>
VIII. Financial and Statistical Information
<TABLE>
<S> <C> <C>
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
</TABLE>
-iv-
978.1
<PAGE>
Note: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
SERIES 45
- ------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 45
("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 Sponsors are Reich & Tang
Distributors L.P. and Gruntal & Co., Incorporated (sometimes referred to as the
"Sponsor" or the "Sponsors"). 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, 1996 (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, 1996
81660.1
<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 1/6272nd 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
81660.1
<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 4.45%
of the Public Offering Price, which is the same as 4.657% 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 $370.37 plus accrued interest of
$8.59 under the monthly distribution plan, $10.40 under the semi-annual
distribution plan and $21.91 under the annual distribution plan, for a total of
$378.96, $380.77 and $392.28, respectively. The Public Offering Price per Unit
can vary on a daily basis in accordance with fluctuations in the aggregate bid
price of the Bonds. (See the "Summary of Essential Information" and "Public
Offering--Offering Price" in Part B of this Prospectus.)
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN. Units
of each Trust are offered to investors on a "dollar price" basis (using the
computation method previously described under "Public Offering Price") as
distinguished from a "yield price" basis often used in offerings of tax exempt
bonds (involving the lesser of the yield as computed to maturity of bonds or to
an earlier redemption date). Since they are offered on a dollar price basis,
the rate of return on an investment in Units of each Trust is measured in terms
of "Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the
yield to maturity or to an earlier call date (whichever results in a lower
yield) for each Bond in the Trust's portfolio in accordance with accepted bond
practices, which practices take into account not only the interest payable on
the Bond but also the amortization of premiums or accretion of discounts, if
any; (2) calculating the average of the yields for the Bonds in the Trust's
portfolio by weighing each Bond's yield by the market value of the Bond and by
the amount of time remaining to the date to which the Bond is priced (thus
creating an average yield for the portfolio of the Trust); and (3) reducing the
average yield for the portfolio of the Trust in order to reflect estimated fees
and expenses of the Trust and the maximum sales charge paid by investors. The
resulting Estimated Long Term Return represents a measure of the return to
investors earned over the estimated life of the Trust. (For the Estimated Long
Term Return to Certificateholders under the monthly, semi-annual and annual
distribution plans, see "Summary of Essential Information".)
Estimated Current Return is a measure of the Trust's cash flow.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolio of the Trust. Moreover, because interest rates on Bonds
purchased at a premium are generally higher than current interest rates on
newly issued bonds of a similar type with comparable rating, the Estimated
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity.
The Estimated Net Annual Interest Income per Unit of the Trust
will vary with changes in the fees and expenses of the Trustee and the
Evaluator applicable to the Trust and with the redemption, maturity, sale or
other disposition of the Bonds in the Trust. The Public Offering Price will
vary with changes in the bid prices of the Bonds. Therefore, there is no
assurance that the present Estimated Current Return or Estimated Long Term
Return will be realized in the future. (For the Estimated Current Return to
Certificateholders under the monthly, semi-annual and annual distribution
A-3
81660.1
<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 Sponsors, although not obligated to do so,
intend 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 4.45% of the Public Offering Price (4.657% 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
81660.1
<PAGE>
<TABLE>
MUNICIPAL SECURITIES TRUST
SERIES 45
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1996
<S> <C>
Date of Deposit*: July 20, 1989 Minimum Principal Distribution:
Principal Amount of Bonds . $2,405,000 $1.00 per Unit.
Number of Units ........... 6,272 Weighted Average Life
Fractional Undivided Inter- to Maturity: 18.5 Years.
est in Trust per Unit ... 1/6272 Minimum Value of Trust:
Principal Amount of Trust may be terminated if value
Bonds per Unit .......... $383.45 of Trust is less than $2,800,000
Secondary Market Public in principal amount of Bonds.
Offering Price** Mandatory Termination Date:
Aggregate Bid Price The earlier of December 31, 2039
of Bonds in Trust ...... $2,224,124.04+++ or the disposition of the last
Divided by 6,272 Units .. $354.61 Bond in the Trust.
Plus Sales Charge of 4.45% Trustee***: The Chase Manhattan
of Public Offering Price $15.76 Bank.
Public Offering Price Trustee's Annual Fee: Monthly
per Unit ............... $370.37+ plan $.96 per $1,000; semi-
Redemption and Sponsor's annual plan $.50 per $1,000; and
Repurchase Price annual plan is $.32 per $1,000.
per Unit ................ $354.61+ Evaluator: Kenny S&P Evaluation
+++ Services.
++++ Evaluator's Fee for Each
Excess of Secondary Market Evaluation: Minimum of $15 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 .......... $15.76++++ issues).
Difference between Public Sponsor: Reich & Tang
Offering Price per Unit Distributors L.P. and Gruntal &
and Principal Amount per Co. Incorporated.
Unit Premium/(Discount) . $(13.08) Sponsor's Annual Fee: Maximum of
Evaluation Time: 4:00 p.m. $.25 per $1,000 principal amount
New York Time. of Bonds (see "Trust Expenses
and Charges" in Part B of this
Prospectus).
</TABLE>
<TABLE>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
<CAPTION>
Monthly Semi-Annual Annual
Option Option Option
<S> <C> <C> <C>
Gross annual interest income# ......... $22.14 $22.14 $22.14
Less estimated annual fees and
expenses ............................ .94 .68 .51
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $21.20 $21.46 $21.63
Estimated interest distribution# ...... 1.77 10.73 21.63
Estimated daily interest accrual# ..... .0589 .0596 .0600
Estimated current return#++ ........... 5.72% 5.79% 5.84%
Estimated long term return++ .......... 5.267% 5.34% 5.385%
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
</TABLE>
A-5
81660.1
<PAGE>
Footnotes to Summary of Essential Information
* 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.
Certain amounts distributable as of June 30, 1996 are reported in the
summary of essential information as if they had been distributed as of
year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment 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
three business days after purchase) of $8.59 monthly, $10.40
semi-annually and $21.91 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
81660.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1996
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 5 issues representing
obligations of issuers located in 5 states. The Sponsor has not participated as
a sole underwriter or manager, co-manager or member of an underwriting
syndicate from which any of the initial aggregate principal amount of the Bonds
were acquired. None of the Bonds are obligations of state and local housing
authorities; none are hospital revenue bonds; approximately 29.1% are issued in
connection with the financing of nuclear generating facilities; and
approximately 4.2% 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 a general obligation bond. All
five of the issues representing $2,405,000 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, Education 1, Mortgage Revenue 1,
Nuclear Power 1 and Toll Revenue 1. For an explanation of the significance of
these factors see "The Trust--Portfolio" in Part B of this Prospectus.
As of June 30, 1996, $1,755,000 (approximately 73% of the
aggregate principal amount of the Bonds) were original issue discount bonds.
None of these original issue discount bonds are Zero Coupon Bonds.
Approximately 4.1% of the aggregate principal amount of the Bonds in the Trust
were purchased at a "market" discount from par value at maturity, approximately
22.9% were purchased at a premium and none 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, 1996 to September 15,
1996, $65,000 of the principal amount of the Bond in portfolio no. 5 was
sold and is no longer contained in the Trust. 167 Units have been
redeemed.
A-7
81660.1
<PAGE>
<TABLE>
FINANCIAL AND STATISTICAL INFORMATION
Selected data for each Unit outstanding for the periods listed below:
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C>
June 30, 1994 6,952 $826.08 $71.66 $72.28 $75.11 $132.80
June 30, 1995 6,831 647.50 52.97 53.49 64.33 173.95
June 30, 1996 6,272 364.54 52.97 26.43 50.12 272.13
</TABLE>
- --------
* 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
81660.1
<PAGE>
Report of Independent Accountants
To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 45
In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust,
Series 45 (the "Trust") at June 30, 1996, the results of its operations, the
changes in its net assets and the financial highlights for the year then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at June 30, 1996 by correspondence with the Trustee, provides a
reasonable basis for the opinion expressed above. The financial statements for
the prior periods presented were audited by other independent accountants,
whose report dated September 15, 1995, except as to Note 7 as to which the
date is September 28, 1995, expressed an unqualified opinion on those
financial statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
October 16, 1996
<PAGE>
<TABLE>
Municipal Securities Trust, Series 45
Portfolio of Investments June 30, 1996
- -------------------------------------------------------------------------------
<CAPTION>
Redemption
Aggregate Coupon Rate/ Feature (2)(4)
Portfolio Principal Name of Issuer and Ratings Date(s) of S.F.-Sinking Fun Market
No. Amount Title of Bonds (1) Maturity(2)(7) Ref.-Refunding Value(3)
<S> <C> <C> <C> <C> <C> <C>
1 $ 355,000 Baldwin Cnty. Al. Bd. of A 5.500% No Sinking Fund $ 349,824
Ed. Spec. Tax Schl. 6/01/2009 6/01/98 @ 102 Ref.
Warrants Series 1989
2 700,000 Salt River Az. Agrcltrl. AA 5.000 1/01/20 @ 100 S.F. 601,566
Imprvmt. & Pwr. Dstrct. 1/01/2025 None
(Salt River Prjt. Elect.
Sys. Rev. Bonds) 1986
Series C
3 100,000 Mich. State Hsg. Dev. AA+ 5.000 4/01/05 @ 100 S.F. 91,945
Auth. Single Fam. Insrd. 4/01/2010 None
Mtg. Rev. Bonds Series
1978A
4 700,000 N.C. Eastern Muni. Pwr. BBB+ 4.500 7/01/20 @ 100 S.F. 578,788
Agncy. Pwr. Sys. Rev. 1/01/2024 1/01/24 @ 100 Ref.
Rfndg. Bonds Series
1987 A
5 550,000 Harris Cnty. Tx. Toll Rd. AAA 8.700 8/15/08 @ 100 S.F. 595,500
Multimode Rev. Bonds 8/15/2017 8/15/97 @ 103 Ref.
------------ Sr. Lien Series 1985C ------------
$ 2,405,000 Total Investments (Cost (3) $2,009,943) $ 2,217,623
============ ============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Municipal Securities Trust, Series 45
Footnotes to Portfolio - June 30, 1996
- -------------------------------------------------------------------------------
(1) All ratings are by Kenny S&P Evaluation Services, a business unit of
J.J. Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies,
Inc., except for those identified by an asterisk (*) which are by
Moody's Investors Service, Inc. A brief description of the ratings
symbols and their meaning is set forth under "Description of Bond
Ratings" in Part B of the Prospectus.
(2) See "The Trust - Portfolio" in Part B of the Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of the
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, 1996, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross Unrealized Appreciation $ 217,733
Gross Unrealized Depreciation (10,053)
-------------
Net Unrealized Appreciation $ 207,680
=============
(4) 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).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Municipal Securities Trust, Series 45
Statement of Net Assets
June 30, 1996
- ------------------------------------------------------------------------------
Investments in Securities,
at Market Value (Cost $2,009,943) $ 2,217,623
------------------
Other Assets
Accrued Interest 49,564
Cash 19,579
------------------
Total Other Assets 69,143
------------------
Other Liabilities
Accrued Expenses 374
------------------
Total Other Liabilities 374
------------------
Excess of Other Assets Over Total Liabilities 68,769
------------------
Net Assets (6,272 Units of Fractional Undivided
Interest Outstanding, $364.54 per Unit) $ 2,286,392
==================
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
Municipal Securities Trust, Series 45
Statement of Operations
- -----------------------------------------------------------------------------
<CAPTION>
For the Years Ended June 30,
1996 1995 1994
<S> <C> <C> <C>
Investment Income
Interest $ 216,812 $ 368,342 $ 496,630
-------------- -------------- --------------
Expenses
Trustee's Fees 5,348 6,420 7,170
Evaluator's Fees 1,031 1,031 1,124
Sponsor's Advisory Fee 1,125 1,575 1,735
-------------- -------------- -------------
Total Expenses 7,504 9,026 10,029
-------------- -------------- --------------
Net Investment Income 209,308 359,316 486,601
-------------- -------------- --------------
Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments (219,018) (154,690) (92,896)
Change in Unrealized Appreciation
(Depreciation) on Investments 195,708 130,732 (313,989)
-------------- -------------- --------------
Net Gain (Loss) on Investments (23,310) (23,958) (406,885)
-------------- -------------- --------------
Net Increase in Net Assets
Resulting From Operations $ 185,998 $ 335,358 $ 79,716
============== ============== =============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
Municipal Securities Trust, Series 45
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------
<CAPTION>
For the Years Ended June 30,
1996 1995 1994
<S> <C> <C> <C>
Operations
Net Investment Income $ 209,308 $ 359,316 $ 486,601
Realized Gain (Loss)
on Investments (219,018) (154,690) (92,896)
Change in Unrealized Appreciation
(Depreciation) on Investments 195,708 130,732 (313,989)
-------------- -------------- --------------
Net Increase in Net
Assets Resulting
From Operations 185,998 335,358 79,716
-------------- -------------- --------------
Distributions to Certificateholders
Investment Income 251,424 367,742 500,102
Principal 1,831,023 1,205,904 923,912
Redemptions
Interest 6,885 2,379 954
Principal 233,358 79,146 47,256
-------------- -------------- --------------
Total Distributions
and Redemptions 2,322,690 1,655,171 1,472,224
-------------- -------------- --------------
Total Increase (Decrease) (2,136,692) (1,319,813) (1,392,508)
Net Assets
Beginning of Year 4,423,084 5,742,897 7,135,405
-------------- -------------- --------------
End of Year (Including
Undistributed Net Investment
Income of $66,382, $115,393
and $126,198, Respectively) $ 2,286,392 $ 4,423,084 $ 5,742,897
============== ============== ==============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Municipal Securities Trust, Series 45
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- ------------------------------------------------------------------------------
1. Organization
Municipal Securities Trust, Series 45 (the "Trust") was organized on
July 20, 1989 by Bear, Stearns, & Co. Inc. and Gruntal & Co.,
Incorporated 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. The Trust was formed to preserve capital and to
provide interest income.
Effective September 2, 1995, United States Trust Company of New York
was merged into The Chase Manhattan Bank (the "Trustee").
Accordingly, Chase is the successor trustee of the Trust.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies
consistently followed by the Trust in preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ
from those estimates.
Interest Income
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.
Security Valuation
Investments are carried at market value which is determined by Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc.,
a subsidiary of The McGraw-Hill Companies, Inc. The market value of
the portfolio is based upon the bid prices for the bonds at the end
of the year, which approximates the fair value of the security at
that date, except that the market value on the date of deposit
represents the cost to the Trust based on the offering prices for
investment at that date. The differences 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
No provision for federal income taxes has been made in the
accompanying financial statements because the Trust intends to
continue to qualify for the tax treatment applicable to Grantor
Trusts under the Internal Revenue Code. Under existing law, if the
Trust so qualifies, it will not be subject to federal income tax on
net income and capital gains that are distributed to unitholders.
<PAGE>
2
Municipal Securities Trust, Series 45
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- ------------------------------------------------------------------------------
4. Trust Administration
The Trustee has custody of assets 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 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. For the years ended June 30, 1996, 1995 and 1994,
559, 121 and 40 units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.32 to $.96 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $15.00 is paid to
a service bureau for each portfolio valuation. A maximum fee of $.25
per $1,000 of outstanding investment principal is paid to the
Sponsor. For the year ended June 30, 1996, the "Trustee's Fees" are
comprised of Trustee fees of $3,096, and other expenses of $2,252.
The other expenses include professional, printing and miscellaneous
fees.
5. Net Assets
At June 30, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original cost to Certificateholders $ 7,181,029
Less Initial Gross Underwriting Commission (351,870)
--------------
6,829,159
Accumulated Cost of Securities Sold, Matured
or Called (4,819,216)
Net Unrealized Appreciation 207,680
Undistributed Net Investment Income 66,382
Undistributed Proceeds From Investments 2,387
--------------
Total $ 2,286,392
------------------
<PAGE>
3
Municipal Securities Trust, Series 45
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- ------------------------------------------------------------------------------
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 6,272 units of
fractional undivided interest of the Trust as of the date of deposit.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds,
it may be affected by economic and political developments in the
municipalities. Certain debt obligations held by the Trust may be
entitled to the benefit of insurance, standby letters of credit or
other guarantees of banks or other financial institutions.
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 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.
<PAGE>
4
Municipal Securities Trust, Series 45
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- ----------------------------------------------------------------------------
8. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding for the year ended
June 30, 1996:
Net Asset Value, Beginning of Period** $ 647.50
Interest Income $ 33.09
Expenses (1.15)
----------------
Net Investment Income 31.94
Net Gain or Loss on Investments(1) 39.63
-----------------
Total from Investment Operations 719.07
Less Distributions
to Certificateholders
Income 38.38
Principal 279.48
for Redemptions
Interest 1.05
Principal 35.62
----------------
Total Distributions 354.53
-----------------
Net Asset Value, End of Period** $ 364.54
==============
See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years
ended June 30, 1996, 1995 and 1994 based on actual units.
(1) Net gain or loss on investments is a result of changes in outstanding
units since July 1, 1995 and the dates of net gain and loss on
investments.
- --------
* Unless otherwise stated, based upon average units outstanding during the
year of 6,551.5 ([6,831 + 6,272]/2).
** Based upon actual units outstanding.
<PAGE>
Note: Part A of This Prospectus May Not Be
Distributed Unless Accompanied by Part B.
MUNICIPAL SECURITIES TRUST
SERIES 46
- -------------------------------------------------------------------------------
The Trust is a unit investment trust designated Series 46 ("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. 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, 1996 (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, 1996
81258.1
<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 1/6596th 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
81258.1
<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 4.74% of the Public
Offering Price, which is the same as 4.975% 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 $841.41 plus accrued interest of $11.82 under the
monthly distribution plan, $16.43 under the semi-annual distribution plan and
$45.74 under the annual distribution plan, for a total of $853.23, $857.84 and
$887.15, 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
81258.1
<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 4.74% of the Public Offering Price (4.975% 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
81258.1
<PAGE>
<TABLE>
<CAPTION>
MUNICIPAL SECURITIES TRUST
SERIES 46
SUMMARY OF ESSENTIAL INFORMATION AS OF JUNE 30, 1996
<S> <C> <C>
Date of Deposit*: November 17, 1989 Minimum Principal Distribution:
- --------------- ------------------------------
Principal Amount of Bonds . $5,191,807.76 $1.00 per Unit.
- -------------------------
Number of Units ........... 6,596 Weighted Average Life
- --------------- ---------------------
Fractional Undivided Inter- to Maturity: 18.1 Years.
- -------------------------- -----------
est in Trust per Unit ... 6,596 Minimum Value of Trust:
--------------------- ----------------------
Principal Amount of Trust may be terminated if
- -------------------
Bonds per Unit .......... $787.11 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 ...... $5,298,712.49+++ The earlier of December 31,
Divided by 6,596 Units .. $803.32 2039 or the disposition of the
Plus Sales Charge of 4.74% last Bond in the Trust.
of Public Offering Price $38.09 Trustee***: The Chase Manhattan
Public Offering Price Bank.
per Unit .............. $841.41+ Trustee's Annual Fee: Monthly
--------------------
Redemption and Sponsor's plan $.96 per $1,000; semi-
- ------------------------
Repurchase Price annual plan $.50 per $1,000;
----------------
per Unit ................ $803.32+ and annual plan is $.32 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 $15
------------------- ----------
Sponsor's Repurchase plus $.25 per each issue of
--------------------
Price per Unit .......... 38.09++++ 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) . $54.30 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).
</TABLE>
<TABLE>
<CAPTION>
PER UNIT INFORMATION BASED UPON INTEREST DISTRIBUTION PLAN ELECTED
Monthly Semi-Annual Annual
Option Option Option
<S> <C> <C> <C>
Gross annual interest income# ......... $56.62 $56.62 $56.62
Less estimated annual fees and
expenses ............................ 1.69 1.24 1.24
Estimated net annual interest ______ ______ ______
income (cash)# ...................... $54.93 $55.38 $55.38
Estimated interest distribution# ...... 4.58 27.69 55.38
Estimated daily interest accrual# ..... .1526 .1539 .1538
Estimated current return#++ ........... 6.53% 6.58% 6.58%
Estimated long term return++ .......... 3.865% 3.92% 3.92%
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
</TABLE>
A-5
81258.1
<PAGE>
Footnotes to Summary of Essential Information
* 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.
Certain amounts distributable as of June 30, 1996 are reported in the
summary of essential information as if they had been distributed as of
year-end.
*** The Trustee maintains its principal executive office at 270 Park
Avenue, New York, New York 10017 and its unit investment
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
three business days after purchase) of $11.82 monthly, $16.43
semi-annually and $45.74 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
81258.1
<PAGE>
INFORMATION REGARDING THE TRUST
AS OF JUNE 30, 1996
DESCRIPTION OF PORTFOLIO*
The portfolio of the Trust consists of 10 issues representing obligations
of issuers located in 6 states. The Sponsor has not participated as a sole
underwriter or manager, co-manager or member of an underwriting syndicate from
which any of the initial aggregate principal amount of the Bonds were acquired.
Approximately 25% of the Bonds are obligations of state and local housing
authorities; approximately 27% are hospital revenue bonds; none are issued in
connection with the financing of nuclear generating facilities; and
approximately 19.9% 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). One issue representing $15,000 of the principal amount
of the Bonds is a general obligation bonds. All nine of the remaining issues
representing $5,176,808 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: Federally Assisted Housing 1, Hospital 3, Mortgage Revenue 2,
Multi-Family Housing 1, Resource Recovery 1 and University 1. For an
explanation of the significance of these factors see "The Trust--Portfolio" in
Part B of this Prospectus.
As of June 30, 1996, $231,808 (approximately 4.5% of the aggregate
principal amount of the Bonds) were original issue discount bonds. Of these
original issue discount bonds, $231,808 (approximately 4.5% of the aggregate
principal amount of the Bonds) are Zero Coupon Bonds. Zero Coupon Bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of Zero
Coupon Bonds is subject to greater fluctuations than coupon bonds in response
to changes in interest rates. Approximately 39.7% of the aggregate principal
amount of the Bonds in the Trust were purchased at a "market" discount from par
value at maturity, approximately 25% were purchased at a premium and
approximately 30.8% 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, 1996 to September 15, 1996
$90,000 of the principal amount of the Bond in portfolio no. 3 was sold
and is no longer contained in the Trust. The entire principal amount of
the Bond in portfolio no. 5 was sold and is no longer contained in the
Trust. 129 Units were redeemed from the Trust.
A-7
81258.1
<PAGE>
<TABLE>
<CAPTION>
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)
- ------------ ---------- ---------- ------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
June 30, 1994 7,794 $1,046.31 $74.21 $74.87 $75.10 -0-
June 30, 1995 7,448 1,075.13 74.08 74.71 75.02 -0-
June 30, 1996 6,596 815.23 66.66 67.18 75.51 $216.96
</TABLE>
- --------
* 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
81258.1
<PAGE>
Report of Independent Accountants
To the Sponsor, Trustee and Certificateholders of
Municipal Securities Trust, Series 46
In our opinion, the accompanying statement of net assets, including the
portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Municipal Securities Trust,
Series 46 (the "Trust") at June 30, 1996, the results of its operations, the
changes in its net assets and the financial highlights for the year then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at June 30, 1996 by correspondence with the Trustee, provides a
reasonable basis for the opinion expressed above. The financial statements for
the prior periods presented were audited by other independent accountants,
whose report dated September 15, 1995, except as to Note 7 as to which the
date is September 28, 1995, expressed an unqualified opinion on those
financial statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
October 16, 1996
<PAGE>
<TABLE>
Municipal Securities Trust, Series 46
Statement of Operations
<CAPTION>
Redemption
Aggregate Coupon Rate/ Feature (2)(4)
Portfolio Principal Name of Issuer and Title Ratings Date(s) of S.F.-Sinking Fund Market
No. Amount of Bonds (1) Maturity(2) Ref.-Refunding Value(3)
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 715,000 Broward Cnty. Fla. Res. A- 7.950% Currently @ 100 S.F. $ 789,146
Recvry. Rev. Bonds (SES 12/01/2008 12/01/99 @ 103 Ref.
Broward Co., L.P. So. Prjt.)
Series 1984
2 500,000 Ga. Resndntl. Finc. Auth. AA+ 8.000 12/01/08 @ 100 S.F. 528,365
Sngle. Fam. Mtg. Bond (FHA 12/01/2016 12/01/98 @ 103 Ref.
Insrd. or VA Guarantd. Mtg.
Loans) Series 1988B
3 530,000 Ill. Hlth. Facs. Auth. Rev. Aaa* 7.700 10/01/10 @ 100 S.F. 588,957
Bonds (Ill. Masonic Med. 10/01/2019 10/01/99 @ 102 Ref.
Cntr.) Series 1989B
4 800,000 Ill. State. Univ. Auxiliary Aaa* 7.400 No Sinking Fund 881,808
Facs. Sys. Rev. Bonds Bd. 4/01/2014 10/01/99 @ 102 Ref.
of Regents Series 1989
5 15,000 City of Chicago Cook Cnty. A 9.250 1/01/06 @ 100 S.F. 16,092
Ill. Gen. Oblig. Bonds Prjt. 1/01/1997 7/01/97 @ 102 Ref.
and Rfndg. Series 1987B
6 730,000 Montgomery Cnty. Md. Hsg. Aa* 7.375 No Sinking Fund 770,296
Opportunities Cmmsn. of 7/01/2017 7/01/99 @ 102 Ref.
Montgomery Cnty. Sngle.
Fam. Mtg. Rev. Bonds
Series 1989A
7 70,000 N.Y. Med. Care Hosp. & AAA 8.000 2/15/09 @ 100 S.F. 75,433
Nrsg. Rev. Bonds (Albany 2/15/2028 8/15/98 @ 102 Ref.
Med. Cntr.) Series 1988A
8 800,000 N.Y. State Med. Care Facs. BBB 7.100 8/15/02 @ 100 S.F. 821,600
Finc. Agncy. Secured Hosp. 2/15/2027 2/15/98 @ 102 Ref.
Rev. Bonds Series 1987A
9 800,000 Ohio Cap. Corp. for Hsg. AAA 7.375 1/01/11 @ 100 S.F. 829,496
Multifam. Hsg. Rfndg. Rev. 7/01/2023 1/01/98 @ 103 Ref.
Bonds (Fannie Mae Colltzd.)
Series 1989C
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
<TABLE>
Municipal Securities Trust, Series 46
Portfolio of Investments June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Redemption
Aggregate Coupon Rate/ Feature (2)(4)
Portfolio Principal Name of Issuer and Title Ratings Date(s) of S.F.-Sinking Fund Market
No. Amount of Bonds (1) Maturity(2) Ref.-Refunding Value(3)
<S> <C> <C> <C> <C> <C> <C> <C>
10 $ 231,808 Ill. Hsg. Dev. Auth. Multi- A+ 0.000% 7/01/06 @ 13.676 S.F. $ 11,908
Fam. Hsg. Rev. Bonds, 7/01/2025 None
1983 Series A
------------ ------------
$ 5,191,808 Total Investments (Cost (3) $ 4,964,105) $ 5,313,101
============ ============
</TABLE>
See accompanying footnotes to portfolio and notes to financial statements.
<PAGE>
Municipal Securities Trust, Series 46
Footnotes to Portfolio - June 30, 1996
- -------------------------------------------------------------------------------
(1) All ratings are by Kenny S&P Evaluation Services, a business unit of
J.J. Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies,
Inc., except for those identified by an asterisk (*) which are by
Moody's Investors Service, Inc. A brief description of the ratings
symbols and their meaning is set forth under "Description of Bond
Ratings" in Part B of the Prospectus.
(2) See "The Trust - Portfolio" in Part B of the Prospectus for an
explanation of redemption features. See "Tax Status" in Part B of the
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, 1996, the net unrealized appreciation of all the bonds was
comprised of the following:
Gross Unrealized Appreciation $ 355,605
Gross Unrealized Depreciation (6,609)
---------------
Net Unrealized Appreciation $ 348,996
==============
(4) 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).
The accompanying notes form an integral part of the financial statements.
<PAGE>
Municipal Securities Trust, Series 46
Statement of Net Assets
June 30, 1996
- ------------------------------------------------------------------------------
Investments in Securities,
at Market Value (Cost $4,964,105) $ 5,313,101
--------------
Other Assets
Accrued Interest 74,598
--------------
Total Other Assets 74,598
--------------
Other Liabilities
Accrued Expenses 680
Advance from Trustee 9,767
--------------
Total Other Liabilities 10,447
--------------
Excess of Other Assets over Other Liabilities 64,151
--------------
Net Assets (6,596 Units of Fractional Undivided
Interest Outstanding, $815.23 per Unit) $ 5,377,252
==============
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
Municipal Securities Trust, Series 46
Statement of Operations
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended June 30,
1996 1995 1994
<S> <C> <C> <C>
Investment Income
Interest $ 469,902 $ 584,142 $ 607,103
----------- ----------- -----------
Expenses
Trustee's Fees 7,545 8,171 8,136
Evaluator's Fees 3,093 3,093 3,354
Sponsor's Advisory Fee 1,886 1,985 1,991
----------- ----------- -----------
Total Expenses 12,524 13,249 13,481
----------- ----------- -----------
Net Investment Income 457,378 570,893 593,622
----------- ----------- -----------
Realized and Unrealized Gain (Loss)
Realized Gain (Loss) on
Investments (41,930) (4,456) (2,577)
Change in Unrealized Appreciation
(Depreciation) on Investments (78,129) 53,240 (225,149)
----------- ---------- -----------
Net Gain (Loss) on Investments (120,059) 48,784 (227,726)
----------- ---------- -----------
Net Increase in Net Assets
Resulting from Operations $ 337,319 $ 619,677 $ 365,896
=========== ========== ============
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
Municipal Securities Trust, Series 46
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For the Years Ended June 30,
1996 1995 1994
<S> <C> <C> <C>
Operations
Net Investment Income $ 457,378 $ 570,893 $ 593,622
Realized Gain (Loss)
on Investments (41,930) (4,456) (2,577)
Change in Unrealized Appreciation
(Depreciation) on Investments (78,129) 53,240 (225,149)
----------- ------------ -----------
Net Increase in Net
Assets Resulting
From Operations 337,319 619,677 365,896
----------- ------------ -----------
Distributions to Certificateholders
Investment Income 477,409 568,324 590,694
Principal 1,524,848 - -
Redemptions
Interest 21,528 3,612 5,223
Principal 943,853 142,788 249,777
----------- ------------ -----------
Total Distributions
and Redemptions 2,967,638 714,724 845,694
----------- ------------ -----------
Total Increase (Decrease) (2,630,319) (95,047) (479,798)
Net Assets
Beginning of Year 8,007,571 8,102,618 8,582,416
----------- ------------ -----------
End of Year (Including
Undistributed Net Investment
Income of $86,366, $127,925,
$128,968, Respectively) $ 5,377,252 $ 8,007,571 $ 8,102,618
============ ============ ===========
</TABLE>
The accompanying notes form an integral part of the financial statements.
<PAGE>
Municipal Securities Trust, Series 46
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- -------------------------------------------------------------------------------
1. Organization
Municipal Securities Trust, Series 46 (the "Trust") was organized on
September 7, 1989 by Bear Stearns, & Co. Inc. and Gruntal & Co.,
Incorporated under the laws of he State of New York by a Trust
Indenture and Agreement, and is registered under the Investment
Company Act of 1940. The Trust was formed to preserve capital and to
provide interest income.
Effective September 2, 1995, United States Trust Company of New York
was merged into The Chase Manhattan Bank (the "Trustee").
Accordingly, Chase is the successor trustee of the Trust.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies
consistently followed by the Trust in preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles ("GAAP"). The preparation of financial
statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual amounts could differ
from those estimates.
Interest Income
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.
Security Valuation
Investments are carried at market value which is determined by Kenny
S&P Evaluation Services, a business unit of J.J. Kenny Company, Inc.,
a subsidiary of The McGraw-Hill Companies, Inc. The market value of
the portfolio is based upon the bid prices for the bonds at the end
of the year, which approximates the fair value of the securities at
that date, 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 differences between cost (including
accumulated accretion of original issue discount on zero-coupon
bonds) and market value is reflected as unrealized appreciation
(depreciation) of investments. Securities transactions are recorded
on the trade date. Realized gains (losses) from securities
transactions are determined on the basis of average cost of the
securities sold or redeemed.
3. Income Taxes
No provision for federal income taxes has been made in the
accompanying financial statements because the Trust intends to
continue to qualify for the tax treatment applicable to Grantor Trust
under the Internal Revenue Code. Under existing law, if the Trust so
qualifies, it will not be subject to federal income tax on net income
and capital gains that are distributed to unitholders.
<PAGE>
2
Municipal Securities Trust, Series 46
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- -------------------------------------------------------------------------------
4. Trust Administration
The Trustee has custody of assets 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 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. For the years ended June 30, 1996, 1995 and 1994,
892, 296, and 241 units were redeemed, respectively.
The Trust pays an annual fee for trustee services rendered by the
Trustee that ranges from $.32 to $.96 per $1,000 of outstanding
investment principal. In addition, a minimum fee of $15.00 is paid to
a service bureau for each portfolio valuation. A maximum fee of $.25
per $1,000 of outstanding investment principal is paid to the
Sponsor. For the year ended June 30, 1996, the "Trustee's Fees" are
comprised of Trustee fees of $5,551, and other expenses of $1,994.
The other expenses include professional, printing and miscellaneous
fees.
5. Net Assets
At June 30, 1996, the net assets of the Trust represented the
interest of Certificateholders as follows:
Original Cost to Certificateholders $ 8,299,253
Less Initial Gross Underwriting Commission (406,628)
--------------
7,892,625
Accumulated Cost of Securities
Sold, Called or Matured (2,936,346)
Net Unrealized Appreciation 348,996
Undistributed Net Investment Income 86,366
Distributions in Excess of Proceeds From
Investments (14,389)
--------------
Total $ 5,377,252
==============
<PAGE>
3
Municipal Securities Trust, Series 46
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- -------------------------------------------------------------------------------
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.
Undistributed net investment income includes accumulated accretion of
original issue discount of $7,827.
6. Concentration of Credit Risk
Since the Trust invests a portion of its assets in municipal bonds,
it may be affected by economic and political developments in the
municipalities. Certain debt obligations held by the Trust may be
entitled to the benefit of insurance, standby letters of credit or
other guarantees of banks or other financial institutions.
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 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.
<PAGE>
4
Municipal Securities Trust, Series 46
Notes to Financial Statements
June 30, 1996, 1995 and 1994
- -------------------------------------------------------------------------------
8. Financial Highlights (per unit)*
Selected data for a unit of the Trust outstanding for the year ended
June 30, 1996:
Net Asset Value, Beginning of Period** $ 1,075.13
Interest Income $ 66.92
Expenses (1.78)
----------
Net Investment Income 65.14
Net Gain or Loss on Investments(1) 97.58
----------
1,237.85
Total from Investment Operations
Less Distributions
to Certificateholders
Income 67.99
Principal 217.15
for Redemptions
Interest 3.07
Principal 134.41
Total Distributions 422.62
Net Asset Value, End of Period** $ 815.23
==========
See "Financial and Statistical Information" in Part A of this
Prospectus for amounts of per unit distributions during the years
ended June 30, 1996, 1995 and 1994 based on actual units.
(1) Net gain or loss on investments is a result of changes in outstanding
units since July 1, 1995 and the dates of net gain and loss on
investments.
- --------
* Unless otherwise stated, based upon average units outstanding during
the year of 7,022 ([7,448+6,596]/2).
** Based upon actual units outstanding.
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, 1996
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. (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 business unit of J.J. Kenny Company, Inc., a subsidiary
of The McGraw-Hill Companies, as Evaluator, and, depending on the particular
Trust, either The Bank of New York or The Chase Manhattan Bank, 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
- --------
* 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.
C/M: 11939.0001 1173.4
<PAGE>
fractional undivided interest or pro rata share in the Trust represented by
each unredeemed Unit will increase, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Certificateholders,
which may include the Sponsor or until the termination of the Trust Agreement.
Objectives
The Trust, one of a series of similar but separate unit investment trusts
formed by the Sponsor, offers investors the opportunity to participate in a
portfolio of long-term tax-exempt bonds with a greater diversification than
they might be able to acquire themselves. The objectives of the Trust are to
preserve capital and to provide interest income (including, where applicable,
earned original issue discount) which, in the opinions of bond counsel to the
respective issuers given at the time of original delivery of the Bonds, is,
with certain exceptions, exempt from regular federal income tax under existing
law. Such interest income may, however, be subject to the federal corporate
alternative minimum tax and to state and local taxes. An investor will realize
taxable income upon maturity or early redemption of the market discount bonds
in a Trust portfolio and will realize, where applicable, tax-exempt income to
the extent of the earned portion of interest, including original issue discount
earned on the bonds in a Trust portfolio. Investors should be aware that there
is no assurance the Trust's objectives will be achieved as these objectives are
dependent on the continuing ability of the issuers of the Bonds to meet their
interest and principal payment requirements, on the continuing satisfaction of
the Bonds of the conditions required for the exemption of interest thereon from
regular federal income tax, and on the market value of the Bonds, which can be
affected by fluctuations in interest rates and other factors.
Since disposition of Units prior to final liquidation of the Trust may
result in an investor receiving less than the amount paid for such Units (see
"Comparison of Public Offering Price, Sponsor's Repurchase Price and Redemption
Price"), the purchase of a Unit should be looked upon as a long-term
investment. Neither the Trust nor the Total Reinvestment Plan is designed to be
a complete investment program.
Portfolio
All of the Bonds in the Trust were rated "A" or better by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies ("Standard &
Poor's") or Moody's Investors Service, Inc. ("Moody's") 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 or Moody's, (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
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considered in the Sponsor's determination to direct the Trustee to dispose of
the Bond. See "Portfolio Supervision". For an interpretation of the bond
ratings see "Description of Bond Ratings".
Housing Bonds. Some of the aggregate principal amount of the Bonds may
consist of obligations of state and local housing authorities whose revenues
are primarily derived from mortgage loans to rental housing projects for low to
moderate income families. Since such obligations are usually not general
obligations of a particular state or municipality and are generally payable
primarily or solely from rents and other fees, adverse economic developments
including failure or inability to increase rentals, fluctuations of interest
rates and increasing construction and operating costs may reduce revenues
available to pay existing obligations. See "Description of Portfolio" in Part A
for the amount of rental housing bonds contained therein.
Hospital Revenue Bonds. Some of the aggregate principal amount of the
Bonds may consist of hospital revenue bonds. Ratings of hospital bonds are
often initially based on feasibility studies which contain projections of
occupancy levels, revenues and expenses. Actual experience may vary
considerably from such projections. A hospital's gross receipts and net income
will be affected by future events and conditions including, among other things,
demand for hospital services and the ability of the hospital to provide them,
physicians' confidence in hospital management capability, economic developments
in the service area, competition, actions by insurers and governmental agencies
and the increased cost and possible unavailability of malpractice insurance.
Additionally, a major portion of hospital revenue typically is derived from
third-party payors and government programs such as Medicare and Medicaid. Both
private third-party payors and government programs have undertaken cost
containment measures designed to limit payments. Furthermore, government
programs are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings and government funding restrictions, all of
which may materially decrease the rate of program payments for health care
facilities. There can be no assurance that payments under governmental programs
will remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients participating in such
programs. In addition, there can be no assurance that a particular hospital or
other health care facility will continue to meet the requirements for
participation in such programs.
The 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. 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
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Part A for the amount of bonds issued to finance nuclear generating facilities
contained therein.
Mortgage Subsidy Bonds. Certain Bonds may be "mortgage subsidy bonds"
which are obligations of which all or a significant portion of the proceeds are
to be used directly or indirectly for mortgages on owner-occupied residences.
Section 103A of the Internal Revenue Code of 1954, as amended, provided as a
general rule that interest on "mortgage subsidy bonds" will not be exempt from
Federal income tax. An exception is provided for certain "qualified mortgage
bonds." Qualified mortgage bonds are bonds that are used to finance
owner-occupied residences and that meet numerous statutory requirements. These
requirements include certain residency, ownership, purchase price and target
area requirements, ceiling amounts for state and local issuers, arbitrage
restrictions and (for bonds issued after December 31, 1984) certain information
reporting, certification, public hearing and policy statement requirements. In
the opinions of bond counsel to the issuing governmental authorities, interest
on all the Bonds in a Trust that might be deemed "mortgage subsidy bonds" will
be exempt from Federal income tax when issued. See "Description of Portfolio"
in Part A for the amount of mortgage subsidy Bonds contained therein.
Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue bonds."
Under the Internal Revenue Code of 1986, as amended (the "Code") (and under
similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to
residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions, and certain
information reporting certification, and public hearing requirements. There can
be no assurance that additional federal legislation will not be introduced or
that existing legislation will not be further amended, revised, or enacted
after delivery of these Bonds or that certain required future actions will be
taken by the issuing governmental authorities, which action or failure to act
could cause interest on the Bonds to be subject to federal income tax. If any
portion of the Bonds proceeds are not committed for the purpose of the issue,
Bonds in such amount could be subject to earlier mandatory redemption at par,
including issues of Zero Coupon Bonds (see "Discount and Zero Coupon Bonds").
See "Description of Portfolio" in Part A for the amount of mortgage revenue
bonds contained therein.
Private Activity Bonds. The portfolio of the Trust may contain other Bonds
which are "private activity bonds" (often called Industrial Revenue Bonds
("IRBs") if issued prior to 1987) which would be primarily of two types: (1)
Bonds for a publicly owned facility which a private entity may have a right to
use or manage to some degree, such as an airport, seaport facility or water
system and (2) facilities deemed owned or beneficially owned by a private
entity but which were financed with tax-exempt bonds of a public issuer, such
as a manufacturing facility or a pollution control facility. In the case of the
first type, bonds are generally payable from a designated source of revenues
derived from the facility and may further receive the benefit of the legal or
moral obligation of one or more political subdivisions or taxing jurisdictions.
In most cases of project financing of the first type, receipts or revenues of
the Issuer are derived from the project or the operator or from the unexpended
proceeds of the bonds. Such revenues include user fees, service charges, rental
and lease payments, and mortgage and other loan payments.
The second type of issue will generally finance projects which are owned
by or for the benefit of, and are operated by, corporate entities. Ordinarily,
such private activity bonds are not general obligations of governmental
entities and are not backed by the taxing power of such entities,
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and are solely dependent upon the creditworthiness of the corporate user of the
project or corporate guarantor.
The private activity bonds in the Trust have generally been issued under
bond resolutions, agreements or trust indentures pursuant to which the revenues
and receipts payable under the issuer's arrangements with the users or the
corporate operator of a particular project have been assigned and pledged to
the holders of the private activity bonds. In certain cases a mortgage on the
underlying project has been assigned to the holders of the private activity
bonds or a trustee as additional security. In addition, private activity bonds
are frequently directly guaranteed by the corporate operator of the project or
by another affiliated company. See "Description of Portfolio" in Part A for the
amount of private activity bonds contained therein.
Litigation. Litigation challenging the validity under state constitutions
of present systems of financing public education has been initiated in a number
of states. Decisions in some states have been reached holding such school
financing in violation of state constitutions. In addition, legislation to
effect changes in public school financing has been introduced in a number of
states. The Sponsor is unable to predict the outcome of the pending litigation
and legislation in this area and what effect, if any, resulting changes in the
sources of funds, including proceeds from property taxes applied to the support
of public schools, may have on the school bonds in a Trust.
Legal Proceedings Involving the Trusts. The Sponsor has 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
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assistance for reorganizing their debts; notwithstanding, the Sponsors are
unable to predict to what extent financially troubled municipalities may seek
court assistance in reorganizing their debts in the future and, therefore, what
effect, if any, the applicable federal bankruptcy law provisions will have on
the Trusts.
The Trust may also include "moral obligation" bonds. Under statutes
applicable to such bonds, if an issuer is unable to meet its obligations, the
repayment of such bonds becomes a moral commitment but not a legal obligation
of the state or municipality in question. See "Description of Portfolio" and
"The Trust" in Part A of this Prospectus for the amount of moral obligations
bonds contained in the Trust.
Certain of the Bonds in the Trust are subject to redemption prior to their
stated maturity dates pursuant to sinking fund or call provisions. A sinking
fund is a reserve fund appropriated specifically toward the retirement of a
debt. A callable bond is one which is subject to redemption or refunding prior
to maturity at the option of the issuer. A refunding is a method by which a
bond is redeemed at or before maturity from the proceeds of a new issue of
bonds. In general, call provisions are more likely to be exercised when the
offering side evaluation of a bond is at a premium over par than when it is at
a discount from par. A listing of the sinking fund and call provisions, if any,
with respect to each of the Bonds is contained under "Portfolio" in Part A of
this Prospectus. Certificateholders will realize a gain or loss on the early
redemption of such Bonds, depending upon whether the price of such Bonds is at
a discount from or at a premium over par at the time 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.
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Some of the Bonds in the Trust may have been purchased at a "market"
discount from par value at maturity. This is because the coupon interest rates
on the discount bonds at the time they were purchased and deposited in the
Trust were lower than the current market interest rates for newly issued bonds
of comparable rating and type. At the time of issuance the discount bonds were
for the most part issued at then current coupon interest rates. The current
returns (coupon interest income as a percentage of market price) of discount
bonds will be lower than the current returns of comparably rated bonds of
similar type newly issued at current interest rates because discount bonds tend
to increase in market value as they approach maturity and the full principal
amount becomes payable. A discount bond held to maturity will have a larger
portion of its total return in the form of capital gain and less in the form of
tax-exempt interest income than a comparable bond newly issued at current
market rates. Gain on the disposition of a Bond purchased at a market discount
generally will be treated as ordinary income, rather than capital gain, to the
extent of accrued market discount. Discount bonds with a longer term to
maturity tend to have a higher current return and a lower current market value
than otherwise comparable bonds with a shorter term of maturity. If interest
rates rise, the value of discount bonds will decrease; and if interest rates
decline, the value of discount bonds will increase. The discount does not
necessarily indicate a lack of market confidence in the issuer.
PUBLIC OFFERING
Offering Price
The secondary market Public Offering Price per Unit is computed by adding
to the aggregate bid price of the Bonds in each Trust divided by the number of
Units outstanding, an amount based on the applicable sales charge times such
aggregate bid price of the Bonds in each Trust.
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
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expected date of settlement for the Units is added to the Public Offering
Price. Accrued interest is the accumulated and unpaid interest on a Bond from
the last day on which interest was paid and is initially accounted for daily by
the Trust at the daily rate set forth under "Summary of Essential Information"
in Part A. The secondary market Public Offering Price can vary on a daily basis
from the amount stated in Part A in accordance with fluctuations in the prices
of the Bonds. The price to be paid by each investor will be computed on the
basis of an evaluation made on the day the Units are purchased. The aggregate
bid price evaluation of the Bonds is determined in the manner set forth under
"Trustee Redemption".
The Evaluator may obtain current prices for the Bonds from investment
dealers or brokers (including the Sponsor) that customarily deal in tax-exempt
obligations or from any other reporting service or source of information which
the Evaluator deems appropriate.
Accrued Interest
An amount of accrued interest which represents accumulated unpaid or
uncollected interest on a Bond from the last day on which interest was paid
thereon will be added to the Public Offering Price and paid by the
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.
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
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Securities Trust Discount Series, subject to the Sponsor's right to change the
dealers' concession from time to time. Such Units may then be distributed to
the public by the dealers at the Public Offering Price then in effect. In
addition, for transactions of 1,000,000 Units or more, the Sponsor intends to
negotiate the applicable sales charge and such charge will be disclosed to any
such purchaser. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. The Sponsor reserves the right to change
the discounts from time to time.
Sponsor's Profits
The Sponsor will receive a gross commission on all Units sold in the
secondary market equal to the applicable sales charge on each transaction. (See
"Offering Price".) In addition, in maintaining a market for the Units (see
"Sponsor Repurchase"), the Sponsor will realize profits or sustain losses in
the amount of any difference between the price at which it buys Units and the
price at which it resells such Units.
Participants in the "Total Reinvestment Plan" can designate a broker as
the recipient of a dealer concession. See "Total Reinvestment Plan".
Comparison of Public Offering Price, Sponsor's Repurchase Price
and Redemption Price
The secondary market Public Offering Price of Units will be determined on
the basis of the current bid prices of the Bonds in the Trust, plus the
applicable sales charge. The value at which Units may be resold in the
secondary market or redeemed will be determined on the basis of the current bid
prices of such Bonds without any sales charge. On the Evaluation Date, the
Public Offering Price per Unit (based on the bid prices of the Bonds in the
Trust plus the sales charge) exceeded the Repurchase and Redemption Price per
Unit (based upon the bid prices of the Bonds in the Trust without the sales
charge) by the amount shown under "Summary of Essential Information" in Part A
of this Prospectus. For this reason, among others (including fluctuations in
the market prices of Bonds and the fact that the Public Offering Price includes
the applicable sales charge), the amount realized by a Certificateholder upon
any redemption or repurchase of Units may be less than the price paid for such
Units.
ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN
The rate of return on an investment in Units of each Trust is measured in
terms of "Estimated Current Return" and "Estimated Long Term Return".
Estimated Long Term Return is calculated by: (1) computing the yield to
maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in a Trust's portfolio in accordance with accepted bond practices,
which practices take into account not only the interest payable on the Bond but
also the amortization of premiums or accretion of discounts, if any; (2)
calculating the average of the yields for the Bonds in each Trust's portfolio
by weighing each Bond's yield by the market value of the Bond and by the amount
of time remaining to the date to which the Bond is priced (thus creating an
average yield for the portfolio of each Trust); and (3) reducing the average
yield for the portfolio of each Trust in order to reflect estimated fees and
expenses of that Trust and the maximum sales charge paid by Certificateholders.
The resulting Estimated Long Term Return represents a measure of the return to
Certificateholders earned over the estimated life of each Trust. The Estimated
Long Term Return as of the day prior to the
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Evaluation Date is stated for each Trust under "Summary of Essential
Information" in Part A.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price per Unit. In contrast to
the Estimated Long Term Return, the Estimated Current Return does not take into
account the amortization of premium or accretion of discount, if any, on the
Bonds in the portfolios of each Trust. Moreover, because interest rates on
Bonds purchased at a premium are generally higher than current interest rates
on newly issued bonds of a similar type with comparable rating, the Estimated
Current Return per Unit may be affected adversely if such Bonds are redeemed
prior to their maturity. On the day prior to the Evaluation Date, the Estimated
Net Annual Interest Income per Unit divided by the Public Offering Price
resulted in the Estimated Current Return stated for each Trust under "Summary
of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of each Trust will vary
with changes in the fees and expenses of the Trustee and the Evaluator
applicable to each Trust and with the redemption, maturity, sale or other
disposition of the Bonds in each Trust. The Public Offering Price will vary
with changes in the bid prices of the Bonds. Therefore, there is no assurance
that the present Estimated Current Return or Estimated Long Term Return will be
realized in the future.
A schedule of cash flow projections is available from the Sponsors upon
request.
RIGHTS OF CERTIFICATEHOLDERS
Certificates
Ownership of Units of the Trust is evidenced by registered Certificates
executed by the Trustee and the Sponsor. Certificates may be issued in
denominations of one or more Units and will bear appropriate notations on their
faces indicating which plan of distribution has been selected by the
Certificateholder. Certificates are transferable by presentation and surrender
to the Trustee properly endorsed and/or accompanied by a written instrument or
instruments of transfer. Although no such charge is presently made or
contemplated, the Trustee may require a Certificateholder to pay $2.00 for each
Certificate reissued or transferred and any governmental charge that may be
imposed in connection with each such transfer or interchange. Mutilated,
destroyed, stolen or lost Certificates will be replaced upon delivery of
satisfactory indemnity and payment of expenses incurred.
Interest and Principal Distributions
Interest received by the Trust is credited by the Trustee to an Interest
Account and a deduction is made to reimburse the Trustee without interest for
any amounts previously advanced. Proceeds representing principal received from
the maturity, redemption, sale or other disposition of the Bonds are credited
to a Principal Account.
Distributions to each Certificateholder from the Interest Account are
computed as of the close of business on each Record Date for the following
Payment Date and consist of an amount substantially equal to one-twelfth,
one-half or all of each Certificateholder's pro rata share of the Estimated Net
Annual Interest Income in the Interest Account, depending upon the applicable
plan of distribution. Distributions from the Principal Account will be computed
as of each semi-annual Record Date, and will be made to the Certificateholders
on or shortly after the next semi-annual Payment Date. Proceeds
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representing principal received from the disposition of any of the Bonds
between a Record Date and a Payment Date which are not used for redemptions of
Units will be held in the Principal Account and not distributed until the
second succeeding semi-annual Payment Date. No distributions will be made to
Certificateholders electing to participate in the Total Reinvestment Plan,
except as provided thereunder. Persons who purchase Units between a Record Date
and a Payment Date will receive their first distribution on the second Payment
Date after such purchase.
Because interest payments are not received by the Trust at a constant rate
throughout the year, interest distributions may be more or less than the amount
credited to the Interest Account as of a given Record Date. For the purpose of
minimizing fluctuations in the distributions from the Interest Account, the
Trustee will advance sufficient funds, without interest, as may be necessary to
provide interest distributions of approximately equal amounts. All funds in
respect of the Bonds received and held by the Trustee prior to distribution to
Certificateholders may be of benefit to the Trustee and do not bear interest to
Certificateholders.
As of the first day of each month, the Trustee will deduct from the
Interest Account, and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (as
determined on the basis set forth under "Trust Expenses and Charges"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trust. Amounts so withdrawn shall not be
considered a part of the Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In
addition, the Trustee may withdraw from the Interest and Principal Accounts
such amounts as may be necessary to cover redemptions of Units by the Trustee.
The estimated monthly, semi-annual or annual interest distribution per
Unit will be in the amount shown under Summary of Essential Information and
will change and may be reduced as bonds mature or are redeemed, exchanged or
sold, or as expenses of the Trust fluctuate. No distribution need be made from
the Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per Unit.
Distribution Elections
Interest is distributed monthly, semi-annually or annually, depending upon
the distribution plan applicable to the Unit purchased. Record Dates are the
first day of each month for monthly distributions, the first day of each June
and December for semi-annual distributions and the first day of each December
for annual distributions. Payment Dates will be the fifteenth day of each month
following the respective Record Dates. Certificateholders purchasing Units in
the secondary market will initially receive distributions in accordance with
the election of the prior owner. Every October each Certificateholder may
change his distribution election by notifying the Trustee in writing of such
change between October 1 and November 1 of each year. (Certificateholders
deciding to change their election should contact the Trustee by calling the
number listed on the back cover hereof for information regarding the procedures
that must be followed in connection with this written notification of the
change of election.) Failure to notify the Trustee on or before November 1 of
each year will result in a continuation of the plan for the following 12
months.
Records
The Trustee shall furnish Certificateholders in connection with each
distribution a statement of the amount of interest, if any, and the
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amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit. Within a reasonable time after the end
of each calendar year (normally prior to January 31 of the succeeding year),
the Trustee will furnish to each person who at any time during the calendar
year was a Certificateholder of record, a statement showing (a) as to the
Interest Account: interest received (including any earned original issue
discount and amounts representing interest received upon any disposition of
Bonds), amounts paid for redemptions of Units, if any, deductions for
applicable taxes and fees and expenses of the Trust, and the balance remaining
after such distributions and deductions, expressed both as a total dollar
amount and as a dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; (b) as to the
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (including any unearned original issue discount but
excluding any portion representing accrued interest), deductions for payments
of applicable taxes and fees and expenses of the Trust, amounts paid for
redemptions of Units, if any, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (c) a list of the Bonds held and the
number of Units outstanding on the last business day of such calendar year; (d)
the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (e) amounts actually distributed to
Certificateholders during such calendar year from the Interest and Principal
Accounts, separately stated, expressed both as total dollar amounts and as
dollar amounts representing the pro rata share of each Unit outstanding on the
last business day of such calendar year.
The Trustee shall keep available for inspection by Certificate-holders at
all reasonable times during usual business hours, books of record and account
of its transactions as Trustee, including records of the names and addresses of
Certificateholders, Certificates issued or held, a current list of Bonds in the
portfolio and a copy of the Trust Agreement.
TAX STATUS
All Bonds acquired by the Trust were accompanied by copies of opinions of
bond counsel to the issuing governmental authorities given at the time of
original delivery of the Bonds to the effect that the interest thereon is
exempt from regular federal income tax, but such interest may be subject to the
federal corporate alternative minimum tax and to state and local taxes. Neither
the Sponsor nor the Trustee nor their respective counsel have made any review
of the proceedings relating to the issuance of the Bonds or the bases for such
opinions, and express no opinion as to these matters, and neither the Trustee
nor the Sponsor nor their respective counsel have made an independent
examination or verification that the federal income tax status of the Bonds has
not been altered since the time of the original delivery of those opinions.
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
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<PAGE>
"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
Certificateholder 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.
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A Certificateholder may also realize taxable income or loss when a
Unit is sold or redeemed. The amount received is allocated among all the
Bonds in the Trust in the same manner as when the Trust disposes of Bonds
and the Certificateholder may exclude accrued interest and the earned
portion of any original issue discount (but not amounts attributable to
market discount). The return of a Certificateholder's tax cost is
otherwise a tax-free return of capital.
A portion of social security benefits is includable in gross income
for taxpayers whose "modified adjusted gross income" combined with a
portion of their benefits exceeds a base amount. The base amount is
$25,000 for an individual, $32,000 for a married couple filing a joint
return and zero for married persons filing separate returns. Interest on
tax-exempt bonds is to be added to adjusted gross income for purposes of
computing the amount of benefits that are includable in gross income and
determining whether an individual's income exceeds the base amount above
which a portion of the benefits would be subject to tax.
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). In addition, in certain cases, Subchapter
S corporations with accumulated earnings and profits from Subchapter C
years will be subject to a minimum tax on excess "passive investment
income" which includes tax-exempt interest.
The Trust is not subject to the New York State Franchise Tax on
Business Corporations or the New York City General Corporation Tax. For a
Certificateholder who is a New York resident, however, a pro rata portion
of all or part of the income of the Trust will be treated as the income of
the Certificateholder under the income tax laws of the State and City of
New York. Similar treatment may apply in other states.
The exemption of interest on municipal obligations for federal income tax
purposes does not necessarily result in exemption under the income tax laws of
any state or political subdivision. In general, municipal bond interest exempt
from federal income tax is taxable income to residents of the State or City of
New York under the tax laws of those jurisdictions unless the bonds are issued
by the State of New York or one of its political subdivisions or by the
Commonwealth of Puerto Rico or one of its political subdivisions. For
corporations doing business in New York State, interest earned on state and
municipal obligations that are exempt from federal income tax, including
obligations of New York State, its political subdivisions and
instrumentalities, must be included in calculating New York State and New York
City entire net income for purposes of computing New York State and New York
City franchise (income) tax. The laws of the several states and local taxing
authorities vary with respect to the taxation of such obligations and each
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"
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<PAGE>
exemption, the "small issue" exemption will not be available or will be lost
if, at any time during the three-year period beginning on the later of the date
the facilities are placed in service or the date of issue, all outstanding
tax-exempt IRBs, together with a proportionate share of any present issue, of
an owner or principal user (or related person) of the facilities exceeds
$40,000,000. In the case of IRBs issued under the $10,000,000 "small issue"
exemption, interest on such IRBs will become taxable if the face amount of the
IRBs plus certain capital expenditures exceeds $10,000,000.
In addition, a Bond can lose its tax-exempt status as a result of other
subsequent but unforeseeable events such as prohibited "arbitrage" activities
by the issuer of the Bond or the failure of the Bond to continue to satisfy the
conditions required for the exemption of interest thereon from regular federal
income tax. No investigation has been made as to the current or future owners
or users of the facilities financed by the Bonds, the amount of such persons'
outstanding tax-exempt IRBs, or the facilities themselves, and no assurance can
be given that future events will not affect the tax-exempt status of the Bonds.
Investors should consult their tax advisors for advice with respect to the
effect of these provisions on their particular tax situation.
Interest on indebtedness incurred or continued to purchase or carry the
Units is not deductible for federal income tax purposes. In addition, under
rules used by the Internal Revenue Service for determining when borrowed funds
are considered used for the purpose of purchasing or carrying particular
assets, the purchase of Units may be considered to have been made with borrowed
funds even though the borrowed funds are not directly traceable to the purchase
of Units. Also, in the case of certain financial institutions that acquire
Units, in general no deduction is allowed for interest expense allocable to
such Units.
From time to time proposals have been introduced before Congress to
restrict or eliminate the federal income tax exemption for interest on debt
obligations similar to the Bonds in the Trust, and it can be expected that
similar proposals may be introduced in the future. In 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
Certificateholders, elect to purchase any Units tendered to the Trustee for
redemption. (See "Trustee Redemption".) For example, if in order to meet
redemptions of Units the Trustee must dispose of Bonds, and if such disposition
cannot be made by the redemption date (seven calendar days after tender), the
Sponsor may elect to purchase such Units. Such purchase shall be made by
payment to the Certificateholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.
Trustee Redemption
Units also may be tendered to the Trustee for redemption at its corporate
trust office as set forth in Part A of this Prospectus, upon proper delivery of
Certificates representing such Units and payment of any relevant tax. At the
present time there are no specific taxes related to the redemption of Units. No
redemption fee will be charged by the Sponsor or the Trustee. Units redeemed by
the Trustee will be cancelled.
Certificates representing Units to be redeemed must be delivered to the
Trustee and must be properly endorsed or accompanied by proper instruments of
transfer with signature guaranteed (or by providing satisfactory indemnity, as
in the case of lost, stolen or mutilated Certificates). Thus, redemptions of
Units cannot be effected until Certificates representing such Units have been
delivered by the person seeking redemption. (See "Certificates".)
Certificateholders must sign exactly as
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<PAGE>
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 three calendar days following a tender for redemption, or, if such
third 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
Certificateholder 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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<PAGE>
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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<PAGE>
withdrawal from the Plan with respect to the remaining Plan Units owned by such
participant.
Unless a Certificateholder notifies the Trustee in writing to the
contrary, each semi-annual and annual Certificateholder who has acquired Plan
Units will be deemed to have elected the semi-annual and annual plan of
distribution, respectively, and to participate in the Plan with respect to
distributions made in connection with such Plan Units. (Should the Available
Series from which Plan Units are purchased for the account of an annual
Certificateholder fail to have an annual distribution plan, such
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 underlying bonds may be
expected to be less than the aggregate offering prices. In the event that a
market is not maintained for Plan Units, a participant desiring to dispose of
his Plan Units may be able to do so only by tendering such Plan Units to the
Trustee for redemption at the Redemption Price of full units in the Available
Series corresponding to such Plan Units, which is based upon the aggregate bid
price of the underlying bonds as described in the "Municipal Securities Trust"
Prospectus for the Available Series in question. If a participant wishes to
dispose of his Plan Units, he should inquire of the Sponsor as to current
market prices prior to making a tender for redemption to the Trustee.
Any participant may tender his Plan Units for redemption to the Available
Series trustee. Participants may redeem Plan Units by making a written request
to the Trustee, at the address listed in the "Summary of Essential Information"
in Part A on the Redemption Form supplied by the Trustee. The redemption price
per Plan Unit will be determined as set forth in the "Municipal Securities
Trust" Prospectus of the Available Series from which such Plan Unit was
purchased following receipt of the request and adjusted to reflect the fact
that it relates to a Plan Unit. There is no charge for the redemption of Plan
Units.
The Trust Agreement requires that the Trustee notify the Sponsor of any
tender of Plan Units for redemption. So long as the Sponsor is maintaining a
bid in the secondary market, the Sponsor will purchase any Plan Units tendered
to the Trustee for redemption by making payment therefor to the
Certificateholder in an amount not less than the redemption price for such Plan
Units on the date of tender not later than the day on which such Plan Units
would otherwise have been redeemed by the Trustee.
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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 Certificateholders.
The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of the holders of
Certificates evidencing 66-2/3% of the Units then outstanding, for the purpose
of modifying the rights of 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
The Sponsor, Reich & Tang Distributors L.P. ("Reich & Tang") (successor to
the Unit Investment Trust Division of Bear, Stearns & Co. Inc.), a Delaware
limited partnership, is engaged in the brokerage business and is a member of
the National Association of Securities Dealers, Inc. Reich & Tang is also a
registered investment adviser. 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, having its
principal place of business at 399 Boylston Street, Boston, MA 02116, 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 successor sponsor for numerous series of unit investment
trusts, including: 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),
Mortgage Securities Trust, Series 1 (and Subsequent Series), Insured Municipal
Securities Trust, Series 1 (and Subsequent Series), 5th Discount Series (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.
On August 30, 1996, the merger of New England Mutual Life Insurance
Company and Metropolitan Life Insurance Company ("MetLife") became effective,
with MetLife being the continuing company. RTAM LP remains a wholly-owned
subsidiary of NEIC LP, a New York Stock Exchange listed company,
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<PAGE>
but its sole general partner is now an indirect subsidiary of MetLife. MetLife
also indirectly owns a majority of the outstanding limited partnership interest
of NEIC LP.
MetLife is a mutual life insurance company with assets of $142.2 billion
at March 31, 1996. It is the second largest life insurance company in the
United States in terms of total assets. MetLife provides a wide range of
insurance and investment products and services to individuals and groups and is
the leader among United States life insurance companies in terms of total life
insurance in force, which exceeded $1.2 trillion at March 31, 1996 for MetLife
and its insurance affiliates. MetLife and its affiliates provide insurance or
other financial services to approximately 36 million people worldwide.
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
many mutual fund group. 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 with its principal executive
office located at 270 Park Avenue, New York, New York 10017 (800)
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<PAGE>
428-8890 and its unit investment trust office at 770 Broadway, New York, New
York 10003. Effective on or after November 15, 1996 the address of the
Trustee's unit investment trust office will be 4 New York Plaza, New York, New
York 10004. The Trustee is subject to supervision by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
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. The Bank of New York is subject to supervision and
examination by the Superintendent of Banks of the State of New York and the
Board of Governors of the Federal Reserve System, and its deposits are insured
by the Federal Deposit Insurance Corporation to the extent permitted by law.
The Trustee must be a banking corporation organized under the laws of the
United States or any state which is authorized under such laws to exercise
corporate trust powers and must have at all times an aggregate capital, surplus
and undivided profits of not less than $5,000,000. The duties of the Trustee
are primarily ministerial in nature. The Trustee did not participate in the
selection of Securities for the portfolio of the Trust.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Bonds or Certificates in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by the
Evaluator. In addition, the Trustee shall not be liable for any taxes or other
governmental charges imposed upon or in respect of the Bonds or the Trust which
it may be required to pay under current or future law of the United States or
any other taxing authority having jurisdiction. The Trustee shall not be liable
for depreciation or loss incurred by reason of the sale by the Trustee of any
of the Bonds pursuant to the Trust Agreement.
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, see "Rights of Certificateholders".
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsor, and mailing a copy of a notice of resignation to all
Certificateholders. In such an event the Sponsor is obligated to appoint a
successor Trustee as soon as possible. In addition, if the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Notice of such removal and appointment shall
be mailed to each Certificateholder by the Sponsor. If upon resignation of the
Trustee no successor has been appointed and has accepted the appointment within
thirty days after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The resignation or
removal of the Trustee becomes effective only when the successor Trustee
accepts its appointment as such or when a court of competent jurisdiction
appoints a successor Trustee. Upon execution of a written acceptance of such
appointment by such successor Trustee, all the rights, powers, duties and
obligations of the original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
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The Evaluator
The Evaluator is Kenny S&P Evaluation Services, a business unit of J.J.
Kenny Company, Inc., a subsidiary of The McGraw-Hill Companies, with main
offices located at 65 Broadway, New York, New York 10006. The Evaluator is a
registered investment advisor and also provides financial information services.
The Trustee, the Sponsor and Certificateholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, the Sponsor, or Certificateholders for errors in judgment, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
The Evaluator may resign or may be removed by the Sponsor and the Trustee,
and the Sponsor and the Trustee are to use their best efforts to appoint a
satisfactory successor. Such resignation or removal shall become effective upon
the acceptance of appointment by the successor Evaluator. If upon resignation
of the Evaluator no successor has accepted appointment within thirty days after
notice of resignation, the Evaluator may apply to a court of competent
jurisdiction for the appointment of a successor.
TRUST EXPENSES AND CHARGES
At no cost to the Trust, the Sponsor has borne 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
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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
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 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
market value of the Securities in the Trust portfolio or on the aggregate offer
price of the Bonds in the other Trust Portfolios; and, after the initial
offering period has been 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); and after the initial offering period has been completed, based on
the aggregate bid price of the Bonds in the Exchange Trust portfolio if its
initial 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 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% 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), 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
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secondary market and therefore there is no assurance that the Exchange
Privilege will be available to a Certificateholder at any specific time in
the future. At the time of the Certificateholder's election to participate
in the Exchange Privilege, there also must be Units of the Exchange Trust
available for sale, either under the initial primary distribution or in
the Sponsor's secondary market.
(2) Exchanges will be effected in whole units only. Any excess
proceeds from the Units surrendered for exchange will be remitted and the
selling Certificateholder will not be permitted to advance any new funds
in order to complete an exchange. Units of the Mortgage Securities Trust
may only be acquired in blocks of 1,000 Units. Units of the Equity
Securities Trust may only be acquired in blocks of 100 Units.
(3) The Sponsor reserves the right to suspend, modify or terminate
the Exchange Privilege. The Sponsor will provide unitholders of the Trust
with 60 days' prior written notice of any termination or material
amendment to the Exchange Privilege, provided that, no notice need be
given if (i) the only material effect of an amendment is to reduce or
eliminate the sales charge payable at the time of the exchange, to add one
or more series of the Trust eligible for the Exchange Privilege or to
delete a series which has been terminated from eligibility for the
Exchange Privilege, (ii) there is a suspension of the redemption of units
of an Exchange Trust under Section 22(e) of the Investment Company Act of
1940, or (iii) an Exchange Trust temporarily delays or ceases the sale of
its units because it is unable to invest amounts effectively in accordance
with its investment objectives, policies and restrictions. During the 60
day notice period prior to the termination or material amendment of the
Exchange Privilege described above, the Sponsor will continue to maintain
a secondary market in the units of all Exchange Trusts that could be
acquired by the affected unitholders. Unitholders may, during this 60 day
period, exercise the Exchange Privilege in accordance with its terms then
in effect. In the event the Exchange Privilege is not available to a
Certificateholder at the time he wishes to exercise it, the
Certificateholder will immediately be notified and no action will be taken
with respect to his Units without further instructions from the
Certificateholder.
To exercise the Exchange Privilege, a Certificateholder should notify the
Sponsor of his desire to exercise his Exchange Privilege. If Units of a
designated, outstanding series of an Exchange Trust are at the time available
for sale and such Units may lawfully be sold in the state in which the
Certificateholder is a resident, the Certificateholder will be provided with a
current prospectus or prospectuses relating to each Exchange Trust in which he
indicates an interest. He may then select the Trust or Trusts into which he
desires to invest the proceeds from his sale of Units. The exchange transaction
will operate in a manner essentially identical to a secondary market
transaction except that units may be purchased at a reduced sales charge.
Example: Assume that after the initial public offering has been completed,
a Certificateholder has five units of a Trust with a current value of $700 per
unit which he has held for more than 5 months and the 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
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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 Municipal Securities
Trust, Insured Municipal Securities Trust, Mortgage Securities Trust, New York
Municipal Trust or Equity Securities Trust (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 market value of the underlying
securities in the Trust portfolio or 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. 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, 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 and
a sales charge as set forth below. If the participant elects to purchase units
of the Equity Securities Trust under the Conversion Offer, the purchase price
of the units will be based, at all times, on the market value of the underlying
securities in the Trust portfolio plus a sales charge.
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.
-29-
C/M: 11939.0001 1173.4
<PAGE>
(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 2% per unit (or per 1,000 units for the
Mortgage Securities Trust or per 100 Units for the Equity Securities
Trust).
To exercise the Conversion Offer, a unit owner of a Redemption Trust
should notify his retail broker of his desire to redeem his Redemption Trust
Units and use the proceeds from the redemption to purchase Units of one or more
of the Conversion Trusts. If Units of a designated, outstanding series of a
Conversion Trust are at that time available for sale and if such Units may
lawfully be sold in the state in which the unit owner is a resident, the unit
owner will be provided with a current prospectus or prospectuses relating to
each Conversion Trust in which he indicates an interest. He then may select the
Trust or Trusts into which he decides to invest the proceeds from the sale of
his Units. The transaction will be handled entirely through the unit owner's
retail broker. The retail broker must tender the units to the trustee of the
Redemption Trust for redemption and then apply the proceeds to the redemption
toward the purchase of units of a Conversion Trust at a price based on the
aggregate offer or bid side evaluation per Unit of the Conversion Trust,
depending on which price is applicable, plus accrued interest and the
applicable sales charge. The certificates must be surrendered to the broker at
the time the redemption order is placed and the broker must specify to the
Sponsor that the purchase of Conversion Trust Units is being made pursuant to
the Conversion Offer. The unit owner's broker will be entitled to retain $5 of
the applicable sales charge.
Example: Assume a unit owner has five units of a Redemption Trust which
has held for more than 5 months with a current redemption price of $675 per
unit based on the aggregate bid price of the underlying bonds and the unit
owner wishes to participate in the Conversion Offer and exchange the proceeds
for units of a secondary market Conversion Trust with a current price of $750
per Unit. The proceeds from the unit owner's redemption of units will aggregate
$3,375. Since only whole units of a Redemption Trust may be purchased under the
Conversion Offer, the unit owner will be able to acquire four units of the
Conversion Trust (or 4,000 units of the Mortgage Securities Trust or 400 Units
for the Equity Securities Trust) for a total cost of $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
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
-30-
C/M: 11939.0001 1173.4
<PAGE>
such State Trusts are located. The Insured Municipal Securities Trust combines
the advantages of providing interest income free from regular federal income
tax under existing law with the added safety of irrevocable insurance. Insured
Navigator Series further combines the advantages of providing interest income
free from regular federal income tax and state and local taxes when held by
residents of the state where issuers of bonds in such state trusts are located
with the added safety of irrevocable insurance. Mortgage Securities Trust
offers an investment vehicle for investors who are interested in obtaining
safety of capital and a high level of current distribution of interest income
through investment in a fixed portfolio of collateralized mortgage obligations.
Equity Securities Trust offers investors an opportunity to achieve capital
appreciation together with a high level of current income.
Tax Consequences Of The Exchange Privilege And The Conversion Offer
A surrender of units pursuant to the Exchange Privilege or the Conversion
Offer normally will constitute a "taxable event" to the Certificateholder 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 The Chase Manhattan Bank. On the initial date of deposit, Booth &
Baron acted as counsel for The Bank of New York.
Independent Accountants
The financial statements of the Trusts for the year ended June 30, 1996
included in Part A of this Prospectus have been examined by Price Waterhouse
LLP, independent accountants. The financial statements of Price Waterhouse LLP
have been so included in reliance on their report given upon the authority of
said firm as experts in accounting and auditing. KPMG Peat Marwick LLP has
consented to the incorporation by reference of their report on the statements
of operations and changes in net assets for the Trusts included in Part A of
this Prospectus for the periods ended June 30, 1994 and June 30, 1995,
respectively.
DESCRIPTION OF BOND RATINGS*
Standard & Poor's Ratings Services
A brief description of the applicable Standard & Poor's 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
- --------
* As described by the rating agencies.
-31-
C/M: 11939.0001 1173.4
<PAGE>
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.
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:
-32-
C/M: 11939.0001 1173.4
<PAGE>
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Those bonds in the A and Baa group which Moody's believes possess the
strongest investment attributes are designated by the symbol A 1 and Baa 1.
Other A bonds comprise the balance of the group. These rankings (1) designate
the bonds which offer the maximum in security within their quality group, (2)
designate bonds which can be bought for possible upgrading in quality and (3)
additionally afford the investor an opportunity to gauge more precisely the
relative attractiveness of offerings in the market place.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Con-Bonds for which the security depends upon the completion of some act
or the fulfillment of some condition are rated conditionally. These are debt
obligations secured by (a) earnings of projects under construction, (b)
earnings of projects unseasoned in operating experience, (c) rentals which
begin when facilities are completed, or (d) payments to which some other
limiting condition attaches. Rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
-33-
C/M: 11939.0001 1173.4
<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
C/M: 11939.0001 1173.4
<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 Chase Manhattan Bank, Trustee, to pay all semi-annual or
annual distributions of interest and principal (if any) with respect to such
units to The Chase Manhattan Bank, 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 Chase Manhattan Bank
Attn: UIT Reinvestment Unit A
770 Broadway
New York, New York 10003
C/M: 11939.0001 1173.4
<PAGE>
<TABLE>
<CAPTION>
INDEX MUNICIPAL SECURITIES TRUST
(Unit Investment Trust)
Prospectus
Title Page
Dated: October 31, 1996
<S> <C> <C>
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 The Chase Manhattan Bank
Rights of Certificateholders.......................................10 770 Broadway
Tax Status.........................................................12 New York, New York 10003
Liquidity..........................................................16 1-800-882-9898
Total Reinvestment Plan............................................18
Trust Administration...............................................22 or
Trust Expenses and Charges.........................................26
Exchange Privilege and Conversion Offer............................27 The Bank of New York
Other Matters......................................................31 101 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 65 Broadway
and Exchange Commission, Washington, D.C., New York, New York 10006
under the Securities Act of 1933, and to
which reference is made.
</TABLE>
* * *
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.
C/M: 11939.0001 1173.4
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 Exhibits 99.3.1 and 99.3.1.1).
Consents of the Evaluator including Confirmation of Ratings (included in
Exhibit 99.5.1).
The following exhibits:
99.1.1 -- Form of 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 Amendment No. 1 to Form S-6
Registration Statements Nos. 33-29313 and 33-30144 of Municipal
Securities Trust, Series 45 and Series 46, respectively, on July
20, 1989 and November 17, 1989, respectively, and incorporated
herein by reference).
99.1.1.1 -- Trust Indenture and Agreement for Municipal Securities
Trust, Series 45 and 73rd Discount Series (and Subsequent Series)
dated June 16, 1989 (filed as Exhibit 1.1.2 to Post-Effective
Amendment No. 6 to Form S-6 Registration Statement No. 33-33606 of
Municipal Securities Trust, Multi-State Series 39 on April 26, 1996
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. (filed as Exhibit
99.1.3.4 to Post-Effective Amendment No. 10 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 31, 1995 and incorporated
herein by reference).
99.1.3.6 -- Certificate of Incorporation of Gruntal & Co.,
Incorporated, as amended dated May 17, 1988 (filed as Exhibit 1.3.6
to Post-Effective Amendment No. 7 to Form S-6 Registration
Statement No. 33-28384 of Insured Municipal Securities Trust Series
20 on April 25, 1996 and incorporated herein by reference).
99.1.3.7 -- By-Laws of Gruntal & Co., Incorporated, as amended dated September
23, 1988 (filed as Exhibit 1.3.7 to Post-Effective Amendment No. 7
to Form S-6 Registration Statement No. 33-28384 of Insured
Municipal Securities Trust, Series 20 on April 25, 1996 and
incorporated herein by reference).
II-1
991.1
<PAGE>
*99.1.4 -- Form of Agreement Among Underwriters dated June 16, 1989 (filed as
Exhibit 1.4 to Post-Effective Amendment No. 7 to Registration
Statement Nos. 33-29313 and 33-30144 of Municipal Securities
Trust, Series 45 and Series 46 on October 25, 1996 and
incorporated herein by reference).
*99.2.1 -- Form of Certificate dated June 16, 1989 (filed as Exhibit 2.1 to
Post-Effective Amendment No. 7 to Registration Statement Nos.
33-29313 and 33-30144 of Municipal Securities Trust, Series 45 and
Series 46 on October 25, 1996 and incorporated herein by
reference).
99.3.1 -- Opinion of Berger Steingut Tarnoff & Stern (formerly Berger &
Steingut) 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. 33-29313 and 33-30144 of Municipal Securities
Trust, Series 45 and Series 46, respectively, on July 20, 1989 and
November 17, 1989, respectively, and incorporated herein by
reference).
*99.3.1.1 -- Opinion of Battle Fowler LLP 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 3.1.1 to Post-Effective Amendment No.
7 to Form S-6 Registration Statements Nos. 33-29313 and 33-30144
of Municipal Securities Trust, Series 45 and Series 46,
respectively, on October 25, 1996 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 (filed
as Exhibit 6.0 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-62627 of Equity Securities Trust, Series 6,
Signature Series, Gabelli Entertainment and Media Trust on
November 16, 1995 and incorporated herein by reference).
99.6.1 -- Power of Attorney of Gruntal & Co., Incorporated, by its officers
and a majority of its Directors dated May 18, 1989 (filed as
Exhibit 6.1 to Post-Effective Amendment No. 7 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal
Securities Trust, Series 20 on April 25, 1996 and incorporated
herein by reference).
99.7.0 -- Form of Agreement Among Co-Sponsors dated June 9, 1989 (filed as
Exhibit 7.0 to Post-Effective Amendment No. 7 to Form S-6
Registration Statement No. 33-28384 of Insured Municipal
Securities Trust, Series 20 on April 25, 1996 and incorporated
herein by reference).
*27 -- Financial Data Schedule(s) (for EDGAR filing only).
- -------------------
* Being filed by this Amendment.
II-2
991.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrants, Municipal Securities Trust, Series 45 and Series 46 certify
that they have met all of the requirements for effectiveness of this
Post-Effective Amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933. The registrants have duly caused this
Post-Effective Amendment to the Registration Statement 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, 1996.
MUNICIPAL SECURITIES TRUST,
SERIES 45 AND SERIES 46
(Registrants)
GRUNTAL & CO., INCORPORATED
(Depositor)
By: /s/Lee Fensterstock
-------------------
Lee Fensterstock
(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 Gruntal & Co., Incorporated, the Depositor, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
ROBERT P. RITTEREISER Chief Executive Officer )
and Chairman of the Board of )
Directors ) October 25, 1996
LEE FENSTERSTOCK President, Chief Operating )
Officer, Chief Financial )
Officer and Director ) By: /s/Lee Fensterstock
JOANNE T. MARREN Executive Vice President, ) -------------------
General Counsel, Secretary ) Lee Fensterstock
and Director ) Attorney-in-Fact*
</TABLE>
- ---------------
* An executed copy of the power of attorney was filed as Exhibit 6.1 to
Post-Effective Amendment No. 7 to Registration Statement No. 33-28384 on
April 25, 1996.
II-3
991.1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrants, Municipal Securities Trust, Series 45 and Series 46 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, 1996.
MUNICIPAL SECURITIES TRUST,
SERIES 45 AND SERIES 46
(Registrants)
REICH & TANG DISTRIBUTORS L.P.
(Depositor)
By: Reich & Tang Asset Management, Inc.,
as general partner
By: /s/PETER J. DEMARCO
-------------------
Peter J. DeMarco
(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>
<CAPTION>
Name Title Date
<S> <C> <C>
PETER S. VOSS President, Chief Executive Officer )
and Director )
G. NEAL RYLAND Executive Vice President, Treasurer ) October 25, 1996
and Chief Financial Officer )
EDWARD N. WADSWORTH Clerk )
RICHARD E. SMITH III Director ) By: /s/PETER J. DEMARCO
-------------------
STEVEN W. DUFF Director ) Peter J. DeMarco
BERNADETTE N. FINN Vice President ) Attorney-in-Fact*
LORRAINE C. HYLSLER Secretary )
RICHARD DE SANCTIS Vice President and Treasurer )
</TABLE>
- ---------------
* Executed copies of Powers of Attorney were filed as Exhibit 6.0 to
Amendment No. 1 to Form S-6 Registration Statement No. 33-62627 on
November 16, 1995.
II-4
991.1
<PAGE>
Consent of Independent Accountants
We hereby consent to the use in the Prospectus Part A constituting part of
this Post-Effective Amendment to the registration statement on Form S-6 of our
reports dated October 16, 1996, relating to the financial statements and
financial highlights for the year ended June 30, 1996 of the Municipal
Securities Trust, Series 45 and Municipal Securities Trust, Series 46, which
appear in such Prospectus. We also consent to the reference to us under the
heading "Independent Accountants" in the Prospectus Part B.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
October 25, 1996
<PAGE>
Independent Auditors' Consent
Re: Municipal Securities Trust, Series 45
Municipal Securities Trust, Series 46
We consent to the incorporation by reference of our report dated
September 15, 1995, with exception to note 7, as to which the date is September
28, 1995, on the statements of operations and changes in net assets for the
subject trusts for each of the years in the two year period ended June 30,
1995, and to the reference to our firm under the heading "Independent
Accountants" in the prospectus.
KPMG Peat Marwick LLP
New York, New York
October 16, 1996
<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> 0000851949
<NAME> MST, SERIES 45
<SERIES>
<NUMBER> 1
<NAME> MST, SERIES 45
<S> <C>
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 2009943
<INVESTMENTS-AT-VALUE> 2217623
<RECEIVABLES> 49564
<ASSETS-OTHER> 19579
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2286766
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 374
<TOTAL-LIABILITIES> 374
<SENIOR-EQUITY> 2286392
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 66382
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2387
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 207680
<NET-ASSETS> 2286392
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 216812
<OTHER-INCOME> 0
<EXPENSES-NET> 7504
<NET-INVESTMENT-INCOME> 209308
<REALIZED-GAINS-CURRENT> (219018)
<APPREC-INCREASE-CURRENT> 195708
<NET-CHANGE-FROM-OPS> 185998
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 258309
<DISTRIBUTIONS-OF-GAINS> 2064381
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 559
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2136692)
<ACCUMULATED-NII-PRIOR> 115393
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (55010)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 647.50
<PER-SHARE-NII> 31.94
<PER-SHARE-GAIN-APPREC> 39.63
<PER-SHARE-DIVIDEND> 39.43
<PER-SHARE-DISTRIBUTIONS> 315.10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 364.54
<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> 0000853595
<NAME> MST, SERIES 46
<SERIES>
<NUMBER> 1
<NAME> MST, SERIES 46
<S> <C>
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> Year
<INVESTMENTS-AT-COST> 4964105
<INVESTMENTS-AT-VALUE> 5313101
<RECEIVABLES> 74598
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5387699
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10447
<TOTAL-LIABILITIES> 10447
<SENIOR-EQUITY> 5377252
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 86366
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (14389)
<ACCUM-APPREC-OR-DEPREC> 348996
<NET-ASSETS> 5377252
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 469902
<OTHER-INCOME> 0
<EXPENSES-NET> 12524
<NET-INVESTMENT-INCOME> 457378
<REALIZED-GAINS-CURRENT> (41930)
<APPREC-INCREASE-CURRENT> (78129)
<NET-CHANGE-FROM-OPS> 337319
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 498937
<DISTRIBUTIONS-OF-GAINS> 2468701
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 892
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2630319)
<ACCUMULATED-NII-PRIOR> 127925
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (9238)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1075.13
<PER-SHARE-NII> 65.14
<PER-SHARE-GAIN-APPREC> 97.58
<PER-SHARE-DIVIDEND> 71.06
<PER-SHARE-DISTRIBUTIONS> 351.56
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 815.23
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Dated As Of June 15, 1989
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Gruntal & Co. Incorporated
14 Wall Street
New York, New York 10005
MASTER AGREEMENT AMONG UNDERWRITERS
Bear, Stearns & Co. Inc.; Gruntal & Co. Incorporated
Unit Investment Trusts
Gentlemen:
We understand that you, Bear, Stearns & Co. Inc. ("Bear
Stearns") and Gruntal & Co. Incorporated ("Gruntal"), are
entering into this agreement (the "Agreement") in counterparts
with us and other firms who may be underwriters for issues of any
Unit Investment Trust for which Bear Stearns and Gruntal will act
as depositors (the "Depositors"). This Agreement shall apply to
any offering on or after June 15, 1989 of units of fractional
undivided interests (the "Units") in any Unit Investment Trust in
which you are the Depositors and in which we elect to act as an
underwriter (the underwriters with respect to each such trust,
including you, being hereinafter called the "Underwriters") after
receipt of an oral or written notice ("Notice") from you stating
the name, size and proposed date of offering of such trust and
that our participation as an underwriter in the proposed offering
shall be subject to the provisions of this Agreement. We
understand that you are not obligated to give Notice to us and
invite us to participate in the underwriting of any such trust.
We understand that each trust is to be created by a Trust
Agreement substantially in the form delivered to us (the "Trust
Agreement") under which you will act as Depositors, United States
Trust Company of New York will act as Trustee and Standard &
Poor's Corporation will act as Evaluator. The Units shall be
represented by the certificates of ownership (the "Certificates")
to be received in exchange for the underlying debt obligations
("Debt Obligations") to be acquired hereunder upon the deposit of
such Debt Obligations in the trust. Each trust which we agree to
underwrite subject to this Agreement is hereinafter referred to
as the "Trust".
We hereby appoint you Managing Underwriters and
authorize you, in our behalf, to take all such action as you in
your discretion may deem necessary or advisable in order to carry
out the provisions of this Agreement and of the Trust Agreement
C/M 11939.0001 406222.1
1
<PAGE>
and the sale and distribution of the Units. We agree to execute
such powers of attorney evidencing the powers granted to you
under this Agreement upon your request in such form and at such
times as you deem appropriate and advisable.
We hereby agree to sell Units only in those states
where the Units have been qualified for sale as indicated in the
Blue Sky memorandum provided to us by you. We further agree to
provide you with such additional information that you may request
in connection with the registration of Units in any state.
It is understood that you assume no responsibility with
respect to the right of any Underwriter or other person to offer
or to sell Units in any jurisdiction, notwithstanding any
information which you may furnish as to the jurisdictions under
the securities laws of which it is believed, based upon a Blue
Sky survey performed by your counsel, the Units may be sold.
If any Underwriter proposes to offer Units outside the
United States, or in a state in which the offering has not been
registered, its territories or its possessions, such Underwriter
will take, at its own expense, such action, if any, as may be
necessary to comply with the laws of each jurisdiction, domestic
or foreign, in which it proposes to offer Units.
1. Registration Of Trust And Units. We understand
that (i) a registration statement will be filed with the
Securities and Exchange Commission (the "Commission") under the
Investment Company Act of 1940 (the "1940 Act") for the purpose
of registering the Trust under the 1940 Act; (ii) a registration
statement will be filed with the Commission under the Securities
Act of 1933, as amended (the "1933 Act"), to register the Units
under the 1933 Act (The 1933 Act Registration Statement as
amended at the time it becomes effective is hereafter referred to
as the "Registration Statement" and the related Prospectus
contained therein is hereafter referred to as the "Prospectus."
The date as of which such Registration Statement becomes
effective pursuant to the 1933 Act by Commission order is
hereafter referred to as the "Effective Date"); and (iii) the
Trust will take all necessary action under the Blue Sky or
securities laws of the states where it is proposed that the Units
may be offered and sold to qualify the Units for public offer and
sale as indicated in the preliminary Blue Sky memorandum that is
provided to us. We understand that neither you nor any of the
other Underwriters make any representations or warranties or
assume any responsibility with respect to the foregoing except
pursuant to the indemnity set forth in Section 11 hereof and
except to the extent required by express provisions of the 1933
Act, the 1940 Act or other applicable law.
C/M 11939.0001 406222.1
2
<PAGE>
We hereby authorize you to take all such action on our
behalf related to the above as you or your counsel shall deem
necessary and advisable and to file and approve on our behalf any
and all amendments or supplements to said Registration Statement
and related filings as you or your counsel deem necessary and
advisable. We confirm that we agree to furnish you upon your
request with such information as will be required to insure that
such Registration Statement, the Prospectus and all other related
documents are correct in so far as they relate to us.
We hereby authorize you, acting as our representative
and on our behalf, to take all such action as in your discretion
may be necessary or advisable in order to carry out the
provisions of this Agreement. We agree that all action taken by
Bear Stearns hereunder, including the execution of this Agreement
with the Underwriters, shall be deemed to have been taken on
behalf of both Bear Stearns and Gruntal, as Depositors and
Managing Underwriters and to have been authorized by Gruntal.
2. Unit Commitment. We authorize you, acting as our
agent and on our behalf, to receive in exchange for the
Underlying Debt Obligations, the Units representing a fractional
undivided interest in the Trust up to the number of Units which
we have advised you by telegraph, telegram or other form of fac-
simile transmission substantially in the form of Schedule B
hereto that we agree to purchase (the "Acceptance"). We
understand that the Acceptance must be received by you by the
close of business on the day preceding the Date of Deposit (as
defined in the Indenture). We further agree that the
Underwriters to be subject to this Agreement for the Trust shall
be those who have given Acceptances and are named in the
Prospectus. We hereby authorize you to cause the Registration
Statement as first filed with the Securities and Exchange Com-
mission in accordance with Paragraph 1 hereof (the "Registration
Statement") to be amended to include in the Prospectus the amount
of Units of the Trust which we have agreed to underwrite (our
"Unit Commitment"). We agree that notwithstanding our failure to
send the Acceptance to you in the manner set forth in this
paragraph, our acceptance of delivery of the Units subsequent to
the Date of Deposit shall be deemed to be an Acceptance in
accordance with the provisions hereof.
The number of Units of each Trust to be underwritten
hereunder is unlimited and it is understood that you may increase
the number of Units specified in the Registration Statement, or
you may decrease the number of Units, if you shall deem it
advisable and practicable to do so. You may permit any Under-
writer to increase its Unit Commitment (by written agreement) or
additional underwriters to become parties to this Agreement (the
addition of new parties hereto to be evidenced in each case by an
agreement substantially in the form of this Agreement to be
C/M 11939.0001 406222.1
3
<PAGE>
entered into between you and any such new party). You may
decrease our Unit Commitment by any amount, including to zero, by
notifying us by telephone, such notice to be confirmed in
writing. Apart from the authorized decrease provided for in this
Paragraph, the number of Units to be underwritten by each of us
shall not be changed from the amount set forth in our Acceptance
without our written consent.
3. Accumulation Account. We authorize you as our
agent and attorney in fact and as Depositors to purchase and
accumulate Debt Obligations for deposit in the Trust. Debt
Obligations so purchased shall be deposited in an "Accumulation
Account" and shall hereafter be referred to as the "Underlying
Debt Obligations." The Underlying Debt Obligations shall consist
of obligations of the type and quality described in the
Prospectus. We agree that you shall have no liability with
respect to the issue, form, validity, legality, enforceability,
value of, tax status or title to the Underlying Debt Obligations.
We authorize you to execute on our behalf an appropriate
"investment letter" with respect to any Underlying Debt
Obligations purchased on a private placement basis.
You are authorized to sell, exchange or otherwise
dispose of Underlying Debt Obligations from the Accumulation
Account, including those Underlying Debt Obligations purchased
for the Accumulation Account but not deposited in the Trust, for
such consideration as you shall deem appropriate and in the best
interests of the Accumulation Account. All profits and losses
from such transactions shall be included in the final computation
of profit and losses of the Accumulation Account. All profits
and losses from the purchase, accumulation and deposit of the
Underlying Debt Obligations in the Trust, adjusted to reflect
expenses and carrying charges, shall be recorded in the
Accumulation Account and shall be shared among the Underwriters
in accord with their respective elections set forth in Schedule
B. In addition, you are authorized to deduct from the
Accumulation Account the costs of any advertising that you
purchase on behalf of you and all the Underwriters in accordance
with Section 15 hereof. As Depositors, you shall be entitled to
all remaining profit and, correspondingly, shall be obligated for
all losses of the Accumulation Account not expressly allocated
among the Underwriters in accord with such elections.
We authorize you to purchase Underlying Debt
Obligations for the Accumulation Account from any seller,
including you and any of the Underwriters. Such purchases may be
at the current market price then in effect (as reasonably
determined by you); provided, however, if any Underwriter is a
member of a syndicate underwriting an original issue and is
prohibited by price restrictions of the syndicate from reselling
Debt Obligations at less than a certain price, then the purchase
C/M 11939.0001 406222.1
4
<PAGE>
price of such Underlying Debt Obligations to the Accumulation
Account shall be the lowest price permitted by such restrictions.
We shall furnish to you in writing any information
regarding Underlying Debt Obligations sold by us to the
Accumulation Account which you deem necessary for inclusion in
the Prospectus, including the date on which such Debt Obligations
were acquired by us, the price of acquisition, and, if the sale
is made by us as a member of another underwriting syndicate, our
takedown retained as a member of such syndicate. If Underlying
Debt Obligations purchased from us were initially acquired by us
from the manager of a syndicate of which we are or were a member
or manager, we agree that there shall be furnished to you in
writing such estimates as to our participation in the profit to
the syndicate resulting from such sale as may be practicable
under the circumstances.
If at any time prior to the deposit of Underlying Debt
Obligations in the Trust you shall determine that it is
impracticable or inadvisable to complete the acquisition of
Underlying Debt Obligations because of unfavorable market
conditions or for other reasons adversely affecting such
acquisition or the offering of Units hereunder, we authorize you
to sell for the Accumulation Account the Underlying Debt
Obligations acquired prior to such determination in such manner,
at such times and at such prices as you shall deem advisable. As
soon as practicable after all of the Underlying Debt Obligations
have been sold pursuant to this paragraph, this Agreement shall
be terminated and our account hereunder settled in the manner
stated in Section 13.
4. Financing Of Accumulation Account. From time to
time during the term of this Agreement, we agree to transmit to
you upon your request a certified or official bank check to your
order in an amount not in excess of 10% of our respective
Underwriting Percentage shares in the Accumulation Account to
serve as margin in carrying the Underlying Debt Obligations and
the Units received upon deposit of the Underlying Debt
Obligations in the Trust and for the other purposes of this
Agreement.
We authorize you to advance your own funds or to
arrange loans (including repurchase agreements) for the
Accumulation Account for the purposes of carrying the Underlying
Debt Obligations and the Units and of carrying out the other
purposes of this Agreement and in connection therewith to hold or
pledge as security all or any of the Underlying Debt Obligations
and the Units. You may deliver any note or other instrument in
connection with such transactions as you may deem necessary or
advisable. Any lender or purchaser is hereby authorized to
accept your instructions with respect thereto.
C/M 11939.0001 406222.1
5
<PAGE>
5. Trust Deposit And Certificates. We authorize you,
acting as our agent and in our behalf, to deposit the Underlying
Debt Obligations in the Trust at such time after the acquisition
of the Underlying Debt Obligations as you deem appropriate and to
receive in exchange therefor for our account Certificates
representing our Unit Commitment in the Trust. We authorize you
to retain custody of the Certificates until delivered to us or
sold for our account in accordance with this Agreement.
You may deliver to us from time to time against
payment, for carrying purposes only, any Certificates
representing Units which you are holding for sale for our account
but which have not been sold and paid for. We will redeliver to
you against payment any such Certificates so delivered to us for
carrying purposes at such times as you may demand.
6. Public Offering Of Trust Units. A public offering
of the Units is to be made as soon after the Effective Date as in
your judgment is advisable. You shall notify us promptly by
telephone and confirm by mail or telegram when the public
offering is to commence (the "Public Offering Date"). The public
offering is to be made by means of the Prospectus and at the
public offering price, terms and conditions set forth in the
Prospectus. We authorize you to change the terms and conditions
of the public offering as you deem advisable.
We also confirm that we will take reasonable steps to
provide the preliminary prospectus prior to the Effective Date
and the Prospectus thereafter to any person making written
request to us. We understand that our requests for sufficient
copies of such prospectuses will be processed by your printer.
7. Purchase Of Units By The Underwriters. The sales
charge contemplated in this transaction is an amount per Unit as
described in the Prospectus. The amount set forth in Schedule B
hereto will constitute the per Unit sales takedown
("Underwriters' Takedown"). The amount of the Underwriters'
Takedown set forth in Schedule B is subject to change upon
written notice to each Underwriter by you. The sales charge less
the Underwriters' Takedown will accrue to you as Managing
Underwriters.
Upon notification from you that the public offering is
to commence, we hereby agree with you and the several other
Underwriters to purchase Certificates representing our Unit
Commitment on the Public Offering Date. The price to be paid for
each such Unit shall be the public offering price on such Date
plus the per Unit accrual of interest to the settlement date
(estimated at five business days thereafter) less the
C/M 11939.0001 406222.1
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<PAGE>
Underwriters' Takedown. Such payment is to be made by delivering
to you within five business days of the Public Offering Date, a
certified or bank cashier's check in New York City Clearing House
funds payable to the order of Bear, Stearns & Co. Inc. At the
Public Offering Date, we will become the owner of such Units and
be entitled to the benefits and subject to the risks inherent
therein.
We will offer to the public in conformity with the
terms of the offering and at the then effective public offering
price described in the Prospectus any of our Units not reserved
by you for sale to retail accounts or to dealers or sold by us
directly to dealers as herein authorized. When requested by us
from time to time, you shall furnish to us the then effective
public offering price.
We may sell to dealers part or all of the Units
delivered to us for direct sale at the then effective public
offering price, plus accrued interest, less the dealer's
concession set forth in the Prospectus, subject to your right to
change such concession from time to time. Any Units purchased by
us after the Public Offering Date as a result of an increase in
our Unit Commitment pursuant to Section 12 or which are delivered
to us for direct sale pursuant to Section 8 will be purchased by
us at the then effective public offering price plus accrued
interest, less the Underwriters' Takedown, with no additional
accumulation profit participation.
8. Direct Sales Authorization. We authorize you to
sell for our account to retail accounts or to dealers (including
one or more of the Underwriters) such of our Units as you shall
determine. Sales of Units to retail accounts or to dealers shall
be made for the account of any Underwriter in such manner as you
may deem appropriate. Our liability to take and pay for Units
under this Agreement shall be reduced to reflect any such sales
of Units for our account. You shall advise us promptly on the
Effective Date as to our Units reserved by you for sale to retail
accounts or to dealers pursuant to this paragraph. You may
advise us at any time thereafter that any Units so reserved for
sale for our account and not sold are no longer so reserved and
we shall then be responsible to take and pay for such Units as if
they had not been reserved.
You shall deliver to us for direct sale any Units held
by you for our account and not reserved for sale to retail
accounts or to dealers, and, with your consent, any Units held
for our account which are so reserved from time to time in
accordance with our instructions, and, upon payment to you by us
of the then effective public offering price of such Units, plus
accrued interest, adjusted for the Underwriters' Takedown.
C/M 11939.0001 406222.1
7
<PAGE>
We authorize you to sell for our account to other
Underwriters such of our Units held by you for our account as you
shall determine which are not reserved by you for sale to retail
accounts or to dealers or, in accord with the preceding
paragraph, delivered to us for direct sale provided that (i) such
sales shall be made only to Underwriters to whom you shall have
delivered all of their Units not reserved for sale to retail
accounts or to dealers and (ii) such sales shall be made for the
account of each Underwriter for whose account you hold unreserved
Units in such manner as you may deem appropriate.
You may, and any of the other Underwriters may with
your consent, make purchases and sales of Units from or to any
other Underwriter at the then effective public offering price,
plus accrued interest, adjusted for the Underwriters' Takedown.
You shall advise us as soon as practicable of any sales
made by you for our account pursuant to this Section 8.
From time to time prior to the termination of this
Agreement, on your request, we will advise you of Units remaining
unsold which were delivered to us, and, on your request, we shall
deliver to you any such Units remaining unsold for sale for our
account to retail accounts or, adjusted for the Underwriters'
Takedown, to other Underwriters or dealers, all in the manner and
subject to the limitations stated above.
We understand that any Units sold for our account to
retail accounts will be subject to a discount per Unit on
purchases of 100 Units or more, as described in the Prospectus.
9. Unit Repurchases. We understand and agree that
you may, but are not obligated to, repurchase any Units which are
tendered or offered to you by the holders thereof. If, during
the term of this Agreement, you purchase or contract to purchase
for the account of any Underwriter in the open market or
otherwise Certificates for any Units which were retained by, or
released to, us for direct sale, or any Certificates which may
have been issued in exchange therefor or if any such Units shall
be tendered to the Trustee for redemption, and which Units were
therefore not effectively placed for investment by us, we
authorize you to charge our account with an amount equal to the
underwriter's concession with respect thereto, or to require us
to repurchase such Units at a price equal to the total cost of
such purchase, including accrued interest and commissions, if
any, and transfer taxes on the redelivery.
If, for any reason, during the term of this Agreement
we do not sell all of our Unit Commitment, you agree to buy from
us any unsold Units we have in our account at the then current
bid price plus accrued interest.
C/M 11939.0001 406222.1
8
<PAGE>
We agree that, until the termination of this Agreement,
we will make no purchase of the Units other than (i) purchases
provided for in this Agreement, (ii) purchases approved by you
and (iii) purchases as a broker in executing unsolicited orders.
10. Legal Opinion And Accountants' Letter. After
notification of the Effective Date has been released by the
Securities and Exchange Commission, there shall be furnished to
us copies of all legal opinions and accountants' reports which
are delivered to you as Depositors, the Trustee and the Trust.
11. Indemnification. We agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the 1933 Act
from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or the Prospectus as amended and supplemented or caused
by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent
that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon or in
conformity with information furnished to you by us for use in the
preparation of the Registration Statement or the Prospectus or
any amendment or supplement thereto. This indemnity agreement
will be in addition to any liability which we may otherwise have.
In case any action shall be brought against any
Underwriter or any person controlling such Underwriter based upon
the Registration Statement or the Prospectus or any amendment or
supplement thereto in respect of which indemnity may be sought
against us, if such Underwriter shall promptly notify us in writ-
ing, we shall assume the defense thereof, including the
employment of counsel and the payment of all expenses. Any
Underwriter or any such controlling person shall have the right
to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or such controlling
person unless the employment of such counsel has been
specifically authorized by us. We shall not be liable for any
settlement of any such action effected without our consent but if
settled with our consent or if there will be a final judgment for
the plaintiff in any such action, we agree to indemnify and hold
harmless any Underwriter and any such controlling person from and
against any loss or liability by reason of such settlement or
judgment.
The indemnity agreement contained in this Section 11
shall remain operative and in full force and effect regardless of
C/M 11939.0001 406222.1
9
<PAGE>
(i) the termination of this Agreement and (ii) any investigation
made by or on behalf of any Underwriter or any person controlling
any Underwriter.
12. Substitution. Until the termination of this
Agreement, we authorize you to arrange for the substitution
hereunder of other persons, who may include you and us, for all
or any part of the commitment of any non-defaulting Underwriter
with the consent of such Underwriter, and of any defaulting
Underwriter without his consent, upon such terms and conditions
as you may deem advisable, provided that such substitution shall
not in any way affect the liability of any defaulting Underwriter
to the other Underwriters for damages from such default, nor
relieve any other Underwriter of any obligation under this
Agreement. The expenses chargeable to the account of any
defaulting Underwriter and not paid for by it or by the person
substituted for such Underwriter and any additional losses or
expenses arising from such default shall be considered to be
expenses of the underwriting account and shall be charged against
the accounts of the non-defaulting Underwriters in proportion to
their respective Underwriting Percentages.
In the event that either of you shall for any reason
cease to act as a Depositor of the Trust prior to the termination
of the Trust Agreement, we hereby authorize the Trustee to select
a substitute Depositor as provided in the Trust Agreement.
13. Termination. This Agreement shall terminate 30
days after the Public Offering Date unless sooner terminated by
you, provided that you may extend this Agreement for not more
than four successive periods of 30 days each upon notice to us
and each of the other Underwriters.
Upon termination of this Agreement, or prior thereto,
at your discretion, (i) you shall deliver to us Certificates for
any Units received by you for our account and not theretofore
delivered to us and Certificates for any Units held by you for
our account and (ii) after (a) crediting to our account advances
made by us to you pursuant to Section 4 and payments made to you
on account of Units sold by you for our account or delivered by
you to us, (b) charging or crediting to our account our share of
any profit or loss in the Accumulation Account and (c) making
such other credits or charges to our account as are authorized by
the provisions of this Agreement, our account hereunder shall be
settled and any amount due and owing thereunder shall be paid by
you or by us, as the case may be. The determination by you as
Depositor and Managing Underwriter of the amount to be paid to or
by us in settlement of our account shall be final and conclusive.
C/M 11939.0001 406222.1
10
<PAGE>
Notwithstanding any settlement on the termination of
this Agreement, we agree to pay our Underwriting Percentage share
of any amount payable on account of any claim, demand or
liability which may be asserted against the Underwriters, or any
of them, based on the claim that the Underwriters constitute an
association, unincorporated business or other separate entity and
our Underwriting Percentage of any expenses incurred by you in
defending against any such claim, demand or liability. We also
agree to pay any stamp taxes which may be assessed and paid after
such settlement on account of any units received or sold
hereunder for our account.
Notwithstanding any termination of this Agreement, no
sale of the Units shall be made by us at any time except in
conformity with the provisions of Section 22(d) of the 1940 Act.
We agree that if, within ninety days from the time the
Registration Statement shall have become effective, either (i)
the net worth of the Trust shall be reduced to less than $100,000
or (ii) the Trust shall have been terminated, then we will
refund, on demand and without deduction, all sales charges to
purchasers of Units from us or any dealer participating in the
distribution of our Units.
14. Underwriting Commitment. We hereby commit on the
terms and conditions of this Agreement to purchase and pay for
the number of Units set forth opposite our name in Schedule B
("Unit Commitment"). Except for the right to decrease our Unit
Commitment granted to you above, and except as provided in
Section 11, our Unit Commitment may be increased or decreased
only by mutual written agreement between us and you at any time
prior to the date the Underlying Debt Obligations are deposited
in the Trust.
Our percentage interest ("Underwriting Percentage") and
the percentage interest of each Underwriter in the total Units to
be offered shall be expressed by the following ratio:
Unit Commitment = Underwriting Percentage
Total Units
The final determination of the respective Underwriting
Percentages of all Underwriters shall be made by you as of the
date the Underlying Debt Obligations are deposited in the Trust.
You are authorized to increase or decrease the number
of Units (and, correspondingly, the amount of Underlying Debt
Obligations) to be offered if you shall deem it advisable and
practicable to do so. In the event you shall elect to decrease
the number of Units hereunder, you shall have the right to
decrease our Unit Commitment proportionately by notifying us of
C/M 11939.0001 406222.1
11
<PAGE>
such election by telephone and promptly confirm by telegraph or
writing.
You are authorized to amend Schedule A to add
additional Underwriters as you deem advisable in which case such
Underwriters shall be deemed to have been parties to this
Agreement as of the date of its confirmation by you. Any
deletion of Underwriters from Schedule A by you to reflect their
withdrawal from this underwriting participation shall be subject
to reservation of all our rights with respect to them conferred
in us by this Agreement.
15. Advertising. Public advertisement of the offering
may (but need not) be made by you on your behalf or on behalf of
the Underwriters on such date as you shall determine. Such
public advertisement may bear the name of the Sponsors alone or
the names of any or all Underwriters unless any Underwriter shall
notify you that it does not wish its name to so appear. Any
advertisement any Underwriter makes, or which any Underwriter
permits any dealer which purchases Units from it to make, will be
at the responsibility of such Underwriter and at such
Underwriter's or dealer's expense, provided, however, that all
such public advertisement shall conform to the rules and
regulations of the Securities and Exchange Commission relating
thereto and of the National Association of Securities Dealers,
Inc. (the "NASD").
16. Miscellaneous. Default by any one or more of the
other Underwriters in respect of their several obligations under
this Agreement shall not release us from any of our obligations
hereunder.
Nothing herein constitutes us partners with you or with
the other Underwriters and the obligations of ourselves and of
each of the other Underwriters are several and not joint.
Nothing herein contained shall be deemed to protect or
purport to protect any person against any liability to the Trust
or the Certificateholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the duties of such person, or by
reason of such person's reckless disregard of such person's
obligations and duties under this Agreement.
Notices hereunder shall be deemed to have been duly
given if telephoned and then promptly mailed or telegraphed to us
at our address set forth in the Underwriters' Questionnaire,
attached hereto as Exhibit A, or to you at your address set forth
at the head of this Agreement.
C/M 11939.0001 406222.1
12
<PAGE>
The headings contained in this Agreement are for
reference purposes only and shall not affect its meaning or
interpretation. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
17. Underwriting Participants. This Agreement is
being executed by us and delivered to you in duplicate. Upon
your confirmation hereof and of Agreements in identical form with
each of the other Underwriters, this Agreement shall constitute a
valid and binding contract among us.
Very truly yours,
Name of Firm:
By:
(Authorized Signator)
Address:
Confirmed as of the date set forth on page
1 of this Agreement.
BEAR, STEARNS & CO. INC.
Depositor and Managing Underwriter
Acting on behalf of the Depositors
and on behalf of the other several
Underwriters named in Schedule A hereto.
C/M 11939.0001 406222.1
13
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
INSURED MUNICIPAL SECURITIES TRUST
47TH DISCOUNT SERIES
MONTHLY
PLAN OF DISTRIBUTION
45808m498
CUSIP
This is to certify that Bear Stearns & Co. Inc. is the owner
and registered holder of this Certificate evidencing the
ownership of 9,240 unit(s) of fractional undivided interest in
the above-named Trust created under the laws of the State of New
York pursuant to the Trust Indenture and Agreement among Bear
Stearns & Co., Inc. (and such other Depositors, if any,
identified therein), as Depositors, United States Trust Company
of New York, as Trustee, and Standards & Poor's Corporation, as
Evaluator (the "Indenture"), a copy of which is available at the
office of the Trustee. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Indenture
to which the Holder of this Certificate by virtue of the
acceptance hereof assents and is bound, a summary of which
Indenture is contained in the Prospectus relating to the Trust.
This Certificate is transferable and interchangeable by the
registered owner in person or by his duly authorized attorney at
the Trustee's office upon surrender of this Certificate properly
endorsed or accompanied by a written instrument of transfer and
any other documents that the Trustee may require for transfer, in
form satisfactory to the Trustee and payment of the fees and
expenses as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer
of the Agent for the Depositors (referred to in the Indenture)
and the manual signature of an authorized signatory of the
Trustee.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
<PAGE>
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
INSURED MUNICIPAL SECURITIES TRUST
47TH DISCOUNT SERIES
Annual
PLAN OF DISTRIBUTION
45808m514
CUSIP
This is to certify that Bear Stearns & Co. Inc. is the owner
and registered holder of this Certificate evidencing the
ownership of 420 unit(s) of fractional undivided interest in the
above-named Trust created under the laws of the State of New York
pursuant to the Trust Indenture and Agreement among Bear Stearns
& Co., Inc. (and such other Depositors, if any, identified
therein), as Depositors, United States Trust Company of New York,
as Trustee, and Standards & Poor's Corporation, as Evaluator (the
"Indenture"), a copy of which is available at the office of the
Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the
Holder of this Certificate by virtue of the acceptance hereof
assents and is bound, a summary of which Indenture is contained
in the Prospectus relating to the Trust. This Certificate is
transferable and interchangeable by the registered owner in
person or by his duly authorized attorney at the Trustee's office
upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other
documents that the Trustee may require for transfer, in form
satisfactory to the Trustee and payment of the fees and expenses
as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer
of the Agent for the Depositors (referred to in the Indenture)
and the manual signature of an authorized signatory of the
Trustee.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
<PAGE>
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
INSURED MUNICIPAL SECURITIES TRUST
SERIES 20
Monthly
PLAN OF DISTRIBUTION
45808m522
CUSIP
This is to certify that Bear Stearns & Co. Inc. is the owner
and registered holder of this Certificate evidencing the
ownership of 4620 unit(s) of fractional undivided interest in the
above-named Trust created under the laws of the State of New York
pursuant to the Trust Indenture and Agreement among Bear Stearns
& Co., Inc. (and such other Depositors, if any, identified
therein), as Depositors, United States Trust Company of New York,
as Trustee, and Standards & Poor's Corporation, as Evaluator (the
"Indenture"), a copy of which is available at the office of the
Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the
Holder of this Certificate by virtue of the acceptance hereof
assents and is bound, a summary of which Indenture is contained
in the Prospectus relating to the Trust. This Certificate is
transferable and interchangeable by the registered owner in
person or by his duly authorized attorney at the Trustee's office
upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other
documents that the Trustee may require for transfer, in form
satisfactory to the Trustee and payment of the fees and expenses
as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer
of the Agent for the Depositors (referred to in the Indenture)
and the manual signature of an authorized signatory of the
Trustee.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution in the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
<PAGE>
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
INSURED MUNICIPAL SECURITIES TRUST
SERIES 20
Annual
PLAN OF DISTRIBUTION
45808m548
CUSIP
This is to certify that Bear Stearns & Co. Inc. is the owner
and registered holder of this Certificate evidencing the
ownership of 210 unit(s) of fractional undivided Interest in the
above-named Trust created under the laws of the State of New York
pursuant-to the Trust Indenture and Agreement among Bear Stearns
& Co., Inc. (and such other Depositors, if any, identified
therein), as Depositors, United States Trust Company of New York,
as Trustee, and Standards & Poor's Corporation, as Evaluator (the
"Indenture"), a copy of which is available at the office of the
Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the
Holder of this Certificate by virtue of the acceptance hereof
assents and is bound, a summary of which Indenture is contained
in the Prospectus relating to the Trust. This Certificate is
transferable and interchangeable by the registered owner in
person or by his duly authorized attorney at the Trustee's office
upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other
documents that the Trustee may require for transfer, in form
satisfactory to the Trustee and payment of the fees and expenses
as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer
of the Agent for the Depositors (referred to in the Indenture)
and the manual signature of an authorized signatory of the
Trustee.
C/M 11939.0001 406225.1
<PAGE>
Date: June 16, 1989
Agent for Depositors
By
Authorized Signatory
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By
Authorized Officer
ASSIGNMENT
For Value Received
hereby sells, assigns and transfers unto
the within Certificate and does hereby irrevocably constitute and
appoint attorney, to transfer the within
Certificate on the books of the Trustee, with full power of
substitution In the premises.
Date:
Notice: The signature(s) to this assignment must
correspond with the name(s) as written above upon the face of
this Certificate in every particular, without alteration or
enlargement or any change whatever.
C/M 11939.0001 406225.1
BATTLE FOWLER
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
280 Park Avenue
New York, New York 10017
(212) 856-70002
October 30, 1990
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Re: Municipal Securities Trusts,
Series 45 and 73rd Discount Series, and
Series 46 and 74th Discount Series
Dear Sirs:
You have asked for our opinion on the status, for purposes of
federal income tax, New York State franchise tax and New York City general
corporation tax, of Municipal Securities Trusts, Series 45 and 73rd Discount
Series, and Series 46 and 74th Discount Series (collectively referred to as the
"Trusts"), each of which is a trust created under the laws of the State of New
York pursuant to Reference Trust Agreements (the "Agreements") dated July 20,
1989 and November 17, 1989, respectively, among Bear, Stearns & Co. Inc.,
United States Trust Company of New York (the "Trustee") and Standard & Poor's
Corporation.
In rendering this opinion, we have examined the Agreements, the
proposed form of final Prospectus relating to each Trust dated October 31, 1990
(the "Prospectus") and the documents referred to therein, among others, and we
have relied on the validity of said documents and the accuracy and completeness
of the facts set forth therein. We have assumed that each Trust has been and
will continue to be operated in accordance with its governing instrument.
You have represented that all bonds acquired by the Trusts
pursuant to the contracts of purchase described in the Prospectus (the "Bonds")
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 currently exempt from regular
federal income tax, but we have not made any review of the proceedings
C/M 11939.0001 408843.1
<PAGE>
relating to the issuance of the Bonds or the bases for such opinions and
express no opinion as to them, and neither the Trustee nor the Sponsor has 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.
Based on the foregoing, it is our opinion that, under existing
law:
The Trusts are not associations taxable as corporations for
federal income tax purposes under the Internal Revenue Code of 1986, as
amended (the "Code"), and income received by each Trust that consists
of interest excludable from gross income under the Code will be
excludable from the federal gross income of the Certificateholders (as
defined in the Prospectus) of such Trust.
Each Certificateholder of a Trust will be considered the owner
of a pro rata portion of such Trust under Section 676(a) of the Code.
Thus, each Certificateholder of a Trust will be considered to have
received his pro rata share of Bond interest when it is received by
such Trust, and the net income distributable to Certificateholders that
is exempt from federal income tax when received by that Trust will
constitute tax-exempt income when received by the Cer-tificateholders.
Gain (other than any earned original issue discount) realized on
sale or redemption of the Bonds or on sale of a Unit is, however,
includable in gross income for federal income tax purposes, generally
as capital gain. (It should be noted in this connection that such gain
does not include any amounts received in respect of accrued interest.)
Such gain may be long or short-term depending on the facts and
circumstances. Capital losses are deductible to the extent of capital
gains; in addition, up to $3,000 of capital losses of non-corporate
Certificateholders may be deducted against ordinary income. A capital
asset acquired on or after January 1, 1988 must be held for more than
one year to qualify for long-term capital gain treatment. Long-term
capital gains are taxed at the same rates applicable to ordinary
income.
Each Certificateholder of a Trust will realize taxable gain or
loss when such 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
- 2 -
C/M 11939.0001 408843.1
<PAGE>
allocating the total tax cost of each Unit among all of the Bonds held
in the Trust (in accordance with the portion of such 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 a 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). No deduction is
allowed for the amortization of bond premium on tax-exempt bonds such
as the Bonds in computing regular federal income tax.
Discount generally accrues based on the principle of compounding
of accrued interest, not on a straight-line or ratable method, with the
result that the amount of earned original issue discount is less in the
earlier years and more in the later years of a bond term. The tax basis
of a discount bond is increased by the amount of accrued, tax-exempt
original issue discount thus determined. This method of calculation
will produce higher capital gains (or lower losses) to a
Certificateholder, as compared to the results produced by the
straight-line method of accounting for original issue discount, upon an
early disposition of a Bond by a Trust or of a Unit by a
Certificateholder.
A Certificateholder of a Trust may also realize taxable gain or
loss when a Unit of such Trust is sold or redeemed. The amount received
is allocated among all the Bonds in such Trust in the same manner as
when the Trust disposes of Bonds and the Certificateholder may exclude
accrued interest and the earned portion of any original issue discount
(but not amounts attributable to market discount). The return of a
Certificateholder's tax cost is otherwise a tax-free return of capital.
A portion of social security benefits is includable in gross
income for taxpayers whose "modified adjusted gross income" combined
with 50% 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.
- 3 -
C/M 11939.0001 408843.1
<PAGE>
Effective for taxable years beginning in 1987-89, corporate
Certificateholders are required to include as an item of tax preference
for purposes of the federal corporate alternative minimum tax 50
percent of the amount by which the adjusted net book income (which will
include tax-exempt interest) of the corporation exceeds the alternative
minimum taxable income (determined without this tax preference item). A
similar provision based on adjusted earnings and profits (but with a
75% inclusion rate) will apply for taxable years beginning after 1989.
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 after December
31, 1986 and before January 1, 1992. In addition, in certain cases,
Subchapter S corporations with accumulated earnings and profits from
Subchapter C years will be subject to a minimum tax on excess "passive
investment income" which includes tax-exempt interest.
The Trusts are not subject to the New York State Franchise Tax
on Business Corporations or the New York City General Corporation Tax.
For a Certificateholder of a Trust who is a New York resident, however,
a pro rata portion of all or part of the income of such Trust,
including the earned portion of original issue discount, will be
treated as the income of the Certificateholder under the personal
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 entire net
income for purposes of calculating New York State 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 certain of the Bonds that are "industrial revenue
bonds" ("IRBs"), you have informed us that the opinions of bond counsel to the
respective issuing
- 4 -
C/M 11939.0001 408843.1
<PAGE>
authorities indicate that interest on such Bonds is exempt from regular federal
income tax. Interest on such Bonds will not be exempt from federal income tax,
however, 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 Certificate-holder who is such a "substantial user" or
"related person" thereof will not be tax-exempt. Furthermore, in the case of
Bonds that qualify for the "small issue" exemption, the "small issue" exemption
will not be available or will be lost if, at any time during the three-year
period beginning on the later of the date the facilities are placed in service
or the date of issue, all outstanding tax-exempt IRBs, together with a
proportionate share of any present issue, of an owner or principal user (or
related person) of the facilities exceeds $40,000,000. In the case of IRBs
issued under the $10,000,000 "small issue" exemption, interest on such IRBs
will become taxable if the face amount of the IRBs plus certain capital
expenditures exceeds $10,000,000.
In addition, a Bond can lose its tax-exempt status as a result
of other subsequent but unforeseeable events, such as prohibited "arbitrage"
activities by the issuer of the Bond or the failure of the Bond to continue to
satisfy the conditions necessary for the interest thereon to be exempt from
regular federal income tax. We have made no investigation 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. In rendering this opinion we have relied upon your representation
noted above concerning the opinions of bond counsel relating to any Bonds that
are IRBs.
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 the
Units.
The Tax Reform Act of 1986 (the "Act") resulted in many
important changes to the federal income tax system, including a reduction in
marginal tax rates, the elimination of preferential treatment for capital gains
after 1987 and the elimination or reduction of many exclusions and deductions.
Included in the Act
- 5 -
C/M 11939.0001 408843.1
<PAGE>
are provisions relating to tax-exempt bonds that: (a) require tax-exempt
interest on certain bonds to be included as an item of tax preference for
purposes of the individual alternative minimum tax; (b) provide for a new
volume cap in lieu of the prior-law private activity bond and qualified
mortgage bond volume caps; (c) place restrictions on arbitrage and advance
refundings; (d) require that tax-exempt interest be shown on tax returns for
taxable years beginning after 1986; (e) disallow 100% of deductions for
interest expense allocable to tax-exempt obligations acquired by financial
institutions; and (f) make certain technical modifications. The enactment of
the Act may affect the character of the income that the Certificateholder
receives. The Act significantly lowered individual and corporate income tax
rates. In general, a lower overall rate of income taxation could make
tax-exempt bonds less attractive to investors and could decrease the value of
tax-exempt Bonds held by the Trusts.
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 Trusts, and it can be expected that
similar proposals may be introduced in the future. The 1987 budget
reconciliation legislation proposed a provision that would have required market
discount on tax-exempt bonds to be included in income throughout the term of
the bonds. Although this provision was deleted from the Revenue Act of 1987, it
or a similar proposal could be reintroduced and enacted in the future.
The Congress has recently passed legislation that would increase
tax rates, including the individual alternative minimum tax rate, and provide
advantageous treatment for capital gains in certain circumstances. It has been
reported that the President will sign this legislation. The Sponsor cannot
predict the effect of this legislation on a Certificateholder or on the value
of the Bonds.
In a 1988 decision (South Carolina v. Baker), the U.S. Supreme
Court held that the federal government may constitutionally require states to
register bonds they issue and subject the interest on such bonds to federal
income tax if not registered, and that there is no constitutional prohibition
against the federal government's taxing the interest earned on state or other
municipal bonds.
The Supreme Court decision affirms the authority of the federal
government to regulate and control bonds such as the Bonds in the Trust and to
tax interest on such bonds in the future. The decision does not, however,
affect the current exemption from taxation of the interest earned on the Bonds
in the Trust in accordance with Section 103 of the Code.
- 6 -
C/M 11939.0001 408843.1
<PAGE>
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 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.
The material set forth under the section entitled "Tax Status"
in the Prospectus is a fair summary of our opinion.
We hereby consent to the filing of this opinion regarding the
Tax Status of the Trusts as an exhibit to the Registration Statement and to the
use of our name in the Registration Statement and in the Prospectus under the
headings "Tax Status" and "Legal Opinions."
Very truly yours,
- 7 -
C/M 11939.0001 408843.1
J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Vice President
New York, NY 10006-2551 Tax-Exempt Evaluations
Tel 212 770 4422
Fax 212 797 8681
Standard & Poor's
A Division of The McGraw-Hill Companies
October 31, 1996
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, NY 10020
Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005
Re: Municipal Securities Trust,
Series 45
Gentlemen:
We have examined the post-effective Amendment to the Registration
Statement File No. 33-29313 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 Registratin Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commision.
Sincerely,
Frank A. Ciccotto
FAC/trh
<PAGE>
J.J. Kenny Frank A. Ciccotto, Jr.
65 Broadway Vice President
New York, NY 10006-2551 Tax-Exempt Evaluations
Tel 212 770 4422
Fax 212 797 8681
Standard & Poor's
A Division of The McGraw-Hill Companies
October 31, 1996
Reich & Tang Distributors L.P.
600 Fifth Avenue
New York, NY 10020
Gruntal & Co., Inc.
14 Wall Street
New York, NY 10005
Re: Municipal Securities Trust,
Series 46
Gentlemen:
We have examined the post-effective Amendment to the Registration
Statement File No. 33-30144 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 Registratin Statement for the respective
bonds comprising the trust portfolio are the ratings indicated in our KENNYBASE
database.
You are hereby authorized to file a copy of this letter with the
Securities and Exchange Commision.
Sincerely,
Frank A. Ciccotto
FAC/trh
